Allen J. Margulis collaborated with Forbes.com to present an article about the proper way to transfer title of guns after one’s death. Leaving guns can present a number of problems. Is a minor responsible enough to handle and take care of a certain firearm? How do you transfer title for firearms that are restricted by the National Firearms Act? Do you have to get approval from your Chief Law Enforcement Officer?
A Gun Trust is a special purpose revocable living trust. A Gun Trust is written
to hold only firearms.
http://www.forbes.com/sites/peterjreilly/2011/09/22/gun-collections-pose-special-estate-problems/
Many clients elect to have their Revocable Trusts continue following their deaths for the benefit of their adult children. Most everyone realizes that a trust is necessary to hold and distribute assets for minor children and grandchildren, but what about for adult children and grandchildren?
Inheritances that are held in trust can be protected from claims by a spouse if your child or grandchild were to divorce. The assets held in trust would most likely be viewed as not being joint marital property. Additionally, if your child or grandchild has creditor problems the assets held in trust could possibly protect those assets from being levied upon or subject to a lien or claim.
Leaving those assets in a your revocable trust for children or grandchildren with health problems or who may be too immature to handle a large sum of money are also excellent reasons to have the trust distribute the assets.
To recap, here are the advantages of having inheritances remain in the trust and be distributed pursuant to the terms of your revocable trust:
- Protect inheritance against claims by child’s creditors or spouse
- You can choose to spread receipt of an inheritance over as many years as you direct
- You can choose to provide your child with an income for his or her lifetime, with the remainder passing on to your grandchildren
As always, this is not legal advice and should not be construed as such. I am always available to discuss estate planning, and trusts specifically, with you and your family to see what would be a good fit.
This is the ninth entry in a series I will be featuring about celebrity estate planning mistakes and what they could have done to prevent the problems that arose.
Name: James Brown
Age: 73
Died: December 25, 2006, Atlanta, GA
Cause: Congestive heart failure due to pneumonia
Family: Six children named in will; many others contending paternity
Estate Mistake: Although he was known for keeping a very tight beat, he left a very loose will and sloppy estate planning, which led to multiple lawsuits and severe tax implications. His will was contested by several parties, partly because he had not updated the document since 2000.
He also left his mansion and music rights to an irrevocable trust to benefit underprivileged students. However, the trustees and family are still battling over it. His assets were not well sheltered so an auction of his personal affects was ordered to help settle the tax bill.
I recently met with clients who brought their estate planning documents to me on their own to ensure they were “up to date” and “said what they wanted them to say”. These clients are by far in the minority. Their plans were from the early 90′s and did require updating. They had one “general power of attorney” that was not durable and gave no specific powers to their attorney-in-fact. We also updated the distribution portion of their will and trust as they had new grandchildren that were not specifically mentioned.
There is not a bright line rule for when one should review documents. It’s a good idea to give your documents a yearly review to ensure laws have not changed and to ensure everything and every person listed are still around. I, as well as most estate planning attorneys, do not charge to sit down with their existing clients on an annual basis to ensure everything is correct.
I also recommend to revisit your documents whenever a life change occurs-new job, retirement, a move, new children and grandchildren, marriage, divorce and death. Additionally, do not forget to review your beneficiaries with your life insurance agent and certified financial planner.
I receive lots of questions on a daily basis. I am the token family attorney so I get lots of questions covering broad areas of law. I don’t always know these answers, but I can answer most of the questions regarding estate planning. By and far the most the questions I receive about estate planning are about trusts. Revocable trusts are the most common and preferred trusts. I have taken my most frequently asked questions about revocable trusts and answered them here.
WHAT DOES A REVOCABLE TRUST DO?
A revocable trust, like any trust, holds an asset and determines to whom or where that asset goes, when it goes there and how it goes there.
ARE REVOCABLE TRUSTS NECESSARY IF I DO NOT HAVE AN ESTATE TAX PROBLEM?
