If you are someone who has chosen to make charitable giving an important part of your life, then you may wish to consider making it part of your estate plan as well. A charitable trust can allow you to provide for your charity long after your death. As with most trusts, a charitable trust may also provide important tax and probate avoidance advantages as well. If you wish to combine charitable and non-charitable giving, that can also be done through the use of a charitable lead trust or a charitable remainder trust.

Charitable lead trust: A charitable lead trust provides payments to a charity (or more than one) for a specific period of time after which the assets that remain in the trust pass to a non-charitable beneficiary. Often, the lead interest (portion that is paid out to the charity) will qualify for a charitable tax deduction. An example of a lead trust is as follows: You fund a trust with $100,000. The trust terms call for 25% of the trust assets to be paid out to a charity each year for three years with the remainder interest paid to your children upon termination of the three year term.

Charitable remainder trust: A charitable remainder trust works in reverse of how a charitable lead trust operates. Both a charitable and non-charitable beneficiary are designated. The non-charitable beneficiary receives a portion or percentage of the trust for a specified period of time after which the remainder interest passes to the charity. In the above example, assume that the trust terms call for $15,000 to be paid to your son each year for five years. After the five year period expires, the remaining trust assets will then pass to the named charity.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

If you have made philanthropy an important aspect of your life, there is no reason not to make it an equally important part of your estate plan. A charity can be incorporated into your estate plan as a beneficiary just as a family member or loved one is, allowing you to continue to support a cause that is important to you long after death. Each estate plan is unique, and each charity has individual needs, making an in-depth consultation with your estate planning attorney an essential part of incorporating charitable giving into your estate plan. There are, however, some key point to charitable giving that apply universally.

A direct bequest in your Last Will and Testament to the charity of your choice is certainly an option; however, a trust frequently offers probate and tax advantages that a direct bequest does not and provides flexibility that cannot be offered through a direct gift.

A charitable trust can be either a living trust or a testamentary trust.

The most common charitable trusts fall into one of two main categories — remainder and lead trusts

A charitable remainder trust provides income to non-charitable beneficiaries, such as family members, for a specific period of time, or life, and then gives the remainder to a charity

A charitable lead trust provides income to a trust for a specific period of time and then gives the remainder to non-charitable beneficiaries, such as family members.

A portion of the value of assets used to fund the trust may qualify as a current deduction for income tax purposes.

The amount that passes to a charity may qualify for an estate tax deduction when you die, thereby decreasing the estate taxes due on your estate.

You may be able to avoid paying capital gains taxes on highly appreciable assets, such as real estate, that are used to fund a charitable trust.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

With the news of Whitney Houston’s death at the age of 48, the world realized the loss of one of the greatest voices ever to record a song. The response of fans was reflected by soaring record sales and an outpouring of grief. The response of Houston’s family, aside from grief over her loss, was to prepare for a battle over Houston’s fortune. Thankfully, Houston’s family can breath much easier this week as news was released that Houston left behind not only a Last Will and Testament, but a trust as well. The existence of the trust goes a long way toward reassuring Houston’s family that her fortune is safe.

Bobbi Kristina is Houston’s only child and has now inherited her entire estate. At 18, Bobbi Kristina could have inherited the entire estate outright, which was precisely what concerned Houston’s family. Reports indicated that Bobbi Kristina battles her own drug and/or alcohol problems, leading to concerns that her father may try to step in and ask a court to appoint himself as conservator of her estate, thereby gaining control over Houston’s fortune.

Because Houston had the forethought to create a trust, she was able to appoint a trustee of her own choosing to administer the trust and oversee the management and distribution of the fortune she left behind for her daughter until Bobbi Kristina is old enough, and competent enough, to handle it herself.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

In America, we are trained from an early age to plan for our retirement. Many of us start to fund retirement accounts as soon as we start working. While planning for your retirement is undeniably important, over-funding your retirement account can create an estate planning nightmare. Excess funds that are left over from your retirement account when you die could be subject to income tax and estate taxes. As a result, the amount left over could be reduced to a small percentage of its original value. The good news is that with proper estate planning, you can both adequately plan for your retirement and protect any excess from being lost to income and/or estate taxes.

