Estate Planning Myths, Tips, and More with Attorney Bobby Sawyer

This week's blog post is a very special Guest Post and interview with Attorney Robert "Bobby" Sawyer. The podcast is available for download from the iTunes StoreGoogle PlayStitcher Radio, and TuneInYou can also download this episode HERE.  

What’s the number 1 estate planning challenge for most of my clients? The answer depends on the client’s particular situation and stage in life.

Big picture – all of our estate planning goals can be summarized like this: first, we want to control what we have for as long as we are able; second, we want to make sure a trusted person is there to manage affairs when we become unable or pass away; third, we want to make sure our assets go to the right people; and finally, we want to do it as efficiently as possible and with as little government involvement as possible. When the government gets involved, it means taxes.

Where you are in life will dictate the details of each of those goals. For new parents or parents of minor children, the name of the game is making sure there will be a roof over the children’s heads, food on the table, and someone is going to take care of and love them as much as you do. Easier said than done, right? Here is a list of steps that will get the ball rolling.

If you’re on the other end of the spectrum – in retirement and enjoying the golden years of life – then your estate planning goals are drastically different. A big concern for you is how to handle the cost of long-term care. Depending on where you live and the level of care needed, the annual costs of long-term care could easily exceed $85,000. Without long-term care insurance, these costs could quickly eat through your retirement nest egg.

This list gives you some good steps to take in order to get a plan in place to help when a loved one becomes incapacitated.

To address the cost of long-term care, I generally recommend 2 things: a revocable living trust based plan and then a will that contains testamentary supplemental needs trust provisions. All this means is your will contains provisions to create a trust. The net effect of this is that between a husband and wife, when the first person passes away, a trust is created that has several protections and features that a standard revocable living trust does not.

There are several advantages to using a revocable living trust as the basis of your estate plan. One of the primary ones is avoiding the cost, time, and stress of the probate process

Bobby is a partner with the Law Office of Craig S. Johannesmeyer, PLLC, a Real Estate and Estate Planning Firm based in North & South Carolina. Bobby is a United States Army Veteran, an Auburn University graduate, and lives with his wife and three children in Belmont, North Carolina. To order a copy of the book Bobby discussed in the podcast episode click here The Generals by Thomas Ricks or on the link below (The show receives a portion of each purchase made through these affiliate links.)

Have a question you want answered? Send it to me HERE, and we'll answer your question on next week's show.

Click Here to schedule your free Estate Strategy Session with me and for weekly doses of actionable advice subscribe to the FutureSelf Estate Planning Podcast. You can also download our free Estate Planning manual 6 Things to Know Before Making a Will or Living Trust.

2 Comments

Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.

Her Father Died When She Was 4 Years Old. This Is How His Love Lived On.

 Grateful to have had a Dad who had a kind heart, loved beer, baseball, country music, his family, and my mama.

Grateful to have had a Dad who had a kind heart, loved beer, baseball, country music, his family, and my mama.

When I was still in diapers my Dad was diagnosed with a brain tumor-yes, cancer. One week before my 5th birthday he died. He was 43 years old. This was a terribly tragic moment in my life, but I'm not writing to make you feel sad or gain your sympathy. I'm writing to share my story of a beautiful, loving man and the sacrifices he made to ensure I could live a wonderful and full life. This is a story with a happy ending. 

It's been 32 years since my Dad left me, and not a day goes by that I don't think about him. I wish everyday that he was here to see the woman I have become, the life I have made for myself. I wish he could meet my husband, I wish he could laugh with my friends. As I write this, millions of families around the world are celebrating Father's Day. This has always been a difficult day for me, but this year has been particularly challenging. My husband and I have recently made the decision to start our own family, and the thought that my children will never know their Grandfather, will never know the strong, kind, gentle, and caring man that he was, hurts my heart.  

Estate Planning Guest Post Success Jenna Rush Ingalls Law

My Dad was born to be a family man. When I was born (surprise!) he had already raised three adult sons, and he thought changing diapers and chasing toddlers was behind him. He didn't miss a beat though. We were only together for a short time, but I have so many beautiful memories of him. From teaching me how to fish to chasing me around the yard, he was always a doting and attentive father. While grief is always a rollercoaster, with it's ups, downs, twists, and turns, one thought always brings me comfort in those moments, the person I am today is a direct result of how much he care about me.

