Category Archives: Trusts

Should We Have Joint or Individual Revocable Living Trusts as a Married Couple?

Should We Have Joint or Individual Revocable Living Trusts
as a Married Couple Estate Planning Together?

I’ve been getting this question a lot lately: Why shouldn’t we, as a married couple who have had all joint accounts and joint ownership, just have one joint revocable living trust instead of separate or individual revocable living trusts?

Joint revocable living trusts can and do make sense for some married couples some of the time, just like Wills rather than trusts sometimes make more sense in a given situation. It is always important to review all of your personal family and financial circumstances with your estate planning lawyer to be sure that you have a complete and accurate understanding of how and why one approach may be better suited to you than another.

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To broadly generalize, however, here are 8 reasons I would recommend individual living trusts rather than a joint trust for a married couple planning together:

1. If you and your spouse are likely to have over $2M combined total assets in your estate (including the value of any life insurance policies that would have paid out upon your deaths and the value of all retirement accounts), this is a way to minimize the impact of the Massachusetts estate tax (which has a $1M threshold for filing and an upper tax rate of 16% on the adjusted total assets in your estate).

2. If you and your spouse are likely to leave a combined total of over $10.86M, as the federal estate tax currently stands, then this is a way to minimize the effect of the federal estate tax as part of your overall estate plan. Note that the federal estate tax has been in existence for about a century in one way or another, but this is the highest exemption amount we’ve ever had and being the political hot button topic that it is, there is no guarantee that the present exemption or tax rates will stay where they are. In fact, if the last 15 years have demonstrated anything (going from a $1M exemption and 55% tax rate in 2001 to the present levels), it’s that the federal estate tax is highly likely to shift around, sometimes rather dramatically! Without a crystal ball the best we can do is to draft very flexible plans and keep a lookout for all the possible chances that may occur.

3. It is easier for your surviving spouse and/or trustee to determine, in consultation with your estate planning attorney, your CPA, and your financial advisor working together as a team, which assets to fund into which irrevocable subtrusts to take into account the laws as they exist at that time of your death. If the assets were held in a joint trust, your surviving spouse and/or trustee would not be able to move assets held jointly into the credit shelter or family trust or it could invalidate the tax exemption status of that entire subtrust.

4. When you die, you’re not around to change the terms of your trust anymore, so at that point, your trust becomes irrevocable at least in part. The portions of your trust that would benefit your surviving spouse and your children, if applicable, become irrevocable. If you have a separate revocable living trust, you can still amend your own trust even after the death of your spouse. This provides a surviving spouse with more flexibility and autonomy than a joint trust would.

5. If yours is a second or subsequent marriage and/or blended family, you and your spouse may not have the same plan for distribution and the flexibility you have to make somewhat different plans can avoid some potential family drama.

6. To minimize estate taxes, you will have to divide assets at some point. I believe that it is probably a lot easier to cherry-pick and split up assets now, while you are in full possession of your faculties and not in the process of grieving the loss of your spouse, than it would be in the relatively immediate aftermath of his or her death and without his or her assistance with the process.

7. If you or your spouse came into the marriage with substantially unequal assets, separate trusts can also be a way to maintain the character of those separate assets and ensure that they end up where you ultimately intend.

8. There are also some questions, and potential traps, regarding the character of assets contributed to a joint trust as opposed to separate trusts. For examples, depending on the language and provisions of the trust itself, it may not be explicitly clear what portion of the assets in a joint trust should be attributed to the deceased spouse vs. which portion of those assets would be considered part of the surviving spouse’s estate, and contributions to a joint trust may be counted as a taxable gift to your children or other secondary beneficiaries.

After a full examination of your current family and financial circumstances and a personal discussion with you about your goals and priorities in terms of your estate plan, your attorney will be able to help you make the best informed choices about which type of plan best suits you and your family.

“it’s not about what you have, it’s about how much you care"

October 20-26, 2014 is 
National Estate Planning Awareness Week

Attorney Danielle G. Van Ess of the family-friendly, Hingham, Massachusetts law firm DGVE law, LLC wants to help you “protect your family, yourself, and your stuff.” She explains, “it’s not about what you have, it’s about how much you care. You care about who makes your medical decisions for you. You care who takes care of your children. You care about preserving whatever you have to use throughout your lifetime. You care about what you leave behind to whom, how, and when.”


If your children are minors you worry about who would raise them into adulthood. If your child just became a legal adult, you worry that, without his or her own basic estate plan in place, you lack access to financial and medical information to help him or her. If you have a child with special needs you worry about who would know everything you do about your child and how to ensure your child’s needs are always well met. If you have an adult child with a history of less than stellar financial management skills, addiction, gambling, or who may be divorcing, you worry about lost assets.

 More people are sued than ever today. We know most doctors will be sued sometime in their careers, but increasingly so will financial, accounting, real estate, and IT professionals. Car accidents, slip-and-falls, and accidents involving other people’s children are all real threats. The time to protect your assets from possible lawsuits is before you think you might be sued, before it is too late, and the way you try to protect your assets determines your likelihood of prevailing. Some DIY efforts, such as titling assets in your spouse’s name or establishing a family LLC or LLP without ensuring it owns the assets nor maintaining required formalities just provide false confidence and will likely fail to provide asset protection.


