Leaving Someone Out of Your Will

Let's Talk About.......Leaving someone our of your Will.

By: Alan Orlowsky

The main purpose for executing a will is to decide exactly who will inherit your property at your death. You can leave family and friends out of your will, and there's not much they can do about it. However, some state laws don't allow you to disinherit minor children or surviving spouse.

Disinheriting a Spouse

Many states use a concept known as "elective share" to ensure that a surviving spouse isn't entirely disinherited from a will.Generally, a disinherited spouse can take between one-third and one-half of the estate, regardless of what the will says or doesn't say. Some states use a sliding scale approach and look to the number of years a couple was married to determine how much of the estate a surviving spouse can claim. In other words, the longer the marriage, the more property the surviving spouse gets.

Disinheriting Minor Children

In most states, your adult children are not entitled to any property in your estate unless you specifically name them as heirs in your will. Some states forbid the exclusion of minor children from your will, despite what you say in your will, and will award them part of your estate.

Homestead Laws

If you die before your spouse or have minor children at the time of your death, state homestead laws may preclude you from leaving a primary residence to someone else in your will. Other states may exempt certain types of property, such as your home, or provide a minimum sum of money from your estate that must go to a surviving spouse and minor children. As a result, intentionally disinheriting your spouse or child may not be wholly effective if your state has one of these laws on their books.

Clearly State Your Intention to Disinherit

If the law in your state permits you to leave a child or spouse out of your will, it may be a good idea to include a few lines in your will that names the individuals you're intentionally leaving out and the reasons why. Since your will can be contested in court after your death by people who are disinherited, including such statements can discredit any argument that you made a mistake and didn't intend to disinherit anyone.

A Trusts and Estates Lawyer can help explain the laws surrounding leaving someone out of your will. Our Firm has clients throughout the North Shore assisting with the complexity with this issue; Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact Orlowsky & Wilson to see how we can help with any questions you may have.

If you have questions about this post or about a particular legal situation, please contact Alan Orlowsky by calling 847-325-5559, or visit our website at http://www.orlowskywilson.com

Who Should I Choose as Trustees of My Trust?

Lets talk about....Who should I choose as Trustees of My Trust?      By: Alan Orlowsky

You can select an individual as a Trustee, such as a close friend or family member; or a professional Trustee can be selected such as an attorney or CPA; or you may choose a financial institution or a bank. A good Trustee should be someone who is honest and trustworthy, because they will have a lot of power under your trust document. The person you choose to act as a Trustee should also be financially responsible, because they will be handling the investments in regards to your Estate and the benefit of your beneficiaries. The Trustee should be someone who can get along and have a good relationship with the beneficiaries of your trust. They should also possess good record-keeping abilities.

In many cases, you may want to consider appointing co-trustees. A Trustee is required to abide by the terms of a trust. If that Trustee fails to do so, a beneficiary of the trust is not without recourse. One of the benefits of naming co-trustees is that they tend to hold one another accountable. In addition, most trusts will provide a way for the beneficiaries to remove a Trustee, and replace them with the next successor trustee on the list.

It is wise to name not only your immediate successor, but subsequent successor Trustees as well. An individual Trustee may refuse to accept the position, or may resign from the position due to any number of reasons. The Trustee may become disabled or die. Many clients want family members or close friends to act as successor Trustees. But since all individuals eventually pass away, it is good practice to name a bank trust department or other corporate trustee as the final successor trustee on the list. Some clients with very high net worth, or very complex assets, may name a professional or an institutional trustee from the very beginning – either as a co-trustee with a trusted family member, or serving as the sole trustee.

One of the advantages of naming a professional or corporate fiduciary is that they manage trusts professionally every day, and usually know what they are doing. They act very objectively to follow the instructions set forth in the trust document. They have investment experience and record-keeping skills. They know the law, and follow the prudent investor rule. If they make a mistake, they have errors and omissions insurance, so the trust beneficiaries have a source to recover any potential damages.

