But it’s important to understand when a will can even be properly contested. If you’re someone who wants to contest a will, you need to know you have the legal grounds to do so. If you’re someone who wants to protect their inheritance from contest, you’ll want to know your legal grounds for keeping things as they were.

Essentially everyone involved with the contesting of a will needs to read this article. Let’s take a look at when a will can actually be contested.

Improper Signatures

One of the ways a will can be contested on legal grounds is that the will was not signed in accordance with the state laws governing the signature of last wills and testaments. While other people might have a moral problem with this approach – after all, an improper signature does not mean the deceased did not want the will to go through as written – a bad signature can indeed be legal grounds for contesting a will.

What constitutes an improper signature? It depends on the local laws. In some states, for example, it will be required to have a witness watch the will being signed – without this witness, the signature is of debatable importance.  In Florida, there must be two witnesses to the signature of a last will and testament. In essence, the signature has to be reconciled with state laws, or else the entire document can be brought into question.

As a side note, if you’re preparing your own last will and testament, it’s important that you ensure it is properly signed according to your individual state’s laws.

Capacity and Influence

Even if a signature is valid, there are other elements that come into the signing or authorization of a will that can be brought into question. Was the signor of the will under the influence of pressure, therefore meaning the will itself was not actually the signor’s intent? Did the signor have the mental capacity to modify or change their will at the last minute, or should the older version of the will be used as the document that more appropriately represents the deceased’s wishes?

These are tough legal questions, and if there is evidence to support that the signor’s capacity was somehow changed or that they were being influenced into signing the will, there may be legal grounding for changing how the estate is handed down.

There are more ways to contest a last will and testament, of course, which is why it’s important to educate yourself about these documents if you plan on contesting one yourself. Don’t leap into the decision – instead, be sure that you have the grounding to come forward with these contests.

The only question remaining is: why set up a trust?

The answer is simple: trusts are remarkable financial tools. They help you avoid more estate taxes (as you’ll learn here), they help you control your money, and they help you to provide for the care of loved ones who might not be able to take care of themselves.

Let’s take a closer look at the art of the trust and figure out how you can start taking advantage of them to ensure that more of your property and money is left behind responsibly – and so that your family members can enjoy as much of your success as legally possible.

The Role of Trusts in Estate Taxes

It’s important to point out that having a trust will not actually reduce the rate of your estate taxes. Saving money on taxes isn’t done by creating a trust and then suddenly paying a smaller rate – the estate tax rate is the same for everyone, provided they meet the federal minimum estate value.

How, then, do trusts save estate tax money?

One of the most popular ways to save money on estate taxes is to technically reduce the value of your estate. If you have an estate, for example, that can be valuated at near the federal estate tax minimum, then reducing the value of your estate by moving money into other places can actually save you money by simply getting your estate to lower in value. This is not a common strategy, however, as no one can predict when you’ll pass on.

Trusts can save some estate tax money by reducing the size of the estate (since the money technically belongs to the trust and not your estate) and therefore reducing the amount of money that is exposed to the estate tax rate. But it’s important to remember that trusts might face their own tax issues after you pass on, which is why it’s usually a good idea to consult an attorney whenever you want to create a trust.

Understanding the Living Trust

Many people then turn to the “Living Trust” in an effort to save money. But what exactly is a living trust and what can it do for you?

A living trust is not very complicated – in fact, it simply refers to a trust that you create while you’re still alive. If you create a trust and fund it, with that money to be signed over to a beneficiary upon your passing, then you’re using a living trust to your full advantage.

Of course, the questions about trusts and living trusts involve people. Who will be the beneficiary of a trust? Many parents will set up a living trust for the financial support of a developmentally –challenged child, for example. Others will do it to ensure that their money will be securely transferred to their family members upon their passing.

Living trusts can have enormous benefits because you can still retain control over them while you’re still alive, thus giving you a great degree of say-so when it comes to the ultimate destiny of your finances.

