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Estate Planning

Clear Counsel Law Group / Estate Planning

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Elder Financial Abuse – What You Need to Know

One of the most serious problems confronting our growing elderly population is the risk of elder financial abuse. Elder financial abuse is defined as the use of unfair or deceptive practices that financially exploit and rob the elderly of the money that they spent their whole lives saving. In fact, it is already a widespread problem affecting people across the country. According to Consumer Reports, only 1 in 44 acts of abuse is ever reported, and the rate of elder abuse continues to grow.

Who Commits Elderly Financial Abuse?

One of the scariest things about this crime is that it can be perpetrated by almost anyone who is in direct contact with the victim. Most frequently, this abuse is committed by close friends and family, but caregivers and other helpers also have the ability to steal from their elderly patients. According to the National Adult Protective Services Association, elderly financial abuse can be committed by:

Caregivers
Family
Friends
Attorneys
Neighbors
Bank employees
Priests
Medical professionals

How Can You Prevent It?

The financial exploitation of the elderly is a serious problem, but fortunately there are steps you can take to make sure that you do not become a victim. Firstly, you should make sure you have trustworthy professionals who will help you manage your estate. CPAs and certified financial planners can help you manage your retirement accounts, but you also want to hire a reliable estate planning attorney such as one of the many at Clear Counsel. A good estate planning attorney will help you write power of attorney documents, as well as will documents. With their help, you can also establish trusts and structure them so that your relatives’ access to the money is controlled or limited.

When your attorney is helping you craft your power of attorney, you want to give a lot of thought to who you should give that power. That person is legally obligated to act in your best interests, but with the power of attorney, he or she will have the ability to manage your money without your supervision. That is why it is critically important that you assign power of attorney to a family member who is very trustworthy. Consumer Reports recommends that you give that power to a family member who is financially secure and more detached from you instead of the family members who are closest to you. That may reduce the risk of abuse, but it always depends on the situation. It is also possible to assign a separate relative or friend to monitor the person who has power of attorney and that will give you greater protection and control over the situation.

It is also a good idea to set up most of your recurring payments as direct deposit. Payments such as those that come from pensions, Social Security, and tax refunds should go directly to your bank account. That will reduce the risk that someone close to you, such as a caregiver, will have access to your money. Finally, you can work with your bank so that recurring payments such as mortgage payments and utility bills are paid out automatically from your account. This will further reduce the risk that someone close you can exploit you financially.

Call the experienced staff at Clear Counsel today to set up a consultation about your legal rights and set up the documents that will help to protect you from elder financial abuse.

Estate Planning / General Interest - 12/15/2014

Why Should I Set Up a Trust?

A very common misconception among people engaged in estate planning is the idea that only the extremely wealthy should establish a trust. This is actually not true. If you have more than $100,000 worth of assets, it is typically a good idea to set up a trust. There are other circumstances when a trust would be a good idea:

A business, real estate property, or an art collection makes up a large portion of your assets
Paying out your estate to your heirs in very specific ways
Setting aside a portion of your estate for children from a prior marriage
Maximizing exemptions from estate taxes
Providing benefits to a disabled relative

Benefits of a Trust

Control: With a trust, you can decide exactly how much of your assets are distributed, when, and to whom. For instance, if some of your heirs are less responsible with money, you can arrange the trust so that they receive their disbursements in smaller amounts and at a later date. You can also set conditions such as graduation from college or marriage, so that the money is distributed in exactly the way you prefer.

Reducing Taxes: There are many different types of trusts, and they are subject to taxes in different ways. Generally speaking, trusts are a great way to reduce the amount of estate and gift taxes that would normally be paid.

Avoiding Probate: Probate is a long and costly process. CNNMoney.com reports that probate can cost between 5-7% of your estate. By setting up a trust, your heirs can get access to your estate quickly and easily and bypass the probate process altogether. Another advantage is that the probate process is public record. If you would like to distribute your assets privately and provide privacy to your heirs, a trust is the perfect way to do that.

Protecting Your Assets: Transferring your assets to a trust can protect them from lawsuits and creditors. If you can survive financially without many of your assets, creating a trust is a good way to protect them long term.

