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Small estates, and even big ones, can qualify for probate shortcuts

by Tom Alberts July 24, 2018

Summary: In many states, it’s not the size of an estate that matters if you want to avoid probate. It’s the value of the assets that are titled in an individual’s name without a beneficiary that plays a key role in whether you can avoid the costly and time-consuming process of probate. An estate can be worth many millions, but if those hefty assets are passed to beneficiaries through trusts and other estate-planning tools, the bulk of an estate can bypass probate. The assets that remain to be distributed can then fall below a state’s threshold, enabling an estate to qualify for a simplified and expedited form of summary administrative probate.

While few people may aspire to a life of modest means, having a small estate is one ticket to avoid the purgatory of a full-blown probate process.

Better yet, if a key objective is to avoid probate, it doesn’t mean you have to liquidate your estate and give away your possessions, real estate and money before you die. 

For those who’ve achieved financial success, accumulated substantial assets and are rightly wary of probate, don’t fret. There are strategies that can make a large estate look like a small one in the eyes of probate laws and glide through a streamlined probate process. An abbreviated and simplified probate process means you can avoid anxiety-filled trips to the courthouse, steep legal fees and dealing with unpredictable decisions that precede the slam of a judge’s gavel. Depending on the state, it may be possible to avoid a formal probate hearing and expedite the estate resolution process by filing the appropriate paperwork and affidavits with the court.

More than 20 states have established thresholds of an estate’s total value to determine whether formal probate administration proceedings can be avoided. If the value of an estate’s assets are below the threshold, a simplified form of probate, often referred to as summary administrative probate for small estates, may be utilized. 

That’s a big deal, because formal probate can take several months, even years, to complete for large estates. In the meantime, your heirs are denied access to their inheritance, and your legacy remains in limbo. Summary probate can be completed in much less time. In some states, if a decedent has been dead for a certain length of time, the estate – regardless of size – may qualify for summary probate.

HOW DO YOU STAY BELOW THE THRESHOLD?

To determine the dollar limit of an estate, add up the value of assets titled in an individual’s name without a designated beneficiary. If the total falls below the threshold, then the estate may qualify for summary probate.

Depending on the state, summary probate thresholds and other restrictions vary widely. In Georgia, for example, the threshold to be considered eligible for summary probate as a small estate is $10,000. In Arkansas, it’s $100,000. For California, the limit is $150,000 in combined real and personal property with a 40-day waiting period to qualify for summary probate via affidavit. In Minnesota, the threshold is $50,000 – as long as that’s personal property only and not real estate. Oklahoma’s threshold is $20,000 in personal property only. The amounts and restrictions run the gamut depending on individual state laws.

The trick is to keep the value of untitled assets below the state’s small-estate limit. The magic to stay below the threshold can be found in several estate planning tools.

Assets that are held in living trusts, payment-on-death accounts, transfer-on-death deeds, joint tenancy as well as life insurance proceeds and accounts with designated living beneficiaries like IRAs and annuities can skirt probate completely and don’t count toward the threshold total. 

A grantor who establishes a living trust takes advantage of a primary asset transfer tool to bypass probate and distribute assets directly from the estate to the beneficiaries. Assets left to heirs directly through a living trust – and outside of probate – in many cases are distributed within weeks of the grantor’s death.

Keep in mind that trusts must be properly established and funded during the life of the grantor to be valid and enforceable. But once they are, trusts skip probate entirely – unless the grantor outlives all the beneficiaries.

There may be assets that have not been placed in a trust at the time of a person’s death. In those cases, a  pour-over will may be an option. A pour-over will directs that any assets not transferred into a trust at the time of the grantor’s death be “poured over” into the living trust. In essence, the trust is the benefactor of the will. The key is to make sure the value of untitled assets in the pour-over will – sometimes called the “probate estate” – does not exceed the threshold for small-estate summary probate. Otherwise it could require that the will pass through a prolonged probate process. If a pour-over will is above the threshold and doesn’t qualify for summary probate, it can delay distribution of the trust for months until it clears regular probate. Therefore, it’s important to limit a pour-over will to minor assets to ensure staying below the threshold.

