Category: Trust Planning

Trust Lawyer in Houston Answers, “What is a Trustee?”

When you work with a trust lawyer in Houston to set up a trust, you will be asked to name a trustee. Before you can select someone for this important job, you need to fully understand the role and responsibilities this person will be given.

A trustee is the person who will manage the assets that are in your trust. Many people choose to be their own trustee and can continue to manage their affairs as normal. Married couples can be named co-trustees. In that case, when one dies, the other can continue to make financial decisions without any other legal steps needed.

You can also name a successor trustee. A successor trustee is the person who will take over your decision-making if you (or the co-trustee) are no longer able to do so. In some cases, several successor trustees are named in case the previous one is unable to serve. In other cases, people choose to select two or more adult children who will act together. Some people choose a completely unbiased corporate trustee, usually a bank or trust company, who will take over decision-making.

The following list contains some of the responsibilities that are required of a trustee:

  • Make decisions regarding assets in your trust. This typically involves managing the trust investments, property and making decisions that are in the best interest of the trust beneficiaries. Assets must also be managed according to the terms of the trust and governing law.
  • Keep detailed records for all of the trust transactions.  All transactions need to be accounted for by maintaining a record of receipts and other documentation.
  • Comply with all federal and state law requirements. It is critical that a trustee follows the terms of the trust documents and the trust creator’s instructions. Additionally, a trustee is responsible for complying with federal and state laws, meeting any reporting requirements, and filing federal and state taxes.

Administering a trust is often complicated and confusing. The trustee not only has to manage the details of the trust, they are also dealing with emotions and conflicts that can arise among the beneficiaries of the trust. That is why many trustees contact us to assist. We can help you avoid all of this by walking you through the entire trust administration process. Doing so will relieve you of tremendous stress and might help you avoid litigation brought on by unhappy beneficiaries.

Complete a Complete Estate Plan

When it comes to planning, the focus is typically on making you better prepared for the future. That means limiting taxes, creating wiser investment strategies, knowing when it’s best to claim Social Security and developing sustainable retirement income plans. All of these help you on the path to your financial future and your long-term goals. But The Brainerd (MN) Dispatch reports in “3 common estate planning questions, answered,” that there is, however, one exception. That’s estate planning. While much of financial planning primarily benefits you, your estate planning primarily benefits your family and loved ones. 11-14-16

The basic component of your estate plan is your will but there may be other parts you need. Depending on your estate, you may want to consider a trust, in addition to healthcare directives, powers of attorneys and guardian designations. You should also remember that your will isn't necessarily the only instruction when it comes to distributing your assets. The beneficiary designations on your retirement and brokerage accounts, and the life insurance policies you own will take precedence over what you say in your will. Review beneficiary designations regularly to be sure the money in your accounts or the death benefit on a life insurance policy goes to the right person.

A trust can be complicated, so talk with an estate planning attorney to see if it makes sense and whether you'll actually benefit from using a trust. If most of your assets are covered by beneficiary designations or owned in joint tenancy, those assets are already exempt from probate, so they won’t necessarily benefit from a trust strategy.

The executor or the personal representative is the person who will be responsible for carrying out the instructions in your will, settling your debts and paying taxes on your estate. As far as selecting an executor, it should be someone with the capacity to carry out the needed tasks of the position. It also needs to be someone who is willing to serve and is familiar with your situation such as a family member or a close family friend.

If you don't spend every last dollar you have to your name on the day you die, you'll need to have an estate plan. Speak with an experienced estate planning attorney to develop one.

Reference: The Brainerd (MN) Dispatch (Sept. 23, 2016) “3 common estate planning questions, answered”

How Not to Do It: Spending the Inheritance on Royal Souvenirs and Strippers

For the Scripps family, who were heirs to a media fortune, they simply spent their millions. According to an article on CNBC.com, “The Greed Report: Not a billionaire? You still need an estate plan,” they took luxury cruises around the world and family outings to strip clubs. 11-10-16

Melissa Scripps bought Queen Elizabeth II's coronation chair and Queen Victoria's nightgown. Like his mom, son Michael liked to buy war memorabilia and guns. Oh, and he married a stripper.

When the well ran dry, the family started to fight. Mother and son turned on each other, one family member went to prison and tarnished a name once associated with entrepreneurship and philanthropy. This tragedy provides some lessons for the rest of us.

Everybody needs estate planning in some form or another—it doesn't need to be complex in many situations but everyone needs a plan, even those with social problems, financial problems and marital problems.

A good estate plan will consider all of those problems and keep your assets in the family and away from the government and taxes.

Estate planning doesn’t have to be complex or expensive. Estate planning is sometimes 95% social work and 5% legal, some attorneys say. The legal part they know—it's the social part that takes time. The Scripps family probably should have spent more time on the social part as well: Melissa Scripps' attorney said that at the time she inherited the family fortune, she had never held a real job and only had a high school education.

Maybe some more estate planning might have prevented the Scripps’ century-old legacy from turning into a gigantic family feud.

Reference:  CNBC.com (Sept. 22, 2016) “The Greed Report: Not a billionaire? You still need an estate plan”

Celebrity Estate Panning Leaves a Lot to Be Desired

One would think that big stars like Prince would have a team of high-powered advisors, compared to the average Joe and Jane. But that isn’t so, says CNBC in the recent article “Don’t make these celebrities’ estate-planning blunders.” 11-08-16

Celebrities make the same mistakes. Here are a few:

Mistake #1: No Will. Nearly two-thirds of Americans don’t have a will. This has included the likes of Abraham Lincoln, Prince, Sonny Bono, Jimi Hendrix and Pablo Picasso. Dying without a will can mean numerous potentially disastrous consequences, like your assets not being distributed to those you intended or family in-fighting. The state intestacy laws apply and they are rigid regarding who gets what share of the estate. And without specific instructions from the deceased, an estate may be fought over in court by family members who think they deserve their fair share.

Mistake #2: No Current Will. Signing a will is just the beginning: you need to regularly update your estate planning documents and beneficiaries when your financial and personal situation changes. Look at singer Barry White. He was separated but not divorced from his second wife at the time of his death. As a result, his wife got everything. White’s live-in girlfriend of several years got zero.

Mistake #3: No Tax Plan. Even if you’re not ultra-rich and your wealth is well below the federal estate tax threshold of $5.45 million per person this year, there may be state estate taxes. Poor planning could force your heirs to sell valuable or sentimental items because there are insufficient liquid assets to pay the tax. Joe Robbie’s family sold its stake in the Miami Dolphins and Joe Robbie Stadium to pay estate taxes.

Mistake #4: No Reference to Personal Property. Comedian Robin Williams’s family has battled over his film memorabilia. And Martin Luther King Jr.’s kids fought over his Bible and Nobel medal. People forget about personal property in their estate planning, which can trigger lots of fights over who gets family heirlooms, collectibles and Dad’s Barry Manilow record collection. Be specific with descriptions.

Reference: CNBC (Sept. 17, 2016) “Don’t make these celebrities’ estate-planning blunders”