You may worry about how to pass significant resources to your loved ones without causing unintended consequences such as disrupting family harmony. Your estate planning attorney can help you design a plan so each family member can enjoy your cherished vacation home without disagreements far into the future. If you have always been charitably inclined, you can plan to support charities dear to your heart while also ensuring your loved ones are well provisioned. If you have a trusted financial advisor and CPA, your lawyer can and should work together with them as a team on your behalf to help you make your dreams for the future come true. Or you may worry about having sufficient resources to support yourself through retirement, possible long term medical expenses, remaining in your home as long as possible, and preserving your hard-earned resources for your loved ones. While you may not feel like you have enough to worry about estate taxes, you just might and perhaps ironically the less you have the more important it may be to preserve it to protect those you love.

Despite all these important reasons to meet with an experienced estate planning lawyer to learn how the law views your family or financial circumstances, whether your current plan is likely to achieve your goals, and what your options really are, most Americans mistakenly believe they do not need even a simple Will. Far too many Americans have stale, old estate plans that no longer reflect their current personal circumstances, especially given recent sweeping changes in the law.

In 2008 Congress passed a resolutionproclaiming the third week of every October as National Estate Planning Awareness Week noting, “Many Americans are unaware that a lack of estate planning and financial illiteracy may cause their assets to be disposed of to unintended parties by default through the complex process of probate.” With a comprehensive estate plan and financial roadmap for success, Van Ess says, “you can control your own assets during your lifetime, designate the people you want to care for you and provide for your loved ones if you’re ever incapacitated, and make sure that after your death you leave what you want to whomever you want how and when you want, all while ensuring there are more assets left rather than wasted on unnecessary expenses.”


Because there is so much more to an estate plan than just filling in forms, you need to find a qualified lawyer to assist you. Van Ess is passionate about educating and empowering her clients. Says Van Ess, “Just as we as patients seek the right bedside manner in our doctors, we need to find the right deskside manner in our lawyers. Once we find that lawyer we can say with confidence ‘I want to talk with my lawyer’ and it takes away so much unnecessary worry, replacing it with true peace of mind and comfort of heart.”


About Attorney Danielle G. Van Ess and DGVE law®
Raised on the North Shore in Swampscott, Massachusetts, Van Ess graduated with honors from the George Washington University in Washington, DC then met her husband, Chad Van Ess, Senior Counsel for the Acushnet Company, comprised of the Titleist and Footjoy golf brands, in 1998 as classmates at Boston University School of Law. Danielle “got her passport stamped” and moved with Chad to Hingham on the South Shore in 2006 where they laid down firm roots and are raising their four daughters, ages 1 through 9. Danielle established her law firm, DGVE law, LLC in their family home on East Street on September 1, 2008. For over six years now DGVE law® has been proudly “helping people add to, protect, and move their families”® by providing high quality professional legal services in the areas of adoption, estate planning, and residential real estate. For the right, truly passionate entrepreneurs, DGVE law® is also “helping you build, grow, and nurture your business.”
       
For more information, please visit: www.dgvelaw.com, like us on Facebook, or call: 781-740-0848.

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Would You Like a Revocable Living Trust With That?

