Tuesday, November 30, 2010

What's the difference between a divorce, a legal separation, and an anullment?

Divorce (also called "dissolution of marriage") ends your marriage. After you get divorced, you will be single, and you can marry or become a domestic partner again. If you get divorced, you can ask the judge for orders like child support, spousal support, custody and visitation, domestic violence restraining orders, division of property, and other orders.

Legal Separation does not end a marriage. You can't marry or enter into a partnership with someone else if you are legally separated (and not divorced). A legal separation is for couples that do not want to get divorced but want to live apart and decide on money, property, and parenting issues. Couples sometimes prefer separation for religious reasons 

Annulment (or "nullity of marriage" or "nullity of domestic partnership") is when a court says your marriage is NOT legally valid. A marriage that is incestuous or bigamous is never valid. There are other reasons for anullments, but annulments are very rare. If you ask to have your marriage annulled, you will have to go to a court hearing with a judge. We The People cannot assist in preparing forms for annulment.

Monday, November 29, 2010

Funding my Living Trust


Once your trust has been signed, a very important task remains to be accomplished. In order to achieve your objectives of ensuring that your loved ones receive their inheritance as you planned as well as eliminating the delay and cost of probate, assets must be transferred to the trustee of the living trust. Your trust will remain "unfunded" until you transfer your assets into it.

People often place their real estate, financial accounts, proceeds for life insurance and annuity contracts, corporations, partnerships, businesses and any other significant assets into the trust. Not all assets need to go into a living trust. Life insurance allows you to directly name a beneficiary to whom the proceeds would be paid upon your death without processing through probate. IRAs and 401Ks cannot be placed in a trust.

Assets many choose not to include are small assets which may be able to pass to heirs without formal probate through the "pour over will." The pour over will takes property left outside of the trust and places it into the trust after you pass away so that the property may be distributed in accordance with the trust. The value and type of assets which you may leave to be dealt with by
a pour over will and still avoid probate vary from state to state.

As is often the case, it is a good idea to check with a Certified Public Accountant, or Attorney if you have questions on your transfer to obtain advice on which assets you should transfer to your living trust.

Examples of commonly transferred assets include, but not are limited to:
  • Real estate
  • Savings accounts
  • Sole proprietorships and other business interests
  • Other significant property or assetsStocks and bonds held directly in a certificate; ownership interests in private or closely-held corporations

Sunday, November 28, 2010

Parties of a Living Trust

Settlor/Grantor - The person who creates the trust.

Trustee - The person who will manage the trust. The grantor and the trustee are generally the same person.

Successor Trustee - The person(s) with whom the settlor places the responsibility for managing and distributing the assets placed in the living trust after the settlor's death. If you pass away your successor trustee gathers your assets, pays valid debts, claims and taxes, and then distributes your assets as you have directed in your living trust without your assets being subject to probate.

Also, if you become incapacitated, your successor trustee can take over the management of the assets in the trust for your benefit without any further legal proceedings.

Beneficiaries - The person(s) named by the settlor to receive the assets after death. The settlor will designate in the living trust how the estate should be divided and when the beneficiaries would be entitled to receive the distributions. When the settlor dies, the successor trustee is responsible to distribute the assets according to the wishes of the settlor, as set out in the trust.

Saturday, November 27, 2010

Our Living Trust Package includes:

1. DECLARATION OF TRUST or THE TRUST AGREEMENT is the written document that sets forth the terms and conditions of the trust. This document is tailored to meet the unique needs of
your family and circumstances.

It will include provisions such as:
Names of trustees
Names of your family members
Names of beneficiaries and terms of distribution
Name of a custodian for any minor beneficiary
Names of who will serve and in what order as successor trustee

THE POUR OVER WILL transfers any remaining assets or property not previously transferred into the trust. The function of the pour over will is to act as a safety net to catch any property that has been intentionally or inadvertently left out of your trust at the time of your death. This document allows those assets to "pour over" into the trust so they may be distributed according to the terms of the trust. This is also the important document that will state your choices for a guardian if you have minor children.

