Trusts: The Swiss Army Knife of Estate Planning

Asset Protection, Estate Planning, Irrevocable Trust, Special Needs Trust, Trusts / Asset Protection, Beneficiary, Estate Planning Attorney, Grantor, Settlor, St. Petersburg Estate Planning Attorney, Trustee, Trusts

Trusts serve many different purposes in estate planning. They all have the intent to protect the assets. The type of trust determines what those protections will be, and from whom assets are protected, says the article “Trusts are powerful tools which can come in many forms,” from The News Enterprise. To understand how trusts protect assets, start with the roles involved.

The person who creates the trust is called a “grantor” or “settlor.” The individuals or organizations receiving the benefit of its property or assets are the “beneficiaries.” There are two basic types of beneficiaries: present interest beneficiaries and “future interest” beneficiaries. The beneficiary, by the way, can be the same person as the grantor, for their lifetime, or it can be other people or entities.

The person who is responsible for managing the property within the trust is the “trustee.” This person is responsible for overseeing the assets and following the instructions in the document. The trustee can be the same person as the grantor, as long as a successor is in place when the grantor/initial trustee dies or becomes incapacitated. However, a grantor cannot gain asset protection through a trust, where the grantor controls the assets and is the principal beneficiary.

One way to establish asset protection during the lifetime of the grantor is with an irrevocable trust. Someone other than the grantor must be the trustee, and the grantor should not have any control over the assets. The less power a grantor retains, the greater the asset protection.

One additional example is if a grantor seeks lifetime asset protection but also wishes to retain the right to income from property and provide a protected home for an adult child upon the grantor’s death. Very specific provisions within the document can be drafted to accomplish this particular task.

There are many other options that can be created to accomplish the specific goals of the grantor.

Some trusts are used to protect assets from taxes, while others ensure that an individual with special needs will be able to continue to receive needs-tested government benefits and still have access to funds for costs not covered by government benefits.

An estate planning attorney will have a thorough understanding of the many different types of trusts and which one would best suit each individual situation and goals.

Reference: The News Enterprise (July 25, 2020) “Trusts are powerful tools which can come in many forms”

Why Did a Georgia Woman Try to Trick a Judge Concerning Her Son’s Special Needs Trust?

Estate Planning, Special Needs, Special Needs Trust / Conservator, Disability, Scam, Special Needs Trust, St. Petersburg

A Georgia woman surrendered to the Gwinnett County Detention Center recently and remains behind bars without bond on charges of perjury, forgery, identity theft, theft by deception, criminal solicitation and exploitation of an at-risk adult.

Yvonne Longmire’s son, 20-year-old Lee Earnest Longmire, is still missing. He has been declared a ward of the state but his guardian at the Georgia Division of Family and Children Services has not seen him or cared for him.

11alive.com’s recent report, “Mother accused of trying to swindle special needs son out of trust fund turns herself in,” says that Yvonne Longmire and her attorney informed the police that Lee is “okay” but haven’t divulged his whereabouts or cooperated in turning him over to DFCS, as ordered by the state. The attorney told police that a doctor signed off on Lee’s recovery, stating he had become higher functioning. The man has special needs and has not been seen in years. His mother is accused of attempting to scam him out of his trust fund.

“Obviously, there are different interpretations of what OK is. We need to make sure that he’s OK to the standards set forth by the state,” Gwinnett Police spokesperson Wilbert Rundles said.

Yvonne Longmire is accused of hiring another man, 23-year-old Maurice Ford from Atlanta, to take her son’s place in court to convince a judge that he no longer needed a conservator over his trust fund, which is valued at $200,000. However, before the funds could be withdrawn and given to Yvonne, the former conservatory attorney and his paralegal became suspicious and called the police.

According to the police report, Yvonne provided a driver’s license to the attorney, who acted as Lee’s conservator, but he said the picture didn’t look like Lee. The paralegal found a photo of Lee on Facebook, and the two confirmed it wasn’t the same person.

But one of Lee’s old teachers also saw the driver’s license and said it was him, according to the police report.

