Read more about the article When is a Trust a Good Idea? – Annapolis and Towson Estate Planning
Trust and Estate Planning is shown on a conceptual business photo

When is a Trust a Good Idea? – Annapolis and Towson Estate Planning

If you prefer to place specific conditions on your assets after you pass away, you should have a trust in place, says Kiplinger’s recent article, “Why Do I Need a Trust?”

Trusts can be especially important with second marriages, where one spouse wants to leave their assets to their children but not their stepchildren. Here are some other benefits of a trust:

Creditor Protection. If your profession has a high probability of liability, having assets transferred via a trust (once the trust becomes irrevocable) may shelter funds from being attached in a lawsuit. This can be very specific concerning state law and the type of lawsuit, so discuss this with an experienced estate planning attorney before making any decisions.

Passing Funds Outside of the Estate. For large estates that are anticipated to grow, creating trusts during your lifetime and gifting assets can remove the growth from your estate and lower future estate taxes. If your estate is higher than the exemption, and you have more funds than you need to live on, funding an irrevocable trust now is beneficial. Also, remember, revocable (or living) trusts become irrevocable on your passing, so anything in the revocable trust will be out of the beneficiary’s estate.

Providing for Grandchildren. If you want to provide for grandchildren at your death or don’t trust the parents to set inheritance funds aside for their children, creating a trust for the grandchildren is an option. If you leave assets outright to their parents, there’s no guarantee that the funds will get to them.

Protect Against Fraud or Beneficiary Changes. Seniors can be duped into updating their beneficiaries when they’re in the hospital or under hospice care. If the individual can sign a form and their signature matches what is on file at the custodian—and they have no immediate family to catch the update—this can be a problem. If the elderly person is not of sound mind, the attorney will likely be able to notice something is wrong compared to submitting a beneficiary form to a custodian directly.

Special Needs Beneficiaries. If you have incapacitated beneficiaries who require special care due to mental or physical disability, setting up a special needs trust may be a good move. A Special Needs Trust will ensure that assets can be given to this person but not interfere with government benefits or disability payments.

Ask an experienced estate planning attorney if your situation and your intentions warrant a trust. They can help you protect your assets and your wishes.

Questions? Contact us to schedule a call with one of our experienced estate planning attorneys.

Reference: Kiplinger (August 31, 2022) “Why Do I Need a Trust?”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article What Should I Know About a Living Trust? – Annapolis and Towson Estate Planning
Information about Living trust and glasses on it.

What Should I Know About a Living Trust? – Annapolis and Towson Estate Planning

Forbes’ recent article, “What Is A Living Trust? Definition, Pros & Cons,” explains everything you need to know about living trusts to determine if one is right for you.

The grantor (or owner of the assets) transfers property ownership to the trust. They will name a trustee to manage the trust property. The grantor can choose to be the trustee, retaining control of trust property. However, the grantor can also designate a “successor trustee.” The successor trustee will manage the trust property if and when the primary trustee becomes incapacitated or passes away.

The grantor also names beneficiaries of the trust. These individuals are the individuals (or other entities) who benefit from the trust. The grantor designates beneficiaries who will inherit the property held within the trust after the grantor’s death. A significant benefit of a trust is that the assets held within the trust transfer to the beneficiaries without going through probate.

Creating a living trust entails drafting a formal legal document that:

  • Establishes the trust
  • Names the trustee (and successor trustee)
  • Names the beneficiaries; and
  • States when and how trust property will be transferred to beneficiaries.

Note that after you create the trust document, you must transfer the property title to it.

The trust becomes effective as soon as you create it. However, because it’s a living trust, you have the right to cancel it or make changes to it any time you want to.

A living trust is a powerful legal tool. However, there are other estate planning documents that you may need. Work with an experienced estate planning lawyer to get help creating a living trust, as well as assistance in developing a comprehensive plan to protect you in case of incapacity and to provide for your loved ones after you’re gone.

Questions? Contact us to schedule a complimentary initial call with one of our experienced estate planning attorneys.

Reference: Forbes (May 12, 2023) “What Is A Living Trust? Definition, Pros & Cons”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Who is Legally Able to Amend a Trust? – Annapolis and Towson Estate Planning
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Who is Legally Able to Amend a Trust? – Annapolis and Towson Estate Planning

Procrastination is the most common mistake in estate planning when people don’t create a will and trusts and when documents are not updated. For one family, a revocable trust created when both parents are living presents some complex problems now, when the surviving wife wants to make changes but is suffering from serious health issues.

