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Tag: Wills and Trusts Greenbelt

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Dodging an Unpopular Tax Provision

MP900442233The recently passed federal tax overhaul limits deductions for state and local taxes to $10,000.  It has not been popular with those affected. Estate planning attorneys might have found a way around it.

The new tax laws that were passed in December of 2017 have been controversial. Some people are very happy with the changes.  However, most people have found something they do not like about them. One of the more controversial changes was that the itemized deduction for state and local taxes was limited to $10,000.

People who own expensive property in high tax states are not happy that as it will increase their taxes, in many cases. Initially, some state governments tried to figure out a way around the limit for their citizens, but the IRS shot most of those down. Some estate planning attorneys might have found a solution though, as Bloomberg reports in "How the Rich Can Dodge Trump's Property Tax Hike."

The idea is to first create an LLC in a non-tax state such as Delaware or Alaska. Real estate ownership is then transferred to the LLC. After that, several non-grantor trusts are created. Ownership of the LLC is then divided up and transferred to the new trusts. When tax time comes around, each non-grantor trust can take a $10,000 deduction for any property taxes that were paid by the LLC. Effectively, the new deduction limit can be rendered moot.  Ask your local estate planning attorney about this practice.

The IRS could issue a new regulation against this practice.  However, estate planners think it will work.

Reference: Bloomberg (June 15, 2018) "How the Rich Can Dodge Trump's Property Tax Hike."

 

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Funding a Trust

Irish-handsAfter creating a trust, you need to fund it. That does not have to be a difficult process.

One of the many problems of “discount” trusts, either from a trust service or an online document service, is that they never get around to funding the trust. When the settlor passes away, the trust does not work as intended, because there are no assets in it to be distributed according to the terms of the trust. The time and money spent creating the trust were all wasted.

Trusts must be funded. That does not mean just putting money in them. It means transferring the title of property to the trust, as the Times Herald-Record discusses in “How to transfer assets to a trust.”

Transferring title of property differs for different types of assets. However, it does not need to be difficult for any asset type. It is mostly a matter of filling out the right paperwork and getting that paperwork to the proper authority. For example, when you purchased your home, the title was transferred to you and registered with your local Register of Deeds. You just need to do the same thing for the trust this time.

There is someone who can help you make sure that your trust is properly funded. That is an estate planning attorney who knows how to transfer title in different asset types. This is one reason why it is better to hire an attorney to create a trust, instead of using a cheaper service. It helps make sure that your trust gets funded and will be effective when it is needed.

Reference: Times Herald-Record (May 31, 2018) “How to transfer assets to a trust.” 

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Your Executor Is Important

One of the simplest things that you can do to help prevent your estate from facing difficulties, is to make the right choice about who your executor should be. MP900309139

People who get wills, normally put a lot of thought into how they would like their property to be distributed after they pass away. It is very important to them, that their wishes are carried out and everything goes to the appropriate heirs. However, often relatively little thought is put into who should make sure it all happens.

The person in charge is the executor. Instead of thinking about whether the person they are choosing is the right person, many people just pick a close friend or relative. This can be a very big mistake, if the person does not know what they are doing, as Forbes points out in "Choosing an Executor for Your Estate."

The executor of your estate will have a lot of work to do. There are often important tax decisions that need to be made quickly. The executor needs to determine what assets you have at the time you pass away.  However, they cannot just give those assets to the people you want to have them.

First, they need to go to probate court and be officially appointed to administer the estate. They will then need to determine, if you had any debt when you passed away. That debt normally needs to be paid out of your assets, before any property can be distributed.

Your executor needs to be someone who not only has the time to serve in the capacity, but also can handle administrative and financial tasks well. Put some thought into this important decision.

Reference: Forbes (May 16, 2018) "Choosing an Executor for Your Estate."

 

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Use a Trust to Avoid Disputes

If you know that your family is likely to fight over your estate, you can limit the fight greatly, by using a trust instead of a will. Couple on sofa angry with each other

Many family fights over estates are predictable. People know when their family members do not get along and are likely to fight over their inheritances. They know that “unequal” inheritances are more likely to trigger trouble, too.

When it comes to estate planning, it is important to understand that those fights quite often result in protracted court cases over the estate. This is especially true, if the main instrument used to distribute the estate is a will that has to go through probate by its very legal nature. Some of this mayhem may be avoided by using a trust instead as the Times Herald-Record discusses in “Trusts avoid inheritance disputes among family members.”

Since trusts do not go through probate, there is no open probate case for family members to easily file a claim. That in and of itself makes a trust much less likely to lead to litigation. It is also easier to use the trust document itself to create language making family fights less likely. Even if there are fights, an independent trustee can often referee those fights and thus avoid any litigation.

It is nearly impossible to completely guarantee that no family fight will ever occur over an estate. An estate planning attorney can help make those fights much less likely, by creating a good trust.

Reference: Times Herald-Record (April 5, 2018) “Trusts avoid inheritance disputes among family members.”

 

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Harper Lee’s Will Unveiled

Harper Lee valued her privacy while she was alive. Her will suggests that she also values it in death. MP900398819[1]

After writing To Kill a Mockingbird, Harper Lee mostly kept out of the public eye. She did not release another book for decades and made very few appearances.

She died in 2016. Journalists and literary historians have been attempting to piece together details of the author's life, but they have met with little success. She was a private person and those who knew her have not been willing to talk very much.

Lee’s will has been unsealed but it does not reveal very much either, as Al.com reports in "Harper Lee's will is unsealed but questions about the legend of American literature remain."

Lee's will directs that all of her assets, including literary property, be put into a previously created trust. Details about the trust are not publicly known. There does not appear to be a way to make them public. The trust's beneficiaries and trustee are not known.

What Lee created is known as a pour-over will. It is a simple way to have assets transferred to a trust, after someone passes away. Since trusts do not have to go through probate and are private, this is a great method to use for people who do not want the details of their estates known to the public, as Lee apparently did not.

Reference: Al.com (Feb. 27, 2018) "Harper Lee's will is unsealed but questions about the legend of American literature remain."

Suggested Key Words: Wills, Trusts