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Four Reasons to Revise Your Estate Plan

Four Reasons to Revise Your Estate Plan

by | Apr 18, 2022 | Asset Protection, Estate Planning

The need for an estate plan is something that many Americans only recognized as important during the worst months of the Coronavirus pandemic. We generally dislike thinking about our eventual demise, but the mortality rates of COVID-19 prompted us to see matters in a different light. In April 2020, professors David Horton and Reid Weisbord, respectively of the University of California Davis and Rutgers Law School, published the results of a survey showing that 68% of Americans did not have a will or any kind of estate planning strategy in place at a time when COVID-19 contagion was at a very high level.

 

Passing away without a will or an estate plan throws you into what is known as intestacy, which essentially means that your assets and property will be distributed according to state law. The probate code in many states calls for an estate distribution among tax agencies, creditors, surviving spouses, and descendants. This is not an ideal situation for many families; moreover, the interests of couples who never married, and of people who live in non-traditional family structures, are seldom taken into account by intestacy laws.

 

Seasoned estate planning attorneys can tell you that intestacy is only one of two major problems related to probate matters in the U.S. Failing to review, update, and revise an estate plan can complicate matters at a time when you won’t be around to fix the problem. If you already have an estate plan, great…but there is also a chance that you need to revise it due to legislative changes related to taxation, probate, or trusts. Even if changing legislation hasn’t impacted your estate plan, the natural evolution of your life probably has. Please take a moment to think about the major life events you have experienced since your estate plan was created. If any of them match the situations below, this is your cue to revise your plan.

 

Family Matters

Let’s consider the joy of getting married or welcoming a baby. Think about the letdown of getting divorced, or the sorrow of losing a loved one. These are major life events that call for an immediate revision of your estate plan, particularly when they involve weddings or marriage dissolution.

Moving Across State Lines

If you moved to Alabama from another state, the only way to tell if your estate planning strategy will continue to be effective is to review it. Keep in mind that some states have specific provisions with regard to the number of witnesses who must sign legal documents, such as trusts, living wills, medical directives, and others. Likewise, if you purchase a vacation home or investment property in a state other than the one you reside in, your plan will need to be updated accordingly.

Changes in Trustee or Estate Executor Designation

Your estate plan likely names an executor, personal representative, or trustee who is responsible for carrying out your wishes, distributing your assets, and otherwise administering your estate. If something happens to your named executor or trustee—or your relationship takes a turn for the worse—you should revise your estate plan immediately.

Changes to Assets and Liabilities

Filing for bankruptcy, paying off debts, selling a home, winning the lottery, or purchasing a collectible car are all examples of financial events that can significantly change the value of your estate, thus calling for an adequate revision.

Want to learn more about estate planning and the important role it can play in your future? Feel free to contact our office with questions. You can also download a free copy of The Basics of Estate Planning in Alabama, or attend one of our upcoming free workshops.



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What is a Trust…and Do I Need One?

What is a Trust…and Do I Need One?

by | Apr 13, 2022 | Avoiding Probate, Elder Law, Estate Planning, trust

Most people know that a will is an important piece of the estate planning puzzle, but there are many misconceptions about trusts. Most people believe that trusts are reserved for the very wealthy. While it’s true that not everyone needs a trust, it is hardly limited to those with multi-million dollar estates. Depending on your estate planning goals, assets, and wishes, a trust may be a very viable option for you—even if your estate is modest.

But, what is a trust…and how do you know if you need one?

What is a trust?

A trust is a legal contract that ensures the proper distribution of assets to the trustor’s beneficiaries. Assets can be distributed in the exact manner you wish them to be. The individual creating the trust—called a ‘trustor’ or ‘grantor’—places title to his or her assets into the ownership of the trust. The process of transferring assets to the trust is called ‘trust funding,’ and is an essential part of successful trust creation. The trustor will also name a person to manage and administer the assets held in the trust, called a ‘trustee.’ A well-organized and regularly maintained trust has the potential to save your loved ones from certain headaches, like probate court, and can offer tax benefits for inheritances, as well as more privacy and control over your assets.

General Guidelines

Generally speaking, trusts may be a viable option for you if you have a net worth of $100,000 or more, a considerable portfolio of real estate and other tangible assets, or detailed instructions for how you’d like your assets to be distributed to your beneficiaries when you pass away. It’s important to note that these recommendations are not set in stone, as each circumstance is highly unique, and even those who don’t meet these guidelines may still benefit from drafting a trust.

