October 6, 2016

What Is Your Estate Planning Attorney Talking About?

Estate Planning Attorneys talk about a lot of different legal documents. You need to know what those documents are.

When you visit with an estate planning attorney, the attorney is likely to mention the names of several different legal documents. If you want to understand what the attorney is talking about, then you will need to know what those documents are.

Most attorneys would be happy for you to ask if you do not know. Answering questions is what the attorney is there for. However, if you are not comfortable asking basic questions, then you should learn some basics beforehand.

Recently, the Ventura County Star published a list of basic estate planning documents and what they do in "Get to know estate planning documents." The list includes:

Advance Directive – Tells doctors and other health care professionals what procedures not to perform if you are terminally ill and have no chance of recovery.
Asset Inventory – A list of all of your assets to let your estate executor know what you have after you pass away.
Beneficiary designations – Life insurance, retirement accounts, and other financial accounts you designate to go to a specific person after you pass away.
Power of Attorney – Allows for someone else to handle your finances if you are incapacitated.
Power of Attorney for health care – Allows for someone else to make medical decisions for you if you are incapacitated.
Record of Locations – A list of where your heirs can find all the important financial and legal documents after you pass away.
Trust agreement – A method of passing assets to others while having those assets maintained by a third person.
Will – The most common estate planning document that says how assets should be distributed after you pass away via probate.

A qualified estate planning attorney can help you decide the best legal documents to use for your unique circumstances.

Reference: Ventura County Star (Sept. 17, 2016) "Get to know estate planning documents."

October 5, 2016

Trusts – What Different Types of Trusts Exist?

Learning about trusts can sometimes be difficult as there are several different types of trusts that you can get that are designed to do different things.

When attorneys talk about trusts they often end up confusing laypersons with all of the legal jargon. There are many different types of trusts out there and each type has its own terminology. This legalese can be difficult for the uninitiated to understand.

This is a problem for people who would like to set up a trust. They need to know what it is their attorneys are talking about so they can choose the right type of trust.

Recently, the Motley Fool discussed some common trust types in "Navigating the World of Trust Funds: Your Quick Guide," including:

Revocable Living Trusts – These are trusts the settlor (the person who creates the trust) can easily dissolve. If circumstances change, assets in the trust can be removed and a different trust can be created. These trusts avoid probate. They do not reduce taxes.
Irrevocable Trusts – These trusts cannot be revoked. They often have estate tax benefits, while revocable trusts don't.
Credit Shelter Trusts – While not as useful as they used to be, these trusts still offer a good way to avoid some estate taxes. They are particularly useful in Maryland and DC, which currently have state estate taxes for estates greater than $2million and $1 million. Assets in the trust are held for the benefit of children normally, but a spouse can still use those assets while he or she is alive. The assets are not counted as part of the spouse's estate for tax purposes.
Generation-skipping Trusts – These trusts are created for the benefit of grandchildren instead of children. This is normally done for estate tax purposes, but the trusts need to be set up by experts to avoid other tax issues.
Qualified Personal Residence Trusts – These very specific trusts are a way to pass a home on to heirs while minimizing estate and gift taxes on the home.

When it comes to deciding which trust “flavor,” if any, is appropriate for you, be sure to contact a qualified estate planning attorney.

Reference: Motley Fool (Sept. 18, 2016) "Navigating the World of Trust Funds: Your Quick Guide."

Suggested Key Words: Estate Planning, Trusts

October 4, 2016

Rise of the Super Rich

More and more Americans are amassing large fortunes. That means that more and more Americans are concerned about how passing that wealth on to their children could impact their children's lives.

In "Penta Millionaires: The New Rising Class" Barron's reports that the number of American families with wealth is growing and diversifying. More families have wealth of over $5 million than ever before. Many more of these wealthy are female and younger than ever before.

