Author: Michele Braverman

We Are Celebrating International Networking Month

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We Can Do Great Things When We Work Together

February is known as International Networking Month. During this month, we can celebrate our professional relationships by building and strengthening our networks. When we work together, we can provide unique solutions for our clients, like our hypothetical couple John and Jane.

Meet John and Jane  

John and Jane are beginning a comprehensive estate planning journey and need your help. John is a 45-year-old software engineer with an annual income of $150,000, and Jane is a 42-year-old marketing manager who makes $120,000 per year. 

Together, they have joint ownership of their primary residence with a current value of $600,000 and a mortgage of $300,000. John has $500,000 invested in a 401(k), $200,000 in various stocks and mutual funds, $50,000 in savings, and about $20,000 in credit card debt. Jane has $300,000 in her 401(k), $150,000 in investment accounts, and $30,000 in savings, with no significant debt. 

John and Jane have a strong financial foundation, but they are aware of the importance of planning for the future of their growing family. They have two young children, Danny (age 11) and Jenny (age 8), and want to ensure their wellbeing in the event of unforeseen circumstances. 

Serve as Their Financial Advisor

John and Jane need professional advice to address retirement savings and investment goals. If their investments are optimized, their estate can grow. A financial advisor can help them develop a strategy to 

  • maximize their investment portfolios, ensuring their funds grow efficiently and can fund their long-term goals;
  • create a comprehensive retirement plan, ensuring they are saving enough so they can maintain their lifestyle once they retire; 
  • assess and mitigate potential risks, providing a financial safety net for major life events; and
  • help ensure their investments are funded into their trust, if a trust is part of their estate plan.

Meet With a Tax Professional

A tax advisor can ensure that John and Jane’s estate plan is tax-efficient, preserving more of their wealth for future generations by

  • ensuring John and Jane are aware of available exemptions, deductions, and credits that can minimize potential tax liabilities during their lifetime;
  • discussing tax consequences when gifting money and property to their children or other loved ones;
  • evaluating real estate, potentially reducing capital gains taxes for heirs upon the sale of inherited property; and
  • keeping John and Jane informed about tax law changes. 

Contact an Insurance Agent

A professional insurance agent can advise John and Jane on the right amount of insurance coverage to provide liquidity in an emergency. Integrating risk management strategies into their estate plan provides a safety net for their family by

  • ensuring life insurance death benefits are sufficient to cover outstanding debts, ongoing living expenses, and the future needs of the surviving spouse and children;
  • choosing term life, whole life, or universal life policies for different situations;
  • considering long-term care insurance so John and Jane can access quality healthcare in an emergency; and
  • reviewing policies and beneficiary designations as needs change.

Reach Out to a Spiritual Leader

John and Jane may also consider advice from their spiritual leader about the legacy they want to leave their children and future grandchildren. Discussing the important lessons that they want to impart to Danny and Jenny and their future children can allow John and Jane to 

  • reflect on the legacy they want to leave to their children, not just in terms of money or property but shared principles, traditions, and giving back to the community; and
  • consider their end-of-life wishes to ensure that their spiritual and cultural beliefs are respected, from their desired treatment and care to funeral or memorial arrangements.

Take Valuable Advice to an Estate Planning Attorney

Advisors’ contributions paint a complete picture for John’s and Jane’s estate planning attorney, whose job is to prepare a strategy that aligns with their goals and needs.

An estate planning attorney can guide John and Jane through hypothetical scenarios based on their current situation to determine what would happen if they could not make their own decisions due to incapacity or death. They will need to

  • name trusted decision-makers in their powers of attorney for financial and medical emergencies; 
  • decide and document their wishes regarding life-sustaining treatments, organ donation, and funeral arrangements in their healthcare directives;
  • choose a guardian and backup guardians to care for Danny and Jenny in the event of their incapacity or passing;
  • create a plan to distribute and protect their wealth with a will or trust;
  • identify beneficiaries;
  • discuss any specific bequests or charitable intentions; and
  • explore strategies to preserve money and property for their loved ones.

Share the Love Through Networking

A team of advisors can provide expertise in various ways, resulting in a comprehensive estate plan that is legally sound but also deeply rooted in John’s and Jane’s values and preferences. From developing trusts that protect their life savings to transferring property and personal belongings equitably to both children, John and Jane will have peace of mind that their children will not suffer unnecessary tax consequences, issues with creditors, or complications when the time comes. Let’s work together to help ensure that all of our clients will have a successful and comprehensive plan like John and Jane.

