Getting Divorced? Vital Info Regarding Your Estate Plan | Uncategorized

Getting Divorced? Vital Info Regarding Your Estate Plan

By Alexis Martin Neely

If you've already got an estate plan in place and you are going through a divorce, you've got some steps to take because no matter how you cut it, divorce has a major impact on your estate plan. I hate to tell you that because I know that the last thing you want to think about in the middle of your divorce is your estate planning and yet, it's critically important unless you want your ex to end up with control over all of your assets if anything happens to you.

Yep, that's what could happen if you don't address your estate planning as part of your divorce … your ex could end up with everything or at the very least in control of everything.

For most people going through a divorce, this is the last thing they want. It certainly was for me!

To make sure this doesn't happen, you need to revamp your estate plan and create a new Will, Trust, Powers of Attorney and Health Care Directives during your divorce and not wait until afterwards.

Revamp Your Estate Plan During Your Divorce Or Your Ex Could Get Everything (including control of your medical decisions!)

Here's the truth: if you are in an accident during your divorce, it's your soon to be ex who will be making  your health care decisions, who will be in control of your money, and will inherit everything if you die unless you have new documents drafted.

Your estate planning lawyer should be one of the first calls you make when you file for divorce.
 
While your divorce is pending, your estate planning lawyer can prepare a divorce Will (a temporary Will that ensures your soon to be ex won't inherit from you if you die), create a new Trust to receive the assets that you will receive after the divorce is final and update your health care directives and powers of attorney.  One thing to be careful of though is not to move any of your assets into your new Trust until after your divorce is final or until your divorce lawyer gives you the go-ahead.

Once the divorce is final and you know which assets you are receiving, you should then revisit your estate planning lawyer and get a new plan in place that will be established to cover what you have been given as part of the divorce and help you plan for your financial future.

Change Your Beneficiary Designations

You also want to make sure to review all of your beneficiary designations after your divorce. This is absolutely critical and often overlooked. And, you need to do it even if your divorce agreement says your ex won't receive any benefits. If you don't change your beneficiary designations, your agreement may be superseded!

There's actually a case pending in the United States Supreme Court right now about this very thing.  Husband and wife got divorced and husband never changed his beneficiary designation on his pension account.  Then, Husband died.  The pension administrator paid the benefits to his ex-wife, as indicated by the beneficiary designation.  Husband's daughter from a prior marriage sued for the benefits claiming that the ex-wife had given up her rights to the pension in the divorce agreement.  The first Court heard the case and agreed.  The appeals Court heard the case and disagreed, saying that the beneficiary designation trumped the divorce agreement. Now, the final answer will come from the Supreme Court.
 
You don't want to put your family through this. So update your beneficiary designations.

Review Your Life Insurance Provisions.

If you have any kind of a requirement in your marital settlement agreement that life insurance should be maintained on the life of either spouse for the benefit of the children, you should have this provision reviewed by your estate planning lawyer.

We've seen so many provisions like this that are just not well thought out. For example, a provision that says "Husband shall maintain life insurance having an aggregate death benefit of $250,000 for the benefit of the minor children" sounds great, right?  But, this is just the kind of provision that provides no protection for the minor children at all.

How long does the insurance have to be maintained?  What type of insurance has to be used?

Can Husband just get a cheap 1 year term policy that needs to be renewed each year?

What if he gets ill and becomes uninsurable? Who should be the beneficiary of the policy?

An effective provision should provide the type of insurance and the minimum length of time it must be in force, specific ratings requirements for the insurance company and whether the policy should be in trust or payable to a trust.  Your estate planning lawyer can help to identify these issues where even a very good divorce lawyer may overlook them.

Bottom line … your divorce has real, meaningful implications for your estate plan. I know it's not something you want to think about and yet if you don't, you and your family could end up very, very sorry you didn't.

© 2008 Alexis Martin Neely

 

Living Trusts: Do They Protect Your Assets From Creditors?

The following is an article written by Phil Craig, an attorney in California:

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A surprising number of readers want to know
“Can a living trust protect my family’s assets from creditors
and lawsuits?”

