Utah Jazz Owner Transfers Team and Arena Into Dynasty Trust

An In-Depth Look into the Recently-Created Utah Jazz Dynasty Trust

On January 23, 2017, Utah Jazz owner Gail Miller and her family announced the transfer of the Utah Jazz and Vivint Smart Home Arena into a dynasty trust, also known as a “legacy trust.”  The move is believed by many to be unprecedented in NBA history. The trust will ensure that the Utah Jazz remain in Utah and that the franchise remains in the Miller family for future generations. According to Miller, the move was “part of a big package of estate planning. But it’s one part that’s all done and it will last forever, as long as we have people who are willing and able to take care of it.”  Continue reading Utah Jazz Owner Transfers Team and Arena Into Dynasty Trust

Estate Planning Issues After Sending Your Children to College.

So you’ve finally emptied the nest. After sending the youngest of your kids off to college, you are a mixed bag of emotions. On one hand, you’re happy to see your kids fly the coup and spread their wings. On the other, you’re wondering where time went — blink and they’re gone!  Continue reading Estate Planning Issues After Sending Your Children to College.

Asset Protection Through Estate Planning

For decades now estate tax considerations have motivated many married couples to include in their estate plans the creation and funding of one or two trusts upon the death of one of the spouses to hold that spouse’s estate.  The tax purpose of this structure is to avoid estate tax at the first death and to assure that the estate tax exemption of both spouses is preserved and available at the death of the second spouse.  Continue reading Asset Protection Through Estate Planning

If Something Happens to You, How Will Your Young Children be Cared For?

For many people, the birth of their first child marks their true entry into adulthood. Late nights out are replaced by late nights soothing a fussy little one. Lazy Sunday mornings soon seem a distant memory. Your top priority becomes ensuring that your child stays safe and healthy, and that means making sure that he or she will be loved and provided for even if something should happen to you. The best way to accomplish that goal is to create an estate plan that includes a will.  Continue reading If Something Happens to You, How Will Your Young Children be Cared For?

Passing Your Family Business to the Next Generation

A business can do more than support a family during the lifetime of the founder. It can be a legacy that continues to provide income and employment to children and grandchildren.

To successfully pass a business to the next generation of ownership requires careful planning. Failing to plan can have devastating consequences. Many businesses fail after the retirement or death of the person who started the business.

Creating a business entity

Creating a business entity is important to protect your personal assets if your business is sued. Many business owners choose a limited liability company (LLC) or family limited partnership (FLP).

Creating a succession plan

To minimize disputes, you should have a clear line of succession for your business, including:

  • Deciding who will manage the business
  • Deciding how decisions will be made
  • Deciding how to share profits among family members

Planning for taxes

A large tax bill could force family members to sell the business It’s important to start planning as soon as possible to minimize taxes. Some ways to minimize taxes include gifting a portion of the business each year, and taking out a life insurance policy to help pay taxes at the time of your death.

Planning for the unexpected

No one expects that a divorce or a family dispute will lead to the dissolution of a business. However, disputes happen and they can affect the business. A buy-sell agreement can help ensure that a business will survive.

With good estate planning, the business you built can continue to create value for your children, your grandchildren and beyond. For more information on business succession and passing your business to the next generation, contact our office today.

Can I Put My Home in a Trust?

The short and simple answer is yes. Any property you own and have legal title to can be transferred into trust. That includes real property. Even real property that is subject to a mortgage can be placed into a trust. Most people, after all, don’t own their houses free and clear of a mortgage when putting their homes into trust. But transferring real property into the trust does not change your obligation to continue to pay the mortgage–if you don’t pay, they can still take back the house. In fact, if you’re thinking of putting your home into trust you should consider contacting your lender first. You might trigger a due on sale clause if one is included in your mortgage contract. The lender can call the entire mortgage due all at once because you technically no longer own the home. Further, if after placing your home into trust you decide to refinance your home the lender may require that you take your home out of trust before getting the new loan and putting it back into trust after getting the new loan.

