A living trust can be either revocable or irrevocable. Although the main difference may be self-evident, it is not the only difference. If you think a living trust may be right for your situation, it is important to fully understand your options.
A revocable living trust
If you create a revocable living trust, you will be able to modify or cancel it at any time. This may be a favorable quality because you can change the details of the trust if you change your mind, if your situation changes or if a loved one’s situation changes.
Another potential benefit is that this type of trust allows you to name yourself as the trustee. This means that, until you pass away, you can manage the assets you put into the trust.
However, the flexibility and control that are so favorable in a revocable trust can also potentially leave your assets vulnerable. Because you are still in control of the assets, they can be taken to settle debts or legal judgments. They also can count as your assets for legal purposes, which could affect your eligibility for certain government programs, such as Medicaid. The property could also be subject to estate taxes when you pass away.
An irrevocable living trust
An irrevocable living trust does not offer the flexibility or control that a revocable trust offers. You usually cannot alter the trust once you create it, and you must name someone else as the trustee. However, an irrevocable trust offers a level of protection that a revocable trust cannot.
Because someone else manages the assets you put into your irrevocable trust, the assets do not count as yours. This means that they cannot be taken away to pay off debts or to settle a judgment. They cannot count against your eligibility for government programs. The assets in the trust can also avoid estate taxes.
Other important considerations
When weighing your options, it is important to realize that the two types of living trust share some benefits. Some of these shared benefits include:
The right type of living trust for you will depend on your estate planning goals and the particulars of your situation. Some people value the control that they can have with a revocable living trust. Other people prefer the security of an irrevocable living trust.]]>
1. How long will probate take?
There are several factors that contribute to how long the probate process will take. Depending on how big the estate is, how many beneficiaries there are, where those beneficiaries are located and if any disputes arise determines how long probate will last. Generally, probate can take anywhere from a few months to a couple years.
While probate may take a while, it’s important that all debts are forgiven and all assets go to their proper beneficiaries. And this can take time. If you want it done thoroughly and correctly, there’s no rushing it.
2. Who is in charge of the process?
Whoever was named personal representative in your loved one’s will is the person who oversees the probate process. The court will officially appoint this person to head the distribution and transfer of assets. However, if the will did not name someone as personal representative, the court will choose someone.
The personal representative is in charge of paying debts and taxes, preparing the assets for transfer and distributing the estate. A responsible and willing personal representative can help the process run as smoothly and effectively as possible.
3. Is probate avoidable?
Probate can often be a concern for people who wish to save time and money. For assets placed in a will, probate is usually unavoidable. However, under certain circumstances, probate is not necessary. In Massachusetts, an estate can transfer without probate if:
4. Do I need a probate attorney?
Although a personal representative is in charge of managing the estate through probate, it can be a complex process. A probate attorney can help you prepare for probate and guide you through the process with as minimal stress as possible.]]>
Even for those with family members they are sure will be willing to serve as an executor, it can be helpful to name someone legally in the will. For example, you may ultimately survive your spouse. In that case, the role would fall to your children. Unfortunately, if one child is not explicitly named, it may cause a problem when they try to pick who will become the executor. That's why it's always the safest choice to legally list someone in your will as the person who will handle your estate.
Role of an executor
You understand why naming an executor is vital–but it's also essential to know what they will be responsible for before you choose one. There are many duties of an executor, but here are a few main ones:
Choosing your executor
With these responsibilities in mind, you should choose someone who you think will be able to manage all of them. A spouse is a common choice, but if that is not an option in your situation, you must decide who will be able to carry out your wishes. No matter who it is, make sure to have an open and honest discussion with them about your expectations.]]>
A special needs trust is an important part of estate planning. Giving an inheritance directly to your child could cause a loss of government benefits. By creating a trust, you make sure your child has money for extra care while still qualifying for government aid.
Asset limits for government benefits
Government benefits like Medicaid and Social Security pay for most of your child’s expenses. But to qualify, your child can only have a limited amount in assets. And if your child has extra expenses to improve his or her quality of life like housing, entertainment or traveling, government benefits won’t cover those.
Avoiding asset limits with a special needs trust
You can leave money for your child while avoiding asset limits by setting up a special needs trust. A special needs trust is an irrevocable trust with your child as the beneficiary. Since it is irrevocable, your child does not have direct access to it. Instead, you appoint a trustee, typically a family member or friend, who draws from the trust to pay for your child’s extra needs. And the government doesn’t count the assets in the trust towards your child’s asset limit for benefits.
Setting up a special needs trust
A special needs trust is a part of your estate plan. When you set up the trust, you decide how much of your estate will fund the trust when you pass away. You also choose who the trustee will be and what happens to money in the trust when your child passes. An attorney can help you set up the trust correctly.
