A trust can be a powerful estate planning tool – it allows property to avoid probate, and in the case of living trusts, can establish a method of managing property and finances in case of incapacitation. While a trust attorney works with you to create a trust, there are several questions that you will need to address in the process….

1. Who are the beneficiaries? In the case of living trusts, you may be a beneficiary, but will still need to name successor beneficiaries for the trust.

2. Who will be the trustee? Again, in the case of living trusts, you may handle the trustee duties, but will need to name a successor trustee that can take over duties upon a specified event, such as your incapacitation or death.

3. When will the trust make distributions? Often trusts begin making distributions to beneficiaries when they reach specified ages.

4. How should the trust assets be invested? Depending on the goal of the trust, you may want to advise how the portfolio will be invested, such as for growth, value or to generate income.

5. What are the trustee’s powers when it comes to making distributions? You may make these powers either broad, allowing the trustee to exercise discretion, or narrow, such as paying out income for specific purposes such as educational expenses.

6. Can the beneficiaries remove and replace the trustee? This should be spelled out within the trust documents.

7. How long should the trust last? A trust can be set up to end with a specified event, such as a beneficiary reaching a certain age, or to continue for a longer timeframe for asset protection purposes.

Creating a trust can benefit many estates, but a trust attorney can best advise you of which trust will best meet your estate planning goals.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

There are several forms of ownership for property, whether it is real estate or personal property, and how your property is owned impacts what happens to it when you pass away. It will also impact your estate planning tasks. Two forms of co-ownership in property are tenancy in common and joint tenancy, and it is important to know the difference, particularly when it comes to estate planning.

Tenancy in common involves undivided ownership interests. Joint tenancy is the other system of co-ownership in addition to tenancy in common and has been the more popular form of co-ownership. With joint tenancy, as with tenancy in common, two or more people own property together. Each has an undivided interest in the property. Each owner has the right to request a court order for partition and sale if he or she wants to terminate the arrangement, such as in the case of a divorce of a married couple. The major difference between joint tenancy and tenancy in common becomes clear at the death of one of the owners.

With joint tenancy, there is a right of survivorship that controls disposition. When property is held in joint tenancy and one of the owners dies, the property goes to the surviving owner. An ordinary will does not impact the disposition of property owned in joint tenancy at the death of the first joint tenant. When property is held in joint tenancy, in essence, there is a “built in” will operating on the death of the first joint tenant to pass away.

On the other hand, if that property was owned under a tenancy in common arrangement, when one owner dies, that person’s interest in the property goes to the heirs under state law if the person has no will. If the individual has a will, the deceased’s ownership interest passes under the will to the named beneficiaries. The heir or will beneficiary then owns the undivided interest in the property with the living co-owner.

There are benefits and drawbacks to each form of ownership. It is important to understand the consequences of the different types of property ownership, particularly when it comes to estate planning. Working with an estate planning attorney not only ensures you understand the terminology used, but it ensures that all aspects of your estate plan coordinate to meet your family’s needs.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

You’ve received an inheritance, or you think you did, you were named as a beneficiary of a trust. So is that the same thing as being a beneficiary in a will and inheriting property?

No, it’s not, and here’s why:

1. A person can create a trust in countless ways. The only restriction is that the trust may not function for an illegal purpose, so the door is left wide open. For example, a trust can be created to hold money or property until you reach a certain age, or even until you achieve a certain goal, such as graduating from college. On the other hand, if you were to inherit money from a will, you normally receive your inheritance when the estate is settled.

2. A trustee is the person who manages a trust, they not only manage the property held by the trust, but they can also determine the best time and method for distributing the assets, as long as their decisions are made for the benefit of the beneficiary and in accordance with trust documents. There is not that level of oversight and control with an inheritance received as a bequest within a will.

3. A trust can help protect the assets held within the trust from your creditors. While you may not be able to access funds when you want them, neither may your creditors in some instances. Therefore, a trust can act as an asset protection device for you, while a will cannot do so.

While it may seem there are strings attached to being the beneficiary of a trust, the trust does act within the best interests of the beneficiary – you. If you need assistance with creating a trust, leaving an inheritance or even estate litigation, an estate planning attorney can help you.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

In every state there are laws that pertain to what makes a Will valid. In Colorado, a Will must be signed by the testator, the person who had the Will drafted, as well as two witnesses. Each witness must either see the testator sign the Will or be told by the testator that the signature on the Will is his or hers and they must sign the Will in the testator’s presence as well as in the presence of the other witness.

