Category Archives: Estate Planning

Asset Protection, Estate Planning

Credit Shelter Trusts

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Many people are surprised to learn that there are a variety of different types of trusts that can be used in estate planning. One type of trust is called the “Credit Shelter Trust,” which is also sometimes referred to as a bypass or family trust. This type of trust permits two parties (typically spouses) to divide their assets between two trusts.

For 2015, the first $5.43 million of an estate is exempt from federal estate taxes. With a Credit Shelter Trust, a married couple could potentially have no estate tax with an estate that is less than $10.86 million. This could potentially double that portion of your children’s inheritance by avoiding estate taxes. Additionally, once assets are put into a Credit Shelter Trust, they are free from estate tax. This is true even if the value of the assets increase. Therefore, if the surviving spouse invests the trust assets wisely and doesn’t need the assets for support, your children’s inheritance can continue to grow, free of any estate tax. As we often tell clients (just to make a point), the Credit Shelter Trust could grow to a BILLION DOLLARS and no estate tax will be paid when they receive their inheritance.

The Credit Shelter Trust also protects your children in the event the surviving spouse remarries. Typically the trust will contain provisions that prohibit its use for anyone except your spouse and your children or grandchildren.

There is another advantage that most people fail to consider. When a Credit Shelter Trust is created, it protects the assets of the trust from the creditors of a surviving spouse. In other words, no matter what happens to the surviving spouse, the nest egg represented by the amount set aside in the Credit Shelter Trust is protected from claims for the life of the surviving spouse.

Typically, when the first spouse dies, the surviving spouse is left a certain amount in trust for their benefit (not to exceed the current federal estate-tax exemption). The remainder of the estate passes to the surviving spouse tax-free through a marital trust or outright bequest (with any remainder to pass to your children upon the death of the surviving spouse). The Internal Revenue Code does not consider the assets in the Credit Shelter Trust as included in the surviving spouse’s estate for the purpose of calculating estate taxes. The theory is that the surviving spouse did not have full ownership of the assets held by the Credit Shelter Trust. The beauty is that they have the benefits and use of the Credit Shelter Trust, but it is asset protected and protected from the estate tax.

It should also be mentioned that the estate tax is portable between the spouses. In other words, if the first spouse to die does not use all of his or her $5.43 million exemption, the surviving spouse’s estate can take advantage of it. The surviving spouse must make this election on the first spouse’s estate tax return.

In short, the Credit Shelter Trust is beneficial if you want to protect your surviving spouse financially. This type of trust provides your spouse with a source of income if needed, while also protecting him or her from creditors, and protecting your children from loss of inheritance. It’s an excellent planning tool.

To learn more about how a trust can benefit your family, call us today. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

What Should I do with an Inherited IRA?

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If you have inherited an IRA from a loved one, there are several options available for how to handle it. However, the rules governing inherited IRAs can be complicated, so it is important to obtain professional advice on what option would be most beneficial to you. It is important that you do not lose the tax-deferred advantage causing you to pay taxes on the entire account balance.

It is important to note that this blog does not take the place of obtaining legal counsel in your jurisdiction, but below are a few options you may want to consider:

  • Cash Out. You are allowed to withdraw the full amount of the IRA. However, you must pay income taxes on this amount, so it often is not the best option.
  • Spouse Rollover. If you inherited the IRA from your spouse, you can roll it into a new IRA or merge into your existing IRA. This option allows the account to continue to grow tax-deferred. This option creates the best income tax strategies, and allows for the inherited funds to continue to be protected from creditors – a big plus!
  • Non-Spouse Option. If you inherited the IRA from somebody other than a spouse, your options may depend upon when the initial owner died.

o   If the initial owner of the IRA died before he or she began to receive requisite distributions, you can establish a “Beneficiary IRA.” This allows you to take yearly distributions based upon your life expectancy. The Beneficiary IRA must be finalized before the end of the year after the initial owner’s death. If the beneficiary does not take the first distribution by then, the full sum of the IRA must be withdrawn by December 31st of the fifth year after the owner’s death.

o   If the initial owner died after he or she began to receive the requisite distributions, a non-spouse beneficiary is required to take a distribution in the same amount as the owner’s require minimum distribution for the year he or she died if one had not already been taken. In subsequent years, the distributions can be based upon the length of either the beneficiary’s life expectancy or the remaining life expectancy of the original owner.

