Why You Might Want to Create a Revocable Trust

In terms of avoiding probate, it is true that there are other methods you might consider, such as assigning assets to designated beneficiaries, or a simply establishing joint ownership. 

However, the advantage of a revocable trust for probate avoidance is that, when it is established and properly funded, it ensures a consistent estate plan. 

Too often, when people rely on designated beneficiaries and joint ownership, the result is a plan that is skewed unintentionally toward one or another beneficiary. The reason for this is that if you have multiple beneficiary designations, and you change one but forgot to change the others, you may create a different distribution than the one you had in mind. By contrast, with a revocable trust, the change can be made once (by means of an amendment to the trust) and this will affect all assets.

Other reasons for creating a revocable trust include:

• Minimizing estate taxes
• Keeping assets available for children until they reach adulthood 

"Pour Over" Wills?

Are you familiar with "Pour Over" wills?

If so, then you know that a “pour over” will is used in conjunction with a revocable living trust. This document is designed to “pour” anything of yours that was not placed into your revocable living trust during your lifetime into it after your death. You might think of it as a “safety net.”

Chances are, you’ll never need a "pour over" will, but if an unexpected need arises, it’s good to have.

Welcome Associate Attorney Tom Harlan!

We are happy to announce that Thomas R. Harlan has joined the firm as an Associate Attorney.

A lifelong resident of Manchester, Tom was Valedictorian of Central High School’s Class of 1988.  He went on to The University of New Hampshire, where he graduated summa cum laude in 1992 with a Bachelor of Arts in History.  

During his undergraduate career, Tom was inducted into the Phi Beta Kappa National Honor Society during his junior year, and subsequently obtained his Juris Doctor degree from U.N.H. Law (formerly Franklin Pierce Law Center) in 1997.

Tom has been a member of the New Hampshire Bar since 1997, and focuses his practice on estate planning.

To Fund or Not to Fund? (April Fools!)

Instead of telling you how to avoid probate, in honor of April Fools Day, we decided to provide you with a list of how to guarantee that your assets will go through the probate process when you pass away. 

• Own everything in your name only
• Fail to name beneficiaries on all of your accounts, no transfer on death designations either
• Don’t own anything jointly, and if you do own real estate jointly, have it owned as tenants in common (note that only sometimes does owning real estate as tenants in common make sense)
• Create a trust, but don’t put anything in it. We lawyers call it “the funding of your trust.” If you don’t put anything in your trust, there is nothing for your successor Trustee to distribute and then the assets go through probate. Your estate planning attorney should assist you with the funding of your trust.

Why So Many People Update Their Estate Plans Every Five Years

A common question from many of our clients involves identifying the right timeframe for updating an estate plan.
 
Generally speaking, there are three reasons whey plans should be updated on an approximate five-year cycle:

1. Changes in law, including tax laws
2. Changes in family situation
3. Changes in financial position

In some cases updates should be made more frequently, such as when changes in family situation occur including births, marriages, deaths, and so on. But generally speaking a five-year updating cycle is a good target.

3 Ways to Avoid Probate

There are a number of different ways of holding assets that will avoid probate.

The simplest is probably just joint ownership, such as a piece of real estate held as joint tenants or a bank account held jointly. This type of assets will pass automatically to the other joint owner when the first owner dies – but keep in mind, there will still be a probate at the second death.

Another way to avoid probate is by assets which have 'designated beneficiaries', such as an insurance policy or a retirement plan (such as an IRA). These assets will pass to those beneficiaries when the owner of the asset dies.

Still another way to avoid probate is to hold assets in a revocable trust.

3 Important Estate Planning Questions

When meeting with families to discuss their estate plan, there are certain questions that many had not thought about or that they didn't consider at all. Although the thoughts of the following questions may be a bit unsettling, thinking about them can assist you with the creation of your estate plan:

• Who do you want to be the guardian over your minor children if both parents should die?
• If you have children from a prior marriage, and if your spouse remarries, can he or she change your estate plan, what happens to the inheritance for your kids?
• If your child has a problem with drugs, what can you do to protect his or her share of the inheritance?