I think there are some promoters out there that use this as a
pitch to get people to set up a living trust using their services:

“Transfer your assets to a living trust and hide them from your
creditors,” are the claims.

Sorry, that’s not the law.

Let’s have a quick review of a revocable living trust. Basically a trust is “a legal arrangement where property is held for the benefit of someone.” In other words, you “entrust” title to your assets to “someone” who is instructed to use and manage those assets per the terms of the trust document.

A trust is revocable if it contains language that allows you to
change your mind and terminate or modify it. In California, the
Probate Code specifically states that all trusts are revocable,
unless specifically stated otherwise.

A trust is called a “living” trust because it is set up by you
while you are living. If you set up a trust through your will,
it’s called a “testamentary” trust since it is created through
your last will and testament.

The right to revoke your trust means you can remove any asset from the trust title at any time you choose.

Since you have the right to revoke the trust, you are treated as the legal owner of the trust assets for purposes of income tax law or creditor collection law.

So, the general, basic answer to the question, “Will my revocable living trust protect my assets from my creditors?” is no. Since you can remove any asset at any time, your creditor can force you to remove the asset.

Now there are types of “irrevocable” trusts that can be used for protection of “spendthrifts.”

(That’s the fancy term for someone who can’t manage their own
property due to lack of sophistication, gullibility, or other
problems).

I know a family where one son spends money as soon as he gets it.

He gives it to friends, spends it on new toys, whatever. He just doesn’t have a healthy concept of money and can’t keep it. He is a classic “spendthrift.”

In his parents’ case, what they have done in their living trust is said, in effect, after they’re both dead, the spendthrift son’s share of the estate will be held in an irrevocable trust for his benefit.

He is to be given a monthly draw on the trust until he dies or until the money runs out.

In that case, the money in the “spendthrift trust” is sheltered from the son’s creditors since he does not, nor did he ever, own the assets held inside the trust.

Sure, the creditors can get his monthly draw once he gets it, but the main trust is sheltered for his benefit.

That is a classic and perfectly legal way of sheltering assets from the creditors of a “spendthrift” using a living trust (it can also be done using a testamentary trust).

Good luck and until next time,

Phil Craig

P.S. Feel free to forward this on to any friends.

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© Phil Craig, All Rights Reserved

http://www.LivingTrustSecrets.com

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Phil Craig is a licensed attorney and entreprenuer.
He started practicing law at age 25 in 1979.
He does not take on any more clients, but is
advisor to some of the biggest names in the internet
world. He shares his knowledge gained over the
last 25 years at his Living Trust Secrets newsletter site:
click here=========>http://www.LivingTrustSecrets.com

Cobb County Divorce Lawyer on Meeting Halfway for Child Visitation Exchanges

Frequently parents of divorce have an agreement, or a court order, to meet at a halfway point for purposes of exchanging their children for visitations.  For families following such an arrangement, MeetWays is a neat website.Meetways

Meetways.com was created to let its users find a point of interest between two addresses. Let's say you need to meet your ex and the kids at some halfway point? Meetways.com will allow you to enter both addresses, then give you the exact halfway point and a list of restaurants and points of interest in that area. Save hours trying to figure out the halfway point on a map and instead find it in one simple click!

Click here for a visit.

SOURCE FOR POST: California Divorce Blawg

Kelli Wolk for Cobb County Probate Court Judge

The Leadership Committee of the Georgia Association of Women Lawyers featured Cobb County attorney and candidate for Cobb County Probate Judge, Kelli L. Wolk, in its Leadership Spotlight:

This month’s leadership spotlight is on Kelli L. Wolk. Kelli is a 2008 graduate of the inaugural GAWL Leadership Academy, and also Leadership Cobb. She is currently running for the Cobb County Probate Court judgeship that opened up when her mentor and long-time probate court judge, the Hon. David Dodd, decided to retire. Kelli clerked for Judge Dodd for two years after graduating from the Georgia State University College of Law. In 2001, Kelli joined the Cobb County office of Moore Ingram Johnson & Steele, where her law practice has continued to focus on probate litigation, guardianship issues, estate planning, and general civil litigation. For the past three years, Kelli was named a Rising Star by Atlanta Magazine’s Super Lawyers, and in 2007, she was featured by Cobb Life Magazine as one of Cobb County’s Top 20 under 40.

