The trust has many benefits. A commonly known benefit is that the assets of the trust avoid any government probate process after your death (including the probate tax). A trust is also the best disability planning document.

A Will only covers you at your death. To say this another way, it just insures your assets are distributed to your desired beneficiaries. Even if you have a Will, you still need important disability documents, such as financial power of attorney and medical power of attorney (advanced medical directive).

The assets of a trust avoid the government probate process and probate taxes. Also, your death trustee (like an executor under a will) is not supervised by the probate court, thus, avoids this stress and burden, as well as, your assets avoid the “probate tax”.

We typically recommend a inter vivos trust (this means a trust created by you during your lifetime) if the client has significant assets. A client has significant assets if he or she owns real property. This is because assets under a will are subject to the probate tax which is calculated based upon the total value of the assets going through the will. There are other reasons we would recommend a Trust: care for disabled spouse, disabled children, creditor protection, special assets, such as businesses, or vacation properties intended to be kept in trust. These are just some of the examples we would recommend a trust over a will. Your trustee (who is like an executor of a will) is not supervised by the courts, thus relieving the trustee of that burden and stress.

If an asset is not in your living trust at your death, and the asset is in your sole name alone, without a beneficiary designated or a surviving joint owner, the asset must be probated by the court.  The executor of your Will, will need to take your original will into the courthouse and get a court order that will give your executor the legal authority to administer those assets. 

If you do not have a Will, the court and the law makes all the decisions of the administration of your assets upon your death, including who will be your beneficiaries. Also, with a Will, you are able to waive certain costs on your executor, such as a surety and fiduciary bond and provide for your executor’s compensation.

Yes. A Will is subject to the probate process. When a person dies, their original Will (if they have one), must be filed with the probate court in the county where they reside. Usually, the executor named in the Will is appointed as the legal representative, and given a court order which gives him or her the legal authority to manage the decedent’s assets.

It depends. Most estate plan attorneys will advise that you sign an amendment changing the governing law to the new state. Also, it may be recommended to prepare a new Affidavit of Trust. There may be other provisions that needed to be added to your trust, depending upon the state’s laws.

It depends on the type of living trust you have. There are two types of living trusts: (1) a revocable trust and (2) an irrevocable trust. A revocable trust gives the grantor the ability to “revoke” and “amend” the trust. The grantor having this type of control may subject the assets of the trust, to the grantor’s creditors. In an “irrevocable” trust, the grantor usually loses the ability to revoke the trust or make certain changes to the trust. To say this another way, the grantor makes an “irrevocable” gift of the asset to the trust and loses personal title of the asset. Thereafter, the trust is the owner and thus the grantor’s creditors can no longer attach the assets. However, certain creditors, such as nursing homes of the grantor, there is a five year look back period, which means that the creditor can still attach the assets within this five year period.

It depends on the type of living trust you have. There are two types of living trusts: (1) a revocable trust and (2) an irrevocable trust. A revocable trust gives the grantor the ability to “revoke” and “amend” the trust. The grantor having this type of control may subject the assets of the trust, to the grantor’s creditors. In an “irrevocable” trust, the grantor usually loses the ability to revoke the trust or make certain changes to the trust. To say this another way, the grantor makes an “irrevocable” gift of the asset to the trust and loses personal title of the asset. Thereafter, the trust is the owner and thus the grantor’s creditors can no longer attach the assets. However, certain creditors, such as nursing homes of the grantor, there is a five year look back period, which means that the creditor can still attach the assets within this five year period.

You can prepare a “irrevocable trust” and make a “irrevocable” transfer of your assets to the trust. Unfortunately, you must lose certain control over the trust and the assets, in order for your creditors not to attach the assets. There are certain rules, such as you can’t transfer your assets if you are currently in debt. Those creditors can still attach the assets. Also, for other types of creditors, such as nursing homes, there is a five year look back period, meaning these creditors may be able to attach the assets transferred within give years of your entry to a nursing home.

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Maecenas eros ligula, faucibus quis nibh a, aliquet suscipit leo. Sed egestas justo efficitur purus placerat, sit amet facilisis erat suscipit. Nulla scelerisque neque erat, at pellentesque metus dignissim quis. Phasellus scelerisque nisi eget augue pulvinar dictum. Nullam dapibus ipsum ut ante placerat pharetra. Sed at vulputate lacus. Nulla ac convallis tellus, at viverra ligula. Vestibulum vestibulum diam a orci sodales, vel lobortis tortor tempor. Fusce ex diam, sodales in molestie ultrices, pellentesque sed massa. Aliquam a urna porta, finibus risus ut, scelerisque ipsum. Donec vitae auctor tellus. Praesent pellentesque dolor molestie odio interdum, sed auctor tellus iaculis. Ut erat eros, egestas sit amet tristique et, tempus non lectus. Nulla at neque bibendum, suscipit nisl eu, fringilla libero.

In Virginia and in most states, a spouse is responsible for the basic needs of their spouse.  You are not allowed to abandon your spouse.  Thus, during you and your spouse’s lifetime, all of your combined assets, including separate property must be used to care for your spouse. 

