Estate Planning for Non-Married Couples in Memphis

April 15, 2008 | Leave a Comment

Very extensive article that is must read for all couples contemplating any financial commitments prior to marriage.  This includes buying a house with a boyfriend or girlfriend or even a fiance.  You’re not legally married until you’re legally married. Our Memphis Estate Planning Lawyers recommend consulting with your attorney before making any financial commitments with someone that is not your spouse.  Laws that protect spouses from and individuals creditors don’t apply to unmarried persons.  While the article focuses also on same-sex marriage which is not recognized in TN, all advice is applicable to un-married couples contemplating marriages or simply in a long-term committed relationship.

Screenhunter_01_apr_11_1032Kathleen Ford Bay(Attorney at Law, Blazier, Christensen, Bigelow, and Virr, P.C.) has recently published her article entitled Untying the Knot– Until Death and Taxes Do Us Part, RPPT eREPORT (Feb. 2008).

 To be cautious and practical, unmarried couples the following should meet with one of our Memphis Estate Planning Lawyers to discuss such issues as:

  1. Wills (avoid testamentary libel);
  2. Financial powers of attorney;
  3. Health or medical powers of attorney;
  4. Advanced Directives (Living Wills);
  5. Revocable trusts and transfer of assets to such trusts (consider the mortgage company; insurance on assets; title insurance on home);
  6. Declaration or nomination of guardian or conservator and stating who can never be a guardian;
  7. Beneficiary designations (insurable interest) and non-probate property;
  8. Providing for children (adoption and other issues); and
  9. Funeral Directive.***  

Source of post: Wills, Trusts, Estates Law Prof Blog

Posted by lawyer | Filed Under Living Trust, Power of Attorney, blog, divorce, estate planning, probate, trusts, wills 

Can I use a do-it-yourself will kit or trust kit?

November 26, 2007 | Leave a Comment

I get this question all the time by potential estate planning clients calling both my Germantown and Olive Branch offices. Here is the short answer, yes but beware. (As a side note I had a friend once who told me that he’s never heard a lawyer simply say yes before. I told him that’s because in law school virtually every exam answer starts with either “yes, but” or “no, but”. Unfortunately there is almost no straight answer for anything when it comes to legal issues.)

A well-tailored estate plan ordinarily has many more elements than can be successfully addressed in a do-it-yourself estate planning kit, will kit or trust kit. While a do-it-yourself will or trust should be valid in both Tennessee and Mississippi if it is propertly executed and witnessed, the likelihood of ending up with a proper will or trust is about the same as if you attempted to fly and land a 747 by just reading the flight manual. Heck, you might get away with it, but the affects if you don’t are catastrophic. There is simply no substitute for the experience of a professional estate planning lawyer.

One probelm with the use of these cheap (and I truly mean “cheap” here, with all the bad connotations that come with that word) estate planning kits is that people simply fill in the blanks and think that what they have done constitutes an estate plan. What many people don’t understand is that a poprer estate plan or trust must actually be funded. An estate plan is not complete simply because a piece of paper was signed. Assets must be transfered properly or else the plan is worthless.  Also, all types of assets that the person owns or controls that pass to beneficiaries independently of a will, such as retirement plans and life insurance, must be considered. The beneficiary designation forms for these assets will not be found in a kit.

In my years of experience I’ve found that people who believe that they need a “simple” estate plan are often surprised to find that they have failed to consider critical points, such as the possibility of simultaneous deaths and the significant benefits that trusts offer.

A do-it-yourself kit may pass muster from a basic legal standpoint if executed properly, but its success should not be measured by whether the resulting documents are legal, but by whether one’s objectives are accomplished.

Posted by James Ferrell | Filed Under James K. Ferrell, blog, trusts, wills 

Celebrity Estate Planning Blowups

November 12, 2007 | 2 Comments

I received the following article courtesy of WealthCounsel. I’m including it here for all of my Tennessee and Mississippi Estate Planning clients who might find it interesting.

The Worst Estates of the Year

Life is short-sometimes tragically so-and an  estate plan is never truly

finished. The year’s most notable estate blowups were all sadly avoidable, if

only they had left clear intentions  for everyone on their list. 

Anna Nicole  Smith

A  $500 million baby . . .  maybe

Only  39 when she died in February of an accidental overdose, Anna Nicole

Smith  had not updated her 2001 will that named her son, Daniel, who had died of 

an accidental overdose several months earlier, as sole heir. Probate court 

will most certainly award her modest assets of roughly $700,000 to her  only

surviving child, daughter Dannielynn. As for her share of billionaire 

ex-husband J. Howard Marshall II’s estate, the court will likely name her  daughter

the rightful heir of close to $500 million.

But where that money ends up will depend on the man who controls it-either 

Dannielynn’s biological father, Larry Birkhead, or her mother’s lawyer and 

companion, Howard K. Stern, who is named as executor and is likely to be a 

trustee. Dannielynn’s financial future would have been safer if her mother’s

will had spelled out full provisions for a trust, says James Ferrell, a

trusts-and-estates attorney in Memphis, Tennessee. Ferrell has handled many estate

disputes involving people who have omitted certain children from their

wills, but the Smith case is virtually unprecedented. In most states, if a

wealth holder wishes to prevent a biological child  from inheriting assets, it

must be stated in the will. Otherwise laws of intestacy will assume the child

was omitted unintentionally.

