Welcome Back to the MVP Estate Planning Blog!
We will be posting about the "POA" for the next two weeks. Our postings will contain the most basic information about the power of attorney document and how it is used.
Please feel free to ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide us with some feedback.
For those that have questions surrounding the "POA" please take the time to review the "Question & Answer" discussion we have created below.
o What is a Power of Attorney (POA)?
A Power of Attorney is the grant of authorization to act on someone else’s behalf in a legal or business matter. The person authorizing the action is deemed the Principal (grantor), and the person authorized to act is the Agent (Attorney-in-Fact, or any competent adult). It is the creation of a fiduciary relationship between an Agent and a Principal, where the Agent must be completely honest and loyal to the wishes of the Principal in their dealings. A POA normally ends when the Principal dies; however, a POA can end upon the Principal’s choosing.
o What does a POA do?
A POA allows an individual who may be elderly, sick, planning to be out of state or the country, or otherwise unable to act on their own behalf to authorize another to act in their best interests in regards to their property and business transactions.
o Should I execute a POA?
If any of the above reasons apply to your situation, you should execute a POA. Additionally, if any of the above situations were to occur, your family members would have to proceed to court so that they could act on your behalf to carry out specific transactions.
An executed POA will hold up in Court, and in the long run it will save you and your family time and money.
o Can I revoke a POA?
A POA can be revoked at any time, and the POA should clearly provide in its language that the Principal may revoke it.
o What types of things can a POA cover?
A POA can cover a wide variety of things, mainly dealings with property and finances. The principal may give the agent the authority to act in their behalf in regards to the following types of transactions:
• Real property transactions
• Tangible personal property transactions
• Stock & Bond transactions
• Commodity & option transactions
• Banking & other Financial institution transactions
• Business operating transactions
• Insurance & Annuity transactions
• Estate, trust & other beneficiary transactions
• Claims & Litigation
• Personal & Family Maintenance
• Benefits from Social Security, Medicare, Medicaid, or other Government programs or Military service
• Retirement plan transactions
• Tax matters
o What is the difference between a general, limited and durable POA?
A general POA gives the Agent the full power to act on behalf of the Principal and is effective upon signature, or at a designated time and will remain effective until the Principal becomes incapacitated, disabled or incompetent.
A limited POA may only encompass certain types of transactions and/or may be limited in duration. It may involve the selling of real estate, the closing of a bank account, or it may be valid for the time that you on vacation outside of the country, etc.
A durable POA is effective upon signature, or at a designated time and will continue to be effective if the Principal becomes incapacitated, disabled or incompetent.
Life is full of unexpected events, so why not have the necessary protections in place in case something where to occur. Having an executed POA in these current times is a protection that one should not be without. Certain situations could occur, like unexpected trips outside of the U.S., possible deportation proceedings, incarceration, or week-long destination trips on cruise ships, which would make it extremely difficult for you to conduct business transactions, handle bank accounts closures, sell certain real estate, or pay off a mortgage without a proper POA in place.
Act now and avoid the chaos of the unexpected.
Why not have a POA that will provide protection for all that you’ve worked for.
Our helpful and capable staff invites you to contact us today to schedule an informative, 30 minute free, initial consultation with an estate planning attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, APRIL 6, 2010
Tuesday, March 30, 2010
Wednesday, March 24, 2010
Different Types of Trusts
Welcome Back to the MVP Estate Planning Blog!
Please remember feel free to ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide us with some feedback.
This entry will focus on the different types of trusts; their advantages, disadvantages and unique qualities/purposes.
Testamentary Trusts
o A testamentary trust is created by a will. The will itself contains language that creates the trust and since a will does not become effective until death, the trust does not exist until death;
o Testamentary trusts are distinguished from inter vivos trusts which are created during the settlor's lifetime;
o In practical terms, testamentary trusts tend to be driven more by the needs of the beneficiaries (particularly infant beneficiaries) than by tax considerations, which are the usual considerations in inter vivos trusts;
o A testamentary trust provides a way for assets devolving to minor children to be protected until the children are capable of fending for themselves;
o The trustee is required to meet with the probate court regularly and prove that the trust is being handled in a responsible manner and in strict accordance with provisions of the will which created the trust;
o The trustee must be prepared to oversee the trust for its duration, which involves a considerable commitment in time, possible emotional attachment, and legal liability.
Living Trusts
o A living trust is created during a person's lifetime to either save money on taxes or set up long term property management;
o With a living trust, your assets (your home, bank accounts and stocks, for example) are put into the trust, administered for your benefit during your lifetime, and then transferred to your beneficiaries when you die;
o Most people name themselves as the trustee in charge of managing their trust's assets. This way, even though your assets have been put into the trust, you can remain in control of your assets during your lifetime. You can also name a successor trustee (a person or an institution) who will manage the trust's assets if you ever become unable or unwilling to do so yourself.
o Young married couples without significant assets and without children, who intend to leave their assets to each other when the first one of them dies do not need a living trust and would not benefit from having a living trust. Other persons who do not have significant assets and have very simple estate plans also do not need a living trust;
o Because living trusts are not under direct court supervision, a trustee who does not act in your best interests may, in some cases, be able to take advantage of you;
o Living trusts are often used because they may allow assets to be passed to heirs without going through the process of probate. Avoiding probate will normally save substantial costs, time, and maintain privacy.
