Posts By: Gene Osofsky

We’ve said it before on our blog and we’ll say it again: It doesn’t matter whether you’re a billionaire business executive or a teacher with a modest salary, it doesn’t matter whether you’re the patriarch of a large family or a stay-at-home mom of a newborn, a revocable living trust may be exactly what your family needs to protect family assets and their best interests. This is because a trust is probably the most comprehensive and versatile tool in your estate plan, and is a key part of helping you accomplish your goals.

There are two basic kinds of trusts—revocable and irrevocable. Revocable means that it can be revoked or changed so long as the grantor (the person who created the trust) is still living and is competent to do so. Logically enough, an irrevocable trust generally cannot be changed once it has been signed.  The reason this question of revocability is so important is because a trust is not merely a set of instructions for how your wealth should be distributed, a trust actually owns the property placed within it, with the person or people serving as trustee (usually for a revocable trust this is the grantors themselves, while they are living) controlling the trust property within. It is for this very reason that trusts can be such a powerful and flexible tool for tax planning and estate planning.

The specifics of your trust will vary greatly depending on what you hope to accomplish.  Parents of young children may wish to include a general trust for the benefit of all the children, with distributions made to their guardians as necessary. This general trust can be split into separate individual trusts when all of the children have reached a certain age or graduated from college. Parents (and often grandparents) may want to include education trusts under the umbrella of their revocable living trust. Many families feel it is important to include instructions for charitable giving in their estate plan, and may choose to set up a charitable trust with their children or grandchildren as trustees. Pet owners often create pet trusts to ensure that their animals will be well cared after the owner has died.

A trust, much more than a simple will, allows the grantor far greater control over his or her assets—and for a longer period of time—which is why trusts are particularly useful for anybody entering into a second or third marriage, or for any parent who worries about the choices a beneficiary might make once they come into their inheritance. Unlike a simple will, trusts are designed to withstand the test of time, allowing you to leave a legacy that can last for decades.

Posts By: Gene Osofsky

Every new project has to begin somewhere, and most newcomers to estate planning choose to begin with a will. A will is the most well-known of all estate planning documents, it is generally the simplest and easiest to create (although some wills can be very lengthy and complex), and in most states a will can contain within it instructions for peripheral topics such as guardianship of minor children or the final disposition of your remains.

But everybody knows that the main purpose of a will is usually to dispose of your assets and effects. In its most basic form, a will should include these important parts:

  • The testator’s (Will-Maker’s) name and crucial information
  • Nomination of an executor to carry out the wishes of the testator
  • The names of the beneficiaries
  • Instructions as to how the estate should be distributed to the beneficiaries
  • Signature of the testator and the date signed
  • Signature of witnesses and the date signed

As mentioned above, this is a will in its most basic form, but in fact most wills will also contain instructions for probate, instructions regarding the payment of debts and taxes, the names of any organizations to receive charitable distributions, a mention of relatives who may purposefully NOT have been named, and more.

Because a will can be so basic, many people believe that a will can easily be created on one’s own, without the help of an estate planning professional; in fact, there are plenty of companies who offer “Do It Yourself” will creation software for a fee. However, it is important to understand that while a will itself can be very simple,  the federal and state tax and probate laws are rarely so.  If you feel your estate is small and your wishes are modest then by all means keep your will short and sweet. However, we strongly urge ALL of our readers (even those with small and simple estates) to have an estate planning professional at least review your will and advise you as to its validity before you sign it and tuck it away.

Posts By: Gene Osofsky

News sources such as the Washington Post entertainment section promise that this summer will be flush with celebrity newborns and proud mamas and papas. Some of the stars expecting additions to their families include Natalie Portman, Kate Hudson, Jennifer Connelly and more.  Here at our office we wonder how many of these new parents will remember to update their wills or estate plans after the birth of their child… and how many of our readers have remembered (or will remember, if they are currently expecting a new child or grandchild) to update their own estate plans after an addition to their families.

Every parent knows that the time after the birth of a new baby can be a tired, busy and chaotic transition, and updating their estate plan is probably the last thing on any new parent’s mind. But after the first few months, when things have calmed down and you’ve settled into a routine, updating your estate plan to include and provide for your new little one should take top priority.