If you are the beneficiary of an inherited IRA and you need help deciding what to do with it, contact our office to schedule an appointment. We can explain all of your options and assist you in determining what would be most beneficial to you. It’s important to contact an expert to discuss your options. There are time limits to make elections you need to be aware of, and if you do something and then decide it was the wrong option, it may be too late to correct the problem.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

 

Asset Protection, Estate Planning

How to Prevent Financial Abuse of Senior Citizens

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Because many senior citizens are particularly reliant on others, they are vulnerable to becoming the victim of financial abuse and scams. If you suspect a relative, caregiver or third-party of taking advantage of your loved one, it is important to contact one of our experienced elder law attorneys for assistance.

Below are a few tips on how to prevent a senior citizen from becoming a victim of financial abuse:

  • Make sure that more than one family member is actively involved in caring for the senior and is helping with their finances
  • Avoid having money or checks delivered to your loved ones’ home – have the funds deposited directly into his or her bank account
  • Help make sure the elderly individual stays involved in community activities as much as possible
  • If your loved one has a caregiver that is not a family member or friend, conduct a thorough investigation (including checking references) of the caregiver’s history
  • Monitor the use of funds for or by any caregivers. It’s not uncommon for a caregiver to use ATM cards or credit cards to assist the family member, but it’s a prime source of financial abuse – where the caregiver withdraws funds and continually explains it was for meals or clothing or a myriad of needs that are not traceable without receipts
  • Watch out for disappearing jewelry or other property

The above tips are not a guarantee that your loved one will not be subjected to financial abuse or become the victim of a scam, but they will reduce the likelihood of it happening. The more people that are involved in the senior’s life, the more protected he or she will be.

How do you know if your loved one is the victim of financial abuse? Each case is different, but below are a few of the warning signs:

  • Significant, unexplained withdrawals of cash
  • Valuable items are disappearing from the elder’s home
  • The senior becomes isolated from others
  • Costly or inexplicable charges on credit cards
  • Your loved one is fearful of the caregiver
  • Numerous checks made out to “cash”

Not only is financial abuse a crime that can be reported to Adult Protective Services, there are other legal options that are available. To learn more, contact one of our elder law attorneys to schedule an appointment.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

 

Estate Planning

A Short Estate Planning Checklist

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Estate planning can seem overwhelming to many people and they don’t know where to begin. While there are many decisions to be made and numerous factors that must be considered, below is a simple checklist of four items that you should look into immediately:

  • Create an estate plan. Although this can include several tasks, it is important to take the first step. Contact us and let us walk you through the process of creating a comprehensive estate plan. Even if you cannot afford to accomplish everything you want right now, your estate plan can be established in steps. We can begin with what fits within your finances, then upgrade later. If you have an existing estate plan, let us review it and update it if necessary. Many changes occur over time, with family, your financial status, and of course your age.
  • Save on taxes. You can save a significant amount of money by taking advantage of the federal gift, estate and generation-skipping transfer taxes. To learn more about how to do this, please contact us.
  • Gifting. You are allowed to give tax-free gifts each year in an amount up to $14,000 in cash or other assets to as many individuals as you want. This strategy allows you to decrease the size of your estate (which can save on estate taxes) over time, while also benefitting your beneficiaries. You should discuss this with an estate planning attorney before embarking on gifting. Giving away assets has the obvious implication that you can’t get it back, but also, there are more tax-efficient ways of gifting than simply writing a check.
  • Life insurance. You should review your life insurance policies (or look into buying one) to confirm that it meets your family’s needs and that the beneficiaries named are correct.
  • Retirement Plans. You should review the beneficiary designations on your retirement plans. Naming the right primary beneficiary and secondary beneficiary is critical to your family.

Don’t be intimidated by the estate planning process. We can help simply it for you while also ensuring that you and your family are protected.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

Essential Legal Documents for Senior Citizen

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If you or a loved one are approaching your “golden years,” there are certain legal documents that should be created and signed as soon as possible. In order for another party to have the authority to discuss your medical treatment with health care providers, you must provide them the legal power to do so. Otherwise, patient confidentiality laws will prevent your loved ones from being able to assist you in making necessary medical decisions if you are unable to act on your own. And remember, these laws extend not only to your doctors, but also to assisted living facilities and nursing homes.

Each state has its own unique requirements for the legal documentation that is required to grant medical decision-making authority to another party. The primary document, in Utah is an Advanced Health Care Directive.

