Is a Testamentary Trust Right for Your Family?

Many of our clients tell us that estate planning, at first, can be a challenging task. This is understandable. Effective estate planning requires you to carefully consider what will happen to your assets when you’re no longer here.

We want you to think through your estate planning needs very carefully and evaluate all of the available planning alternatives with our support. Our goal is for you to rest assured that your assets will be protected and your loved ones well taken care of in the event of your death.

Let us share with you some commonly asked questions about establishing a testamentary trust, so you can make an informative decision on whether it may the right estate plan for you and your family.

What is a testamentary trust?

A testamentary trust, or will trust, is one that is provided for in a last will and testament. The will sets forth instructions to the personal representative of the estate to create a trust. Although the will is drafted while the grantor is still living, the trust itself does not exist until the will is probated upon the creator’s death. The grantor appoints a trustee to manage the assets and funds in the trust until a designated beneficiary takes over.

How does a testamentary trust differ from a revocable trust?

On the most basic level, a revocable trust differs from a testamentary trust in its formation. A revocable trust is set up while the grantor is still alive, while a testamentary trust is established upon the death of the creator. Further, families seeking to avoid the probate process may opt to create a revocable trust, as a testamentary trust guarantees judicial probate. However, to take advantage of this benefit, the grantor must work with his or her attorney to continue to place assets and money into the trust during his or her lifetime, which may pose a challenge for some.

What are the main benefits of a testamentary trust?

Asset protection

One of the most appealing benefits of establishing a testamentary trust is asset protection, particularly for families with significant assets and funds. For example, if a beneficiary owes money to creditors and receives an inheritance via the trust, the distribution will be protected from said creditors. The assets belong to the trust, not the individuals.

Control of assets

Another main benefit of a testamentary trust is that this type of trust allows the grantor to “control”, to a certain degree, how the trust assets and funds will be used. In the case of a beneficiary with poor spending habits, for example, the grantor can set forth certain provisions within the trust to prevent the beneficiary from squandering away his or her distribution.

Simplicity of creation

Creating a testamentary trust is relatively simple. The trust can be incorporated into your will during the will’s creation or later as a separate addition. Costs and fees for establishing the trust can be taken out of your assets at death, limiting the amount of upfront costs you may be responsible for.

While a testamentary trust can be a useful tool for distributing your life savings per your personal desires, it is just one planning option to consider. For many of our clients, the desire to maintain privacy and avoid the probate process entirely, vastly outweighs the potential convenience of a testamentary trust.

If you are ready to discuss your estate planning further, do not hesitate to schedule a meeting with our firm. Let our experienced attorneys guide you through each step of this important process.

How To Update Your Estate Planning After a Divorce

In life, divorce is an extremely difficult event that, unfortunately, many couples may go through. According to the American Psychological Association, at least 40-50% of marriages in the United States end in divorce. What many do not realize is “Gray Divorce” or the divorce of Americans over the age of 60, continues to steadily increase. While divorce is hard enough, the last thing you need is for your estate planning to fail when you need it most.

In many states, estate planning changes after you and your spouse get a divorce and your spouse may even be considered “dead” after your divorce. Florida is no exception. This leads to a possible scenario where no one is left to make serious decisions for you if the time were to come before you updated your planning. The key to success in this scenario is to know how to update your estate planning following a divorce.

Many couples choose their spouse as the agent under the durable power of attorney. This gives your spouse the ability to make decisions for you if you were to become incapacitated or unconscious. Once all of the boxes have been checked and your divorce is finalized, your spouse can no longer make decisions on your behalf. This may be a good thing for some, but, if you do not designate someone else to this position, it can become a sticky situation. This is why you need to name someone else as your agent under your durable power of attorney once your divorce is settled.  You do not have to wait! If you are currently going through a divorce and no longer want your spouse as your agent, then you need to meet with your estate planning attorney to terminate this position and choose a new person to serve in this capacity as soon as possible.

Again, changing your Florida advance directives is the first step when going through a divorce.  The next step of your estate planning that you need to consider is your revocable trust agreement. If you were planning on leaving part or all of your estate to your spouse before you decided to go through with a divorce, then there are major changes that you need to make as soon as possible.

Divorce is painful, and you will need to make many changes in your life.  One of the most important changes will be to your estate planning documents.  Make an appointment with your estate planning attorney to update your estate planning documents as soon as possible. Do not hesitate on this matter, there could be unwanted consequences! If you need advice on this issue, or any other, do not hesitate to contact our law firm.