Supervision: For most types of trusts, you will name a successor trustee. This person will manage the assets after you pass away, and by choosing a savvy and capable trustee, you can ensure that your assets will be managed wisely. This is a great solution if your spouse or heirs lack the skills to manage your assets effectively, or if you wish to distribute assets to children or disabled relatives who may not be able to watch over your assets on their own.

Providing for Charity: Trusts can be drafted so that a portion of your estate goes to charity. For instance, some trusts are designed so that they give the maximum tax-exempt amount to your heirs and then transfer the rest of your estate to charity. If you would like to donate a large portion of your assets, a trust is an excellent way to do that.

Like all forms of estate planning, you will need professional help to establish a trust. According to Investopedia, you will need to pay between $1000 and $3000 for attorney fees when you are setting up a trust. But if these benefits appeal to you, creating a trust is a smart investment.

Estate Planning - 12/12/2014

What Is a Totten Trust?

In 1904, the New York Court of Appeals ruled that individuals could name a beneficiary to an upon-death bank account. The case was referred to as Matter of Totten, which is where this trust got its name. While a totten trust does not meet the formal requirements to be considered a traditional trust, the courts ruled that because these types of bank accounts usually held smaller amounts of money, the practice could continue.

How to Open a Totten Trust

If you are in the process of planning your estate, you may be wondering what will happen to your bank accounts once you die. In most situations, bank accounts are jointly held between two people within marriage. When one person dies, the surviving spouse will become the sole owner of the account, and the account will not need to go through the probate process. However, if you are the sole owner of a bank account, then you will need to take other steps to ensure that your bank account is transferred to the individual you prefer.

A totten trust is basically a “payable-on-death” account, where a named beneficiary will take sole ownership of the account upon your death. In order for the beneficiary to receive the funds in the account, this individual will need to present a certified copy of your death certificate, along with valid identification to prove that he or she is the beneficiary.

To name a beneficiary to a totten account, you will need to go to your bank and ask for the appropriate forms, fill them out, and then turn them in at your bank. Be sure that your bank receives these completed forms, as it is not enough to simply fill them out and keep them with your important documents. The bank will need to have this information prior to your death.

It is important to know that you can revoke or change the trust at any time during your life. This means that you can withdraw the trust or change the beneficiary if you need to. If you do not name a beneficiary to your bank accounts, the accounts will go through probate upon your death and the court will decide who will receive your money. If you do name a beneficiary, this person will only have access to your account after your death. The named beneficiary will not have access to your account while you are alive, not even to inquire about the funds in the account.

Upon your death, the beneficiary will be contacted and will typically receive the funds within a short period; the account will not have to go through the probate process.

Contact an Estate Attorney

If you are interested in beginning the estate planning process, contact the estate attorneys at Clear Counsel Law Group. The attorneys at Clear Counsel understand the importance of financial planning and securing your family’s financial well-being. Call today to set up a consultation.

Estate Planning - 12/08/2014

How to Leave Assets to Children

When considering wills and inheritances, most people think about adult inheritors, however, there are situations where children will be left with property and other assets. Leaving assets to minor children (under age 18) can be trickier from a legal standpoint, as individuals under 18 are not usually able to understand the complexities that come along with monetary gifts. Even more, some children inherit monetary gifts that involve more intricate planning and management, such as stocks, CDs, real estate, and other investments.

While most people know that it is wise to name a guardian in their will for their minor children, most people do not realize that this named guardian will not automatically be able to manage the children’s inherited money. Once you die, your will goes through probate, at which point a guardian is named for your child. This will usually be the person you name. As for inheritances, the court will be in control of this money--not the guardian--until the child reaches 18. When the child reaches legal age, the court will disburse the inheritance as one lump sum.

Once this child reaches legal age, this money is completely theirs, and unless they are willing to let a trustworthy adult help them manage it, chances are that money will not be managed as well as it could be. While some people may consider opening a custodial account for a minor, this also may not be the best method of leaving money to a child. In custodial accounts, a designated custodian, not the court, will be named to manage the funds. However, all of the money will still be disbursed to the child once they reach legal age.

