Estate planning cloud tag

What a Living Trust Can Do for You

Most people have heard about trusts and probably know they come from the estate planning arena. The details of why to have one and what they do, however, are often unclear. Here are a few points to clarify what trusts do and how you can benefit from having a trust.

A living trust is created during your lifetime, becoming enforceable once you sign the documents. These trusts can be revocable or irrevocable. If revocable, you can change or revoke the trust at any point during your lifetime. If irrevocable, the trust (generally) cannot be changed once it is signed.

The “fun” part of trust planning is that your trust can be tailored to meet your goals and desires. A qualified estate planning attorney will address the issues that concern you and create a trust that specifically suits your needs. Here are some of the things a living trust can do:

  1. Save probate costs and reduce estate taxes. By properly funding your trust (transferring assets into the trust), you can avoid probate costs for administering assets upon your death. If trust provisions are properly set up to maximize the use of exemptions, a married couple can save substantially on estate taxes.
  2. Protect your children. Your trust can hold money for minor children until they are responsible enough to manage it themselves. Often, it is preferable to limit outright access to funds in order to protect inherited wealth from creditors, including a future ex-spouse.
  3. Save your grown-up kids from themselves. If you believe a child will never be able to manage money him/herself, a trustee can hold funds in trust for the child’s lifetime, distributing money as needed for the child’s health, welfare, and maintenance.
  4. Ensure your family’s privacy. With just a will, or with assets that must be probated, your affairs will become part of a public record, including details such as the value of your assets, and often, an inventory listing your assets. A living trust, on the other hand, is a private document that is administered by the trustee you have selected.
  5. Protect you while you are alive. If you fund your trust and later become incapacitated, your successor trustee will be able to manage the trust assets for your benefit. This is especially important for anyone who is single, and for those who have no children. Although you may lack an immediate family member to step in, you still have in place the method and means to be provided for in the event you are unable to make decisions for yourself.

At Kling Law offices, our goal is to help you achieve the peace of mind you deserve by planning for both life and death in a way that addresses and protects your needs, your assets, and your family. Contact our office today to set up your free consultation to discuss how a living trust can help you plan for your future.


Privacy Matters: What Happens in Your Estate Plan Can Stay in Your Estate Plan

What do you think when you come across news about the value of a celebrity’s estate? When the value of real estate they own(ed) is reported publicly? Or when there is a fight over assets among heirs? You may not associate such news with your own estate plan, but you may have made the same choices that will leave a great deal of personal and financial information available for public consumption.

This is why deciding whether to use a will or a trust for passing on your estate is important. If you are interested in keeping your family and financial matters away from prying eyes, you need to consider how a trust can help you meet this goal. Understanding the differences between a will and a trust will make this clear.

Through a will you identify who should receive your assets after your passing. You also nominate someone to carry out your wishes on your behalf. Of key importance, however, is that the person you nominate cannot act without approval from the local probate court. This requires filing your will with the court and having a public hearing on the matter. The probate file, which also includes everything filed by other people with a claim in the matter, becomes a public court record.

Is it concerning that anyone who wants can see your probate file? Consider this: It will reveal what you owned, to whom you owed money, and how you wanted your assets to be distributed. Few of us talk completely freely about these matters with our family; most of us would probably avoid talking about them altogether with family members we disinherit, our nosy neighbors, bill collectors, or the press.

To avoid having your estate details become a public record, talk to a qualified estate planning attorney about using a trust as the document at the heart of your estate planning. A revocable living trust is a private contract that you create—typically naming yourself (or you and your spouse) as the trustee and making yourself (or jointly with your spouse) the beneficiary. During your lifetime you, as the trustee, control trust property and make decisions about how to use that property. To insure your assets are treated as trust property, it is important to have assets properly titled in the name of the trust. In the event you become incapacitated or unable to manage the trust, the trust document names someone to act on your behalf. After you pass away, the person you have named in the trust will administer the trust according to its terms. Using a trust and making sure your assets are properly titled gives you control and privacy. Since the trust is a contract, the trustee’s duties can be carried out without filing the documents in probate court.

Kling Law Offices can help by designing an estate plan that meets your goals and desires, including maintaining your privacy—we believe your estate plan should help give you the peace of mind you deserve. Contact our office to discuss your estate planning needs.

Estate Planning

Medical Planning in Your Estate Plan

You might think the most important reason to have an estate plan is distributing assets according to your wishes and desires, and it would be hard to disagree with that idea. We think it is also important to consider the importance of your medical documents and the role they will play in the event you need medical care or attention. While we all know the adage attributed to Ben Franklin that “nothing can be said to be certain, except death and taxes,” present day studies tell us 1 in 3 people face disability before the age of 65. Thus, it is probable that you (or someone you love) will need help making medical care decisions at some point before passing away. This means your health care documents should be up-to-date and accurately reflect your wishes for medical care and treatment during incapacity. For some of us, medical planning may be the most important reason to plan.

It is important to remember that most people go through a period of decline before passing away. This in-between time is frequently when your medical care planning documents hold key importance. The most well-known document used to confer decision making power and state your wishes regarding medical events is the Medical Power of Attorney. This is where you name an agent to make medical decisions on your behalf if you are incapacitated. This person will have to make specific and often complex decisions, so who you name is critical: A competent person relying on a good plan yields the “best” results. It is important to remember, however, that a “good” outcome may not include a recovery. Thus, the decision-maker you designate needs to understand your wishes and desires and be able to make compatible decisions even in the face of complicated medical options and highly emotional circumstances.

