A successor trustee is the individual or entity appointed to handle trust affairs should you become incapacitated or pass away. If you are not sure that a family member or friend you intended to appoint in the role of successor trustee could handle this responsibility well or you fear that it could only spark further family conflict, you may be able to avoid some of these problems by using a trust company or the trust division of a bank.
No matter who you choose, your trustee should be professional and competent and have good skills when it comes to record keeping and decision making for distributing money to beneficiaries. A professional trustee might make the most sense in your case if you have a trust that is intended to last for a long time such as one that would provide for grandchildren.
Another example when it makes sense to choose a corporate trustee is if you have very valuable assets. In most simple revocable living trusts, however, that are designed for avoiding probate, it might not make sense to pay a professional because professional management in a successor trustee role is expensive.
Many trust companies won’t accept accounts that are below a certain minimum and will charge a percentage of the assets as the fee. Some of the potential downsides of going with professional management might include;
Not accepting other kinds of assets beside cash.
The management might not be as personal as that from a friend or family member.
Beneficiaries might have to deal with new people frequently as bank or trust company employees come and go.
Beneficiaries may not get a quick decision when they ask for trust funds since this will need to go through the other entity.
The establishment of a trust is usually a more advanced form of an estate plan and it requires at least three parties, some of who may be served by the same person. The first party to a trust is the person who creates it known as the creator, settlor or grantor. The second party to the agreement is the trustee. This is a person who has legal title to the property and the trust and manages the property according to the terms inside the trust agreement as well as applicable state laws.
In many cases, when the title to the property must be recorded, it is listed as in the trustee’s name not as an individual person but rather as the person trustee of the X family trust. The third party to a trust document and strategy is the beneficiary. This is the person who benefits from the trust and multiple beneficiaries can be on a trust at the same time.
There can also be different beneficiaries over time. Sometimes an individual might be known as an income beneficiary, meaning that they earn interest and dividends in income on the trust. Other beneficiaries can be remainder beneficiaries, which means they will get what is inside the trust after previous beneficiaries pass away or those rights expire.
Creating a trust can be a key aspect of your estate planning, but it only makes sense when you have worked directly with an estate planning lawyer to select the right kind of trust. Given that you can accomplish many different goals with a trust, you want to choose the right one and fund it properly to get all the benefits.
When planning ahead for the future of your estate, trust administration and probate administration are not one and the same. There are some key differences between administering a trust estate and administering an estate inside probate.
The most important difference, for example, is that trust administration is private. For trust administration to begin, a notice letter should be sent to decedent’s beneficiaries and heirs informing them that the trust is being administered. Probate, however, is supervised by the court.
During probate, any of the documents related to the will become subject to public record. This means that details of the estate could be accessed by any member of the public who requests them. Probate will also apply if there is no will and the same rules of public record apply. In terms of trust administration, however, only the trustee and the heirs are able to see the details of the trust.
Another difference between these two processes is that the expenses are different. With probate, you need to submit a court filing fee and any fee associated with publicizing the estate in the newspaper. Any personal representative fees would also be covered under the overall value of the estate’s assets.
For trust administration, the trustee is still entitled to reasonably pay for his or her services, but there are no court filing fees. Unless there is a contest over the trust itself, there’s unlikely to be too many other costs associated with administration or dispute.
Depending on your individual goals, you might need both a trust and a will.
Do you have questions about using both a trust and a will for your estate planning in New Jersey? Our law office is still here working with clients actively and helping them determine their next steps. Schedule a consultation with our law firm today so that you can learn more about what to do next.
It’s important to remember that a living trust is only active and valid once it has become funded. The living trust becomes funded after the creator puts together the necessary documents and then funds the trust by formally transferring the assets inside. The specific process for moving assets into this trust by the grantor will depend on the kind of property involved.
There are two major ways to fund assets into a living trust. The first
of these is by changing title. When you, the grantor, hold title and assets
like bank accounts, brokerage account, investment accounts, stock and bond
certificates or real estate, you will need to transfer assets into the trust by
changing the name of the owner from you to that of the trustee.
