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.

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.

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.

Few decisions in life are as important as choosing a trustee for a trust. The duties and responsibilities of a trustee are numerous and of great importance to the success of the trust. The ultimate decision, of course, is yours; however, there are some factors that bear consideration and should be discussed with your henry county estate planning attorney before you make your decision.

• Location of Trust Assets and Beneficiaries: The closer the trustee is to both the trust assets and the beneficiaries, the easier it will be to oversee the assets and communicate with beneficiaries.
• Trust Discretion: Some trusts allow the trustee a considerable amount of discretion with regard to distributions to beneficiaries. If your trust allows the trustee discretion, be sure that the trustee understands the purpose of the trust and is someone in whom you trust to make decisions regarding distributions.
• Relationship of the Trustee to the Beneficiaries: A trustee that is closely related to a beneficiary can, at some point in time, develop a conflict of interest as a result of that relationship. Although you may have a considerable amount of trust in a close family member, you may be trading that for objectivity and neutrality.
• Financial Ability and Experience: Be sure that your trustee’s abilities and experience are commensurate with the position. A simple trust may not require much in the way of financial skills or experience, but a complex trust certainly will.
• Willingness to Serve: People often overlook this one. Be sure to actually ask the intended trustee if he or she is willing to accept the responsibilities associated with being a trustee.

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

Your Last Will and Testament is your chance to decide how you want your estate assets handled upon your death. You only get one chance to express your wishes. While executing your Will is important, updating it after major life changes is of equal importance. Although there are other reasons why a Will update may be warranted, there are three important events that should always be considered reason to update your Will.

If you have recently been married, you should include your new spouse in your Will. While some states make provisions for one spouse to receive something from the estate of the other spouse regardless of whether or not mentioned in the Will, not all states do so. In addition, the amount your spouse receives under the law of the state where you are a resident at the time of death may be considerably less than what you intended to leave him or her.

On the other hand, a divorce also warrants a Will update for the opposite reason. If you fail to remove your ex-spouse as a beneficiary under your Will, he or she may receive the bulk of your estate despite the divorce if you signed reciprocal Wills, meaning you each left the bulk of your assets to the other.

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

Most people have heard the terms “beneficiary” and “heir” used at one point or another. If you are like most people in Atlanta, you may be under the impression that they are interchangeable words. In fact, although both terms are frequently used in estate planning, they have very different legal meanings. Understanding the difference is a simple, yet important, step to take when planning your estate. While individual states may have varying laws, rules and procedures regarding wills and trusts, the definition of beneficiary and heir is generally similar among the states.

A beneficiary is someone that you specifically name in your Last Will and Testament. If you make a bequest in your Will, whether of money or any other type of asset, the person to whom you leave the asset is a beneficiary under the terms of your Will. For example, if you decide to leave your best friend, Joe, $10,000 in your Will as well as leave your daughter, Rachel, your home in your Will, then both Joe and Rachel are beneficiaries under your Will.

An heir, on the other hand, is someone who will inherit all, or part of, your estate under the intestate succession laws of the state where you resided at the time of death. Intestate laws apply when a valid Will was not executed prior to death, or when there are estate assets left over after all bequests have been satisfied. Your spouse, children and other blood relatives are typically heirs under intestate succession laws.

Someone can be both a beneficiary and an heir. In the above example, Rachel would be both a beneficiary and an heir while Joe would be only a beneficiary.

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

Whether you are in the process of planning your own estate in Fayette county, have recently had a family member or loved one die, or just wish to educate yourself on Estate Planning concepts, understanding intestate succession is important. Before launching into an explanation of intestate succession, it is important to note that individual state laws will govern the specifics of intestate succession, just as they do for other aspects of wills, trusts, and estates. Having said that, the basic premise of intestate succession tends to be the same from one state to the next.

