Revocable Living Trusts | More Than Just a 'Will Substitute'

Summary: Living trusts are sometimes called "will substitutes" because they can accomplish many of the same objectives as a will when it comes to distrbuting your assets when die. A living trust, however, can do much more than that alone. A properly created and funded living trust can also help you plan, not just for asset distribution upon death, but also for the possibility of mental incapacity during your lifetime. Your living trust can help you make sure you have a seamless system in place for the management of your assets should your health dictate that you are no longer able to make those decisions yourself.  

You have many options when it comes to creating your estate plan. Each options has certain benefits, and each has its limits. As you contemplate how to go about constructing your plan, it is important to understand what each estate planning tool can, and cannot, do for you.

One example of this is the revocable living trust. Many people may be familiar with the benefits and uses of this legal document when it comes to avoiding probate. The reality of that benefit is true. A properly crafted and funded living trust may help you distribute your wealth to those you wish to receive it while avoiding the costs, delays and stresses that can be associated with the probate administration process. Because your trust can accomplish this goal of wealth distribution upon the occasion of your death, similar to how a will distributes your assets when you die, that's why living trusts are sometimes referred to as "will substitutes."

However, calling a living trust a "will substitute" misstates, in some ways, exactly what a trust's benefits and limits are. If you engage in the proper sort of estate planning, your trust's benefits may not be limited simply to accomplishing the objectives otherwise available using a will. Potentially, your trust can do much more. An area where this clearly true is protection during your lifetime. Your will does not take legal effect until you die; it can do nothing for you while you're still alive. A living trust, though, has the possibility to be vitally important to you during your lifetime if you should lose your mental capacity (a/k/a your mental ability to make decisions for yourself.) 

If this should happen to you, your properly funded trust can direct what will happen with regard to the management of your assets. When you establish a living trust, you will name someone (often yourself) to serve as the trustee of the trust initially. You will also name the person (or people,) called a "successor trustee" or "successor trustees," whom you want to take over the management of these assets when you either die or are otherwise unable to make those decisions for yourself. So, if you become mentally incapacitated, and you have funded your assets into your trust, then the process of dealing with them transitions seamlessly from you to the person or people you named in your trust document.

Without this type of planning in place, it may be necessary for your loved ones to go to court and ask a judge to appoint what's known as a "conservator" to manage your assets. This process, which is sometimes known as "living probate," has the potential, just like any legal proceeding, to be time-consuming, expensive and stressful for you and your family. By planning to avoid the negative impacts of living probate, your living trust can be a lot more than just a will substitute.

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Court Case Highlights Possible Risks of Pay-on-Death Accounts in Estate Planning

Summary: Estate plans can employ many different tools to accomplish the desired goals. In some plans, a pay-on-death account can help achieve those ends. As with any estate planning technique, it is important to understand the potential risks associated with using pay-on-death accounts in your plan and make sure that your plan uses the tools that make the most sense for meeting your needs.

A recent North Carolina case recited what happened when an 11th-hour pay-on-death (POD) account did not meet the state's statutory requirements for such accounts. Although the money eventually was distributed to the desired person, the case still highlights the possible pitfalls of using POD accounts in estate planning.

The case centered on the estate plan of James Nelson of Boone, NC. Nelson's plan included a revocable living trust, which he had funded. In early October 2008, Nelson wanted to change his estate plan. He called his credit union to move $85,000 from an account held by his trust into a new account. The new account had Nelson as the owner and had, as its POD beneficiary, Nelson's daughter, Martha, who also lived in Boone. 

The credit union employee, recognizing Nelson's voice, created the necessary paperwork and sent it to Nelson, who signed the paperwork. The following Christmas Eve, Nelson died. The credit union informed the daughter that the account had transferred to her, and she withdrew the $85,000. 

Nelson's other two children sued. The trial court in the case agreed with the disgruntled children that the POD account Nelson attempted to create at the credit union did not comply with all of the statutory requirements that North Carolina law imposes. The trial court went on to decide, however, that what Nelson had done was to create a type of common-law trust called a "Totten" trust, or a tentative trust. The trust had, as its beneficiary, Nelson's daughter, Martha, and its contents consisted of the $85,000.

The disgruntled children appealed, but they lost. The North Carolina Court of Appeals agreed with the lower court that the transaction Nelson attempted to complete with a POD account was enough to recognize the creation of a separate tentative trust for the benefit of the one daughter. 