Five estate planning tips for the newly widowed

On average, women live five years longer than men, and it is currently estimated that 70 percent of baby boomer women will outlive their husbands. According to an ING Direct USA survey, almost 80 percent of boomer women say they lack the financial savvy to make the right financial planning decisions and 40 percent still leave financial planning totally up to their husbands.
Taking action now can spare you from financial panic; here are some recommendations:
Start estate planning now. Many women cannot count on having a lot of time to get their financial affairs in order after a spouse dies. Make sure all your accounts are jointly held and steps are taken to avoid probate if possible. You will want continuing access to all your assets if your spouse dies before you do.
Educate yourself. Know what you have in terms of assets and where to find those assets. Sit down now with your spouse and make a full list of all accounts, passwords and contacts and keep that list in a safe place.
Delay Social Security. If a husband was the primary earner and can hold off taking Social Security benefits until age 70, a surviving wife will qualify for a significant benefit premium.
Don’t make hasty decisions about money. Experts recommend that widows not make any major decisions – financial or otherwise – in the first six months of widowhood.
Get professional help. The help of an estate planning attorney or financial planner can be invaluable following the death of a spouse, helping you navigate the estate administration process and ensuring your financial future.
With the proper guidance, you can protect your finances and spare your loved ones the frustration of having to make costly and difficult decisions. Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

How to Avoid 5 Common and Costly IRA Mistakes

How to Avoid 5 Common and Costly IRA MistakesAmericans currently have invested more than $5 trillion in IRA accounts, and much of these assets will eventually pass to heirs. To ensure that as much of these assets pass according to your wishes, be sure you are not making any of these costly IRA mistakes:

  1. Misplacing the beneficiary form– if your IRA beneficiary form can’t be located after you die, the default provisions of your plan will decide who inherits. The worse case scenario could be to have those assets default to your estate, which would have adverse tax consequences.
  2. Your beneficiary form is out of date– if you have divorced, remarried or just had a change of heart, if your beneficiary form does not reflect the right person you want to inherit your IRA assets, they will not inherit. Even if you have named the rightful heir in your will, the person(s) named on the beneficiary form will still inherit.
  3. You have not named a back-up beneficiary– should the person you named as your IRA beneficiary die first and a secondary beneficiary has not been named, the IRA will be liquidated and taxed before going to your estate.
  4. You have not taken advantage of the stretch– to enable the IRA assets to grow tax-deferred, you can have your beneficiary designation set up to extend payments out over the lifetime of your heir.
  5. Your assets are not protected– you can use a special trust to protect your child’s inheritance from divorce, bankruptcy, debt collection or just poor money management.

Our experienced and trusted estate planning attorneys have been serving Treasure Coast families for decades, and Michael Fowler is one of only nine attorneys in the state of Florida who is double board-certified in wills trusts and estates and in elder law. Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

Top 10 Things You Need to Know About Your Social Security Benefits

Top 10 Things You Need to Know About Your Social Security BenefitsSocial Security is the primary source of retirement income for millions of Americans over the age of 65. Based on contributions made over your years of employment, the amount of your monthly benefit is calculated based on how much you earned during your employment years, when you were born and when you start taking benefits.

Here are 10 things you need to know about Social Security:

Benefits Calculation — Social Security adjusts your actual earnings to account for changes in average wages since the year the earnings were received, and then calculates your average indexed monthly earnings during the 35 years when you earned the most.

Income Tax – While Florida does not tax Social Security benefits, you will have to pay federal taxes on a portion of your benefits if your income as an individual is above $25,000 or $32,000 for a married couple filing jointly.

Maximizing Benefits – The longer you can wait to file for Social Security, the bigger your monthly check will be. While you can start claiming at age 62, you can boost your benefits by waiting until your full retirement age or longer.

Wait Gain – If you wait as long as possible to claim your benefits, your monthly check could increase by 8 percent each year after your full retirement age, plus two-thirds of one percent more for each month you put off making a claim.

Max Payout – For 2016, the maximum monthly payout available is $2,639 at full retirement age. To attain the maximum amount, a worker needs to earn the maximum taxable amount each year after the age of 21.

Social Security and Unemployment Benefits – Your Social Security benefits are not affected by payment to you of unemployment insurance benefits; however, your unemployment benefit may be affected by receiving Social Security benefits or other retirement income.

Living Overseas – As long as you are a U.S. citizen, you can move overseas and will continue to receive your Social Security benefits.

Military Service Credit – Social Security recognizes earnings for active duty military service or training, and in some cases, special earnings can be credited to your military pay rate for Social Security purposes.

Spousal Options – Spouses may receive benefits of up to 50 percent of the highest wage earner’s monthly benefit if that amount is higher than what they might receive based on their own work record. In addition, spouses who both worked and who have reached full retirement age can claim twice – first by signing up for a spousal payment, and then claiming on their own record.

What The Numbers Mean – The first three digits of your Social Security number refer to a geographical region, going from east (lowest numbers) to west (highest numbers). The middle two numbers are called group numbers, and are issued in nonconsecutive order from 01 to 99. The last four digits are issued in sequential order.

