If you are one of the millions of Americans who consider your pet to be part of your family, will you likely wish to include him or her in your estate planning. Just as you make plans for who will take care of your children in the event of a tragedy, you can also make provisions for who will care for your pet as well as how that care will be funded. Creating a pet trust is a legal option which will allow you to know that your pet is well taken care of for his or her natural lifetime.

A pet trust requires you to appoint a trustee to take care of the administration of the trust. Your may or may not be the same person who has the day to day care of your pet. For example, you may feel more comfortable with your attorney or your bank handling the money aspects of the trust, but want a family member to care for your pet, then you may choose to set up your trust accordingly.

You are also required to fund your pet trust. How much money or assets you decide to place in the trust is your decision. Consider the life expectancy of your pet as well as the cost of keeping your pet in the style to which he or she is accustomed to living. Also take into account the fact that your pet will age and likely need additional care and medical treatment as he or she ages.

The terms of your trust can be as flexible or as specific as you decide. The funds will be distributed to the caregiver according to your instructions. You can choose, for example, to distribute the funds on a monthly or yearly basis with a provision that additional funds can be accessed for emergencies or extraordinary medical treatment. Talk to your estate planning attorney for specific details.

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

 For parents with young children, one of the biggest fears is what will happen to the children in the event of the death of one, or both, of the parents. Although no one can prevent tragedy from striking, careful planning can provide you the peace of mind to know that your wishes with regard to your children will be followed. Creating a Last Will and Testament is the key to that peace of mind.

There are a number of reasons why creating a Will is important when you have young children. One practical consideration is avoidance of probate. In most states, when a decedent dies without leaving a valid Will behind, the estate is required to pass through the legal process known as probate in order to determine the intestate heirs. Probate can take months to complete leaving those assets that you did intend to leave behind for your children inaccessible until the probate process concludes.

Along with avoiding probate, your Will can be the only opportunity to choose a guardian for your children. In a situation where the other parent is not living, or not in the child’s life, or where both parents die at the same time, the court will have to appoint a guardian for any minor children.

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

Often, when people discuss their estate plan, they focus solely on how to transfer or protect assets upon their death. Protecting and transferring assets is certainly an important part of any comprehensive estate plan; however, another important part of an estate plan is incapacity planning. Protecting yourself and your wishes should be included in your estate plan by executing an advance directive for healthcare, often referred to as a health care power of attorney or living will.

An advance directive for healthcare generally allows you to accomplish two goals. First, you appoint someone to make health care decisions on your behalf if you are unable to do so in the future. Next, you have the opportunity to express what treatments or care you do, or do not, want in the event you are unable to express those wishes if incapacitated at a later time. For example, you may be able to indicate whether you wish life sustaining measures to be taken on your behalf as well as whether or not you wish to be given intravenous food.

Many people mistakenly believe that a spouse, parent or child will automatically be allowed to make health care decisions in the event you are unable to do so as a result of incapacity. In reality, a court must generally make the decision regarding who will be allowed to make decisions on your behalf. Although the court may eventually decide that your spouse, parent or child is the appropriate person to appoint, valuable time may be wasted in the meantime.

Although it is impossible to make all possible decisions ahead of time with regard to your health care or treatment, an advance directive for healthcare allows you to legally express certain wishes ahead of time.

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

 A trust is a legal arrangement that requires you to designate assets to be held in the trust, appoint one or more beneficiaries to receive the benefits of a trust, and appoint a trustee to administer the trust. Although there are numerous and varied trusts, all of them utilize a trustee. Before deciding who to appoint as trustee of your trust, be sure you understand the responsibilities of the trustee.

The trustee plays a critical role in a trust. While the terms of a trust dictate how the trust assets are to be handled, the trustee has the day to day control over the trust assets once the trust becomes active. The trustee is charged with not only protecting the trust assets, but also attempting to grow those assets by investing them in many cases. As you can clearly see, the choice of trustee is an extremely important decisions when creating a trust. Although a family member or loved one may seem a logical choice for trustee, many people choose to appoint an attorney or bank because of the impact the trustee has on the trust.

Along with guarding and growing the trust assets, the trustee has an obligation to the beneficiaries to treat them equally and impartially and to keep them informed. In some cases, this obligation can be complicated. For example, if a trust has current as well as future beneficiaries, the trustee must consider what decisions allow both classes of beneficiaries the most benefits when investing the trust assets.