How to Set Up Trusts

The paperwork to establish a trust should be done with the cooperation and guidance of a trusted estate planning attorney – or at least a trusted general attorney who has some experience in these matters. They’ll often get the right paperwork for you and make sure you understand all of the roles that a trust requires people fill.

If you’re still confused about how trusts can help you save money on estate taxes, it might be a good idea to start with the basics – learn about the estate tax and what it applies to.  It will also be a good idea to learn how Wills work so that you can get started on drafting a will of your own when necessary. Then you can return to the idea of setting up a living trust with the person of your choice listed as its beneficiary.

Will a living trust solve all of your problems? Of course not. But it’s still a powerful tool that gives you a greater degree of control over your money – and when it comes to estate planning, that’s enough to give you the peace of mind you’ve been searching for.

But how, exactly, can this be accomplished? There are a number of strategies that people use. We’re going to explore ten such strategies in this article, offering an introduction into each. Do your best to see which solution might work best for you – and then continue researching this topic until you’re sure it’s for you.

#1. Giving family members a gift. Many people circumvent the estate tax burden simply by giving away much of their money while they’re still with us on earth – and one such way to do this is to give each family member a gift. There is, of course, a separate gift tax that you’ll have to worry about, but generally if you give a gift within a certain range, you’ll be able to avoid this gift tax altogether. Many people like this option because it allows people to share what they have while they’re still with us. Repeat gifts can also be made in order to add to the amount that’s left behind.

#2. Creating a trust fund. Creating a trust is a great way to avoid an estate tax because, technically, the money you use to fund the trust isn’t yours anymore. And what’s not yours – well, that’s not going to be taxed as if it’s yours, is it? Of course, the art of setting up a trust to leave money behind can be a complicated one, so this is something you’ll want to bring up with your estate planning lawyer or tax attorney during your next meeting. But it’s certainly an option worth looking into.

#3. Investing the money. Remembering that a key theme is to move money around so that that money is not applied to the estate tax, some people will simply choose to leave behind a strong legacy by investing their money wisely. For example, a parent that is going to leave a business behind to his or her child might invest more money into the business so that it’s stronger when the child takes over. There are a number of indirect ways of leaving money behind, of course, but few are as efficient as sound investment.

#4. Leaving money to a spouse. Leaving money to a spouse  means that the money is left behind tax-free. The spouse might then be able to dole out the money in a manner we’ve already stated, such as creating trusts, giving gifts, etc. This is a common way to leave behind money without letting the government get at it, but in many cases this might be the wrong solution because of internal family rifts and the age of the spouse in question.

#5. Giving money to charity. Charitable donations are often tax-free and tax-deductible, which makes them highly efficient ways to leave behind a legacy and avoid Uncle Sam.

#6. Decrease the value of your estate. The estate tax generally kicks in heavily when you have a large estate to leave behind. But if you leave behind a smaller estate – and this figure varies according to the year in which you die – you’ll be able to leave tax-free money behind. Of course, you don’t want to sabotage yourself; you should simply move money around so that your own estate technically isn’t worth as much. This is a good option if your estate is already teetering on the estate tax line.

#7. Drafting a will. Say what you want, but drafting a will and making sure it doles out money in a clear and efficient way can save more on taxes – and save more headaches – than you might imagine. Simply consulting a lawyer who’s experienced in drafting wills can save you a lot of money.

#8. Ensuring that the money is not contested. Your goal, after all, is to ensure that your children receive a lot of money after you’ve passed. They receive less money if they have to contest the money you leave behind. So be clear in your will about who receives what – and be upfront with your children about it as well.

#9. Take proper inventory of your estate. Understanding the size of your estate is the first step in ensuring that your estate planning goes off without a hitch. You don’t want to create great plans only to see them rendered invalid!

#10. Make sure your estate plan is in good hands. The attorney you work with in drafting a solid will and estate plan will be crucial to ensuring its success in avoiding taxes. Choose wisely.

A flight that’s delayed ten minutes can feel like a lifetime of waiting. A text message that takes ten seconds longer to send will make you feel like your phone belongs in the stone age.

