All posts in Trusts And Wills

08 Apr

Too much information? Consider disclosure rules when designing trusts

In Trusts And Wills by admin / April 8, 2013 / 0 Comments

Estate Planner May-June 2006

Trusts are an integral part of many estate plans, and often there are advantages to keeping the trust’s terms – or even its existence – confidential. Why? Perhaps your beneficiary is immature or reckless. Or you may be concerned that knowledge of the trust would cause your beneficiary to become dependent on it and fail to pursue his or her own ambitions.

There are many legitimate reasons for keeping a trust quiet. But in many cases, state law interferes with this goal by requiring a trustee to disclose information about the trust to its beneficiaries.


The Uniform Trust Code (UTC), which has been adopted in many states, requires the trustee of certain trusts to disclose detailed information about a trust to any “qualified beneficiary” who requests it. Qualified beneficiaries include not only those who may receive a distribution under the trust (your children, for example), but also those who might benefit if a “first-in-line” beneficiary’s interest terminates (your grandchildren, for example).

The UTC also requires you to notify each qualified beneficiary of his or her rights to information, making it nearly impossible to keep the trust a secret from your beneficiaries.

The purpose of the UTC’s disclosure provisions is to help avoid fraud or mismanagement on the part of trustees by allowing beneficiaries to monitor the trust’s financial activities and performance. Some states that have adopted the UTC allow you to waive the trustee’s duty to disclose. Others allow you to name one or more third parties to receive required disclosures and protect the beneficiaries’ interests.

An alternative strategy

If applicable law doesn’t provide a mechanism for avoiding disclosure to your child or other beneficiary, an alternative strategy is to grant your spouse or someone else a power of appointment over the trust. The person who holds the power of appointment can then redirect trust assets to your child if needed.

This solves the disclosure problem, because you don’t have to name your child as a trust beneficiary. The primary disadvantage of this approach is that the power holder has no legal obligation to honor your intentions.

Put your trust in trusts

Trusts are commonplace in estate plans. Before you create a trust or if you’re concerned about the confidentiality of your trusts, be sure to consider the law in your state.


08 Apr

Why Everyone Needs a Will

In Trusts And Wills,Wills by admin / April 8, 2013 / 0 Comments

Estate Planner May-Jun 1997

Young people, single people, people without children and people with less than $600,000 in assets often think that they don’t need wills. The fact is, everyone needs a will. Let’s look at some common questions about wills.

Q: Does everyone have an estate?
A: Yes, if you own anything at all. The term applies not just to real estate, but also to cash, cars, furniture, books, insurance and retirement plans — all property.

Q: What happens if I die without a will?
A: Your state’s laws of descent and distribution take over.

Q: Why not let state laws take over?
A: State laws are impersonal — they don’t make exceptions, they may deplete your estate unnecessarily, and they are written to predict your desires (without knowing them) concerning choosing your administrator and guardian of your surviving minor children. The state also cannot make charitable gifts.

Q: Doesn’t joint ownership make a will unnecessary?
A: No. That’s a common misconception. Joint ownership may not eliminate estate taxes and may even create gift taxes. It may also deny you complete control over your property while you’re still living. Joint ownership is a poor will substitute, but can work well in conjunction with a will.

Q: Do I need a will if my estate is small?
A: Yes, the smaller the estate, the more important that it be settled quickly — delays usually mean more expense. Besides, your estate may be larger than you realize. Don’t think of your property in terms of what it cost originally. Its value may have increased substantially. A will also may cut probate costs, waive bonding requirements, and name heirs and legatees.

Q: Can I name my spouse as executor?
A: Yes. Or name a close relative or friend, or the trust department of a bank or other corporation.

Q: Can an executor refuse to serve, before or after accepting the position?
A: Yes. This can occur due to ill health, travel or the press of other business and is one reason it’s wise to name an alternate executor. The trust department of your bank may be your best choice to act as executor because it will always be able to serve.

Q: What does the executor do?
A: The executor’s role, in general, is to probate your will; collect your property; file necessary tax returns, including income tax returns and federal estate tax returns; pay any claims made by creditors; dispose of your property in accordance with the will; and close the probate estate.

Q: Is there a danger that my bequest may not be distributed as planned?
A: Yes. This may occur due to an incorrect or unofficial name in your will. Use an additional identifier, such as “friend,” “sister” or “town of residence” designation.

Q: How many witnesses does my will require, and must they read the will and know its contents?
A: State laws differ on the required number of witnesses, who merely must attest that you have said it is your will and have signed it in their presence.

Q: Is it legal for a witness also to be a beneficiary of the will?
A: Yes, but it’s not advisable because it may result in the witness not receiving property left to him or her.

