- Aug 21, 2014
5 REASONS YOU SHOULD HAVE A WILL AND A TRUST
1. If I have a Will, won't I avoid Probate?
No!!! A Last Will and Testament is what the Probate Court reviews to determine which of your assets should go to which of your heirs/beneficiaries. If you die without a Will, (dying "intestate") there are State Statutes designed to direct the Probate Court to determine those issues. Nonetheless, you should execute a Will to direct how you want your personal items to be specifically given (for example, all of my pets in my household shall, upon my death, be given to my sister; my gold ring shall be devised to my grandson; all of my pictures on Facebook and Shutterfly shall be addressed by my friend, who will used to create my memorial page). Plus, a Will can direct how you wish for your final remains to be disposed (buried, cremated, memorial, no memorial, etc.). However, when a Trust is done properly, it can be like magic and help your heirs avoid Probate. Plus, unlike Probate, which is a formal court proceeding that can be very lengthy and costly, no matter how small (or big) your assets total, a Trust is administered mostly privately, usually without court intervention. This helps prevent that long-lost great nephew from making any claims on the distribution of your assets. Your private assets remain private, with few exceptions! Also, unlike Probate, the administration of a Trust means that after your death, the distribution of your remaining assets will be distributed seamlessly and faster, since little to no court intervention is necessary.
2. I am worried that someone in my family will contest my Last Will and Testament; couldn’t they do that with a Trust, too?
Possibly, however, if your assets are transferred properly into the Trust while you (the Grantor) are still alive and competent, then it less likely that attacks on the provisions contained in the Trust will be successfully contested as you (as Grantor) already acted on your intent, not just signed the documents, as you do with a Last Will and Testament. Also, a Revocable Trust can be easily amended so, unlike a Will, less formalities are needed to change your provisions contained therein, as long as the Trust expressly grants that power within the Trust initially (which is highly suggested). Likewise, the ability to easily make amendments to your Trust will substantially save potential costs, than compared with executing a new Will and/or Codicil to your current Will.
3. Dementia and Alzheimer's are a concern of mine. Won't my Will address those issues?
NO!!! A Last Will & Testament only is reviewed by the Probate Court upon your death; it does not have any impact on your life's decisions. However, many Revocable Trusts contain provisions directing a designated individual(s) on what to do and who you wish to administer your assets in YOUR LIFETIME for YOUR sole benefit should you definitively declared incompetent. Many clients are concerned that their children should receive all of their assets upon their deaths. The reality is that with 1 in 6 women, 1 in 11 men in our country over the age of 65 declared having Alzheimer's, you will likely live a longer life than you anticipate, and you very well may have Dementia and/or Alzheimer-related issues in the later part of your life. This means that your assets will need to be applied for your round-the-clock care for an extended period of several years. Although long-term care insurance (which I highly recommend purchasing) will help offset the costs for such care, you still need to address the legal requirements of that situation. A Living Revocable Trust can (and should) reflect your intent and wishes for such a situation by including a Pre-Need Designation of Guardianship, which is highly suggested and to which a Will cannot address. In addition, to a Will and Revocable Trust, I also highly suggest that my clients create their "living documents":
(1.) a Health Care Surrogate Designation and Living Will (also called "health care directive"); (2.) a Durable Power of Attorney (a "DPOA"); and (3.) a HIPAA (health instructions permitting provider authorization, in accordance with the Health Insurance Portability and Accountability Act)
A Health Care Surrogate Designation and Living Will reflects your end-of-life desires; in contrast, your HIPAA permits as many people as you choose to discuss medical issues with your health care professionals as needed to discuss your medical issues but NOT to make decisions on your behalf. The Durable Power of Attorney allows the people appointed to make financial decisions on your behalf, if you are temporarily incapable of doing so.
4. I have a home and live right now in one state but will be retiring and living in my second home in another state, while still owning property in my current domicile. Won't my Will address all of these issues?
A Will is usually state-specific, so when you declare your permanent residence in a different state you should update your Will to reflect that. Moreover, a Trust is a multi-state instrument which can avoid multiple Probate proceedings in different states no matter where your real estate and/or assets are located. If you only have a Will, then your heirs will likely, depending on the wording of your deeds, have to enter Probate into each state that you own real property at the time of your death (called ancillary Probate administration). This will extend the length and cost of the Probate proceedings considerably. However, by transferring your real property into the Trust during your lifetime, all of that time and expense can be significantly saved.
