What Is Estate Planning?

Estate planning is the process of analyzing your family dynamics, your assets and liabilities, what you wish to happen after your death and creating documents to ensure Remember, you are planning for the next three years only. It’s too hard to plan for contingencies and possibilities much further out into the future than three years. Therefore, you should plan to review your estate planning documents every three years.

What Is A Trust?

A Trust is a way to ensure that your family is cared for if you die or become disabled. You transfer your money and property to a trust, designate trustees and specify the terms of the distribution of your property. The trustee then has fiduciary duties to preserve and safeguard the assets of the trust, ensure that they earn a sufficient rate of return and make distributions when and to whom you indicate in the trust.

One of the most important things is that under the law the money or property in the trust can only be used for the benefit of the beneficiaries.

How Does A Trust Work?

Create the Trust-

You create the trust by writing the trust document. You sign it, notarize it then you must fund it. That means you must transfer some money or property to the trust. This is a revocable grantor trust that becomes effective immediately. You are the trustor, settlor and grantor- person who creates the trust.

Revocable Trust:

· A revocable trust can be changed during your lifetime.
· You can change the beneficiaries
· You can put money and property into and take it out of the trust at any time (subject to community property rules)
· Community property remains community property- either spouse can take it out
· Separate property remains separate property- only the owner of the separate property can take it out
· You are the initial trustee and beneficiary of the trust (both spouses, if married)
· You can change the distributions rules
· The trust becomes irrevocable on your death (50% of it if a married couple)

Grantor Trust:

Creator of the trust retains incidents of ownership over assets, receives benefits of assets
· Creator handles all investment decisions, takes all income, can take property out & put property into the trust at will
· Creator reports all income and expenses on his or her income tax returns
· Trust uses creator’s social security number

Or you can put a provision in your will or your living trust to create the trust on your death. This is also an irrevocable trust that only comes into being when you die.

Name the Trustee-

If you are creating the trust and funding it now, you (both of you, for a married couple) can be the trustee and name someone as the alternate trustee to serve when you can no longer do it. It should be someone who can manage money and invest it properly.

The trustee will be responsible for:
· investing funds to get a good rate of return
· perhaps selling assets, especially real estate
· transferring money and assets
· ensuring the validity of and paying debts
· making sure all distributions are made on time
· responding to requests for additional distributions from beneficiaries
· completing all required accountings on a timely basis
· making sure all income tax returns are filed and taxes are paid timely

If you think about it, this is too much for many adult children to handle, especially if they are young adults eighteen to twenty five years old. The trustee does not have to be the same person as the executor of your will, but oftentimes is.

You should ask this person if they are willing to do it and ask him or her to sign the trust document accepting the job.

You should name as many alternate trustees as you can in case those persons named can no longer do it. If you don’t have any alternates you can appoint a bank, such as Wells Fargo, or a professional trustee. Remember, you are planning for the next three years only.

Give the Specifics of the Distributions to Beneficiaries-

What will your children need after you’re gone? Here’s a list of considerations for child beneficiaries:

· Are they minors who will need someone to care of them?
· How much will they need for their own support per month?
· How much income will your assets generate per month?
· Will they remain in your current residence or live some where else?
· Do they have private school tuition?
· Will they be attending college soon?
· Do they have any special medical or other needs?
· Are they mature enough to manage their own assets?
· Could they be a cotrustee?
· Are there any drug or alcohol abuse problems?
· Do they have good relations with their siblings?

This is not a complete list. You also want to consider if there are services, such as a nanny, that would have to be hired out when one spouse dies.

Describe How the Trustee Will Make Distributions-

You can give the trustee discretion to decide what the reasonable distributions to the beneficiaries are for the trust or you can give specific instructions and require the payment of a certain set monthly amount to be paid or require that all income be paid out to the beneficiaries each month. Likewise, for the principal of the trust you can decide whether the principal of the trust must be paid out to the beneficiaries at certain times or whether to leave it to the discretion of the trustee to decide. Oftentimes trust distributions are required to be made as follows:

One-third of trust principal is distributed when the children reach age 25
One-half of trust principal is distributed when the children reach age 30
The balance of trust principal is distributed when the children reach age 35

Morre to come in my next post! Please leave a comment and forward this to Twitter, Facebook, etc.

