Divorce and Death - What you need to know.

You probably do not even think about all the details of a divorce until you are in the middle of one. That may not be the most appropriate time for you to make rational decisions affecting the rest of your life. But, be that as it may.


What you need to remember, whether you are getting a divorce or not, is that upon death money is distributed 4 ways: by Will, Trust, Joint Ownership or Beneficiary Designation. You need to make whatever changes are necessitated by the divorce in all 4 of these areas.


Contact us at www.ythlaw.com for all your estate planning, probate and elder law needs.

Estate Planning Mistakes - Number Twenty

Do not fail to plan for "non-probate" assets. Most people do not understand what is a probate asset or what is a non-probate asset. Probate assets are those assets that pass under a person's Will because the asset is only in the name of that person.

Non-probate assets are those assets that pass outside of a person's Will because the distribution is NOT govern by the Will but is governed by another document. As a result of someone's death, money can be distributed from a life insurance policy, from a jointly held bank account or from assets held under a Trust.

Everyone should review their beneficiary designation forms under a life insurance policy or a retirement account to make sure you have "appropriately" named someone. For example, if you name your children and something happens to a child do you want your grandchildren to get that child's share? Your beneficiary designation form should be reviewed to make sure your intent is clear.

Contact us at http://www.ythlaw.com/ for expert estate planning advice.

Estate Planning Mistakes - Number Fifteen

What about Fido? Do not forget about your dogs, cats, horses or other family pets. You want to make provisions for your pets in your Will or you can even have a Pet Trust established for the benefit of your furry friends.

A Trust might cover (1) designation of the caretaker (2) the fee to be paid a caretaker (3) name the trustee (4) standard of care for the pet and (5) the amount to be left in Trust for the pet.

You want your estate plan/Will to be comprehensive. Therefore, make sure you contact us at http://www.ythlaw.com/

Estate Planning Mistakes - Number Ten

Many Wills unfortunatly fail to provide appropriately for minor beneficiaries. How do you want the property left to minors handled? The guardian named over the person of the child does not necessarily provide such guardian with rights to administer the assets left the child.

1. Do you want a minor child to get all assets left to him/her at 18 years of age? If yes, then name a guardian of the property.

2. Do you want a minor child to get all assets left to him/her at 21 years of age? If yes, then name a custodian of the property. Not only is the age higher but there is more flexibility provided a custodian.

3. Do you eant a minor child to get all assets left to him/her over a period of time beyond 21? If yes, then a Trust would be best. The terms and conditions of the Trust could be whatever you desire in the best interest of your child. The ages could go well into adulthood.

Contact us at http://www.ythlaw.com/ for expert legal advice.

A Trust serves as Will Substitute

The sweltering heat had us take a drive down to the Jersey Shore for the day. I thought about the Jersey Shore properties that are owned by so many folks who live in Pennsylvania. In many cases, it would be appropriate that their property would be passed on via a Trust. A Trust would avoid probate. Therefore, those with real estate in more that one state, avoidance of probate would make a lot of sense.

A Trust in those cases would serve as a perfect alternative to a will, a will substitute. Remember, if your property still has a mortgage on it, consent of your mortgage company would be required.

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What is an Endowment?

I did a presentation and book signing at Freedom Theatre sponsored by African Tropic Decor Gallery, Inc. It was a wonderful evening. The art on display was uniquely fantastic.

Well, we had lots of questions which I enjoy the most when I do these presentations. I share one with you here. What is an Endowment? First, an endowment is not a bequest which is a gift left in a will. Note, a bequest could go towards an endowment. An endowment is not a trust which serves a specific purpose and generally can hold a variety of assets.

An endowment is a fund established generally with money, but can include real estate and other assets, to benefit an institution or person. It has a specific purpose and the money in the fund is to be applied for that purpose. In an endowment fund, the principal is invested, and only a portion of the investment earnings, income, is spent. The rest of the earnings are directed back into the fund, so that the endowment grows over time. In this manner, the endowment becomes a perpetual source of funding for whatever the person making the donation wishes to achieve.

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Inherited IRAs

I had a question posed regarding IRAs. The question was what is the benefit of leaving retirement benefits in Trust when the beneficiary of an Inherited IRA may "stretch" the Inherited IRA and therefore get payments over time. The short answer is that they may but a Trust makes sure that they do. If you want to protect the asset you pass on to loved ones, the trust provides you with that protection as well as the control.

