Tag Archives: Trusts

What is a Revocable Living Trust?

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Video explaining what a Revocable Living Trusts

What is a Revocable Living Trust? Click play on the video above to learn more about revocable living trusts and how they can assist you with your estate planning needs. A living trust can be an incredibly valuable and powerful tool when it comes to estate planning. A revocable living trust is a legal arrangement, used by estate planners that allows assets to be held and managed by a third party. This third party in a trust is known as a Trustee. The Trustee is the person or group of people responsible for ensuring that an estate is handled in the manner specified in the trust documents.

A revocable living trust lets you decide how your assets are managed and distributed. A living trust holds (owns) the property you put into the trust. Unless specifically stated in the language of the living trust, you are permitted to control the trust assets as the trustee while you are living. Upon your death, the living trust becomes irrevocable and the assets in your trust will be distributed to the beneficiaries that you have designated.

The person who creates the living trust, is usually referred to as a settlor or grantor. The successor trustee is the person or institution who takes over the management of a living trust when the original trustee (typically you) has passed or become incapacitated. The beneficiaries of the trust are the people named in the living trust who will receive the assets held by the trust once you have passed.

Language defining the rules of the trust, such as the name of a successor trustee and information on how the assets of the trust are to be distributed upon your passing are all recorded in the trust documents. The living trust is funded by transferring your personal assets to it. Once the assets are transferred, the trust owns the assets. While the trust is revocable and you are designated as the trustee, you may place assets into the trust or remove assets from it. Most types of assets can be placed into a living trust. Common examples of irrevocable trust assets include real estate, land, automobiles, business interests, stocks, bonds and bank accounts.

 

What to do when a loved one passes?

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Steps to take when a loved one passes on

Steps to take when a loved one passes on

Regardless of how much advanced notice we may have had, the loss of a loved one is never easy. The responsibility or planning their funeral arrangements or handling the needs of their estate only make the situation more challenging, especially when you don’t know where to begin. So what do you do when a loved one passes away? This EstatePlanningGuide.org article will help you answer that question.

What should I do when a loved one passes away?

The following provides advice on what to do when a loved one dies. This step by step guide will help you with this challenging time and hopefully remove some of the stress.

Steps to take immediately after the passing of a loved one

1 – Obtain a Legal Pronouncement of Death: A legal pronouncement of death is a declaration of the time and date when a person was pronounced dead. The pronouncement of death is typically recorded in the patient’s medical record by the attending provider of health care if one was present. If your loved one passed away at a hospital or nursing home, the staff will handle this. If your relative passed away at home, you will require the assistance of a medical professional to declare their death. You should call 911 and inform them of the situation. They will transport your loved one to the hospital where a legal pronouncement of death can be made and you can request the document at that time. If your loved one passed away at home under hospice care, the hospice nurse can declare them dead and assist you with obtaining the legal pronouncement of death. The official declaration of death or legal pronouncement of death is the first step to obtaining a death certificate. The legal pronouncement of death is important for a variety of tasks involved with the handling of their estate. Without a legal pronouncement of death or death certificate you will not be able to access their bank accounts, filing life insurance claims or beginning their estate and probate process.

2 – Notify family members and close friends: Begin by notifying family members and close friends of the deceased. You may not have contact information for all of them or even know everyone who was important to them. Start with the person who you know that was closest to them. You may want to ask them for their assistance in notifying others, or at least ask them for a list of people who should be notified, along with their relationship to the deceased and their contact information so that you can make the notifications.

3 – Notify their employer and coworkers: If your loved one was employed at the time of their passing you should inform their employer as well as any close friends they worked with. For some our coworkers can be like a second family and they will likely be grieving the loss along with you.

4 – Assist with the needs of any dependents: If the person who passed away had dependents such as children, a person with special needs or an elderly person who is reliant upon them for their survival, make sure their immediate needs are addressed until long term care can be assessed and carried out.

5 – Make sure any pets are cared for: If the person who passed had pets, find them a proper caretakers until permanent arrangements can be made for them. Sometimes people will include requests for the care of their pets in their estate planning documents. The Executor of the decedent’s estate (if it is someone other than you) should be able to assist you with this. A dog or cat can die within just a few does of going without water.

Steps to take a few days after the passing of a loved one

6 – Secure the person home / property: As soon as possible, you should secure the person’s home. Make sure that all doors and windows are locked. Notify any trusted neighbors and ask them to contact you if they notice anything unusual. You should discard and perishable food and remove any trash from the home. You should water plants and tend to any immediate need for the care of the home. You should collect the decedent’s mail and if mail forwarding is needed you should contact the United State Postal Service here.

