5 Things to Know About LLCs in Your Estate Plan

When it comes to protecting your hard-earned money and property, it is important that you have the right plan, which can include a number of tools for your unique situation. One tool that might benefit you is a limited liability company (LLC) that owns some of your accounts and property.

What is a limited liability company?

An LLC is a business structure that can own many types of accounts and property. The LLC is owned by members who contribute money or property to the LLC. You can have a single-member-owned LLC or a multimember-owned LLC. If there is more than one member, management of the LLC can either be carried out by each member or the members can elect a manager.

What can an LLC own?

When people think of an LLC, they assume that it is a structure to operate a business. However, many types of accounts and property can benefit from being owned by an LLC:

  • Real estate. An LLC can own property such as a second home, a rental property, or a property that has been in the family for generations.
  • Investments. In some cases, an LLC can be formed to allow multiple people to pool their money and invest it with a larger volume.
  • Expensive and risky property. An LLC can own items such as airplanes and boats.

Why should I consider using an LLC in my estate plan?

Asset Protection

Because the LLC is a separate entity, typically the LLC’s creditors can only go after the LLC’s money and property, not the member’s personal accounts or property. Also, if the proper formalities are in place, the member’s personal creditors may not be able to reach the LLC’s accounts and property to satisfy the member’s personal debts. Note: […]

2023-04-08T09:33:25-07:00April 30th, 2023|Estate Planning, FAQ|

What to Do with a Loved One’s Used Medical Equipment

After a loved one has passed away and the funeral has been held, the task of sorting through their personal belongings begins. While items with sentimental value or family historical importance may have been distributed to beneficiaries in the estate plan, many more might still be lying around the house.

The question of what to do with a loved one’s remaining possessions is one that every family faces. Some items, like trinkets and personal effects, may be given away to family or friends. Others, including medical equipment, can be sold or donated to charity. From eyeglasses and hearing aids to wheelchairs and at-home hospital beds, there are options for giving used medical equipment a second life.

Death and Decluttering

Even if somebody is careful to declutter during their lifetime, it is unlikely that they will pass away without any possessions. When somebody is dealing with an ailment or just age-related decline, certain medical items are likely to be needed right up until their final moments:

  • Elder-care or assisted-living products such as bathroom grab bars, shower seats, entryway ramps, and personal alert systems
  • Mobility aids like canes, wheelchairs, scooters, and walkers
  • Eyeglasses and hearing aids
  • Big-ticket medical equipment such as hospital beds, kidney machines, prostheses, ventilators, apnea monitors, and infusion pumps

Family members charged with clearing out the deceased’s home may unwittingly find themselves in control of these left-behind medical items. Nobody in the family may have a use for them, but that does not mean they must be discarded. Provided it is in relatively good condition, the medical equipment can be given to those in need, listed for private sale, or purchased by a dealer.

Donating Used Medical Equipment

The fastest and easiest way to get rid of unneeded medical items […]

2023-04-08T08:39:08-07:00April 13th, 2023|Common Problems, FAQ|

Garn–St Germain Act: What You Need to Know

GarnSt Germain Act: What You Need to Know

It is important to let your estate planning attorney know if you own real estate that is subject to a mortgage. Most mortgages include due-on-sale clauses stating that, upon the transfer of the mortgaged property, the entire amount of the debt owed on the mortgage is immediately due and payable. Under the Garn–St Germain Depository Institutions Act of 1982[1] (Garn–St Germain Act), lenders are prohibited from enforcing due-on-sale clauses in some circumstances but not in others. If your estate plan involves the transfer of property subject to a mortgage, it is important to keep this in mind.

What Is the Garn-St Germain Act?

The Garn–St Germain Act is a federal law that allows lenders to enter into or enforce contracts, including mortgage agreements, that contain due-on-sale clauses even if a state’s constitution or laws, including their judicial decisions, prohibit them. However, the Garn–St Germain Act lists nine situations in which due-on-sale clauses are not enforceable, including some transfers that may be relevant to your estate plan. In the nine situations specified, lenders may not enforce due-on-sale provisions in real property loans “secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home.”[2]

This generally means that the statutory exceptions apply to due-on-sale clauses in mortgages on residential—not commercial—real estate with less than five apartments. Although we will not cover every situation involving mortgages on residential real estate in which lenders are not permitted to enforce due-on-sale clauses, the following exceptions are especially relevant when you are creating or updating your estate plan:

A […]

2023-04-08T08:39:56-07:00April 8th, 2023|Common Problems, FAQ|

Have You Chosen the Right Trustee?

