Most Important Terms to Know with Trust Distribution

There are several common phrases and words often referenced in a trust document to describe the purposes for discretionary distributions. These usually fall under the category of standard of living, emergencies, welfare, support and maintenance, education and health.

When the creator of the trust has included provisions for the trustee to make their own calls about what applies for trust distribution, it’s helpful for a trustee to get up to speed on the expenses generally included. When a trust is vague, this leaves more room for interpretation by the trustee. For example, “living expenses” could include many different kinds of costs and a beneficiary of a trust might be prepared to argue the same.

A trustee should always be familiar with the terms of the trust as well as these general situations that could apply for discretionary distributions.

Standard of living refers to the quality of life that the beneficiary lived immediately prior to the death of the creator of the trust; emergencies, as you might anticipate, have to do with unexpected occurrence; welfare relates to the comfort and wellbeing of a person physically; support and maintenance refer to normal living expenses like food, insurance premiums, medical care, housing and clothing, education refers to preschool, primary and secondary education and health refers to mental health care and hospitalization, medical supplies and devices, routine medical services, ancillary health care and even premiums for health insurance.

Reading through the terms of the trust and understanding the trustor’s purpose in creating this tool can give you a great window into what they intended for the purposes of the trust. If you still have further questions, schedule a consultation with an New Hampshire or Maine estate planning firm.  

 

Should You Establish a Trust in New Hampshire?

There are many estate planning tools out there and you must decide what’s going to work for your individual plans. The two most common tools are a will and a trust, which function individually as well as together. When you have not used these tools before, you’ll likely want the help of an experienced estate planning lawyer to give you further details about these so that you know what to expect and how to proceed.

While a will is the baseline of your estate plan, you might need more than this to provide further privacy and support for your needs. This can come in the form of a trust.

Whether or not you should create a trust in New Hampshire or migrate your trust to New Hampshire, is a question you should discuss directly with your estate planning lawyer. There are several different factors you’ll want to consider as you discuss your estate planning goals and the primary purposes for creating a trust. The most important factors to consider include:

  • Terms of the trust
  • The size of the trust given the possible benefits to be obtained from New Hampshire’s trust and tax laws which are relatively progressive
  • Whether the trust will accumulate the majority of its income balanced with income tax savings
  • The additional effort and expense in establishing or moving a New Hampshire trust

New Hampshire is a popular state for the establishment of trusts, particularly when you can work directly with an experienced lawyer to guide you through this process. Contact our New Hampshire estate law office today.

What Other Documents Might My Personal Representative Need?

When you pass away the will is the basic document in your estate plan that helps make things easy for this person but it’s not the only document that your executor might need. If you can be organized and work with an estate planning lawyer to discuss the specifics of your situation, you will make it that much easier for your executor to know where to look to find this important information.

Most executors will not know about the location of your primary filing documents and if these are located in multiple different places it will be even harder for them to identify it. A couple of things that you can do to help make your executor’s situation easier include gathering data, such as:

  • Birth dates of all minor children
  • Birth dates of any individuals whose inheritance is contingent on reaching a certain age
  • Names and addresses for any witnesses to the will
  • Copies of any trusts and amendments
  • Preliminary list of known debts
  • Preliminary list of non-probate assets
  • Preliminary list of probate assets
  • Copies of any contracts, leases or deeds
  • Three years of income tax returns
  • Any gift tax returns filed
  • The decedent’s home address
  • The decedent’s date of birth

You can make things much easier for your executor by doing this work in advance. There is plenty to think about when it comes to leaving a comprehensive plan behind for your loved ones or your estate administrator. Talk with our NH estate planning lawyers to learn more about your options.

 

Should I Make My Trust Easy to Change?

Before sitting down to work with an estate planning attorney, you have an important choice to make: to make your trust easy to change or not. This is the primary distinction between a revocable and an irrevocable trust. Although the term trust accurately describes both of these, they accomplish different purposes based on the fact that you can update one but not the other.

