Monday, August 18, 2014
Can You Remove A Trustee?
In creating a trust, the trustmaker must name a trustee who has the legal obligation to administer it in accordance with the trustmaker’s wishes and intentions. In some cases, after the passing of the trustmaker, loved ones or beneficiaries may want to remove the designated trustee.Read more . . .
Monday, July 21, 2014
How Long Until You Receive Your Inheritance?
If you’ve been named a beneficiary in a loved one’s estate plan, you’ve likely wondered how long it will take to receive your share of the inheritance after his or her passingRead more . . .
Monday, July 07, 2014
Testamentary vs Revocable Living Trust
The world of estate planning can be complex. If you have just started your research or are in the process of setting up your estate plan, you’ve likely encountered discussions of wills and trusts. While most people have a very basic understanding of a last will and testament, trusts are often foreign concepts. Two of the most common types of trusts used in estate planning are testamentary trusts and revocable living trusts.
A testamentary trust refers to a trust that is established after your death from instructions set forth in your will. Because a will only has legal effect upon your death, such a trust has no existence until that time. In other words, at your death your will provides that the trusts be created for your loved ones whether that be a spouse, a child, a grandchild or someone else.
A revocable living trust is created by you while you are living. It also may provide for ongoing trusts for your loved ones upon your death. One benefit of a revocable trust, versus simply using a will, is that the revocable trust plan may allow your estate to avoid a court-administered probate process upon your death. However, to take advantage this benefit you must "fund" your revocable trust with your assets while you are still living. To do so you would need to retitle most assets such as real estate, bank accounts, brokerage accounts, CDs, and other assets into the name of the trust.
Since one size doesn’t fit all in estate planning, you should contact a qualified estate planning attorney who can assess your goals and family situation, and work with you to devise a personalized strategy that helps to protect your loved ones, wealth and legacy.
Monday, June 23, 2014
Top 5 Overlooked Issues in Estate Planning
In planning your estate, you most likely have concerned yourself with “big picture” issues. Who inherits what? Do I need a living trust? However, there are numerous details that are often overlooked, and which can drastically impact the distribution of your estate to your intended beneficiaries. Listed below are some of the most common overlooked estate planning issuesRead more . . .
Monday, April 28, 2014
What is a Pooled Income Trust and Do I Need One?
A Pooled Income Trust is a special type of trust that allows individuals of any age (typically over 65) to become financially eligible for public assistance benefits (such as Medicaid home care and Supplemental Security Income), while preserving their monthly income in trust for living expenses and supplemental needs. All income received by the beneficiary must be deposited into the Pooled Income Trust which is set up and managed by a not-for-profit organization.
In order to be eligible to deposit your income into a Pooled Income Trust, you must be disabled as defined by law. For purposes of the Trust, "disabled" typically includes age-related infirmities. The Trust may only be established by a parent, a grandparent, a legal guardian, the individual beneficiary (you), or by a court order.
Typical individuals who use a Pool Income Trust are: (a) elderly persons living at home who would like to protect their income while accessing Medicaid home care; (2) recipients of public benefit programs such as Supplemental Security Income (SSI) and Medicaid; (3) persons living in an Assisted Living Community under a Medicaid program who would like to protect their income while receiving Medicaid coverage.
Medicaid recipients who deposit their income into a Pool Income Trust will not be subject to the rules that normally apply to "excess income," meaning that the Trust income will not be considered as available income to be spent down each month. Supplemental payments for the benefit of the Medicaid recipient include: living expenses, including food and clothing; homeowner expenses including real estate taxes, utilities and insurance, rental expenses, supplemental home care services, geriatric care services, entertainment and travel expenses, medical procedures not provided through government assistance, attorney and guardian fees, and any other expense not provided by government assistance programs.
As with all long term care planning tools, it’s imperative that you consult a qualified estate planning attorney who can make sure that you are in compliance with all local and federal laws.
Wednesday, April 16, 2014
Refusing a Bequest
Most people develop an estate plan as a way to transfer wealth, property and their legacies on to loved ones upon their passing. This transfer, however, isn’t always as seamless as one may assume, even with all of the correct documents in place. What happens if your eldest son doesn’t want the family vacation home that you’ve gifted to him? Or your daughter decides that the classic car that was left to her isn’t worth the headache?
When a beneficiary rejects a bequest it is technically, or legally, referred to as a "disclaimer." This is the legal equivalent of simply saying "I don't want it." The person who rejects the bequest cannot direct where the bequest goes. Legally, it will pass as if the named beneficiary died before you. Thus, who it passes to depends upon what your estate planning documents, such as a will, trust, or beneficiary form, say will happen if the primary named beneficiary is not living.
