Using a Pour Over Will to Fund a Trust

When you get a living trust from an estate planning attorney you will likely also get a pour over will that is designed to bequeath any assets you have when you pass away into your trust. It is important not to rely on that will as the sole means of funding your trust.

Getting a trust to avoid having your estate go through probate is only effective if you fund the trust. That means your assets need to be transferred into the trust. Any assets held in the trust when you pass away will then be used and distributed according to the terms of the trust instead of having to go through probate.

At the same time, you will also likely get a pour over will.

These are simple wills that dictate that any assets you had at the time of death that are not in the trust should be placed into it via probate.

Do not let that fool you into thinking you do not need to transfer assets to the trust now and just rely on your will as the Green Bay Press-Gazette points out in “Estate Planner: Importance of funding your trust.”

While the exact rules vary from state to state, it does not take a lot of assets to require an estate to go through probate.

If all of your assets remain outside of your trust, then your executor has to probate your pour over will. By relying on the will you would have essentially defeated the purpose of getting the living trust in the first place.

If you do not know how to transfer assets into your trust or need assistance doing so, then talk to your estate planning attorney to get more information about what you need to do.

Reference: Green Bay Press Gazette (Oct. 31, 2016) “Estate Planner: Importance of funding your trust.”

Estate Planning With no Estate Tax

The federal estate tax might soon be a thing of the past. That does not mean that you will no longer need a will.

Today, January 20, 2017, the Republican Party will control the Presidency, the Senate and the House of Representatives. Many people are hopeful that the party will quickly act on its long-stated goal of eliminating the federal estate tax.

If it does so, do not be tempted to think that you no longer need an estate plan. There are reasons to get one that have nothing to do with avoiding the estate tax.

At the very least, you still want to have a will as Forbes discusses in “Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!”
The reasons include:

•In a will, you appoint an executor who is in charge of administering your affairs. The executor can make sure that all of your debts are paid and that your assets are handled appropriately.
•If you have minor children, a will is used to designate who you want to have guardianship of those children in case something happens to you.
•In a will, you can give specific bequests to people. That means if you want one of your children to have a specific piece of personal property for sentimental reasons, a will is the place that you do that.
•While getting a will you can also get advanced medical directives that will determine how you should be cared for, if you are incapacitated and not able to communicate with doctors at the time.
•A will is more efficient than allowing the courts to handle your affairs without your directions. It also protects your estate by making sure that your property does not go to people you do not want to have it.

Reference: Forbes (Dec. 8, 2016) “Five Reasons You Need a Will (Even If the Estate Tax Is Repealed)!

What Estate Planning Is

Do not be confused about what estate planning is and whether or not you need to do it.

Most Americans do not have estate plans. One of the reasons that they don’t is confusion about what getting an estate plan means and who should have them. The term “estate” often conjures up images of the palatial estates of the ultra-wealthy. However, the term applies to the property of anyone who passes away.

We will all have estates someday. For that reason, it is important to know what estate planning actually does.

Recently, the Vail Daily discussed some basics in “Estate Planning.”

If an estate is the property you have when you pass away, then estate planning is deciding what should happen to that property. It is you deciding beforehand who you want to have your property and the legal means by which they will receive it.

The two most common methods to have your property distributed are wills and trusts.

A will is a legal document that is submitted to a court. The will sets out who should receive what. If the will is valid, the court will oversee the process of making sure that the property goes where you want it to.

A trust creates a new legal entity to hold and distribute property. It is not normally submitted to a court, unless it is a “testamentary” trust created under a will to manage the estate distribution. Another person known as a trustee, is charged with making sure that your directions are followed.

There are other aspects of estate planning you should address, including planning for your own end-of-life care. Visit an estate planning attorney if you have questions about wills, trusts, or any other aspects of estate planning.

Reference: Vail Daily (Dec. 8, 2016) “Estate Planning.”

When to Change Beneficiary Designations

Who you name as the beneficiaries of your retirement accounts and your life insurance policies, is an important part of modern estate planning. Knowing when to change them is vital.

Estate planning today is not just about going to an estate attorney to have a will or a trust drawn up. It also includes making plans for your own end-of-life care and deciding who should get your retirement accounts and life insurance policies, if something happens to you.

The beneficiaries of your accounts will get the assets by operation of law. If you have done everything correctly, then you have factored those accounts into your overall estate plan with the assistance of your estate planning attorney. Sometimes you need to review and change those designations.

