Dan Morris 2013-09-19 00:56:11
Leaving a Legacy Should Not be Difficult Dan R. Morris is the senior partner of Morris, Hall & Kinghorn. Since 1970, his private practice has focused on estate planning, business planning, real estate and corporate law. Morris earned his Juris Doctor from the University of Arizona. He is admitted to practice law before the U.S. Supreme Court, the 9th Circuit Court of Appeals, the U.S. Tax Court and the state and federal courts of Arizona. For more information, call (888) 222-1328 or visit www.morristrust.com. Do I need a trust? This is a question we have heard many times. Rather than describe who needs a trust, I will share two stories with you about what happens when a person dies without a trust. These examples can help you determine whether a trust would be beneficial for you. I share with you the stories of two single women at different stages and with different circumstances in their lives. Each gives a good perspective as to how proper planning can allow even a modest estate to leave a legacy. The first story is about a single mother named Jennifer. Jennifer has two daughters, both of whom are under the age of 18. Jennifer had a will prepared that gave her estate to her daughters equally at her death. The will was properly prepared and simple in its instructions. She had a life insurance policy worth $100,000, as well as $40,000 of equity in her home. Unfortunately, Jennifer developed cancer and died while the girls were still under the age of 18. The grandmother was nominated as the personal representative of the estate and was selected to be the guardian of the minor granddaughters. Several issues arose in this case, which created the need for three separate legal proceedings in order to administer the estate. The estate, unfortunately, could not afford the mortgage payments on the house, thus causing a probate proceeding. Also, because the children were under 18, a guardian had to be assigned for each of them. Even with a minimum fee of $2,500 for each proceeding, including the court costs, the total cost was $7,500. In most cases the costs are much higher. In the end, each daughter would receive $70,000 when they turned 18. The will did not list any restrictions as to how the money could be used or what it could be used for. The money paid to the first daughter at age 18 lasted only 60 days before it had all been spent. No education was obtained and there was no money left. The other daughter chose to wait until she was 19, but still was not cautious enough with the funds and did not use them toward her education or for prudent investments. Now let’s take a look at the next scenario. It is about Tina, who is a mother of one son and grandmother to three granddaughters. Tina had a modest estate consisting of a home with a value of $140,000 and a small life insurance policy worth $10,000. She also had a will, which left everything to her son, who was also listed as the personal representative. Very sadly, Tina’s son preceded her in death and she never updated the will. This left the three granddaughters as the beneficiaries of the estate, and two of them were under 18. Yet again, there would be a probate and two guardianship proceedings. Approximately the same costs were incurred in the legal proceedings as for Jennifer’s family. In addition, however, annual reports were required of the guardian until the last two granddaughters turned 18. Would a simple living trust have made a difference to the beneficiaries in these two situations? Would it have improved their situation and helped them have a better future? The answer is a resounding yes! Every parent wants the best for their children, and with a living trust they can help ensure their children have help even after they’ve passed on. Jennifer and Tina could have dictated the ways that the funds needed to be distributed and could have spread distributions out - preventing a young adult from spending the funds immediately. Parents can dictate that certain funds are required to go toward a college education. They can choose to have funds set aside for the purchase of a home. Perhaps they wish to have a portion of funds go to the care of a grandchild. There are so many options that a parent can use to make certain that the funds they provide to their children are used wisely to help support them and to give them a better future. Leaving a legacy for your loved ones is one of the greatest gifts you can give to them, and it doesn’t have to be difficult. In fact, a living trust can make the process simple and give you peace of mind knowing your loved ones are provided for even after you have moved on. The greatest gift of today is providing security in the future for those you love!
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