What many of the new wealthy are discovering is the old truth that having money in and of itself does not necessarily translate into a worry-free life. Instead, being wealthy comes with its own set of worries about maintaining that wealth and how best to pass it on to the next generation.

Wealthy people, especially those who have earned the wealth themselves, often fear that if they leave it to their children, it could ruin their children's lives.

The children might inherit the wealth and decide they do not need to work hard at their own careers and they can just live off of their parents' money. Some parents also fear their children will waste their inheritances on frivolous pursuits and possessions.

There are several ways to help alleviate these concerns about the effect of large inheritances on children.

One way is to make sure the children receive a proper education in how to handle finances. Another complimentary way is through proper estate planning.

Inheritances can be structured to ensure that assets are not squandered and that the children who inherit wealth continue to pursue their own careers.

Contact a qualified estate planning attorney about how to bless your heirs instead of curse them with your wealth. Profit Law Firm can provide information on how to pass wealth in a manner that encourages children to handle it responsibly.

Reference: Barron's (Sept. 17, 2016) "Penta Millionaires: The New Rising Class"

October 3, 2016

Alleviating End-of-Life Regrets

Everyone regrets something at the end of a long life, even if it is just not telling friends and family how much they meant to them. A letter-writing project seeks to help people alleviate some of those regrets.

Doctors and other professionals who care for the elderly who are approaching the end of their lives often report that their patients are full of regrets. They regret everything from not mending a broken relationship to not saying thank you to those who helped them and not telling people how much they love them.

This should not be surprising as there are many things people wish they had done differently during their lives. One of the tragic things for those near the end of life, however, is that they often do not have the time or ability to tell loved ones what they regret not saying sooner.

The New York Times reports on a new project designed to help with that problem in "Writing a 'Last Letter' When You're Healthy."

The Stanford Friends and Family Letter Project is a relatively simple idea.

It offers a free letter template with seven questions for people to answer. The questions include "Who do you wish to thank?" and "What do you wish to thank them for?"

This simple idea provides an easier way for people to order their thoughts and let people know how they feel.

One thing this project does not address is estate planning.

Having a properly planned estate is one way to lessen end-of-life regrets as it gives comfort in knowing that family members left behind will be taken care of. If you do not have an estate plan, then contact an estate planning attorney about how to get one.

Reference: New York Times (Sept. 7, 2016) "Writing a 'Last Letter' When You're Healthy."

September 30, 2016

What Happens When a Will is Lost In Maryland?

Some states require that an original will be submitted to probate or restrict the circumstances when a copy can be produced instead. What happens when the original will has been lost? Maryland and the District of Columbia require originals.

It is always a good idea to keep the original copy of your will safe and secure. In some states the original has to be produced for the will to be used in probate. In other states the original might not always be necessary, but the circumstances when a copy of the will can be used are restricted.

For this reason, many people choose to have their lawyers keep the original copy of the will. When they pass away, the attorneys can then produce the original will.

In a recent Napa Valley Register column entitled "Is lost will still valid?," a couple wrote in to ask what would happen to their will. They left it with the attorney who drafted it for them. The attorney, however, had retired and the couple had no idea what happened to their will or how to find the attorney to ask.

While the advice given was specific to California, it is generally good advice anywhere in the U.S. in this type of situation.

Attorneys are required to keep their files even after they retire. The normal practice is to have another attorney take care of the client files and to inform the state bar association of the arrangement.

Therefore, this couple should call the bar association and make inquiries. If that does not produce the whereabouts of the will, the couple can always get a new will.

Reference: Napa Valley Register (Sept. 8, 2016) "Is lost will still valid?".

September 29, 2016October 25, 2023

Not the Best Advice

Sometimes people who have good intentions can give bad advice. An illustration of this comes from a recent Dear Abby column that advised a woman to tell her mother to set up a trust.

The columnist known as Dear Abby has been giving advice for decades to newspaper readers who write in with problems. To her loyal readers she is seen as a wise woman who can always be counted on to assess a situation, cut to the chase and dispense good advice.

