Tag: trust

How Could SLATs Be The Best Planning Tool For You?

Do you and your spouse have a Florida estate plan?  Are you wondering if a Spousal Lifetime Access Trust, commonly referred to as a “SLAT,” is an estate planning tool that you should add to your estate plan? Are you aware that SLATs will allow you to remove up to $11.6 million from your estate and place it in an irrevocable trust for your spouse? Your spouse will then be able to use and access these funds during his or her lifetime.  You need to know that one of the primary benefits of a SLAT is that it allows your spouse to use distributions from the irrevocable trust while you are both living while simultaneously avoiding the estate tax and isolating those assets from creditors.

With a SLAT, however, there are a few precautions you should consider taking in order to obtain the estate planning and asset protection benefits of a SLAT. To begin, you should be sure that there is no express or implied agreement that the party gifting the assets in the trust will get those assets back. It should be clear that the assets in the trust will not be returned to the grantor or the trust will not be viewed as “irrevocable.” Next, the SLAT should not allow the funds in the trust to be used to pay the creditors of the grantor. Be mindful that if the trust allows for such payments, it may not qualify as a SLAT and there may be resulting tax consequences.  Lastly, even though the beneficiary of SLATs cannot agree to return the funds to the grantor, the beneficiary can distribute the funds to their children, which will allow the assets to remain in the family if the beneficiary spouse should pass away while the trust remains funded.

We would highly recommend that you see your Florida estate planning attorney to find out if you and your family would benefit from a SLAT. Your Florida estate planning attorney can review your finances and your estate planning goals to help make recommendations regarding the best estate planning vehicles, including SLATs, to preserve your assets for your family and minimize any adverse tax consequences.

Elder and Estate Planning Attorneys, PA, is a law office small enough to provide personal service but large enough to provide service in Jupiter, as well as Palm Beach, Martin, St. Lucie, and Indian River Counties in Florida. Our law firm will guide you through legal challenges involving elder law, estate planning, trusts, veterans benefits, real estate, and more. We encourage you to contact us and schedule a meeting with our attorneys.

Three Reasons Why Trusts Fail

Are you contemplating adding a trust to your Florida estate plan? Trusts are a useful estate planning instrument: To keep an estate out of probate. For tax planning purposes. For long-term care planning by structuring a person’s assets in a way that makes him or her eligible for Medicaid to cover the expense of a nursing home. Unfortunately, though, trusts can also fail. We would like to share with you three reasons why a trust may fail.

1. The trust was never funded. Working with your Florida estate planning attorney and creating a trust is a lot of work. Equally important is signing the trust and making it legal. However, there is one more very important step, the trust must be funded. All of the assets described in the trust must be moved into the trust in order for the trust to be funded. This means that the trust must hold title to all of your assets. This involves changing the deed on your home, the title to cars, boats, RV’s, the ownership of bank accounts and stock certificates intended to be transferred into the trust. Funding a trust can be a critical step in properly establishing a trust, but it is also one that may be overlooked. If the trust is not funded, the trust’s beneficiaries may find that they will receive nothing from the trust.

2. The beneficiaries were never updated. Once you have completed your trust, you do not just place it in a drawer or safety deposit box and forget it. A trust should be reviewed and if necessary updated whenever there is a significant life change, such as the birth or death of a loved one, a divorce or a remarriage, or even the death of your trustor. All of these life events can impact who inherits from your estate.

3. The trust was never updated to reflect current law. You need to be aware that the laws on trust and estates can change. In fact, your trust may have been drafted under one set of laws, but more importantly, there may be new or updated laws at the time of your passing, which have the potential to invalidate portions of your trust. Your best solution to this problem is to work with your Florida estate planning attorney. She can provide periodic bulletins regarding significant changes in the law, which can alert you to the need to have your trust revised. It is vital that everyone have their trust reviewed periodically by their estate planning attorney to assure that it is supported by current law.

