When it comes to estate planning there are two major vehicles for the distribution of property: A will and a trust. Both are very useful tools and can accomplish specific goals—but how do you know which one is best for your family? Which document you will need depends on a number of factors, some of which may seem completely irrelevant at first: the size of your estate, your goals for that estate, the age of your children, your marital status, your retirement account, and many, many more. But the first step to understanding which tool may be right for you is to understand what each document does.

A Will: A will is a formal declaration of your wishes. It is a document you create to declare the extent of your privately held property (it does not cover jointly owned property) and what your wishes are for the distribution of that property. You name an executor to carry out your wishes, and you can even include a nomination of guardian for young children in your will. A will does not go into effect until after you die; before then it is simply a piece of paper containing your private wishes. However, once you have passed away your will no longer remains private, it now becomes a matter of public record, available to anybody who would like to view it, and overseen by the court in a sometimes lengthy and expensive process called probate.

A Trust: A trust is a far more extensive tool than a will. In fact, there are many different kinds of trusts, each of which may be used for specific situations. Most trusts created for estate planning purposes are revocable living trusts (or RLTs.) An RLT is a document created not simply to distribute your property, but to own your property on your behalf, to be invested and spent for your benefit or the benefit of your named beneficiaries. As such, a trust takes effect as soon as you sign it and your property is protected by and subjected to the trust parameters as soon as you place them in the name of your trust. There is a lot of flexibility available with a trust, and yours can be created to fit your unique situation. Most RLTs name the trust creators as the initial trustees, nominating individuals or banks to take over as trustee when the creator becomes incapacitated or passes away. The benefit of a trust is that when the creator passes away, property is not merely distributed and that’s the end of it; the creator can instruct the trustee to distribute the money slowly and in any number of ways, even to the extent of creating new trusts for each beneficiary. Trusts can last for generations, as evidenced by the enduring Kennedy trusts.

Wills and trusts are necessary tools in estate planning, each one working in unique situations. Your attorney will be able to tell you which one is best for your family.

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Creating a will or trust, healthcare documents, powers of attorney, etc., can sometimes seem overwhelmingly sad and serious. Well, the act of protecting your loved ones is very serious, but it doesn’t have to be sad. In fact, planning your estate can sometimes be downright enjoyable! Here are 5 ways you can enjoy planning your estate:

1. Let the process of choosing and informing your fiduciaries (the people you will trust to be your executor, your guardians, your agents) forge stronger bonds with the people you love and trust the most. It can be the perfect excuse to spend more time with the friends and family you will be naming in your documents.
2. Make it a time to go crazy with your dreams for the future: Your own retirement, goals for your children, and plans for your grandchildren. Have fun imagining the wonderful old-age you want—and then make it happen.
3. Take the opportunity to learn more about your past—and record that past for your children and grandchildren. Talk to your parents and grandparents about their history and experience; then write it down—along with your own memoirs—and include it with your EP docs for your children to find.
4. As long as you’re gathering important financial information and documents, keep the momentum going and use the time to organize your important files and information. Not only will this help you with your planning, it will make life easier for you every time tax season rolls around, and it will save your family and executor a lot of headache and heartache as well.
5. The biggest reason to enjoy planning your estate is the simplest—it has to be done and it’s the right thing to do. When your estate plan is signed and complete it will be a weight off your shoulders because you will know you have done what is necessary to protect yourself, your family, and the people you love.

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Do feel like there’s more to your children’s inheritance than money? Does your will or trust seem good but… not quite enough?

You’re right. A will and a trust are essential documents to have—especially if you have minor children—but there’s more to protecting your children than those documents. With those documents (plus a nomination of guardian, of course) you’ve provided for your children financially, but what about emotionally? After all, you’ve built a full life for your family and children, one in which they are comfortable and happy. Preserving (as much as possible) the comfort and stability of that life is at least as important as preserving your financial estate.

One of the best ways to do this is with a document called a memorandum of intent. A memorandum of intent is a letter that you write to the guardians of your children. This is a document that details the crucial minutia of your daily life. In it you can express the things that might be considered too small, or the things that change to frequently, to include in your trust—but are essential to the daily fabric of your life:

• After-school activities
• Names and phone numbers of your children’s “best friends”
• Your preferences for religious upbringing
• Unique holidays and traditions celebrated by your family
• Pediatrician name and phone number (or other health-care providers)
• Your discipline style and parenting resources you find helpful
• Your children’s favorite foods, favorite toys, comfort objects

These things may all seem small right now, but it is these comfortable people, places and activities that will help your children through a difficult transition should tragedy strike. You can’t be sure that you will always be there to guide your children into adulthood, but you can be sure they will always know your hopes and wishes for them.

(*A memorandum of intent is not necessarily just for parents of young children. Memorandums can be especially helpful if you have a special needs child or are the caretaker of an elderly parent. Some people have even chosen to leave memorandums of intent along with a pet trust to the caretakers of their pets.)

