Take Back Your Date Night!

Leaving your children home with a baby sitter can be both a blessing and a curse. You finally get to wear your fancy clothes and tucked neatly into the pockets is your fully charged phone with the the ringer volume turned to the loudest possible setting. Because while you and your darling are finally able to get some much needed alone time, you never stop being the concerned parent.

You deserve some quality cuddle time, claim it, guilt free, by executing a Babysitter/Caregiver Medical Treatment and Parental Consent Form (aka Babysitter’s Consent Form).This handy little document gives the person left in charge (babysitter, grandparents, neighbor etc.) the power to make decisions that would ordinarily require parental consent, for your child.  In an emergency situation the caretaker (custodian) is able to give consent to time sensitive emergency procedures. A baby sitter consent form is also useful in non-emergency situations, like allowing the custodian to sign your child up for ballet classes or give a doctor permission to set a broken arm.

Authorizing parents remain liable for decisions made on their behalf because the form is the parent’s express permission to have the custodian act as “parental decision maker” in their stead. The custodian essentially becomes an agent of the parents. The form also gives the custodian the ability to sue those who refuse to acknowledge their authority.

 For parents with minor children, the baby sitter consent form is ideal to send along with your child on camping trips, class field trips and slumber parties. It can be used wherever there is a need for parental approval and is legally enforceable. Keo’vonne Wilson Legal, PLLC provides custom Babysitter/Caregiver Medical Treatment and Parental Consent Forms that provide the custodian with specific information regarding your child and their specific needs. You can include food and medicine allergies, nontraditional parent preferences and binding care instructions. The clearly defined powers bind both the custodian and the person requiring parental consent to abide by the Parental instructions. The form is especially useful for parents with minors that have special needs.

Reclaim Your Date Night With A Babysitter Consent Form!!!

Click here and simply fill out the form and enter payment directly at KeovonneWilsonLegal.com. Within 48 hours your will receive your custom Babysitter/Caregiver Medical Treatment and Parental Consent Forms via email. Call or email us for additional information. Info@KeovonneWilsonLegal or 480-383-4017

Keo'vonne W.

"Turn Your Dream Into Your Legacy"

Tame Your Ghost: Why Estate Planning Doesn't Have To Be Terrifying

       This weekend I volunteered at Wills For Heroes, it is an amazing program that provides free basic estate planning to veterans, firefighters, police officers and other first responders. I sat with a married couple to prepare their wills and powers of attorney. The interview was cheerful and sprinkled with easy laughter. When we got the part of the interview that covers the assignment of guardianship for the couple's minor children, barely audible, the wife began to sob. I listened quietly as her husband asked her why she was crying. I offered tissue while she explained that the couple had prayed the entire way to the event. The subject of their prayers had been the safety of their children and leaving her little ones behind had been the part she had feared in the midst of their prayer. The husband expressed that his concerns mirrored that of his wife. 

 Talking about end of life issues in the context of their children had made the couple nervous. I began to explain, that sitting down with me did not mean they were ready to die; it meant that they were ready to live without worry. The couple leaned in as I narrated the list of troubles that their foresight would spare their children. 

        This couple is not alone in their fear and their fear is not an unusual one. Sitting down to discuss your estate plan means that you must face your own mortality. The fact is you will not live forever, but that doesn't have to mean that you cannot take care of your family long after you are gone. The planning process is not a declaration that you have given up on life but rather a declaration that you have decided to live a life without fear of the unknown. 

 
       We were able to come up with a plan that made sense for the couple and their family and I was able to suggest some additional planning beyond the services of the Wills For Heroes program. We had defeated the shadowy ghost of uncertainty together and by the end of our session, both husband and wife were all smiles. 
       This experience reminded me that we all have our own ghosts to wrestle with but coming to the mat with a plan in hand, renders your foe already defeated.  

Keo'vonne W.

"Turn Your Dream Into Your Legacy"

FIVE ESTATE PLANNING MISTAKES YOU MAY BE MAKING RIGHT NOW

1. Not Talking To Your Family About Your Estate Plan.

            We've all seen the movie scene where the family gathers around Grandpa’s attorney while he reads off who gets what. There is a dramatic and unexpected gift made to a long lost son, or everyone gets disinherited and the dog takes it all. While this makes for wonderful movie drama, it makes for horrible estate planning. Talk to your family about your intentions. A lot of family feuds could have been prevented if the creator of the will and/or trust had been clear about their intentions to family members before they passed.