In Nelson's case, he may not have had the opportunity to communicate his wishes with his other two children (as he died less than three months after he originally began trying to move the $85,000.) But his case nevertheless points out the importance of communicating with one's beneficiaries, especially when those beneficiaries are your children and you are leaving them unequal amounts of your wealth. Sometimes, communicating the reasons for your decisions can help stave off a court challenge after you're dead.

Additionally, setting up the sort of POD account arrangement Nelson attempted can create certain other risks. If his daughter Martha had predeceased him, and if he placed no alternate beneficiaries on the account, then that $85,000 would flow not back into his trust but rather into his probate estate, possibly requiring the completion a probate administration in order to distribute it. An amendment to Nelson's living trust potentially could have accomplished the same end without exposing the funds to probate.

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. 

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How Trust Planning Can Help When You're a Divorced Parent of a Minor Child

Summary: Estate plans can come in many different varieties to accommodate a wide array of planning needs. If you have a minor child or a child with special needs, making sure you have an estate plan should be a priority. If are no longer married to the father/mother of your child, an estate plan can help you ensure that you have the exact people you want caring for your child and managing your child's wealth, even if those are different people.

As you may know if you've much research on estate planning, your estate plan can offer you and your family more benefits than just providing instructions regarding the distribution of your wealth after you die. An estate plan can also help you create a "roadmap" for the care and support of your minor child or children (or child with special needs). 

With an estate plan, you can nominate the person (or people) you want to be your child's guardian. By engaging in this type of estate planning, you can rest assured that the person or people caring for your child after your death is someone who wants to have that job, and with whom you and your child are comfortable.

Also, you can make sure, through your estate planning, that your child will be properly cared for financially. Establishing a trust of which your child is the beneficiary can achieve that end. Additionally, a trust of which your child is the beneficiary can allow you to ensure that your child does not receive too large an inheritance at too large an age. You can structure your child's trust such that she receives distributions at points you set up. That way, you can ensure that your child does not, for example, receive one large lump-sum of cash at age 18. You can instruct the trustee to issue payments at various points, such as a 21st, 25th or 30th birthday, college graduation or marriage.

Creating a trust for your child is especially helpful if your child has special needs and receives benefits from government programs that include needs-based qualifications for eligibility. Without a trust, a direct inheritance from you could cause your child to lose her continued eligibility for these programs. 

Estate planning for your child's care can be especially important for families where you and the child's father/mother are divorced. Perhaps your preference, in the event of your death, would be for your ex-spouse to serve as your child's guardian, but you do not want your "ex" to control the money you desire to leave for the benefit of your child. A carefully constructed estate plan can address all of these concerns. The law does not require that the person you name to serve as the guardian of your child be the same as the person you designate as the trustee of your child's trust. So, for example, you could name the child's father as the guardian, but could also name another trusted family member, like your brother, sister or parent, to function as the trustee of the trust. This is, of course, just one option available in order meet all of your family's needs.

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. 

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Legacy Assurance Plan

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How Your Estate Plan May Help You Avoid 'Living Probate'

Summary: Avoiding the probate process upon death, with its possibility of time delays, expenses and loss of privacy is one goal that drives many people to create an estate plan. However, a comprehensive estate plan can accomplish that and so much more, because there is more to complete estate planning than just having a plan for dealing with probate (or avoiding it). A thorough estate plan can also provide the necessary documentation needed to avoid, or minimizing the chances of, having to deal with a guardian and/or conservator, and ensure that you are in control both in life and after death. 

Many people, when they speak of "avoiding probate," are referring to the probate procedures that occur after you die. However, an estate plan that is comprehensive enough to help you avoid "living probate" -- the proceedings that can occur in a probate court during your lifetime -- can also provide you and your loved ones immense benefits. With a proper plan for minimizing the chances of going through living probate, you can save your loved ones not only time and money, but also stress and anguish, while ensuring that you are in control, even after you are no longer able to speak for yourself. In one recent case from Florida, a man's estate plan's thoroughness, including its inclusion of advance directive documents, proved vital in thwarting an effort to have a court-ordered guardianship created.

At some point in his life, Burton Adelman made the decision to create an estate plan. The man's plan wisely addressed more than just what objectives he wanted carried out after his death. The plan also addressed the issue of living probate. The documents in the man's estate plan covered living probate by specifying that his ex-wife, Ruby Adelman, was to serve as his attorney-in-fact, as his healthcare surrogate and as his trustee.

