When creating your estate plan, you may wish to make use of one or more trusts. A trust can be very complicated, or amazingly simple. At its core, a trust is comprised of a grantor who creates the trust, a trustee who oversees the trust, one or more beneficiaries, and assets that are used to fund the trust. In many cases, the grantor, trustee and beneficiary position may be held by the same individual. While trusts come in many varieties and perform a wide array of functions, the two broad categories of trusts are revocable and irrevocable.

As indicated by the name, a revocable trust allows you, as the grantor, to terminate, amend or modify the trust at any time and for any reason. You may add or delete a beneficiary, amend the terms of the trust, or terminate it as you please. Additionally, a revocable trust is not required to pass through probate. Probate is the legal process used to inventory, value, and distribute estate assets upon your death. Avoiding probate allows assets to reach beneficiaries much sooner.

Although an irrevocable trust also allows you to avoid probate, it offers other advantages as well. An irrevocable trust offers asset protection and estate tax avoidance as well as capital gains tax and personal income tax advantages in some cases. In order to gain these additional benefits, however, you must give up the ability to terminate or make changes to the trust at a later point in time.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

Creating a Last Will and Testament is the foundation of any estate plan. While executing a Will is certainly essential, updating it is equally as important. As the saying goes “nothing stays the same.”  So how do you know when you need to update your existing Will? Although each person presents unique circumstances, there are some common events that warrant revisiting your Will, as well as any other estate planning tools you have in place.

Major life changes always warrant updating your Will. Although there are other events that may also warrant updating your Will, the top three major life changes that clearly require a Will update are marriage, divorce, or the birth of a child or grandchild. The reasons why are equally as apparent. If you get divorced, you likely do not want your ex-spouse to receive the bulk of your estate if you die. If, however, he or she remains a named beneficiary in your Will, that is precisely what is likely to happen. Likewise, if you get married yet fail to name your new spouse as a beneficiary, he or she may not be entitled to anything, depending on the laws of the state where you are a resident. Even if your spouse is entitled to something under state law, it may not be as much as you wished him or her to take from your estate. The birth of a child or grandchild is also a good reason to update your Will. Although the generic term “issue” is often used in a Will to refer to any children or grandchildren, it is best to name children or grandchildren by name in order to avoid confusion. In addition, if you did not have any children when you made your Will, you may not even have a generic provision for any future children, making an update essential.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

If you are considering the creation of an estate plan, one important consideration is often the avoidance of probate. In order to understand why avoiding probate is such an important facet of estate planning, you need to have a firm understanding of what probate is and how the probate process operates.

Probate is the legal process that is often required when someone dies. Although the process may vary somewhat from one state to the next, there are commonalities. Probate begins when someone petitions the court to probate the decedent’s estate and admits the decedent’s Last Will and Testament to the court, if one exists. The court then appoints a personal representative or executor. If the decedent left a will, an executor was likely named in the will. The court must still approve of the nomination. In the absence of a will, the court will appoint someone as personal representative.

The executor or personal representative is then charged with making a complete inventory of the decedent’s assets. All assets must also be valued and an inventory list submitted to the court. Notice of the probate is required to be given to beneficiaries and/or heirs as well as to the public by publications in a local newspaper. Claims can then be made against the estate for debts which are approved or denied by the executor or personal representative. Taxes must also be paid by the estate in some cases. A final accounting is eventually submitted by the executor or personal representative to the court for approval, If no disputed claims or a will contest against the estate have been filed, the court will then release the assets to the beneficiaries or

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

For many, a pet is much more than a pet, he or she is part of the family. According to the Humane Society of America, more than half of American families are home to at least one pet. Although dogs are the most popular pet followed closely by cats, there are an infinite number of other animals from birds to pigs that are kept as pets. Regardless of the type of animal that you have made part of your family, chances are that you wish to ensure that your pet will be well taken care of after you are gone.