Now you may be thinking why on earth would someone reject a generous sum of money or piece of real estate? There could be several reasons why a beneficiary might not want to accept such a bequest. Perhaps the beneficiary has a large and valuable estate of their own and they do not need the money. By rejecting or disclaiming the bequest it will not increase the size of their estate and thus, it may lessen the estate taxes due upon their later death.
Another reason may be that the beneficiary would prefer that the asset that was bequeathed pass to the next named beneficiary. Perhaps that is their own child and they decide they do not really need the asset but their child could make better use of it. Another possible reason might be that the asset needs a lot of upkeep or maintenance, as with a vacation home or classic car, and the person may decide taking on that responsibility is simply not something they want to do. By rejecting or disclaiming the asset, the named beneficiary will not inherit the "headache" of caring for, and being liable for, the property.
To avoid this scenario, you might consider sitting down with each one of your beneficiaries and discussing what you have in mind. This gives your loved ones the chance to voice their concerns and allows you to plan your gifts accordingly.
Monday, March 31, 2014
Transferring Shares in A Business
Estate Planning: How Certificates of Shares Are Passed Down
How is the funding handled if you decide to use a living trust?
Certificates represent shares of a company. There are generally two types of company shares: those for a publicly traded company, and those for a privately held company, which is not traded on one of the stock exchanges.
Let's assume you hold the physical share certificates of a publicly held company and the shares are not held in a brokerage account. If, upon your death, you own shares of that company's stock in certificated form, the first step is to have the court appoint an executor of your estate.
Once appointed, the executor would write to the transfer agent for the company, fill out some forms, present copies of the court documents showing their authority to act for your estate, and request that the stock certificates be re-issued to the estate beneficiaries.
There could also be an option to have the stock sold and then add the proceeds to the estate account that later would be divided among the beneficiaries. If the stock is in a privately held company there would still be the need for an executor to be appointed to have authority. However, the executor would then typically contact the secretary or other officers of the company to inquire about the existence of a shareholder agreement that specifies how a transfer is to take place after the death of a shareholder. Depending on the nature of the agreement, the company might reissue the stock in the name(s) of the beneficiaries, buy out the deceased shareholder’s shares (usually at some pre-determined formula) or other mechanism.
If you set up a revocable living trust while you are alive you could request the transfer agent to reissue the stock titled into the name of the trust. However, once you die, the "trustee" would still have to take similar steps to get the stock re-issued to the trust beneficiaries.
If you open a brokerage account with a financial advisor, the advisor could assist you in getting the account in the name of your trust, and the process after death would be easier than if you still held the actual stock certificate.
Sunday, March 23, 2014
How Do You Put Assets Into Your Trust?
A Minneapolis Estate Planning Attorney Answers the question: What Does the Term "Funding the Trust" Mean?
If you are about to begin the estate planning process, you have likely heard the term "funding the trust" thrown around a great deal. What does this mean? And what will happen if you fail to fund the trust?
The phrase, or term, "funding the trust" refers to the process of titling your assets into your revocable living trust. A revocable living trust is a common estate planning document and one which you may choose to incorporate into your own estate planning. Sometimes such a trust may be referred to as a "will substitute" because the dispositive terms of your estate plan will be contained within the trust instead of the will. A revocable living trust will allow you to have your affairs bypass the probate court upon your death, using a revocable living trust will help accomplish that goal.
Upon your death, only assets titled in your name alone will have to pass through the court probate process. Therefore, if you create a trust, and if you take the steps to title all of your assets in the name of the trust, there would be no need for a court probate because no assets would remain in your name. This step is generally referred to as "funding the trust" and is often overlooked. Many people create the trust but yet they fail to take the step of re-titling assets in the trust name. If you do not title your trust assets into the name of the trust, then your estate will still require a court probate.
A proper trust-based estate plan would still include a will that is sometimes referred to as a "pour-over" will. The will acts as a backstop to the trust so that any asset that is in your name upon your death (instead of the trust) will still get into the trust. The will names the trust as the beneficiary. It is not as efficient to do this because your estate will still require a probate, but all assets will then flow into the trust.
Another option: You can also name your trust as beneficiary of life insurance and retirement assets. However, retirement assets are special in that there is an "income" tax issue. Be sure to seek competent tax and legal advice before deciding who to name as beneficiary on those retirement assets.
The estate planning attorney at Unique Estate Law offers all clients a 6-page set of Funding Instructions to help walk you through the process after you've left the office and can't recall how to put your checking account into your trust.
