There Is More To Estate Planning Than A Will

While having a will is key in estate planning, people often make the mistake of thinking that its the only estate planning document they need.

A Forbes article, The Biggest Estate Planning Mistake People Make points out that a “will has little or nothing to do with you, It’s all about planning for someone else.” 

            So, what is estate planning?        

To guarantee that you are well-covered legally, financially and medically even when you are debilitated and cannot decide for yourself, make sure to complete the following five documents in your estate plan: 

Also known as Health Care Power of Attorney or Medical Power of Attorney, the Advanced Health Care Directive is one of the two legal documents every adult needs. This document assures you that your chosen and trusted health care agent will be able to make health care decisions for you when you are unable to do so for yourself. 

A Living Will contains your instructions on what actions should be taken if you are permanently unconscious or terminally ill. A Living Will is often signed by persons who do not want the burden of deciding whether to remove life support to be placed on the shoulders of a loved one.

A Durable Power of Attorney (often called a Financial Power of Attorney), on the other hand, will cover other practical and financial obligations you are incapable of handling. Again, your chosen and trusted agent will make decisions and do thing on your behalf, which includes but are not limited to: payment of bills, taking care of investments and overall financial management. 

A Revocable Living Trust “acts like a super power of attorney,” according to Brad Wiewel. It reduces the possibility of having problems with financial institutions accepting your Durable Power of Attorney and gives you many other benefits. One main advantage of having a revocable living trust is that assets transferred to the trust avoid probate at death, which keeps details of your estate private and often reduces the cost and time of administration after your death.

If you are a long-time reader of my blogs, you might remember me enumerating the benefits of a revocable living trust when I discussed the flexibility of living trusts.

You must take note though, that even with a living trust, you will still need a Durable Power of Attorney “to identify the person you want to manage your retirement accounts, like your 401(k) and your IRAs,” according to the Forbes article.

A HIPAA Medical Authorization ensures that the people you name are legally entitled to obtain your protected health information. In other words, it allows your loved ones to be informed of your condition if you have a medical emergency or condition that prevents you from communicating with them directly.

If you want want to donate your organs when you die, you need to complete an Organ Donor Registry form. You should also notify the BMV when renewing your driver's license and inform your health care agent. To join the organ donor registry, visit Donate Life Ohio.

Ready to get your estate planning taken care of? Call me at 614.453.5208 to set up a free 1-hour initial consultation.

Russell C. Golowin helps clients create wills, trusts powers of attorney, HIPAA Medical Authorizations and other estate planning documents in the central Ohio area. Visit his website for more information on estate planning in Columbus, Ohio. 

Half of Adult Americans Don't Have A Will

A recent survey of Caring.com reveals that 58% of adults in the U.S. do not have a will or living trust. This percentage shows how adults neglect the importance of estate planning.

If you are part of this population, read on.           

I understand that it is easy to put off end-of-life planning not only for the young, but also for most people who refuse to think about their mortality. However, this kind of thinking prevents you from making decisions that will save your loved ones from additional stress during a time of great grief.

Have you considered setting up a will but never really acted on it?

Caring.com's survey conducted by Princeton Survey Research Associates International found out that 47% out of 1,003 adults do not have estate planning documents because they “haven’t gotten around to it.”

Procrastination is a common hindrance to any kind of planning, but once you know the burden and stress that a lack of will or living trust will give to your loved ones, you might reconsider.

I have previously written a blog post "Steps To Take When A Loved One Dies", a long list of to-do’s that will definitely exhaust bereaved family members. You wouldn’t want your loved ones to go through this arduous process while on a grieving period. If you need a bit of a push to start your estate planning, think of your loved ones. Do it for them.

 

Are you hesitant because of the value of your assets? 

Jody Giles, author of “Missing Pieces Plan: Providing You and Your Loved Ones Peace of Mind” says, “Even if you don’t have the wealth of Steve Jobs or Prince, what you do have means something to somebody. Regardless of the amount of ‘wealth’ you are passing on, let it be handed over based on your wishes, not your state’s laws.”

 

Still thinking about it? Here are two more reasons why you should seriously consider starting your estate planning NOW:

If you are a parent, you have to ensure that your child will be given the best care even after you are gone by nominating a guardian for your children. Giles stresses that a will has a critical role for the minor children and all parents need a will, “If for no other reason than the sole purpose of naming guardians.” This isn’t usually a topic that you or your partner would comfortably discuss, but it is imperative. You would want to leave your children under the care of people you trust, and not someone appointed by a judge. 