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We frequently urge you here on our blog to create the documents necessary to protect yourself in case of emergency, and to ensure that your family and loved ones know your wishes for health care if you are ever unable to make those decisions yourself. But a recent article on MSNBC reminds us that creating the documents isn’t always enough.

The article by Susan Brink details the final days of Bunny Olenick, 87-year-old mother and grandmother, whose massive stroke in December of 2008 threw her family into a state of confusion… in spite of the fact that she had done all the right things.

“Olenick had done all she could to give her family instructions about her death. She had spoken to her sons about her wishes, filled out an advance directive, a living will, and had named her sons as health care proxies — all legally accepted documents and procedures designed to insure that a person’s end-of-life wishes are spelled out and honored. Yet even they weren’t prepared for the many difficult questions they faced.”

The questions they faced were a surprising mixture of technical and metaphysical: Did “life-support” include temporary nasogastric tubes for nutrition?—How exactly does one define “Quality of Life?”—Was a short-term oxygen mask okay, even though a respirator was against her wishes?—And Bunny’s own heart-breaking question upon waking up in a hospital bed, “Why am I still here?”

Bunny’s story illustrates for all of us the importance not only of creating the appropriate legal documents, but also creating the time and space to talk to our loved ones about these difficult situations. Our firm can help you to create an estate plan that will protect your loved ones and guide your agents in your wishes… but the documents are only a small part of the process. Talk to your family about the process of creating your estate plan: the how and why of your important decisions. Knowing why you made the choices you did will help your family accept your decisions and follow your wishes when the difficult metaphysical questions come up.

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Whether or not we do it regularly, all of us know how to plan ahead: We plan for travel and vacation, we plan weddings, and we plan for natural disasters, for retirement, or what to make for dinner tomorrow night. Why is it, then, that so few of us will create a plan to help our families and loved ones when we die?

Part of the reason may certainly be fear and discomfort. Nobody likes to think about their own death, let alone talk about it with others; but neglecting to have this conversation now, while you are still alive, means that you are leaving the conversation for your loved ones to have later, when they are hurt and grieving. It also means that you are unfairly asking them to guess at what your wishes may have been, and make difficult decisions that should have yours to make.

This article by Michael O’Mara lists 10 things to for your family before you die. 10 things may seem like a tall order, especially when the subject is “the great hereafter”; but it seems a whole lot easier when you consider that 7 of the things listed are generally addressed as part of your estate planning with our firm—and we can help you with the other 3 things if you so desire.

You wouldn’t leave it for your children to pack your suitcase after you’ve left on vacation—don’t leave it for them to make your difficult decisions after you’ve passed away. Call our office to help you with your estate planning today.

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Would you ever turn down an inheritance?

Your first reaction might be “Of course not!” But don’t speak too soon. Most estate plans are created at least in part to protect heirs (generally spouses and children) from the sometimes devastating blow of estate taxes; but with the estate tax in a confusing state of flux this year some of these plans won’t work as their creators intended—and heirs may end up looking for a way to protect themselves against the unintended consequences of well-intentioned estate plans.

This article in the New York Times explains what it means if you disclaim (or turn down) an inheritance, and when you may want to employ this tactic.

“Historically, lawyers have recommended disclaimers to repair estate planning oversights that bring negative tax consequences — as when parents left money to already affluent adult children. In such a case, the children could disclaim, so the inheritance would go their own children instead, rather than facing the possibility that this money might be taxed in their own estates.”

The article goes on to explain why some people might consider using this strategy this year, when—due to the expiration of the estate tax—“a formula clause could wind up allocating all the money to one [heir] or the other, rather than dividing it between the two.”

Although this is an interesting solution to be considered in some cases, there are no easy answers to the question of what to do when you are the beneficiary of an estate that has taken an unexpected turn. If you have any questions whatsoever about an inheritance—or about your own estate plan—call your estate planning attorney for help.

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It’s that time of year when many high school seniors are starting to prepare for graduation and eventually to head off to college; these seniors are close to turning—or in some cases have already turned—eighteen. It’s almost time to spread their wings, leave the nest, and be on their own…

… Except that most 18 year old college freshmen aren’t actually ready to be on their own. They still rely on their parents for financial support, emotional support, credit card payments, physical transportation… even clean laundry! And just about all of them still rely on their parents’ medical insurance when they need health care. You would think, then, that you as parents would be able to make medical and financial decisions for these fresh 18 year olds when they need help… except you can’t.

Once your child is 18 you as a parent are no longer their legal guardian. No longer will you be able to easily call the shots in the hospital or doctor’s office. You may pay the credit card bill, but you may not always get a representative to talk to you if there is a problem with that credit card. Likewise you may not make decisions regarding their bank account, or have legal dealings on their behalf with their landlord. Not unless your child gives you permission, that is—written permission in the form of a durable power of attorney and/or a healthcare directive.