And yet when it comes to taking action on estate planning, we suddenly seem to have all the time in the world. “A will?” we might ask ourselves. “But I’m only 40. What’s the point of a will right now when I don’t even have that much money saved?”

This, of course, is the wrong attitude. But there’s more to the story: Americans simply don’t know enough about estate planning to embrace it. Sure, many people with a lot of property to leave behind seem to be on top of things. But it doesn’t take a brilliant money manager to exercise sound financial planning – and you don’t have to have a lot of money to enjoy the process of drafting a will.

Hopefully this article will fill in this gap by explaining many of the basic estate planning strategies that are available to Americans under current laws. At the very least, you can read it while you’re waiting for your flight to board!

Drafting a Will

The first thing you need to do to make sure that your estate will be taken care of after you die is to draft a will. Consult a trusted, experienced lawyer who’s knowledgeable about wills and schedule a meeting – if you bring in enough information about your property, you should have no problem drafting a will within a short amount of time.

Drafting a will is not a very difficult process; the only real preparation you’ll need is to tabulate your investments, your finances, your accounts, and your property. There will be some difficult questions to ask yourself, of course, but that’s no reason you need to put off drafting a will any longer.

And what can you do when drafting a will? Your options are almost unlimited. You can leave specific property to specific people. You can leave behind instructions for the care of that property. You can leave behind funeral instructions, burial instructions – even a kind note if you want.

Avoiding Estate Taxes

They say there are two certainties in life: death and taxes. In estate planning, you deal with both. The question is how to avoid expensive estate taxes – which can rob you of around half of your total wealth before you leave even a penny behind.

There are strategies to avoid these taxes. First, you can create a trust that will provide money to a loved one after you die – because the money is in the hands of a trust and not your estate, it will not be subject to the same taxes. Similarly, you can give your family gifts before you pass away. Gifts of up to around $13,000 are tax-free.

Making the Tough Health Decisions

Even if you aren’t very old and you don’t have a lot of money, the Living Will is a vitally important document to draft and sign. The Living Will lets people know about the medical decisions you want to have made when you’re not able to make them yourself. For example, if you want to continue with life support even when the situation is dire, you can put that down in your Living Will.

Because any one of us could become medically incapacitated at any age, it’s important that you at least leave a Living Will with your attorney.

Problems to Avoid

There’s a good chance that if more Americans knew about the problems that occur in probate court – when estate planning issues are settled – they would do a better job at drafting their own wills. Leaving behind a lot of money to your second wife might be tax-free, but it can also cause a rift in your family. Leaving all of your money to the wrong third party could mean your family doesn’t see any of your money or property at all. These problems, of course, are to be avoided.

How to you ensure you avoid them? By working with a trusted and experienced attorney from the outset. By educating yourself about estate planning, as you’re doing right now. And ultimately, the best solution is that you take a proactive approach to your own estate. Make the decisions you don’t want a court to make for you. Put it all down in writing. Ask yourself the tough questions and be determined to come up with the right answers.

After all, who has the patience to put their estate planning off any longer?

So what’s the solution?

Simple: learn a little bit about Wills and Living Wills. As it turns out, you might be intrigued by the prospect of using your legal powers in this fashion. Many people actually find out that the more they learn about estate planning, the more the process seems, well, fun. At the very least, it’s a process that can make you feel more empowered and less worried about the future.

So let’s kick-start your interest in estate planning by learning the difference between two of the most important documents you’ll ever sign: the Will and the Living Will.

Only the Names are Similar

One mistake people make in regards to Wills and Living Wills is assuming that because the two sound like similar documents, they must deal with very similar things. And while both a Will and Living Will deal with important questions surrounding your health and even your passing, the two documents actually address two very different aspects of your last wishes and ultimate legacy.

First, it’s the Will that deals with your estate and, therefore, your property. When you decide where you want your money to go when you die, you put that information in a Will. It’s this document that will tally all of your properties. It will also describe what’s to be done with the property after you’re gone, going so far as to leave instructions for loved ones.