When the testator dies, the Will is authenticated in a Probate Court and the estate is then administered. A self-proving Will allows the witnesses to avoid a court appearance to re-affirm the signatures within the Will. It also provides an additional layer of authentication that can help your beneficiaries avoid a long, drawn out probate process. A self-proving Will can be particularly helpful when one or more of your witnesses cannot be located or they have since passed away.

A self-proving Will, or a self-proving affidavit attached to a Will, acts as a substitute for the live testimony of each of the witnesses. It simply certifies that the witnesses and testator properly signed the Will. Since the witness swears an oath during the signing of the affidavit, it is presumed to be truthful and is used in lieu of live testimony, which is not only convenient, but allows a more timely validation of the will. The self-proving affidavit is normally signed at the same time as the signing and execution of the Will.

Working with an estate planning attorney not only ensures your estate planning documents are valid and legal, but ensures that your family’s needs and goals are met within the estate plan.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Trusts are more than just estate planning tools for the rich and famous, they are legal tools that allow you to transfer whatever you own to your loved ones without the hassle, delay and expense of going to court, put conditions on how and when your assets will be distributed after your death, and can also help manage property later in life.

One of the primary purposes of estate planning is to ease the burden of your passing on your loved ones. This includes reducing the costs to your estate and ensuring the full, fast and proper distribution of your property. Using a trust as an estate planning tool helps meet this goal, as a trust allows property to pass outside of probate, the legal process which administers an estate. Not only can this save on probate court costs, but can distribute these assets more quickly, as well as put terms in place to help manage and distribute those assets in a way that benefits the beneficiaries named in the trust documents.

In fact, a living trust can also help manage your financial affairs should you no longer be able to do so on your own due to age, illness or other incapacitation. Establishing a trust involves working with a trust attorney to draft the legal documents, and a simple, living trust may involve the following tasks:

1. A Grantor establishes a Trust to benefit beneficiaries that they name.

2. The Grantor transfers an asset or assets, such as a piece of real estate, to the Trust, which is known as funding the Trust.

3. The Grantor names a Trustee to manage this asset. In a living trust, the Grantor can also act as the Trustee, and name a Successor Trustee to take over when they pass away.

4. The property is managed by the Trust. When the Grantor passes away, the property does not go through Probate, since the property is owned by the trust rather than the deceased. The Successor Trustee takes over the Trust administration duties.

5. The Trustee manages the Trust to benefit the named beneficiaries, which can involve selling the property and distributing the proceeds to the beneficiaries, thus terminating the Trust.

As you can see, this estate planning tool could benefit many estates, not just those of the wealthy – in fact, many modest-sized estates can benefit from many of the estate planning tools that are used within a comprehensive estate plan. Working with an estate planning attorney ensures that you have the legal documents and plans in place that meet the needs and goals of your family.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Asking someone to be the Executor of your estate is a crucial part of creating a will and the basis for beginning the estate planning process. While the question may seem fairly benign, many don’t realize exactly what is required within an Executor’s duties.

An Executor is named when a will is drafted, their duties begin once the testator, the person who had the will created, dies. Once the estate begins probate, the legal process that settles the estate of a deceased, the Executor duties will include:

• Appearances and filings in Probate Court;
• Notifying beneficiaries and heirs;
• Sending death notices;
• Opening a checking account to pay the estate’s bills;
• Filing a tax return;
• Inventorying assets;
• Identifying and paying debts of the estate; and
• Distributing bequests to beneficiaries.

Obviously, it can be a labor-intensive process for an Executor, and unfortunately it also comes during a time of grief. But the Executor does have options, such as hiring a Probate attorney or accountant to assist with the Executor’s duties. The fees are paid for by the estate.

If you are choosing an Executor for your estate, make sure you speak with your choice and let them know of the responsibilities and duties that come with the task. You also have the opportunity to make the Executor duties easier, such as keeping records and instructions up to date, and having a comprehensive estate plan in place that eases the burden of your passing on your loved ones as well as your Executor.

An estate planning attorney can help you prepare a plan to meet the needs and goals of your family, as well as discussing options in choosing an Executor while creating a will.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

It’s hard to believe 2010 is almost over, and with 2011 just around the corner, it’s time to make your New Year’s resolutions. For many people, the standard resolution is getting organized, and along these lines, let’s make it a year to get our estate plans in order.

Estate planning is all too often our ‘when I have time’ or ‘next year’ task. But tis the season to get our estate plans in place. Whether it is creating a will, disability planning, creating a medical power of attorney or considering a living trust – these are not tasks that should be left, once again, for next year. With the major changes in store with estate taxes for 2011, as it stands, estate taxes are slated to go from 0 to as high as 55% on January 1, 2011 (although there’s a lot of activity in Congress as they wrestle over possible changes).

