Why Shouldn't I Do My Own Estate Planning?  

​Estate Planning involves skills, knowledge, and judgment ac­quired only through professional training and experi­ence.

Standardized Wills and Trusts, such as those produced using kits or forms, may not be drafted sufficiently to comply with Pennsylvania laws or the laws of any other State.

A Will or Trust that is not properly drafted could result in your Estate being distributed in a manner contrary to your wishes. Your family may also incur unnecessary legal costs should the Will or Trust be challenged.

Remember ...

The only way to be certain that your specific needs and desires in Estate Planning are being met is by consulting a knowledgeable lawyer or a lawyer referred to you by a trusted source. 

Why do I need an Estate Plan?

A well thought out Estate Plan ensures that all your Plans for the management and distribution of your assets, the needs of your spouse, your medical care in the event of incapacitation, the succession of a family-owned business, and/or the guardianship for minor children or children with special needs will be carried out according to your wishes and not left to the State or others to decide.

What happens if I do not have an Estate Plan?

If you die without a Will, you are considered to have died Intestate. If that occurs, your Estate will be under the control of the Court and your assets will be distributed according to State Law. These statutes almost never match how you would have divided your assets among your family members. Documents to appoint an Administrator of your Estate must be filed with the Probate Court by your family and the Court's approval must be obtained. The Court will appoint Guardians for your Minor Children and Children with Special Needs. If you become incapacitated, the Probate Court may appoint a Conservator or Guardian to make decisions about your medical care if you are unable to do so. If you own a business, the Court may also appoint an Administrator to wind up your business affairs. Without a valid Plan, all decisions about your Estate will have to be approved through the Probate Court system.

What things should I consider before I begin?

Who will be the Beneficiaries of your Estate?

How you want your Estate to be distributed at your death?

Who will be the Executor of your Last Will?

Who will be the Successor Trustee after you if you draft a Trust?

Who should be the Guardian for your Minor Children or Children with Special Needs?

Who will make financial decisions for you if you cannot make them yourself?

Who will make health care decisions for you if you cannot make them yourself?

How you want your end of life medical care handled?

Arrangements should be made for the succession of a family owned business,

If you want to make any anatomical gifts at your death?

How you want your Estate to be distributed at your death?

Why Do I Need a Will?

A Will is a legal document that helps you put your affairs in order when you die. Every adult should have a Will to outline his or her intentions regard­ing home, finances, and other assets and possessions, as well as, any business affairs upon death. Your Will should identify who will handle your Estate, how your assets will be divided, how your business affairs will be settled, the succession of a family-owned business, and who will serve as guardian for your minor children. If you die without a Will, your money and possessions will be distributed according to a formula fixed by law, which means that your spouse may have to share assets with other family members not of your choos­ing. It also could create lengthy delays in the final distribution of assets.

Additionally, dying without a Will could result in your minor children being placed in the care of a court-appointed guardian rather than with people you would have chosen to care for them.

What Does a Will Do?

A Will provides for the distribution of certain property owned by you at the time of your death, and generally, you may dispose of such property in any manner you choose. Your right to dispose of property as you choose, however, may be subject to forced heirship laws of most states that prevent you from disinheriting a spouse and, in some cases, children. For example, many states have spousal rights of election laws that permit a spouse to claim a certain interest in your Estate regardless of what your Will (or other documents addressing the disposition of your property) provides.

Your Will does not govern the disposition of your property that is controlled by beneficiary designations or by joint title, and such property passes outside your Probate Estate. Such assets may include property titled in joint names with rights of survivorship, payable on death accounts, life insurance, retirement plans and accounts, and employee death benefits. These assets pass automatically at death to another person, and your Will is not applicable to them unless they are payable to your Estate by the terms of the beneficiary designations associated with them.

This is why reviewing beneficiary designations, in addition to preparing a Will, is a critical part of the Estate Planning process. It is important to note that whether property is part of your Probate Estate has nothing to do with whether property is part of your Taxable Estate for Estate Tax purposes.

Wills can be of various degrees of complexity and can be utilized to achieve a wide range of family and tax objectives.

If a Will provides for the outright distribution of assets, it is sometimes characterized as a Simple Will.

If the Will creates one or more Trusts upon your death, the Will is often called a Testamentary Trust Will.

Alternatively, the Will may leave probate assets to a preexisting Inter Vivos Trust (created during your lifetime), in which case the Will is called a Pour-Over Will.

Such preexisting Inter Vivos Trusts are often referred to as Revocable Living Trusts. The use of such Trusts, or those created by a Will, is to ensure, among a variety of factors, continued property management, the protection of an heir with a disability or an heir from his or her own irresponsibility, the succession of a family-owned business, creditor protection for the surviving family members, provisions for charities, and the minimization of taxes.

