Living Trusts

How do I transfer assets into my revocable living trust?

There are a variety of estate planning tools than can ensure your loved ones are protected. While creating a will serves a variety of purposes, it must be probated which can be a time consuming and costly process. For this reason, establishing a revocable living trust is another option. This estate planning tool takes ownership to your property, but allows you (as the trustee) to continue managing your assets during your lifetime.

In addition, a well designed trust allows your property to be distributed to the beneficiaries without going through probate, and also allows you to name someone to manage the assets in the event you become incapacitated.

If these are your circumstances, you are probably already worrying about how to continue to help your child once you are gone.  You predict that your child will misuse any lump sum of money left to him or her via your will.  You don’t want to completely cut this child out of your estate plan, but at the same time, you don’t want to enable destructive behavior or throw good money after bad.

Trusts are an estate planning tool you can use to provide an inheritance to a worrisome heir while maintaining control over how, when, where, and why the heir accesses the funds.  This type of trust is sometimes called a spendthrift trust.  

As with all trusts, you designate a trustee who controls the funds that will be left to the heir.  This trustee can be an independent third party (there are companies that specialize in this type of work) or a member of the family.  It is often wise to opt for a third party as a trustee, to prevent accusations among family members about favoritism.

The trust can specify the exact circumstances under which money will be disbursed to the heir.  Or, more simply, the trust can specify that the trustee has complete and sole discretion to disburse funds when the heir applies for money.  Most parents in these circumstances discover that they wish to impose their own incentives and restrictions, rather than rely on the judgment of an unknown third party.

The types of conditions or incentives that can be used with a trust include:

• Drug or alcohol testing before funds are released
• Payments directly to landlords, colleges, etc., rather than payment to the heir
• Disbursement of a specified lump sum if the heir graduates from university or keeps the same job for a certain time period
• Payment only to a drug or alcohol rehab center if the child is in an active period of addiction
• Disbursement of a lump sum if the child remains drug free
• Payments that match the child’s earned income

If you are considering writing this type of complex trust, it is advisable to seek assistance from a qualified and experienced estate planning attorney who can help you devise a plan that best accomplishes your wishes with respect to your child.
 

Fran Hawthorne (NYTimes.com) has an article published entitled “When Boomers Inherit, Complications May Follow” (Feb10, 2014). Provided below is a summary of the article from NYTimes.com:

When Boomers Inherit, Complications May Follow

There have never been as many heirs with as much money as now, thanks to the intersection of two demographics: the 79 million baby boomers and the general thriftiness of their Depression-raised parents.

"Inherited money is sacred money," said Rick Kagawa, 61, a financial planner in California who inherited money and property when his mother died in 2010.

"Whatever you do with that money, you should think about your parents and what they would think of what you did."

Often, as with Ms. Cornell, emotional ties make heirs reluctant to alter a penny of their parents' investment strategy or shed a single inch of property.

"We've had clients who wanted to keep a stock that was part of the family's wealth in memory of their parents, even if it's causing a lack of diversification in the portfolio," said Charles D. Haines Jr., chief executive of Kinsight, a financial advisory firm based in Birmingham, Ala., with $500 million under management.

Ms. Bradley of the Sudden Money Institute suggests that instead of trying to memorialize parents by hanging onto their stock portfolio, offspring should "Do something with the money to create a lasting memory." One client, she said, uses the interest from her inheritance to host an annual family reunion.

A picture caption on Tuesday with an article about baby boomers' inheriting their parents' estates misstated the name of the university where the photograph of a Japanese garden was taken.

To read the full article go to "When Boomers Inherit, Complications May Follow" By Fran Hawthorne (NYTimes.com).  

Danielle and Andy Mayoras (Forbes.com) have published an article entitled “Five Estate Planning Lessons From The Paul Walker Estate” (Feb 10, 2014). Provided below is a summary of the article from Forbes.com:

Five Estate Planning Lessons From The Paul Walker Estate

Recently, Paul Walker's father filed to open the estate, which included Paul Walker's Last Will and Testament.

The probate filing revealed that Paul Walker’s assets totaled about 25 million dollars. The filing also showed that Walker had a revocable living trust in which he named his daughter the sole beneficiary of that trust. Unlike wills that are public documents, Trusts are private documents, thus no one but the designated ones according to the Trust will know what the Trust language states.

Lesson #1: Paul Walker placed His Trust In A Trust.

Depending on your circumstances, having a trust is one of the best Estate Planning tools for a lot of people, having a will is only a portion of the planning. Paul Walker’s will transferred all of his assets into a trust he created. This allows the probate process to be much quicker and simpler.

Lesson #2: Trusts Must Be Funded During Life.

