It was a reasonable question. The article described a provision buried in the One Big Beautiful Bill that tax lawyers and accountants are calling a double taxation problem for trusts. They found it in a footnote of a Congressional tax guide released after the law was signed.

The answer to her question: it might. Here is what we know right now.

What the Law Was Supposed to Do

When the One Big Beautiful Bill was signed, the headline for families was the estate tax exemption increase. Starting in 2026, the exemption rises to $15 million per person, or $30 million for a married couple, with no scheduled sunset. For families who had been watching that number, it is genuinely good news.

That provision got covered everywhere. A second one didn’t.

The bottom line: The exemption increase is real and it matters for some families. But buried in the same law is a provision that affects a much broader group, including families with modest trusts they built for very practical reasons.

The Provision Buried in the Footnotes

The One Big Beautiful Bill imposed a new deduction limitation on high-income individuals. The rule caps how much certain taxpayers can benefit from deductions once they reach the top income tax bracket.

What tax lawyers and accountants discovered is that this limitation now appears to apply to trusts and estates as well.

Here is why that matters. Trusts hit the top income tax bracket far earlier than individual taxpayers do. In 2026, the 37 percent rate kicks in for a trust at approximately $16,000 in taxable income. For a single individual, that same rate does not apply until income exceeds $640,600.

So a modest family trust generating $16,000 in income is now potentially subject to the same limitation designed for the country’s highest earners.

The consequences are specific. Historically, when a trust distributes income to a beneficiary, the trust deducts that distribution and the income is taxed once, at the beneficiary level. Under this new provision, that may no longer be the case.

Here is how the math works. The One Big Beautiful Bill caps the deduction benefit for taxpayers in the top bracket at 35 cents per dollar instead of 37 cents. That same cap now appears to apply to trusts. Consider a trust obligated to distribute $370,000 in income to a surviving spouse. Under the new limitation, the trust may only be able to deduct $350,000 of what it distributed. The trust owes tax on the remaining $20,000,  even though the spouse is also paying tax on the full $370,000 she received. To cover that bill, the trust either dips into its principal or goes back to court to reduce what it pays her. Neither is what the trust was built to do.

The bottom line: A provision most families have not heard about may be creating a double taxation problem inside trusts that were working exactly as intended before the law changed.

Who This Affects

This is not only a problem for large estates. The advisors raising this alarm are specifically calling out families with modest trusts.

One wealth advisor told CNBC: “This is something that is going to affect somebody with a $400,000 special needs trust. It’s not just going to be something that $100 million dynasty trusts suffer with.”

Special needs trusts. If you have a child with a disability and a trust designed to protect their government benefits, that trust may now face this limitation. The trust may owe taxes on income it distributed to your child, while your child is also paying taxes on that same income.

Trusts for a surviving spouse. Many families set up trusts to provide income to a surviving spouse while preserving the principal for children. If that trust is obligated to distribute its income, it now faces a real problem: it may owe tax on income the spouse already paid tax on, and paying that bill means either selling assets or going back to court to reduce her distributions.

Life insurance trusts. Irrevocable trusts holding life insurance policies are a common planning tool. If that trust generates taxable income, the new limitation potentially applies.

The common thread is any trust that distributes income to someone who depends on it. The trusts most immediately at risk are those obligated to distribute their income such as QTIP trusts for surviving spouses, special needs trusts, and irrevocable life insurance trusts that generate taxable income. Trusts with more distribution flexibility may have more options depending on how Treasury guidance ultimately lands.

And the provision applies to income generated in 2026, meaning for some families, this is already in motion.

The bottom line: If you have a trust that distributes income to a beneficiary, this provision may affect how that trust performs. The families most at risk are the ones whose trusts were built to take care of someone: a child with a disability, a surviving spouse, a dependent who relies on those distributions.

What We Know and Don’t Know Yet

This provision comes from a footnote in the Joint Committee on Taxation’s Bluebook, which is Congress’s own explanation of the law. It is not the law itself. Treasury Department guidance could resolve the double taxation concern or clarify which trusts are affected and how.

Advisors who follow this closely are hoping for that guidance. They are also planning as if it may not fully resolve the issue.

“We hope for the best but plan for the worst,” one tax attorney told CNBC.

What is clear: the provision applies to this tax year. Waiting for certainty before acting is not a neutral position if your trust is already generating income that may be subject to it.

The bottom line: Guidance from the Treasury could clarify or reduce the impact. It has not arrived yet. Planning now, before the end of the year, is the responsible choice. I am monitoring Treasury Department guidance closely. When that guidance arrives, I will follow up with every client whose trust may be affected. That guidance may resolve the concern for family trusts entirely, limit it to charitable giving, or confirm the double taxation issue across the board. You will not have to chase me for the update.

What You Can Do Right Now

If you have a trust, this is the moment to make sure it is still working the way you intended.

That starts with understanding what kind of trust it is, what income it generates, and who depends on its distributions. Some trusts can be restructured. Distribution strategies can sometimes be adjusted. In some cases, a different approach serves the original goal better under the new rules than the current structure does.

What I can tell you is that the families who built their trusts did so for real reasons: to protect a child with a disability, to provide for a surviving spouse, to make sure the right people have what they need when they need it. The new law does not change those goals. It raises the question of whether the structure you chose to achieve them still gets you there.