Estate Tax News!

The IRS has announced that the estate tax exclusion amount for the estate of those passing away in 2015 will be $5.43 million compared to $5.34 million in 2014. The lifetime tax exclusion also rises to $5.43 million, but the annual gift tax exclusion remains at $14,000.00.   Remember, this only applies to estate tax. There are no exclusions for gifts made within 5 years under the Medicaid rules.

Caregiver Thoughts

Did you know that according to the Kaiser Health News that the number of Americans with Alzheimer's will almost triple by 2050?   As baby boomers enter their "golden years," the number of people afflicted with the disease is expected to reach millions more than previously anticipated — 13.8 million by 2050.                                                  

This is not encouraging news, but knowing this does give people the opportunity to take proactive steps with respect to their estate plan now.

Read full article.

Two More Good Reasons to Plan Your Estate

As noted in our previous post, people often ask about why it is important to have an estate plan. Here are two more good reasons:

• Allows you to protect yourself and your loved ones in the event you become disabled. Without powers of attorney for financial matters and health care, if you become disabled, your loved ones will be dealing with the courts, which is costly, time consuming and stressful.
  
• Save your heirs taxes, time in settling your affairs, surety insurance premiums and legal and accounting costs. Did you know that the tax rate for accumulation trusts has increased significantly under recent changes to our tax laws and particularly under Obamacare? It is important that if you have a trust that you have it reviewed to ensure that the income is distributed, not accumulated.

Avoiding Probate...

There are a number of different ways of holding assets that will avoid probate. 

The simplest is probably just joint ownership, such as a piece of real estate held as joint tenants or a bank account held jointly. This type of assets will pass automatically to the other joint owner when the first owner dies – but keep in mind, there will still be a probate at the second death. 

Another way to avoid probate is by assets which have designated beneficiaries, such as an insurance policy or a retirement plan (such as an IRA). These assets will pass to those beneficiaries when the owner of the asset dies.

Still another way to avoid probate is to hold assets in a revocable trust.

Do I need to do estate planning with an attorney?

Most people will benefit from a properly drafted estate plan. Even if a person has modest assets, the other documents created in the estate planning process, such as the durable power of attorney for financial matters, and the durable power of attorney for health care, are of great benefit in assisting a person's family in administering his or her affairs should he or she become ill or incapacitated. Beyond that, a will, or in many cases, a trust, is very helpful in creating an orderly way for assets to pass when someone dies.

As far as using an attorney is concerned, while it is true that many of the documents that an estate planning attorney will use can be found in very simple form in a bookstore or online, these documents, when used by a non-lawyer, will not be able to encompass the complexities of particular individual situations, and may contain \"boiler plate\" language that is not at all what the person intended. In addition, these forms may not even be valid in the state where the person using them resides.

What is Probate?

Some time ago, one of our posts referenced the reality that estate planning is important for people of "all ages," not just for those in there sixties.

But taking a more general view, people often ask, "What is probate, anyway?"

Very simply, probate is the process by which a person's assets change hands at their death. If a person dies and his or her will says that all assets are to go to the children, the children cannot take possession of those assets until the will and other papers have been filed with the probate court, and the probate court has given its approval.

The whole process takes at least six months, and often more.

Gifting Considerations

Gifting can have serious consequences, in the event a person needs nursing home care and doesn't have enough funds to pay for his/her care for 5 years.

As we discussed in a previous post, there is a five (5) year disqualification period for Medicaid purposes for any improper transfer or gift. The question is what constitutes an improper transfer?

