When we assist personal representatives in probates, we are often asked about taxes and tax filing requirements associated with probate. This post explains the possible tax filings that might be required as part of a probate process. When we represent clients in probates or trust settlements, we will work through these issues and give specific recommendations on each.
Understanding Probate Accountings
Our office routinely assists personal representatives in probate matters. We also assist trustees in settling revocable trusts. This post explains the financial reporting involved in those matters, and how we help our clients handle their responsibilities appropriately.
To keep this article simple, we discuss a probate process, in which the decedent leaves an estate, and the administrator is called a personal representative. When the decedent uses a revocable trust as their planning tool, the decedent leaves a trust, and the administrator is called a trustee, but the same reporting rules apply.
Trust Accountings for Ongoing Trusts
Our office routinely assists trustees in preparing accountings for ongoing trusts. This post explains what those accountings are and why they are important. It also gives some advice for trustees on making financial reporting as easy as possible.
Trust Accounting Basics
An ongoing trust is an arrangement under which one person is managing money for another according to a governing document. The person managing the trust is the trustee, and the person they are managing for is the beneficiary. The governing document explains how the funds are to be used.
Trusts for Children that Include IRAs
When we draft estate plans for parents of minor children, those plans typically include a trust fund for their children. This trust fund generally is structured so that a trustee selected by the parents (typically, a trusted family member) will manage those funds for the child until the child is old enough to do so themselves (perhaps at age 25-30).
When the parents’ assets include significant traditional IRAs or other pre-tax retirement accounts that would be included in this type of trust, the parents will also want to consider using a conduit trust to minimize taxes on IRA accounts that would be held by the trust. This article explains that option.
Differences Between a Will and a Trust
When people come to our office for estate planning, they often start by asking us whether they need a will or a trust.
The very short answer is, of course, that it depends. Wills and trusts are tools. The right tool for each client will depend on the client’s family situation, asset situation, and goals for their plan. Historically, about half of our plans have been will-based plans, and half trusts.
That being said, there are some common reasons to choose one tool over another. This post explains how each option works and the common reasons we might recommend one over another.
Should I Give My House to My Kids?
During an estate planning consultation, clients often have a simple question for us:
“If I end up in a nursing home, I want to make sure my kids get my (house, land, stock, etc.). How can I do that?”
Our short answer is:
“You can do it, but you might not like what you have to do.”
The full answer truly is a long answer to a short question. But it is an important answer to understand, even if it may not be the one everyone would like to hear.
Planning for Blended Families
Estate planning used to be pretty easy when every family was a husband, wife, and two and a half kids surrounded by a picket fence. That’s often not how it works anymore, and we now do many estate plans for blended families.
Like a lot of issues involving blended families, there are good solutions available in this type of planning, but it can take a little more time and thought to get there. This post explains how we work through plans for blended families.
How to Choose Agents
Choosing the right people to carry out a plan is often just as important as designing the plan correctly. We spend a great deal of time in our estate planning meetings discussing who to choose for a variety of key roles. These roles include financial roles, like estate administrator, and personal roles, like guardians for minor children and powers of attorney for health care.
This post discusses the various roles and the skill set necessary in each.
Options for the Family Cabin
Family cabins are often a source of memorable family experiences, and assets most likely to be kept in the family as part of an estate plan.
In most family cabins, the parents (generation 1) are the original owners, and at some point pass the property on to their children (generation 2). We have worked both with parents and with second generation owners to structure cabin ownership in a way that meets their needs.