Advantages of Putting a Home into Trust

Homestead Exemption Issues 

If your line of work leaves you vulnerable to lawsuits you may want to consider your state’s homestead exemption laws. These laws put your house – or at least a portion of its value – out of reach of judgments or, in a worst-case scenario, your bankruptcy estate. When it comes to trusts, homestead laws can vary significantly from state to state. In some states, your property is only protected if you personally hold title. If you transfer ownership of your house to an irrevocable trust, however, this shouldn’t be a consideration. This type of trust also shields assets from creditors, so you’d just be exchanging one form of protection for another.

Avoidance of Probate Issues 

Most living trusts are structured to avoid probate and its costs. While some states have streamlined their probate process, many still require cost, time and attendance at multiple hearings. Most homeowners wishing to avoid probate and transfer title to their home to their heirs quickly find avoiding probate through a trust to be a strong advantage.

Consider the Deed Used to Transfer the Home into Trust 

The deed you use to transfer your property to your trust can present another issue. Real property can be transferred by two main instruments: a warranty deed or a quitclaim deed. A warranty deed guarantees a future buyer that there are no hidden liens or claims against your property, and that you – or your trust – actually own it. Thus, you have something to sell. A quitclaim deed, on the other hand, makes no such representations. It simply transfers any ownership interest you might have without guaranteeing that you have an interest or that it’s not encumbered by liens. A future buyer would be wary of this type of deed if your trustee finds that he must sell the house after your death. Depending on the type of deed you use to make the transfer to your trust, you could create a big estate issue in the process of settling your estate at your death.

For more information about how we can help with your estate planning needs please contact our office today!

Discretionary Trusts

A discretionary trust gives the trustee discretion over how, when, and if the beneficiaries may access trust assets. Certain uses of the money might be deemed acceptable, whereas other uses will be restricted. The settlor of the trust may seek to provide guidance to the trustee but any attempt to restrict trustee’s discretion invalidates the trust. Since no asset is clearly identifiable with any beneficiary, creditors cannot attach the trust assets in payment of a loan or liability.

For instance, the trustee might distribute funds if your daughter wants to go to college, or your son wants to start a business. But if your child (or other beneficiary) has creditor problems or is faced with a divorcing spouse, the trustee can stop making distributions. If your beneficiary develops substance abuse problems, or is just generally unable to manage money, the trustee can make payments on the beneficiary’s behalf (such as paying rent directly to the landlord) without enabling the beneficiary’s mismanagement of the funds.

Thus, a discretionary trust can provide asset protection of an inheritance. A conniving ex-spouse, immovable creditor, or plaintiff in a lawsuit against your beneficiary will have a hard time breaking through that wall and accessing property you’ve left. Of course, nothing is foolproof, but a discretionary trust can make access very difficult, thus leading to minor creditors “going away,” and others settling for cents on the dollar.

For more information on discretionary trusts contact our office today!

NFA GUN TRUSTS

NFA Firearms (also called Title II Firearms) are guns and other items regulated by the National Firearms Act (the “NFA”). The NFA regulates the sale, use, possession, and transfer of machine guns, short-barreled shotguns and rifles, silencers, destructive devices, and AOWs. In Alabama, all of these weapons are legal.  In order to be able to transfer or make these items, the Bureau of Alcohol, Tobacco, Firearms, and Explosives requires completion of a Form1 or Form 4 along with payment of $200 for a tax stamp. Establishing a gun trust for your firearms will allow you to avoid these requirements.

A trust is a fiduciary agreement that allows a party (known as a trustee) to hold assets on behalf of one or more beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. A gun trust, when effectively executed, will provide instructions and determine a single person or a married couple’s firearms are to be managed during his/her/their lifetime, in the event of his/her/their incapacity, and also upon his/her/their death.

While a traditional trust can be used to purchase NFA firearms, there are many problems with using a traditional trust and therefore only an NFA Gun Trust should be used. An NFA Gun Trust can avoid some of the federal transfer requirements and provide other benefits including:

Allowing more than one person to possess and use the weapons held in trust. If you name more than one person as trustee, each trustee will have the right to possess or use the trust firearms.