By naming you as his agent in a durable power of attorney and/or a healthcare directive, your brand new 18 year old is giving you the power to keep doing what you’ve been doing all along… be his loving parent and help with the tough decisions; or—heaven forbid—step in to take charge in case of an emergency.

Durable powers of attorney and health care directives are documents that can be easily executed by our office or your own trusted attorney. Creating one of these documents for the first time is a good opportunity to discuss responsibility with your child, and encourage him or her to begin thinking of these decisions that you have helped them make all these years as their own. We know, however, that this isn’t always an easy subject to discuss with your young adult. If your child is resistant to discussing this with you, perhaps he or she will be willing to discuss it with your family estate planning attorney instead. This is an important subject, not only for you as a parent, but also for your young adult’s safety and well being.

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The creation of a trust and estate plan includes spending a certain amount of time choosing the people who will be your fiduciaries—the people who will carry out your wishes. One of the most important fiduciaries is your trustee, who is involved in just about every aspect of the administration of your trust. Most people choose someone close to them to serve as trustee: a best friend, son or daughter, brother or sister. Choosing someone who knows you and your family to serve in this role can be beneficial in many ways, but if that person doesn’t have a financial or legal background the responsibilities can be overwhelming!

If you want to give your trustee a head start (or if you’ve been nominated as a trustee and need a little help yourself) this article from the Elder Law Answers website shares “9 Do’s and 1 Don’t” of being a trustee. These suggestions will help a potential or new trustee better understand their responsibilities and the scope of the job to come. Advice such as #1, “Do read the trust document”; or #3, “Do keep the best interests of the beneficiaries in mind at all times” may seem obvious now, but it’s not always so clear when you’re beset by insistent and emotional relatives. The more technical tips such as #2, “Do create a checking account for the trust”; and #9, “Do file income tax returns for the trust” are invaluable starter-steps for someone who has never done this before.

But the most important tip to remember is the one don’t: #10, “Don’t fly solo. Get professional advice to make sure you are correctly fulfilling your role.” If you or the people you’ve chosen as your trustee are ever in doubt, please don’t hesitate to call our office for help.

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A month and a half into 2010 and Congress’ failure to stop the lapse in estate tax is still making waves. These two trusted news sources explain why having “no estate tax” this year should worry you.

One of the first reasons you should be worried, as revealed by this article in the Wall Street Journal, is that a larger base of estates will actually end up paying more this year rather than less; “Under last year’s law, estates up to $3.5 million, or $7 million for married couples, were exempt from federal tax. This year that law has been replaced by a fiendishly complex levy raising taxes on the assets of those with little as $1.3 million. It will affect the heirs of at least 50,000 U.S. taxpayers who die this year, whereas the old law affected only about 15,000 estates a year.”

Another main cause of worry, explains the New York Times, is the possible reinstatement of the estate tax by congress, effective retroactively; “The general view is that Congress wants to, and should, re-enact the estate tax retroactive to the beginning of this year,” [says tax specialist Ian Shane] “In January, February or March that’s easy, but as the year goes on it becomes more difficult.”

Of course the biggest worry estate planners have is the effect this year-long lapse will have on existing plans. Couples who already have an existing estate plan are advised to get their documents reviewed—and possibly revised—to prevent “standard clauses” from having unanticipated effects. As Joanne Johnson, head of the American wealth advisory service of J. P. Morgan explained to the NY Times, “It’s common to find language like ‘I hereby fund this trust to the maximum amount I can shelter from federal estate tax.’ The rest can then pass tax-free to the spouse. Such wording is risky as long as the estate tax is off the books… because there is no maximum.” What ends up happening is that everything goes into the trust for the kids, leaving the spouse with nothing.

What is the lesson here? The lapse in the estate tax may not be the boon it first appears to be. Talk with your estate planning attorney to find out how the new laws may affect your family.

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As members of a melting-pot nation, Americans place a high value on family stories and history. We love to know when and why our ancestors came to this country from “the home land”; but we also enjoy the simple stories about how mom and dad met, or how grandpa served in the military. These stories help us define who we are and where we came from—they give us a sense of belonging.

But the sad fact is that most of us don’t think about asking our parents or grandparents about their stories and histories until it’s too late. All too often it’s after grandma passes away and you’re going through her belongings that you find old books, photos or letters and wish you could ask about them.

This is part of the reason why writing memoirs, or a family history, has become so popular in recent years. Although the thought of “writing your memoirs” may seem daunting, it doesn’t have to be difficult. In fact, it has become so popular that there are quite a few books and tools out there to help guide you through either writing your own history or interviewing older relatives to record theirs.

Nothing seems more natural than including your memoirs as part of your estate plan. When you create an Estate Plan you plan to pass on your estate (property, assets, and wealth) to your loved ones; but that is only part of what you’ll want to pass along. An Estate Plan can also include your history and experience as part of that wonderful inheritance. Our firm can help take care of your assets, but only you can preserve the wisdom and experience that makes your history so unique. Don’t wait until it’s too late.

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