Estate Planning Practice Blog

The Beauty of a Living Trust.

Living Trusts are named such because they can be amended, revoked and otherwise changed during the lifetime of the persons who created the Living Trust.

For most people, the goal is to avoid probate of their estate when they pass away. The best way to avoid probate is to make sure that all of your assets have beneficiaries listed. Payable on death beneficiaries for bank accounts. Primary and contingent beneficiaries for life insurance policies. And so on for many assets.

In California, you can't name a beneficiary for real estate holdings like your home. The way to do this is to set up a Living Trust and transfer title of your real estate holdings to the Living Trust.

The Living Trusts has beneficiaries designated within the trust instrument.

The beauty of a Living Trust is that you can name the Living Trust has a beneficiary for most of your other assets with the exception of retirement assets. You can name or transfer assets to your Living Trust "to be the beneficiary" for your real estate holdings, your bank account assets, your life insurance policies, your expensive vehicles, stocks and bonds and even some business interests like LLC ownerships or partnership interests.

So, let's say, you name the Living Trust to be the beneficiary for almost all of your assets (with the exception of retirement assets and have your estate planning attorney explain why). The Living Trust will be able to take control of all these assets where the Living Trust is named as a beneficiary and make handle your final distribution wishes.

Getting back to the beauty of Living Trusts... now, you've changed your mind about your beneficiary designations. Instead of contacting each financial institution to change the beneficiary listing, you can simply amend your Living Trust to reflect your new wishes.

How this works is really easy. To give an example, let's say your Living Trust divides your estate into 5 shares. One share for each of your three step-children, one share for your favorite niece and one share for your very helpful neighbor. Let's say you and your neighbor are on the outs because he parks his RV on your side of the street and this honks you off. Then what? You can amend your trust to either omit your neighbor or name a replacement beneficiary without having to change the beneficiary designations for all of your other assets. Why? Well, remember, that your beneficiary designations for all of your other assets points to your Living Trust.

The beauty of a Living Trust is you have one document that specifies how you want all of your assets to be distributed when you die.  And amending one document is easy when your wishes change.

Last Chance to Cut your '06 Taxes

I know, it's only November. And your taxes aren't due until April 15 of 2007. But, you're not really early. You're late! Your tax planning for your 2006 return should have started last December. It's more complicated this year because tax laws have changed again -- for the 40th year of the last 43 years. Still, there are moves you can and should make before Dec. 31 to trim your 2006 tax bill.   Read the full article by Jeff Schnepper here.

Special Needs Trusts For Your Disabled Children

Mark Merenda of Smart Marketing counsels attorneys in marketing their legal practice. He is quoted in this New York Times article about Meeting Special Needs and the Need for Peace of Mind regarding setting up a Special Needs Trust for a disabled child. (I know Mark through a lawyer email group that we are both on.)

Mark aptly states that, “The [living] trust is like a bucket, and if you don’t put anything in the bucket, it’s almost worse than not having the bucket,” said Mark Merenda, a Naples, Fla., marketing adviser for lawyers. “It gives you the illusion of peace of mind.”

Special Needs Trusts ("SNT") are an important component of estate planning if you have a special needs or disabled child (whether a minor or adult) that you wish to provide for when you pass away. Generally, SNTs are either stand alone trusts funded with a separate asset like a life insurance policy or it can be a subtrust in your existing Living Trust.

Either way, talk to your estate planning attorney about a SNT if you have a child with special needs.

And, getting back to Mark's quote, be sure that your Trusts are funded. If you have not signed and recorded grant deeds transferring real estate to your Trusts or named the Trust as a payable upon death beneficiary -- your Trusts may not be funded. It's a fishbowl. If it is empty, there is nothing for the successor trustee to manage upon your death.

If you have concerns about whether your Trusts are funded, consult with your attorney about this issue as well.

What's a Thirty-Day Survivor Clause?

Stan Rule, a Trust and Estates attorney in British Columbia, has explained very matter-of-factly the survivorship clauses often included in most Wills and Trusts.

The general consensus is that a 30 day survivorship clause is a good thing. It doesn't have to be 30 days: it can be longer or shorter depending on what you are thinking.