Life Insurance Trusts
o A life insurance trust is an irrevocable, non-amendable trust which is both the owner and beneficiary of one or more life insurance policies;
o If the insured is the owner of the policy, the proceeds of the policy will be subject to estate tax when she dies; however, if she transfers ownership to a life insurance trust, the proceeds will be completely free of estate tax;
o The insured cannot serve as trustee of the life insurance trust. That means that he will have to find or hire a third party trustee. However, many banks and trust companies offer reduced fees for life insurance trusts because they involve essentially no investing decisions;
o Upon the death of the insured, the Trustee invests the insurance proceeds and administers the trust for one or more beneficiaries;
o Insurance trusts may be funded or nonfunded. A funded life insurance trust owns both one or more insurance contracts and income producing assets. The income from the assets is used to pay some or all of the premiums. Funded insurance trusts are not commonly used;
o Many people find that the tax saving potential of a life insurance trust is worth the cost and hassle. It allows you to remove from your estate a significant asset that you are unlikely to want access to during your life. And it ensures that the life insurance proceeds go 100% to the beneficiaries, not the federal government.
Special Needs Trusts (Supplemental Needs Trust)
o A special needs trust is created to ensure that beneficiaries who are disabled or mentally ill can enjoy the use of property (assets) which is intended to be held for their benefit;
o A special needs trust provides for the needs of a disabled person without disqualifying him or her from benefits received from government programs such as Social Security and Medicaid;
o A Supplemental Needs Trust provides for supplemental and extra care over and above that which the government provides;
o According to Congress a Supplemental Needs Trust must be irrevocable. A properly-drafted Trust will include provisions for Trust termination or dissolution under certain circumstances, and will include explicit directions for amendment when necessary;
o This type of trust can be established at any time before the beneficiary’s 65th birthday. It is very common to create a Special Needs Trust early in a child’s life as a long term means for holding assets to benefit the disabled family member;
o A special needs trust can be funded through a will or gifts from relatives and friends made directly to the trust instead of to the disabled child. Many special needs trusts are funded through "survivorship" or "second-to-die" life insurance policies that cover both parents and pay out on the death of the second parent.
Charitable Remainder Trusts
o It's an irrevocable trust designed to convert an investor's highly appreciated assets into a lifetime income stream without generating estate and capital gains taxes;
o Charitable trusts are a handy tax-saving tool. But they can also greatly benefit a charity of your choice;
o Usually cash or readily marketable securities, including bonds are the types of assets commonly used to establish a CRT. But real estate, works of art and other assets may be deemed acceptable. The marketability of the asset is a prime consideration in funding a charitable remainder trust. Establishing a CRT may be especially advantageous if you have assets, like low-dividend stocks, that have been generating little or no income;
o The disadvantage is that the assets are permanently tied up or committed;
o There are two kinds of CRTs: the charitable remainder unitrust provides variable income; the charitable remainder annuity trust provides fixed income;
o Anyone who is subject to paying capital gain taxes on appreciated assets, whose estate is subject to estate taxes, would like to benefit charity, and has a need for income is a candidate to benefit greatly from a CRT.
Dynasty Trusts
o A dynasty trust is an estate-planning tool that provides income and support to children and future generations of your family. Instead of wealth passing directly to your children, the assets reside in the trust, which helps protect them from estate taxes, the consequences of divorce, creditors and uncontrolled spending, while remaining in the family for generations;
o Most dynasty trusts are typically structured to continue in existence for the maximum period of time permitted under the applicable state law in which the trust is located;
o Dynasty trusts should only be funded with certain types of assets;
o The trust's assets are valued at the amount they were worth when the trust was created as long as they stay in the trust. Any appreciation generally is exempt from estate taxes;
o The trust's structure can be as flexible as possible to protect the grantor and beneficiaries from the unknown;
o This type of trust protects future generations against uncertainties and provides a variable income for them, stretching out such payments as long as legally possible.
For more information on a particular type of trust, our helpful and capable staff invites you to contact us today to schedule an informative, 30 minute free, initial consultation with an estate planning attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, MARCH 30, 2010 REGARDING THE POWER OF ATTORNEY DOCUMENT.
Please remember feel free to ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide us with some feedback.
This entry will focus on the different types of trusts; their advantages, disadvantages and unique qualities/purposes.
Testamentary Trusts
o A testamentary trust is created by a will. The will itself contains language that creates the trust and since a will does not become effective until death, the trust does not exist until death;
o Testamentary trusts are distinguished from inter vivos trusts which are created during the settlor's lifetime;
o In practical terms, testamentary trusts tend to be driven more by the needs of the beneficiaries (particularly infant beneficiaries) than by tax considerations, which are the usual considerations in inter vivos trusts;
o A testamentary trust provides a way for assets devolving to minor children to be protected until the children are capable of fending for themselves;
o The trustee is required to meet with the probate court regularly and prove that the trust is being handled in a responsible manner and in strict accordance with provisions of the will which created the trust;
o The trustee must be prepared to oversee the trust for its duration, which involves a considerable commitment in time, possible emotional attachment, and legal liability.
Living Trusts
o A living trust is created during a person's lifetime to either save money on taxes or set up long term property management;
o With a living trust, your assets (your home, bank accounts and stocks, for example) are put into the trust, administered for your benefit during your lifetime, and then transferred to your beneficiaries when you die;
o Most people name themselves as the trustee in charge of managing their trust's assets. This way, even though your assets have been put into the trust, you can remain in control of your assets during your lifetime. You can also name a successor trustee (a person or an institution) who will manage the trust's assets if you ever become unable or unwilling to do so yourself.
o Young married couples without significant assets and without children, who intend to leave their assets to each other when the first one of them dies do not need a living trust and would not benefit from having a living trust. Other persons who do not have significant assets and have very simple estate plans also do not need a living trust;
o Because living trusts are not under direct court supervision, a trustee who does not act in your best interests may, in some cases, be able to take advantage of you;
o Living trusts are often used because they may allow assets to be passed to heirs without going through the process of probate. Avoiding probate will normally save substantial costs, time, and maintain privacy.