Here are a few things new parents will want to consider as they prepare to update their estate plan:

  • Guardians for your child. Who are the people who will raise your child if the unthinkable should happen to you and your spouse? Many people choose close family members, others choose trusted friends.
  • Keep your child’s inheritance in trust. Settling your entire estate on a 5, 10 or 16 year old is never a good idea.  Consider instead creating a trust for your child which will provide for him until he reaches maturity.
  • Trustees of your child’s inheritance. Who do you trust to invest and distribute the estate for your child while she is still a minor? Some parents choose to have the guardians also serve as trustees; others prefer to nominate separate trustees and guardians who will work together, providing a natural system of checks and balances.
  • Providing for your child’s special needs. If your child has special needs he will need special planning to ensure that his needs continue to be provided for. Ask us (or your own local estate planning attorney) about a special needs trust.

Guardians, trustees, trusts and special needs planning are the very basics of estate planning for families with minor children, and should serve as a jumping off point for further discussion with your estate planner.

Posts By: Gene Osofsky

Many people think that estate planning is a piece of cake: choose your beneficiaries, write up a simple will, and voila – you’re done! The truth is that while estate planning can sometimes be achieved with this amount of simplicity, most of the time there’s more to it than that—a lot more—especially if you have any variables or special circumstances to consider.  Variables and special circumstances can encompass just about anything, including:

  • Young children
  • Adult children with differing financial needs
  • Adult children who don’t get along
  • A child, parent or sibling with special needs
  • A second (or third) marriage
  • A spouse with significant health problems, or who needs care

And according to this article in the Chicago Tribune special circumstances also include:

  • A non-citizen spouse
  • A much younger spouse
  • Health concerns

A good tool in your estate planning toolbox to deal with these “special circumstances” may be to create a trust rather than just a simple will.  A trust can be comprehensive and add flexibility to your plan —even if known circumstances change after your death.  A well-drafted Durable Power of Attorney can add even more flexibility to your plan; for example, it can even authorize your trusted agent to modify your trust later on if the need arises.

For example, parents with three children ages 21, 17 and 15 may not want to divide their estate evenly now, especially considering that they’ve likely already paid for their 21-year old’s college education, but have yet to pay for college for the 17 and 15 year olds.  These parents could choose to place their assets into a common trust to pay for the needs of all the children at the discretion of the trustee, and then divide into separate and equal trusts when the youngest child reaches the age of 21, or when all have graduated from college.

Very few families fit the simple “boiler-plate” description, and even fewer families will benefit fully from a one-size-fits-all estate plan. Our office can help you craft a plan to fit your family’s unique and special circumstances—both to address your situation right now, as well as circumstances that may arise years in the future.

Posts By: Gene Osofsky

One of the most difficult aspects of caring for an elderly parent (or helping an aging parent who lives far away) is keeping one step ahead when that parent begins to lose the ability to manage his or her own finances. Many seniors can be very resistant to discussing what they feel is an extremely private and sensitive topic.  Furthermore, according to this article in AgingCare.com, “for many elders, being able to take care of their own finances is an important symbol of independence and self-worth,” and one that they are not likely to relinquish easily.

Unfortunately, an elderly parent’s ability to manage their own money may cease before they are willing to ask for help. In these cases, it may be up to their children and loved ones to step in and help as best they can.  What follows is a list of some non-invasive, non-offensive steps adult children and caregivers can take to help aging parents manage their finances.

  • Ask for a list of important people and information you might need in case of emergency. This list would include contact information for an attorney, financial advisor, primary care physician, and insurance agent.
  • Ask where your parent keeps important documents and how an executor or advisor could access those documents upon your parent’s death or incapacity.
  • If your parent is willing, discuss their estate plan with them, including who they have chosen as their agent or executor, and what you can do if something happens.
  • Ask your parent to make a list of monthly bills, expenses and account numbers. Although your parent may not want to hand over this information right away, the list should be stored with other important estate planning documents so that it can be accessed in case of emergency.
  • As you keep track of your own financial deadlines (tax filing deadlines and the like) set up reminders for your parent as well.
  • Ask that your parent list you as an “emergency contact” with their utility services, so that you would be informed if your parent’s service is in danger of being terminated.
  • And finally, talk to your parent as often as you can. Keeping open lines of communication is the very best way to stay informed about the abilities and well-being of your aging parent.

Posts By: Gene Osofsky

Being named as the executor of the estate of a deceased loved one comes with many challenges, including dealing with the probate system.  But one of the most difficult (and least discussed) challenges is sorting through the plethora of paper and information that people collect over the course of a lifetime.