In addition to her law practice, Kelli is a frequent speaker on the subjects of probate, guardianships, estate planning, advanced directives, and administration of estates at continuing education seminars for lawyers and other groups, including social workers, medical professionals, mothers’ groups, and senior citizens. Kelli worked on the revision of Georgia’s Guardianship Code and has also testified before the Special Judiciary Subcommittee of the Georgia House of Representatives.
“Running for Cobb County probate judge has been an amazing process,” Kelli says. “It has enabled me to put into practice many of the leadership, communication and networking skills we studied at the GAWL Leadership Academy.” Campaigning has given her the opportunity to meet a huge number of talented people and to do things she never would have experienced had she not thrown her hat into the ring. From attending forums and fairs and lugging 200 pound signs around the county, to taping television commercials, “Nothing brings home more just how large Cobb County really is than trying to meet all of its citizens,” says Kelli. Through her experience first as law clerk, then as a fulltime litigator before the Probate Court, Kelli has become passionate about the court and the services it provides to people in need and in crisis. Kelli’s enthusiasm for running for probate judge has kept her energized and on her toes.

Although integrating her law practice with campaigning has been a challenge at times, Kelli says she has been able to maintain a full client load by focusing on her clients’ needs during the workday, and returning campaign-related calls and emails from early evening till bedtime, and then again at the crack of dawn. Which can make for a very long day. Kelli firmly believes, however, that because of her background and temperament, she will make an excellent probate judge. “There will be plenty of time to catch up on sleep after the election on November 4,” says Kelli.   
One of Kelli’s strengths is her ability to communicate complex legal issues in a way that makes them understandable. Her communication skills go way back. Kelli did her undergraduate work at Missouri State University, where she earned a B.A. in Communications. Between college and law school, she worked in television production for nearly ten years.

If elected, Kelli will bring a wealth of leadership and community experience to the bench. Kelli volunteers with Habitat for Humanity in Cobb County. She is a former member of the Cobb County Bar Association’s Board of Trustees, a past member of the Cobb Justice Foundation Advisory Board, past chair of the State Bar Young Lawyers Division Elder Law Committee, and is past president of the Elder Law Section of the Cobb County Bar. Kelli is active in Rotary, and headed the Marietta Rotary Boys and Girls Club Literacy Program, “Bookville.” She also currently serves on the Board of Directors for MUST Ministries, which provides education, counseling, shelter, and other services to assist those in need to break the cycle of homelessness and poverty. You can find more information about Kelli at www.kelliwolkforprobatejudge.com .

Avoid 7 common mistakes with trusts

Many people use revocable or living trusts in their estate plans.

Living trusts are very powerful planning tools you can use for all kinds of purposes. Trusts can avoid probate, protect your beneficiaries from their creditors or divorcing spouses and can provide for the family cottage, education for grandchildren or your favorite charities.

Many of these trusts are signed and then put away in a drawer or safety deposit box, not to be looked at again for years. This can result in an estate plan that does not work as intended.

Trusts, like any other tool in your shed, must be kept sharp. When a trust is part of your overall comprehensive estate plan, you should try to avoid the seven most common trust mistakes:

  • Mistake 1: Failing to title assets in the name of your trust
  • Mistake 2: Failing to update your trust
  • Mistake 3: Using form documents
  • Mistake 4: Choosing the wrong trustee
  • Mistake 5: Thinking your trust protects you from your creditors
  • Mistake 6: Thinking that assets in a revocable living trust escape estate taxes
  • Mistake 7: Forgetting your favorite charities.

    If you have not put your assets into your trust, also called "funding" your trust, you have lost some of the benefits of your trust.

    Any assets that are in your own name at the time of your death will need to be probated. However, any assets that are titled in the name of your trust at the time of your death will avoid probate and usually result in lower after death administration costs.

    Generally, except for qualified retirement funds and certain annuities, all of your assets should be transferred into your trust during your lifetime.