            If your concern is privacy or keeping your intentions private up until you pass, you can work with an attorney to draft a clear letter of intention to accompany your estate plan. A letter of intention is a non-binding but influencing document that can spell out to your loved ones what you hoped to accomplish with your estate plan. Legal jargon sometimes cannot convey your hopes and dreams for your family like a letter or heart-to-heart with loved ones can.

2. Doing It Yourself.

            I know, I know, you can go on (insert legal DIY website here) and download a Will for little to no money. My response: you've worked hard to earn what you’ve got, why take the risk. A knowledgeable attorney can help you avoid mistakes that can cost you and your family time, money and headaches down the road. My mantra “ Pay now, or Pay later…either way you're gonna pay.” It simply means this; you can pay a knowledgeable attorney to draft a complete and comprehensive plan now and have your assets pass and estate administered seamlessly later. Or you can DIY now to save money and have your family pay a knowledgeable attorney to step in and help sort through an incomplete or poorly drafted estate plan later.

        If, despite my warning, you are confident in your DIY skills and go forward with drafting your own documents, have an attorney review the documents to make sure they meet the minimum legal requirements. Most attorneys, including myself, will charge an hourly rate for legal advice/document review. An attorney can also help you determine whether you have included the documents relevant to your estate planning goals.

3. Not Funding Your Trust

            Ok so you made the first steps, consulted with an attorney, got your ducks in a row, and now the crisp papers of your estate plan pad your safe deposit box. Good for you! But those trust documents do not provide protection for your assets if your assets are not in the trust.

           If you are not sure how to move your assets into your trust consult with your attorney. Putting items in a trust can be as simple as naming or retitling assets into the trust. Some assets, like annuities and closely held stock ,  will require the help of your CPA of financial advisor in order to facilitate a proper transfer. In any case, in order for the trust to provide probate aversion and tax benefits, the assets must be in the Trust.

           If your trust is irrevocable, you will still have access and maintain control over your assets. If you trust is irrevocable, talk to your attorney or CPA about the best way to fund you trust while ensuring that you have the assets you need to address financial obligations and maintain your lifestyle.

           

4. Half Doing Your Estate Plan

            I recently spoke at a community legal forum, where a woman stood and shared with the group that her uncle had prepared his trust documents himself. He properly placed his home in the trust. I asked the woman, “So what is the problem ?” She waved the trust at me and said that the trust was the only document he had executed. There were no other documents, he had not executed a will or any power of attorneys. More importantly there was no pour-over will to default all of the assets left outside of the trust into the trust. As a consequence of the missing documents, the uncle, left his niece, the intended beneficiary of all his assets, with the home titled in the trust and nothing else.  The woman, who I found out was the man’s niece, was this woman angrily waving the manila folder at the crowd.

            This story may straddle the fence as an argument against do-it-yourselfers, but more importantly it shows the importance of creating a complete and comprehensive plan. I am asked all the time, by clients, if I could just offer the estate planning documents piece meal. I can and do but I always but a warn against it. An estate plan is just that, a plan, and in order for the plan to work properly you must have all of the elements of the plan. The manila-folder-waving-woman was months into a contested and stressful probate process that I believe her uncle intended to save her from.

I was reminded of one of my mother’s favorite quotes “Do it right or don't do it at all”.

5.Not Having An Estate Plan

            Of course the big no-no is not having an estate at all. Nearly once a week someone will tell me, “I don't really have anything of value anyway.” This argument is the reason I believe many people don't utilize any estate planning tools. In reply I tell them, and you “Everyone has something worth giving to your family when you pass”.

            To be clear, I'm not talking about money or homes. I am talking about the relief you provide your loved ones when they don't have to guess at complicated decisions in the wake of your death. It is hard enough to say goodbye to a loved one, it is even harder to then have to make the decision to cut off life support, or argue with family members about burial or cremation, what to do with the remains, sell the home or keep it, battle over guardianship of a minor or an incapacitated parent. You see where I'm going with this. An estate plan is not about giving away a piece of property, it is about giving your loved ones a piece of mind.

Keo'vonne W.

"Turn Your Dream Into Your Legacy"

Girls, Girls, Girls...Just Kidding, More Trusts

Last week’s Blog broached the subject of trusts; explaining what they are and how they function. We also looked at different marital trusts. This week we will cover the wonderful world of Trusts! Yep more trusts.

