My husband and I are considering adding our son (he is married) as joint owner to our banking accounts in the event we should become ill or die. Would him being on our accounts be considered his and his wife’s personal property? If they would divorce would she be entitled to half of our accounts? We do not wish to set up a living trust since we do not own real property.

I think you should reconsider doing a trust. A trust is a very effective way to accomplish your objective of having your son pay the bills, without giving anything to his wife right now. You don’t say if you have any other children. If you have other children and you put his name only on the account, you may be disinheriting your other children.

If you don’t want to prepare a trust, there are other choices. The issue is not what happens if you die. You can do a payable on death option with your bank. The bank would give the account to your son at the death of the second of you to die. The problem is what happens if you become ill. You will need him to help you pay your bills.

If the account is in his name, he becomes one of the owners of the account. He has the right to take all of the cash. If you make him power of attorney instead, he can use the account to pay your bills, but the money is not his. You could make these changes the next time you go down to your branch. You, your husband and your son must be at the branch at the same time.

Think carefully about your choices.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

All we have is a house and a few cars, part ownership in another house.

I would go one step further. The foundation of estate planning is control. Life happens. When one spouse dies it is natural for the survivor to remarry. In remarriage loyalties change. It is not good or bad. It just is.

I would recommend an Irrevocable Life Insurance Trust (ILIT) with your children from a prior marriage as the sole beneficiaries. This type of trust is designed to hold a life insurance policy. In addition, this type of rust is not changeable once it is established, so there is no risk of the assets going to anyone except your children. I would also recommend that you name one or other of your children from a prior marriage as Trustee of the Trust. They would be responsible for managing the trust and keeping the policy alive. Finally at your death, the policy proceeds are payable to your children.

This planning enables you to protect your current spouse and your children at the same time.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

Would I need a living trust or what forms would I need?

A sensible way to transfer assets to children, in the event of your death, is through a revocable living trust.

Transferring assets to children through a last will generally gives the children assets at age 18, Most of my clients believe that children cannot manage assets at that age.

Another common way to transfer assets is a trust inside a last will. The assets can be held for a longer time period. However, you have to probate the will in order to get to the trust. A probate generally means extra time and costs.

A revocable (changeable) living (established during your lifetime) trust works well because it is set up during your lifetime, you can change it over time and it allows you to give your assets to children when you want and exactly the way you want.

You will need an estate planning attorney to draft the trust for you. The attorney will need to prepare a “pour over” last will as well as the trust to make certain all of your assets are controlled by the trust.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

Everything was divided equally among the children according to their will.

There is a hierarchy to paying taxes when someone dies. The general rule is that the Trust must pay any tax liabilities. If the Trust does not pay the taxes and there are assets with which to pay the taxes, the Trustee may be personally liable. Finally, if the Trustee fails to pay, and the beneficiaries have received assets from the trust, the IRS may hold the beneficiaries responsible.

The simple rule is to pay the taxes first.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

I need advice about choosing a trustee and custodian for my daughter. I want to make sure after I die my daughter will be taken care of and get money that I saved for her. I can’t decide whether to have my brother in Thailand or my friend in the USA be a trustee. What will you suggest?

Will there be any court order or approval for any payment transactions before the designed-trustee can withdraw money from my bank account?

Will there be anyone to check and make sure all withdrawal transactions were for my daughter? Is there a case that a designated-trustee took everything and ran away?

I also want my family in Thailand to be my daughter’s custodian but my ex-husband (American) disagreed. How will my Will be affected by my ex-husband’s Will? Any suggestion will be appreciated.

In your fact pattern, I recommend that you set up a revocable living trust with a pour over will. The trust will take care of you and your daughter. In the event of your death, the will sets out the guardian, but the will is only probated if all the assets are not in the trust.

The job of trustee for a minor child is a challenging one. You should also remember that the trustee will take care of you in the event of your illness or incapacity.

Rather than answer who, I ask you to consider the character traits of each individual in this light. A trustee manages your assets when you are incapacitated or in the event of your death, and invests the money for the trust in the best interests of the beneficiary. A trustee should be good with numbers, good with investments and have knowledge of taxes and tax filings. The trustee should also be familiar with your family and your family values. In addition, the trustee should be able invest the trust assets and make distributions to you (if you are disabled) and your daughter (in the event of your death).