5. Isn't a Trust just for rich people and very complicated?
No! If you own any real estate and have any assets that you wish protected, a Trust certainly should be an instrument you consider. The initial work that you will have transferring assets into the Trust is not that burdensome and will potentially prevent Probate, Guardianship and Elder Abuse -- well worth the time spent while you are still capable and competent to do so! A Revocable Living Trust will not save any applicable Federal Estate Taxes but certainly can save you and your loved ones, time, attorney and court fees, and emotional stress by addressing probate and guardianship for yourself BEFORE these issues arise. At the least, a Will should be executed but you should also highly consider executing a Trust, as well! Why encourage my clients to execute a Trust that may entirely avoid the need for Probate, which would generate significantly more income for my firm? Doesn't that ultimately hurt my practice? Yes, but I do so because I work hard to provide good counsel to my clients, not just what increases my own income. I see first-hand what happens when someone does not take preventative measures to avoid probate and guardianship proceedings. I truly am here to help you avoid that situation, if possible!
BEFORE YOUR TROUBLES HIT THE FAN, PLEASE FULLY EXECUTE YOUR ESTATE PLAN!!
- Aug 14, 2014
The following is an article, found at www.dailyfinance.com/writers/dan-caplinger/, published on Aug 14th 2014; it reminds us why whether healthy or sick, rich or poor, a basic will probably is not enough to protect most families sufficiently.
Robin Williams' Estate Plan Spares His Heirs a Lot of Drama
The life of comic genius Robin Williams brought joy to millions of fans, and his tragic death has sent shock waves throughout the entertainment community. But as painful as his loss will be for family, friends and fans, it appears that at least according to early reports, Williams took care of business when it came to setting up a solid estate plan.
Keeping Private Affairs Private
Celebrity estate planning is often bungled, and the errors get magnified both by the large sums involved, and the fact that their deaths play out on the same public stage that they lived their lives on. (Think of Philip Seymour Hoffman, for example.)
Despite having a wealth of advisers, many wealthy entertainers fail to prepare adequately to handle the transfer of their real wealth after their death. Williams, however, apparently used at least one revocable trust for the primary portion of his estate planning, and that will likely be adequate to avoid some of the complications and tax liabilities that other celebrities' families have had to endure.
Most people think of wills as the basic must-have estate-planning document. But for those in the public eye, the downside of using a will as your primary document is that it's subject to the probate process, which invites public scrutiny of court-filed records. Especially in California, where Williams lived, the probate process is notorious for being long and arduous.
By contrast, revocable trusts enable people to arrange for the disposition of their assets after death without any involvement from a probate court. And, the public has no right to see the trust document. It's possible that we'll never know for sure what any trust that Williams created said. Because trusts keep personal business out of the public eye, even family members who disagree with each other can choose to resolve disputes privately, if they choose. That can avoid the negative publicity of will contests and keep arguments from escalating.
Is a Revocable Trust Smart for You?
Apart from the different procedural requirements, revocable trusts also give you the ability to control how and when your loved ones will receive your assets. For instance, in many cases, parents arrange to have money held in trust until children reach a certain age at which they believe they will be able to responsibly manage their finances. These provisions allow trusted advisers to act as trustee and handle financial matters during the early part of children's lives, and they ensure that children don't squander their inheritance quickly and find themselves with regrets later in life.
In addition, revocable trusts can give you flexibility in making changes to your estate plan as needed without necessarily having the same level of formality that a will involves. Given that Williams was married three times and had children from different marriages, making sure that his estate planning was rock solid in the face of changing circumstances was particularly important. Sometimes, families will break up into factions following a death, and arguments can become contentious when the estate plan isn't perfectly clear.
The downside of a revocable trust is that it tends to be more costly in terms of upfront fees than a simple will. However, unless you live in a state whose probate process is relatively simple, the extra cost in preparing a trust often pays for itself in not having to hire an estate planning attorney or pay court costs associated with probate proceedings after death.
Testamentary Trusts Are an Alternative
If probate isn't an issue, then you can get the same protection that trusts provide by setting up testamentary trusts in your will. If you go that route, the trust doesn't come into being until after your death, and your will automatically transfers your assets into the trust according to your instructions at that time.
One important thing to remember is that a revocable trust doesn't do you any good at all unless you transfer assets into the name of the trust.
Many times, people make the mistake of creating a trust, but never executing the real estate deeds to move their home into the trust, or leave financial accounts in their own names rather than making arrangements with their brokers to have accounts opened in the name of the trust. Even if you follow the common practice of having a backup will that puts any forgotten assets into the trust at your death, doing that leaves you vulnerable to probate, negating one of the values of having a trust in the first place.
No matter how modest your estate might be, having the right documents in place, and your financial house in order, can make a huge difference to your heirs if something happens to you.
OOOOOH, can't wait!! The Boca Walk to End Alzheimer's will be partnering with ROBERT GRAHAM and WINES FOR HUMANITY on Saturday, Sept. 6 at Boca Town Center Mall. Great reason to spend money, drink and be hopeful that Together, we will make Alzheimer's a Memory!!!