Showing posts with label Irrevocable Trust. Show all posts
Showing posts with label Irrevocable Trust. Show all posts

Monday, March 27, 2017

Trust Funding | You’ve Created Your Estate Plan With a Revocable Living Trust… Now What?


Summary: Proper estate planning is a process, not just a single task. Rather than being a single step, estate planning is more like an ongoing journey. Just because you have set up and executed a set of estate planning documents, that doesn’t mean your estate planning is “done.” This is especially true if you have a plan with a revocable living trust. Once you’ve put your signature on all of your documents, including your living trust, there are beneficial things you can begin doing almost right away to ensure that your plan will be properly maintained.             

One of the first things you can do, if you haven’t begun already, is put together a list of all your assets. You’ll need to list both your titled assets (like your home and vehicles, for example,) as well as your personal property (like furniture, jewelry and collectibles.) You’ll need each of these lists for two different reasons. For assets like real estate, vehicles and financial accounts, you will need to make certain that they are funded by executing the proper paperwork establishing that you have transferred ownership of that asset from you as an individual to you as the trustee of your trust. Of course, this means that one of the first things you’ll need to do after you’ve finished compiling your list is obtaining all of your current ownership documents, such as the deeds to all of your real estate properties and the titles to all of your vehicles. 

For your real estate, funding means obtaining a deed from an attorney putting the transfer into legal effect. For your vehicles, funding entails a trip to the DMV and re-titling the auto. For your financial accounts, the institution where you hold your account(s) probably has their own special proprietary paperwork they’ll require you to fill out to complete the transfer.    

When it comes to your personal property, especially specific items that you want to specifically distribute to a particular beneficiary, your list will be especially helpful in making certain these assets get funded, too. They get funded a bit differently, however, since they don’t have deeds, titles or other ownership paperwork. These assets get listed in a special place in your trust, which is usually referred as “Schedule A,” “Appendix A” or something similar. Listing these assets in your trust’s schedule is a means of putting down in writing your intent to transfer them from you to your trust, where they can be distributed in accordance with the special instructions you’ve laid out in your trust document.      

A popular self-help book from the 1990s advised, “Don’t sweat the small stuff.” That may be true in a lot of areas, but not when it comes to funding your trust. Here, you want to be more like Santa Claus, as in “making a list and checking it twice” in order to be sure you’ve not left anything out. Do you hold an ownership interest in a business like an LLC, partnership or corporation? These assets can potentially be transferred into your trust, depending on the business’s operating agreement or articles of incorporation. Do you hold any copyrights, patents or trademarks? The appropriate government office (the U.S. Copyright Office or the U.S. Patent and Trademark Office) have transfer forms. Additionally, if someone owes you money (whether from a loan or a legal judgment,) you can create a document that says that you are transferring, or assigning, your right to collect that debt to your trust. 

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:
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
@assuranceplan
#legacyassuranceplan



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Thursday, March 23, 2017

Revocable Living Trust | Your Estate Plan Can Protect You in Many Ways, Some of Which May Surprise You


Summary: Many people are aware that some forms of estate planning can offers a certain type of protection as one of their benefits; namely, protection. But they may also do more. They may protect you from the potential costs and delays of probate administration, they may protect you from the loss of privacy deriving from having the details of your estate become public record, they may possibly protect you from potentially unnecessary and stressful conservatorships proceedings in court, and they may even potentially protect you from claims by people professing to be your heirs who were left out of your plan. Properly drafted and implemented, a complete estate plan can do many things for you and your family, probably even more than you would have thought.           

A lot of people who are familiar with estate planning know that you can plan to avoid probate. Planning to avoid probate can help save you time, money and stress, as probate administration can be drawn out and expensive. An estate plan with a revocable living trust isn't the only way to avoid probate administration, but an estate plan with a living trust and its companion, the "pour over" will, can accomplish several other ends that may have great value for you. 

This form of planning may also protect your privacy. In many locations, probate administration case files are public record, meaning that anyone potentially can look at the contents of your estate simply by requesting your estate's file from the court clerk. If, however, your wealth is funded into a living trust, you avoid this as, in most states, living trusts and the distribution of their assets are not matters of public record and their details cannot be accessed by anyone with a file number. In addition, a plan with a properly funded living trust may be able to reduce the possibility of needing to go to court to seek appointment of a conservator to make financial decisions on your behalf should you become mentally incapacitated and be unable to make decisions for yourself. With a living trust, the management of your funded assets transfers seamlessly from you to the successor trustee you chose if you become incapacitated.

However, your estate plan with a living trust may provide you with an additional protection that is not as well known: protection against people claiming to be your long-lost children in order to get a portion of your wealth. Generally, the law assumes that all parents want to leave something to all of their children. So, in general, the laws have a default inheritance for children. This means that, if someone who isn’t in your will goes to court claiming to be your child, and the judge rules that they are legally your child, then they may get a “cut” of your estate. 