Just as you make provisions in your estate plan for family members and loved ones, you can provide for your pet in the event of your death. Granted, your pet cannot manage his or her own money, but that can be accounted for as well with the creation of a pet trust. A pet trust operates in much the same manner as any other trust, except the beneficiary is an animal instead of a person. You will need to designate a trustee to oversee the trust as well as someone to handle the day to day care of your pet upon your death. While they can be the same person, they do not have to be. After that, you simply decide on the amount and type of assets you wish to use to fund the trust and your pet trust is created. By creating a pet trust, you can rest assured that your pet will be cared for after your death just as he or she was

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

When you visit an estate planning attorney to become apprised of your options with regard to vehicles of asset transfer you may well find that a trust is the most appealing option. Depending on the nature of your assets there are a number of different trusts that can be utilized to achieve specific objectives, and many people with significant, diverse holdings may want to use a combination of them. But even people with relatively simple financial profiles often choose to use a trust such as a revocable living trust because of the fact that the transfer of assets to their loved ones will take place outside of the probate process.

Individuals typically avoid the probate process for three primary reasons. One of them is the fact that probate is a public proceeding, and it allows for interested parties to step forward and challenge the will if they choose to do so. Many would prefer to keep their final affairs private and keep the door closed to those who are unwilling to honor their wishes.

Probate can also be a rather long and drawn out affair, taking anywhere from several months to several years to run its course in complicated cases. Of course the heirs to the estate do not receive their inheritances until the estate has been probated and closed. In addition to this, there are significant costs associated with probate that can erode the overall value of your estate considerably, and every cent that is spent is money that could potentially have been in the pockets of your loved ones.

If you do choose to use a trust as your vehicle of transfer it would probably behoove you to include a pour-over will as well. Most people are going to have some property remaining after they pass away that was not placed into the trust either because they obtained it after the trust was created or because they had practical reasons to retain personal ownership. The pour-over will accounts for property of this nature by directing it into the trust upon your death.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

If you have an elderly family member or loved one who has become incapable of caring for himself or herself, you may wish to step in and help make day to day decisions for your family member or loved one. Unfortunately, you may also have found out that having good intentions, or even being related to the person, is often not enough to allow you to make those decisions. Often, an appointment as guardian of the ward, or person who needs assistance, is required before you can help.

State laws determine when a guardianship is needed, how to petition for one and sets the limits of authority granted to a guardian. In addition, terminology may vary by state. As a general rule, a guardian has authority over the ward while a conservator has authority over the estate of the ward.

In order to become a guardian, you must file a petition for guardianship, or similar document, with the appropriate court. This is typically the probate court; however, it may vary by state or city within a state. After the petition is filed, anyone with an interest in the proceedings is entitled to be notified that the petition was filed, including the ward. The court will then schedule a hearing to determine two things — if the ward is legally in need of a guardian and, is so, whether you are an appropriate person to be appointed guardian. Given the importance of being appointed guardian, you may wish to consult with an elder law attorney once you see the need for appointment

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

One of the things that you would do well to keep in mind when you are considering the subject of estate planning is the fact that things do not stand still. When you first arrange for a consultation with an estate planning attorney and walk out of the office with an estate plan in place you could get complacent, feeling as though you have satisfied this responsibility.

This is a mistake because that initial plan is going to have been devised based on your life as it stood on that day. Time marches on, and inevitably things change, both within your family and throughout the society as a whole and many of these changes have an effect on your estate plan.

With this in mind you would do well to recognize the fact that the estate tax parameters are scheduled to change in the beginning of 2013. Because of the passage of the piece of legislation that has come to be known as the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 the current maximum rate of the estate tax is 35% and the exclusion is $5 million. But this tax relief act is going to expire at the end of 2012. As the laws currently stand, the exclusion will go down to $1 million and the rate will rise to 55% at that time.

Legislative changes that would impact these parameters are certainly possible. But at the same time, right now there is a congressional committee in place that is devising a plan for reducing the federal debt by $1.5 trillion over the next decade. This is going to require spending cuts. Given this reality, pushing for further estate tax relief at a time when tough cuts are being made may be a difficult sell in some quarters.

It may be unrealistic to expect the typical layperson to stay on top of all of these intricacies. This is why it is a good idea to develop a relationship with an experienced estate planning attorney who will gain an understanding of your situation and let you know how to proceed in light of any changes that may take place.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

When you decide that you would like to go on a trip you are generally going to invest a good bit of time making preparations. Of course you want to identify your destination, and you will probably develop an itinerary. And if you are like a lot of people, you will consider all the contingencies that may arise and make sure that you are prepared to handle them.

