People often ask us to explain the difference between a revocable and an irrevocable trust. That’s a tough one because there are so many kinds of trusts and even irrevocable trusts can, within the Trust-300x225terms of the trust, allow certain things to be revoked or amended. But here’s our answer.

Most people who consider forming a trust like the concept of a “revocable” trust. The word “revocable” implies that you can amend, undo, change, alter, or revoke the trust. When someone hears that a trust is “irrevocable,” they often get concerned because that implies that things are rigid, fixed, inflexible, and control is lost.

The typical “avoid probate” trust is a revocable trust. There is no requirement that the typical “avoid probate” trust be irrevocable. Your home and other assets must simply be titled in the name of your trust when you die.

6d40ea6ed7ae7784abf574b8c6174543_300x300-300x200I met today with the children of a woman who is presently residing in a Madison nursing home due to her dementia diagnosis. The children had no idea how long term care and Medicaid financing for long term worked.

They told me that Mom owned a home, three annuities, some cash in the bank, and expensive jewelry and antiques. Their financial advisor referred them to my office. I asked them what they knew about long term care and Medicaid. They said they were starting to “hear things” but they wanted to get the truth.

I told them that if all of the assets stayed in their mother’s name, then their mother would be forced to spend her $475,000 of financial assets until she had less than $2,000 remaining. They told me that their mother was spending about $8,000 per month currently on her care. I also told them that – if Mom keeps everything in her name – then after Mom spends all of her finances, she will qualify for Medicaid, but then Medicaid will have the right to enforce its Medicaid Estate Recovery rights after Mom dies, forcing the house to sold after Mom dies to reimburse Medicaid for what they spent on Mom’s care after Mom spent all of her own money.

This July 4th, the U.S. will celebrate its 241st Independence Day! On July 2, 1776, the Continental Congress voted in favor of independence. Two days later on July 4, its delegates adopted the Declaration of Independence, drafted by Thomas Jefferson, and declared the 13 American colonies independent states and no longer a part of the British Empire. Check out the infographic for some fun facts to help mark the holiday!

How will you be celebrating this Fourth of July?

 

Independence-Day

OEpic-Blog-Image-3-300x133ne of the biggest problems that senior citizens ages 65 and older face is that they are frustrated by the fact that they have worked hard and sacrificed to save a nest egg for their later years only to face the possibility that they could lose everything to a long term care medical need, while others who spend and don’t worry about their finances can rely on government assistance to pay for all of their skilled nursing home costs

Sometimes older parents and grandparents even wake up in the middle of the night worrying about how much their children will struggle to have to provide care for their aging parents while the children watch the family finances go down the drain.

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Let’s face it. many people HATE paying tax. And many people hate paying income tax when distributions are made from their IRA.8942c891917593748f2b7930878e34f5-300x300

We recently were working with a gentleman from our area on his estate plan. He owned property in Dane County. He had never been married and he never had children.

He wanted to leave some things and some money to a family member of his, but he liked the idea of setting up some scholarship funds. So, after quite a bit of discussion, he decided to name his college as the beneficiary of part of his IRA when he died. But he did not want the funds from his IRA to go into the general funds of the college. So, we are restricting the IRA so that it can only be used in a certain curriculum of the university. Now, he knows that students in his prior field will benefit from scholarships that he establishes.

The internet has turned the paper trail of one’s life into virtual confetti of online accounts. Sure, it’s not hard to find someone’s Facebook, LinkedIn and Twitter accounts. You might even be able to guess a password or two. But you won’t guess them all, and even if you could you might be breaking the law; in many places, accounts can’t be legally accessed by anyone other than the holder.

All that gray area creates the potential for Twitter, Facebook, email and other accounts to sit stranded online in a state of suspended animation. At best, they’ll be creepy reminders every time they prompt friends and family to wish a happy birthday to the departed. At worst, they’ll keep important assets, like bank balances, locked away.

There are currently federal and state laws that may make it a criminal offense for anyone other than the account owner to access an account. This is true even if the owner gives another person permission to do so.  By the end of 2017, it is expected that almost every state will have enacted some form of the Revised Uniform Fiduciary Access to Digital Assets Act. RUFADAA will allow for users to request a digital assetsservice provider to give a fiduciary access either by opting in on an online tool furnished by the service provider or through one’s estate planning documents.

The biggest challenge facing your estate may be finding digital assets after a death. If your family or named fiduciary isn’t aware that you have a Dropbox account, no one may ever look for it.

We recently partnered with Directive Communication Systems which provides personal representatives with a powerful solution for managing personal accounts. When the time comes, DCS works with accounts to implement an estate’s final wishes which may include deletion, transference, memorialization or other instruction. Even a financial institution can be contacted to initiate next steps for the attorney. With DCS, you can be assured that accounts will be managed securely and estate administration will be handled smoothly saving both time and anxiety.  Continue reading

Not all of a deceased person’s property has to go through probate. If the property had a properly designated beneficiary, such as an insurance policy, an IRA or a 401(k), those do not go through probate.
Additionally, because of Wisconsin’s marital property law, everything owned jointly by a married couple easily transfers over to the surviving spouse. However, if real estate is only in the deceased spouse’s name there may need to be a probate. Continue reading

We recently had some discussions with a Madison family that was trying to make the most of their father’s IRA and had questions about naming the beneficiary of an IRA. The family wanted to make sure that after the father died, the IRA would benefit one of the children, and then after that child died, the family wanted the IRA to be shared among the other children.

retirement trustThe family kept asking: “Should we name the child as the beneficiary, or should we name a trust (for the benefit of the child) as the beneficiary.

One of the children was married to an accountant. His suggestion (whether it has merit or not is debatable) was, “Don’t name a trust as the beneficiary of an IRA because I hate trusts.”

One of the children stated, “Dad wants it left to a trust for the benefit of a child so that Dad has the assurance that when the child dies, the remaining IRA would go to the child’s siblings.”

What should they do?

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An affidavit of transfer is an alternative option to probate only when people have less than $50,000 in probateable assets, in other words, anything that would pass through the probate court. Typically that would include any real estate, bank accounts or other personal property which was held in the deceased person’s name. However, again the total of all assets would have to be under $50,000.

Another option for estates over $50,000 to avoid probate requires planning before the person passes away.

Another option to avoid probate is by creating a revocable trust and then transferring all of the assets into that trust. Upon doing so, if a person then dies, there would be no need for a court case. This is the best way for most people to plan their estates.

What Types Of Trusts Are Useful In Protecting Retirement Plans?

There are a number of schools of thought here. In our practice, we feel a revocable living trust is not a good vehicle to handle retirement plans. Often these are not drafted with the appropriate language to comply with the IRS service regulations to be what’s called a “see-through trust”. A Retirement Plan Trust is specifically drafted to comply with the service regulations and meet all the criteria so that if this trust is designated as the beneficiary, you will be able to preserve the tax deferral for those named beneficiaries to get the stretch advantages.

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