The second method of transferring assets into a living trust is by
assigning ownership rights. If you own a piece of property, but do not hold the
legal title in the assets, such as jewelry, art, antiques, intellectual
property, business interest or promissory notes, you must formally assign
ownership rights from you as the individual to the trustee. You could choose to
list the trustee or the trust as your beneficiary for other assets such as
pensions, life insurance, and retirement accounts, but remember that this
action in and of itself does not technically transfer those assets inside the
This is why you need support from a team of experienced professionals
such as a tax advisor and a knowledgeable estate planning attorney to help you
with the process of selecting, managing, and funding a living trust.
Selecting someone to serve as a trustee over this popular estate planning strategy is important because this individual might have regular and ongoing contact with your beneficiaries and loved ones.
As a result of this direct contact and the need to have open minds of communication between beneficiaries and trustees, it’s a good idea to appoint someone who is familiar with all the roles that they must play in serving as a trustee.
If your beneficiaries are likely to be dependent to some degree on the trustee for support, it is even more important that you select someone that everyone is comfortable with.
Most people will have someone in their family who possesses the skills to be an effective trustee. The more dependent the beneficiary will be on the trust, however, the more independent that trustee should be.
A trustee and beneficiary’s relationship is forever altered if there are problems in the disbursement of funds or disagreements over the relationship in terms of the trust. This relationship can be forever altered and not always for the better if you select someone who is not independent from the trust itself. This can lead to difficult family conflicts and even possible litigation and is a leading reason why you might want to choose an independent party to serve as your trustee.
So many changes in the estate and the gift tax rules mean that it’s more important than ever to contemplate estate planning strategies. Trusts matter now more than ever because these are much more than tax planning vehicles for the estate planning purposes.
Many people continue to struggle with the problem of determining how much is enough and how much is too much when passing on assets to your grandchildren or children.
Although few families are subject to the federal estate tax, leaving assets inside a trust enables a beneficiary to reap the advantages of a family’s success without the high potential for adverse effects such as spending the money too quickly. You can also provide significant protections for your beneficiaries by putting assets inside a trust. This includes protection from creditors, protection from a spouse who seeks a divorce in the future and protecting a beneficiary from being exploited financially.
Even if no tax planning is needed, trusts can be used to further your goals and to address your individual concerns about inherited wealth. Scheduling a consultation directly with an experienced estate planning attorney is your first opportunity to talk through using a trust as an estate planning vehicle.
Your trust is a powerful tool for you and your loved ones, but only if it’s created and funded properly. You need time set aside to speak to a lawyer you can trust about how to craft the right trust for you.
Often grandparents are the ones asking questions about whether or not to use an educational trust. This raises further questions about whether or not one fund should be set that all of them are eligible to tap into or individual funds for each person.
Planning for a loved one’s education is an important contribution that you might be interested in making, but the most difficult part of this process is determining what form that bequest will take.
A trust is a great option for passing on benefits for future education. There are many different types of trusts and some of them offer flexibility regarding the conditions and terms that the loved ones need to meet in order to get the benefit of the assets placed inside the trust. If you want to establish one trust fund, this could come in the form of a pool of money that each beneficiary is entitled to request funds from.
This seems like a simple option but should never be created without careful planning because if you intend for all of the beneficiaries to be treated equally, you’ll need to establish clear terms. One beneficiary might attend a more expensive university than another.
Furthermore, if there are wide age differences between the beneficiaries, then the younger beneficiary could discover that the older ones used up the majority of the trust before the younger ones even had a chance to make it to the application stage of college. A separate trust for each of the beneficiaries is another option, but this is not without its downsides.
Individual trusts do make it easier for equal treatment because each beneficiary’s trust would get the same amount of money, but the separate trust might not be enough to meet your goals. Someone who chooses a less expensive education will have excess funds inside their trust, whereas, someone who pursues a more expensive option will run out too quickly.
One of the most common questions presented to estate planning attorneys has to do with approaching Medicaid planning in the right way. Medicaid planning requires advanced knowledge and plenty of experience in this field because the rules surrounding Medicaid are subject to change and are state specific.
One question that you may have in relation to your elderly parents is about Medicaid benefits. If your elderly loved one currently lives in a nursing home and you are worried about the surviving spouse who may pass away first, this can raise questions about whether or not the benefits will stop. People should always have their estate planning documents created in the past thoroughly reviewed when initiating the Medicaid planning process or a Medicaid application.