With good planning, trusts can be one of the most useful estate planning instruments. Elder and Estate Planning Attorneys, PA, is a law office small enough to provide personal service but large enough to provide service in Jupiter, as well as Palm Beach, Martin, St. Lucie, and Indian River Counties in Florida. Our law firm will guide you through legal challenges involving elder law, estate planning, trusts, veterans benefits, real estate, and more. We encourage you to contact us and schedule a meeting with our attorneys.

Establishing a Third-Party Special Needs Trust for a Disabled Grandchild

Have you considered creating a special needs trust that can be used to provide financially for a grandchild with special needs without jeopardizing the receipt or continued receipt of government benefits? There are different types of special needs trusts, each better suited to some situations than others. A qualified special needs estate planning attorney can guide you through the options. If you are a grandparent with a special needs grandchild, a third-party special needs trust may be the best choice.

A first-party trust and can be used when the beneficiary of the special needs trust is the person whose assets or property are going to fund the trust. This type is often utilized by a disabled individual in order to allow them to qualify for medical assistance from the state. As the grandparent of the special needs individual, this is probably not the right choice for you. Another type of special needs trust is a third-party trust. A third-party special needs trust can be used when you have decided to fund a trust for another special needs beneficiary, in this case your grandchild. A third-party trust is often also called a supplemental needs trust. This is because the trust is intended for you to provide funds to supplement the needs of your grandchild, rather than provide for all of their expenses or replace any assistance they might currently receive. 

If you decide to set up a third-party special needs trust, the trustee can be you, your spouse, your child (the parent of your grandchild) or another relative or friend. The trustee will be responsible for informing your local authority that the trust exists if your grandchild applies for any type of medical assistance, and the appropriate agency will decide whether it should count when determining your grandchild’s eligibility for services. The existence of the trust should not impact any responsibility of your grandchild’s school district to provide them with services, but it can be important to talk to a qualified attorney to understand the specifics. The main thing to keep in mind may be that, if you are considering leaving money to your grandchild with special needs, creating a third-party special needs trust will likely allow them to use the money you intend to leave them without jeopardizing other assistance they currently receive.

Do you have questions? Please contact our law practice to learn more. We are here for you. Elder and Estate Planning Attorneys PA is a law office small enough to provide personal service but large enough to provide service in Palm Beach, Martin, St. Lucie and Indian River Counties.

What are the Different Types of Trusts to Use in Estate Planning?

Trusts are an estate planning tool created for the management of assets, both during your life and after your death. Are there different types of trusts to use in estate planning? Yes, there are several types. They can, however, be divided into a couple of categories, which may make them much easier to understand. 

First of all, trusts can be either living or testamentary. Living trusts, also known as inter vivos trusts, are created while the trustor is still living. There are also testamentary trusts, which are created by a trustor after his or her death. 

Secondly, trusts are either revocable or irrevocable. In simplest terms, this speaks to whether or not they can be changed or revoked after they are created. There can be important legal implications of choosing between revocable or irrevocable. 

A revocable trust is created by a trustor, who also remains as the beneficiary until his or her passing, and then passes onto the successor trustee and beneficiaries. The easiest way to envision a revocable trust may be one created by a married couple, who remain as both co-trustors and co-beneficiaries until their passing and then, an adult child becomes the successor trustee and their other children, and possibly grandchildren, become the successor beneficiaries. A revocable trust can be revoked or changed at any time prior to the original trustor’s death. Accordingly, there are no tax benefits. Essentially, the revocable trust can function as a means of distributing assets to beneficiaries while avoiding the timely and costly probate process. 

As the name implies, once an irrevocable trust is created it cannot be changed, except under rather limited circumstances. Once the assets are transferred to the trust, they are no longer considered to be the property of the trustor, but rather, are the property of the trust. The benefits include limiting or eliminating both income and estate tax and usually the trust property cannot be reached by the trustor’s creditors. Another key draw of the irrevocable trust may be because the assets of the trust are no longer the property of the trustor, they are not considered, when determining the trustor’s eligibility for government programs, such as Medicaid, which can make them an integral tool in long-term care planning. Along the same lines, a special needs trust, which is most typically created to provide for an adult disabled child following the passing of their parents is most usually irrevocable, assuring the disabled child remains eligible for government programs. 