You may be asking yourself why focus on trusts. For starters, it has been my experience that, on average, people really don’t know a whole lot about trusts. And while its true some trusts will not serve you well if you have a modest estate, there are some that are perfectly suited to a modest estate. And it is important to know what they are and how they operate. I've been approached by people who never thought they'd need an estate plan, let alone a trust fund; and then they received a large settlement from a lawsuit, or got married, or took a job position with a substantial pay increase. Below we cover this versatile estate planning tool a bit more. 

Noteworthy Tidbits

• The 2014 Estate Tax Exclusion amount is $5.34 million for individuals and $10.68 million for married couples
• Estates over $5.34million will be taxed at a top rate of 40%
• Federal estate tax law says the when a spouse dies; the unused estate tax exclusion will transfer to the surviving spouse. This concept is called “Portability”. The surviving spouse is able to add the deceased spouse’s unused tax exclusion to his or her own federal estate tax exclusion.
• Portability provides that the deceased spouse’s unused exclusion will roll over to the surviving spouse so long as the surviving spouse makes an affirmative election on the deceased spouse’s federal estate tax return using IRS Form 706 to claim it within nine months following the deceased spouse's death.

• If the deceased spouse does not use any of their available federal tax credit, then the surviving spouse is left with a federal estate tax credit in the amount of $10.68 million
• Arizona does not have a state estate tax so the federal estate tax amount will be the applicable exclusion amount for cases in Arizona.
• Portability does not provide creditor protection

Bypass or “B” Trust also known as Credit Shelter Trust 

A Credit Shelter Trust is a revocable trust designed to shelter the estate from federal estate taxes. This trust doubles the amount of tax credit if you are married, very similar to the concept of Portability, however at the death of the second spouse's assets can pass to beneficiaries tax free and with protection from creditors. This trust plan generally splits a marital estate in half between the couple, keeping the trust funded with an amount lower than the federal exemption amount. When the first spouse passes, the second spouse will be supported from the trust's funds, at the discretion of the trustee. The second spouse is able to forgo taxation on her estate because she does not control the principal assets of the trust established by the first spouse. She is able to enjoy use of the assets but the trustee’s role in controlling distributions renders the estate safe from taxation because it is technically outside of the surviving spouse’s estate.

Pros

• Protects estates that may surpass the tax deduction limit from a 40% tax rate.
• Protects assets from creditors
• Protects assets inherited by marital children should surviving spouse remarry

Cons

• This method is generally of less use to a moderate estate because portability allows assets under $5.34 million to pass to a spouse tax free. But it does provide creditor protection to beneficiaries.

Noteworthy Tidbit

These type of trusts are usually used in conjunction with an A trust ("A" Trust explanation here)

Testamentary Trust

A Testamentary Trust is created at the death of the testator. It is created by operation of the testator’s will.

Pros

• Covers items accumulated during the life of the testator. Very useful to address those assets brought into the estate as a result of the testators death. For example, the estate sues and wins on the deceased testator’s behalf for a wrongful death claim. Proceeds from a settlement may be kept in a testamentary Trust.
• Is a good choice for a person with a very small estate that stands to make a large gain at death (usually through large life insurance proceeds). Particularly helpful if the deceased has young children who stand to inherit before reaching adulthood.
• Can be cheaper than most kinds of trusts.

Cons

• A Testamentary Trust still has to go through probate. The trust is created as a result of the Will going through the process of probate.
• Assets are not immediately available to beneficiaries.
• Assets are subject to taxes.
• Still must pay for the cost of probate.

Living Trust Also called an Intervivos Trust.

“Inter vivos” is Latin for “among the living". This definition defines the nature of this trust, which is created during the settlor’s lifetime and takes effect at the time of execution of the document. During the settlor’s lifetime the trust is completely revocable and amendable, but becomes irrevocable (unchangeable) on the death of the settlor. A settlor will usually name himself the trustee during his lifetime, with a named successor trustee who will be responsible for trust distributions and responsibilities at the death of the settlor.