Recently, the Aiken Standard listed some appropriate times to do that in “On the Money: Don’t disinherit your loved ones,” including:

•If you get divorced or remarried, then review your accounts to make sure you are not leaving things to an ex-spouse or that your new spouse is included.
•If you get a new employer and roll over your old account, then make sure that the new account accurately reflects your wishes.
•If the primary beneficiary on your accounts passes away, then you obviously need to make changes.
•If the financial institutions you have the accounts with change ownership, review your beneficiary designations to make sure the new company has everything recorded properly.
•If you have a new child or grandchild, consult your estate attorney about including them and whether they should be named as beneficiaries.
•If a beneficiary becomes disabled, you should talk to an attorney about creating a special needs trust. Keeping them as a beneficiary could make them ineligible for some needed government benefits.

Reference: Aiken Standard (Dec. 10, 2016) “On the Money: Don’t disinherit your loved ones.”

Estate Planning Is Not as Hard as You Think

Many people put off estate planning because they mistakenly believe that it will be too difficult and time-consuming.

Younger people delay getting estate plans for all sorts of reasons. Some think that they are too young for it. Some think that they do not have enough assets to bother with it. Others think that it will be too difficult or take too long.

A columnist for The Gleaner put it off because she and her husband could not agree about who would care for their children. She wrote about their experience in “HARDY: No reason to delay estate planning.”

The article is instructive and enlightening. The writer details how once she and her husband did come to an agreement about their children, the process of getting an estate plan was not as difficult as they thought.

This might be because they took the critical step of going to an estate planning attorney instead of trying to do things for themselves.

The attorney provided the couple with a questionnaire that allowed them to think about things that they had not even considered and make their own decisions about those things. If the couple had tried to create their own estate plans, they likely would have been incomplete because of the things they did not know.

The important lesson to learn from the column is that there really is no reason to delay getting an estate plan. If you go to an estate attorney, the process will be simple and you will get a complete plan.

Reference: The Gleaner (Dec. 10, 2016) “HARDY: No reason to delay estate planning.”

Elder Man Dies after Humiliation by Store

An odd case out of Florida has emerged where a woman claims that a Walgreens store employee forced her husband to clean its bathroom which subsequently led to his death from emotional distress.

According to a lawsuit filed by Florida widow Maria Elizarraras, her elderly husband died under suspicious circumstances. She alleges that her husband used the bathroom in an Orlando Walgreens store that he often frequented. On his way out of the store, he was allegedly stopped by store employees and ordered to clean the bathroom because he had left a mess.

The widow claims that her 69-year-old husband was forcibly detained, forced to clean and mop the bathroom for 20 minutes and was made fun of by store employees. The lawsuit alleges that the humiliation led to emotional distress that caused the man’s death.

WFTV9 reported this story in “Man dies of emotional distress after being forced to clean Walgreens bathroom widow says.”
There are several problems with this lawsuit.

Specifically it is not clear how exactly the incident caused the man’s death. In addition, the suit does not state how long after the incident the man passed away. Setting aside those legal hurdles, if the incident is true, it is a shocking case of elder abuse.

To force an elderly man to clean a store’s bathroom while mocking him is abuse. It is difficult to imagine he could have left a mess that required 20 minutes to clean, but even if it was a large mess, a pharmacy should be more aware about problems the elderly might face and be more understanding.

This specific incident might provoke snickers in some people, but it is a good reminder of how the elderly can be abused and that the abuse can lead to problems.

Reference: WFTV9 (Dec. 8, 2016) “Man dies of emotional distress after being forced to clean Walgreens bathroom widow says.”

Debbie Reynolds’ Death Sparks Sales

The death of actress Debbie Reynolds just days after the death of her daughter Carrie Fisher, has sparked a renewed interest in Reynolds’ work.

If most people were asked what the bestselling DVD on Amazon is at any given time, they would likely choose a recent action blockbuster, an animated children’s feature or perhaps a recent Oscar winner. However, if that question had been asked at the end of 2016, they would have been wrong.

The bestselling DVD at that time was Singin’ In The Rain starring the recently deceased Debbie Reynolds. The movie was also placed on the New and Noteworthy list on iTunes.

TMZ reported on this story in “Debbie Reynolds Singin’ In The Gains Death Causes Spike In Sales, Searches.”

This comes as no surprise to estate planners and others who follow celebrity estates.

Whenever a major celebrity passes away, their work almost always sees an increase in sales. Reynold’s case is a bit unusual, since she had not been in the limelight for quite some time. However, as her death came only a few days after her daughter passed away, the increase in sales should not be a surprise.