To avoid money management issues, it may be best to set up a living trust for your child. In your will, you can also name someone who will manage the inheritance until the child takes over. Using this option, the trust will not be handled by the court. Revocable trusts are set up while you are alive and you decide who will inherit the money and at what age. With revocable trusts, the person you choose to manage the money will still have power even if you become incapacitated. (This is not always the case with irrevocable trusts).

All assets that are in a trust are protected from the courts. This is beneficial because court hearings and other legal technicalities can be expensive, thus reducing the value of the inheritance. Trusts also protect the money from irresponsible spending, as you are able to name a trustworthy individual who will manage the money. Even more, assets in trusts are protected from creditors. This is especially important should a divorce proceeding come into the picture.

Seek an Attorney

If you have questions about estate planning or would like to start planning your estate, contact Clear Counsel Law Group to set up a consultation. The attorneys are Clear Counsel know how to help plan estates based on individual needs.

Estate Planning / Probate - 11/24/2014

How to Choose the Right Executor for Your Estate

How to Choose the Right Executor for Your Will

When it comes to planning your estate, it is necessary to designate an executor. This person, or institution, will be responsible for clearing all of your debts, as well as carrying out your final wishes. Choosing the executor of your estate is one of the most important decisions regarding estate planning, so careful consideration should be given as to who best would serve this role.

The individual who assumes this responsibility should work diligently and promptly to finalize all of your final earthly matters, as well as allocating assets appropriately to beneficiaries. Even more, ensuring family harmony will be another responsibility of this person, as family friction can be especially high during times of grieving.

Some of the responsibilities of the executor, include:

Filing documents to probate court to ensure the validity of the will (this is typically required by law)

Paying final bills, funeral costs, and taxes with estate funds

Canceling credit cards and notifying government agencies of the death (post office, banks, and Social Security)

Filing final income tax returns

Allocating possessions to the heirs designated in the will

Because of the complexity of an executor’s responsibilities, the person you choose should be well organized, trustworthy, dependable, and good with preparing and filing paperwork.

Who to Choose

Typically, most people will name a family member as the designated executor, usually a spouse or child. In some cases, a close friend could be chosen if you do not have a relative that could take on the role. If the executor you choose lives out of state, be sure to check state laws that may require an out-of-state executor to be a relative. Also keep in mind that third parties can be designated as executors if you do not have a friend or relative that you feel can take on the role, especially if the estate is larger in size.

When choosing an executor, be sure that this person is emotionally capable of fulfilling such an important duty. Some individuals handle death better than others, while others may not be able to take on such a significant responsibility like that of an executor. Always be sure to ask the individual you have chosen if they accept the role, as sometimes individuals do not feel comfortable taking on the associated responsibilities.

Cost of an Executor

If a family member or close friend is designated as the executor, chances are that they will take on the responsibility for free. However, you can set aside a monetary gift for them if you decide to do so. If a third party is designated, such as a bank, this institution will charge a fee that is determined by your state. In most states, the fee will depend on the size of your estate and will range from one to five percent of the estate’s value.

If you have any questions about estate planning or choosing an executor, contact Clear Counsel Law Group to talk with one of our experienced probate attorneys.

Estate Planning / Probate - 11/21/2014

7 Ways to Protect Assets from Creditors

When it comes to planning your estate, it is not always easy deciding where your assets will go once you are gone. Not only should you try to reduce your estate taxes as much as you can, it is also important to protect your assets from creditors. But be careful, because some measures to protect your assets may be considered fraudulent under the Uniform Fraudulent Transfer Act. If an asset transfer occurs with the intent to defraud or hinder a creditor, it is considered a “fraudulent conveyance.” Below are 7 safe methods you can use to protect transferred assets from being claimed by creditors.

1. Outright gifts – By giving an outright gift to an heir, it is protected from creditors. However, be aware that you will lose control over the asset, including all economic interest.

2. Family Limited Partnerships (FLPs) – Limited partnerships within a family means that each partner pays taxes independently of each other. So when assets are involved, when one of the partners die, the assets left to the limited partner will be more difficult for creditors to access to cover debts. Only the limited partner’s interest can be reached by creditors in most cases.

