Living Trusts vs. Wills - Part 5 (final)
December 17, 2007 | 1 Comment
It seems that a lot of you have enjoyed the series on living trusts vs. wills from viewing the amount of traffic that these posts have seen. I hope that all of my subscribers will enjoy the final post in this series. Soon I’ll have the entire list up on the resources page so that you can have everything in one place and be able to go there and download the full list in word format if you’d like.
I want to add that this list isn’t a conclusive list but just some things that you should keep in mind when doing your estate planning. As an estate planning lawyer I highly believe that living trusts are among the most efficient and best estate planning instruments available. However, they are right for everyone. When making important estate planning decisions that will effect your family for decades make sure to talk to your lawyer.
Okay, with that out of the way. Here is the conclusion to the list.
Living Trusts vs. Wills - Part 5 (final)
19. Is a living trust expensive?
Not when compared to all the costs of court interference at incapacity and death. How much you pay will depend on how complicated your plan is.
20. How long does it take to get a living trust?
It should only take a few weeks to prepare the legal documents after you make the basic decisions.
21. Should I have an attorney do my trust?
Yes, but you need the right attorney. A local attorney who has considerable experience in living trusts will be able to give you valuable guidance and peace of mind that your trust is prepared properly. In some states, qualified paralegals can now also prepare trust documents; however, they cannot give you legal advice.
22. If I have a living trust, do I still need a will?
Yes, you need a “pour-over” will that acts as a safety net if you forget to transfer an asset to your trust. When you die, the will “catches” the forgotten asset and sends it into your trust. The asset may have to go through probate first, but it can then be distributed as part of your living trust plan.
23. Is a “living will” the same as a living trust?
No. A living trust is for financial affairs. A living will is for medical affairs; it lets others know how you feel about life support in terminal situations.
24. Are living trusts new?
No, they’ve been used successfully for hundreds of years.
25. Who should have a living trust?
Age, marital status and wealth don’t really matter. If you own titled assets and want your loved ones (spouse, children or parents) to avoid court interference at your death or incapacity, consider a living trust. You may also want to encourage other family members to have one so you won’t have to deal with the courts at their incapacity or death.
26. Summary of Living Trust Benefits
- Avoids probate at death, including multiple probates if you own property in other states
- Prevents court control of assets at incapacity
- Brings all your assets together under one plan
- Provides maximum privacy
- Quicker distribution of assets to beneficiaries
- Assets can remain in trust until you want beneficiaries to inherit
- Can reduce or eliminate estate taxes
- Inexpensive, easy to set up and maintain
- Can be changed or cancelled at any time
- Difficult to contest
- Prevents court control of minors’ inheritances
- Can protect dependents with special needs
- Prevents unintentional disinheriting and other problems of joint ownership
- Professional management with corporate trustee
- Peace of mind
ABA Releases it’s Free Estate Planning Guide
December 11, 2007 | Leave a Comment
What should everyone in Memphis and Mississippi look at before going to their estate planning lawyer? The new ABA Estate Planning Guide. It’s a great source of information for all of your questions about wills, trusts, power of attorneys and probate both for here in Memphis, Tennessee and Mississippi.
I’ve included a link to each chapter that you can click on to download and view.
Ch. 1: Getting Started
Ch. 2: Transferring Property without a Will
Ch. 3: Making a Will
Ch. 4: Trusts
Ch. 5: Living Trusts
Ch. 6: Common Estate Planning Situations
Ch. 7: Special Considerations
Ch. 8: Death and Taxes
Ch. 9: Changing Your Mind: Changing, Adding to, or Revoking Your Will or Trust
Ch. 10: Choosing the Executor or Trustee
Ch. 11: Planning Now to Make Things Easier for Your Family
Ch. 12: When You Can’t Make the Decision: Living Wills, Powers of Attorney, and Other Disability Issues
I’d like to give thanks to Attorney David Goldman over at floridaestateplanninglawyerblog.com for bringing this to my attention.
Power to You : Write Your Will!
December 10, 2007 | Leave a Comment
Death and taxes: how to prepare for one while reducing the other. A tounge-in-cheek approach.
Power of an Attorney
Even a signing mistake can weaken your will’s validity, and it only takes one greedy nephew to tie it up in court for months and lop off up to eight percent of your estate in legal fees. Skip the sites and get a flesh-and-blood attorney to draft you an airtight document.
Power of Planning
According to David T. Phillips, author of Estate Planning Made Easy, leaving everything to your spouse could mean losing 25 percent of a $4 million estate to taxes. Shelter half of that in a Bypass Trust instead: Wifey gets paid, the kiddies get their tax-exempt cash.