Although experts voice opinions on a regular basis regarding how much money we will all need in order to sustain our lifestyle after retirement, the reality is that there really is no way to know how much money we will actually use after we reach retirement age. You have no way of knowing how long you will live or what your health care costs will be throughout your golden years. As a result, most people plan for the worst and hope for the best. This frequently leads to a significant excess of retirement funds upon death. If you have done nothing to prepare for this contingency, those funds could be taxed as income and then taxed again as part of your estate, resulting in the loss of well over half of the funds left.

By taking advantage of the numerous estate planning tools that are available to you, you should be able to create an estate plan that continues to allow you control over the assets while you are alive, yet protects them from over-taxation in the event you have over-funded your retirement account.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

At some point in your life you will likely start to think about what it is that you will leave behind when you die. While money and assets may be part of what you leave behind, you likely also wish to leave behind your ideals and principals. These are the things that create your legacy. If the legacy that you leave behind is important to you, then the creation of a thorough legacy plan is essential.

Your legacy plan takes over where your basic estate plan leaves off. A basic estate plan can distribute your assets and money to the beneficiaries of your choice, but transferring assets directly to beneficiaries is not always the best way to ensure the continuation of your legacy. Simply leaving money or assets to beneficiaries who are ill prepared to handle them is often a recipe for disaster. By planning ahead and creating a legacy plan, you can ensure that your family members, loved ones philanthropic causes  will be provided for long after your death.

Your legacy plan should focus first on how to protect, and even increase, the assets you currently own. Next, it should take into consideration who you wish to provide for after your death. Often, a legacy plan includes one or more trusts. A trust can allow you to provide for future generations and to control how the trust assets are spent, effectively incorporating your ideals and principals into your legacy plan. Remember that your legacy is yours to create so take the time now to create the legacy you want to leave behind.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

An inter vivos, or living trust can be either revocable or irrevocable. Both types have advantages and disadvantages. A revocable living trust does not provide some of the estate tax or asset protection advantages that an irrevocable trust provides. An advantage of a revocable living trust is the ability to make changes, amend, or even terminate the trust at any time. A revocable living trust can also be an attractive estate planning tool for incapacity planning purposes.

In the event of your incapacity, your loved ones will likely need access to your assets in order to take care of you and/or your family. Absent pre-planning on your part, this will require lengthy, and costly, court proceedings. The creation of a revocable living trust, however, can solve this problem by creating a legal tool to transfer control of your assets without court intervention.

When you create a revocable living trust, you can name yourself as both the trustee and beneficiary of the trust, thereby retaining control over the trust assets while you are capable of managing them. You can also appoint one or more successor trustees when you create the trust allowing the successor trustee control in the event you become incapacitated.

The beauty of using a revocable trust for incapacity planning is that you get to decide what constitutes your incapacity. You can require physician signatures, the consensus of a panel of experts, or your spouse’s concurrence if you choose. Your own definition will determine when the successor trustee takes over.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

Unfortunately, first marriages in the United States are  statistically likely to end in divorce. Most of those divorces then result in a re-marriage at some point in time. If you are one of the millions of people who is planning to remarry, you are probably spending a considerable amount of time trying to ensure that your blended family will be a success. One consideration is how to handle your finances once you are married. Along with creating a plan for handling everyday finances, be sure to talk to your future spouse about how plan to handle your estate plans once you are married.

There is no “right” or “wrong” way to handle your estate plans once remarried. There are, however, some things that you may wish to consider and discuss with your estate planning attorney.

Inheritance money and personal family heirlooms may be best kept separate. By titling accounts or property jointly, you may be creating marital property that can be more complicated to untangle upon your death.

