Archive for the ‘Trusts’ Category

Should I tell my insurance agent that my house is going into my trust?

Posted by

Yes indeed. You need to contact your insurance agent to discuss how your trust owned real estate is covered in the event of loss. Your property insurance agent can help you figure out how the trust ownership should be reflected on your policy.

Here is the back story on this:

People use revocable living trusts in an estate plans all of the time. This is because a revocable living trust can keep a person’s assets out of probate. A revocable living trust can also be used to feather money to minors or to adults that need to be protected, keep your affairs private after death, and decrease cost while adding efficiency in distribution to your heirs after death.

If you choose to use a revocable trust in your estate plan, you will likely go on a mission to “Fund” it after you form it.  “Funding” a trust is a fancy way of saying that you will transfer ownership of your assets into the trust or change the named beneficiary to the trust. You do those things so that your assets are held in the trust  vs. going through the probate process when you die.

Your real estate is an asset the goes into your trust during the “Funding Process”.  You can accomplish this by signing a quit claim deed that states you are changing the ownership of your real estate from you to your revocable living trust.  You would then filed that deed with the Register of Deeds.

The Rub:

The real estate that you plan to transfer into your trust is covered by property insurance. If you leave the property insurance policy in your name alone without adding the trust in some way, the property insurance policy may not pay if you have a loss.  In short, the insurance company could avoid paying if the “owner” of the house is not an “insured party” on the policy.

The Answer:

You should contact your property insurance agent to determine how the trust ownership should be reflected on your policy. It is something that insurance companies see regularly, but the necessary adjustment does not happen without your reaching out to the company.

Discussing this with some of my insurance agent friends, here is what I have learned about it. They suggest that you should continue your property insurance coverage in your name – just like you had before you developed your trust.  Then, along with that, add the name the revocable living trust as an “additional insured” on the policy.

When your revocable living trust is added as an “additional insured” to your insurance policy, you still get the liability coverage and personal property protection for the contents of your home. The trust, on the other hand, is also protected against liability and casualty issues that occur with the property.


What is a Wisconsin Transfer on Death Deed?

Posted by

 

What is a transfer on death deed? A transfer-on-death deed, or TOD deed, is a simple, inexpensive, and effective tool to transfer real property at the death of the owner. In the states where it is available, it has become very popular with attorneys, property owners, and beneficiaries alike.

Why are transfer on death deeds popular? The reason TOD deeds have become so popular is that the transfer of the land under a TOD deed can work to avoid both the after death expenses of probate, and the upfront planning expenses of a trust.

Are they for everyone? No. TOD deeds are not the best approach for everyone. While they are an excellent option under the right circumstances, they are primarily for individuals with adult beneficiaries that get along very well. If you have any hint that your beneficiaries will fight, you better choose to use a will/ probate based plan or a revocable living trust plan for your estate.


Contentious Probate Settled – Kudos to the Family Involved

Posted by

 

One of the hardest things to deal with in life is the raw emotion that comes from the loss of a loving parent.

What further devastates a family facing such emotion is when matters are not planned properly.

Unfortunately, that “let the chips fall” mentality recently left a family at odds with each other on a number of complex property distribution issues.

Fortunately, after some time and effort, the matter was settled amicably between the parties and short of protracted litigation.

Kudos to the families out there that, despite the high level of emotions involved can see that their deceased loved one would not have wanted the battles and family breakups to occur over money and worldly possessions.

We were proud to play a small role in this success and we are grateful for the opportunity to serve such a wonderful family in a time of need.


Revocable living trust and pour over will. Why do I need both?

Posted by

The Question. Why do we have a pour over will when we already have a revocable living trust in our estate plan? Isn’t that repetitive?

Let’s try to answer this age old question.

Quick clarification. Your Trust is the Boss. Your trust is your featured estate planning tool for moving your assets to the next generation. Your Pour over will (Called pour over because it names the trust as beneficiary) should be a smaller player in the whole scheme of things, but it is a necessary role player.

For those folks with one, after you develop your trust document …you add your assets into your trust. This is accomplished by changing the title of the property into the name of the trust or by setting the trust in as the beneficiary of a certain asset. (IE: life insurance). Then, when you die, the assets stay in the trust avoiding the need for a probate of the assets it holds on your behalf.

