Revocable Living Trusts, Not a "One Size Fits All"

Is a Revocable Living Trust Right for You?

Revocable Living Trusts have become the basic building block of estate plans for people of all ages, personal backgrounds, and financial situations. But for some, a Revocable Living Trust may not be necessary to achieve their estate planning goals or may even be detrimental to achieving those goals.

What Are the Advantages of a Revocable Living Trust Over a Will?

Revocable Living Trusts have become popular because when compared with a Last Will and Testament, a Revocable Living Trust offers the following advantages:

  1. A Revocable 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 Revocable Living Trust provides instructions for your care and the management of your property if you become 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 your assets into a Revocable 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.

Why Shouldn’t You Use a Revocable Living Trust?

Although Revocable Living Trusts offer privacy protection, incapacity planning, and probate avoidance, they are not for everyone. For example, if your main concern is avoiding probate of your assets after you die, then you may be able to accomplish this goal without the use a Revocable Living Trust by using joint ownership, life estates, and payable on death or transfer on death accounts and deeds. However, those strategies aren’t a perfect fit for everyone.

In addition, if you are concerned about protecting your assets in case you need nursing home care, then an Irrevocable Living Trust, instead of a Revocable Living Trust, may be the best option for preserving your estate for the benefit of your family. The rules governing Irrevocable Living Trusts can be very complex, and you should only create an Irrevocable Living Trust after a thorough discussion with a qualified trust attorney.

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Do You Still Need a Revocable Living Trust?

While some estate planning attorneys advise their clients against using a Revocable Living Trust under any circumstance, others advise their clients to use one under every circumstance. Either approach fails to take into consideration the fact that Revocable Living Trusts are definitely not “one size fits all.” Instead, your family and financial situations must be carefully evaluated on an individual basis and the advantages and disadvantages of using a Revocable Living Trust must be weighed against your personal concerns and estate planning goals. In addition, these factors must be re-evaluated every few years since your family and financial situations, concerns, and goals will change over time.

If you have a Revocable Living Trust and it has been a few years since it has been reviewed, then I can help you determine if a Revocable Living Trust is still the right choice for you and your family.

Planning for the Future (Without a Crystal Ball)

Estate Tax Repeal Means No Need to Plan...Right?

Nothing could be further from the truth! Although there was a lot of tax-driven planning in the past, in recent years estate planning has largely focused on preserving family unity, protecting assets, ensuring privacy, and effectively passing along financial and emotional legacies.

Read More

5 Things Every New Parent Needs to Know About Wills

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As a new parent, you naturally want to ensure your new baby’s future in every way. For many new parents, infancy is a time for celebrating new life, and making a will is the last thing on their minds. For others, the process of bringing new life into the world sparks intense feelings of wanting control and needing organization. Regardless of where you fall on that spectrum, you might be struggling to figure out what steps you need to take to protect your family’s future should the unthinkable happen. Here are five key things every new parent should know about wills.

 

1. Naming a guardian could be the most important part of your will.

If you pass away while your child is a minor, the first issue to be addressed is who will assume responsibility for your child’s care. If you don’t name a guardian for your child in the will, the courts may decide this question for you, and the guardian might not be the person you would choose. Selecting a trusted guardian is in many ways more important at this stage than deciding about how to pass any assets you own.

2. Name an executor you trust.

To ensure your child does receive all that you have allocated when she comes of age, choose a trustworthy executor. Many people choose a family member, but it’s just as acceptable to appoint a trusted attorney to handle your estate. Typically, an attorney has no emotional attachment to the family, which might seem bad, but usually results in less potential conflict.

3. Named beneficiaries on your financial accounts may override the will.

Many accounts allow you to name a beneficiary. When you pass away, the funds go to the beneficiary named on the account, even if your will states otherwise. If you’re creating a will with your child in mind (or adding the child to an existing will), you should review your investment and bank accounts with your financial advisor to make sure there are no inconsistencies when naming beneficiaries. It’s also a good time to check retirement account and life insurance beneficiary designations with your financial advisor and your attorney.

4. A will is not always the right document for your goals.

When naming your child as a beneficiary, a will only goes into effect after you die. If your will leaves property outright to a minor child, the court will step in and hold the assets until your child turns 18. Most 18 year olds lack the maturity to handle even a modest estate, so we don’t recommend outright inheritance for minor children.

A trust, on the other hand, goes into effect when you create it and can provide structure to manage the assets you leave behind for the benefit of your child. An experienced estate planning attorney can advise you on the best option for your family and your circumstances.

5. In the absence of clearly stated intentions, the state steps in.

Think of a will, trust and other estate planning documents as an instruction manual for your executor and the courts to follow. You must be clear and consistent in your stated intentions regarding your child, as well as for others. If you’re not clear or if you don’t leave any instructions at all, the probate courts will step in and follow the government’s plan, which can lead to long delays and is probably not the plan you would have selected for your child and family.

Providing for your baby’s long-term welfare may start with just a simple will, but to be fully protected, you probably need more. That’s why it’s important to talk with a competent estate planning attorney to make sure you have the right plans in place to fulfill your goals. I’m here to help! Contact me today to talk about your options to protect your family.

Do I Need an Estate Plan?

