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Virginia  |  WV  |  Maryland

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For almost 20 years, Abe Zysman, J.D., LL.M., has served as an attorney, helping thousands of families with their disability and estate planning needs. In this Article, he shares with you why the Revocable Living Trust oftentimes best serves the requirements of today’s modern families.

WILLS vs. TRUSTS

A great many families visit their local attorney or business attorney for help with their estate planning needs and most often the estate plan provided to them is a Will-based plan. In other words, the primary document determining how assets will pass at the client’s death is a Last Will and Testament. Though the Will may have trusts included as provisions in the Will, these trusts will only come into being after the Will is implemented at death and are thus “testamentary” trusts. This is quite different from the “Living” trust which is the subject of this article. Although Wills are fully legal and valid tools to transfer wealth and in many situations are quite sufficient to do so, they are limited in what they are able to accomplish and many families decide they need more than a Will to accomplish their objectives.

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After-death Administration falls into two categories: Probate Administration and Trust Administration. Probate Administration is triggered where the decedent’s assets are solely owned. Those assets pass to beneficiaries through a will, which must comply with Virginia law. Probate is also triggered where the decedent’s assets are solely owned and there is no will or trust to provide direction as to who gets what. In this case the decedent is deemed “intestate,” meaning he or she died without a will. Who will receive, and how much each will receive, is determined by Virginia State Law.

Trust Administration is triggered where the decedent’s assets are owned by the trust and are governed by the instructions in the trust agreement, not the probate court. Trust Administration usually occurs at the death of a Trustmaker or, if married, at the death of each of the Trustmakers. The purpose of this article is to explain the necessary Trust Administration that must occur after the FIRST Trustmaker’s death for a married couple. Sometimes, this is referred to as the period for the surviving spouse.

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During our Firm’s initial planning conference with clients, this question is often asked, “What is the role of my Back-up (Successor) Trustee upon my disability or death?” This excellent question is answered either during the first (initial) conference or at our Presentation/Signing Conference.

The Successor Trusteeship begins when you – the Trustmaker – can no longer serve as your own Trustee, either upon your disability or death. Let’s examine each event.

ROLE OF THE DISABILITY TRUSTEE

When a Revocable Living Trust (RLT) is established, the Trustmaker will always name in the Trust document an individual(s) (for example, the spouse or other family member) or a corporate Trustee (bank or trust company) to serve as the Back-up Disability Trustee. In our RLT, Article Four contains all the important Trustee instructions and provisions. Upon disability, The Trustmaker has already determined who the Successor Trustee will be, as well as the parameters of their authority, so decisions can be made privately – without court or guardianship proceedings.

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What is a Blended Family?

A blended family is where there has been a second, third or more marriages and there are children from different marriages contained within the family unit. For example: Bob is divorced from his prior wife, Nancy, with whom he has one child, Bobby. Sue is a widow. Sue has a son and daughter from her first marriage, Steve and Lisa. Bob and Sue marry, creating a new “blended family unit” consisting of Bob and Sue, Bobby, Steve and Lisa. As you can imagine, there are many concerns of Bob and Sue should address in planning their estates. This article will discuss the varying and often complex issues that arise in blended family situations similar to that of Bob and Sue.

Identifying the Need

Blended families have been on the rise over the last thirty years. Almost everyone can think of a divorce and remarriage situation that has impacted him or herself, their family or friends. However, most people still do not recognize the importance of proper estate planning in blended family situations. There is a wide menu of inherent issues and potential problems awaiting the uniformed blended family at the death of a spouse. For example, husband dies and the new wife receives all of the husband’s assets due to a “boiler-plate” Will. The unfortunate result is that husband’s children are unintentionally disinherited at their father’s death. Or, a wife commingles her assets with her new, young, “tennis-pro” husband in joint ownership with right of survivorship. At wife’s death, the new husband receives all of wife’s assets by operation of law, again causing wife’s children to be unintentionally disinherited. In both situations, the deceased parent loved the children. The deceased parent did not intentionally set out to disinherit the children, but the unfortunate results are the same.