In some states, though, that rule applies only to a person’s probate estate. Oklahoma, for example, has explicitly ruled that these “pretermitted heirs” rights to a distribution do not extend to the assets funded into a living trust. In other words, if someone files a court claim alleging that they are your long-lost “love child,” and you have a fully funded living trust, then it doesn’t matter what the court decides about that person’s parentage, they still cannot take anything from your trust.

All this goes to show that proper estate planning, including the possibility of incorporating a living trust into your plan, has many potential benefits and multiple ways in which your plan can be a value protector to both you and your family.

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:
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
@assuranceplan
#legacyassuranceplan



                             
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Location: Sarasota, FL, USA

Thursday, March 9, 2017

Revocable Living Trusts | How a Popular Radio Financial Advisor's Misconceptions Reveal Common Errors People Make

Summary: There are a lot of misconceptions people have regarding living trusts. Sometimes, even experienced (and well-known) financial planners can hold and speak some of these misconceptions. By looking closely at what the law allows you to do with a living trust (or any estate planning tool), you can get a better understanding of how these tools really can work for you and whether or not including them in your plan makes sense for you. Despite what some may say, a properly drafted living trust can allow you to maintain exactly as much control over your assets after you've funded them into your trust as you had before. 


Dave Ramsey is, according to Wikipedia, "an American businessman, author, radio host, television personality, and motivational speaker," and he is a highly successful one at that. His radio show is heard across 500 stations and his financial advice courses have been attended by countless people. His advice has helped many people overcome financial problems, especially when it comes to overcoming the potentially crushing burden of excessive debt.

Just like all of us, however, Ramsey is not infallible. When it comes to the issue of estate planning and the use of revocable living trusts, his statements reveal some misconceptions that are common among some professionals and lay people alike. By looking at some of his misconceptions, you can get a better picture of the estate planning options that exist and whether or not they could potentially benefit you.

In his book The Legacy Journey, Ramsey writes that "living trusts require you to move your assets from under your own control to a trust before your death. As a result, even basic financial decisions – like adjusting investments, managing bank accounts, giving to charities, and buying or selling real estate – have to go through a trustee because the trust legally owns everything." While Ramsey's statements are not outright falsehoods, they seem to demonstrate a fundamental misunderstanding of how living trusts can, and many do, work.

His description of how living trusts work is technically accurate in a certain sense, but it is also potentially very misleading. It is true that, if you create, execute and fund a living trust, you as an individual have relinquished control of those assets. That is exactly how trusts help you avoid probate... by moving those assets from legal ownership by you as an individual (which is how your assets are exposed to probate) to legal ownership by your trust (and avoid probate). But here's the thing: setting up such an arrangement does not mean that you have to give up actual control of your assets. 

The law allows you to customize your trust in a great many ways, with lots of options regarding when and to whom you distribute your wealth, as well as who is in charge of your trust. You can, and many people do, set up a living trust where you are the trustee from the time you set up the trust until the day you die or become mentally incapacitated. When Ramsey says that establishing and funding a living trust means moving control of your assets from you to a trustee, he's technically correct, but here's the thing: that trustee who takes over control of your assets --- it's you if you've named yourself as the trustee of your trust. In other words, all you do when set up a living trust like this is move the control of your assets from you as an individual to you as a trustee of your trust. You have no less control that you did before, and you can choose to maintain that level of control right until you die or become mentally incapacitated.
  
Ramsey also described living trusts in his book as "an up sell in the estate planning world" that is, in his words, "expensive" and "unnecessary." While he is correct that, in most cases, an estate plan with a living trusts costs more than one without a trust, a living trust is certainly not in the same class as, say, a fancy sunroof on your new car. 

As most people familiar with estate planning know. your living trust can help you avoid probate. In some states, the simple fact that your estate avoids probate can, by itself, pay for the cost of your living trust many times over. As an example, consider California. Some California estate planning lawyers have estimated that the average probate administration process costs the heirs roughly 5% of the value of the gross estate. So, if you have a $500,000 gross estate, then probate could cost you around $25,000. (And that's just on average!)

Additionally, there are other collateral benefits of living trusts that Ramsey overlooks. One of these is privacy. Certainly, some people may not care about all of the details of their estate becoming public record as part of their probate court case file, but a lot of people might look upon avoiding this outcome as an important goal as it relates to protecting their privacy and the privacy of their loved ones. Living trusts can do that in most locations. In most states, a probate case file, which has to be opened to probate a will, is public record; on the other hand, no such court case file is required to be opened to settle your trust and distribute its assets.   