Taking care of your special needs child is important. A special needs trust makes sure that your child is taken care of after you pass away.]]>
However, having a will in place is one of the most important and loving decisions you can make for your family. Having an estate plan is more than dividing up your assets when you die, it can also tell a court who you want to raise your kids as well as making sure your belongings go to the people or organizations of your choice.
Essential questions to ask yourself
When creating your will, there are three fundamental questions that you should answer:
Estate planning is sound financial planning
Estate planning is more than planning for your death and helps avoid confusion and a potentially lengthy probate process if you die without drafting a will. An experienced estate planning attorney here in Massachusetts can help you find the right plan for your family’s future, while giving you peace of mind while you are still around to enjoy your loved ones as well as the wealth you’ve created.]]>
As a personal representative, you are responsible for managing your loved one’s final affairs. This can involve numerous steps, each with its own legal complexities.
Duties of a personal representative
Your duties as a personal representative will depend on the situation. However, some duties you may be responsible for, include:
Common mistakes to avoid
According to Forbes, many personal representatives make similar mistakes. Some of the biggest mistakes personal representatives make include failing to act, favoring one beneficiary over others and self-dealing.
As a personal representative, you have a fiduciary obligation to all the beneficiaries to move the estate through the probate process and treat them each fairly. Failing to act, favoring one beneficiary or self-dealing could be a breach of your obligation.
Another common mistake is forgetting that the personal representative has personal liability. This means that if you complete one of your responsibilities incorrectly or breach your fiduciary obligations, you could be required to use your personal assets to remedy the mistake.
Serving as a personal representative is an honor, but it can involve a lot of work. To avoid possible problems, it can be helpful to be sure that you completely understand your responsibilities, so you can successfully fulfill each of them.]]>
Trusts, while they can be more legally complex, do offer some additional flexibility under certain circumstances. With that in mind, here are a few instances in which utilizing a trust, rather than a will, might be effective.
You want to minimize certain taxes
Taxes can take a real bite out of an estate. By putting certain assets into a trust or trusts, it may be possible to reduce some of those tax obligations. Doing so successfully requires a thorough understanding of the different types of trusts available. But it could mean the difference between selling property in order to pay those taxes and keeping the estate mostly intact.
You want to avoid probate
Probate is the legal process of administering an estate. The process, which is overseen by the courts, can take months to complete and potentially cost more money than someone had planned for, especially in the case of large, complex estates. It’s possible to set up a trust in a way that does not require certain assets to go through probate, likely cutting down the time commitment and financial requirements.
You’re looking for privacy
The probate process, since it goes through state courts, is a matter of public record. Some people may not want the outcome of their estate to be so widely known. In those cases, if property is successfully placed into a trust to avoid probate, it will also remain private – out of the public eye.
You own real estate outside Massachusetts
If you own real estate outside of Massachusetts, that property may need to go through the other state’s probate court – referred to as ancillary probate. That means more time, more documents and potentially more court costs. Because that’s often not ideal, some individuals choose to place that property in a type of trust that may be able to avoid the need for ancillary probate.
Whether a trust is right for your situation depends entirely on your goals. It’s important to remember the right answer for someone else might not be the right answer for you.]]>
Two common types of advanced directives are health care directives/proxies and living wills.
What is a health care directive/proxy?
A health care proxy is a document where you appoint someone to make medical decisions for you if you are unable to make them for yourself. This could be a close friend or relative you trust.
What are the benefits of setting up a health care directive?
What is a living will?
A living will is a document where you specify what type of treatment you would want if certain situations were to arise. These situations can include severe mental illnesses, comas and difficult pregnancies.
What are the benefits of setting up a will?
Overall, either of these choices may be the right fit depending on your personal situation. Considering which of these options might be right for you and understanding the components of each is a good step toward taking control of your future.]]>
Unfortunately, no matter how much planning you do, your parents could fall and suffer injuries. Even if they live in a well-staffed nursing home, you may want to do all you can to decrease your parents’ chances of falling.
5 ways you can reduce the chances of falling among the elderly
It is extremely common for older adults to fall. Weakened muscles and trouble walking account for roughly 24% of falls for residents in American nursing homes, and falls take the lives of 20% of adults aged 65 and over.
Although you cannot prevent every fall, and likely are not able to personally provide around-the-clock care for your aging parents, there are some ways you can work with your parents to prevent falls.
The reminders you can give your parents to reduce their chances of falling include:
Despite your best efforts to help your parents, they could still fall; in some cases, this could be the result of negligence. Your parents could potentially fall due to a poorly-maintained wheelchair, bed that is adjusted incorrectly, wet floor or insufficient lighting.
Remaining aware of your parents’ progress and their level of care could help you determine the cause of any fall-related injuries they experience. However, if you believe one of your parents fell due to the negligence of their caregiver, you would be wise to explore not only the kind of care provided but also your legal options in holding their nursing home accountable.]]>