The Difference Between a Living Trust and a Will

While you may have heard of both a will and a living trust, you may think of them separately and not subject to comparison. The truth is that both a will and a living trust can have an important place in an estate plan. In fact, both can act as a means of distributing a person’s assets upon their death. So, what are the difference between a living trust and a will? Why would you use one over the other in your estate plan? Let’s take a look at how these two estate planning tools differ to help answer these questions.

The Difference Between a Living Trust and a Will

A trust is an interesting and useful estate planning tool. There are a variety of trust types and each can serve a unique purpose. A living trust is created by a grantor during his or her lifetime. A trustee must be appointed to manage the trust for the benefit of the beneficiaries according to the governing terms of the trust. Often with living trusts, the grantor acts as trustee for his or her lifetime and then a successor trustee takes over when the grantor dies. Once established, the trust immediately takes effect, but, in order to be effective, must be properly funded. To fund a trust, assets must be transferred into the trust. This means that ownership of these assets must be turned over to the trust. Upon the death of the grantor, the corpus of the trust will be managed and distributed by the trustee according to the trust terms. 

A will, on the other hand, is a legal document created by the testator during his or her lifetime that will not take effect until the testator dies. Each state has its own rules for how to create a valid trust and what formalities must be observed for a will to be properly executed. In a will, the testator can detail assets and state who is to receive said assets after the testator passes away.

One of the central differences between a will and a living trust, especially as it pertains to asset distribution upon a trustor or testator’s death is the fact that a will goes through probate and a living trust does not. The assets that are distributed via a will go through probate. Beneficiaries of a will have to wait for what can be a very lengthy court-supervised process to be completed before receiving an inheritance. Probate can also be quite costly with court costs and legal fees adding up along the way. Furthermore, probate proceedings become a matter of public records and, therefore, do not afford much privacy. For these reasons, people often seek to avoid the probate of their estate in whole or, at least, in part. Using a living trust is a good way to do so. Assets passed via a living trust avoid probate and distribution is overseen by the trustee.

Syracuse Estate Planning Attorneys

There are many estate planning tools and options of which many people are not aware. Talk to the knowledgeable estate planning team at CDH Law on how to create a comprehensive estate plan that takes your goals and best interests to heart. Contact us today.

What Should Be On Your Estate Planning Checklist

There are a number of excuses as to why people choose to delay estate planning. They don’t think they are old enough. They don’t think they are wealthy enough. They feel in good health and figure they do not need to start estate planning. They are too busy and will get to it when things slow down. The truth is, however, that estate planning is too important to put off. This is true regardless of your age, your health, or your wealth (or lack thereof). To help you see the importance of estate planning and also give you a bird’s eye view of what will be involved in the estate planning process, we have assembled this estate planning checklist for your review.

What Should Be On Your Estate Planning Checklist

A good place to begin in the estate planning process is to compile a list of your assets, their value, and who you want to receive them after you pass away. Yes, depending on the size of your estate, this could be a rather substantial endeavor, but it is an important one, nonetheless. Be sure to account for your real property, your digital assets, and those assets that may not be worth much financially speaking, but are great in sentimental value.

Consider your options for how you can transfer your assets so that they end up in the hands of the correct beneficiaries. While most people think of a will to serve this purpose, there are a number of other options. Some people choose tools other than a will for asset distribution for reasons such as avoiding probate. To do so, various trust types may be utilized. Furthermore, some assets may be designated as payable on death or transfer on death so that they are automatically transferred to a named beneficiary upon the death of the account owner.

While asset distribution is an important part of estate planning, it is by no means the only part of it. Estate planning also involves putting important tools in place to protect your health care wishes and incapacity planning. That is why your estate planning checklist should include the creation of a living will, health care surrogate, and durable power of attorney. A living will can outline your health care wishes in the event you are in a terminal health care state and unable to communicate such wishes for yourself. A health care surrogate will appoint a trusted individual as your agent empowered to make health care decisions on your behalf should you become incapacitated. A durable power of attorney can grant your agent the authority to conduct legal and other business matters on your behalf and can help the need for a guardianship to be established should it be found that you are unable to manage your affairs on your own.

