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What Is A Trustee?

What Are Trusts?

Legal Requirements for Trusts

If you are interested in creating a trust as part of your estate plan, a Belleair estate planning attorney can discuss the legal formalities that must be executed with trusts. Additionally, your Belleair estate planning lawyer can explain that these formalities are the same as those required by individuals who make a valid will.

Writing

One basic requirement of a valid trust that your Belleair estate planning attorney can mention to you is the need for the trust to be in writing.

Signatures

Additionally, your Belleair estate planning attorney can explain that you must sign the trust or ask another person to sign on your behalf in your presence. Two witnesses must see this signing personally. These witnesses must also sign the trust in front of the person creating it and in the presence of one another.

Presumption of Revocability

The person who establishes the trust is usually able to revoke or amend the trust at his or her bidding unless the trust is expressly made irrevocable.

Revoking or Amending a Trust

If only one person created the trust, the settlor can generally amend or revoke the trust by substantially complying with a revocation or amendment provision in the trust. If the trust does not say how to amend or revoke the trust, the settlor can revoke or amend it by making a later will or codicil that specifically devises the trust property or any other method that provides clear and convincing evidence of the settlor’s intention to revoke or amend the trust. Again, the formalities of creating a will are required.

Special Rules Regarding Joint Settlors

If more than one settlor established a trust, such as when a married couple does, there are different rules regarding revoking or amending the trust. For example, if the trust has community property in it, the trust can be revoked by either spouse. However, it can only be amended by both of the spouses together. For property amendments that are separate property, each settlor can revoke or amend the trust regarding that part of the trust individually.

Contact a Belleair estate planning lawyer from the Coleman Law Firm at 727-461-7474 for help with your estate plan.

Charitable Trusts

Clearwater trusts attorney Father and Son Reviewing Estate Planning DocumentsOne of the chief goals of estate planning is to find ways of minimizing taxes on money left to beneficiaries. Sometimes settlors wish a portion of their assets to go to a charity as well. Charity trusts serve this purpose. The charitable remainder trust, or CRT, is one of the most common charitable trusts. A Clearwater trusts attorney will help you ascertain whether a charitable trust is right for you, and help you to set it up.

Charitable Remainder Trusts Explained

A CRT allows you, the settlor, to use part of the assets during your lifetime. A portion of the rest is left to named beneficiaries when you die, and the remainder goes to a charity that you name. The attorney with your Clearwater trusts law firm will tell you that one distinct disadvantage of this type of trust is that once it is established, you cannot add or remove beneficiaries. One way to circumvent this problem is to name heirs as contingent beneficiaries, which your will can order removed.

Types of Charitable Remainder Trusts

Three types of CRTs exist, and your Clearwater trusts attorney will help you choose which one is best suited to your needs: the unitrust, annuity trust or pooled income trust. While there are definite differences with each, in common is the fact that the named charity acts as trustee. The charity will invest the money in ways that will bring the highest return. It is the charity, then, that will pay assets out of the trust to beneficiaries for the appointed amount and duration.

It is important to note that the named charity must be one that is approved by the IRS for this purpose.

Tax Savings

You can enjoy tax advantages in a number of ways. For one, you can take a tax deduction spread over five years for the amount you gift to charity. It is important to note, however, that the IRS will calculate the amount you are likely to receive out of the CRT during your lifetime and deduct this amount from the tax-deductible gift.

You may also be able to help beneficiaries avoid a capital gains tax, since charities do not have to pay this. Unless your estate is very large, it is unlikely you will need to worry about an estate tax.

A Clearwater Trusts Law Firm Can Help You Establish a CRT

If you are interested in setting up a charitable trust or have questions, call a Clearwater trusts attorney today. Call Coleman Law Firm at 727-461-7474.

Living Trusts

Clearwater trusts lawyer meeting with clientsA living trust is a popular estate planning tool a Clearwater trusts lawyer can create that can be useful during the lifetime of the person as well as make the distribution of assets after death less complicated and less expensive.

A Living Trust is Revocable

The person who creates the trust, called the settlor or grantor, creates the trust in their lifetime and can add to it, change it in any way or revoke it entirely in their lifetime.

Essential Components

A Clearwater trusts attorney can explain that a legal trust requires a grantor, at least one named beneficiary, a trustee and assets that are legally transferred to the trust. Most often, the grantor is also the original trustee and thus retains complete control over the management of the trust.

Incapacity

A well-crafted trust should contemplate the possibility that the grantor, or other named trustee, may become incapacitated. By naming a successor trustee who assumes trust management in the event the trustee can no longer handle trust management duties, the trust can continue to operate to pay bills and make investment decisions without the need for a court-ordered guardian.