Now Is the Time to Cultivate and Build Relationships

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Love Is in the Air: Have You Protected Your Loved Ones?

Valentine’s Day is approaching, when many people express just how much their loved ones mean to them by giving gifts and cards. But this year, you could try something different to show your love: think about your estate plan and how you can protect and provide for your loved ones. Preparation can help guide your loved ones through life’s challenges, and your love will be your legacy.

The New Year Has Begun 

The beginning of a new year is an opportune time to focus on family. A comprehensive estate plan can act as a roadmap, shielding your loved ones from uncertainties and providing peace of mind for both you and your family.

Protecting Relationships

Unmarried Partner

Today, it is common for adults to be in long-term committed relationships but be unmarried. If you have a life partner and are unmarried, it is imperative that you have an estate plan if you want your partner to receive your money or property at your death or if you want them to make financial or medical decisions on your behalf if you are alive but unable to make your own decisions. If you rely on your state’s laws, an unmarried partner will likely receive nothing at your death and will have no authority to make decisions on your behalf.

Spouse

Under most states’ laws, if a person does not have an estate plan, a judge usually chooses the spouse to make decisions for them if they cannot or to wind up their affairs when they pass away. The spouse is also typically given a large part of the person’s money and property if they die without an estate plan. However, a proactive and documented estate plan can help alleviate complications and misunderstandings among other family members. This is especially important in a blended family, where, for example, you may want your surviving spouse and children from a different relationship to receive your money and property at your death or you want an adult child to make medical decisions for you instead of your spouse. 

New Child or Grandchild

Welcoming a new family member is a joyous occasion, but it also comes with added responsibilities. Providing for a child or grandchild at your death in an estate plan involves nominating a guardian for your minor child and creating the terms for the inheritance you would like your child or grandchild to receive. By creating or revising your estate plan after the birth of a child or grandchild, you can help ensure the wellbeing and financial security and support the future aspirations of your young family members.

In-Laws

In-law relations such as a son-in-law, daughter-in-law, or parent-in-law may not typically be included in an estate plan, but you may want to leave an in-law relation something upon your passing. Alternatively, you may want your in-law to receive another family member’s inheritance if they predecease you or pass away before they have received their entire inheritance. By default, most state laws will not provide for an in-law if you pass away without an estate plan, so if this is your desire, you need to proactively plan for it. You should also reevaluate what you leave newly married family members in your will or trust, focusing on protecting their inheritance from their new spouse in the event of a divorce.

Protecting Your Family During Your Job Changes

Life is dynamic and so are your financial circumstances. It is essential that you update accounts and beneficiary designations with each job change or significant change in income. Failing to do so may have unintended consequences on life insurance policies, retirement accounts, flexible spending and health savings accounts, and more. Talk to your human resources benefits advisor to take an inventory of investments tied to your former employer and any new employer. Even if you have been at the same company for years, you should periodically check your beneficiary designations to make sure everything is up-to-date.

Estate planning is not a one-and-done task. It should evolve with changing circumstances. Regular reviews ensure that your estate plan aligns with changes in your relationships, financial situation, and life events. An estate plan is made up of documents that require accurate information to protect and provide for those you hold dear.

In February, the month of love, take the time to create or revisit your estate plan. Through thoughtful planning, you can continue to express love and care for your family, even after you are gone. If you have any questions or would like to review your existing estate plan, give us a call.

Top 3 Questions to Ask Your Clients About Their Estate Plan

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As a trusted advisor, you provide expert guidance to your clients regarding many financial planning matters. It makes sense that you will come across clients who ask about estate planning. Even if they do not ask, you can start the conversation by inquiring if they have thought about what would happen to their money and property if something were to happen to them. 

You do not need to be an expert in estate planning to help a client get started. However, you should refer them to an attorney after your initial discussion and encourage them to develop a comprehensive plan that contains the right legal tools to meet their goals. You can lay the groundwork by explaining how important it is to have a comprehensive estate plan.

Clients who already have an estate planning attorney may only see them once every few years to review their plans, while others may not have spoken to their estate planning attorney since they first created their estate plan many years ago. You may see the client more often and know of changes in their life, investments, and beneficiaries that can greatly affect their estate and long-term goals. You can remind your clients that they may need to visit their estate planning attorney due to changes you have discovered or discussed.

1. Does your client currently have a will or trust?

Many people procrastinate about creating a will or trust, often thinking they do not own enough to need an estate plan or wanting to avoid what they think will be a complex, expensive process. You can address these misconceptions so they can move forward with protecting themselves and their loved ones. 