Life Insurance Trusts
o A life insurance trust is an irrevocable, non-amendable trust which is both the owner and beneficiary of one or more life insurance policies;
o If the insured is the owner of the policy, the proceeds of the policy will be subject to estate tax when she dies; however, if she transfers ownership to a life insurance trust, the proceeds will be completely free of estate tax;
o The insured cannot serve as trustee of the life insurance trust. That means that he will have to find or hire a third party trustee. However, many banks and trust companies offer reduced fees for life insurance trusts because they involve essentially no investing decisions;
o Upon the death of the insured, the Trustee invests the insurance proceeds and administers the trust for one or more beneficiaries;
o Insurance trusts may be funded or nonfunded. A funded life insurance trust owns both one or more insurance contracts and income producing assets. The income from the assets is used to pay some or all of the premiums. Funded insurance trusts are not commonly used;
o Many people find that the tax saving potential of a life insurance trust is worth the cost and hassle. It allows you to remove from your estate a significant asset that you are unlikely to want access to during your life. And it ensures that the life insurance proceeds go 100% to the beneficiaries, not the federal government.
Special Needs Trusts (Supplemental Needs Trust)
o A special needs trust is created to ensure that beneficiaries who are disabled or mentally ill can enjoy the use of property (assets) which is intended to be held for their benefit;
o A special needs trust provides for the needs of a disabled person without disqualifying him or her from benefits received from government programs such as Social Security and Medicaid;
o A Supplemental Needs Trust provides for supplemental and extra care over and above that which the government provides;
o According to Congress a Supplemental Needs Trust must be irrevocable. A properly-drafted Trust will include provisions for Trust termination or dissolution under certain circumstances, and will include explicit directions for amendment when necessary;
o This type of trust can be established at any time before the beneficiary’s 65th birthday. It is very common to create a Special Needs Trust early in a child’s life as a long term means for holding assets to benefit the disabled family member;
o A special needs trust can be funded through a will or gifts from relatives and friends made directly to the trust instead of to the disabled child. Many special needs trusts are funded through "survivorship" or "second-to-die" life insurance policies that cover both parents and pay out on the death of the second parent.
Charitable Remainder Trusts
o It's an irrevocable trust designed to convert an investor's highly appreciated assets into a lifetime income stream without generating estate and capital gains taxes;
o Charitable trusts are a handy tax-saving tool. But they can also greatly benefit a charity of your choice;
o Usually cash or readily marketable securities, including bonds are the types of assets commonly used to establish a CRT. But real estate, works of art and other assets may be deemed acceptable. The marketability of the asset is a prime consideration in funding a charitable remainder trust. Establishing a CRT may be especially advantageous if you have assets, like low-dividend stocks, that have been generating little or no income;
o The disadvantage is that the assets are permanently tied up or committed;
o There are two kinds of CRTs: the charitable remainder unitrust provides variable income; the charitable remainder annuity trust provides fixed income;
o Anyone who is subject to paying capital gain taxes on appreciated assets, whose estate is subject to estate taxes, would like to benefit charity, and has a need for income is a candidate to benefit greatly from a CRT.
Dynasty Trusts
o A dynasty trust is an estate-planning tool that provides income and support to children and future generations of your family. Instead of wealth passing directly to your children, the assets reside in the trust, which helps protect them from estate taxes, the consequences of divorce, creditors and uncontrolled spending, while remaining in the family for generations;
o Most dynasty trusts are typically structured to continue in existence for the maximum period of time permitted under the applicable state law in which the trust is located;
o Dynasty trusts should only be funded with certain types of assets;
o The trust's assets are valued at the amount they were worth when the trust was created as long as they stay in the trust. Any appreciation generally is exempt from estate taxes;
o The trust's structure can be as flexible as possible to protect the grantor and beneficiaries from the unknown;
o This type of trust protects future generations against uncertainties and provides a variable income for them, stretching out such payments as long as legally possible.
For more information on a particular type of trust, our helpful and capable staff invites you to contact us today to schedule an informative, 30 minute free, initial consultation with an estate planning attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, MARCH 30, 2010 REGARDING THE POWER OF ATTORNEY DOCUMENT.
Thursday, March 18, 2010
Preparing/Drafting a Trust Document
Welcome Back to the MVP Estate Planning Blog!
Please remember feel free to ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide us with some feedback.
This entry will focus on planning/preparing and drafting a Trust document– what it is, what it can include, benefits, etc.
There are roughly eight steps in the process of developing a valid trust document:
1. Decide what type of trust best suits your particular situation. You may already know what you are looking for, but if not, an experience lawyer will be able to help you determine which type of trust would satisfy your goals.
2. Decide what items to leave in the trust. Several types of property may be transferred to a Trust. The following types of property can be effectively transferred to a Trust:
a. Personal property
b. Automobiles
c. Real Estate (Real property)
d. Bank Accounts
e. Registered Stocks & Bonds
f. Life Insurance
g. Retirement Plans
3. Decide who will inherit your trust property.
4. Choose someone to be your successor trustee.
5. Choose someone to manage children's property (if applicable to your situation).
6. Prepare the trust and sign it in front of a notary.
7. Transfer title of property to yourself as trustee.
8. Store your trust document safely.
Now for more general information:
A trust is a legal agreement that allows you (the trustor) to transfer property and assets for the benefit of someone else (the beneficiaries). Beneficiaries can be individuals, businesses, or charitable organizations. You place your assets under control of a trustee, an individual or organization that manages and distributes the assets as set out in a trust document specifying your wishes.