Furthermore, you can also potentially enjoy greater control over the distribution of your wealth by using a trust. With a will, the entirety of an heir's distribution is given to him or her as soon as the probate process is complete. If you'd like to give your loved ones their distributions in portions spread out over a longer period of time, a trust can help with that, while a plan that relies upon a will cannot.

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:
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
@assuranceplan
#legacyassuranceplan



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Location: University Park, FL, USA

Tuesday, January 31, 2017

Estate Planning Laws | Enactment of New Law Reminds Us of the Importance of Estate Plan Reviews

Summary: Very little in life is unchanging. The relationships in our lives change through death, birth, marriage and divorce, among other things. The laws change through the passage and enactment of new bills. Whether it is a new law or a life-event change, it can have an impact on your estate plan. With periodic estate plan reviews, you can gain the peace-of-mind that comes from knowing that your plan remains optimized to function at its best possible level, even after taking into account all of the changes in the law and your life that have taken place. 

Back in late May 2016, Minnesota Governor Mark Dayton signed a bill into law. The signing probably was not headlines news, even in that state. But, for Minnesota pet owners, it was welcome news. With the governor's signature, Minnesota became the 50th and final state to recognize the legal validity of pet or animal trusts. Pet or animal trusts work similarly to most every other kind of trust. They allow an animal owner, whether the beneficiary is your pampered poodle or a working animal like a horse, to establish the trust agreement with that animal (or animals) as the beneficiary. The trust creator then names a trustee who manages the trust assets and the income from those assets for the benefit of that named beneficiary. With this kind of estate planning, you can ensure, not only that your animal will go to a loving home, but that the animal will have the financial resources he or she needs. 

Transfer on death deeds are a useful tool for some people who may desire to avoid probate but whose circumstances may dictate that a revocable living trust isn't right for them. These deeds work like the death beneficiary designations on your life insurance or other financial accounts. With proof of a valid transfer on death deed, along with evidence that you're the beneficiary and the previous owner has died, you can take immediate ownership of a piece of real property without requiring a probate process. More than half of the 50 states recognize these deeds. Missouri has had them since 1989. California, however, passed a new law and began recognizing them in 2016.

What do these sets of facts have in common? They are both reminders that the laws governing estate planning are not etched in stone. They change with some frequency. Some of the changes may be very minor. Others, like the creation of a new type of trust or new type of real estate deed, can be major. Regardless of whether a change created by a new law is minute or large-scale, any change can have an impact on your plan. 

A few years ago, Indiana law created a legally enforceable "Funeral Planning Directive." If you lived in Indiana and decisions like place of burial or cremation-versus-interment mattered to you, this change would be enormous to you. If, however, you had already created your Indiana estate plan before the new law passed and you thought that your were all finished with your estate planning, you might have had the potential of missing out on the benefits of this change in the law. The same is true if you, as a pet owner, had already created your Minnesota estate plan before May 2016 and ceased doing anything with your plan after you signed it.

A popular modern social media acronym is "FOMO," which is short for "fear of missing out." As someone with an estate plan, you should have FOMO -- fear of missing out on the benefits of potentially helpful changes in the law, or fear of missing out on having an optimized estate plan because you did not update your plan to account for shifts in the law or changes in your personal life. With periodic estate plan reviews, you need not have this fear, however. A routine estate plan review can help you identify life-event changes, such as marriages, divorces, deaths or births, which may indicate a need for an amendment to your plan. Reviews may also allow your estate planning team to notify you that a law has changed, and give you the opportunity to discuss with your estate planning attorney how these changes may impact your plan.

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:
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
@assuranceplan
#legacyassuranceplan


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Location: Bradenton, FL, USA

Friday, January 20, 2017

Estate Planning Mistakes | Planning to Ensure That Your Wishes Are Carried Out



Summary: In all areas of life, mistakes happen. A recent estate planning dispute in Michigan exemplifies this, as an overlooked property deed triggered a dispute that required a trial court and an appeals court to resolve. While your plan hopefully involves less complication and less litigation, the case is a useful reminder of the importance of engaging in comprehensive planning, which will contain safeguards to protect you even if you make mistakes in the estate planning process.

As part of their 1998 estate plan, Michigan couple Larry and Joy Hutchinson created a revocable living trust. Like many living trusts, the couple were the original trustees, and the trust's assets were to be for the benefit of the couple during their lives, then the survivor of the two after the first death. After both had died, the husband's three daughters (from another relationship) received what remained. 

Several years later, the husband's daughters discovered the trust's existence and launched a lawsuit accusing their stepmother of mismanaging the trust's assets. The two sides settled the case and, as part of that settlement, the wife was required to sell the family farm and another property, and the three children were to receive certain proceeds from those sales. The wife complied, selling both properties. 

