December 4, 2013   Trusts

Problems with Powers of Attorney

By Vickie Schumacher
A power of attorney is a legal document that gives someone authority to conduct business for you if you are unable to do so. For example, if you know your signature will be required when you are out of the country, you might give someone you trust (like your spouse or attorney) legal authority to sign the papers for you in your absence.   Some people sign a general power of attorney thinking this document will allow their designee to transact business for them if they should become incapacitated, as a way to avoid a court conservatorship or guardianship. But most general powers of attorney become invalid at incapacity, so they won’t work then. Some professionals recommend using a durable power of attorney, which does remain valid through incapacity. But even a durable power of a...
December 2, 2013   Trusts

Why Do I Need a Power of Attorney if I Have a Living Trust?

By Vickie Schumacher
When your attorney prepares your living trust document, he or she will probably also prepare a durable power of attorney for asset management. There are several reasons why this document could be important.   1. Limited control over assets not in your trust. Your living trust document can only give your successor trustee (or co-trustee) authority to manage the assets you put into your trust. A durable power of attorney for asset management gives your successor limited authority to manage assets that are not in your trust.   For example, let’s say you are incapacitated and your successor trustee finds that you forgot to put an asset into your trust—or you receive an inheritance or win the lottery in your personal name. This document (when properly written, of course) c...
November 1, 2013   Trusts

Three Ways to Plan for Your Pet

In 2007, Maltese lapdog Trouble became the richest dog in the world when owner Leona Helmsley left Trouble an inheritance of $12 million. Until her death in 2011, Trouble lived in the lap of luxury, receiving care totaling $100,000 annually and enjoying a full-time security guard. Although most pet owners will never see Trouble’s wealth, many treat their pets as part of the family. This article discusses three ways that pet owners can provide for the pets that outlive them.   Informal Arrangement Often, pet owners will simply make informal agreements with loved ones concerning the care of a pet. These informal agreements typically consist of a verbal conversation during which a friend or family member of the pet owner agrees to care for the pet after the owner becomes incapacita...
September 4, 2013   Trusts

Why Do I Still Need a Will if I Have a Living Trust?

By Vickie Schumacher
When your attorney prepares your living trust, he or she will also prepare a short “pour over” will to go along with it. There are primarily two reasons for having this document: 1) it acts as a safety net and sends a “forgotten asset” back into your trust and 2) it names a guardian for any minor children.   The Pour Over Will as a Safety Net A revocable living trust can only control the assets that have been transferred into it. This process of changing titles and beneficiary designations to your trust is called “funding your trust.” It is a simple concept, yet it is what keeps you and your family out of the courts in the event of your incapacity and/or death; it also allows you to keep more control over the distribution of your assets to your bene...
September 3, 2013   Trusts

Should I Name All of My Children as My Successor Trustees?

By Vickie Schumacher
I know this sounds like the kind of response you would get from your attorney, but the short answer, truly, is “It depends.”   When you set up a revocable living trust, you name someone to be trustee of your trust. Most people are their own trustees so they can continue to handle their assets and financial affairs just as they always have. Many married couples, especially those who have been married for some time and own their assets together, are co-trustees. This way, when something happens to one of them, the other can continue to handle their financial affairs without interruption.   But, eventually, you will need someone (a successor trustee) to step in and manage your trust for you—at your incapacity or death if you are a single trustee, or at your survivi...
August 30, 2013   Trusts

Is a Living Will the Same as a Living Trust?

By Vickie Schumacher
This is confusing to many people, and quite understandably so, because the names are so similar. But these are very different documents and they do very different things.   A living trust is for financial affairs. It is similar to a traditional will because it gives instructions for the disposition of your assets after you die. But, unlike a traditional will, a living trust also provides instructions in the event you become incapacitated before you die. After a living trust has been established, you transfer your assets to it by changing the titles and beneficiary designations of your assets to your trust. This keeps you, your family and your assets out of the courts if you become incapacitated and avoids probate after you die.   A living will is for medical affairs. It is a docu...
October 3, 2012   Trusts,   Estate Planning

How to Transfer More than $5 Million to an Irrevocable Spousal Access Trust

By James G. Blase, CPA, JD, LLM
Background   Many clients are scrambling to implement significant gifting plans and trusts prior to year-end, when the current $5 million lifetime gift tax exemption and $5 million generation-skipping transfer tax exemption are both scheduled to sunset, with the lifetime gift tax exemption potentially being reduced to its previous $1 million level. For many married couple clients, the goal is to double the amount of this current gift, to up to $10 million, again either outright or in trust.   Reciprocal Trusts   It is of course a simple matter for one spouse to establish a $5 million irrevocable spousal access trust (or “SAT,” for short) for his or her spouse, and for the other spouse to establish a $5 million trust or trusts for the benefit of the chil...
January 25, 2012   Trusts

Ins and Outs of Trusts

By Gary B. Garland, J.D., CELA
Some of the public does not know what a trust is. Others think it is merely for the rich. Many others have come to me and said something like “I need a trust,” as if it is aspirin or some panacea. What most of the public (and most non-estate planning attorneys) don’t realize is that there are roughly 65 different types of trusts, some more broad than others, some quite specialized, and many share similar features. This brief overview should be a simple reminder for the seasoned practitioner, or a starting point for those new to the wonderful world of trusts.First, let’s start with the basics – the Trust has three “points” – a Grantor (Settlor, Trustmaker), a Trustee, and one or more beneficiaries. The Grantor creates the trust, the Trustee ca...
January 19, 2012   Trusts

Offshore Asset Protection Trusts

With malpractice and liability insurance costs so high -- and lawsuits so common -- some people have turned to offshore asset protection trusts as a way to protect their assets and still keep some control.Those who are at a higher risk and may need this kind of asset protection include lawyers, doctors, architects, entrepreneurs, contractors, property developers and accountants.Offshore asset protection trusts are created under the laws of a foreign country (often the Isle of Man, Cayman Islands, or the Cook Islands) that does not enforce the judgments of other countries.A common way to set up one of these trusts is to transfer your assets to a limited partnership. As the general partner, you could keep only 1% of the shares and retain control. The other 99% of the shares would be transfer...
September 1, 2011   Trusts

Niche Trusts

Revocable Living, Irrevocable Life Insurance, Charitable Lead, and Grantor Retained Annuity - these are trust descriptors that are familiar to estate planning professionals. However, there are many less well-known types of trusts that clients may ask about or benefit from having. Some of those other types of trusts will fill an estate planning need like no other arrangement can. Some arrangements called "trusts" do not fit the traditional trust definition. Still other things called "trusts" are outright shams.As professionals, we need to know about the lesser-known trusts, when to use them, when to avoid them, and when to warn our clients to get out of them.In this issue of The Wealth Counselor, we review some trust basics and then provide an introduction to a number of...
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