YOU SHOULD UPDATE YOUR WILL AND/OR TRUST!!!

Trustees and their beneficiaries should talk more. To make sure that happens, Georgia lawmakers amended the Georgia Trust Code effective July 1, 2010.

But what if you don’t have a trust? What if you aren’t a Trustee? You think the Georgia Trust Code doesn’t affect you?

You’re wrong. Are we sure? Absolutely.

If you have a Revocable Living Trust, a Last Will & Testament that creates a trust upon your death or a Property Power of Attorney, your estate plan was affected by the 2010 Revision of the Georgia Trust Code. 

What does that mean? Your estate plan needs to be updated.

The Revised Georgia Trust Code of 2010 has over 100 sections and is located in Title 53, Chapter 12 of the Official Code of Georgia. Many of the new Trust Code provisions affect the terms of your estate plan.

For example, the new Trust Code expands the statutory law related to Trustee duties – adding additional duties that are now, unless specifically waived, required of Trustees. These duties include the duty to inform beneficiaries as to the existence of a trust and the duty to provide reports and accountings.

Well those duties don’t sound so bad, do they? Of course not. But taking a closer look, they may be more intrusive and more of an administrative responsibility than you’d like for your Trustees to be obligated.

The duty to inform, for example, requires the Trustee to notify “qualified beneficiaries” of the existence of a Trust within 60 days of its creation (OCGA §53-12-242). Practically speaking, that means that your Trustee has 60 days from your date of death to notify your beneficiaries of any trusts created by your estate plan. Qualified beneficiaries are defined statutorily as not only the primary beneficiaries who are entitled to distributions, such as your spouse or children, but also any other beneficiaries who would be entitled to distributions if your primary beneficiaries ceased to exist. That’s probably not an administrative duty you want your Trustee to have to “calendar” and you may not want your grandchildren, nieces and nephews or charities to be informed of a trust from which they might never actually benefit. Fortunately, this duty is waivable but if you don’t amend your estate plan, your Trustee is required to fulfill this duty for so long as the Trust exists.

The new duty to provide reports and accountings is also a waivable responsibility, but only if you amend your estate plan to specifically do so. Why would you want to relieve your Trustee of this responsibility?   OCGA §53-12-243 statutorily obligates your Trustee to provide to any qualified beneficiary a report about all trust assets, receipts and disbursements. Practically speaking, that means that a beneficiary who may never actually benefit from the trust can require the Trustee to provide information regarding trust activity. Imagine leaving assets to your spouse in a trust protected either from taxes, long term care costs or other claims and then your grandson, who is only a remote contingent beneficiary, requesting a report of how much money your spouse has used from the trust since his grandfather died. 

Those are just two examples of the many changes represented in the 2010 Revised Georgia Trust Code. We know that you want your Trustee held accountable, but you’ve picked Trustees you trust and you don’t want to unnecessarily burden them with what may amount to administrative hassles.

Thankfully, the new Trust Code allows your estate plan to waive the requirements you find unnecessarily burdensome. We can only provide such waivers, though, by amending your estate plan. The fee for an Amendment to your Revocable Living Trust addressing the applicable Trust Code provisions will be $410.00 per person and an Amendment to your Last Will and Testament will be $310.00 per person ($620 – $820 respectfully for a married couple). If you are not a member of the Annual Maintenance Program, we will make you a special offer. If you join the AMP for 2010 and 2011, we will provide you these changes for FREE! To update your plan, call 770-507-2500 today!

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

Do you wish to protect assets from creditors, a divorced spouse, or other types of legal claims? You may be able to do so by creating a separate Lifetime Trust for each beneficiary. Lifetime Trusts allow you to create a legal barrier between the properties held and the claims against a beneficiary. 

All assets owned by a Trust are the property of the Trust for as long as the Trust is in effect. In the case of a minor beneficiary, the creation of a Trust allows you to keep the beneficiary’s inheritance away from a court-supervised guardianship or conservatorship. However, the normal practice is to create a Trust for a minor and include a provision for its termination when the minor reaches a specific age or is considered mature enough to make his or her own investment decisions. Once the Trust is terminated, the assets held under trust are transferred to the minor beneficiary and become vulnerable to claims. To prevent that possibility, you may decide to create a Lifetime Trust that will continue for the lifetime of the beneficiary. 

A Lifetime Trust can also be drafted to protect a beneficiary’s inheritance from his or her own poor decisions or spending habits. The creation of such a Trust will restrict the way the beneficiary can spend and utilize assets while helping to maintain a steady stream of income. 