There are many good reasons that you might want a trust to be able to update while you are still alive. Many expectations and assumptions that might have influenced the original terms of the trust, for example, can change as your children get older. But a settlor might not be comfortable with the idea of a trust becoming easily modified by beneficiaries after they have passed away. There are plenty of financial and tax reasons why the power to change your trusts may last several generations is advantageous. However, state trust laws have always allowed a beneficiary process for petitioning the court with jurisdiction to approve a modification if and when necessary.

Lately there has been a trend towards giving greater control to the trust beneficiaries and avoiding the use of state courts. Many creators of trusts today view this relationship as a financial strategy to reduce taxes and to provide for family governance. This approach values discretion and family control more so than fiduciary expertise. If you want the flexibility and control, think carefully about how to create a trust that would work for you and your loved ones. Sit down with a New Hampshire estate planning lawyer to learn more about when you should create a trust and what to consider as you draft one.

 

 

What Is the Difference Between Intestate and Probate?

When you pass away without a will, you are said to have died intestate. This means there is no documented plan for what will happen to your assets. In these cases each state has specific rules about who will receive your assets and how those will be divided. This is a leading reason why it’s important to set aside a time to meet with an attorney to create a will.

There’s plenty of confusion between the concepts of intestate and probate. These two ideas refer to different things. For example, intestate refers to dying without a will and what happens if the court disproves a will. If the will is not approved by the court, then the decedent could also have been said to have passed away intestate. Probate, however, is the process of verifying or proving the authenticity of a will in court and the plan for disposing of assets in the manner desired by the person who created the will. Probate will also refer to the court’s function in distributing any assets inside your estate if you pass away without a will.

The will is used to direct your personal representative on how to distribute your assets but if one does not exist then a judge will distribute your assets in a manner that is consistent with state law.

In New Hampshire, your estate will go entirely to your children if you don’t have a surviving spouse. It gets more complicated following a formula if you have both a surviving spouse and children from that or another marriage.

To avoid the mismatch of intestate succession with your existing estate plan desires set aside time to speak with an estate planning attorney in NH.  

 

Advantages of Using a Revocable Living Trust for Asset Transfer

There are many different advantages to using a revocable living trust as part of your estate planning. If an accident or an illness leaves you incapacitated but still alive, your successor trustee is able to handle your financial affairs without the need for appointing a conservator or a guardian by the court.

Another major benefit to using a revocable living trust is that if the beneficiaries of your trust are minor children or others who may not be capable of handling an inheritance as you intend, the trust can keep those assets and hold them until those individuals reach a more mature age.

This gives a great deal more control and flexibility to the creator of the trust for those who may be concerned about children who are spendthrifts or not capable of properly managing a significant inheritance.

You can also avoid the hassle, time, and expense of multiple probate proceedings if you own real property in more than one state. A husband and wife may even be able to maximize their federal estate tax exemptions when partnering with an experienced revocable living trust attorney to craft this document. Finally, it is more difficult to contest a living trust.

When a will is contested, the assets are frozen and they cannot be distributed until the claim has been addressed. Assets placed in a living trust, however, are not frozen pending the outcome of a legal challenge. Discover more about the benefits of using a revocable living trust by scheduling a consultation with an experienced estate planning lawyer in Maine.

 

 

Naming a Trustee

What Qualities Should I Consider in Naming Someone as Trustee?

One of the most important distinctions between a revokable and an irrevocable trust, concerns who will be appointed as the successor or initial trustee. If you are putting together an irrevocable trust, naming yourself as a trustee would defeat the primary purpose of this estate planning strategy. Naming a successor trustee of a revokable trust or a primary trustee of an irrevocable trust, however, requires careful consideration about the person you are choosing to install in this role.Naming a Trustee

There are several important qualities to consider. First, this should be a person who you trust when it comes to their overall judgment and ability to manage your investments. Second, they should also be able to communicate and speak coherently with your beneficiaries. Third, they must understand how to legally transfer trust assets to those beneficiaries when the time comes. Forth, they should be capable of handling what could be complex financial transactions.