The primary disadvantages of a corporate trustee, however, are cost and the fact that they may not have a personal relationship with the beneficiaries. A family member acting as trustee may better understand the family dynamic, and make better discretionary decisions when it comes to your loved ones. On the other hand, although family members will usually serve for little or no compensation, they may not be the best choice for a Trustee. While the trust may allow for some discretion, some family members are prone to make decisions on an emotional basis. Most times, the family member is not an experienced Trustee and does not know what is required of him or her under the law. If they make mistakes, they may face the wrath (and legal action) of the beneficiaries, or the trustees may be unwilling to take action, and your plans and goals for the beneficiaries are not fulfilled. If you do choose a family member as a Trustee, it is best to train them for the responsibility before you die.

Sometimes the best solution is a combination of a professional or corporate Trustee and a family member Trustee working together as co-trustees. The family member brings knowledge of the family situation, and the professional or corporate trustee knows how to invest and maintain records.

If you have questions about this post or about a particular legal situation, please contact Alan Orlowsky by calling 847-325-5559 or visit our website at http://www.orlowskywilson.com

What are Trustees and What Do They Do?

Lets Talk about.......What are Trustees for Estate Planning, and What does a Trustee Do?
By Alan Orlowsky

Trustees are those individuals (family members, attorney, or CPA for example) or entities (such as a bank trust department) named in a trust agreement to administer the trust. Trustees are required to manage and invest trust property and to distribute the trust property to certain individuals (the beneficiaries) based upon the instructions contained in the trust. Because trusts often last for years or even decades, a well-designed and drafted living trust agreement should include different trustees for different phases of your life, and the lives of your beneficiaries, and when possible should try avoid any conflict or contested estates.

In a typical revocable living trust, you will serve as your own Trustee as long as you remain alive and well. When a joint living trust is used (a trust created by both), the couple will usually serve as co-trustees of the trust while they are both alive and well. When each spouse has their own trust, it is customary that both spouses will serve as co-trustees of each spouse’s individual living trust.

When it comes to Elder Law we are seeing longer life spans because of medical advances, the result is more people will suffer periods of disability prior to death; requiring the assistance of others to manage the trust and its assets. One or more Disability Trustees should be named in the trust document to take care of your personal affairs and assets in the event of disability or mental incapacity. It is critical that the trust document include detailed instructions for the care of both you and your loved ones in the event you become disabled.

The trust should specifically state who is a permitted trust beneficiary during your disability, and whether there is any priority for distributions (e.g., “provide for me, then my spouse, then my children, in that order of priority”). If you are using a gifting program to reduce the size of your estate, you may want that to continue during a period of disability. But a Trustee can do that only if the trust includes those instructions. You will also name one or more Death Trustees who will assume management of the trust upon your death. The death trustees are responsible for all phases of trust administration, including identifying assets, working with professional advisory (e.g., attorney, accountant and financial advisory) to prepare tax returns, and distributing the trust assets to the named beneficiaries. If assets are to remain in trust for one or more beneficiaries, the death trustees may be appointed as trustees of the beneficiary’s trust share, or other trustees may be named for that role.

If you create a “protective trust” for a child that will be funded at your death, or the death of you and your spouse if you are married, your attorney may suggest that a responsible adult child serve as a trustee of their own trust share along with a “friendly” co-trustee. This technique would allow for your child to have access to their trust assets for their needs, but can help insulate those assets against attacks by your child’s creditors, including a divorcing spouse.

A Trustee has the legal duty to carry out the directions set forth in your trust. As a fiduciary, the Trustee cannot derive personal benefit from the assets with which he or she is entrusted. If the Trustee does not follow the directions set forth in your trust, they can be subject to personal liability. Some of the duties of the Trustee include taking a complete inventory of the assets when they begin to act as Trustee; obtaining a tax identification number for the trust; determining values of the assets in the trust; investing the money in the trust for the benefit of the beneficiaries; paying expenses of the trust; preparing accounting for the beneficiaries of the trust; preparing tax returns for the trust; and distributing the assets in accordance with the terms of the trust.

If you have questions about What is a Trustee and how they can impact your Estate Planning please contact me today at 847-325-5559 or visit our website at: http://www.orlowskywilson.com