Aside from providing for the intended disposition of your property upon your death, a number of other important objectives may be accomplished in your Will.

  • You may designate a guardian for your minor child or children if you are the surviving parent and thereby minimize court involvement in the care of your child.
  • Also, by the judicious use of a Trust and the appointment of a Trustee to manage the assets funding that Trust for the support of your children, you may eliminate the need for bonds (money posted to secure a Trustee's properly carrying out the Trustee's responsibilities), as well as, avoid supervision by the Court of the minor children's inherited assets.
  • You may designate an Executor (personal representative) of your Estate and eliminate their need for a bond. In some states, the designation of an independent Executor, or the waiver of otherwise applicable State Statutes, will eliminate the need for court supervision of the settlement of your Estate.
  • You may choose to provide for persons whom the State's Intestacy Laws would not otherwise benefit, such as stepchildren, godchildren, friends, or charities.
  • If you are acting as the Custodian of Assets of a child or grandchild under the Uniform Gift (or Transfers) to Minors Act (often referred to by their acronyms, UGMA or UTMA), you may designate your Successor Custodian and avoid the expense of a court appointment.

How Do I Execute (sign) a Will?

Wills must be signed in the presence of witnesses and certain formalities must be followed or the Will may be invalid. In many states, a Will that is formally executed in front of witnesses with all signatures notarized is deemed to be “self-proving” and may be admitted to Probate without the testimony of witnesses or other additional proof.

What If I Change My Mind About the Contents of My Will?

In Pennsylvania, a Will is not filed (or probated) until after a person dies. As a result, you can change or update your Will at any time throughout your life, as circumstances require.

Amendment or Codicil:

A later amendment to a Will is called a codicil and must be signed with the same formalities. Be cautious in using a codicil because, if there are ambiguities between its provisions and the prior Will it amends, problems can ensue.

What Does a Will Not Do?

A Will does not govern the transfer of certain types of assets, called non-probate property, which by operation of law (title) or contract (such as a beneficiary designation) pass to someone other than your estate on your death. For example, real estate and other assets owned with rights of survivorship pass automatically to the surviving owner. Likewise, an IRA or insurance policy payable to a named beneficiary passes to that named beneficiary regardless of your Will.

Many of these problems also are applicable to institutional revocable Trusts and "pay on death" forms of ownership of bank, broker, and mutual fund accounts and savings bonds. Effective planning requires knowledge of the consequences of each property interest and technique.

In many instances, people prepare Wills believing that the Will governs who Will inherit their assets when in fact, the title (ownership) of various accounts or real property, for example, as joint tenants, or beneficiary designations for IRAs, life insurance, and certain other assets control the distribution of most or even all assets. This is why merely addressing your Will is rarely sufficient to accomplish your goals.

What Is Probate?

The Probate or Estate Administration Process begins and takes place when someone dies owning assets in his or her name alone with or without a Will. At the person's death, an Estate must be started by a Personal Representative to handle the Decedent's assets and settle his or her affairs. The Personal Representative is called an Executor if appointed in the Decedent's Will. If the Decedent has not designated an Execu­tor in a Will, the Court will appoint an “Administrator,” which can be an individual or corporation such as a bank or trust company. The Executor or Administra­tor is the only person or entity legally authorized to manage the assets of the Estate and matters related to the administration of the of Estate.

Why Is There a Probate Process?

Probate is a process required by State Law. The Probate Process in Pennsylvania is an efficient way to protect beneficiaries and creditors and to assure proper distribution of Estate assets. Assets held in a Trust are governed by the terms of the Trust rather than the Decedent's Will, and pass outside the Pro­bate Process. Even if assets are not subject to Probate, however, they may still be subject to all of the same Estate Taxes as Probate assets.

What Are the Costs of Probate?

In Pennsylvania, the cost of Probate includes filing fees for opening the Estate, advertising the Estate, filing an inventory of Estate assets, and other papers to complete the administration process. Legal fees are paid to the attorney handling the Estate work, which may include the preparation of various death and income tax returns. Obtaining appropriate legal advice about the administration of the Estate can help contain costs and taxes. We can walk you through the process and assist you in aspects of Probate.

Is Probate a Lengthy Process?

In Pennsylvania, Probate need not, and normally does not, take long in comparison with some other States. Executors or Administrators are accorded broad powers to accomplish the Administration of Estates in a timely manner. They are empowered to handle most details without seeking Court approval for each and every transaction, such as the liquidation of assets and the paying of debts and expenses.

What Is a Trust?

