Most people don’t like to discuss their own demise. Frankly, it’s not the most enjoyable thing to think about. However, drawing up a will or trust allows you to designate exactly where and how you want your assets to be distributed if you pass away. It’s a common misconception that using a trust can save you on estate taxes. In reality, there are other major differences between wills and trusts that could save you time, money, and headaches in other ways. Let’s discuss the advantages and disadvantages of each.

Wills

Advantages: Wills are usually cheaper and easier to create. If you have a smaller estate, the costs of creating a trust could exceed the savings of avoiding probate. Plus, you don’t have to worry about some of the formalities that come with holding your assets in a trust, like retitling any of your assets. Lastly, using a will requires court supervision of your estate, which is helpful if you’re skeptical that your assets would be distributed according to your wishes.

Disadvantages: Wills must be probated. That means a court must supervise the distribution of the assets, making the process more costly as well as time-consuming. In addition, the court documents are public records, so anyone can go to the courthouse to see how your estate was distributed. Also, your will doesn’t take effect until you’re deceased, meaning you can’t use a will to name someone to take care of you if you’re incapacitated. Other documents are needed to do that.

Trusts

Advantages: A living trust allows you to pass your property to your heirs without going through probate, which usually allows for faster distribution than wills. If you have multiple properties in multiple states, a trust can pass the assets without the need for additional proceedings. With a will, you might need to go through subsidiary probate proceedings in the other states as well. Lastly, trust documents are effective immediately, allowing you to include things like end-of-life directives or assign a guardian in the event that you’re incapacitated.

Disadvantages: Generally, trusts have higher preparation costs than wills and they require you to retitle your assets in the name of the trust, taking up time and money. If you don’t retitle your assets, they won’t pass through the trust and instead will go through probate. Also, trusts don’t offer any kind of special asset protection, meaning your creditors can still get assets in your revocable trust.

Estate planning can be murky waters to navigate without the help of an Attorney. When making decisions this important, you need a trusted estate planning attorney to ensure your documents are correct and cover every possible area of your plan. Call Chuck Bendig.

After the loss of a loved one, emotions can run high, sometimes bringing resentments to the surface. It’s common to have heirs challenge the deceased final wishes if there was an expectation of inheritance that didn’t exactly pan out. However, they need to do so on the basis of one of four legal grounds:

Undue influence: Although difficult to prove, if the deceased was pressured by someone to change their will, the would-be heirs could have a case.

Fraud: If the will’s author was somehow tricked into signing, the will is invalid. For example, maybe they were told that it was a deed or other legal document but they were unable to read it themselves.

Improper execution: Wills are complex. That is why so many people choose to have a lawyer help them with the specifics. However, if the will was not prepared properly under the state laws, it could be deemed invalid.

Lack of capacity: If the deceased was not mentally capable of thinking out the many issues that are involved in preparing a will, for example, if they had dementia, the will could be thrown out at court.

Is it worth it?

If you’re wondering if it will be worth the effort to contest, look at the amount of money that is involved. If your interests are more about proving wrongdoing and not increasing your bank account, you may decide it’s not worth the pursuit. It costs tens of thousands of dollars to challenge a will in court. Ask yourself if the payoff is worth it to you. If there is a suspicion of elder abuse, however, contesters might be able to pursue criminal charges against any alleged offenders. That may make more sense than bringing a costly case to court.

Also, consider the potential cost to personal relationships. If you’re feeling slighted in some way by a late relative or missing out on a potentially large inheritance, it can be painful. Contesting the will may very likely affect any relationship you have with the adversary, and you should be warned that successful will contests are few. Most end up being settled out of court.

Can I contest a trust?

Has a trust omitted you in favor of a sibling? Similar to wills, these can be deemed invalid for similar reasons as a will, and this result can be difficult to achieve as well. Courts consider accounts of convenience, as well. For example, let’s say you know that the deceased didn’t intend to keep a joint owner on a bank account. Maybe they only added that person as a matter of convenience in order to assist them with bill paying. Courts can order the asset to be turned over to the estate, depending on the intent of the person who added the name at the time it was created.

If you feel there’s a reason to challenge a will or trust, consult Estate Attorney Charles Bendig. The consultation is without obligations and completely confidential.

Thinking about all the “what-ifs” becomes the norm once you become a parent. What if they fall down and hurt themselves? What if I’m not giving them what they need? What if something happens to me?

Having an estate plan is crucial, especially for parents. Not only will having one ease your mind but if the unthinkable happens, you can ensure your children are cared for in the way that you intend.

First and foremost, in today’s “I’ll just download one” mindset, know that estate planning law is complex and your situation is unique to you. If you misstep, misjudge, or simply don’t completely understand it, your mistakes can not only be expensive but also burden those that you care for the most. So, it’s extremely important to speak with an estate planning attorney.

Having these three basics is a must: A Will, a Power of Attorney, and a Medical Directive.

These documents will allow the distribution of your assets, authorize someone of your choosing to make decisions on your behalf, designate who cares for your children and provide guidance for medical professionals regarding your treatment and care.

Along with those basics, you should review your beneficiary designations on assets such as bank accounts, digital access, individual retirement accounts, life insurance, and annuities. Major life events (divorce, marriage, death, children, or step-children) can change the way you want to distribute your assets and decision making authority.

If you have a minor child, you will also want a medical power of attorney so you can entrust a family member or an associate with the authority to take your minor child to a doctor and to make health-care decisions on their behalf.

If you are young, you may be more concerned about the economic impact of COVID-19 rather than any impact on your mortality. The economic downturn may have affected your net worth and inspired you to adjust your estate plan.