Yes. Only irrevocable trusts can reduce estate taxes. Revocable trusts, however, still have the following very important purposes:
- all assets in the trust avoid probate
- trusts help avoid accidental disheritances with second marriages and blended families
- trusts hold and distribtue money for minor children and grandchildren
- the management of assets in the event of a disability
DO I LOSE CONTROL OF MY ASSETS?
No. You are still in control of your assets so long as you name yourself as trustee and are competent. You can also determine who the trustee will be in the event of incompetency or death.
ARE THERE ANNUAL COSTS OR CHARGES ASSOCIATED WITH A REVOCABLE TRUST?
Not usually. There are no fees if you are serving as your own trustee. A corporate trustee does charge a small fee. Trusts, like all estate planning documents, should be reevaluated every 5-10 years to determine whether or not they are still in accordance with local laws and statutes and to ensure they still do what you want them to. Additionally, you need to update your documents, including trusts, anytime there are changes in your family’s circumstances.
WHAT OTHER DOCUMENTS USUALLY ARE PREPARED WITH A REVOCABLE TRUST?
- documents transferring your property into your trust
- a pour-over will
- durable financial power of attorney
- durable medical power of attorney
- living will
IS A POUR-OVER WILL NECESSARY IF I HAVE A REVOCABLE TRUST?
Yes. A pour-over will directs that any assets not placed in your trust should be distributed into the trust upon your death. The pour-over will is a safety net. This safety net ensures that all assets get into trust. Sometimes assets are forgotten and not transferred into the trust or an asset in the trust (such as a home) is replaced and new asset does not get transferred.
This is the second entry in a series I will be featuring about celebrity estate planning mistakes and what they could have done to prevent the problems that arose.
Name: Marilyn Monroe
Age: 36
Died: August 15, 1962, Brentwood, CA
Cause: Drug Overdose
Family: Three Ex-Husbands
Estate Mistake: Marilyn left much of her estate to her acting coach, Lee Strasberg. The estate itself was not huge, about $800,000.00, but Strasberg claimed a right to her image. That has led to at least a $30 million dollar payout to a woman Marilyn never met – Anna Strasberg, Lee’s third wife. Marilyn’s case is often cited as an instance in which a trust would have been best to carry out a client’s wishes.
This is the first entry in a series I will be featuring about celebrity estate planning mistakes and what they could have done to prevent the problems that arose.
Name: Elvis Presley
Age: 42
Died: August 16, 1977, Memphis, TN
Cause: Drug overdose
Family: daughter
Estate planning mistake: Elvis is probably the most notorious example of a porrly planned estate. Of his $10 million estate, about 73% was lost in the probate process to estate taxes and other settlemtn costs. His case illustrates why a trust is often the best way to protect an estate.
A revocable living trust can be used to avoid the costs and delays associated with the probate process and in most states keeps the disposition of the estate out of public view. The estate plan must also focus on estate taxes in order to not only minimize them, but also to avoid the untimely liquidations in order to pay the tax. Of course, Elvis did get the last guffaw because he has earned far more money dean than alive.
This is an article researched and written by Stephen Davis and Alfred Brophy. The topic is how Civil War-era families maintained their wealth within thier own families by properly using wills and trusts. These families used Estate Planning tools that are still around today to accomplish many of the same goals that modern families strive for.
Huge plantation estates were held in trusts for generations ensuring they would not fall to anyone outside of the family. Families who were concerned about son-in-laws for their daughters had the daughter’s property held in trust so the the wealth would not be lost through marriages.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1398522
Here is a great objective article about wills, doing it yourself and whether you need a trust or not.
http://bucks.blogs.nytimes.com/2010/08/26/getting-a-will-six-common-questions/
Deborah Jacobs is an estate planning attorney and journalist for Forbes.com. She examines the inevitable problems with DIY will and trust kits.
As Timothy E. Kalamaros, a lawyer with his own practice in South Bend, Ind., says, using a DIY will is like “pulling your own tooth with a pair of pliers instead of going to the dentist.”