Here are a three reasons why a pour over will is still necessary….

  1. Guardians. A pour over will can do an important things that a living trust document cannot do. If you have minor children and want to name a guardian for them — someone to raise them if you and the other parent die before they reach adulthood — you must use a will to do that.

 

  1. Human Error. Lets face it. We all make mistakes. One big reason to write a pour over will is that a living trust covers only property you have transferred, in writing, to the trust. Almost no one transfers everything to a trust. And even if you do scrupulously try to transfer everything, there’s always the chance that you’ll acquire property shortly before you die and not have time to put it into your trust. If you don’t think to (or aren’t able to) transfer ownership of an asset to your living trust, it won’t pass under the terms of the trust document. Anything not transferred into your trust prior to your death could instead be subject to probate and distributed under your pour over will. In short, a pour over will acts as a safety net and sends a “forgotten asset” back into your trust.

 

  1. Satisfying the rules for paying a decedent’s last bills. The law says that an estate pays the last bills. The pour over will contains language that passes that statutory obligation from the Personal Representative of an empty estate to the trustee under the trust. This language, coupled with special language accepting the responsibility under the trust, make the bill paying process seamless.

 

Of course, there is more to all of this. The key for anyone with a trust is to seek counsel. Get your questions answered. Also know that a trust is a beautiful thing, but it never acts alone. It always needs the reliable sidekick called a pour over will in order to accomplish its mission.


News Flash: Beneficiary designations are a Big Deal

Posted by

 

Grove Thoughts

Use Care: Beneficiary Designations Trump Your Will or Trust.

Always a good thing to meet with your investment adviser and have your insurance coverage and investments properly aligned to meet your needs.   However… Some times …  after all that planning … the act of filling out your beneficiary designation forms might seem like an afterthought.

As mundane as the beneficiary designation process may seem, it is important to keep in mind that the beneficiary designation form on file with the company will control ownership and distribution of the life insurance policy/individual retirement plan after you die: Not your will or your trust.

Example: If you have a life insurance policy for $100,000.00 and you name your son Mickey under the beneficiary form, Mickey gets the cash on your death. If you also named Minnie to receive your assets under your will, she sees none of that money.

Knowing that the designation trumps the Will or Trust, great care should be used when filling the beneficiary designation form out.

The Change Forms the Companies offer are not always understandable or helpful.

The insurance companies and IRA custodians have pre-printed beneficiary designation forms that they make you use. Keeps them out of hot water because they are a consistent element of their operations, which leads to fewer mistakes when the time comes to process them.   They are (for the most part) constructed to fit the company’s processing needs but can sometimes fall short when they are being used to meet your goals. This is because sometimes the company’s processing needs are not lined up with your wishes.

Ask yourself some questions when filling out these forms.

What happens if one of my beneficiaries dies before I do?

One of the biggest surprises for unwary clients is that so many of the forms default to the “survivorship rule”. These forms with the survivorship rule in them divide a predeceased beneficiary’s share equally among the surviving beneficiaries. This “survivor takes all” result works for some people, but not most people. For example, some folks would like to see a grandchild take a predeceased child’s share rather than leave the grandchild out by having the proceeds split only between the children lucky enough to survive them.

If the survivorship rule is not what I am looking for, what are some alternates available?

So now we enter into the world of Latin phrases. But … do not worry. These are not as hard to grasp as it might seem. There are two main phrases to remember: “by right of representation, per stirpes” and “by right of representation, per capita”. The term “per stirpes” means by root or branch, while the term “per capita” means by head.

Per stirpes: Per stirpes is the most popular of these two alternatives. Per stirpes boils down to meaning that the percentage planned for one beneficiary that predeceases goes to the deceased beneficiary’s heirs by blood: Often their children or grandchildren.

Example: If your son Mickey was entitled to 50%, but died before you did, his two surviving kids (your grandkids), Tammy and Timmy would each take 25 %. Your surviving daughter, Minnie is entitled to the other 50%.

Per capita:  Per capita is the rarest of these two alternatives. Per capita boils down to meaning that the percentage planned for one beneficiary that predeceases is ignored. Instead the deceased beneficiary’s heirs by blood: Often the decease beneficiary’s children, step up onto the same level as you children.