Summary probate won’t work if the will is contested or if heirs can’t be located. Estates with multiple creditors or that are insolvent and can’t pay creditors also won’t qualify for a shortcut.

Some states impose other restrictions on the use of summary probate. Those conditions may require the surviving spouse to be the lone heir or that all heirs must agree on the division of property. 

The Uniform Probate Code has been enacted in 18 states, and parts of the code have been adopted in several others. The UPC establishes a small-estate procedure that allows the executor of an estate to immediately disburse funds and distribute the estate without giving notice to creditors.

The UPC requires the executor to certify that the estate value falls below the threshold and distributions have been made to heirs. The executor also must send a copy of the closing statement to all heirs, creditors and other claimants. If no court action involving the estate is initiated, the appointment of the executor terminates a year after the closing statement is filed, according to the UPC.

Regardless of your state of residence, careful estate planning is essential to avoid the pitfalls of a long, drawn-out probate process. Developing an estate plan that establishes trusts, payment-on-death accounts and transfer-on-death designations can keep assets out of the “probate estate.” That’s important because many states allow small estates below a maximum value to qualify for expedited summary probate. 

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life’s contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

Legacy Assurance Plan is an estate planning services company. Its goal is to educate people on a variety estate planning issues. It also provides access to a variety of resources to help its members achieve their estate planning objectives. Whether your goal is as simple as protecting your family and loved ones from the costs, delays and hassles of probate or as complex as providing for a disabled child when you no longer can, Legacy Assurance Plan can help you find the information and resources you need to privatize your estate.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com. 

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com (email)
#legacyassuranceplan
@assuranceplan

Some new faces in the family? 
Time to rethink your estate plan

by Tom Alberts July 21, 2018

Summary: Adoptions create special considerations for families when it comes to estate planning. Intestate succession laws require that the adoption process be finalized before children can establish inheritance rights with their non-biological families. Other situations, such as same-sex marriage and advances in reproductive technology, require modern-day families to make sure their children are considered rightful heirs.

Sometimes, families expand in nontraditional ways through adoption or when stepchildren become part of a blended household.

While the addition of an adopted child or the welcoming of a stepchild into a newly formed family can be a reason to celebrate, those events also require re-evaluating your estate plan. 

Intestate succession laws in the United States determine who inherits property when someone dies without a last will and testament. Those laws, many of which were initially written a century ago, take a traditional approach to defining the family unit. 

Traditional legal definitions for words like “child,”“issue” and “heir” don’t always fit in a society that has made unimagined advances in reproductive technology and whose relationships have diversified widely from the nuclear families familiar to our top-hat wearing forefathers. But many estate plans continue to use those terms to determine inheritance.

As a result, it’s important that wills and trusts are created with modern families in mind. It’s also critical that those legal documents employ the proper terminology to protect your legacy and your heirs – whether they are children adopted by same-sex couples or offspring conceived in test tubes or by a surrogate mother.

State laws of descent and distribution generally refer to “child” as first generation only. “Issues” are defined as lineal descendants of the same bloodline. An “heir” is someone who either was conceived by or birthed by the individual who has died or is the child of such an heir. 

In the law books, a relationship by “blood” is the common thread that ties together the rights of inheritance, but there are important exceptions. Modern families, however, are very often not limited to such “blood” relationships.

Intestate succession laws generally treat adopted and biological children equally as long as the adoption process – which can take months to years to complete – is finalized. A child with an adoption that is still in progress has not secured inheritance rights and must be named in a will or trust of an adoptive parent or parents to be protected as a beneficiary.

Also keep in mind that stepchildren don’t have rights of inheritance under a new stepparent unless the new stepparent legally adopts them. 

Adoption by a new stepparent, however, can impact the child’s ability to inherit from their biological parents and biological relatives. Basically, it’s one or the other – the child is either the rightful heir of the biological parent or the adoptive parent. The children’s inheritance rights are linked to the adoptive parents and severed from the birth parents once an adoption is official.