An ORGANIZATIONAL SECTION for record keeping and to collect information about your personal and financial affairs is included. Forms are provided which can be completed regarding where assets are located, wishes for memorial services, and any other information which you consider to be pertinent. The organization will be instrumental in assisting loved ones settle your estate, as well as beneficial to your power of attorney agents or representatives in the event that you are disabled or incapacitated. It also allows for easy tracking of your assets to benefit you while funding your estate, managing your estate and furthermore, getting and staying organized can speed estate distribution.

A POWER OF ATTORNEY FOR FINANCES AND PROPERTY MATTERS allows you to delegate broad authority over your personal financial affairs. A power of attorney for finances and property matters gives you peace of mind to know the person you designate will manage your affairs should you be unable or unavailable as well as during periods of incapacity. You may choose a power of attorney that is effective immediately and continues to be in effect even if you become incapacitated or incompetent; or you can choose a springing power of attorney, which doesn't become effective until you become
incapacitated or incompetent. We The People will not be able assist Minnesota residents in preparing a springing power of attorney.

(Please note: With a springing power of attorney, a physician generally must certify the incapacity of the principal
before the power of attorney "springs" into effect, but the physician may be reluctant to make such a certification
because of the Health Insurance Portability and Accountability Act.)

THE DURABLE POWER OF ATTORNEY FOR HEALTH CARE allows you to appoint a person to make important decisions about your medical care, including your right to withhold certain medical treatments in certain circumstances.

THE LIVING WILL can be part of the durable power of attorney for health care or a separate document in some states. It is an optional document that formally expresses your end of life decisions and your wishes to forgo extraordinary medical treatment if you become terminally ill.

Friday, November 26, 2010

What types of trusts do By The People offer?

We The People now offers the following four living trust products, which have the following characteristics:

Single Trust

a. Assets are held in trust during the settlor's life and then distributed to beneficiaries after the settlor's death.

b. Used by a single or married individual.

c. Main purpose is to avoid probate of the assets transferred to the trust.

Joint A Trust (with optional B trust)

a. Assets are held in trust during the settlors' joint lives. After one settlor dies, assets remain in trust for the suriving settlor, with the surviving settlor having full control over the assets and an option to create a B trust (with limited control) for tax purposes. Assets are distributed to the beneficiaries after the surviving settlor dies.

b. Used by a married couple.

c. Main purpose is to avoid probate of the assets transferred to the trust.

d. Second main purpose is to give maximum flexibility to surviving spouse. If necessary, the surviving spouse may elect to create an irrevocable estate tax-saving trust (B trust). Generally, this trust is appropriate for married couples with a combined estate up to $4 million.

e. The main disadvantage of this trust is the surviving settlor inherits all the assets after the first death and the deceased settlor loses control over his or her share of the estate after his or her death. Of course, if the surviving spouse elects to create the irrevocable estate tax-saving trust, then the disadvantages associated with the A/B trust would also apply here, with the big difference that the surviving spouse makes the choice. The surviving spouse has 9 months in which to create the irrevocable B Trust by signing a qualified disclaimer and the surviving spouse must not have accepted the interest or any of its benefits prior to the disclaimer. The surviving spouse should consult with his or her qualified tax professional to determine whether to activate the irrevocable trust.

3. Joint A/B Trust
a. Assets are held in trust during the settlors' joint lives. After one settlor dies, assets are divided into an A trust, with the surviving settlor having full control over those assets, and a B trust, with the surviving settlor having limited control. Assets are distributed to the beneficiaries after the surviving settlor dies.

b. Used by a married couple.

c. One main purpose is to avoid probate of the assets transferred to the trust.

d. Second main purpose is to minimize estate taxes, so generally appropriate for married couples with a combined estate greater than $2 million and less than $4 million.

e. Deceased settlor's property is transferred to an irrevocable trust at the first death, which carries with it disadvantages including:

i. Annual tax returns must be filed for the irrevocable trust.
ii. Surviving settlor has limited access to the deceased settlor's property.

a. The characteristics of an A/B/C trust are the same as the A/B trust except that on the first death, any of the deceased settlor's property above $2 million is passed to a C trust (also called a QTIP trust) to postpone payment of estate taxes on property in excess of $2 million. Generally appropriate for married couples with a combined estate greater than $4 million.