The Living Will, however, does not deal with property. It deals with important decisions that have to be made in your absence, including medical and health decisions.  In this case, however, it’s important to remember that “absence” doesn’t necessarily refer to you having passed away. It may refer to any event in which you’ve been incapacitated and you are unable to communicate which decisions you want to be made.

Answering the Questions Each Document Poses

There is another similarity between these two documents: they will both require that you answer some pretty tough questions. The questions, however, will be different.

In a Will, you might ask yourself:

• What do I want to happen to my house after I die?
• Who will receive the money I leave behind?
• What do I want to happen to my property after I pass away?
• How can I leave more money behind to my family?

In a Living Will, your questions will look more like this:

• Do I want to authorize a Do Not Resuscitate (DNR) order for when I am incapacitated?
• Do I want to be on life support under certain conditions?
• What should my doctor know if I am incapacitated?

Obviously, both sets of questions carry heavy implications, which is why it’s so important to start answering them as early as possible – and not leave the creation of these documents to the last minute.

Should You Do Both Documents at Once?

In some cases, you may feel that it’s a good idea to handle all of your estate planning issues in one fell swoop, such as during a long meeting with an attorney. But the larger your estate, the more likely it will be that there are questions you’ll have that can’t be answered in a single meeting.

Provided you use an attorney and are careful but also proactive with your Living Will and Will, there is generally no wrong way to go about drafting either of these documents. The attorney will be able to give you the insights you need to craft a solid estate plan while bringing any potential problems to your attention. But the larger your estate, the more personal decisions there will be for you to make.

For example, if you have an estate that’s worth more than the minimum estate value that must pay the estate tax, then you’ll have to enter more serious estate planning. How can you move money around so that your loved ones receive as much money as possible?

Each situation will be different, but there are two important rules to remember: work with a trustworthy, quality attorney – and make sure that you take action rather than put action off into the future. The peace of mind you receive as a result of having these documents drafted according to your wishes will be well worth the effort.

In other words, you want your property to go to the right people. That’s generally the role of a will’s executor, and it’s something you’ll want to focus on when you consider your estate planning. Believe it or not, it can rarely be “too early” to draft a will and choose an executor for that will. Forgive the morbid thought, but you never know when you’re going to pass, and if you did, the entire estate planning process would probably be a lot simpler. But we know that’s not how things work.

Do you need help choosing the right executor for your will? If so, you’re not alone. A lot of people are looking for that same advice, which is why we can outline a few but very crucial tips for choosing the executor of your will.

Tip #1: Choose an executor for your situation – don’t follow a cookie-cutter approach. One of the most popular executors for a will can be someone you love closely like a family member. But let’s face it: not everyone has the ideal family situation that others do. While one person could easily choose their spouse to be the executor of their will, there are potential obstacles along the way if the family situation is complicated.  That’s why it’s important not to choose a cookie-cutter approach. Don’t pick someone simply because they’re your son, brother, wife – what have you.  Choose someone because they’re the right executor to your will.

This means that you’ll have to exercise a little judgment.  If you ask yourself who among your friends and family you trust implicitly to handle something like a will, remember that not everyone is cut out for it. You may trust your third daughter implicitly, but perhaps your eldest daughter is better qualified to handle a will. You may trust your friend implicitly, but maybe they’ve never been totally responsible in their own lives.

It’s important to remember at this point, also, that choosing an executor to a will is not a sweeping judgment on the value of any person. If you have two sons and one is a lawyer, the choice should be obvious – it doesn’t mean you love any of your two sons more than the other. So be shrewd with this choice and, if you’re wracked with guilt over choosing someone over another, it might be a good idea to tell them about your decision and to remind them that it doesn’t reflect on any one personally.

Tip #2: Sometimes it’s okay to leave it to the professionals. In many cases someone will simply allow their estate planning lawyer to be the executor of a will. Or they might choose an accountant or a tax planner. This takes away any of the issues surrounding family battles over wills, at least as far as the executor is concerned. If someone is drafting a will and anticipates a family battle over the estate, then a professional might be a good choice to be executor over the will.