7 – Contact important organizations: If the person was in the military or had a close connection to a religious organization you should inform them of the passing of your loved one. The Veterans Administration may be able to offers burial benefits or conducts funeral services if requested. You can find out additional information regarding the US Department of Veteran Affairs Burial Benefits here. Additional information on applying for the VA Burial Benefits can be found here on their website. They can also be reached by phone at (800)827-1000.

8 – Employer assistance: If your loved one was employed at the time of their passing you can reach out to the employer to make arrangements for their estate to receive any outstanding compensation that is due and to see if the decedent was eligible for any company sponsored life insurance.

9 – Begin making funeral arrangements: Examine any estate planning documents such as a will or trust that was left by your loved one. In some cases they may have provided information on their funeral wishes or made plans in advance. If none exist, speak with other family members or close friends. Begin making arrangements for funeral, memorial service, cremation or burial. An obituary is a notice of a death, typically including a brief biography of the deceased person and published in a newspaper. You may want to consider writing one for your loved one. If you need assistance on writing an obituary, you can view this article on the NBC News Website located here. You will need to inform people about the service and invite the attendees. You should coordinate tasks like flower arrangements, food and refreshments.

Steps to take a couple of weeks after the passing of a loved one

10 – Obtain the death certificate and make copies: A death certificate is a legal document issued by a medical practitioner which states when a person died. A death certificate may also be issued by a government civil registration office that declares the date, location and cause of a person’s death. Death certificates are important when handling aspects of the decedent’s estate such as probate as well as obtaining government benefits. The death certificate is usually provided by the funeral home. You will want to create multiple copies.

11 – Locate your loved ones estate planning documents: If you have not done so already, you will want to locate your loved ones will or any estate planning documents and notify the declared estate Executor or Trustee of they are declared in the documents and that person differs from yourself. If you are unsure where these documents are located, you may want to search for them in a desk, filing cabinet or lock box. If you are unable to find them, ask family members, close friends or the attorney of your loved one if they are aware of the existence and location of them. If you are unable to locate any, the court will assist you with the handling of the estate during probate.

12 – Speak to an attorney or begin the probate process: If your loved one had a living trust, reach out to a trust and estate or estate planning attorney and review the trust documents for advice on how to proceed. You may be able to avoid the probate process. If there was not a living trust in your loved ones estate planning documents, contact your local county court office about beginning the probate process. Probate is a court administered process that transfers the estate of a deceased individual to named or remaining heirs. An estate is made up of the decedent’s real estate, personal property, life insurance, bank accounts, investments and personal belongings. The court will either approve the designated estate Executor or appoint one at the beginning of the probate process. The Executor will carry out the duties of the estate.

13 – Speak with your loved ones accountant or hire one for assistance if needed: If your loved one had been working with a CPA, you should reach out to them. Inform them of the passing of your loved one and ask for their advice on how to proceed. The estate may have to file a tax return, as well as a tax return on the decedent’s behalf as well.

14 – Complete the probate process if needed: If the probate process is required there are several steps involved that will need to be completed by the executor. Here is what you can expect during a typical probate process:

  • Stage 1 – Filing a petition in probate court and having probate initiated
  • Stage 2 – Issuing notices to heirs and creditors
  • Stage 3 – First probate hearing occurs and the proving of the will
  • Stage 4 – Collection of the decedents assets / estate assets
  • Stage 5 – Paying of creditor claims
  • Stage 6 – The filing of taxes for the estate
  • Stage 7 – Probate court closes the estate and any remaining assets are distributed to the heirs of the estate

Additional information and on the probate process can be found here.

15 – Cancel any services that are no longer needed by your loved one: You should close or cancel and service that are no longer needed by your loved one. Examples of services include health insurance, cellphone service, internet service, newspapers, magazines, streaming services, cable TV service and automobile insurance.

16 – Notify the Social Security Administration of your loved ones passing: If your loved one was receiving Social Security benefits, you must notify the Social Security Administration as soon as possible. You can view information on how to notify Social Security about the passing of a loved one here.  Family members of the decedent may be eligible for death benefits from the Social Security Administration. We suggest asking them for information on benefits when you call them to inform them of the passing of your loved one. The Social Security Administration can be reached at (800)772-1213.

17 – Consider closing your loved ones social media and email accounts: You can choose to have your loved ones social media accounts removed or left up as a memorial to them. If you choose to have the accounts removed, you will likely need to provide them with a copy of your loved ones death certificate. Many of the larger social media companies such as Facebook and Instagram will also allow a deceased person’s profile to remain online, marked as a memorial account. You can click here if you are interested in removing a loved ones profile from Facebook.

We hope that this checklist on what to do when a loved one passes is helpful. If we can provide you with any other information, please leave us a comment or contact us here.

