If you have not included an incapacity arrangement in your estate plan you should do so immediately. Every person needs an incapacity plan to care for their financial assets and medical needs in the event of a mental disability or major physical ailment.

Advance Health Care Directive

An Advance Health Care Directive allows you to plan for your medical needs if you become disabled. This document allows you to name the person(s) you wish to make medical decisions for you if you can’t make them for yourself. It also allows you to state your wishes regarding life support and organ donations.

Financial Power of Attorney

If you should become disabled, someone must be available to manage your finances. A financial power of attorney (POA) allows you to name an agent to sign documents on your behalf, use your funds and income to pay bills, manage your personal and retirement accounts, and invest your accounts for extra income. With the help of your attorney, you can tailor your POA to fit your financial needs.

When you create a POA, you can choose between an Immediate and a Springing POA. An Immediate POA allows your financial attorney-in-fact to assist with your assets immediately. With a Springing POA, your attorney- in-fact can only manage your affairs after you become incapacitated.

Revocable Living Trust

A Revocable Living Trust has many benefits including the fact that it can be used for incapacity planning. Every asset that you fund into your Trust can be handled by your successor trustee during your time of disability.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Have you been named as an executor for a loved one’s estate? As an executor your job is to organize and settle the affairs of your family member. Whether you have been named by a Last Will and Testament or by a court of law in the case of an estate without a Will, it is important to understand your duties.

Organize the Estate

The first step is to identify what the estate includes. Try to locate all estate documents. If you have been appointed by the court, you may not have to worry about this step since it may have already been determined that no estate documents exist.

If a Will does exist you should use it to list all beneficiaries. If no Will exists, heirs will be determined by state law. In either case, you will have to locate assets and debts on your own.

Probate the Estate

Once you have a general idea of the estate, you should meet with an attorney to begin probate. Probate is the court-supervised process by which you will settle the decedent’s affairs.

Every estate asset must be appraised for the date of death value. Next, with the help of an attorney, you must contact all known creditors. In case any creditors are unknown, you will place a notice in the local newspaper.

You will use estate funds to pay debts. If funds are not available, you may have to sell property. You will also be responsible for paying all taxes associated with the estate from its assets. You must file the final income tax return for the decedent, as well as the estate tax return if estate and inheritance taxes are applicable. You may wish to contact an accountant for assistance.

When all taxes and debts have been paid, the Court will order you to give the beneficiaries what remains of the estate. If there was no Last Will and Testament, your attorney can help you determine who the heirs at law are based upon the state intestacy laws.

It is very important to make sure all taxes and debts are paid and you receive a Court order before you hand out inheritances. If you do not, you will be financially responsible for unpaid debts and taxes.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

The primary difference between a Revocable and Irrevocable Trust is flexibility. Revocable means you can make changes to your trust. Irrevocable means that once it is created the terms are final and you cannot alter fiduciaries or beneficiaries.

What Revocable Does

A Revocable Living Trust is a common estate planning document that can help property to easily pass from a decedent to his or her beneficiaries. Because a Revocable Living Trust allows you to make changes as you need, you can alter your Trust throughout your life. You can fund new property or assets into it, change your beneficiaries or even name a new successor trustee.

There are three common reasons to use a Trust. First, a well executed and fully funded Trust can help your estate avoid probate. Second, you can use your Living Trust as part of a disability plan. If you should become mentally incapacitated, your successor trustee would step forward and manage your Trust assets for you. Many people also use a Trust for privacy. A Last Will and Testament is a public legal document. After your death, anyone can obtain a record of your holdings. With a Trust, your estate assets and beneficiaries are kept private.

One problem with a Revocable Trust is that you cannot use it for asset protection. The assets within are still considered yours.

What Irrevocable Does

An Irrevocable Trust is one you cannot change after it is created. This type of trust is common for asset protection. Once you transfer items into the Trust, they no longer belong to you and cannot be used to settle a debt or lawsuit. Irrevocable trusts are also a great way to minimize estate and income taxes. Because the assets in such a trust do not belong to you, they will not be included in your estate’s tax liability. A charitable irrevocable trust allows you to donate to a cause of your choice upon your death and receive an income tax deduction for the year that you place funds within the Trust.

When Revocable Becomes Irrevocable

If you have a Revocable Living Trust, it will become Irrevocable upon your death. Your living trust can break apart into several irrevocable lifetime trusts for the benefit of your spouse, children and grandchildren or other beneficiaries.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

You’ve probably heard all the buzz about the benefits of a Living Trust, but you may be wondering how it actually works.

