Trustee

Home / Archive by category "Trustee"
What Happens To My Joint Trust If I Get Divorced?

What Happens To My Joint Trust If I Get Divorced?

 

 

What Happens To My Joint Trust If I Get A Divorce?

What Happens To My Joint Trust If I Get Divorced?

              Going through a divorce can be an extremely painful, stressful and seemingly unending process.  It affects so many different aspects of your life.  This article discusses just one of the effects, which is your estate planning, including your living trust, will and power of attorney documents.

What happens to my estate plan when I get divorced?

This is a great question and one that a qualified estate planning lawyer Dardenne Prairie can assist you with.  In Missouri, a divorce essentially treats any distributions intended for your ex-spouse as void.  In other words,  you have a will, it says that when you pass everything goes to your ex-spouse, but upon finalization of the divorce, that provision for your now ex-spouse is treated as if they have predeceased you and therefore the distribution would pass to your contingent beneficiaries, which would usually be your children.

What happens if I have assets that will avoid probate, such as a life insurance policy?

The Missouri law treating the ex-spouse as a voided beneficiary only covers assets in probate.  If you had a life insurance policy that left your soon to be ex-spouse as the primary beneficiary, you would need to change that after divorce, because if you pass away, your ex-spouse would inherit.  This happens all the time, unfortunately, and that’s why it’s important to have a game plan to review your estate plan (or establish one) after your divorce is final.

The second thing to note is that any distribution to your ex-spouse upon your passing is only void if the divorce is final.  If you expect your divorce to be extended for a period of time, it’s important to meet with an estate planning attorney to make changes anyway.  Under Missouri law, you can adjust your estate plan to cut out your soon to be ex-spouse.  You can’t completely cut them out (unless you have a prenuptial agreement or postnuptial agreement), but you can ensure that they will not inherit everything, which would be the case if you did nothing and passed before your divorce was finalized.

What happens if I have a trust and am getting divorced?

That depends on the type of joint trust you have.  An irrevocable trust attorney O’Fallon, Missouri  can explain in more detail, but the terms of this type of trust cannot be changed after the trust is created, regardless of divorce.  This type of joint trust, however, is usually created by spouses to benefit their children.

If, on the other hand, you have a revocable joint trust, both spouses can retain control over the assets.  Of course, this assumes you would want to do that.  Most of the time, spouses want to dissolve their trust and distribute assets as agreed in their marital settlement agreement.  From there, you can take the safest step and create a new estate plan with your own trust, a new will and new powers of attorney.  You’d probably want to do that anyway, since your now ex-spouse is usually listed as your principal in your healthcare power of attorney and durable power of attorney documents.

Do you really want your ex-spouse making healthcare calls for you at the end of life?  Me neither.

As you can see, the best practice, at a minimum, when you are going through a divorce is to sit down and review your estate plan with an experienced estate planning attorney.

 

 

Seven Reasons To Change Your Revocable Trust…

Seven Reasons To Change Your Revocable Trust…

SEVEN REASONS TO CHANGE YOUR REVOCABLE TRUST

               Creating a revocable trust is one part of proper estate planning for the protection of your family.  However, even after creating a revocable trust, there may still be reasons to change, or amend it.

As a revocable trust lawyer Wentzville, Missouri, much of my time is not only spent with clients creating new documents but changing their existing documents.

This article discusses seven reasons to change your trust:

You Want New Beneficiaries:      Every trust must have beneficiaries to receive your stuff when you pass away.  You may want to change those beneficiaries over time.  Perhaps you want to keep the same beneficiaries, but change the distribution percentages.  Either way, you’ll need to change the trust to do so.

You’ve Moved To Another State:  If you move to a new state, your trust needs to be amended to reflect this fact and usually to change the governing law provision.  A Missouri living trust is governed by Missouri law and will state this in the document itself.  If you move to Michigan, you’ll need to change the governing law provision so that Michigan law controls.

You Had Another Child:  Having another child is a classic example of when you need to update your revocable trust.  They should be included in the document so that it’s clear they are to receive part of the trust estate when you pass.  A quick amendment can resolve this issue.

You’re Getting Divorced:  Perhaps an obvious example of when to change your trust document is when you have divorced since it was created.  Most trusts these days are joint revocable trusts created by both you and your spouse.  Since you likely left everything to the other spouse, you’ll need to amend your documents, or more likely, completely re-do them once you’re divorced.

You’re Getting Married:  On a more positive note, if you’re divorcing someone but marrying instead, you’ll likely want to update your trust so that your new spouse is at least a partial beneficiary of your revocable living trust.

You’ve Married And Now Have Stepchildren:  If you have stepchildren, they will not receive property out of your trust generally unless you have adopted them, or, otherwise, you have provided for them in your trust.  The safest bet is to amend your trust and include them in the document if that’s what you intent.

Change In Law:  New laws are created and old laws are repealed or changed all the time.  Some of these situations can greatly affect your estate planning, including your revocable trust.  Consult with an attorney to make sure that any change in laws is reflected positively in your documents.