Some time later, one of the man's grandnieces went to court asking the trial judge to appoint a professional guardian over the man. In some states, like Florida, the court must make two determinations before the judge can appoint a guardian. First, the court must conclude that the person over whom the guardianship would be appointed is, in fact, mentally incompetent. However, it does not stop there. The court must also analyze the specifics of the case and determine whether or not a "less-restrictive alternative" to guardianship exists.

In Adelman's case, although he was deemed incompetent, his estate plan offered the court precisely the sort of "less-restrictive alternative" the law contemplated. The estate plan named the ex-wife as the person the man wanted to manage all of his affairs, both financial and personal, in the event that he could not make decisions for himself. The ex-wife was able and willing to assume these responsibilities. Because the man's plan offered a seamless scheme for handling the decision-making process in the event of his mental incapacity, guardianship was unnecessary in his case.

Estate planning is important for many reasons because an thorough estate plan can accomplish so many things for you. A complete estate plan can not only give your loved ones directions regarding your preferences and goals after you die, it can also provide essential instruction for how you want your affairs handled while you are still alive but unable to make those decisions for yourself.

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. 

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Legacy Assurance Plan

8039 Cooper Creek Blvd

University Park, Florida 34201

844.306.5272 (Phone)

info@legacyassuranceplan.com (email)

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Settling an Estate Across Long Distances

Summary: Many states have laws restricting who may serve as executors of probate estates. Some of these laws relate to allowing non-residents to serve. If your state has these types of laws and your preferred executors are residents of other states, this can create a possible problem. There are various ways of dealing with these logistical issues, such as using a revocable living trust to distribute your assets. Your estate planning attorney can help you decide which technique is the best way to deal with the long-distance logistical issues within your estate plan.

Today, people are more mobile than ever. While some people can trace their lineage four or five (or more) generations without traveling more than one or two counties .away, this is rare. Whether you're seeking out a new job opportunity, relocating to be closer to loved ones or just seeking out that ideal retirement destination, people rarely spend their whole lives in one place. One aspect of life where this can present complication is in estate planning. 

When you pass, someone must handle the task of settling your estate. For many people, the person (or people) they want to complete these duties are people close to them whom they trust completely. However, depending on how you've structured your estate plan and what your state's laws say, that option may not always be available.

Why is this? Because some states' laws restrict who can serve as an executor in charge of carrying out the instructions you placed in your will. For example, in Florida or Kentucky, you must either be a resident of that state, or else (as a non-resident) be related by blood, marriage or adoption in order to serve as an executor. In other states, non-resident executors can be forced to jump through legal hoops. In Illinois, for example, if your preferred executor is not an Illinois resident, he or she can be made to pay a bond in order to serve as your executor. The court can impose this requirement even if your will expressly said that a bond was not required!

In many states, like Wisconsin, Virginia, Texas, Oklahoma, North Carolina, Missouri, Louisiana, Kansas and Arkansas (among others,) you can have a non-resident serve as your executor, but he or she must go through the process of naming an agent who is a resident of that state. The agent is responsible for accepting legal papers regarding the estate. Even then, it is not a certainty. In some states -- Wisconsin is one such example -- the probate court can refuse to allow a non-resident to serve as your executor based on residency alone.

If the people you hold close and trust all live out of state, this can be a major hurdle. There are many ways around these complications. One way is by using a revocable living trust in your plan. In most situations, you can name anyone who is a mentally competent adult to serve as the successor trustee of your trust. Generally, the laws of any state contain no residency requirement about people serving as trustees of trusts.

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)

@assuranceplan

#legacyassuranceplan

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Legacy Assurance Plan Article | Excluding Relatives from Your Estate Plan's Distributions

Summary: Deciding to exclude a child from your estate plan can be a difficult decision, regardless of whether you've made this decision for personal or financial reasons. Once you've elected this choice, you should make sure that your estate plan is carefully constructed in a way that minimizes, to the extent possible, the chances that the child you've disinherited can go to court and successfully contest your plan. There are various pieces of information that should be included in your plan, and others excluded, in order to give your plan the best protection possible against your disinherited child.  

Estate plans and estate planning goals are as unique as the people who make them. The same is true of family dynamics. If your family circumstances are such that you are considering leaving a child nothing from your estate, you generally can do that, but there are several things you should keep in mind as you go forward with your plan. 