As described in the article “Estate Planning: Who can amend the trust” from NWI Times, this scenario requires a careful review of the trust document, which should contain instructions about how it can be amended and who has the authority to do so. An estate planning attorney must review the trust to ensure it can be amended.

If the trust allows the surviving settlor to amend the trust, the authority to amend it may only be given to the surviving settlor. The mother may be permitted to amend the trust. However, it can’t be anyone acting on her behalf.

If the language in the trust makes the power to amend personal, a guardian or an attorney-in-fact likely won’t be able to amend the trust. Likewise, if the mother is incapacitated and cannot do this herself, the trust may not be amendable while she is ill or disabled.

However, if the trust allows the surviving settlor to amend the trust and the power is not personal, a legal representative, such as a guardian or an attorney-in-fact, may be able to amend the trust for her, if they have the authority to do so under the terms of the trust.

Anyone contemplating this amendment must be aware of any “self-dealing” issues. The legal representative will be restricted to making changes only for the benefit of the beneficiaries and should be mindful before attempting to amend the trust.

Suppose the authority to amend doesn’t exist or other restrictions make it impossible, depending on the state’s laws. In that case, it may be possible to docket the trust with the court and obtain a court order authorizing the trustee to depart from the terms of the trust or even amend the document.

Accomplishing this is far easier if all involved agree with the changes to be made. Unfortunately, if any interested parties object, it may lead to litigation.

Depending upon the desired change, entering into a family settlement agreement may be possible after the mother dies. If everyone is willing to sign off, an agreement can be written authorizing the trustee to deviate from the terms of the trust. This will also require the guidance of an estate planning attorney to ensure that the agreement follows the state’s laws.

If family members disagree with the change, the trustee can refuse to accept the settlement agreement to protect themselves from potential liability.

Contact us to schedule a review of your estate plan with one of our experienced estate planning attorneys.

Reference: NWI Times (May 7, 2023) “Estate Planning: Who can amend the trust”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys. 

Read more about the article Why Would I Put My Home in a Trust? – Annapolis and Towson Estate Planning

Why Would I Put My Home in a Trust? – Annapolis and Towson Estate Planning

Putting property in a trust can make managing and distributing your assets — including your home — easier after your death. It can also have legal and tax benefits.

Bankrate’s recent article entitled, “How, and why, to put your home in a trust,” says that a real estate trust is a legal arrangement in which the owner of a home, known as the “grantor” or “settlor,” transfers ownership of the property to another entity or individual, known as the “trustee.” The trustee manages the property for the benefit of the grantor and any named beneficiaries of the grantor’s estate.

You can place your home into a trust by signing a deed that names the trustee as the property’s new owner. The deed must be recorded with the local county recording office, and then the trust is the legal owner of the property.

The home’s original owner will usually name him- or herself as the trustee, so they can maintain control of the property. However, the original owner can name someone else as the trustee. This can be helpful in case the original owner passes away. Trustees are frequently adult children of the homeowner, who will inherit the property upon the homeowner’s death.

Trusts are often used for tax, estate planning, or asset protection purposes, as — depending on the type of trust — the property can be protected from creditors and transferred directly to the beneficiaries without going through probate. Two primary types of trusts pertain to real estate: revocable and irrevocable.

Also called a living trust, a revocable trust can be changed or dissolved at any time by the grantor (creator) of the trust. A revocable trust lets a grantor control the property and make changes to the trust during their lifetime. The grantor retains the right to modify or dissolve the trust. The grantor can act as a trustee, manage the property, or appoint someone else.

A revocable/living trust states the original homeowner’s wishes upon death. When the grantor passes away, the property in the revocable trust is distributed to the grantor’s beneficiaries according to the terms of the trust agreement.

An irrevocable trust, as the name implies, is more permanent and can’t be terminated or modified by the grantor after it’s been created, unless the beneficiaries agree to the change.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Bankrate (February 21, 2023) “How, and why, to put your home in a trust”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys 

Read more about the article How is Estate Planning Used to Distribute Property? – Annapolis and Towson Estate Planning

How is Estate Planning Used to Distribute Property? – Annapolis and Towson Estate Planning

One of the tasks of estate planning is to distribute property, through a variety of ways. A recent article from The News-Enterprise, “How property passes upon death is central to estate planning,” says there are generally four ways to pass property after death.

