I get asked the question above on an almost weekly basis. The short answer is that if you put your assets into a trust, you still get taxed. A trust is not a magical way to avoid all taxes on assets, despite persistent myths to the contrary. A trust can help to minimize taxes, but not eliminate taxes completely. The IRS publishes a list of the “Dirty Dozen” tax scams each year. These are easily identified ways that try to scam the tax system. This year’s list includes the following: “Abusive tax structures including trusts...are sometimes used to avoid paying taxes. The IRS is … [Read more...]
[ANSWERED] How Often Should You Update Your Will?
Almost every person I meet asks me how often they should review, update, or revisit their will. I am happy to answer this question, explaining as follows: “You should update your will every few years, or whenever you have a major life change.” Please read the following sentences in as sarcastic of a voice as you can: I know this is quite the definitive statement, and leaves nothing open for interpretation. Certainly the phrase “every few years” is absolutely definitive, and cannot be misinterpreted. Back to normal now, sarcasm is done: What do You Mean by, “Every Few … [Read more...]
Four Fundamental Estate Planning Documents: Part 1 – The Will
When I talk with clients about estate planning, I often need to start with the basics, giving them a good solid foundation. I am not sure I have done that yet on my blogs, so I am excited to do a four part series where I talk about the basic, foundational documents of every estate plan. Hopefully this will set a good foundation for you. In my opinion, any estate plan should have these four basic, fundamental, foundational documents: A Will A Financial Power of Attorney A Medical Power of Attorney A Living Will (also called an Advanced Directive) This blog will talk about … [Read more...]
The 3 Roles in a Trust, and Why They’re Important to Understand Before Sitting Down With Your Estate Planning Attorney
A couple of weeks ago I was discussing a trust with a client, and thought I had explained what a trustmaker, trustee, and trust beneficiary were. While I was talking about how only one of their kids would act as the Trustee, the client reacted with haste, exclaiming, “WHAT DO YOU MEAN ALL OF MY CHILDREN WILL NOT BE ON THE TRUST? THAT’S NOT WHAT I WANT AT ALL!” With a smile, I calmly re-explained the difference between a child being a beneficiary of a trust, and what the role of the trustee was. If you have ever experienced the same, or a similar, misunderstanding when working with any … [Read more...]
Estate Planning and Collaboration, A Great Combination
I have a confession. A dark secret that I hide behind a facade of confidence and competence. I know this may come as a surprise to some people who know me well, but I am here to admit, “I don’t know everything.” (I can hear a collective gasp of disbelief from my friends, and a faint scoff from my family…) Because I don’t know everything, I also do not handle all legal matters myself. Many of my classmates from law school seemed to act like they knew everything, or at least that they knew better than everyone else. I have never found being all-knowing to be particularly effective in my … [Read more...]
Estate Planning: No Laughing Matter, Or is It?
One of my guiding business philosophies comes from the great philosopher Bugs Bunny “You can’t take life too seriously. You will never get out of it alive.” I attribute this quote to Bugs Bunny because I recall having seen him say it once, but it is possible that the sentiment comes from somewhere else. I suppose many quotes are like that, you hear them from one person, or source, but they were originally from somewhere else. I still like to give Bugs Bunny the credit. I have been told that I have a dry sense of humor. I admit that is true. I use humor in a lot of different situations to … [Read more...]
How to Involve Family In Your Estate Plan – Get on the Bus
When I was a little kid, I used to sing the song, “The Wheels on the Bus.” I would sing about the wheels on the bus going round and round, the wipers on the bus going swish, swish, swish, the driver on the bus, and the people on the bus. When I became a parent, I sang the same song to my children, and we made up many more verses of the song. Family bonding over the song seemed like a good idea. I think my children have outgrown signing, “The Wheels on the Bus” by now, as they are a bit older, but I still think about that song and sing it when I see a bus driving in the rain. From school … [Read more...]
How to Determine Mental Capacity for a Will or Estate Plan
Your mind matters! I often have people I meet who feel the need to apologize to me for not having created an estate plan before they met with me. Many times this comes from an older couple who realized that they should have planned sooner. I think I addressed that attitude in my last blog about putting things off until tomorrow, but I often reassure these types of people by talking about the two threshold requirement to put together an estate plan, as follows: You need to be alive. You need to be mentally competent. There may be a lot of other things that need to happen to set … [Read more...]
I’ll Get To It Tomorrow
As a child, I watched the movie “Annie” where the little orphan Annie sings the lines: “Tomorrow, tomorrow. I love ya, tomorrow. You’re always a day away.” Annie is singing about how the sun will come out tomorrow, and that she will have brighter prospects for her life in the orphanage because of the sunny day that will come. However, she makes an interesting point with the line “You’re always a day away.” Tomorrow is always in the future, as tomorrow refers to a future time, and once tomorrow gets here, we call it today. Tomorrow is an ever present barrier to getting an estate … [Read more...]
Where there’s no Will, There is a Way
When someone asks me, “Well, if I set things up right, I don’t even need a will or a trust, right?” I often wonder if the person asking the question wants an actual answer, or just wants me to agree with them. I think I understand what the person is asking, but I am not sure why someone would want me, an estate planning attorney, to simply agree that the work I normally do serves no purpose. Perhaps it is because people want to look for easy ways to do things, or they don’t want to be involved with the courts after a loved one or relative passes away. Or, perhaps people just don’t want to … [Read more...]