Let your hard earned assets serve your loved ones in the way that you want. Leave your assets in a Trust. We can help. Contact us at www.ythlaw.com or leave a comment here.

No Dog House for Trouble the Maltese

Many states now provide for Pet Trusts under their laws. But, there is a right way and there is a wrong way to leave money to you pet. Here is example of how you do not want to do it.

When she died in 2007, hotel tycoon Leona Helmsley's will left most of her $5 billion estate to charity, created a $12 million trust for her Maltese dog, Trouble, and completely cut out two of her four grandchildren. The two stiffed grandkids sued her estate, claiming she wasn't mentally fit to create her will and trust. The case settled, with Trouble getting $2 million, and the two grandkids sharing $6 million plus legal fees.

If you're older and cutting out relatives, have some professional, doctor or lawyer, conduct an evaluation of your sanity to confirm your sanity when the natural object of your "bounty" is disinherited, especially in favor of an animal.

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Selection of Trustee

Last night I attended a seminar on the Selection of Fiduciaries & Advisors. I thought it would be informative to share the important highlights of this meeting over the next few days. Your fiduciaries & advisors generally fall into 3 major categories. They can be individual family members or friends, professional advisors or corporate/institutional advisors.

Today my discussion will center on the selection of family members or close friends as trustees. Any one who serves as a trustee does so in a fiduciary capacity which means the role is govern under the laws pertaining to fiduciaries. What are the pros and cons of selecting family members or close friends as trustees?
PROS:
(1) Generally the fee for the service is nominal or none. Family members are often times beneficiaries under the trust and so therefore would not also charge a fee for managing the trust. Family friends agree to serve to be of assistance and may only expect to get reimburse for expenses incurred on behalf of the trust.
(2) Family members and friends know the beneficiaries and understand the needs. They understand the dynamics of the family relationship and the intent/desire of the person creating the trust.
(3) Knowledge of the trustworthiness of family members or friends is known through experience. The person creating the trust will choose family members or friends who have already proven their loyalty and trustworthiness.
CONS:
(1) Family members or close friends probably will not be familiar with the laws applicable to Trust or Fiduciaries. They are govern by these laws and must become familiar with them so that they are not in violation and subject to fines and penalties.
(2) Sometimes the closeness to the beneficiaries can cause a conflict and make it difficult for the trustee to make the tough/unpopular decisions.
(3) What if the trustee were to become incapacitated or die? This is always a potential issue for longer term trusts with individuals as trustees.

Understanding the pros and cons will help you decide how you might want to proceed with appointing individual trustees. Tomorrow, I will discuss having professional advisors as trustees. Leave your questions or comments here or contact us at http://www.ythlaw.com/

Bankrupt, but why?

This is just unbelievable to me. I was reading statistics regarding Players for the NBA and NFL. Sixty percent (60%) of NBA players are broke within 5 years of retirement. What is even more startling is that seventy-eight percent (78%) of NFL players are bankrupt within only 2 years of retirement. How does this happen? Are all of these players just getting bad advise? Are they getting good advice and just not listening or following it?

I just think we have to start teaching people basic life skills early in the education process. Too many people just do not understand money and how to handle it at a very basic level. You do NOT have to be rich to take advantage of how the estate planning process can help you protect your money. In making sure that those you love are taken care of upon your death, the estate planning process makes sure you have money to leave. So while you are living and in your retirement years, you can look at putting money and real estate in a Trust for your benefit and others or consider other estate planning options.

If you know of a NBA player or NFL player that could benefit from our services, leave a comment here or contact us at http://www.ythlaw.com/

3. Creates A Legacy - Continued

Yesterday, I stated that creating a legacy is the most important benefit of estate planning. The reason I made that statement is because all of us have a legacy. Let the estate planning process help you find yours if for some reason you do not know your legacy.

In an earlier blog, I introduced Max from my book Stop! What Are You Waiting For? Your Step-by-Step Guide to Estate Planning. Max collected historical memorabilia on the American Revolution. How can he preserve this passion for the historical significance of a major event in American history? Through estate planning, he can build upon this legacy. Future generations could benefit from the knowledge these documents provide. Max can even make sure the next generation is guided by his wisdom by giving specific instructions on the use of assets. He does not want to lose the momentum of his collection through ineffective management by his spouse or children if their interests should differ from his. Professional advice and guidance now can make the difference between creating a legacy and losing an accumulated treasure of the past.