Advanced Health Care Directive

A Utah Advanced Health Care Directive (“Directive”) has two components. First is the appointment of an agent for health care decisions. This part of the document appoints another party to make medical decisions if you are no longer able to do so, including the right to admit you to a health care facility and other actions, which you should carefully consider. It can even nominate the person to be your guardian. Your appointed agent can also gain access to your medical records. It is important to provide a copy of your Directive to your appointed agent, your primary physician, your estate attorney (who should help you create it) and any applicable assisted living facility or nursing home.

The second part of the Directive allows you to determine whether or not you want certain life-sustaining medical care in certain events. This includes whether, or for how long you want to remain on life support. You can leave instructions regarding end of life decisions, which removes a hefty burden from your loved ones, or you can let your agent make decisions. If you execute a Directive, it is critical that you provide a copy with your agent and any relevant health care providers.

Do Not Resuscitate Orders

There is another category of health care planning that can be utilized in Utah. If you are the end stage of a debilitating disease, or in hospice care, knowing death is imminent, there is a DNR order you can sign, with the co-signature of a physician, which can stop all care to resuscitate you under your specific circumstances. This must be approached carefully. It is not intended as a substitute for a Living Will or Advanced Health Care Directive and should only be used when you are actually at the end of your life. This form should never be used with a health senior who might have an accident or health care incident and could be expected to recover.

We provide careful and thoughtful assistance with our clients in designating health care agents and in deciding the type of end of life care they desire.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

Getting Married? Time to Discuss Finances!

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If you are engaged, you are probably making a wide variety of plans for your future. Many couples spend considerable time planning their wedding, but they do not plan for how to combine their financial lives. Before you say “I do,” below are several issues you should discuss with your future spouse:

  • If you have always had your own accounts, you should consider each other’s spending habits and how to best organize your finances. In many cases, it makes sense to wait a while before combining your accounts, including credit cards. Many financial advisors believe it is wise for each spouse to maintain one individual credit card.
  • You will need to decide how your bills will be paid. Will one spouse be in charge of paying everything? Will you split the bills?
  • Should you consider a premarital agreement? If this is not a first marriage, or you have acquired significant assets prior to marriage, this is something you should definitely consider.
  • Both individuals should fully disclose their debt. You want to enter your marriage being open and honest about what you owe. It is surprising how many people get married only to discover their spouse has tax debt, credit card debt or even old DUI fines or court related payments being made. You should not undertake to pay these debts for your spouse!
  • If only one spouse has a job, you should discuss how the non-breadwinner will access and have some control over the family funds.
  • You should confer with a tax professional regarding whether you should file your taxes jointly or separately. This decision may make a significant difference in saving you money. It should not be done without thought, and each spouse should participate and understand the filing of tax returns. If one spouse has their own business they can create havoc on the household if they do not honestly and scrupulously report taxable income and expenses.
  • Once you are married, it is critical that you create a comprehensive estate plan. Not only will you want to protect your spouse if something should happen to you, your estate plan can provide you with many protections as well. We can assist you with creating wills, trusts, a health care proxy, power of attorney and an asset protection plan.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

How Technology Impacts Your Estate Plan

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It seems everyone is attached to their smartphone, iPad or iPod these days. As a result, these devices can play an important part in your estate plan, especially if you store personal and financial information online.

What does this all mean? Your online data can include significant assets that should be included in your estate plan. Whether it is access to your bank account, iTunes account, rewards points or other valuable online information, your estate plan should provide for your loved ones to have access to this type of property. You should leave a list of the websites you commonly access and your user-names, passwords or other log-on information. Failure to leave this information for your loved ones could result in the money, music, games or other types of virtual property you own getting lost.

While your loved ones are probably aware of where you maintain your checking account, but it is unlikely that they are aware of where you save your digital currency. It can be further complicated if your online identity is not the same as your actual identity. Without your login information to access these websites, the company that maintains your account may not allow your loved ones to access your digital assets. You must also remember to update your list each time you change your passwords.

In addition to leaving instructions on how to access your digital accounts, you should also set forth how your family members should handle these matters. For example, you may want to review each website’s terms of use to understand how your online assets will be handled upon your death. If there are certain instructions for granting rights to your executor or beneficiaries, you should take action to follow them. Some websites may have specific forms you need to complete and leave with your estate planning documents.

