How to Protect Your Retirement Account

Shocking to most people, your retirement accounts can be seized once they pass to your loved ones. During your lifetime, your retirement funds have asset protection, meaning they can’t be taken in a lawsuit. Unfortunately, as soon as retirement accounts are inherited by your loved ones, the protection evaporates. This means your hard earned money can legally be snatched by strangers and the courts. As estate planning attorneys, we constantly look for ways to protect our clients as well as their loved ones and assets. That’s why we suggest we have a conversation about your retirement accounts and together determine whether a retirement trust would make sense for you. What is a Standalone Retirement Trust & Why Might It Be Good For You? A Standalone Retirement Trust  is a special type of revocable trust designed to be the beneficiary of retirement accounts.  The Standalone Retirement Trust is popular because it:

• Protects inherited retirement accounts from beneficiaries’ creditors as well as predators and lawsuits
• Ensures retirement accounts go to whom you designate – and nobody else
• Allows for experienced management and oversight of assets by a professional trustee
• Prevents beneficiaries from reckless spending or gambling
• Enables proper planning for a special needs beneficiary
• Permits you to name minor beneficiaries as immediate beneficiaries without court-supervised guardianship
• Facilitates generation-skipping transfer tax planning

A Common Example: Your In-Law Becomes Your Out-Law Many parents are concerned their in-laws may someday become the "out-laws". Your children may someday get divorced and inherited assets can be seized by a divorcing spouse. Here’s the story of Mary and Tom - which outcome would you prefer for your children? Option 1:  Mary and Tom love their son-in-law, Mike, and think his marriage to their daughter Liz will last. They gave Liz her share of their retirement plans outright at their deaths. Five years later, Liz and Mike divorced and Mike was able to take 50% of Liz’s inherited retirement funds.  Option 2:  Mary and Tom love their son-in-law, Mike, but recognize that 50% of all couples end up in divorce. It’s an unfortunate reality, so when they did their estate planning, they provided for their children, but made sure the inheritances couldn’t be taken from them. Instead of outright distributions, they passed their retirement plans in trust. Five years later, Liz and Mike divorced and Mike was not able to take any of Liz’s inheritance. Want to know more? Contact us today to learn more. While every situation is different, we can help you determine whether a Standalone Retirement Trust is right for you.

How to Protect Your Retirement Account is courtesy of http://ift.tt/1GYrgWo

How to Avoid Sending Your Assets and Loved Ones to the Probate Court

[caption id="attachment_2973" align="alignright" width="300"] Bonnie, Estate Planning Attorney & Organized Mom, explains trusts and probate[/caption] Over the years, we’ve discovered that many people make a BIG mistake, catapulting their assets and loved ones right into the court system. Most of our clients want to avoid probate because it has a reputation for being time consuming, stressful, and public, meaning anyone anywhere can see who got what and how to contact them. Beneficiaries may become victims to nosey neighbors, predators, and unscrupulous “charities.” You can avoid this with a trust. In this issue you will learn:

• What it means to fund your trust
• What happens to assets left out of your trust
• Which assets should, and should not, be funded into your trust
• How funding your trust will ensure your final wishes are carried out and save your loved ones money and the frustration of going to court – while preserving privacy

What Does it Mean to Fund Your Trust? Funding a trust is simply the process of transferring assets from your name into the name of your trust. Often, beneficiary designations are changed to your trust as well. Funding is accomplished in three ways:

1. Changing the title of the asset from your individual name (or joint names if you’re married) to the name of your trust – for example, from Jane and John Smith to Jane and John Smith, Co-Trustees of The Smith Family Trust dated January 1, 2016. 
2. Assigning your interest in an asset without a title (such as artwork, jewelry, collectibles or antiques) to your trust.
3. Changing the primary or contingent beneficiary of the asset to your trust. Think life insurance, retirement accounts, and annuities.

Planning Tip:  Put together a list of your assets, their values, and locations, then start funding the most valuable ones and work your way down. Keep plugging away until your trust is fully funded. We can help.

What Happens to Assets Left Out of Your Trust? For many people, avoiding probate court is a main reason they set up a revocable living trust in the first place. Unfortunately, you are not “done” when the trust documents are signed. If you don’t take the next step to fund, probate court is guaranteed. WARNING:  If your trust is left unfunded, you will send your family and assets into probate court. Which Assets Should, and Should Not, Be Funded Into Your Trust? In general, you will probably want to fund the following assets into your trust:

• Real estate – homes, rental properties, vacant land and timeshares
• Bank and credit union accounts – checking, savings, CDs
• Safe deposit boxes
• Investment accounts – brokerage, agency, custody
• Notes payable to you
• Life insurance – if you don’t have an irrevocable life insurance trust
• Business interests
• Intellectual property
• Oil and gas interests
• Personal effects – artwork, jewelry, collectibles, antiques

On the other hand, you will probably not want to fund the following assets into your trust:

• IRAs and other tax-deferred retirement accounts – only the beneficiary should be changed
• Incentive stock options and Section 1244 stock
• Interests in professional corporations
• Foreign assets – in some countries funding an asset into a U.S.- based trust causes adverse tax consequences, while in other countries trusts aren’t recognized or are ignored due to forced heirship laws
• UTMA and UGMA accounts – your minor grandchild is the owner, not you as the custodian; instead, name a successor custodian
• Cars, trucks, boats, motorcycles and scooters – most states allow a small amount of assets, including vehicles, to pass outside of probate; in other states, a beneficiary can be designated for vehicles; and in other states, vehicles don’t have to go through probate at all

Planning Tip:  Work closely with your estate planning attorney to determine what should go into your trust and what should stay out. We can help.

What Are the Benefits of Trust Funding? Funding your trust makes it possible to obtain trust benefits:

• Your trustee, instead of a judge, will take control of your trust assets if you become incapacitated or die.
• Your trustee will have direct access to your trust assets without a court order.
• Your trustee will be empowered to pay bills and manage, invest, sell, and reinvest your trust assets without court intervention.
• Your private wishes will remain private instead of being publicized.
• Settlement time and frustration are reduced.

The Bottom Line on Trust Funding A trust has a myriad of benefits, including probate avoidance. Yet, in the end, an unfunded trust doesn’t avoid probate.

Act Now: Call us now at (720) 266-8190 and we’ll help you make sure your assets are owned properly and that your trust is up to date.

The article How to Avoid Sending Your Assets and Loved Ones to the Probate Court Read more on: Wills & Wellness