Wealth Preservation, Trusts and Estates

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If you have used a lawyer to prepare your trust, you will also find that a well structured estate plan will also contain a pour over will.

Why?

Many people pay the extra legal fees for a living trust so that they can place all of their assets into that trust and escape the need to probate a will. However, the mere fact that you have a trust does not eliminate the need for a will. In fact, a plan without a pour over will is a disaster waiting to happen.

If you have created a trust, your will is still the document that will control assets remaining in your name at the date of death. And, even if you are meticulous in changing the title and account names of all of your assets over to the trust, you may 1) miss an asset, 2) inherit or otherwise receive assets which do not get titled into the trust before your death, or 3) become involved in an accident or other lawsuit that results in an award being paid to you (or your estate) rather than your trust.

If that happens, and you do not have a will, you will then have a partial intestacy and the courts will decide where those assets go based on the Pennsylvania intestate laws.

And if you’re the type of person who wants his or her affairs to be organized so that your heirs have lower costs and simplicity, that is not a desirable result.

So what is the solution?

Make sure that your lawyer prepares both a living trust, and a pour over will. The pour over will is a simple document that instructs your executor (only if needed) to take any assets which remain in your name, and which have not been transferred into your trust prior to death, to be added to and distributed under the trust.

Simple. Inexpensive. And, your plan works.

Trust Warning For Living Trusts Purchased in The Last Ten Years:

P.S. Be sure, that if you have a living trust, that was prepared by a non attorney in the last few years, to consider having it reviewed. It may be fine. However, the Pennsylvania attorney general pursued a number of “trust mills” over the last few years who used non-lawyers – or vague references to lawyers that the consumers never saw. These trusts are often presented in customized binders but the documents themselves are very standardized and may not actually state your true intentions. To make matters worse, many of these trust documents are way too complex and might actually cost your estate money rather than save dollars.

Finally, due to a number of changes in the federal estate tax laws, your trust may be able to be simplified to remove estate tax references and techniques that you might no longer need and which might make your estate and trust costs higher for your surviving spouse or children.

You can have your estate plan reviewed by calling 610-933-8069 and mentioning this discount code for a complimentary consultation – Code: Frees2010.

David M. Frees III is a trust, estate, and estate planning lawyer with offices located throughout Chester County including law offices in Phoenixville, West Chester and Malvern.

These offices serve clients in Devon, Berwyn, Wayne, Exton and Chester Spring as well as many other communities.

David Frees is also the Chairman of the Trust, Estate, and Wealth Preservation Section of Unruh, Turner, Burke and Frees.
dfrees@utbf.com

David M. Frees III on Required Minimum Distributions and 2009 Deductions You Can Still Get

Tax Deductions and Required Minimum Distributions for 2009 and 2010 – Estate Planning Means Good Tax Planning

If you took advantage of the one year exception last year, you may not have taken a required minimum distribution from your IRA or 401(k). However, as our friend Doug MacGray reminds us in his news letter MacGray Matters, that the RMD is back.

Doug also notes that Haiti earthquake donations made this month can still be taken on your 2009 tax return.

First, the issue of required minimum distributions.

THE RMD is back: If you hold money in a traditional IRA, and you are older than 70 ½, then beginning this year (2010), you must once again withdraw your annual Required Minimum Distribution. Of course, when you make these withdraws, you are subject to tax (on traditional and not Roth IRAs).

The I.R.S. suspended the RMD rule in 2009 due to the large loses many taxpayers experienced. That was great for last year, but the RMD is back.

As your tax preparer will remind you, the RMD is determined by your age and the market value of your IRA. So if you’re 70 1/2 or above, contact your investment advisers soon to plan for this withdraw and the tax issue that will result in on your 2010 return.

Tax deductions still available for 2009:

Just as a reminder, President Obama recently signed into law an act which allows taxpayers to claim a charitable deduction for tax year 2009 for cash donations made for the relief of victims in areas affected by the January 12, 2010 earthquake in Haiti. These contributions must be made before March 1. Ask your adviser for more specifics about the eligible recipients.

Thanks to our friend Doug MacGray
Principal, Senior Vice President Financial Planning
300 Conshohocken State Road, Suite 670 | W. Conshohocken, PA 19428 | (610) 783-4265 (direct)

Hope that you had a great snow weekend and here’s to a safe return to work.
Be well.

David M. Frees III, Esquire
For an estate planning consultation or for advice concerning an estate or trust, call 610-933-8069. Mention OFFER DMFREES2010 for your free consultation.

Unruh, Turner, Burke and Frees maintains offices in Malvern, Phoenixville, and West Chester serving Devon, Berwyn, Exton, and the Western Main Line

dfrees@utbf.com