DO I NEED A WILL OR A TRUST?J. Max Barger, Attorney, MBAAckerman Brown1250 Connecticut Avenue, NWSuite 200Washington, DC 2...
TITLE MATTERS© J. Max Barger, 2012
TITLE MATTERS© J. Max Barger, 2012
TITLE MATTERS Types of Title • Own assets alone, or with others        • Individual        • Co-Tenancy            • Joint...
TITLE MATTERS© J. Max Barger, 2012
TITLE MATTERS How Assets Pass to Beneficiaries                          • Made during the Donor’s lifetime and completed. ...
TITLE MATTERS How Assets Pass to Beneficiaries                          • Made during the Donor’s lifetime and completed. ...
TITLE MATTERS How Assets Pass to Beneficiaries                          • Made during the Donor’s lifetime and completed. ...
MANAGEMENT OF YOUR AFFAIRS© J. Max Barger, 2012
MANAGEMENT OF YOUR AFFAIRS Management of the Decedent’s EstateProbate Assets          Probate                         Esta...
MANAGEMENT OF YOUR AFFAIRS Management of the Decedent’s EstateProbate AssetsBeneficiaryDesignations            Trust      ...
WHAT DO I CHOOSE?© J. Max Barger, 2012
• Planning for death            • Probate            • Orderly Court supervised              transfer of assets           ...
Trusts – Will It Really Make Things Easier?                        • Planning for incapacity                          and ...
WILLS VS. TRUSTS Wills – The Good and the Bad    Trusts – Will It Really Make Things Easier? • Larger individual deduction...
WILLS VS. TRUSTS© J. Max Barger, 2012
APPROPRIATE PLANNING© J. Max Barger, 2012
APPROPRIATE PLANNING Foundational Planning – Care of the                 Foundational Planning – Care of the Property     ...
DO I NEED A WILL OR A TRUST?J. Max Barger, Attorney, MBAAckerman Brown1250 Connecticut Avenue, NWSuite 200Washington, DC 2...
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Do I Need a Will or a Trust Ackerman Brown

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  • Good afternoon, my name is Max Barger. I head the trust and estates practice at Ackerman Brown, a boutique law firm with a big heart.Do you need a Will or a Trust?I help people plan their estates. When I ask them about their goals for estate planning, many say that they want a Will. Generally, that simply means that they want to get their affairs in order, and “getting a Will” is synonymous with estate planning. Other people come in with a very strong opinion about using a Trust as the foundational document for their estate plan. They have read an article or a book pointing out the benefits of Trusts, and they use that information. Still, other times the people I meet with haven’t decided what they prefer to use in their estate plan. They have heard of Revocable Trusts, but don’t really understand the difference between a Will and a Trust. Certainly just about everyone has heard of a Last Will and Testament.There is a lot of information floating around about Wills and Trusts. The purpose of this discussion is to evaluate the benefits and drawbacks of both Wills and Trusts, so you are armed with good information so that you can make a decision. To be honest, every lawyer will have a bias regarding the use of Wills or Trusts; sometimes a strong prejudice one way or the other. Both are right, there isn’t a wrong answer. Generally it is more about the practitioner’s education and experience.We should probably start out with a little background. To fully appreciate the differences between Wills and Trusts, you need to understand the process through which we are trying to navigate. And, I think it all boils down to…
  • We want to pay close attention to your and your family’s liquidity needs at these different stages – life as it is now, during incapacity and at death.Estate Planning is going to provide for the smooth transition of management.
  • So, Title, the way the asset is held, has a great impact on the management of your affairs and estate during your incapacity and after you have died. In many cases, upon death there will be some assets that pass through probate, others that avoid probate with beneficiary designations or the operation of law, and possibly there are assets titled to trust that pass according to the terms of a trust.Probate assets pass to beneficiaries of the deceased person’s Will or to the heirs at law if there is no Will.The designated beneficiaries or surviving joint tenants receive each individual piece of property with these designations or titling.Now, who pays the funeral bill? The cost of the last illness? The outstanding debts, mortgage, taxes? The cost of administration of the estate and wrapping up the affairs of the decedent?The law places that obligation on the probate estate, and the personal representative (or executor) of the estate has the responsibility to make sure all this is taken care of. So, consider… what if the personal representative doesn’t have enough assets to pay everyone? What if the beneficiaries named in the Will are different than the beneficiaries designated on the life insurance or retirement plan? You can quickly see how contentious and litigious administration of a deceased person’s estate can get. Some of the ugliest fights occur among family members who got along famously, before money was involved. The loss of a loved one – particularly a parent – can bring out a spectrum of emotions, old patterns of behavior from childhood, hurt feelings, impatience and downright contentious situations. While this is traditional, it puts into place a poor system where there are too many decision makers who do not have the same interests – economically and emotionally.A recent Virginia Supreme Court case highlights the problem… the case pitted a second wife, the beneficiary of the residence, against the children of the first marriage, the beneficiaries under the Will. The question, who paid the mortgage? It wasn’t clear in the Will, and the residence passed by operation of law. What do you think the Supreme Court decided? …. Worse yet is that the end result may be different under Maryland law, or District of Columbia law.Alternatively…
  • When all of a person’s assets point to his or her revocable trust, then the trustee is in control of all of the assets, and all of the affairs of the decedent. It allows for the centralized management of the estate.In cases where there are multiple beneficiaries, no one gets accidentally disinherited. By the terms of the trust you can pay all the expenses, each beneficiary sharing a proportional share of the cost. And a single beneficiary cannot be a hold-out, refusing to pay a proportional share.The trustee controls the assets during the term of the administration. After all is wrapped up, the trustee may divide the remainder proportionally among all of the beneficiaries.In the case of our second wife and children from the first marriage, if both the residence and the house were owned by the trust, and the trust specified that all obligations should be paid, then the result is clear… and we avoid the cost of litigation. Often times the emotional cost of litigation – the broken relationships - is even greater than the sum of the invoices.
  • I’ve given you a list of some of the pros and cons. While it may seem like a lot of information – and certainly it is a good start - this list is not exhaustive. Hopefully, it is helpful.
  • Finally, a quick word on what appropriate planning looks like, and when should it occur?
  • Do I Need a Will or a Trust Ackerman Brown