Whether you are reviewing your existing trust or creating a new trust, you should understand the important role that a trustee plays not only in handling trust matters but also in providing for and protecting your loved ones.

What is a trust?

A trust is an agreement between an owner of accounts and property (trustmaker) and another person (trustee) who agrees to manage the accounts and property on behalf of a third party (beneficiary). In most situations, there is a written document, called a trust agreement, that lays out the specific instructions or rules that govern the trust relationship.

What is a trustee?

A trustee is a trusted decision maker who is tasked with handling all matters that relate to your trust. Depending on the type of trust, you could be the trustee in the beginning and need someone else to act as trustee only when you are unable to manage the trust, or you could select a trustee to act immediately.

What types of trustees are there?

When creating an estate plan, there are several types of trustees to consider. An initial trustee is the decision maker that immediately starts managing the trust’s accounts and property. You may choose to be the initial trustee if you create a revocable living trust. However, for some types of irrevocable trusts, you will need to select someone else to be the initial trustee.

The successor trustee is the next in line to manage the trust. This person may need to act because the initial trustee becomes incapacitated, dies, or steps down from their role.

You could choose to have one trustee handle the entire trust. You could […]

2023-03-21T08:33:22-07:00March 14th, 2023|Asset Protection Trusts, FAQ, Irrevocable Trusts, Trusts|

Ways Your Will Can Be Revoked

A will (which should be accompanied by other important documents such as healthcare and financial powers of attorney, as well as an advance healthcare directive) is a foundational estate planning document. However, according to Gallup, only 46 percent of US adults have a will.[1] This number has remained consistent in Gallup polls dating back to 1990. If you are among the minority of Americans with this crucial estate planning document, then you probably recognize the risks of not having a will.

But simply creating a will does not mean that your estate plan is complete or final: your will may need to be updated from time to time. It may even need to be revoked and redrafted entirely.

Usually, revoking a will is a purposeful act on the part of the will maker. But many states have laws that automatically revoke a will, or portions of it, in specific situations. Certain actions by a beneficiary can also revoke that person’s interest in the will.

What Is in a Will?

A will—more formally known as a last will and testament—provides instructions about who should receive a person’s money and property after the person’s death and who they would like to care for their dependents. A basic will should specify the following:

  • who receives personal assets (e.g. property, bank account balances, investments, business interests, and personal possessions) and in what amount
  • an executor or person responsible for making sure that instructions in the will are carried out
  • guardian arrangements for minor children

When a person passes away, their will goes through a legal process called probate, usually in a probate court located in the county where […]

2023-03-21T08:33:59-07:00March 8th, 2023|Common Problems, Do It Yourself - Fail, FAQ, Wills|

Estate Planning to Protect Your Most Valuable Assets – Your Loved Ones

Learn the TOP 5 THINGS YOU MUST DO to protect your loved ones in your estate planning documents? Listen to this conversation between Arizona estate planning and business law attorney Richard C. Keyt and financial planner Armando Roman, the founder of AXIOM Founders Family Office, Inc.

Armando helps successful people preserve their American success story by preserving their wealth, mitigating their taxes, taking care of their heirs, making sure their assets are not unjustly lost through litigation and magnifying their charitable gifts.

In this conversation between the two former CPAs, you will learn:

  • Why Estate Planning?
  • What is a Will?
  • What is a Trust?
  • What are Powers of Attorney?
  • What is Probate?
  • Why should Assets be Titled in Trust name?
  • Why have an Entity for Your Business?
  • What if you have a Business Partner?
  • Why retain Key Employees?
  • Why Separate Business Entities can Protect Your Assets?
  • Why Keeping the Business Separate from the Family matters? Why Business Succession Matters?

2023-03-06T07:05:56-08:00March 6th, 2023|Estate Planning, FAQ, Video|

What Is the Effect of an Unrecorded Deed?

