Posts tagged ‘trust’

August 9, 2013

Time to Review Your Estate Plan

An estate plan represents a snapshot of someone’s current life. Though we draft our estate documents to be amenable to life changes, one should still review his estate plan every year or so to see if the documents reflect his or her wishes.

At our firm, the wills we draft are general, and more often than not cover one’s entire estate in lieu of referencing specific assets. Although the estate plan may be generalized, many life events warrant changes to one’s documents. Moving between states, marriage, divorce, estrangement, and death of loved ones all represent appropriate reasons to update an estate plan.

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January 24, 2013

Tools Available to Plan Your Estate

For anyone considering estate planning, we offer several documents to accomplish common goals of the estate. The information below provides explanations of each of our estate planning documents. For a free consultation about these documents and other common estate planning tools, contact us at (623)551-9366.

WILL: AKA “Last Will and Testament.” The will or simple will is the document that allows a person (referred to as the testator/trix) to choose where his or her assets go upon your death. The will allows parents of minor children to appoint a guardian and trustee for those children if he or she in

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November 23, 2010

Do I Need a Trust?

Many people contact our law firm to ask our opinion as to whether they need to have a Trust? They may have friends or family members that have established a Trust or they may have received an advertisement from a financial planner or attorney warning them that if they do not establish a Trust they may lose their assets by having to go “through Probate”. The advertisements imply that your failure to put your assets in a Trust will allow the State to take a large portion of your estate. The truth is, for most residents of Arizona, they do not need a Trust, and establishing a Trust may not save them any money in the long run.

There are certain situations where a Trust is indeed advisable, and in some cases, very important to establish. If you are a married couple and the value of your estate is likely to exceed $1 million there may be significant tax advantages to establishing a Trust since there is a chance that the Federal Estate Tax may make apply to Estates starting at $1 million as of January 1, 2011 (unless Congress acts and the President signs a bill raising the limits before the New Year.) A Trust can double the exemption amount available to married couples resulting in significant tax savings. Another circumstance that may warrant a Trust is when you have a blended family and each spouse wants to make sure that certain of their assets are left to their respective children. A third circumstance where a Trust is helpful is when a person owns properties or other assets located in multiple states and he or she wishes to avoid multiple probate on each state where the assets are located.

One common fallacy that many clients have is the belief that, by placing assets in a Trust, they protect those assets from creditor’s claims. Since most people establishing Trusts are establishing “revocable trusts”, i.e., Trusts that they can remove assets from during their lifetime, the assets in such a Trust are subject to their creditor’s claims. Assets can be placed in an “irrevocable trust” which may protect those assets from creditor’s claims, but the assets may not be accessible to the party establishing the Trust once they have been placed in the Trust.

So, if you are like a majority of Arizona residents that do not have assets worth in excess of $1 million, and if you do not feel it is necessary to place assets in a Trust in order to assure they are left to children of a prior marriage, or you are not concerned about probate in multiple states, you most likely do not need a Trust.  A Trust can be a great estate planning tool that will allow the easy transfer of assets to your intended heirs (your Trust beneficiaries) in a timely and private manner (Probate proceedings are public records that can be viewed by the general public whereas Trusts are not).

If you are undergoing financial stress during these difficult economic times and do not have a lot of spare cash, you may want to hold off on setting up a Trust. However, we do strongly recommend that you have a Will prepared, a document that costs you a fraction of the cost of a Trust! (See article on why you need a will on this website) If you have any questions about the need to have a Trust after reading this article feel free to give our office a call.

November 22, 2010

Put a Will Check-Up on Your Calendar

As 2010 draws to a close, there remains a gray cloud of uncertainty over what will happen to the Federal Estate & Gift Tax, often referred to as the “Death Tax”. This tax is the tax imposed by the federal government upon your “estate” when you leave this planet for your heavenly pursuits, i.e., you die! The Federal Estate Tax was originally enacted in 1916 as a means for providing availability of funding to the federal government on a regular basis as opposed to having enacting emergency revenue raisers in times of national emergencies such as wars. The tax can take quite a bite out of inherited wealth with a top rate of 55% in addition to what states may charge. (Arizona does not charge an Estate Tax like many states do.)

In 2002, Congress passed a law that effectively was designed to wean away the Estate Tax by increasing the amount exempt from taxation through 2009 with all estates exempt for the year 2010. In other words, for those dying in 2010, their estates are not subject to any tax, at least as long as Congress does not act to retroactively impose the tax, which it can, and may do. Unless and until that happens billionaires (such as the late George Steinbrenner) can pass along billions of dollars of wealth without the feds taking the major cut they would have been entitled to if Congress had only gotten its act together. However the “repeal” only lasted through 2010 and further action of Congress was required to permanently “kill” the “Death Tax.” Consequently, in addition to the sounds of corks popping off of Champagne Bottles on New Year;’s Eve this year, we may hear distant gunshots as Millionaires and Billionaires in ill health decide to end it all early so as to leave their heirs the additional millions/billions that may not be available as of January 1, 2011, which brings me to the point of this article.

As of January 11, 2011, (under the law in effect as of the date of this writing, 11/19/2010), the federal estate exemption amount will drop to $1 million, including all insurance, which means if you have assets and insurance that exceed $1 million your heirs may be hit with a very heavy tax burden. If the value of your estate is invested in a real estate or a family business worth more than one million, your heirs may have to sell the asset just to pay the tax! If you presently have a “Simple Will”, and if Congress fails to reach agreement on raising the size of exempt estates, you need to have your estate plan reviewed! You may choose to set up a Trust or to utilize a slightly more complex “Disclaimer Trust” Will which will allow you to double the amount of your exemption.

Since Congress still seems to be gridlocked and the federal government is starved for cash, it is indeed possible that the lowering of the exemption to $1 million is possible. After all, it is much easier politically to tax dead people than it is to tax the living! If your estate approaches that figure you need to keep a close eye on this issue! Look to this website for further updates.