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.

Everyone knows that an estate plan can ensure your heirs receive the right inheritance. But did you know there are other benefits too? Here’s five things a good estate plan can for you.

1. Protect Against Disability – No, your estate plan can’t prevent disability from striking but it can certainly ensure that you and your estate are protected if it happens. Using Powers of Attorney such as an Advanced Health Care Directive and General Durable Power of Attorney can ensure that your medical wishes are followed and that your finances are handled by someone you trust.
2. Provide Incentives to Your Heirs – With the right planning tools, you can do much more than leave your heirs a lump sum estate. Instead, you can create incentives for them to excel and achieve by offering inheritance bonuses for graduating college, getting married or other milestones. You can also set it up so that your heirs’ inheritance matches whatever income they earn each year. If they want a bigger inheritance, they must find a way to earn a better living.
3. Avoid Probate – Yes, with the right tools, your estate plan can help your heirs stay out of probate court. This makes the whole property distribution process much smoother and ensures that the details of your estate remain private.
4. Sponsor A Charity – There are certain types of trusts that allow you to structure assets so that they benefit both your heirs and your favorite charity. Donating this way also provides significant tax breaks to all parties involved.
5. Protect Disabled Dependents – A Special Needs Trust can ensure that your disabled dependent continues to qualify for important government assistance programs while still enjoying the benefits of his or her inheritance.

Of course, that’s not all an estate plan can do, but it’s a good start. To learn more about how a good estate plan can make your life easier, contact our office today.

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

Are your children under the age of eighteen? When you plan your estate, choosing a guardian for your minor children is one of the hardest and most important aspects. Here are four qualities to consider when you pick a guardian.

Responsible

The guardian or guardians you choose should be responsible and over the age of eighteen. When you are choosing among loved ones for the honor of raising your children, it may be easy to let emotions make the decisions for you. Avoid picking a favorite family member if you do not think they will be responsible enough for the job.

Able Bodied

A guardian must be physically able to raise your children. It may not be wise to choose your sister who already has four children of her own, or your uncle who is bed-ridden. Consider how your children will fit into the life of your guardian. When you choose older relatives as guardians, consider their age and health. It would be unfortunate for your children to go through a change to another guardian in the event of the first guardian’s death.

Good Mediator

When you choose a guardian you may have to decide between several family members. This can sometimes cause hurt feelings. During your estate planning you should speak with all family members about your guardian choice. You may also want to leave a letter explaining why you chose a particular person. Guardians must keep your children’s interest first while still maintaining contact with all family members for the benefit of the children.

Parenting Skills

When you choose a guardian, if you have more than one possible choice, you may wish to focus on who would raise your children with a similar parenting philosophy and moral beliefs to your own. If this is not possible, you should focus on who would be the best parent even if they do not share all of the same parenting ideals you do. You can always speak with your guardian choice about your wishes for your children’s care and upbringing.

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.

Many quote the adage that “you have to spend money to make money” but that’s not necessarily true. Unless you really need the items you’re thinking about purchasing, saving your money can be a great way to make money too – especially if you place extra cash in a savings account or long term investment.

Avoid Credit Card Interest

In today’s society, buying is easy. Goods are sold everywhere. Impulse buying has become a common phrase and is one of the major reasons for high credit card debt among Americans. Before you make your next “impulse buy”, consider how much you will be paying for that item if you use a credit card. If your interest is ten percent and you have over $ 1,000 in debt, you will pay one hundred dollars per year on that debt.

When you avoid frivolous spending and credit card debt, you can begin to save money. Create a monthly budget to help you. Your budget should allow for at least ten percent of your earnings to go into a savings account each month.

Earn Savings Account Interest

A savings account is the first step to creating financial security. In case of an emergency, you should save enough money for three months living costs in your savings account. Once your emergency fund is established, it will earn interest until you need it.

