Q: I executed my trust 15 years ago and haven't looked at it since. Should I ask an attorney to review it to see if any changes need to be made? If not, when should a trust be reviewed by an attorney?
A: Unfortunately there isn't a perfect rule of thumb here but I will try to give a good one. Have an attorney review your trust, or will, if there are any changes in your family situation such as divorce, marriage, death, or a concern over a beneficiary/heir. Otherwise, once every 3-5 years is a good idea. Of course if you hear about any changes in the estate tax code or local trust law, and think the changes may apply to you, call.
This raises the next question, won't the attorney contact me? Good practice says yes they will but they are not legally obligated to notice you. Most estate plans are a one-time only project. You hire an attorney for a specific job, upon completion, your relationship is over. Most firms will even say this in the final letter from their office. This of course protects the law firm but it does place the burden on the clients to stay on top of changes in their family and the laws. If you schedule period reviews of your estate plan every 3-5 years, then your chances of any changes getting incorporated in your plan are much higher.
Monday, October 19, 2009
Tuesday, October 6, 2009
Managing Finances After Death of a Spouse
From the October 4, 2009, Chicago Tribune.com, Janet Kidd Stewart reports in the Article How to manage finances after death of spouse that one key is "Organization".
She reports while it is hard to discuss while both partners are alive, you need to do so. Firstly, get organized. She mentions gathering legal and financial documents, including any death certificates you may need, select a funeral home, find a marriage certificate, spousal birth certificates, Social Security cards, insurance policies, military discharge papers, wills and trust documents and all retirement and investment account records.
I cannot agree more. Having all these documents handy in order to avoid the search when the emotional disability caused by death is immeasurable. It isn't long before the phone calls need to be made to the funeral home, social security, brokerage houses, retirement funds and life insurance companies. Most, if not all, will require one or more of these documents in order to start the process.
She next reported on something I see in my practice with mostly older clients. Sometimes the the surviving spouse was not the one that originally handled the financial planning. Now the survivor will need to start thinking about managing money. It can be as basic as never having learned to manage the bank account to what investments are suitable for the survivor. One advice she cites in the article I really like. She cites the advice to let a family member or close friend help to screen calls to avoid scams while the survivor is vulnerable. I'm sorry to say but people scan the obituaries to find their next prey. The article next states the sound advice that "you have to recognize you're still in shock. Don't run out and do something you can't reverse," said Alexandra Armstrong, a financial planner and co-author of "On Your Own: A Widow's Passage to Emotional and Financial Well-Being. "I've spoken to widow after widow who couldn't remember any conversations they had the first month after their spouse died." This is absolutely the case. Yet, you need to take action as soon as you are able. Figure out your budget and seek a trusted advisor to assist with your investments. Our office, or a close and trust family member or friend, can give a referral. You will need to make some lifestyle changes, very often this includes financial changes as well.
I could not have agree with this article more. While this seems to be covering financial planning, this almost always dovetails into good estate planning.
Very best,
Jim
She reports while it is hard to discuss while both partners are alive, you need to do so. Firstly, get organized. She mentions gathering legal and financial documents, including any death certificates you may need, select a funeral home, find a marriage certificate, spousal birth certificates, Social Security cards, insurance policies, military discharge papers, wills and trust documents and all retirement and investment account records.
I cannot agree more. Having all these documents handy in order to avoid the search when the emotional disability caused by death is immeasurable. It isn't long before the phone calls need to be made to the funeral home, social security, brokerage houses, retirement funds and life insurance companies. Most, if not all, will require one or more of these documents in order to start the process.
She next reported on something I see in my practice with mostly older clients. Sometimes the the surviving spouse was not the one that originally handled the financial planning. Now the survivor will need to start thinking about managing money. It can be as basic as never having learned to manage the bank account to what investments are suitable for the survivor. One advice she cites in the article I really like. She cites the advice to let a family member or close friend help to screen calls to avoid scams while the survivor is vulnerable. I'm sorry to say but people scan the obituaries to find their next prey. The article next states the sound advice that "you have to recognize you're still in shock. Don't run out and do something you can't reverse," said Alexandra Armstrong, a financial planner and co-author of "On Your Own: A Widow's Passage to Emotional and Financial Well-Being. "I've spoken to widow after widow who couldn't remember any conversations they had the first month after their spouse died." This is absolutely the case. Yet, you need to take action as soon as you are able. Figure out your budget and seek a trusted advisor to assist with your investments. Our office, or a close and trust family member or friend, can give a referral. You will need to make some lifestyle changes, very often this includes financial changes as well.
I could not have agree with this article more. While this seems to be covering financial planning, this almost always dovetails into good estate planning.