Additional trustee responsibilities include disbursing the trust assets as directed by the trust, keeping records of the trust business and filing tax returns with state and local tax authorities.

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

 A trust is a legal agreement that requires four basic elements — a grantor, a trustee, assets and a beneficiary. The grantor, sometimes referred to as a maker or trustor, is the person who creates the trust. The grantor must designate assets to fund a trust as well as appoint a trustee to oversee the trust and at least one beneficiary who will receive the benefits of the trust. A person can play more than one role within a trust. For example, the grantor may also be a beneficiary. Trusts come in many forms and are created for a wide variety of reasons. One category of trusts that has gained popularity over the last few decades is the asset trust.

An asset trust, as implied by the name, is a trust that has protection of assets as the main purpose of the trust. The grantor may be attempting to shield the trust assets from creditors or taxes, for example. An asset protection trust works by separating the benefits of the trust assets from legal ownership of the assets. In other words, the idea is to allow the trust beneficiary to enjoy the benefits of the trust assets without having actual legal ownership of the assets. With no legal rights of ownership to the trust assets, the beneficiary cannot be taxed on the assets and creditors of the beneficiary cannot attach a lien to the assets or garnish the assets.

State laws govern the availability and formation of an asset trust within the United States. In most cases, an asset protection trust must be irrevocable to qualify. In addition, most asset protection trusts include a spendthrift provision which prevents the beneficiary from alienating his or her benefits in favor of a creditor or a third party. Asset protection trusts are not impenetrable, however. Child support obligations, for example, can often penetrate the shield of an asset protection trust. Historically, a grantor who was also the beneficiary of the trust was not an allowable asset protection trust; however, many states have made changes which now allow for self-settled asset protection trusts under certain conditions.

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

If you have worked hard over your lifetime and managed to amass a sizable estate that you wish to pass down to future generations, you undoubtedly wish to avoid allowing the government to take a large portion of it in taxes before it can be passed down. That is precisely what can happen unless you create an estate plan that minimizes the tax impact on your estate upon your death. One tool that can be used in your estate plan is a generation skipping trust.

The Internal Revenue Code requires estate taxes to be paid on the estate of a decedent before any assets can be transferred, or passed down, to the beneficiaries or heirs. Although the estate tax rate changes on a regular basis, it is not uncommon for it to be as high as the highest individual income tax bracket. To put this in perspective, if you leave an estate valued at one million dollars, it is possible that over $300,000 of your estate will be lost to taxes before your heirs, or beneficiaries, receive anything. One solution, or loophole in the IRS code, is to use a generation skipping trust.

A trust is a legal agreement that requires a grantor (you), a trustee, a beneficiary and assets to fund the trust. As implied by the name, a generation skipping trust is a trust created by you that names your grandchildren as the beneficiaries, thereby “skipping” a generation. By leaving the assets to your grandchildren, they are not subject to estate taxes. Your children do not have to be left out of the trust entirely. You may be able to draft the trust in such a way that your children can receive benefits from the trust in the form of interest, for example, while the principal trust assets remain in the name of your grandchildren. By using generation skipping trusts, a family can often keep a sizable estate in the family for many generations without losing the bulk of it to estate taxes. Consult with your estate planning attorney for details about how a generation skipping trust may work for your estate planning purposes.

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

Most people purchase a life insurance policy at some point. Often, life insurance is offered as part of employment or as part of affiliation with a union or other group. The basic function of all life insurance is to provide financial security to a beneficiary upon your death. Although the basic purpose of life insurance is accomplished by all types of life insurance, it pays to understand the difference between the two main types of life insurance from a financial perspective.

Life insurance comes in two basic types — term and permanent life insurance. Variations of the two main types have evolved over the years, but understanding the principal differences between term and permanent life insurance policies is a good place to start.

A term life insurance policy is purchased solely for the purpose of providing money to a beneficiary, or beneficiaries, upon your death. A term life insurance policy is not an investment. All policy premiums are lost once paid, meaning the policy does not accrue equity. The benefit to a term life insurance policy is generally the lower cost of the premiums. Because a term life insurance policy does not offer any growth on the capital invested, the premiums are usually significantly lower than premiums for a whole life policy.

A permanent life policy, on the other hand, offers both financial security for loved ones as well as investment potential for the policy owner. While a permanent life insurance policy does provide benefits upon the death of the insured, it can also provide a cash reserve that can be accessed at any time by the policy holder. A “loan” can be taken out against the value of the policy by the policy holder once enough funds have accrued in the form of premium payments. Premiums are often higher for permanent life insurance policy, but are also typically fixed.

