What Is the Role of Using A Trust in Virginia Estate Planning?

Most people know that the basic core component of an estate plan is a will, but not everyone understands why trusts can also be a critical component of a clear and comprehensive estate plan. This means you must understand the state rules surrounding wills and trusts, and this process can be explained to you by an experienced Virginia estate planning lawyer.

The role of trusts in the Virginia estate planning process cannot be understated. Trusts serve numerous different purposes, such as saving you money in taxes, providing for controlled wealth for your loved ones, and shielding your assets.

Trusts are a formal arrangement in which a trustee holds and manages income producing assets on behalf of a beneficiary. If you own any assets that are producing income, such as mutual funds, stocks or bonds, a trust could be a powerful tool for you with Virginia estate planning. This gives you financial protection and long term flexibility.

Trusts can also help your loved ones avoid the probate process which is a common reason why many people sit down with a Virginia estate planning attorney. Assets that are formally inherited through a will have to go through the probate court process. This probate process could cost your loved ones money and time after you pass away. Probate courts could even drain your estate by as much as 7% of the value of your assets.

Assets that are placed inside a trust, not just in name but having their title transferred, could help you avoid the probate process altogether, meaning that your beneficiaries can obtain these assets quicker and save money. Sit down with a knowledgeable Virginia estate planning attorney to discuss more about what this looks like in your specific case and why trusts might be beneficial for you as well as your heirs.

 

 

Does A Trust Offer Asset Protection?

There are numerous different reasons why it might make sense to establish a trust for the purpose of meeting your estate planning goals. Far too many people misunderstand how trusts can be appropriately used and this means that the trust never gets funded and therefore is never able to pass on the assets to the intended beneficiaries.

Because of all the complicated issues involved in crafting a trust that addresses all of your issues and is followed through so as to be viewed as valid under state law, you must work with an estate planning lawyer.

One of the most common reasons that people choose to use trust is because these enable asset protection. A revocable trust established during your lifetime becomes irrevocable after you pass away. If the assets are still inside the trust for the lifetime of your children, those assets are protected from litigation that could be filed against your children.

Another good reason to use a trust is because it can help to provide for children from multiple marriages. A trust is an outstanding tool to provide assets for your spouse during the course of his or her lifetime after you pass away, then enabling any remaining assets to be passed on to your children from your first marriage. This helps to protect your children as well as your grandchildren who might ultimately receive your assets.

 

How Does A Trust Help to Prevent Bad Decisions in The Future?

There are numerous different reasons for establishing a trust, especially in light of the constantly shifting nature of estate tax reform. Clients often ask estate planning attorneys, why do really need a trust. It might seem as though the simplest approach is to use a last will and testament to document how you intend for your loved ones to receive materials from your estate.

However, it’s likely that the tax cuts, which have a very high exemption amount, are probably temporary. Planning for incapacity, adding privacy, and avoiding probate are just a couple of the other reasons why you might wish to use a trust.

Trusts can also be used to limit a child’s access to an inheritance or to prevent bad decisions that are made by a surviving spouse. This is because trusts allow for some level of control by the trust creator as far as who receives benefits from the trust and at which point in time.
Employing some level of control is best exercised by putting together and properly funding a trust. Your lawyer should be used to draft this trust.

If you are concerned about the surviving spouse spending too much money on frivolous items and not leaving behind enough for your children or grandchildren, the support of an estate planning attorney is crucial in developing a living trust document that reflects your individual needs.

When Is Your Living Trust Better Than a Will?

Do you only have a handful of documents set up for estate planning purposes? If so, you’re like most people who don’t realize that your will probably doesn’t go far enough to protect your interests. Having a living trust is a great way to incorporate additional planning opportunities into your big picture to ensure that you’ve considered the whole scope of everything. 
In some situations, a living trust is a better place to incorporate these estate planning concerns. Talking a lawyer begins this conversation and ensures that you’ve considered all the factors that belong in your ultimate trust. Once your lawyer has reviewed what you hope to accomplish, you’ll be in a better place to move forward with your entire estate plan.
A living should be a cornerstone of your estate planning toolkit if you fall into any of the following categories:

  • You have a surviving spouse
  • You are a senior with significant assets
  • You have a family to support even after you pass away

