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Trust and Estate Administration

Thursday, November 21, 2019

Myth: A Will Avoids Probate


Many people believe that once they have created a Will--whether drafted by an experienced attorney or using a do-it-yourself solution or online form--they have avoided probate. Unfortunately, they are wrong.

A Will is a way to designate a person to wind up your affairs once you have died, determine who will get your hard-earned savings and property, and, if necessary, appoint a guardian to care for your minor children. However, it is not self-effectuating. The Will has to be submitted to the probate court to formally determine its validity, appoint the person you have designated, called a Personal Representative, and begin the process of distributing your money and property.
Read more . . .


Thursday, July 11, 2019

State Taxation of Trusts


On June 21, 2019, the US Supreme Court ruled in North Carolina Department of Revenue v. Kaestner 1992 Family Trust that the presence of in-state beneficiaries alone does not permit a state to tax trust income that has not been distributed to the beneficiaries where the beneficiaries have (1) no right to demand the income and (2) no guarantee that they would eventually receive the income from the trust. 

In 1992, Joseph Lee Rice III created a trust for the benefit of his children. The trust was to be governed by New York law (Rice’s home state), with the initial trustee residing in New York and the trust custodians residing in Massachusetts. The original trust provided that the trustee would have “absolute discretion” to distribute the assets to the beneficiaries “in such amounts and proportions” as the trustee might “from time to time” decide.
Read more . . .


Thursday, January 17, 2019

A Checklist for Family of Immediate Tasks After the Death of a loved One (Originally posted May 16, 2014)


With my mother’s recent passing and helping my siblings identify and deal with matters as they came up, I was reminded of the checklist that I posted about 5 years ago.  Because it still has relevancy today, I am reposting it and encouraging all that come across it to share it with as needed.  

One of the services we provide at Scott, Tokerud & McCarty, P.C., is probate/trust administration of decedents’ estates.
Read more . . .


Friday, August 3, 2018

Think Twice About Adding Your Children to Your Bank Account or Other Assets

I see it often in our practice.  When people hear about the cost, delays and potential perils of the probate process, they often just add their children as co-owners on their bank accounts or their residence in order to avoid probate.  However, this should be done, if at all, only after careful consideration of the potential perils of joint ownership and the alternatives available to avoid probate.

I know, most people’s first thought in response to this is, “Why?  My children are good kids, they’d never steal from me.”  That’s probably true and I’m not trying to convince you otherwise.


Read more . . .


Friday, March 16, 2018

Refinancing your principal residence when owned by your revocable living trust

We occasionally get calls from clients who are trying to refinance their house which has been placed in their revocable living trust.  Most often it is because their mortgage lender wants them to supply assurances that, if the living trust owns the house, the trust gives the Trustee the power to mortgage the property and use the house as collateral so that the lender’s interest is secure, i.e., is protected and can be foreclosed in the event of the clients' default on the loan.

Sometimes the lender wants a letter from an attorney certifying certain things are true about the trust--that it is revocable, that is valid under Montana law, and the Trustee has certain powers including the power to borrow.


Read more . . .


Monday, August 21, 2017

The Beneficiary-Controlled Trust


The beneficiary-controlled trust (sometimes call an inheritor’s trust) is a vehicle for an heir to receive - and enjoy - an inheritance without the inheritance being owned outright by the heir and hence subject to claims of his or her creditors.  Thus, it is an asset protection tool.

 How does it work? Generally, an inheritance is bequeathed to a trust for the benefit of an heir, and the heir is the trustee as to all issues except distribution of funds to himself or herself.  That is controlled by a "distribution trustee" whom the heir names (and can remove).  The distribution trustee has the discretion to distribute income and/or principal to the heir.
Read more . . .


Friday, June 23, 2017

New IRS Ruling Extends Deadline to Elect Portability on Behalf of Surviving Spouse

The IRS recently issued Revenue Procedure 2017-34 which grants another round of relief for personal representatives who mistakenly forget to file an estate tax return that elects portability on behalf of the decedent’s surviving spouse. One of the major misconceptions with the portability of the estate tax exemption for surviving spouses is the method of acquisition. Many personal representatives believe the exemption is automatic, while the reality is that it must be requested by filing a federal estate tax return electing portability. The portability election applies to estates of decedents dying after December 31, 2010, if such decedent is survived to by a spouse.


Read more . . .


Friday, June 9, 2017

Standalone IRA Beneficiary Trusts for Inherited IRAs


It is pretty safe to say that almost everyone has heard of an individual retirement account (IRA), but not many people know about an IRA beneficiary trust.  Part of this may be that IRAs were not originally designed to be wealth transfer vehicles for anyone other than a surviving spouse.  However, in 2003, the IRS issued regulations permitting a non-spouse beneficiary who is inheriting an IRA to "stretch out" the taxable Required Minimum Distributions over his or her own lifetime.  This not only applies to traditional IRAs, but also to Roth IRAs and 401(k), 403(b), SEP and SIMPLE plans, which I will refer to herein generally as IRAs.

The ability to stretch out the distributions allows for the compounding of the investments inside the IRA, tax free, over a much longer period of time, thus, substantially increasing the amount of money that is ultimately distributed.


Read more . . .


Friday, November 14, 2014

The importance of keeping your documents in order

When my mom passed away in June, my sisters handled most of the day-to-day issues, and I went to work handling the legal side of her affairs, as you might guess.

Our jobs were not that hard because my mom had a modest estate, and she had spent a lot of time and energy in her later years organizing her affairs.  She had sold and given away most of her personal property items, and she had organized her files well.  We knew what Mom had, and we knew what to do.

We thought.

A few weeks ago, Sharman found a pile of documents and dropped them by the office.  Most of them referred to bills long since paid and accounts already closed, but Jeanne, my crack paralegal, went through them just to be sure.  Lo and behold, the documents contained a reference to life insurance policies that no one knew my mom had.  We contacted the companies and just found that, yes, we kids are the beneficiaries on two policies Mom bought a long time ago.  We've submitted claim forms and should receive benefit checks in the next few weeks.

My mom could have thrown the documents away.  And Sharman could easily just have chucked the pile of documents.  In either case, we undoubtedly never would have learned of the policies.

My mom worked in law offices for more than twenty years and handled many probates.  She was meticulous in her record-keeping and spent a lot of time cleaning up her affairs before she died.  And still we almost missed out on receiving a good part of what she left behind.

If that's what happened in her estate, what does that tell you?  What about you and your family members?  If incapacity or death strikes without warning, how many life insurance policies - or stock certificates or bank account records or other assets - will be lost to your family because no one finds them?  Even if your family does eventually find them, how much extra time and expense - and headache - will it cause your family to locate the asset information if it's not well organized?

There's a pretty clear lesson here, isn't there?

 Keith


Friday, May 16, 2014

A Checklist for Family of Immediate Tasks After the Death of a loved One

One of the services we provide at Scott, Tokerud & McCarty, P.C., is probate/trust administration of decedents’ estates.  We occasionally are called by family members or others involved in the affairs of the deceased and asked what they should do or keep in mind immediately after the decedent’s passing.  By this, I don’t mean the actual probate or trust administration, but, rather, the immediate post-death actions or activities that the family should undertake when a loved one dies.  I thus thought it would be beneficial to post a checklist of items that come to mind.  The list is not all inclusive, but it should serve to cover most situations.

        __ Arrange organ donation as authorized by decedent before death.

        __ Arrange for immediate help as needed with childcare, pet care, plants, care of surviving spouse, if incapacitated, etc.

        __ Notify relatives, friends, employer, landlord, etc.

        __ Prepare decedent’s obituary for newspaper publication.

        __ Find and review decedent’s expressed funeral and burial wishes.

        __ Contact funeral director, arrange for cremation or burial and service.

        __ Order sufficient copies of death certificate (6–10).

        __ Consider the need for securing decedent’s residence and changing locks at residence, and business, if necessary.

        __ Dispose of perishables.

        __ Discard all medications.

        __ Notify post office to change mailing address or to hold mail.

        __ Do not pay decedent’s debts until attorney discusses with family or with Personal Representative.

        __ Collect keys (house, cars, storage, safe deposit box, safe, etc.)

        __ Locate and organize important documents: trust, will, life insurance policies, fire and casualty insurance policies, deeds, stock certificates, bank statements, tax returns, credit card statements, etc.

As always, please feel free to share this with others.

Jon

 


Wednesday, January 29, 2014

How We Approach Estate Planning for Our Clients

At Scott, Tokerud & McCarty we help our clients pass their property to whom they want, when they want and how they want - while minimizing expenses. We work to help our clients maintain control of their lives and pass their non-financial legacy on those they love. Please see our latest video blog below on this topic:



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