Posted by James Ferrell | Filed Under James K. Ferrell, Living Trust, blog, probate, trusts, wills 

Vital “Step 2″ of the Living Trust Process

November 12, 2007 | Leave a Comment

I’ve published posts on the overall scheme in regards to revocable living trusts (Part I and Part II), but the issue of funding your living trust is so important that it warrants a post of it’s own.

J04018321It’s essential to remember that setting up your living trust is a two-step process. Step #1 is having the document prepared and formally executing it.  Step #2 is funding it.  Too many clients complete Step #1 and think that the process is over when they are really only halfway done.  If you do not complete Step #2 then your estate will have to go through probate, which would obviously be a shame since the main reason for setting up a living trust is to avoid probate.

In regards to your real estate, your attorney should prepare a “quitclaim deed to trust” for you to sign which will transfer ownership of your real estate to your living trust, thereby funding the trust with your real estate.  This normally takes place at the same time that you execute the trust itself.

As far a bank and investments accounts go, you will usually just need to fill out and sign a one-page document.  Again, just like with the real estate, you are changing the title to the account so that the records of the financial institution indicate that your trust is now, technically, the owner of the account.

Please note that anything that has a designated beneficiary (life insurance, qualified retirement accounts, annuities, etc.) are already set up to avoid probate, regardless of whether you have a living trust.  But it is generally a good idea to name your trust as the beneficiary of these assets, especially if you are a married couple and your attorney has set up credit shelter planning in your trusts to address estate tax concerns or if you have set up trusts for children in your living trust.  Be sure to check with your attorney.  Again, remember that this would be a change of beneficiary, not a change of ownership.  Closing one of these accounts out and opening a new one in the name of your trust might trigger unnecessary penalties and taxes.

Posted by James Ferrell | Filed Under James K. Ferrell, Living Trust, blog, probate, trusts 

Do You Really Need a Living Trust (Step 1 -Part I)

November 6, 2007 | Leave a Comment

Based on a lot of e-mail messages I have been receiving recently, this is the post that a lot of readers have been looking forward to…some honest commentary on how vital it is for one to own a “Revocable Living Trust” (RLT).  Public interest in RLT’s has been running high for the last several years.  This interest has been fueled a great deal by some attorneys who convince every client that they absolutely have to own one.  They create this concept of RLT’s as documents that can do accomplish everything for you short of slicing vegetables.  This isn’t the case because every client is different and RLT’s simply are not for everyone.

Bldjg01107081First, we should start with a quick sketch of how RLT’s work.  When you sign an RLT you essentially create a legal entity that is separate and apart from yourself, and it is a document that directs how and where the trust assets are distributed when you die, just like a will does.  You then transfer ownership of your assets (bank accounts, investments, real estate, etc.) into the name of your RLT.  So when you die and the Probate Court wants to know what you owned when you passed away so that it can go through the probate process, the answer is that, technically, you owned nothing…your RLT owned eveything.  Therefore, no probate. 

Here is a message well worth repeating:  Planning with living trusts does not end when the trust documents are signed (which is the case with wills).  Please notice that a vital step in this process is actually putting assets into your trust, which essentially means re-titling certain assets so that they are legally owned by your trust.  Otherwise, you’ll end up going through probate and defeating the primary purpose of having a trust.  In other words, there are two very important steps to this process.  Skipping step #2 (funding the trust) is, hands down, the most common mistake made with living trusts…and it’s a big one!

Please note that it is extremely important to sign a “pour-over” will along with your trust.  It is a very short and simple will which simply says that upon your death, anything that is not already owned by your trust is poured over into your trust.  This ensures that all of your assets are distributed in accordance with the instructions in your trust.  Ideally, everything will already be owned by your trust when you die.  But just in case you forgot to re-title a particular asset or just didn’t get around to it, then the pour-over will finishes the job and gets that asset into your trust.  The considerable downside is that the asset now must go through the probate process, which is precisely what you were trying to avoid when you set up the trust in the first place!

Posted by James Ferrell | Filed Under James K. Ferrell, Living Trust, blog, trusts 

What exactly is a trust?

November 5, 2007 | Leave a Comment

Here in the Memphis and Northern Mississippi area many people come to my offices wanting to create a trust account for their childen or loved ones but initially have little knowledge of what a trust actually is.  A trust is a separate legal entity from yourself that you allow to hold onto an asset for you before the trust one day distributes to the people that you have elected to benefit from the trust. Think of it much like you would a safe that you place assets in to one day be opened up and the contents distributed to your designated beneficiaries.  

A basic trust always has these four components: 

  • The Grantor – This is the person who creates the trust.
  • The Beneficiary(s) – Person who receives the benefits (income and/or principal) of the trust. The grantor can also be the beneficiary.
  • The Assets – These are the items, properties or policies transferred into the trust.
  • The Trustee – This is the person who manages the assets of the trust and distributes proceeds according to the guidelines set forth in the trust. The grantor can also serve as the trustee while he/she is alive. A trust can established while you are still living (the legal term for this is inter vivos) or it can be established upon your death by specific instructions made in your will (this is called a testamentary trust).

 A revocable trust is a trust that can be changed or revoked during by the grantor during his lifetime.  An irrevocable trust is a trust that cannot be changed or revoked after they are created.

Posted by James Ferrell | Filed Under James K. Ferrell, blog, trusts