You need to have a health care power of attorney. Why? Because when there’s medical emergency and you are not able to decide for yourself, you want someone that you trust make the decisions for you. When a child reaches 18 years of age, parents are no longer legally empowered to make medical decisions for their children. In medical emergencies, you may even find it difficult to get updates on your child's condition without an advance health care directive and HIPAA Release.

Ready to take the first step but still have questions? Here are some answers to the questions commonly asked by clients and friends:

 

            Isn’t estate planning too complicated and costly?

 

It depends. The extent and complexity of your financial situation and your personal goals and wishes directly affect the process of estate planning. Simple estate planning usually doesn't cost much, but expect higher expenses when there’s a need to sort out some issues. According to Ashley Case, an Arizona-based tax and estate-planning attorney, “For individuals with modest wealth and straightforward wishes, a simple estate plan can be prepared quickly and inexpensively. Some factors that tend to complicate an estate plan include multiple marriages, children from different relationships, certain business assets, a higher net-worth, and complex wishes regarding distributions.”

 

            Should I get a will or a living trust?

 

            Mark Gilfix, an elderlaw attorney with Gilfix and La Poll Associates, LLP, suggests that you should choose living trust over a will. He discussed in a Caring.com video, Estate Planning: What You Need, the main factors to consider in choosing between a will and a living trust.  

However, Giflix emphasized that having a will is much better than nothing.

 

            How will I start with my estate planning?

 

      Another video of Mark Giflix briefly enumerates these steps to follow:

 

      He mentioned that the first step is to choose a trusted agent (usually chosen from parents, siblings, children and trusted friends). Then the next step would be determining your personal plan for your assets and where you want them to go when you are gone. Lastly, he highlighted the need to work with an expert upfront.  

With this guide, you can be more confident in taking the first few steps in implementing your estate plan. Remember that a help of an expert in this field can save you time and give you peace of mind that your documents have been prepared correctly. This way, you will avoid any possible problems and additional expenses in the future.

 

Russell C. Golowin is an Elder Law and Estate Planning Attorney for families in the Columbus, Ohio area.  If you need assistance with wills, trusts and other estate planning documents, call (614) 453-5208 today. Visit his website for more information on estate planning in Columbus, Ohio.

Does A Revocable Living Trust Protect My Assets From Nursing Homes?

One of the most repeated questions I hear in client meetings or at presentations is "Will a revocable living trust protect my assets from the nursing home?"

In the Medicaid Planning world, misinformation seems to swirl around the public.  It seems that many of the families I speak with were specifically told at a seminar that their revocable living trust would protect their life savings from the costs of long term care, and that they would not have spent the money on such a trust otherwise.

Can I Create a Trust Inside My Will?

All trusts aren't alike. When you put a trust in your will, it should be drafted precisely in order to satisfy your wishes and goals. Just any old boilerplate text or preprinted legal form won't do.

You may have one or more reasons to put a trust in your will (called a testamentary trust by lawyers). It can benefit your family, protect your money and save taxes. When the initial beneficiary dies (your spouse, perhaps), your trust can make certain other heirs chosen by you (say, children or grandchildren) will share the principal. Or you may want your favorite charitable organization to benefit. Quite likely you have other goals you want your trust to achieve.

You can set up a trust for just about any purpose. It's a remarkably versatile and flexible means to carry out your intent and assure the prudent management and eventual distribution of your assets. Let's look at some possibilities and benefits.

Types of Trusts
Testamentary trusts are often given various kinds of descriptive labels to identify their nature and purpose. Still, a trust can have multiple objectives.

• Marital trust. You can leave some of your estate to a marital trust for your surviving spouse's benefit. The trust assets will be free of federal estate tax in your estate because of a marital deduction, but they will be subject to estate tax when your spouse dies later. You can give your spouse the right to appoint the trust remainder to anyone. Or, if you prefer, you can use a "QTIP trust" so you can name the remainder beneficiaries.
  
  
• Family trust. Also called a bypass or credit-shelter trust, this provides lifetime financial support for your spouse. The trust assets can bypass the federal estate tax twice: first, at your death, when it qualifies for the unified estate and gift tax credit; second, on your spouse's death, when the remaining principal passes directly to your children or other beneficiaries you name. Many couples include both a marital trust and a family trust in their estate plans.
  
  
• Other trust types. An irrevocable life insurance trust is funded by the proceeds of life insurance on your life. A trust that benefits your family first and then distributes the principal to your favorite philanthropy is called a charitable remainder trust. Trust types go on and on.

Typical and Special Trust Provisions
Trusts usually last a long time. Just as you wisely choose the right kind of trust, you should include essential terms to assure flexibility and anticipate unpredictable circumstances.