An important aspect of your estate planning checklist is also to take careful consideration in who to appoint to certain trusted roles within said estate plan. You will need to designate a personal representative of your estate as well as agents under your health care surrogate and durable power of attorney. Consider these roles and the responsibilities they will carry with them. It is a big decision as to who should take them on.

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For every item on your estate planning checklist, CDH Law is here to help. Contact us today.

Moving? Remember to Update Your Estate Plan

Summer can be a busy time! The kids are out of school, you are getting out to enjoy the summer sun, and, for many, it can be a great time to move. While moving, especially when relocating out of state, can be rife with challenges, it can also be an exciting time. If you have moved this summer or are planning to move in the near future, you are likely to be already working through a significantly lengthy to-do list. Be sure that updating your estate plan tops it.

Moving? Remember to Update Your Estate Plan

Estate plans are not something to set and forget. As life is constantly growing, evolving, and changing, so should estate plans. This is because estate plans reflect our current lives as well as our current hopes for the future. As things change, so should your estate plans. This means that almost all of your major life changes will merit an estate plan update. Moving is no exception.

Relocating can have a bigger impact on your estate plans than you may initially have considered. Take, for example, your selection of trusted people to take on such responsibilities such as your agent pursuant to a power of attorney or the personal representative of your estate. You may have chosen someone nearby to help simplify things, logistically speaking. When you move, this may no longer be the case. Not only can logistic simplification merit choosing others in your new location for these roles, but the law can necessitate it. Did you know that some states require an immediate relative or resident of your state to serve as personal representative of your estate? If your out-of-state move rendered your selection invalid, it can be necessary to update this accordingly.

Another important thing to consider is that, while your estate planning documents may be valid in your new state, they may not necessarily be effective when you need them. Most states will acknowledge the validity of estate planning documents that were properly executed out of state. Practically speaking, however, you may run into some complications using your out-of-state forms. Health care directives, for example, may be valid in your new state, but health care providers are not likely going to be familiar with these different kinds of forms. As a result, there may be hesitancy in accepting the validity of your forms which could result in critical delays in performing important duties, such as conducting financial transactions pursuant to a power of attorney or making health care decisions pursuant to a health care surrogate.

There may also be estate tax consequences for your out-of-state move. Not every state has a state-level estate tax. If you are moving from a state without an estate tax to one with an estate tax, you may want to evaluate your estate plan and make updates that can protect your estate from taxation.

Estate Planning Attorneys

If you need to update your estate plan after a move, talk to the team at CDH Law to help ensure you make all of the necessary changes. We want to help you maintain an estate plan that continues to best reflect and protect your best interests and goals for the future. Contact us today.

How Remarriage Can Impact Estate Planning

After putting an estate plan in place, life continues moving forward. Families change. There are marriages and there are divorces. There are births and there are deaths. Because of this, it can be critical to keep your estate plan updated to reflect your most current life circumstances. After a major life event, take the time to go and review your estate plan. See if there any updates you need to make, likely there will be. For instance, have you remarried since putting an estate plan in place? Do not wait to go review your estate plan. There may very well be major changes you will want to make.

How Remarriage Can Impact Estate Planning

Spouses often play a central role in a person’s estate plan. As such, a change in a spouse will usually merit some major changes to an already established estate plan. Here, we will discuss several aspects you should pay particular attention to after a remarriage.

First, take the time to go and update your beneficiaries on things such as your life insurance, retirement accounts, and any payable on death (POD) or transfer on death (TOD) accounts. You may have your former spouse as opposed to your current spouse listed as a beneficiary. There will also be other important appointments that you should check in on and update accordingly. For instance, did you list your former spouse as the personal representative of your estate? Do you have a power of attorney in place with them listed as your agent? Did you list them as your surrogate in a health care surrogate? These are important designations that can have substantial implications for you, your family, and everyone’s well-being. Go back and check to see if you still have your former spouse listed in these positions. If so, you will likely want to consider changing them to your new spouse or someone else.