Sunday, January 19, 2014
Protect Your Family Cabin with a Trust
Protecting Your Vacation Home with a Cabin Trust
Many people own a family vacation home--a lakeside cabin, a beachfront condo--a place where parents, children and grandchildren can gather for vacations, holidays and a bit of relaxation. It is important that the treasured family vacation home be considered as part of a thorough estate plan. In many cases, the owner wants to ensure that the vacation home remains within the family after his or her death, and not be sold as part of an estate liquidation.
There are generally two ways to do this: Within a revocable living trust, a popular option is to create a separate sub-trust called a "Cabin Trust" that will come into existence upon the death of the original owner(s). The vacation home would then be transferred into this Trust, along with a specific amount of money that will cover the cost of upkeep for the vacation home for a certain period of time. The Trust should also designate who may use the vacation home (usually the children or grandchildren). Usually, when a child dies, his/her right to use the property would pass to his/her children.
The Cabin Trust should also name a Trustee, who would be responsible for the general management of the property and the funds retained for upkeep of the vacation home. The Trust can specify what will happen when the Cabin Trust money runs out, and the circumstances under which the vacation property can be sold. Often the Trust will allow the children the first option to buy the property.
Another method of preserving the family vacation home is the creation of a Limited Liability Partnership to hold the house. The parents can assign shares to their children, and provide for a mechanism to determine how to pay for the vacation home taxes and upkeep. An LLP provides protection from liability, in case someone is injured on the property.
It is always wise to consult with an estate planning attorney about how to best protect and preserve a vacation home for future generations.
Monday, December 02, 2013
14 Costly Misconceptions About Planning for Your Senior Years
A Minneapolis Estate Planning and Probate Lawyer Discusses Estate Planning Issues Specific to Seniors
Misconception #1: Most seniors move into nursing homes as a result of minor physical ailments that make it hard for them to get around. Wrong! A large percentage of admissions to nursing homes is because of serious health, behavior, and safety issues caused by Alzheimer’s disease and dementia.
Misconception #2: Nursing home costs in Minnesota average $1,500 to $2,500 per month per person. Hardly. Current nursing home charges for one resident typically run $6,000 per month, or $72,000 per year, which does not include prescription drugs -- and those costs continue to rise.
Misconception #3: Children can care for a parent with Alzheimer’s disease at home, without the need for nursing home care. Not true! Many patients with Alzheimer’s disease end up in nursing homes because children are simply unable to provide the level of care their parent needs. In most cases, the children want to care for their parents. But, as a practical matter, they simply can’t. Moving a parent into a nursing home is an intensely personal issue and should not be labeled as a right or wrong decision. In many cases, it’s the only realistic option. The rare exception is when the family has enough money to pay for skilled nursing care at home.
Misconception #4: Standard legal forms are all you need for a good estate plan. Not true. A competent estate plan begins with clearly defined goals, supported by well-drafted legal documents, and the repositioning of assets, as needed, to protect your estate from taxes, probate costs, and catastrophic nursing home costs. But you MUST PLAN EARLY.
Misconception #5: Your child will never move you into a nursing home. Wrong. Most children consider all options before moving a parent into a nursing home. But, sadly, children usually find they have no other alternative. As a result, parents who never expected to live in a nursing home soon discover that a nursing home is the only place with the staff and equipment to provide the care they need.
Misconception #6: As payment for nursing home care, the government will take your family home. Not true, if you plan ahead. Many people fear that the government will take their home in exchange for nursing home care, but you can avoid this with proper planning. You’ll be glad to know there are some ways you can protect your home so it won’t be taken.
Misconception #7: You will never end up in a nursing home. That’s hard to predict. Your odds are roughly 50/50. Of Americans reaching age 65 in any year, nearly half will spend some time in a nursing home. And a surprising number will require care for longer than one year. That means every year, tens of thousands of seniors will face costs of $48,000 or more ($60,000 in Minnesota), which does not include the cost of prescription drugs.
Misconception #8: If your spouse enters a nursing home, all of your joint savings will have to be spent on his or her care. No. With proper planning you can keep half of your combined “countable” assets up to approximately $103,000 (increasing each year). In some circumstances, you may be able to protect nearly all of your life savings. In fact, it is often possible to protect much more than the $103,000 maximum. “Countable” assets are those assets such as cash, checking accounts, savings, CDs, stocks, and bonds that the government considers available to be spent on the cost of nursing home care.
