Happy New Year!

Does Your Trust Still Fit?

Many couples who had estate plans prepared prior to 2011 have trusts that require that the assets be divided into two separate trusts on the first death. Trusts were drafted this way to maximize the value of assets that could be passed down to children without estate tax. The tax law changed in 2011, and it is no longer necessary to divide trust assets on the first death to preserve the amount a couple can pass to their children free of the estate tax. If you have this type of trust, then you are legally required to divide your assets into two trusts when the first spouse dies.  However, you can avoid this requirement by amending your trust during your joint lifetimes. This type of trust is still appropriate for some people, but you should discuss your situation with your attorney.

How Old Is Your Durable Power of Attorney?

A Durable Power of Attorney gives your agent (“attorney in fact”) the power to help you with financial aspects of your life that are unrelated to your trust assets (checking accounts, retirement plans, insurance, billing queries, etc.). Many financial institutions refuse to acknowledge the validity of “stale” documents. If your Durable Power of Attorney was executed more than four years ago, then you should have it updated.

Most Frequent Mistakes People With Trusts Make

If you have a trust, congratulations on planning to avoid having your estate probated. One common mistake people with trusts make, however, is that they do not properly fund their trusts. Your real property, investment accounts, money market accounts, savings accounts, and CDs should be titled in the name of your trust. If you die with more than $150,000 of assets outside of the trust, then your successor trustee will have to petition the court to gain access to those funds.

Remember that retirement accounts can never be titled in the name of a trust because only individuals can own them. Make sure you have beneficiaries named on your retirement accounts.

Another common mistake is having your documents prepared and putting them away forever. Laws change and circumstances change. It is important to have your trust reviewed every five years.