Revocable vs Irrevocable Trusts: What You Need to Know

As you move into the latter stages of life, you want to know where your resources will end up when you pass away.

Setting up a trust is an extremely common way to do this, and it can help ensure that your life’s savings will end up in the right hands.

Here are a couple of types of trusts you should know about, revocable and irrevocable trusts.

Revocable Trusts

A revocable trust is one that is changeable after it is made. Being able to change a provision or two in your trust might be a good option if you have any serious relational issues with your beneficiaries. 

Additionally, you can decide to entirely rework the trust if you find that its provisions are not the way you would like them to be later in life. A large positive for people who choose a revocable trust is that you can adjust if your mental health suffers in old age. 

This is a concern for many people. If you have a specific illness already, or your family has a history of mental decline in old age, you may want to consider a revocable trust. That way, you can pass your assets on to a trusted beneficiary when the time comes.

Finally, revocable trusts do not require probate. Probate is essentially the process of bringing your beneficiaries to court and verifying the dispersion of your estate. If you would rather not put your beneficiaries through those legal proceedings, a revocable trust will not force you to. 

Irrevocable Trust

An irrevocable trust is one that is not changeable after it is made. So, once the grantor has finalized the paperwork, you cannot change it.

That means forever, so make sure to choose wisely. There are a few ways that people use irrevocable trusts in order to benefit themselves in other ways. 

One of those ways is an estate tax reduction. Removing the value of your property from your estate by issuing an irrevocable trust can help your beneficiaries avoid paying taxes on property when you pass. 

Additionally, placing assets into an irrevocable trust essentially sets them aside from the hands of creditors and the like. In this way, your assets are still passed down to your family when you pass and they are not liable to be used in any way other than is listed in the trust. 

This is because, in a sense, one gives up ownership of assets when they place them into a trust. Those assets are held unconditionally until the grantor passes, at which time those assets will be granted to the beneficiary.

Want to Learn More about Revocable vs Irrevocable Trusts?

Understanding revocable vs irrevocable trusts is essential if you plan to use one of them in securing your assets. There is a lot more to learn that is not listed in this article, though. 

Visit our site to learn more about planning for your estate. 

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Estate Planning Essentials: Types of Trusts and When to Use Them

Most people do not have a clear understanding of the different types of trusts and how they can affect your estate when you pass.

It is important to get some fundamental knowledge of trusts before you start making decisions about where your assets will go.

We are going to give a rundown of the four essential types of trusts and when you should choose them for your estate.

Understanding Types of Trusts

There are four primary types of trusts that we will cover here: living trusts, testamentary trusts, revocable trusts, and irrevocable trusts.

A trust can hold two of those titles, as living and testamentary trusts refer to the state of the trust once it is created, and the accessibility of the trust applies to the other terms.

Living Trusts

Living trusts are those that become effective immediately after being created. 

That does not mean that the beneficiary will have access to those assets, though. The accessibility of those assets will be laid out in the terms of the trust. 

One perk of living trusts is that they do not require probate when they are dispersed.

Testamentary Trusts

Testamentary trusts are not effective until the grantor dies. These trusts are typically created in conjunction with wills. This poses issues of privacy, as wills are public documents.

They are relatively easy to set up in comparison to living wills because they are created at the same time as a trust and exist within that context. 

Additionally, testamentary trusts give you the ability to make adjustments. While adjusting a trust or a will can be costly and difficult, there may be a chance to do so.

Revocable Trusts

Revocable trusts are those that have the ability to be amended and changed before the grantor dies.

People often take the option of revocable trusts in order to make adjustments, should their mental health decline in old age. Additionally, if any life changes occur that affect one’s decision to name individuals in their trust, they will be able to make those changes.

Irrevocable Trusts

Irrevocable trusts are unable to be changed after they are in place. So, once the paperwork is done, the assets are in the hands of the beneficiary and cannot be accessed until the grantor’s death. 

That rule is unflinching in most cases. Despite one’s best efforts, the chances of changing an irrevocable trust are minimal at best. There are some good reasons to choose this kind of trust, though. 