A trust can give you:
• Control--by protecting your beneficiaries from fraud or mismanagement of your assets, especially in case of your disability or death.
• Continuity--by continuing to manage your assets appropriately if you encounter a life-changing event.
• Privacy--by keeping your affairs out of the public record. A will becomes a public record when it's filed with a probate court upon your death, so if you use just a will for estate planning, anyone can access it.
• Tax advantages--by distributing your assets in a way that minimizes your tax burden, or that of your beneficiaries.
There are many types of trusts, each designed to accomplish specific goals. Trust agreements can be great tools, but they're complex, so it's important to understand how they work and how to get started.
To establish a trust, the trustor develops a trust agreement, usually with the help of an attorney. This legal contract specifies the property the trust covers; names the trustee(s); and includes instructions for holding and investing the property, and for disbursing the property and any related income.
A trust can govern the management of diverse assets--money, real estate, an insurance policy, a business, or stocks--during the trustor's lifetime or after his or her death or disability. Once a trust agreement is activated, the trustor no longer owns the assets; they're the property of the trust. The trust is a separate entity.
The trustee has a fiduciary responsibility, which means that the individual or organization is legally obligated to act impartially, in the best interest of all beneficiaries, and may not seek personal benefit from trust transactions. It's important to select a trustee with sufficient knowledge and experience to manage the trust skillfully. For example, if the trust includes a stock portfolio, the trustee must know how to invest the stocks appropriately. Trustees also must keep complete records of trust activity, and file tax returns and make tax payments for the trust.
Trustors can select individuals, such as family members, as trustees. In some cases they can act as their own trustees. However, because the responsibilities are complex, many select an organization with trust services representatives specially trained to administer trusts.
Trusts are classified as either living or testamentary. A living, or inter vivos, trust is created during the trustor's lifetime, while a testamentary trust is created as part of a will and becomes active upon the trustor's death.
Property covered by a living trust usually doesn't have to go through probate when the trustor dies. (Probate is a required legal validation that a person's will is genuine. The term also broadly refers to the administering of an estate.) With a testamentary trust, property must go through probate before it becomes subject to the trust agreement. Both types of trusts can bring tax advantages.
A living trust can be revocable, meaning that the trustor can amend or cancel it at any time. Trustors usually use a revocable living trust when they don't want to lose permanent control of the assets, or they want the flexibility to change their trustee arrangements in the future.
A living trust also can be irrevocable, meaning that the trustor can't change or cancel it after signing the agreement. A testamentary trust is always revocable because it's part of a will, which can be changed at any time.
Our helpful and capable staff invites you to contact us today to schedule an informative, 30 minute free, initial consultation with an estate planning attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, MARCH 23, 2010 FOCUSING ON THE DIFFERENT TYPES OF TRUSTS AVAILABLE.
Please remember feel free to ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide us with some feedback.
This entry will focus on planning/preparing and drafting a Trust document– what it is, what it can include, benefits, etc.
There are roughly eight steps in the process of developing a valid trust document:
1. Decide what type of trust best suits your particular situation. You may already know what you are looking for, but if not, an experience lawyer will be able to help you determine which type of trust would satisfy your goals.
2. Decide what items to leave in the trust. Several types of property may be transferred to a Trust. The following types of property can be effectively transferred to a Trust:
a. Personal property
b. Automobiles
c. Real Estate (Real property)
d. Bank Accounts
e. Registered Stocks & Bonds
f. Life Insurance
g. Retirement Plans
3. Decide who will inherit your trust property.
4. Choose someone to be your successor trustee.
5. Choose someone to manage children's property (if applicable to your situation).
6. Prepare the trust and sign it in front of a notary.
7. Transfer title of property to yourself as trustee.
8. Store your trust document safely.
Now for more general information:
A trust is a legal agreement that allows you (the trustor) to transfer property and assets for the benefit of someone else (the beneficiaries). Beneficiaries can be individuals, businesses, or charitable organizations. You place your assets under control of a trustee, an individual or organization that manages and distributes the assets as set out in a trust document specifying your wishes.
A trust can give you:
• Control--by protecting your beneficiaries from fraud or mismanagement of your assets, especially in case of your disability or death.
• Continuity--by continuing to manage your assets appropriately if you encounter a life-changing event.
• Privacy--by keeping your affairs out of the public record. A will becomes a public record when it's filed with a probate court upon your death, so if you use just a will for estate planning, anyone can access it.
• Tax advantages--by distributing your assets in a way that minimizes your tax burden, or that of your beneficiaries.
There are many types of trusts, each designed to accomplish specific goals. Trust agreements can be great tools, but they're complex, so it's important to understand how they work and how to get started.
To establish a trust, the trustor develops a trust agreement, usually with the help of an attorney. This legal contract specifies the property the trust covers; names the trustee(s); and includes instructions for holding and investing the property, and for disbursing the property and any related income.
A trust can govern the management of diverse assets--money, real estate, an insurance policy, a business, or stocks--during the trustor's lifetime or after his or her death or disability. Once a trust agreement is activated, the trustor no longer owns the assets; they're the property of the trust. The trust is a separate entity.
The trustee has a fiduciary responsibility, which means that the individual or organization is legally obligated to act impartially, in the best interest of all beneficiaries, and may not seek personal benefit from trust transactions. It's important to select a trustee with sufficient knowledge and experience to manage the trust skillfully. For example, if the trust includes a stock portfolio, the trustee must know how to invest the stocks appropriately. Trustees also must keep complete records of trust activity, and file tax returns and make tax payments for the trust.
Trustors can select individuals, such as family members, as trustees. In some cases they can act as their own trustees. However, because the responsibilities are complex, many select an organization with trust services representatives specially trained to administer trusts.