ARE YOU IN A ‘MODERN FAMILY?’

A different scenario arises in second-parent or co-parent adoptions, which often take place when an unmarried person adopts a partner’s children without termination of the other partner’s parental rights. In some states, according to the National Center for Lesbian Rights, the second-parent adoption procedure can be utilized by same-sex parents. Other states limit or prohibit adoption by unmarried LGBT individuals and couples. 

Married same-sex couples, however, have the same adoption rights as traditional couples, the organization says, but caution is urged.

“It is legally advisable for non-biological parents to get an adoption or parentage judgment to ensure that their parental rights are fully protected no matter where they move or travel to, even if they are married, in a civil union, or a registered domestic partnership,” the NCLR advises.

Advances in reproductive technology and the legal acceptance of same-sex marriage have made second-parent adoptions an important part of estate planning.  

Consider the situation involving Lyndsey D’Arcangelo of New York, who wrote a commentary for NBC News about her experience with second-parent adoption as a same-sex parent. In D’Arcangelo’s case, her wife gave birth to a child via artificial insemination. 

Despite their legal same-sex marriage, D’Arcangelo was left off the birth certificate as the baby’s legal parent. 

“In same-sex couples, where only one member of the couple can donate biological material at a time by default, the legal status of the non-biological parent is in question,” D’Arcangelo writes. “In New York State, the non-biological parent in every same-sex couple that conceives via in vitro must go through a second-parent adoption if both parents want legal rights to that child.”

In other cases, second-parent adoptions can enable a child to be adopted by a stepparent or another adult while preserving ties to existing birth parents. Often, the intention is to create a new parental relationship while preserving ones that previously existed. Such an adoption would require consent of the birth parents. 

Estate planning also is critical for unmarried couples who want the nonparent to have custody should the parent die or become incapacitated or if nonparents want children to inherit from them. A parent in an unmarried relationship can grant power-of-attorney authority in a will that allows the nonparent to act in the child’s behalf if the parent is incapacitated.

In those situations, experts suggest both partners should change their wills. The parent’s will would name the partner as guardian; the nonparent’s will would list property to be left to the child as a beneficiary. It’s also recommended that you name a guardian familiar with your family’s needs and circumstances and clearly state your intentions in your will and in a living trust. Also, the creation of a trust may be a good option to protect an adopted child’s interests and ensure assets benefit the child, experts say.

Adopted children also present other considerations for parents. For example, parents may want to include special provisions in wills and trusts when a foreign-born child is adopted. Parents can provide for an adopted child to visit his or her native country and be exposed to native culture.

WHO WILL TAKE CARE OF YOUR CHILD?

Keep in mind that adopted children are no different from biological children when it comes to considering a supplemental-needs trust for youngsters with disabilities. Parents also should ponder the multitude of life’s scenarios that can arise. For example: What if both parents die at the same time in a car accident? 

The nomination of a guardian in one’s will can deal with such a tragedy and other unforeseen situations.

“It’s better to nominate an individual as a personal guardian; if you name a couple and they split up, what happens to the child? Be sure to consult with the person you name to be sure he or she wants the job, and name an alternative guardian in case your first choice should have a change of heart or die before the child is grown,” according to the American Bar Association. 

A property guardian is another appointment to consider making in a will, the ABA says. Generally, the property guardian is the same person as the personal guardian. 

“You can appoint two different people to manage the child’s money and personal affairs, but be aware that conflicts can arise if you split authority this way,” the ABA advises. One exception may be if the property guardian lacks financial expertise, a separate guardian for personal and financial affairs could be considered. 

There are several other factors and real-life situations to consider concerning adoptions and estate planning. Fortunately, membership in Legacy Assurance Plan, which educates its members on a variety of estate planning options and provides access to numerous resources to achieve planning objectives, can assist families in making important decisions that improve lives for the next generation and beyond. 

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com. 

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com (email)
#legacyassuranceplan
@assuranceplan

Alfred Nobel’s handwritten last will and testament is dated Nov. 27, 1895. Photo courtesy of Prolineserver via commons.wikimedia.org.  