3. Inter Vivos qualified terminable interest property – This trust is to be created for your spouse while you are alive. Once created, it qualifies for the gift tax marital deduction. When your spouse dies, the QTIP trust will be a part of his/her estate. If your spouse does not have enough assets to cover federal estate taxes, only then will the QTIP assets be used to fulfill taxes.

In the case that you survive your spouse, the QTIP assets that you established for your spouse will now fund a family trust. This amount will be equal to the estate tax exemption, which is currently $1.5 million. Any assets left over after this transfer will be assigned to you under the marital trust law, and because it qualifies for the marital deduction, there will be no federal estate tax on these assets at the time of your spouse’s death.

Because assets that enter a family trust do not qualify for estate taxes, it is beneficial to set up your QTIP trust in this manner. This structure protects your assets from creditors because assets moved to a family trust for a surviving spouse’s benefit are not subject to federal estate taxes. This is because these family trust assets are not legally part of the surviving spouse’s estate.

4. Irrevocable life insurance trusts (ILITs) – For federal estate tax purposes, insurance proceeds in ILITs are not considered part of your estate. This trust protects insurance proceeds during and after your death from creditors.

5. Qualified personal residence trusts (QPRTs) – With a QPRT, you can transfer a residence, either primary or vacation, to a living trust. With this trust, you reserve the right to live in the residence for a set number of years that is determined by using IRS tables. The “remainder interest,” the amount of time that you can remain living in the residence, is calculated by taking the value of the property, minus your term interest’s value. The QPRT protects a residence from the gift tax through your $1 million gift tax exemption.

6. Charitable remainder trusts (CRTs) – In this type of trust, a percentage of assets are provided to a “grantor” annually for his/her lifetime. When the grantor dies, his or her spouse will become the CRT annuitant for the remainder of his or her lifetime. After both grantors have passed, the remaining CRT assets are given to charity under the “remainder interest” qualification.

7. Grantor retained annuity trusts (GRATs) – With a GRAT, a donor makes a donation into a trust. For the remainder of the fixed term of this trust, the donor will receive an annual payment. Once this term has ended, selected beneficiaries will receive any remaining value of the trust as a gift.

Estate planning is very complex. Protecting yourself and your family should be your top priority, so speak with an experienced probate attorney at Clear Counsel to discuss your options.

Estate Planning / Probate - 11/20/2014

Why and How to Avoid Probate

When a person dies, his or her assets are going to need to be distributed one way or another, as well as debts paid. While a will is usually there to determine who receives what, sometimes a will is never created. If this is the case, the court will decide how assets are to be allocated.

Why to Avoid Probate

Probate can be slow – Probate is not usually a quick process, as it is handled through the court system. In simple cases, probate can be completed in as little as six months, however it can sometimes take up to a year to be settled. If an individual has a complicated estate or someone in the family contests the will, the probate process can be drawn out to two or more years. Because the probate process can be time consuming, it often creates tension within family members who are named in the will to receive inheritances or other assets.

Probate can be expensive – What many people do not realize is that probate is not free. The court takes a percentage of the estate’s worth to handle the costs of the probate process. In some cases, probate courts need to hire lawyers to protect minor children’s inherited assets. While each state charges differently for probate fees, it is generally expensive to go through the probate process at all; in fact, the probate fee can be as much as 10% of the estate.

Probate is public – Because the probate process goes through the court system, any information involving an estate becomes public record. If someone in the public chooses to, they can search these records to see what an estate consisted of. What this means is that whatever assets were left and distributed is public knowledge. So for instance, if you inherited gold coins from your grandma, people can find this out through public records. The availability of this information can make individuals targets for burglaries.

How to Avoid Probate

While most people instinctively create a will to name heirs, there are other methods of distributing valuable assets and property upon death. Instead of developing a will, a living trust can be established. A living trust allocates assets and property in a private manner that will entirely bypass the probate process. There are no probate fees or unwanted publicity regarding assets and property. When a living trust is created, a trustee is named and will be in charge of managing the assets of the trust. This trustee will notify the beneficiaries of their inherited assets and will allocate as necessary. And because a living trust does not need to go through probate, the process to distribute valuable assets will be much quicker than if a will was used.