Of course, this isn’t the only reason you might select a professional that you trust. You might simply want to lessen the burden on your family when you’ve passed, leaving the work of will execution to someone whose job it is to do so. This is a compassionate move, and many times this is reason enough for some people to choose a professional when it comes to the execution of their will.

It’s also important to remember that if you have a large estate to leave behind, someone capable of handling all of the ins-and-outs of your estate might be better qualified than someone in your family. Again, this is not a value judgment:  it’s simply a matter of letting someone else handle the work of estate planning from start to finish.

Many people ask that if “trust” is one of the most important issues here, then why would a complete stranger be a good executor simply because they’re a professional?

The answer is simple: who says you can’t trust your lawyer? If you’ve been working with an estate planner for several years, then you’d better trust them ahead of time, making sure that their references stack up and they have a solid reputation.  Don’t work with anyone you can’t trust in the first place, and you won’t have to worry about the trust issues that surround the execution of a will.

Tip #3: Once the decision is made, be at peace with it. Estate planning should be all about giving as much peace as possible to both you and your loved ones. That’s why it’s important to remember that once you’ve chosen an executor for your will, it’s okay to relax and trust that your estate will be in good hands. Sure – put lots of work into the decision up front. But once you’ve made the decision, use that freedom to enjoy your life and your time with your loved ones.

A recent U.S. Supreme Court decision should motivate some people to move this overlooked step higher on their priority list.  This particular ruling involved a 401(k) plan, but it could apply to all plans or investment vehicles that require beneficiary designations.  The case involved is Kennedy v. Plan Administrator for DuPont Savings and Investment Plan.  Mr. and Mrs. Kennedy were married in 1971.  Shortly after their marriage, Mr. Kennedy completed a beneficiary designation form naming Ms. Kennedy as his sole beneficiary.

The Kennedys subsequently divorced in 1994.  As part of the divorce decree, Mrs. Kennedy waived all her rights to any retirement benefits relating to Mr. Kennedy’s employment.   However, it was later discovered that this state court divorce decree did not meet the standards for a Qualified Domestic Relations Order (QDRO).  A QDRO describes how certain items, such as qualified retirement plans and child support, will be handled in the case of a divorce.  Of course, to further complicate this situation, Mr. Kennedy never followed the plan’s procedures for changing his 401(k) beneficiary after the divorce, although he did change the beneficiary designation on his company pension plan.

Mr. Kennedy died in 2001 and his daughter acting as executrix of his estate, informed the plan administrator and asked that the proceeds of the savings and investment plan be distributed to the estate. However, the plan administrator reviewed the beneficiary designation form on file and forwarded the $402,000 to the former spouse, Mrs. Kennedy, as she was the sole beneficiary shown. The daughter then sued the plan administrator, claiming they had erred in distributing the funds.

The Supreme Court ruled in favor of the plan administrator, finding they had followed the plan’s procedures and should not have been expected to know about the existence of the divorce decree in which Mrs. Kennedy waived her rights to the 401(k). The Supreme Court said, “Under the terms of the Investment Plan, Mrs. Kennedy was Mr. Kennedy’s designated beneficiary.  The plan provided an easy procedure for Mr. Kennedy to change the designation, but for whatever reason, he did not.  The plan provided a way to disclaim any interest in the account, but Mrs. Kennedy did not purport to follow it and, therefore, the documents controlled so Mrs. Kennedy won the case.

So failure to fill out and complete a beneficiary designation form and keep it current can have negative consequences.  It is especially important to review these forms after major life events such as marriage, divorce, death of a loved one or birth of a child.  It is equally important to ensure that beneficiary designations are consistent with the provisions of one’s estate planning documents.  These crucial steps will guarantee the assets controlled by beneficiary designation align with the participant’s estate plan and wishes.

Steven W Tarta has been providing Estate Planning and Elder Law services for over 25 years. His focus has been on “Asset Preservation” resulting in the elimination or reduction of Federal Estate Taxation by the use of Revocable and Irrevocable Trusts. Also, Steven is very concerned with quality of life issues as they relate to his Elder Law practice. Steven provides a conservative and professional approach which analyzes the client’s objectives and creates an appropriate strategy for Asset Preservation as well as addressing all Elder Law issues.  Mr. Tarta is also a member of the LawGuru Attorney Network.

