Avoiding Trust Litigation

The intention of a revocable trust is to avoid litigation and conflict upon the death of the trustor or primary beneficiary. Unfortunately, poorly worded or unclear trusts, or contentious beneficiaries can sometimes undo all the good intentions of an estate planner. There are no guarantees, but to avoid potential pitfalls, the estate planner should keep a few things in mind.

  • Determine the trustor’s intent. Upon the death of the individual, the primary means of contesting the will or trust will be challenging the intent of the trustor. This is especially true if the individual suffered from any kind of dementia or mental defect. If there is any question of the trustor’s mental status, a doctor’s affidavit should accompany the trust.
  • Amend trusts to reflect changes in tax laws. In the current political climate, tax laws and estate laws are changing rapidly, and can affect formulaic bequests (negatively and positively). To ensure the trustor’s intentions are met, keep the trust bequests current with tax laws.
  • Include a mediation or arbitration clause in the trust. If the trustor agrees, a clause specifying that disputes must be resolved (or attempted to be resolved) through mediation or binding arbitration can help in preventing future litigation. The majority of disputes involve breakdowns in communication, so professional mediators can be of great assistance in ending arguments.
  • Clarify everything. Don’t let legalese obscure the intent of the trustor. If the intent is to remove an individual from the trust, or to fund certain properties, the trust should say so as clearly as possible. The clearer the language, the clearer the testor’s wishes will be when the trust or will is finally read.

The estate planner needs to think of all these things ahead of time, because the trustor and the family and other beneficiaries won’t, until after the shouting begins in court. By writing clearly and keeping abreast of changes to tax and other requirements, much difficulty can be prevented in the future.

To be completely honest, estate planning can be a tricky task to tackle.  Those who actually make an attempt at developing an estate plan have made a big step because many people never even take the first step towards estate planning.  A huge number of people have no Will, and the majority of them have children.  Dying without a Will means leaving the well-being of your children unprotected.

Without a well-drafted Will, your unexpected death may mean that your teenage son ends up having access to significant amounts of money when he is not yet capable of making good decisions with that money.  Likewise, your small children might end up being given to a family member that you would not want raising your children in your absence.

Even if you have a simple estate, you should still have a simple estate plan.  A simple Will allows you to choose when your children will receive your money and who will care for your children if you are suddenly not able to do so.

Do you need an estate plan? Do you need to update your current estate plan? Contact us today for more information.

Wills and Estate Mistakes of the Rich and Famous

Celebrity deaths immediately capture the public’s attention but quickly fade from the spotlight as popular culture marches on. The aftermath of a celebrity death can be far more interesting, primarily because of the estate planning mistakes that many celebrities make in their wills.

Heath Ledger is a prime example. The Oscar-winning actor whose portrayal of the Joker in the Batman trilogy created a Will before he died in 2008. He left his entire $20 million estate to his parents and sisters, but gave nothing to his daughter, who had been born after Ledger wrote the will. The actor’s relatives remedied this omission by putting significant assets into a trust for her. The lesson here is that Wills need to be updated periodically to reflect changes in circumstances.

The King of Pop, Michael Jackson, also created an estate plan before his untimely death. That plan included a trust, but many of Jackson’s assets were left outside of that trust. Because he failed to follow through on his plan, Jackson’s estate has been in and out of probate court several times.

Unlike Jackson and Ledger, the musician, Prince, had no Will or estate plan at the time of his death in 2016. Without a Will, his assets are set to be distributed to heirs per the intestacy rules in the State of Minnesota, but a substantial portion of those assets will be depleted by legal fees and government estate taxes.

This list of celebrity Will mistakes goes on and on as fame and glory blind the rich and famous to planning for their own mortality. Fortunately, we can take some instruction from their mistakes not only to make our own Wills and estate plans, but to keep those plans fully up-to-date. Ford + Bergner LLP helps residents of Texas and other states to develop estate plans that maximize the value of their assets for their heirs while minimizing estate taxes and probate costs and expenses. Please contact us for assistance with your own will and estate plan.

Communication and Wills

At its core, a Will is a tool to assure the continuity of families by smoothly moving assets between generations. Viewed this way, it only makes sense that those involved should openly communicate to achieve a clear understanding of who is in the Will, why it is distributed as it is, and why any limitations or conditions have been put in it.

Parents have a right to decide conditions and distributions of inheritance and have no obligation to justify their decisions. But if they choose to explain their reasoning, their children will benefit. Consider choosing between even and uneven distribution between children.

Children normally expect that assets will simply be split evenly between them. While this is the most common distribution, a parent may have reasons for uneven distribution. A common situation is adjusting inheritance based on relative financial need. In this case, a financially successful child may feel slighted and may take these feeling out on a less successful sibling.

The purpose of communication between parent and child is not to debate if the method of distribution is fair or not, but to create understanding and acceptance of the decision. Doing this while the parent is alive provides the disappointed child an opportunity to process the situation and ask questions. This in turn focuses any disappointment towards the parent and away from a sibling – possibly preserving the relationship.