If your client has not done an estate plan, remind them that the state has an estate plan for them—the intestate law for those who die without a will or trust—and that plan may not be what they want, especially if they have a blended family. There is a hierarchy that the state follows when determining which family members receive a person’s money and property and how much they will receive. In most cases, these laws do not account for stepchildren or unmarried partners. If the client wants to determine who will receive their money and property, they need to proactively plan with the assistance of an experienced estate planning attorney. 

If your client already has a will or trust, ask when it was last reviewed or updated. Explain why estate planning is not a one-and-done project. Changes in family dynamics and life events will affect their estate plan. Over time, people change their minds, get married or divorced, have children and grandchildren, and buy and sell investments and property. These changes can impact who the client chooses as their trusted decision-makers, who they want to receive their money and property, and how much they want certain people or charities to receive. The client’s estate plan needs to evolve with the client to ensure that their wishes are carried out.

2. Does your client have people they trust to make financial or medical decisions for them in emergencies?

If your client has not chosen people to make financial and medical decisions for them, if they are unable to make their own decisions, they need to think about who they would want to do so. When choosing trusted decision-makers to serve as agents under a financial or medical power of attorney, your client must consider whether a person has the necessary qualities and skills to handle the role, whether they are willing to accept the role, and whether they understand their responsibilities. 

If your client has chosen people to serve as decision-makers, it is important that these people understand your client’s wishes should they need to step in and act. Your client can communicate their wishes by having a conversation with the decision-makers, providing their wishes in writing, or stating their wishes in a video. Your client should also periodically evaluate whether the people they have chosen are still the right people for the job. 

If your client is unable to make decisions for themselves and they have not properly named someone to act for them under financial and medical powers of attorney, a judge will have to decide who will make the financial and medical decisions on the client’s behalf. It can be time-consuming and costly for family members, as well as emotionally overwhelming, particularly in a medical emergency. In addition, the judge may appoint someone whom the client would not have chosen.

3. Does your client have minor children?

If your client has minor children, the client must nominate temporary and permanent guardians to care for them in the event the client and the other parent are unable to care for them. If the client has already nominated someone to serve as a guardian, they should review this selection and make sure the person is still able and willing to care for the children should something happen. If your client does not nominate someone, the state will choose a person to care for the children. If no family members are available, it could be a professional guardian who is a stranger. 

Starting your client on their estate planning journey offers them the incredible opportunity to preserve their legacy and protect their loved ones. Reminding your clients to review their existing estate plan ensures that their loved ones and legacy will continue to be protected. We are happy to work with any of your clients who have questions about creating or updating their estate plans.

Third-Party Waivers and Why We Sometimes Need Them

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As your trusted estate planning attorney, if we do not have an immediate answer or solution for you, we can often get one by contacting another attorney or advisor who works in an area that falls outside of our expertise—a vetted professional that we have developed working relationships with or perhaps your trusted advisor who can be brought in to enhance the services provided to you. 

When this happens, we must adhere to specific ethical guidelines, including those outlined in the American Bar Association’s (ABA) Code of Professional Conduct Rule 1.6, regarding client confidentiality and obtaining informed consent before disclosing information related to your planning. According to ABA Model Code Rule 1.6, “[a] lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent.”

Attorney-Client Privilege 

You are surely familiar with attorney-client privilege—confidential communications between you and your attorney stay between you and your attorney. This is one of the oldest legal privileges, with boundaries respected by the courts. However, there are times when attorney-client privilege is waived, such as when information is shared outside of the attorney-client relationship. 

Lawyers often include other individuals as part of their “team,” specifically to provide the best and most comprehensive representation to their client. For example, lawyers may often seek out a trusted accountant, tax advisor, financial planner, or insurance agent to help translate complex financial information, tax strategies, or policy information for advanced estate planning. However, when these individuals are brought in, we want to make sure that you are informed and protected.

The Third-Party Waiver Form

In situations where nonclients, including your family members and advisors, are integral to the estate planning process, we may ask you to sign a third-party waiver form. This form serves a dual purpose:

  1. It allows us to share confidential information that is otherwise protected by the attorney-client privilege with relevant third parties to complete the estate planning process.
  2. It allows third parties to be present during our estate planning meetings where sensitive details are discussed. 

The third-party waiver is not only an ethical requirement but it also serves as a practical tool for permitting effective communication and collaboration among various experts. This can help to cultivate a comprehensive and transparent approach to estate planning. By seeking informed consent through the third-party waiver, we adhere to legal and ethical standards that prioritize your best interests.

