A life insurance trust is a form of irrevocable trust that invests the proceeds of a life insurance policy into a trust with designated beneficiaries. Most life insurance policies are owned by the insured. The money is paid when the insured dies, but the payment made to the beneficiaries is taxable. Because a life insurance trust is owned by a trust, which functions as a separate entity from the insured, the beneficiaries do not owe taxes. Life insurance trusts are often used to avoid passing burdensome estate taxes onto the beneficiaries. Understanding Estate Taxes The federal government taxes your estate above a certain amount, based on limits set annually and subject to change. When the estimated value of your estate exceeds this amount, the excess amount if subject to the federal estate tax. This tax is in addition to any income taxes and probate taxes or fees owed at the time of death, and they must be paid in cash within nine months of the death of the estate owner. If you hold considerable financial assets, your estate may be subject to very high taxes, thus reducing the amount you can pass on to your heirs by a substantial amount. Life Insurance Trusts: How They Work An irrevocable life insurance trust has a grantor, the person creating the trust. A trustee is the person chosen to manage the trust. The beneficiaries are those chosen to receive the benefits of the trust. The trustee purchases life insurance in the trust’s name, with you as the insured. The trust is typically named as owner and beneficiary. Upon your death, the money from the life insurance company is paid to the trust. The trust then pays any probate costs, legal fees and other fees related to the death and funeral expenses, and then distributes the remainder to the trust’s beneficiaries. Benefits Of Life Insurance Trusts Life insurance trusts aren’t subject to estate taxes. They also give you greater control of your assets, since you establish the rules and boundaries of the trust fund. A trust cannot be touched by creditors or the courts, so funds inside the trust are relatively secure. There are a few things to note about life insurance trusts. They’re irrevocable, which means that once you set up the trust, you can’t change it. Be certain of how you wish to create the trust and the ground rules regarding the management and distribution of funds. Life insurance trusts aren’t for everyone, but they do offer another option to minimize estate taxes. Tax laws and tax rules are constantly being updated and interpreted. This article contains general information, so please discuss your individual situation with a trusted tax adviser before making tax decisions.

You never know when life will pull the rug out from under you in the way of a lost loved one. You may be forced to make decisions you don’t have the answers for, or even worse not be allowed to make decisions because you or your loved ones haven’t prepared end-of-life documents. Anyone over the age of 18 should have estate planning documents drawn up by an attorney to help your family answer those important and difficult questions. 4 Estate Planning Tools You Need Before a Trip to the Hospital Going to the hospital or doctor may seem like an ordinary thing, much like driving a car, or crossing a street. However, the dangers of these everyday activities can lead to tragedy and loss. It’s important to ensure your affairs are in order in case of these losses. Healthcare Power of Attorney A Healthcare POA helps define what you’d like to see happen medically once you are unable to make decisions coherently anymore. This document ensures that the agent you choose to represent you will respect your legal wishes on how you’d like to be cared for. Another supporting document to have prepared is the HIPAA authorization form and the Living Will. Having these tough talks can be grueling but allowing someone to help guide you can make the process less scary. Durable Property Power of Attorney A Durable Property POA helps define who and how your financial property is taken care of if you were to become incapacitated or couldn’t take care of things for some reason. It assigns an agent or proxy to act in your place once you are no longer able. This includes controlling not only your assets, but any debts or real estate or other property. Last Will and Testament A last will and testament is a legally binding document that allows you to have control over who and how your assets are distributed when you pass away. Although it is an excellent starting place, having just a will is not usually enough. There is a process to the distribution of your valuables called probate. This process is often time-consuming and expensive. It involves filing your will and documents with the local courthouse, as well as collecting proof of your assets and liabilities. Putting a trust in place can help you avoid the probate process. Revocable Living Trust A trust allows an appointed person to take care of designated property, including money, assets, real estate, businesses, and anything else of value that you specify. This is helpful if you have younger children who may not be ready to take responsibility for those assets yet. Having a trust also helps you avoid the lengthy process of probate. There are many kinds of trusts which can be individualized to your specific life and goals. Resources: https://www.guttmanlaw.com/blog/2022/april/what-legal-steps-do-i-need-to-take-before-a-medi/