Types of Trusts

To further answer the question “what is a trust,” and determine whether a trust will fit your unique needs, it’s important to understand the different types of trusts that exist, and what makes them different. The most common types of trusts include:

  • Revocable (aka ‘Living’) Trust: This flexible trust allows you to cancel, maintain, and make amendments to the trust while you’re still alive. A revocable trust isn’t subject to probate, but doesn’t always protect assets from creditors, as the trustor still legally owns the assets that have been transferred to the trust.
  • Irrevocable Trust: Contrary to a revocable trust, irrevocable trusts are not able to be revoked or amended without the consent of all beneficiaries named in the trust. While this certainly limits the flexibility of the trust, it better protects the trustor from creditors and lawsuits. Additionally, an irrevocable trust can help minimize estate tax liabilities.
  • Testamentary Trust: Also referred to as a ‘will trust’ this type of trust is generated from a last will and testament, becoming effective (and irrevocable) after the trustor passes away. Testamentary trusts ensure that assets are distributed to beneficiaries at a designated time—known as the ‘trust expiration,’—which is prompted by a triggering event, such as the beneficiary turning a certain age. Because this trust is part of a will, it must go through probate before the trust can be created.
  • Charitable Trust: This type of irrevocable trust allows you to leave behind a legacy of giving. Charitable trusts are often established to reduce estate and gift tax liabilities. A charitable remainder trust (CRT) carries the added benefit of providing a source of income to you or your beneficiaries during the trust term. At the time of your passing, all remaining assets will then be distributed to the designated charity.
  • Special Needs Trust: Parents and guardians of children and adults with a disability can use this type of trust to protect a beneficiary’s eligibility for needs-based government programs, like SSI and Medicaid. This allows trustors the ability to provide financially for these beneficiaries when they are no longer around to physically care for them.

While creating a trust isn’t for everyone, it is a valuable part of an estate plan for many, providing an additional layer of protection for your legacy, and the future security of your loved ones. The flexibility, problem-solving, and variety that a trust provides makes it an attractive option for those seeking a well-rounded estate plan.

Educating yourself on trusts is only the first step. When it is time to create your trust, working with an experienced estate planning attorney will ensure that your trust is established and funded properly. Contact usvia the brief form below to get started today, or learn more about protecting your assets by signing up for Miller Estate and Elder Law’s FREE estate planning workshop.



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The Difference Between Wills and Trusts

The Difference Between Wills and Trusts

by | Apr 5, 2022 | Avoiding Probate, Estate Planning, trust

Establishing an estate plan that clearly lays out your instructions for asset distribution is one of the greatest gifts you can give to the people you care about. Two of the most important ingredients to ensure your assets and loved ones are protected are wills and trusts. These legal instruments are often confused with one another, making it difficult to discern which option is right for you. What are wills and trusts? How are they different? When should you use wills vs trusts? 

What follows is answers to these questions (and more), to help you make the best decisions for your family, and your legacy.

What are Wills and Trusts?

Wills and trusts both outline instructions for how you want your assets distributed, so you’ll see some overlap in what each is capable of doing, and the advantages and disadvantages of each. One of the major differences is when and how each becomes effective.

Wills

A will is considered a “simple” document, providing instructions for how you’d like your assets to be distributed. In your will, you’ll name an executor who will be responsible for distributing your assets per your wishes. Additionally, a will allows you to name a guardian for minor children and pets, forgive debts owed to you, and provide any additional instructions for such matters as funeral arrangements, and how taxes should be paid.

Trusts

A trust is a bit more complicated than a will, establishing a separate legal entity that holds legal title to your assets, and naming a trustee to manage and distribute those assets on your behalf, should you become incapacitated or pass away.

While there are many different types of trusts, they can all be classified in one of two ways:

  • Revocable (Living) Trust: This document allows the trustor to create the trust, retitle assets to the trust, assign a trustee, and make alterations, amendments, or terminations while they are living. This type of trust allows you to make an impact while you’re still alive, while giving you the flexibility to easily make amendments as life circumstances change.

  • Irrevocable Trust: This type of trust also assumes asset ownership, but cannot be altered, amended, or terminated by a trustor without the permission of his or her beneficiaries. While more restrictive than revocable trusts, this type of trust offers tax benefits that a revocable trust does not. 

Will vs Trust: What’s the Difference?

Both wills and trusts will help you handle your estate planning affairs, but there are some key differences that may help you decide whether your unique situation requires one or the other—or even both—options.

  • Effective Date

As aforementioned, one of the key differentiators of wills and trusts is when they go into effect: a will goes into effect upon death, while a trust becomes effective immediately upon funding and signing it. 

