10 Do's and 1 Don't for the Trustee of a Trust

Whether it feels like an honor or a burden (or both), you may have been appointed to serve as the trustee of a trust. What sort of responsibilities do you face in this role, and what can you do to ensure you’ll carry them out successfully?

10 Do’s

Here are 10 do’s to get you started:

1. Do read the trust document: It sets out the rules under which you will operate, so you need to understand it completely, including your specific responsibilities and limitations.
    
2. Do create a checking account for the trust: All income and expenses should go through this account. While you can and should invest the money, a checking account will enable you to make distributions and payments and keep track of them.
    
3. Do act in the best interests of the beneficiaries: You must avoid any conflicts of interest. You have what’s called a “fiduciary” duty to them, which is an extremely high standard.
    
4. Do keep your personal financial dealings entirely separate from the trust: For instance, you cannot borrow money from the trust or lend the trust money to anyone.
    
5. Do communicate with the trust beneficiaries to understand their needs: You want to prioritize transparency and openness with beneficiaries. This may include updating them on the trust’s performance or any changes that may affect their interests. In addition, you may provide the beneficiaries and anyone else indicated in the trust with an annual account of trust activity. This can be a copy of the checking and investment account statements, or a more formal trust account prepared by an accountant or attorney.
    
6. Do invest the trust funds prudently and productively: You cannot simply leave the trust funds in a savings account, and you can’t put them all into a promising new company.
   
   You need to diversify the trust portfolio among stocks and fixed income securities. Working with a professional investment advice may be a good idea.
    
7. Do keep meticulous records of all transactions and decisions you make on behalf of the trust to ensure accountability.
    
8. Do be aware of any public benefits the beneficiaries may be receiving and make sure you do not jeopardize their access to these benefits.
    
9. Do file annual income tax returns for the trust.
    
10. Do stay informed: Consider enhancing your knowledge and skills as a trustee. For example, this may include attending workshops or seminars on trust management. You want to do what you can to ensure you are fulfilling your duties effectively and responsibly.

1 Don’t

1. Don’t fly solo: Get professional advice to make sure you are correctly fulfilling your role. For one, an estate planning attorney can provide invaluable guidance by clarifying your legal responsibilities as a trustee.
   
   A financial advisor can also play a crucial role in helping a trustee manage the trust’s assets effectively. They can provide insights into investment strategies that align with the trust’s goals and the beneficiaries’ needs. By assessing the trust’s financial situation, a financial advisor can recommend appropriate asset allocations, ensuring that the trust grows over time while minimizing risks. In addition, they can help the trustee understand the tax implications of various investment decisions.
   
   In addition to estate planners and financial advisors, several other professionals can support a trustee in managing a trust effectively.

• Certified public accountants (CPAs) can assist trustees with the financial reporting and tax obligations of the trust. They can prepare tax returns, advise on tax strategies, and ensure that the trust maintains proper financial records. An accountant’s expertise can help the trustee avoid costly mistakes and ensure compliance with tax laws.
• Some trustees may choose to work with trust administration firms that specialize in managing the day-to-day operations of trusts. These firms can handle tasks such as record-keeping, distribution of assets to beneficiaries, and communication with all parties involved. This support can alleviate some of the administrative burdens on the trustee, allowing them to focus on more strategic decisions.
• Insurance professionals can help trustees assess the need for various types of insurance, such as life insurance or liability coverage, to protect the trust’s assets. They can provide guidance on selecting appropriate policies that align with the trust’s goals and the beneficiaries’ needs.
• For trusts with significant assets, hiring an investment manager can be beneficial. These professionals specialize in managing investment portfolios and can help the trustee make informed decisions about asset allocation, risk management, and investment performance. They also can provide ongoing monitoring and adjustments to the investment strategy as market conditions change.

Collaborating with these professionals can provide you with peace of mind. You will know that you are handling the trust to the best of your ability, with expertise and care. It also can provide reassurance to beneficiaries that their interests are in fact top of mind.

