Trust Amendment

Monday, September 28th, 2009

All good estate plans are designed to accommodate and anticipate changes.  The owner reserves the right to amend or revoke the trust in part or in whole.  And the most common amendment done by the owner is changing the trust asset distribution.  It’s so common for people to delete or add beneficiaries or even to adjust the amount or percentage that the beneficiary will receive.  Also, another common change is to change the order or names of successor trustees.

Because it’s so easy to amend any trust, some people are doing it on a regular basis.  There are some trusts with seven or more amendments.  But sometimes, it’s easier to just replace the whole trust instead of amending it several times. 

However, some people don’t like the thought of doing the trust all over again because it’s a bit daunting.  In a new trust, all assets titled in the first trust’s name needs to be transferred to the new one.  And it could be too much work to re-title assets.

So instead of creating a new trust, you can just restate it.  The great thing about this is: you don’t need to re-title the assets of your old trust.  A trust restatement is already funded, and could simple replace the original trust.

Tags: asset, assets, beneficiaries, estate plans, Family Trust, owner, trust, trust amendent, trust restatement
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Education Savings Plan in Estate Planning

Sunday, September 20th, 2009

Estate laws truly affect your assets.  Most of your assets constitute your estate when you pass away.  And since you know that an estate over $3.5 million will be taxed up to 45%, you may want to keep your estate below that level.  In order to do that, you can give gifts or acquire a 529 education savings plan.

Actually, this kind of education savings plan would allow you to select any relative or friend as your beneficiary.  That person is expected to incur education costs.  Moreover, the plan offers flexibility like for example; you can change the beneficiary any time, change investment elections, and make various contributions to the account.

You can choose from several 529 accounts that may be available in your state.  If you’re a resident of Ohio for instance, you can choose Ohio 529 plan and deduct your contributions from the state income tax.  Currently, IRS rules are allowing investors to make large lump sum contributions to the 529 plan.  In 2009 you can contribute up to $65,000 for individuals or $130,000 for couples.

So 529 education savings plan not only allows you to help your children grandchildren, nephews, nieces, and other loved ones from pursuing education, it would also allow you to qualify for tax deductions.  Seek advice from your estate planning attorney whether this strategy could be applied in your situation.

Tags: assets, attorney, education, estate, Estate Planning, laws, Ohio, plan, savings, strategy, tax deduction
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What Do You Need?

Friday, August 7th, 2009

A Harris Interactive poll (2008) found that 55% of adults don’t have wills.  Maybe some don’t want to think about dying, but the truth is: majority doesn’t know how to start one or who to talk to.

An estate plan may be as simple as creating a will or it could also be as complex as building up a living will or trust.  You can talk with a qualified attorney to be enlightened on this but remember that it’s important to create one because you want to ensure the destiny of your assets as well as your children.  When you don’t have any of these, the state will have a free hand on where to take your money and your children along with it when you pass away.

Choose what you need.  A will is an instruction document that states your assets and the individuals or institutions where you want to give it to.  Most wills go to probate after your death.  A probate court will oversee inheritance distribution and debt payment.  A living trust sets up conditions on when and how to distribute your assets.  This will help reduce the taxes paid and avoid probate.  Finally, a living will provides an assignment of medical power of attorney given to a person you trust.

Tags: assets, attorney, death, estate plan, Harris Interactive poll, living will, probate, state, trust, Wills
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Estate Planning Options

Thursday, August 6th, 2009

In Wisconsin Statutes, the Ch. 770 addition encourages more same-sex couples to have more options to estate planning.  However, attorneys say that there are still a lot of questions to answer.  Michelle T.L. Hernandez, an attorney for Krueger & Hernandez shares that she has been receiving several calls about this process ever since the application for domestic partner declarations have started on August 3.

Over 400 couples have already filed for declarations - this means that same-sex domestic partners may inherit assets pursuant to state intestacy statute.  They may also sue a wrongful death of a deceased partner.  Hernandez said that this niche is still small.  As more couples register, she expects an evaluation whether she would change their trusts, wills, and estate planning documents and incorporate the new law benefits.  “I think attorneys implementing plans for domestic partners as well as those handing partnership termination will find this new area to be a brand new and hot law.”