Let's face it, your children may have different ideas about whether to live in, sell or keep the house you own. To prepare for a smooth and efficient transfer of your home, think about your goals and financial situation. Ask your family about their expectations. Anticipate that the conversation, though necessary, may be difficult. You might want to recruit a neutral friend or family member to help facilitate the dialogue. In the discussion, you want to explore taxes and transaction costs, avoid hurt feelings and not disrupt good relationships. If your home is sold, legal fees, taxes — based on the house's value at the time of your death — and other transaction costs will be incurred. As several states have estate tax exemption limits far below the federal level, heirs may have problems paying the state estate tax bill. If you still have a mortgage at the time of your death, the mortgage's sale clause may be triggered. If your heirs want to keep the house, other assets in the estate might need to be sold to pay off the debt; additionally, the inheritor would need to qualify for a new mortgage. Consider your options Here are some ways to smooth the inheritance associated with a house: Add heirs to your deed as co-owners. This way, they will take ownership when you die. There are some downsides to this approach: You'll want to understand how much you can give another person free of gift tax in any one year and in a lifetime. It is also important to remember that assets gifted during your lifetime don't receive a step-up basis, which means the inheritor may get a larger tax bill. The home becomes an asset, and if the child has financial trouble, the home may be put under a lien. Create a will in which you decide who inherits the property. The downside to this approach includes probate, a legal process that may create a privacy concern. Establish a revocable trust, which allows you to retain control of your home during your lifetime while specifying how and when the asset (along with the rest of your assets) will pass to your beneficiaries. This approach has many benefits, including: The trust acts as a substitute for a will, enabling assets to be privately and quickly distributed without probate. You'll retain full control and use of your home but know that you’re providing an efficient distribution of the asset. Move the house out of your estate into a qualified personal residence trust. Your home is transferred as soon as the trust is established; you retain the right to live in the house (and are responsible for maintenance and taxes) but reduce the gift tax costs. A QPRT includes a date after which ownership is transferred to the beneficiary. If you want to continue to say in the house, you will need to negotiate a lease with the heir. QPRTs are most often used for vacation homes. Create a transfer-on-death deed. A TOD allows you to avoid probate while giving your heirs a step-up basis for tax purposes. TODs may be less expensive than setting up a revocable trust. The drawback is that only individuals (like your spouse, child, other relative, or friend) or charities can be beneficiaries; there’s no way to skip a generation to pass the asset to grandchildren. Consider selling the home and renting another. Tax implications are among the considerations here.  It’s natural to want your home to stay in the family but think not just about your needs but about those of your heirs. Working with professionals can help you achieve an outcome that's in everyone’s best interests. Give us a call today at Nash Bean Ford & Brown and we'll help navigate some of these tough life decisions.

When you leave the office of Nash Bean Ford & Brown after creating your personalized estate plan, you’ll receive several documents that you’re told to put in a safe location. Understanding the nuances of these documents can be tricky, with legalese and formatting, as well as all the fine details included in them. So here, we’ve explained a few of the basic ones you may walk away with. Last Will and Testament, or Trust No one likes to consider a world without themselves in it. However, planning for that inescapable end can bring peace and comfort not only to you, but also your family members once you’re gone. Many people start their estate planning with the drafting of a will. A will is a legally binding document that allows you to have control over who and how your assets are distributed when you pass away. There is a process to the distribution of your valuables called probate. This process is often time-consuming and expensive. A trust allows an appointed person to take care of designated property, including money, assets, real estate, businesses, and anything else of value that you specify. This is helpful if you have younger children who may not be ready to take responsibility for those assets yet. Having a trust also helps you avoid the lengthy process of probate. There are many kinds of trusts which can be individualized to your specific life and goals. Property Power of Attorney A Property POA helps define who and how your financial property is taken care of if you were to become incapacitated or couldn’t take care of things for some reason. There are different kinds, including durable and limited. Which one is better for you will depend upon your preferences and assets, so we suggest consulting with an expert. Healthcare Power of Attorney A Healthcare POA helps define what you’d like to see happen medically once you are unable to make decisions coherently anymore. This document ensures that the agent you choose to represent you will respect your legal wishes on how you’d like to be cared for. Having these tough talks can be grueling but allowing someone to help guide you can make the process feel less scary. Living Will A Living Will document goes more specifically into the decisions you’d like made regarding long-term care, end-of-life care, medical procedures, and other end-of-life matters. This brings up some difficult conversations but can be made easier with guidance. Advanced Healthcare Directive Another document often included in Healthcare Directives is the HIPAA authorization, which stands for Health Insurance Portability and Accountability Act. This law requires your signature for anyone to view your medical records. All of these documents safeguard the life values and legacy you hope to pass on, so consulting with a professional on which documents are best suited for you is highly recommended. Reach out to us at Nash Bean Ford & Brown to set up a free consultation! Written by Valerie Kline Marketing Coordinator and Office Assistant Nash Bean Ford & Brown, LLP Attorneys and Counselors at Law • Est 1857 Resources Estate Planning Guide and Checklist for 2024 (ncoa.org) 4 essential estate planning documents | LegalZoom