The Estate, Trust & Elder Law Firm, P.L., provides attorney services ranging from estate planning for young families to advanced and crisis long-term care for seniors. Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

5 Tips for Helping Elderly Parents Maintain Their Independence

5 Tips for Helping Elderly Parents Maintain Their IndependenceAs parents age, many adult children find themselves having to lend a hand with the things our parents used to be able to do for themselves. The thing is, they still want to do these things for themselves, and many may resent their inability to do so.

Here are some tips to help your elderly parents or any other aging family member keep their independence for as long as possible:

  1. Determine their needs. Assess the person’s daily and weekly care giving needs and find professional service like grocery delivery, yard maintenance workers or housekeepers to fill the gaps. Arrange for other transportation options if they are no longer able to drive.
  2. Seek out community resources. As the U.S. population has grown older as a whole, more resources have opened up for senior care. Check the person’s hometown website for such listings or explore care giving services offered for seniors from for-profit sources.
  3. Recruit local volunteers. If you live far away, see if there are friends or extended family in the area that can check in on an elderly relative. If your relative is lonely, pet ownership may be an option for him or her.
  4. Make home modifications. Your parents’ home may need some modification so mobility is easier for them. You should also consider installing a home monitoring system for medical, fire and police emergencies.
  5. Consider a move. If your aging parent can no longer live safely at home, it may be time to consider an assisted living facility.

The Estate, Trust & Elder Law Firm, P.L., provides attorney services to a range of clients from young families to advanced and crisis long-term care for seniors. Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

Tips for Choosing a Continuing Care Retirement Community

Tips for Choosing a Continuing Care Retirement CommunityIf you are nearing the age where you are thinking about moving to a senior living community, or are in charge of finding the right place for your aging parents, chances are that you are probably going to be looking for a continuing care retirement community (CCRC), which is a facility that “moves” seniors along from independent living to assisted living and, if necessary, to a nursing home with 24/7 care.

Most elder care financial advisors suggest that seniors and their caretakers approach CCRCs as an investment. CCRCs typically require an upfront payment plus continuing monthly rates. Here are some questions you should ask when considering a CCRC:

  1. Is the community established or even built yet? Be sure to check into the developer’s finances; some seniors get stuck paying big fees for facilities that either don’t get built or are stalled by financial problems way past the time the new home is needed.
  2. Is the entrance fee refundable? If you die or decide to move out within a certain period of time after moving in, your entrance fee may be wholly or just partially refundable.
  3. What’s included and what costs extra? Nearly all CRCCs provide guaranteed access to health and personal care services but not all of them include it in their monthly fee.
  4. Are there just old folks? Facilities with ties to the local community and schools tend to offer seniors a more satisfactory lifestyle.
  5. Is there a pool? Wellness programs keep seniors active, helping to lower rates of depression and illness.
  6. What transportation is available? You may want easy access to public transportation for the day when you have to give up your drivers’ license or even if you just don’t want to pay for a taxi every time you want to go somewhere. Some CRCCs provide transportation for residents.
  7. Are there other special amenities? Free Internet, concert tickets or other amenities can add a lot to a senior’s quality of life.
  8. What about Alzheimer’s patients? The reality is that the incidence of Alzheimer’s is growing with the population. Facilities that offer Alzheimer’s wings may be a good choice for both couples and singles.

At The Estate, Trust and Elder Law Firm, P.L. we help our Treasure Coast clients develop and implement comprehensive estate planning strategies personally tailored to their unique situation, needs, and goals.   Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

Financial Pros and Cons of Late Life Marriages

Financial Pros and Cons of Late Life MarriagesRecent research on the financial ramifications of living together versus marrying for boomers over the age of 60 has found pros and cons in each of three important areas:

Retirement — Marrying before the age of 60 can have adverse effects on retirement income, especially if you are receiving Social Security benefits from a late spouse’s work record.  If you marry after 60 – or are already receiving benefits on your own record – there is no impact.  If you name a non-spouse as a beneficiary of an IRA, they will have to withdraw and pay tax on the entire amount in the IRA within five years of the death of the original owner, which is not the case for spouses who inherit IRAs.  A non-spouse beneficiary can also elect to take the stretch option, allowing for withdrawals over their life expectancy, but they must take the first distribution by the end of the year following the death of the original IRA owner.

Medical – Marrying after 60 could be hazardous for a poorer partner since spousal assets are counted when determining Medicaid benefits.  Employers differ on who qualifies for medical coverage; while spouse are usually covered, non-spouses may not be so if one partner is still working, he or she should check with an employer about health benefits.  Life insurance benefits can be left to anyone.

Assets – Unmarried spouses do not qualify for the marital deduction when it comes to estate taxes, nor is the portability option available to couples who are unmarried.  Titling the home as a life estate is one option for unmarried couples to enable a surviving partner to remain in the home until they die, when the home would then pass to heirs.

Estate planning experts advise live-in partners to create a cohabitation agreement to protect each partner’s assets, with provisions to cover personal liability issues and debts.

With the proper guidance, you can protect your finances and spare your loved ones the frustration of having to make costly and difficult decisions.  Contact us for your free initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.