Working With an Estate Planning Attorney

As mentioned above, an estate planning attorney can serve as a strong source of support for a trustee of a trust. They can help in ensuring compliance with trust laws and helping navigate complex tax issues. They can also assist in drafting necessary estate planning documents, resolving disputes among beneficiaries, and offering strategies to protect the trust’s assets, ultimately ensuring smooth administration.

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Esq.

Law Office of Elise Lampert

9465 Wilshire Blvd. | Suite 300 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

2024 Election: Harris, Trump on Social Security and Medicare

Keeping track and making sense of government policies and presidential candidates’ promises can be daunting during any election year. This year is no exception. Consider Social Security and Medicare, two 2024 election issues that are top of mind for older Americans.

As with any election, the political landscape is always changing, and candidates’ views and promises may also shift. Even after a president is sworn in, their agenda may not work out as they had hoped or promised, since the president is one part of a much larger governing body. Yet leading up to Election Day, staying informed about the presidential nominees’ proposals and their records on various issues remains important to many voters.

Social Security

Social Security benefits are a crucial resource for America’s older population as well as people with disabilities. Millions of Americans rely on these funds to stay out of poverty. Research suggests that nearly 80 percent of Americans oppose reducing Social Security benefits in any way.

Kamala Harris

Vice President Kamala Harris’s campaign has stated that she wants to expand Social Security benefits for seniors and individuals with disabilities while ensuring the program’s long-term solvency. The Biden/Harris administration has also pledged to protect Social Security from cuts and opposed proposals to reduce benefits or raise the retirement age.

In 2019, Harris, then a senator, co-sponsored the Social Security Expansion Act with fellow Senator Bernie Sanders. The legislation proposed extending the Social Security payroll tax to incomes over $250,000 a year.

At the time, the income amount subject to payroll taxes capped out at $132,900. That means that no Social Security tax was withheld from income earned in excess of $132,900. By raising the amount to $250,000, more funds would be put into the Social Security fund.

Donald Trump

Former President Donald Trump’s campaign has likewise assured voters that he will protect Social Security, though he hasn’t provided details as to how he would do that while ensuring the program remains solvent.

For example, in late July, he stated that seniors should not have to face Social Security benefits taxes. (Currently, higher-income seniors pay federal income taxes on these benefits.) However, some policy experts say Trump would need to find another avenue of funding to keep the program solvent in the long term.

While he was president, Trump opposed efforts to reduce funding for Social Security programs.

Medicare

The main function of Medicare is to serve as a federal health insurance program for Americans who are 65 and older. The funds to support Medicare come from different sources, including payroll taxes as well as premiums paid by enrollees.

Kamala Harris

Harris has expressed support for expanding Medicare coverage to include dental, vision, and hearing care. Older adults often have to pay out of pocket for these areas of health care.

The Biden/Harris administration had proposed protecting Medicare for future generations by extracting more tax revenue from corporations and wealthier individuals instead of reducing benefits or raising costs for Medicare recipients.

In August, the Biden/Harris administration announced Medicare’s newly negotiated prescription drug prices. (In his role as Minnesota governor, Tim Walz has also supported reform for prescription drug pricing.) This is a first in Medicare’s history and is part of the Inflation Reduction Act.

Lower prices for 10 drugs will become effective in 2026. Each year after that, additional medications may become available at lower prices.

Donald Trump

Trump’s administration encouraged the expansion of Medicare Advantage plans, which are privately managed alternatives to traditional Medicare. Enrollment in these plans grew significantly during Trump’s term, with the administration promoting them as a way to provide more choice and flexibility to seniors.

Trump’s administration also sought to lower prescription drug prices through various executive actions. For example, the Most Favored Nation Model aimed to align the prices of drugs covered by Medicare with the lower prices paid by other developed countries. However, this rule faced legal challenges and was not fully implemented.

Despite some efforts to control costs, the Trump administration’s past budget proposals included cuts to Medicare, raising concerns among advocates for older Americans. These proposed cuts were primarily aimed at reducing federal spending but were met with significant opposition and were not fully realized.

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Esq.