Contact an Estate Attorney

If you would like to know more about living trusts, contact the estate attorneys at Clear Counsel Law Group. The attorneys at Clear Counsel understand that your family’s security is your number one priority, and would like to help you create a secure way to manage your assets and property. Call today to set up a consultation.

Estate Planning / Probate - 11/18/2014

Revocable vs. Irrevocable Trusts

When it comes to living trusts, there are two basic options available; a revocable trust and an irrevocable trust. When it comes time to determine which type of trust is best, it is important to understand the fundamental differences between the two trusts and when one may be better than the other.

The revocable trust is the type of living trust that remains under the ownership of the grantor, or the person who takes out the trust. Revocable trusts can be changed and even cancelled at any time, which makes this type of trust seem like a great option. However, there are drawbacks to revocable trusts that are discussed below.

The irrevocable trust is where the grantor’s assets are moved out of his or her estate. This means that the assets in the irrevocable trust are no longer considered the property of the grantor. In some scenarios, the irrevocable trust may more sense than a revocable trust.

When an Irrevocable Trust is Better

Asset Protection – When a person has assets in a revocable trust, these assets are considered the trustmaker’s property. Because of this, these assets are vulnerable to creditors; assets in revocable trusts can also be taken should a lawsuit be brought against the grantor. However, when assets are in an irrevocable trust, these assets are no longer considered the property of the grantor, but instead are managed by an independent trustee. All of the decisions regarding the assets in the irrevocable trust will be in the hands of the independent trustee, and may or may not be extended to the grantor.

Estate taxes – Because assets in a revocable trust remain in the grantor’s estate, these assets may qualify for the federal estate tax depending on the value of the assets. However, assets in an irrevocable trust are no longer part of the grantor’s estate, disqualifying them from estate taxes.

Capital Gains Taxes – If handled correctly, assets that are transferred to an irrevocable trust will not be taxed as capital gains. In revocable trusts, these same assets would be taxed. However, be aware that gift taxes may be required when transferring money to an irrevocable trust.

Charity – If an individual decides to put assets into an irrevocable charitable trust, these assets can be written off as charitable deductions at tax time.

When a Revocable Trust is Better

Irrevocable trusts may be ideal when there is a large amount of assets that could be taxed. On the other hand, revocable trusts are typically best for individuals who do not have serious tax issues. Even more, revocable trusts are usually recommended for individuals who may at some point lose the mental capacity to handle their own assets. For instance, if an individual has a family history of dementia, it may be wise to transfer assets into a revocable trust. Once this individual is no longer able to manage the assets in the trust, the designated trustee will step up to handle the assets. If the original grantor chooses to do so, specific wishes and guidelines can be stated in the revocable trust for the successor trustee to follow. However, in most other cases, irrevocable trusts make the most financial sense.

Talk to an Estate Attorney

If you have questions regarding trusts or would like to discuss setting one up, contact Clear Counsel Law Group to schedule a consultation. The attorneys at Clear Counsel Law are experienced in estate planning and are there for you to help secure your family’s financial future.

Estate Planning - 11/14/2014

Every Parent Needs A Will.

Most people don’t want to think about their own demise. For parents with young children it can be emotionally draining to think about your kids growing up without you. However, it is important to plan who will take care of your children if you pass away unexpectedly, especially if you are a single parent. Even if you are married and your spouse is able to care for your children, you need a will in the event you both pass away at the same time and to ensure all your assets are passed on appropriately.

What Happens If I Die Without A Will?

If you die without a will the state will use the rules of intestacy to determine how your assets are divided. Also, if your spouse has also died or you are a single parent, the court will determine who will raise your children. These are very scary things to think about. That is why it is important to prepare a will that addresses these issues. Depending on the complexity of your estate you may also need other items such as a trust.

What Should I Put In My Will?

