Choosing a Trustee: What you need to know

Choosing a Trustee: What you need to know

Establishing a trust is akin to nominating a financial guardian who takes charge of your financial affairs. The role of a trustee is multifaceted, encompassing tasks like collecting income, paying bills and taxes, saving and investing for the future, buying and selling property, providing for your loved ones, maintaining accurate records, and ensuring everything is organized and in good order.

Who Can Be Your Trustee

Interestingly, if you have a revocable living trust, you can don the mantle of a trustee. For married individuals, their spouse can serve as a co-trustee, providing continuity in handling financial affairs if one becomes incapacitated or passes away. This arrangement is common among couples who jointly own accounts and property. However, being your own trustee isn’t obligatory. Some people opt for an adult child, a trusted friend, or even a professional or corporate trustee such as a bank trust department or trust company.

The decision to appoint someone else as a trustee doesn’t mean relinquishing control. The chosen trustee is legally bound to adhere to the instructions in your trust and keep you informed. Moreover, you retain the right to replace your trustee if you change your mind. This flexibility ensures that your trust is managed according to your wishes and best interests.

Professional or Corporate Trustee – A Worthy Consideration

There are circumstances where a professional or corporate trustee’s expertise proves invaluable. These include scenarios where you may be elderly, widowed, or in declining health with no children or other trusted relatives living nearby. Perhaps your other candidates lack the time or ability to manage your trust, or maybe you don’t have the time, desire, or experience to manage investments by yourself. Certain irrevocable trusts might also prohibit you from serving as a trustee due to tax law restrictions. In such cases, a professional or corporate trustee, with their experience, time, and resources, can effectively manage your trust and help meet your investment goals.

However, it’s important to note that professional or corporate trustees do charge a fee for their services. But when you consider their experience, the range of services provided, and the potential investment returns they can deliver, the fee is generally quite reasonable.

What’s next?

In conclusion, before making a decision, it’s crucial to evaluate whether you are the best choice to be your own trustee, consider appointing a co-trustee, assess your trustee candidates carefully and realistically, and if considering a professional or corporate trustee, speak to several to compare their services, investment returns, and fees.

Remember, we’re here to assist you in selecting, educating, and advising your successor trustees, ensuring they have the necessary support and knowledge to carry out your wishes. Don’t hesitate to reach out to us today.

How to Make Your Inheritance Last

How to Make Your Inheritance Last

Research conducted in 2012 revealed that approximately a third of Americans who inherit money end up with negative savings within two years. Among those who inherit $100,000 or more, almost one in five lose it all through spending, donations, or mismanagement.

If you’re about to inherit, there are several measures you can take to ensure your newfound wealth lasts longer than a few years.

1. Don’t Rush Decisions

Put your inheritance in a safe place temporarily, like a savings account, money market, or CD. This will give you enough time to plan on how you should manage the inheritance. Invest in a long-term money plan or create an emergency fund that is enough to cover your cost of living for 6 months.

If you’re married, you also need to decide if the inheritance should stay in your name or become joint property with your spouse. Be extra careful if you’re thinking of giving some of it to your kids. There might be tax consequences you should know about.

2. Boost Your Retirement Savings

If you’re working and not saving the most you can in your 401(k), think about adding more, especially if your employer matches your contributions. If you don’t have a 401(k), start an IRA. Keep this in mind: if you’ve inherited a traditional IRA, the money you take out will be taxed. To pay less tax, only take out what you have to, and let the rest grow inside the inherited IRA.

3. Assemble a Team of Experts

To create a long-term strategy for your inheritance, it is highly recommended that you seek professional assistance. Here are the people that can help:

  • Financial Advisor: They’ll look at your money situation now and help you plan for the future. This includes investing, choosing the right insurance, handling debt, saving for college, and getting ready for retirement. They can also help you reach big goals like buying a home or starting a charity.
  • Accountant: They’ll help you keep track of your money and pay as little tax as possible.
  • Estate Planning Attorney: They’ll work with you to create a plan for your inheritance. This includes making sure your will is up-to-date, finding ways to lower estate taxes, setting up a plan for giving, making sure your money goes where you want it to, and protecting your inheritance from debts, bad actors, and legal issues.

A sizable inheritance has the potential to sustain you for life. But you don’t have to navigate this journey alone. We’re here to provide answers to any queries you may have about receiving, growing, donating, protecting, and eventually passing on your inheritance to your loved ones. Reach out to us today.

Navigating 10 Different Trust Options for Estate Planning

Navigating 10 Different Trust Options for Estate Planning

Navigating the different trust options in the pursuit of crafting an optimal estate plan can be overwhelming. If you are worried that things might go wrong, contact us and we can help you create a plan that meet your needs.

To start, here are 10 common types of trusts that are used with estate planning.