There are lots of different reasons you might choose to leave a child nothing. Most people associate this decision with a relationship that has become extremely distant or hostile. This is a very common reason for leaving a child nothing, but there are others. Perhaps your child has become wealthy, and you wish to leave your assets to your less-fortunate loved ones. Also, you may have given special assistance to one child in the form of financial gifts during your lifetime, and therefore feel that you have already "provided for" that child outside your estate. Whether your reasons are financial or personal, it is important to avoid including excessive explanations within your plan (especially personal matters) that would only serve to anger or offend your child, because that might further motivate him/her to launch a legal challenge to your plan.

If you plan to disinherit a child, it is important that you include those wishes expressly within your estate planning documents. You may choose to leave a disinherited child some nominal amount, such as $1, if you want, but this is not necessary. However, attempting to disinherit a child by simply not mentioning him/her at all can be problematic. Your disinherited child could, after you've died, go to court and claim that he/she was "pretermitted," meaning that your failure to leave a distribution was the result of a mere oversight or mistake on your part. If successful, that child may be entitled to take a portion of your estate equivalent to what he/she would've gotten under your state's intestacy laws. (In other words, his/her inheritance would be the same as if you'd died with no plan in place at all.)

Keep in mind that you can disinherit in most, but not all, situations. Generally, the most likely circumstance in which the law bars you from disinheriting a child is if an existing court order (most likely as part of your divorce from the child's other parent) says that you must provide for that child in your estate plan. Just like how state statutes governing a spouse's right to inherit from his/her spouse's estate plan generally can "trump" a plan that leaves that spouse nothing, a court order that requires you to provide in certain ways for a child generally can override an estate plan that runs contrary to that order's demands.

Additionally, once you've decided to disinherit a child, be aware that no plan is 100% immune to a legal challenge. Almost anyone can go to the courthouse and file a lawsuit to contest almost anything in which he/she has a personal interest. Your estate planning attorney can give you guidance on ways to structure your plan to minimize the potential that anyone could initiate a successful challenge to 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:

Legacy Assurance Plan

8039 Cooper Creek Blvd

University Park, Florida 34201

844.306.5272 (Phone)

info@legacyassuranceplan.com (email)

@assuranceplan

#legacyassuranceplan

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Legacy Assurance Plan Article | Getting Married and its Impact on Estate Planning

Summary: Everyone who makes the decision to enter the institution of marriage should be aware of how that decision will impact his or her estate plan. Marriage can offer certain new estate planning opportunities to couples, but can also introduce possible new complications that your estate plan can address. This important life event should be viewed as a welcome opportunity to get your estate plan established, or to get your existing plan reviewed.  

Earlier this year, the US Supreme Court ruled that same-sex couples across the country have the right to get married. With this decision, the pool of people contemplating marriage in the near future has almost certainly increased significantly. Regardless of your sexual orientation, the decision to marry can have substantial impacts on your estate plan, especially for older couples. It is important to consider these effects as you go forward with your plans to marry.

Becoming married opens up additional options for you. You and your spouse can choose to own property as a tenancy by the entireties. In this arrangement, the surviving spouse automatically takes full ownership of the property upon the death of the first spouse. This type of ownership is only available to married couples.

While tenancy by the entireties offers several significant advantages, such barring creditors from taking the property unless both spouses are named parties to debt in question, your individual situation may indicate that a better option exists for carrying out your estate planning goals, such as a revocable living trust. 

Marriage also carries with it additional obligations. If you or your new spouse die intestate (in other words, with no valid estate plan,) then the law says that your spouse gets a statutorily-dictated portion of your assets. Depending on your circumstances, this could dramatically unravel many of your estate planning goals. For example, perhaps your are an older couple and one or both of you entered the marriage with substantial wealth. You and your spouse may decide that your prefer to leave your assets to other loved ones instead of each other. An estate plan is very important for you, because the law's intestate plan would result in a very different distribution. 

In some states, the intestate laws split your wealth between your spouse and close blood relatives. Perhaps you are estranged from your children and desire to leave everything to your spouse. Again, getting an estate plan is vital to ensure that this distribution is carried out, rather than what the intestate laws would do.

Your estate plan can provide other assistance, regardless of whether you and your partner are married. Just because you and your partner become married does not mean that your new spouse would be able to make financial or healthcare decisions for you in the event that you lost the able to make them yourself. Your estate plan's inclusion of financial and healthcare powers of attorney can accomplish this objective for you. Similarly, an advance directive can make certain that the person you desire to make your end-of-life decisions will have the authority to do so. These can be very beneficial in families where tension exists between your spouse and your other relatives.

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)

@assuranceplan

#legacyassuranceplan

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