    1. 1. DO I NEED A WILL OR A TRUST?J. Max Barger, Attorney, MBAAckerman Brown1250 Connecticut Avenue, NWSuite 200Washington, DC 20036Max.Barger@AckermanBrown.com202.393.5428© J. Max Barger, 2012
    2. 2. TITLE MATTERS© J. Max Barger, 2012
    3. 3. TITLE MATTERS© J. Max Barger, 2012
    4. 4. TITLE MATTERS Types of Title • Own assets alone, or with others • Individual • Co-Tenancy • Joint Tenancy with Rights of Survivorship • Tenancy by the Entirety • Tenancy in Common • Operation of Law • With Rights of Survivorship • Real Property (in some jurisdictions) • Pay Death/Transfer on Death • Other Contracts© J. Max Barger, 2012
    5. 5. TITLE MATTERS© J. Max Barger, 2012
    6. 6. TITLE MATTERS How Assets Pass to Beneficiaries • Made during the Donor’s lifetime and completed. Gifts • Donor changes title.© J. Max Barger, 2012
    7. 7. TITLE MATTERS How Assets Pass to Beneficiaries • Made during the Donor’s lifetime and completed. Gifts • Donor changes title. • With a Will or No Will Probate • Property owned individually or in a tenancy in common© J. Max Barger, 2012
    8. 8. TITLE MATTERS How Assets Pass to Beneficiaries • Made during the Donor’s lifetime and completed. Gifts • Donor changes title. • Assets held by the Trustee are subject to the terms of Trusts the Trust Agreement Lifetime • Life insurance, annuities Transfers Contracts • Retirement plans Operation of Law • TOD/POD • Rights of Survivorship Transfers at • Real Estate Death • With a Will or No Will Probate • Property owned individually or in a tenancy in common© J. Max Barger, 2012
    9. 9. MANAGEMENT OF YOUR AFFAIRS© J. Max Barger, 2012
    10. 10. MANAGEMENT OF YOUR AFFAIRS Management of the Decedent’s EstateProbate Assets Probate EstateBeneficiaryDesignations Operation of LawTrust Assets Trust Estate© J. Max Barger, 2012
    11. 11. MANAGEMENT OF YOUR AFFAIRS Management of the Decedent’s EstateProbate AssetsBeneficiaryDesignations Trust EstateTrust Assets© J. Max Barger, 2012
    12. 12. WHAT DO I CHOOSE?© J. Max Barger, 2012
    13. 13. • Planning for death • Probate • Orderly Court supervised transfer of assets • Public accountability • Publicity of Will • Court appoints personal representative, guardian • Creditor claims cut-off© J. Max Barger, 2012
    14. 14. Trusts – Will It Really Make Things Easier? • Planning for incapacity and death • Avoids probate • No court supervision • Transfer of title to assets currently • Accountability according to the trust term • Privacy of document • Grantor appoints trustee • Creditor claims may be extended© J. Max Barger, 2012
    15. 15. WILLS VS. TRUSTS Wills – The Good and the Bad Trusts – Will It Really Make Things Easier? • Larger individual deduction • Uniform Trust Code for income tax purposes implemented in many • Require beneficiaries to jurisdictions release PR from liability • Privacy and less formal • May help quell contentious reporting requirements situations • Elimination of multiple • May need the Letters of Administration to transact probate administrations some business • Centralized management of • International Wills treaty Decedent’s affairs may make planning with Will • The concept of trust is not preferable for some non- recognized in all citizens clients international jurisdictions© J. Max Barger, 2012
    16. 16. WILLS VS. TRUSTS© J. Max Barger, 2012
    17. 17. APPROPRIATE PLANNING© J. Max Barger, 2012
    18. 18. APPROPRIATE PLANNING Foundational Planning – Care of the Foundational Planning – Care of the Property Person • Revocable Trust and Pour Over Will or Last Will • Healthcare Power of Attorney (Advance Medical and Testament Directive) • Healthcare Proxy • Durable Power of Attorney • Living Will • Statutory Power of Attorney • Anatomical Gifts • HIPAA Authorization • Disposition of Bodily Remains/Funeral Ancillary Documents Arrangements • Standby guardianship for minor children • Healthcare power of attorney for children Phase II Planning • Common interest agreement for couples who are • Prenuptial or marital agreement not married, or whose marriages are not • Irrevocable life insurance trust recognized • Domestic asset protection trust • Equity sharing agreement or partnership agreement • Grantor retained annuity trust • Certificate of Trust • Charitable reminder or lead trust • Funding documentation and instruction • Intentionally defective trust • Executive summaries of the primary documents • Family partnership or limited liability company • Record of personal history • Inventory of assets and liabilities • Document locator© J. Max Barger, 2012
    19. 19. DO I NEED A WILL OR A TRUST?J. Max Barger, Attorney, MBAAckerman Brown1250 Connecticut Avenue, NWSuite 200Washington, DC 20036Max.Barger@AckermanBrown.com202.393.5428© J. Max Barger, 2012

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