These reasons are primarily tax-related. You can significantly reduce estate taxes by using an irrevocable trust.

Interested in Learning More?

There is more specific information available on the different types of trusts. It is important that you do more research before you make a decision. 

If you are interested in finding more of that information and making a confident decision, visit our site to learn more. You can also contact us if you are ready to start discussing estate planning services. 

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How Did I Miss That? 5 Common Mistakes When Writing a Will

Despite the importance of estate planning, a majority of Americans seem to neglect it. In fact, 60% of American adults do not have a will.

Having more than enough to worry about already, many people do not want to add their mortality to their list of concerns. But writing a will can help you take good care of those you love, protect your assets, and prevent future disputes.

But just creating a will is not enough. You need to take the necessary measures to avoid common pitfalls that make your will legally sound.

Avoid these five common mistakes when writing a will.

Only Planning for the End of Life

A legal will should not just cover what will happen when you die. It should also articulate what should happen while you are still living.

To achieve this, you will need to create a living will as well as the last will and testament form.

The living will outlines your health care wishes while you are still alive. The last will and testament form gives your directives on estate inheritance after your death.

When drafting a living will remember to include advance directives.

Failing to Update Your Will

Making a will is not something you do once and forget about it. You need to update your will according to significant life changes.

Failure to do this can result in unintended inheritances and gifts, leaving your estate in a big mess.

Ignoring the Law

Each state has different legal requirements for creating a will. So before writing your will, familiarize yourself with your state’s stipulations for creating one.

Specifically, find out your state’s restrictions and requirements on matters such as; the number of witnesses required, selection criteria for witnesses, age, and notarization.

Failing to Name an Executor

An executor is a person responsible for ensuring that your will is followed to the letter. In your will, you should include the name of this individual/entity.

But before you select an executor, it is essential to get their permission. This is not something you would want to be a surprise.

Additionally, consider selecting a second executor. In case the first executor is unable to carry out their duties for whatsoever reason; the second executor will fill in.

Including Burial Wishes in the Will

Including your burial instructions in your will is not ideal, as wills are typically read several weeks after the funeral. As such, your burial instructions might be read too late, and this can leave your loved ones stressing about not observing your last wish.

To avoid this, write your burial instructions in a separate letter and tell your family where to find it.

Who to Trust When Writing a Will

Considering these potential pitfalls, writing a will can be a little bit tricky without a helping hand.

If you do not know how to write a will, Lilac City Law is here to help. We take our time to get to know you, your goals, and circumstances. This way, we can help you protect your assets better and secure the future of your loved ones.

Whether you want to create a will or maximize the effectiveness of the one you have already created, our experts will ensure that your last wishes are fully observed.

Contact us today to get started!

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Not a DIY Job: Why You Need an Attorney to Write a Will

About 60% of Americans do not have a will or a living trust.

Granted, thinking and planning for the end of life is not something anyone would be enthusiastic about. So, while most people know they should, they wait until later to write a will.

Unfortunately, the decision at most times is put off until it is too late. In fact, 55% of Americans die without ever having had a will.

Why Do You Need a Will?

If you pass away or become incapacitated without writing an enforceable will, your loved ones might be tied in the legal system battling for your property long after you are gone.

It also means that how you want your property divided or your remains disposed of is left in the hands of other people.

To avoid this, it is best to draw up a will as early on as possible and revisit it as necessary.

DIY vs. Legal Expert to Write a Will

First things first; do you need to pay a lawyer to draw up your will, or can you DIY?

The internet is awash with how to do wills, complete with templates, and so on. So yes, it is possible to do your own will. The most important question is this: should you?

And if you do, will it be valid and enforceable in a court of law? Hiring a lawyer ensures that what you want is captured accurately because you will not be there to speak for yourself.

Here are three top reasons why you should let your attorney oversee this process.

1. Will vs. Estate Planning

A will is easy to DIY. However, hiring an estate planning lawyer to advise and oversee your estate planning is indispensable.

An estate plan is a detailed document that prepares for your death or disability.