Misconception #9: Legally, you can give away only $14,000 to each of your children each year. Not true. You can give away any amount, but you have to report to the IRS gifts in excess of $14,000 per recipient per year ($28,000 if both husband and wife make a gift). However, there is no requirement that you pay any gift tax unless you have exhausted your lifetime exclusion amount, which is currently set at $2,000,000 for an individual. But, there is a "look back" period so you must work with a qualified attorney before gifting away any assets as you age.
Misconception #10: You can wait to do long-term planning until your spouse or you get sick. Yes, to some degree. However, you and your spouse will be much better off if you have taken important planning steps in advance, before a crisis occurs. What stops most people from being able to effectively plan when they are in the middle of a crisis is that the ill person is unable to make decisions and sign the necessary legal documents.
Misconception #11: All General Durable Powers of Attorney are created equal. Completely false! A General Durable Power of Attorney is a highly customized legal document -- and NOT a form! Most Durable Powers of Attorney don’t contain even the most basic gifting authority. Without a gifting power, your agent is usually limited to spending your money on your bills and selling your assets to generate cash to pay your bills. Some Durable Powers of Attorney contain a gifting provision, but the Minnesota Statutory Power of Attorney it is limited to $10,000 per year. This is particularly concerning for unmarried couples as the IRS considers ANY exchange of money/assets between them to be a gift. The annual limit of $10,000 is too small for effective asset protection planning, and relates to a completely different type of federal estate and gift tax issue. Unique Estate Law has created an enhanced power of attorney to get around that limit.
Misconception #12: Since you are married, your spouse will be able to manage your property and make financial decisions without a general durable power of attorney. Not true. If you become incapacitated and your spouse needs to sell or mortgage the family home -- or gain access to financial ac-counts that are in your name only -- your spouse will need a general durable power of attorney. Without one, your spouse will have to go to Court and get the judge’s permission to act on your behalf by way of a conservatorship proceeding.
Misconception #13: You can hide your assets while you become eligible for Medicaid (Known as Medical Assistance in Minnesota). False! Intentional misrepresentation in a Medicaid application is a crime and can be costly. The IRS shares any information concerning your income or assets with the local Medicaid eligibility office. You -- or who-ever applied for Medicaid -- may have to repay Medicaid to avoid prosecution.
Misconception #14: Medicaid rules that applied to your neighbor when he went into a nursing home will also apply to you. Maybe not. Medicaid rules change. Don’t assume the law that applied to your neighbor will also apply to you. In addition, there may have been facts about your neighbor’s situation that you just don’t know.
Tuesday, November 05, 2013
19 Smart Ways to Protect Your Assets
Minneapolis Estate Planning and Probate Lawyer Explains How to Protect Your Assets
Smart Way #1: Make a promise to yourself -- now. Make a personal commitment to yourself and your family that you will do everything possible to protect your family and your assets.
Smart Way #2: Identify your personal and financial goals. If you could have anything you want, personally and financially, what would it be? What are your dreams? How do you and your spouse want to spend your retirement years?
Smart Way #3: Discover which tools you can use to achieve those goals. You have many legal tools at your disposal that, when used correctly, will create exactly the plan you want for yourself and your family. Ask your estate planning attorney to explain the tools that will achieve your personal and financial goals.
Smart Way #4: Avoid probate and the Court system, as appropriate. Create a family estate plan that, upon your death, distributes your assets to your heirs without going through the Court-supervised process called probate. Most often a Revocable Living Trust is used for this purpose.
Smart Way #5: Reduce income taxes whenever possible. Create a family asset protection plan that eliminates unnecessary income and capital gains taxes and minimizes all other taxes. Without proper planning, much of your estate can be lost to various types of taxes.
Smart Way #6: Protect yourself with insurance. Lawsuits can quickly tie up your assets. And if the other party wins the lawsuit, the judgment against you could quickly deplete your funds. If you drive frequently, own rental property, or operate a business, buy an umbrella liability policy that protects your assets from lawsuits.
Smart Way #7: Provide for future health care and financial decisions. Your family estate plan should protect you and your spouse if the time comes when either of you cannot make decisions. Your estate planning attorney can make sure you have the legal documents in place so a competent, trusted person can make these important decisions according to your wishes.
Smart Way #8: Plan now to fund nursing home care. Sadly, many people think the only way they can pay for their nursing home care is by spending down their estate. But, in fact, you can fund your long-term care in ways that do not require that you spend down your estate. One common way is with long-term care insurance. Don’t wait until it’s too late to decide how to fund your nursing home care. Do it now, long before you need it.
