If you do not have an up-to-date Will, you should draw one up now. A Will can spare your family and loved ones from unnecessarily legal hassles when you are gone. There are several reasons you might want to revise your Will, including:

• A change of mind regarding distributing benefits
• A change in your property and assets
• Your receipt of an inheritance
• A change in tax laws and your decision about setting up a Trust or other accounts

There are two ways to change your Will. The first is to create what is known as a Codicil. This is basically an amendment to your Will and is attached to the original version.

You can have multiple Codicils attached to your Will and they can be used for a variety of purposes such as changing a beneficiary’s name, adding property and/or bequests and even deleting or amending language found in the original version.

The other option for changing your Will is to draft a new document that replaces the first. This is a good option if you have major changes to your Will or if you already have multiple Codicils and would like to simplify the document.

Of course, before you make any changes to your estate plan, you should consult with a qualified attorney. If you’d like to learn more about drafting or changing a Will, contact our office today.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Trust administration involves appraising and protecting the assets of a trust, ensuring that the trustor’s wishes are followed, and paying legally required taxes and fees. Trust administration can be fairly straightforward, but there are a number of variations that you should be prepared for if you’re in the role of trustee (the trust administrator).

If you have established a living trust, you’ll likely be the trustee as well, and will designate someone to take over that role after your death. You’ll want to consider all the responsibilities of a trustee when choosing that person, and consider hiring a professional trustee if you do not know anyone capable of carrying out those responsibilities.

Proper assessment of the estate can make the difference between beneficiaries receiving the full amount left to them and getting less than fair market value of assets. Similarly, if the taxes and fees are not properly assessed and paid, there may be setbacks and more fees later on for those that have received a distribution. Also remember that depending on the year of death, you may need to file federal estate tax in addition to standard income taxes.

Some estates may have instructions that require other tasks, such as setting up multiple trust funds. In some cases, you may want to employ a professional with knowledge of trust administration or licensure in a particular area to help you carry out specific instructions. Your role as trust administrator may last nearly a lifetime, or may be complete within a couple weeks.

In the best case, you will select or be selected as the administrator of the trust during the estate planning process. This will ensure that both you and the trustor are clear on how details will be handled, and that you are confident in your ability to complete this role.

Unfortunately, this is not always the case and you may find yourself in over your head. Should you have questions or need assistance with trust administration, consult with a qualified estate planning attorney as soon as possible.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

A trust is essentially a legal entity that hold title to your assets to help streamline their distribution after you’re gone.

There are two basic types of trusts: a Living Trust and a Testamentary Trust. A Living Trust is created during your lifetime and you can benefit from the assets held within the trust while you are alive. A Testamentary Trust on the other hand, is implemented after your death and only your beneficiaries will receive benefits from the assets. This type of trust is typically executed via instructions in your Will

The Three Roles

There are three different roles involved in most trust agreements. Depending upon the type of trust, these three roles may or may not be filled by the same person.

The first party to a trust is the trustor, also referred to as the donor or grantor. This is the person that creates the trust, i.e., you. As trustor, you are basically transferring title of certain assets to the trust to accomplish a specific set of goals.

It may be that you just want to help your heirs avoid probate and streamline the distribution process after you’re gone or perhaps you want to provide for a disabled dependent. There are actually a number of concerns a trust can address so choosing the right one for you is as important as funding it with your assets.

The second person involved is known as the trustee. This is the person that will manage the assets in the trust and in many cases, that role may initially fall to you. After you’re gone, your chosen successor trustee will step in and manage the assets on your behalf.

The last person is the beneficiary – this is the party or parties who will benefit from the assets in the trust. Again, you might be the primary beneficiary of your trust while you’re alive and then after you’ve passed on, your children would become the beneficiaries of the trust.

Revocable Trusts vs. Irrevocable Trusts

In addition to the distinction of living or testamentary, a trust can also be revocable or irrevocable. This simply indicates whether the trust can be changed or not.

A revocable trust for example, can be changed and/or revoked at any time by the trustor, without the approval of other beneficiaries. A Living Trust is a good example of this type of trust, allowing you to set aside assets for your heirs and help them avoid probate after you pass away.