Many attorneys are now encouraging their clients to apply for this domestic partnership status.  Same-sex partners will find that the new law provides a few “unique” opportunities in estate planning that is not available to them before.  This includes the ability to obtain the partner’s property, vehicle, or home in the event of death.    

Tags: assets, attorneys, death, declarations, Estate Planning, Krueger & Hernandez, law, Michelle T.L. Hernandez, partnership, same-sex couples, Wisconsin
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Transferring Business Assets to Children

Thursday, July 30th, 2009

There are several methods for business owners to transfer ownership or assets to their children without the high cost of federal gift tax.  Some methods would include providing numerous money transfers until the exclusion limit, setting up family limited partnership, and setting up a family trust that will receive transferred assets.  A business owner like you should know when would be the right timing to step out of your family business.  Here are some tools you can use:

*Buy-sell agreement - this is a legal contract prearranging your business sale interest with a willing buyer.

*Outright sell - you can receive cash and use it to maintain your lifestyle through selling your business interest to any of your family members

*Grantor retained annuity trusts (GRAT) - a sophisticated succession tool in business which uses irrevocable trusts to transfer assets while at the same time retaining a specific income payment for a particular set of time.

*Private annuities - sale of property wherein the buyer makes an unsecured promise that they will make periodic payments to the seller for the rest of his or her life.

*Family limited partnerships - when you transfer ownership of your business to this partnership, control of general partnership interest will still be with you and you can gift this interest to your family members.

Tags: assets, business owners, buy-sell agreement, family limited partnerships, family trusts, famly business, federal gift tax, GRAT, outright sell, private annuities, trust
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Draft an Advance Directive to be Prepared

Saturday, July 18th, 2009

Nobody would like to spend time mulling over their death.  However, it’s important to create an advance estate plan that will give you control over any situation when the time comes that you can’t voice your opinion anymore.  Estate planning attorneys’ advice: “You can’t change the fact that you will die.  And if you have the legal paperwork properly filed, you’re just showing that you respect the people you are leaving behind - you’re not putting them through stress and emotional turmoil than necessary.”

Fortunately today, anyone can draft an advance estate plan, which is a legal document specifying the things you want to happen when you’re no longer able to provide consent.  Aside from the distribution of your assets to beneficiaries, these advance directives would typically cover the situations you want when medical staff would attempt to revive you or the kind of life support you prefer to be put on.

At age 25, maybe you would want them to revive you at full blast (even hit you with lightning if possible) but at age 95, you may have a different perspective since you would not want to reach 100 years old hooked to these machines.  Therefore, advanced directives such as these would legally allow you to specify these things before the actual emergency situation when you’ll be unable to give directions yourself.  

Tags: assets, attorney, attorneys, beneficiaries, death, directives, emergency, estate plan, Estate Planning, legal, legal paperwork
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Proper Way to List Assets in your Trust

Friday, July 17th, 2009

Most trusts would include an asset list being transferred to it (sometimes called Schedule A or Exhibit A).  This list would be for the benefit of the successor trustee, who’s the person knowledgeable about the contents of your trust.  Merely listing a home or bank account on the list does not place assets in the trust.

Also, it’s important to keep the asset list current.  It has to be updated and revised continuously, perhaps with a photocopy of asset list given to the successor trustee.  The values of the properties or balance of the accounts don’t need to be included.  On top of listing the assets, you should also transfer the asset title to the trustee - this is called “funding your trust.”

Also, a deed given to “Smith Family Trust” would not be sufficient because there might be numerous Smith family trusts out there.  The trust deed should state “Mary Smith, trustee of Smith Family Trust u/a (under agreement) July 17, 2009.” 

Sometimes, the initial “u/d/t” is used, which is short for the words “under declaration of trust.”  In summary, the individual trustee holding the legal title must be identified as well as the date of trust so that the bank could clearly determine who has legal rights or access to the trust.  

Tags: assets, deed, funding your trust, successor, trust, trustee, trusts
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Help Parents Manage Finances and Leave a Legacy

Thursday, July 16th, 2009

You’re very fortunate if your parents are still living.  However, it’s time for you to assist them on some areas of their life, more specifically on financial issues.  In fact, it’s imperative for you to be involved with them on these two things: managing finances on their retirement as well as leaving a legacy.