Trusts are classified as either living or testamentary. A living, or inter vivos, trust is created during the trustor's lifetime, while a testamentary trust is created as part of a will and becomes active upon the trustor's death.
Property covered by a living trust usually doesn't have to go through probate when the trustor dies. (Probate is a required legal validation that a person's will is genuine. The term also broadly refers to the administering of an estate.) With a testamentary trust, property must go through probate before it becomes subject to the trust agreement. Both types of trusts can bring tax advantages.
A living trust can be revocable, meaning that the trustor can amend or cancel it at any time. Trustors usually use a revocable living trust when they don't want to lose permanent control of the assets, or they want the flexibility to change their trustee arrangements in the future.
A living trust also can be irrevocable, meaning that the trustor can't change or cancel it after signing the agreement. A testamentary trust is always revocable because it's part of a will, which can be changed at any time.
Our helpful and capable staff invites you to contact us today to schedule an informative, 30 minute free, initial consultation with an estate planning attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, MARCH 23, 2010 FOCUSING ON THE DIFFERENT TYPES OF TRUSTS AVAILABLE.
Thursday, March 4, 2010
Introduction to Trusts – The Basics
Welcome Back to the MVP Estate Planning Blog!
We will be posting about "Trusts" for the next two weeks. Our postings will contain some of the most basic information about trust planning, drafting and general information on the most used types of trusts. Please feel free to ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide us with some feedback.
For those that have questions surrounding the "Trust" please take the time to review the "Question & Answer" discussion we have created below.
o What is a Trust? A trust is a legal person that comes into existence when an individual signs a legal document which contains certain provisions. A grantor/trustor is the creator of the trust and the one who transfers property to the trust. A trustee is the person who has a fiduciary duty to protect the assets of the trust, whose powers are spelled out in the trust, and who must make sure that the purposes of the trust are carried out. A beneficiary is one who benefits from the trust. There can be two types of beneficiaries in a trust document, an income beneficiary and a principal beneficiary. An income beneficiary receives only income from the trust (i.e.; savings account bond, dividends from stock, rental income from Real Estate, etc) A principal beneficiary receives the actual trust assets (i.e., monies in a savings account, bond, stock or rental Real Estate, etc)
There are two basic types of trusts, an intervivos trust, and a testamentary trust. An intervivos trust is created during one’s life, and can be either revocable or irrevocable. Whereas, a testamentary trust is created under the terms of an individual’s will and does not become effective until an individual’s death.
A trust is a complex and expensive estate planning tool compared to a Will, and does not eliminate the need for a Will, as there may be some assets that do not get transferred to the trust, leaving the need for a Will.
Trusts are most popular with individuals who own large estates, and may not be necessary for many estates. Therefore, it is important to consult an experienced Estate Planning Attorney before taking the planning plunge on your own.
o What can a Trust do? Basically, a trust collects all of your assets in one place, which simplifies management and investment of your assets making it easier to keep track of everything. Trusts enable a grantor to determine who receives their assets, when and under what conditions. A trust clearly and specifically identifies trustees, beneficiaries, and trust assets.
A trust is an efficient and effective method to avoid probate because it allows assets to pass quickly to beneficiaries.
o What are the duties of a Trustee? As indicated above, a trustee has a fiduciary duty to protect the assets of the trust, and to make sure that the purposes of the trust are carried out. Accordingly, by having possession and control of the trust assets the trustee must preserve the trust assets; control the investment of the trust assets; keep an accounting of the trust assets; keep the assets separate; make accurate distributions and keep beneficiaries fully informed.
The powers of a Trustee vary by State and are clearly spelled out in a Trust Document.
o What property can be transferred to a Trust? Several types of property may be transferred to a Trust, and we can assist you through this process as a different method may be required for each type of property. The following types of property can be effectively transferred to a Trust:
• Personal property
• Automobiles
• Real Estate
• Bank Accounts
• Registered Stocks & Bonds
• Life Insurance
• Retirement Plans
o Are there many different types of Trusts? Yes, there are several different types of trusts available for the needs of every individual. Some of the different types of trusts include:
• Testamentary Trusts
• Living Trusts
• Life Insurance Trusts
• Special Needs Trusts
• Charitable Remainder Trusts
• Qualified Domestic Trusts
• Personal Residence Trusts
• Dynasty Trusts
If you would like more information on a specific type of trust, please contact our office for more information.
o When should a Lawyer’s services be utilized? There are many self-help kits on the internet that allow individuals to prepare and plan their own trusts; however, as the creation of a trust is complex and expensive in nature, we recommend that you obtain the expertise of a licensed professional who has experience in the estate planning process. It is always better to have the assistance of an experienced attorney to guide you through the challenging process.
We are here to assist YOU in this process. We know you do not want to plan for the inevitable, but with the peace of mind that you gain by knowing that the assets you worked your lifetime to accumulate will pass to your beneficiaries quickly and as you intended, should leave no question in your mind that a Trust could possibly be for YOU.
Act now and prepare for the future of your family.
Our helpful and capable staff invites you to contact us today to schedule an informative, 30 minute free, initial consultation with an estate planning attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, MARCH 16, 2010 FOCUSING ON PLANNING AND DRAFTING A TRUST DOCUMENT!
We will be posting about "Trusts" for the next two weeks. Our postings will contain some of the most basic information about trust planning, drafting and general information on the most used types of trusts. Please feel free to ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide us with some feedback.