4. Joint A/B/C Trust
[aka Disclaimer Trust]

d. Contains no estate tax saving provisions, so generally appropriate for a single person, or a couple with an estate less than $2 million.

What is probate?

Probate is the court supervised distribution of your assets if you don't have a living trust and can be a long, expensive process that simply does not have to occur. The expense of this process as compared to the expense of administering a living trust should be calculated to decide whether, in your case, creation of a living trust is a better solution. Death is a difficult time for everyone concerned, and you may want to protect your family from having to go to probate court, if there is a better solution in your case.

The probate process usually involves…

• Filing a deceased person's will with the local probate court
• Taking an inventory/getting appraisals
• Publishing notices
• Paying all legal debts
• Distributing the remaining assets and property to the rightful heirs

Probate may require an "executor" and an "attorney." Sometimes the executor is referred to as the "personal representative." The executor is responsible for making sure the Last Will and Testament is followed. The executor often hires an attorney to handle the necessary paperwork.

Executors and attorneys are allowed to charge "reasonable fees" for their services. Executors who are family members frequently waive their own fees where the estate is small, but they are not obliged to do so. Some additional fees beyond those paid to the attorney and executor include court costs, filing fees, etc. These fees are paid out before any proceeds are distributed to the decedent's family.

Thursday, November 25, 2010

Happy Thanksgiving!

Thanksgiving or Thanksgiving Day, celebrated on the fourth Thursday in November, has been an annual tradition in the United States since 1863, when during the Civil War, President Abraham Lincoln proclaimed a national day of thanksgiving to be celebrated on Thursday, November 26.

The event that Americans commonly call the "First Thanksgiving" was celebrated to give thanks to God for helping the Pilgrims of Plymouth Colony survive their first brutal winter in New England.

The first Thanksgiving feast lasted three days, providing enough food for 53 pilgrims and 90 Native Americans. The feast consisted of fish (cod, eels, and bass) and shellfish (clams, lobster, and mussels), wild fowl (ducks, geese, swans, and turkey), venison, berries and fruit, vegetables (peas, pumpkin, beetroot and possibly, wild or cultivated onion), harvest grains (barley and wheat), and the Three Sisters: beans, dried Indian maize or corn, and squash. The New England colonists were accustomed to regularly celebrating "Thanksgivings"—days of prayer thanking God for blessings such as military victory or the end of a drought.

Source: http://en.wikipedia.org/wiki/Thanksgiving_(United_States)

Wednesday, November 24, 2010

What is a Living Trust?

A living Trust is designed to pass your assets to your loved ones as you planned as well as eliminate the delay and cost of probate of assets placed in the living trust during your lifetime. A living trust is created with a document known as a Declaration of Trust or Trust Agreement. This legal document contains articles which name who you want to leave your property to and how, as well as name those you trust to carry out your wishes.

A Living Trust can also be called by its common name, a "revocable living trust." It is called "revocable" because you can change your trust anytime during your lifetime and even revoke the entire trust during your lifetime if you choose and take the assets back.

It is described as "living" because the trust is created while you are alive. The trust survives you at death and will distribute your assets per your instructions. It is a "trust" because it creates an entity into which assets can be placed for normal use during your lifetime and then be available for distribution to anyone you select after your death.

Benefits of a Living Trust

There are many benefits to having a living trust. Some of these are advantages that can benefit everyone, while other benefits of a living trust are for estates in a certain financial category.

The following are a list of benefits of a living trust that affect anyone and everyone who has one:

• A trust allows for the quick and easy transfer of property to your loved ones
• A trust can provide uninterrupted management of the estate should you and your
spouse become incapacitated
• A trust can provide an organizational section for record keeping and to collect
information about your personal and financial affairs
• A trust can avoid the probate process, thus avoiding the time and expense that usually
occurs with court proceedings
• A trust may help you avoid or reduce certain estate taxes
• A trust is a private document (as probate is a matter of public record)
• A trust is valid in every state
• A trust can be revoked or amended at any time during your lifetime