Plan Carefully
Don't take chances—make sure your trust plans fulfill your beneficiaries' needs, allow prudent investment management and shelter the assets from unnecessary taxes. See an attorney who specializes in drafting wills and trusts. Equally important, name an experienced corporate trustee.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Spice Up Your Estate Plan By Using Trusts

Are you looking for new ways to protect your family and your money? Would you like to cut estate taxes and probate costs, too?

Trusts can be the answer. They are remarkably versatile and can broaden your estate plan. While not magical, they can produce results that seem beyond belief.

The particulars are simple. A trustee chosen by you manages the trust assets, called the principal, and pays an income to those you want to support, your beneficiaries. Your will or a separate legal document is needed to establish a trust. When you create a trust, you are referred to as the grantor or donor.

Why Would You Use Trusts Today?
A trust can be either revocable or irrevocable. A revocable living trust agreement allows you to amend or cancel the trust at any time, in case you change your mind. On the other hand, if you put a trust arrangement in your will, it will become irrevocable upon your death.

You can set up a trust for anyone for just about any purpose. Here are some typical trust arrangements.

• Family trust. You can create a trust in your will—known as a testamentary trust—for the benefit of your spouse, children and other family members. In a typical family trust, a husband and wife set up a trust in their wills for the surviving spouse's benefit. Each directs that after his or her death, the trust shall continue for the support of their children until the children attain a certain age, say 25 or 30. Then the trustee is to turn over the principal to the children.
  
  
• "QTIP trust." The acronym stands for qualified terminable interest property. Although the surviving spouse receives lifetime income from this trust, he or she may not have the power (other than certain limited rights) to determine the beneficiary of the remaining trust assets upon the survivor's death.
  
  The intent is generally to allow more control in a second marriage situation where the goals are to provide maximum financial support for the surviving spouse, but still ultimately pass the trust principal to children of the prior marriage.
  
  
• Living trust. You might decide to create a trust for your own benefit, a trust that will remain operative while you are living. It logically is called a living, or inter vivos (Latin for "between living persons"), trust. In this case, you direct the trustee (which can be yourself or a professional trustee of your choice) to look after the trust assets, pay you the income and counsel you about the investments. You are to be kept fully informed about all transactions. You can reserve the right to amend or revoke the trust, to add or withdraw assets, and to approve investment changes. The trust can continue after your lifetime for the benefit of your family or others, and the trust assets avoid the costs and delays of probate.

A Versatile Tool
If you'd like to make a gift to our organization or another charitable organization, but you first must satisfy your own family's financial needs during your lifetime and after, a trust can be the ideal solution.

Trusts let you have it both ways—pass assets to your heirs with the least amount of tax and make a gift to us. Often trust arrangements will accomplish much more, including professional investment management and the assurance that your wishes will be fulfilled.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Should I Create a Joint Trust? (Should We Have One Trust or Two?)

If you're married, perhaps you and your spouse are thinking about setting up living trusts. If so, you might ask, "Can't we have just one living trust for the two of us?" Is a joint trust a good idea?

How a Joint Trust Works
First, don't confuse a joint living trust with jointly owned property. A joint trust is created by a single document that manifests your and your spouse's respective wishes about the disposition of your respective property placed in the trust. As to joint ownership, there are various forms, but the most familiar is joint tenancy with rights of survivorship, by which the share of the deceased joint owner passes automatically and outright to the surviving joint owner.

With a joint trust, community property and separate property of both spouses may be transferred into the trust and retain their character as community or separate property. Both spouses benefit from the trust during their joint lifetime. When one spouse dies, the entire trust continues for the benefit of the surviving spouse.

Estate Tax Advantages
A joint trust is most commonly used in community property states, where most of the property in the trust is characterized as community property.¹ In some cases, there can be significant estate tax advantages to this type of arrangement.

Typically, the terms of such a joint trust are somewhat like this: When the first of the couple dies, the trust splits into Trusts A and B. The assets allocated to Trust A qualify for the federal estate tax marital deduction and include the survivor's share of the community property and the survivor's separate property, if any.

Example: Fred and his wife, Jean, have $5 million of community property in a joint trust. When Fred dies, normally one-half, or $2.5 million, would be allocated to Trust B, intended eventually to bypass Jean's taxable estate. However, this would generate estate tax in Fred's estate on the excess over a tax-free allowance $2 million in 2008. So, assuming Fred made no prior gifts, the excess of $500,000 will be allocated to Trust A. Result: Trust A will wind up with $3 million and Trust B with $2 million, both fully exempt from federal estate tax in Fred's estate.

However, the potential estate tax advantages must be weighed against many other factors and issues created by joint trusts.

