Wednesday, October 5, 2016
Property Passing at Death
What is Probate?
Probate is the formal legal process that gives recognition to a will and appoints the
executor or personal representative who will administer the estate and distribute
assets to the intended beneficiaries. The laws of each state vary, so it is a good idea
to consult an attorney to determine whether a probate proceeding is necessary,
whether the fiduciary must be bonded (a requirement that is often waived in the will)
and what reports must be prepared. Most probate proceedings are neither expensive
nor prolonged, which is contrary to the claims of many vendors selling living trust and
other products.
The basic job of administration and accounting for assets must be done whether the
estate is handled by an executor in probate or whether probate is avoided because
all assets were transferred to a living trust during lifetime or jointly owned. Many states
have simplified or streamlined their probate processes over the years. In such states,
there is now less reason to use probate avoidance techniques unless there are other
valid reasons to continue to minimize probate. In planning your estate, more important
than minimizing probate is minimizing the real issues that can make probate diffi -
cult, such as lawsuits by heirs
American Bar Association
Wednesday, September 7, 2016
Estate Planning Legal Terns Explained
Health Care Directive (Living Will) - A legal document in which you choose a health care agent to act on your behalf, set forth the extent of your health care agent’s powers, and state your desires regarding when and under what circumstances life-sustaining medical treatment should be withheld or withdrawn from you.
Estate - Means the property you own at death.
Executor - see Personal representative.
Fiduciary- Refers to a trusted person who acts on behalf of another and includes a personal
representative, guardian, financial agent, and health care agent.
Financial agent - A trusted person who you choose to manage your finances and make financial decisions for you when you are no longer capable of doing these things for yourself.
Guardian - A trusted person who you choose to care for your minor child(ren) (under 18)
if both you and your minor child(ren)’s other parent are deceased. A guardian can also
be chosen to care for a person over 18 who is adjudged to be legally incapacitated.
Health care agent - A trusted person who you choose to make medical decisions for you when you are no longer capable of making them for yourself. A health care agent will have access to your medical records if you lose health care decision-making capacity and will have any additional powers granted to them in your Advance Health Care Directive.
Partial distribution - A distribution under your Last Will to your surviving spouse of less than 100% of your estate. NOTE: a surviving spouse is legally entitled to an elective share of the deceased spouse’s estate. A surviving spouse can sue for his or her elective share if the Last Will makes a distribution to the surviving spouse that is less than the surviving spouse’s elective share.
Personal representative - A trusted person who you choose to administer your estate and make the gifts and distributions designated in your Last Will.
Power of attorney - A legal document in which you choose a financial agent to act on your behalf if you become incapacitated and are unable to make decisions for yourself and sets forth the extent of the financial agent’s powers.
Tangible personal property - Refers to items of personal and household property and includes
motor vehicles, furniture and furnishings, appliances, clothing, jewelry, heirlooms, collections, guns, club memberships, silverware, glassware, china, pets, books, pictures and other works of art, stamp collections, family memorabilia, etc.
Written statement - A written document signed by you or in your handwriting that describes
(1) items of tangible personal property you wish to give at death and (2) the recipient of each item.
Probate - In general, probate is the legal process for making sure that a decedent’s property is collected and preserved; the decedent’s debts and taxes are paid; and the remaining property is distributed to the beneficiaries designated in the decedent’s Will or, if the decedent died without a valid Will, to the decedent’s lawful heirs.
Estate - Means the property you own at death.
Executor - see Personal representative.
Fiduciary- Refers to a trusted person who acts on behalf of another and includes a personal
representative, guardian, financial agent, and health care agent.
Financial agent - A trusted person who you choose to manage your finances and make financial decisions for you when you are no longer capable of doing these things for yourself.
Guardian - A trusted person who you choose to care for your minor child(ren) (under 18)
if both you and your minor child(ren)’s other parent are deceased. A guardian can also
be chosen to care for a person over 18 who is adjudged to be legally incapacitated.
Health care agent - A trusted person who you choose to make medical decisions for you when you are no longer capable of making them for yourself. A health care agent will have access to your medical records if you lose health care decision-making capacity and will have any additional powers granted to them in your Advance Health Care Directive.
Partial distribution - A distribution under your Last Will to your surviving spouse of less than 100% of your estate. NOTE: a surviving spouse is legally entitled to an elective share of the deceased spouse’s estate. A surviving spouse can sue for his or her elective share if the Last Will makes a distribution to the surviving spouse that is less than the surviving spouse’s elective share.
Personal representative - A trusted person who you choose to administer your estate and make the gifts and distributions designated in your Last Will.