Knowing What to Expect from Your Estate Planning Attorney

If you are ready to start the estate planning process and have other trusted advisors you feel would help the process, you can expect to sign a third-party waiver form. Your privacy is of the utmost importance. 

If you want to include family members or friends in your estate planning meetings, you will need to sign a waiver permitting us to share your private planning information with them as well. In some instances, we have found it helpful to include family members in a meeting once the estate plan is complete, especially if those individuals have been given a role as an executor, trustee, or agent under a financial or medical power of attorney. We will explain what their roles involve and your intentions for them in decision-making processes. We can be there to provide them with advice and support and navigate tough conversations if needed. 

We are your attorneys, and it is our responsibility to represent you and your interests. In some areas of the law, this may mean excluding people; however, in estate planning, it may be to your benefit to include outside professionals, family members, or loved ones. Regardless of the situation, we are here for you to ensure that you have an estate plan that is comprehensive and carries out your wishes.

Rules to Follow When Working With Referral Sources

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Attorneys are bound by many different sets of rules regarding how they interact with clients, prospects, and referral sources. To properly represent a client, an attorney may need to refer the client to another attorney or advisor for their specialized expertise, such as a financial professional, tax advisor, or insurance agent.

To ensure that all parties have a mutually beneficial relationship, the following are some American Bar Association model rules that attorneys must adhere to when working with other professionals.

American Bar Association Model Code of Professional Conduct Rule 7.2: Communications Concerning a Lawyer’s Services

The American Bar Association’s rules of conduct protect attorneys, clients, and referral sources. Lawyers can establish reciprocal referral relationships with other attorneys and nonlawyer professionals as long as those referral relationships are not exclusive. For example, if our estate planning client needs assistance from a financial advisor, we must recommend a few different advisors. In selecting who to refer to the client, we must also ensure that our recommendations do not interfere with our professional judgment and the client knows about the arrangement. This ensures transparency and allows the client to make informed decisions when looking for other professionals. 

As a matter of ethics and integrity, lawyers cannot receive financial incentives or compensation in exchange for referrals. However, referrals can express appreciation through nominal gifts of little monetary value as a gesture of gratitude. This rule prevents conflicts of interest that may arise from financial arrangements between attorneys and other professionals.

American Bar Association Model Code of Professional Conduct Rule 1.6: Consent for Involvement of Non-Clients

Attorney-client privilege protects confidential communications between a lawyer and their client. Rule 1.6 protects this privilege and the client’s privacy. Clients must consent before an attorney can share privileged information with referral sources, other professionals, or the client’s family members. Your clients may want their advisors involved in the estate planning process because they have relevant information to share (e.g., bank account balances, policy information, prior tax filings) and can offer helpful insight. 

We welcome the opportunity to work with you to better serve our mutual clients. To make sure that we fulfill our ethical obligations, we may have the client sign a third-party waiver form that grants us permission to share relevant information with you or to have you be part of the planning session we have with the client.

To help ensure that our clients have a comprehensive estate plan, we sometimes need to assemble a team of trusted professionals who can contribute their expertise to achieve incredible client outcomes. We appreciate working with you and look forward to working with you more in the future. 

Cultivate and Build New Relationships Through Networking 

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In addition to being considered the month of love, February is International Networking Month. In today’s world, developing new relationships with people is truly important. Our social and professional interactions contribute to our overall health and mental well-being. Many people work remotely or live far away from their friends and family and often engage with others online rather than in person. This can make it hard to make new friends or find colleagues with common interests. We need to make the time and put in some effort, and that is where networking comes in.

What Is Networking?

Networking involves attending in-person and online events to find people who can offer insights, opportunities, guidance, and support for business or personal endeavors. Whether you want to find people who share your hobbies, a lunch date, a travel companion, or a professional who understands your specific challenges at work, your networking community can add value to your life. 

Networking can be a strategic business activity or a social gathering. You can plan your own event or attend someone else’s based on a personal or professional goal. Who do you want to meet and why? From LinkedIn business communities to Meetup.com, networking sites have many ways to help you find “your people” and offer opportunities to meet virtually or face-to-face.

When Do You Network?

Networking helps you expand your circle of friends or peers. You might feel lonely, want to learn something new, need a break from your routine, or simply want to be in a room with like-minded people. Search for specific events and activities that speak to you and meet your criteria for locations and times. Check the profiles of online participants and comments about the group to determine if it interests you. If you cannot find exactly what you are looking for, create a group describing the types of people you want to meet and the activities or interests you want to explore. Then set up a time and place to see if other people in your area are willing to meet. 