A deed is a legal document used to transfer real property ownership rights from one person or entity (the grantor) to another (the grantee). In many cases, this transfer occurs due to the property being sold, with the seller transferring the property to the buyer. Typically, a deed is recorded with the local county recorder of deeds. Recording the deed gives the public notice that the grantee now legally owns the property.

Not recording a deed can cause problems for the grantee. They may be unable to obtain a mortgage, insure the property, or sell it. Even more problematic, an unrecorded deed may make it possible for the grantor to sell the property to a buyer and subsequently sell the same property to a different buyer. This could result in the property being sold out from under the original buyer who failed to record the deed.

Whether this last scenario is legally permissible depends on state laws that determine which party prevails when there are conflicting ownership claims to a property.

Title versus Deed

A deed is a document that confers property ownership rights associated with title to a property. Both the deed and title to the property transfer from the grantor to the grantee when real estate is conveyed. But a title and a deed are not the same thing.

Title refers to a property owner’s legal rights, such as the right of possession, the right of control, and the right of disposition. Title is not a document—it is a legal right of ownership.

The deed, on the other hand, is a physical document that transfers ownership of property from the grantor to a grantee. It […]

2023-02-25T12:33:02-08:00January 7th, 2023|Common Problems, Estate Planning, FAQ|

Don’t Let Your Cryptocurrency Give You and Your Loved Ones Nightmares

Although cryptocurrency may be one of the latest investment strategies with great potential, for some individuals and their loved ones, investing in cryptocurrency has not gone as planned. The following stories are each a little different, but they all underline one simple warning: if you own cryptocurrency, you need a plan.

Impact of Volatility on Estate Administration

Matthew Mellon, an investor and businessperson who was a member of two prominent families, the Mellons and the Drexels, died in April 2018.[1] At the time of his death, his estate was estimated to be worth approximately $200 million. Much of his wealth came from a $2 million investment in the cryptocurrency XRP, managed by the company Ripple.

Mellon died with an outdated will that did not mention his cryptocurrency. It was later discovered that he kept the keys to his cryptocurrency on various devices throughout the country and under other people’s names. Fortunately, his lawyers were able to access his cryptocurrency by working with Ripple. However, it is extremely rare for anyone to be able to access cryptocurrency without a plan.

Because the value of the XRP fluctuated by approximately 30 percent in the weeks after Mellon’s death, it was crucial that the XRP be liquidated quickly to pay his outstanding debts, income tax obligations, and estate tax. However, Mellon had entered into an agreement with Ripple that limited the amount of XRP that could be sold at a given time. This delayed the wrapping up of his affairs. By the end of 2019, his estate was worth less than half of the original value at his time of death because the XRP had lost about two-thirds of its […]

2023-02-25T12:31:54-08:00December 22nd, 2022|Common Problems, Crypto, Digital Legacy, Estate Planning, FAQ|

Red Flags When Hiring a Professional To Be Your Trustee

When you form a trust as part of your estate plan, one of the most important decisions you will make is who will oversee the trust’s management when you are no longer able to manage it (also known as your successor trustee). Because a trustee’s work may be time-consuming, complicated, and risk liability, many people who create a trust consider naming a professional fiduciary as their trustee. Keep in mind that if you ask your estate planning attorney to serve as your successor trustee, you should ask for a separate engagement letter from the one you sign engaging them to create your estate plan. When looking to hire a professional to serve as your trustee, the following are several red flags you should keep in mind.

Do They Have Adequate Resources?

A professional’s agreement to act as your trustee does not guarantee that they have the resources needed to administer your trust properly. Be proactive about asking questions. Trust administration is an important job, and you should satisfy yourself that the person you appoint as your trustee is well-equipped to fulfill the role. The following are some of the important functions you should ask the professional about:

  • The professional you hire should have a good system for trust accounting. Trust funds must be held in a separate account that is not commingled with their business’s funds, and there must be a system in place to keep separate records of income and principal, disbursements from the account, receipts, capital transactions, and more. The professional trustee has a duty to provide information to the trust’s beneficiaries, and current income or principal beneficiaries are entitled to a detailed accounting to enable them […]
2023-02-25T12:31:03-08:00December 21st, 2022|Common Problems, FAQ, Peace of Mind, Trusts|

Important Issues to Address Before You Leave on Vacation

Getting ready to embark on your next great adventure? Before you zip up the last suitcase, here are five issues you need to address to protect yourself and your loved ones.