Although many people execute a Last Will and Testament prior to death, not everyone does so. When a person dies without having executed a Will, the legal term that applies is “intestate.” Just because a person dies intestate does not mean he or she did not have estate assets at the time of death. The legal process that decides who will inherit those assets is referred to as intestate succession. Intestate succession can also apply when a valid Will was executed if assets remain after all the specific and general bequests have been honored.

As mentioned earlier, state laws will dictate who will inherit under intestate succession and in what proportion; however, there are similarities here as well. Most states look first to the spouse and children of the decedent. Other blood relatives may also inherit under intestate succession in the event there is no spouse or living children, or there are estate assets remaining after the spouse or children have received their share.

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

A trust is a legal agreement that is frequently used as part of an estate plan. At its most basic, a trust requires a grantor (sometimes referred to as a trustor, makor or settler) a trustee, beneficiaries and assets to fund the trust. Over the years, the basic trust concept has evolved to create numerous special interest trusts aimed at achieving specific goals. One of those special interest trusts is the spendthrift trust.

Individual states determine whether or not to recognize spendthrift trusts; however, most states do recognize some form of a spendthrift trust. A spendthrift trust is designed to allow the grantor to retain control over the trust assets even after they have been devised to the beneficiaries. When you create a spendthrift trust, specific language must be used to make it clear that it is intended to be such a trust. Consult with your Atlanta estate planning attorney to be certain the language you want to use is appropriate for Georgia.

In general, the language used in a spendthrift trust is designed to prevent the beneficiary from using the trust assets as collateral for credit, from borrowing against the assets or from assigning the assets in any way to a third party. For example, a beneficiary cannot assign her rights to future trust benefits in order to obtain a mortgage, car loan or personal loan. Likewise, a creditor cannot attach a lien to the assets held by the trust or to any benefits to which the beneficiary is entitled.

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

If you are considering creating a trust as part of your estate plan, understanding the basics of a trust is important. Although all trust require a grantor, a beneficiary, a trustee and trust assets, after that they can be structured very differently depending on the main purpose of the trust. One major distinction among trusts is the revocable versus irrevocable distinction.

Not surprisingly, an irrevocable trust is one that, generally speaking, cannot be changed or revoked while a revocable trust can be changed or revoked. While it is best to think of an irrevocable trust in this way, most states do provide for the modification or termination of an irrevocable trust under certain conditions which typically require court approval.

An irrevocable trust is an inter vivos trust, meaning it goes in effect while you are still alive. One of the major advantages to an irrevocable trust is that the assets used to fund the trust become trust property once placed in the trust and are, therefore, not considered part of your estate for estate tax purposes upon your death. In addition, the trust assets may avoid the often lengthy probate process since they are not owned by you at the time of death.

Assets placed in the trust, however, may be subject to gift taxes if they exceed your lifetime exclusion amount. Another catch to an irrevocable trust is that any transfers made close to the time of death may be considered “gifts in contemplation of death” and may be included in your estate for tax purposes. As such, you should consult your Fayette County estate planning attorney before transferring assets to a trust.

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

The idea behind creating an estate plan, and specifically behind executing a Last Will and Testament, is that you have control over who receives your estate assets upon your death. Unfortunately, the terms of a will can sometimes leave a family member or loved one less than pleased. In some cases, you may know ahead of time that a will contest is likely to be filed. Even if you have no reason to believe that a will contest will be filed by someone, preparing for the possibility is still advisable.

Although state laws vary with respect to what grounds are required to uphold a will contest, many states require a petitioner to prove specific facts such as that the testator was subject to undue influence or under duress at the time the will was signed. Another common ground upon which a will contest can be filed is that the testator lacked the mental capacity required at the time the will was executed. While there is no way to ensure that a will contest will not succeed, you can take steps to make success less likely.

Witnesses often play an important role in a will contest. By having your Fayette county estate attorney draft your will, and then signing the will in front of your attorney, you have created an excellent witness to your state of mind and capacity at the time of signing. Another simple step to take is to have a thorough check-up with your regular doctor near the time of execution. Your doctor can then be called upon to testify to your general health and mental capacity at the time, if necessary.

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