Online networking sites introduce you to many communities and individuals you can build relationships with over time. You can control the level of interaction you are looking for, whether it is to attend a casual cocktail hour with 50 people or schedule a meeting with one individual for coffee.

What qualities are you looking for in the people you will meet? How far do you want to travel to meet them? What interests do you want to share? Get started and work to establish connections that enhance your quality of life. You may find that you develop many lasting friendships or relationships with referral sources.

Networking Is a Worthwhile Endeavor

It takes time to find people who have the qualities you enjoy, whether in personal or business relationships. Get comfortable with introducing yourself to others. If you are a bit introverted, start with smaller networking groups, bring a friend, and spend more time listening before jumping in. Seasoned group members are often happy to introduce themselves and help new people feel comfortable. 

You may have to try multiple networking events before finding the right fit. Once you do, commit to this social exercise. Building valuable relationships requires gravitating to people you can appreciate for their personality, skills, or knowledge.

In a world where family members live in different states and most interactions are virtual or remote, we need to discover new ways to meet people and connect on a deeper level. A sense of community brings people together. Networking offers an opportunity to give and receive love and support in a variety of ways. Give networking a try!

Decanting: How to Fix a Trust That Is Not Getting Better with Age

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While many wines get better with age, the same cannot be said for some irrevocable trusts.  Maybe you are the beneficiary of a trust created by your great-grandfather over 70 years ago, and that trust no longer makes sense. Or maybe you created an irrevocable trust over 20 years ago, and it no longer makes sense for your current situation. Wine connoisseurs may wonder if there is any way to fix an irrevocable trust that has turned from a fine wine into vinegar. You may be surprised to learn that under certain circumstances, the answer is yes—by decanting the old, broken trust into a brand new one.

What Does It Mean to Decant a Trust?

Wine lovers know that the term decant means to pour wine from one container into another to open up the aromas and flavors of the wine. In the world of irrevocable trusts, decanting refers to the transfer of some or all of the accounts and property owned by an existing trust into a brand new trust with different and more favorable terms.

When Does It Make Sense to Decant a Trust?

Decanting a trust makes sense under myriad circumstances, including when you would like to make the following types of changes:

  • Tweak the trustee provisions to clarify who can or cannot serve as trustee
  • Expand or limit the trustee’s powers
  • Convert a trust that terminates when a beneficiary reaches a certain age into a lifetime trust
  • Change a trust in which a beneficiary is entitled to receive their inheritance at a certain point or for certain purposes into a full discretionary trust in which the trustee decides when money will be given to the beneficiary in order to protect the trust’s accounts and property from the beneficiary’s creditors
  • Clarify ambiguous provisions or drafting errors in the existing trust
  • Change the governing law or trust situs to a less taxing or more beneficiary-friendly state
  • Merge similar trusts into a single trust for the same beneficiary
  • Create separate trusts from a single trust to address the differing needs of multiple beneficiaries
  • Provide for and protect a special needs beneficiary   

What Is the Process for Decanting a Trust?

A state’s statutes or case law can allow decanting. Additionally, the trust agreement may contain specific instructions with regard to when or how a trust may be decanted.

Once it is determined that a trust can and should be decanted, the next step is for the trustee to create the new trust agreement with the desired provisions. The trustee must then transfer some or all of the accounts and property from the existing trust into the new trust. Any accounts or property remaining in the existing trust will continue to be administered under its terms; an empty trust will be terminated.

Decanting Is Not the Only Solution to Fix a Broken Trust

While decanting may work under certain circumstances, fortunately, it is not the only way to fix a “broken” irrevocable trust. Our firm can help you evaluate options for fixing your broken trust and determine which method will work best for your situation. If you have a trust that has turned to vinegar and is not what you want it to be, give us a call.

Celebrating International LEGO Day 

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Mark your calendars: January 28 is International LEGO day, which celebrates the date when the patent for the globally famous plastic brick system was filed. 

Since the 1940s, people have been creating their own worlds, brick by brick, with LEGOs. With an estate plan, you can help your loved ones build a great future. Make your estate plan as specific as you want by providing step-by-step instructions for how you want them to honor your legacy. Or give them the resources to bring their vision to life, no strings attached. 

Either way, an estate plan—like LEGOs—makes a great gift that can be enjoyed by generations to come. 