Money and family can be a messy combination. Keeping unnecessary secrets and creating big reveals may delay facing problems, but this will normally create unnecessary hard feelings and conflict. A modest amount of open communication can prevent these problems. Please contact us for assistance in structuring an estate plan that benefits your family.

Estate planning: Long-term care (LTC) insurance can protect assets.

Investors nearing retirement might want to consider purchasing a long-term care (LTC) insurance policy to help minimize the impact of nursing home expenses on the portfolio.

Granted, while an LTC policy many not offer full coverage of such costs, including in-home care, the insurance is designed to reduce major drawdowns out of a retiree’s overall savings. In such cases, policyholders can go to their Social Security, or pensions, to pick up the nursing home cost differential.

For example, if a nursing home expenses total $8,000 a month, but only $3,000 of it is picked up by your pension and Social Security, the rest of the money might have to come from a 401(k), IRAs and Roth IRAs. Even so, and with an LTC policy, any shortfall might well be covered by the policy—nursing-home ‘per day’ benefits may accumulate quicker the longer you own the policy, and if an ‘inflation protection’ rider is included.

Today’s LTC policies can also offer the option of using ‘in-home health assistance’ instead of traditional nursing home care. Moreover, some policies provide for limited care in an assisted living facility.

Guidelines used by insurance companies in determining when a coverage kicks-in  are defined by the number of ‘daily tasks’ the insured is unable to perform on their own. This might include an inability to cook one’s own meals, or bathe, in which case the policy could provide assistance when needed.

Contact us to learn more about retirement planning and strategies you can use to protect assets in case of major health issues.

Why You Need an Estate Plan With a Will

An estate plan ensures that you know exactly where your assets and money is distributed and everything is done within legal documents so that when the time comes, your loved ones have an easier time of handling your affairs during their time of grief. However, there is more to an estate plan than just that. In fact, there are quite a few reasons why everyone needs a plan for their future.

You may be wondering what an estate plan can do for you and if you need it so here are a few things to take into consideration.

More Than Just Assets

An estate plan helps you plan for more than simply your assets and money. It also ensures that if for some reason you cannot take care of yourself or become incapacitated, you are able to choose who you want to make the decisions for you.

The same applies if you have children who are minors and become unable to care for them – the person you designate will be the only person in charge of their care. Without having a will that chooses a guardian, your children under the age of 18 may have to live where a court decides so that is why it is integral to have an estate plan.

And if you have someone who you take care of that needs help such as a parent or child with special needs, you can set up a trust to provide them the care that you can not provide in person.

Minimize Taxes

An estate plan also makes sure that your beneficiaries get the most money possible instead of more of it going towards taxes. With the right estate plan you can help make sure that the minimum amount goes to the government and your beneficiaries get the maximum.

Expedited Property to Beneficiaries

There are a few options that help your beneficiaries get property faster and this includes living trusts, joint tenancy, and insurance that is paid directly to them. You are also able to ensure that your beneficiaries get partial payments during probate and take advantage of either an expedited probate or a simplified one.

Make Things Easier on Your Loved Ones

One of the things that makes it harder on loved ones is if you do not have funeral arrangements in place. An estate plan allows you to set up your funeral as well as have the option to set a limit on how much is spent or choose where you want the arrangements to take place.

Keep Your Business Intact

If you run a small business, with an estate plan you can set up things so that it remains intact and runs smoothly in your absence.

Pick a Trustee or Executor

It is important for you to be able to pick who you want as the executor or trustee of your estate and take some of the burden off of your loved ones.

Choose a Cause You Support

Some people want some or even all of their money to go to a charity, religious cause, or educational cause and by having an estate plan, you know that your wishes are taken care of and the money or assets go exactly where you wish them to.

Everyone needs an estate plan – from those who are younger and unmarried who may need simple items, those who have children, and those who are wealthy and need more help – the bottom line is that you need some kind of planning. If you would like to learn more about how we can help you plan for the future or if you have any questions, simply contact us and we’ll be more than happy to help.

3 Reasons Why Even Young People Should Write a Will

It’s never too young to write a will. Young people have the lowest percentage of will-writers, but it shouldn’t be that way. Here are a few reasons even young people should write a will.

You Have Children

If you have children or even just one child, you definitely need to write a will, even if you’re young. You need to appoint someone who will be their guardian and trustee. If you have any assets you want to leave them, writing a will is the way to do it.

You Are In a Relationship

Are you in a relationship but you’re not legally married? If you don’t write a will, your beloved partner won’t get anything. In fact, if you have children that were born from a previous marriage, it may be your ex who will be left to deal with your assets.

There Always Are Assets

You may not think that you own a lot of stuff, but there most probably are quite a few items of value in your possession, and you need to take care of delegating them. Pets, benefits (such as life insurance) from employees, jewelry, your car and even digital assets such as social media accounts should all be delegated.

At the risk of sounding morbid, accidents do happen and you should be prepared for them.  If you’re in the military or travel often, creating a will is even more important because of the dangers you face.

For help with all of your will planning and writing needs, just contact us today.