For those that have questions surrounding the "Trust" please take the time to review the "Question & Answer" discussion we have created below.
o What is a Trust? A trust is a legal person that comes into existence when an individual signs a legal document which contains certain provisions. A grantor/trustor is the creator of the trust and the one who transfers property to the trust. A trustee is the person who has a fiduciary duty to protect the assets of the trust, whose powers are spelled out in the trust, and who must make sure that the purposes of the trust are carried out. A beneficiary is one who benefits from the trust. There can be two types of beneficiaries in a trust document, an income beneficiary and a principal beneficiary. An income beneficiary receives only income from the trust (i.e.; savings account bond, dividends from stock, rental income from Real Estate, etc) A principal beneficiary receives the actual trust assets (i.e., monies in a savings account, bond, stock or rental Real Estate, etc)
There are two basic types of trusts, an intervivos trust, and a testamentary trust. An intervivos trust is created during one’s life, and can be either revocable or irrevocable. Whereas, a testamentary trust is created under the terms of an individual’s will and does not become effective until an individual’s death.
A trust is a complex and expensive estate planning tool compared to a Will, and does not eliminate the need for a Will, as there may be some assets that do not get transferred to the trust, leaving the need for a Will.
Trusts are most popular with individuals who own large estates, and may not be necessary for many estates. Therefore, it is important to consult an experienced Estate Planning Attorney before taking the planning plunge on your own.
o What can a Trust do? Basically, a trust collects all of your assets in one place, which simplifies management and investment of your assets making it easier to keep track of everything. Trusts enable a grantor to determine who receives their assets, when and under what conditions. A trust clearly and specifically identifies trustees, beneficiaries, and trust assets.
A trust is an efficient and effective method to avoid probate because it allows assets to pass quickly to beneficiaries.
o What are the duties of a Trustee? As indicated above, a trustee has a fiduciary duty to protect the assets of the trust, and to make sure that the purposes of the trust are carried out. Accordingly, by having possession and control of the trust assets the trustee must preserve the trust assets; control the investment of the trust assets; keep an accounting of the trust assets; keep the assets separate; make accurate distributions and keep beneficiaries fully informed.
The powers of a Trustee vary by State and are clearly spelled out in a Trust Document.
o What property can be transferred to a Trust? Several types of property may be transferred to a Trust, and we can assist you through this process as a different method may be required for each type of property. The following types of property can be effectively transferred to a Trust:
• Personal property
• Automobiles
• Real Estate
• Bank Accounts
• Registered Stocks & Bonds
• Life Insurance
• Retirement Plans
o Are there many different types of Trusts? Yes, there are several different types of trusts available for the needs of every individual. Some of the different types of trusts include:
• Testamentary Trusts
• Living Trusts
• Life Insurance Trusts
• Special Needs Trusts
• Charitable Remainder Trusts
• Qualified Domestic Trusts
• Personal Residence Trusts
• Dynasty Trusts
If you would like more information on a specific type of trust, please contact our office for more information.
o When should a Lawyer’s services be utilized? There are many self-help kits on the internet that allow individuals to prepare and plan their own trusts; however, as the creation of a trust is complex and expensive in nature, we recommend that you obtain the expertise of a licensed professional who has experience in the estate planning process. It is always better to have the assistance of an experienced attorney to guide you through the challenging process.
We are here to assist YOU in this process. We know you do not want to plan for the inevitable, but with the peace of mind that you gain by knowing that the assets you worked your lifetime to accumulate will pass to your beneficiaries quickly and as you intended, should leave no question in your mind that a Trust could possibly be for YOU.
Act now and prepare for the future of your family.
Our helpful and capable staff invites you to contact us today to schedule an informative, 30 minute free, initial consultation with an estate planning attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, MARCH 16, 2010 FOCUSING ON PLANNING AND DRAFTING A TRUST DOCUMENT!
Tuesday, March 2, 2010
Administering an Estate - An Overview
WELCOME BACK to the MVP Estate Planning Blog!
Please ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide some feedback.
This post will focus on administering an estate – what it is (definitions), what to expect, and timeframes.
You may have a will already prepared and filed in the Register of Wills Office for the county in which you are domiciled, but are you aware of what will occur after your death once your will is admitted to probate? Have you shared this information with your family? In this post, I will inform you of the definitions for the most basic terms used in the process as provided by the Register of Wills Office. I will also provide you with a general overview of Administering an Estate in the State of Maryland and inform you of the timeframes associated with Administering an Estate.
