family trust estate

Estate Planning Basics: An Introduction to Trusts, continued

by with No Comment Estate Planning

family trust estate
Last time we discussed some of the terminology associated with trusts. Now let’s look at how revocable trusts differ from irrevocable trusts and the benefits of having a trust.

Revocable Versus Irrevocable Trusts

A revocable trust is a trust that can be altered by the grantor during his or her lifetime. An irrevocable trust, on the other hand, is a trust that cannot be changed by the grantor (except under extraordinary circumstances). In the case of irrevocable trusts, the grantor typically foregoes total control of the property and must obey all trust rules and guidelines. Furthermore, a trust can be revocable during the grantor’s lifetime and then become irrevocable upon the grantor’s death.

When most people use the word “trust” in the context of estate planning, a revocable living trust is the one they have in mind.

A revocable living trust allows you to maintain complete control over your assets while you are alive and after you have passed away. You don’t have to transfer your assets to the trust all at once, you can do so over time and even add to the trust as you acquire new assets.

Other benefits of a revocable living trust include:

  • Avoiding probate. The probate process is time-consuming, needlessly expensive and exposes your assets and estate to public scrutiny
  • It can be changed over time, to compensate for changes in your financial and family situation
  • Basic wills can lead to disagreements among family members. A revocable living trust can help eliminate challenges to the will and ensure beneficiaries receive what you have intended for them
  • It allows for ongoing financial management. As your wealth accumulates, so too will assets in the trust

Contact a New York Estate Planning Attorney

One of the questions frequently asked by clients is whether or not they need a trust. The answer depends on the client’s unique needs and goals. Would you benefit from a trust? We’d be happy to discuss the matter with you at your earliest convenience. Contact us today to get started.

Trusts concept: Young family playing on couch at home.

Estate Planning Basics: An Introduction to Trusts

by with No Comment Estate Planning

Trusts concept: Young family playing on couch at home.
Perhaps you have heard about trusts but wonder exactly what they are and what they can help you accomplish. Simply put, a trust is an agreement outlining how assets will be managed and held for the benefit of another person. There are many types of trusts, capable of addressing a wide range of concerns and accomplishing a number of important goals. Let’s begin our discussion by looking at the elements and terminology shared by most trusts.

The Grantor

All trusts have a grantor (also known as a trustor or settler). The grantor is the person who creates the trust and has the legal authority to transfer property held in the trust.

The Beneficiary

The beneficiary is the person who “benefits” from the trust. A beneficiary can be one person or a number of different parties. A beneficiary can also be an institution, such as a charity.

The Trustee

The trustee is the individual (or in some cases, the institution) authorized to take title to property on behalf of a beneficiary. The trustee is responsible for managing the property according to the rules described in the trust document. Additionally, the trustee must act and make decisions based on the best interests of the trust’s beneficiaries.

Trust Funding

For a trust to accomplish its goals, it must be funded by the grantor. “Funding a trust” refers to the process of transferring ownership of assets from the grantor to the trust. These assets can include money, real estate, stocks, jewelry, and more. It is important to note that assets “outside” the trust are not controlled by the trust.

Next time we’ll discuss the difference between a revocable and irrevocable trust, together with the benefits of planning with trusts.

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Choosing a Trustee for Your Special Needs Trust

by with No Comment Estate Planning

special needs trustee

Choosing the right trustee for any trust is a difficult and extremely important decision. In the case of choosing the right trustee for the trust you have created to protect your loved one with special needs, the decision is even more important—particularly if your loved one is a young child. Let’s take a look at some of the options and discuss the pros and cons of each.

Your Parents

Many couples consider this first. After all, your parents know and love your children, and understand your wishes. However, this is only a temporary solution, as your special needs trust must protect your loved one with special needs for his or her entire lifetime.

Your Siblings

Like your parents, this may be a good temporary solution. But the same drawback applies here as well. Your siblings are unlikely to outlast the trust itself, and you will need a successor trustee.

Your Other Children

This option seems logical to many couples because their children know one another well and are roughly the same age. However, you must consider a number of factors with this option. First, the role of trustee is a difficult one, fraught with potential liability. Do your other children have the time and capacity to serve as trustee? Then you need to consider the dynamics of your family. Should all of your children be named as co-trustees, or should only one of them be named as sole trustee, and how will this impact the relationship between family members. That is, will you be perceived as “playing favorites?”

A Bank or Trust Company

Most banks, brokerage houses and trust companies will only accept large trusts, ranging from a minimum of $300,000 to more than $1,000,000. Many will not accept special needs trusts at all. However, if you have a special needs trust that meets the institution’s minimum requirements, and the institution’s trust department has an outstanding reputation, this may be a long-term option worth considering.

As you can see, there are a variety of options, each of which has advantages and disadvantages. Sometimes, the best choice is a combination of one or more options. We are here to guide you through the various options and help you choose the trustee, or combination of temporary trustee and successor trustee, best suited to your particular situation and needs.

guardian

8 Factors to Consider When Choosing a Guardian for Your Children.

by with No Comment Estate Planning

guardian

Who should raise your children if for some reason you or your spouse is unable to do so? It’s not an easy question to answer, but if you have young children, it is a topic you most certainly should address in your estate plan. Otherwise, a court will decide, and their decision will probably not be the same as the one you would have made, and may not even be in the best interests of your children.