Scrivener’s error: Handwritten wills can translate into probate problems

by Tom Alberts July 18, 2018

Summary: Laws vary in the United States concerning the validity of handwritten, or holographic, wills. In some states, one’s last wishes can be scrawled on a piece of paper and accepted as valid in probate court. In other jurisdictions, holographic wills will be rejected, and a state’s intestacy laws will determine the distribution of one’s assets. Experts agree the best advice is to utilize an attorney to assist in the process of creating a well-planned and valid will.

Seventy years ago, Canadian farmer Cecil George Harris was trapped under his tractor and used a pocket knife to etch his final wishes into one of the implement’s fenders. 

Harris’ immortal words – “In case I die in this mess, I leave all to the wife. Cecil Geo Harris” – have been carved into legal textbooks ever since his accidental death in 1948. The famous fender was accepted as a valid last will and testament by the probate court and survives in a display at the University of Saskatchewan College of Law. 

Before the advent of the typewriter and computer age, the standard practice to record one’s legacy was to dip a quill into an inkwell and compose your final wishes on parchment. Back then, a handwritten, or “holographic,” will was the norm. 

Today, using pen and paper makes better sense for a grocery list or a note for the baby sitter. Not all states accept holographic wills, and there are other potential pitfalls in using a handwritten document.

DO YOU KNOW YOUR STATE’S LAWS?

The recognition of a holographic will depends on where you live. Some states no longer recognize holographic wills under any circumstances. In other jurisdictions, you can bequeath your fortune based on decrees scrawled on a cocktail napkin, matchbook cover – or tractor fender if necessary.

In about half of the U.S. states, like Oklahoma, holographic wills are perfectly OK. In some, like Florida, they are forbidden. In others, there are specific exceptions and requirements for holographic wills to be recognized by probate courts.

But holographic wills have special requirements that – when not followed – can cause potential problems in probate proceedings. Legal Aid Services of Oklahoma Inc. offers instructions but warns, in all capital letters, that you must follow the 10 detailed rules or a judge may not follow your requests. Among the rules: Every word must be in the testator’s own handwriting; sign your name at the very end with the date above the signature; do not have any witnesses sign the document; and do not notarize it. “Papers with even one typewritten or computer-printed word are not holographic wills,” the information sheet warns.

Nevada loosely regulates holographic wills and has only three requirements: It must be in the testator’s own handwriting, dated and signed. Las Vegas-based probate attorney Jonathan Barlow, discussing the topic in a YouTube video, recounted a case in which a man wrote his will – which was admitted in court as valid – on hotel stationery. 

“In that he says, ‘Dear Susie: I want to make sure that you get everything that I have and that my children and my other relatives get nothing.’ Basically: ‘I intend to create a will at some point in the future. Love, Bill,’” Barlow explains. “The kicker is the estate was worth over $2 million. The children were cut out of $2 million due to a hotel stationery letter.”

ARE YOU AVOIDING A RECIPE FOR TROUBLE?

States that validate holographic wills require that they be entirely handwritten, and the “material provisions” – which specify the testator’s wishes – must be in the author’s handwriting. 

A will that mixes handwriting and typed copy is a recipe for trouble. In one Arizona case, a partially typed and handwritten document was invalidated. A grandmother’s wishes were tossed aside, and her granddaughter did not share in her legacy. The case is a warning to do-it-yourselfers, says Phoenix-based attorney Kent Burke. 

The grandmother had prepared her will on a computer and named the granddaughter as an heir. Some handwritten changes were made, and the will was only signed by the grandmother and a notary. The grandmother’s sister challenged the will and prevailed. 

Arguments that the document was a valid holographic will were rejected because the material provisions were not handwritten by the testator. Burke says the case was a “perfect example of someone wanting to save money by preparing her own will. By doing so, it created confusion and substantial costly litigation.”