1. Bypass Trust

This trust holds a portion of a deceased spouse’s assets and property. It uses the deceased spouse’s lifetime exclusion amount to potentially eliminate estate taxes. This trust is significant as estate tax calculations occur at the first spouse’s death, thus bypassing it for estate tax purposes at the death of the second spouse. It is often known as a credit shelter trust or family trust.

2. Generation-Skipping Trust

This trust allows you to distribute wealth to grandchildren or subsequent generations, free from taxation, by utilizing your lifetime exemption to offset potential taxes.

3. Special Needs Trust

This trust is designed for supporting individuals with special needs. This trust also ensures that the eligibility for government benefits is not jeopardized due to the financial assistance.

4. Charitable Lead Trust

This trust channels income to the charity of your choice for a specified period of time. Afterward, the remaining funds benefit you or your loved ones, bringing substantial tax advantages.

5. Charitable Remainder Trust

This is the reverse of the Charitable Lead Trust. This Charitable Remainder Trust provides income to you or your loved ones for a specific period of time. Afterwards, it directs the remainder of the assets in the charitable remainder trust to be distributed to the charity of your choice, yielding significant tax savings after the designated time or death.

6. Marital Trust

Geared toward the surviving spouse, this trust safeguards assets and property for their benefit and qualifies for the unlimited marital deduction. Assets are excluded from estate tax at the first spouse’s death but included for tax purposes.

7. Irrevocable Life Insurance Trust

Holding high-value life insurance, this trust receives the death benefit after the trustmaker’s passing. It exempts life insurance proceeds from the estate for tax purposes while serving liquidity needs.

8. Grantor Retained Annuity Trust

This irrevocable trust offers you an annuity for a specific period based on trust property’s value. Upon annuity completion, the remaining assets are distributed to named beneficiaries. This trust is advantageous for making substantial financial gifts.

9. Qualified Terminable Interest Property Trust

Offering income to the surviving spouse, this trust ensures beneficiaries receive the remaining assets upon the spouse’s death. It maximizes estate and tax exemptions, and is often applied in second marriages to protect children from a prior relationship.

10. Testamentary Trust

Created within a will, this trust safeguards assets for beneficiaries instead of transferring them outright. This trust is beneficial for those needing financial management or asset protection. However, testamentary trusts require probate before becoming active.

Let’s work together to determine the right trusts for your needs. Reach out now to schedule an in-person or virtual appointment. We’re here and eager to assist you.

What Wills and Trusts Can Achieve

What Wills and Trusts Can Achieve

Do you still wonder about the differences between a will and a trust? Then you’re probably in the same boat as many. While we’re here to help you navigate this, it is still best to get a basic understanding of the two.

What a Revocable Living Trust Can Do – That a Will Cannot

  • Safeguard your interests if you can’t. It lets you appoint someone to handle your money and property that has been transferred to the trust if you can’t manage it yourself. A will only comes into play after your passing, so it’s not helpful during your lifetime.
  • Avoid probate. Assets and property in a revocable living trust skip the probate process, unlike those distributed through a will, which can be time-consuming and public.
  • Preserve privacy. A will is public, but a trust isn’t. By using a trust, you can keep your family’s matters private after your passing.
  • Reduce court challenges. Attacking a trust is generally harder than challenging a will due to privacy.

What a Will Can Do – That a Revocable Living Trust Cannot

  • Name guardians for minor children. When it comes to choosing someone to take care of your kids if you’re not around, a will is the tool to use. It’s like a special note that says who you want to be in charge of them.
  • Choose an executor. A will lets you choose someone called an executor or personal representative. They’re like the ones who tidy up things after a big event. So, if you pass away, this person steps up and works with the probate court. They collect and keep safe your stuff that’s not in a trust, pay any debts you might have, and then give what’s left to the folks you’ve named to receive it. However, if everything you own is already in a revocable trust, having an executor might not be needed.

What Both a Will and Trust Can Do

  • Allow changes. You can update them if your intentions or situation changes. Take note that this is only allowed if you still have the mental capacity to do so.
  • Strategically name beneficiaries. Both options empower you to choose who should get your belongings. However, a will only affects items that are in your name personally, while a trust’s directions influence only the things titled under the trust’s name.
  • Offer asset protection. Trusts, and sometimes wills, can include protective measures to prevent creditors from seizing assets that were transferred to your beneficiaries.

Are you ready to setup your wills and trusts?

With these foundational insights, we can collaborate more effectively to craft a personalized estate plan that aligns with your life aspirations. Reach out to us now to schedule a consultation, whether in person or virtually.

3 Reasons Why People Run Away from Estate Planning

3 Reasons Why People Run Away from Estate Planning

Embarking on estate planning might not seem like the most thrilling adventure – it’s more like the dentist’s chair than a roller coaster. Yet, your wish is likely to ensure your dear ones are secure and inherit your efforts, whether it’s a hefty or modest amount.