Example: Your son Mickey was entitled to 50%, but died before you did and your surviving daughter, Minnie was entitled to the other 50%. Mickey had the two kids Tammy and Timmy. Tammy and Timmy step up on the same level as Minnie. That means Minnie, Tammy and Timmy would each receive 33 1/3%.

What most people want is a per stirpes distribution at death vs. the survivorship rule or a Per capita distribution.

What happens if I run out of listed beneficiaries?

The answer here can be found on the form but also may be in the policy or contract itself. Some companies default to have the proceeds paid to your estate, while some set your spouse, children and/or parents as beneficiaries if you run out or fail to name any beneficiaries.  Definitely get this question answered.

What to do.

Be sure to read the default provisions in your beneficiary designation forms. You need to know what they say so that you can make any appropriate changes to them.  Customize your designation if you have to do so. In many cases, the beneficiary designation forms can be customized to meet your wishes by adding and addendum (attachment) to it spelling out your intended desires.

Know that is ok to seek help too. A qualified estate planner can help you spot issues and help you to modify the beneficiary designation form so that it aligns with your wishes.


Estate and Trust Planning:  Going Beyond Just the Numbers and into the Heart

Posted by

Estate planning professionals are taught early on that they need to be objective.  It is an essential element of the practice to be dispassionate when approaching the work. We are brought into the mix to assist our clients with minimizing the costs of probate and to help them find ways to reduce the impacts of various taxes and fees related to one’s death. We are often enamored with the latest trust techniques out there that can be employed to meet sophisticated gifting and distribution goals set for our clients.

Understanding the points above, I was reminded again last week that there is much more to the estate planning story than the mechanical muckity muck of law and taxation.  I was meeting with a client to discuss a revocable living trust in his planning. He had many perceptive questions about the use of a trust in his potential plan. After we counseled for some time, he was satisfied that the trust was the best option under his circumstances.  Once there, he leaned back in his chair and said simply: “I want to do this because I love my children and my grandchildren.” With that said, our path for his plan was decided.

It was fitting that the date of that meeting was right around Valentine’s Day. As with most estate plan meetings happening everywhere, I provided a list of trust planning pros and cons on a whiteboard. I’ve never added the word love to my list of pros. However, I think that love is a major factor in why folks plan in this way.

Put simply, the motivation for estate and trust planning goes beyond just the numbers and into the heart.


Choosing an Attorney for Your Estate Planning

Posted by

A recent Caring.com article by Susan Kostal, Senior Editor of the Legal channel, tells us who to look for when searching for a Trust, Wills, and Estates Attorney.

The article is a great read for people wondering how to find a qualified Trust and Estates Attorney. Most of the advice in the article is good quality common sense stuff.

Ask Your Friends

According to the article: “If you’re unsure how to find the right lawyer, start by asking friends for recommendations. Who have they used — and liked? You can also ask other lawyers who they would use.”

Look the Attorney in the Eye

Attorney Philip Feldman, head of the trusts and estates practice at Coblentz Patch Duffy & Bass in San Francisco is quoted in the article.  Feldman states that “Clients need to get a sense of who their lawyer is going to be. It’s important to look someone in the eye. This should be one of the most personal professional relationships you’ll have.”

Cost Expectations

Even more excellent advice from Ms. Kostal regarding fees:  “An average flat fee for a basic revocable trust plan may run from $2,500 to $10,000, depending on the complexity of the trust and the size of the estate. Flat fees, however, aren’t necessarily a better deal than hourly rates. And the most expensive lawyer isn’t always the best.

Ask at the outset for the lawyer’s rate. It’s better to know upfront, so that neither of you wastes the other’s time if there’s a huge discrepancy between what an attorney charges and what you’re willing to pay. Generally, the more assets a person has, the more complicated his estate is likely to be, and the more it will cost to put together a thoughtful estate plan.”

We think the advice provided by the article is right on point and recommend that you take a few minutes to read it.

For more information on Trusts: Articles on Trusts and Estate Planning.

 


Conservation Easement: A Beautiful Thing

Posted by

A conservation easement is an interest in real property. It is established by agreement between a landowner and a qualified private land conservation organization (often called a “land trust”) or a government organization (often the DNR). It is put in place to restrict the exercise of rights otherwise held by a landowner in order to achieve stated conservation purposes.

