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Trust

What is Estate Planning?

Believe it or not, nearly everyone has an estate. Your estate consists of everything you own— your car, your home, your rental and investment properties, your business interests, bank accounts, investment and stock accounts, life insurance, household items, and personal possessions. No matter how large or how modest your estate is, you can’t take it with you when you die.

Having a Living Trust reduces the stress on your family.

In most cases, you probably want to control who gets your things and how after you pass away—and it is a “when” and not an “if. To ensure that your estate, no matter how modest, goes to the people or organizations you care most about, you need to provide instructional guidance designating the persons or charities whom you want to receive your certain assets, what items you want them to receive, and when. In addition, you will want this to happen with the least amount paid in taxes and legal fees.

            That is the essence of estate planning—making a plan in advance and naming whom you want to receive the things you own after you die. However, good estate planning can be so much more than that. It can:

  • Include instructions for passing your values(religion, education, hard work, etc.) in addition to your valuables.
  • Provide guidance for your care if you become disabled before you die.
  • Provide for family members with special needs without disrupting government benefits.
  • Name a guardian for minor children.
  • Protect your loved ones who might be irresponsible with money, dealing with creditors or collections, and/or going through a divorce.
  • Provide for the transfer of your business at your retirement, disability, or death.
  • Minimize taxes, court costs, and unnecessary legal fees.

Estate planning is beneficial to everyone.

  • Estate plans are not just for seniors, although people do tend to think about it more as they get older. Unfortunately, we can’t predict how long we will live, and illness and accidents happen to people of all ages.
  • Asset protection is not just for “the rich,” either. To the contrary, estate planning often matters more to families with modest assets, because they can afford to lose the least.

Too many people don’t plan.

People put off estate planning because they think they don’t own enough, they’re not old enough, they’re busy, think they have plenty of time, they’re confused and don’t know who can help them, or they just don’t want to think it. Then, when something happens to them, their families have to pick up the pieces.

If you don’t have a plan, your state has one for you, but you probably won’t like it.

At disability: If your name is on the title and you can’t manage the assets due to mental or physical incapacity, only a court appointee can sign for you. The court, not your family, will control how your assets are used to care for you. It can become expensive and time consuming, and it does not end automatically even after you recover.

At your death: If you die without an estate plan, your assets will be distributed according to the probate code. That means the beneficiary designations, their shares, and distribution time will be determined by the probate court. The distribution of your things would be a public process and involve quite a few third parties and court officials. Furthermore, if you and your spouse pass away at the same time (i.e., in a car accident), the court will appoint a guardian for your children without knowing whom you would have chosen.

Given the choice—and you do have the choice—wouldn’t you prefer these matters be handled privately by your loved ones, not by the courts? Wouldn’t you prefer to keep control of who receives  your things and when? And, if you have young children, wouldn’t you prefer to have a say in who will raise them if you can’t?

Contact Attorney Milda Goeriz today to explore your estate planning needs and options for the protection of your property. Call our office at 619-630-4765!

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LIVING TRUST ADVANTAGES – PART 2

Today we will continue to explore the living trust advantages and benefits. Part 1 of this post discussed such benefits as avoiding the probate proceedings, minimizing the emotional stress on the family, preventing conservatorship, and preserving privacy.

In addition, the living trust advantages include the following:

Centralized Management. The assets transferred to a living trust are all under one “roof” which provides for centralized management.

Protection of Dependents. Because a revocable living trust sets forth the terms for the distribution of your property and assets, you can choose to continue to keep the property in the trust even after your death to provide an ongoing source of funds for young children or dependents with special needs.

Reduce or Eliminate Estate Taxes. Although a living trust does not eliminate or reduce estate taxes in itself it can be constructed and funded in a way to ensure full use of the marital deduction and applicable credit for estate tax purposes.

Easy to Set Up and Maintain. Setting up a revocable living trust is relatively easy and usually involves only a one-time charge. Once the trust is set up and funded, it requires very little maintenance. Usually, you would only need to see an attorney if you desire to change the terms of the document (for example, disinherit someone, change the trustee, etc.)

Avoids the problems of joint ownership. Joint ownership will only avoid the probate process at the passing of the first joint owner (the asset will be subject to probate upon the second owner passes away) and will result in the loss of one spouse’s applicable credit amount. Also, if the joint owners pass away in a common disaster or accident such that it is impossible to determine which joint owner died first, two probate estates will need to be started (one for each owner). Lastly, joint ownership between a parent and child could result in gift tax liability and subject the asset to the claims of the child’s creditors. All of these problems are avoided by having a revocable living trust.

Effective prenuptial protection. If the trust is established before the marriage, the property placed in the trust will remain there and stay separate from the property accumulated during marriage.

Difficult to Contest. The procedure for contesting a trust is much more difficult than contesting a will. The complexity of the procedure may dissuade the angry beneficiary from challenging the terms of your trust.

Clearly, the living trust advantages are significant, and should be considered when designing every estate plan.

In the next post, we will discuss how does the living trust work, who are the parties, and what happens after the revocable trust is executed.

To be continued.

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WHAT IS A REVOCABLE LIVING TRUST?

 The Living Trust Series Part 1

 We all have at least a basic understanding as to the substance and meaning of a will. But the concept of a trust often sounds foreign, complicated, and confusing. This blog post series will attempt to resolve the mystery and explain the most important issues, such as

  • What is a Revocable Living Trust?
  • What are its advantages?
  • How does it work?
  • How is it administered and funded?

So without further ado, lets explore the essentials.

A Revocable Living Trust is a legal document often used as an integral component of an individual’s overall estate plan.

Sounds very similar to a will, doesn’t it? That’s is correct. An estate plan can be either will based or trust based, and individuals of all ages and wealth have used both estate planning vehicles for generations.

What does the document do? 

By executing the legal document, the person establishes a separate entity and transfers his or her assets into it while he or she is living. These assets may include a home, other real estate, stocks, bonds, securities, and the like. However, some assets, such as retirement plans and stocks of a professional corporation, cannot be transferred.

While LivinFamily Walkg 

The individual maintains complete authority and control over the assets while he or she is alive. Hence, the term “living”. The person’s powers over the property remain completely unchanged. The individual has the rights to all of the income earned by the assets, the right to the assets, right to add assets to the entity, and the right to amend, change, or terminate the trust at any time.

After DeathAfter death

Upon the individual’s passing, the trust enters the phase of administration and distribution. At this stage the document has a great deal of similarity to a will in that it sets forth how the property is to be administered and distributed among the person’s beneficiaries (i.e. spouse, children, grandchildren). Unlike a will, however, the property in the Revocable Living Trust does not go through the probate. The process, therefore, avoids the time, expense, and publicity associated with it. After the individual’s death, the property can be distributed to the named beneficiaries outright or it could continue to be held in trust for the named beneficiaries. Because no two families are the same, the terms and the dispositive schemes set forth by the trusts will differ from person to person based upon their specific estate planning needs, goals, and objectives.

To be continued in Part 2: Advantages of the Revocable Trust.

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