Most clients come to me looking for a “simple Will” and we talk about all the related estate planning legal instruments they also need to really accomplish their goals and protect their loved ones. What is perhaps less obvious is why even those with modest estates might also like a Revocable Living Trust (“trust”) as a centerpiece of their estate plan. I often ask clients whether they’d like a trust, but I assure you it’s not just an up-sell technique a la McDonald’s “you want fries with that?” I am not at all interested in up-selling my clients legal services they do not need. To help you better understand why in many cases a trust is not just extra carbs to avoid, opting for the leaner estate plan, the following are some of the benefits of establishing a trust.
  1. Provide for the Long Term Management of Your Minor Child’s Assets. Without a trust, if both parents of a minor child die, the court will have to appoint a Guardian to oversee the child’s inheritance, making annual reports to the court, until the child turns 18 years old and receives everything outright. With a trust, you can decide when your child receives how much of her inheritance (for example, 1/4 at 25, 1/2 at 30, 1/4 at 35) and even take additional measures to protect your child from immature decisions and creditors.
  2. Avoid Probate. When you have a trust, your named successor trustee is in control of all of your assets so there is no need to go through the whole court process called probate that is otherwise necessary to change legal title to all your assets and permit the financial custodians of your banks, the registrar of deeds, and so on to release your assets to your children without concern about potential lawsuits for doing so before completion of the probate process. In Massachusetts the probate process generally takes approximately 12-16 months and costs approximately 5% of the value of your gross estate in necessary appraisal and court costs and attorneys’ fees. In addition, during the entirety of the probate process, your assets are frozen and inaccessible. A will alone does not avoid probate; rather, it ensures that you will need to probate your estate.
  3. Avoid Various Potential Unintended Consequences of Creating Joint Ownership With or Transferring Ownership to Your Adult Children. If you have adult children, it is often far better to name them as your successor trustees of a revocable living trust than to transfer ownership of your property to them because of the potential unintended tax and other consequences. (I will explain more on this in another blog post to follow soon…)
  4. Help Your Loved Ones Obtain Faster Access to Your Bank and Other Financial Accounts. While a Durable Power of Attorney (“POA”) is a legally-enforceable and binding instrument, many banks and other financial institutions historically have had an inherent distrust of and been resistant to comply quickly (if at all) with them. It has not been uncommon, practically speaking, for such institutions to demand proof of a more recent grant of power or corroboration of incapacity or even require their own forms. Although the new Massachusetts Uniform Probate Code amended the Durable Power of Attorney statute as of July 1, 2009 to alleviate these concerns, it is still very new law and it remains to be seen whether these problems will persist. Financial institutions are often much more willing to work with a trustee of a trust than with an attorney-in-fact named under a POA. Having a trust can make the process much easier for your named trustee and intended beneficiaries. A POA is still necessary, however, to allow your agent to act with respect to those issues not encompassed by the trust, such as dealing with government agencies, contracting for services on your behalf, completing any work to fund the trust, or dealing with any other assets that may not be in the trust.
  5. Ensure That Your Loved Ones Have Immediate Access to Your Assets and That They Are Distributed as You Want. With a trust, there is no delay in making the disbursements to the people you want, how and when you want them made as there would be if your estate had to go through probate. A trust looks and functions much like a Will in that it includes instructions for how you want your estate to be distributed upon your death. The trust, while completely changeable during your lifetime, becomes irrevocable upon your death. You can therefore specify exactly whom you want to receive what, when and how you want them to receive it.
  6. Protect Your Family’s Privacy. Whereas a Will must be submitted to the court and becomes a public record for any and all interested parties to see, a trust is a private agreement not subject to public disclosure. With a trust, there is no need for everyone to know exactly how much of what you had where and to whom it is going. Unlike the Executor of an estate under your Will, your Successor Trustee of your trust will not be required to report to the court, making the process of wrapping up your estate not only more expedient and convenient, but also completely private.

If you are a Massachusetts resident who wants to learn more about how your family might benefit from having a trust at the heart of your estate plan, please call my office at (781) 740-0848 to schedule an appointment.

If You Voted The Couple Would Choose Lawyer C…

First, the couple has a very brief telephone call with Lawyer A asking for and being told they can have just want they want for a flat fee of about $800. Next they have an initial consultation with Lawyer B, who waives the initial fee. After an hour, in which the couple begins to feel very overwhelmed by a seemingly unnecessary for them complex process, Lawyer B says he anticipates their estate plan will cost somewhere around $5,000. But because it he bills by the hour and he can’t predict everything, it could run higher. Additionally, they would be responsible for several other itemized expenses that could prove necessary in the course of the representation. This plan would include far more than the simple Wills, Powers of Attorney, and Living Wills Lawyer A offered, but the couple leaves unclear as to why they are talking about trusts and feeling like they are being offered more than they need.

The couple then schedules a meeting with Lawyer C, receiving a welcoming packet of information and initial questionnaire in advance. Lawyer C explains she needs this information to properly evaluate and make recommendations about what type of estate plan might suit them best. Through the process of completing this questionnaire, which helps them organize their estate planning information and sharpen their focus on their wishes, the couple begins to feel better prepared and less “in the dark.”

With Lawyer C, the couple immediately feels comfortable, as though they are talking with a peer, rather than being talked down to by a superior. Lawyer C explains a little about her practice, the estate planning process generally, and asks some probing questions of them. She then suggests what she thinks would best protect the couple’s family and assets according to the wishes and goals they expressed. Understanding it is their choice to make, the couple then reviews Lawyer C’s printed fee schedule, comparing apples to oranges as it were. They choose a $4,000 flat fee package they feel provides them the best value, happy there will be no surprise fees, and agreeing to handle some of the administrative work themselves. Although this is far more than they originally planned to spend, they agree it is important enough to do now while they could and not wait for tragedy to strike, particularly in light of recent events. So they sign up for an automatic monthly payment via credit card, and leave already feeling relieved.

A few weeks later, after several very conveniently timed telephone conferences and thorough, patient reviews of and revisions to drafts, the couple’s estate plan is ready for signing. Lawyer C comes to their home one Saturday afternoon and they sit around the kitchen table, while the couple’s young children play around them. Lawyer C makes sure they understand and feel good about every document they sign, and thanks the neighbors who kindly stopped by to serve as witnesses. Lawyer C then reminds the couple to whom they should provide copies of each document, where they should store them, and offers some additional resources for information sharing. She reminds them to revisit their plan and promises to follow up with them as well, but says they shouldn’t be strangers in the meantime.

That night, the couple goes out for “date night” dinner and drinks with friends, leaving their young children happy at home with their favorite babysitter. On the way home, a drunk driver strikes the couple’s car directly. Stay tuned for what happens next . . .