The most recent Conservation Easement project underway here at our office presents a great story. Our Clients are both nature buffs. They truly love the outdoors and they want to make a difference in society.

After thinking it through, they decided that the best way to accomplish that goal was by donating 75 acres to a local nonprofit Audubon society. They also made the land subject to a conservation easement to be held by a Madison area land trust.

The Property contains areas of prairie grassland and oak woods/oak savanna. The public will have access to the property for bird-watching, hiking and other educational and recreational activities.

The preservation of this slice of heaven for the scenic enjoyment by and the outdoor education of the public is very important to the Landowner. What a terrific thing for the people of Wisconsin and beyond.


News Flash: Few People Actually Plan for Death or Incapacity

Posted by

 

Estate Planning Note:

AARP shared an article that reminds us how few of our neighbors have done Estate Planning.

See: http://www.aarp.org/…/info-2017/half-of-adults-do-not-have-…

The failure to plan for your death or incapacity can be painful for the family members left behind. This really rings true if you have underage kids or an asset like a family farm or other type of business that needs to be thoughtfully passed on to the next generation. The family assets can sometimes be tied up for years with fees and cost racking up.

With this in mind, this just might be the year to finally get this particular project done.

Have a great day.


Why did you put Latin in my Will and Trust?

Posted by

 

The legal phrases: “by representation”, “per stirpes”, “per capita”, “per capita at each generation” and “survivorship” are found in both wills and trusts. While they may appear to be gibberish, the phrases have meaning in the probate and trust world.  They each provide for a distinct rule used to distribute assets after a person dies.

It is very easy to become confused when one comes across this kind of mumbo jumbo. The phrases are a far cry from plain English. They are definitely “old-school”.  The reason for using this old-school terminology is history. The phrases are based on old English law which was developed centuries ago and then handed down through the ages.

As one would suspect, each legal phrase produces a different result when used to determine the people receiving your assets when you die. “By representation”, “per stirpes” and “per capita” are there to help determine how assets flow to your descendants. “Survivorship” is a short stop/ everything to the one in a named group who survives the decedent. I like to call that the “king of the raft” approach. This was game I played in my youth where we tried to be the last one standing on a raft in the lake.

This  photo  shows three simplified examples that compare three commonly seen approaches (Per stirpes, Per Capita, and Survivorship):

The “per stirpes” model is by far the most popular choice for the clients in our practice. The families we deal with seem to like the branch approach to distribution, where a child’s share works its way down to survivors that are the heirs of that child if he or she dies before they do. “Per capita” is less popular, but can be used if the grandchildren are thought to be on par with the surviving children. The “survivorship” model is used most often with older clients who have already spent down a great deal of their assets and want to leave smaller amounts to the surviving children immediately below them rather than spread the minimal assets among an extensive family tree of heirs.

The State of Wisconsin has a statute that covers this topic too. Wisconsin Statue Section 854.04: “Representation; per stirpes; modified per stirpes; per capita at each generation; per capita”, does a nice job of explaining the differences as well. It goes as far as to delineate between a per stirpes and a modified per stirpes approach. It also equates the phrase “by representation” to “per stirpes”. Finally, it also lays out “Per capita at each generation” and “Per capita”. Section 854.04, in its final paragraph, says: If the transfer is made under a governing instrument (Will or trust, normally) and the person who executed the governing instrument had an intent contrary to any provision in this section, then that provision is not applicable to the transfer. In short, your will or trust can override the statute. This is often the way to go. A will or trust can be drafted to modify the general rule so that the distribution plan can be modified to fit your family’s unique circumstances.

Use care to consider what happens when the beneficiary dies before the person whose estate is being divided. Most folks want the children of the predeceased beneficiary to take the share which their parent would have taken had he or she survived the decedent. If the plan for distribution isn’t spelled out that way, the assets could be divided equally among the surviving heirs and the children of a deceased heir might not receive the deceased heir’s share.

Be sure to get solid advice on this and other important planning topics from a qualified expert. Do not hesitate to ask about the options available to you when you do sit down to plan your estate.  That way you can be sure that your hard-earned assets will go to your loved ones in the way that you intend.