However, we typically recommend that marital trusts (the trust that is established after the first spouse’s death to hold the deceased spouse’s share of the assets as of the date of death) include “remarriage protections”, to protect these assets from being taken by a subsequent spouse of the surviving spouse. 

It depends.  There are three basic types of taxes that may affect your child’s inheritance from you: (1) Inheritance Tax (2) Death/Estate Tax (3) Capital Gains tax; and (4) Income Tax.

Virginia does not have an “inheritance” tax, nor does it have a “Death/Estate” tax.  However, an estate may be subject to the Federal Tax.   Currently the federal individual exemption amount is approximately $11 million per person (approximately $22 million for couples in certain circumstances).  Thus currently, the federal estate tax does not affect many people.   Also, your beneficiaries are not likely to pay a “capital gains” tax, because under current federal law, upon your death, assets with a cost basis, the cost basis is “stepped up” to your date of death.  Thus, usually the asset is sold shortly after your death avoiding a capital gain (if any). Your beneficiaries are still subject to “income tax” on the asset.  Particular retirement plans that have never been subject to income tax, your beneficiary must pay the income tax.  Currently under Secure Act 2, beneficiaries have maximum of ten years to pay the tax.

You can protect their inheritance from their creditors by establishing a beneficiary sub trust in your trust. When you pass, your child’s inheritance will be held in a beneficiary sub trust and managed by a trustee for their benefit. Since your child or grandchild is not the owner of the assets, their creditors cannot take the assets. There are many different ways to structure these types of trust depending on your intentions and situation and needs of the beneficiary.

We typically recommend that marital trusts (the trust that is established after the first spouse’s death to hold the deceased spouse’s share of the assets as of the date of death) include “remarriage protections”, to protect these assets from being taken by a subsequent spouse of the surviving spouse.

We usually recommend that you register your personal vehicles to your trust. This gives your trustee immediate authority over the vehicle and upon your death, the vehicle will not be subject to probate.

If you reside in Virginia and you own real property outside of Virginia (including certain timeshares), those real properties will have to be probated in the state where they are located. Upon your death, the executor of your Will, will have to first record your Will in Virginia (county you reside at your death) and then record a “authenticate copy” of certain of the Virginia probate documents, in the county of the other state where the property is located. This sometimes referred to as “ancillary administration or foreign estates”. Usually, the executor will have to hire a probate attorney in that estate to assist him with the administration.

After both of your deaths, your trust (including the marital trust) will terminate.  Usually, the Trustee sells (liquidates) the non-retirement assets (real estate, stocks, investments) and reduces to  “cash” form.  The trustee then distributes the cash in equal shares to the children to a bank account that is titled to each of their separate lifetime trusts.  Since the assets receive a “step up” in cost basis at your date of death, there is no capital gains taxes on the sale of the assets.

Alternatively, your Trustee has discretion to distribute the assets to the beneficiaries “in kind”, but this tends to be more burdensome on the trustee, as he must split the assets equally and some investments are not able to be divided.   I typically advise the trustee to liquidate the non retirement assets to cash and then distribute the cash.  This is the simplest approach.  The beneficiaries will then determine their own individual investment strategy.

The assets in the retirement plans will not liquidated.  Your Trustee will instruct the retirement plan company to set up inherited IRA trusts for each beneficiary, to be held by their separate lifetime trusts.  The beneficiary as trustee will then have control over their separate inherited IRA.

After both your deaths, the death trustee will identify the assets remaining in both the original trust and the marital trust, as well assets due to the trust, upon your death (such as life insurance proceeds).  Your Trustee will collect all the assets into the trust.  Your Trustee may consolidate multiple accounts to one account.  Your trustee will sell off the assets (reduce to cash).  See #1 above.  Your Trustee will then satisfy all your remaining debts and obligations, including funeral and burial costs, and file your final tax return(s).  The trustee will work with the beneficiaries to open a new bank account titled to their separate beneficiary lifetime trust, to receipt each beneficiary’s share of the assets.  The original trust and marital trust will terminate once completely exhausted. 

Yes. Each child will be the initial trustee of their own separate beneficiary sub trust (lifetime trust). Usually this starts with the opening of a bank account to receipt their share of the inheritance. Since the child is the initial trustee, they control and manage the assets and can access the assets for their lifetime needs.

We typically recommend that marital trusts (the trust that is established after the first spouse’s death to hold the deceased spouse’s share of the assets as of the date of death) include “remarriage protections”, to protect these assets from being taken by a subsequent spouse of the surviving spouse.

Yes. You can leave a “specific gift” to your church or friend. Specific Gifts are usually a nominal fixed amount gifted to a charity or individual, etc. (examples include: $500 to my church, $1000 to each of my then living nieces and nephews, $1000 to each of my then living grandchildren, etc.) . These types of gifts are paid prior to the residuary amount (rest and remainder of your estate), being distributed to the primary beneficiaries (your children).