When your parents don’t initiate conversations on these things, it’s better if you start talking to them about it.  Who knows, you might find them willing to discuss these things with you more than you thought.  Encourage your parents to seek the help of an estate planning attorney to identify several ways on how they could pass their assets to the next generation.

Moreover, you may want to suggest that they check on beneficiaries designations of their qualified plans (such as IRAs, 401ks, etc.) or life insurance contracts. Maybe the family picture changed in the last couple of years, and they are really intending to change the designations.  They should take action now before it’s too late.

While it’s important for your parents to deal with legacy issues, they may still have numerous years ahead of them.  Therefore, you can also start discussing about their investments, savings, assets, and so on.  This kind of knowledge would be very helpful if you would become involved in distributing or managing their resources.

Tags: assets, attorney, estate planning attorney, finances, legacy, parents, plans, resources, retirement
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Trust Meaningless Unless with Assets

Monday, July 13th, 2009

Two siblings consulted an attorney about the estate of their father who passed away in 2006.  Both their parents have revocable trusts and a $3 million combined net worth.

Both their trusts were adequate and well-written.  It has the necessary language and complete documents to ensure that the first deceased spouse’s estate would be divided into family trust and shelter the whole $1.5 million (husband’s share) from future estate tax lasting for 12 generations because it will not be added to the other $1.5 million taxable estate (wife’s share).

Instead of writing a will, which could have resulted in tax worth $460,000, the family trust saved them from this expense.  However, even if their trust was adequate, it would be meaningless unless it has assets.  What’s worse is that the children can’t sue the attorney who drafted the trust - he has included a firm warning that there are negative consequences if the couple failed to fund the trust and even included a separate sheet on how they can do so.

As a result, they need to file probate, which would cost them an additional $210,000 for court costs, attorney’s fees, and representative fees in addition to the $460,000 tax payable to the IRS upon their mother’s death.  All of these problems could have been avoided if only their parents funded the trusts.

Tags: assets, attorney, estate, estate tax, Family Trust, probate, revocable trusts, trusts, will
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Lessons from Michael Jackson

Thursday, July 9th, 2009

Before he died, it’s a good thing that Michael Jackson made a smart estate plan.  He provided and cared for his loved ones because a separate document gathered his assets (estimated to be over $500 million, which exceeds his debt by $200 million).  It’s called a family trust - this ensures that his affairs would stay out of court and out of the eyes of the public.

He established this trust along with his will, and it’s also called a “living or revocable trust.”  The goal of this estate-planning tool would be to transfer all the property - including real estate, bank accounts, and cars - into a separate owned entity while maintaining the control as a trustee.  In Jackson’s case, he established a “Michael Jackson Family Trust.”

At his death, the control will be transferred to his successor trustee or co-trustee.  Most people (Jackson included) will set it up to “pour over” - this means that whatever assets remain outside of the trust would be eventually be added to the estate at their death.

The beauty of this trust is: people can avoid a public process called probate.  Aside from celebrities, this process would also make sense for people with significant assets because it would spare their heirs from a prolonged legal process.

Tags: assets, co-trustee, estate plan, Family Trust, legal, living trust, Michael Jackson, probate, revocable trust, successor trustee, trust, trustee, will
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Checklist for Parents’ Will

Monday, July 6th, 2009

As parents, you should be prepared to plan for the unthinkable.  If one or both parents die, anyone could be assigned as guardians to your children.  This means that the courts - not you - would decide their future.  So to guide you through the drafting of your will, consider the following steps:

-Pick a guardian for your children as well as their future assets.  Think about this thoroughly.  Who could be there for them who’ll share your values in the long-term?  What’s surprising is that the person may not be your close blood relative or current romantic interest.

-You can choose one person to raise your child and another one to take care of your money.

-Before making the designation, make sure that your guardian will accept this responsibility.  Divorced parents should make this guardianship decision together.  They could also consider each other to be named as guardian, as the courts would most likely award it to either of them when the other party petitions for it.

-Give a certified “will” copy to your guardian and let them know where you stored the original.