Law Office of Elise Lampert

9465 Wilshire Blvd. | Suite 300 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Proper Estate Planning Reduces Issues of Probate

Probate is a legal process that happens after someone dies. While probate can be complex, lengthy, and expensive, an estate planning attorney or probate attorney can help mitigate unwanted risks. They will be able to anticipate what might happen and prevent issues before they arise.

Sound estate planning can make the probate process run efficiently and smoothly. In turn, this helps to protect your estate’s value and legacy and preserves your family’s well-being.

The probate process includes the following:

• Validating the will of the person who died
• Identifying and performing an inventory of the property of the deceased person
• Getting property appraisals
• Paying valid outstanding debts and taxes
• Distributing the decedent’s remaining assets and property according to their will
• Applying state intestacy laws if the deceased person had no will

Avoiding Probate

Estate planning attorneys can structure your estate to minimize or avoid probate. Circumventing probate reduces legal fees for your surviving heirs. It can also give your family a certain level of privacy, as probate is part of the public record. In addition, it can help avoid estate tax, a tax that can significantly reduce the assets you would like your loved ones to inherit.

Some Popular Alternatives to Probate

A Revocable Living Trust

With a revocable living trust, you can transfer money and property to a trust that still allows you to have access to these assets during your lifetime. This probate-avoidance technique can protect property you own, including:

• Bank accounts
• Real estate
• Jewelry
• Art collections and heirlooms
• Vehicles

This trust functions like a will by leaving your property to your loved ones. With a revocable living trust, you can change the terms of your trust and the beneficiaries or revoke it while you are still alive. After your death, the property in the trust is in the control of your named successor trustee. They will then handle the distribution of your assets to inheritors according to the trust’s instructions – without involving probate court.

Life Insurance and Annuity Policies

Death benefits are paid directly to a designated beneficiary upon the death of the insured or annuitant and pass outside probate. And in some states (for example, Texas), death benefits are also generally exempt from creditor claims for either the insured or beneficiary.

Payable-on-Death (POD) or Transfer-on-Death (TOD) Accounts

Payable-on-death (POD) accounts or transfer-on-death (TOD) accounts are available in some states as a simple, no-cost strategy to keep money, even large sums, out of probate.

With POD accounts, you can designate a beneficiary (or beneficiaries) for all types of bank accounts via your financial institution’s POD paperwork process. A TOD transfer applies in the same way to stocks, bonds, and brokerage accounts. These accounts will not be accessible to the beneficiary while you are alive. You can designate beneficiaries on various account types, such as:

• Checking or savings accounts
• Certificates of deposit (CDs)
• Individual Retirement Accounts (IRAs) and 401(k)s
• Inheritable pension and veteran benefits
• Investment accounts

As the account owner, you can withdraw money, close the account, or name a different beneficiary at any time. There may be a short waiting period after the designator’s death before the bank or credit union releases funds to the beneficiaries, but probate is not a requirement.

Depending on the laws in your state, a POD account can also be a:

• Totten trust
• Tentative trust
• Informal trust
• Revocable bank account trust
• ITF, short for “in trust for”

In some cases, you may not be able to name an alternate beneficiary, so staying current with the paperwork that designates your choice is important. No matter what information is in your will, it can’t override a properly established beneficiary designation.

Streamlining the Probate Process

Many states have simplified probate procedures for smaller estates (those estates that are under a certain dollar valuation). Depending on your state’s rules, even if your estate exceeds the definition of a small estate, there may be an avenue available to exclude large chunks of assets to lower your estate’s size and value.

Many states don’t consider the value of certain properties when evaluating an estate. These property types may include real estate, real estate located in another state, and even motor vehicles. Additionally, many states won’t count the value of a property that doesn’t pass through probate. In essence, probate avoidance can pay double dividends after your death.

When trying to minimize an estate’s value to streamline the probate process, some states permit you to subtract any amounts owed on a property you don’t fully own. This can make a significant difference. Knowing your state’s definition of a small estate is crucial when creating probate-avoidance strategies. Staying under a certain threshold can simplify probate.

