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Estate Planning Questions and Answers
Excerpts from questions sent to Layne Rushforth. |
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Estate Planning Questions and Answers
Excerpts from questions sent to Layne Rushforth. |
Answer: Excellent question.
OPTION #1: My first recommendation would be to get a list of "fellows" with the American College of Trust and Estate Counsel (ACTEC). To get a list of trust and estate attorneys in your area from ACTEC, point your web browser to http://www.actec.org and click on "Request a referral list". To participate in the American College of Trust and Estate Counsel, an attorney must have a minimum of 10 years' experience, must focus his or her practice on estate planning and probate, and must be recommended by his or her peers.
OPTION #2: Call a bank or trust company and ask for two or three attorneys' names. Banks and trust companies work with experienced attorneys regularly, and they should be able to steer you to people who are qualified. This is not my first choice because sometimes banks and trust companies make recommendations based on business referrals rather than on quality of work.
OPTION #3: Call one or more financial or investment advisors whom you trust, such as your certified public accountant, financial planner, stock broker, or insurance advisor, and get the names of several attorneys whom they trust. Again, sometime these recommendations are based on business referrals rather than on quality of work.
OPTION #4: Do all of the above, and focus on the attorneys or firms that are mentioned more than once. You can also check out attorneys' biographies on www.martindale.com, but all attorneys do not pay for a biographical listing there.
Once you have decided which attorneys to consult, make appointments. Most estate planning attorneys offer a low-fee or no-fee initial consultation. Some will provide memos or brochures to read and/or questionnaires to complete. (Links to the simple questionnaire and memos that I use are found at http://rushforth.net/epforms.html#InitialForms.) In my opinion, you should be looking for someone who will focus on accomplishing your objectives rather than someone who can quickly generate estate planning documents. You are looking for experience, ability, and sincere interest more than slick marketing materials.
A word of advice: take your time to do it right, and do not make price your number one criteria. Most people spend more time and effort shopping for a new car than they do searching for the right estate planning attorney. Perhaps that is not wise. Your estate plan will affect ALL of your assets, not just your car. With estate planning attorneys, you do not always get what you pay for, but be careful about the too-good-to-be-true bargains. This is too important to look for the cheapest deal you can get.
Answer: The enforceability of a post-nuptial agreement depends on state law. In Nevada where I practice, a post-nuptial agreement is enforceable under a set of statutes that is different from the statutes that apply to a pre-nuptial agreement, and I personally consider pre-nuptial agreements to be stronger. In other states, post-nuptial and pre-nuptial agreements (marital property agreements) are governed by the same statutes. I have done co-habitation agreements for unmarried persons, even though there is no specific statute in Nevada on that.
Generally speaking, marital property agreements are enforceable and can be very helpful. Because I am an estate-planning attorney, the pre-nuptial and post-nuptial agreements that I prepare are focused on preventing problems when one of the spouses dies. For example, suppose a wife has a home that was hers prior to the marriage. She marries, and the couple lives in Nevada, a community property state. Wife pays the monthly mortgage payment on her home. After several years, husband and wife die in an auto accident. Wife's children claim the home is the wife's separate property, and they are entitled to 100%. Husband's children claim that because community property helped pay the mortgage, they are entitled to a portion. Either a post-nuptial and a pre-nuptial agreement could prevent this problem.
Although the marital property agreements I do are focused on estate planning, they can also provide some protection in a divorce.
Of course, marital property agreements can be challenged. A marital property agreement will not be enforceable unless there is strict compliance with state law, and each spouse must have an opportunity to consult with an attorney of his or her own choosing. Most states require that there be either a full disclosure of the parties' assets and liabilities unless the parties waive that right. Challenges to marital property agreements frequently focus on claims that (1) one party had inadequate legal representation and opportunity to review; (2) one party exercised undue influence or coercion over the other; (3) a party provided false representations or inadequate disclosure regarding assets and liabilities; or (4) the agreement is blatantly unfair to one party.
A good marital property agreement can reduce the disputes that can arise during the distribution of one's estate at death, as well as during a divorce proceeding. If you want a good marital property agreement, you need to consult an experienced family law or divorce attorney.
I have made some stock transactions in the account that resulted in fairly large taxable capital gains. As in prior years, I shall file the son's Federal tax return.
My question is: can I withdraw funds from the account to cover tax payment on his own tax return? If the answer is YES, is it also possible to withdraw funds to cover some emergency, such as significant medical bills? I have found quite a bit of info on *setting up* these accounts, but very little on *withdrawals* from these account until the child reaches the age of 18.
Answer: The Uniform Transfers to Minors Act is essentially a statutory trust for the benefit of your son, and you, as custodian, are the trustee. In most states' version of the law (which are not exactly "uniform"), you can spend money to pay the taxes on the income and to pay for your son's benefit. What is less clear in many states is the ability to pay for items that parents would normally pay out of their own funds. In many states, the law is that the child's own funds (including UTMA funds) cannot be legally spent unless the parents' funds are insufficient.
In Nevada (and I presume most states), this should not be a problem because the Nevada Revised Statutes (NRS) includes the following:
"NRS 167.055 Delivery, payment or expenditure of custodial property for benefit of minor.
"1. A custodian may deliver or pay to the minor or expend for the minor’s benefit so much of the custodial property as the custodian considers advisable for the use and benefit of the minor, without court order and without regard to:
"(a) The duty or ability of the custodian personally or of any other person to support the minor; or
"(b) Any other income or property of the minor which may be applicable or available for that purpose."
Before spending the UTMA money, it would be wise to consult an attorney licensed in your state that is experienced in this area of law AND familiar with the facts and circumstances of your case.
Email address:
layne@rushforth.net
Your comments and suggestions will be greatly appreciated.