The first item that a will should address is who will care for your children. Your will should first state that your spouse shall have sole custody if you pass away and then name a guardian if both you and your spouse are dead or if you are a single parent. It is important to think carefully about who to name as the guardian of your children. The person you choose should be physically and emotionally able to handle raising your children and your children should have some form of connection to him or her. It is also wise to name an alternative guardian if the first choice is no longer available. It is best to talk to the people you are thinking of naming to ensure they are willing to accept the responsibility

The second item that your will should address is how to dispose of your assets. Your will should first state that all your assets shall be given to your spouse if he or she is living. In some states if you die without a will, your assets are split between your spouse and your children. Your spouse then has to involve the court to spend the children’s assets before they reach 18. Your will should then name a custodian of your assets if you and your spouse are both dead or if you are a single parent. The custodian does not have to be the same person as the guardian. Some people think it is easier to have the guardian also be the custodian so he or she can use your assets to pay for your children’s expenses. However, others prefer to have a separate custodian especially if the guardian is not good with money. The drawback to this arrangement is that the guardian will have to seek the approval of the custodian to use the funds, which can be a hassle. Your will should also designate at what age you wish your children to have control of their inheritance. The default rule is 18 but most teenagers are not mature enough to handle a sizeable inheritance. A better rule of thumb is 25 but every situation is different.

Please contact us at 702-522-0696 to discuss your estate planning needs, especially if you have young children. We can help you prepare simple documents that will give you peace of mind about your family’s future if you pass away.

Estate Planning / Probate - 08/29/2014

Delaware's Digital Death Law Blazes Trails for Consumer Rights.

Delaware has enacted a law on digital death that is the first of its kind in the nation. The statue provides a deceased person’s (or incapacitated) executor (or guardian) access to his or her digital accounts and to be an authorized user of the accounts.

This is a huge deal since big corporations, including amazon and apple, have previously insisted that at your death your digital "self" including your library of digital media, can not be passed along to your inheritors. While this law does not specifically allow for passing on digital goods to inheritors beyond anything stated in the EULA, it begins clearing the way for laws around the inheritance of digital assets.

The law reads as follows:

Except as otherwise provided by a governing instrument or court order, a fiduciary may exercise control over any and all rights in digital assets and digital accounts of an account holder, to the extent permitted under applicable state or federal law or regulations or any end user license agreement. A fiduciary with authority over digital assets or digital accounts of an account holder under this chapter shall have the same access as the account holder, and is deemed to (i) have the lawful consent of the account holder and (ii) be an authorized user under all applicable state and federal law and regulations and any end user license agreement. (emphasis added)

Thus, the executor or guardian would have access to the person’s email, music, photos, and other digital content. In passing the law, the Delaware legislature noted that people’s lives are increasingly conducted on-line and that their assets are increasingly stored in the “cloud”. Under current probate and estate laws, it is difficult for executors to gain access to a deceased person’s digital assets. Specifically, the legislature stated:

Recognizing that an increasing percentage of people's lives are being conducted online and that this has posed challenges after a person dies or becomes incapacitated, this Act specifically authorizes fiduciaries to access and control the digital assets and digital accounts of an incapacitated person, principal under a personal power of attorney, decedents or settlors, and beneficiaries of trusts.

However, the law is not as sweeping as it appears. The statute specifically states that it is subject to federal and state laws as well as end-user license agreements. Both Apple and Google end-user licenses do not appear to allow this type of activity. Moreover, both end-user licenses state that they are governed by the State of California not Delaware. Therefore, it may be difficult for an executor in Delaware to obtain access to a deceased person’s Gmail or iTunes accounts. Google actually has a “digital afterlife” service whereby a person can set up how his or her accounts will be handled after his or her death. Consequently, Google may ask the courts to defer to its established services and not recognize the Delaware statute. Moreover, some advocates are opposed to the Delaware law because they believe it violates the privacy rights of the people who communicated with the dead person. For example, the executor may read emails to and from the deceased person that contain information subject to professional rules of confidentiality or are simply very private matters.

Although novel, the Delaware law does not currently have a lot of “teeth”. Its effectiveness will likely be tested in court, at which point it will be clearer as to what powers an executor has access a deceased person’s digital assets.

Estate Planning / Probate - 08/28/2014

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