A Trust is a legal entity to which your assets (bank accounts, securities, house, etc.) can be trans­ferred for management by a Trustee. Trusts can be created while you are living to manage your assets while you are alive or to help your heirs manage their inheritance after your death. There are a number of types of Trusts, each with its own set of benefits. As such, Trusts can be complicated, so it is important that you contact a lawyer to make sure that you un­derstand all of the issues about trusts.

Trusts can provide incredible flexibility for the ownership of certain assets, thereby enabling you and your heirs to achieve a number of significant personal goals that cannot be achieved otherwise. The term Trust describes the holding of property by a Trustee, which may be one or more persons or a corporate Trust Company or Bank, in accordance with the provisions of a contract, the written Trust instrument, for the benefit of one or more persons called Beneficiaries.

Note: The Trustee is the legal owner of the Trust property, and the beneficiaries are the equitable owners of the Trust property. A person may be both a Trustee and a Beneficiary of the same Trust.

If you create a Trust, you, as the Trustmaker, are described as the Trust's Grantor or Settlor.

A Trust created by a Will is called a Testamentary Trust, and the Trust provisions for such a Trust are contained in your Will.

A Trust created during your lifetime is called a Living Trust or an Inter Vivos Trust, and the Trust provisions are contained in the Trust agreement or declaration. The provisions of a Living Trust or Inter Vivos Trust (rather than your Will or state law default rules) usually determine what happens to the property in the Trust upon your death.

A Trust created during your lifetime may be revocable, which means it may be revoked or changed by the Trustmaker/Settlor, or irrevocable, which means it cannot be revoked or changed by the Trustmaker/Settlor. Either type of Trust may be designed to accomplish the purposes of property management, assistance to the Trustmaker/Settlor in the event of physical or mental incapacity, and disposition of property after the death of the Trustmaker/Settlor of the Trust with the least involvement possible by the probate court.

What's the difference between having a "Will" and a "Living Trust?"

A last Will is a written document that states who you wish to be the guardians for your Minor Children or Children with Special Needs, and how you would like your assets distributed at your death. The last Will names an Executor to facilitate the management of your Will during the Probate process.

Trusts are a legal construct that allow you to create a separate legal entity to hold your assets. A Trustee is named who manages the assets for the benefit of you and your Beneficiaries. Revocable Living Trusts are created and funded during your lifetime and you can name yourself as Trustee to maintain control of the assets until your death or incapacity. A Testamentary Trust is created after your death by a provision in your Will. Trusts are very flexible and there are many different types. The type of Trust used is dependent on your specific goals and circumstances.

A Living Trust offers protection should you become incapacitated by allowing your Successor Trustee to manage your assets without interruption. Please note that even with a Living Trust you should still have a Will known as a "Pour-Over" Will. These Wills make sure that any assets, which may not be in your Living Trust at the time of your death, "pour-over" into the Trust. Your Trust Package will include all of the necessary Estate Planning documents including a "Pour-Over Will."

How do I know whether I need a "Will" or a "Living Trust?"

After you complete the online interview your information will be reviewed by an attorney. Together, we will discuss the information and decide the best course of action and which documents best fit your individual circumstances.

Are Trusts only for the wealthy?

Many young parents with limited assets choose to create Trusts either during life or in their Wills for the benefit of their children in case both parents die before all their children have reached an age deemed by the parents to indicate sufficient maturity to handle property (which often is older than the age of majority under state law).

Trusts permit the Trust assets to be held as a single undivided fund to be used for the support and education of minor children according to their respective needs, with an eventual division of the Trust among the children when the youngest has reached a specified age. This type of arrangement has an obvious advantage over an inflexible division of property among children of different ages without regard to their level of maturity or individual needs at the time of such distribution.

What type of Living Trust do we need?

There are a number of different Trust types for a married couple; all of which are typified by the result after the first death. The factors which go into determining the correct type of Trust are the size of the Estate, the Tax Laws, the underlying ownership of the Trust assets, and the comfort level the couple has with the degree of control the Survivor should have over the Trust. Examples include, but are not limited to, the following types of Trusts:

A Revocable Living Trust is one that can be changed while the Trustmaker is still living. An irrevocable Trust is one that can't be changed at all once it is made.

An Irrevocable Trust is one that cannot be altered, changed, modified, or revoked after its creation. Once a property is transferred to an Irrevocable Trust, no one, including the Trustmaker, can take the property out of the Trust.

An Irrevocable Life Insurance Trust (ILIT) is useful when you leave behind illiquid assets and will let you use your life insurance to pay certain estate costs in exchange for surrendering the ownership rights to it.