Power of attorney - A legal document in which you choose a financial agent to act on your behalf if you become incapacitated and are unable to make decisions for yourself and sets forth the extent of the financial agent’s powers.
Tangible personal property - Refers to items of personal and household property and includes
motor vehicles, furniture and furnishings, appliances, clothing, jewelry, heirlooms, collections, guns, club memberships, silverware, glassware, china, pets, books, pictures and other works of art, stamp collections, family memorabilia, etc.
Written statement - A written document signed by you or in your handwriting that describes
(1) items of tangible personal property you wish to give at death and (2) the recipient of each item.
Probate - In general, probate is the legal process for making sure that a decedent’s property is collected and preserved; the decedent’s debts and taxes are paid; and the remaining property is distributed to the beneficiaries designated in the decedent’s Will or, if the decedent died without a valid Will, to the decedent’s lawful heirs.
Wednesday, June 1, 2016
Music Icon Prince Dies without will
Prince, a music legend oversight in not creating a will or trust is creating incredible stress for his family.
"According to two estate lawyers, it’s likely to be a mess that will take years to sort out. The fact that Prince died without official instructions on how to handle his estate is very unusual–even surprising, says Darren Wallace, an estate lawyer at Day Pitney, LLP, a Connecticut law firm. “With the amount of control he exercised throughout his life with respect to his contractual arrangements and protection his music and his image and his name change—clearly he understood a lot of these issues.” http://time.com/money/4308204/prince-dies-without-will/
The lesson here then is to act now on getting your will or trust completed. Few will have the vast assets that Prince had, but the stress can be equally difficult on those left begin who have no guidance from you on what to do with all your asset. Even more important, what happens to your children? Who will become their guardian? If you don't choose, someone else will and it could be the last thing your really wanted.
"According to two estate lawyers, it’s likely to be a mess that will take years to sort out. The fact that Prince died without official instructions on how to handle his estate is very unusual–even surprising, says Darren Wallace, an estate lawyer at Day Pitney, LLP, a Connecticut law firm. “With the amount of control he exercised throughout his life with respect to his contractual arrangements and protection his music and his image and his name change—clearly he understood a lot of these issues.” http://time.com/money/4308204/prince-dies-without-will/
The lesson here then is to act now on getting your will or trust completed. Few will have the vast assets that Prince had, but the stress can be equally difficult on those left begin who have no guidance from you on what to do with all your asset. Even more important, what happens to your children? Who will become their guardian? If you don't choose, someone else will and it could be the last thing your really wanted.
Revocable Trust
What is the difference between trusts and wills?
A will is a legal document or instrument containing instructions as to how a person, the testator, wants his or her estate to be managed and distributed after their death. Previously, separate instruments were used to disburse personal property (testament) and real property (will). Now, a will, sometimes called a “last will and testament”, disposes of both personal and real property.
A person who dies without a will is referred to as intestate, which results in that person’s estate being distributed according to the laws of the state in which the person resides. On the other hand, a will enables a person to choose her heirs rather than defaulting to the state laws of descent and distribution which selects the heirs for her and, despite being blood relatives, may be individuals the testator dislikes or isn’t acquainted with. Furthermore, the testator decides who will best administer her estate to her heirs, rather than allowing a court to appoint a stranger to serve as executor. Perhaps most importantly, a will can designate a guardian, someone who will raise the young children of the testator i n the event of his death and there being no other parent.
A trust can accomplish what a will does, but has additional benefits. Like a will, a trust contains written instructions directing the disposition of a person’s (trustor) assets. However, a trust takes effect at the time it is executed and may make distributions while the trustor is alive, sometimes called a “living trust.” This is different from a testamentary trust which is created by the terms of a will and places some assets from the deceased person’s estate in a trust to exist from the date of death and until fully distributed. These are often used for the purpose of managing distributions to young children until they are sufficiently mature to receive their full inheritance.
A trust can, like a will, designate a guardian for the young children if the trustor dies and there is no other parent. A trust is managed by a trustee, or trustees, who acting under one of the separated bundles of ownership (legal ownership), can sign documents, make purchases and investments, pay bills, and many other functions of an owner of property. The primary difference being that the trustee has a fiduciary duty to act in the best interest of the beneficiaries who are the equitable owners as opposed to legal ownership which is held by the trustee. Interestingly, this separation of ownership is often one in the same in the sense that the trustor often designates himself to be the trustee and lifetime beneficiary, and naming other contingent beneficiaries.
In order for a trust to function properly after being properly executed, the assets must be legally transferred to the trustee. Trusts can take advantage of certain IRS tax generation skipping codes and therefore, pass more assets to the heirs instead of paying more taxes. But there must be a significant amount of assets to surpass the standard exemptions.