  • Privacy and Probate

All wills must undergo an often-arduous, time-consuming, and expensive probate process, which becomes public record and is accessible to anyone. Trusts, on the other hand, are not subject to probate and remain private. This can make trusts an attractive option for those seeking a faster and more private estate administration process for their beneficiaries…and one that is protected from the challenges often presented in probate court.

  • Property Coverage

A will covers any property solely owned by the grantor at the time of death, but does not cover property held by a trust, or any jointly owned property. A trust will only protect the property that has been transferred to it. Anything outside the trust may be subjected to probate.

  • Cost, Complexity and Maintenance

Wills created by an estate planning attorney often contain more complex terminologies, but a will can be extremely simple, with some states even allowing handwritten wills. This simplicity keeps the cost of creating a will at a minimum and, since wills are typically only revised for major life events, maintenance costs are also low.

Since trusts require you to fund them by transferring title to your assets, they can be more complex, and it is highly recommended you work with a trust attorney to ensure your trust is fully funded, supported by proper documentation, and kept up-to-date as you acquire new assets, and as life changes. This continuous maintenance can add additional costs, but ensures you’ve got 100% of your bases covered.

Will vs Trust: Which one is right for me?

The first step in answering this question is to assess your situation, needs, and goals. Things like your age, wealth, marital status, minor children, special needs, and unique requests play a pivotal role in making this decision. Most people need a will, but a trust is not vital for everyone. Enlisting the help of an estate planning and trust attorney is always the best option to find the estate planning solutions that best suit your needs. Contact Miller Estate and Elder Law to begin your custom-tailored estate plan, or register for our next FREE estate planning workshop today to learn more about estate planning and asset protection.

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Estate Planning 101: Last Will and Testament

Estate Planning 101: Last Will and Testament

by | Nov 12, 2021 | Elder Law, Estate Planning

last will and testament

For many, when they hear the term “estate plan” they immediately think of a last will and testament. While a last will and testament is not the entire estate plan, it is an important part of it. Let’s take a deeper look at what exactly a last will and testament is. 

Last Will and Testament, Defined

The last will and testament is a legal document that communicates a person’s final wishes as to how they want their assets distributed when they pass away, medical care, and dependents.  In the last will and testament, a person can leave instructions as to whether they want certain people to get certain assets, or whether they just want their assets divided among their heirs. In addition, if there are minor children involved, a last will and testament can include instructions for who would raise their children, as well. 

How Does a Last Will and Testament Work?

A person can write their last will and testament while they are still alive and of sound mind. When they pass away, the instructions will be carried out by a named personal representative (also called an executor or executrix) of the estate. The personal representative is normally named when the will is initially drafted.

Necessary Requirements

Since the last will and testament is vital to distributing the assets of a person’s estate, there are a few requirements that must be met in order for the will to be considered valid. 

First, the person who is writing the will must be of sound mind and mentally capable. For example, someone who has severe dementia would not be able to write a will, or make changes to their existing will. In addition, for a will to be considered valid, not only should the person signing it be of sound mind, but two unrelated and mentally sound witnesses must sign it, as well. If these requirements are not met, then the document will not be considered legally binding. 

What a Will Doesn’t Do

While the last will and testament is the foundation of a solid estate plan, it should not be the only part of an estate plan. This document outlines your wishes, but does not grant any individual the ability to make medical or financial decisions for you if you were to become incapacitated, but not die. It also cannot protect your assets from creditors, or from the costs of long-term care if that becomes necessary. A power of attorney, advanced directive, and trusts are other planning documents that you need considerations to consider include in your estate plan. 

The best way to ensure that your estate plan is complete is to speak with an estate planning attorney. If you have questions about creating a Last Will and Testament—or an estate plan altogether—we encourage you to contact Miller Estate & Elder Law at (256) 251-2137 or or register for one of our free estate planning workshops.

 

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Estate Planning During a Pandemic: 3 Reasons to Quit Stalling

Estate Planning During a Pandemic: 3 Reasons to Quit Stalling

by | Nov 10, 2021 | Asset Protection, Estate Planning, trust

pandemic

It is hard to believe that we are heading into our second winter season while still in the midst of a pandemic. At this point, Coronavirus has taken a toll on our finances, as well as our physical and mental health. Most people likely know someone who has been seriously impacted by Covid-19, and it is worrisome. To add some peace of mind to this otherwise stressful situation, right now is an opportune time to make sure your health and finances are appropriately protected with an effective estate plan. 