An Asset Protection Trust is one that is formed to provide protection against claims from future creditors. Generally, these are irrevocable for a specified amount of time. In some cases, these Trusts are set up outside of the United States. This type of Trust allows a spouse to pass on assets to his or her spouse. The amount of the federal estate tax imposed when the second spouse dies is limited when these Trusts are used.

A Spendthrift Trust takes away a beneficiary's right to pledge away or sell their portion of a Trust. The assets in this Trust are protected from the creditors of the beneficiary.

A Special Needs Trust is established for a person with “special needs” who receives government benefits so as not to disqualify the Beneficiary from such government benefits. This is completely legal and permitted under the Social Security rules provided that the disabled beneficiary cannot control the amount or the frequency of Trust distributions and cannot revoke the Trust. Parents of a disabled child can establish a Special Needs Trust as part of their general estate plan and not worry that their child will be prevented from receiving benefits when they are not there to care for the child.

A Constructive Trust is established by a court based on certain facts and circumstances. It is sometimes called an Implied Trust.

A Charitable Trust is one that benefits a particular charity upon the death of the Trustmaker. In some cases, this type of Trust can benefit the public.

A Charitable Remainder Unitrust and a Charitable Remainder Annuity Trust share many common advantages with two important distinctions:

A Charitable Remainder Unitrust pays the beneficiary a fixed percentage of the principal of the trust as it is revalued annually. This type of trust provides the donor with the flexibility to make additional gifts to the trust.

In contrast, a Charitable Remainder Annuity Trust pays the beneficiary a fixed dollar amount, which is determined when the trust is established. Additional gifts to this type of trust are not permitted.

A Pooled Income Fund is a type of Charitable Mutual Fund created from securities or cash donated by an individual, a family, or a corporation to a charity, which is then invested to provide dividends for both the donor and charity. The donations are irrevocable and tax-deductible and must be from personal assets.

A Bypass or Family Trust (alternatively known as a “Credit Shelter” Trust) enables you to leave a certain amount to the Trust, and the rest passes to your surviving spouse tax-free.

A Dynasty Trust, or Generation-Skipping Trust, lets you leave a significant sum to your grandchildren tax-free, an option that has been growing in popularity.

A Qualified Personal Residence Trusts (QPRT) allows you to leave your home as a gift to your heirs and freeze its valuation at whatever the IRS calculates it will be worth at the end of a period of time that you will still control it. This usually creates a window that allows the property to be valued less than it is and be subject to less tax exposure.

A Qualified Terminal Interest Property Trust (QTIP) lets you direct assets towards certain relatives; it can be created so that your surviving spouse will receive income from the Trust, but your specified heirs will inherit the assets.

A Totten Trust is one that is created during the lifetime of the grantor by depositing money into an account at a financial institution in his or her name as the Trustee for another. This is a type of Revocable Trust in which the gift is not completed until the Trustmaker's death or an unequivocal act reflecting the gift during the Trustmaker's lifetime. An individual or an entity can be named as the Beneficiary. Upon death, Totten Trust assets avoid probate. A Totten Trust is used primarily with accounts and securities in financial institutions such as savings accounts, bank accounts, and certificates of deposit. A Totten Trust cannot be used with real property.

Does a Living Trust save on Income Taxes?

A Living Trust or a Testamentary Trust may help save on taxes in certain circumstances. The Estate and Gift Tax Laws are complex and fluid. Trusts are flexible vehicles that are often used in Tax Planning. Your individual situation will determine what Trust type, if any, will help best preserve your assets.

We are not married; can we still have a Joint Living Trust?

“Non-married Couples” have the same options as "Non-traditional Couples" to prepare a Joint Trust along with all of the matching supporting documents.

My spouse is not a U.S. Citizen. Are there any Special Problems or Issues?

Yes. A non-citizen surviving Spouse can be required to pay substantial Estate Taxes upon the death of his or her spouse if a proper Estate Plan is not in place. Depending on the size of the Estate, it may be necessary to have your Living Trust set up as a "Qualified Domestic Trust" to avoid the payment of any taxes at the death of a spouse. Our program can create the appropriate Trust for you based on the information you provide.

How Do I Set Up A Revocable Living Trust?

A Revocable Living Trust is established by writing a Trust Agreement, which normally and involves three primary people: the Trustmaker, also called the Grantor, Settlor or Trustor, the Trustee, and the Beneficiary. In the typical situation, when the Revocable Living Trust Agreement is created, the three people named in the Trust, i.e., the Trustmaker, Trustee and Beneficiary, can actually be the same person.

Once the Revocable Living Trust Agreement has been signed or executed, the Trustmaker will proceed with funding the Trust with all of his or her assets and designating the Trust as the Beneficiary of retirement accounts, life insurance, and annuities.