However, a recent column in which she advises a woman to tell her mother to get a trust illustrates why some types of advice are better left to lawyers.

The column was published in the Chicago Sun Times as “Dear Abby: He wants a night when wife dresses sexy.”

A woman wrote in to say that her mother has given her older brother an allowance for many years. The brother lives in another country because he is a fugitive from the law with outstanding warrants. The mother fears that without the money the brother will become homeless and not be able to support himself. Because of this the mother expects the daughter to continue giving money to her brother after the mother passes away.

Abby suggests that the woman tell her mother to set up a trust for the brother so that he will be taken care of and it will not be the letter writer’s problem.

At first glance, that advice might seem reasonable. A trust would be a great way for a mother to provide for a son who needs money but is not able to take care of himself.

Under ordinary circumstances a trust lawyer would be happy to set up this type of trust. However, this is not an ordinary circumstance. Since the brother is a fugitive, anyone who knowingly helps him could face legal consequences. The better advice may have been to consult an attorney.

Reference: Chicago Sun Times (Sept. 12, 2016) “Dear Abby: He wants a night when wife dresses sexy.”

September 28, 2016March 27, 2024

What is a Simple Will? When do you need more?

The term “simple will” is often used to describe a certain standard type of will that many people get. Before getting one for yourself, you need to understand what it means.

Estate planning attorneys are used to clients saying they just need to get a simple will. Many people are told by others, long before they visit an estate planning attorney, that a simple will is what they need to get. However, what a client might mean by a simple will is not necessarily what the attorney thinks it is.

Estate planning attorneys use the term to normally mean a particular type of will that has standard features.

Recently, the Courier Journal explained what those features are in “Thank You and Simple Wills.”

A simple will normally refers to a relatively short document the primary feature of which is directing that all of the testator’s assets should go to a spouse. In the event the spouse has predeceased, then a simple will almost always directs that all assets be shared between the testator’s children in equal shares. A simple will might also include basic information about who should be the guardian of any minor children the testator has.

That is normally all that a simple will contains, but there might be a few more basic provisions in some circumstances.

It should be obvious that a simple will is not the appropriate estate planning document for everyone. Particularly in Maryland and DC, which are among the minority of states with either a state estate tax or an inheritance tax a simple will does not reduce tax liability or defer taxes. In the District of Columbia which has an estate tax of $1 million and in Maryland which has BOTH an estate tax o $2 million and an inheritance, an individual may need more protection that simple will provides. Middleclass homeowners, for instance, based on the value of their house and insurane or IRAs, often exceed these thresholds and need more complex wills and/or trusts to reduce state tax liability. Consult Profit Law Firm, for a consultation to see if a simple will provides enough protection for your heirs.

Essentially, before telling an estate planning attorney you need a simple will, tell the attorney what you hope to accomplish with your estate plan. The attorney can then help direct you to the proper legal instrument for your needs.

Reference: Courier Journal (Sept. 13, 2016) “Thank You and Simple Wills.”

September 27, 2016

Do You Need a Revocable Living Trust in Maryland?

Contrary to popular belief estate planning is not one-size fits all and not everyone needs a revocable living trust. However, they are a good option for many people.

When you start asking around for estate planning advice, you will probably find the first thing many non-experts say about it is that you need to get a revocable living trust. They are extremely popular instruments and articles abound on the Internet extolling their virtues. They are so popular that a common belief is that everyone should get one.

That noted, they do have drawbacks and these drawbacks might make some people decide to go another route. Contrary to popular belief, revocable living trusts do not offer tax protection. Different trust and estate planning tools can be used to reduce tax liability. Another drawback, is that revocable living trust give take assets out of probate, and sometimes you lose valuable benefits found in probate. For example, in Maryland, creditos can only come after assets in the estate for six months after death, versus the usual three year period. Placing assets in revocable trusts take them out of probate and give them longer exposure to unwarranted creditor claims.