This document will encompass your will, healthcare power of attorney document, financial power of attorney, and disposal of your final remains, among other things.

2. Legal Terms Can Be Your Undoing

You want your will to be interpreted exactly as you thought it out in your head. However, the words and phrasing you use can later be misinterpreted—intentionally or unintentionally.

Further, the various governing bodies and state regulations are fluid and are not easy to understand and keep up with.

However, this is an attorney’s job, so they are well-versed with phrasing, legal terms, and new regulations. When you bring a lawyer on board to handle your will, you are giving yourself the best chances of your will being enforced the way you want it.

3. Objectivity

A lawyer functions as a neutral party when drawing up a will. It is not uncommon for people to rush into doing a will after major fallouts where the main aim is to disinherit someone.

In such cases, your attorney can be objective and advise on this.

They are also able to look into the future outcomes of the decisions you make now. For example, an attorney can advise how to hold money or place it in a trust until the beneficiaries fulfill specific requirements.

They can also advise on who the executors should be so that, again, your wishes are honored after your passing.

The Verdict

All in all, you want not only to have your last wishes fulfilled, but you also want your family to have a sense of normalcy as soon as possible after your passing. When you write a will, this is achievable.

Would you like to talk to someone about drafting or amending an existing will? Contact us, and we will be happy to hold your hand through the process.

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You Asked, We Answered! 4 Common Questions About Estate Planning

When you think about estate planning, what do you think of first?

Probably death and older people.

While estate planning is not the most exciting thing to think about, it is necessary to make sure your children and family members are taken care of and your assets get distributed according to your wishes.

Do not get overwhelmed by the estate planning process. Do your research and hire a reputable estate planning attorney to walk you through the process.

This article will get your research started with 5 of the most common estate planning questions.

1. Who Needs Estate Planning?

Your estate consists of all of your assets at the time of your death. Assets could include real estate, cash, personal property, IRAs or other retirement accounts, investments, and life insurance plans, among others.

Anyone who has any assets needs estate planning, not just the wealthy as many people believe. If you want to make sure your estate gets distributed according to your wishes, you need estate planning.

Estate planning can also help avoid large inheritance taxes and set up financial assistance for one of your beneficiaries who may need guidance in managing their inheritance.

2. When Should I Start Planning My Estate?

Probably earlier than you think. Experts agree that you should start estate planning in your 20s.

Even though you might be broke, you can at least make a plan, identify a decision-maker, and prevent your family from having to go through a lengthy probate process for your small amount of assets.

3. What is the Difference Between a Will and a Trust?

There is a difference between a will and a trust. A will is a legal document specifying how your assets are distributed after your death. You are able to revise it as often as you want during your lifetime.

On the other hand, a trust not only specifies where your assets go, but it also dictates when your beneficiaries can access them.

A trust can be either revocable or irrevocable. Like a will, you can change a revocable trust at any time during your life. An irrevocable trust means that you give up any rights to revise the trust after you create it.

4. What is Probate?

Probate is the process of legally authenticating the will. All of the assets must be located, creditors must be identified, and beneficiaries must also be located.

Before any of the assets get distributed, they all must be located and verified and outstanding debts must be paid. Only then can the beneficiaries receive any distribution of assets.

With estate planning, you can avoid the lengthy probate process.

5. Do I Need an Attorney?

Yes. Do not try to go through the estate planning process alone. An estate planning attorney can help you avoid the common mistakes made when people try to plan their estates on their own.

Estate Planning: Do not Delay

You are not too young to think about estate planning. As uncomfortable as it might be, it is all about taking care of those you love. Do them a favor and plan your estate now, so they do not have to worry about it when you pass and they are grieving.

Our firm will help you with the entire estate planning process. Contact us today for an individualized plan for your estate.

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Protecting Your New Additions: Estate Planning Tips for Parents

Bought the stroller? Check. Purchased a year’s supply of diapers? Check. Sorted your will?…

Yes, that is what we thought.

In the excitement of having a baby, we often forget to plan for the unexpected. Luckily for you, we have four estate planning tips to help you do precisely that.

Let’s dive in.

