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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Procrastinating is a Bad Habit

Tuesday, August 11th, 2009

When faced with a difficult decision, people naturally procrastinate.  For instance, only 40% of people have an up-to-date will according to Visa Inc.’s recent poll.  A will is certainly not mandatory - although you don’t have to have a will when you die, you wouldn’t want to leave important decisions about your health and finances to strangers would you? Therefore, address these issues now and spare your family from dealing with them.

Consider hiring an estate planning attorney to draft and review your documents.  They can help you decide whether to create a simple will or come up with complex documents such as trusts involving large assets or complex estates.  Here are some things you need to do:

• *Before naming a power of attorney or executor, make sure they’re up to the task.
• *Name alternate executors and beneficiaries in case someone would die before you.
• *Compare trust or will beneficiaries to those named in your retirement or insurance plans to eliminate conflicts.
• *Review documents periodically, most especially when your family situation changes (death of a beneficiary, new child, divorce, or marriage).
• *Date, sign, and notarize documents as well as file them for safekeeping.

Tags: attorney, beneficiaries, documents, estate, Estate Planning, executor, family, procrastinate, strangers, trust, will
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Taking Family Trusts to the Next Level

Sunday, August 2nd, 2009

Beneficiaries of family trusts (oftentimes referred to as discretionary trusts), typically have no entitlement to assets held in trust, not until the trustee would exercise his or her discretion and distribute capital or income in their favor.  For example, when a father passed away, his wife may inherit the house or other assets that form part of his estate.  Then, the children (if they’re not minors) would usually take control of the trust and business.  However, trusts commonly have beneficiaries who are creditors too - this part is most often overlooked.

The reason that family trusts (especially those that carry business) tend to have creditors as beneficiaries is because the trustee would be taxed on the debts with a 46.5% flat rate unless he or she distributes all profits, earnings, and realized capital gains in a financial year.  This is one of family trusts’ benefits - the ability to stream the various classes of income and give it to most appropriate beneficiaries so that in the end, a lower tax amount is paid generally compared to business structures where the owners have fixed settlement.

Ideally, a succession plan requires a solicitor, accountant, lawyer, and financial adviser working together.  This will encourage a smooth facilitation so that the estate plan is complied with in a timely manner.

Tags: accountant, beneficiaries, capital, creditors, discretionary trusts, estate plan, family trusts, financial advisor, income, lawyer, solicitor, sucession plan, trust, trustee
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Estate Plan for Faraway Real Estate

Saturday, August 1st, 2009

Do you have a condo in a ski country?  Maybe you have a house at any shore or a Florida time share?  So how much real estate do you have in several states?

No matter where your real estate is, your properties will be involved in your estate settlement unless you make some arrangements to your estate plan and avoid this complication.  Real estate law is a state law.  This means that only the courts in a particular state can have the authority in resolving issues about ownership and title of real estate property in that state.

So if you’re a Pennsylvania resident and you own a Florida condo, your estate settlement will require Pennsylvania domiciliary probate and a Florida ancillary probate when you pass away.  Take note that ancillary probate is always required in each state wherever you own real property.

The simplest way to eliminate the probate proceedings requirement is to title the real estate in joint names of your intended beneficiaries (probably with your spouse and children).  This is a simple device which means that in the event of your death, the real property will automatically pass to the joint owners without any probate proceeding requirement.

Tags: beneficiaries, courts, Estate Planning, Florida, owners, Pennsylvania, probate proceedings, real estate
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Asset Descent and Distribution in Illinois

Saturday, July 18th, 2009

Every state has its own descent and distribution law which applies if somebody passes away without a will (intestate).  Generally in Illinois, half of the estate would pass to the surviving spouse and then the other half would be equally divided to the descendants (like children, etc).

For assets with named beneficiaries already or those titled jointly will not be part of the estate of a decedent spouse; therefore, these would pass directly to the beneficiary or joint tenant.

However, if there are assets titled only to one spouse, it could create a problem.  For instance, your home (or any asset) was titled to your name only due to credit issues, or maybe you already owned the asset even before marriage, then the surviving spouse would only get half of your home and the other half would be inherited by the children.

If this is the case, the surviving spouse needs to get permission from the children before selling the house and would give half of the proceeds to the children after the sale.  Typically, this is not what spouses would intend to do; however, if one of them dies without a will, then their intention will not be admissible in court.    

Tags: beneficiaries, beneficiary, descendants, Illinois, intestate, law, will
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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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Celebrity Estate Planning

Wednesday, July 1st, 2009

With so many celebrities passing away recently - Karl Malden, David Carradine, Farrah Fawcett, and Michael Jackson - there’s been a lot of talk about lack of proper estate planning.  Some celebrities who passed away without even planning their estate are Elvis, Anna Nicole Smith, Jerry Garcia, and Heath Ledger.

Apparently, Michael Jackson did some planning; however, his documents were not updated for more than 7 (seven) years.  So it goes to show that when celebrities neglect this very important step, then there are dreadful consequences.

You might be thinking that you don’t have an estate to protect like them and you probably don’t need estate planning.  But be informed that whatever size your estate is, it does not excuse you from executing an estate plan.  Simply put, it’s a plan that will ensure your family’s financial needs are met after you die.

So if you own a home (whether mortgaged or not), a business, or any other asset (such as insurance policies), you need an estate plan.  Certainly if you have children, you would want to ensure a bright future for them even after you’re gone.  The only way to do this is to dust off your documents and review them to see and decide on the beneficiaries of your assets.  It would be better if you speak to an estate planning attorney to seek help in taking care of this.

Tags: beneficiaries, celebrities, estate, estate plan, Estate Planning, estate planning attorney, Michael Jackson
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Roles of the Testator

Wednesday, June 24th, 2009

A testator is a person who will decide on the beneficiaries of their estate. If there’s no will, the estate will just be divided according to laws of intestacy, and this may result in another outcome which is not the wish of the deceased.

For instance, significant sums of money may pass to the children instead of the surviving spouse.  Though it may be desirable to have some funds for the children, the testator can provide a limit or the final decision on the beneficiaries that he or she decides to give benefit to.

Also, the testator can select an individual to be their executor.  This individual will be responsible for administering the estate of the testator.  Testators should not only choose individuals that they trust, but most important, those whom they think can cope up with the stress of the role.  Also, the executors may need to apply for insurance in order to protect the estate.

Every testator should make sure that he or she has an accurate and up-to-date will since a well-drafted will may also be a very vital tax-planning tool.  More people can be caught up with inheritance tax or death duties, but these can be avoided easily if the testator seriously considered the creation of a will.

Tags: beneficiaries, estate, executor, inheritance tax, intestacy, testator, will
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