• Giving away assets for less than FMV unless such transfer is exempt under the rules; paying for your grandchild's education, your daughter's new car, and/or giving each of your children $14,000.00 for Christmas every year are all improper transfers
   
• Adding a child or another third party as a partial owner/owner of your property
   
• Selling assets for less than FMV; i.e., my car was worth $10,000.00, but I gave it to my grandson for $2,000.00
   
• Purchasing an annuity that doesn't comply with the Medicaid rules
   
• Paying a family member for services without a written contract
   
• Disclaiming assets from an inheritance

Unfortunately, the Medicaid system's holiday spirit can be more like Ebenezer Scrooge's. This being the case, if you are contemplating any "improper transfers" and there is any possibility that you or your spouse could need nursing home assistance down the road, it is important to contact your elder law attorney prior to doing so.

Caregiver Series...

As we age, for planning purposes, people often ask about the questions they should be asking themselves and their loved ones. Here are some questions for you to think about, which might help you identify goals and what is important to you.   

• Do I want to leave an inheritance for my children?
• Do I want to make sure my spouse is taken care of?
• Do I want to stay in my own home?
• If I need help making decisions relating to my health care or finances, do I have the legal documents in place without the need for a guardianship?
• If I have a disabled child, do I have the planning in place to ensure he/she is taken care of after I am gone?
• Have I communicated my wishes to my loved ones regarding end of life decisions?

A Fundamental of Estate Planning

A fundamental of estate planning has to do with the portability of the estate tax exemption. This means that if the first spouse dies and doesn't use all of his or her federal exemption for estate taxes that the surviving spouse can add the unused estate tax exemption of the deceased spouse to their own exemption, allowing spouses together to transfer up to $10 million tax free.

However, it is important to note that portability is not automatic. To get it, the executor of the first spouse who died must file an estate tax return, even if no estate taxes are due. The safest course for most people is to review their situation with an attorney to make sure portability options are maximized.

Avoiding Probate Part 2: Revocable Trusts

As noted in our February 13 post, there are certain methods that can help you avoid probate. An additional method is to create a revocable trust.


One advantage of a revocable trust for probate avoidance is that, when it is established and properly funded, it ensures a consistent estate plan. Too often, when people rely on designated beneficiaries and joint ownership, the result is a plan that is skewed unintentionally toward one or another beneficiary. The reason for this is that if you have multiple beneficiary designations, and you change one but forgot to change the others, you may create a different distribution than the one you had in mind. 


By contrast, with a revocable trust, the change can be made once (by means of an amendment to the trust) and this will affect all assets.

Live Like You're Going to Die...

We we often meet with families who are experiencing significant stress typically originating from disability or the death of a loved-one. 

This being the case, in the course of reading online the Huffington Post, there are was an article by Mike Robbins that captivated my attention entitled, "Live Like You're Going to Die (Because You Are)."

The author's inspiration for contemplating death was Steve Jobs and in the article, he provides us with some things that we can think about and focus on and do on a regular basis that will allow us to live like we're going to die, in a positive way. 

Read the full article...

Myths About Wills & Trusts...

There are a number of things that people often assume about wills and trusts, and sometimes these assumptions can cause problems. With this in mind, we'll begin a short series of listing some of the more common myths associated with wills and trusts.


For a start, many people think if they die without a will, everything will go to their spouse...

Well, this is not necessarily true. If you don't have a will, your estate is distributed according to the intestacy statute and in some cases, it could be divided between your spouse and your children. This issue is especially relevant if you have children from a previous marriage.

Another Frequently Asked Question

Another frequently asked question is, "Do I need to do estate planning with an attorney?"

Most people will benefit from a properly drafted estate plan. Even if a person has modest assets, the other documents created in the estate planning process, such as the durable power of attorney for financial matters and the durable power of attorney for health care, are of great benefit in assisting a person's family in administering his or her affairs should he or she become ill or incapacitated. Beyond that, a will, or in many cases, a trust, is very helpful in creating an orderly way for assets to pass when someone dies.

As far as using an attorney is concerned, while it is true that many of the documents that an estate planning attorney will use can be found in very simple form in a bookstore or online, these documents, when used by a non-lawyer, might not be able to encompass the complexities of particular individual situations. Read more...