When people start looking for information about making their own will, they are often bombarded by internet offers that claim you can make your own will cheaply, easily and quickly. While some of these offers are legitimate, they are no substitute for the expertise and experience of a qualified attorney.  Though an online will may be legally valid, that doesn’t mean it is the best document suited to your needs and your particular situation.

All states have very specific laws that govern what has to be included in your last will and testament for it to be legally valid. Most of these laws are quite simple and only require you to meet a few basic hurdles, such as being of age, mentally competent and having your will witnessed by two adults. However, there are many other factors that go into creating a will that, even though not required by law, will ensure that you are able to pass on as much property to your heirs as possible.

When considering an online legal document company or will provider, it’s important to note that these companies may not be reliable or completely up-to-date with changes in the law. Also, online document preparers cannot give you legal advice about what decisions to make when creating your will or whether doing so is in your best interests. You may, for example, be much better off by first creating a trust to which you can transfer ownership of all of your property.

Online will preparation services or will creation software may seem like it is a great idea because it offers a cheap and easy solution, but it will never be able to take the place of a skilled attorney who can carefully evaluate your estate planning situation. Even if you do choose to go with an online option, always have an attorney review the document. You may be surprised at what you missed.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

When you are planning your estate you need to identify an attorney who is focused on this particular area of specialization because of the fact that there are so many financial instruments involved. It takes time and dedication to this aspect of the law to fully understand all that is available to you and when you should implement one strategy rather than another.

With this in mind we would like to take a look at a very effective device that can achieve multiple estate planning goals simultaneously: the charitable remainder trust. Through the creation of such a trust you can gain tax efficiency, provide yourself with a source of income for life, and satisfy your philanthropic urges all in one fell swoop.

The way that these instruments work is that you fund the trust and name yourself as the beneficiary (if you want to receive the income rather than naming a different beneficiary). You can also serve as the trustee if you so desire, but many people engage a bank or trust company to serve this function. If you fund the trust with appreciated securities they will not be subject to capital gains tax and this is one of the primary appeals of the charitable remainder trust.

You as the beneficiary have to receive at least 5% of the fair market value of the trust annually, but your distribution may not exceed 50%. The charity that you choose must wind up with a remainder of at least 10% of the original value of the contribution into the trust at the end of its term. Your are entitled to a charitable deduction on your income tax return for the year in which you fund the trust, but IRS tables will determine the amount you may deduct.

In addition to the charitable deduction and the capital gains break, when you create a charitable remainder trust you also remove the value of the contribution from your estate for estate tax purposes.

At the end of the trust term, which can be for the life of the donor or for a specified period of time not to exceed 20 years, the remainder is passed on to the charitable or tax exempt organization named in the trust agreement.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

When you are planning your estate you want to be cognizant of all of your options. There are many different estate planning vehicles that can be utilized to address certain situations, and this is why it is advisable to work with a professional. When an experienced estate planning attorney absorbs what you are trying to accomplish and then examines your holdings a strategy will immediately start to coalesce in his or her mind. And since we are talking about advanced tax savings strategies involving specific legal instruments, this strategy is invariably going to include a healthy dose of acronyms. One of them is the GRAT.

GRAT stands for “grantor retained annuity trust.” This vehicle is useful when you would like to derive income from assets that you expect to appreciate and then pass that appreciation on to an heir in a tax-free manner. This is done through what is called the “zeroed out” GRAT strategy. The first thing that you do is fund the trust with volatile assets that you would expect to appreciate significantly. Of course you name a trustee and a beneficiary. When you are drawing up the trust agreement you set a term during which you will be receiving annuity payments out of the trust and the amount of these payments. It should be noted that if you die before the term has ended the strategy fails and the assets are returned to your estate.

When you funded the trust you removed those assets from your estate for estate tax purposes, but that donation is subject to the gift tax. The IRS calculates the taxable value of the gift. You “zero out” the trust by setting your annuity payments to equal this taxable value, so no gift tax is levied. But if the actual appreciation exceeds the original IRS valuation (something you anticipate), your beneficiary receives that remainder free of taxation at the completion of the trust term.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

One of the primary reasons why some estate planning attorneys have traditionally recommended revocable living trusts would be to enable probate avoidance. However, there are many other reasons that people choose this method of estate planning.

For example, one reason why a revocable living trust may be used as an alternative to a will is to ensure the privacy of the parties involved in the transfer. When you use these trusts only the beneficiary of the trust and the trustee are aware of the details. When you use a will to express your wishes the details of your estate can be made public, and there are those who would prefer to keep these details confidential.