After spending literally half of her life with my father (she married him at 17), his passing was extremely difficult for my Mother. The months and years after were a testing time in her life, sometimes even simple day-to-day routines were unbearable. I didn't know this until later in life, but my father had spent years planning for just such a moment. For all his strength, he understood the uncertainty of life all too well. And, the last thing he wanted was to leave his wife and child behind to fend for themselves in what can be a cruel world. My father's foresight and financial responsibility provided us the comfort and support he could no longer physically provide for us. Because of his careful attention we were always provided for and never felt the fear of financial instability. My Mom was able to stay home and raise me, as they had always planned for, we were able to move to a new home in a safe and quiet neighborhood, and I was able to attend a good school. I may have taken these things for granted at the time, but looking back, these were amazing advantages that few are afforded after such a tragedy. I have no doubt that my life would have turned out very differently had my mother had to immediately embark on a career, in the midst of the turmoil and grief, in order to put a roof over our heads and food on the table. Sadly, this kind of tragedy happens to families all over the world everyday. So, each day I am so thankful for not only the time I got to spend with my father, but for the planning, hard work, and dedication he put into making sure we were safe and provided for even in his absence.

 That fish was a lot bigger in person.

That fish was a lot bigger in person.

Thanks to my Dad making arrangement for the “just in case”, my childhood is filled with memories of my Mom picking me up from school everyday, baking cookies, and summers filled with travel and seeing new places. My childhood memories could have looked very different if my Dad had not put a plan in place to ensure that we were cared for when he was gone. He loved baseball and he sure knew how to prepare for a curveball. 

 One of our last pictures together...in front of the lilacs

One of our last pictures together...in front of the lilacs

Now, as I am preparing to start my own family, I have such a deep understanding and appreciation for the the benefits of planning for the future. I know most people have a very abstract understanding of the benefits of planning for a future that does not include them, but I can say from personal experience, it's one of the most beautiful, thoughtful, and kind things my Father did for us. And, I am committed to making sure my children will feel the same comfort and protection if one day I'm not there to give it to them. 

Jenna Rush is a writer, chef, Oncology Nurse Supervisor, adventurer, supermodel, aspiring horticulturist, and one hell of a wife. She lives in Charlotte, North Carolina with her devilishly handsome husband and their brood of four-legged children. 

Do you have a story of how Estate Planning made a positive difference in your life? We'd love to hear about it. The best entries will be considered for their own posts (stories will only be reproduced with your express consent.) Feel free to send your stories or questions to us HERE.

This Is How to Plan If Your Pet Is Family

I went camping with my family (my wife Jenna and our dog Liberty) over Memorial Day weekend. We stayed at River Creek Campground, a delightful place just outside Lake Lure, North Carolina. Yes, the place where Dirty Dancing was filmed. Because my wife is apparently the only person from our generation that missed that movie as a child, we didn't spend much time scouting the filming locations. Instead we hiked to Bradley Falls on Saturday and spent Sunday paddling the lake. It is a lovely area and we look forward to going back.

Each time we pack up the car and spend  a few days outside, I'm reminded what a big part of the family Lib has become (Did you grab the leash? Food? What about her bed?) It will be two years in August since we rescued her (I always feel a little silly saying we "rescued" her, as if she were drowning and I put my life in peril to save her. The real heroes in the rescue game are the people with the Greater Charlotte SPCA, who work tirelessly to save lives.) Being such a great travel companion, we rarely travel without her anymore. Although, she still holds a slight grudge over leaving her for our two-week honeymoon.

 Taking Selfies while the captain and first mate get us out of a jam

Taking Selfies while the captain and first mate get us out of a jam

The point is, she's more than a pet to us, she's part of the family. And, as part of the family, I'm concerned about her welfare if I wasn't here to take care of her anymore. Who would she live with? Who would make sure she got her shots? Do they even know what vet she was going to? These concerns are very real. Every year in the United States family pets are abandoned or euthanized because no one is there to care for them. That's why we decided to create a Pet Care Trust for Lib and our felines, Bodhi and Ivy. The Pet Care Trust gives us the peace of mind that our furry family, that has provided us so much comfort and companionship, will be cared if and when we're no longer able. 