Maurice Ford was arrested in Phoenix, Arizona and is currently awaiting extradition to face charges in Georgia. In the meantime, the search continues for Lee.

“Our primary focus is his safety,” Rundles said. “We care about his well-being, we care about his safety and we want the people that are going to be able to take care of him to provide him care or put him in a long-term care facility, where he can be cared for by someone who does have his best interests at heart.”

Reference: 11alive.com (March 5, 2019) “Mother accused of trying to swindle special needs son out of trust fund turns herself in”

Using Trusts to Maintain Control of Inheritances

Estate Planning, Inheritance, Special Needs Trust, Trustee, Trusts / Beneficiary, Income Only Trust, Inheritance, Special Needs Trust, Spendthrift Trust, St. Petersburg, Trust, Trustee

Trusts, like estate plans, are not just for the wealthy. They are used to provide control in how assets of any size are passed to another person. Leaving an inheritance to a beneficiary in a trust, according to the article from Times Herald-Record titled “Leaving inheritances to trusts puts you in control,” can protect the inheritance and the asset from being mishandled.

For many parents, the inheritance equation is simple. They leave their estate to their children “per stirpes,” which in Latin translates to “by roots.” In other words, the assets are left to children according to the roots of the family tree. The assets go to the children, but if they predecease you, the assets go to their children. The assets remain in the family. If the child dies after the parent, they leave the inheritance to their spouse.

Some beneficiaries need more protection than others.

An alternative is to create inheritance trusts for children. They may spend the money as they wish, but any remaining assets goes to their children (your grandchildren) and not to the surviving spouse of your child. The grandchildren won’t gain access to the money, until you so provide. However, someone older, a trustee, may spend the money on them for their health, education and general welfare. The inheritance trust also protects the assets from any divorces, lawsuits or creditors.

This is also a good way for parents, who are concerned about the impact of their wealth on their children, to maintain some degree of control. One strategy is a graduated payment plan. A certain amount of money is given to the child at certain ages, often 20% when they reach 35, half of the remainder at age 40 and the balance at age 45. Until distributions are made to the heirs, a trustee may use the money for the person’s benefit at the trustee’s discretion.

The main concern is that money not be wasted by spendthrift heirs. In that situation, a spendthrift trust restricts payments to or for the beneficiary and may only be used at the trustee’s discretion. A lavish lifestyle won’t be funded by the trust.

If money is being left to a disabled individual who receives government benefits, like Medicaid or Supplemental Security Income (SSI), you may need a Special Needs Trust. The trustee can pay for services or items for the beneficiary directly, without affecting government benefits. The beneficiary may not receive any money directly.

If an older person is a beneficiary, you also have the option to leave them an “income only trust.” They have no right to receive any of the trust’s principal. If the beneficiary requires nursing home care and must apply for Medicaid, the principal is protected from nursing home costs.

An estate planning attorney will be able to review your family’s situation and determine which type of trust would be best for your family.

Reference: Times Herald-Record (Feb. 16, 2019) “Leaving inheritances to trusts puts you in control”

Here’s Why You Need an Estate Plan

Asset Protection, Estate Planning, Guardian, Power of Attorney, Probate, Protecting Children, Special Needs Trust, Trusts, Wills / Asset Protection, Capacity, Capital Gains Tax, Conservatorship, Estate Planning Lawyer, Guardianship, Inheritance, Power of Attorney, Probate Court, Revocable Living Trust, St. Petersburg, Trustee, Wills

It’s always the right time to do your estate planning, but it’s most critical when you have beneficiaries who are minors or have special needs, says the Capital Press in the recent article, “Ag Finance: Why you need to do estate planning.”

While it’s likely that most adult children can work things out, even if it’s costly and time-consuming in probate, minor young children must have protections in place. Wills are frequently written, so the estate goes to the child when he reaches age 18. However, few teens can manage big property at that age. A trust can help, by directing that the property will be held for him by a trustee or executor until a set age, like 25 or 30.

