Estate Planning

Preparing your your estate plan is one of the best things you can do for yourself and for your family. However, for best results, your estate plan will require periodic attention.
 
Key life events can make it necessary to change your estate plan.
 
Generally, any significant change in your family, financial, or health status should prompt a review of your estate plan.
 
The following is a list of examples:
 
Personal and family changes:

• You marry, separate or divorce;
• Your health, or the health of your spouse, declines;
• Your spouse passes away;
• A child is born or adopted;
• A beneficiary gets married or divorced;
• A family member develops special needs or requires extra care;
• A minor becomes an adult;
• A beneficiary’s attitude toward you changes;
• A beneficiary develops a substance abuse problem;
• A beneficiary displays poor financial management skills;
• The health of a parent or other beneficiary declines;
• A family member dies.

Family finance changes:

• The value of your assets changes significantly;
• You anticipate the sale or transfer of a family business;
• You buy real estate in your own or another state;
• The value of a family member’s assets changes dramatically;
• A beneficiary gets into financial difficulties;
• A parent or other relative becomes financially dependent upon you.

Other Changes:

• Federal or state tax laws change;
• You move to a different state;
• You change your mind about a trustee, guardian, or administrator you selected;
• A successor trustee, guardian, or administrator moves, becomes ill, or changes his/her mind about serving.

A living trust is a legal document which allows you to place your assets into a trust for your benefit during your lifetime, and then transfer them to designated beneficiaries at your death by the “Successor Trustee” you select.
 
Living Trusts have become popular because they offer the following advantages over a Will-based estate plan:

1. A Living Trust protects your privacy by keeping your final wishes a private family matter, since only your beneficiaries and Trustees are entitled to read the trust agreement after your death. On the other hand, a Last Will and Testament that is filed with the probate court becomes a public court record which is available for the whole world to read.
2. A Living Trust provides instructions for your care and the management of your property if you become mentally incapacitated. Since a Last Will and Testament only goes into effect after you die, it cannot be used for incapacity planning.
3. If you fund all of the appropriate assets into a Living Trust prior to your death, then those assets will avoid probate. On the other hand, property that passes under the terms of a Last Will and Testament usually has to be probated. A probate could add thousands of dollars of costs at your death.

Although Living Trusts offer privacy protection, incapacity planning, and probate avoidance, they are not for everyone.  If you have questions about Living Trusts, please contact my office.

When you establish a living trust, you name someone to be the trustee.
 
A trustee basically does what you do right now with your financial affairs. The trustee collects income, pays bills and taxes, and saves and invests for the future. The trustee also buys and sells assets, provides for your loved ones, and keeps accurate records. The trustee generally keeps things organized and in good order.
 
Who Can Be Your Trustee
 
If you have a revocable living trust, you can be your own trustee. If you are married, your spouse can be trustee with you. This way, if either of you become incapacitated or die, the other can continue to handle your financial affairs without interruption. Most married couples who own assets together, especially those who have been married for some time, are usually co-trustees.
 
You don’t have to be your own trustee. Some people choose an adult son or daughter, a trusted friend or another relative. Some like having the experience and investment skills of a professional or corporate trustee. Naming someone else as trustee or co-trustee with you does not mean you lose control. The trustee you name must follow the instructions in your trust and report to you. You can even replace your trustee should you change your mind.
 
When to Consider a Professional or Corporate Trustee
 
You may be elderly, widowed, and/or in declining health and have no children or other trusted relatives living nearby. Or your candidates may not have the time or ability to manage your trust. You may simply not have the time, desire or experience to manage your investments by yourself. Also, certain irrevocable trusts will not allow you to be trustee. In these situations, a professional or corporate trustee may be exactly what you need: they have the experience, time and resources to manage your trust and help you meet your investment goals.
 
Professional or corporate trustees will charge a fee to manage your trust, but generally the fee it is quite reasonable, especially when you consider their experience, services provided and investment returns.
 
If you are considering a professional or corporate trustee, talk to several. Compare their services, investment returns, and fees.
 

For many families, passing along religious beliefs and values to the next generation is just as important as passing along financial wealth and tangible assets.
 
Transferring your faith and values to the next generation is usually done over a lifetime, by letting them see your faith at work in your life, taking them to religious services, and by being charitable. However, it is never too late. You can explain what your faith has meant to you, and how it has helped you through the difficult moments of your life. You can also write personal letters or make a video that your family can keep and review long after you are gone.
 

By 1996, singer Toni Braxton sold more than 20 million records. Two years later, she filed for Chapter 7 bankruptcy. In 2010, she was in bankruptcy court again, with debts up to $50 million.
 
“Sudden wealth syndrome” and is most commonly a problem with entertainers, professional athletes and lottery winners. However, according to financial advisors, it is a problem that can happen with just about anyone who quickly attains wealth.
 
Some of the reasons suddenly wealthy people lose their wealth are (1) not understanding the impact of taxes, (2) lack of understanding of investing, saving, finance, asset allocation, risk reward, diversification and inflation, and (3) pressure from family and friends to overspend.
 
Knowing about sudden wealth syndrome is important if you are planning to leave a large inheritance to someone who has never before been wealthy.
 
An estate planning attorney can help you to structure the inheritance to minimize potential problems with sudden wealth.
 
Reference: The Downside Of Sudden Wealth, Private Wealth, June 16, 2016.
 

A Last Will and Testament is a crucial component of every estate plan.
 
If you have a Living Trust-based estate plan, you are probably wondering if you also need a Last Will and Testament. Yes, you do!
 
The Pour-Over Will is designed to work in conjunction with your Living Trust.
 
The Pour-Over Will acts as a safety net for any property that you inadvertently fail to re-title in the name of your Living Trust before your death. It then “pours the property over” into your Living Trust. The Trustee of your Living Trust can then distribute the property to your chosen beneficiaries according to your instructions in your Living Trust.
 
To summarize, the Pour-Over Will works with your Living Trust, enabling it to transfer property more easily than a Last Will and Testament could transfer it alone.