Very best,
Jim
Monday, September 28, 2009
Answer to an Email Question re: Restated Trusts
Q: Is a restatement of trust different than a normal run-of-the-mill trust?
A: A revocable living trust is specifically designed to meet estate planning needs. Like all good estate plans, it is designed to anticipate changes and to accommodate many of the most common ones. However, no matter how thorough an estate plan may be, it simply can't address all the changes in circumstances we encounter in our lives. This is why most estate plans can be amended or revoked.
In most revocable living trusts, the grantor reserves the right to revoke or amend the trust in whole or in part. It's not uncommon for a person to add or delete a beneficiary or adjust the percentage or amount the beneficiary will receive or change a trustee.
Because it is so easy to amend a trust, some people do it on a fairly regular basis. I've seen trusts with eight or nine amendments -- although effective multiple amendments can make a trust difficult to read and follow. At some point, it simply becomes necessary to replace the trust in whole. In some circumstances, the trust document is outdated or fails to provide adequate provisions.
The problem with creating a new trust is that all of the assets titled in the name of the first trust must be transferred into the new one. A fully funded trust agreement takes some work and likely a person does not want to re-title assets. The thought of doing it all over again is probably a bit daunting.
This is where a restatement comes in. A restatement is simply a complete and total amendment of the original trust which replaces it in its entirety. In other words, the restatement reflects the terms of the new trust agreement and replaces both the original agreement and any amendments that may have been made to it.
The great thing about restating a trust is that it refers back to the original trust agreement and its creation. In effect, you have created a new trust agreement but you don't have to re-title the assets into the name of the new trust. Because it simply replaces the original trust agreement, it's already funded.
It's really not that unusual to come across a restated trust. As frequently as people change their minds, it's a wonder that you don't see more of them.
A: A revocable living trust is specifically designed to meet estate planning needs. Like all good estate plans, it is designed to anticipate changes and to accommodate many of the most common ones. However, no matter how thorough an estate plan may be, it simply can't address all the changes in circumstances we encounter in our lives. This is why most estate plans can be amended or revoked.
In most revocable living trusts, the grantor reserves the right to revoke or amend the trust in whole or in part. It's not uncommon for a person to add or delete a beneficiary or adjust the percentage or amount the beneficiary will receive or change a trustee.
Because it is so easy to amend a trust, some people do it on a fairly regular basis. I've seen trusts with eight or nine amendments -- although effective multiple amendments can make a trust difficult to read and follow. At some point, it simply becomes necessary to replace the trust in whole. In some circumstances, the trust document is outdated or fails to provide adequate provisions.
The problem with creating a new trust is that all of the assets titled in the name of the first trust must be transferred into the new one. A fully funded trust agreement takes some work and likely a person does not want to re-title assets. The thought of doing it all over again is probably a bit daunting.
This is where a restatement comes in. A restatement is simply a complete and total amendment of the original trust which replaces it in its entirety. In other words, the restatement reflects the terms of the new trust agreement and replaces both the original agreement and any amendments that may have been made to it.
The great thing about restating a trust is that it refers back to the original trust agreement and its creation. In effect, you have created a new trust agreement but you don't have to re-title the assets into the name of the new trust. Because it simply replaces the original trust agreement, it's already funded.
It's really not that unusual to come across a restated trust. As frequently as people change their minds, it's a wonder that you don't see more of them.
Wednesday, September 16, 2009
Where Are We On The Estate Tax?
According to to The Hill, if I may quote the title, the "Debate over estate tax likely to wait til 2010" by Walter Alarkon, 9/15/09. This isn't surprising since it is what many of us suspected. The writer states that between the split among Democrats and a very full Fall agenda, it won't happen this year. Some experts and congressional aides have been saying that to buy time, Congress will likely pass a one-year extension in order to deal with the expiring estate tax next year.
Even though the Senate Fiance Committee Chairman Max Baucus considers the estate tax a "must-do" items, it isn't on the committee's schedule, with most of the meetings revolving around the healthcare reform bill.
So where were we while we wait? Both the President and Committee Chairman Baucus want to make permanent the 2009 rate (45% and 3.5M exemption) and indexing for inflation for future years. One strong contender is our own Arizona Senator Jon Kyle, who has joined with a more centrist Democrat Sen. Blance Lincoln, on a 35% rate and increase the exemption to $5 million.
We'll have to see what happens in 2009 but my guess is we will be waiting until next year for final word.
My Best,
Jim
Even though the Senate Fiance Committee Chairman Max Baucus considers the estate tax a "must-do" items, it isn't on the committee's schedule, with most of the meetings revolving around the healthcare reform bill.
