If you die in Camden County, New Jersey without a will, you are said to die “intestate”. Each state has developed its own rules about how the assets of intestate estates are divided among the living. These rules vary from state to state, but in general, your assets will be divided between your spouse and children. How your estate is divided between your spouse and child depends on your state of residence at the time of your death.
A revocable living trust is a trust created during lifetime over which the grantor reserves the right to terminate, revoke, modify, or amend. These trusts are generally used to avoid probate, provide assistance to a parent who needs help managing assets, address family situations, provide privacy and provide for orderly administration of assets after your death. During your lifetime, any assets in the revocable trust are used for your care. Because the trust is revocable the assets in the trust are still available to your creditors and are part of your taxable estate, but they are not part of you probate estate.
Any good estate plan considers the tax ramifications of your death and the possible ways to reduce those taxes. If your estate plan also includes giving money to charity, then a charitable remainder trust might be a useful tool that not only provides you with a way to fulfill your charitable gift, but also reduce your taxes.
Happily, 2014 continues to bring stability in the federal estate, gift and generation skipping taxes. For decades these taxes have been used as a political football, bouncing up and then down as politicians used the tax to drum up votes…and their campaign funds…rather than address the tax in a reasonable manner. Finally, things seem to have fallen into place and we can make long-term plans for our clients without guesswork. Of course things can always change, but the politicians have moved onto other issues, and the taxes now effect so few people, the political will to make change has dissipated.
Under the current rules, the federal estate tax exemption protects the vast majority of families from paying any federal estate tax. And, because the federal estate tax exemption is adjusted, over the years inflation will not grow estates so they are subject to the tax. For now, only the most wealthy families are subject to the estate tax and the number of federal estate tax returns Form 706 filed continues to shrink. From 2003 to 2102 the number fell 87%.
Trusts are becoming an ever more common part of our lives. You are not atypical any longer if you can talk about your Irrevocable Life Insurance Trusts holding large life insurance policy on your life, or how you set up an Education Trusts to hold money earmarked for the education of generations of your family. But typically, the most likely trust that you would have is the Revocable Living Trust.
No matter what trust you form, there are three components. A Grantor who formed the trust, a Trustee who holds the asset, and the Beneficiary for whom the asset is held. In a Revocable Living Trust, the Grantor, Trustee and Beneficiary are all the same person. You form the trust, you transfer your assets to the trust and you hold them for your own benefit. For discussion about why you would form a Revocable Living Trust, please read my article Is a Revocable Living Trust Right for Me?.
The Philadelphia Archdiocese found itself with serious financial problems. An outside, third-party company offered them a large sum of money to lease out thirteen cemeteries, some of which had unused space. Some of these cemeteries had been under the trust and care of the Archdiocese for over 100 years, and all had previously been exclusively Catholic.
Would entering lucrative maintenance, management and operating agreements with a non-Catholic, third party organization constitute a diversion of property from the purposes, uses and trusts to which these cemeteries had been lawfully dedicated? How do you notify the interested parties in this case? Is the Philadelphia Orphans’ Court even the correct venue for this matter?
It was not long ago when the definition of a family, and to whom a court would allow visitation to minor children, was simple; biological mother and biological father. Then times changed.
If you are reading this article, it is possible that by the time your issue appears before a magistrate or judge the rules in your county will have changed from what they are today. The rules, like the definition of family, are changing.
Reading the facts and the decision in Arrington v. Thrash , from the Mississippi Court of Appeals allow you to see the law change before your eyes. The court ruled that the facts and circumstances in that case justified an award of grandparent visitation comparable to that which would have been given to a noncustodial parent. The court reasoned that this decision was in the best interest of the minor child.
In estate planning, “my estate” can mean different things. Your probate estate includes all your assets that will pass through your will at your death, while your taxable estate includes all your assets that will be taxed at your death. Many assets are included in your taxable estate, but not your probate estate, such as assets in your revocable living trust, your IRAs, assets held jointly with a right of survivorship and all of your payable on death accounts.
The Montgomery County Register of Wills cannot hold or file your Will until after you have died. Your executor will go to the Register’s office in Norristown with the original Will, an original death certificate, an ID and a check. After verifying all is in order, the Register will then file the Will. There is no Pennsylvania procedure to hold Wills of the living.
If you are like most Philadelphians, you are provided the option of participating in a qualified plan program, such as a 401k, 503(b) or TIAA-CREF program. Otherwise, you may have an Individual Retirement Account (IRA) or a Roth-IRA that you have formed and funded yourself. These plans are designed to hold assets tax deferred and earmarked for retirement but, with the exception of a ROTH-IRA, when the funds are removed, the deferred income taxes come due.