Most living trusts (also known as revocable or grantor trusts) have two administrative phases. In the first phase, you administer the trust. In the second phase, after your death, the named trustee takes over its administration. In this way, the trust is a contractual relationship established between you and the trustee who is charged with managing it. The legal processes the trustee faces can be complicated. Failure to administer correctly can expose the trustee to liability for damages to your estate. Common trustee tasks include notifying beneficiaries, compiling and providing inventories of trust assets, and listing all assets titled in the trust's name with each asset's market value. To assist your future trustee, take these important steps when setting up your living trust: Fund your trust. Ensure that your trust is funded by transferring ownership of your assets from your name to the trust's name. Assets still titled in your name at the time of your death will have to be probated. Name a beneficiary. A viable trust agreement requires at least one beneficiary. Should a beneficiary pass away or become incapacitated after the trust's creation, you must amend the trust accordingly. Without updates, the trustee might need court direction. Protect beneficiaries. Draft your trust to shield beneficiaries from lawsuits or divorce. This can help safeguard assets from creditors or divorce proceedings that may affect your children or grandchildren. Choose a trustworthy trustee. Select a trustee you trust to follow your wishes and fulfill their fiduciary responsibilities faithfully. It's also important to designate at least one successor trustee. The initial trustee may prove unsuitable or otherwise unable to do the job. Having an alternative ready will smooth the process for all involved. Document the trust. It's crucial to have your trust in writing. Oral agreements, even among family and friends, are not legally binding, particularly for trusts involving real property. Provide specific directions. Clearly state the conditions under which distributions should be made to beneficiaries or on their behalf. If the trustee has discretion over distributions, misunderstandings and disputes can arise, with beneficiaries potentially believing they are entitled to distributions that the trustee deems inappropriate. Include a pour-over provision in your will. Incorporate this clause into your will to ensure any remaining assets transfer to your trust upon your death. Without it, assets not already in the trust will need to go through probate, potentially leading to improper distribution. Regularly review your trust. Annually review your trust to ensure its terms still reflect your estate planning goals and adjust as necessary. The difference between trusts and wills Trusts and wills are both legal documents that convey how to distribute your assets after your death, but they differ in when they take effect, whether the assets will go through probate, who manages your assets and when assets will be distributed. Like a will, the validity of a trust can be challenged on various grounds — due execution, lack of capacity, undue influence, fraud and duress. It's also not uncommon for beneficiaries to allege that a trustee hasn't properly handled trust assets, has failed to properly maintain trust property or hasn't communicated adequately. Because trustee duties are so complicated and the stakes for failing to properly administer a trust are so high, it is a good idea to consult with a trust lawyer when drafting a living trust. 

In this blog post, we tackle three commonly held yet mistaken beliefs regarding estate planning lawyers. Read on to learn more!

Many people are uncomfortable discussing with their loved ones how they plan to distribute their estates. Perhaps you don't want your children to realize how much they may receive after your death. Or maybe you think your choice of heirs could change in the future. However, if you don't discuss your estate plans, disagreements and conflicts could erupt once the details are revealed. For instance, after your death, siblings may resent each other if distributions aren't equal, even if one child is substantially less financially secure than the others. Or, if you're remarried, children from your first marriage may feel anger about assets you leave to your second spouse. At that time, you won't be able to explain your thoughts and wishes regarding the distribution of your assets. Discussing your estate plans gives you an opportunity to inform heirs about the distribution of your estate and explain why you decided to handle matters in a certain way. You can go into specific detail, informing heirs how each asset will be distributed or you can give a general overview of your estate plan. If you've selected one heir as executor, explain why you chose that individual. As an alternative, you can leave a personal letter with your estate planning documents explaining these items. Even if you reveal your plans to heirs, you may still want to include a personal letter with information about benefits, special wishes, who should receive personal effects, your cemetery and funeral preferences and the location of important documents. At a minimum, specify where to find: Income tax returns. Life insurance policies. Other insurance policies. Investment details. A list of household contents. Outstanding loan documentation. Automobile titles. Important warranties and receipts. Bank account information. Credit card details. Information about your home. This letter will help your heirs identify all assets and benefits and avoid speculation about your wishes. Preparing the letter will also force you to organize your records and make sure all important documents can be easily located. Since the information is likely to change, review the letter at least annually. Your Children's Estate Plans If you have a sizable estate that you'll be leaving to your adult children, your children probably need estate plans of their own. To encourage them to plan, consider these tips: Explain why estate planning is important. You don't want to dictate what they should do, just emphasize the need for estate planning. When your children encounter major life events, such as marriage, divorce or a child's birth, remind them to review their estate plans. Coordinate estate planning across generations. If you have a substantial estate, you may want to coordinate your planning efforts with your children's plans. For instance, if your children also have substantial estates, they may prefer that their inheritance be distributed to your grandchildren instead. A coordinated effort can help minimize taxes. Encourage your children to get important estate planning documents in place, such as a will, an advanced health care directive or a power of attorney.

