People make an estate plan because they want to make life easier for their loved ones and to save a large amount of their lifetime savings from needing to be paid to the IRS for estate taxes. Many people make a Last Will and Testament and think that there is nothing else needed. They believe that because they made a will and since they named their loved ones as their beneficiaries, those loved ones will be able to just walk into their banks and collect their money. But it doesn't work that way. If a person passes on having owned their assets in their individual name, those assets will have to go through a probate court process before the bank will release those funds. Having that Last Will and Testament won't matter to the bank. The loved ones who expected money immediately, will be disappointed when they ask for the money. They will be told they need to go through probate. The only assets which will avoid probate are those with a beneficiary designation like an IRA or 401K, annuities, jointly owned property or property held in trust. All others need to go through probate before a bank or brokerage company will release the money. When people attend the seminar they learn how their Last Will and Testament works, what probate is and why probate is required, they become interested in knowing how that probate process can be avoided. They learn that with the use of the living trust, probate can be avoided and the beneficiaries, the children, can merely walk into the banks and collect the money, usually in a matter of minutes. The seminar also covers federal estate taxes and we see how great an amount of money needs to be paid the IRS for estate taxes. Most people are totally unaware of what those taxes are. With the enormous values on the single family house today, people may have estates which are taxable and they don't know it. Therefore, when the last of the parents pass on, it's their children, the people they name as their beneficiaries who will have to pay. Those taxes can easily amount to hundreds of thousands of dollars. This is a shock to most people. Yet, those taxes can be avoided if planned for.
When A Loved One Passes Away
Clients who have made the living trust have a complete set of instructions on what steps need to be taken so that the assets can be withdrawn from the banks or brokerage firms when the parent passes on. For instance, the instructions show the trustee(s) what they need to show the banks and brokerage firms so that those institutions will immediately turn over those funds. In addition, there may be an immediate buyer for the family home. The instructions show the trustee(s) how they are able to immediately sell that home without the need to go through the probate proceeding. Special care needs to be taken with the IRA's, 401K's and other tax deferred instruments. There may be a need to disclaim assets so that those assets can be preserved from being taxable at the death of the last spouse/parent. The instructions show the children/successor trustee(s) what needs to be done.
What Do The Children Do When The Parents Have Passed On?
When estate planning has been done using the living trust, the children, beneficiaries/ trustee(s) will review the specific instructions found in the estate plan documents. They will find out just what documents need to be given to the bank so that the parent's funds can be immediately released to them. Also included are instructions on what the surviving parent needs to do when their spouse has passed on. The trusts include a Credit shelter Trust which will serve to preserve a good portion of the family assets so that they don't need to be paid to the IRS for federal estate taxes. The instructions show the family members named as trustee(s) how to deal with the distribution of the family assets. The family members themselves, their children, will just walk into the banks and request the money. The bank will know in advance who they are. They will also find instructions on how to deal with the IRA or 401K distributions. The process for the children is made as simple as possible. Our office has been making the living trust based estate plan for over ten years. We know our clients are satisfied because we continue to get referrals of family members and friends of the family. And we welcome you to call us for an appointment for a free consultation, provided you have attended our free seminar.
Incapacity And Medicaid Planning
The use of the living trust with respect to Incapacity and Medicaid Planning is acknowledged as an invaluable tool. One of the difficulties which face a family where a loved one has become incapacitated, is the inability of the family to manage and control the assets of the incapacitated person. When their assets cannot be managed, the family will need to retain an attorney who will as the court to appoint a guardian to manage the assets. The guardianship proceeding is a costly one and in many cases the court will appoint an attorney as guardian. The guardian must be paid for the time invested in the matter and the family has a stranger involved in the family finances. This process can be avoided with the use of the living trust. The living trust includes the people named in advance, family members who will be able to immediately take over the management of a family member once that member has become incapacitated. The family finances will now be managed by the family in complete privacy. If the family can care at home for the incapacitated family member, and they are now able to transfer the assets out of the parent's name, then, provided the requisite period of time has elapsed that family member can be made eligible for Medicaid. Many persons rely on the Durable Power of Attorney to be able to manage the parent's finances in the event of incapacity. However, it is acknowledged that many banks and brokerage companies will not honor a Power of Attorney. Worse than that, most people do not discover that fact until it is too late.
For Those Loved Ones With Special Needs
Social Services Laws now permit parents or grandparents to make special provisions so that their loved ones who are now being supported by SSI(Social Security), can inherit assets. If those special needs provisions are not met, the assets, if left to a person on SSI, must be used up to pay for the care and upkeep of the special needs person. Until inherited assets become all used up to pay for that support, the government will not pay for that person's support. If however, those assets are placed into a Supplemental Needs trust which meets the requirements of the law, those assets can be used for the benefit of the loved one. This means that a special loved one can have money supplied by inherited assets which will now permit them to go on vacation trips, take special classes, etc. Social Security will still continue to pay for their main support. Where those Special Needs Trusts are required, we will incorporate them into the living trust.
Lesbian/Gay
Life partners are frequently denied the same equal legal status and benefits that married couples receive in planning their estates. The court could appoint a guardian - instead of a life partner or loved one - to govern your affairs if you should ever become disabled or incapacitated. Your assets may be divided among undesignated blood relatives if you do not have the estate planning necessary to protect your partner and your wishes.