Lifetime Trusts can also be continued for future generations and be established as a Generation Skipping Trust. A Generation Skipping Trust lasts the lifetime of a beneficiary and is then passed on to the next generation of beneficiaries, bypassing estate taxes after the death of the initial beneficiary.

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

If you do not make a Will before you die, your assets are placed in probate. However, there are some assets that are not placed in probate regardless of whether or not you have a will. These assets are called non-probate assets.

 What are Non-Probate Assets?

Some types of assets are part of your non-probate estate since they are contractual in nature. Non-probate assets can include assets:

• You own jointly with other peoples, such as your spouse, as joint tenants with right of survivorship. When you die, your portion of the property is automatically transferred equally to other owners of the property.
• Owned by your Revocable Living Trust.
• Owned as a life estate. After your demise, the life estate is passed to the remainder beneficiary.
• Owned by you and transferred to your designated beneficiary after your death. These assets include Payable on Death (POD) accounts, Transfer on Death (TOD) accounts, Totten Trusts and In Trust For (ITF) accounts. Life insurance policies, retirement accounts, health savings accounts (HSAs) and medical savings accounts (MSAs) are also included in these assets.

Although your non-probate assets can avoid probate, their value will be included in the value of your gross estate when your estate tax liability, if any, is determined.

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

Since a minor does not have the legal right to take control and manage the property he or she inherits, the courts appoint a guardian or conservator to do so. The choice of a guardian is made with the needs and requirements of the ward (the minor) in mind. The courts examine the financial condition, health, judgment, morals and character of the person who requires guardianship.

Once appointed, a guardian is expected to fulfill various duties and responsibilities to meet the needs of his or her minor ward.

• A guardian must take inventory of all the assets of the ward, determine their value and file a list of their estimated value with the court.
• A guardian’s position is based on trust and they are legally obligated to protect the interests of the ward in the same manner they would protect their own.
• A guardian has the authority to make decisions regarding the management of all assets owned by the minor.
• A guardian cannot invest the ward’s money in speculative ventures or neglect any duties related to the maintenance of land, crops or buildings that are part of the ward’s estate.
• A guardian has to ensure the timely payment of all bills, taxes and other payments relative to the management of the minor’s estate.
• A guardian cannot allow someone else to maintain or manage the business of the minor without direct supervision on the part of the guardian.
• A guardian has the legal right to hold or sell the property of the minor but not use the proceeds for the guardian’s personal benefit.
• A guardian is prohibited from making gifts from the ward’s estate and is required to keep his or her own money and the ward’s money separate.
• The guardian needs to pay for the health, education and other maintenance expenses of the minor.
• The guardian can make a decision regarding where the minor will live but must receive court approval.
• The guardian may require the court’s permission for carrying out certain duties, depending on individual state laws and guidelines.
• The guardian must present to the court on an annual basis details of assets of the minor, along with additions or subtractions from those assets.

Once the minor reaches adulthood, the guardian must make a final accounting of the minor’s assets and seek termination of guardianship.

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

Nearly 20% of people over the age of 65 have fallen victim to some type of fraud, whether it be an inappropriate investment, unreasonable fees for services or outright theft.  Following is a rundown of just a few of the latest fraudulent schemes to watch for:

Medicare Scams

Medicare is complicated, and scammers know that fact all too well.  They often send email or make phone calls to seniors purporting to be a Medicare employee and asking to “confirm” sensitive financial information, such as a bank account number, social security number or a credit card number.  Medicare will NEVER ask for information in that manner, particularly financial information.   Don’t be afraid to ask the caller for their name, phone number, title and the name of their department.   Verify this information with Medicare before answering questions, even if the caller claims the information requested is needed to fix an error.  You may also call the Health and Human Services Office of Inspector General at 800-HHS-TIPS if you suspect you’ve received a fraudulent call or contact a Medicare office to confirm a worker’s identity.

Debt Scams

Thieves can also target seniors who have recently lost their spouse.  In a recent scam, a couple would scour obituaries and contact the surviving spouse claiming an outstanding bill or debt that must be paid immediately.  They requested a check or credit card information to “avoid penalties and fines”.  They took the money and were never heard from again.  Ask any creditor for verification of a debt via a written confirmation with all details.  Confirm outstanding balances and ask questions of all “collectors”.

Repair and Contractor Inflation

Beware of any contractor or repairman who would make the first point of contact offering to “fix” something or help with landscaping.  These “workers” are often looking for someone to pay inflated rates for work that is either never completed or poorly done.  If you are the person initiating contact for a repair or a contractor, make sure to get more than one estimate to ensure prices are reasonable.  Check out contractors and servicemen through the Better Business Bureau and always confirm that they are properly licensed.  If it’s something that is outside your knowledge area, ask a friend or relative for assistance in hiring a good, honest, insured contractor.