No one likes to think about estate planning, but it’s important for adults of any age to have their affairs in order, especially if you have family or loved ones. As the old saying goes, “hope for the best, prepare for the worst.” Here are just a few stress-free tips to help you plan your estate. Involve your loved ones They may not like the conversation, but it’s necessary to make your requests known to your family and allow them the opportunity to input their wishes, also. Explaining your plan to your family may potentially lessen their burden when it’s time for them to make tough decisions. Start early It’s better to have a plan and not need it, than it is to leave your family unprepared should anything unfortunate happen. Even if you’re earning an entry level salary or paying off debts, it’s still important to make your wishes known. This is particularly vital if you are married or have young children. Meet with an estate planning professional When you meet with an estate planning professional, you’ll work out all of the finer details. Do your research ahead of time (learn the difference between a will and a trust, for example), so you can come up with a comprehensive list of questions for the attorney. They will walk you through the necessary components of an estate plan and make sure your plan is compliant with the law. Update your estate plan annually Your life can change dramatically in the course of a few years. Make sure your will is up-to-date and accurately reflects your wishes. Most professionals recommend updating your estate plan annually so that you can be ready for any of life’s twists and turns. Regardless of your age, it’s important to plan ahead and spare your family the hard decisions involved in handling your affairs. Call Nash Bean Ford & Brown, LLP to start planning today, and protect yourself and your loved ones.

Before you retire, one of the first things to ask yourself is if you should even move at all. If where you live now is affordable, close to family and friends, and provides access to the activities you enjoy, then staying in the community you are familiar with may be the best move. Another reason for staying close by is if you are living mortgage-free. In this scenario, consider staying local but downsizing to reduce the cost of utility, maintenance and repair bills. If you have decided that moving is right for you, then the next question to ask is where to retire to. This decision will have a major impact on your financial situation and quality of life, and all factors should be carefully thought out. Here are some criteria to help you find the right retirement spot for you: Cost of living According to some estimates, you can expect to spend between 55% and 80% of your current income in retirement. Low housing costs are a major part of the equation. Once you are on a fixed income, you will want to stretch your retirement budget as much as possible. You may have your heart set on retiring to a Hawaiian island, but be aware that Hawaii is one of the most expensive places to live in the country, as are New York, California, Oregon and Massachusetts. More affordable states include Mississippi, Oklahoma, Arkansas, Missouri and Tennessee. Quality of life Experts encourage retirees to choose destinations that have quality hospitals and assisted living facilities, adult day services, and ample wellness and fitness opportunities. Places with thriving economies should also be considered in case your financial situation changes and you need to find a job. Many retirees are finding the amenities offered by college towns to be a real draw. These towns usually have excellent cultural, recreational and educational resources. Some colleges even offer classes to senior scholars free of charge or for a minimal fee. Tax environment Don't be fooled here. Some states look very inviting because they don't have an income tax, so it looks like a free ride. But every state has to raise money one way or another, and if the taxes don't come from income, they'll come from somewhere else. Naturally, you'll want to consider your new tax environment and your financial situation generally. However, your best bet is to talk to a financial professional who is well versed in state and local laws. Summers and winters Think about the climate, particularly if you live in a region that receives cold and rainy weather for a good part of the year. The warmer Southern climes may be attractive to you. If you enjoy sports and outdoor activities, consider a locale where you can play golf or fish all year round to keep you fit. Of course, many places with warm winters can have blistering summers. Travel plans Depending on how far away you settle from your family, you will need either a reliable car for shorter distances or a nearby airport to take you longer distances. The airport should be accessible so that your family can come to visit without too much stress. Start with a trial run by spending several weeks living in a locale before relocating. A trial run will help you decide whether the location is a fit for you in terms of your expectations. Living in a home in the community is vastly different from vacationing in a hotel there. When you rent a home in the area, you will need to carry on all the activities of everyday life, such as grocery shopping, finding restaurants and interacting with people who live in the community. The idea is to immerse yourself in the lifestyle to see if it's right for you. Once you go back home, subscribe to local media to keep up to date on the latest happenings in the area.  Retirement is a time when you must make important decisions in order to successfully transition into this next stage of life. Contact a financial adviser for their expertise and experience in guiding you through this exciting time.