Next, consider the implications your remarriage may have on your children from your previous marriage, from the aspect of estate planning, in particular. Have you reached an informal agreement with your current spouse that you will leave the bulk of your estate to him or her and he or she will, in turn, provide for your children? This can place your children at needless financial risk. Instead, to help ensure both your current spouse and your children are provided for, consider establishing a marital trust to provide for your spouse during their lifetime and have the children listed as trust beneficiaries upon the death of your spouse. There are other trust types you may want to consider as well.

Estate Planning Attorneys

The strongest estate plan you can have is one that is kept up to date to reflect your most current life circumstances. At CDH Law, our team of dedicated estate planning attorneys wants to help you ensure that your estate accurately and effectively reflects and works to accomplish your goals for yourself and your loved ones. Contact us today.

Portability of the Estate Tax Exemption

The federal estate tax is applicable to the transfer of property after a person’s death. The tax can end up taking a significant portion of the estate’s value. The good news is, however, that the tax only applies to the part of the estate’s value that exceeds the federal estate tax exemption amount. With proper planning, many can succeed in avoiding the federal estate tax in whole or in part. In order to do so, however, you must first understand the federal estate tax exemption, related laws, and the appropriate estate planning techniques used to avoid such taxation of an estate.

Portability of the Estate Tax Exemption

In recent years, there have been several significant pieces of legislation relating to the federal estate tax exemption. For instance, the Tax Cuts and Jobs Act (TCJA) doubled the estate tax exemption amount. This means that the exemption moved up to $11.18 million per person for the years 2018 through 2025. With exemption levels being indexed for inflation, the exemption amount has gone up still. It sat at $11.4 million for 2019, $11.58 million for 2020, and it has now hit $11.7 million for 2021. Please note that these exemption amounts are for individuals. It is twice the amount for married couples.

Regarding the estate tax exemption for couples, a most notable piece of legislation signed by President Obama on December 17, 2010, represented a significant shift in estate planning law. This piece of legislation, named the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (TRUIRJCA) introduced the portability feature to the federal estate tax exemption. You see, prior to TRUIRJCA, estate planning was focused in no small part on having married couples divide up ownership of assets so each spouse’s estate could fall under the estate tax exemption amount in full or even in part.

The portability of the federal estate tax exemption for married couples eliminated the need to plan in such a way. The portability feature means that when one spouse dies and his or her estate value does not use up to the total available estate tax exemption, the unused portion of the estate tax exemption is then added to the available estate tax exemption for the surviving spouse. When the surviving spouse passes away, his or her estate will enjoy the estate tax exemption for an individual, plus that unused estate tax exemption portion remaining from his or her spouse’s estate.

For planning purposes, there are a few other important things to note. First, the portability feature only applies to the federal estate tax exemption. Only two states offer portability at the state estate tax level. Second, the portability feature is only available for married couples. Third, it looks like the portability feature is here to stay for an indefinite amount of time. When President Obama signed the American Taxpayer Relief Act (ATRA) into law back in 2013, this law made the portability feature permanent in the way that it does not need to be renewed. In fact, Congress must take active steps to overturn it in order for it to go away.

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At CDH Law, our team of dedicated estate planning attorneys wants to help you ensure that the value of your estate is maximized for the benefit of those you care about most. Contact us today.

Are There Different Types of Trusts Used in Estate Planning?

A solid, comprehensive estate plan will help ensure that there will be a smooth transfer of assets to a person’s selected beneficiaries once he or she passes away and that everyone’s best interests are protected the whole way. Without proper planning, inheritances can be whittled away by taxes, excessive court costs, and irresponsible spending on the part of a beneficiary. Fortunately, an estate plan can guard against these things with the proper implementation of a trust.