Talk to your estate planning attorney about including this clause if you don't see it in the drafts presented for your review.

Estate Planning Is Legacy Planning.

One of the key components of estate planning is ensuring that your loved ones will be taken care of upon your death in the ways you care most about -- your values and the message you wish to leave behind for others to carry forth in your memory. This is about creating and passing on a legacy.

Nearly every philanthropic organization defines legacy and legacy planning in a different way, but it all comes down to the fact that you need to have an estate plan to create and pass along a legacy. There is no positive legacy left if there is no estate plan to detail your legacy and name someone to carry it out.

In fact, failure to have an estate plan could create the opposite effect: a negative legacy.

You might leave behind a family torn apart by the drastic effects of not having an estate plan.

You might leave behind a charitable organization that you always wished to support because you did not have an estate plan with detailed instructions on how to support your chosen cause.

You might leave your estate to someone you dearly wished would not have inherited because you did not have an estate plan.

If leaving behind a positive legacy is important to you, talk to an estate planning attorney or your favorite charitable organization for more information on legacy planning.

For an inspiring story about leaving a legacy, read about Joan Palevsky's gift to the California Community Foundation. She left more than $200 million in a surprise bequest to the organization, which was announced on October 30, 2006.

Scams Against Older Adults.

A fellow blogger and employment law attorney in Seattle, D. Jill Pugh,  alerted me to this neat online article in the Seattle Times about scams against the elderly.

What's neat about this article is that it contains audio clips of what the scammers say... play the clip for an older loved one in your family to see if they already receive phone calls like this.  The article also discusses common scams and some ideas to mitigate scammers from reaching your elder loved ones.

Of course, it follows my Thanksgiving week theme of starting discussions about legal matters like estate planning and now elder law issues with your loved ones at the dinner table. Talking Turkey works!

Starting Thanksgiving Traditions.

Here is a very nice post from Leanna Hamill, Esq., an Estate Planning and Elder Law Attorney in Massachusettes about sharing traditions this Thanksgiving.

Leanna asked a her friend Ann Quilan from Healthy Aging Matters to write a guest post.

Read Ann's post here on Leanna's blog.

I Help People [Insert Catchy "Estate Planning" Phrase Here.]

I love practicing law in the areas of estate planning and trust administration.  One aspect of practicing law is also marketing my myself, my practice areas and my firm to attract and retain clients.

One thing I am learning as a marketer (remember, I have to attract and retain clients) is developing an audio logo or an elevator speech. (Here's another neat explanation of an elevator speech.)

What do you think would make a good elevator speech for an estate planning attorney? I have my own ideas. I'd love to hear yours. Post a comment...

Trust Distribution and Termination Agreement.

Are you currently administering a Living Trust?

Is it time to wrap up the Living Trust by distributing the assets and terminating the Living Trust entirely?

One thing to think about when this time comes, if you have not already retained an attorney to help you with trust administration, is preparing a Trust Distribution and Termination Agreement.

This agreement, when properly prepared, often contains key components of trust administration to include recitals of successor trustees, distribution provisions, distribution of personal property already made, funding at date of distribution values, proposed final distribution, consent from beneficiaries for final distribution, waivers of accounting if appropriate among other clauses that ultimately protects the successor trustee while obtaining an agreement among the beneficiaries for the final distribution of trust assets.

This is the last step of a series of steps that should be taken when administering a Living Trust.

If you have questions, please consult with an attorney for more information. If you like, you can email me or contact TLD by phone at any of the phone numbers listed on the left column.

Robert J. Bruss Endorses Living Trusts

Robert J. Bruss, a nationally syndicated real estate columnist, has endorsed Living Trusts time and time again. He has a very informative Real Estate Center website as well.

Recently Bob's column featured an interesting question about Living Trusts and stepped-up basis on real property ownership.

A reader wrote:

DEAR BOB: Our house is owned under my living-trust name. If I survive my husband, will the basis for the house be stepped up to market value as of the date of his death? Should I add my husband's living trust to the deed?

Click here to read Bob's answer.