There are specific rules about how many assets a person is allowed to have to maintain eligibility for Medicaid. If your loved one, who is currently in a nursing home for which the bills are being paid through Medicaid, receives a sudden inheritance that puts him or her over the cap, that person could lose benefits at least temporarily until the inheritance was used up on nursing home expenses.
A testamentary special needs trust could be an option depending on the circumstances of your loved ones. The first spouse’s estate or a portion of it would flow into the trust, following the payment of all debts. Then an adult child or someone else can be named as the trustee and the trustee is eligible to use the funds to provide for services that might not be covered by Medicaid, such as second medical opinions, transportation, private care giving services, special therapies, and more.
The money will then be able to pass onto other beneficiaries rather than going to Medicaid when that parent passes away. However, this requires complex planning techniques and insight from an experienced attorney. Schedule a consultation with an estate planning lawyer today.
If you have a lot of changes to make to a trust document and you have a revocable living trust, you may be curious about the best way to amend it. Many people may be tempted to simply write their changes directly on the trust document and initial it. However, you need to sit down with your knowledgeable estate planning attorney and figure out whether or not this is true in your case. Since not every trust is amendable, you’ll first want to figure out whether you do have an amendable and revocable trust. 7You should not make changes directly to the trust document and initial them. You must use an amendment to a trust to reflect your changes. Amendments are relatively simple documents but they should be put together by your lawyer. These amendments acknowledge the ability to make changes, amend the trust and then provide that the remaining portion of the trust stays in full effect, despite the new amendment. If you’ve already amended the trust a few times, or if you have a significant amount of changes to incorporate on your trust, this can be very difficult for a trustee to follow. This can lead to confusion and conflict down the line, so make sure you talk through what is best in your case.
There are ways to amend an existing trust that essentially creates a brand new trust and this could come as a complete restatement. You’ll want to talk this over with your knowledgeable estate planning attorney to figure out what is truly best for you.
If a person already has a trust established with the help of an experienced estate planning attorney, they may be curious about whether a second trust could revoke the terms of the first one. The simple answer to this question is generally no because the creation of a second trust does not immediately revoke a prior trust.
This is because there is a significant difference between trusts and wills that many people struggle to understand. Although wills contain a provision that a new will revokes all prior wills, trusts typically do not include the same language or apply in the same way. There is an exception to this rule fi the second trust is a complete amendment of or a restatement of the first trust. However, a restatement is not a new trust in and of itself, but rather an amendment to the first trust already created.
It is a complete amendment but still an amendment to the trust already generated. A trust may also contain a provision that revokes the first trust but this would technically classify as revocation in a written form of the first trust and would usually work to revoke the first one. However, many people may need to consult with an experienced estate planning attorney about their intentions to do this and the possible problems that may arise as a result of it.
If you are using trusts as part of your estate planning strategy, you are engaging with one of the most powerful tools for enhancing your privacy and control now and well into the future. Dynasty trusts have become increasingly popular in recent years as a tool for people to incorporate into their overall process. A trust gives a client the flexibility to change the disposition after a transfer.
Even for many different clients who may be in the process of considering a dynasty trust when there is no estate tax, trusts are very flexible estate planning tools that also provide privacy and peace of mind for the person creating it. Dynasty trusts should always be drafted directly for the purpose of flexibility.
Merger, decanting, amendment and non-judicial settlements are all different possibilities to consider in a dynasty trust. A trust that allows a trustee to make distributions for beneficiaries with the absolute discretion assigned to that trustee may provide more flexibility than a trust that requires distributions made to beneficiaries with an ascertainable standard. All of these terms can be explained to you when you schedule a consultation with a trust planning attorney.
Trusts offer numerous different benefits for people creating the trust, as well as for your beneficiaries down the line. But because there have become so many options in the area of trust planning, a consultation with a lawyer is important to identify the tool that is most appropriate for your individual needs.
If you were thinking about putting together a revocable living trust, this can be a powerful estate planning tool. It is one often chosen by people who want to avoid the probate process.
Numerous delays and expenses may be associated with your estate having to pass through probate, which prompts many people to put together a revocable living trust to make things easier for their loved ones in the future.
There are many different types of trusts, but revocable living trusts do not have a special tax treatment associated with them.
