You don’t need to live in the Biltmore House, have a vacation home, or have a private art collection big enough to rival MOMA to consider yourself the owner of an estate. In fact, virtually anyone who owns anything has an “estate” in the eyes of the law. Although the term may conjure images of mansions and flashy cars, for the purposes of estate planning law, the term “estate” covers a whole lot more.
The "For Sale" signs and "Pending/Sold" signs are still taking over Asheville, and clients have been checking in with us after new home purchases, so we thought this blog topic might be of interest. Whether this is your first home or an upgrade/downsize, purchasing a home is a big event in your life. When these major life changes occur, it is important that you are properly prepared. Below are a few things for you to consider now that you finally have the keys to your new home!
If you own a closely-held business, a Revocable Living Trust might be a great tool to consider – as it gives you the ability to transfer your business interests into a trust.
Typically there will be a gap between the date of death and the appointment of an executor to handle your estate during the probate process. This time gap can cause problems with a business running smoothly and in extreme cases can lead to your business dying with you.
As a way around this, business owners can transfer their interest in the business into a Revocable Living Trust. When the owner dies, the successor trustee can continue to run the business in a seamless manner and without delay.
Since the owner will only be transferring the business interest (as opposed to the actual business) into the trust – there won't be any major functional differences when running the business. At the same time, in the event that something happens to the owner, business employees or others who rely on everything running smoothly won’t suffer the consequences of a time delay in the event of the owner's death.
Whether or not to create a Revocable Living Trust will vary from person to person based on their needs and estate planning goals. If this is something you would like to learn more about, feel free to reach out to us so we can discuss it further.
One of the biggest misconceptions about Revocable Living Trusts is that they are only for the wealthy. However, even if you have only accumulated a moderate amount of wealth or assets, having a trust might be a useful tool to consider for your estate plan.
Probate is the court-supervised process of settling an estate after someone dies. It is a time-consuming process and can sometimes end up being costly. Additionally, it is completely public – anyone can see the distributions made and who they are made to.
A Revocable Living Trust, however, allows for greater privacy since any assets that were titled in the name of your trust during your lifetime will generally avoid the probate process and will not become part of the public record. At the same time, a Revocable Living Trust can be altered, revoked, or amended any time during the lifetime of the person who created it – without the consent of the trustee or others – allowing privacy at death and flexibility during life.
While it is important to fund the trust by adding your assets to it, it is also important to have a will that will work in conjunction with the trust. A carefully drafted will can allow for assets that were not in the trust at the time of your death to “pour over” into the trust during the probate process.
Revocable Living Trusts are useful tools, but it’s important to keep in mind that they are not a magic solution to all of your problems. Without further planning, most Revocable Living Trusts cannot help you avoid income taxes, avoid estate taxes, shield assets from your creditors, or help you qualify for Medicaid. While options may be available such as a credit shelter trust to reduce the amount of estate taxes due for some people or a spendthrift trust to prevent a creditor from accessing some assets, these are issues that would need to be carefully addressed on a case-by-case basis.
Whether or not to create a Revocable Living Trust will vary from person to person based on their needs and estate planning goals. If you would like to talk about whether one will be beneficial to you, we recommend talking with an attorney or tax advisor. As always, don't hesitate to contact us if this is something you would like to discuss.
While it is never something we want to consider, planning for incapacity is an important part of making an estate plan. There are many methods and tools available to make sure that your wishes are respected and that the people you trust the most will be the ones making important decisions on your behalf.
Some useful tools to consider include:
We highly recommend that you put a plan in place so your wishes are followed in the event of incapacity, and perform periodic reviews of your documents to make sure nothing needs to be changed or updated.