Amending your trust in Missouri is not all that complicated.   You’ll meet with an estate planning lawyer Wentzville to discuss the changes, he or she will draft the amended documents and you’ll sign them, just as with your original documents.  The new documents will supersede the old and you’ll have an estate plan that fits your current circumstances.

 

Help! My Trustee Is A Fraud!

Help! My Trustee Is A Fraud!

 

HELP!  MY TRUSTEE IS A FRAUD! 

               Trustee’s should be trusted, but are not always trustworthy.  In fact, it’s unfortunately not uncommon for a chosen trustee of a trust to be acting fraudulently or in a manner which is not in line with their powers and duties as trustee.  As an inheritance attorney St. Peters, I often get frantic calls from beneficiaries in this situation.

If I believe there is malfeasance by a Missouri trustee, I will either file litigation or send a demand letter seeking information related to the trust.

I’m A Trust Beneficiary, What Rights Do I Have?

Remember, if you are a beneficiary, you are entitled first and foremost to a copy of the trust.

Second, you are entitled as a beneficiary to an accounting or reporting of trust activities from the trustee.  How often depends on the terms of the trust, but this is a common area where trustees engage in improper behavior:  they don’t keep beneficiaries informed of what’s going on with the trust assets.

I’m often surprised at how long clients will endure the lack of information from a trustee.  In some cases in can be months, but it’s just as often years.  Years of excuses or non-responses from a trustee.

In these cases, you must take action.  You must hire an experienced inheritance attorney, St. Peters, Missouri to decide the best course of action.  In some cases, it’s best just to file litigation right away, assuming there is a colorable claim of malfeasance by the trustee.  Examples would be not responding to communications from a beneficiary, not providing the accounting, or misappropriation of trust funds or some combination or all of these things.

If your trustee is supposed to be sending you money every month and suddenly is jetsetting around the world, there’s almost definitely something wrong.

Okay, I’ve Got A Lawyer, What’s Next?

If there’s misconduct by the trustee, the course of action is usually to file litigation, often in an expedited procedure called an injunction hearing.  The idea with an injunction hearing is you have enough information of bad conduct that your attorney can show a likelihood of success in the pending lawsuit, but you need immediate action to stop any bad conduct.  From there, the court can demand that the trustee account within a certain amount of time, temporarily remove the trustee and appoint someone else or take other action.  The point here is that you have to show an emergent situation.

Ultimately, the goal would be to permanently remove a bad acting trustee, obtain a damage award for misconduct, save assets from being wasted and track down where trust funds went.

Can I Get My Attorney’s Fees Paid For?

This is a common question from beneficiaries in this situation and I’m completely sympathetic to it.

The answer is it depends.

The court has discretion to award fees, and often will if the beneficiary is successful.  Now, the problem from where do those funds get paid back?  Well, bad acting trustees usually don’t take money from a trust because they want to invest it in gold.  They usually have blown through at least part of the money and getting money back after a judgment is obtained is a completely new ball of wax.

Conclusion

In lieu of that, or often in addition, the beneficiary can usually be paid for out of the trust proceeds, if there are adequate funds left.  This would almost certainly be the case where there are other beneficiaries who have benefitted from the litigation.  In that case, the judge might apportion the fees to be paid on a pro rata basis among the beneficiaries, most likely from their portion of the trust.

A final piece of advice:  It’s 2018.  Most attorneys practice in a couple of practice areas.  Some still practice in many.  This situation, however, requires a specialist in probate litigation.  Knowledge of the judges, special procedures in particular probate divisions in different counties and the law, most importantly, is really an advantage.  A divorce lawyer who just happens to be a nice guy and your friend shouldn’t be your counsel in this type of case.  Hire someone with experience and make sure that they can back up their experience when you meet with them.

 

Common Estate Planning Terms in Wills and Trusts….

Common Estate Planning Terms in Wills and Trusts….

Common Estate Planning Terms in Wills and Trusts

Estate planning is an area of the law with plenty of legalese. The placement of certain in documents like Missouri wills and especially special needs trusts attorney St.Common Estate Planning Terms in Wills and Trusts
Estate planning is an area of the law with plenty of legalese. The placement of certain in documents like Missouri wills and especially special needs trusts attorney St. Peters, Missouri can make a huge difference in the document.

Here are some commonly used estate planning terms in wills and trusts.

Wills

Testator / Testatrix: The person creating the will. Formally, a male creating a will is a testator, whereas a female is referred to as a testatrix.

Executor: The person or persons named in a will who will administer the estate when the testator dies. The person in charge. In Missouri and other states, an executor is called a personal representative.

Beneficiary: The person(s) named in a will that the testator wants to inherit their property. In a trust, this person is also referred to as a beneficiary.