Do you have a foundational estate plan? Has it been reviewed?

An estate plan is a set of instructions memorialized in legal documents that explains to your trusted decision makers and loved ones your wishes about your care, the care of any dependents, and how your money and property should be handled.

Last will and testament

Depending on your unique situation and needs, you may have a last will and testament (also known as a will) as the foundation of your estate plan. This document allows you to name someone to wind up your affairs (i.e., gather your belongings for safekeeping, create a list of everything you own, pay your outstanding bills and taxes, and give the remainder to the individuals and charities you have chosen). You can also name a guardian for your minor children if you have any. Because a will takes effect only at your death, using a will to outline your wishes will likely still require your loved ones to go through the probate process (a court process that can be expensive, time-consuming, and public) to carry them out.

Revocable living trust

On the other hand, you might have a revocable living trust as the basis of your estate plan. A revocable living trust is an entity that owns your accounts and property. In order for your trust to own your accounts and property, they will either be retitled in the name of your trust (instead of in your sole name) or […]

2023-02-25T13:05:57-08:00December 15th, 2022|Common Problems, Estate Planning, FAQ, Peace of Mind|

Legal Perils of Gifts and Joint Ownership between Unmarried Couples

Cohabitation without marriage is becoming more common in the United States. Among eighteen- to forty-four-year-olds, the percentage of adults who have lived with an unmarried partner at some point is now higher than the percentage of adults who have been married.

When you live with a romantic partner, it may feel as though you share everything. And to some extent, this may be true, legally speaking. For example, there is a trend toward unmarried couples buying homes together. While this might make economic sense, especially at a time when household budgets are being stretched, it can also create legal complications.

Gifts that are given purely out of affection can create unintended consequences as well. This includes gift taxes and the relinquishing of control over the gift once it is accepted. Your heart might be in the right place, but without understanding gifts and joint ownership, you could be making a decision that you will come to regret.

Unmarried Partners and Cohabitation: A New Norm

Decades ago, it was rare—and even scandalous—for unmarried couples to live together. However, like many aspects of American life, this is changing.

Over the last two decades, the number of unmarried partners living together has almost tripled from 6 million to 17 million.[1] Among young adults ages eighteen to twenty-four, cohabitation is now more common than living with a spouse.[2] Among adults ages eighteen to forty-four, 59 percent have cohabitated as compared to 50 percent who have ever been married. Since 2002, the share of U.S. adults who are married is down. Over the same period, the share of adults living with an unmarried partner has more than doubled.

Spousal Lifetime Access Trusts: What You Should Know

No one wants to pay more taxes than they have to. To carry out this objective, many people search for the perfect estate planning tool that will allow them to control as much of their money and property as possible while reducing the amount they or their loved ones will have to pay the government. If you have looked for the tax-saving estate planning tools, chances are you might have come across the spousal lifetime access trust (SLAT). Here are some important things you should know before you settle on this tool as your estate planning solution.

What is a spousal lifetime access trust?

A SLAT is a type of irrevocable trust created by one spouse (trustmaker spouse) for the benefit of the other spouse (beneficiary spouse) that is used to transfer money and property out of the trustmaker spouse’s estate. This strategy allows married couples to take advantage of their lifetime gift and estate tax exclusion amounts by having the trustmaker spouse make sizable, permanent gifts to the SLAT that decrease the value of their estate while maintaining some limited access to the money and property that is gifted for the beneficiary spouse’s benefit.

How does it work?

The trustmaker spouse gifts money or property (of which they are the sole owner) to the SLAT for the benefit of the beneficiary spouse. If the couple resides in a community property state, they will likely need to convert community property into separate property through a partition agreement. The trustmaker spouse reports the gift on a gift tax return. The beneficiary spouse can receive distributions from the trust, from which the trustmaker spouse may also indirectly benefit. Upon the death […]

What if I Cannot Find a Beneficiary?

When someone has named you as the executor (also known as a personal representative) of their will or the trustee of their trust passes away, you are obligated to distribute that person’s money and property according to the document’s terms to the designated beneficiaries. (For convenience, the roles of executor and trustee will be referred to throughout this article as the general term fiduciary.) Sometimes, perhaps because of a family conflict or just falling out of touch, the whereabouts of a will or trust beneficiary are unknown. What should you, as the fiduciary, do if you cannot locate a beneficiary of the will or trust?