Max’s legacy can be addressed in many ways. If he wants to leave assets to his spouse or children but their interests or passions differ from his, then he can leave the collection in a trust. He can fund the trust and choose a trustee who will be responsible for preserving the assets he accumulated in a way that he may designate. If his interest is charitable, he can give in a number of ways to those who will cherish his generosity, including institutions of higher education, museums, or organizations of scholarly pursuit. Estate planning can even enable Max to create a legacy of philanthropy that can include the involvement of his spouse, children and grandchildren.

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1. Protect Your Assets

Inside:

Stop! What Are You Waiting For?

Your Step-by-Step Guide to Estate Planning,

we visit Eve and Bob. Both Eve and Bob inherited wealth and made a lot more money beyond their inheritance. They now breed show dogs and actively participate in charities benefiting animals. They only have one daughter, Julia, who at thirty-six still can not quite make it on her own. She has already experienced personal bankruptcy and, given her unemployment history, would be on welfare if not for her parents’ continued support.

Eve and Bob want to make sure Julia will not become destitute when they die. Therefore, instead of leaving money outright to her upon their death, their estate plan includes a trust for the money left for Julia, who is not fiscally responsible enough to manage the money herself. A trust is effective because Eve and Bob appointed a trustee to both manage and distribute the money for Julia’s benefit.

The cash left for Julia by her parents will not be subject to the claims of Julia’s creditors. Nor will the cash be subject to any further bankruptcy, lawsuits, or divorce settlement Julia may experience in the future. It is Eve’s and Bob’s legacy that is being protected. They have the right to determine who will be the recipient of their bounty.

For Eve and Bob, money represents their primary asset. How do you define your assets? Do you consider your children, your home, or the money you have accumulated over your lifetime, as Eve and Bob did, your assets? Do you consider yourself an asset? However you define assets, it is important to know that we all have assets, and they are worth protecting.

Tomorrow, we will continue to follow the legacy of Eve and Bob and the journey of their daughter Julia. Leave your comments here or contact us at http://www.ythlaw.com/

Money, Money, Money

As I was doing my bills the other day, my mind could not help but go to the current state of the economy. You have listened to the gloom and doom news comparing our current state of affairs with the Great Depression. Well, what did we, or our parents/grandparents, learn from that period. They learn to save prudently and cautiously. I can not tell you how many of my clients have benefitted from that saving mentality. Over the generations, the family members of my clients have passed on the wealth in hope of making my clients' life better and it worked! Now we have our greatest challenge. How will future generations benefit from our response to this economic crisis? What should we be doing, now? Among the many things we have to do is work together as a unified society. Individually, we have to take responsibility for ourselves and those dependent upon us. We have to plan for our future generation by taking such actions as making a will to pass on our assets and our legacy. We have to set up trusts to hold and distribute our assets, whatever they may be, in a responsible manner. We have to do these things even when we think we have nothing, especially if we think we have nothing. We never know exactly what the future may bring. However, we can and should plan for the future that we hope for, for ourselves and for our children.

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Get Your Deeds in Order - ISSUE THREE - Trust Provision

This is the third day of looking at the issues surrounding Deeds. Many Deeds need to be updated to current situations.

Today, we address those Deeds that provide that they are held in Trust for designated individuals. Many times this occurred because the person was underage and needed to have someone named as the Trustee over their assets. Does that need still exist when the person is no longer underage?

I would suggest that some of the reasons for establishing the Deed in Trust for others after time, no longer applies. However, no one takes the time to make the change to updated circumstances. It is best to revise Deeds when all parties are well and can make sound decisions. Do not wait for an emergency which will make it more costly and time-consuming.

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James Brown - His Legacy

I recently read about the settlement reached after James Brown's will was contested by his adult children alleging mismanagement by the trustees. Trustees are those appointed by James Brown (or the court if necessary) to be legally responsible for the financial management of certain assets placed in Trust.

In any event, what I am reminded of in that controversy is the importance (financial and otherwise) of ones legacy. It is the future income from movies, royalties and the sale of James Brown's likeness that may really prove to be the most lucrative for his estate. The settlement leaves his estate to his wife, his children, the Brown Family Educational Trust and charity.

Even though you may not be able to stop someone from contesting your will, you can make sure it withstands the scrutiny of the probate court with proper estate planning. Leave your comments here or contact us at www.ythlaw.com

The Five Year Look Back - Keeping Assets in the Family

I am often asked about the 5 year look back period as it relates to nursing home costs. Will the nursing home take all of a person's assets? Can assets be transferred before a person has to go to a nursing home?