Beneficiary accounts. Any type of account with a beneficiary designation listed on the account paperwork passes directly to the beneficiary. Most people think of life insurance proceeds as the typical beneficiary designation. However, this can also include investment accounts, some retirement accounts and payable-on-death (POD) or transferable-on-death (TOD) accounts. It’s also possible for real estate property to have a beneficiary designation.

The individual owns property with a beneficiary designation during life but upon death; the property passes directly to the beneficiary. It’s a quick process, usually requiring a death certificate and perhaps other paperwork to pass the asset to the beneficiary.

The primary problem with using a POD or TOD account in this way is what happens if the beneficiary is disabled and is receiving means-tested government benefits. Receiving assets directly could put the person’s entire benefits structure at risk.

Jointly owned property. If an account or property is held jointly and includes survivorship language, the joint owner will own the entire share of the property upon the death of the first co-owner. Without the proper survivorship language, the decedent’s share of the property will pass through probate.

Jointly owned property is commonly how a married couple own assets. There are potential risks involved. If property or assets are left to one spouse, when the surviving spouse dies, the survivor’s separate beneficiaries may inherit the assets rather than the decedent’s intended beneficiaries.

Similarly, suppose one child is added to an account so they may continue to pay bills. In that case, the named child will become the account’s new owner upon the parent’s death, and they will have no legal requirement to share the account with siblings or other beneficiaries.

Trusts. Trusts provide the most control for managing assets during life and after death. Property held in trust does not pass through probate and goes directly to the beneficiary as per the instructions in the trust. In addition, a trust created with an experienced estate planning attorney includes provisions for distributing assets owned by the trust if the beneficiary is disabled, incapacitated, or a minor child, potentially offering significant asset protection for the grantor—the person creating the trust—and beneficiaries.

Property not falling into any of these categories is distributed via a will and through probate. If the decedent had a will, the executor must file it with the court. If there is no will, then a probate case must still be established. However, the distribution of assets will be according to the laws of the state of residence, regardless of the decedent’s wishes.

An estate planning attorney reviews their client’s property and unique situation and prepares an estate plan to distribute property in the most ideal manner based on the client’s goals.

Contact us to schedule your complimentary initial call with one of our experienced estate planning attorneys.

Reference: The News-Enterprise (May 6, 2023) “How property passes upon death is central to estate planning”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Protecting Assets with a Trust vs. Limited Liability Company – Annapolis and Towson Estate Planning

Protecting Assets with a Trust vs. Limited Liability Company – Annapolis and Towson Estate Planning

While trusts and Limited Liability Companies (LLCs) are very different legal vehicles, they are both used by business owners to protect assets. Understanding their differences, strengths and weaknesses will help determine which is best for your situation, as explained by the article “Trust Vs. LLC 2023: What Is The Difference?” from Business Report.

A trust is a fiduciary agreement placing assets under the control of a third-party trustee to manage assets, so they may be managed and passed to beneficiaries. Trusts are commonly used when transferring family assets to avoid probate.

A family home could be placed in a trust to avoid estate taxes on the owner’s death, if the goal is to pass the home on to the children. The trustee manages the home as an asset until the transfer takes place.

There are several different types of trusts:

A revocable trust is controlled by the grantor, the person setting up the trust, as long as they are mentally competent. This flexibility allows the grantor to hold ownership interest, including real estate, in a separate vehicle without committing to the trust permanently.

The grantor cannot change an irrevocable trust, nor can the grantor be a trustee. Once the assets are placed in the irrevocable trust, the terms of the trust may not be changed, with extremely limited exceptions.

A testamentary trust is created after probate under the provisions of a last will and testament to protect business assets, rental property and other personal and business assets. Nevertheless, it only becomes active when the trust’s creator dies.

There are several roles in trusts. The grantor or settlor is the person who creates the trust. The trustee is the person who manages the assets in the trust and is in charge of any distribution. A successor trustee is a backup to the original trustee who manages assets, if the original trustee dies or becomes incapacitated. Finally, the beneficiaries are the people who receive assets when the terms of the trust are satisfied.

An LLC is a business entity commonly used for personal asset protection and business purposes. A multi-or single-member LLC could be created to own your home or business, to separate your personal property and business property, reduce potential legal liability and achieve a simplified management structure with liability protection.