January 28 and LEGOs

The history of LEGOs began in 1932, when carpenter Ole Kirk Christiansen began making wooden toys in his shop. In 1936, he named his company LEGO, combining the words in the Danish phrase leg godt, meaning “play well.” 

Following World War II, the availability of plastics in Denmark changed the company’s trajectory. Christiansen purchased a plastic injection molding machine and, inspired by interlocking plastic bricks produced by a competitor, he launched the forerunner of modern LEGO bricks in 1949, calling them Automatic Binding Bricks. 

But it was not until 1954 that Christiansen had the aha moment that would make LEGOs world-famous. Until then, his plastic bricks were seen as more of a stacking toy than a system that allowed every brick to fit together and be used in multiple ways. During a business trip to the United Kingdom, a serendipitous conversation with a toy department manager provided the spark that led Christiansen to produce the first LEGO system in 1955.

Customers complained, however, that models built from the plastic brick system lacked stability and clutch power. Godtfred Kirk Christiansen, who had taken over day-to-day operations from his father, hit on the idea of a coupling principle that used a three-tube design. 

The LEGO Group filed a patent for the new building system on January 28, 1958. This design unlocked the LEGO building blocks that are known and loved to this day for their endless building possibilities. 

Draw Inspiration from LEGOs for Your Estate Plan

International LEGO day honors the legacies of the Danish father and son whose passion and creativity spawned one of the best-selling toy lines of all time. The system approach to LEGOs has made it infinitely upgradeable, able to piggyback on changing tastes while remaining timeless. 

LEGOs can inspire not only hobby builders but also estate planners. Like LEGO sets, estate plans can be built in any way imaginable. If you can dream it, you can build it with an estate plan that customizes your legacy and lays down generational building blocks. 

Here are a few estate planning ideas from popular LEGO sets. 

Dream House

For many families, memories are rooted in the places they call home. As children move away and families spread out geographically, there may be a special place, such as a grandparents’ home or a vacation home, that everyone returns to for holidays, family reunions, and other special occasions. 

Passing down a home can keep it in the family, ensuring that new memories are made and old ones are kept alive. There are several ways to leave your home to loved ones, including through a will, co-ownership, a trust, a transfer-on-death deed, or a limited liability company in some states. 

Because the family may not want to deal with maintaining and upkeeping the home, an alternative is to leave a monetary gift that the beneficiary can use to purchase a new house. Everyone has a different idea of what their “castle” looks like. It could be an alpine lodge, a suburban family house in the brick colonial style from Home Alone, or a tiny home for the intrepid minimalist. 

World Travel

Among younger generations, there is an emphasis on spending time and money on experiences rather than amassing material goods. An Eventbrite survey found that nearly 80 percent of millennials would choose to spend money on an experience over buying an object they desired. 

Travel is a major part of the so-called experience economy. Most bucket lists include at least one travel destination. In 2023, due in part to pent-up pandemic demand, Americans reported spending more on travel and traveling longer. 

An estate plan gift can help loved ones cross off bucket-list destinations and fulfill their dreams of seeing the world. Travel money can be gifted to an individual or set aside for a group trip that lets the family visit a special destination. Send them to see the wonders of the world or set aside money for a more personal journey to the small village from which your ancestors emigrated. 

Education

No gift keeps on giving quite like an education. Educated people are more likely to reap benefits throughout their life. More education is often linked to higher income, which is in turn linked to greater wealth and better health. 

Money placed in a trust for education can come with attached terms that a trustee oversees. For example, the trust may specify that the funds may only be used to pay for a college education, or, if the University of Brickester is not in the cards, a vocational training program. 

Trust money could fund a nontraditional path as well. Does somebody in your life aspire to write a book or design their own LEGO set? Gift them a nest egg that offers the financial freedom to bring their idea to life. 

Give Back

The legacy wishes of some individuals extend outside their immediate family and are focused on the greater good. For the philanthropically minded, a charitable gift can support a cause that they are passionate about. 

Maybe you are committed to supporting disadvantaged youth or preserving wildlife. And you might want to encourage your beneficiaries to carry on your legacy of giving back once you are gone. Both can be addressed in an estate plan. 

As a bonus, charitable contributions offer tax advantages. Charitable contributions can minimize estate taxes, leaving more for your loved ones and providing for a good cause at the same time. 

Build Your Legacy. Talk to An Estate Planning Attorney. 

LEGOs have brought decades of joy to people of all ages. Thoughtful estate planning can do the same. 

