You don’t have to own a big house to have an estate. Your estate consists of everything you own right now. This can include your home, personal property, investments, bank accounts, retirement plans and any interests in a family business or partnerships. The Bergman team can help analyze your current situation and create a customized estate plan or to develop strategies to accomplish your unique wealth-planning goals. We understand that careful planning now can help you avoid costly mistakes later. Bergman and her team devote their knowledge, experience, and creativity to provide you with personalized legal services that will make a difference in your life and those you love. We are committed to help you avoid estate taxes and probate, protect your assets from creditors and predators, build your wealth, and protect your family from unexpected events.
The Bergman team will help you uncover your hopes, fears, and expectations for yourself and for those who are most important to you. This process almost always requires the preparation of several sophisticated legal documents, but those documents themselves are not ‘estate planning.’ Planning is a process, represented by a complete strategy that is properly documented and maintained by a professional who has taken the time to get to know you and who is committed to continuing to serve you.
Do You Need An Estate Plan?
1. I have a will. Why would I want a living trust?
Contrary to what you’ve probably heard, a will may not be the best plan for you and your family. This is primarily because a will does not avoid probate when you die. A will must be validated by the probate court before it can be enforced. If your will goes through probate, it will become public record and could be viewed by the public at large, including creditors who want to go after your assets.
Another downside is that a will goes into effect after your passing, it provides no protection if you become physically or mentally incapacitated. If this happens, a court could easily take control of your assets and make decisions for you.
By contrast, a living revocable trust lets you keep control of your assets while you are living — even if you become incapacitated — and after you die.
2. What is probate?
Probate is the legal process that takes place upon death to administer an estate and ensure your debts are paid and your assets are distributed according to your will. If you don’t have a valid will your assets will be distributed according to state law.
3. What’s so bad about probate?
- It can be expensive. Legal fees, executor fees, and other costs must be paid before your assets can be fully distributed to your heirs. If you own property in other states, your family could face multiple probates, each one according to the laws in that state.
- Gathering of all trust assets
- It takes time, usually nine months to two years, but often longer. During part of this time, assets are usually frozen so an accurate inventory can be taken. Nothing can be distributed or sold without court and/or executor approval. If your family needs money to live on, they must request a living allowance, which may be denied.
- Your family has no privacy. Probate is a public process, so any “interested party” can see what you owned, whom you owed, who will receive your assets and when they will receive them. The process “invites” disgruntled heirs to contest your will and can expose your family to unscrupulous solicitors.
- Your family has no control. The probate process determines how much it will cost, how long it will take, and what information is made public.
4. Doesn’t joint ownership avoid probate?
Not really. Using joint ownership usually just postpones probate. With most jointly owned assets, when one owner dies, full ownership does transfer to the surviving owner without probate. But if that owner dies without adding a new joint owner, or if both owners die at the same time, the asset must be probated before it can go to the heirs.
There are other problems with joint tenancy as well. For example, when you add a co-owner, you lose exclusive control of the property. Your chances of being named in a lawsuit and of losing the asset to a creditor are increased. There could be gift and/or income tax problems. And, since a will does not control most jointly owned assets, you could disinherit your family. With some assets, especially real estate, all owners must sign to sell or refinance. So if a co-owner becomes incapacitated, you could find yourself with a new “co-owner,” such as a court or another party.
5. Why would the court get involved at incapacity?
If you can’t conduct business due to mental or physical incapacity (dementia, stroke, heart attack, etc.), only a court appointee can sign for you — even if you have a will. (Remember, a will only goes into effect after you die.)
Once the court gets involved, it usually stays involved until you recover or die and the court, not your family, will control how your assets are used to care for you. This public, probate process can be expensive, embarrassing, time consuming and difficult to end. It does not replace probate at death, so your family may have to go through probate court twice.
6. Does a durable power of attorney prevent this?
A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so. However, many financial institutions will not honor one unless it is on their form. And, if accepted, it may work too well, giving someone a “blank check” to do whatever he/she wants with your assets. It can be very effective when used with a living trust, but risky when used alone.
7. How does a living trust avoid probate and prevent court control of assets at incapacity?
When you set up a living trust, you transfer assets from your name to the name of your trust, which you control. Because your assets are titled to the trust, there is nothing for the courts to control when you die or become incapacitated.
8. Do I lose control of the assets in my trust?
No. You keep full control. As trustee of your trust, you can do anything you could do before — buy and sell assets, change or even cancel your trust. That’s why it’s called a revocable living trust. You even file tax returns for the trust under your name. Nothing changes but the names on the titles.
9. Is it hard to transfer assets into my trust?
No, and your attorney, trust officer, financial adviser and insurance agent can help. Typically, you will change titles on real estate, stocks, CDs, bank accounts, investments, insurance and other assets with titles. Most living trusts also include jewelry, clothes, art, furniture, and other assets that do not have titles.
Some beneficiary designations, such as insurance policies, should also be changed to your trust so the court can’t control them if a beneficiary is incapacitated or no longer living when you die. (IRA, 401(k), etc. can be exceptions.)