A pet care trust is created to provide continued care for a pet. The trust can provide assets as well as personalized instructions on how the pets should be cared for and who should provide the care. Pet care trusts can be particularly valuable if you own pets that may be strenuous and/or expensive to care for such as horses, exotic fish, or birds. A couple things to keep in mind when contemplating a Pet Care Trust: 1) name a guardian that you have previously discussed the Pet Care Trust with and has agreed to provide care for them, and 2) consider naming a trustee other than the guardian. Sometimes even the most well-intentioned person may begin to feel entitled to more than agreed upon after caring for Fido and Leo for a few years. 

 by the way my name is liberty Line

by the way my name is liberty Line

As always, feel free to leave a comment or shoot me a message with any questions. And, don't hesitate to forward this to anyone that may have questions about protecting their pooches and other pets. Learn more about Pet Care Trusts by: Booking a Private Consultation or Clicking Here for more estate planning advice, informational videos and articles, as well as a copy of my new Ebook Six Things to Know Before Making a Will or Living Trust.  

3 Comments

Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.

Funding Your Trust

 An empty trust is like an empty wallet, neither will get you very far. 

An empty trust is like an empty wallet, neither will get you very far. 

A well-designed trust is the cornerstone of many estate plans. In earlier posts we discussed What a Trust Is and the benefits of Revocable Living Trusts and Irrevocable Living Trusts. Now, we’re going to learn a little about putting the “fund” in “trust fund.” A oft-repeated phrase in the Estate Planning world is “an unfunded trust isn’t worth the paper it’s written on.” That really is the long and the short of it. You can design the craftiest and most elegant trust, a set of glimmering documents that would make even Warren Buffett proud, but without actually putting your assets inside the trust, it’s just a sexy stack of recyclables. 

Funding Your Trust

“Funding the trust” means making the trust the legal owner of the assets. At that point, you will no longer be the owner of the assets. The trust will be the owner and the trustee will make decisions based on the guidelines established in the trust. Don't get riled up just yet, it's still your trust. And, the whole point of a trust is to benefit you and your family. In that vein, many people choose to serve as trustee of their own trusts.  However, some people choose to name a spouse, child, or friend as trustee or co-trustee. If you are the only trustee, you should name a successor trustee to serve at the time of your death. Funding the trust is a vital step in the process. Any assets not in the trust at the time of your death will not be protected. Be careful, many people make that big mistake that sends their assets and family members right into the court system.

While transferring assets from your name into your trust is the first step in the funding process, you should also change most beneficiary designations to your trust. Funding is accomplished in several different ways:

  • Changing the title of the asset from your individual name (or joint names if you’re married) to the name of your trust – for example, from Malcolm Reynolds to Malcolm Reynolds, Trustee of the Malcolm Reynolds Living Trust dated June 1, 2016.
  • Assigning your interest in an asset without a title (such as artwork, jewelry, collectibles or antiques) to your trust.
  • Changing the primary or contingent beneficiary of the asset to your trust.

What Happens to Assets Left Out of Your Trust?

For many people avoiding conservatorship or guardianship and probate are the main reasons they set up a revocable living trust. Unfortunately, you may believe that once you sign your trust agreement, you’re done. But if you fail to take the next step to change titles and beneficiary designations and then become mentally incompetent or die, your assets and loved ones will end up in probate court.

Which Assets Should, and Should Not, Be Funded Into Your Trust?

In general, you will probably want to fund the following assets into your trust:

  • Real estate – homes, rental properties, vacant land and timeshares
  • Bank and credit union accounts – checking, savings, CDs
  • Safe deposit boxes
  • Investment accounts – brokerage, agency, custody
  • Notes payable to you
  • Life insurance – if you don’t have an irrevocable life insurance trust
  • Business interests
  • Intellectual property
  • Oil and gas interests
  • Personal effects – artwork, jewelry, collectibles, antiques

Conversely, you may want to reconsider funding the following assets into your trust:

  • IRAs and other tax-deferred retirement accounts – only the beneficiary should be changed
  • Incentive stock options and Section 1244 stock
  • Interests in professional corporations
  • Foreign assets – in some countries funding an asset into a U.S.-based trust may lead to adverse tax consequences, while in other countries trusts aren’t recognized or are ignored due to forced heirship laws
  • UTMA and UGMA accounts – your minor grandchild is the owner, not you as the custodian; instead, name a successor custodian
  • Cars, trucks boats, motorcycles and scooters –most states allow a small amount of assets, including vehicles, to pass outside of probate, in others a beneficiary can be designated for vehicles, and in others, vehicles don’t have to go through probate at all

It’s important to work closely with your attorney to determine what should go into your trust and what should stay out. Also, before purchasing new assets, consult with your attorney to find out how to title the account or deed or who to designate as the beneficiary.