Don’t let these usual obstacles stand in your way of safeguarding yourself and your loved ones.

1. Death is an uncomfortable topic

Conversations about death, illness, money, family, wills, and trusts can be awkward. It’s a natural response to feel uneasy. However, don’t let a brief moment of discomfort deter you from securing your well-being and your loved ones’.

2. Can’t find the right time

Life is bustling for everyone, and we get it. Yet, the perfect moment may never arrive. Reach out to us, mark your calendar, and get it sorted. We’re here for both face-to-face and virtual appointments.

3. It’s too complicated

Delving into family intricacies, drawing diagrams, discussing finances, and navigating the law can be bewildering, especially if it’s unfamiliar terrain. If you’re perplexed, you’re not alone. We’ll simplify complex legal jargon into everyday language and make sure you’re comfortable with every step in your estate planning journey.

We are Here to Help

With proper guidance, estate planning isn’t as daunting as it may seem. We will work with you as a team and create a strong plan that is suited to your family situation and financial concerns. Reach out to us today.

Ensuring Financial Security for Your Unmarried Partner

Ensuring Financial Security for Your Unmarried Partner

When it comes to planning and safeguarding your unmarried partner, it’s important to explore various options. Factors such as the value of your assets, protection from your partner’s creditors, and your individual circumstances will influence which strategies are most suitable.

However, it’s crucial to seek guidance from an experienced estate planning attorney to ensure that you navigate these choices correctly. While DIY approaches may seem cost-effective, they can potentially lead to more complications that could be costly to resolve.

Joint Ownership on an Account or Property

One of the simplest ways to grant your partner immediate access and control over an account or property is by making them a joint owner. With the right of survivorship, your partner will automatically become the sole owner in the event of your passing, without the need for probate court involvement. However, it’s important to consider the drawbacks of this option:

1. Granting sole ownership to your partner means they will have control over the account or property after your death, potentially making decisions that may differ from your intentions.

2. Joint ownership exposes your assets to your partner’s debts, as creditors could seize jointly owned property to settle outstanding judgments.

3. In the unfortunate event of a breakup, removing your partner’s name from accounts or property can be challenging, potentially leading to costly and emotional legal disputes if cooperation is lacking.

Retirement Account or Insurance Policy Beneficiary

These forms typically allow you to specify both a primary beneficiary and a contingent beneficiary as a backup option. By naming your partner as a beneficiary, you can ensure they receive the funds without compromising your control over the account or policy during your lifetime.

However, If your partner faces legal action, the designated funds could potentially be accessible to satisfy any judgments against them. Additionally, when your partner passes away, they will have the authority to decide who will receive any remaining money.

Pay-on-Death or Transfer-on-Death beneficiary of an account has the same problems as above. On top of that, your partner will only have access to the money upon your death. If there will be a point that you are unable to make your own decisions, your partner will not be able to access the funds.

Last Will and Testament Beneficiary

Creating a Last Will and Testament grants you the ability to designate specific assets and property that you want your partner to inherit. This applies to items solely owned by you that do not automatically pass to a surviving joint owner or beneficiary. You can even outline how your partner will receive these assets, whether it be as a lump sum or through installments over time. In addition, a testament trust can be added to your will to safeguard the money and property that you leave to your partner.

However, it’s crucial to keep in mind that utilizing a will means your partner will need to navigate the probate process to receive the designated assets upon your passing. This process may involve court supervision until the final amount is distributed. It’s also important to note that a will solely operates upon your death and does not offer any instructions or benefits to your partner in the event of your incapacitation.

Revocable Livint Trust (RTL) Beneficiary

With a well planned RTL, the accounts and property held within the trust can serve as a lifeline for your partner even during your lifetime if you are unable to manage your affairs.

Within the trust agreement, you have the authority to designate who will manage the trust and benefit from its assets during your lifetime and after your passing. This allows you to provide financial support for your partner during any period of your incapacity, specify which accounts or property they will receive, and establish the timing and manner in which they will inherit these assets upon your death.

One significant advantage of an RLT is its ability to bypass the probate process. By placing your accounts and property under the trust’s ownership, you can maintain the privacy and confidentiality of your personal matters, shielding them from public scrutiny.

We are Here to Help

As you can see, there are several different ways to provide for your partner during your incapacity or when you die. We are here to help you craft a plan that addresses your concerns and help you ensure that your partner is taken care of during all phases of life. Call us today to schedule your in-person or virtual consultation.

750 F Street, Suite 2
Davis, CA 95616

333 University Ave, Suite 200
Sacramento, CA 95825

3017 Douglas Blvd, Ste 300
Roseville, CA 95616

288 Pearl Street
Monterey, CA 93940

San Antonio
18756 Stone Oak Pkwy, Ste 200
San Antonio, TX 78258

We operate on an appointment-only basis other than our Davis office.

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