An irrevocable trust on the other hand, cannot be changed by the trustor without approval of the beneficiaries. This type of trust drastically limits your control and access to the assets but in doing so, provides some extra protection from creditors and lawsuits.

Choosing the kind of trust you need requires some professional assistance. If you’d like to learn more about the different types of trusts and their benefits, contact our office today.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

One of the documents you’ll likely sign while putting together your estate plan is a Durable Power of Attorney. This is the document with which you’ll appoint an Attorney In Fact to handle your finances in the event that you’re unable to do it yourself.

While an Attorney In Fact can be a godsend, managing your finances, paying your bills, signing legal document for you and helping you avoid the need for a guardian or conservator, you’ll want to be careful who you appoint.

The person you choose will have a great deal of power over your legal and financial affairs. Poor decision making or dishonesty on the part of your Attorney In Fact can result in a financial nightmare for you. So, what qualities should you look for?

• Age. While, legally, a person only has to have reached the age of majority to serve in this position, it’s a good idea to choose someone who has demonstrated that they’re financially responsible.
• Financial Acumen. While your Attorney In Fact doesn’t need to be a CPA, it’s a good idea to choose someone who has handled his or her own finances responsibly – and who has demonstrated the ability to handle financial affairs at least as complicated as yours.
• Organizational Skills. You want someone who will be able to keep track of all of your bills and paperwork, and know what’s going on with your financial and legal affairs at any given moment.
• Diligence. Choose someone who will take the time necessary to make the right decisions on your behalf, whether this means doing a little fact-finding or consulting with an expert.
• Trustworthiness. Most importantly, you want someone you can trust implicitly. The purpose of appointing an Attorney In Fact is to have someone there to watch out for you when you can’t do it yourself. Choose carefully and trust your instincts.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Charitable Trusts are irrevocable trusts established for charitable purposes. These types of Trusts can be set up during your lifetime or as part of your will at death. Charitable Trusts can provide benefits both to your heirs as well as your favorite charities, and offer significant tax breaks for the donors and their beneficiaries.

Types of Charitable Trusts

There are two basic types of Charitable Trusts: Remainder Trusts and Lead Trusts.

With a Charitable Remainder Trust, the assets are held in the trust but the donor (that’s you) can continue to use the property and/or receive income from it during your lifetime. Upon your death, the property goes to the charity, but your beneficiaries receive the income from the property for a specified period of time. If the trust is a Unitrust, the income is a fixed percentage paid annually, while an Annuity Trust pays a fixed dollar amount to the beneficiaries on an annual basis.

A Charitable Lead Trust on the other hand, gives the income generated from the assets in the trust to the charity while you’re alive. Then upon your death, the assets and their income are transferred to your beneficiaries.

Tax Benefits of Charitable Trusts

Donors generally get a federal income tax deduction based on the Trust’s value and when the assets are transferred to your heirs upon your death, both estate and gift taxes are significantly reduced.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Leaving an Inheritance for your children is easy if they are over the age of eighteen because under the law, they’re considered adults. But leaving an inheritance to minor children can be a bit more challenging and you need to think about how you want their money managed until they’re old enough to manage it on their own.

Custodian

Just as you can name a guardian to watch over your children until they turn eighteen, you can also name a custodian to manage your child’s property and money. You can outline how the custodian should use the funds on the children’s behalf or you can simply trust him or her to make wise decisions on behalf of your child.

Trustee

If you have a Revocable Living Trust, you can name a trustee to watch over the trust assets until your children are old enough to do so on their own. You can also specify how and when the children can inherit, such as distributing a percentage of the assets based on certain life or academic achievements.

You can leave the funds in the family trust or you can set up separate trusts for each child. Again, how and when they inherit is totally up to you. This may be a good option if the inheritance is large and you’re concerned about their ability to make wise financial decisions. Rather than giving them a big lump sum on their eighteenth birthday, they would receive smaller increments over the years and would be encourage to continue to achieve in order to receive future distributions.