DEFINITIONS
Administration of an Estate – the management of a decedent’s assets, which includes the collection of property, payment of expenses and debts, and distribution to the heirs or legatees
Administrative Probate – a proceeding that is initiated by an interested person with the Register of Wills for the appointment of a personal representative and for the probate of a will, or the determination of intestacy of the decedent
Decedent – a deceased person
Estate – the property of a decedent
Information Report – the document that reports all non-probate property (property that passes outside the probate estate). (Non-probate property includes jointly held assets, life estate or remainder interests in a trust or deed, trusts in which the decedent had an interest, payable on death (P.O.D.) assets, and pension and benefit plans including IRAs with named beneficiaries)
Inheritance tax – a tax imposed on the privilege of receiving property from a decedent’s estate
Heir – a family member who inherits from an estate under the laws of intestacy (decedent died without a will)
JudicIal probate – a probate proceeding conducted by the Orphans Court (as opposed to the Register of Wills) when the situation prohibits administrative probate (validity of the will is questioned, will is damaged, more than one qualified person applies for personal representative, etc)
Legatee – a person named in a will to receive
Letter of Administration – a document issued by the Register of Wills that authorizes a personal representative to administer an estate
Limited Order – an order allowing for the search of assets in the decedent’s name alone or the will located in a safe deposit box in the name of the decedent
Lineal heir or legatee – one who is of the direct line of the decedent
Modified Administration – a streamlined version of administrative probate available to the personal representative (in estates where the decedent died on or after 10/1/97). In lieu of an inventory and account, the personal representative is required to file a final report within 10 months from the date of appointment
Net estate – property remaining after the deduction of liens, debts and expenses
Petition to Probate – the document required to initiate a probate proceeding
Probate estate – property owned solely by the decedent or as a tenant in common
Regular estate – the estate procedure for a decedent who owned probate assets with a gross value in excess of $30,000 (or $50,000 if the sole heir or legatee is the surviving spouse)
Small estate – the estate procedure for a decedent who owned probate assets with a gross value of $30,000 or less (or $50,000 or less if the sole heir or legatee is the surviving spouse)
ADMINISTERING A REGULAR ESTATE IN MD
Before administering an Estate, the will of the decedent must be filed with the Register of Wills in the county where the deceased was domiciled at the time of death. Once the Register has the decedent’s will, the process of administering the estate can begin. The Petition for Administration (Form 1112) and Schedule A (Form 1136) are the forms that initiate the opening of an estate. The Petition indicates who is applying to open the estate and Schedule A lists the amount of assets and debts of the estate. The Notice of Appointment (Form 1114) must be filed with the Petition. This Notice is published for three consecutive weeks to put others (other persons, creditors) on notice that a personal representative has been appointed and that a will may be admitted to probate. If a person wishes to avoid notice requirements they may file the Waiver of Notice (Form 1101) to avoid notice requirements. The Nominal Bond (Form 1116) or the Bond of Personal Representative (From 1115) must also be filed. The List of Interested Persons (Form 1104) may also be filed with the petition, but must be filed within 20 days after appointment.
If the person applying to administer the estate is not a Maryland Resident, the Appointment of Resident Agent (Form 1106) will need to be completed and filed. Additionally, if the proper person is not applying to administer the estate, the Consent to Appointment of Personal Representative (Form 1118) is required by all interested persons who have greater priority.
The duties and powers of a personal representative begin when the Letters of Administration are issued by the Register to those named in the will, a spouse, children, creditors or any other person.
The Register of Wills will also provide a schedule of mandatory filing deadlines. For instance, within 20 days the Personal Representative must provide the Register with copies of the Notice of Appointment; within three (3) months, complete the Inventory and Information Report; and within nine (9) months, file an accounting with the Register. The final approval of the final account by the Register automatically closes the estate.
Please refer to the link above for more specific information or contact the Register of Wills Office in your county for details on administering a regular estate.
ADMINISTERING A SMALL ESTATE IN MD
Before administering an Estate, the will of the decedent must be filed with the Register of Wills in the county where the deceased was domiciled at the time of death. Once the Register has the decedent’s will, the process of administering the estate can begin. The Petition for Administration (Form 1103) and Schedule B (Form 1137) are the forms that initiate the opening of an estate. The Petition indicates who is applying to open the estate and Schedule A lists the amount of assets and debts of the estate. The Notice of Appointment (Form 1109) must be filed with the Petition unless the values of the assets in the estate are less than the allowances . This Notice is published once in a newspaper of general circulation to put others (other persons, creditors) on notice that a personal representative has been appointed and that a will may be admitted to probate. If a person wishes to avoid notice requirements they may file the Waiver of Notice (Form 1101) to avoid notice requirements. A Waiver of Bond (Form 1117) may also need to be filed. The List of Interested Persons (Form 1104) may also be filed with the petition, but must be filed within 20 days after appointment.
If the person applying to administer the estate is not a Maryland Resident, the Appointment of Resident Agent (Form 1106) will need to be completed and filed. Additionally, if the proper person is not applying to administer the estate, the Consent to Appointment of Personal Representative of Small Estate (Form 1105) is required by all interested persons who have greater priority.
The duties and powers of a personal representative begin when the Letters of Administration are issued by the Register to those named in the will, a surviving spouse, children, creditors or any other person.
The Register of Wills will also provide a schedule of mandatory filing deadlines. You must make a reasonably diligent effort to ascertain the names and addresses of the decedent’s creditors and mail or deliver notice to those creditors and within three (3) months, complete an Information Report.
Please refer to the link above for more specific information or contact the Register of Wills Office in your county for details on administering a small estate.
**Administering an Estate may seem like a quick and easy process and in most cases, it is; however, there can be claims raised against an estate which will in effect prolong the process. Typically, many estates can be administered within a few months up to a year, but there are some that can take several years to administer depending upon a number of factors.
For more information on administering an estate, please contact the Register of Wills Office located in your county or a licensed Probate and Trust Administration Attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, MARCH 9, 2010 FOCUSING ON TRUSTS – THE BASICS.
Please ask questions and engage in the discussion. We will not know how to adequately address your needs and concerns unless you provide some feedback.
This post will focus on administering an estate – what it is (definitions), what to expect, and timeframes.
You may have a will already prepared and filed in the Register of Wills Office for the county in which you are domiciled, but are you aware of what will occur after your death once your will is admitted to probate? Have you shared this information with your family? In this post, I will inform you of the definitions for the most basic terms used in the process as provided by the Register of Wills Office. I will also provide you with a general overview of Administering an Estate in the State of Maryland and inform you of the timeframes associated with Administering an Estate.