If substantial gifts are part of your plan, let’s develop a strategy that will accomplish the transfer of your assets while also minimizing the tax burden.

In an estate-planning guide there are a number of basic things to consider:

• Irrevocable living trusts – These spell out exactly how assets in a trust will be held and distributed before and after your death.
• Durable powers of attorney – These allow you to designate a person of your choosing to make financial decisions on your behalf when you are unable to do so.
• Health-care surrogates – These can designate a surrogate to make health decisions on your behalf and receive health-care information from your doctors in the event you become incapacitated.
• Living wills – These permit you to designate whether you want life-prolonging treatment should you be in a terminal state.

What should your Will include?

Here are a few basics:

Beneficiaries are people you choose to receive real property or personal property in the form of cash or assets. It’s common to name your spouse, children, friends, charities, or other family members.

Executor is the individual who will carry out what’s written in your Will. You can choose whomever you like, but most people choose a responsible friend or family member. If you don’t name an executor, often this job falls into the hands of an administrator who has to pay for a bond.

Parental guardian: If you are caring for young children, it’s important to name the person(s) you want to raise your children should you pass away. Since this is a major life endeavor for the person or people you name, list a few individuals in case one or two of them are not in a position to take on this role at the time of your death.

If the pandemic is making you fear for your health, or your finances, contact Estate Planning Attorney Chuck Bendig today. The consultation is free and online consults are available.

Trusts can be used to protect your hard earned assets, to help your beneficiaries avoid the cost and expense of probate, as well as transfer legal ownership of assets to a trustee. A property is deeded in the name of the trust and the trustee is responsible for administering it as the grantor specifies. However, there could be more strings attached to an asset in a trust than if it were left to someone in a will.

While a trust is fairly straightforward, simple mistakes can invalidate your transfer of property.

Below we’ll discuss the common mistakes people can make when creating a trust.

1. You fail to show intent to create a trust. This is vital. American courts are extremely protective of individual property rights. The intent standard for a trust conveyance is similar to the property being gifted: The individual granting the property must show that making such a grant was intentional. Without this, no trust can be considered valid.

2. You fail to sufficiently fund the trust. A trust cannot be created unless the property changes hands. Any failure to deliver the property to an adequate item or sum in trust will result in a trust failure. Funding problems could be due to the granting party failing to make delivery or due to placing in trust some future property interest that can’t be tied to any property in a way that proves its viability.

3. You fail to instruct beyond precatory language. Precatory language expresses your desire but doesn’t create a legal obligation. Your trust document must indicate that you are creating a legally binding obligation.

4. You fail to name beneficiaries. A person or group of people must be named as beneficiaries. Viable trusts name beneficiaries and set out any terms for the trust as well as the duties the trustee owes to the beneficiaries.

5. You fail to put the trust in writing. When a trust involves a grant of real estate or a trust is created through the execution of a will, it must appear in writing to be considered valid. A “verbal arrangement” made with a family member or close friend will never see the inside of a courtroom.

Of course, there are expenses to set-up the trust, but these expenses should be compared to the costs of probate as well as any fees paid to the estate executor that often equal a large portion of the probate estate. The expenses may include:

• The cost to establish the trust and to create a pour-over Will that deposits all remaining assets into the trust at the time of death.
• When administering the trust, the trustee might have to retitle documents or add new filings in order to transfer ownership to the trust.

Another potential problem involves interpersonal issues that could arise between the beneficiaries and the trustee if the beneficiaries resent the trustee’s role or believe that they are not acting in their best interests.

However, it’s key to remember that you can overcome any of these problems by setting up a trust with forethought and professional assistance. Call Chuck Bendig for your free consultation.

Chances are you’ve heard the saying “In this world nothing is certain, but death and taxes”, and as it turns out, taxes are certain even if preceded by death. In fact, a decedent’s executor must file one last tax return for the deceased, with a few conditions which we’ll discuss here.

The decedent’s marital and parental status are key factors since there are special rules for families:

The deceased’s spouse may file a joint tax return for the year of the spouse’s death. However, if the spouse remarries during that same year, a “married filing separately” return should be filed.

If the surviving spouse has a dependent child, they might receive a tax break for up to two tax years following the death. The surviving spouse referred to as the ‘qualifying widower’, can pay the tax rate that applies to married couples, which could mean a smaller tax bill.
To be eligible;

1. you must have been entitled to file a joint return with your deceased spouse for the year of their death,
2. you must not be remarried before the end of the current tax year,
3. you must have had a dependent child,
4. you must have provided more than half the cost of maintaining your home (considered head of household)

What forms should I use to file taxes for the deceased?

You’re probably familiar with Form 1040 for a federal income tax return, start there. If you’re the executor, you will sign the form in the capacity of estate representative, and if you are the surviving spouse and are filing a joint return, you will sign it yourself. Be sure to add the words “filing as the surviving spouse” after your signature. An executor who is appointed before the return is due will need to sign as well.

In the case where there is no surviving spouse and an executor has not been appointed, whoever has taken charge of the deceased’s property should sign the return as a ‘personal representative’.

Any income that was earned by an estate or trust should be reported on IRS Form 1041.

As with any other income tax return, the returns are due on April 15 of the year after death. If the deceased person didn’t file a tax return for the prior year, you’ll need to file that tax return as well. Although there is no extra paperwork needed to claim a refund for a surviving spouse on a joint return, there are additional forms in other situations.

If you’re not sure if your loved one’s estate or trust will be subject to taxes or if you’re not sure whether what you have inherited will be subject to taxes, call estate planning attorney Charles (Chuck) Bendig, as settling an estate can be complicated.