-Pick an attorney who’s board-certified in estates and wills.  It would also be best if they had an advanced training or certification to claim their specialized area.

Tags: assets, attorney, courts, estate, estates, guardian, parents, plan, will, Wills
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Event Helps Heroes to Prepare their Wills

Tuesday, June 30th, 2009

Men and women who are putting their own lives on the line each and every day to serve and protect the people should have readied documents to protect their families’ future and assets when an unfortunate event happens to them.  This is according to the lawyers that came to Moriarty Civic Center on Saturday.

Torrance County launched “Wills for Heroes,” a public service program that offers free health care directives, power of attorney, and wills for first responders as well as their spouses.

Eleven attorneys came to draft the documents at Civic Center, many of them coming from Santa Fe and Albuquerque.  First responders were invited from the county including paramedics, police departments, and fire departments.  The service is free, with a potential savings of $600 - the average cost of creating and notarizing all the wills and other documents needed by a person and their spouse.   ”It’s a one-stop shop and the people will have legally active documents when they walk away from here,” said Matt Page, Assistant District Attorney.

“I want to create a will because I don’t want machines to keep me alive if I become incapacitated, and I also don’t want my own family to make these kinds of decisions for me,” says Susan Enchinias, Moriarty Police Officer.  

Tags: Albuquerque, assets, attorney, attorneys, heroes, lawyers, Moriarty Civic Center, police officer, responders, Santa Fe, Wills
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Estate Planning Process

Saturday, June 27th, 2009

Business succession planning should address the continuity and transfer of tangible assets such as equipment and land.  This also includes intangible assets such as people and culture.  Aggressive succession planning encourages transfer of farm or business to the next generation before the death of its owners.

Estate planning is essential because it prevents liquidation of your assets to cover tax liabilities.  It’s an ongoing process of expressing, designing, refining, and adopting the programs, structures, and documents needed to achieve the continuity objectives of your family business.  In addition, it requires communication, refinement, and continual review of necessary plans and transfer to your vendors, key personnel, partners, and family who’ll be affected by your loss.

The process must accomplish three goals:

• *Establish plans for continuity of family assets or family business
• *Initiates transfer of assets to charities and family members prior to death
• *Upon death, completes transfer of assets with minimum administrative hassle and cost, according to your wishes

Be careful to avoid estate planning complexities that often arise out of unfocused objectives, dysfunctional relationships, and special family circumstances.  To protect the rights of your beneficiaries or descendants, hire an estate planning lawyer who will be the executor of your estate.

Tags: assets, business succession, Estate Planning, estate planning lawyer, executor, family business, lawyer, tax liabilities
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Preventing Family Feuds from Wills

Monday, June 22nd, 2009

It’s easy to divide your assets in preparing a will.  However, the real challenge is to prepare a document that will ensure peace after you die.  “So many wills are like ticking time bombs,” said Les Kotzer, a wills and estate lawyer.  From experience, he knows that a loosely worded will (or no will at all) typically create long-lasting family feuds.

“Too many wills are simply outdated, not worded properly, or doesn’t take into consideration specific family issues.  Quite often, this is a recipe for family battle when I review wills for clients,” he added.

He warned that people are making a big mistake in planning a will when they don’t talk about its contents to the benefactors.  “Often, the topic is considered taboo, especially when kids don’t want to seem greedy and the parents don’t want to talk about death to their kids.  But parents should be talking with their children now,” he emphasized.

This talk should include the decision on who would likely be the best executor.  For example, are you going to pick your eldest son just because he’s good at math and he’s the first born?  It may not be a good idea.  The executor has great power so it should not go to someone who will likely abuse it.