Benefits of Trust Funding

A properly funded trust makes it possible to obtain the best results from your trust-based estate plan, including:

  • Your personally designated incapacity trustee will take control of your trust assets if you become mentally incompetent, instead of a conservatorship or guardianship judge.
  • Your personally designated settlement trustee will take control of your trust assets after your death, instead of a probate judge.
  • Your trust provides an easier method to modify your estate plan as your wishes and circumstances evolve, instead of relying on a piecemeal approach through joint ownership, payable on death or transfer on death accounts, or individual beneficiary designations.
  • Your final wishes will remain a private family matter rather than being publicized in the local probate court records.
  • Your incapacity or settlement trustee will have direct access to your trust assets without the need for obtaining a court order.
  • Your incapacity or settlement trustee will be able to manage, invest, sell and reinvest your trust assets without court intervention.

Still Have Questions? We Can Help.

A trust can provide immense value to families of all economic circumstances. However, as we discussed earlier, the substantial benefits a trust offers are practically worthless if the trust is not properly funded. To learn more about trust funding and more Click Here to schedule your Virtual Estate Strategy Session with me (if you're not ready to talk but want more information, sign up for my Estate Planning Essentials Webinar). Choose a day and time that works best for you, we'll send you an intake form, I'll contact you either by secure video portal or telephone, I provide a comprehensive overview of your options as well as answers to all your questions, then you choose the plan that works best for you. When it’s time to sign the documents we send the completed plan directly to your home or place of business, we review the plan together for accuracy, and then we make notaries and witnesses available at the location of your choosing to execute the plan. Easy peasy! As an added benefit, members of our Estate Maintenance Program have 24/7 access to their entire executed plan through our secure client portal, accessible through any device. 

Click Here for more information on trust funding, estate planning advice, informational videos and articles, as well as a copy of my new Ebook Six Things to Know Before Making a Will or Living Trust

Comment

Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.

What Is an Irrevocable Living Trust?

The term “Trust Fund” often evokes images of the Kennedys, Rockefellers, and Du Ponts sheltering their vast fortunes from the grasp of the government. This popular trust is referred to at the Irrevocable Living Trust.

If a Revocable Living Trust is a wallet, think of the irrevocable trust as Fort Knox; it’s secure, but once the property is inside you can’t just reach in and grab it when you want it. When assets are placed in an irrevocable trust the creator of the trust loses ownership rights in the property and the right to modify or revoke the trust. The primary purpose of the irrevocable living trust was to minimize or eliminate the federal estate tax. Others reasons include insulating wealth from the high expense of medical care and protecting property from creditors.

Irrevocable living trusts were popular throughout the twentieth century, when relatively modest estates were subject to as much as a 77% estate tax. As recently as 2001, estates valued at $675,000 were subject to the Federal Estate Tax. However, as of 2016, estates with a value below $5,450,000 ($10,900,000 for married couples) are not subject to the Federal Estate Tax. Therefore, some primary benefits of the irrevocable living trust are no longer applicable to more than 99% of the population.

Click Here for more estate planning advice, informational videos and articles, as well as a copy of my new Ebook Six Things to Know Before Making a Will or Living Trust

Comment

Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.

Revocable Living Trust - A Wallet for Your House

Revocable Living Trust Protect Your Family

The most commonly utilized estate planning tool today is the Revocable Living Trust. This widespread popularity is due to the ability to retain control of the assets contained in the trust, the ease and ability to modify the trust, the ability to benefit from the assets in the trust, and the ability to avoid probate.

So, what is it and how does it work? Think of all your assets as a wad of dollar bills that you carry with you clenched in your fist every day. Everywhere you go the wad of bills is exposed and, if you happen to trip and fall, the bills are likely to go flying everywhere. You know better than to walk around with a wad of cash in your hand everyday, that’s why you use a wallet. With a wallet, you can keep all your bills tucked neatly inside, while keeping them immediately accessible to you. Think of the revocable living trust as a wallet for your assets.

When you trip and fall in life (death, incapacity) without an estate plan, your assets go flying everywhere and you have no control over them. However, with a revocable living trust (unlike a will), your assets are neatly tucked inside the trust, safe from harm, and will be handled in accordance with your wishes. Your revocable living trust is your wallet to protect your assets. The assets remain the same, and you retain full access and control as the trustee of the trust. However, one thing to keep in mind, because you retain access to and control over the assets, a revocable living trust does not shield the assets from creditors or from the Federal Estate Tax.