Appoint a Power of Attorney

When there is a newborn on the scene, it is essential you and your partner execute a power of attorney. So, if something awful happens to you, someone you trust is able to access the funds they need to care for your child.

This same person will also make health care decisions on your behalf while you are temporarily or permanently disabled.  

Guardian 

If for whatever reason both parents are not around anymore, your child will need a guardian to look after them during your absence. 

In layman’s terms, a guardian is just someone who is given custody over your child. 

Top Tip: It is imperative to check with the potential guardian first whether they are happy to undertake this huge responsibility. Yes, it is a massive compliment, but it is also a burden.

The role of a guardian slightly differs from a trustee; this is someone who has control over your child’s finances. 

Make Your Wishes Clear

If you sadly pass away without a will, your estate is equally split between your spouse and your kids (by default). 

It is common for parents to want the other parent to have the entirety of their funds once they are deceased. If you fall into that camp, you will need to make this wish very clear in your will.

Once more, minors cannot own property. So, if you are planning on leaving real estate to your children, you need also to detail the age they are permitted to access your former estate. 

Review Your Life Insurance 

In the unfortunate event you pass away while your children are still young, life insurance is essential. This is the only way to guarantee they will receive sufficient funds after you are gone.  

If you have not purchased life insurance yet, consider how much money you think your family will need. That is in addition to how long you think you will need a life insurance policy (as horrible as that is to contemplate!)

Unfortunately, this is something you will need to consider as you decide whether to take insurance that covers a set period or a policy that lasts the duration of your lifetime. 

Once you have taken both these factors into account, you will be in a better position to purchase appropriate coverage. 

Did You Like These Estate Planning Tips?

We hope you found the above estate planning tips useful. If you have any questions on the subject or need help with creating a will and settling your estate, please feel free to reach out and contact the friendly team here at Lilac City Law. 

We are always happy to help. No question is too big or too small for us. Get in touch with us today!

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What Millennials Should Know About Social Security Disability

Accidents happen when you least expect them. One day, you are healthy and active, and the next you can be down and injured. Since accidents are unpredictable, social security disability is the protection you should learn more about.

Every age group, if they are working, deserves to have a backup plan. As a younger generation, millennials need to educate themselves about what is available.

What Is Social Security Disability?

This particular disability plan is a form of financial help that is sponsored by the government in the form of contributions from every taxpaying citizen. There are options for both short-term and long-term disability. These programs both have qualifications and eligibility standards that must be met.

If you work a regular job in the United States, you contribute to this form of disability coverage at some level. States require your employer to pay a certain amount based on your gross income before you even receive your paycheck.  

Paying into Social Security Disability

Every time you receive a paycheck, certain state deductions are made automatically. One of these goes towards disability insurance. Just because you pay it does not mean you automatically receive it at the drop of a hat, but it does give you access once approved.

You can find out how much you have paid into this financial protection by reviewing your pay stubs and getting year-end reports. When you file your taxes each year, this is a number that will show up as you put together your financial summary.

Applying for Disability Assistance

If you find yourself in the unfortunate circumstance of suffering a medium to long-term injury or illness, you are most likely worried about income. Depending on how long it takes to recover, you may be unable to earn a paycheck for a while.

You will want to start the disability insurance process since it is going to take some time. The Social Security Administration will review your previous income, what you have contributed and the extent of your current injury.

If then, the SSA decides you meet qualifications, you will be assigned a certain amount of money each month. It is not necessarily broken down by how much you have paid in.  Many other factors are also taken into consideration.

Make Plans for Future Injury Protection

It is important to plan for accidents and injuries and keep yourself financially protected. No one wakes up and decides they are going to ruin their future earning potential on purpose.

However, if that happens to you, then you need to understand how social security disability can help. 

Talk to our team and see how we can help you!

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What Is a Durable Power of Attorney? | Spokane, WA

A Power of Attorney designation gives someone the right to make decisions on your behalf in a number of different matters.

A Durable Power of Attorney allows for that decision-making to continue, for the designated medical and financial issues that it covers after you become incapacitated or are mentally unable to think for and act for yourself.