For those who have already started the estate planning process, take time to review your plans and make sure they are up to date. Whether there have been life changes or even law changes, estate plans consist of ‘living’ documents that should be updated on a regular basis.

An estate planning attorney can help you with your estate planning New Year’s resolutions, and help to ensure your family’s needs and goals are met.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Reading legal terms can often be like reading something in a foreign language. In fact, some legal terms actually are a foreign language! We define several terms that are used in estate planning that may help you translate these words to allow a better understanding of estate plans.

Administrator: An administrator is appointed by a probate court when there is no will to ‘settle’ an estate. Their tasks include paying debts, inventorying assets and distributing inheritances to the heirs. Administrator may be used interchangeably with the term executor, although an executor is usually named within a will, while an administrator is appointed by the probate court.

Beneficiary: A person or institution who inherits property by a will, trust, retirement account or life insurance policy.

Bequest: A bequest is often used to describe personal property that is left by a will.

Codicil: A codicil is used to supplement or make changes to a will.

Decedent: Someone who has died.

Escheat: The legal process in which property of a decedent passes to the state if no heirs are identified or located.

Grantor: The person creating a trust.

Inter vivos trust: Another term for a living trust.

Intestate: Dying without a will

Marital deduction: The exemption within federal estate tax laws for property passed to a surviving spouse.

Probate: The legal process which validates a will, if there is one, and administers an estate, such as paying bills, identifying heirs and transferring ownership of property that is inherited.

Residuary estate: Property that is not specifically left to a designated beneficiary.

Testator: A person making a will.

Trust: A legal arrangement in which a settlor or grantor, the person making the trust, transfers ownership of their assets into a trust in which a trustee then manages and controls the assets for the benefit of a third person, called a beneficiary.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

Estate planning is an important process, it not only addresses the distribution of your property upon your passing, but the management of property and incapacity planning for later years. There have been clients who have chosen to complete this process without discussing their plans with family members, but in most cases, we disagree with this decision. Here’s why…

Executors and Guardians

Many times, family members are chosen as an executor to an estate or as guardians for minor children. It’s important to discuss these appointments with your choices prior to naming them within your will. Both executor duties and guardianships are huge responsibilities, and it’s best to ensure your choices are willing to take on these challenges.

Family Impact

Since your family is significantly impacted by these plans, it’s best to discuss them so they know what to expect in advance. Not explaining your choices prior to your passing can not only lead to hurt feelings and anger, but does not allow for your family members to plan for possibilities that may come up as a result.

Reducing Chances for Disagreements Later

An open dialogue will reduce the chances a family member could contest your will later. When beneficiaries understand your decisions and know the true intent of your estate planning documents, the chance of a will contest is reduced.

Making the Plan Known

If a will or other estate planning documents cannot be located, they cannot be presented to be used after your passing. It’s important that family members know that these documents exist and how to locate them.

Estate planning is a sensitive topic, but in order to ensure that your family’s needs and goals are met, it’s important to discuss plans with family members.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.

One of the goals of estate planning is ensuring that the tools used would be able to stand up to a legal challenge by a beneficiary or heir. Which estate planning tool is more difficult for a beneficiary to challenge, a will or a living trust?

It is generally considered more difficult to challenge a living trust than to contest a will. Why? A living trust allows for a continued involvement of the grantor, the person establishing a trust, than a will does. For example: A living trust requires that property be transferred to the trust in order to fund it, this act alone may serve as proof of competency in managing financial affairs.

Contesting a will and challenging a trust are both more difficult than many believe. To successfully contest a will, a person must prove that the testator, the person creating the will, either lacked the capacity to have the will drafted or they were subject to undue influence by a beneficiary. They may also challenge the legality of the will itself if it is suspected to be fraudulent.

These issues would also be used when it comes to challenging a trust. However, they are likely to be more difficult to prove with a trust document, since:

• A living trust is more likely to be set up by a trust attorney who can avoid the pitfalls of a ‘DIY’ will;
• A living trust has the continued participation from the grantor, making it more difficult to prove incapacitation;
• A living trust allows a successor trustee to be named, meaning they can take over should the grantor be found to be lacking capacity to make decisions involving the trust.

We would all like to believe that our friends and family will come together after we pass, and that a will will not be contested nor a trust challenged. Unfortunately, family issues or feeling slighted during an emotional time may lead to unexpected challenges upon the death of a loved one. Working with an estate planning attorney or trust attorney can help you determine the best estate planning tools for your family’s goals and needs, as well as take proactive measures to avoid contests and challenges.

The Hammond Law Group is a member of the American Academy of Estate Planning Attorneys.