A trust is an entity set up by the trust grantor, or settlor, and managed by a trustee for the benefit of the trust beneficiaries. The grantor transfer assets into the trust. The property held in a trust may include tangible property such as jewelry, cars, and more, but it can also include intangible assets such as securities. The assets held in the trust are referred to as the trust “principal” or “corpus.”

Are There Different Types of Trusts Used in Estate Planning?

There are a number of different trust types that can be used in estate planning. Broadly speaking, trusts are divided into two central categories: revocable and irrevocable. A revocable trust has a great deal of flexibility as it can be altered or revoked at any time during the grantor’s lifetime. An irrevocable trust, on the other hand, cannot be amended or revoked except under very limited circumstances.

More specifically speaking, there are a number of trusts that fall under these two broader subcategories. For instance, there is a living trust which is created during the grantor’s lifetime when the grantor transfers property into the trust. With a living trust, it is common practice for the grantor to also act as a trustee. Once the grantor passes away, a successor trustee takes over and the trust becomes irrevocable. A living trust offers several advantages, one main one being that the assets held in the trust will avoid delays and expenses associated with the probate process. This nearly eliminates any delays a beneficiary may normally experience in accessing an inheritance. The fact that the trust avoids probate also means that there is the benefit of privacy as the assets do not pass through the public transfer of probate.

A testamentary trust, another type of trust, is created specifically by a will upon the death of the grantor. This is a popular option for those wanting to leave money to charities. It can also be a great way to preserve assets if you have children from a previous marriage. Furthermore, a testamentary trust can be a good way of fostering a solid financial future for a surviving spouse by providing a steady income stream over the course of his or her lifetime in the form of trust distributions.

An irrevocable life insurance trust (ILIT) can also be a valuable trust to include in your estate plan. An ILIT is often used as a tax savings technique as the trust allows life insurance proceeds to be excluded from the estate of both the first spouse to pass away as well as that of the second spouse. The trust is funded by transferring a life insurance policy into the trust. The trust then becomes the owner and beneficiary of the policy. The grantor’s heirs, however, act as the beneficiary of the trust itself.

Estate Planning Attorneys

Do you want to learn more about how a trust can help you create a strong estate plan that protects future goals for you and your loved ones? At CDH Law, we are here to provide you with the answers you need to create an estate plan you can count on. Contact us today.

The Benefits of a Special Needs Trust

A special needs trust is a legal tool designed to both hold and protect assets for the benefit of a disabled beneficiary. The structure of a special needs trust allows both a special needs individual, as well as family members and loved ones, to contribute assets and other resources to the trust and have them managed for the benefit of the special needs individual. Sometimes, a special needs trust is established in the estate plan of a parent who wishes to fund the trust with assets or life insurance proceeds upon his or her own death as opposed to giving an inheritance outright. Here, we will review the benefits of establishing a special needs trust.

The Benefits of a Special Needs Trust

One of the central benefits of a special needs trust is one of the main reasons why they are established in the first place. A special needs trust allows family members and loved ones to provide financial support to a disabled individual without jeopardizing the continued receipt of much-needed government benefits. Giving assets or leaving an inheritance to a disabled individual outright could disrupt the receipt of government support. Government assistance programs are often need-based. It would not take much in the way of financial support to render a person ineligible for these often critical benefits. When assets are put into a special needs trust instead of given to a disabled person outright, they are generally not includable in the eligibility calculation for programs such as Medicaid and Supplemental Security Income (SSI).

This is why a special needs trust is often referred to as a supplemental needs trust. The assets held in the trust for the benefit of a disabled beneficiary are not intended as a substitute for government benefits, but instead, provide supplemental support for things not covered by government benefits. Trust funds can be distributed for purposes of things like entertainment, education, and other things, but not for basic needs covered by government benefits.