There are other potential pitfalls with holographic wills. For one, probate courts need to prove the validity of wills and may require the use of handwriting experts. Legibility and sloppiness are another concern that could lead to legacy-altering misunderstandings, and handwritten wills can leave out important details that an estate planning attorney would include. Also, the will is at risk of rejection if there’s evidence the testator was under duress or incompetent when it was written.

When the question about the propriety of creating a holographic will was posed to popular financial writer and TV host Dave Ramsey, his advice was clear. “I would never advise someone to write his own will, unless, of course, he’s an attorney in that state,” Ramsey writes. “Laws can vary from state to state, and some states may not look upon a document like that as being official under law. ... If you’re trying to save money by doing it this way, I would strongly urge you to look at involving a lawyer as an investment.”

Sometimes, there’s little time to spare in creating a last will and testament – like in the case of the Canadian farmer dying in a field – and a holographic will is necessary. But because a thoughtfully crafted will is the foundation of an estate plan, experts suggest utilizing a lawyer when preparing the document. After all, your legacy is at stake.

There are numerous issues to keep in mind when creating your last will and testament as part of a comprehensive estate plan. One helpful option to consider is a Legacy Assurance Plan membership. Members are educated on a variety of estate planning matters and receive access to numerous resources they can use to achieve legacy-protecting objectives. Membership with Legacy Assurance Plan can help families in making important choices that will improve lives for the next generation and beyond. 

Legacy Assurance Plan is an estate planning services company. Its goal is to educate people on a variety estate planning issues. It also provides access to a variety of resources to help its members achieve their estate planning objectives. Whether your goal is as simple as protecting your family and loved ones from the costs, delays and hassles of probate or as complex as providing for a disabled child when you no longer can, Legacy Assurance Plan can help you find the information and resources you need to privatize your estate.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com. 

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com (email)
#legacyassuranceplan
@assuranceplan

If a trustee is no longer trustworthy, a protector can look out for your interests

by Tom Alberts July 8, 2016

Summary: Trust protectors can be appointed to oversee the actions of a successor trustee. Grantors often authorize trust protectors to resolve disputes among the trustee and beneficiaries and give them veto power over spending and investment decisions involving trust assets.

Who can you count on to make the proper decisions regarding a trust you’ve established for your estate plan? More succinctly put: Who can you trust with your trust?

A simple answer is a self-appointed successor trustee, which can be a person or an institution like a bank’s trust department. As the term implies, a trustee should be someone or an institution that is highly trustworthy to make fiduciary decisions in the ongoing management, administration and distribution of the assets of a trust to its beneficiaries.

Situations arise, however, that may require oversight of the trustee. Sometimes there’s a need for a watchdog to police those entrusted to manage a trust and provide an additional check and balance between the grantor’s intentions and the trustee’s actions.

Experts say the use of trust protectors rose in popularity in the 1980s and provided grantors with guardian angels to look after trusts created in foreign jurisdictions.

Since then, grantors have utilized trust protectors for a wide variety of other purposes. One may be to arbitrate disputes that occur between trustees and beneficiaries. Another could be to add or remove a trust beneficiary or the successor trustee. A trust protector also might oversee the accounting of the trust and fees paid to the successor trustee. Or, the trust protector might be given sway over specific fiduciary duties usually assigned to the trustee, such as investment decisions or management of a business owned by the trust.

Grantors also assign powers that a trust protector can use without petitioning a court for approval. Among them are the abilities to amend or terminate the trust or move it to another state for tax advantages.

‘Where there is wealth, there is greed’

It’s important to focus on the term “trust” as a verb when thinking about who to allow to pull the levers on your legacy, advises Forbes contributor and lawyer Jay Adkisson.

“Whether the trust is small or large, we have learned at least one thing after hundreds of years of trust jurisprudence: Trustees often cannot be trusted. The bigger the trust, the more likely the problem,” Adkisson writes. “The temptation is just too great. The whole idea of a trust is to accumulate wealth. Where there is wealth, there is greed, and where there is greed, you’ll find temptation – and often misconduct.”