Don’t be a victim, trust your instinct and always:

• Ask questions;
• Confirm information;
• Make informed decisions;
• Ask a friend or relative for advice or assistance;
• Avoid giving sensitive information to callers or via email – including a social security number, credit card or bank account numbers or even a date of birth;
• Check out businesses with the Better Business Bureau or a local Chamber of Commerce.

Don’t be embarrassed to ask questions or ask for additional information.  If a situation escalates, don’t be embarrassed to ask for advice or assistance on how to handle it.  It’s always better to be safe than sorry.

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

Wills are considered the foundation of a comprehensive estate plan, but they aren’t the “catch-all” for your directives.  Some of the issues that should not be addressed in a will are: 

Funeral Plans 

Wills are often not located and rarely read until several days after the passing.  Funeral plans need to be made immediately, so it’s best to address funeral and burial wishes in a letter to your family and/or Executor.  Make sure to advise the location and even the contents of the letter. 

It is also a good idea to pre-plan your funeral. Pre-planning your funeral can also alleviate overspending andn added responsibility to your family during their time of grief. 

Contingency Gifts 

There have been plenty of movies based on the premise of an inheritance based on the recipient having to get married.  While it may be an entertaining notion, basing an inheritance on a contingency as important as divorce or marriage is not allowed in a will.  You may express wishes in a letter as part of your estate plan, but it is not a legally binding document. 

Medical Wishes 

A will is not read until after you pass, so it does not make sense to address medical issues in this document.  Advanced directives, such as the Georgia Advance Directive for Health Care, address medical and “end of life” issues and are more appropriate for these wishes.  Advanced directives are another important aspect of estate planning. 

A will is a fundamental part of an estate plan, but it certainly isn’t the only part.  While the will addresses asset distribution, other aspects of the estate plan are addressed in additional documents.

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

Nearly 25% of senior citizens enrolled in Medicare choose a Medicare Advantage Plan.  Medicare Advantage is offered by private insurance companies and subsidized by Medicare funds. Medicare Advantage Plans typically offer more benefits than the Original Medicare Plans; however, you may be required to see doctors that belong to the plan or go to certain hospitals, much like a traditional HMO. 

Medicare Advantage is similar to a private insurance plan, but offers lower rates to senior citizens as the plans receive subsidies from the Medicare program.  In essence, the Federal Government is paying these plans to manage Medicare benefits.  But the 2010 Health Care Reform Act cuts the subsidy payments Medicare makes to private Medicare Advantage Plans. 

What remains to be seen is how these cuts will affect the care and benefits of those enrolled in these popular programs.  Many are concerned that these cuts will lead to a reduction in their plan’s “extra” benefits, such as dental coverage and free eyeglasses, to make up for the subsidy reduction, or worse, a rise in premiums. 

There is a bright spot for Medicare Advantage recipients; the new health care law takes strong steps to ensure that by 2014, at least 85% of every dollar received in these plans is spent on health care, rather than administrative costs and profits.  Supporters hope that this results in better health care and coverage for seniors. 

The 2010 Health Care Reform ACT will affect the health care of senior citizens and Medicare benefits and programs, particularly the Medicare Advantage Plans.  These changes are being phased in over the next several years, but it’s important to remember that no one currently using Medicare Advantage is going to be suddenly without coverage. 

Stay informed and up to date as we see the details on these changes to health care emerge.

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

A Will is probably the most commonly used estate planning tool in the United States… and for good reason!

A Will is simple and straightforward. It allows you to distribute your assets and provide for your loved ones after you’re gone.

With a Will, you can say who gets what and how your estate should be dissolved. You can specify how debts should be paid and you can even name a guardian and/or a conservator for your minor children.

Having a Will ensures that your estate is distributed the way you want instead of being left to the discretion of a probate judge.

When you die without a Will, your estate will be distributed according to the laws of intestacy. These laws basically split your assets up among your closest relatives, such as your spouse and children, but there’s no way to guarantee that any special bequests will be honored.

If you wanted your sister to have the silver tea set your mother left you for example, a judge may not honor that request because there’s nothing in writing to say that this was your wish.

It also means that if you have any debts that need to be paid, the judge will address these before any assets are distributed to your heirs. If there’s not enough funds in the estate to cover these debts, the judge may order the estate representative to sell off assets to cover the difference.

But without a Will, you won’t be able to specify which assets are sold and that antique silver tea set could end up being sold at auction instead of passed onto your family.

To learn more about creating your own estate plan, contact our office today.