You can save your executor (and your family) time and money later by organizing your important documents and finances right now.  If you’re not sure where to begin, or what information an executor would need to know, we’ve assembled a list of information and documents an executor might need quick and easy access to if anything were to happen to you:

  • Instructions and letter to trustee: Contact information for your attorney and trustee(s), instructions on how to begin the process.
  • Minor children: Information about your minor children, nearby guardians or relatives, medical and health insurance information.
  • Personal Information: Birth and marriage certificates, passports, family, friends and contact people.
  • Estate Planning Documents: Trust, wills, any amendments, personal property distribution memorandum.
  • Employment/Business Information: Contact information for supervisors; client information if you are a small business owner.
  • Real Estate and Tangible Property: Deed to your home, mortgage information, homeowners and fire insurance, vehicle records, artwork and antiques.
  • Bank Accounts and Investments: Account numbers and locations, contact information.
  • Monthly Expenses and Bills: A copy of one monthly statement for each.
  • Information about recent Taxes
  • Retirement Accounts/Government Benefits: Account numbers, beneficiary information.
  • Life Insurance: Account numbers, beneficiary information, and copy of each policy
  • Memorial and Burial/Cremation: Preferences, pre-paid arrangements, phone numbers.
  • Memberships/Secured Accounts/Passwords

Once you are organized, keep your information in an accessible place and make your executor aware of the location. This simple act of organization will not only benefit you right now, it will save your family and your executor much time, money and frustration later on.

Posts By: Gene Osofsky

A new “Portability Provision” in The Tax Relief, Unemployment Insurance Reauthorization, and Jobs Creation Act of 2010 has some couples excited about the financial possibilities.  As explained in this article in the Wall Street Journal, the new portability provision “permits surviving spouses to elect to use the unused portion of the estate tax applicable exclusion amount of their predeceased spouses. This provides the surviving spouse with a larger exclusion amount and allows married couples to transfer a collective $10 million estate.”

The new provision may seem like a boon, but the author of the article advises caution for a few reasons: “First, portability may encourage procrastination rather than planning; second, complications emerge with GST taxes, remarriages, and state exclusions; and third, the temporary nature of the act and the unpredictability of Congress make for uncertainty in estate planning for the future.”

Our readers will know that there are a number of planning tools and opportunities that crop up over the years; this new portability provision is certainly one of them. Our readers will also know that none of these tools will necessarily be the “silver bullet” of estate planning.  The fact is that estate planning is like anything else—to do it right and to do it effectively requires intelligence and research; a dedication of time and resources.  Most families simply don’t have the time or the resources to devote to researching every new “perfect planning tool” that crops up promising to save your family money.

This is why our firm is here; it is our business to research the best planning tools for your family.  We listen to your goals; we take into account your financial history and your current status.  We help you create the plan that works best for you.  If you think that this portability provision—or any other strategy you’ve heard about—might be your “silver bullet”, please call our office for an appointment.  We can then help you evaluate your situation in light of current law, and help you make an educated and effective plan for your family.

Posts By: Gene Osofsky

When it comes to protecting your wealth and your family creating an estate plan is one of the most important things you can do.  An estate plan is your key to ensuring that your hard-earned assets are distributed (or saved or invested) as you designate. An estate plan is your family’s safety net.  Unfortunately, too many people attempt to take shortcuts with their plan, and find themselves with a safety net that is falling apart just when they need it most.  Below are 5 of the most common missteps that can sabotage your estate plan, and how you can avoid them.

1. Neglecting to fund your trust. A trust can be a wonderful tool for protecting your assets; flexible and customizable, a useful trust can be created for just about every situation.  But a trust is like a strongbox—if you don’t fill it up it has nothing to protect.  Accounts and assets must be put in the name of your trust for it to work as you’ve designed it to.

2. Not enlisting the help of an estate planning attorney. There are a number of Do-It-Yourself will and estate planning programs out there that promise you a full estate plan for a cheaper price; but estate plans are complicated things, requirements change depending on your state of residence, the size of your estate, the age and situation of your beneficiaries, and much more.  If you aren’t able to work with an attorney to create your plan, at the very least we urge you to have an attorney review your plan before you sign it.

3. Neglecting to mention previous estate planning documents, or making unofficial changes in the margins of documents that have already been signed. When creating a will or a trust or any other common estate planning document it is usually necessary to revoke any previous documents so there is no confusion about which document is current and valid.  Neglecting to do this can end with your assets tied up in probate court for months or years—or even worse, invalidating both documents completely.

4. Putting your plan somewhere safe—somewhere so “safe”, in fact, that nobody can find or access it! People recognize that estate planning documents are things of value, and as such should be protected in a locked filing cabinet or safe deposit box.  Wherever you choose to store your documents, be sure one or two trusted individuals have not only the knowledge of where the documents are, but also the ability to access them.  An estate plan does no good if it cannot be accessed when it’s needed.