For instance, an ill-motivated trustee may be interested in boosting his compensatory fees paid by the trust. Disputes among beneficiaries can prompt litigation, and litigation can lead to more fees, Adkisson says. Another scenario might entail a trustee instigating litigation to procure referral fees from law firms as a reward for new business. There are numerous other ways for a trustee to engage in misconduct and “milk” a trust.

Problems can develop when the trustee is both a family member and a beneficiary of the trust. The 2018 case involving retired astronaut Edwin “Buzz” Aldrin serves as an example. Aldrin sued his successor trustee – his son – alleging misuse of trust funds. In turn, the son petitioned court to have his father declared incompetent and placed under his guardianship. A trust protector may have been able to resolve the family dispute before it resulted in litigation and wound up making headlines. In other words, a trust protector can purge a trust predator.

To avoid conflicts of interest, grantors are often advised to avoid designating a family member as a trust protector. A better choice may be an accountant or financial adviser; or a law firm or bank could be asked to appoint someone. An impartial overseer may be the best choice to make potentially controversial decisions on adding or removing beneficiaries, allowing discretionary distributions, selling specific assets or other matters.

A brain trust for your trust

Trust protectors also can play an important role beyond the oversight function and serve as a consultant and adviser for the trustee. In situations where assistance may be needed to manage financial instruments within a trust – such as matters related to taxation, investments and real estate – a trust protector with expertise in those areas can come in handy.

Another duty may be to protect beneficiaries – often from themselves or unexpected situations. External events – a beneficiary’s bankruptcy or substance abuse problem, for example – can put at risk assets intended to serve as an inheritance. Those risks can be alleviated if a trust protector is empowered to amend the terms of the trust and change distributions as life’s events warrant.

The authority to transfer assets from one trust to another trust, known as “decanting,” can be another important role for the protector, especially when circumstances have changed significantly since the trust was established. Consider a scenario in which a beneficiary becomes disabled and eligible to receive Supplemental Security Income and Medicaid. A trust protector could transfer funds and establish a special (supplemental) needs trust that would preserve eligibility for those government benefits. A windfall from an inheritance then would be shielded from obligations to pay for medical care.

In most situations, however, trust protectors are unnecessary and state laws are not uniform, Adkisson cautions. “Still, many circumstances arise in which the use of trust protectors can aid in enhancing the oversight of trust matters and reduce the potential for litigation.”

Whether or not a trust protector is necessary can be determined in the process of developing an estate plan. Legacy Assurance Plan membership is one option for consumers to consider. Members are educated in estate planning and provided with access to numerous resources to achieve their planning objectives.

Legacy Assurance Plan is an estate planning services company. Its goal is to educate people on a variety estate planning issues. It also provides access to a variety of resources to help its members achieve their estate planning objectives. Whether your goal is as simple as protecting your family and loved ones from the costs, delays and hassles of probate or as complex as providing for a disabled child when you no longer can, Legacy Assurance Plan can help you find the information and resources you need to privatize your estate.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website atwww.legacyassuranceplan.com.

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com(email)
#legacyassuranceplan
@assuranceplan

If a trustee is no longer trustworthy, a protector can look out for your interests

by Tom Alberts July 8, 2018

Summary: Trust protectors can be appointed to oversee the actions of a successor trustee. Grantors often authorize trust protectors to resolve disputes among the trustee and beneficiaries and give them veto power over spending and investment decisions involving trust assets.

Who can you count on to make the proper decisions regarding a trust you’ve established for your estate plan? More succinctly put: Who can you trust with your trust?

A simple answer is a self-appointed successor trustee, which can be a person or an institution like a bank’s trust department. As the term implies, a trustee should be someone or an institution that is highly trustworthy to make fiduciary decisions in the ongoing management, administration and distribution of the assets of a trust to its beneficiaries.

Situations arise, however, that may require oversight of the trustee. Sometimes there’s a need for a watchdog to police those entrusted to manage a trust and provide an additional check and balance between the grantor’s intentions and the trustee’s actions.

Experts say the use of trust protectors rose in popularity in the 1980s and provided grantors with guardian angels to look after trusts created in foreign jurisdictions.

