Every year we tend to get a lot of new trust administration clients in November and December. Most people know that if their parent or grandparent had a living trust, they may be able to avoid probate. However, most people don’t know what is involved in a trust administration. We’ve prepared a guide outlining the basic steps to administer a trust.
This afternoon I will watch El Dorado Musical Theater’s (EDMT’s) wonderful production of A Christmas Carol for the sixth time. Yes, my daughter is in the show. It is a fantastic performance based on the Charles Dickens story. It brings to mind what may be Dickens best novel, Bleak House, about years and years of litigation over a will.
Two of my lawyer friends are probate and trust litigators. They help family members protect their inheritance from what are at best greedy or at worst intentionally fraudulent executors or trustees.
How smoothly everything goes when an updated estate plan is in place. We do a lot of trust administrations, and by far the majority of them are done effectively without the need for court intervention and the costs and anxiety that go with litigation,
These trust administrations go smoothly because the parents named responsible people to serve as the role players in their living trust, will, durable power of attorney, advance health care directive and HIPAA, and they funded their living trust so their assets were owned by the trust and not subject to probate. And, they kept their estate planning documents up to date by reviewing them with their attorney every few years.
By the way, what goes unreported in A Christmas Carol is that after Scrooge’s change of heart following his experience with the ghost of Marley, and the ghosts of Christmas past, present and future, he worked with his estate planning attorney and executed an estate plan naming his nephew Fred as trustee and executor and leaving his fortune to Fred and the Cratchit family. And he kept his estate plan up to date until the day he died.
El Dorado Musical Theater’s (EDMT) A Christmas Carol is amazing. Don’t miss the ghost of Marley zombie dance number. We are lucky to have this Broadway quality production with our kids in our community. A must see for the whole family at the Harris Center. Only one week to go. Click here for tickets and more info.
The IRS has released the 2016 estate and gift tax figures. The Estate Tax Applicable Exclusion amount will be $5,450,000 (2015 is $5,430,000). The top Federal Estate Tax Rate remains at 40%. And the Annual Gift Tax Exclusion remains at $14,000.
An estate plan is simply a set of legal documents that instruct your loved ones how to manage your assets when you pass away, and if you have young children, it identifies the persons you want to raise your children. It also authorizes the persons you choose to manage your assets and make health care decisions for you if you become incapacitated. An estate plan can also leverage your assets to reduce or eliminate estate taxes and capital gains taxes, and it can be structured to significantly protect the inheritance you leave your spouse and children from divorce claims and lawsuits.
As you can see, estate planning has to do with death and taxes, and as Ben Franklin said, “in this world nothing can be said to be certain, except death and taxes.” Since everyone will have to deal with death and taxes, everyone needs an estate plan.
The type of estate plan you need will depend on your family, your assets and your goals. At a minimum, you will need a will, which lays out who you want to receive your assets, a durable power of attorney, which names the persons you want to manage your affairs if you become incapacitated and an advance health care directive and HIPAA, which authorize the persons you want to make health care decisions for you if you can’t. If you own a home, you will also want a revocable living trust so your estate won’t have to go through probate.