The Trustee (who, as mentioned above, can also be the Trustmaker) will then manage, invest, and spend the trust property for the benefit of the Beneficiary (who, as mentioned above, is also the Trustmaker) until the Trustmaker's death or incapacitation.

In the event of the Trustmaker's death or incapacitation, the Trustmaker must also name a person to become the "Successor Trustee," and will name the new people, or charities, whichever the case may be, as the new Beneficiaries, normally the spouse, children and grandchildren of the Trustmaker.

Can I be my own Trustee?

Yes. In fact, most people who create Living Trusts act as their own Trustees. If you are married, you and your Spouse can act as Co-Trustees. During your life, you will have complete control over all of the assets in your Trust. In the event of your incapacity, your hand-picked Successor Trustee assumes control over your affairs.

What do I do after I create a Living Trust?

You need to ensure that you transfer and title the appropriate assets into the Trust and in the name of the Trust. Once a Trust is created and funded, it will continue on until it is revoked or it is distributed pursuant to its terms. There are no ongoing costs or fees to establishing a Living Trust, and there are there no separate accountings or tax returns required during your lifetime. IRS Regulations provide that a Revocable Living Trust uses the tax identification number of the Trustmaker/Grantor — your Social Security Number — as its identification number and no separate tax returns should be filed for the Trust. Instructions on how to transfer or title assets into the name of the Trust will be provided.

Phase One of a Revocable Living Trust: The Trustmaker is Alive and Well

The Trust's formation documents should include specific provisions allowing the Trustmaker to invest and spend the Trust assets for his own benefit during his lifetime. The Trustmaker can then manage all the assets that have been transferred or funded into the Trust's ownership, assuming he has not appointed someone else to act as Trustee. If another person has been named as Trustee, then the Trustmaker would typically take direction from Trustee.

The Trustmaker reserves the right to undo a Revocable Trust, which is why the term "revocable" is used. The Trustmaker can reclaim assets placed in the Trust, divert the income from the Trust to himself or herself or to another beneficiary, sell the assets or place more assets into it, as the case may be. The Trustmaker maintains final control.

A Revocable Living Trust is not a separate legal entity and does not have its own taxpayer identification number, unlike an irrevocable Trust where the Trustmaker gives up all control. A Revocable Trust and its Trustmaker share the same Social Security number. Trust taxes are filed on the Trustmaker's Form 1040, just as though the Trustmaker continued to hold ownership of the assets personally.

Phase Two of a Revocable Living Trust: The Trustmaker Becomes Mentally Incapacitated

The Trust Agreement should specify what happens if the Trustmaker becomes mentally incapacitated and can no longer manage his or her own affairs and those of the Trust. The Trust documents should name a "Successor Trustee," someone to step in and take over management of the Trust if the Trustmaker is determined to be mentally incompetent. The Successor Trustee can then manage the Trustmaker's finances and the assets that have been placed into the Trust and follow the wishes of the Trustmaker as outlined in the Trust document.

Phase Three of a Revocable Living Trust: The Trustmaker's Death

A Revocable Trust automatically becomes Irrevocable when the Trustmaker dies simply because the Trustmaker can no longer make changes to it. The named Successor Trustee then steps in and begins the process of managing the assets, paying the Trustmaker's final bills, debts, and taxes, just as he would if the Trustmaker became incompetent. In the case of death, however, he would then distribute the remaining assets to the Trust's beneficiaries according to instructions included in the Trust's formation documents.

How a Revocable Living Trust Avoids Guardianship or Conservatorship.

Because the Trustmaker will not own any property in his or her individual name after the assets have been funded into the name of the Revocable Living Trust - they will instead be owned by the Trustee for the benefit of the Beneficiary - if the Trustmaker becomes mentally incapacitated, then the trust assets won't need to be subjected to a court-supervised guardianship or conservatorship. Why? Because the Disability Trustee named in the Trust Agreement will have the legal authority to step into the Trustmaker's shoes and take over control of bank and investment accounts and business interests without the need for a court-supervised guardianship or conservatorship.

What is the process for “funding” my Trust?

Funding a Trust is the process of transferring your assets from you to your Trust. To do this, you physically change the titles of your assets from your individual name (or joint names, if married) to the name of your Trust. You will also change most beneficiary designations to your Trust.

Who is responsible for funding my Trust?

You are ultimately responsible for making sure all of your appropriate assets are transferred to your Trust.

Who controls the assets in my Trust?

The Trustee you name will control the assets in your trust. You can name yourself as Trustee giving you complete control. One of the key benefits of a "Revocable" Living Trust is that you can continue to buy and sell assets just as you do now. You can also remove assets from your Lving Trust should you ever decide to do so.