Which of the people you are considering have these qualifications? If you still cannot decide, you might want to consider both of them together. Two trustees would answer your questions concerning safeguards. Since both have to agree to investments and distributions, one would be responsible for watching the other to make certain that the distributions were in the best interests of the beneficiaries.

With regard to your ex-husband, if he is the biological father of the child, under the laws in most of the US, he is first in line to have custody of your daughter. You can’t fight that. You could note in your will, if your daughter’s father does not wish to be the custodian, you could list your family in Thailand.

That being said, I would also recommend that you ask your trust attorney to draft the trust so that there are options. For example, I want this to happen if my family is custodian. However, if my ex-husband is custodian, I want stricter provisions to make certain the money goes to my daughter and not her father.

Remember also, that the older your child gets, the more decision making power she will probably have in choosing her own guardian. Don’t get stuck with this issue. A trust is designed to be used in the future. If you get stuck on too many issues, the documents will never be prepared.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

My spouse, who has Stage 4 Terminal Cancer, made a Will, but no Trust. The Will states 70% of assets go to me and 30% go to our child. However, my husband owns no property (we rent our home). Am I obligated to set up a Trust Fund for me and my husband’s child (our child is a minor)?

I am so sorry for your difficult situation.

Any assets passing to a minor child through a probate are held in a conservatorship, or trust fund for the child. If there are no assets passing through probate, no assets will go through the conservatorship. Other assets that might go through a conservatorship are life insurance policy proceeds which pass to your child directly from your husband’s life insurance policy, if any.

The best way to avoid probate is with a revocable living trust. I would strongly recommend that you see an estate planning attorney as soon as possible, to see if a revocable living trust is needed to avoid a conservatorship of your minor child’s assets. Don’t delay.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

If you’ve been reading our blog regularly then you know that the 2010 estate tax repeal has caused no end of confusion and uncertainty; not only for those who have been dealing with probate and trust administration since the tax was first repealed, but also for those who are trying to think ahead and do the right thing for their spouses and children. Many people have come to the erroneous conclusion that they have no choice but to stand by and wait until the Washington politicians make up their minds about whether or not to restore the estate tax retroactively—but we’re here to tell you that you don’t have to wait to protect your assets and your family.

Forbes.com recently published an article entitled How to Protect Your Family From Estate Tax Uncertainty. This article suggests that there are a number of steps you can take right now to protect your heirs and your assets, even if you don’t know what changes lawmakers may enact tomorrow or 2 months from now. Their suggestions include everything from working with your estate planning attorney on contingency plans to account for anomalies such as no estate tax or minimum exemptions, to common sense action items such as taking the time now to track your cost basis for assets (to help your executor and heirs determine the change in value for tax purposes.) The Forbes article also suggests that some people may want to plan to save by giving—taking advantage of the gift tax exemption amounts.

There are always steps you can take to ensure that your estate plan is up to date, our firm can be your compass and your guide; we can help your family prepare for whatever the future may have in store.

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The creation of a trust and estate plan includes spending a certain amount of time choosing the people who will be your fiduciaries—the people who will carry out your wishes. One of the most important fiduciaries is your trustee, who is involved in just about every aspect of the administration of your trust. Most people choose someone close to them to serve as trustee: a best friend, son or daughter, brother or sister. Choosing someone who knows you and your family to serve in this role can be beneficial in many ways, but if that person doesn’t have a financial or legal background the responsibilities can be overwhelming!

If you want to give your trustee a head start (or if you’ve been nominated as a trustee and need a little help yourself) this article from the Elder Law Answers website shares “9 Do’s and 1 Don’t” of being a trustee. These suggestions will help a potential or new trustee better understand their responsibilities and the scope of the job to come. Advice such as #1, “Do read the trust document”; or #3, “Do keep the best interests of the beneficiaries in mind at all times” may seem obvious now, but it’s not always so clear when you’re beset by insistent and emotional relatives. The more technical tips such as #2, “Do create a checking account for the trust”; and #9, “Do file income tax returns for the trust” are invaluable starter-steps for someone who has never done this before.

But the most important tip to remember is the one don’t: #10, “Don’t fly solo. Get professional advice to make sure you are correctly fulfilling your role.” If you or the people you’ve chosen as your trustee are ever in doubt, please don’t hesitate to call our office for help.

www.blogprofs.com