Some of the most important issues to consider when choosing a guardian include:

  1. Does the prospective guardian have a genuine interest in your children’s well-being?
  2. Does the prospective guardian share your values?
  3. Can he or she handle the role physically and emotionally? What about financially, if you cannot provide him or her with enough assets to raise your children?
  4. Does the prospective guardian already have children of his or her own? Will he or she be able to make enough time to adequately care for and look after your children?
  5. Where does the prospective guardian live? Would that be a good fit for your children? Would having to move far away make an already stressful situation for your children even more so?
  6. Is it essential that all your children share the same guardian? Most parents say yes, but in some circumstances, such as when your children are of significantly different ages, naming more than one guardian is an option.
  7. Should you choose one person to act as personal guardian and another to manage the financial arrangements for your children—that is, name a second person to act as Custodian or Trustee? In certain situations, such as when the best surrogate parent for your children is not necessarily the best person to handle financial matters, this option is worth considering.
  8. Perhaps most important of all, have you spoken to the prospective guardian about taking on such a responsibility, and does he or she seem readily willing to do so?

Contact an Experienced Guardianship Attorney

We have helped many couples select the ideal guardian for their children and designed wills or other planning documents to ensure their wishes are carried out. We welcome the opportunity to do the same for you.

Living trust concept: a young family preparing breakfast in the kitchen

Make Sure Your Revocable Living Trust Is Properly Funded

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You’ve taken the time to plan for the financial well-being of your loved ones and yourself. You’ve created a customized estate plan to address your goals and concerns. Your plan includes one of the most powerful estate planning tools out there, the Revocable Living Trust, which allows your heirs to avoid probate upon your death and provide for management of your assets without interference from the court should you become disabled or otherwise incapacitated.

Living trust concept: a young family preparing breakfast in the kitchen

Properly Funding Your Living Trust

All is well and good—unless you have not taken the steps necessary to fund your trust. Without proper funding, your trust is worth no more than the paper it is written on.

It’s hard to believe, but many families take the time to create a comprehensive estate plan, together with a Revocable Living Trust, then fail to properly fund the trust. And even though a Will may provide that all assets pour over into your trust for further disposition, this takes place only after said assets pass through probate, thereby negating one of the primary benefits of creating the trust in the first place.

Another important factor to consider is that assets such as life insurance, individual retirement accounts and pension plans pass to designated beneficiaries. If the trust is not named as the beneficiary of such assets, they will not be held (and protected) by the trust. Likewise, assets held in joint tenancy with rights of survivorship will go to the surviving joint tenant, not the trust. In addition, assets held in your name alone will not go to the trust until probate has been completed, which can take several months, a year, and sometimes even longer.

Given all of this, it is extremely important for you to review all of your assets to determine which titles should be changed to your trust. Assets you will want to review, and possibly title to your trust, include all of the following:

  • Bank accounts
  • Certificates of deposit
  • Investment accounts
  • Retirement accounts
  • Stocks and bonds held in certificate form
  • Real property
  • Tangible personal property such as art, rugs, jewelry, vehicles, etc.
  • Promissory notes
  • Closely-held business interests

Contact an Experienced New York Estate Planning Attorney

We can counsel you on the best strategies to employ so that your assets are correctly titled and your trust properly funded to achieve your goals and ensure your wishes are carried out.

Insurance policy on a desk.

Have You Reviewed Your Beneficiary Designations Lately?

by Estate Planning

Beneficiary designation documents on a desk.

Maybe it’s an insurance policy you took out years ago. Or the retirement plan you set up with your employer the day you started working for the company. Or the IRA you have been scrupulously contributing to for two decades.

You created them all to protect your financial future and that of the people you care about most. But over time, your personal situation may have changed. Perhaps you have gotten divorced and remarried? Or one of your children has gotten married, and you are not exactly thrilled with your new son or daughter in law? The fact is, change is a part of life. The question is, have your beneficiary designations kept pace with the changes in your life?

We understand that reviewing your designations is something that’s easy to put off, the kind of chore you’ll get to “any day now.” The consequences of not doing so, however, can be catastrophic. At the very least, it will thwart your wishes regarding precisely who you want to receive your hard-earned assets after you are gone. As your estate planning counselor, we can’t help but implore you—okay, maybe even nag you—to review your designations as soon as possible. Preferably today… right now!

Your Legacy is More than Just the Money You Leave to Loved Ones

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When we hear the word legacy, many of us think of money left to people and institutions that have come to mean the most to us over the course of our lives. But your legacy is much more than that. It includes your memories, values, wisdom, family history, and more that do not necessarily have monetary value. How can you pass those on to future generations?

You could begin by writing down, or making a recording of yourself sharing, stories about your parents, grandparents, and other relatives. Don’t just talk about where they lived and what they did for a living. Try to convey a sense of who your family members were, what was important to them in life, and the values they held dear.