Another benefit of a special needs trust is the fact that a trustee is appointed to both manage the investment of trust assets as well as overseeing the proper distribution of trust assets so that they are made in a way that will not jeopardize government benefits. Giving an outright inheritance or gift to a special needs individual can not only be problematic because of the jeopardizing of government benefits, but the individual may be unable to independently manage his or her own finances. The structure of the trust innately provides a solution to this problem. The trustee is tasked with managing the trust and distributing trust proceeds according to the intentions of the trust.

An added benefit of a special needs trust is that it shield assets from creditors. Should the beneficiary ever be sued, the trust will act as a shield and protect the assets held within the trust from the reach of creditors.

Estate Planning Attorneys

For more information on special needs trusts and other valuable estate planning tools, talk to the knowledgeable attorneys at CDH Law. We are committed to helping our clients develop comprehensive estate plans that meet their unique needs and that of their loved ones. Contact us today.

What Is a Pour Over Will?

Estate planning is so much more than a last will and testament, although most people associate the two. Estate planning has a number of valuable legal tools you can put in place to help you accomplish unique, specific goals that meet your own objectives. For instance, have you ever heard of a pour over will? We are here to talk more about this and how it may be fitting for your own estate planning purposes.

What is a Pour Over Will?

Many people, for the potential benefits it offers, choose to create a living trust as part of their estate plan. This may be, in part, to help avoid probate, which is notoriously time consuming and often can be expensive. If you have considered creating a revocable living trust, then you may have heard of a pour over will. The two are often used in connection with each other.

A pour over will is a legal tool used in conjunction with a trust. Pursuant to the terms of a pour over will, property that would otherwise pass through your will upon your death is instead transferred to, or “poured into,” your trust instead. The property transferred to the trust is then distributed to trust beneficiaries named in the trust document when you were alive.

Why would someone have a pour over will? Doesn’t a pour over will just transfer property into your trust? Well, for starters, it can simplify things a great deal. When your remaining property is transferred into the trust, all of it is governed under one, single trust document. Do not underestimate the value of simplicity. It makes it clear as to which beneficiaries get what. It also makes the job of the personal representative of the estate as well as the trustee much easier.

The pour over will also ensures that things you may have meant to transfer into the living trust but did not get around to doing before your death end up being transferred. It is a great way to ensure completeness of transferring things into the trust. A decedent may also have deferred putting certain property into the trust to avoid things like property taxes or merely to avoid certain inconveniences associated with such a transfer. A pour over will accomplishes things that were otherwise delayed. In other words, it can be a great way of wrapping up your plans for your trust, even when you are not around to do so for yourself.

A pour over will also help protect your privacy. Trusts are private. Wills are not. Wills become public records and trusts. This means that, using a pour over will, you are protecting your privacy. You are keeping details such as who inherits what private.

Estate Planning Attorneys

There are so many more estate planning tools that remain a mystery to most, but can actually play an instrumental role at effectively establishing a comprehensive estate plan. A pour over will is just one such tool. To find out more about your estate planning options, talk to the dedicated estate planning attorneys at CDH Law. Contact us today.

Common Estate Planning Mistakes to Avoid

Estate planning puts important legal tools in place that can provide serious protections for you and your family. While estate planning can provide critical benefits for you and the ones you loved, estate planning the right way is very important. There are several mistakes people make in estate planning that can be avoided, especially if you are aware of these potential missteps in the first place. Let us take a look at some of the more common estate planning mistakes you should take care to avoid.

Avoid These Common Estate Planning Mistakes

One of the biggest and most common estate planning mistakes is not to have an estate plan at all. Far too many people do not even have the most basic estate planning documents in place, such as a will. Without a will, you pass away intestate and your estate will be disbursed according to state intestacy laws, which may not be according to the way you would have wanted things to be distributed. You also miss out on the opportunity to name a guardian for any of your minor children and you do not get to choose who will serve as personal representative of your estate.