The 2010 repeal of the federal estate tax was originally enacted in 2001, a much different time with respect to our country’s political and economic climate.  This 2001 legislation was strange because it included a feature whereby the federal estate tax would be “re-enacted” in 2011 after full repeal in 2010.  With the then Republican dominance in Washington, D.C., many believed that the complete and permanent repeal of the federal estate tax would be accelerated at a date prior to 2010.  However, after a number of attempts to repeal the estate tax after 2001, which required a 60-vote margin in the U.S. Senate to pass, the estate tax remains in effect.

Throughout the current year, many expected the Democrat-controlled federal government to pass and sign legislation that would have kept the federal estate tax alive in 2010 and beyond. Although Congress was preoccupied with the health care debate, there were a number of opportunities to make changes to the 2001 law to prevent repeal of the federal estate tax from happening on January 1, 2010; however, all to no avail.

At the present time, estate planning is particularly challenging from an estate planner’s perspective even though the federal estate tax is technically repealed. Some still believe that Congress will still act this year to eliminate the 2010 repeal of the federal estate tax.   However, if Congress does nothing this year, the federal estate tax will be resurrected on January 1, 2011.   Unfortunately, if the federal estate tax is resurrected without congressional action this year, it returns to the 2001 tax rate and tax levels. This represents a massive tax increase to 55% on assets over one million dollars when compared to the federal estate tax as it existed on December 31, 2009, which was 45% estate tax on assets in excess of three million five hundred thousand dollars.

Others believe that Congress will take some action this year to retroactively reinstate the federal estate tax; although there is an argument that a retroactive application of federal tax law would be unconstitutional (such an argument has not been upheld by the U.S. Supreme Court in other federal tax matters).  Another view is that Congress will take no action until the mid-term elections in November and if Republicans retake control of Congress this November, it is possible that the federal estate tax will remain repealed for the entire year 2010, with some type of reintroduction in 2011.  So as the saying goes: “Stay tuned for further developments………”.

Steven W Tarta has been providing Estate Planning and Elder Law services for over 25 years. His focus has been on “Asset Preservation” resulting in the elimination or reduction of Federal Estate Taxation by the use of Revocable and Irrevocable Trusts. Also, Steven is very concerned with quality of life issues as they relate to his Elder Law practice. Steven provides a conservative and professional approach which analyzes the client’s objectives and creates an appropriate strategy for Asset Preservation as well as addressing all Elder Law issues.  Mr. Tarta is also a member of the LawGuru Attorney Network.

The easiest estate planning tool, that provides some asset protection, is a Qualified Personal Residence Trust.  This is also known as a “QPRT” which is pronounced Q-pert.  A QPRT is an irrevocable trust.  This means you effectively have GIVEN AWAY the assets put into the trust upon creating the trust.  As the name indicates a QPRT is usually funded with a… personal residence.  It actually can be created with multiple personal residences so for you people with a house at Lake Tahoe or a home at Sea Ranch you can do a couple QPRTs.  How does a QPRT work?  Well, a QPRT is simple a reservation of a life estate in your house with the remainder going to your kids (or other chosen beneficiary).  There can be substantial estate tax reduction by use of a QPRT.  Many people are concerned about giving away property but with a QPRT you retain the right to live in the house, the right to switch houses, the right to an income stream if you sell the house and don’t buy a replacement, and in general many of the rights of ownership. However, it is generally going to be protected from claims of your creditors!  If you want to hear about the mechanics of a QPRT send me an email and we can talk more about it to see if it would be appropriate for you.