When you fund your trust during your lifetime all the assets you put into your Trust will automatically be private once you pass away, meaning that nothing should be left to pass through the will. The reason we do know that Walker had a will, trust, and 25 million in assets is because he didn't fully fund his trust. 

Lesson #3: No One Should Wait Until They Are Old To Do Estate Planning.

Paul Walker’s will was signed in August of 2001, when he was only 28 years old. Far too many adults in this country wait until “someday” to prepare even a basic will.  No one should ever procrastinate with estate planning!  Walker certainly didn’t plan to die in a car accident.

To continue reading the Five lessons head over to read the full article by clicking the link: "Five Estate Planning Lessons From The Paul Walker Estate" By Danielle and Andy Mayoras (Forbes.com).  

Week 3: Free Online Will Based Estate Plan Package¹

The LegalJourney Law Firm is providing a free “Online Will Based Estate Plan Package” for the first 2 active duty and/or reserved military members who sign up for a new client account via the online legal services link at www.legaljourney.com. 

To set up a free online account:

1.     Go to www.legaljourney.com;

2.     Select “Click Here For Online Legal Services”;

3.     Select “Register for a New Online Legal Services Account today!"

Create a user account and you will be notified within 24 hours if you will be a recipient of todays offer.

The LegalJourney Law Firm’s Online Will based Estate Plan Package includes: a Will, a Living Will, Health Care Power of Attorney, HIPPA Authorization and Durable Power of Attorney.

To find out additional details, please contact the LegalJourney Law Firm PLLC

¹This offer is available until close of business May 23, 2014.

Day 4: Free Online Will Based Estate Plan Package¹

The LegalJourney Law Firm is providing a free “Online Will Based Estate Plan Package” for the first 2 mother's who sign up for a new client account via the online legal services link at www.legaljourney.com. 

To set up a free online account:

1.     Go to www.legaljourney.com;

2.     Select “Click Here For Online Legal Services”;

3.     Select “Register for a New Online Legal Services Account today!"

Create a user account and you will be notified within 24 hours if you will be a recipient of todays offer.

The LegalJourney Law Firm’s Online Will based Estate Plan Package includes: a Will, a Living Will, Health Care Power of Attorney, HIPPA Authorization and Durable Power of Attorney.

To find out additional details, please contact the LegalJourney Law Firm PLLC

¹This offer is available until close of business May 15, 2014.

Day 2: Free Online Trust Based Estate Plan Package¹

The LegalJourney Law Firm is providing a free “Online Trust Based Estate Plan Package” for the first 2 mother's who sign up for a new client account via the online legal services link at www.legaljourney.com. 

To set up a free online account:

1.     Go to www.legaljourney.com;

2.     Select “Click Here For Online Legal Services”;

3.     Select “Register for a New Online Legal Services Account today!"

Create a user account and you will be notified within 24 hours if you will be a recipient of todays offer.

The LegalJourney Law Firm’s Online Will based Estate Plan Package includes: a Will, a Living Will, Health Care Power of Attorney, HIPPA Authorization and Durable Power of Attorney.

To find out additional details, please contact the LegalJourney Law Firm PLLC

¹This offer is available until close of business May 13, 2014

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.

As a way of saying thank you, the LegalJourney Law Firm PLLC will be offering free and/or reduced estate planning for *Mother’s day and **National Military Appreciation during the Month of May.

Every mother and/or military member (current active duty or reservist) who connects with the LegalJourney Law Firm PLLC via the LegalJourney Blog, LinkedIn, Twitter, and/or Facebook during the month of May will also receive 10% off any online legal service.

Opportunities to receive a reduced price or completely free legal service will be posted via the LegalJourney Blog, LinkedIn profile, Twitter account and Facebook page.

*During the week after Mother’s day, mother’s can take advantage of the offers each day starting May 12, 2014 through May 16, 2014.

**Active duty and/or reserved military members that reside in the state of Florida can take advantage of the offers each week of May. 

Estate planning is important for everyone. We simply don’t know when something tragic could happen such as sudden death or an accident that could leave us incapacitated. With proper planning, families who are dealing with the unexpected experience fewer headaches and less expense associated with managing affairs after incapacity or administering an estate after death.

If a person fails to do any planning and becomes involved in a debilitating accident or passes away, each state has laws that govern who will inherit assets, become guardians of minor children, make medical decisions for an incapacitated person, dispose of a person’s remains, visit the person in the hospital, and more. In some states, the spouse and any children are given top priority for inheritance rights. In the case of incapacity, spouses are normally granted guardianship over incapacitated spouse, though this requires a lengthy and expensive guardianship proceeding.