This is because the owner of this trust is still classified as the owner of the assets, so you will have to continue reporting income and earnings on your individual tax return as you did in the past. Revocable living trusts can help you avoid the problems typically associated with probate, but not those associated with the estate tax system.
A living trust may include provisions like language to generate a bypass trust upon someone’s death, but these same kinds of provisions are often included in wills or other estate planning tools. Talk to an experienced estate planning attorney today to learn more about the benefits of scheduling a consultation to put together a revocable living trust.
Establishing a trust in conjunction with the development of your will is frequently the cornerstone of a person’s estate plan. However, you shouldn’t think that your work is done after you’ve created the trust. This is a crucial first step that should be completed with the guidance of an estate planning attorney but many people forget to fund their revocable trust, which in essence means it doesn’t serve a purpose. No trust can exist unless it also holds assets.
When you put together a revocable trust, you will need to retitle your accounts in the name of the trust and a brokerage firm or financial planner can help you with this. Additional estate planning strategies may be recommended based on your individual needs. An annual review scheduled directly with an estate planning attorney may be necessary to figure out whether or not your current estate planning documents and tools are working as you need them to work.
Many people experience major changes in their life such as the birth of a child, marriage and divorce. All these issues can alter your existing estate plan and therefore, a lawyer should be used to review them in full. Do not hesitate to get help from an experienced estate planning attorney who has years of working directly with people to not only establish trusts but to properly fund them so that they are valid. A regular review with an estate planning lawyer can save you and your loved ones.
More than 10 years ago, a $110 million lawsuit was filed in Los Angeles Superior Court against an alleged trust mill. A trust mill, in that company in particular, are typically accused of duping senior citizens into purchasing annuities and using part or all of their retirement investments to do so. The individual selling these opportunities received substantial fees in commissions in the process.
A trust mill may also be referred to as a living trust mill and it is a situation in which agents try to sell individuals investment opportunities by explaining it as an estate planning tool. More often than not, these sales agents work for an insurance company and the sales agent’s job in these particular cases is to persuade clients to cash in mutual funds and CDs to purchase an annuity but the agents receive a commission for that annuity. The sales pitch typically follows a similar pattern.
Usually the agent starts off by telling the seniors that their current investments generate low interest rates or extremely high risk, giving them an incentive to cash in those investments and purchase a higher interest annuity or in a less risky annuity that the agents offer. One of the biggest problems with trust mills is that sometimes these sales agents position themselves as estate planning specialists even though they are insurance agents rather than estate planning attorneys. Seniors may not be informed about the serious financial consequences of transferring all of their investments over. If you want to discuss valuable living trusts and other estate planning opportunities with a knowledgeable estate planning lawyer, contact a New Jersey estate planning law firm as soon as possible.
You may discover too late that someone you love has been a victim of a trust mill. Make sure to do your research to have utmost confidence in any professional you choose to work with.
A revocable living trust affords many different benefits for the people who choose to use it.
There are six primary reasons why a living trust can be extremely beneficial for you. These include:
Protecting property for certain beneficiaries who may be unable to control receiving such a large inheritance. This is very beneficial for anyone who has a spendthrift adult child.
Minimizing or eliminating estate taxes. Depending on the size of your gross estate, transferring property into a trust can help to shield it from your estate when it is time to calculate the estate taxes.
Avoiding probate. Many individuals see the benefits of avoiding probate as keeping their beneficiaries from having to go through the frustrating and sometimes expensive process. Probate is also extremely public, meaning that anyone can learn more information about your estate if you choose not to take advanced steps.
Managing property after incapacity. Although there are other solutions such as a durable power of attorney, the most comprehensive solution is a revocable living trust. This allows a successor trustee to take over in any situation in which you become incapacitated or when you choose to resign. There are many different ways that a revocable living trust can benefit you in this manner.
Avoiding will contest. Wills are much easier to contest than a revocable living trust. Since a revocable living trust contest requires that the individual arguing that you have been unduly influenced or were incompetent has to prove that you met those criteria every single time that distributions were made or property was transferred into the trust as well as when you created the trust to begin with.
Privacy. Many individuals dislike the process of probate because it is extremely public, but a revocable living trust is extremely private and information is only given out in the event that a trustee or the grantor allows it to be so.