Many people think that estate planning is only for the wealthy, but this is simply not the case. Estate planning ensures that someone you trust will be able to make medical and financial decisions for you, should you become incapacitated. Estate planning can also ease the process of settling a person’s affairs after they pass away, helping your family and loved ones avoid emotionally-draining, lengthy, and costly legal affairs. Without a plan, the probate court will appoint someone to manage your financial affairs—and ultimately, the transfer of assets upon death—following intestate laws governed by the state. 

Consider these three reasons for why now is a better time than ever to plan your estate:

A Plan for You

An estate plan is not just for when a person dies, but it can also protect someone in the event that they become incapacitated or cannot make decisions for themselves—for example, if someone was placed on a ventilator. Entrusting a specific family member or loved one to make medical or financial decisions on your behalf can help ensure your needs will be met, and that you will receive medical treatment in alignment with your beliefs and wishes. There are several estate planning documents that help protect your own best interests. 

Your healthcare power of attorney designates an agent to act on your behalf, or be your representative, in situations where you are unable to make decisions regarding your own healthcare. A living will is also something to consider, as it includes an advanced healthcare directive, which provides instructions for end-of-life care.

A durable power of attorney may be one of the most important pieces in your estate plan. This document gives someone else the power to act on your behalf in financial and legal situations. Being “durable” means that the authority of the individual you have assigned remains, even if you become incapacitated. The power of attorney stays in effect until you die, or revoke the document.

A Plan for Your Children

So many things right now are uncertain with the pandemic, and sometimes there doesn’t seem to be a rhyme or reason to why things happen. If you are the parent of minor children, they need to be protected in case the unthinkable should happen. An estate plan will help ensure that children are cared for by approved guardians if the parents die before they turn 18. Without legally binding documents in place, the courts could be responsible for deciding who will raise your children.

A Plan for Your Assets

With no documented estate plan, such as a will or living trust, the state in which a person resides will typically decide how assets will be distributed after a person dies. By having an estate plan, however, the courts will have clear (and legal) documentation about how assets should be transferred upon death. This can save a family time and frustration, and ensure that assets are dispersed in the intended manner.

A last will and testament dictates who will serve as the executor or personal representative for your estate, what power they have, and what they will be responsible for after your death, for example, collecting documents, paying debts, and distributing assets. The last will and testament also identifies how, when, and to whom your assets or property should be transferred. 

A living trust is also known as a revocable living trust, and is a legal document that allows the transfer of assets from a trust to your beneficiaries—without needing to go through probate court proceedings. 

Note that everyone has unique needs when it comes to estate planning, and the above considerations are just some general guidelines for you to think about. It is most important that you reach out to Miller Estate & Elder Law to help you craft an estate plan that fits your specific situation and needs.  Give us a call at 256 251-2137 or register for one of our free estate planning workshops.  

 

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Estate Planning for Business Owners: Your Guide to Getting Started

Estate Planning for Business Owners: Your Guide to Getting Started

by | Oct 25, 2021 | Asset Protection, Business, Estate Planning, trust

estate planning for business owners

As a business owner, life can be hectic. Someone who chooses to take an entrepreneurial route often has to learn how to juggle managing their business with family life, in addition to actually doing their jobs! So many business owners put their blood, sweat, and tears into creating a profitable business. However, the job does not end here. As an entrepreneur, it is critical to implement an estate plan to protect the business you’ve worked so hard to grow. 

Appoint a Financial Power of Attorney

A financial power of attorney would appoint someone you trust to oversee your finances if you become incapacitated or worse. As a business owner, you more than likely have a more complicated financial situation than most. It is imperative that you choose someone who you not only trust, but who also understands the financial situation of your business. Many business owners will appoint a trusted CPA as their financial power of attorney.

Draft a Living Trust

Most business owners have several assets that are tied up in their business. These assets may even be essential to keep your business running. This is why it’s vital to create a living trust. A living trust is a legal document that will outline your directions for asset management and/or distribution, and will also name a legal entity or person as the trustee who is responsible for making sure your wishes are executed. 

One thing to keep in mind is that living trusts are not something you can draft once, and then forget about. As your business grows and assets change, it is important to remember to update your living trust in order to better protect your business. 

Create a Business Succession Plan

A business succession plan is a critical blueprint for any business owner who plans to one day transition ownership of their business. A succession plan is something that shows stakeholders your expectations of the business transition, and also outlines important company operations, mission statements, and visions for future owners. A business succession plan is a necessity for anyone who wants to protect the legacy of the business they worked so hard to create. 

If you have questions about creating an estate plan for business owners, we encourage you to contact Miller Estate & Elder Law at (256) 251-2137 or register for one of our free estate planning workshops.

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bill@millerestateandelderlaw.com