Heir: The persons who will receive your property if you do not have a will in place when you die. Dying without a will is called “dying intestate” and each state, including Missouri has a list of heirs that receive your property when you die intestate and in what order. For example, in Missouri, many people don’t know that if a spouse passes away and does not have a will, all non-joint property owned by the deceased spouse goes partially to the children, if any, and partly to the surviving spouse. All receiving property are referred to as heirs.

Bequest: A specific item listed in a will, other than real estate, to be distributed at death as a gift. Example: “I give all of my silver coins to Joe.” The bequest is only the silver coins, not any others and Joe is the beneficiary of the item.

Devise: Real estate given at death, received by a devisee. Example: “I give my 10 acre farm to Joe.” The testator has devised the farm to Joe, the devisee.

Bequeath: Means that the testator is giving property to someone other than a person. Example: “I give my book collection to the St. Charles County Library.”

Bond: A policy that requires the executor to insure the estate, usually for the value of the estate. The idea is that if the executor runs off with the money, the heirs / beneficiaries are protected by the bond in place. A testator can state that no bond is required in their will.

Real Property: Land of any acreage and/or a home. Also includes anything affixed to the property. Example: Joe has a 10 acre farm, which includes his home. He also has a pole barn which is attached to the land. All are examples of real property.

Tangible Personal Property: Any property that you can actually touch. Example: Loose cash is personal property. Cash in a bank account is not personal property.

Intangible Property: Any property that you cannot touch. Example: Mutual funds that you hold in an account are intangible property.

Titled Property: Property that may or may not be tangible that has a registration. Example: A bank account. It is titled in your name, has an account and you get statements every month in the mail. Also an insurance policy because it has a policy number, a named insured and beneficiary.

Revocable Trusts

Grantor: The person creating the trust. Also referred to as a Settlor or Trustor.

Trustee: An individual or individuals listed in the trust to administer the trust for the grantor. The grantor and trustee are often the same person.

Beneficiary: Same as with a will, a person listed to receive assets in a trust.

Estate Tax: A tax levied either by the federal government and some states when a person passes away. The estate tax is much less of an issue because the estate tax exemptions are much higher than they used to be.

Estate Tax Exemption: An amount of money that a person is allowed to have when they pass away that does not result in federal estate tax being levied. In 2018, for a person this amount is approximately $11 million dollars. Any amount above that, without proper planning in place, is subject to taxation.

No-Contest Clause: A provision in a trust (or a will) that states that if a beneficiary to the trust contests their inheritance, they risk losing that inheritance if they file a lawsuit. These provisions vary greatly, but are enforced by courts and are a good way to ensure that beneficiaries don’t litigate your estate when you pass away.

These are just some of the terms that you would come across in a will or trust lawyer O’Fallon, MO. Creating documents with an estate planning lawyer is just part of the process. The real important part is understanding how they work and what the terms mean. Don’t get discouraged, we are all masters of our own knowledge and what’s natural to you would be unnatural to your attorney!

 

Gift Taxes 101

Gift Taxes 101

GIFT TAXES 101

Federal gift taxes are extremely confusing.  While it may seem odd to most people that even giving away your property can result in tax consequences, as we all know, with the IRS, rules are rules and they must be followed (or else).

As a wills and trust attorney O’Fallon, MO I often discuss gift taxes with my clients during our meetings to discuss estate planning.  Taxpayers have two exclusions or exemptions available to them, either on an annual basis or spread out over their lifetime.

The first is the annual gift tax exclusion.  This is a set amount of money you can give away tax free to an unlimited number of people.  A series of gifts made to the same person in a calendar year are not subject to gift if they don’t exceed the annual gift tax exclusion.  For 2017, this number was $14,000.  For 2018, there’s a bump to $15,000.

Here’s an example:  Say in January 2018, you give your son $5,000, then another $5,000 in April 2018 and then a final $5,000 in December 2018.  You’ve reached the cap for your son in 2018, but in January 2019 you could give them another $5,000, subject to the 2019 annual gift tax exclusion (not currently known).

Gifts can also be in kind.  You can give stock, jewelry, or artwork for example tax-free as long as they don’t exceed $15,000.

If you’re married, you and your spouse each get an annual gift tax exclusion, so in the example above, your son could receive $30,000 in 2018.

The lifetime gift tax exemption is the total amount you can give away over your lifetime.  These gifts are also free from tax.  However, the total amount gifted over your lifetime will reduce the amount of exemption to protect your estate from estate tax at your death.

The good news is the estate tax exemption has been indexed to inflation as of 2013, which means it increases each year.  Additionally, the Tax Cuts and Jobs Act, passed at the end of 2017, raises the exemption per spouse to $11.18 million in 2018.  This is indeed a good problem to have.

Gifting is part of the estate planning process for certain individuals who are either concerned about taxes on their estate or want to help family members financially without incurring tax.  Provisions in a living trust and powers of attorney often discuss taxes and the ability of trustees and/or powers of attorney to reduce taxes owed.

If you’re interested in gifting always remember that these opportunities require compliance with IRS regulations, including special filings.  You should always obtain professional advice from a CPA or a tax attorney before considering gifting.