Here is a further breakdown of how a durable power of attorney works in practice.

Power of Attorney Over Medical and Healthcare Matters

A medical Power of Attorney allows you to make decisions about a person’s medical needs and healthcare. In practice, the Durable Medical Power of Attorney will allow you to continue to make those decisions, even if the person is no longer mentally competent or stable enough to make the necessary decisions on their behalf. For instance, the Durable Medical Power of Attorney might enable you to you decide on the type of care to provide a person who is in a coma, up to and even including, enacting a do not resuscitate request on their behalf. 

Not all medical POA’s concern life or death decisions, however.  In addition to making decisions concerning medical care, you will also be able to make decisions concerning long-term or palliative care. For instance, due to age or disability, if the person who is ill, incapable, or injured is no longer able to choose the type of facility where they would like to go, it will be up to you to determine which facility best suits their needs and will provide them with the type of care they need to be comfortable and secure. 

Power of Attorney Over Financial Matters

In contrast to a Medical Power of Attorney, a Financial Power of Attorney enables you to make decisions concerning the finances and accounts of the person who granted you the authority. You will be able to make decisions when it comes to paying bills, authorizing specific changes to financial accounts, and making sure all financial obligations are met as necessary.

As a Financial Power of Attorney, you will also be enabled to establish trusts and other accounts to care for the individual’s family and children. You can also create an account that will be used to cover any final expenses that may not have been previously accounted for.

As Financial Power of Attorney, it will be up to you to account for any money you spend while you are performing your duties.

General and Durable Power of Attorney

Whereas the previous sections covered the scope of various powers of attorney, this section speaks to the nature of the tool.  There are two types of powers of attorney to cover

General Power of Attorney

The designation can be revoked at any time if you no longer feel you need it. If you prefer, you can also place an expiration date on the document so it will cancel automatically. The authority associated with a Power of Attorney document will end when you die. A Power of Attorney designation will also terminate if you become mentally unable to care for yourself.

Durable Power of Attorney

This is where a Durable Power of Attorney is beneficial. A Durable Power of Attorney remains in effect no matter what your mental capacity is.

Let Lilac City Law Help You with Your Power of Attorney Designation

The team at Lilac City Law will explain what a Durable Power of Attorney is and how it affects you and your family.

Both medical and financial Power of Attorneys can be designated as “Durable” so that decisions can be made on your behalf any time the situation arises. When you plan your estate or are writing your Last Will and Testament, including a Durable Power of Attorney is extremely beneficial. Because both medical and financial POAs are separate, they can be granted to two individuals, or you can give one person control over both areas.

Whether you choose to offer a Power of Attorney for a specific amount of time or for an indefinite period, you can rest assured your wishes will be followed and your family will be taken care of.

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How Do I Go About Setting Up a Trust? | Spokane, WA

People often think a trust is set up only by rich people, but that is not the case. Many people set up trusts, and the reasons are varied.

While some people set up revocable trusts to help with taxes, the majority of trusts are set up by people who want to make sure their assets go exactly where they want when they die.

Others want to set up trusts to provide assets for children, grandchildren, or others, but they want that money held for a specific purpose. These are only a few of the reasons.

Whatever your reason for considering setting up a trust, you may think it is complicated. We are here to help you understand how easy it is to set up a trust.

There are three main steps to consider.

Do You Need a Trust?

This is a question that you need to ask. In many cases, you can divvy up your assets in a will. Unfortunately, wills are sometimes subject to long probate periods, and a trust is not.

Think about what you would like those you are setting up the trust to have. Is it for something like college tuition, the purchase of a first house, or maybe to be used for a dreamed-of trip? These are all great reasons to set up a trust as you can specify what it is to be used for.

Another reason you might want to consider a trust is if you want someone, say your grandchild, to have what you are giving, but do not want their parents to take it for their use. And yet another example would be if you have a beloved pet that will outlive you and want to make sure it is taken care of properly when you are gone; you can set up a trust to provide a means for its future care.

If you decide a trust would be perfect for your situation, you then go on to the next step.