Why is funding my Trust so important?

If you have signed your Living Trust document but haven't changed titles and beneficiary designations, you will not avoid probate. Your living trust can only control the assets you put into it. You may have a great trust, but until you fund it (transfer your assets to it by changing titles), it does not control anything. If your goal in having a Living Trust is to avoid probate at death and court intervention at incapacity, then you must fund it now, while you are able to do so.

What happens if I forget to transfer an asset?

You should also prepare a “Pour-Over Will” that will act as a safety net. When you die, the Will “catches” any forgotten asset and sends it to your Trust. The asset will go through probate first, but then it can be distributed according to the instructions in your Trust.

Which assets should I put in my Trust?

Generally, assets you want in your Trust include real estate, bank/saving accounts, investments, business interests, and notes payable to you. You will also need to change most beneficiary designations to your Trust so those assets will flow into your Trust and be part of your overall plan.

Should I put my Real Estate in the Trust?

Putting your Real Estate in a Trust has very little effect on the property or how it is managed. You can transfer real estate you own to your Living Trust and purchase new real estate in the name of your Trust.

As long as the Living Trust is "revocable," transferring real estate to your Trust should not disturb your current mortgage in any way. Even if the mortgage contains a “due on sale or transfer” clause, retitling the property in the name of your trust should not activate the clause. Refinancing may be more difficult. Lending institutions may require you to conduct the business in your personal name and then transfer the property to your Trust.

There should be no effect on your property taxes because the transfer does not cause your property to be reappraised. There will have no effect on your being able to use the capital gains tax exemption when the property is sold. Your homeowner, liability and title insurance will not be affected.

What about Real Estate in another state?

If you own Real Estate in more than one state, you can deed the out-of-state property into the Trust. Otherwise, your family may be faced with two separate probate estates, one in the state where you live, and a second in the state where your real estate is located, which is referred to as "ancillary probate."

Should I put my Life Insurance in my Trust?

The answer to that question depends on the size of your Estate. Federal Estate Taxes must be paid if the net value of your estate when you die is more than the amount exempt at that time. In Pennsylvania, the death benefit from a life insurance policy is always free of inheritance tax. The federal government does include life insurance in your taxable Estate; however, under current IRS Rules, if your Estate is under $5,430,000, then no tax is due. Also, if a surviving spouse claims the marital deduction for such assets, then no tax is due. Other states may have their own estate/inheritance tax, and it is possible your estate could be exempt from federal tax but have to pay state tax.

There are some restrictions on transferring existing policies to an "Irrevocable" Life Insurance Trust. If you die within three (3) years of the transfer date, the IRS will consider the transfer invalid and the insurance will be back in your Estate. These restrictions, however, do not apply to new policies purchased by the Trustee of a Trust.

Should I put my IRA or other tax-deferred plans in my Trust?

You should not change the ownership of these plans to your Living Trust. You can name your Trust as the beneficiary, but be sure to consider all your options, which could include your spouse; children, grandchildren, or other individuals; a Trust; a charity; or a combination of these.

Whom you name as beneficiary will determine the amount of tax-deferred growth that can continue on this money after you die.

Most married couples name their spouse as beneficiary because 1) the money will be available to provide for the surviving spouse and 2) the spousal rollover option can provide for many more years of tax-deferred growth. It is important to remember that after your death, your spouse can “roll over” your tax-deferred account into his/her own IRA and name a new beneficiary, preferably someone much younger, including children and/or grandchildren would be. A Non-spouse Beneficiary can also inherit a tax-deferred plan and roll it into an IRA to continue the tax-deferred growth, but only a spouse can name additional beneficiaries.

The one caveat here is that when you name an individual as a Beneficiary, you lose control of how the money is used. After you die, the beneficiary can do whatever he or she wants with this money, including cashing out the account and destroying your carefully made plans for long-term, tax-deferred growth. The money could also be available to creditors, spouses, and ex-spouses, and there is the risk of court interference at incapacity.

Naming a Trust as Beneficiary will give you maximum control because the distributions will be paid not to an individual, but into a Trust that contains your written instructions stating who will receive this money and when. After you die, distributions will be based on the life expectancy of the oldest Beneficiary of the Trust. You can also set up separate Trusts for each Beneficiary so that each one's life expectancy can be used.

What about property that does not have a "title?"

Personal property (artwork, clothing, jewelry, cameras, sporting equipment, books and other household goods) typically does not have a formal title. Your attorney will prepare an assignment to transfer these items to your Trust.

What if I buy new assets after I fund my Trust?

Find out if you can take the title initially as Trustee of your Trust. If not, transfer the title right away. If you're not sure how to transfer it, contact your attorney for instructions.