A second popular estate planning tool which gives some asset protection is a Family Limited Partnership.  These are also known as “FLP’s” or “FLiP’s.”   We actually use LLC’s now days but they have kept the LP moniker.  Either way you are setting up a business entity, akin to a corporation, to shield assets from creditors.  You then, with the aid of a knowledgeable attorney, break off small interests which go to your kids (or other chosen beneficiaries).  I often recommend putting the kid’s shares into an irrevocable trust to give them additional asset protection.  There can be substantial estate tax savings by the use of an FLP.   This tool is not right for everybody but if you own rental properties, commercial real estate, a business, a farm, and certain other assets an FLP can be an incredible estate planning device to use.

A third popular way to plan your estate, while creating asset protection, is by use of a life insurance trust for your spouse.  That is, you set up an irrevocable life insurance trust (“ILIT”) for the benefit of your spouse and children (or other chosen beneficiaries).  If it’s set up right you get around any issues related to the community property nature of your premium payments and can set up large sums of money to pass with very strong asset protection for your spouse.  That is, your creditors and those of your spouse would have a very difficult time knocking down an ILIT to get at the money sitting inside it.  As with the above devices using a knowledgeable and experienced attorney is crucial here!

All of the above are useful tools to help bolster your personal empire.  They are NOT impervious walls.  Rather each device you put up in another obstacle that a potential creditor must get around.  The number one key with “asset protection” is to do it early and hopefully before any creditors are even on the horizon!  I would love to talk about the above plus other things you can do… or maybe already are doing (pension and 401ks are often given almost impervious protection).

John B. Palley is a partner with the Law Offices of Meissner, Joseph & Palley, Inc.  Mr. Palley is a Certified Specialist in Estate Planning, Trust & Probate Law as determined by the State Bar of California Board of Legal Specialization.  He also has received the prestigious “AV” rating by Martindale Hubbell.  Mr. Palley also is a past Sacramento Bee estate planning and probate “expert”  and is also a member of the LawGuru Attorney Network.

Assets under the trust umbrella need to be titled in the name of the trust.  Assets such as individual retirement accounts and pension plans pass pursuant to a beneficiary designation.  Unless the trust is named as a beneficiary, such assets will not be held by the trust.  Similarly, assets held in joint tenancy with rights of survivorship will pass upon death to the surviving joint tenant by operation of law, and not pass to the trust.

Review each of your assets and determine if the title should be changed to the trust.  Generally titling assets in the name of your trust should be similar to the following: “John Doe, as Trustee under the John Doe Revocable Trust, dated March 14, 2010.”  The trust will be identified by your social security number and only your 1040 individual income tax return will be required.

Changing title to your trust:

Stocks and bonds held in certificate form. The original certificate must be returned to the stock transfer agent in exchange for a new certificate in the name of your trust.

Investment/brokerage accounts. Consult your institution for specific instructions on changing title of the account to your trust – it may be a simple name change, or you may have to transfer the assets from the current account to a new account.

Bank accounts and certificates of deposit. Retitling bank accounts is similar to retitling investment accounts.  However, before you retitle a time deposit (e.g., a CD) confirm there are no adverse consequences because your bank may consider the retitling of a CD as an early withdrawal of funds.

Tangible personal property (art work, jewelry, rugs, etc). A transfer is generally accomplished by bill of sale or a deed that describes either general categories of property or specifically lists items. Notify the insurance company of any insured property.

Closely-held business interests. Review any shareholder, partnership or operating agreements for restrictions on transfers and specific procedures that must be followed to retitle your shares or interests.

Promissory Notes. Ownership can be changed by assignment of the note to the trust by the payee.

Once titled in the name of your revocable trust, any amendments relate back to the original trust, so there is no need to retitle your assets each time you modify the terms of the trust.  When you acquire additional assets, remember to consider titling them in the name of the revocable trust.

Steven W Tarta has been providing Estate Planning and Elder Law services for over 25 years. His focus has been on “Asset Preservation” resulting in the elimination or reduction of Federal Estate Taxation by the use of Revocable and Irrevocable Trusts. Also, Steven is very concerned with quality of life issues as they relate to his Elder Law practice. Steven provides a conservative and professional approach which analyzes the client’s objectives and creates an appropriate strategy for Asset Preservation as well as addressing all Elder Law issues.  Mr. Tarta is also a member of the LawGuru Attorney Network .