Other assets, however, may benefit from being titled jointly or converted to a “pay on death” account. By doing this, you are providing your future spouse with instant access to the assets upon your death instead of requiring the assets to go through the often lengthy probate process. If you are concerned that your spouse may need the assets to care for himself or herself, or to care for any future children the two of you may have, then jointly held assets may be the best way to go for estate planning purposes.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

A comprehensive estate plan often incorporates a variety of estate planning tools, including a trust. Trusts come in many forms and offer a wide variety of benefits. Although trusts differ in many ways, trust basics are the same in all trusts. The formation of a trust requires a grantor, the appointment of a trustee, one or more beneficiaries and assets to fund the trust. Once you have taken care of the basics, the next decision is typically whether to form an irrevocable or a revocable trust. Each has advantages and disadvantages.

An irrevocable trust allows asset protection, an important feature for some grantors. In addition, assets you place in an irrevocable trust are not subject to estate taxes and may also offer capital gains and personal income tax benefits as well. Finally, an irrevocable trust is not required to pass through probate, meaning that the trust assets will be available for distribution to the beneficiaries shortly after the death of the grantor. The downside to an irrevocable trust is that you cannot amend, modify or terminate the trust once it has been created.

A revocable trust also allows you to avoid probate just as an irrevocable trust does. More importantly, a revocable trust can be amended, modified or changed in any way and at any time after creation. If, for example, you wish to remove or replace a beneficiary, you may do so. A revocable trust does not, however, offer asset protection, estate tax avoidance or some of the other tax benefits of an irrevocable trust.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

As news of the death of singer and actress Whitney Houston hit the airwaves, sales of her work began to soar. Houston was discovered dead in her Beverly Hills Hilton hotel room just hours before she was scheduled to attend the Grammy Awards. Once considered the darling of the music industry because of her soulful voice and endearing personal style, Houston was best known for the timeless hit I Will Always Love You. Along with a string of chart topping number one hits throughout the 90s, Houston also managed to accomplish the often difficult task of crossing over into the acting arena with successful roles in movies like The Bodyguard and Waiting to Exhale. Sadly, despite her professional success, the last decade of Houston’s life was marked by personal troubles.. The value of Houston’s estate will be determined by the date of her death for probate purposes; however, her beneficiaries will enjoy the benefits of soaring sales that have followed the news of her death.

You may not have a lucrative record deal or movie role residuals to count among your estate assets, but you likely do have estate assets that are likely to increase in value. You may also have assets that may continue to provide an income stream for your estate beneficiaries long after your death. Assets such as these require additional consideration when planning your estate in order to ensure that they are handled correctly and are left to the appropriate beneficiary.

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.

As the family member or loved one of an adult who seems unable to care for himself, it is often difficult to know when to step in. For this reason, the courts have developed guardianship proceedings that establish, from a legal perspective, when a person is in need of a guardian. State laws will vary to a certain degree, but in most cases a guardian is appointed when a person, known as the ward, is determined to be incapacitated. If you are appointed as the guardian, you will typically be able to make personal decisions for the ward, such as where she will live or what doctor will treat her. Financial decisions are generally not within the control of a guardian but are made by a conservator if one has been appointed. Often, you may be appointed as both a conservator and guardian. Only a court can determine if someone needs a guardian, but the following are common reasons that a Fayette County attorney recommends you petition for a court determination:

• Your loved one is low functioning or mentally challenged to the point that she cannot make decisions for herself
• She has a mental illness that impairs her ability to make basic decisions
• She is unable to make medical decisions or fails to follow through with medical treatment
• She has a physical condition that impairs her ability to care for herself
• She is homeless or at risk for being homeless as a result of her inability to care for herself
• She has a drug or alcohol addiction that impairs her ability to make decisions

Pyke & Associates, P.C. is a member of the American Academy of Estate Planning Attorneys.