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

When a decedent dies, the assets of the decedent’s estate are often held up in a lengthy, and costly, legal procedure known as “probate”. If you have suffered the loss of a loved one, you should take the time to inquire regarding alternative options to formal probate. While state laws and procedures differ somewhat, most states offer some type of informal probate which, under certain circumstances, can drastically reduce the time and cost of the probate process.

Although the names may vary, most states refer to the less formal probate options as “small estate administration” or “small estate affidavit”. The degree to which these options lessen the cost and time factor involved in formal probate will also vary; however, in all cases they are worth investigating if you think your loved one’s estate may qualify.

Qualifying for small estate administration is often based on the value of the estate, type of assets owned by the estate and whether or not the decedent left a valid will. Almost universally, when a decedent dies without leaving a valid will, or intestate, small estate administration is not an option. The reason for this is that a court must make a legal determination regarding who the heirs to the estate are, which requires a more formal administration.

If the estate is valued under a certain dollar amount and the assets are not complex, small estate administration may be available. Small estate administration procedures will also vary, but frequently allow a personal representative to attest to the value of the estate without the need for formal valuations and appraisals. If all the beneficiaries agree to the listed assets and their value, a court will approve the distribution in considerably less time than a formal probate administration. Some states also allow an even simpler small estate affidavit which allows an asset, such as a vehicle, to be transferred by virtue of completing and filing one simple affidavit with the court.

If you believe that your loved one’s estate may qualify for a small estate administration alternative to formal probate, consult with your estate planning attorney as soon as possible.

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

At some point, most people start to worry about how their assets will be passed down to family and loved one’s. Proper estate planning can make the process of transferring your assets simple and as pain-free as possible upon your death. Along with deciding who you wish to leave your assets to upon your death, you may wish to consider how you want those assets to be transferred. Unless you take steps now to avoid the necessity of probate upon your death, your assets will likely be required to pass through a probate court before your family and loved ones will have access to them. Among the various options available to help avoid probate is the creation of a living trust.

A trust, at its simplest, is a legal agreement that allows you to place assets into the trust that are to be used for the benefit of beneficiaries that you name in the trust. A trust must also have a trustee whom you appoint as well as a successor trustee. In most cases, you may appoint yourself to be the trustee. As the name implies, a living trust is a trust that you create and activate while you are alive. A living trust can be created as a revocable living trust, meaning that you, as the maker of the trust, have the power to revoke the trust, or modify the terms of the trust, at any time prior to your death.

Upon your death, property owned by you must pass through probate; however, property that you placed into a trust is considered trust property, meaning you do not legally own the property at the time of your death. When you die, the successor trustee takes over and is able to transfer the trust property directly to the beneficiaries named in the trust, thereby avoiding the need for the assets to be included in the probate process. Often, using a living trust in combination with other estate planning tactics can allow your estate to avoid probate altogether upon your death.

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

Most people have heard the term “trust” used in a variety of contexts, but you may not understand exactly what a trust is and how it functions. A trust is a legal agreement, created in a document, that allows you to place assets in the care of a trustee for the benefit of another person or persons. State laws determine the specific rules required to form a trust as well as what types of trusts can be formed within the state. While there are numerous different types of trusts, and minor variations regarding trust rules among the states, there are also some trust basics that may help you better understand trusts.

Understanding who the participants are in a trust is the best place to begin. The person who creates the trust is referred to as the grantor, settlor or trustor. The person in charge of overseeing the trust is known as the trustee. The people who are intended to receive the benefit of the trust assets are the beneficiaries. Now this is where it can become a bit tricky. In some states and for some types of trusts, an individual can hold more than one title within the trust. A grantor may also be a trustee for example, or a beneficiary may be allowed to also be the trustee. The important thing to understand is what each designation means.

Regardless of why a trust is created, the basic function remains the same. The grantor designates assets to be used in the trust. Assets can be cash or property–both tangible and intangible. Those assets then become trust assets. The grantor must also designate a trustee. The trustee then holds those assets for the benefit of the beneficiaries under the terms of the trust. The trustee is responsible for guarding and accounting for the trust assets at all times. The trustee may also be responsible for dispersing the assets to the beneficiaries. The beneficiaries are the people who receive benefits in the form of interest or principal payments from the trust assets. The terms of the trust will dictate how, when and in what amount the beneficiaries are to receive funds from the trust.

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