Downs Law Firm, P.C.
A badly in debt woman dies leaving the proceeds of substantial insurance policies to her children only to have her trust contested by relatives who claim an amendment naming the children as beneficiaries is invalid with no witnesses, misspelled names, suspicious signatures and was never given to previous trustees for review as required by agreement. A long, expensive, and protracted legal battle likely is brewing.
Unlike a last will and testament, a revocable living trust is effective during your lifetime.
One of the biggest challenges that clients encounter during the process is deciding who to appoint as their trustees, powers of attorney, health care surrogates and executors.
Selecting an Executor (or Trustee)? If you can’t pay your bills due to injury or death, selecting an Executor (or Trustee), often proves to dictate how well the plan will work. Who do you pick as the quarterback? In a Will, Trust, or Power of Attorney, you must select a money managing chain of command. Who are you going to hand the checkbook to? Although the role has different names for different documents, the considerations are the same. They all serve as fiduciary, who you trust to stand in your shoes and act for you when you can’t. In a Power of Attorney, this fiduciary role is called an “Attorney-in-Fact”; for a Last Will and Testament, this is an executor, and for a trust, it’s the trustee. Selecting fiduciaries becomes more accessible when the role is understood. A fiduciary is someone empowered to control different assets for another person, usually the intended beneficiary of the assets. The fiduciary must put the fiduciary’s interests aside and act in the beneficiary’s best interest, even when doing so is contrary to the fiduciary’s interests. Who Can Be a Fiduciary? A fiduciary can be anyone with legal capacity, including family members. Suppose you are not comfortable with a relative controlling your assets as a fiduciary. In that case, you may prefer to have a non-family member or even a financial institution serve in that role. For example, an estate planning attorney is a fiduciary by the nature of her legal and ethical obligation to act in the best interest of her clients. Still, an attorney also may serve as a fiduciary for an estate, a person, or a trust. The fiduciary appointed to administer a trust and manage its assets is a trustee. If the trust is created under your last will and testament to administer the inheritance for your beneficiaries, then such trust is known as a “testamentary” trust. On the other hand, if the trust is created under your revocable trust established during your lifetime, then the inheritance trusts come into play upon your death. Both inheritance trusts are irrevocable; the difference is that the “testamentary” trust requires probate, and the other does not. The fiduciary nominated by you to carry out the probate and administration of your Last Will and Testament is an executor (or personal representative). The executor must first receive permission from the court to carry out the executor’s responsibilities. Their authority to act comes into effect only after the last will has been presented for probate and the court appointments that person to serve. How Do I Select the Best Candidate to Be My Fiduciary? Ordinarily, the person doesn’t need to be a financial expert: pick someone honest and reliable. They can hire experts, but there is no substitute for character. Selecting a fiduciary to take care of your financial and legal decisions at incapacity or death can be more complicated than deciding who you want to inherit your estate. If your family includes multiple marriages or has
A spendthrift trust allows you to leave funds to a beneficiary without giving them full control over those funds.
A pot trust is a type of trust that lists children as beneficiaries, with the trustee using his or her discretion as to how trust assets should be spent. If you have minor children, you might consider setting up a pot trust to meet their financial needs, if something should happen to you. This type of trust allows you to create a single pool of assets to be used for the benefit of multiple children.
Estate planning is a cornerstone of any healthy financial plan, but it can be difficult to discuss.
Trusts give parents of special-needs children additional options for extending care and financial assistance. However, you might need some expert help.
The death of a loved one results in an emotional grief that, when combined with large sums of money on the line, can cause the beneficiaries of the will or trust or the heirs of the deceased to challenge the validity, interpretation, or administration of the will or trust.
When you hear the word trust fund, you might think of wealthy kids a big chunk of cash on their 25th birthday. However, trust funds aren’t just for the rich. They are flexible tools to protect your loved ones.
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