While sometimes these increased sales are temporary, they are not always so and can continue for many years. This means that celebrities, even minor ones, will want to make sure their estates are prepared to handle increased revenue and potentially new commercial opportunities
Reference: TMZ (Dec. 29, 2016) “Debbie Reynolds Singin’ In The Gains Death Causes Spike In Sales, Searches.”

What You Might Have Wrong About Wills and Trusts

Although wills and trusts have been standard legal documents for a long time, many people still have misconceptions about them.

Estate planning can be complicated by the fact that many people have misconceptions about the basics of wills and trusts and what having either one of them means. This problem is compounded by the Internet as people who are wrong, often share their misconceptions with other people online. The result is more confusion.

Recently, TCPalm discussed common misconceptions in “Common misconceptions about wills and trusts,” including:

•Having a will means that your estate does not have to go through probate. This is completely false. In most cases, wills have to be submitted to a probate court for administration.
•If your estate is not large enough to pay the estate tax, then you do not need to have a will or trust. This is another falsehood since there are many other reasons to have a will or trust. The most important is that if you do not, then all of your property will be distributed according to statutory rules instead of how you might have preferred it to be distributed.
•By putting your assets in a revocable trust, you lose the ability to have any control over the assets. This is not true. If you are the trustee of your trust and the trust is drafted properly, then you will still be able to do whatever you want with your assets during your lifetime.
•You have to file a separate tax return for your revocable trust. This is also not true. As long as your trust is properly drafted, a revocable trust will not be considered a separate legal entity during your lifetime and you will not need to file a separate tax return for it.

Talk to a qualified estate planning attorney who will be more than happy to educate you on the realities of estate planning.

Reference: TCPalm (Dec. 2, 2016) “Common misconceptions about wills and trusts.”

Naming Your Trust the Beneficiary of Your IRA

If you have a trust and would like to make it the beneficiary of your IRA instead of an individual, you can do so. However, there are some important things to consider before doing so.

When people get trusts, one of the first things they are told is that they should put all of their important assets into the trust. They are often told that they can designate their trusts as beneficiaries of their life insurance policies and retirement accounts, and that they should consider doing so.

However, for tax purposes, it is not always a good idea to designate a trust as the beneficiary of your IRA, as Financial Advisor explains in “Is Naming A Trust As Beneficiary Of A Client’s IRA A Good Idea?”

The biggest and most important issue is that IRA beneficiaries must take required minimum distributions or face tax consequences. This requirement does not go away when the beneficiary is a trust and not an individual.

Satisfying the requirement with a trust can get technical.

Every beneficiary of the trust must be identifiable and must be an individual. While that might seem easy to accomplish, it is not always the case. Every successive beneficiary must be an identifiable individual. Therefore, the beneficiaries who would automatically receive the trust assets when a previous beneficiary passes away, must be an identifiable individual.

This can be an issue if a residual clause in the trust includes giving assets to a charity, for example.

That is not the only complication with designating a trust as the beneficiary of an IRA. There are other potential problems, which is why you should consult with an estate planning attorney before doing so.

Reference: Financial Advisor (Dec. 2, 2016) “Is Naming A Trust As Beneficiary Of A Client’s IRA A Good Idea?”

The Best Reason to Get an Estate Plan

There are many reasons why you should get an estate plan, but one of them stands out above the others. Estate planning is the best way to make sure that your family does not have problems after you pass away.

Too many people think getting an estate plan implemented is an unnecessary and time-consuming bother. It is true that properly planning for an estate requires gathering up all of your financial documents, thinking about where you want all of your property to go and spending time meeting with lawyers. Almost everyone can think of other more enjoyable things that they would rather do with their time.

However, there is a very good reason to make the effort now and get an estate plan as J Weekly suggests in “Estate planning wards off problems later on.”
If you think estate planning is difficult and time-consuming for you now, imagine how difficult it will be for someone else to do it after you pass away. It is very likely that a close family member will have to figure out what property you have and go to court to figure out who should get all of your property.

To give just one example of how difficult this can be, you can now easily go to your bank and get all of the information you need concerning your accounts. Your children cannot do that easily now and they would not have an easier time of it after you pass away, unless they have a court order requiring the bank to give them the information.

Getting that court order will, of course, be time-consuming and require the hiring of an attorney for assistance.
Any way you look at it, taking the time to get an estate plan now will be less expensive and less time-consuming than it will be for your family to figure things out if you do not get an estate plan.

Reference: J Weekly (Dec. 1, 2016) “Estate planning wards off problems later on.”