As a fiduciary, you have an obligation to use reasonable diligence to locate a missing beneficiary. What is considered reasonable depends on the circumstances, including what efforts have been made to locate the missing beneficiary and how much money or property is at stake.

At a minimum, a fiduciary should call the last known phone number and send notice of the estate or trust administration to the last known address. If this initial effort yields no results, then the fiduciary should contact known family members or friends for information that may lead to the beneficiary’s location, search social media and people-search sites on the Internet, publish notice in the newspaper, check property records, and otherwise use their best efforts to locate the missing beneficiary.

If the value of property to be distributed to the missing beneficiary is very small, then the fiduciary will likely not be required to spend a lot of the estate or trust’s money to locate the missing beneficiary. If, however, the property value is significant, then the fiduciary may have to […]

2023-02-25T13:20:13-08:00October 5th, 2022|Beneficiaries, Common Problems, FAQ, Probate|

Three Tips for Overwhelmed Personal Representatives

While it is an honor to be named as a trusted decision maker, also known as a personal representative or personal representative, in a person’s will, it can often be a sobering and daunting responsibility. Being a personal representative requires a high level of organization, foresight, and attention to detail to meet responsibilities and ensure that all beneficiaries receive the accounts and property to which they are entitled. If you are a personal representative who is feeling overwhelmed, here are some tips to lighten the load.

  1. Get help from an experienced attorney.

The caveat to being a personal representative is that once you accept the responsibility, you also accept the liability if something goes wrong. To protect yourself and make sure you are crossing all the “t’s” and dotting all the “i’s,” hire an experienced estate planning attorney now. Having a legal professional in your corner not only helps you avoid pitfalls and blind spots, but it will also give you greater peace of mind during the process. In fact, in some states it is a requirement that a personal representative be represented by competent legal counsel, so it is always a good idea to discuss your responsibilities with an attorney before you take action. It is also important to note that the expense of hiring an attorney does not have to be borne by you. As a personal representative, you are allowed to hire professionals to assist you in carrying out your responsibilities, and they can be paid from the deceased person’s money. This includes professionals such as financial advisers and certified public accountants.

  1. Get organized.

One of the biggest reasons that you […]

2023-02-25T14:15:28-08:00October 4th, 2022|Common Problems, Estate Planning, FAQ, Probate|

What is a Qualified Terminable Interest Property Trust aka QTIP?

Question:  What is a Qualified Terminable Interest Property Trust?

Answer:  A QTIP trust is a type of irrevocable trust that can be used to give income and principal to a surviving spouse after the first spouse dies and then after the surviving spouse dies give the assets that remain in the trust to the beneficiaries selected by the first spouse to die.  Any irrevocable trust can be drafted to do the same thing.

Estate planning attorneys use a QTIP trust when both of the following facts exist:

  • The first spouse to die wants to leave assets to the surviving spouse that can be used only by the survivor during his or her life (aka a “life estate”).
  • The first spouse to die has an estate that is greater in value than the federal estate tax exemption amount ($5,250,000 for people who die after 2012).

A QTIP contains certain language required by the IRS so that the assets transferred to the QTIP will qualify for the federal estate tax marital deduction and not be included in the estate of the first spouse to die and taxed when the first spouse dies.  Without the special language necessary to qualify as at QTIP the assets transferred into the trust by the first spouse to die would not be eligible for the federal estate tax marital deduction in determining the federal estate tax due on the death of the first spouse.

I typically create a trust for a married couple that creates two or three trusts after the death of the first spouse.  These new trusts created after the death of the first spouse are frequently referred to as the A & B […]

2016-12-13T20:33:27-08:00July 30th, 2013|FAQ, Trusts|

Do You Need An Estate To Create An Estate Plan?

Forbes:  “When I would tell people that I was working on a book about estate planning, many of them looked at me quizzically because they weren’t sure what I meant. Others said, “Oh, that’s not something I need, because I don’t have an estate.”

Contrary to popular misconception, you don’t have to own a big house to have an estate. Your estate consists of everything you own when you die, including your home, personal property, investments, bank accounts, retirement plans and any interests in a family business or partnership. Beneficiary designation forms control who gets retirement accounts, along with life insurance proceeds. For most other assets, you need a will or living trust that says who gets your stuff.”