White House Email on Health Care Reform

Today I received the White House email forwarded to me by my Uncle George. Yes, the one the White House is sending out to convince people that we want Obama’s health care reforms. I don't believe a lot of this propaganda that the White House is sending out about the health care reforms. These things they are discussing in their email may be in the bill - however- they don't discuss the other things that are in there, such as the public option- that include fines for employers who don't provide health care insurance for their employees.

Employers don't provide health care insurance for their employees because they can't afford it! I know as a small business woman. So if you are forced to provide health insurance or pay extra taxes, employers will of course choose the cheaper public option to provide the government plan to their employees. That's how Obama and the Dems intend to get us all eventually onto the government plan so we can have Socialized Medicine.

You must realize that this will lead to a huge government bureaucracy that will develop to implement and grow the government plan. Let's all think about a government agency like the DMV running our medical care system. That's appealing.

Just look at Medicare. The bureaucracy that runs the Medicare system is fraught with fraud they cannot control, whereby the government pays out millions in false claims. The people who really need Medicare are so overwhelmed with paperwork I have personally met people who have had to hire an outside company just to process their Medicare claims & do their paperwork. There are also many situations where coverage is denied and patients have to hire an attorney to force Medicare to pay for their treatment.

Why on earth would anyone want to create a bigger more inefficient government agency to run a health care system that would be a bigger more complicated version of Medicare? Another mismanaged federal government agency that is also running out of money?

And that doesn't address the lies the White House & Obama are telling about this plan not costing the government any more money & not increasing the deficit. That's an out and out lie. Obama's own Government Accounting Office has said so. There's no way he can pay for this without raising taxes. Oh yes, I forgot, the employers are going to pay for it. Is that before or after they go out of business? You can't get blood from a turnip.

There are other reforms that could be done, such as, allowing insurance companies to sell insurance across state lines. That would engender competition and by the workings of a free market would lower prices. That's what this country is based on- free enterprise. That's why this country is the greatest country on earth and why we have become so prosperous.

Obama is a Socialist who believes in a redistribution of the wealth. He has said so many times. This is an obvious first step to making our country into a Socialist society like those in Europe. That's why people are so outraged about this health care plan. Perhaps alot of people who elected Obama want that. But many people don't.

You know this is Obama’s first step towards that goal of redistributing the wealth. That’s another goal of his he has stated many times. We all know “redistributing the wealth” means some people work hard and make money, then the government takes it and gives it to people who don’t work.

All you have to do is look at California to see what will happen to the country if these health care reforms are forced on us. It will go bankrupt in the face of the Democrats' feeble thinly veiled attempt to get the poor to reelect them. But there just aren't enough taxpayers to support all those people who are using our government resources such as, free health care. Again, just look at California. That’s what will happen to our country if this government health care system is put in place.

How can you think that Obama & the Democrats don't intend to make this into government run health care system? That's what he said he wanted to do in his campaign! That's what many in Congress have said they wanted for years. So to say that's not their intention is just another lie.

Cash For Clunkers

We went last night to talk to salesman at Chrysler dealership to find out about the "Cash for Clunkers" program. We went to Chrysler because we heard they giving matching funds in the amount of $ 4,500, so we wanted to find out how to get $ 9,000 towards a new car since we have no money.

The answer is- you can't. Only people who already have money to buy a new car can use the program.

The rules are:

1. The "clunker" must have been registered to you for the last 2 years. It must belong to you. We had a clunker owned by my daughter's in-laws- so my daughter and her husband couldn't use that car to get the $ 4,500.

2. You must have had insurance on the clunker for the past year. Ok- we insure all of our cars whenever we have the money. So our clunkers would have qualified under that rule.

3. You must "own" your car- so if it has a loan on it- the lender owns it and you don't and it doesn't qualify. So my clunker didn't qualify.

4. The Chrysler $ 4,500 only applies if you buy a PT Cruiser. That's not what we were interested in- so it wouldn't have helped us.

5. You only get $ 4,500 from the government if it's a truck you are giving in as a clunker. Cars only get $ 3,500.

So again- we have a program that only helps people who already have enough money to have no car loan, have their insurance paid up to date on a clunker they don't usually drive to help them buy another brand new car that they have enough cash to be able to put an additional 10 to 20 grand down payment on!

Another great government program! Thanks for the help!