10. Doesn’t this take a lot of time?
It will take some time – but you can do it now, or you can pay the courts and attorneys to do it for you later. One of the benefits of a living trust is that all of your assets are brought together under one plan.
11. Should I consider a corporate trustee?
You may decide to be the trustee of your trust. However, some people select a corporate trustee (bank or trust company) to act as trustee or co-trustee now, especially if they don’t have the time, ability or desire to manage their trusts, or if one or both spouses are ill. Corporate trustees are experienced investment managers, they are objective and reliable, and their fees are usually very reasonable.
12. If something happens to me, who has control?
If you and your spouse are co-trustees, either can act and have instant control if one becomes incapacitated or dies. If something happens to both of you, or if you are the only trustee, the successor trustee you personally selected will step in. If a corporate trustee is already your trustee or co-trustee, they will continue to manage your trust for you.
13. What does a successor trustee do?
If you become incapacitated, your successor trustee looks after your care and manages your financial affairs for as long as needed, using your assets to pay your expenses. If you recover, you resume control. When you die, your successor trustee pays your debts, files your tax returns and distributes your assets. All can be done quickly and privately, according to instructions in your trust, without court interference.
14. Who can be successor trustees?
Successor trustees can be individuals (adult children, other relatives, or trusted friends) and/or a corporate trustee. If you choose an individual, you should also name some additional successors in case your first choice is unable to act.
15. Does my trust end when I die?
Unlike a will, a trust doesn’t have to die with you. Assets can stay in your trust, managed by the trustee you selected, until your beneficiaries reach the age(s) you want them to inherit. Your trust can continue longer to provide for a loved one with special needs, or to protect the assets from beneficiaries’ creditors, spouses and future death taxes.
16. How can a living trust save on estate taxes?
Your estate will have to pay federal estate taxes if its net value when you die is more than the “exempt” amount at that time. (Your state may also have its own death or inheritance tax.) If you are married, your living trust can include a provision that will let you and your spouse use both of your exemptions, saving a substantial amount of money for your loved ones.
17. Doesn’t a trust in a will do the same thing?
Not quite. A will can contain wording to create a testamentary trust to save estate taxes, care for minors, etc. But, because it’s part of your will, this trust cannot go into effect until after you die and the will is probated. So it does not avoid probate and provides no protection at incapacity.
18. Is a living trust expensive?
Not when compared to all of the costs of court interference at incapacity and death. How much you pay will depend primarily on your goals and what you want to accomplish.
19. How long does it take to get a living trust?
It should only take a few weeks to prepare the legal documents after you make the basic decisions.
20. Should I have an attorney do my trust?
Yes, but you need the right attorney. A local attorney who has considerable experience in living trusts and estate planning will be able to give you valuable guidance and peace of mind that your trust is prepared and funded properly.
21. If I have a living trust, do I still need a will?
Yes, you need a “pour-over” will that acts as a safety net if you forget to transfer an asset to your trust. When you die, the will “catches” the forgotten asset and sends it into your trust. The asset may have to go through probate first, but it can then be distributed as part of your overall living trust plan. Also, if you have minor children, a guardian will need to be named in the will.
22. Is a “living will” the same as a living trust?
No. A living trust is for financial affairs. A living will is for medical affairs; it lets others know how you feel about life support in terminal situations.
23. Are living trusts new?
No, they’ve been used successfully for hundreds of years.
24. Who should have a living trust?
Age, marital status and wealth don’t really matter. If you own titled assets and want your loved ones (spouse, children or parents) to avoid court interference at your death or incapacity, you should probably have a living trust. You may also want to encourage other family members to have one so you won’t have to deal with the courts at their incapacity or death.
25. Summary of Living Trust Benefits
- Avoids probate at death, including multiple probates if you own property in other states
- Prevents court control of assets at incapacity
- Brings all of your assets together under one plan
- Provides maximum privacy
- Quicker distribution of assets to beneficiaries
- Assets can remain in trust until you want beneficiaries to inherit
- Can reduce or eliminate estate taxes
- Inexpensive, easy to set up and maintain
- Can be changed or cancelled at any time
- Difficult to contest
- Prevents court control of minors’ inheritances
- Can protect dependents with special needs
- Prevents unintentional disinheriting and other problems of joint ownership
- Professional management with corporate trustee
- Peace of mind
Our Estate Planning Process
Step One: Sign Up
We offer prospective estate planning clients a complimentary initial consultation for general estate planning. Please contact us to schedule this consultation.
Step Two: Create Documents
During this first meeting, our attorneys will listen to our clients’ needs, plans and goals. We will generally make some estate planning recommendations, and we may ask for a follow-up meeting to present a summary and specific recommendations. After making our recommendations, we will quote a flat fee for design, drafting and implementation of the plans. Prospective clients may then choose to engage our firm by signing a fee agreement and paying a deposit; or they may choose to take some time to reflect before moving ahead.
Step Three: Review
Should potential clients choose to engage our firm at this point, a follow-up meeting to sign documents and begin implementation of the plan will be scheduled. This meeting may be quite lengthy, as we will thoroughly explain the planning documents to your clients, and to their family members if necessary. We will also explain how to fund trusts and provide instructions on how to complete this process.