The dynasty trust carries on generation after generation, providing assets and avoiding federal transfer taxes for as long as the assets remain in trust. In addition, the assets in the dynasty trust have asset protection.

“Asset protection” means that trust assets can’t be taken by the creditors, divorcing spouses, disgruntled business partners, bankruptcy court, medical bill creditors, or any lawsuit creditors of any of the beneficiaries….forever…so long as the assets remain in trust.

Federal Transfer Taxes Eliminated

The financial savings of avoiding the federal estate tax and generation skipping taxes is tremendous; this is how wealthy families maintain and build their wealth. Instead of the assets being sliced in half by taxation with each generation, they grow and grow and grow. Compounding.

Asset Protection Granted

Assets in the dynasty trust are only available for the trust beneficiaries, not their creditors. Likely, assets can be used for beneficiaries’ health, education, maintenance, and support; although, on occasion, different distribution terms are included. The trust itself will provide specific direction. The trust will, specifically, state that the assets cannot be assigned to creditors.

Trustee Required

Although it has been commonplace for beneficiaries to be named as the trustee of their own trust share, this is short-sighted. If a beneficiary is the sole trustee of his or her own trust share, the court can order the trustee/beneficiary to release the assets. Instead, a co-trustee should be named to serve with the beneficiary/trustee, if the beneficiary is to serve at all.

Funded with Life Insurance

Dynasty trusts are often funded with life insurance. Consult with a qualified estate planning attorney to determine whether a dynasty trust fits into your customized estate plan.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

You need umbrella liability insurance and you need it now. No kidding. If you are not properly insured, all of your estate planning  and hard work is for nothing because your assets can be taken in a lawsuit. Think you won’t get sued?  Some attorneys observe that if you haven’t been sued yet, you haven’t lived long enough.

What is Umbrella Liability Insurance?

Umbrella liability insurance (aka “personal catastrophic insurance”) raises the coverage of your car and homeowners/renters insurances.

Like an umbrella, the insurance sits on top of your other policies, drastically raising the coverage. If you buy a $1 million of coverage, your underlying policies are both raised to $1 million. If you buy $5 million of coverage, your policies are raised to $5 million.

Does Umbrella Liability Insurance Cost A Lot Of Money?

Surprisingly, this insurance coverage is inexpensive. While you have to purchase a certain level of underlying insurance, the umbrella liability insurance is inexpensive. For example, $1 million of coverage costs under $200 per year. It’s a lot of bang for your buck.

How Do I Get Umbrella Liability Insurance?

Call your property and casualty (homeowners/renters/auto) agent. All you have to do is sign the applicable form and you’re covered. (You need separate coverage for your business.)

Umbrella liability insurance is part of any comprehensive estate plan. If you have questions about protecting your assets and this insurance, consult with a qualified estate planning attorney.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

“Crummey” is actually a man’s last name; his estate planning case made headlines.  Making headlines, for estate planning matters, is rarely a good thing.  However, thanks to Dr. Crummey, we all, estate planning attorneys and clients, alike, benefit.

What’s a Crummey Notice?

A Crummey notice is used to transform what would otherwise be a future gift into a present gift.

Okay, we know that sentence makes no sense to non-lawyers.  We’ll try again; a Crummey notice saves you a lot of money that would otherwise go to pay taxes.

Bottom line:  Crummey notices save you and your family money!!

When are Crummey Notices Used?

Crummey notices are used when money is put into a life insurance trust.  Usually, this is once a year.

Who Gets a Crummey Notice?

The beneficiaries of the life insurance trust receive the Crummey notices.

What does a Crummey Notice Say?

A Crummey notice says, “A gift has been made to a trust of which you are the beneficiary.  You have the right to take out xxx dollars for the next 30 days.”

Do I Take the Money Out? 

No, whoever named you as the beneficiary and his or her attorney will likely explain to you that it is in your best interest to leave the money in the trust.  The money will be used to make life insurance premium payments of which you are a beneficiary.

Life insurance trusts and their Crummey notices are commonly used to save federal estate taxes, generation skipping taxes, and gift taxes.  Consult with a qualified estate planning attorney to learn whether this would work for you.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

When creating your estate plan, you will be forced to make many planning decisions including insurances.   You will consider various forms of insurance.   Take a look at some of the information below to better understand the importance of obtaining the right kinds of insurance.  If you have any questions, or if you need help selecting an insurance policy or creating an estate plan, speak with an estate planning attorney.

Life insurance – This type of insurance can allow you to provide for your loved ones, even if you are unable to do so with your current assets.  The life insurance proceeds can be used to provide care to your family, pay future expense, and past debts. It’s important to purchase enough life insurance, so that your loved ones are always protected.

Life insurance is also used to create an estate, pay federal estate taxes, create an inheritance, equalize inheritances, and fund a buy-sell agreement.

Homeowner’s insurance – Many people don’t take the time to consider what would happen if they were to lose their home.  A good homeowner’s insurance policy will protect you against damage to your home.  This includes consider enough coverage for repairs and complete loss.  Include coverage for replacement of contents, temporary living costs if your home is unlivable, and liability in the event someone is injured on your property or bitten by your dog.

Long term care insurance – This type of insurance can cover the costs of your future long term care needs.  Long term care continues to be more expensive each year.  You want to make sure that you have a plan in place so that you’re financially able to get the care that is needed. Each policy is unique so that you’re able to find the right policy that meets your individual care needs.

When you are updating or creating your estate plan, also consider disability and umbrella insurances.  If you live in a geographically fragile area, consider applicable insurances such as earthquake and wind and hail.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.

When you make a plan for your estate, you may opt to buy a life insurance policy that can help you in a variety of ways. Life insurance can help you achieve several financial and emotional objectives.

Benefits of Life Insurance

Life insurance can:

• Help your family meet financial requirements, since the insurer usually offers replacement of lost income.
• Provide liquidity to your family, helping them meet immediate costs, like medical bills and funeral expenses, and pay off debts.
• Provide peace of mind from knowing your family will be financially secure.
• Help you divide and distribute your estate among your loved ones in an equitable manner.
• Reduce and even eliminate gift and estate taxes.
• Form an integral part of an estate plan.
• Make certain estate planning options more effective, specifically those that come into effect only if you outlive a specific period. Your life insurance policy can in that case provide cash to cover additional taxes.

You can also use life insurance to reposition your assets. For example, if you do not need some of the funds in your IRA or 401k to cover living expenses during retirement, you can take out cash, pay income tax due, and invest the remainder in a life insurance policy.

If you purchase the life insurance policy under the name of an Irrevocable Life Insurance Trust, the proceeds of the policy will go to your loved ones after your demise and they will not have to pay any estate and income tax on those proceeds. You can also transfer an existing policy to a Life Insurance Trust but you will need advice from an experienced estate planning attorney to help with this process to insure it gets completed correctly.

Duffy Law Office is a member of the American Academy of Estate Planning Attorneys.