Since then, grantors have utilized trust protectors for a wide variety of other purposes. One may be to arbitrate disputes that occur between trustees and beneficiaries. Another could be to add or remove a trust beneficiary or the successor trustee. A trust protector also might oversee the accounting of the trust and fees paid to the successor trustee. Or, the trust protector might be given sway over specific fiduciary duties usually assigned to the trustee, such as investment decisions or management of a business owned by the trust.

Grantors also assign powers that a trust protector can use without petitioning a court for approval. Among them are the abilities to amend or terminate the trust or move it to another state for tax advantages.

‘Where there is wealth, there is greed’

It’s important to focus on the term “trust” as a verb when thinking about who to allow to pull the levers on your legacy, advises Forbes contributor and lawyer Jay Adkisson.

“Whether the trust is small or large, we have learned at least one thing after hundreds of years of trust jurisprudence: Trustees often cannot be trusted. The bigger the trust, the more likely the problem,” Adkisson writes. “The temptation is just too great. The whole idea of a trust is to accumulate wealth. Where there is wealth, there is greed, and where there is greed, you’ll find temptation – and often misconduct.”

For instance, an ill-motivated trustee may be interested in boosting his compensatory fees paid by the trust. Disputes among beneficiaries can prompt litigation, and litigation can lead to more fees, Adkisson says. Another scenario might entail a trustee instigating litigation to procure referral fees from law firms as a reward for new business. There are numerous other ways for a trustee to engage in misconduct and “milk” a trust.

Problems can develop when the trustee is both a family member and a beneficiary of the trust. The 2018 case involving retired astronaut Edwin “Buzz” Aldrin serves as an example. Aldrin sued his successor trustee – his son – alleging misuse of trust funds. In turn, the son petitioned court to have his father declared incompetent and placed under his guardianship. A trust protector may have been able to resolve the family dispute before it resulted in litigation and wound up making headlines. In other words, a trust protector can purge a trust predator.

To avoid conflicts of interest, grantors are often advised to avoid designating a family member as a trust protector. A better choice may be an accountant or financial adviser; or a law firm or bank could be asked to appoint someone. An impartial overseer may be the best choice to make potentially controversial decisions on adding or removing beneficiaries, allowing discretionary distributions, selling specific assets or other matters.

A brain trust for your trust

Trust protectors also can play an important role beyond the oversight function and serve as a consultant and adviser for the trustee. In situations where assistance may be needed to manage financial instruments within a trust – such as matters related to taxation, investments and real estate – a trust protector with expertise in those areas can come in handy.

The authority to transfer assets from one trust to another trust, known as “decanting,” can be another important role for the protector, especially when circumstances have changed significantly since the trust was established. Consider a scenario in which a beneficiary becomes disabled and eligible to receive Supplemental Security Income and Medicaid. A trust protector could transfer funds and establish a special (supplemental) needs trust that would preserve eligibility for those government benefits. A windfall from an inheritance then would be shielded from obligations to pay for medical care.

Another duty may be to protect beneficiaries – often from themselves or unexpected situations. External events – a beneficiary’s bankruptcy or substance abuse problem, for example – can put at risk assets intended to serve as an inheritance. Those risks can be alleviated if a trust protector is empowered to amend the terms of the trust and change distributions as life’s events warrant.

In most situations, however, trust protectors are unnecessary and state laws are not uniform, Adkisson cautions. “Still, many circumstances arise in which the use of trust protectors can aid in enhancing the oversight of trust matters and reduce the potential for litigation.”

Whether or not a trust protector is necessary can be determined in the process of developing an estate plan. Legacy Assurance Plan membership is one option for consumers to consider. Members are educated in estate planning and provided with access to numerous resources to achieve their planning objectives.

Legacy Assurance Plan is an estate planning services company. Its goal is to educate people on a variety estate planning issues. It also provides access to a variety of resources to help its members achieve their estate planning objectives. Whether your goal is as simple as protecting your family and loved ones from the costs, delays and hassles of probate or as complex as providing for a disabled child when you no longer can, Legacy Assurance Plan can help you find the information and resources you need to privatize your estate.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website atwww.legacyassuranceplan.com.