There is good chance that you might already have considered the basic benefits of having a will but a will is not enough if you need to accomplish these additional goals. A living trust or revocable trust many be a better tool instead. Living trusts were created specifically to fix the issues that are often tied to a traditional will.
The first thing that makes a revocable trust different from other types of trust is that it can be changed or dissolved base on the wishes of the person who created it. Rather than having your estate go through the process of probate, wherein the court has temporary possession of all of the assets inside, you can use a living trust to ensure a smooth and seamless transition of these assets.
You might be concerned that your final wishes surrounding property won’t be honored with a living trust. However, a trust is stricter than a will when it comes to ensuring that appropriate requirements are met. A trust can also handle more specific concerns that you wish to be carried out on a regular basis.
Another benefit of a living trust is you can establish your inheritor trustee as your power of attorney. To put together a living trust, you will want to first discuss this opportunity with the help of an experienced estate planning lawyer.
 
 

Don't Give Too Much Too Soon in Your Estate Plan

It makes sense that you want to pass on as much as possible to your loved ones. What’s even more important, however, is how you choose to do this. The timing of when you make a gift to a loved one can make a big difference in how your family member is able to manage that resource.

The establishment of a trust is a popular tool for an estate planning strategy but if you’re not careful, it could end up being a big mistake. Putting together a trust when your children are relatively young, such as those under 6, might lead you to think that they can handle receiving large sums of money when they reach age 21 or 25.
It can be a shock for many parents who have already put this plan into place to discover that the children are simply not ready to inherit such a large sum of money. If you’re not careful in how you structure your fund, however, it’s difficult to overturn this when the child reaches these milestones.
Parents should consider delaying bigger portions of a child’s inheritance to allow a trustee to have greater discretion in distributing the money should your child need it sooner. It is not always easy to predict what your child may need in the future, but giving them too much too soon could actually make it more difficult for them to develop into adulthood and to protect their own interests.
Using a trust that has flexible terms and scheduling a consultation with a Virginia Beach estate planning lawyer who can walk you through this process and advise you against some of the most common mistakes is strongly recommended.
 

The Four Critical Components of Living Trusts

A trust is a legal way of managing, distributing, and holding property. The selection of a living trust is very popular, but you should always understand what is needed to ensure that this trust is valid.
In order for a trust to be effective and valid, it needs to have four different elements. First of all, there must be assets. Secondly, there must be a person who has created the trust, often referred to as the grantor or the trustor.
Another person must be named in order for the trust to be legally effective. This person is called the trustee and this individual manages, holds, and distributes the assets. Finally, in order to put together a properly structured trust, the trust must have a purpose and it must be funded. The person for whose benefit the trust is created is referred to as the beneficiary and you may have more than one beneficiary depending on your unique estate plan. Living trusts can help you avoid the probate process and for this reason are a popular tool for a number of different people who are looking to have a comprehensive estate plan. Scheduling a consultation directly with an experienced lawyer is the only way to figure out whether or not a living trust should be part of your estate plan and which or your assets should be placed inside it.
A living trust is titled in this manner because you can change it or revoke it over the course of your life, giving you maximum freedom and flexibility. Call a Virginia estate planning lawyer today to learn more.
 

Should You Consider Using a Charitable Lead Trust?

Do you want to leave behind a legacy for charity in addition to accomplishing your estate planning goals? If so, read on to learn more about the options available with a charitable lead trust.
A family that intends to give to charity while also minimizing estate and gift taxes should consider all possible strategies recommended by an experienced estate planning attorney.
ThinkstockPhotos-524226911A charitable lead trust may be one such tool that is effective for families looking to accomplish this goal. These trusts work the best in a low interest rate environment so the present conditions for taking advantage of a charitable lead trust are favorable. Interest rates may have increased somewhat over the last couple of years but are still historically low. There are two major types of charitable lead trusts.
The first is known as a charitable lead unitrust, which pays out a set percentage of the assets inside the trust recalculated on an annual basis. The second type is known as a charitable lead annuity trust which makes annual payments to the charity associated with a fixed percentage of the initial value of the trust assets or a fixed dollar amount.
Consulting with an experienced estate planning attorney can help you identify which one of these options is most appropriate for you and how you can accomplish your estate planning goals using tools like charitable lead trusts.
 