Life itself can be viewed as a journey, and along these lines it is important to make preparations for all the eventualities of aging. You can’t say with certainty what the future will hold, but what you can do is become aware of the facts, understand the possibilities that lie in wait, and make the appropriate plans for addressing them.

One of the challenges that many people who reach an advanced age experience is that of mental and/or physical incapacity. Believe it or not, upwards of half of the people who are described in geriatric circles as the “oldest old,” those 85 years of age and up, are suffering from dementia. This is largely due to the ubiquity of Alzheimer’s disease. Dementia can make it impossible for its victims to make sound decisions regarding health care and financial matters.

To prepare yourself for this possibility it is advisable to execute durable powers of attorney. With these documents you empower representatives of your choosing to make medical and financial decisions for you in the  event of your incapacitation. Because of the fact that they are in fact “durable” they do remain in effect upon the incapacitation of the grantor, unlike standard powers of attorney.

If you do not have an incapacity plan in place a guardian that you did not choose yourself could be appointed to act in your behalf should you be deemed incapable of making your own decisions at some point in time. Most people would prefer to select their own decision-makers, and this is why capacity planning is so important.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

If you wanted to leave an inheritance to a loved one who is suffering from a mental or physical disability there is an inherent challenge involved, especially if this individual is receiving long-term nursing care that is paid for by Medicaid. Medicaid is a government welfare program that is designed to pay the health care expenses of those who do not have adequate financial resources to meet their medical needs.

The cost of long-term care being what it is (in 2010 the national average for a year in a private room in a nursing home was over $83,000) it can be difficult for many people to lose that entitlement because they received an inheritance. The law states that a recipient must have assets of less than $2,000 to receive Medicaid.

One way that you could provide for a family member who is disabled and receiving Medicaid is through the creation of a third party supplemental needs trust. You fund the trust and appoint a trustee, and the choice of trustee is very important because this individual or entity will have to be very careful about following the letter of the trust agreement stipulations so as not to violate Medicaid regulations.

The trust can provide for the supplemental needs of the beneficiary but he she may not have direct access to the trust or place any personal assets into the trust without losing Medicaid benefits. The third-party grantor has a right to revoke the trust, and the trust agreement can stipulate exactly the type of supplemental needs that the trustee is empowered to finance. The trust agreement can contain a secondary beneficiary who would assume ownership of any remainder funds upon the death of the primary beneficiary.

A special needs trust can also be created with funds that belong to a disabled individual who is less than 65 years of age by his or her parent, grandparent, guardian, or by court order and the person can still receive Medicaid benefits. However the state must be reimbursed by the trust for the amount of the Medicaid benefits paid out in this person’s behalf after his or her death.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.

Unfortunately, many Americans are without much needed health care coverage. As a result, people often cannot afford preventative health care or treatment for serious medical conditions. If you are without health care coverage, the Medicaid program may be an option. Most people have heard of the Medicaid program, but many do not know how the program is administered, what it covers and how you may qualify.

Medicaid is a program that is funded by the federal government; however, the program is administered at the state level by the individual states. As a result, eligibility requirements may vary from one state to the next as will the extent of the coverage provided by the program. Although there are differences among the states, the program is intended to provide health care coverage for low-income individuals and families who would otherwise be without health care coverage.

There are various factors common among the states that go into a decision regarding eligibility for the Medicaid program. First, you must be a U.S. citizen or lawful non-citizen. Your child, however, may qualify even if you do not meet the citizenship test as long as he or she does. After that, your income and resources will be evaluated to determine whether your household is considered “low-income”. Income limits will vary among the states as well as within the various classes of Medicaid coverage. Some classes of applicants can qualify with higher income limits than others. Children, pregnant women and the elderly or disabled typically have higher income limits than able-bodied adults. Most states also have different eligibility guidelines for persons living in a nursing home or long-term care facility.

The services that are covered by the Medicaid program are usually similar to those covered by private insurance companies. The principle difference is that you must find a doctor or healthcare facility that accepts Medicaid. While coverage for adults may not include preventative services, coverage for children often does include preventative services as well as services for illness or injury. Medicaid may also cover a significant amount of the medical care involved in caring for an elderly or disabled individual who is residing in a long-term care facility.

Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC is a member of the American Academy of Estate Planning Attorneys.