Without being named as a proxy decision maker in well drafted medical planning documents, your loved ones may have a challenging time gaining access to your health care providers and records. In today’s world of privacy concerns, medical facilities may not share even basic information with family members in the absence of proper authorizations. One way to ease this problem is to execute a HIPAA release naming close family members as persons authorized to receive private health care information. The HIPAA release confers no decision-making power but allows medical personnel and care facilities to disclose otherwise confidential information about the patient’s care.

Naming the right medical agent(s) takes thought and attention to detail. At Kling Law Offices, we understand that estate planning is not a one-size-fits-all business. Instead, we focus on learning your wishes and desires and work with you to develop a plan that suits your unique situation—regarding not only your financial wealth, but also the wealth of having the quality of life you and your family deserve. Please contact our office for a free consultation regarding your estate plan and all the important decisions that will make that plan truly work for you.

Titling Your Assets in Your Estate Plan

Titling Your Assets the “Right” Way

Once you have executed your estate planning documents, it is important to remember that the process is incomplete until you confirm how your assets are titled. Your estate planning documents cover a lot of information and give directions about how your estate should be distributed. If, however, your assets are not properly titled, or beneficiary designations are not properly completed, your estate may not pass as you intended.

There exists a wide range of choices for titling your assets, from financial to real estate, all of which serve different purposes. It is up to you to identify your assets during the estate planning process. It is up to your attorney to discuss and explain the impact different titling options will have on the disposition of various assets at your death.

For instance, if you own a mutual fund in your individual name, that account would be distributed as directed by the terms of your will and the probate process. If you owned the same account in the name of your trust, the account would be distributed as directed by the terms of your trust without the need for probate. Contrast this with the option of owning the account jointly with another person (most often as “joint tenants with rights of survivorship”), which makes the terms of your estate plan irrelevant as to the account since it will transfer automatically upon your death to the surviving joint owner. How you hold title to your mutual fund should take into account both to whom and how you want the asset to pass upon your death.

Dealing with retirement accounts and life insurance policies is equally important, but requires a few different considerations. Their distribution upon your death is generally controlled by beneficiary designation forms and their value can pass directly to an individual, to a trust, or to a combination of beneficiaries. A key fact is that the beneficiary designation form, alone, controls distribution of the assets. Other legal documents do not affect the beneficiary designation and it does not automatically update for life changes like divorce, or even changing brokerage houses. If you divorce and leave your ex-spouse as a designated beneficiary, s/he will receive the funds upon your death regardless of the fact you are no longer married. If you move accounts to a new brokerage house (ie: you want to follow your broker from one financial firm to another), you must update beneficiary designation forms for the new accounts at the new brokerage house. Otherwise, those accounts will lack valid beneficiary designations and the assets will pass via intestacy or the terms of your will, necessitating probate proceedings.

How you want your assets to pass is entirely up to you. Just remember that making sure your choices are carried out means making sure your assets are titled the “right” way. If you would like to review your estate plan and whether your asset ownership truly reflects your goals and desires, contact Kling Law Offices today for a complimentary consultation.

Pet Trusts

Pet Trusts Can Provide for Your Furry Loved Ones

It is not unusual for pet lovers to ask about providing for their beloved animal(s) as part of creating a complete estate plan. As with our non-furry loved ones, there is often a strong sense of responsibility to ensure the ongoing comfort and care of one’s animals. The way to accomplish this goal is to establish a pet trust. Yes, there really is such a thing, and pet trusts are now recognized in all 50 states.

Nevada enacted its pet trust law in 2001, allowing a pet owner to create a trust for the care of one or more animals that are alive during the settlor’s lifetime and terminating when no living animal is covered by the trust. Nevada’s law requires that assets left in a pet trust actually be used as directed by the settlor. The named trustee is a fiduciary, charged with the same duties and level of care as the trustee of any other trust. However, any person who demonstrates an interest in the animal-beneficiary’s welfare can petition the court to be appointed as trustee, or to remove a current trustee. The court must give preference for appointment to a person who demonstrates this interest.

There are some limitations on funding a pet trust in Nevada, as in many other states. If a court determines the assets left in trust exceed the amount required to care for the animal-beneficiary (one or more of them) our state law mandates, “the excess amount must be distributed to the person who would have taken the trust property if the trust had terminated on the date of the distribution.” NRS 163.0075. Courts in other states have upheld this provision, reducing multi-million-dollar pet trusts to amounts that reflect the actual anticipated cost of care for the animal(s). Likewise, it is important to name remainder beneficiaries under the pet trust so any funds that remain after the pet passes away can be distributed as you desire without further court involvement.

While the idea of pet trusts may seem frivolous to some, beloved pets are family members to many. As with more traditional forms of estate planning, the goal in creating a pet trust is to give the pet owner peace of mind. For seniors, this can be especially important since having unresolved questions about a pet’s care prevents some people from making important health-care and life decisions. Although funding a pet trust is optional, this too is recommended. As novel as it may seem, pet trusts are often funded by receiving a fixed percentage of an insurance policy, bank account, retirement account, or even the sale of other assets.

Making plans for your pet’s care can provide assurance that your beloved Fluffy, Fido, or Penny the Hedgehog will be well cared for in the event of your incapacity or passing. If you would like to discuss establishing a pet trust as part of your estate plan, please call Kling Law Offices for your complimentary consultation.