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Showing 7 posts tagged trusts.
Trustee Discretion and Liability of an Individual
It's an understatement to say that the role of the trustee is fraught with pitfalls. Often times, a settlor creates a trust to suit his or her needs, but rarely does the settlor take into consideration, the difficulties the trustee will face when administering the trust. The discretion given to the trustee can provide a gateway for added liability, and the creation of a trust should take the twin concerns of trustee discretion and trustee liability into as much consideration as the disposition of the trust assets. More >
The Evolving Duty of Trustee Communication with Beneficiaries
Trustee communications with beneficiaries have followed an interesting legal path in Kentucky. The original Kentucky statute regarding communication with the beneficiaries required that the trustee must keep the beneficiaries reasonably informed about trust activities. This statute, KRS 386.715, did not make a distinction between revocable and irrevocable trusts. The traditional presumption is that a settlor may change a revocable trust at will, and thus the trustee of a revocable trust did not have a duty to notify beneficiaries of trust status, as the identity of the beneficiaries could potentially be in flux. More >
In the Uniform Code We Trust: Basic Provisions of Kentucky's Uniform Trust Code
Kentucky recently followed 27 other states in enacting the Uniform Trust Code ("UTC"), which went into effect on July 15th of last year. The sweeping provisions of the UTC will apply to all types of express trusts, even those created prior to the effective date of the law, so it is important for trustees, settlors and beneficiaries to have a thorough understanding of the new law. More >
A Hollywood Lesson for Everyday People: Trusts
Phillip Seymour Hoffman, an accomplished actor, died suddenly in February at age 46 of a suspected drug overdose. Seymour had a long-term companion, Marianne O'Donnell, with whom he had three young children. Under the terms of his Will, a significant chunk of his $35 million-plus estate was left to O'Donnell. The media and estate planners have examined the Will, which has led to several estate planning issues garnering public attention. His Will was written before the birth of his last two children and never updated; thus, his estate plan is completely silent about his wishes for them. The actor's death also highlights the effect that marriage can have on an estate plan. Because Hoffman and O'Donnell were not married, nearly $14 million must be paid in estate taxes - an outcome that could have been avoided had the couple tied the knot (at the federal level, any property passing to a spouse at death is free of estate taxes, therefore delaying any federal estate tax until the surviving spouse's death). More >
A New State & Your Estate
People are not stationary - moving to a new state for work, family, or other reasons is a part of life for a great deal of individuals. What happens to an estate plan, though, when a person no longer lives in the state where their plan was created? Is the plan still valid in their new state? Although estate planning documents that were validly executed in one state should generally be valid in another, these instruments may need some modification. It is highly recommended that all executed documents be, at the very least, reviewed by an attorney when relocation occurs. More >
The Gift of Education
Many grandparents want to enrich the lives of their grandkids, but are not sure the best way to accomplish this with their estate plan. I encourage clients to consider helping their grandchildren with the future costs of education. The proper planning can help grandkids avoid hefty loans and be tax-efficient for the donor. More >
What is an Irrevocable Life Insurance Trust?
Life insurance is an important estate planning tool; however, life insurance proceeds can be quickly diminished by taxation. This is due to the fact that a policy's face value is often included in a decedent's taxable estate. For instance, if you own a life insurance policy with a face value of $2 million dollars and you have other assets valued at $4 million dollars, then at the time of your death your estate would be valued at $6 million dollars. Your heirs would be exposed to estate tax liability on the amount exceeding $5.25 million dollars, the current estate tax exemption, (which is always subject to change). Notwithstanding these facts, proper planning can protect life insurance proceeds; one way to minimize the threat is to create an irrevocable life insurance trust ("ILIT"). More >