Tags: assets, estate lawyer, executor, lawyer, Les Kotzer, will, Wills
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Critical Factors in Estate Planning Process

Saturday, June 20th, 2009

The nature of your various assets and how you are holding title to those assets are critical factors in your estate planning process.  Before you change title (or take title) to an asset, you have to understand the consequences of your proposed change.  Seek the help of your estate planning lawyer to advise you on:

• *Separate property and community property - if you’re a registered domestic partner or you’re married, the assets that you or your domestic partner earns are part of a community property. However, you can also continue to own separate property. These may be property that you own prior to marriage. Also, inheritance or gifts received during the partnership may be considered separate as well. Community property can be converted to separate property (and vice versa) through a written agreement.
• .
• *Tenants-in-common - for example, several people own property and a co-tenant (co-owner) dies, then the co-tenant’s property interest would pass on to the beneficiaries named in the will.
• .
• *Joint tenancy with survivorship right - single or married co-owners that own property can hold title as joint tenants with survivorship right. Therefore, if one tenant dies, the property would pass on to the surviving tenant overriding the will of the deceased person.
• .
• *Community property with survivorship right - typically, married people would hold title to property by passing it to the surviving spouse in the event that the other party would die. This would also pass on without any influence of the will created by the deceased person.

Tags: assets, community property, Estate Planning, estate planning lawyer, gifts, inheritance, separate property
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Introduction to Planned Giving

Friday, June 19th, 2009

A term that’s commonly used to describe donating to charity during one’s lifetime or after death is called “planned giving.”  This is done while meeting your current needs as well as providing for your heirs.  Also, it’s typically done with estate planning.

From the perspective of the donor, planned giving may be attractive for many reasons.  First, it allows you to give larger gifts out of your existing assets.  And it may also reduce your estate taxes or capital gains, earn higher investment yield, or give you an income stream for life, depending on how you set it up.  These planned gifts normally appeal to people who are not sure how much assets they’ll need during their lifetimes, and at the same time, want to benefit charitable organizations.

Planned gifts may be used to start a private foundation, create a support organization, establish your own fund at any community foundation, or give to a specific nonprofit organization.  The most common planned giving vehicles are beneficiary designations, charitable requests, charitable lead trusts, charitable remainder trusts, and gift annuities.

For more information on these programs, consult an attorney or professional advisor.  You can find them in any attorney listings or directories online.

Tags: assets, attorney, attorney listings, capital gains, charitable organizations, directories, Estate Planning, estate taes, gifts, online, planned gifts, Planned Giving
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Getting to Know Family Trust

Friday, June 19th, 2009

A family trust is also known as a living trust or revocable living trust.  It’s a legal document holding ownership or title to your assets and real property.  When you create a family trust, it means that you will transfer the ownership of your assets to this trust.  This asset transfer is typically called “funding.”

You do not relinquish control when you transfer title.  Therefore, you can still borrow, buy, or sell.  Family trust may look similar to a will because it includes information and details of the instructions for your estate at your death.  Unlike wills, however, properly funded trusts:

• -Do not go through probate,
• -Give you control over assets you’re going to leave to your children or grandchildren, and
• -Prevent courts from controlling assets at incapacity.

In other words, you will not lose control of your assets when you write a family trust.  Also, it enables you to pass the property to your family or loved ones after your death.  In addition, it allows you to pick out a successor trustee (or any appointed person) to make sure that your property will go to the people you chose when you pass away.  As a result, you’ll have peace of mind.

Tags: assets, estate, Family Trust, funding, living trust, probate, property, revocable living trust, successor trustee, title
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What is Estate Planning?

Thursday, June 18th, 2009

It’s important to have an “estate plan” in place no matter how much your net worth is.  Such plan will ensure that your financial goals are met and your family gets your assets after you pass away.

Several elements of an estate plan include: a will, living will or a health-care proxy (sometimes called medical power of attorney), and power of attorney assignment.  For some people, it would also make sense to have a “trust.”  However, you have to be mindful of both state and federal laws governing estates.  That is why it’s important to consult an attorney for your estate planning.

A good place to start is to take inventory of your assets.  These consist of your business interests, real estate properties, insurance policies, retirement savings, and other investments.  Answer these three questions?

1. 1. Who will inherit your assets?
2. 2. If ever you’re incapacitated, who do you want to handle your financial affairs?
3. 3. If you’re unable to make decisions yourself, who do you want to make medical decisions for you?

Remember that everybody needs an estate plan and it’s not just for the wealthy.  Inheritance can sometimes be a loaded issue.  So by being clear on your intentions, you can help dispel potential conflicts when you’re gone.

Tags: assets, attorney, estate plan, health-care proxy, inheritance, laws, living will, power of attorney, trust, will
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