When you hear the term “Estate Planning”, do you think:

  • “I don’t need an estate plan because I don’t have very much,”
  • “My wishes are simple, I can just jot down what I need,”
  • “I know someone who said they used a Will template off the Internet and said it was great,”
  • “Why should I care about estate planning since I’m going to be dead anyway?”  
  • Or perhaps you just want to avoid the topic altogether.

If you relate to any of these thoughts, you are not alone.

But why are these thoughts risky?

You do not have to own a large vista on the hills overlooking the Pacific Ocean to have an estate. An estate is simply a term to describe everything you own - your money, property, and personal belongings are all part of your estate. An Estate Plan helps you determine what will happen to these things once you are no longer able.

However, a complete Estate Plan goes far beyond dispersion of your assets and belongings.  An effective Estate Plan also includes areas such as caring for your family, making health care decisions, avoiding probate and estate taxes, protecting your assets, and addressing specific concerns for distributions.

Questions that may arise during a comprehensive Estate Planning meeting are:

Family

  • Who will care for your minor children? Is there anyone you do not want caring for your children?
  • Do you want the same person who is caring for your children in charge of your assets for your children or should you appoint a trustee?
  • How can you make sure your youngest child is provided for in the same manner as your oldest?
  • How can your special needs child or dependent be cared for?

Healthcare

  • Who should make healthcare decisions for you if you are unable?
  • What types of healthcare interventions do you want?

Estate Taxes and Probate

  • How can you avoid or minimize your estate taxes?
  • How can you avoid having your estate go through probate - which can be a time-consuming and costly process?

Asset Protection

  • What is the best way to ensure that your property doesn’t fall into the hands of creditors?
  • Is there a way to distribute assets to your beneficiaries over time instead of handing over a lump sum?
  • Who will manage your finances if you are unable?
  • Who will manage your small or family-owned business?

Distribution Concerns:

  • What are some different options for splitting your estate among your beneficiaries?
  • How can you take care of your spouse, but ensure that money also goes to your children?

Sitting down with a qualified Estate Planning attorney can help you answer these important questions and many more. In order to ensure full protection of your estate for your loved ones and yourself, you do not want to depend on a fill-in-the-blank template. Instead, you want to meet with someone who knows key questions to ask to ensure your plan provides you and your loved ones with the comfort and peace of mind that comes with knowing you have your affairs in order.

Please call or email this office to schedule your free 30 minute consultation to discuss ways to protect you and your family.

The Impossible Choice - Selecting a Guardian for your Children

You put so much thought into caring for your children - finding the best doctors, the healthiest foods, and the schools that best suit their personalities. But if you are like many parents with young children, you have not thought about what would happen if you were unable to care for your children. Who would step in and make sure your children are cared for, loved, and raised if you were unable to? Picking a guardian to care for your children if something were to happen to you is one of the toughest decisions you can make, but it is also one of the most important. So what are some factors to consider when selecting a guardian, and what happens if you do not have a guardian selected and a need arises?

Tips for selecting a guardian:

  • Emotional Stability: Perhaps the most important quality parents look for in a guardian for their children is the guardian’s capacity to love their children. Does the guardian have the time and energy to give your children what they need? Are there special circumstances in the guardian’s life that would make guardianship a larger burden than normal? Of course, becoming a guardian would be a major adjustment in anyone’s life, but ideally, once the dust settles, your children would be incorporated into the guardian’s immediate family as much as possible.

  • Willingness to Act as Guardian: It is imperative that you discuss with the guardian his/her willingness to act as guardian. Simply listing your choice in your will is not enough to ensure that your children will end up in the household you request. The guardian must also accept the appointment.

  • Values and Religion: Consider family members or friends who have a similar value system to you. Do you want your children raised with certain values, traditions, or religion? If so, seek out those people who already share these traits with your family. If there is no one who is a good match, you may also want to consider people who are open to your religious or value preferences, and would be willing to encourage your child in those areas.

  • Access to other Family Members: Location is another factor to consider. Is your choice of guardian near other family members with whom you would like your children to stay in close contact? Is travel a possibility for this guardian? Alternatively, if there are influences you would prefer your child to be kept from, would your choice of guardian respect your preference?

  • Financial Stability: Does your choice of guardian have the financial means to take on the responsibility of caring for other children? The assets from your estate may be able to provide financial support. This office is also happy to help you purchase a life insurance policy that would help cover expenses.

  • One Person versus a Couple: When choosing a guardian, many people like to choose a couple to act as co-guardians. While this is certainly understandable, and in many cases good for family dynamics, we have to think about what happens if the co-guardians should split up or one of the guardians passes away. Would you be comfortable with either co-guardian acting separately? If not, it might be best to only choose one person as the guardian instead of the couple as co-guardians. There are other alternatives available such as putting contingencies in place if certain events occur - please contact this office to discuss.

What happens if you do not select a guardian:

While it is common, and understandable, to struggle with the guardianship decision, it is vitally important that you do so. The truth of the matter is that if a guardian for your children is needed, and you have not made your preferences known in a legally-binding manner, the decision will be left to the courts. This means that any interested person may petition the court for guardianship. The judge will ultimately make the decision based upon what is in the best interest for your children.

Conclusion

There is rarely a perfect choice for a guardian for your children, and it is very unlikely that the guardian will need to step in. Keep in mind that changes can be made to your guardianship selection if circumstances change in the future. Once you have made this important decision, hopefully you will have the peace of mind knowing that your children will be well cared for in the unlikely event you are unable to do so.