5. And finally, one of the most common missteps that can sabotage your estate plan is failing to update your plan regularly. Not only do federal and state laws change periodically (as we have recently experienced) but you will undoubtedly experience changes in your own life and fortune.  Failing to update your plan to keep up with the law or with your own life can result in an estate plan that is as useful as a car you neglected to maintain—it may look fine on the outside, but it simply won’t run anymore.

Posts By: Gene Osofsky

Although recent news surrounding the estate tax—both its repeal and its reinstatement—has died down, many people are still talking about their estate plans. Most people recognize that now is the time to create their estate plan, or to review and update their existing plan if they have one. This means that many people are asking questions about the primary document in just about any estate plan: the Last Will and Testament.

What is a Will?

A will is, for many people, the cornerstone of their estate plan. In fact, if you only create one estate planning document (which we don’t recommend) that document is probably a will. A will is the document which details your wishes about how and to whom your property will be distributed upon your death. A will can list your property in great detail, or it can make a statement about “all my legal property” in general. Your will names an executor, the person who will carry out your wishes as detailed in the document. And if you have minor children your will can name guardians, the adults you choose to care for your children in your absence.

What is required to make a Will?

At its heart a will is very simple.  Requirements will differ depending on your state of residence, but there are some basic requirements that will be the same across the board:

  • A will must be created by a person who is of legal age, who is proven to be of sound mind and judgment, and who is under no duress.
  • A will should revoke all previous wills and codicils.
  • A will should be signed and dated.
  • A will generally needs the signatures of disinterested witnesses, and in some states must also be notarized.

It is important to note that there is no requirement that a will must be created by or with an attorney; however, homemade wills have been frequently found to be invalid, or have been contested by disgruntled heirs or potential heirs, so having the help and advice of an attorney is highly recommended.

What happens if you don’t have a Will?

If you don’t have a will your property will be distributed according to the intestacy laws of your state. Property will generally be inherited by a spouse, or by a spouse and children.  If there are no spouse or children,  then property will generally go to living parents or siblings, then to nieces, nephews, or other living relatives who can be found. The state will choose an executor for your estate, as well as guardians for any minor children you have. Unfortunately, the people chosen by the state to serve in these roles may not be the people you would have chosen. Additionally, the probate process is likely to be even longer than usual as the extent of your estate, as well as any outside claims to it, are investigated.

Luckily, there is very little reason for anyone to die without a will. Although wills can be designed to be as comprehensive and intricate as you like, they are at heart very simple documents which can provide peace of mind for you and your family. Contact our office—or another attorney you trust—to help guide you through the process of creating your own last will and testament.

Posts By: Gene Osofsky

It’s all over the news lately that Prince William and his fiancé Kate Middleton will likely not sign a prenuptial agreement before the royal wedding on April 29th. Although many reasons have been given as to why the couple will forgo signing a prenup, one of the reasons is that “while prenuptial agreements are common in the United States, they are far less prevalent in the UK. Only in the last year have British courts agreed to recognize such deals.” This is a statement that has some Americans asking exactly how legally binding are prenuptial agreements here in the States?

The answer to that question depends on a number of factors: your state of residence, the terms of your prenuptial agreement, how long you stay married, and more.  Fortunately, the longer prenuptial agreements are around, and the more common they become, the more respect they get from the courts.  But if you’re worried that your prenuptial agreement won’t hold up in court, here are few tips to help ensure the validity of your agreement.

Neither party must be signing under duress. The more time each party has to review the agreement before the wedding the better.  Any prenuptial agreement signed the day of or the day before the wedding could be looked upon as being signed under duress.

The agreement should include full disclosure of income and assets. If you live in a state where it is possible to waive full disclosure of assets then BOTH parties should specify that they do so knowingly.

Each party should have their own legal representation. In order to be sure that neither party is being taken advantage of, each party should have their own independent attorney review the document before it is signed.

Details regarding children or child support in a prenuptial agreement may not be enforced by most courts. Partners my want to include details about possible custody or child support arrangements in a prenuptial agreement, but keep in mind that any court will always give the best interests of a child the highest priority, even if it means disregarding those sections of the agreement between spouses.

Waivers of Spousal Support (alimony) Will Be Carefully Construed by California Courts. Any attempt to waive spousal support in the pre-nup will be carefully construed in the event of divorce, and may or may not later hold up, so just beware.

Seniors with children from prior relationshps, who remarry later in life,  often consider pre-nups as a way to ensure the inheritance of their own children.  So, its not just above divorce.   Hopefully, these tips can help ensure that your agreement will be considered valid by a court should the need for enforcement arise down the road.