Funding Your Living Trust. Assets You Probably Want in Your Living Trust:

  • Real property (home, land, other real estate)
  • Bank/credit union accounts, safe deposit boxes
  • Investments (CDs, stocks, mutual funds, etc.)
  • Notes payable (money owed to you)
  • Life insurance (or use irrevocable Trust)
  • Business interests, intellectual property
  • Oil and gas interests, foreign assets
  • Personal untitled property
  • Assets You May Not Want in Your Living Trust
  • IRAs and other tax-deferred retirement accounts
  • Incentive stock options and Section 1244 stock
  • Interests in professional corporations

Note: Funding Real Estate into a Living Trust is state-specific and may not apply in all states

How does a Revocable Living Trust Avoid Probate?

Since you, the Trustmaker or Settlor, will not own any property in his or her individual name after the assets have been funded (transferred) into the name of the Trust. The assets will then be owned by the Trustee for the benefit of the Beneficiary named in the Trust document. When you, the Trustmaker or Settlor, dies, assets in the Trust are not part of your Estate for purposes of probate.

Unlike a Will, which ends once the distribution of the assets is made, the Trust itself will continue to live on and the Administrative or Successor Trustee will have the legal authority to step into the Trustmaker's shoes and manage the assets according to the terms of the Trust document.

Will a Revocable Trust Protect my Assets if I have to move into a Nursing Home?

No. Because you maintain complete control over your assets titled in your “Revocable” Living Trust, those assets are considered available for your use should you have to go into a nursing home. If you want to shield your Estate from the costs of a nursing home, you must form and fund an “Irrevocable” Living Trust with your property. This involves naming someone else to act as Trustee; and you cannot change your mind and take your property back after you move it into the Trust. The ownership of your property is severed from you at that point and the nursing home cannot expect you to use those assets to pay for your care. Unless you anticipate the need for nursing home care within the near future, the preferred way to plan is to set up a Revocable Trust along with Powers of Attorney. This provides for the eventuality that if you are unable to implement your own nursing home planning in the future, someone will be designated to do so for you.

Is a Living Will valid in all States?

Yes, a Living Trust is valid in all fifty States and the District of Columbia.

What Are the Common Myths About “Living Trusts?”

“If I have a ‘Living Trust'” ...

  • I do not need a Will. False — Even if a “Living Trust” is right for you, you still should have a Will. If some of your property is left out of the Trust, or if any portion of the Trust is invalid, a Will can ensure your assets are transferred consistent with your wishes.
  • My estate will not pay attorney's fees. False — Because transferring assets under a “Living Trust” will require accumulating assets and distributing them (and since taxes may be due), it is usually necessary to hire a lawyer to help administer the “Living Trust” after death. In addition, there are legal fees associated with preparing the Trust docu­ment.
  • The assets will not be considered mine if I need to go to a nursing home. False — Because “Living Trusts” usually are revocable (meaning you can alter them during your lifetime), they will be considered your assets if you apply for nursing home benefits. Thus, the determination of whether or not to make the Trust "revocable" or not does determine the actual "ownership of the assets in the Trust.
  • My Estate will not pay inheritance or es­tate taxes since my estate will not “go through probate.” False — Generally speaking, any transfer of assets as a result of death will result in inheritance and possibly estate taxes being due. Thus, in most cases, property passing by a “Living Trust” will be subject to tax. Certain Trusts, referred to as irrevocable trusts, may have tax advantages that other Trusts cannot provide.
  • My assets automatically will be part of the Trust and my Will will not have to be probated. False — Only property that you specifically list as part of the Trust will be part of it. If you own property individually and do not include it in the Trust, your Will still must be probated.

What is a Power of Attorney?

A Power of Attorney gives one or more persons the power to act on your behalf as your agent. The power may be limited to a particular activity, such as closing the sale of your home, or be general in its application. The Power may give temporary or permanent authority to act on your behalf. The Power may take effect immediately, or only upon the occurrence of a future event, usually a determination that you are unable to act for yourself due to mental or physical disability. The latter is called a "Springing Power of Attorney."

Can a Power of Attorney be revoked?

A Power of Attorney may be revoked, but most states require written notice of revocation to the person named to act for you.

How does the Agent act on my behalf?

The person named in a Power of Attorney to act on your behalf is commonly referred to as your "Agent" or "Attorney-in-Fact." With a valid Power of Attorney, your Agent can take any action permitted in the document. Often your Agent must present the actual document to invoke the Power. For example, an Agent who signs documents to buy or sell real property or a motor vehicle on your behalf must present the Power of Attorney to the title company or any governmental agency involved in the transaction. Similarly, the Agent has to present the Power of Attorney to a broker or banker to affect the sale of securities or opening and closing bank accounts. However, your Agent generally should not need to present the Power of Attorney when signing checks for you.

