In short, proper Estate Planning allows you to plan for potential future incompetency and your eventual death while allowing you to maintain control over your decisions and assets as long as possible. More specifically, Estate Planning is the process by which you select and create the appropriate legal documents to accomplish three goals. First, to identify who will assist you with financial and medical decisions if you are unable to make these decisions yourself. Second, to identify your wishes regarding end-of-life medical care. Third, to identify not only who will receive your assets upon your death but also how they will receive those assets, when they will receive them and who will manage the transfer of those assets. In some cases, a fourth purpose of estate planning is to legally and ethically minimize or eliminate estate taxes that might otherwise be levied on your estate.
If you already have an Estate Plan, it is important to update your Estate Plan as your life situation changes. As children become mature, responsible adults, as your parents pass on, as your financial situation changes, your Estate Plan may need to be reviewed and updated. Furthermore, periodically, Estate Planning and Estate Tax laws change, sometimes necessitating updates. You do not need to use the same attorney to review and update your Estate Plan that you used to originally draft your Estate Plan. Our Utah Estate Planning Lawyer, Addison D. Larreau, has reviewed and updated Estate Plans for hundreds of clients that had their original Estate Plans drafted by other attorneys. Mountain View Law Group does not charge a consultation fee to review an Estate Plan and to advise a new client whether updates or changes are needed.
A Trust is a contractual arrangement under which one person, called a Trustee, holds legal title to property for the benefit of that same person, or that of another person or persons, called a Beneficiary or Beneficiaries. The person creating the Trust is called the Grantor. Different kinds of Trusts can help you avoid Probate, reduce or eliminate estate taxes, or set up long-term property management and provide for the care of minor children, disabled adult children or other dependents.
A Living Trust, sometimes called an Inter Vivos Trust, is simply a Trust you create and fund while you’re alive, rather than a Trust that is created at your death under the terms of a Will. Typically, Living Trusts are revocable and amendable by the Grantors who created the Living Trust. You would typically be both the Trustee and the Beneficiary of your own Living Trust, keeping full control over your assets and enjoying the complete use and benefit of all property held in the Living Trust during your lifetime. If you were to become incompetent, someone you have identified in the Living Trust as a Successor Trustee will become the active Trustee and will have authority to manage the Trust assets for your benefit until you become competent again, if ever. Upon your passing, the Successor Trustee will have authority to manage and distribute the assets of the Living Trust for the benefit of your Secondary Beneficiaries or heirs, but only according to terms and conditions you included in the Living Trust as the Grantor. Living Trusts are typically used as an Estate Planning tool to accomplish the following: one, provide for the management of assets if the Grantor/s become incompetent and cannot manage their own assets; two, avoid the requirement of Probate upon the Grantor/s’ passing; and, three, to provide for the management of assets for minor children, incompetent adult family members and other dependants. A Living Trust is the foundation of a good Estate Plan for most situations.
A Will becomes a matter of public record when it is submitted to a probate court, as do of all the other documents associated with the Probate, including inventories of the deceased person’s assets and debts and a list of which persons received what assets. The terms of a Living Trust, however, will typically not be made public because the probate court is not involved. Typically the only time the terms of a Living Trust will be made public is if it is legally challenged by a beneficiary or a creditor, which rarely occurs.
Making a Living Trust work for you does require some crucial paperwork. First, there is the Trust Agreement which identifies the Trustee, Successor Trustees, your Beneficiaries and contains instructions to the Successor Trustee regarding to whom and at what time you want the Beneficiaries to receive the Trust assets.
Second, your property must be properly transferred into the Trust for the Successor Trustee to be able to distribute the property to your Beneficiaries. For example, in order for your house to be transferred through your Living Trust, you must sign a new deed showing that you now own the house as Trustee of your Living Trust. It is important to transfer all of your property appropriate for a Living Trust to your Living Trust in order for your Beneficiaries to receive your assets, upon your death, through your Living Trust. Not all property is appropriate in a Living Trust. For example, your Living Trust cannot typically own your retirement accounts, although your Living Trust can be the beneficiary of your retirement accounts after your death. It is important to have experienced legal advice when deciding which assets should and should not be owned by your Living Trust.
Once an asset has been transferred to your Living Trust, you simply need to remember two words: “Trust” and “Trustee”. All assets with a title (such as an automobile) or a deed (in the case of real estate) should be purchased and sold in the name of your Living Trust and you should write the title of “Trustee” after your name to indicate that you were acting on behalf of the Living Trust. By remembering these two words, “Trust” and “Trustee”, you can easily manage your own Living Trust and do not need the assistance of an attorney each time you buy or sell an asset.
Holding assets in a revocable Living Trust does not shelter your assets from legitimate creditors. A creditor who wins a lawsuit against you can go after your Living Trust property just as if you still owned it in your own name. This is the trade-off for maintaining complete control over your assets by being both the Trustee and Beneficiary.