An estate that spells out exactly how beneficiaries are to use inherited assets is comparable to a LEGO set that provides building instructions. Another option is to pass down assets in a lump sum, without instructions, giving recipients an open-ended gift that can be used however they want, in the style of a classic build-your-own LEGO kit. But be careful—just like LEGO pieces that are left out, your loved one’s inheritance could be snatched up by creditors, a divorcing spouse, or used up quickly if you give it to them in one lump sum.

Legacies are part inspiration, part follow-through. It took a patent office filing to launch the LEGO empire. To this day, LEGO is owned by a grandchild of the company’s founder. 

Extending your personal empire into the future—to your children, great-grandchildren, and beyond—requires executing estate plan documents and updating them periodically. To start building your estate plan, contact our office and schedule an appointment. 

5 Good Reasons to Decant a Trust

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Today, many estate plans contain an irrevocable trust that will continue for the benefit of a spouse’s lifetime and then continue for the benefit of several generations. Because trusts like these are designed to span multiple decades, it is important that they include trust decanting provisions to address changes in circumstances, beneficiaries, and governing laws. 

What is trust decanting?

When a bottle of wine is decanted, it is poured from one container into another. When a trust is decanted, the accounts and property from the existing trust are removed and distributed into a new trust that has different and more favorable terms.  

When should a trust be decanted?

Provisions for trust decanting should be included in trusts that are intended to last decades into the future. Decanting can do the following:

  1. Clarify ambiguities or drafting errors in the trust agreement. As trust beneficiaries die and younger generations become the new heirs, vague provisions or outright mistakes in the original trust agreement may become apparent. Decanting can be used to correct these problems.
  2. Provide for a special needs beneficiary. A trust that is not tailored to provide for a special needs beneficiary will cause the beneficiary to lose government benefits. Decanting can be used to turn a trust in which the beneficiary is entitled to money into a full supplemental needs trust.
  3. Protect the trust’s accounts and property from the beneficiary’s creditors. A trust that gives the beneficiary control or access to their inheritance puts that inheritance at risk of being snatched by the beneficiary’s creditors, rapidly depleting the inheritance if the beneficiary is sued. Decanting can be used to convert a trust without any asset protection features into a full discretionary trust that the beneficiary’s creditors will not be able to reach.
  4. Merge similar trusts into a single trust or create separate trusts from a single trust. An individual may be the beneficiary of multiple trusts that have similar terms. Decanting can be used to combine these trusts into one trust that will reduce administrative costs and oversight. On the other hand, a single trust that has multiple beneficiaries with differing needs can be decanted into separate trusts tailored to each individual beneficiary.
  5. Change the governing law or situs to a different state. Changes in state and federal laws can adversely affect the administration and taxation of a multigenerational trust. Decanting can be used to take a trust that is governed by laws that have become unfavorable and convert it into a trust that is governed by different and more advantageous laws.   

Final Thoughts on Trust Decanting

Including trust decanting provisions in an irrevocable trust agreement or a revocable trust agreement that will become irrevocable at some time in the future is critical to the success and longevity of the trust. This will help ensure that the trust agreement has the flexibility necessary to avoid court intervention to fix a trust that no longer makes practical or economic sense.  

If you are interested in adding trust decanting provisions to your trust or would like to have the decanting provisions of your trust reviewed, please call our office.

How Much Authority Does a Trustee Have Over the Stuff in My Trust?

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A trustee is a person or entity responsible for managing and administering your trust according to your instructions and in accordance with state law. They are considered a fiduciary (meaning they are held to a higher standard of care and owe certain duties to the beneficiaries). As a fiduciary, a trustee must protect the trust’s investments and act in the best interests of the beneficiaries. They must prepare and maintain trust accounting records and prepare tax-related forms, providing this information to the beneficiaries at their request. At some point, they may need or be required to liquidate or sell the trust’s accounts and property. 

A Trustee’s Authority to Sell Assets While Administering the Trust

When administering a trust, the trustee might encounter situations in which they need to convert trust assets into cash to provide liquidity to the trust. This could mean converting trust assets such as stocks and bonds or selling other trust property such as real estate or other high-value assets to generate the necessary funds. Though this decision must be based on prudent investor rules or standards and be in the best interest of the beneficiaries, trustees generally do not need beneficiary approval to liquidate or sell trust property, but they may seek it to avoid potential arguments in court regarding their decisions and authority. The biggest restriction is that trustees are not allowed to sell trust property for their own benefit. There may be an exception to this restriction if the trustee is also a trust beneficiary.