Pros

•  Estate will avoid probate, unlike the testamentary trust. One of the most alluring features of a trust is the fact that the trust assets bypass the probate process which can be costly and lengthy.
• Truly preventative measure in the case where incapacity is an issue.
• Seamless transition of power over the trust from grantor/trustee to the successor trustee upon death or incapacity of the grantor/trustee. 
• Beneficiaries have immediate access to the trust income because the trust assets do not have to go through probate.
• The details of the trust remain private, whereas the details of a will are accessible by the public. 

Cons

• Some property is best left outside of the trust, but this will depend on what your estate planning goals are.

            For example- Ordinarily a life insurance policy with a named beneficiary is generally best held outside of the trust because life insurance policies are paid out almost immediately after the death of the insured party. So it is usually best to let Life Insurance policies pass outside of a trust.

            However, if your estate-planning goal is to pass the proceeds from your life insurance policy to a minor grandchild, it may be a good idea to name the trust as the beneficiary of the life insurance policy with your grandchild named as beneficiary of the trust with a designated age or event to trigger disbursement.

• A living trust does not insulate the trust assets from creditors while the grantor is still alive. He still has the power to revoke the trust and stills controls the assets. Creditor protection doesn't kick in until the grantor passes and the trust becomes irrevocable.
• Income earned by the trust is taxable and is the personal tax responsibility of the grantor.

Noteworthy Tidbit

- The Average (uncontested) probate case can take about six months to a year and start at $3000 (not including filing fees and other costs).

- While the estate is being probated the executor is prohibited from distributing the estate property. 

Qualified Domestic Trust (QDT- called a Q-dot)

A Qualified Domestic Trust allows a spouse who is not a U.S. citizen the ability to take advantage of the marital tax deduction that is otherwise granted to married couples.

Pros

•  The only way for couples consisting of one non-us citizen to still take advantage of the marital deduction.

Cons

• At least one trustee of the QDT must be a U.S. citizen. This may include a U.S. corporation.
• Only awarded to surviving spouses whose spouse died after November 10, 1988.

Irrevocable Life Insurance Trust also called an ILIT

 An ILIT is a trust that is funded with the proceeds of a life insurance policy. The trust is named as the beneficiary of the policy and owner of the policy, and precludes taxation even after the death of the second spouse. In the previous post, we noted that the common factor in all of the marital trusts was that the trusts provided a delay on taxation until the death of the second spouse. Unlike a marital trust, the ILIT assets are not included in the estate of the second spouse. 

 Pros

• Ordinarily the proceeds of a Life insurance policy is included in the estate of the owner of the policy and will be included in the owners estate at death. So your estate will be taxed at a rate that includes the life insurance. 
• Ex. If you own a $2 million dollar life insurance policy, at your death the estate taxes will be assessed considering the $2 million dollars a part of the estate. This will eat into your $5.23 million estate tax exemption.
• If your estate planning goals are to provide for your children and grandchildren, and ILIT can be set up as a Generation Skipping Trust (Dynasty Trust).

 Cons

• This is not ideal for families who need liquid assets( ie a family who is reliant on access to the life insurance policy proceeds).
• This is one of the types of trusts that should only be used if the family is substantially flushed with liquid asset, (ie this is one for the rich folks or very, very good savers).
• The insured person must give up control over the insurance policy; he may not act as trustee of the trust. 
• This type of trust is irrevocable.

Generation Skipping Trust or a Dynasty Trust

As the name implies a Generation Skipping Trust (GST) is a trust where the assets are transferred in trust to the testator’s grandchildren, hence it "skips" a generation.

Pros

• The assets are not subjected to estate taxes. The assets would be taxed would be if the assets were in trust for the settlor’s children.
• Helpful if you want to provide for grandchildren whose parents are financially irresponsible.
• Insulates assets from children’s and grandchildren’s creditors and or a divorced spouse
• An individual may give Grandchildren up to $5.34 million without transfer taxation.
• The settlor’s children do have access to the income generated by the assets. 
• Ex. If an asset is rental property or stock that produces dividends, the grantor's children may access the profits from the rent and the dividends.

Cons

• May not be advantageous where the assets do not generate income the children of the testator may not receive financial benefits.
• May not be advantageous in very modest estates that will automatically avoid the Generation Skipping Tax consequences.

Next week we will cover Charitable Trusts. If there is a term or explanation in this post that is still unclear please ask for clarification by posting your inquiry in the comments section or emailing us at Info@KeovonneWilsonLegal.com

Keo'vonne W.

"Turn Your Dream Into Your Legacy"

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