Whether you decide to use a Custodian or a Trustee to care for your children’s finances will depend upon your estate and your family’s situation. Either way, if you don’t put someone in charge of your child’s inheritance, then a probate judge will do it for you and the outcome may not be what you had in mind.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

A trust is created by a person wishing to plan his estate and simplify the transfer of assets to loved ones.

If the trust is revocable, the trust maker can make changes and even dissolve the trust during his or her lifetime. Assets can be added, sold and transferred from the trust, all at the trust maker’s discretion.

But once the trust maker dies, the provisions of the trust become irrevocable – meaning they cannot be changed – and the terms of the trust are carried out by a successor trustee.

The terms of the trust will direct the successor trustee to either distribute assets to the beneficiaries or hold assets in the trust for the benefit of the named beneficiaries until a pre-determined date or event.

The responsibilities of a successor trustee after the death of the trust maker include:

• Management and investment of all the assets funded in the trust
• Collection of any insurance proceeds, retirement accounts and annuities
• Payment of all the final bills, debts and taxes of the trust maker
• Distribution of the balance trust funds to the final beneficiaries named in the trust agreement.

The settlement of a trust following the death of the trust maker is dependant on several factors, such as:

• The number of beneficiaries and their location
• The level of agreement or disagreement amongst the various beneficiaries on the management of the various assets held under the trust
• Whether the validity of the trust is going to be contested by anyone
• Whether the estate under the trust’s management is taxable or not
• The level of complicacy related to the various assets held under the trust

The time frame for the settlement of a trust is also dependant on several factors, including the nature of the assets transferred to it, their taxability and the terms outlined at the time of forming the trust.

Once all the assets within the trust have been transferred to the appropriate beneficiaries, the trust is dissolved.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

Although having a Will is an important element of estate planning, there are simply some issues that it cannot cover.

The Types of Property Not Covered in a Will

You cannot leave property to someone using your Will if that property is held in joint tendency with someone else. This would include property owned jointly through tendency by entirety, or community property with right of survivorship.

A Will also does not cover property that you have in a trust, as well as any life insurance benefits where a beneficiary has already been declared. It will also not cover 401k or IRA funds, as well as stocks and bonds. The change in beneficiary will have do be done through the broker by changing the person that is named on the forms.

Funeral Arrangements

It is not a good idea to leave instructions that you want carried out for your funeral arrangements. The reason that putting this in a Will is a bad idea is that it is likely that your Last Will and Testament will not even be read until after your funeral. It is best to create a separate document for this, and make sure that someone knows how to find this document.

Some other areas that are not really covered through a Will include leaving money to pets. There is no way for a pet to inherit (they are considered to be property) and a Will won’t change this. It is better to leave your pet to someone who will care for it, and then leave money to that person. You also should not use your Will to provide for a loved one with special needs as this could affect their eligibility for government assistance programs. A better way would be to create a Special Needs Trust.

It is also difficult to put restrictions on someone’s inheritance, as this is difficult to enforce.

Wills are very important and can accomplish many things when it comes to estate planning, but a Will cannot cover everything. This is one the reasons why you need more than just a Will to ensure that you have a solid estate plan that will protect your family after your death.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.

A trust is designed primarily to assist with transferring and retitling of assets. Trusts can be managed by a person, group or firm, known as the Trustee. Upon death, the assets in a trust are distributed to beneficiaries according to your wishes. The party responsible for the trust also makes financial decisions about the assets in the trust.

A living trust refers to a trust that is set up while you are alive, instead of after you’ve passed on. Depending on how you structure the trust, you can maintain control of the assets and continue to benefit from any income generated from those assets.

When you set up a living trust, you must name a beneficiary and in many cases, the person you choose to manage the trust and benefit from the assets is actually yourself. A successor trustee is also named to take over the management of the trust when you pass on or if you become incapacitated.

Setting up a living trust provides offers a number of benefits including minimizing taxes and avoiding probate upon your death. It is however, a legal process that can be very complex. Naming beneficiaries and protecting your property upon death are extremely important decisions and as such, should be done with the help of a good estate planning attorney.

The Bonfrisco Law Firm is a member of the American Academy of Estate Planning Attorneys.