Gene Wilder recently passed away from Alzheimer’s disease. His legacy as an actor was almost certainly tied to his iconic role as Willy Wonka in Charlie and the Chocolate Factory, but he was also significantly generous in his philanthropic efforts to raise awareness for ovarian cancer after his third wife, Gilda Radner, passed away from complications associated with ovarian cancer.
It is believed by some estate planning experts that his philanthropic efforts were inspired by a genuine desire to help the cause as well as the fact that he had no children to leave assets to. There are many different reasons that you may consider leaving behind assets to a charity. Those individuals who plan to give to charity for altruistic purposes may still be able to reap tax benefits while using appropriate estate planning techniques.
Charitable remainder trusts and charitable lead trusts allow the grantors to support charities the grantor is passionate about as well as providing estate tax and income tax charitable deductions as well as being able to benefit family members at what’s known as a reduced transfer tax cost. The timing of the charitable gifts can be an important consideration and this is why it should be included in the conversation with your estate planning attorney.
An estate planning tool that once used to be relatively popular may cost families a great deal more in taxes than it could have the potential to save. This is because the bypass trust has become less appealing in recent years due to changes in the estate tax rules at the federal level. The way that a bypass trust works is that when the first spouse passes away and leaves everything to the surviving spouse, the surviving spouse could have an estate that exceeds the federal or the state tax exemption.
A bypass trust then prevents the passage of the estate to the surviving spouse with the payment of estate taxes. The terms of these individual trusts would typically vary but a typical stipulation would be that the trust income is paid out to the surviving spouse and that the principle is available at the trustee’s discretion if the surviving spouse were to need it. Since estate taxes changed dramatically in 2013, very few individuals are subject to federal estate taxes.
In 2016 the first $5.45 million of an estate is safe from federal estate taxes for each individual. This means that couples would have an estate tax exemption up to $10.9 million. The fact that the estate tax is now portable between spouses means that you can accomplish the same purposes of bypass trusts without having to establish a trust.
There are some circumstances, however, when a bypass trust may still make sense. For example, if your estate is bigger than the current estate exemption, a bypass trust could still be one way to protect your assets from the estate tax. In certain states, estate taxes are leveraged at much lower thresholds than the federal estate tax exemption and in this situation a bypass trust may be valuable.
Bypass trusts may also be helpful for other families who have needs outside of avoiding estate taxes. Consulting with an experienced estate planning attorney in New Jersey can help you answer this question for yourself.
If you read yesterday’s post, you’ll know that wills and living trusts each accomplish three goals, but they are not one and the same. Neither document is likely to be a comprehensive solution for all your needs, so you’ll need to consider what time period you are planning for.
If you are looking simply to plan for what happens after you pass away, both a will or a living trust can be a good option. If incapacity, however, is your primary concern, a living trust is far and away the more superior tool. Many people focus on what happens after they pass away when it comes to estate planning, but disability and incapacity are increasingly important concerns regardless of your current health.
Assets inside a living trust will already be under the control of a trustee you named to manage things in the event of your incapacity, this allows for a smooth and quick transition. Rather than having to wait out months in a legal disability proceeding, you’ll have a trustee who is empowered to act right away. There are a few other reasons that a living trust wins out over the will, such as if you have a vacation home or real estate located in another state. This is because you won’t have to worry about the estate being probated separately in each state after you pass away, so long as the property is inside the trust.
As you can see here, neither one of these tool is an all-encompassing solution, so you should talk about your needs with an experienced estate planning attorney. We can help at email@example.com
If you have decided to use a trust to pass on your assets, this can be an exciting decision that gives you peace of mind about the firmness of your plans. If you don’t ensure that the trust is properly funded, however, it’s unlikely that your trust is going to carry out the plans that you intended.
If you already have assets inside the trust, make sure that you set up reminders to continuously review your materials and always have unfunded or new assets titled into the trust’s name. Don’t ever assume that these changes have been made, since the ownership of verification falls squarely on your shoulders. Keep copies of documents that confirm your changes so that you are always clear on what’s been taken care of already. If values have also changed, ensure that is updated as well.
If an asset that you used to own has now passed onto someone else through a sale or closure, make sure it’s removed from your funding portfolio. This makes it easier on your family members in the future and the trust executor so that they are not searching for assets that are no longer present. To review your funding in your living trusts, get in touch with us through email at firstname.lastname@example.org or over the phone 732-521-9455