Revocable living trusts are frequently used in combination with a pour-over will. A pour-over will transfers all assets subject to your will into the trust after death. However, because the assets are not already owned by the trust, the assets are likely to be subject to probate before the trust can take ownership.

The key to an effective trust is actually funding it (putting your assets inside.) Remember, an unfunded trust isn't worth the paper it's written on. I talk more about what it means to fund a trust Here. The key benefits of a revocable living trust include:

1. Avoiding probate
2. Protecting privacy
3. Planning for incapacity
4. Managing out-of-state real estate
5. Preventing family friction

Click Here for more estate planning advice, informational videos and articles, as well as a copy of my new Ebook Six Things to Know Before Making a Will or Living Trust

Comment

Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.

What Is a Trust?

Revocable & Irrevocable Trust Ingalls Law

The term “Trust Fund” often evokes images of the Kennedys, Rockefellers, and Du Ponts sheltering their vast fortunes from the grasp of the government. However, in recent years, the trust has become a widely utilized tool by people at all income levels to take advantage of current legislation and provide enhanced protection for their families.

While a number of different types of trusts have sprung up over the years, the following are the among the most widely utilized today.

Revocable Living Trust

The most commonly utilized estate planning tool today is the revocable living trust. This widespread popularity is due to the ability to retain control of the assets contained in the trust, the ease and ability to modify the trust, the ability to benefit from the assets in the trust, and the ability to avoid probate. It’s like your wallet, you can put stuff in, you can take stuff out, you can even empty it and get a new one. The revocable living trust is just a wallet big enough to fit all your assets (even your house.)

Irrevocable Living Trust

If a revocable living trust is a wallet, think of the irrevocable trust as Fort Knox; it’s secure, but once the property is inside you can’t just reach in and grab it when you want it. When assets are placed in an irrevocable trust the creator of the trust loses ownership rights in the property and the right to modify or revoke the trust. The primary purpose of the irrevocable living trust was to minimize or eliminate the federal estate tax. Others reasons include insulating wealth from the high expense of medical care and protecting property from creditors.

Testamentary Trust

 A testamentary trust is created in a will and, unlike living trusts, does not formally exist until the death of the creator. Therefore, all assets to be included in the testamentary trust must first proceed, like a pour-over will, through the probate process.

Special Needs Trust

A special needs trust is a trust created for a person that is receiving benefits from the government. When a person is receiving governmental benefits, receiving an inheritance or other sum of money (a gift, damages stemming from a lawsuit, etc.) can lead to a termination or reduction in benefits. In order to maintain eligibility, a special needs trust is created to shelter the funds and provide for the person, while remaining eligible for benefits.

Pet Care Trust

A pet care trust is created to provide continued care for a pet. The trust can be used to provide assets as well as personalized instructions on how the pets should be cared for and who should provide the care. Pet care trusts can be particularly valuable if you own pets that may be strenuous and/or expensive to care for such as horses, exotic fish, or birds.

Spendthrift Trust

A spendthrift trust is often created for the benefit of a child or other beneficiary to protect the assets from ex-spouses, creditors, lawsuits, and/or the poor financial responsibility of the beneficiary. Keep in mind, spendthrift trusts are unlikely to protect the assets from child support orders or IRS liens.

Which Trust is Right For You?

The choice of a particular trust is a decision unique to every situation. The above list of trusts in not exhaustive and there are a number of alternatives that may be preferable depending on your current situation. Always speak with an experienced estate planning professional prior to making any decisions.

Click Here for more estate planning advice, informational videos and articles, as well as a copy of my new Ebook Six Things to Know Before Making a Will or Living Trust

Comment

Robert Ingalls

I am the founding member of Ingalls Law, PLLC. My practice focuses primarily on Civil Litigation, Personal Injury, and Workers' Compensation. I graduated from East Carolina University with a Bachelor of Science, and received my law degree three years later. I have been admitted to the North Carolina State Bar and the United States District Court for the Western District of North Carolina. I represent clients in the areas of Civil Litigation, Workers' Compensation, Employment Discrimination, and Personal Injury. I have also represented employees and employers in hundreds of unemployment benefits hearings throughout North Carolina. In addition to my law practice, I am an active member of the North Carolina Bar Association, Mecklenburg County Bar Association, American Bar Association, Delta Theta Phi Law Fraternity, and The North Carolina Advocates for Justice.