Now that you have an understanding of the fundamentals of trusts, it is a great time to meet with an estate planning attorney to discuss how best to meet your estate planning goals. Do you have questions? Please contact our law practice to learn more. We are here for you. Elder and Estate Planning Attorneys PA is a law office small enough to provide personal service but large enough to provide service in Palm Beach, Martin, St. Lucie and Indian River Counties.

Why You Need An Estate Plan

People try to stay healthy so they can live longer. But since no one lives forever, it’s important to make arrangements for the inevitable. To determine who gets your assets and how they receive them after your death and even what happens to you if you are unable to speak for yourself, you need an estate plan. But what does an estate plan cover and how do you make one? There are some important estate planning issues to consider when you decide what you want. Anne Desormier-Cartwright of Elder and Estate Planning Attorneys PA offers some insight. “Make a will, consider a trust, “establish healthcare directives, “make a financial power of attorney, “protect your children’s property, file beneficiary forms, “prepare for funeral and related expenses, “and make your final arrangements.” You should also plan ahead for your business and store your paperwork so your attorney and executor will have access to these documents. Desormier-Cartwright continues that this is a partial list and the advice of an experienced estate planning attorney will be the guidance you need to have a thorough understanding of a comprehensive estate plan. Elder and Estate Planning Attorneys PA is a law office small enough to provide personal service, but large enough to handle all of your estate and planning needs.

Updating Your Revocable Trust: How Many “Tweaks” Are Too Many?

If your life or the law has changed since you signed your trust, it needs to be updated. Updates can be made by way of an amendment – or – a complete restatement. An amendment updates a specific part of the trust; whereas, a restatement, updates the entire trust. You might think that an amendment would cost less than a restatement, but that’s not necessarily true. Let’s chat about which is best for you.

Amendments vs. Restatements: Which Is Better?

Imagine a recipe card you’ve used for years. If one or two provisions have been crossed out and replaced, the card may still be readable. However, if many provisions have been altered, the recipe is likely confusing. If your loved ones can’t read your instructions and determine whether to add a cup of flour or a cup of sugar, your recipe won’t work. You’ve got a 50/50 chance for a great dish – or a complete disaster.

The same can be said about revocable trust. Making one or two amendments is generally acceptable, but when revisions are numerous or comprehensive, your instructions may become confusing and you may be better served with a restatement.

Although amendments are generally used to make smaller changes and restatements are used for larger ones, there’s no bright line rule when it comes to amending or restating a revocable trust. A general guideline to follow is that anytime you’re making more than two changes, restatements are likely better as they:

  • Foster ease of understanding and administration
  • Tend to avoid ambiguity
  • Reduce the amount of paperwork to retain and provide to financial institutions / parties
  • Decrease the risk of misplacement
  • Prevent beneficiaries from discovering prior terms
  • Provide an opportunity to provide other relevant updates, such as changes in the law

In many cases, a restatement may actually be more cost effective than amendments. This is especially true today as computer software allows estate planning attorneys to create and retain documents easily and efficiently. Fortunately, today, you pay for legal counseling, not typing.

Have Questions About Updating Your Trust? We Can Provide Answers

Before deciding whether to amend or restate, it’s important to determine whether previous changes have inadvertently altered your intent or might adversely affect how the trust is administered. We’ll help make your instructions clear.

Have questions? If you do, that’s normal. We can provide you with answers. Whatever your circumstances, rest assured that we can help you to determine the best way to update your trust. Call us today and we’ll help make your instructions are up-to-date and crystal clear.

The content of this article is general and should not be relied upon without review of your specific circumstances by competent legal counsel. Reliance on the information herein is at your own risk, as it expresses no opinion by the firm on your specific circumstances or legal needs. An attorney client relationship is not created through the information provided herein.