In today’s world, increasing numbers of couples are choosing to spend their lives together but aren’t getting married, either because they aren’t allowed to under the laws of their state, such as in the case of gay and lesbian couples, or simply because they choose not to. However, most states don’t recognize unmarried partners as spouses. In order to be given legal rights that married couples receive automatically, unmarried couples need to do special planning in order to protect each other.

In general, unmarried individuals need three basic documents to ensure their rights are protected:

1. A Will – A will tells who should inherit your property when you pass away, who you want your executor to be, and who will become guardians of any minor children. These issues are all especially important for unmarried individuals. In most states, an unmarried partner does not have inheritance rights, so any property owned by his or her deceased partner would go to other family members. Also, in the case of many gay and lesbian couples, the living partner is not necessarily the biological or adoptive parent of any minor children, which could lead to custody disputes in an already very difficult time.  Therefore, it’s critical to nominate guardians for minor children.
    
2. A power of attorney – A power of attorney (for financial matters) dictates who is authorized to manage your financial affairs in the event you become incapacitated. Otherwise, it can be very difficult or impossible for the non-disabled partner to manage the disabled partner’s affairs without going through a lengthy guardianship or conservatorship proceeding.
    
3. Advance healthcare directives – A power of attorney for healthcare, informs caregivers as to who is responsible for making healthcare decisions for someone in the event that a person cannot make them for himself, such as in the event of a serious accident or a condition like dementia.  Another document, called a living will, provides directions on life support issues.

Estate planning is undoubtedly more important for unmarried couples than those who are married, since there aren’t built-in protections in the law to protect them and their loved ones.  It’s imperative that unmarried couples establish proper planning to avoid undue hardship, expense and aggravation.

Properly drafted estate planning documents are integral to the success of your legacy and end-of-life wishes.  Iron-clad estate planning documents, written by a knowledgeable attorney can make the difference between the success and failure of having your wishes carried out.  However, there’s more to estate planning than paperwork.  For your wishes to have the best chance of being honored, it is important to carefully choose the people who will carry them out.

Your estate plan can assign different responsibilities to different people.  The person who you most trust to raise your children, for example, may not be the person you’d designate to make health care decisions on your behalf, if you are incapacitated.  Before naming individuals to carry out your various estate and incapacity planning wishes, you should carefully consider the requirements of each role and the attributes which each individual has that will allow him or her to perform the duties effectively.

Executor.  You name the executor, (also known as a personal representative), in your will.  This person is responsible for carrying out all the terms of your will and guiding your will through probate, if necessary.  The executor usually works closely with a probate or estate administration attorney, especially in situations where will contests arise and your estate becomes involved in litigation.  You may appoint co-executors, or name a professional – such as a lawyer or accountant – as the co-executor.

Health care proxy.  Your health care proxy is the person you name to make medical decisions for you in the event you are incapacitated and unable to do so yourself.  In addition to naming a health care proxy (sometimes called a health care power of attorney), most people also create a living will (or health care directive), in which they directly state their wishes for medical care and end-of-life care in the event of incapacity.  When choosing a health care proxy, select a person who you know understands your wishes regarding medical care, and who you trust to carry out those wishes, even if other family members disagree.  You should also consider individuals who have close geographic proximity to you as well as persons you believe can make difficult decisions under pressure.

Power of attorney.  A financial power of attorney (or simply power of attorney) is different from a health care power of attorney in that it gives another person the authority to act on your behalf in financial matters including banking, investments and taxes.  You can limit the areas in which the person may act, or you may grant unlimited authority.  A power of attorney may also be limited for a specific time, or it may be a durable power of attorney, in which case it will continue even after the onset of incapacity (until your death).  A power of attorney can take effect immediately or “spring” into effect in the event of incapacity.

Guardians.  If you have minor children or other dependents (disabled adult children or other disabled adults for whom you are the named guardian), then your estate plan should name a person or persons to take over the parental role in the event of your death.  The guardian may also have control over any assets that you leave directly to your minor children or other dependents.  If you create a trust for the benefit of your minor children, then the trust’s trustee(s) will have control over those assets and their distribution.  Important considerations include age of the guardian, compatibility with his or her personality and moral values as well as the extent and quality of the existing relationship with your children.

Trustee.  If you place any assets in trust as part of your estate plan, then you must designate one or more trustees, who will act as the legal owners of the trust.  If you do not wish to appoint someone you know personally, you may appoint a corporate trustee – often a bank – to play this role.  Corporate trustees are often an excellent choice, since they are financial professionals and neutral, objective third parties.  Its important you select individuals who are not only trustworthy but also organized, diligent and detail oriented.