A Will is probably the most commonly used estate planning tool in the United States… and for good reason!

A Will is simple and straightforward. It allows you to distribute your assets and provide for your loved ones after you’re gone.

With a Will, you can say who gets what and how your estate should be dissolved. You can specify how debts should be paid and you can even name a guardian and/or a conservator for your minor children.

Having a Will ensures that your estate is distributed the way you want instead of being left to the discretion of a probate judge.

When you die without a Will, your estate will be distributed according to the laws of intestacy. These laws basically split your assets up among your closest relatives, such as your spouse and children, but there’s no way to guarantee that any special bequests will be honored.

If you wanted your sister to have the silver tea set your mother left you for example, a judge may not honor that request because there’s nothing in writing to say that this was your wish.

It also means that if you have any debts that need to be paid, the judge will address these before any assets are distributed to your heirs. If there’s not enough funds in the estate to cover these debts, the judge may order the estate representative to sell off assets to cover the difference.

But without a Will, you won’t be able to specify which assets are sold and that antique silver tea set could end up being sold at auction instead of passed onto your family.

To learn more about creating your own estate plan, contact our office today.

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

There’s been quite a bit of buzz about estate taxes lately and if you’re following the story, you’ve probably caught the phrase “step-up in basis” once or twice.

So, what is the step-up in basis? And how does it affect you?

The step-up rule is what protects your heirs from paying capital gains tax on their inheritance. If, for example, your home is worth $200,000 when you pass away and your family decides to sell it for $200,000, your heirs would have to pay capital gains tax on the difference between your basis in the property (i.e.what you paid for the home so many years ago) and the $200,000 value it has now.

But with the step-up, your basis in the home is revalued at $200,000 at your death, so when your heirs sell the house, there’s no capital gains tax on the profit.

Of course, this isn’t the only way that estate taxes will affect your assets and some are not as beneficial. To learn more about planning your estate and minimizing taxes, contact our office today.

There’s been quite a bit of buzz about estate taxes lately and if you’re following the story, you’ve probably caught the phrase “step-up in basis” once or twice.

So, what is the step-up in basis? And how does it affect you?

The step-up rule is what protects your heirs from paying capital gains tax on their inheritance. If, for example, your home is worth $200,000 when you pass away and your family decides to sell it for $200,000, your heirs would have to pay capital gains tax on the difference between your basis in the property (i.e.what you paid for the home so many years ago) and the $200,000 value it has now.

But with the step-up, your basis in the home is revalued at $200,000 at your death, so when your heirs sell the house, there’s no capital gains tax on the profit.

Of course, this isn’t the only way that estate taxes will affect your assets and some are not as beneficial. To learn more about planning your estate and minimizing taxes, contact our office today.

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

Over the forty, fifty or sixty years that you spend in the workforce, it’s conceivable that you’ll have more than one job. It’s also not unusual then, to end up with more than one pension along the way.

But what happens when the company offering the pension is no longer around? How do you collect your pension at retirement if you can’t find the company?

The Pension Benefit Guaranty Corporation (http://pbgc.gov) is a federal corporation created by the Employee Retirement Income Security Act of 1974 to provide assistance with this very thing.

Using their website, you can search to see if you’re one of the hundreds of thousands of people that are eligible to receive a known lost pension.

But even if your company isn’t listed, all is not lost. PBGC can help you track down your old employer and get access to the pension benefits you deserve.

To get the best results, you’ll need to have some information available when you contact PBGC. In addition to your name, address, social security number and date of birth, you’ll also need to provide the name of the employer that sponsored your plan and, if you have it, the employer’s tax identification number and plan identification numbers.

These can be found on the pension documents that you were given when you first entered the plan.

Over the forty, fifty or sixty years that you spend in the workforce, it’s conceivable that you’ll have more than one job. It’s also not unusual then, to end up with more than one pension along the way.

But what happens when the company offering the pension is no longer around? How do you collect your pension at retirement if you can’t find the company?

The Pension Benefit Guaranty Corporation (http://pbgc.gov) is a federal corporation created by the Employee Retirement Income Security Act of 1974 to provide assistance with this very thing.

Using their website, you can search to see if you’re one of the hundreds of thousands of people that are eligible to receive a known lost pension.

But even if your company isn’t listed, all is not lost. PBGC can help you track down your old employer and get access to the pension benefits you deserve.

To get the best results, you’ll need to have some information available when you contact PBGC. In addition to your name, address, social security number and date of birth, you’ll also need to provide the name of the employer that sponsored your plan and, if you have it, the employer’s tax identification number and plan identification numbers.

These can be found on the pension documents that you were given when you first entered the plan.

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