Work With Your Estate Planning Attorney

Your estate planning attorney will be able to help you identify the best path to protect your estate from the probate process. A sound estate plan can help sidestep many issues that arise from probate. Again, probate can sometimes be a lengthy process and, as a result, may reduce your estate’s value and legacy. Estate planners have the expertise to assist you and your loved ones in avoiding the additional costs of probate, both monetarily and to your family’s well-being.

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Attorney at Law

9465 Wilshire Blvd. | Suite 300 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

7 Common Inheritance Mistakes to Avoid

The period following the death of a loved one can be a tumultous time. Dealing with death and receiving an inheritance brings mixed emotions. The loss of a loved one is distressing, and while added funds can bring relief, it can be hard to think and plan objectively.

After receiving an inheritance, some people blow through it surprisingly quickly. Here are some mistakes people make when inheriting money and how to avoid them.

1. Not Factoring in Potential Inheritance Taxes

Depending on the size of the inheritance, you may get bumped into a higher tax bracket than you were previously. You could also be on the hook for capital gains taxes; if you've inherited property, you also may owe capital gains. Consider working with an attorney who specializes in estate planning in addition to talking with a financial advisor or an accountant before you spend any of your inheritance.

2. Failing to Make a Budget

If you don’t have a budget and are not used to managing money, you may not be prepared to handle significant funds. This could lead to overspending and a quickly disappearing inheritance. If you already have a budget, factoring in your new funds will help you see how it will affect your saving and spending strategy.

3. Spending Too Much

When receiving a large sum of money, you may assume that it will easily last. All too often, people fritter away inheritances by making major purchases right away, such as cars, boats, or vacations. Even if such purchases don’t seem all that significant at first, the costs can accrue quickly, especially if items you've purchased have additional costs, such as maintenance and insurance.

Stay grounded and take time to consider whether you truly need what you’re buying. Also, think through how much more money you could have in the future if you invest the money instead of spending it now. If you know how much you will inherit before you receive it, you can create a budget in advance.

4. Not Paying Off Debts

Paying off debts should be your first priority if you inherit a large sum of money. Paying off your mortgage, credit cards, or student loans will give you more freedom to do other things. You will still need to balance the debts you decide to pay with the amount of money you’d like to invest for the future.

5. Losing Other Income Sources

For people relying on asset-based or income-based government benefits, such as Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), receiving an inheritance could end up disqualifying them from these crucial public assistance programs. The benefactor needs to plan for this before passing on the inheritance. Establishing and funding an appropriate trust will reduce the possibility of this happening.

6. Not Saving Enough

Suddenly coming into a large amount of money can lead you to think about all the things you can do with it now instead of how you can save and invest for your future. After paying off debts, create an emergency fund with enough money to live on for about six months. Once you have done these two things, start increasing your contributions to your retirement accounts.

7. Not Getting Expert Advice

An inheritance, especially a sizeable one, can help you achieve financial security and allow you to pursue a dream career or some other life goal. However, an inheritance can vanish surprisingly quickly if not managed well. Before doing anything with your inheritance, consult with a financial advisor, an accountant, and an estate planning attorney.

How Estate Planning Attorneys Can Help

Consult with your estate planning attorney to ensure you make smart investment decisions with your inheritance. Together with a financial advisor, an estate planner can provide valuable advice on diversifying investments and minimizing risks to maximize the potential growth of your inheritance. Seek out both these professionals to manage your inheritance wisely and plan for a financially healthy future.

You also can work with an estate planning attorney to get assistance in setting up a trust to protect your newfound money (or property). Additionally, partnering with an estate planner can mean knowing how to safeguard your inheritance for future generations.

Keep in mind that the estate planning process may prove useful in many ways other than protecting your inheritance. A good estate planning attorney can collaborate with you to create a detailed estate plan. This may include drafting a last will and testament, durable power of attorney, medical directives, and other important estate planning documents.

By connecting with your estate planner, you can make informed decisions that align with your financial goals and secure your financial future.

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Esq.