How The Agent Should Sign?

Assume John Jones appoints his wife, Mary Jones, as his agent in a written power of attorney. Mary, as agent, must sign as follows: John Jones, by Mary Jones under POA or Mary Jones, Attorney-in-Fact for John Jones.

Who Should Be Your Agent?

There are no special qualifications necessary for someone to act as an Attorney-in-Fact except that the person must not be a minor or otherwise incapacitated. The best choice is someone you trust. Integrity, not financial acumen, is often the most important trait of a potential agent.

The designation of Co-Agents should indicate whether you wish to have the majority act in the absence of full availability and agreement. Regardless of whether you name Co-Agents, you should always name one or more Successor Agents to address the possibility that the person you name as Agent may be unavailable or unable to act when the time comes.

Will my Power of Attorney expire?

Most states permit a "Durable" Power of Attorney that remains valid once signed until you die or revoke the document. Some Powers of Attorney expressly include termination dates to minimize the risk of former friends or spouses continuing to serve as agents. It is vital that you review the continued effectiveness of your documents periodically.

What is a Living Will?

A Living Will is your written expression of how you want to be treated in certain medical circumstances. Depending on state law, this document may permit you to express whether you wish to be given life-sustaining treatments in the event you are terminally ill or injured, to decide in advance whether you wish to be provided food and water via intravenous devices ("tube feeding"), and to give other medical directions that impact your care, including the end of life.

"Life-sustaining treatment" means the use of available medical machinery and techniques, such as heart-lung machines, ventilators, and other medical equipment and techniques that may sustain and possibly extend your life, but which may not by themselves cure your condition.

Living Wills do not determine your medical treatment in situations that do not affect your continued life, such as routine medical treatment and non-life-threatening medical conditions. Thus, having a Living Will does not mean that medical professionals would deny you pain medications and other treatments that would relieve pain or otherwise make you more comfortable.

In all states, the determination as to whether you are in such a medical condition is determined by medical professionals, usually your attending physician and at least one other medical doctor who has examined you or reviewed your medical situation.

What is a Durable Health Care Power of Attorney?

A Durable Health Care Power of Attorney is broader than a Living Will or advance directive. It empowers an "Agent," appointed by the individual signing the document, to make healthcare decisions on the person's behalf in case he or she becomes incompetent.

This Agent can make decisions about admissions to and discharges from healthcare facilities, gain access to medical records, determine whether to authorize an organ donation, authorize whether to move the patient, make arrangements for home health care and accept or refuse treatment that affects the physical and mental health of the patient. These medical decisions come into play at all levels of health care, not just when death is imminent.

You do not have to be a Lawyer to be designated as the Agent under a Durable Health Care Power of Attorney. The word "Attorney" simply means "Designated Agent."

This Durable Power of Attorney takes effect only when an individual is determined to be legally incompetent. For example, your dad might not be able to communicate following a stroke or might be too confused following surgery to make decisions. In that case, you'll be the one to decide whether it's safe for him to go home or what home health agency to hire to help him with his recovery. However, as soon as he has recovered and is competent, your father resumes the power to make his own healthcare decisions. Your parent must sign the Durable Health Care Power of Attorney when he or she is competent and in front of a witness.

What is the Cost of Estate Planning?

Please review our Concierge Estate Planning Service under Legal Plans.

When is the best time to plan your Estate?

None of us really likes to think about our own mortality or the possibility of being unable to make decisions for ourselves. This is exactly why so many families are caught off-guard and unprepared when incapacity or death does strike. Do not wait! You can put something in place now and change it later as circumstances change in your life, which is exactly the way Estate Planning should be accomplished.

What benefit can I derive from Estate Planning?

Knowing you have a properly prepared plan in place - one that contains your instructions and will protect your family - will give you and your family peace of mind. This is one of the most thoughtful and considerate things you can do for yourself and for those you love.

What should I do if I want to use your services?

Developing an Estate Plan is a smart and caring act on your part. Whether you use our service or someone else you are taking the first step to gaining control of your affairs and your loved ones will be very grateful.

This Program is designed to make the building of a Basic Estate Plan as easy and economical as possible. Completing the online interview yourself allows you to work at your own pace, ask yourself the important questions, and see the Plan come together. It also allows you to save on fees as we do not have to enter the data ourselves although we will be there to assist you in any way necessary.

You will need to complete a Registration Form and then log-in information will be sent to you by email so you can proceed, and so we can contact you if there are any changes in federal or state law that might affect your Trust.

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