 
 

Four Things You Need to Know About Using a Living Trust

You may also have heard that a living trust is referred to as a revocable trust. This means that you are eligible to update it or cancel it over the course of your life.
As the name suggests, your living trust is effective over the course of your lifetime, meaning that you can also transfer assets into it to protect you even when you are incapacitated. There are four critical things you should keep in mind as you put together a living trust.
These include:

  • Make use of power of attorney documents such as a financial power of attorney or a healthcare power of attorney to appoint someone else to make decisions on your behalf if you are unable to do so.
  • Transfer all probate type assets into this trust using a letter of instructions. Legal guidance should be used for any complex property moving into the trust.
  • Consider using a pour-over will. The only way to avoid probate is to ensure that the property is inside the living trust when you pass away. A pour-over will can assist with this process.
  • Select the right trustee. You could name an individual or a corporate trustee to serve in this role.

A living trust can be used to help many different estate planning situations, and working with your lawyer regularly to ensure that all your estate planning strategies are in line with your needs is important. Consulting with an experienced estate planning attorney in Virginia is strongly recommended if you intend to use living trusts as part of your process.

Choosing Trust and Estate Attorney Takes Some Research

young  woman signing contract front of professional

young woman signing contract front of professional

Most people probably know, or strongly suspect, that they need a lawyer when it comes to planning an estate or setting up trusts.
But how should they go about selecting one?
A recent web posting at trust-estate.lawyers.com offers some helpful pointers.
“The practice of ‘trusts and estates’ is a very broad category that includes estate planning, estate and trust administration, probate, elder law and more,” the site states. “Estates and trusts attorneys usually have more expertise in specific issues. So, if you need a trusts and estates attorney, look for one who specializes in the area of your concern. For example, if your mother just passed away and you want to hire an attorney to settle her estate, look for someone with lots of experience probating estates in the county where your mother lived. Or, if you want to plan your estate but have a complicated financial situation, look for an attorney with lots of experience drafting trusts, ideally someone with a tax background as well.”
The author of the article cautions that it’s easy to be fooled into thinking a lawyer has more knowledge and expertise in given areas than is actually the case. But, the story points out, that need not necessarily be a deal-breaker.
“Unfortunately, there are some attorneys who hold themselves out as experts in trusts and estates, but who have little or no experience in this area of practice. If one of these attorneys offers to draw up your will or trust, he or she will probably just plug your information into a software program without really knowing the details about the law or what effects it might have on your estate.
“That said, if money is tight and you need to find a lawyer who charges a moderate fee, consider finding a smart, less experienced, attorney to help you. After all experience does not necessarily make a good lawyer, and a newer attorney may very well become a great attorney. However, less experienced attorneys should also know when they are in over their heads, so make sure that any less experienced lawyer you hire has a more experienced attorney to consult, if needed.”
The article recommends doing research in advance once a list of potential lawyers is selected, including visiting his or her website; contacting the state bar association to make certain they are all in good standing; speaking with other people about their experiences with legal representatives; and checking up on certifications.

Wills And Trusts Require Expertise, Not ‘Cheaper’ Alternatives

Estate planning

Estate planning

There is no easy way out, certainly no simple way out, when it comes to estate planning.
As the American Bar Association website points out, in all likelihood the do-it-yourself estate planner has a client who could use better advice.
“It is easy to be lured by advertisements claiming you can save time and money by drafting your own will or trust using do-it-yourself websites, retail software or fill-in-the-blank will or trust kits from the bookstore,” the site states  “It is unlikely that these alternatives will generate a suitable plan that accomplishes all of your objectives. Only a qualified trusts and estates lawyer can interpret the myriad laws bearing on property rights, taxes, wills, probate, and trusts. More important, canned programs and forms cannot provide the wide range of legal advice to assure that the form is correct, that assets passing outside of your will or trust are properly handled, that state law nuances are taken into account, or that relevant tax, legal and personal issues are properly addressed.”
Far from being the more expensive option, the ABA says consulting an attorney can actually be the less costly alternative in the long run.
“On the other hand, you can save time and money by preparing for a meeting with your estate planning lawyer. You can organize your information regarding your assets, liabilities, and title arrangements and think about your feelings regarding providing for various family members. Most lawyers practicing in this area have questionnaires that will help you with this process. You should take with you copies of important documents such as previous wills or trusts, powers of attorney, life insurance policies, employment benefits, and prenuptial agreements and divorce decrees.”