Specifically, the Motley Fool looked at the benefits and drawbacks of revocable living trusts in "Is a Revocable Living Trust Right for You?"

The biggest benefit of a revocable living trust is that your primary assets, as long as they are transferred into the trust, do not have to go through probate when you pass away. As probate can be an expensive and time-consuming experience, this can make handling your estate much easier for your heirs. In Maryland, probate is relatively inexpensive and less lenghty, so some people may find it to their benefit to be in probate. Probate is also normally a public process, but if you have a trust you can keep your estate details private. Probate is public in Maryland and DC. Finally, should you become incapacitated a successor trustee can take over your finances instead of having to go through court to get a guardian.

On the other hand, trusts can be more expensive to set up than other estate planning instruments, but they might save your estate money in the long run depending on probate costs. Transferring assets into your trust can also be very time-consuming depending on what you own. Having a revocable living trust also does not mean you do not need a will. You will still need a simple will to deal with anything left out of the trust. If you want a consultation on whether revocable living trust is right for you, contact the Profit Law Firm.

Reference: Motley Fool (Sept. 10, 2016) "Is a Revocable Living Trust Right for You?"

September 26, 2016February 15, 2024

Basic Estate Planning Mistakes to Avoid

If you would like to make sure that your estate goes to the people you want it to go to, then it is important to avoid making some basic estate planning mistakes.

It is impossible to avoid making mistakes in every aspect of your life. No one can always be perfect at everything. Estate planning is no different.

CNBC recently wrote about some of the common estate planning mistakes we can avoid in “Don’t drop the ball when planning your estate.”

They include:

Many people do not make a will. Without a will, then you cannot decide who gets your property. Every estate plan should have a will of some sort.
After making a will some people never update it. This is a mistake as a will should be changed whenever there is a significant change in circumstances to make sure the will reflects the new circumstances.
It is a mistake to not consider how your heirs will handle their inheritances and whether they are capable of being responsible with anything you leave them.
It is a mistake to not consider getting a trust, especially if your heirs have the potential to be irresponsible. A trustee can oversee the inheritance and make sure it is used appropriately.
Finally, it is a mistake to not think carefully about who to appoint as an executor of a will or as a trustee.

If you realize that you need a will or trust, call Profit Law Firm for a consultation.

Reference: CNBC (Sept. 13, 2016) “Don’t drop the ball when planning your estate.”

September 23, 2016November 26, 2024

Librarian Leaves Millions to University

Every once in a while a story comes out about a person who lived frugally and managed to amass a fortune. The latest example is a librarian from New Hampshire.

Robert Morin loved books. It is believed that with only a few exceptions he once read every book published in the U.S. between 1930 and 1940 in chronological order. Thus, it was probably fitting that when he graduated from the University of New Hampshire in 1963 he went to work in the school’s library.

Librarians do not normally make a lot of money, so it came as a surprise to everyone when Morin left the university his entire fortune when he passed away, which was approximately $4 million.

Apparently, Morin lived simply and invested well. He stipulated that $100,000 should go to the library where he worked, but the university can use the rest for other purposes.

My Central Oregon reported this story in “Librarian Quietly Saved $4 Million, Left it to School Where He Worked.”

Similar stories come up every few years. For example, grade school teachers have been known to save and leave millions to charity. In another recent case, a janitor left a small fortune to the school where he worked.

What this shows is that anyone who has the desire to do so can make a fortune by living simply and investing money well.

Of course, not everyone wants to live that way. Those who do, however, should not neglect to spend some of their money visiting with an estate planning attorney so they can makes sure the money goes where they want after they pass away. It does not make sense to save all the money only to have it go to someone you do not want to have it.

Reference: My Central Oregon (Sept. 4, 2016) “Librarian Quietly Saved $4 Million, Left it to School Where He Worked.”

Building Legacies that Last Estate Planning and Elder Law

Author: Profit Law Firm