DEFINITIONS
Administration of an Estate – the management of a decedent’s assets, which includes the collection of property, payment of expenses and debts, and distribution to the heirs or legatees
Administrative Probate – a proceeding that is initiated by an interested person with the Register of Wills for the appointment of a personal representative and for the probate of a will, or the determination of intestacy of the decedent
Decedent – a deceased person
Estate – the property of a decedent
Information Report – the document that reports all non-probate property (property that passes outside the probate estate). (Non-probate property includes jointly held assets, life estate or remainder interests in a trust or deed, trusts in which the decedent had an interest, payable on death (P.O.D.) assets, and pension and benefit plans including IRAs with named beneficiaries)
Inheritance tax – a tax imposed on the privilege of receiving property from a decedent’s estate
Heir – a family member who inherits from an estate under the laws of intestacy (decedent died without a will)
JudicIal probate – a probate proceeding conducted by the Orphans Court (as opposed to the Register of Wills) when the situation prohibits administrative probate (validity of the will is questioned, will is damaged, more than one qualified person applies for personal representative, etc)
Legatee – a person named in a will to receive
Letter of Administration – a document issued by the Register of Wills that authorizes a personal representative to administer an estate
Limited Order – an order allowing for the search of assets in the decedent’s name alone or the will located in a safe deposit box in the name of the decedent
Lineal heir or legatee – one who is of the direct line of the decedent
Modified Administration – a streamlined version of administrative probate available to the personal representative (in estates where the decedent died on or after 10/1/97). In lieu of an inventory and account, the personal representative is required to file a final report within 10 months from the date of appointment
Net estate – property remaining after the deduction of liens, debts and expenses
Petition to Probate – the document required to initiate a probate proceeding
Probate estate – property owned solely by the decedent or as a tenant in common
Regular estate – the estate procedure for a decedent who owned probate assets with a gross value in excess of $30,000 (or $50,000 if the sole heir or legatee is the surviving spouse)
Small estate – the estate procedure for a decedent who owned probate assets with a gross value of $30,000 or less (or $50,000 or less if the sole heir or legatee is the surviving spouse)
ADMINISTERING A REGULAR ESTATE IN MD
Before administering an Estate, the will of the decedent must be filed with the Register of Wills in the county where the deceased was domiciled at the time of death. Once the Register has the decedent’s will, the process of administering the estate can begin. The Petition for Administration (Form 1112) and Schedule A (Form 1136) are the forms that initiate the opening of an estate. The Petition indicates who is applying to open the estate and Schedule A lists the amount of assets and debts of the estate. The Notice of Appointment (Form 1114) must be filed with the Petition. This Notice is published for three consecutive weeks to put others (other persons, creditors) on notice that a personal representative has been appointed and that a will may be admitted to probate. If a person wishes to avoid notice requirements they may file the Waiver of Notice (Form 1101) to avoid notice requirements. The Nominal Bond (Form 1116) or the Bond of Personal Representative (From 1115) must also be filed. The List of Interested Persons (Form 1104) may also be filed with the petition, but must be filed within 20 days after appointment.
If the person applying to administer the estate is not a Maryland Resident, the Appointment of Resident Agent (Form 1106) will need to be completed and filed. Additionally, if the proper person is not applying to administer the estate, the Consent to Appointment of Personal Representative (Form 1118) is required by all interested persons who have greater priority.
The duties and powers of a personal representative begin when the Letters of Administration are issued by the Register to those named in the will, a spouse, children, creditors or any other person.
The Register of Wills will also provide a schedule of mandatory filing deadlines. For instance, within 20 days the Personal Representative must provide the Register with copies of the Notice of Appointment; within three (3) months, complete the Inventory and Information Report; and within nine (9) months, file an accounting with the Register. The final approval of the final account by the Register automatically closes the estate.
Please refer to the link above for more specific information or contact the Register of Wills Office in your county for details on administering a regular estate.
ADMINISTERING A SMALL ESTATE IN MD
Before administering an Estate, the will of the decedent must be filed with the Register of Wills in the county where the deceased was domiciled at the time of death. Once the Register has the decedent’s will, the process of administering the estate can begin. The Petition for Administration (Form 1103) and Schedule B (Form 1137) are the forms that initiate the opening of an estate. The Petition indicates who is applying to open the estate and Schedule A lists the amount of assets and debts of the estate. The Notice of Appointment (Form 1109) must be filed with the Petition unless the values of the assets in the estate are less than the allowances . This Notice is published once in a newspaper of general circulation to put others (other persons, creditors) on notice that a personal representative has been appointed and that a will may be admitted to probate. If a person wishes to avoid notice requirements they may file the Waiver of Notice (Form 1101) to avoid notice requirements. A Waiver of Bond (Form 1117) may also need to be filed. The List of Interested Persons (Form 1104) may also be filed with the petition, but must be filed within 20 days after appointment.
If the person applying to administer the estate is not a Maryland Resident, the Appointment of Resident Agent (Form 1106) will need to be completed and filed. Additionally, if the proper person is not applying to administer the estate, the Consent to Appointment of Personal Representative of Small Estate (Form 1105) is required by all interested persons who have greater priority.
The duties and powers of a personal representative begin when the Letters of Administration are issued by the Register to those named in the will, a surviving spouse, children, creditors or any other person.
The Register of Wills will also provide a schedule of mandatory filing deadlines. You must make a reasonably diligent effort to ascertain the names and addresses of the decedent’s creditors and mail or deliver notice to those creditors and within three (3) months, complete an Information Report.
Please refer to the link above for more specific information or contact the Register of Wills Office in your county for details on administering a small estate.
**Administering an Estate may seem like a quick and easy process and in most cases, it is; however, there can be claims raised against an estate which will in effect prolong the process. Typically, many estates can be administered within a few months up to a year, but there are some that can take several years to administer depending upon a number of factors.
For more information on administering an estate, please contact the Register of Wills Office located in your county or a licensed Probate and Trust Administration Attorney.
PLEASE LOOK FORWARD TO OUR NEXT BLOG POSTING SCHEDULED FOR TUESDAY, MARCH 9, 2010 FOCUSING ON TRUSTS – THE BASICS.
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