Death of the Grantor

Typically, at the death of the grantor, the trust becomes irrevocable and the plan for distribution of the decedent’s assets is implemented. The primary exception is for a trust created for a married couple. In such a case, most commonly the surviving spouse becomes the sole trustee upon the death of the first, and the trust becomes irrevocable after the death of the survivor. In either case, a named successor trustee then manages the trust.

Living Trust Advantages

The primary advantage is the avoidance of probate for those assets that have been properly transferred to the trust. Title to those assets remains in the trust after the grantor’s death. Assets that are not in a trust need to go through probate to legally allow transfer of title from the name of the grantor to the name of the beneficiary. For large estates, there may also be a federal estate tax advantage where a married couple has a joint trust.

Contact a Clearwater Trusts Lawyer for Legal Advice

Learn whether a living trust provides an advantage over a standard will for your particular needs. Call the Coleman Law Firm at 727-461-7474.

 

Pet Trust Planning 101

Do any of your closest friends have feathers, fins or fur? What will happen to them if you are no longer around? Although it cannot replace you, a Pet Trust can provide your friends with love and care for the rest of their lives.

An estimated 500,000 pets are euthanized each year by shelters and veterinarians when their owners predecease them.  Do any of your closest friends have feathers, fins or fur? Are you also responsible for their room, board and ongoing veterinarian care?

Consider this: If something untoward were to happen to you today, what would happen to your feathered, finned or furred friends tomorrow?

What arrangements have you made for these friends (some people refer to them as pets, so we will use the terms interchangeably) in your Life & Estate Plans? Unfortunately, if you are like most Americans (58 percent), you do not have even a basic Last Will and Testament. Not surprisingly, most Americans also have neither health care directives (69 percent) nor powers of attorney for either health care or financial matters (74 percent).2

Pet Trust Anatomy

Given these numbers, it should come as no surprise that most Americans (79 percent) have not created a traditional trust as part of their estate plan.3 (Traditionally, a trust is a legal arrangement providing for the ongoing management of assets, sometimes for multiple generations of beneficiaries.) Whether you are among the minority who have completed comprehensive estate planning, or among the majority who have yet to do so, be aware that a new type of trust may be an appropriate adjunct to traditional planning. More than 30 states now have laws permitting the creation of Pet Trusts and a growing number are considering them.

A Pet Trust may be created under a Last Will and Testament or a Revocable Living Trust. Either way, there generally are four parties to any Pet Trust: the trustee, the caretaker, the pet (one or more) and the remainder beneficiary. In addition, a Pet Trust should have property contributed to it to adequately fund the lifelong care of your pet.

The trustee may be an individual, a corporate fiduciary, or both. As with most choices, there are advantages to each approach. The same is true with the caretaker. However, it may be prudent to ensure that the trustee and the caretaker are not one in the same.

While a trusted friend or family member likely knows your pet better than any outsider, whenever money is involved; there also lurks the temptation for mischief. For example, there have been reported instances where pets have died, only to be replaced by look-alikes so the trustees/ caretakers continued to receive compensation for their services. Also, remember to appoint successors in case a primary trustee or caretaker is unwilling or unable to serve.

The remainder beneficiary is the party designated to inherit any remaining trust property upon the death of the last surviving pet beneficiary. Typically, the remainder beneficiary is a family member, friend or charity.

Setting aside the appropriate amount of property to fund your Pet Trust is essential to its success. For example, a horse not only eats like a horse, but has an average life expectancy of between 25 and 30 years (or more than 40 years, with tender loving care). By contrast, a Great Dane has a much smaller appetite and a much shorter average life expectancy of between seven and 10 years.4 Accordingly, you would need to set aside a significantly larger nest egg to fund the future care of a horse than for a Great Dane.

So, just how much of a nest egg do you need to set aside to fund the future care of your pet? The amount depends on two variables “ the life expectancy of your pet and the projected cost of care. Your veterinarian is an excellent resource when estimating the life expectancy of your pet, just as your check register is an excellent resource to calculate the actual cost of annual care. Once you know the likely remaining life expectancy of your pet and the historical cost of care, simple multiplication is all that is needed to determine the amount of trust property required to provide the appropriate nest egg. You may want to err on the conservative side, too, since inflation will affect the future cost of care for your pet.