The most significant advantage of a trust is avoiding the time-consuming process of probate, so beneficiaries may receive their inheritance faster. Assets in a trust may also prevent or reduce estate taxes. Trusts also keep your assets and filing documents private. Unlike a will, which becomes part of the public record and is available for anyone who asks, trust documents remain private.

LLCs and trusts are created on the state level. While LLCs are business entities designed for actively run businesses, trusts are essentially pass-through entities for inheritances and to pass dividends directly to beneficiaries while retaining control.

Your estate planning attorney will be able to judge whether you need a trust or an LLC. If you own a small business, it may already be an LLC. However, there are likely other asset protection vehicles your estate planning attorney can discuss with you.

Questions? Contact us to schedule a complimentary initial call with one of our experienced estate planning attorneys.

Reference: Business Report (April 14, 2023) “Trust Vs. LLC 2023: What Is The Difference?”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys 

Read more about the article How to Pre-pay for a Funeral – Annapolis and Towson Estate Planning

How to Pre-pay for a Funeral – Annapolis and Towson Estate Planning

When getting started with prepaying funeral expenses, a big factor to consider is your age and current health status. Unlike life insurance policies, funeral planning insurance from most major providers is available to anyone over 18 who wants a policy. However, depending on the type of policy, you may have to answer some health screening questions. Your answers will impact the terms and benefit payouts determined by time of death, says Yahoo Life’s recent article, “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?”

Pre-arrangement insurance policies must be paid in full by age 90, so someone near that age and planning for the first time will likely have to pay in full upfront.

Some companies might state that certain diagnoses with imminent death are disqualifiers for policies, and others will insure individuals with a short life prognosis but with altered payout clauses—or they may require full payment upfront.

In those instances, a trust might be a better choice. That fiduciary arrangement lets a third party (the trustee) hold assets on behalf of a beneficiary or beneficiaries.

Remember that companies, policies and regulations vary greatly by state. It will, therefore, be helpful to consult an experienced estate planning attorney on the best options for you.

You should review your plans periodically throughout life because what you want today in your 20s may differ from what you want in your 80s. You should also keep your family up to date on any changes you make.

There’s one main difference between trusts and insurance policies. Insurance will often have a clause allowing for the difference between what you’ve paid and the total cost of your funeral arrangement to be covered, if you haven’t paid your policy out in full at the time of death.

However, a trust will typically let you put in whatever amount you want over time.

The pre-arrangement insurance policies used by funeral homes to cover the cost of funerals differ from what is generally known as “life insurance.” A life insurance policy is meant to cover unexpected death. However, it’s not guaranteed to pay out benefits—because factors like cause of death affect the policy payout.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo Life (Feb. 17, 2022) “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys 

Read more about the article Do I Need an Estate Planning Attorney? Annapolis and Towson Estate Planning

Do I Need an Estate Planning Attorney? Annapolis and Towson Estate Planning

Sound estate planning can help minimize taxes and expenses associated with transferring your assets and property after your death, says Urban Asia’s recent article entitled “Why Is It Important To Hire An Estate Planning Attorney.”

An experienced estate planning attorney can help you with your estate planning goals efficiently, avoiding legal processes that can be time-consuming and costly. Estate planning through an attorney can help you, and your loved ones avoid legal complications or unwanted delays.

What are the benefits of hiring an experienced estate planning attorney?

  • Legal expertise: They have specialized knowledge of the laws and regulations governing probate and estates. They can advise you on the best plan to suit the utilization of your assets and needs, and make sure that your estate planning complies with all applicable laws.
  • Tax implications: Estates can have tax implications. An experienced estate planning attorney can advise you on how to structure your estate plan to minimize taxes and maximize the benefits for your beneficiaries.
  • Customization: They can help customize your estate plan to suit your individual needs and goals.
  • Protection of beneficiaries: Estate planning attorneys can help protect your heirs’ interests by ensuring that your will and trust are administered correctly. They can help assure that all your assets are protected from creditors and other legal claims.
  • Charitable giving: An estate planning attorney can advise you on how to make philanthropic gifts, either during your lifetime or at death, through charitable trusts or other charitable giving vehicles.
  • Incapacity planning: They can help you plan for incapacity by creating a power of attorney or living will to let you specify how your assets and property should be managed, if you are unable to decide for yourself.