Which Is Better?
Needless to say, arriving at a decision between a joint trust versus separate trusts is relatively complex. If you reside in a community property state, you and your advisor may wish to seriously consider a joint living trust. (One cautionary note: You may live in a community property law state, but perhaps the majority of the property you plan to place in the trust is characterized as separate property. In this case, separate trusts should be considered.)

If you reside in a noncommunity property state [Ohio is a SEPARATE PROPERTY State], each spouse's wishes and property usually are dealt with more efficiently by separate trust agreements. Ultimately, the right answer depends on your state laws and your personal circumstances. Whichever course you choose, it is imperative that your selected executor and trustee are experienced in dealing with separate and community property, and that they take all the necessary steps to maintain the original character of the property.

Your living trust will have legal and tax consequences. Equally as important, the structure of that document will have an impact on you and your beneficiaries in many other ways. Seek the counsel of an attorney who specializes in estate planning. And, of course, our organization's trust and estate planning professionals are available to assist you in exploring your options in developing this very important financial planning document.

¹ Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Discover the Flexibility of Living Trusts

A living trust is just what its name implies—a trust you establish while you're living. Living trusts can be "revocable" or "irrevocable," and there are unique characteristics to each. Although it's not normally intended to completely replace a will, a revocable living trust can be an effective way to maintain control of property during your lifetime—and a private way to dispose of it after your death.

Revocable Living Trusts
The benefits of establishing a revocable living trust—one that allows you to change the terms at any time—are many. Here are some of the most important advantages.

• Professional management. You may not have the ability or the time now to act as your own trustee and manage your assets the way you want. A professional trustee will do that for you. You can then observe how your trustee manages your money and continually make clear to him or her exactly what you want done with your money during and after your life.
  
  
• Probate avoidance. At your death, the revocable trust will become irrevocable. Then the assets in your living trust will bypass the expense and delay of probate. Transfers will not be public, so your privacy will be preserved.
  
  
• Asset protection. A trust will protect beneficiaries from others (protecting children's inheritances, for example, from divorced spouses).
  
  
• Control of terms. You may select the location of your revocable trust, thus choosing the law that will govern its operation and the interpretation of your trust instrument. By choosing the law of one state over another, it may be possible to do things that you cannot do under the laws where you are domiciled.

The Irrevocable Charitable Trust
If you are interested in making a major charitable gift but feel you can't give up the income from your assets, consider an irrevocable charitable remainder trust. Eventually [the charity] will receive what's left of the trust after your lifetime (and that of another beneficiary, if you wish), but in the meantime you'll benefit in these ways.

• Tax savings. If you transfer long-term appreciated assets to a charitable trust, you'll receive an income tax deduction based on your age and the fair market value of the assets on the day you set up the trust. Plus, the transfer is not subject to up-front capital gains tax.
  
  
• Lifetime income. Every year, the charitable trust pays you (or your beneficiary) either a fixed income (with the annuity trust) or variable income (with the unitrust) You make the choice when you set up your trust.

See how a charitable remainder annuity trust can benefit you.

See how a charitable remainder unitrust can benefit you.

SOURCE: University of Georgia in an article written by Mary L. McCormack

A Living Trust? You Don't Need to Be Rich

The term "trust fund" conjures up images of mansions, yachts and huge fortunes. But once the province of the very rich, trusts have found themselves into the lives of many families who've never thought of themselves as wealthy.

Trusts come in myriad forms, but for middle-class families, the living trust is popular because the person creating the trust can enjoy lifetime benefits. You can deposit assets in your own trust and ask the trustee to manage them prudently and pay the income to you, so you have more time for hobbies, travel and family.

Later, there are other important advantages. The property in a living trust that survives you can avoid the costs, publicity and delays of probate and speed property distribution to your spouse or other beneficiaries. If you choose, the trust can continue for their benefit in order to provide sound investment management and reliable financial support.

What Is a Living Trust, Anyway?
Unlike a trust you might establish by will, a living trust is set up by a written agreement between you and the trustee, and it takes effect immediately.

While you can be your own trustee, you may prefer to name a professional trustee to manage the trust assets, keep good records, pay you a regular income and—should you become incapacitated—pay your household and medical bills.

A living trust can be revocable or irrevocable. The advantage of a revocable trust is that you don't give up control—you can amend its terms or even cancel it whenever you wish. On the other hand, you may want to put some of your assets in an irrevocable trust so you can achieve other significant goals.

For example, you could set up a charitable remainder trust to pay yourself a dependable income for your lifetime and then distribute the remaining principal to our organization. The substantial, current income tax savings as well as future estate tax savings of this kind of trust magnify its appeal.