Keep the gun in the trust even after the current owner’s death, avoiding the usual transfer requirements. If you create a trust and transfer firearms to it, you can arrange for the trust to stay in existence even after your death. The trustees and beneficiaries of the trust would have whatever rights you grant them in the terms of the trust, meaning your heirs can avoid paying a $200 transfer tax. Also, the ATF requires that all individuals obtain approval from their Chief Law Enforcement Officer (the “CLEO”) as part of the application process to obtain a Title II firearm from another individual or Class 3 dealer. Establishing an NFA Gun Trust will allow you to avoid having to file an ATF transfer form, receive permission from the local chief law enforcement officer (CLEO), and get fingerprinted and photographed.

Avoid probate. Because the firearms are held by a trust, they do not need to go through probate at your death.

Avoid possible future restrictions on gun transfers. Although no such legislation has been proposed, many advocates of gun rights fear that someday it will be illegal to leave certain firearms to inheritors or transfer them during life. Thus, the create gun trusts in hopes of providing protection against their gun rights.

Privacy. Individuals who submit their ATF forms to their CLEO are often concerned about who will have knowledge of their firearms. They also express concerns that they will come under additional scrutiny because the police will have knowledge that they are in possession of these more restricted firearms. In most states when using an NFA Gun Trust, neither the CLEO nor the police are given notice that you will be in possession of or own the NFA firearms.

To learn more about gun trusts and how our office can assist you in obtaining a gun trust contact us today.

Do I Have to Pay the Debts of My Deceased Loved One?

If you have lost a loved one who owed debts to creditors then you may be worried about how those debts will be paid. Often the heirs of a deceased person are worried that they may be responsible for footing the bill of their deceased loved ones.

Heirs are not responsible for a decedent’s unsecured debts, such as credit cards, medical bills or personal loans, and many of these go unpaid or are settled for pennies on the dollar. However, there are some circumstances in which you may share liability for an unsecured debt, and therefore are fully responsible for future payments. For example, if you were a co-signer on a loan with the decedent, or if you were a joint account holder, you will bear ultimate financial responsibility for the debt.

Unsecured debts which were solely held by the deceased parent do not require you to reach into your own pocket to satisfy the outstanding obligation. Regardless, many aggressive collection agencies continue to pursue collection even after death, often implying that you are ultimately responsible to repay your loved one’s debts, or that you are morally obligated to do so. Both of these assertions are entirely untrue.

Secured debts, on the other hand, must be repaid or the lender can repossess the underlying asset. Common secured debts include home mortgages and vehicle loans. If your parents had any equity in their house or car, you should consider doing whatever is necessary to keep the payments current, so the equity is preserved until the property can be sold or transferred. But this must be weighed within the context of the overall estate.

Executors and estate administrators have a duty to locate and inventory all of the decedent’s assets and debts, and must notify creditors and financial institutions of the death. Avoid making the mistake of automatically paying off all of your loved one’s bills right away. If you rush to pay off debts, without a clear picture of your parents’ overall financial situation, you run the risk of coming up short on cash, within the estate, to cover higher priority bills, such as medical expenses, funeral costs or legal fees required to settle the estate.

For more information on how to handle a deceased loved one’s debts after death, contact our office today. 

Guardianships

If you become disabled because of a serious physical or mental condition, someone must have the authority to make the decisions about your medical and financial needs. A legal guardianship is in place so that a person’s physical and mental well-being are honored when he or she is no longer able to make sound decisions. It is a court proceeding used to appoint someone to be responsible for the personal well-being of a minor or incapacitated adult if the role has not already been assigned through an executed power of attorney. The guardianship petition seeks to have you declared as incapacitated so another person can step in and make decisions on your behalf. This person may or may not be who you would otherwise choose.

A ward is the person for whom the guardian will be appointed. The guardian must be acquainted with the ward personally and is responsible for the ward’s welfare. If the ward is a minor, the guardian takes on the responsibilities of a parent and must provide for the education, care and support for the minor. For an incapacitated adult, the guardian must ensure that the ward’s daily needs are met, such as his meals, personal hygiene and medication. The court has the discretion to limit a guardian’s powers or responsibilities as necessary.

The appointment of a guardian by a probate court can be avoided through the execution of a well-drafted and carefully executed power of attorney. For more information on how we can help you draft a power of attorney to avoid a guardianship contact our office today.