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com(email)
#legacyassuranceplan
@assuranceplan

Intestacy is not an ailment,
but it can be painful to loved ones

by Tom Alberts July 2, 2018

Summary: When someone dies without a valid last will and testament, a probate judge will follow state intestacy laws to determine how their estate is distributed. The laws don’t take into consideration the specific wishes of the deceased.

Intestacy is not a disease, but it should give you heartburn thinking about it. It’s described as the condition of an estate of a person who dies without having executed a valid last will and testament. In other words, if you don’t have valid will when you die, you’ll lose direct control of your financial legacy.

Intestacy laws, which vary from state to state, determine who is entitled to inherit property when no guidance from a will is given and no estate plan is in place.

One’s heartburn should begin with the realization that once you’re gone, a probate judge, unaware and legally blind of your true intentions, will decide the fate of your estate and divvy up your assets.

Imagine someone pondering a will that proclaims: “I hereby leave to the state and a probate judge all the necessary authority to decide in a public forum who receives my property and how much they shall receive, regardless of my actual wishes. If necessary, the court can appoint anybody it sees fit, without my input, to serve as guardian of my minor children. In addition, please charge my estate 3 to 8 percent of its value for the services of the probate process.”

It’s hard to fathom someone of sound mind contemplating such a declaration. But that’s essentially what happens when an estate lacks a properly executed will.

In intestacy, there’s no effort to investigate what the dearly departed’s wishes truly were. An inquiry into proper and well-thought intentions? No way. Judicial interrogations to determine the undisputed and desired outcome? That’s not likely, either.

Generally, intestacy statutes distribute estates to the surviving spouse and children and their descendants and climb up and down branches of the family tree as necessary to determine other beneficiaries. State laws on the method of property distribution vary but generally provide that recipients are the closest surviving relatives.

The order of inheritance in most states is the surviving spouse, children, parents, siblings, nieces and nephews and next of kin. If you lack survivors, the state treasury will gladly consume the fruits of your life’s labor – not your favorite charity, beloved friend or treasured pet.

When a person dies without a will, he is described to have died "intestate."

There are a plenty of examples to illustrate the ills of intestacy, but consider just one mess caused in Texas when a woman’s husband died without a will.

The husband was survived by two children from prior relationships. The woman had lived with her husband in a home he bought before they were married.

The lack of a will suddenly put the home in play. Would the children seek the sale of the home in order to collect their share of dad’s assets? That’s because in Texas, the surviving spouse is entitled to half of the couple’s community property but only one-third of the deceased spouse’s personal property, and the children would get dad’s two-thirds in equal shares. Since dad owned the house before marrying his surviving spouse, she’s only entitled to one-third of the dwelling’s value.

If his dying wish was to risk leaving his wife without a home and cause a major rift among his survivors, intestacy laws are able tohelp make that happen. Intestate also means a lengthy wait – usually several months and sometimes years – for the potentially costly legal process of probate to conclude.

Being intestate has unintended consequences, which is why proper estate planning is always a smart move.

Avoiding probate and ensuring that your wishes are followed begins with a properly executed last will and testament. In the estate planning process, there are other options to consider, such as a creating a living will and establishing trusts. That way, the distribution of your estate is determined by you, not a judge, and uncertainty, stress and the possibility of a legal challenge is minimized.

One option to consider is membership in Legacy Assurance Plan, which educates its members on a variety of estate planning options and provides access to numerous resources to achieve planning objectives.

Legacy Assurance Plan is an estate planning services company. Its goal is to educate people on a variety estate planning issues. It also provides access to a variety of resources to help its members achieve their estate planning objectives. Whether your goal is as simple as protecting your family and loved ones from the costs, delays and hassles of probate or as complex as providing for a disabled child when you no longer can, Legacy Assurance Plan can help you find the information and resources you need to privatize your estate.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website atwww.legacyassuranceplan.com.

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com(email)
#legacyassuranceplan
@assuranceplan