So where were we while we wait? Both the President and Committee Chairman Baucus want to make permanent the 2009 rate (45% and 3.5M exemption) and indexing for inflation for future years. One strong contender is our own Arizona Senator Jon Kyle, who has joined with a more centrist Democrat Sen. Blance Lincoln, on a 35% rate and increase the exemption to $5 million.
We'll have to see what happens in 2009 but my guess is we will be waiting until next year for final word.
My Best,
Jim
Tuesday, September 15, 2009
Some comments on recent articles and blogs.
In The Southern.com, it talks about a woman that only had two wishes for her will. One, she wanted to be cremated, and two, she wanted her ashes spread in Walmart. Allegedly she stated that this was the only way she could be sure her daughters would visit her twice a week. Unsure if that is a true story but an interesting approach to one's burial.
Jill Schlesinger, a financial writer and speaker associated with CBS News, wrote the following in her blog a couple of weeks ago:
.... I delivered a presentation about personal financial responsibility. When I conduct these affairs, I try to talk about the sexy stuff (stock market, investing) long enough to hook my audience before telling them one of the great lessons that I learned as an investment adviser/financial planner: people need to think a little bit less about their 401 (k) plans and lot more about their estate planning. The biggest problem that I saw in my 15-year practice was not a poorly-allocated portfolio–it was the astounding number of people who did not have what I consider essential estate documents: a will, a durable power of attorney and a health care proxy.
I couldn't agree more. In my years of practice, I have noticed two types of financial advisers. Some that work with their clients on their entire financial picture, which includes risk management, their financial and non-financial goals, and investment advice. The other type of advisor is the one that doesn't.
The Seattle Times reported on September 12 that a revocable trust won the State's Lotto. I found that interesting. For many years, estate planning attorneys felt that trusts were a superior estate planning document over a will but discovered some resistance in their implementation. For a while, clients were suspicious of a trust and thought that only the wealthy used them. Some financial institutions were reluctant to recognize trusts without going to their legal departments for clarification first. Now we have come so far that a trust is the winner of a lottery. Of course the trust isn't out there gambling but its grantor is, and must have registered its trust as the owner of the Lotto proceeds. We have come a long way in recognizing this superior estate planning device.
My Best,
Jim
Jill Schlesinger, a financial writer and speaker associated with CBS News, wrote the following in her blog a couple of weeks ago:
.... I delivered a presentation about personal financial responsibility. When I conduct these affairs, I try to talk about the sexy stuff (stock market, investing) long enough to hook my audience before telling them one of the great lessons that I learned as an investment adviser/financial planner: people need to think a little bit less about their 401 (k) plans and lot more about their estate planning. The biggest problem that I saw in my 15-year practice was not a poorly-allocated portfolio–it was the astounding number of people who did not have what I consider essential estate documents: a will, a durable power of attorney and a health care proxy.
I couldn't agree more. In my years of practice, I have noticed two types of financial advisers. Some that work with their clients on their entire financial picture, which includes risk management, their financial and non-financial goals, and investment advice. The other type of advisor is the one that doesn't.
The Seattle Times reported on September 12 that a revocable trust won the State's Lotto. I found that interesting. For many years, estate planning attorneys felt that trusts were a superior estate planning document over a will but discovered some resistance in their implementation. For a while, clients were suspicious of a trust and thought that only the wealthy used them. Some financial institutions were reluctant to recognize trusts without going to their legal departments for clarification first. Now we have come so far that a trust is the winner of a lottery. Of course the trust isn't out there gambling but its grantor is, and must have registered its trust as the owner of the Lotto proceeds. We have come a long way in recognizing this superior estate planning device.
My Best,
Jim
Monday, August 31, 2009
Update to Philanthropist Brooke Astor
Brooke Astor:
The prosecution rested its case against son Anthony Marshall and his defense is now putting on their case. Recall that this is a case where the son is being accused of fraud and larceny for trying to take almost 60 million from Brooke Astor, by way of changes to her will , back in 2004. She was diagnosed with Alzheimer's disease in 2000 and she died two years ago at 105.
I don't feel qualified to comment on this criminal trial other than to note certain estate issues that arise. Apparently Brooke's grandsons, one of whom originally started the investigation into his father's care of his grandmother after finding his grandmother living in very poor conditions in spite of her great wealth, stands to lose if the State wins. It seems Marshall Astor entered into a divorce decree with his first wife, the mother of the sons, and agreed that he could not disinherit his sons from the Astor wealth if he ever received it. In other words, if Marshal gets Brooke's money, then upon Marshall's death, it then has to go to his sons. Considering it was the sons that started the domino effect that lead to the prosecution, and even served as witnesses to the prosecution, this finding must be giving them mixed feelings. Of course if the prosecution can prove its case that Marshall Astor either tricked his mom into signing the changed will, or as suggested, forged her signature all together, the the subsequent fight over the inheritance will be a short lived battle in Act II of this family drama that is slated to start when the criminal trial has ended.