While it is difficult, if not impossible, to plan for every possible hurdle life may throw in your way, the best estate plans tackle the unexpected things in life as best as possible. For instance, does your estate plan consider what would happen should you ever become incapacitated? This means that your estate plan should include a durable financial power of attorney that will grant a trusted individual to manage your financial affairs. The durability feature means that the power survives any incapacitation on the part of the principal, you. Additionally, you should have a health care surrogate in place naming a trusted individual that will make health care decisions on your behalf should you become incapacitated and unable to communicate these wishes for yourself. A living will should be considered as well because it outlines your end of life care wishes in terminal care situations.

Your plan should also have backups, or contingency plans. This means selecting alternates for important roles of responsibility such as powers of attorney, trustees, health care surrogates, and personal representatives. There may come a time when the person initially named is unwilling or unable to serve. This is why you should always name an alternate. Also, be sure that you talk to those named to take on roles of responsibilities. Far too many people fail to do this and the person they name ends up not wanting to take on the responsibility.

Failing to update an estate plan is also a far too common mistake that is made. In order for an estate plan to most accurately reflect your wishes, it should be consistently updated, especially in light of major life events such as births, death, marriages, and divorces in the family. Such big life moments can have a substantial impact on things such as beneficiary designations and who you wish to name in roles of responsibilities, such as those previously discussed. Failure to keep your estate plan updated can easily result in an estate plan that does not reflect truly what you want for yourself, your assets, and your loved ones.

Estate Planning Attorneys

To avoid common estate planning mistakes and secure an estate plan that will best protect your wishes for yourself and your loved ones, talk to the knowledgeable estate planning attorneys at CDH Law. Contact us today.

The Importance of Health Care Directives in Your Estate Plan

Estate planning means so much more than drafting a will. There are other estate planning legal tools that are critical to protecting you and your family. For instance, health care directives are an important part of establishing a comprehensive estate plan that maximizes the protections available to you. Health care directives are legally binding documents that address what should happen to you regarding medical treatment should you become incapacitated and unable to communicate your own wishes. Everyone should have health care directives in place. These vital legal tools are not just for the elderly or those with existing medical issues. They are for everyone. That is because anyone can suddenly fall ill or be involved in a devastating accident. Health care directives help you plan for the life events you cannot plan for.

The Importance of Health Care Directives in Your Estate Plan

There are several types of advance health care directives you can include in your estate plan. A health care proxy is one such directive type. In a health care proxy form, you designate a person who will be empowered to make medical decisions on your behalf should you become unable to communicate your own wishes. Think about this. The person you designate as your health care proxy will act as your agent. They will make choices regarding who treats you, where you are treated, and what type of treatment you receive. Acting as a health care proxy is a huge responsibility and putting this legal document in place on your own can be a weight off of your shoulders. 

Having a health care proxy in place means that you are empowered to select this trusted individual. You can talk to the person you select as your proxy beforehand and discuss your values and opinions regarding healthcare and treatment options. You will get peace of mind knowing your health care choices will always be in the best hands. The more you talk to your health care proxy about your wishes and what other health care directives you have in place, the better they can handle the task of making sure your own health care wishes are enforced.

Another important health care directive to put into place is a living will. A living will can be as concise or as detailed as you wish. It is meant to outline your wishes regarding end of life medical care. It can direct your treating health care professionals regarding what medical interventions and life-prolonging treatment you would want or not want to receive should it be necessary to make these decisions on your behalf. Think about what types of medical treatment you may have an opposition to, either morally, religiously, or just personally. Memorialize your wishes in a living will. Then you can know that your doctors will always have guidance on your wishes. Your family and loved ones will not be left guessing what you would have wanted, a terribly difficult decision to be in.

New York Estate Planning Attorneys

Don’t wait to put a comprehensive estate plan in place. It provides important legal protections for you and your loved ones. The team of trusted estate planning attorneys at CDH Law is here to help see that you maximize the many and varied benefits of estate planning. Contact us today.