In order to qualify for state funding of one's nursing home expense, you either have to have no assets or spend down your assets. There are some permissible spend down, ie. prepaid funeral, home repair but the biggest one is paying for nursing home cost. Once you have paid for the nursing home care for a period of time, most assets are depleted. Some assets are protected if you are married and your spouse is not in a nursing home. If you are single, there is little that can be done unless you have planned ahead of time and transferred assets at least 5 years prior to going into a nursing home.

That is why planning now is so important. Leave your comments or contact us at http://www.ythlaw.com/

Amending Your Trust

I had a question from a client regarding their revocable trust. They wanted to know whether they could amend their California trust or whether they had to execute a new trust now that they lived in Pennsylvania.

These clients had moved from California several years ago to Pennsylvania. In California they had executed a trust and proceeded to place their assets in their trust. This required them to retitle their assets from their individual names to the name of their jointly held trust. Over time new assets had been placed in the trust and now they wanted some of the terms to change since their circumstances had changed.

In response to their question, I advised that they could amend their trust. This way all of the assets already titled in the name of the trust would not have to be retitled into the name of yet another trust.

It is important when you move to have all of your estate planning documents reviewed to determine what documents need to be replaced and what documents may only need to be amended. Please leave your comments here or contact us at http://www.ythlaw.com/

Celebrity's Will

Another celebrity's will is being revealed and what can we all learn. Farrah Fawcett who died June 25, 2009, the same day as Michael Jackson, left most of her fortune in trust to her only child. Sounds simple and straight forward enough. But, as with all things it is the back story that fuels the headlines.

Farrah Fawcett left nothing to Ryan O'Neal, her longtime companion and the father of her son Redmond O'Neal. And the point here is WHAT??? It is HER will and other than a spouse, she is not required by law to leave anything to a companion even if he was with her throughout her illness.

Her estate is being reported to be 5.5 million dollars in cash and millions more in special holdings, still to be determined. Her son who was in prison at the time of her funeral, and still is, for drug related probation violation, though he was allowed to attend the funeral. In any event, she left the money in trust with 2 executors to oversee the money for his "journey into sobriety rather than giving him the means to destroy himself." If a dying mother can not turn a child's life around, will a well manage fortune do it? At least Farrah Fawcett believed as much and in the final analysis that is all that matters.

She also left money to her alma mater, Texas University. This is an important part of her legacy and her way to help others as she was helped by her alma mater.

More when the will is released. Your thoughts or comments are appreciated. Contact us at www.ythlaw.com

Your Legacy And Charitable Giving

When you use the term philanthropy, many people think it does not apply to them but to the very wealthy. However, most people do see themselves as charitable. Well, philanthropy and charity are one in the same thing. You often are charitable to those things that matter most to you. In your display of charity, you are expressing a part of yourself, a part that can be captured in your estate planning. It is your personal legacy.

For many, one of the most important part of a personal legacy is philanthropy/charitable. But it is seldom just about the amount of the check or the impact the gift has on taxes. It is about the personal legacy story and the portion of the story that the charitable gift completes.

I have many clients who are committed to the idea of higher education and making it more accessible and afforable to others. As a result, they often want to provide a bequest in their will or establish a trust which would represent their legacy. They feel a greater sense of connection to the causes and educational institutions to which they give, and they are better able to articulate their values and life experiences that led them to their philanthropic/charitable choices. As a result, philanthropy/charity can provide the added benefits of both a teaching tool and a treasured family tradition.

Your comments are encourage or feel free to contact us at www.ythlaw.com

Michael Jackson - Five Estate Planning Lessons

I thought I would check in at this point with estate planning lessons learned thus far from Michael Jackson's death. I am sure there will be more during what is the beginning of a long and complex estate planning saga:

FIRST, you must have a will that is up-to-date and valid.
SECOND, you must name the guardian of your minor children and address potential issues and challenges from a surviving parent who is not named as guardian.
THIRD, you must name the executors who will gather up and protect your assets and ensure distribution in accordance with your will.
FOURTH, you must provide for the distribution of your assets, but you are not required to provide for parents, siblings, an ex-wife, or other family members.
FIFTH, unlike a will, a trust, with all its terms and conditions, is not a public document.

Comment on what lessons you might have learned or contact us at www.ythlaw.com