Sidenote: who do you think stands to gain the most from proving the change to the will in 2004 was fraud or forced? New York Charities. Several of them. They stand to gain millions in an economy where donations are way down. The charities are the remainder beneficiaries and certainly will not be acting very charitable when the criminal trial ends and the challenge to Marshall's inheritance begins.
The prosecution rested its case against son Anthony Marshall and his defense is now putting on their case. Recall that this is a case where the son is being accused of fraud and larceny for trying to take almost 60 million from Brooke Astor, by way of changes to her will , back in 2004. She was diagnosed with Alzheimer's disease in 2000 and she died two years ago at 105.
I don't feel qualified to comment on this criminal trial other than to note certain estate issues that arise. Apparently Brooke's grandsons, one of whom originally started the investigation into his father's care of his grandmother after finding his grandmother living in very poor conditions in spite of her great wealth, stands to lose if the State wins. It seems Marshall Astor entered into a divorce decree with his first wife, the mother of the sons, and agreed that he could not disinherit his sons from the Astor wealth if he ever received it. In other words, if Marshal gets Brooke's money, then upon Marshall's death, it then has to go to his sons. Considering it was the sons that started the domino effect that lead to the prosecution, and even served as witnesses to the prosecution, this finding must be giving them mixed feelings. Of course if the prosecution can prove its case that Marshall Astor either tricked his mom into signing the changed will, or as suggested, forged her signature all together, the the subsequent fight over the inheritance will be a short lived battle in Act II of this family drama that is slated to start when the criminal trial has ended.
Sidenote: who do you think stands to gain the most from proving the change to the will in 2004 was fraud or forced? New York Charities. Several of them. They stand to gain millions in an economy where donations are way down. The charities are the remainder beneficiaries and certainly will not be acting very charitable when the criminal trial ends and the challenge to Marshall's inheritance begins.
Wednesday, August 5, 2009
Arizona Republic Article on Powers of Attorney
This was in Sundays paper, August 2, 2009, in the Ask Steve column.
The question that was asked in his colum was a follow-up to a health care power of attorney article he ran previously. This one was about the financial power of attorney.
I have discussed financial powers of attorney before. Since I find these very important documents while the person is alive, which is the only time you can use it, I would like to touch on the topic again.
In the article, Mr. Sanghi discusses how financial powers of attorney can be durable or non-durable. Durable means the agent can still use the power of attorney after the person who created it becomes incapacitated. From my perspective, I cannot think of a better situation when you want a power of attorney than those times when you are unable to handle your own affairs. Don't get me wrong, a non-durable power of attorney does have an occasional benefit. For example, you need someone to represent you now for a one time only occurrence.
The other point raised in the article, and I like this as well, is what we call a "springing power of attorney." Let me first explain what this means then discuss circumstance of the use. A "springing" document means in this situation that there is some occurrence that causes the power of attorney to kick in, or "spring" into effect. For powers of attorney this is almost always upon doctors' orders that the principal that created the document is now incapacitated. Until then, the agent has no authority to act on his or her behalf. From my experience, I rarely see the benefit of letting someone have so much control and access to our financial affairs until we are unable to handle it ourselves. Of course if a person is just unable to handle his or her affairs, but is not necessarily "incapacitated", he or she can always create a power of attorney to apply immediately upon its execution.
My best,
Jim
The question that was asked in his colum was a follow-up to a health care power of attorney article he ran previously. This one was about the financial power of attorney.
I have discussed financial powers of attorney before. Since I find these very important documents while the person is alive, which is the only time you can use it, I would like to touch on the topic again.
In the article, Mr. Sanghi discusses how financial powers of attorney can be durable or non-durable. Durable means the agent can still use the power of attorney after the person who created it becomes incapacitated. From my perspective, I cannot think of a better situation when you want a power of attorney than those times when you are unable to handle your own affairs. Don't get me wrong, a non-durable power of attorney does have an occasional benefit. For example, you need someone to represent you now for a one time only occurrence.
The other point raised in the article, and I like this as well, is what we call a "springing power of attorney." Let me first explain what this means then discuss circumstance of the use. A "springing" document means in this situation that there is some occurrence that causes the power of attorney to kick in, or "spring" into effect. For powers of attorney this is almost always upon doctors' orders that the principal that created the document is now incapacitated. Until then, the agent has no authority to act on his or her behalf. From my experience, I rarely see the benefit of letting someone have so much control and access to our financial affairs until we are unable to handle it ourselves. Of course if a person is just unable to handle his or her affairs, but is not necessarily "incapacitated", he or she can always create a power of attorney to apply immediately upon its execution.
My best,
Jim
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