When Do You Want the Trust Distributed?

Sometimes, you may want to put stipulations on when the trust will be released to the intended recipient.

Maybe you want to have it released as soon as you pass. Alternatively, perhaps you want your grandchildren to reach a specific birthday, such as the age of 30; or reach a milestone, such as getting married or graduating from college; before the trust is released. You can make any stipulations regarding the trust you feel is appropriate. Doing this gives you a greater sense of peace knowing your assets will not go to something you would not approve of or be frittered away on trivial things.

Who Is Entrusted to Hold and Then Distribute the Trust?

Lastly, you need to choose a trustee. This is someone who will keep your trust safe until it is turned over to the benefactor. You want someone you can trust entirely with the management of the trust. They need to be financially smart, trustworthy, and preferably, someone who knows you well enough to understand your conditions.

While some people entrust this position to a relative or close friend, many go through a trust company or bank. If you do choose an individual, you will want to make provisions in case that person should not be able to carry out their duties due to circumstances such as death. With an institution, you will not have to worry about succession.

Let Us Help

If you are looking to set up a trust or need more information on the legal aspects of doing so, we here at Lilac City Law are ready and eager to help.

We want those who come to us to leave feeling that they have been heard and understood. We will work with you to help you set up the kind of estate plans that you are most comfortable with.

Contact us at any stage of your estate planning, and let us help take the stress and confusion out of the process.

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What Are the Duties of a Guardian?

A guardian is appointed by you or a judge to make sure your children are adequately cared for if you pass away or no longer can perform your duties.

In essence, it is up to them to provide the child with the same necessities and privileges that they would expect to receive if you were still present in their life.

In most cases, appointed guardians are family members who already have an established relationship with the child, but close family friends can also be a good choice.

Regardless of who you would choose to take over short term guardianship of your children, or even permanent guardianship, there are several things you will need to think about in selecting someone appropriate.

Your Guardian should Provide Proper Care for Your Children

One of the primary tasks assigned to a guardian is to provide proper care to the child. This responsibility includes making sure that all of their medical needs are met (physically, mentally, and emotionally).

A guardian will be in charge of maintaining your child’s basic well-being, including activities that further their development and growth, including sporting events, extracurricular activities, and other events that provide the child with the same type of experiences that they may have received if you were present.

The terms proper care and maintenance commonly refer to all activities or practices that are employed during the raising and caring of a minor child.

A Guardian Needs to be Able to Provide the Necessities

A guardian is also charged with providing for all of the child’s necessities. These necessities include providing food, shelter, clothing, and any other items that may be needed. Of course, most people consider a loving home and ample opportunities to succeed as necessities as well.

If the appointed guardian cannot provide these things themselves, they must find a home that is suitable to offer those in their care. This can be a facility or the home of a close family member who knows the child and is willing to take on the responsibility of raising and caring for them daily.

In many cases, the guardian that is named by the parents (or appointed by the court) will personally take on the task of raising and caring for the child.

A Guardian’s Duty: Meet Educational Requirements

One of the most important parts of a guardian’s duties is to ensure that the child’s educational needs are met. These educational needs include both attending school and other extracurricular activities that are associated with the learning process. They can also involve hiring tutors and providing instruction in various forms outside of a school setting such as piano/guitar/violin lessons or athletic training.

It is up to the guardian to ensure that the child is offered the opportunity to attend secondary school and learn a trade or profession that allows them to become self-sustaining and successful adults. A guardian’s duty in this aspect is not fulfilled until the child becomes an adult and can legally care for themselves under the scope of the law.  Essentially, the guardian would support the child’s education needs as if they were their own child.

Work with a Reputable Attorney to Protect Your Family

If you have a minor child or children, it is essential that you take the necessary precautions and include specific instructions as to how your child is to be cared for and by whom if something were to happen to you.

At Lilac City Law we will help you make the best possible decisions when it comes to choosing the right guardian for your child. We will explain the duties that a guardian is expected to perform. We will also go over the full scope of your kids’ protection planning. 

Do not leave the future of your family up to chance, start planning ahead, today!

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