Refrigerator Notes

It is not unusual for the parents of small children to arrange for an occasional evening out “ alone. Before leaving for their date, however, many parents post rather detailed notes on the refrigerator containing such child-specific instructions as authorized snacks, favorite games and the appointed bedtime hour. Just like these parents, consider leaving written instructions for the trustee and caretaker of your friend. You can update these written instructions as necessary without formal changes to your Pet Trust (or additional legal fees!). In your instructions, tell the trustee and caretaker everything about your friend, from favorite daily rituals (e.g., walks and feeding) to how your friend seeks shelter away from the annual pop-pop-pop of the neighborhood fourth of July firecrackers.

Emergency Cards

Estate planning attorneys oftentimes prepare Health Care Emergency Cards for their clients to carry in their wallets or purses at all times. Why? If a client is ever involved in an accident, or suddenly is taken ill, then the emergency card will let medical providers know that the client has prepared a health care directive, a durable power of attorney for health care matters and a written declaration regarding organ donations. In addition, these emergency cards not only identify the card holder, but also the names and phone numbers of their appointed health care agents. In a health emergency, time is of the essence.

Similarly, consider creating a Pet Card to ensure, upon your incapacity or death, that prompt attention and care is given to your pet. At a minimum, the Pet Card should contain your name, key information about your pet (e.g., name, type, location, special care needs and veterinarian) and contact information regarding the appointed trustee and caretaker of your Pet Trust.

Final Thoughts

Your pet has been a loyal companion and friend, whether it has feathers, fins or fur. Unfortunately, if you have no plan (or plan to leave money to someone) for their future care, then you are simply leaving the future care of your pet to chance. Alternatively, a properly prepared and adequately funded Pet Trust can replace this element of chance with the requirements of law;  providing greater peace of mind. And there is no better time than today to ensure that your pet will be okay even if you are not.

1. Survey, LexisNexis Martindale-Hubbell, 2004

2. Ibid.

3. Ibid.

4. Source, www.estateplanningforpets.com

This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.

Note: Nothing in this publication is intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [See IRS Circular 230.]

LOSSES IN REAL ESTATE INVESTMENT TRUSTS (REITS)

Did you lose money after your broker encouraged you to invest in real estate investment products to generate income or to diversify your portfolio?

It is well known that real estate values have dwindled in America over the past few years.  Regardless, many banks and brokerage firms have continued to encourage their clients to invest in real estate products to diversify their portfolios or to generate income.   Many brokers led investors to these risky products with attractive yield percentages and misled investors by selling these products as “CD alternatives,” “preferred stocks,” or even “bonds.”  Unfortunately, the true risks associated with these products were not disclosed, and investors have lost all or a significant amount of their investments, have not received the yield percentages that were touted, or are unable to access the money they invested.

Investors are filing claims against banks and brokerage firms for losses suffered in the following:

1). Non-Traded REITs – Non-traded (or private) REITs are securities offered by your bank or brokerage firm that are not listed or traded on a public exchange. These products often offer attractive yields; however, many have reduced the advertised distribution amounts, have stopped making distributions to investors, or have forbidden investors from accessing their money.  In other words, many investors in non-traded REITs are finding that they are receiving much less income than anticipated, no income at all, or that they cannot access any of their investment dollars.

             2). Traded REITs – Traded REITs are securities sold by your bank or brokerage firm that are listed and traded on a public exchange.  These securities often offer attractive yields and trade similarly to common stocks; however, traded REITs share the downside risks of common stocks.  Your broker may have told you that you were purchasing a “bond” or “preferred stock” when you actually purchased a REIT.  Many investors in traded REITs have suffered significant losses due to decreases in share price or have been unable to find buyers for their now worthless shares due to financial problems of the underlying real estate company.

             3).  Other Real Estate Projects – Many investors have been approached by representatives of banks and brokerage firms to invest in or make loans to real estate projects organized by that representative or a business partner or friend of that representative.  Investors are often approached despite not having a relationship with the particular bank or brokerage firm.  The projects often promise attractive returns or yields much greater than what is offered by the bank or brokerage firm.  The investments are not offered by the bank or brokerage firm and often involve condominium and commercial real estate developments and oil/gas exploration.  Unfortunately, investors often lose all or a significant portion of their investments in these projects and find that the projects were scams or were poorly managed. The bank or brokerage firm, however, still may be liable for investor losses in these projects.

If you wish to discuss your investment in REITs or other real estate investments offered by representatives of banks or brokerage firms or have questions about securities fraud and want to know if you have a case, please contact us at (727) 461-7474 or visit our Investor FAQs page and fill out the Do I Have a Case form at www.colemanlaw.com.

For more information about Securities fraud, or estate planning, particularly if you are in Clearwater, Palm Harbor, Tarpon Springs or the Tampa Bay, Florida area, go to our website www.colemanlaw.com.