Creating Liquidity 

A trustee may need to create liquidity for various reasons:

  • Meeting financial obligations. The trust may have ongoing financial commitments, such as taxes, mortgage payments, or insurance premiums. By creating liquidity, the trustee can fulfill these obligations without disrupting the overall trust management.
  • Covering administrative costs. There could be administrative expenses related to legal and accounting services, as well as fees for managing the trust. Creating liquidity ensures that the trustee can cover these costs promptly and efficiently.
  • Fulfilling distributions. If the trust mandates periodic or one-time distributions to beneficiaries, creating sufficient liquidity allows the trustee to meet these distribution requirements in a timely manner.
  • Responding to opportunities or challenges. Market opportunities or unexpected financial challenges may arise that require quick access to funds. Creating liquidity enables the trustee to seize favorable investment opportunities or address unforeseen financial needs effectively.

Investment Strategy

A trustee has the authority and responsibility to manage the trust’s investments in a manner that aligns with the trust’s goals and changing financial circumstances. It may be necessary to modify the investment strategy for a variety of reasons:

  • Evaluating economic conditions. The trustee must continuously evaluate economic conditions, market trends, and the performance of the trust’s assets, such as accounts and other property. If the existing investment strategy no longer serves the trust’s objectives, the trustee may need to consider adjustments.
  • Risk management. Based on the trust’s performance and the financial landscape, the trustee may need to rebalance the portfolio to ensure an appropriate level of risk and potential return. This could involve diversifying investments or reallocating assets.
  • Adapting to beneficiary needs. Changes in beneficiary circumstances, such as increased education expenses or healthcare needs, may necessitate a shift in the investment strategy to generate income or accommodate specific beneficiary requirements.
  • Long-term growth versus income generation. Depending on the trust’s purpose, the trustee may need to adjust the investment approach to prioritize long-term growth, income generation, or a balanced approach, ensuring the trust’s sustainability and fulfillment of its intended purpose.

You Can Control the Sale of the Trust’s Assets

If you are the trustmaker and have concerns about a trustee’s authority to liquidate or sell accounts and property, you can provide specific guidelines controlling the sale of the trust’s assets.

When establishing a trust, you may have specific assets you would like to preserve, whether for sentimental reasons, future generations, or other purposes. However, you should be cautious when including provisions that restrict the liquidation or sale of particular assets.

Placing restrictions on liquidating or selling assets in the trust can help preserve family heirlooms, properties with historical or emotional significance, or specific investments that align with the trust’s long-term goals. However, overly restrictive provisions can present challenges to the trustee, especially in situations where the trust may require liquidity, when there is a need to change the investment strategy to meet financial obligations or adapt to market conditions, or if there have been changes in tax laws, economic conditions, or family dynamics.

It is essential to strike a balance between preserving important assets like certain property or accounts and allowing the trustee the flexibility needed to effectively manage the trust, ensuring the trust’s long-term viability and the best interests of the beneficiaries.

A Trustee’s Responsibility Regarding Distributions to Beneficiaries

Overall, the trustee must adhere to the instructions laid out in the trust agreement. If the trust’s terms specify that the trustee must distribute money or property to a beneficiary at a particular future date or upon meeting specific conditions, the trustee is obligated to follow these instructions precisely. That is why making informed decisions when creating a trust and defining the trustee’s role and responsibilities is important. 

Stipulating specific instructions regarding when and how distributions should be made to beneficiaries often requires attaching conditions to distributions, such as timelines and other triggering events like a beneficiary’s age or completion of a milestone. Whatever the conditions are, the trustee will usually be required to follow them unless they are illegal or against public policy.

Communication Between a Trustee and Beneficiaries Is Critical When Selling Trust Assets

The trustee should—and in some instances is required to—maintain open communication with both the beneficiaries and any co-trustees, keeping them informed about the trust’s status and decisions when creating liquidity and changing investment strategies that may affect upcoming distributions. Transparency helps answer questions and manage expectations.

Accurate and thorough recordkeeping is essential to demonstrate compliance with the trust terms and the law. Detailed records can help explain the rationale behind each decision, and relevant documents can support the actions taken by the trustee.

If you are a trustee and are unsure about the trust terms relating to the management or sale of assets, we can assist you and any financial professionals with whom you are working. If you are creating an estate plan that includes a trust, working with an experienced attorney to craft a comprehensive trust agreement can help ensure your trustee’s compliance and protect the interests of both the trust and its beneficiaries.

We can help you memorialize your intentions in your trust agreement and strike a balance between preserving your life savings and granting the trustee the necessary flexibility to manage the trust successfully. Give us a call to schedule your appointment today.