2016-12-13T20:33:28-08:00July 11th, 2012|Beneficiaries, Estate Planning, FAQ, Trusts, Wills|

I Got A Divorce. What Should I Do With My Estate Plan?

Question:  I was recently divorced, but my estate plan names my former spouse in a few places.  What should I do?

Answer:  Revise your estate plan!  You should always think about updating your estate plan when a major life event happens.  Divorce or legal separation from your spouse is one of these events.  There are probably a number of places in your current estate plan that name your former spouse.  These are the areas that you should consider updating:

  • Incapacity planning.  Who did you name as your agent under your healthcare power of attorney or financial power of attorney?  If you were to become incapacitated, your current estate plan probably says that your spouse should make all of your healthcare decisions and should have the ability to access your finances and make financial decisions.  Since you probably do not want your former spouse to make these decisions for you, consider changing your healthcare agent and financial agent to someone like a trusted friend or family member.
  • Inheritance planning.  Your current estate plan probably states that if something were to happen to you, all of your assets should go to your former spouse.  After a divorce, you probably don't want your former spouse to inherit everything.  As such, you should change the primary beneficiary of your will or trust.
  • Life insurance.  Your current life insurance policy might name your former spouse as the beneficiary of that policy.  Talk to your life insurance company about updating the beneficiary designations on the policy.  Another life insurance issue could arise if your divorce settlement requires you to maintain life insurance for your children. If so, you should consider creating an irrevocable life insurance […]

Including Passwords With Your Legacy

Question:  I know I should leave the passwords for my computer / files / email / social media with my estate plan.  What is the best way to do this?

Answer:  Store a list of your important passwords somewhere safe that isn't on your computer.

More and more people are using their computers to store their important, personal information.  For example, if you use financial accounting software, it may be next to impossible to settle your estate without being able to access that information.  However, because of the sensitive nature of this information, you may have your files computer password protected.  Also, things like your social media accounts and your email may need to be accessed after your death.  Sure, your family can spend hundreds of dollars to hire an expert to decrypt your information, but the better solution is to leave your passwords somewhere that your loved ones will find.

The goal is to keep your passwords secure during your life, but readily accessible after that.  Here are some options we suggest:

  • Put a list of all of your passwords and accounts in your estate planning portfolio.  When you keep everything together in one central location, it makes it much easier for your loved ones to follow your instructions and wishes.
  • Put a list of your passwords and accounts in your safe deposit box.  If you don't have one, ask the lawyer to drafted your Will to store it with your client file.
  • Tell your personal representative or spouse about your passwords and accounts.
  • Don't include your password in the text of your Will.  You may have to change your password, which would then require […]
2016-12-13T20:33:29-08:00May 23rd, 2012|Digital Legacy, FAQ, Social Media|

How Do I Get Email Access To A Loved One’s Account After Death?

Question:  I want to access the email account for my deceased loved one.  How do I do this?

Answer:  In many cases, you can contact the email provider and provide them some information demonstrating that you should have access to the account.

During the difficult time after a loved one passes, it is easy to forget about some of the small things, like accessing your loved one's email account.  In a perfect world, your loved one would have left their email information and password in a safe place for you to find, perhaps even with their estate plan.  However, people often overlook small details like these when preparing their estate plan.

If you cannot locate your loved one's email password, you can likely gain access by contacting the email provider.  The email provider is whoever is listed after the @ symbol in the email address.  Most email providers will turn over email account information to the deceased's next of kin with sufficient proof.

  • Google's Gmail requests a death certificate, a document giving you power of attorney over the person's affairs and the full header of an email sent to you by the deceased's account.  You will also have to provide your name, address, email address and a copy of your photo identification as well as the deceased's email address.  For more information see: http://tinyurl.com/6mu6jcn
  • Microsoft's Hotmail also requires a death certificate, a document giving your power of attorney or showing that you are the personal representative (executor) of the deceased's estate.  You will also need to provide the deceased's email address, first and last name, date of birth, the city, state and zip the person gave […]
2016-12-13T20:33:29-08:00May 23rd, 2012|Digital Legacy, FAQ, Social Media|
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