The operative word here is control. When you create the revocable living trust you can name yourself as both the trustee and the beneficiary, so you retain complete control of the assets in the trust throughout your life. But when you are drawing up the trust agreement you name a beneficiary who will receive distributions from the trust after your death, and you will also name a successor trustee to take over for you upon your death or disability. Both of these concepts ensure that you are in control during your life including any time you may be incapacitated and even after your death.

Many people will choose a loved one to serve as successor trustee and in the right circumstances, people may engage the services of a bank or trust company to serve as the successor trustee. In either case, the funds in the trust are being managed and distributed with professional due diligence so, where a loved one is chosen, he or she may engage the services of a bank or trust company to manage the investments but retain the right to be involved in the personal touches regarding your beneficiaries. No matter who you choose the trustee will distribute the funds in accordance with your wishes as stated in the agreement. So if you want to make sure that your beneficiary exhibits an appropriate amount of thrift you can limit the distributions as you see fit when you draw up the trust. But remember, things change; so giving your trustee discretion is unsually a wise choice.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Since the 2009 exemption was $3.5 million, the return of the estate tax with an exclusion amount of just $1 million in 2011 is leaving a lot more people vulnerable. For many, the value of their homes is what is going to drive the total worth of their estate over that figure, so this is the area that they need to focus on.

An estate planning tool that can be used to reduce the value of your house from your estate for tax purposes is the QPRT, or qualified personal residence trust. Let’s assume you have always planned to leave the home to your children after you pass away. You place the residence into the trust and name your children as the beneficiaries, but your life doesn’t change at all. You can live in the house rent free during the term of the trust for as long as you stipulate in the trust agreement, but you are liable for the cost of upkeep and property taxes as they become due. After the term of the trust, you can still live in the home but must pay rent (this also reduces your taxable estate).

At the end of the trust term if you are then surviving, the value of the house is no longer a part of your estate for estate tax purposes, since it was considered to be a gift to the trust and it was subject to the gift tax. However, the true market value at the time of the transfer was not used by the IRS to calculate your gift tax liability, but rather a discounted value .

The taxable value of the gift is reduced by your retained interest in the house, your use of your house during the trust term. So the longer the term of the trust, the larger your retained interest will be, and the lower the taxable gift value will be. When your beneficiaries assume ownership of the home at the end of your prescribed term, the home is no longer part of your taxable estate. However, if you do not survive the term of the trust the entire value of the house at your death is included in your estate. If you survived the term of the trust, you transferred this property to your heirs and either reduced or eliminated any estate or gift tax liability.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Do you suspect that one of your beneficiaries may contest part or all of your Last Will and Testament? If so, you may wish to speak with your attorney about including a No Contest Clause in your Will.

Who Can Contest

Any current beneficiary, any beneficiary from a previous version of your Will who is now disinherited, or any heir at law can challenge your Last Will and Testament. This contest may be for one of four reasons: your Will was not signed according to law, you were not mentally competent to sign, someone fraudulently convinced you to sign, or a beneficiary had a major effect on provisions placed within your document (undue influence). A Will contest may hold up probate for additional months or even years. A long probate could cost your family and estate more money.

What a No Contest Clause Does

A no contest clause is a provision in your Last Will and Testament that aims to keep beneficiaries from contesting your Will. This clause states that if any beneficiary tries to challenge your estate document he or she will be completely disinherited.

Will It Work?

A No Contest Clause does not always work, and in fact it does not work at all in some states, such as the state of Florida. So why bother putting it in, if it may not work? Just the existence of the clause may be enough to deter your family members from protesting any part of your document. If you have left something to a family member in your Will, he or she will know what may be lost by contesting.

If you have disinherited a beneficiary in your Will, he or she will have nothing to lose and will feel no pressure to avoid a challenge. For this reason, it is sometimes advisable to leave at least something to every beneficiary and heir at law to make a no Contest Clause more meaningful.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Reciprocal Last Will and Testaments, sometime called “I Love You” Wills, is an estate planning device that allows married couples to easily leave their entire estate to the other spouse in the event of death. To decide if a Reciprocal Will is right for you and your family, consider the potential benefits and pitfalls that come with this legal device.

Low Cost Planning

A Reciprocal Will can allow for fast and inexpensive planning. You and your spouse will each create simple Wills that state the other spouse inherits all. If you are looking to save money during the estate planning process, this is a good way to do so. Beware; however, a Reciprocal Will does not fit every family’s situation.

Good for Underage Children

If you and your spouse are the parents of all children in your household and all children are underage, a Reciprocal Will may be the easiest way to handle your children’s inheritance. You cannot leave an inheritance to a minor for his or her own control. With an “I Love You” Will, it is usually assumed that the living spouse will pass on the estate to the children. For this reason, creating a separate inheritance for each of your children may not be necessary in your early years of estate planning.

