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Why it is not enough just to have estate planning documents?

D380A277-AB87-4564-9CC8-AD38CD4EE8E3A friend of mine recently shared a story about what happened to her family, and it made me realize that it’s not just enough to have estate planning documents. My friend was the Power of Attorney agent for her mother.

Her mother was remarried, and the gentleman had actually raised her, and she considered him her father. When mom started to have issues and needed decisions to be made on her behalf, the hospital asked for the documents, and unfortunately the daughter did not have them in her possession.

The doctor and hospital continued to pressure the daughter to submit the Powers of Attorney immediately, in case something went wrong. The hospital offered to just have mom do new estate planning documents, particularly her Healthcare Power of Attorney, and Living Will. Rather than have to drive back to the house and try to find them, the daughter said to her mom ….”Go ahead and do a new Healthcare Power of Attorney.”  When the nurse asked who she would like as the Power of Attorney, the daughter chimed in and said “Mom, why don’t you have dad and me.”

The mom immediately said “No! You are always my Power of Attorney and I want you to make decisions for me.”  It was a very uncomfortable and awkward moment for the daughter because she could tell that her step-dad, whom she called her dad, was very upset and didn’t understand why mom didn’t trust him.

We spend a lot of time explaining the importance of having documentation in place, but rarely do we take the time to really emphasize the importance of getting those documents to the appropriate people.

We at Bellomo & Associates encourage our clients to take a copy of their Healthcare Power of Attorney and Living Will immediately to their doctors, and also to have it put in their charts at the hospitals.

We always provide extra copies of these documents so the children can have them as well. We try to explain the importance, and certainly will re-emphasize this in the future based upon my friend’s story.

It is not just enough to have the documents, but make sure you have them where you need them and your family members can find them so that you can avoid any undue heartache. Join us for an upcoming workshop to get your estate planning started!

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I did a trust, but did not put anything in it. Does it still work?

FA5C4784-E2E4-4A39-BAC9-8679C3BFAF73We often get this question in our office, and frequently have occasion to review estate planning documents which include a trust.

But when I ask what was put in the trust, clients have no idea what I mean.

A trust is a contract between the three parties: 

  1. The grantor, or the person who creates it; 
  2. The trustee, or the person who controls it; and 
  3. The beneficiary, or the person who receives it. 

It is a written, binding agreement among those parties that sets forth who’s in control, who gets the benefit, and when. However, in order for a trust to control the assets, the assets must actually be in the name of the trust. For example, if I have the Bellomo Family Trust, if I want my house to be in the trust, the deed must actually say “the Bellomo Family Trust” as part of the title.

Typically, we will see it say, “Jeffrey R. Bellomo, Trustee of the Bellomo Family Trust dated October 22, 2019”. The bank account, or other assets that I want to be in the trust, must also have the exact same titling. If the titling is correct, then the agreement between those three parties governs, and what occurs will be set forth clearly in the trust document. 

Unfortunately, if the assets are not titled in the name of the trust, then they will be distributed by the way that they are titled. For example, if the asset is titled jointly with Jeffrey and Whitney, when Jeff dies, the asset would transfer automatically to Whitney. This process is called non-probate, and goes outside of the probate process, but is subject to inheritance tax.

Currently, the Pennsylvania inheritance tax to a spouse is zero, so in this specific circumstance, the result would be a zero tax and avoid probate. However, if the account was in Jeff’s name alone, and he died, then it would go through his Will, which is the probate process. The executor in his Will would have to go the courthouse and open an estate and follow that process to the end. 

If you want your trust to work the way you intended it to, It is imperative that you make sure you have the assets are properly titled into the trust. If you have questions about your assets and how they’re titled contact us and we’ll help get you the answers you need!