Finding the right attorney for estate planning can be a challenging task. Estate planning can be complex, and selecting an attorney with experience and expertise in this discipline is essential. Therefore, look for an attorney with plenty of experience in estate planning.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Urban Asia (Jan. 22, 2023) “Why Is It Important To Hire An Estate Planning Attorney”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Read more about the article Do I Need a Will If I’m Leaving Insurance Policy to a Beneficiary? Annapolis and Towson Estate Planning

Do I Need a Will If I’m Leaving Insurance Policy to a Beneficiary? Annapolis and Towson Estate Planning

If you aren’t thorough with your estate planning, you could create conflict, even with the best of intentions, says a recent article from Yahoo Entertainment titled “Life Insurance Beneficiary vs. Will: Do I Need Both?”

Your life insurance beneficiary designation supersedes your will, so you’ll need to have your life insurance policy and your will aligned to save heirs from stress, confusion, and possible litigation. You can use both life insurance beneficiaries and wills to bequeath assets to others when you die. However, they can work together or against each other, so meticulous planning is key.

Here’s how they work, and which takes precedence.

A life insurance beneficiary is the person or entity, like a charity, named to receive proceeds from your life insurance policy when you die. Your beneficiary will receive payment from the life insurance policy according to the terms of the policy. Who you designate as a beneficiary doesn’t have anything to do with who receives other assets from your estate, such as property or financial accounts.

A will is a legal document declaring who should receive your possessions after death. The will does not define the destination of one specific asset, like a life insurance beneficiary. Instead, it contains a list of the beneficiaries who you wish to receive your assets.

If you have minor children, a will is also used to assign legal guardians, the people who you wish to raise your children in your absence.

Your will needs to go through probate court before beneficiaries receive anything. The probate process confirms your will’s authenticity, interprets the language in the will and authorizes the named executor to carry out your intentions. Your life insurance policy goes directly to your beneficiary without probate review.

Does a life insurance policy override a will? If you designate one person to receive your life insurance policy proceeds and then name a different person in the will to receive the proceeds, the person named in the life insurance policy will win. Any intentions in the Will don’t influence or have any legal power over what’s in the will.

Your beneficiary designation in the policy is the sole determining factor, with one exception. If the beneficiary passes away before you and there is no contingent beneficiary named, the life insurance proceeds will go to your estate. Your executor will then disburse assets from the estate according to the beneficiaries named in your will.

Do you need a will? While a will has no influence over your life insurance, it’s a critical part of your estate plan. Probate court uses the will to determine who receives assets and name an executor. Just be sure that your will, any trusts and named beneficiaries on life insurance and other accounts are aligned to avoid creating friction between loved ones. It’s best to have a will to bring cohesion to your estate plan, instead of relying on separate beneficiary designations.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo entertainment (Feb. 6, 2023) “Life Insurance Beneficiary vs. Will: Do I Need Both?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What Recourse Is Available if Inheritance Is Stolen? Annapolis and Towson Estate Planning

State inheritance theft laws typically cover four distinct aspects, says Yahoo’s recent article entitled “Someone Stole My Inheritance. What Are My Options?”

The four are:

  • Who committed the inheritance theft,
  • When the theft happened,
  • What was taken, and
  • How the theft happened.

As far as the “how” goes, note that inheritance theft can take many different forms. One of the most common examples involves elder financial abuse where someone takes advantage of an elderly person’s weakened physical or mental state to steal from them.

If you think someone’s stolen your inheritance, it’s important to review inheritance theft laws in your state. Again, each state has different guidelines regarding:

  • What constitutes inheritance theft,
  • Who has the standing to bring a civil claim or file a criminal complaint concerning a stolen inheritance,
  • The legal grounds for successfully pursuing an inheritance theft claim, and
  • Penalties and remedies for inheritance theft.

Speaking with an experienced estate planning attorney can help you see if you have standing and grounds to file a claim for inheritance theft. Your attorney may advise you to take certain steps to develop a case, including:

  • Taking an inventory of the estate’s assets,
  • Reviewing estate documents, such as wills or trusts, to look for any potential signs of fraud or forgery, and
  • Verifying the validity of will or trust documents.

With a larger estate, you may need to hire a forensic accountant. They specialize in examining financial documents, which may be helpful if you’re struggling to create a paper trail to support a claim of inheritance theft.

Inheritance theft laws can help to protect your rights to an estate if you think your inheritance was stolen. You can also take actions to preserve your own estate for your heirs by drafting a valid will, creating a trust and choosing trustworthy individuals to act as your executor, trustee and power of attorney.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo (Jan. 18, 2023) “Someone Stole My Inheritance. What Are My Options?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys