angry mother and daughter

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As an Estate Planning Attorney, I’ve seen more than my fair share of familial challenges.  I’ve had clients dealing with everything from chronic illness and sudden death to troubled children, estranged spouses and greedy siblings. I can’t count how many times a frustrated parent, sibling or spouse has plopped in a chair in my office, demanding that we disinherit someone out of anger and frustration. Usually, it’s because they don’t know other options are available.

 

Cutting someone out of your Will completely isn’t your only option!

The fact is, there are other ways to deal with errant relatives and disinheriting all together could be saved as a last resort:

 

Something to Lose

For the real troublemakers, your best option may be to leave them something that will be taken away if they contest your estate, instead of leaving them nothing at all.  This will also satisfy the requirement that they are at least mentioned in your Estate Plan and give them a choice: take something or risk everything.Unhappy older man and son

 

Something to Earn

You can also make heirs earn their inheritance – even after you’re gone! This can be anything from requiring college graduation to successful drug testing before the money is doled out.

 

Restricted Inheritances

Some people take longer to grow up and get their act together. You can make an heir wait until they are 30 (or 60 if that what it takes!) or give them multiple chances by staging distributions in increments every 1-5 years.  You can also Will a restricted annual or monthly payment (similar to a pension).

 

Limited Use Inheritances

Some kids should never get any money at all, but you can still leave them money to cover medical expenses, education, purchase of a home, etc. This money will  stay in a Trust and be distributed by your executor.

 

 

If none of these options work for your unique situation, you still have every right to exclude any family member from your Trust or Will.  It’s 100% your choice and don’t let anyone tell you otherwise. If you would like to discuss this – or any other Trust or Will question, contact us now to schedule a consultation.

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One concern that may be holding you back from creating a Trust – or worse – leading you to one of those online legal services or a document preparer, is the idea that it may be expensive to create and maintain one through a real Attorney. The fact is, it’s probably more affordable than you think.

 

To help you take that step to plan for your family’s future once you’re gone, here is a breakdown of what you can expect to invest in creating and maintaining a Living Trust:

Creating the Trust

The only expenses in creating a trust are the Attorney fees associated with creating it and a small recording fee for new property deeds. The cost for an attorney to draft a living trust can range from $1,500 to $2,000 for individuals and $2,000 to $2,500 for married couples. Simple or complicated plans can affect this estimate. The cost of recording property transfer deeds is approximately $20 per deed. Note that living trust estate plans always include a back-up or “pour over” Will, financial power of attorney, advance health care directive, and other related documents.SeniorMoney-262x300

 

 

Changing the Trust

Events like marriage, divorce, death of a spouse, beneficiary or trustee, changes in financial or residency status and new tax laws can affect your Living Trust and require changes. Changes are usually billed hourly by your attorney. Basic changes to asset and gift schedules can sometimes be done by you, so long as your share your changes with your attorney.

 

Reviewing the Trust

It’s a good idea to review your trust with your attorney at least every five years, unless one of the changes listed in #2 occurs, then you should get it reviewed at the time of the event. Reviews, like changes are usually billed by the hour.

 

 

If you have an old Trust or Estate Plan and would like to have an Attorney review it – or if you don’t have one yet, contact the Law Offices of Joel Harris and schedule your consultation today.

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It’s easy to think Life Insurance and Trusts as two completely different things: one protects your family in case of death, and the other distributes your estate upon your death. Planning ahead is wise when you want to protect your family’s financial future, and it is commendable if you have already established a Trust as well as obtained life insurance.  You may have heard that you can or should include life insurance into your plans. But how?  Put simply, in most cases you should name your Trust as the beneficiary of your life insurance and here are four reasons why:

 

1.)  Better Control and Management of Your Named Beneficiary. With a trust you have taken the time to create a legal document that is binding and assures your assets will be distributed the way you want. By naming your Trust as beneficiary of your life insurance, you will always have a viable beneficiary to receive the funds. Even if one beneficiary were to pass away, the trust would have already stated the next succeeding beneficiary, together with any special provisions that you want to make for these beneficiaries.

 

2.) Not having to worry about the settlement of your estate. As time changes so do financial situations. For example, a realistic scenario that has occurred many times over, is when a Trustee needs funds in order to settle the estate but has no resources to do so. It is easy to imagine the added stress this causes grieving family members. Naming your Trust as beneficiary of your life insurance insures that your trustee will have funds to pay your bills, attend to your funeral and final disposition, and manage your estate until it can be distributed. wills and life insurance

 

3.) Protecting beneficiaries who are minors. Too many people name young children as life insurance beneficiaries without considering the consequences.  If the children are under 18, a Court supervised Guardianship is required.  This is not the best way to provide for the children. Then a child turns 18, the money is turned over without restriction.  This is worse.  Naming your trust as beneficiary will eliminate court intervention and avoid younger beneficiaries squandering their inheritance.  Most Trusts provide for the care, support, maintenance and education of children as needed, with distribution at a later age, such as 25 or 30.

 

4.) Protection Against Creditors or Unwanted Beneficiaries. If life insurance pays directly to heirs who have financial problems, health or medical issues, or even incarcerated creditors, the government may be able to claim the money.  A trust may protect your heirs, and the proceeds of your life insurance, from creditors and the government!

 

In addition, it’s noteworthy to mention that naming your Trust, a document that you update throughout your life, protects your life insurance from accidentally falling in the lap of an ex-spouse or someone else you would like to avoid.

 

 

Warning: there are also sometimes good reasons not to include life insurance in your trust. This involves more complicated estates when life insurance is used to pay estate taxes or fund a business transition. Don’t change the beneficiaries of these kinds of policies, or of policies not actually owned by you, without consulting your attorney!

 

Do you have questions about your own Life Insurance or Living Trust? Give us a call now for an Estate Plan Review or Consultation.