Smart Way #9: Pay close attention to Alzheimer’s disease and its associated costs -- even if you have no reason to worry about it. Many people who never expect Alzheimer’s disease to strike have had to face its problems with no advance planning. So, plan for Alzheimer’s disease now, while you have time. This includes the need to address issues of backup decision-makers, assisted living, and nursing home care. If your children can care for you later in life, that’s fine. If they cannot, your advance planning will pay big dividends. Plan for the worst -- and hope for the best. Then, in either case, you will have all your bases covered.
Smart Way #10: Keep all control within your family. If you don’t plan properly, you could find that a friend or relative has petitioned the Court to intervene on your behalf. Once a judge gets involved, you have ongoing legal and accounting expenses, plus more problems and hassles than you would ever want to endure. The smart way to plan for your later years is to keep total control within your family.
Smart Way #11: Create your plan now, while everyone involved is competent to make decisions. Seniors often come to our office seeking help only to learn that they are too late to correct a terrible situation. We feel awful when we must tell them that the much-needed planning should have been done two, five or ten years earlier. Don’t wait until you need help to create your plan. By then, it’s too late.
Smart Way #12: Review your plan at least once a year. Every time your circumstances change or your goals change, you should change your estate plan. If your plan is not up to date, the unintended consequences to you and your family could be disastrous. Make an appointment at least every year to meet with your estate planning attorney. Then you can go over your plan and discuss any changes in your life circumstances.
Smart Way #13: Make proper decisions concerning your retirement benefit distributions. Make sure your estate plan maximizes income-tax-free deferrals and minimizes income and estate taxes.
Smart Way #14: Work closely with your physician about your Medicare coverage. Often skilled nursing services and home health coverage are terminated or denied with little or no input from your treating physician. Before you go without health care that could be covered by Medicare, talk with your physician about your concerns so that he or she can help you get the Medicare coverage you deserve.
Smart Way #15: Think about future housing options. Start from the perspective of where you would like to live. Then determine if you could afford this option by comparing your monthly income along with your life savings to the initial cost and the ongoing financial commitment you would have to make. Make sure you consider (1) your healthcare needs that will not be covered by insurance, (2) financial security for your surviving spouse, and (3) your desire to pass on a legacy to your children.
Smart Way #16: If you are in a second marriage, decide how you will handle the high cost of nursing home care. If you are not able to pay $5,000 per month to a nursing home and want your children from an earlier marriage to receive your property, a Marital Agreement alone will not do the trick. Medicaid ignores these contracts and considers all of the couple’s assets, whether owned jointly or individually, in determining Medicaid eligibility. A better choice is to include in your Marital Agreement a provision that requires each spouse to obtain and maintain long-term care insurance. Also, you can include additional provisions that clearly state that the healthy spouse is able to take all necessary steps to protect his or her separate property from a Medicaid “spend-down.”
Smart Way #17: Keep the lines of communication open within your family. If one of your children will be managing your finances, you should take specific steps to help him or her avoid conflict within your family. Insist that your child disclose to other family members what has been done on your behalf. You can do this by adding this instruction to your Trust or General Durable Power of Attorney. By doing this you accomplish two things: One, you keep everyone in the loop so feelings of distrust are eliminated. And two, you reduce the risks of financial abuse because other family members will know how your finances are being managed.
Smart Way #18: Don’t let incapacity put your family at risk for criminal or social worker investigations. Many professionals are responsible for protecting frail and elderly people from predators. If your legal documents don’t provide clear legal authority and guidance on how to manage your assets, the police or adult protective services could step in and question your children’s actions and motives. If authorities investigate your children’s actions, at worst, they could file criminal charges. At best, an investigation by adult protective services could return a “finding” of no current financial abuse. You can eliminate these risks to your children -- and avoid becoming a burden to your children -- with a competent estate plan.
Smart Way #19: Hire a competent, experienced estate planning attorney to create an estate plan. The areas of estate planning and elder law are far too complex to hire just any attorney. Often, strategies used in estate planning to minimize taxes directly conflict with strategies used in elder law planning to protect assets and achieve Medicaid eligibility for nursing home care. In situations where both goals are important, you and your family need a lawyer who has in-depth knowledge and experience with both sets of rules and strategies. Most attorneys are not qualified to provide these services. Make sure the estate planning attorney you hire has the knowledge, skill, judgment, and experience to create a competent plan for you and your family.
From within Hennepin County Unique Estate Law represents estate planning and elder law clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park. The Minnesota law firm of Unique Estate Law focuses on all aspects of estate planning, including specialized wills, trusts, powers of attorney and medical directives for married couples, young families, blended families, single parents, gay families and those going through a divorce. Unique Estate Law also handles probate administration, asset protection, Medical Assistance planning, elder law, business succession planning, adoptions and cabin planning.