Law Office of Elise Lampert

9465 Wilshire Blvd. | Suite 300 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Avoid a Conservatorship With a Durable Power of Attorney

A conservatorship protects the interests of an adult who can no longer make decisions for themselves. A conservator is someone (or several people) with the legal authority to make decisions and act on behalf of another.

The Conservatee is the adult who needs help with their finances, health care, living arrangements, and daily affairs. This individual may need assistance because of old age or physical or mental limitations. Common reasons for having a conservator of a person include situations where an adult is in a coma or has dementia or developmental delays.

Some conservatorships are broader than others. For example, a conservator may only have power over medical decisions, but not living arrangements or a conservator may only have authority over financial decisions regarding specific investments or property.

Note, however, that different states may use the terms conservator and guardian to mean different things. Getting legal advice from a local attorney is important to ensure you are addressing your specific situation properly.

Durable Powers of Attorney

Having a conservatorship is different from having durable powers of attorney. A durable power of attorney (DPOA) is a legal document. An adult can partner with an attorney to set it up in case they lose the capacity to make decisions at some point.

With a DPOA, you can choose someone – your “agent” – who would make important decisions for you.

The benefits of having a durable power of attorney as part of your estate plan include the following:

• ensures that someone you trust will be able to make important decisions on your behalf if you ever lose capacity

• gives you peace of mind knowing that your affairs will be handled according to your wishes

• helps avoid the need for a court-appointed guardian or conservator, which can be costly and time-consuming

• allows you to maintain control over your future even if you are unable to make decisions for yourself

To include a DPOA as you develop your estate plan, seek the help of a qualified estate planning attorney.

In contrast, conservators are put in place by court order. They serve to manage the affairs of those who can no longer make their own decisions about health care or finances. Without a durable power of attorney reflecting your wishes, the court must appoint a conservator or guardian.

What Does a Conservator Determine?

A Conservator of the estate guides financial matters, while a Conservator of the person manages personal and medical decisions. In most circumstances, one person may be in charge of both estate and personal or medical conservatorships. Both types of conservators follow court supervision and are held accountable to that court.

This court supervision acts as a safeguard, preventing mismanagement of property or taking advantage of the ward. The conservator must report the details of their actions to the court on a periodic basis.

Frequently, courts will require the conservator to seek permission before making major decisions. This can include decisions such as terminating life-support or requiring medications, or selling real estate or other property. Additionally, a financial guardian must often post a bond as an insurance policy protecting the ward's estate from mismanagement.

The Conservator Role

Conservators must serve the conservatee’s best interests. They must be competent and trustworthy. Yet court proceedings can be time-consuming and expensive. Professional conservators (e.g., attorneys) are often pricey, too.

By adequately preparing durable powers of attorney before a physical or mental health crisis occurs, you can avoid a conservatorship.

DPOAs provide direction for decision-making based on your wishes by the designated power of attorney(s). Without these documents, the court appoints a conservator related to the conservatee who is available to serve. This might be their spouse, adult child, or another family member.

A conservator will act until the court issues an order ending this responsibility. This usually follows:

• The conservatee’s death

• The conservatee no longer requires this level of assistance

• In the case of financial affairs, all assets are spent

• The conservator can no longer handle the responsibilities or resigns

• The court removes the conservator following a successful legal challenge by the conservatee.

Work With an Attorney

To avoid an unwanted conservatorship, draft your DPOA while you are young and have all your faculties. Although it’s unpleasant to consider, you never know when your life can change drastically. You can easily establish a durable power of attorney when you execute other estate planning documents, like a will.

Meet with your estate planning attorney to discuss concerns you may have regarding potential physical or mental illness. They can assist you in choosing the right representative, someone you can trust to make decisions in your best interest. This way, you will have peace of mind knowing that future decisions will reflect your wishes.

Likewise, if you are facing issues with a loved one who is no longer of sound mind, an estate planning attorney can help.

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

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Elise Lampert, Esq.

Law Office of Elise Lampert

9465 Wilshire Blvd. | Suite 300 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com