Your Estate Plan, Too

A revocable living trust can be an important part of your estate plan. It's an ideal vehicle for holding title to real estate outside your home state. You can make your life insurance payable to your trust. And the trust can include a credit shelter trust provision to help minimize estate taxes and other provisions to make gifts to family and charitable beneficiaries.

Along with your attorney, we can show you how a living trust can blend your personal needs, estate plans and philanthropic intentions.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Five Benefits of a Living Trust

Living trusts are flexible estate planning tools that can offer you many advantages, five of which are mentioned below:

1. Revocable. Because the needs of family members may change over time, a living trust normally allows you to modify trust provisions or change the beneficiaries.

2. Private. A living trust avoids the costs and delays of probate—the state-sanctioned system that oversees the administration of your estate. Because a living trust is not subject to public scrutiny, your beneficiaries and the specific amounts or percentages they receive remain confidential.

3. Continuous. Assets put in a living trust stay under the control of the trustee, until you choose differently. When the trust is established, you can name a successor trustee who will carry on financial responsibilities in the event of your incapacity or death.

4. Flexible. You may add other assets to the trust during your life. The living trust can be especially useful if you own real estate in another state by eliminating the need to have a separate probate proceeding in the other state.

5. Professionally managed. Though not exclusive to living trusts, banks are generally well prepared to act as trustee. Also, some attorneys are willing to take on the task. Through prudent investing, these individuals can help make the most of your trust's assets and ultimately deliver more money to your beneficiaries.

A living trust is a remarkable financial and estate planning tool. To secure the plan best suited to your individual needs, be sure to consult an attorney who is knowledgeable about the features and benefits of living trusts.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Getting Started: The Revocable Living Trust

The University of Georgia's Mary L. McCormack wrote the following article entitled "Getting Started: The Revocable Living Trust:

The subject of a living trust as an estate planning tool generates quite a bit of discussion. A living trust is an arrangement you create during your lifetime to provide for yourself and your family both before and after your death. It has built-in flexibility that can work very well with your overall estate plans. Though there are many advantages to using this estate planning tool, it is not a substitute for a will.

Looking at Both Sides

• Reduction of probate costs. Although you can enjoy the use of the assets you place in a trust during your lifetime, a living trust removes those assets from your estate for probate purposes. Therefore, you save the probate and administration costs you would incur if those same assets were distributed by the terms of your will.
• Speedy distribution of trust assets. By establishing a living trust during your lifetime, you are setting up a method of managing and distributing your assets. Because a living trust escapes the probate process, the plan of distribution you describe is set in motion immediately at your death. There are none of the delays that occur under distribution by will, and you can be sure your assets ultimately will benefit the charitable institution(s) that mean so much to you.
• Flexibility of planning. Most living trusts are revocable. This gives you the freedom to amend, add to or even completely revoke the trust agreement as you wish.
• Freedom of control. Living trusts give you the freedom to name both the beneficiaries and the trustee. Most likely you will name yourself as the trustee during your lifetime and maintain the right to appoint and select successor trustees and beneficiaries. You also control the income and principal and how much of it you wish to use during your lifetime.
• Investment management. You may choose to appoint a professional trustee such as a bank trust department or trust institution. This frees you from the worry of the day-to-day management of assets, yet if you remain as co-trustee, you still may direct investment goals, including instructing your trustee to change investment strategies.

If you wish, you can give your trustee broad powers and allow the trustee to make the decisions, do all the paperwork and collect the dividends and interest and credit them properly. You would receive periodic and detailed accounting statements, including year-end data for tax purposes. Should you suffer a prolonged illness, your trustee could even pay your medical and household bills.

• Confidential trust terms. A living trust is private. Unlike a will, no one, other than the beneficiaries, needs to know the contents of a trust.
• Charitable contributions. Once your needs and those of your family are met, trust assets can be distributed to charitable organizations like UGA.
• Tax savings. Although all the assets in a living trust are subject to estate taxes, a living trust may be drafted to make the most of estate tax advantages afforded under federal law. After your lifetime, the value of the assets distributed immediately to a charitable institution completely avoids estate tax.

Some Final Thoughts

Keep in mind that there's no income tax charitable deduction when you create a revocable trust, and the level of income is not guaranteed. The trust's assets can be invested in highly rated securities, of course, but the yield is dependent upon economic and market conditions. From your standpoint, these drawbacks may be more than offset by your right to retain control of the trust terms and investments.

A living trust generally is not a stand-alone document. It is advisable to have a pour-over will since it is difficult to get every asset into a trust.

A living trust gives you flexibility while you receive income from your assets during your lifetime, and it can provide asset management after your death.