Estate Planning for Beginners Part 2: Trusts
June 28, 2011
We’ve said it before on our blog and we’ll say it again: It doesn’t matter whether you’re a billionaire business executive or a teacher with a modest salary, it doesn’t matter whether you’re the patriarch of a large family or a stay-at-home mom of a newborn, a revocable living trust may be exactly what your family needs to protect family assets and their best interests. This is because a trust is probably the most comprehensive and versatile tool in your estate plan, and is a key part of helping you accomplish your goals.
There are two basic kinds of trusts—revocable and irrevocable. Revocable means that it can be revoked or changed so long as the grantor (the person who created the trust) is still living and is competent to do so. Logically enough, an irrevocable trust generally cannot be changed once it has been signed. The reason this question of revocability is so important is because a trust is not merely a set of instructions for how your wealth should be distributed, a trust actually owns the property placed within it, with the person or people serving as trustee (usually for a revocable trust this is the grantors themselves, while they are living) controlling the trust property within. It is for this very reason that trusts can be such a powerful and flexible tool for tax planning and estate planning.
The specifics of your trust will vary greatly depending on what you hope to accomplish. Parents of young children may wish to include a general trust for the benefit of all the children, with distributions made to their guardians as necessary. This general trust can be split into separate individual trusts when all of the children have reached a certain age or graduated from college. Parents (and often grandparents) may want to include education trusts under the umbrella of their revocable living trust. Many families feel it is important to include instructions for charitable giving in their estate plan, and may choose to set up a charitable trust with their children or grandchildren as trustees. Pet owners often create pet trusts to ensure that their animals will be well cared after the owner has died.
A trust, much more than a simple will, allows the grantor far greater control over his or her assets—and for a longer period of time—which is why trusts are particularly useful for anybody entering into a second or third marriage, or for any parent who worries about the choices a beneficiary might make once they come into their inheritance. Unlike a simple will, trusts are designed to withstand the test of time, allowing you to leave a legacy that can last for decades.
It’s a Dog’s Life
June 25, 2010
There seems to be some confusion nowadays about whether “a dog’s life” refers to a life of ease or toil, but for these wealthy canine heirs life is definitely the former! Whether it’s a wealthy eccentric leaving millions to a dear canine companion or whether it’s a lover of animals leaving a portion of their estate to charity, more and more dogs (and other animals) are being included in wills and trusts.
Naming your pet in your will or trust may seem odd, but it’s perfectly legitimate. Unfortunately, disinherited family members may not always agree. When Leona Helmsley passed away in 2007 she left $12 million to her dog, Trouble, but that amount was reduced by Judge Renee Roth of the Manhattan Surrogate Court to a mere $2 million. The current canine court battle is over the will of Miami heiress Gail Posner, which leaves $3 million to her dog Conchita, as well as $26 million split between seven of her bodyguards, housekeepers and other personal aides.
Naming your pet in your will may be perfectly legitimate, but the truth is that there is nothing to stop disgruntled family members from contesting your wishes. If you choose to do something “unusual” in your will or trust, or if you know of family members who are likely to make trouble, it may be necessary to take extra precautions to ensure your wishes are followed. For example, California permits the creation of a Pet Trust, either as part of your “Living” Trust or as a stand-alone document. Inform your estate planning attorney of the potential conflict and discuss what steps can be taken to prevent it. In some cases “no contest clauses” can be added to a will or trust to discourage court battles. In other cases a simple meeting of all family members with your attorney to explain your wishes and reasoning will do the trick. Talk to your attorney to find out what can be done to keep the peace in your family—canine or human.
Part of the Family: Planning for Pets
January 24, 2010
Creating an estate plan often involves serious discussion with your advisors about tax planning, asset protection, and charitable giving; but it is important to remember that at its core, estate planning is about protecting your family—and as this article in the Wall Street Journal reminds us, for many people the word “family” also includes our four-legged friends.
Some people will be tempted to roll their eyes and joke about Leona Helmsley at the mention of including your pet in your estate plan, but most will agree with article author Max Alexander that ensuring your pet will be taken care of after your death is not a frivolous indulgence but a simple matter of responsibility.
Providing for the care of your cat or dog does not necessarily mean leaving millions of dollars in a pet trust, what it really means is taking steps to ensure your pet doesn’t end up out on the street or in a cage in the local animal shelter. The Wall Street Journal suggests four simple steps pet lovers can take when planning their estate, including:
- Choosing a “pet guardian”
- Deciding whether or not to provide financial assistance for the care of your pet
- Adding language to your will or trust regarding the care of your pet
- Writing down a list of instructions for your caregiver
Over 50% of U.S. households own a dog or a cat. Those pet owners know that in return for companionship, love, and devotion pets rely on their owners for the basic necessities: food, shelter and protection. Why gamble with the future when ensuring their care can be so easy?
When Planning for the Future, Don’t Forget Your Pets
January 3, 2009
In our blog we often address how estate planning can help you provide for your children or protect your elderly parents or grandparents, but today let’s talk about another member of the family—Today we would like to address how estate planning can help you take care of your pets.
According to this article by Angie Campbell, two-thirds of American households have pets, but approximately 70% of adult Americans do not have a will or other kind of estate planning. This means that if something happens to you, your pets (arguably the most helpless members of your family) are left out in the cold—literally.
Providing for your pets doesn’t have to be a difficult or expensive undertaking. The first thing, of course, is to find friends or family willing to serve as loving caretakers of your pets after you are gone. Create a letter of intent listing important information such as the age of your pet, medical history if any, and veterinary contact information. You can make your letter as formal or informal as you like, including as many details about your pet as you think are necessary or helpful.
Taking on extra mouths to feed can sometimes be a financial strain on a household. If you want to go one step further and provide financially for your pets or their caretakers, ask your attorney about creating a pet trust. Making your pets (or their caretakers) a beneficiary of your estate doesn’t have to be a Leona Helmsley size endeavor unless you really want it to be. With the right help, a pet trust can be small and simple, and an ideal way to say a most important thank you to your beloved canine or feline companions. We would be happy to assist you in taking this extra step, which can be easily incorporated into your Estate Plan and/or updated Estate Plan.
Jinies.com