    A trust drafted as a qualified beneficiary for retirement funds and named as beneficiary of your qualified retirement assets preserves the "stretch out" of the distributions over the ultimate beneficiary’s life expectancy.

    Placing all of your assets in your trust means that all assets will be distributed according to the detailed instructions you leave in your trust. Having a trust without putting your assets into the trust is like buying a brand new car, but not filling it with gas: It looks great, but it does not go anywhere.

    Your trust should be reviewed at least once a year to make sure it still meets your needs.

    There are many changes that can trigger an update to your trust. There may be changes in your personal life such as births, deaths, mar riages or divorces. There may be financial changes in your life, such as job changes, retirement, the stock market going up or the stock market going down.

    There also are tax and non-tax changes in the laws. Congress never fails to pass some sort of a tax act every year. There also are changes in your attorney’s experience. The trusts I draft this year are better than the ones that I drafted in previous years as I learn and experience new things.

    Many people attempt to draft their own trusts by using forms found on the Internet or in legal software packages. Many attorneys also will use forms-based documents. When preparing a trust, the old adage "You get what you pay for" is very often true.

    The forms-based trusts usually treat everyone the same. For example, many form trusts have the provision that your successor trustees take over if you become disabled in the opinion of two physicians. Most of my clients would rather have their family making this decision instead of non-family members.

    Most forms-based trusts are also only will substitutes which provide upon your death that your property is distributed outright to your beneficiaries. For many, outright distributions are not the best protection for your beneficiaries. Many trust makers provide lifetime trusts for their children.

    With lifetime trusts, your children have control over and have access to the funds for their lifetimes for their needs, but there are two key protections.

    Firstl the lifetime trust protects the assets you leave to your children from your children’s creditors.

    And second, as long as the trust assets are not commingled with your children’s marital assets, the assets generally would be protected from being considered as marital assets in the event of a divorce property settlement.

    Many people choose their oldest child as their successor trustee. This may not always be the wisest choice.

    When choosing a trustee, make sure the person that you are choosing has the skill and talents to manage your assets. If a child has a substance abuse problem, has poor money management skills or is married to a predator, it may not be the wisest choice to name him or her as your trustee.

    You also may want to name multiple co-trustees to manage your assets during your disability or after your death.

    You also could name a professional trustee such as a bank or trust company to be a trustee or co-trustee during your lifetime or upon your disability or death. These professional trustees are in the business of managing assets for a reasonable fee.

    If you are not leaving the assets directly to a child as a result of substance abuse problems, poor money management skills, creditor issues or otherwise, an independent professional trustee making distribution decisions is often times better for family harmony.

    Most revocable living trusts are not creditor protection devices for the trust maker. Most living trusts are drafted so you have full authority to change, amend, alter or revoke the trust and you have full access to the assets in the trust. If you have full access to your trust assets, so do your creditors.

    Similarly, assets included in your revocable living trust are available or countable resources for Medicaid purposes.

    Properly drafted and funded trusts for both you and your spouse can, however, protect your trust assets from your spouse’s creditors and vice versa. A trust can also protect the assets you leave to your children from their creditors.

    Many people think if they put assets in a revocable living trust, those assets will escape estate taxes. Upon your death, any assets in a revocable living trust are considered your assets in your gross estate for estate tax purposes.

    In 2008, you can leave up to $2 million estate tax-free to your beneficiaries. However, you and your spouse can double the amount of assets that can be distributed estate tax free to your beneficiaries from $2 million to $4 million by using properly drafted and funded separate revocable living trusts.

    About 89% of Americans donate to charities during their lifetime. However, only about 3% of Americans provide for charities after they are gone.

    If you give regularly to a church or other favorite charity during your lifetime, your donations expire with you. These organizations that have depended upon your donations during your lifetime will no longer have those donations after you are gone, unless you provide for them. You may want to consider a bequest to your favorite charities after you are gone.

    SOURCE: TheTimesHerald.com in an article written by Matthew M. Wallace, an attorney and CPA with the law firm of Matthew M. Wallace, PC, in Port Huron, Michigan.