Is your Trust Fully Funded?
Many of my clients come to me with Trusts that have not been funded or fully funded. What does that mean? It means they had a trust document drawn up by their lawyer in the past, but everything they own is not in the trust. Their house is not in the trust, bank and stock accounts, etc. are not in the trust. They likely did the trust to avoid probate and in fact will not only have probate, but will also have to deal with the trust, who is likely the beneficiary in the Will. What should you do to prevent this? Check out my Determining Your Net Worth hand out and make sure that everything on that worksheet is either in your trust or has beneficiaries (IRA’s, 401Ks cannot be in the trust). Is the house in the trust? Are the timeshares in the trust? What about the cars? In order to have that seamless transition you are expecting when you pass you need to make sure EVERYTHING you own has been included. It doesn’t matter how big or small that account is. The details matter. Learn more about trusts in my hand out – Trusts are they Right for Me?
– Kathryn Bedell, Esq.
Do I need to worry about estate tax?
If you are a Maine resident and your assets are less than $5.7 million dollars (2019), then the answer is “no.” The amount is doubled at the Federal level. This number includes all your assets – retirement, life insurance, real estate, and even assets held in revocable and many irrevocable trusts. If you die with real estate in Maine, a simple form stating that your estate is under the amount is all that is necessary to be filed to release the property. As a result of these higher exemption amounts, most people can have fairly simple estate plans, if they choose. Some people with trusts may find that they have old language in their documents that is outdated and unnecessary. If you are nearing the exemption levels in Maine it’s never too late to start gifting to keep your estate under the exemption amount.
– Kathryn Bedell, Esq.
Timeshares: Lots of fun until you die…
If you have not properly planned, timeshares can inadvertently saddle your loved ones with headaches and needless expenses when you die. Few people realize that most timeshares are deeded real property, even if it is only a week in Sedona or two weeks in Hawaii. If you own the timeshare jointly with someone (e.g., a spouse or friend), you may be fine. But what if you and your spouse die in a common accident? Or your spouse has passed and you now own it yourself alone? Owning real property subjects you to a probate in that state when you die. If you do own a timeshare, make sure you have thought about succession planning. Some options are to place the timeshare in a trust, or to add a child or friend you wish to inherit your timeshare deed before you die (assuming they are willing to take on the annual expense after you are gone). Otherwise, you may end up costing your family far more money dealing with the timeshare than it is actually worth, not to mention the added stress!
-Kathryn Bedell, Esq.
Real Property Transfer on Death Deed
Major changes to the Probate Code that affect all Maine Real Estate – Starting September 1, 2019, Maine will allow a real estate deed, known as a Transfer on Death Deed, to designate beneficiaries, the same way you would on a bank or stock account. Florida residents are already familiar with this deed and call it a “Ladybird” deed. The advantage of the new deed is that the beneficiaries will have absolutely no rights to the real estate and the owner can change the deed at any time before you die, without notice to the beneficiary.
A Transfer on Death Deed will minimize the need for Trusts, especially out-of-state residents with Maine real estate who want to very simply by-pass Maine probate when they die. It will also potentially eliminate probate for Maine residents who have beneficiary designations for all their assets (life insurance, IRA, bank accounts) except the house. Call today to see if this new deed is right for you!
-Kathryn Bedell, Esq.