Find Investment Opportunities

Savings accounts are a great place to put emergency funds, but additional nest egg savings should be placed elsewhere. If all of your money is in a savings account, inflation may lower the value over time. Look for long term investment options, such as stocks and bonds, to grow your nest egg. Investment earnings can help you pay for a house down payment, college education or your retirement.

To ensure your portfolio can help you meet your goals, you should consult a qualified financial advisor.

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.

Long term care insurance is a very important component of your financial strategy and the reasons to get an LTC policy are very compelling.

The cost of assisted living or nursing home care alone should motivate you to pay the premiums. AARP notes that approximately 60% of people over age 65 will require some kind of long term care during their lifetimes.[1] Furthermore, in a 2008 annual Cost of Care Survey AARP and Genworth Financial found that:

• The national average annual cost of a private room in a nursing home is $76,460 – $209 per day, and 17% higher than it was in 2004.
• A private one-bedroom unit in an assisted living facility averages $36,090 annually – and that is 25% higher than it was in 2004.
• The average annual payments to a non-Medicare certified, state-licensed home health aide are $43,884.[2]

You may have heard that LTC insurance is expensive compared with some other forms of policies. The annual premiums are minimal compared to real-world LTC costs.[3] Asset based LTC insurance policies have also provided a balanced approach of self-insuring a portion of the cost, helping to preserve retirement savings and income.

Contact us to learn more about the risk of long term care expenses pose to the value of your estate and how to properly plan to maximize the long term care insurance benefits.

[1] aarp.org/families/caregiving/caring_help/what_does_long_term_care_cost.html [11/11/08]

[2] aarp.org/states/nj/articles/genworth_releases_2008_cost_of_care_survey_results.html [4/29/08]

[3] aarp.org/research/health/privinsurance/fs7r_ltc.html [6/07]

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

If you’re reading all the debates about the return of estate taxes, then you’ve probably run across the “step-up in basis” phrase.

What is this mysterious step-up? And why do you care?

Actually, the step-up is what will keep your loved ones from paying large capital gains on the increased value of your estate.

Basically, the step-up rule says that assets get a new value when they pass to an heir and this new value is the one that’s used to determine if any capital gains taxes are owed when the property is sold.

Let’s say for example, that you purchased the family home for $50,000 decades ago but now it’s worth $150,000. Without the step-up, your heirs would pay capital gains taxes on the $100,000 profit if they sold the home after your death.

But with the step-up, a new value of $150,000 is given to the home and if your heirs sell it after inheriting the estate, they won’t have to pay capital gains tax on the new value.

To learn more about estate taxes and how they might affect your estate plan, contact our office today.

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.

There’s a growing concern among our aging workforce that there might not be enough money to retire.

After all, the recession hit everyone pretty hard and if you were only saving the minimum to start with, you might now be wondering if retirement is a dream that’s never going to happen.

But before you throw in the towel, consider this:

In the past, experts suggested you would need between 75 to 85 percent of your existing income to live comfortably during retirement. But that’s not necessary true.

75% of $100,000 is $75,000 for example, but if your mortgage and/or other major debts will be paid off, you wouldn’t need that much to cover your expenses. Likewise, if you’ve got kids living at home or putting some through college, you’re probably spending quite a bit more now than you will during retirement.

Yes, it’s better to have more than you need versus not enough but rather than following a generic percentage recommendation, start looking at your unique financial picture.

What do you pay now that you won’t be paying later? Based on an average return, what kind of income can you expect from your investments when you actually make the retirement leap?

You may find that the gap isn’t as big as you had previously thought.

What if you haven’t saved anything yet?

First, know that you’re not alone. A large number of working Americans in their 40s and 50s have yet to stash away any substantial amount of money. Unwise? Yes, but certainly not disastrous. If you start funneling money to retirement plans now, you can still expect to embrace your retirement without struggling to get by.

Experts suggest saving a minimum of 20% of your pre-tax income starting at the age of 50 to ensure you have enough to live comfortably during your retirement.

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