The Probate Process

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The Probate Process

The Probate Process

Information About the 7 Step Probate Process

Probate is a court administered process that transfers the estate of a deceased individual to named or remaining heirs. An estate is made up of the decedents real estate, personal property, life insurance, bank accounts, investments and personal belongings. In probate court, an executor (if there is a will) or an administrator (if there is no will) is appointed by the court as a representative to collect the assets, settle any debts and then distribute any remaining assets to the beneficiaries. All matters of probate are reviewed by the court. Each state has their own probate laws. Depending on your state, area and the complexity of the estate; probate can take anywhere for seven months to two years to complete.

The Seven Standard Stages in the Probate Process:

  • Stage 1 – Filing a petition in probate court and having probate initiated
  • Stage 2 – Issuing notices to heirs and creditors
  • Stage 3 – First probate hearing occurs and the proving of the will
  • Stage 4 – Collection of the decedents assets / estate assets
  • Stage 5 – Paying of creditor claims
  • Stage 6 – The filing of taxes for the estate
  • Stage 7 – Probate court closes the estate and any remaining assets are distributed to the heirs of the estate

When a person passes away, their assets and property will be distributed to any named heirs. In order for these assets to be distributed fairly a state probate process takes place. The probate process helps to ensure that all heirs are located, all of the decedents assets are accounted for and the creditors and taxes are paid for the estate.

Click here for a detailed explanation of the 7 steps of probate.

Estate Planning Questions and Answers

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Estate Planning Questions and Answers

Estate Planning Questions and Answers

Estate Planning Common Questions and Answers

The following is a list of common questions people ask when they first begin their estate planning research. For visit this page for a full list of our Estate Planning FAQ. We also have a estate planning glossary page if you have any questions about one of the terms you find here.

Here are some of the most common asked questions about estate planning:

What is an estate plan?

A good estate plan should be designed with several things in mind. It should determine how an individual’s assets will be preserved, managed, and distributed after death. An estate plan should strive to save on estate taxes, reduce court costs, protect assets and avoid probate. It should include a durable power of attorney, Advance Healthcare Directive and a will or trust.

What is a living trust?

A living trust is a legal tool for estate planning that allows a person (known as the Trustee) to hold another person’s (known as the Settlor or the creator of the trust) property for the benefit of someone else (the Beneficiary). It is an estate planning tool that can help family members and beneficiaries avoid a potentially lengthy probate process. A living trust is a legal document which lays out the terms of the trust and the assets that the grantor has assigned to it.

What is estate planning?

Estate planning is the creation on a plan and the preparation of tasks that serve to manage an individual’s assets in the event of their death or incapacitation. Estate planning includes the the distribution of assets to beneficiaries.

Who can help me create an estate plan?

Estate planning or the creation of an estate plan is commonly done with the help of an attorney experienced in estate law or an estate planning professional familiar with the estate laws of your state. There are also a variety of online resources that can help you design an estate plan. Typically the online estate planning tools are far less expensive but may not be ideal for more complex estate planning needs.

Is there a difference between a lawyer and attorney?

What is the difference between a lawyer and an attorney? All attorneys are lawyers, but not all lawyers are attorneys. The primary difference is that attorneys can represent clients in court but lawyers cannot.

Why do I need an estate plan?

Estate planning allows an individual to decide how their assets such as real estate, automobiles, personal property, life insurance policy, investments and cash will be distributed upon their passing. It also allows you to determine who will care for any non adult children or children with special needs. Some estate plans also allow you to determine how your medical care should be handled in case you become incapacitated.

What is an estate?

An estate is all property you own upon your death. Estates commonly include assets such as real estate, automobiles, collections, heirlooms, life insurance policies, investments and cash.

What is a will?

A will is a legal document that provides instructions for what should happen to a person’s assets after his or her death. This term “last will and testament” is commonly used to mean the same thing as a “will”, but to be exact, a last will and testament refers to the most recent version of a will. A will is commonly used to distribute a personal property, real estate, investments or business interests. It may also be used to appoint legal guardians.

What is probate?

Probate is a court administered process that transfers the estate of a deceased individual. An estate is made up of the decedents real estate, personal property, life insurance, bank accounts, investments and personal belongings.

In probate court, an executor (if there is a will) or an administrator (if there is no will) is appointed by the court as a representative to collect the assets, settle any debts and then distribute any remaining assets to the beneficiaries. All matters of probate are reviewed by the court. Each state has their own probate laws. Depending on your state, area and the complexity of the estate; probate can take anywhere for seven months to two years to complete.

Is probate public or private?

Probate cases are public and documents filed regarding the probate of a will are also available to the public. If it is your desire to keep the aspects of your estate private, you will want to consider speaking with a qualified trust and estate lawyer and look into having a living trust created.