Q: Once I have a will, should I ever have to change it?
A: Probably, because even the best wills often become outdated. Review your will periodically in light of changes in marital status, financial status or interests. Updating your will may require nothing more than a simple amendment (codicil).

Q: Am I required to change my will when moving to another state?
A: Most states recognize a will drafted in a state where you previously resided (if the will was properly executed in that state). But it is always a good idea to have your will reviewed by an attorney in the state of your new residence.

Q: Once my will is completed, where should I keep it?
A: Sign only one copy and keep it in your office, home or bank safe-deposit box, or ask your attorney to keep it for you. Retain an unsigned duplicate, so you can easily check it periodically to see if it needs updating.

Q: Is there anything else I need to know about wills?
A: An article like this can only cover the main points. Each person’s circumstances and wishes are different, so consult an attorney about your will.

08 Apr

5 Will Advantages

In Trusts And Wills,Wills by admin / April 8, 2013 / 0 Comments

Estate Planner Jan-Feb 1997

1. Provides standardized procedures and court supervision.

2. Often provides for shorter creditor claims limitation period.

3. Saves the grantor time and money during lifetime by avoiding the costs associated with a living trust, including recording fees, attorney as fees for drafting documents, and transfer fees.

4. Provides protection for disabled or incompetent interested parties through probate process.

5. Provides procedures to financially protect the surviving spouse through elective share.

08 Apr

Do You Need a Living Trust or a Will?

In Trusts And Wills by admin / April 8, 2013 / 0 Comments

Estate Planner Jan-Feb 2000

Two types of documents can form the basis of your estate plan to transfer your assets to your family upon your death. A will is the traditional method for designating distribution of assets held in your name alone. A living trust acts as a substitute for a will and avoids probate. Both documents may minimize estate tax. Whether you should have a living trust or a will depends on many individual factors.

Weighing the Options

A will’s biggest disadvantage is that it must go through probate in a state court to establish its validity. The probate court supervises the administration of the estate and the distribution of assets. Recent changes in many states provide for minimum involvement by the court under most circumstances. Because the procedure varies from state to state, probate may be expensive and time consuming in some states but not in others. If you die owning real estate located in more than one state, a probate may be required in each state.

A living trust can avoid probate when you die because the trust’s successor trustee takes title to the trust assets and distributes them according to your wishes as expressed in the trust document. But probate will be avoided only for assets in the trust.

This means that to avoid probate, you must move assets in your name alone into the name of your trust. In addition, you are the grantor and may also be the trustee and beneficiary. A living trust is considered revocable — you can change or cancel it at any time.

The Specifics

You can keep modest and frequently accessed assets — such as checking accounts — in your own name or place them in the trust. Assets in your name alone that are not transferred to the trust will pass through a “pour-over” will into your trust when you die. This type of will is used to ensure that all of your property is distributed according to the terms of the trust.

Even if some assets pass through a pour-over will, you can still avoid probate in many states through the use of a procedure that applies to small estates. For example, the laws in some states may provide that assets valued at $50,000 or less may avoid probate by using an affidavit indicating to whom the assets should be delivered. When presented with such an affidavit, a bank would turn over the account that was held by the decedent to the person named in the affidavit.

Living Trust Advantages

A living trust has several advantages over a standard will:

  • A trust is usually easier to amend than a will because in most states no witnesses are required to execute a trust agreement.

  • A trust provides greater privacy because a will filed with the court after death becomes a public record available for inspection.

  • A living trust allows you to plan for your incompetence without court involvement. You name a successor trustee to act in your place if you become disabled and unable to manage your affairs. Without a trust, the court must appoint a conservator or guardian to administer your assets if you do not have a power of attorney. Guardianship requires court supervision and may require approval of all expenditures for you. Procedures for appointing a guardian vary from state to state. Powers of attorney do not require court involvement but often are suspect and if improperly drafted may not give your family needed flexibility.

  • In some states, revocable trust assets are not subject to the after-death claims of your creditors unless the transfer was in fraud of the creditor’s rights. Instead, probate assets must settle these claims. Because the power to revoke the trust is available only to you, the grantor, that power terminates on your death. This may leave creditors with little authority to assert claims against trust assets.

  • It is more difficult for heirs or beneficiaries to initiate and win a lawsuit against a living trust. Heirs or trust beneficiaries can contest a trust based on undue influence or lack of capacity. The longer the trust has been funded and in existence, the more difficult it is to contest. A will is more likely to be attacked successfully partly because it doesn’t take effect until your death. On the other hand, a living trust may provide less protection of the assets from the surviving spouse’s nursing home bills.

Seek Professional Advice

If you would like assistance in determining whether a living trust or will is right for you, please let us know. Our professionals can help answer any questions that may arise when deciding between these two important estate planning methods.