There are software ‘apps’ that help you gather all of this information together in one place, and even allow you to designate who has access at your death or incapacity. One of these which is known to the author is “SecureSafe”. It works on PC’s, Android, OS Apple products, etc. But it is critical information for the administration of a Trust or Will.

Don’t take the value of your digital assets for granted. You worked hard to establish your accounts and build your collection of music, points, books, games or other types of property, so you want them to be passed on to your loved ones.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

Events that Motivate Us to Create an Estate Plan

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It is common for people to procrastinate in creating their estate plan. Nobody likes to think about dying or how their family will move forward without them. At the same time, most people feel guilty if they don’t have an estate plan in place.

Over our years as estate planning attorneys, we have seen certain events cause our clients to jump-start their estate planning. Below are a few of the events that cause people to stop procrastinating and contact us:

  • A serious accident or troublesome medical diagnosis
  • The death of a close friend or relative
  • The birth of a child or grandchild
  • A vacation, especially one out of the country
  • Marriage or divorce

There are many other life events that can force you to think about your mortality and motivate you to get your affairs in order. Whatever circumstances, you are facing, you should put creating or updating an estate plan at the top of your “to do” list. You don’t want to wait until you are pressured to meet a deadline to make these crucial decisions. However, if you have a life event motivating you to take action, take the first by contacting us to schedule your initial consultation.

If you have procrastinated, and you believe that death is imminent, we can still help! Many lawyers, our firm included, will meet with clients at home or in a hospital, or do what is necessary to help a client who is dying or close to death and give them peace of mind. We think it’s worth it to take that concern off your mind. Let us help!

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

Do You want to Protect the Environment when you Die?

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If you have spent your life recycling, growing your own food, composting, and other actions that protect the environment, you may want to consider how you can protect the earth when you die.

Funeral home owners and cemeteries are offering eco-friendly options for those that want a sustainable alternative. The “green” movement is gaining popularity and the efforts are extending into how death is handled. Many of the customs used by various cultures can be very harmful to the earth. For example, embalming chemicals, caskets, concrete vaults and the emissions from crematories can be damaging to the environment.

What does an eco-friendly burial involve? Typically, you will be buried in a simple wooden box, wicker casket or even a biodegradable shroud. You can even request plant-based embalming fluids instead of the toxic formaldehyde fluids. In addition to creating less waste, you might be surprised to learn that using these environmentally-friendly options are usually less expensive than traditional options.

If you are interested in taking care of your affairs, we can help you create a comprehensive estate plan, including pre-planning your funeral.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

Why Does an Estate Need to File an Income Tax Return?

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We have many clients ask us why an estate must file an income tax return. The quick answer requires you to understand a simple concept that may come as a surprise. When someone dies, the assets they own create an “estate” which may be made up of income producing property and non-income producing property. The IRS has created rules which state that the estate is now a new, separate taxable entity. It is possible for an estate to receive income following an individual’s death. Someone has to pay taxes on that income so the estate has to file an income tax return.

Common examples include income from a business, rental property, dividends, or even the interest that accrues on the deceased’s checking or bank accounts. All of these are considered to be income from the Internal Revenue Service (IRS). You should also understand that an estate’s income taxes are different from estate taxes, which are based upon the value of the estate.

If an estate receives income after the individual dies and before the estate property has been distributed, it must be reported to the IRS. The appropriate form for reporting an estate’s income is Fiduciary Income Tax Return or Form 1041. If a beneficiary inherits an asset directly from the deceased, the estate does not have to report income on that asset. The beneficiary reports income from the date of death. For example if you inherited General Motors stock because of joint ownership, any dividends paid from the date of death must be reported by you.

In addition, if the estate earns income on certain assets, but then makes distributions to beneficiaries, the estate reports the income, but the beneficiaries may have to report it on their individual income tax returns and pay tax on the income.

Is it possible to avoid the fiduciary income tax? With our help and careful planning, it may not be necessary for a fiduciary income tax return to be filed. If all of the estate assets are quickly transferred to your beneficiaries, the estate will likely not hold the property long enough to earn enough income to require filing of a return. For example, assets that are held in a trust are generally distributed quickly, which can help minimize tax consequences. In contrast, if the probate process is delayed by family disputes or legal issues, the distribution of the estate assets can be delayed for months, even longer! As a result, the estate ends up holding the assets for a period of time, the estate receives income, and that results in the need for the estate to file an income tax return.

We can help trustees or executors understand the tax reporting rules and avoid tax reporting under the right circumstances.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.