You’ll want to take a similar approach in telling your own story. Describe why you made certain decisions, what you learned from mistakes, how you achieved success, and what you would do differently if you could. It’s been said that a picture is worth a thousand words, so be sure to preserve photos that depict your history and that of other family members. You might even want to create a website featuring your stories and photos, and invite family members to contribute to it.

Now let’s consider items that may not be worth much money but have a great deal of sentimental value: an old watch owned by your uncle, for instance, or the rocking chair that your mother used for many years. You’d be surprised at how many family disputes arise over items like these. If one of your children has shown interest in such an object, you could specify in your will that he or she receives it when you pass away. Regarding sentimental objects that have not been “claimed” by your children, consider using an estate planning letter to designate the person you would like to inherit it, and why.

What about your values, is there a way to increase the likelihood that these will be passed on as well? One approach is to use an estate planning tool, such as an Incentive Trust, to encourage certain behaviors while discouraging others. For example, your trust could reward your children for graduating from college, entering a certain profession, purchasing a home, or doing charitable work.

In the end, you may be surprised by how much your values, wisdom, and family history—the nonmaterial aspects of your legacy—mean to the people you love and future generations.

Contact a New York Estate Planning Attorney

To learn more about passing on your legacy to future generations, contact an experienced Estate Planning lawyer at Amoruso & Amoruso, LLP for a personal meeting to discuss your particular needs and goals.

insurance

Five Factors to Consider When Purchasing Long-Term Care Insurance

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The United States Department of Health and Human Services estimates that approximately 70 percent of Americans over the age of 65 will need some type of long-term care. Contrary to what many people believe, Medicare does not cover long-term custodial care. Given the cost of such care, it makes sense to consider your options, in advance, about how to obtain the care you might very well need without exhausting your life savings to pay for it.

insurance

One such option is long-term care insurance. Here are some factors to consider regarding the purchase of a long-term care insurance policy.

Your age and health matter.

The younger you are when you purchase long-term care insurance, the less expensive it will be. Unfortunately, if you have conditions such as diabetes or heart disease, your application might be rejected.

It is better to have some coverage than none at all.

The very best plans, such as those that adjust for inflation or cover the widest range of services, may be prohibitively expensive. Experts advise that policies with the option to add services in the future may be a better approach.

Know exactly what services are provided by your policy, and just as importantly, what services are not covered.

Take note of when the coverage begins.

Most policies have what is known as a waiting period. During the waiting period, you will have to pay for services on your own before the policy kicks in. As you would expect, the shorter the policy’s waiting period, the more expensive the policy will be.

Finally, if you buy your policy through an agent, ask him or her these three questions:

  • How long have you been selling long-term care insurance?
  • How many policies have you sold? Fewer than 100 is not enough.
  • How many insurers do you work with? The minimum should be three or four.

Contact an Experienced New York Estate Planning Attorney

We invite you to contact Amoruso & Amoruso LLP by calling (914) 253-9255 for a consultation about whether long-term care insurance is right for you, and if so, what type of policy makes the most sense for your particular situation.

Irrevocable Living Trust

The Benefits of an Irrevocable Living Trust

by Estate Planning

An Irrevocable Living Trust generally cannot be modified or terminated except under certain limited circumstances. It requires the grantor to transfer assets into the trust and give up his or her rights of ownership to these assets. So why would you want to create an Irrevocable Living Trust, as opposed to a Revocable Living Trust?

Irrevocable Living Trust

Irrevocable Living Trusts, when properly designed and implemented, can provide an almost unsurpassed level of asset protection from the high cost of long-term care. And, like Revocable Living Trusts, they spare your family the delays, frustration and expenses of the probate process. Other reasons to utilize an Irrevocable Living Trust include:

  • Tax minimization
  • Avoiding the risks of placing assets in the name of your children
  • Protecting assets against predators, creditors and lawsuits

While many different types of Irrevocable Living Trusts are available, in essence all of them retitle your assets. Assets placed in an Irrevocable Living Trust can include a business, cash, investments, life insurance policies, and more.

Why is an Irrevocable Living Trust better than a Revocable Living Trust at protecting assets against the cost of long-term care?

Under current Medicaid laws, assets in a Revocable Living Trust are not fully protected. Why? Assets in a Revocable Living Trust are available to the Grantor. Medicaid may determine that those assets be used to pay for long-term care. This is not the case with an Irrevocable Living Trust, as long as it is properly designed and implemented to take into account the latest laws governing Medicaid eligibility.

How does an Irrevocable Living Trust protect your children’s inheritance?

When you transfer assets directly to your children, they typically become outright owners of the assets. They also become responsible for the risks associated with owning the assets. A properly drafted and implemented Irrevocable Living Trust will avoid:

  • Loss of inheritances due to lawsuits, divorce, remarriage, or the inability of your children to manage money on their own
  • Gift tax liability
  • Income tax consequences for your children
  • Problems with getting financial aid to cover educational and other expenses for your grandchildren

To determine if an Irrevocable Living Trust is right for you and your family, contact us today for a consultation.