A Living Trust is a separate legal entity that takes ownership of whatever assets you decide to put in it. So, if you transferred your home to the trust for example, then the deed to your home would be amended to read “Smith Family Trust” or something similar.

In addition, your personal belongings, your jewelry, fine art and just about anything else you own individually can go into your trust.

Then when you pass away, the assets are distributed to your heirs according to the terms set out in the trust documents.

And this is where a Living Trust really shines.

Instead of just distributing your assets in bulk, you can get creative and set up incentives for your heirs or structure the trust so that your beneficiaries live off the income from the assets without ever actually touching the assets themselves.

This allows you to create a legacy for future generations and ensure that all your heirs are well-provided for.

To learn more about structuring your own Living Trust, give us call today.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Instead of your spouse or partner being named as the beneficiary of your life insurance policy, you may choose to transfer the policy proceeds into a irrevocable life insurance trust account and name your partner as beneficiary of the trust.

Why would you want to do that?

When properly done, a life insurance trust allows you to designate what is done with the proceeds as well as what happens to the remainder of the trust funds when you pass away. Also, because the trust owns the policy, the policy is not considered part of the estate when you die and therefore, is not taxable as long as the policy transfers to the trust at least three years before your death. The policy will pass outside of your partner’s estate as well.

You can pay the policy premiums by annually gifting money to the trust. You can also increase the amount of the policy by transferring additional money to the trust, if you wish. One caveat to a trust owning your life insurance policy is that you cannot name yourself as the trustee of the trust. In doing so, the policy is counted toward estate assets, subject to estate taxes when you pass away. Another caveat is to carefully structure the cash or assets going into the trust to avoid gift taxes.

If you don’t have a life insurance policy at the outset, you can also create a trust and transfer assets to the trust and instruct the trustee to purchase a life insurance policy. If the trust applies for and takes out the life insurance policy initially, there is no three-year waiting period before the policy is out of your estate.

An estate planning attorney can help you plan your estate using irrevocable life insurance trusts should you desire to use this tool to avoid estate inheritance taxes and give your heirs the full benefits you wish them to receive.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Even though you have your estate plan in place, it could still face legal problems if any part is deemed invalid. What you thought was a perfectly sound estate plan could turn into a probate nightmare for your family. So, how you do make sure your estate plan will work?

Hire an Estate Attorney

Unless you are up-to-date on inheritance, tax and other laws that govern estate preparation, you will have to become an expert overnight to create your own plan. Writing a Last Will and Testament yourself or even purchasing a cookie cutter Will from a website can cause inheritance problems. Such Wills may not take into account every circumstance of your estate and loved ones such as step-children or a live-in partner may be mistakenly disinherited.

Saving money is great as long as it doesn’t cost more money in the end. If you are considering creating an estate plan without the assistance of an attorney, you may create costly probate issues for your family instead. An estate attorney knows the laws and can make sure your estate plan is legally sound.

Properly Signed Documents

If any estate document is not handled correctly a court of law may deem it invalid. This is why you must take care when you sign and date your documents. Your estate attorney can help with this since he or she will know state laws regarding signing, dating and notarizing.

Regular Maintenance

If you do not keep your estate plan well-maintained, your documents and assets may face probate issues. Maintaining your estate plan simply means checking every couple years or less to see if changes need to be made. Changes in your estate may be due if estate laws have changed, you have purchased or sold property, you have new heirs, heirs have passed away, or you have married or divorced.

If you do not maintain your estate plan and you pass away with property, assets or heirs not included in your Last Will and Testament or Revocable Living Trust, your estate could face a protracted probate. And don’t forget, when you create a new Will be sure to get rid of old copies to avoid confusion.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

While contesting a Will isn’t overly complicated, there are some rules you have to follow.

First and foremost, you must have legal standing to challenge the contents of the Will. What this means is that you might have the right to make the challenge and that “right” is very limited.

In general, the only people entitled to challenge a Will are:

a) those who are a natural heir (i.e., spouse, children, etc.); or

b) those who have been named in a previous version of the Will and are now excluded.

Assuming you fall into one of these two groups, you then must have a valid reason for making the challenge. And no, simply saying that you expected more is not sufficient.

Instead, you’ll need to show that the deceased was not of sound mind when the Will was executed or that they were unduly influenced by a third party.

Another valid reason for challenging the will is that it was not executed correctly. This could be because it isn’t signed by the deceased or wasn’t witnessed properly. If the Will was signed but the signature is questionable, you could challenge the document on the basis of fraud.