Do I need to have a will?

Although there is no legal requirement to have a will, it is highly recommended that you create one. There are many benefits to having a will. A will provides instructions for what should happen to a person’s assets after death. A will is commonly used to distribute a personal property, real estate, investments or business interests. It may also be used to appoint legal guardians. If a person dies without a will, they are said to be intestate, and state intestacy laws govern the distribution of the property of the person who passed.

Do I need to have a will if I have a living trust?

Yes, although a living trust may cover much of the same things that a will covers, it is recommended that you create a pour-over will along with your Living Trust. A pour-over will covers any property that might not have been properly transferred to the Living Trust by the settlor. Without a pour-over will, property acquired after the living trust was created and listed in the Settlor’s name rather than in the name of the trust would normally pass to your heirs as determined under State law as opposed by the language of the trust. A pour-over will ensures that any such assets will be added to your trust and distributed to the beneficiaries named in the trust.

Do I need to use a lawyer to create a will?

No. Anyone can draft their own will, you will just want to make sure that it complies with all of your state laws to insure that it is valid. Although you do not need a lawyer to draft a will, it is advised that you consult a lawyer if you are not comfortable drafting your own, have a potentially complex estate or want to ensure that your getting all of the potential tax benefits that are available to you and your beneficiaries.

What is the difference between a will and a last will and testament?

The term “last will and testament” is commonly used to mean the same thing as a “will”. Although, to be exact, a last will and testament refers to the most recent version of a will.

What is a living will?

A living will is a written legal document that specifies the medical treatments you would and would not want to be used to keep you alive. A living will may also communicate additional medical preferences such as if you wish to be an organ donor or wish to donate your body to medical science. Often A medical power of attorney is used in conjunction with a living will. A medical power of attorney is a legal document that allows you to appoint a person to make healthcare / medical decisions on your behalf in the event that you are unable to make them for yourself.

What is an Advance Healthcare Directive?

An advance healthcare directive and a living will are terms that are commonly used interchangeably. An advance healthcare directive or advance directive is a legal document that explains how you would like to have your medical decisions be made if you are unable to make those decisions for yourself. An advance healthcare directive can be used as a guide for your loved ones when they need to make difficult decisions regarding your medical treatment options.

Do you have to pay taxes on an inheritance?

Inheritances are not considered income for Federal tax purposes, regardless of asset type. However, any subsequent earnings on an inherited assets are taxable. An inheritance tax is a state tax assessed to the beneficiary or heir, unlike an estate tax which is paid by the estate. As of 2022, only Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania impose an inheritance tax. An inheritance tax is not the same as an estate tax. An estate tax is assessed on the estate itself before its assets are distributed. The Estate Tax is a tax on your right to transfer property at your death. The fair market value of the estate assets is used to determine the total value of the estate; the total of all of these items is referred to as the Gross Estate. In 2022 (year of death), the Federal threshold requirement for paying an estate tax was $12,060,000. You can view the IRS Estate Tax Requirements here.

What is an estate planning trust?

A trust, estate planning trust, or sometimes called a living trust is a legal document that allows a person known as the Trustee, to hold the Settlor or creator of the trusts property for the benefit of someone else, referred to as the Beneficiary. A trust is an estate planning tool that can help family members and beneficiaries avoid a potentially lengthy probate process. A trust defines the Settlors wished and lists the assets assigned to the trust. The trustee of a trust is responsible for managing the trusts assets and handling the distribution of the trusts assets upon the Settlors passing. One of the greatest benefits of a trust is the ability to avoid the state probate process.  This can speed up the distribution of an estates assets and potentially save a great deal of money as well.

What is the person who creates a trust called?

The person who creates a trust, or a living trust is commonly referred to as a Settlor, Grantor or Trustor. These terms are commonly used interchangeably. The Settlor, Grantor, or Trustor of a trust decides how the trust will operate and contributes the assets to the trust. The Trustor, Settlor or Grantor is also the person who determines the beneficiaries, or people who will benefit and eventually receive the assets from the trust.

What is a trustee?

A trustee is referred to as the  person or firm that holds and administers the assets of a trust for the benefit of a third party known as a beneficiary. Trustees are required to make decisions in the best interest of the beneficiary.

Who appoints the trustee of a trust?

Typically it is the Settlor (also known as the grantor, trustor or creator) of a trust who appoints the trustee. Often times when the Settlor of the trust is still alive they designate themselves as the trustee. Upon their passing (and the trust becomes irrevocable), a new trustee who was typically previously determined by the Settlor becomes responsible for the trust. When the Settlor appointed trustee is unable or unwilling to carry out their duties, a court may appoint a trustee to manage the trust, its assets and distribution to the beneficiaries.