Some people choose to use a corporate trustee because the scope of the responsibilities of managing a trust might extend beyond that of a lay person’s knowledge. Appointing professional trustees also requires consideration about the fees that would have to be paid to this professional.

Bear in mind that this could reduce the overall value of assets inside the trust, when funds from that trust must be used to pay a professional trustee. If you have further questions about the estate planning process, schedule a time to speak with an experienced estate planning lawyer in NH.

 

 

New Study Shows That Those With Higher Wealth Also Live Longer

A recent study published in the JAMA Health Forum found that out of 5,000 participants, those who had a much higher net worth at midlife had a much lower risk of dying in the 24 years that followed. The study also was particularly interesting in that it included siblings and twins and identified the same results. The purpose of the study was to evaluate midlife in the United States.

Although it was determined that wealth impact on longevity was a modest one at a 1% absolute difference in the probability of survival after nearly 24 years, it is possible that the gap could get bigger if the difference between high income and low-income earners in the United States continues to grow.

According to research from the Urban Institute, residents of the United States in the lowest 10% of net worth had a zero net worth compared with over $600,000 for those in the top 90%. In these circumstances, it is important to reflect on the benefits available to you by consulting with a knowledgeable estate planning lawyer about your estate planning opportunities.

Scheduling a consultation with an estate planning lawyer is the best way to approach your individual goals and align them with your future. Schedule a time to speak with an estate planning attorney in NH today to learn more.

 

 

 

What Do You Actually Want to Do with Your Estate?

If you haven’t done your estate plan yet, you might assume you don’t need it or that the courts will handle the details of your smaller estate. But that default approach leaves out your personal goals.

Most people put off the process of defining their estate plan which can prove especially problematic for their heirs in the future. An estate plan that doesn’t appropriately reflect your intentions is no plan at all and failing to create any of these documents means that you have left the planning up to the state. Getting your financial goals organized is one of the most important steps you can take with the support of an experienced estate planning lawyer.

This will enable you to answer questions about what’s most important to you in accomplishing your estate planning goals and this should begin by asking the question ‘what do you want to do with your estate?’ There are four primary options to consider as you evaluate this question for you. When it comes to your estate assets you could:

  • Give it to heirs
  • Spend it
  • Pay it in taxes
  • Donate it to charity

For most people there are several different possible responses to this and you might use some combination of these strategies to accomplish your goals. Estate planning doesn’t have to be overwhelming, but it can make a world of difference for you and your loved ones. Set aside time to speak to an attorney about your rights.

What Are the Most Common Mistakes an Executor Can Make?

If you have recently been named the executor of a loved one’s estate, you have serious legal responsibilities to wrap up this person’s affairs, distribute the assets of the estate and pay for any income and estate taxes in accordance with relevant laws. Far too often, executors who mean well, and even those who don’t can make mistakes that could expose the entire estate to litigation or even higher taxes.

Some of the most common mistakes can be avoided by ensuring that you have completed proper estate planning and your executor is well aware of the role they will play. Executors can make mistakes, such as:

  • Not paying taxes on tangible personal property.
  • Confusing non-probate and probate property.
  • Failing to hire counsel at a negotiated or reasonable fee.
  • Not liquidating securities.
  • Not following the terms of the will.
  • Inappropriately allocating income between the estate income tax and the decedent’s income tax returns.
  • Making distributions to heirs too early that can expose the executor to personal liability.
  • Failing to choose an appropriate fiscal year for the estate.
  • Not appraising personal property.

In all of these circumstances it is beneficial to plan in advance to minimize the possibility of an executor making costly mistakes that could delay the probate process and the distribution of assets to loved ones.

Our NH estate planning lawyer can guide you through the process of what to do if you have questions about serving as an executor. Schedule a consultation today to get your questions answered.