Do I need a trust? I have been told trusts are better than Wills.
As previously mentioned, a trust can provide additional benefits but also come with a cost. They require careful attention to transfer each asset to the trustee. They are typically more expensive than a will. Trusts are far more valuable than these relatively minor inconveniences depending on what purposes you are trying to accomplish. Trusts can provide Common Questions a better mechanism and instructions to take care of minor children. Trusts provide tax savings, but only over the threshold standard exemptions, which are several millions of dollars. Trusts can protect those assets from creditors, if they meet certain requirements. Finally, trusts avoid the hassle of probate, or the court managing the execution of the will.
Wouldn’t a revocable trust protect my assets from creditors?
If the ownership can be bundled back up, meaning that all of the separate parts of the ownership, are still controlled by the trustor, or if she has the power to “rebundle” it back to herself, then the assets may not be protected from creditors.
Wouldn’t a revocable trust avoid (or at least reduce) taxes?
If the standard exemptions—which change yearly—are not exceeded, then the trust doesn’t provide the added protection or benefit. However, if the marital assets exceed the standard exemption and are properly divided into two separate trusts, often called a marital trust and a family trust, then they can gain additional tax exemptions, depending on the total amount of assets.
A will is a legal document or instrument containing instructions as to how a person, the testator, wants his or her estate to be managed and distributed after their death. Previously, separate instruments were used to disburse personal property (testament) and real property (will). Now, a will, sometimes called a “last will and testament”, disposes of both personal and real property.
A person who dies without a will is referred to as intestate, which results in that person’s estate being distributed according to the laws of the state in which the person resides. On the other hand, a will enables a person to choose her heirs rather than defaulting to the state laws of descent and distribution which selects the heirs for her and, despite being blood relatives, may be individuals the testator dislikes or isn’t acquainted with. Furthermore, the testator decides who will best administer her estate to her heirs, rather than allowing a court to appoint a stranger to serve as executor. Perhaps most importantly, a will can designate a guardian, someone who will raise the young children of the testator i n the event of his death and there being no other parent.
A trust can accomplish what a will does, but has additional benefits. Like a will, a trust contains written instructions directing the disposition of a person’s (trustor) assets. However, a trust takes effect at the time it is executed and may make distributions while the trustor is alive, sometimes called a “living trust.” This is different from a testamentary trust which is created by the terms of a will and places some assets from the deceased person’s estate in a trust to exist from the date of death and until fully distributed. These are often used for the purpose of managing distributions to young children until they are sufficiently mature to receive their full inheritance.
A trust can, like a will, designate a guardian for the young children if the trustor dies and there is no other parent. A trust is managed by a trustee, or trustees, who acting under one of the separated bundles of ownership (legal ownership), can sign documents, make purchases and investments, pay bills, and many other functions of an owner of property. The primary difference being that the trustee has a fiduciary duty to act in the best interest of the beneficiaries who are the equitable owners as opposed to legal ownership which is held by the trustee. Interestingly, this separation of ownership is often one in the same in the sense that the trustor often designates himself to be the trustee and lifetime beneficiary, and naming other contingent beneficiaries.
In order for a trust to function properly after being properly executed, the assets must be legally transferred to the trustee. Trusts can take advantage of certain IRS tax generation skipping codes and therefore, pass more assets to the heirs instead of paying more taxes. But there must be a significant amount of assets to surpass the standard exemptions.
Do I need a trust? I have been told trusts are better than Wills.
As previously mentioned, a trust can provide additional benefits but also come with a cost. They require careful attention to transfer each asset to the trustee. They are typically more expensive than a will. Trusts are far more valuable than these relatively minor inconveniences depending on what purposes you are trying to accomplish. Trusts can provide Common Questions a better mechanism and instructions to take care of minor children. Trusts provide tax savings, but only over the threshold standard exemptions, which are several millions of dollars. Trusts can protect those assets from creditors, if they meet certain requirements. Finally, trusts avoid the hassle of probate, or the court managing the execution of the will.
Wouldn’t a revocable trust protect my assets from creditors?
If the ownership can be bundled back up, meaning that all of the separate parts of the ownership, are still controlled by the trustor, or if she has the power to “rebundle” it back to herself, then the assets may not be protected from creditors.
Wouldn’t a revocable trust avoid (or at least reduce) taxes?
If the standard exemptions—which change yearly—are not exceeded, then the trust doesn’t provide the added protection or benefit. However, if the marital assets exceed the standard exemption and are properly divided into two separate trusts, often called a marital trust and a family trust, then they can gain additional tax exemptions, depending on the total amount of assets.
Wednesday, May 25, 2016
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