What the children discovered after their stepmother's death, however, was that not all of the property rights had been sold. With regard to the farm, the legal rights to the surface had been sold, but no sale had ever been transacted regarding the farm's oil, gas and mineral rights, which were held under a separate deed. Upon making this discovery, the children asked a judge to distribute the mineral rights to them. The wife's executor opposed this request, arguing that the mineral rights should be considered a part of her probate estate.   

The dispute ultimately made its way through the court system, with both the trial court and the appeals court concluding that, because the settlement agreement made no explicit mention of the farm's mineral rights, then the agreement had impact on those mineral rights. That meant that the mineral rights remained the property of the trust and, according to the trusts's terms, should be distributed to the children under the provisions stated in the trust. 

While you may not own any real estate that also involves mineral rights, and hopefully your estate plan will not involve any instances of mismanagement of trust assets, there is still a lesson for many people in this case. Namely, the complicated process involved in resolving this couple's estate plan is a reminder of the high importance of a complete estate plan and regular estate plan reviews. This prolonged litigation erupted because the family farm's mineral rights were simply overlooked until after the wife's death.  Even if it is not mineral rights, there is always the possibility that, despite your best efforts, you may overlook or forget an asset (or assets) when you set out to fund the living trust in your estate plan. 

A complete estate plan will help you be prepared in any scenario. If you have a living trust, your complete estate plan will also have a "pour-over" will, which will protect you against forgotten assets. Your pour-over will will take assets left out of your trust and transfer them into your trust, where they, like the rest of your wealth, can be distributed according to the terms in your trust. Also, this is a reminder of the benefit of estate plan "check-up". A check-up can be an excellent time to review everything involved with the carrying out of your estate planning goals. Anyone can potentially forget to fund an asset. A check-up is just one more opportunity to look at your plan and potentially identify and correct such an oversight.

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:
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
@assuranceplan
#legacyassuranceplan


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Location: University Park, FL, USA

Tuesday, January 10, 2017

Irrevocable Trusts | Their Role in Your Estate Plan



Summary: Estate plans include many different pieces. Most include wills, powers of attorney and living wills. Many also include revocable living trusts, especially if one of your goals is avoiding probate. However, another tool available is the irrevocable trust. There are many situations where an irrevocable trust can be beneficial and, depending on your needs and your goals, looking into the uses and advantages of these trusts may be worth your while.

If you are familiar with the use of trusts in estate planning, chance are that you are aware of revocable living trusts. These trusts can be very helpful to many people. If you want to avoid the potential delays, expenses and stress of the probate administration process, then a revocable living trust may be a worthwhile component of your estate plan. Additionally, if you are interested in planning to minimize the chance of having an unwanted conservatorship filed over you and your assets, then a living trust may be beneficial in this regard, as well, as living trusts allow for the transfer of the management of your wealth from you to the person you chose when you created your trust, not someone that a judge picks.    

However, revocable living trusts are not the only worthwhile type of trust when it comes to estate planning. While revocable trusts allow you to maintain total control over the assets in them, in some circumstances, this degree of control is a drawback instead of an advantage. For these situations, there is the irrevocable trust. Irrevocable trusts can help you with planning for death taxes. If you think you may be facing a federal estate tax liability, there are various trust options out there to help. One is the irrevocable life insurance trust (ILIT). In this situation, you can purchase a life insurance policy that is owned and held by the ILIT. The death benefit proceeds from a policy held by your ILIT do not count as part of your gross estate when it comes to calculating estate taxes, whereas if the policy was held in your name instead of a trust, the proceeds would count toward your total estate, meaning you'd have a greater estate tax bill.

Another area where irrevocable trusts can help is if you have a child with special needs. Many people with special needs often rely upon government benefit programs that impose, as an eligibility requirement, a needs-based standard for qualification. If you leave money outright to your child with special needs, this could result in your child being financially disqualified to continue receiving benefits. Assets placed in a properly structured irrevocable special needs trust, however, do not qualify as assets controlled by the person with special needs and will not trigger a disqualification.

While the use of irrevocable trusts in planning for death taxes or for children with special needs is somewhat well known, there are still other, often less well known, circumstances where an irrevocable trust can help you. One example is if you have a child or grandchild for whom you are saving money for college. In some states, if someone gets a legal judgment against you, that creditor can seize the money in the 529 college savings account you've put away for your child or grandchild's education. However, if you set up an irrevocable trust with the college savings plans owned by the trustee whom you named to manage the trust, then that money is generally protected from judgment creditors.

These are, of course, only a few example of how irrevocable trusts can help meet some specialized needs within estate planning. There are many more ways that irrevocable trusts may possibly be a useful piece in your estate planning puzzle. Your estate planning attorney can help you determine what tools you need to achieve your goals in the best way possible.     

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:
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
@assuranceplan
#legacyassuranceplan


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Location: Bradenton, FL, USA
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