Probate is the default process to administer an estate after someone’s death, when a will or other documents are presented in court and an executor is appointed to manage it. It also gives creditors a chance to present claims for money owed to them. Distribution of assets will occur only after all proper notices have been issued, and all outstanding bills have been paid.

Probate can be expensive. However, wise estate planning can help most families avoid this and ensure the transition of wealth and property in a smooth manner. Talk to an experienced estate planning attorney about establishing a trust. Individuals can name themselves as the beneficiaries during their lifetime, and instruct to whom it will pass after their death. A living trust can be amended or revoked at any time, if circumstances change.

With a trust, it makes it easier to avoid probate because nothing’s in an individual’s name, and the property can transition to the beneficiaries without having to go to court. Living trusts also help in the event of incapacity or a disease, like Alzheimer’s, to avoid conservatorship (guardianship of an adult who loses capacity). It can also help to decrease capital gains taxes, since the property transfers before their death.

If you have minor children, an attorney can help you with how to pass on your assets and protect your kids.

For more information about how to best protect your minor children, download a copy of Mastry Law’s FREE report, A Parent’s Guide to Protecting Your Children Through Estate Planning.

Reference: Capital Press (December 20, 2018) “Ag Finance: Why you need to do estate planning”

How Do I Set Up a Trust?

Estate Tax, Financial Planning, Grantor, Protecting Children, Special Needs Trust, Tax Planning, Trust, Trustee / Estate Planning Lawyer, Estate Tax, Financial Planning, Grantor, minor children, protecting children, Special Needs Trust, St. Petersburg, Tax Planning, Trustee, Trusts

Trust funds are often associated with the very rich, who want to pass on their wealth to future heirs. However, there are many good reasons to set up a trust, even if you aren’t super rich. You should also understand that creating a trust isn’t easy.

U.S. News & World Report’s recent article, “Setting Up a Trust Fund,” explains that a trust fund refers to a fund made up of assets, like stocks, cash, real estate, mutual bonds, collectibles, or even a business, that are distributed after a death. The person setting up a trust fund is called the grantor or settlor, and the person, people or organization(s) receiving the assets are known as the beneficiaries. The person the grantor names to ensure that his or her wishes are carried out is the trustee.

While this may sound a lot like drawing up a will, they’re two very different legal vehicles.

Trust funds have several benefits. With a trust fund, you can establish rules on how beneficiaries spend the money and assets allocated through provisions. For example, a trust can be created to guarantee that your money will only be used for a specific purpose, like for college or starting a business. And a trust can reduce estate and gift taxes and keep assets safe.

A trust fund can also be set up for minor children to distribute assets to over time, such as when they reach ages 25, 35 and 40. A special needs trust can be used for children with special needs to protect their eligibility for government benefits.

At the outset, you need to determine the purpose of the trust because there are many types of trusts. To choose the best option, talk to an experienced estate planning attorney, who will understand the steps you’ll need to take, like registering the trust with the IRS, transferring assets to the trust fund and ensuring that all paperwork is correct. Trust law varies according to state, so that’s another reason to engage a local legal expert.

Next, you’ll need to name a trustee. Choose someone who’s reliable and level-headed. You can also go with a bank or trust company to be your trust fund’s trustee, but they may charge around 1% of the trust’s assets a year to manage the funds. If you go with a family member or friend, also choose a successor in case something happens to your first choice.

It’s not uncommon for people to have a trust written and then forget to add their assets to the fund. If that happens, the estate may still have to go through probate.

Another common issue is giving the trustee too many rules. General guidelines for use of trust assets is usually a better approach than setting out too many detailed rules.

Reference: U.S. News & World Report (November 8, 2018) “Setting Up a Trust Fund”

Trusts: The Swiss Army Knife of Estate Planning

Why Did a Georgia Woman Try to Trick a Judge Concerning Her Son’s Special Needs Trust?

Using Trusts to Maintain Control of Inheritances

Here’s Why You Need an Estate Plan

How Do I Set Up a Trust?

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