Christine Fletcher

How To Read A Trust

If you are getting divorced, you may find that your marital assets include interests in one or more trusts.  It could be that you and your spouse established the trusts during your lifetime, or perhaps a family member created the trusts for the benefit of you or your spouse.  Either way, you need to know what the trusts say.  They may play a crucial role in the division of your assets or the support you will receive.

It is not uncommon for folks to know little about what the trusts say or do.  It happens all the time and is no reason for embarrassment.  It is a good idea to begin to read the trusts yourself and to ask questions about them.  You should rely on the advice of a trusted estate planning attorney.  If your divorce lawyer does not have an estate planning lawyer that he or she works with, you will need to find one.   Here are a few tips in reviewing your trust:

Familiarize yourself with the terms.  There are basic terms of the trust that you will need to know.  (Hint: A lot of this information will be found on the first page of … Keep reading

Why You Need a Trust

People often ask “Why do I need a trust?”  Some folks think they can get by with a simple will.  Here is why you probably need more than that:

  1. Estate tax savings. Depending on the size of your estate and your state’s tax laws, there may be a significant tax advantage to including trusts as part of your estate plan.
  2. Probate avoidance. If you fund your trust during lifetime, you will avoid probate.  Avoiding probate means your family will not have to go to court to authenticate your will after your death in order to access your assets.  It saves time and money.
  3. Planning for incapacity. Another benefit to funding your trust during life is that your successor trustee can access the assets for your benefit if you become incapacitated.  If you are in the hospital or a long term care facility, who will pay your bills and manage your assets?  If your trust is funded, the successor trustee can do that.  Otherwise, your family may have to go to court to have a conservator appointed to oversee your assets.
  4. Limiting children’s access to their inheritance. If you have minor children, you want to make sure their inheritance is
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What Is Federal Estate Tax?

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The federal estate tax (sometimes called the death tax) is a one-time tax that is imposed at death.  If you die with a certain dollar amount of assets, an estate tax return may be required and a tax may be due.  If a return is required, it is due 9 months after the date of death.

Sometimes clients confuse the estate tax with an income tax, but it is not a tax on income.  It is a transfer tax.  Essentially, it is a tax on the wealthy imposed at death.

When does it apply?

In 2019, a federal estate tax is due for all estates with assets of $11,400,000 or more.  If you die with a gross estate under $11,400,000, no estate tax is due.  If your gross estate is over $11,400,000, you pay a tax on the overage.  In general, the tax rate is between 18% and 40%, but it gets to 40% pretty quickly.

The large exemption amount is due to the recent changes in the tax laws that took effect in 2018.    The federal estate tax amount used to be $5 million adjusted for inflation.  It is now $11 million adjust for inflation so it increases … Keep reading

Talking To Your Kids About Prenuptial Agreements

If you have been divorced, you may be excited and yet anxious when your child decides to marry.  You may be happy that she has found love, but you may also be painfully aware of the difficulties she may encounter if the marriage ends in divorce.   How to protect your child from a possible divorce while still showing excitement for the marriage and welcoming her fiancé into your family can be a difficult balance.

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Raising the issue of a prenuptial agreement is not an easy discussion, and should not be had right after the engagement is announced.  Ideally the discussion was had many years ago.  By the time the happy couple decides to wed, your child should already know that she needs a prenuptial agreement.

I tell my clients to talk to your kids about prenups around the time they start dating, or when they start to get serious with someone.  The earlier you talk to kids about prenups, the better.   If you wait until the wedding plans are announced, your child may be reluctant and the fiancé may be offended.  It may cause your relationship with your daughter or son-in-law to start out on a sour note.

Talking … Keep reading

Prenuptial Agreements 101

With wedding season just around the corner, here is a primer on what a pre-nuptial agreement can and cannot do for you:

What a prenup is:

A prenuptial agreement is a private agreement between a couple signed before they get married which sets forth the division of their assets in the event of divorce and death.  Each state has its own laws regarding the enforcement and validity of prenuptial agreements.  Which state’s law to apply depends on where the marriage will take place, where the couple will live during the marriage, and what state law the agreement says to apply.

Essential components:

In most states, the agreement has to be fair, the parties have to fully disclose their assets, and each party needs to have their own attorney.

The idea of fairness depends on the unique facts and circumstances surrounding each couple.  Would it be fair if after 20 years of marriage, the “poorer” spouse walked away with only the small amount of cash she brought into the marriage and no alimony?  Probably not, particularly if she was a stay at home parent raising the children.  It is to the “wealthier” spouse’s advantage to give the agreement … Keep reading

Estate Planning After Divorce

Divorce attorneys saw a wave of divorces last year due to the changes in the tax laws that took effect on January 1, 2019. If you were one of the masses whose divorce was finalized in 2018, now is the time to revise your estate plan. Here are the issues you should discuss with your lawyer:

  1. Make sure your estate planning attorney has a copy of your Divorce Agreement. Your attorney will need to know what obligations you have to your ex-spouse in the event of your death.
  2. Update your Health Care Proxy. The health care proxy allows you to name someone to make health care decisions for you if, for instance, you were in a car accident or had a health emergency and were unable to communicate. You may want to name an adult child, a friend, or another relative.
  3. Update your Power of Attorney. If you had an old power of attorney naming your ex-spouse, that should be revoked. You should also execute a new power of attorney naming a friend, relative or trusted advisor to act as your agent regarding your finances and assets.
  4. Update your Will and Trust. Remove the provisions for your ex-spouse, and
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