Power of Persuasion
Unless you want your trust-fund baby living as an “artist” in a $3 million loft purchased with your retirement, set some rules. Whether it’s graduating college, getting married, or turning 30, any milestone can determine when they receive your hard-earned dough.
Power of Protection
Real estate is a great investment…till taxes are due. To pay off death taxes imposed on your home or business, jack up your life insurance policy (otherwise you’ll lose the assets just to pay the IRS). Just $12,000 in payments can cover an estate-tax bill of $1 million!
Excerpted from http://www.maxim.com/WriteYourWill/articles/6699.aspx
Living Trusts vs. Wills, Part 4
December 7, 2007 | Leave a Comment
Continuing the Living Trusts Frequently Asked Questions theme.
13. If something happens to me, who has control?
If you and your spouse are co-trustees, either can act and have instant control if one becomes incapacitated or dies. If something happens to both of you, or if you are the only trustee, the successor trustee you personally selected will step in. If a corporate trustee is already your trustee or co-trustee, they will continue to manage your trust for you.
14. What does a successor trustee do?
If you become incapacitated, your successor trustee looks after your care and manages your financial affairs for as long as needed, using your assets to pay your expenses. If you recover, you automatically resume control. When you die, your successor trustee pays your debts and distributes your assets. All this is done quickly and privately, according to instructions in your trust, without court interference.
15. Who can be successor trustees?
Successor trustees can be individuals (adult children, other relatives, or trusted friends) and/or a corporate trustee. If you choose an individual, you should name more than one in case your first choice is unable to act.
16. Does my trust end when I die?
Unlike a will, a trust doesn’t have to die with you. Assets can stay in your trust, managed by the person or corporate trustee you selected, until your beneficiaries reach the age(s) you want them to inherit. Your trust can continue longer to provide for a loved one with special needs, or to protect the assets from beneficiaries’ creditors, ex-spouses and future death taxes.
17. How can a living trust save on estate taxes?
If you die in 2007 or 2008 and the net value of your estate (assets minus debts) is more than $2 million, federal estate taxes must be paid on the excess at a rate of 45%. If you are married, your living trust can include a provision that will let you and your spouse leave up to $4 million estate tax-free to your loved ones, saving up to $900,000 in taxes.
18. Doesn’t a trust in a will do the same thing?
Not quite. A will can contain wording to create a testamentary trust to save estate taxes, care for minors, etc. But, because it’s part of your will, this trust cannot go into effect until after you die and the will is probated. So it does not avoid probate and provides no protection at incapacity.
Living Trusts vs. Wills, Part 3
December 5, 2007 | Leave a Comment
As Memphis and Mississippi estate planning lawyers we’re always here to help you. I’m continuing with the Living Trusts vs. Wills series. In this section I’ll be looking a little more in depth at living trusts.
7. What is a living trust?
A living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust avoids probate at death, can control all of your assets, and prevents the court from controlling your assets if you become incapacitated.
8. How does a living trust avoid probate and prevent court control of assets at incapacity?
When you set up a living trust, you transfer assets from your name to the name of your trust, which you control — such as from “Bob and Sue Smith, husband and wife” to “Bob and Sue Smith, trustees under trust dated (date of trust).”
Legally you no longer own anything (don’t panic: everything now belongs to your trust), so there is nothing for the courts to control when you die or become incapacitated. The concept is very simple, but this is what keeps you and your family out of the courts.
9. Do I lose control of the assets in my trust?
Absolutely not. You keep full control. As trustee of your trust, you can do anything you could do before — buy/sell assets, change or even cancel your trust (that’s why it’s called a revocable living trust). You even file the same tax returns. Nothing changes but the names on the titles.
10. Is it hard to transfer assets into my trust?
No, and your attorney, trust officer, financial adviser and insurance agent can help. You need to change titles on real estate (in- and out-of-state) and other titled assets (stocks, CDs, bank accounts, other investments, insurance, etc.). Most living trusts also include jewelry, clothes, art, furniture, and other assets that do not have titles.
Also, beneficiary designations on some assets (like insurance) should be changed to your trust so the court can’t control them if a beneficiary is incapacitated or no longer living when you die. (IRA, 401(k), etc. can be exceptions.)
11. Doesn’t this take a lot of time?
It will take some time — but you can do it now, or you can pay the courts and attorneys to do it for you later. One of the benefits of a living trust is that all your assets are brought together under one plan. Don’t delay “funding” your trust. It can only protect assets that have been transferred into it.
12. Should I consider a corporate trustee?
You may decide to be the trustee of your trust. However, some people select a corporate trustee (bank or trust company) to act as trustee or co-trustee now, especially if they don’t have the time, ability or desire to manage their trusts, or if one or both spouses are ill. Corporate trustees are experienced investment managers, they are objective and reliable, and their fees are usually very reasonable
