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RSS FeedNovember 13, 2012 WealthDocx®
Making Submissions to the Knowledge Base
Question: I have a document that I think could be useful to other Members. How do I submit it to the Knowledge Base? Answer: WealthCounsel encourages our Members to make submissions to the Knowledge Base. What is the Knowledge Base? The Knowledge Base is a web-based repository of various documents and language provisions submitted by our Members that do not become part of the WealthDocxs® document creation System. WealthCounsel has described its purpose this way: In keeping with WealthCounsel’s commitment to promote collegiality and excellence among the estate planning community, Members have access to various documents, presentations, and other materials that are not part of the WealthDocx system. Materials have been submitted b... Read More
October 31, 2012 WealthDocx®
Where You Can Find Language For A Strategy Not Supported By WealthDocx®
Question: I need to create a life estate for a beneficiary, which I've not done before. I couldn't seem to find an option in [WealthDocx®] for that. If it is not there, do you have a suggestion for where I can find good language to draft the life estate? Answer: In answer to the first part of the member’s question, she couldn’t find the life estate option because there isn’t one. But this question—and her follow-up—raises some interesting points that all our members might find informative. First, how do we decide what planning strategies and language options to include in the WealthDocx® document creation system? And second, how can you use the WealthCounsel “Knowledge Base” to find language no... Read More
October 10, 2012 Charitable Trusts, Revocable Living Trust
How To Create the Residuary Share of an RLT to Function as a Charitable Remainder Trust
We’ve Been Asked . . .”How Do I Create the Residuary Share of an RLT to Function as a Charitable Remainder Trust?” Q: “I am preparing an RLT [revocable living trust] for an individual and she would like to leave her remaining property (after she is gone) in a CRT (charitable remainder trust) for the life of her boyfriend, and the remainder interest to a charity. In WealthDocx7™, I only saw an option for a CRT for retirement assets. Is there an option for leaving all of her assets in a CRT? Is there no option because it you don’t recommend it? A: Yes, there is an option for leaving the assets in a CRT. You can find it in the RLT dialogue in the “Residuary Beneficiaries” input options. Of course, whethe... Read More
August 1, 2012 Revocable Living Trust
Creating Ancillary Documents Only
We’ve Been Asked . . . Question: “I want to prepare only a power of attorney and medical directive for someone. The ancillary document screen for the DPOA is taking me to fill in all of the RLT info.” Answer: The member needs only some of the ancillary documents that accompany the creation of a revocable living trust or a Will as the primary estate planning documents, without creating the primary document. This is actually easy to accomplish. In WealthDocx7®, both the Will and RLT modules include these ancillary legal documents—Durable Power of Attorney, Health Care Power of Attorney, HIPAA Authorization, Living Will, and Personal Property Memorandum. The RLT module also includes the Pour-Over Will, Certificate of Trust... Read More
June 12, 2012 Irrevocable Trusts
Drafting to Create Non-Grantor Trust Status for Your IRT
We’ve Been Asked: Question: “I am drafting an Irrevocable Trust that is not intended to be a grantor trust for income tax purposes. Does WealthCounsel have language that expressly precludes all Trustee powers that could cause grantor trust status? If so, how can I find this language?” Answer: Last week, we answered a question about creating an Irrevocable Trust (IRT) taxed as a grantor trust, so the timing of this support question couldn’t be better. Because they deal with the same topic, it might be a good idea to review our previous blog on grantor trusts, How to Create a Grantor Trust using WealthDocx7®. Of course, one way to preclude treatment of the IRT as a grantor trust is simply to select t... Read More
June 10, 2012 Grantor Trusts
How to Create a Grantor Trust using WealthDocx7®
We’ve Been Asked: Question: “I am drafting an IDGT for the first time. How do I do this in WealthDocx7®?” Answer: The use of an IDGT—Intentionally Defective Grantor Trust—is a planning approach that Howard Zaritsky has called “the new sexy.” H. Zaritsky, “Taxable Is the New Sexy,” Estate Planning 36:05 (May 2009). Before getting into “how to’s” of this technique, some background is necessary. What is a “grantor trust?” As the name implies, an IDGT is a grantor trust. Simply put, a grantor trust is a trust in which the trust income will be taxed to the grantor, and not to the trust or the beneficiaries who rec... Read More
May 20, 2012 Gifting Trusts
Gift of REAL Property in Trust?
Query: I'm drafting a trust where an individual wants to leave real estate to another individual in trust. In the past, I have modified the "Monetary Gift - Trust" option to fit...but don't see why a "Specific Property in Trust" section couldn't easily be added. Response: The practical concern I've always had about this type of provision is that it seems to me that more than the real property must be contributed to the trust. How will the financial obligations that attend managing that property be satisfied? There will be property taxes, improvements, insurance, maintenance, etc. that require money to fund. If an item of specific property (real or personal) is put in trust, how is that property maintained? A "dry" tr... Read More
May 15, 2012 Gifting Trusts
How to Leave a Trust Share to Children Only
We’ve Been Asked . . . Question: “I'm trying to set up a trust for residuary beneficiaries to be the two children (surviving spouse will take under a marital trust). I want to be able to set it up to where if one child predeceases the grantor, all of that child's share goes to the other child, not the beneficiaries of the deceased child.” “I can't seem to find an option that allows me to do this ... I'm sure there is a way in the software ... how?” Answer: “This is an excellent question for two reasons: First, it illustrates a “truism” for all legal document creation software – that is, all document creation software products are based on certain preferences. Second, it shows... Read More
April 20, 2012 Marital
Modest estate in decoupled state - Which marital deduction choice?
Query: Client has $1.4MM estate in a decoupled state. Will the selection of "all going to marital share" using a QTIP trust allow the Trustee/PR to make QTIP election for state estate tax purposes? Response: You don't want "all to marital" if you want to fund a marital and a non-marital. With Maryland's $1MM exemption and a $3.5MM federal exemption, an "all to marital" fails to use any state or federal exemption at all. If your state allows a separate state QTIP election (that is, the state QTIP election doesn't have to be the same amount as the federal QTIP election), you can use something like the Clayton election that provides the most flexibility after the client/grantor dies. The executor/trustee makes a $400k state QTIP el... Read More
April 19, 2012 Gifting Trusts
Gifting Trust v. ILIT
We’ve Been Asked . . . Question: “I have a trust that someone drafted using Wealthdocx7®. The intent was to create an ILIT, but the drafter used Gifting Trust as an option instead. What are the key differences of the ILIT option and the Gifting Trust option so I can see if the clients need to make a new ILIT?” Answer: The Gifting Trust and ILIT options operate similarly; a Gifting Trust with language authorizing the Trustee to invest in life insurance policies on the Grantor’s life is identical to an ILIT. To advise your client, you will first need to determine if the Gifting Trust includes these life insurance provisions. The Gifting Trust A Gifting Trust is an irrevocable trust that will... Read More