May Disinherit Family Members

One major disadvantage to a Reciprocal Will is that it can cause family members to be disinherited. When your spouse inherits your entire estate, he or she will decide who inherits next. If your spouse is not the biological parent of your children, you run the risk of having your children disinherited. Your spouse will be able to leave the estate to whomever he or she pleases including his or her own biological children or even another spouse if remarriage occurs after your death.

If you have a blended family, avoid a Reciprocal Will and focus on an estate plan that includes every family member.

Estate Tax Concerns

An “I Love You” Will, will not allow your family to take advantage of basic estate tax savings on the death of the second spouse.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

A Trust Amendment revises the conditions and terms of a Trust. Trust Amendments are only made if certain provisions of a Trust agreement must be changed or modified. All remaining provisions of the agreement remain unchanged in this case. Minor changes may include updating a beneficiary’s name, changes due to marriage or divorce, adding or deleting certain simple bequests, or naming a different trustee.

In contrast, a Trust Restatement is made if the basic goals of forming the Trust have changed or if all or main provisions of the Trust agreement need to be changed. Changes in the number of beneficiaries, changes in the way in which the funds or assets are to be distributed, or compliance with new laws are a few of the significant changes that may warrant a restatement.

A Trust agreement is also restated if the Trust has already been amended several times and consolidating all changes in a clear manner will help provide greater clarity. A restatement can help avoid confusion when directions contained in the Trust are implemented. Restatement of a trust agreement may also make sense if federal and state estate tax laws change, or new administration laws are enacted.

Important Points about Amendment and Restatement of Trusts

• There is no specific rule regarding when you should opt for a restatement or how many times a trust can be amended before it needs to be restated. Get the advice of an experienced attorney.
• While an amendment makes sense for minor changes, a restatement may be essential if major changes are made.
• The restated document completely supersedes the original agreement. In this case, the name and date of the trust remain the same and only the content must be changed.
• A Trust amendment document must be signed and formalized, as is the case with the original document.
• Handwritten changes may not be acceptable in some states or might be considered invalid.

Each time a Trust agreement is changed, the accompanying Pourover Wills should be reviewed as well.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Making out your Will is only the first step to having a solid estate plan. In addition to keeping it updating, you also want to make sure you store your Will is a place that is both accessible to your family and well-protected. Here’s a few ideas to help you out.

In a Safe-Deposit Box

This option is popular because the Will is accessible by the maker, and it is kept under lock and key in a fire-proof safe. A loved one simply needs to know which bank and the location of the key get access to the Will upon your passing. You should also add your spouse or other loved one to the account as an authorized party so that there are no delays in accessing the box when it’s needed.

With the Your Attorney

Attorneys who draft your Will offer to store the Will at no charge. This absolutely safeguards against any parties attempting to destroy a non-favorable Will. It also provides a secure and fire proof location and permits timely access upon your death. You should notify your loved ones where the Will is stored and should note that on your confirmed copy of the Will.

At Home

Still the most popular option, this can also be the least desirable choice unless the Will is kept in a fire-proof and locked safe or filing cabinet. In addition, remember that this makes it easier for others to access as well so persons that you may have never wanted to see the Will may find and read it.

Of course, this is just a small list of places to store your Will. Just remember to notify your family members of its whereabouts so that they can easily access it after you’re gone.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.

Estate plans include a variety of legal documents and plans that are put together to alleviate the impact of your death on your loved ones. At the center of an estate plan is a valid and legal Will that details the distribution of your assets and property.

But as you grow older and your life changes, it’s important that your Will addresses these issues. The situations that may dictate a review of your Will and possible changes are:

• Financial and business changes. Estate plans and Wills deal with finances., Significant changes to personal and professional finances as well as selling important assets or property require and update or review of your Will.
• Changes to tax and estate laws: As tax laws change, particularly with the recent annual changes to the federal estate tax, your Will should be reviewed to ensure that your decisions comply with the tax law changes.
• Change of heart: If you’d like to change a beneficiary, such as adding a charity, changing the recipients of assets, or putting restrictions on inheritances, it’s time to review and change the Will.

It’s important to remember that the will is a living document, it should be updated to reflect life’s changes. Don’t forget that one of life’s changes is our age. Wills should be reviewed at least every five years even if not prompted by another event. Ideally, an annual review will ensure that your Will is always up-to-date.

Levine & Furman, LLC is a member of the American Academy of Estate Planning Attorneys.