And, as mentioned earlier, you can also challenge if you were named in a previous version but have now been disinherited. You would of course, need to show that the omission was unintentional in order for your challenge to stand and the Will to be invalidated.

To determine if you have the right to challenge a Will, contact your estate planning attorney.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

While probate is a common occurrence, most people would prefer to avoid that particular experience. Probate can be expensive, time-consuming and emotionally draining. And considering that probate occurs after you’ve lost a loved one, the last thing you want to do is spend time and money in court dissolving your family member’s estate.

Fortunately, a living trust can help you do just that.

With a living trust, all your assets are transferred into the name of the trust rather than being titled to you individually. This is important because when you pass on, any assets titled in your name are subject to probate. But assets in the name of the trust can be passed directly to your beneficiaries without court supervision.

How to Create A Living Trust

Because a trust is a separate legal entity, you’ll need a legal document known as a Declaration of Trust. Your estate planning attorney will help you prepare this important document. There are however, some things you’ll want to have figured out in advance:

• Your Trustee – Typically the person who created the trust (you) chooses to act as their own trustee, so that you have primary control over the assets you put into your trust. But you don’t have to be your own trustee and if you’re not sure, talk it over with your attorney to get a clear understanding of all your options.
• Funding the Trust - Once you’ve created your trust, you’ll then need to fund it so start thinking about what assets you want to use. Your house is a good one for example, but it might be easier to keep your car in your own name. Again, your attorney can give you guidance on which assets work best, but it certainly doesn’t hurt to start thinking about the assets in your estate now.
• Name Your Beneficiaries – Who will inherit after you’re gone? Make a list of the people or organizations that will inherit the assets and property owned by the trust after you die. Keep in mind that this will only cover the property and assets that are held by the trust; anything outside of the trust you would need to cover with a will.
• Name a Successor Trustee – This is the person that will become trustee after you die.

Having this kind of basic information mapped out is the first step to creating your own living trust. If you’d like more information about a living trust, contact our office today.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

If you have been named as trustee of a trust , you may find that the job isn’t quite as easy as you thought it would be, especially if you have multiple beneficiaries and/or difficult heirs.

In fact, it is a common misconception that the biggest task of a trustee is the financial aspect of their role, but in reality the people that the trustee deals with can be just as much of a challenge.

How to Make Your Role as Trustee Easier

One of the most important things you can do in your role is to communicate with the beneficiaries of the trust. Most people don’t have a clue as to how a trust works, or what a trustee does. Due to the fact that a beneficiary may not understand the mechanics of a trust and your role as trustee, they could be uncooperative. Without the cooperation and support of the beneficiaries of the trust, the trustee’s job can be a lot more difficult than it has to be.

There are some steps you can take to ensure that you and the trust’s beneficiaries are on the same page.

The first thing you will want to do is contact the beneficiaries of a trust as early in the process as possible; at this point do everything you can to educate these people as to what your role of trustee entails. Be upfront with the beneficiaries on subjects such as how long it is likely to take to administer the trust, and always answer questions in a courteous manner. It is also important that you not try and hide the trust document or any of the assets from the beneficiaries, as this will create distrust.

Although the law does require that a trustee keep beneficiaries informed on what is happening with the trust, you will want to do at least this much and a lot more. Look at the beneficiaries more like partners, and they will be a lot happier with how you are handling your role.

Keeping beneficiaries informed is vital; anytime that you take an action that will have an effect on the beneficiaries, you will want to let them know. If you do want to take action and you know that it is not something a beneficiary wants to do, it is a good idea to either get written permission from the person prior to taking action, or to go to court and get approval from a judge.

If you are both a trustee and a beneficiary of the trust, you will have to take extra precautions against potential disputes. It is important that you are fair with all beneficiaries and you will not want to take any action with the trust that you might benefit from at another’s expense.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Last week several senators introduced a bill to continue last year’s estate tax provisions for this year and into the future, retroactive to January 1 of this year.

This bill would reinstate last year’s $3,500,000 per person exemption from the tax, and restore the 45% tax rate on amounts over that for estates up to 10 million. The tax rate increases for estates over 10 million, with an additional surtax on estates over 50 million. It would also reinstate the full step up in basis on appreciated assets held by a decedent. Although the different provisions for very large estates, result in a high tax for those decedents, if passed, the bill would be very good news for many estates that would otherwise be taxable next year with a scheduled $1,000,000 exemption and 55% tax on the excess.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.