Yes, when you have a Living Trust, you need a special type of will called a Pour Over Will. A Pour Over Will is an essential back-up device for property that you may forget to transfer to yourself as Trustee or if upon your death one of your financial accounts does not have a valid beneficiary designation from. For example, if you acquire property shortly before you die, you may not think to transfer ownership of it to your Living Trust – which means that it won’t pass under the terms of the Trust Agreement. Or, you may have an investment account or bank account for which a beneficiary designation form was not completed when the account was opened. Property owned outside the Living Trust which does not have a beneficiary designation would typically become subject to Probate. In this case, in your Pour Over Will would include a clause that directs that all property subject to Probate be given to your Successor Trustee to be managed and/or distributed according to your Living Trust provisions.
If you have a Living Trust, but do not have a Pour Over Will, any property that is not transferred through your Living Trust or other probate-avoidance device, such as beneficiary designation forms, will be distributed in an order determined by state laws called Intestacy laws through Probate. These Intestacy laws may not distribute property in the way you would have chosen, so a simple Pour Over Will is an essential “safety net” for your Living Trust.
A simple revocable, amendable Living Trust has no effect on taxes. More complicated Living Trusts, however, can greatly reduce or even eliminate the Federal Estate Tax bill for people who own valuable assets.
One tax-saving Living Trust is designed primarily for married couples with children. It is commonly called an AB Trust, although it goes by many other names, including “Credit Shelter Trust,” “Exemption Trust,” “Marital Life Estate Trust,” and “Marital Bypass Trust.” Each spouse leaves property in trust to the other for life, and then to the children. This type of Trust can save many thousands of dollars in estate taxes. Other types of Living Trusts can be utilized by single or widowed people to minimize or eliminate Federal Estate Taxes. Very few people are subject to Federal Estate Tax upon their death, so this isn’t typically a concern for most people.
A simple way to ensure that your funds, property and personal effects will be distributed after your death according to your wishes is to prepare a Will. A Will is a legal document designating the transfer of your property and assets after you die. Usually Wills can be written by any person over the age of 18 who is mentally capable, commonly stated as “being of sound mind and memory.” Wills must be taken to Court and Probated after you have passed on in order for your wishes to be honored.
Many people think of Estate Planning as something limited to the question of what will happen to my property after I have passed on. While this is an important part of Estate Planning, a good Estate Plan must take into account the possibility that you may someday you may be injured or ill and be unable to care for yourself, make decisions, or even regain consciousness. In these cases, someone else will need to make financial and medical decisions for you. By using appropriate Medical and Financial Powers-of-Attorney, you can designate while you are competent who it is you want to have authority to make decisions for you if you were to become injured or ill and were unable to make your own decisions.
Since most Estate Planning documents are not used until you have been declared incompetent by your doctors or until you have passed on, it is vital that these documents be prepared and executed properly. Once you are incompetent or have passed on you cannot make any changes to these documents. Therefore, it is vital that these documents be drafted by an Estate Planning Attorney who has extensive training and experience in Estate Planning – not just an attorney who prepares Estate Planning documents as one of many areas of practice.
Mountain View Law Group’s Utah Estate Planning Attorney, Addison D. Larreau, has dedicated his career to excellence in Estate Planning and the related area of Business Planning. Each year, Addison attends seminars and classes that will expand his knowledge and skill in assisting Estate Planning and Business Planning clients. Addison has drafted hundreds of Estate Plans for clients living not only in Utah but also for clients residing in many other states. Addison’s clients have very diverse backgrounds, ranging from students to presidents of large corporations, from very modest estates to multimillion dollar estates, from young parents to great grandparents. Addison’s extensive experience and education is a valuable resource in helping his clients craft thoughtful and efficient Estate Plans.
Addison views his role as an Estate Planning Attorney as twofold: first, he is an educator, helping clients understand what options that they have and how different types of Estate Planning documents might benefit them; and, second, Addison is an advocate, skillfully drafting the necessary Estate Planning documents, helping the clients understand the documents and only then assisting the clients in properly executing the documents.
Addison’s approach to Estate Planning is unique among Estate Planning Attorneys in the following ways:
Addison spends significant time with his clients educating them about the available Estate Planning documents and explaining how each document functions and the interrelation of the various documents before assisting the clients in selecting proper Estate Planning documents necessary for their unique situations. Addison will educate and advise his clients but he will not simple “sell” his clients a “one size fits all” Estate Plan.
Addison reviews the Estate Planning documents in great detail with each client prior to assisting his clients in signing the documents. This ensures that each clients’ documents are complete and accurate and that the client fully understands his or her Estate Plan prior to signing the Estate Planning documents. Any changes that a client needs or wants can be made while they are in the office so that there are no unnecessary delays in signing their Estate Plan.
At the time his clients sign their Estate Plan, Addison teaches them how to maintain their Estate Plan without the need to have an attorney’s assistance every time they buy or sell property. Addison educates his client regarding how to properly manage real property, vehicles, business interests, financial accounts, retirement accounts, life insurance polices and personal property so as to maximize the benefit from their Estate Plan and to minimize potential estate taxes. Addison also is available at no additional charge to answer questions regarding his clients’ Estate Plans even if the clients’ have questions that arise years after the signing of the Estate Plan.
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