When I work with families on this, we look at the full picture: the trust itself, what it holds, who it benefits, and how the new rules interact with the way it was set up. That is exactly the kind of conversation a Legacy Vision Planning Session is built for.

This is not a one-size-fits-all review. Your trust was built for your family’s specific reasons, and that is how we look at it.

The relationship doesn’t end when the documents are signed. When something happens, your family knows to call me.

If your trust has not been reviewed since the One Big Beautiful Bill was signed, that review is overdue.

Schedule a complimentary Legacy Vision Planning Session and let’s make sure your trust is still doing what you built it to do:

The post The New Tax Law and Your Family’s Trust: What to Know Now appeared first on Law Office of Ruby Steinbrecher.

As a quick refresher, a “testamentary trust” is created in your will and only comes into existence after your estate goes through probate. As a result, your  family could wait many months, and sometimes even years, while the court oversees the process of probating your will and establishing your trust. If your objective is to keep your family out of court, and have total privacy after your incapacity or death, a testamentary trust won’t accomplish that.

A living trust, created during your life, and properly “funded” will keep your family out of court, provide the privacy you likely want for them, and generally make things a lot easier for the people you love, when something happens to you. 

In this article, I’ll explain how living trusts provide those  benefits, help you weigh the tradeoffs between the two  approaches, and explain how to be your own best advisor, and make informed decisions.

How a Living Trust Works 

A living trust, often called a revocable living trust, is created and funded while you’re living and have legal capacity to make decisions. You transfer ownership of your assets into the trust now, naming yourself as the initial trustee. This means you maintain complete control during your lifetime. You can buy property, sell property, change investments, and manage everything exactly as you did before. The trust doesn’t restrict you in any way.

The trust agreement includes detailed instructions about what happens to trust assets when you die or if you become incapacitated. Within the trust agreement, you will name a successor trustee, the person who will take over management of the trust assets when you can no longer serve as trustee. You specify who receives trust assets, when they receive them, and under what conditions. All the protective provisions you might include in a testamentary trust can be included in a living trust.

Here’s the crucial distinction between a living trust and a testamentary trust: when you die or if you become incapacitated and cannot make decisions for yourself, the living trust already exists and already owns your assets. Your successor trustee doesn’t need court permission to begin managing trust property. There’s no probate filing. No waiting for court approval. No public disclosure of your assets or beneficiaries. The successor trustee simply follows the instructions you’ve provided in the trust agreement.

This means your family avoids the delay, expense, and public exposure of probate court. Your trustee can immediately pay bills, manage property, and begin distributing assets to your beneficiaries according to your timeline. If you’ve included provisions protecting your children’s inheritance until they reach a certain age, those protections start working immediately. Your family gets the benefit of your planning right when they need it most.

The living trust also provides protection if you become incapacitated before you die. If illness, injury, or cognitive decline leaves you unable to manage your own affairs, your successor trustee can step in and handle things for you without requiring your family to go to court for guardianship proceedings. Your chosen successor simply steps into the role you’ve defined for them.

However – and this is critically important – living trusts only control assets that are actually transferred into the trust. In the world of estate planning lawyers, we call this  “funding” the trust, and it’s a crucial step many people overlook, even when working with a lawyer. If you create a living trust but never change the title on your house or retitle your bank accounts, then those assets aren’t protected by the trust. When you die, those assets will need to go through probate. The trust can only control what it owns.

This is why working with a lawyer who has systems and processes set up specifically for estate planning, and ideally Legacy Vision Planning, is so important. Creating a trust agreement is just the first step, and needs to be part of a full plan that covers all of your assets, ensures all of your assets are titled properly, all beneficiary designations are clarified and updated, and you are clear on how to keep everything up to date throughout the rest of your life. We have processes in our office for supporting just that. 

Now that you understand how both types of trusts function, the question becomes: which one makes sense for your specific situation?

Understanding the Real Tradeoffs

Why would anyone choose a testamentary trust if living trusts offer so many advantages? The main reason comes down to upfront effort and cost. Creating a testamentary trust is usually less expensive initially because you’re just adding provisions to your will. You don’t have to transfer assets into a trust during your lifetime. All that happens in the probate process after you die.

For some, the cost of probate might not be substantial enough to justify the upfront expense of creating and funding a living trust. Others aren’t concerned about the probate process at all. 

But consider the hidden costs your family will face. Even a simple probate proceeding typically costs several thousand dollars in legal fees and court costs. The process usually takes at least months, and often years. Your family must handle this while they’re grieving, gathering documents, communicating with attorneys, and dealing with ongoing stress.

Compare that to the experience with a properly funded living trust. Your family meets with your successor trustee, who already knows what you wanted. They work together to handle immediate needs, notify beneficiaries, and distribute assets according to your wishes. The process is private, usually faster, and doesn’t require court oversight. For most families, this experience is far less stressful and ultimately less expensive than probate.

Consider your family dynamics as well. If you have family members who might contest your wishes, the public nature of probate can fuel disputes. Anyone can access probate files and see what you left to whom. A living trust keeps everything private, which can help minimize conflict.

In addition, consider your specific assets and their complexity. If you own real estate in multiple states, you’re facing probate proceedings in each state where you own property. A living trust holding all your real estate avoids this entirely. If you own a business, probate delays can harm business operations. A living trust allows seamless continuation of business management.

Understanding these tradeoffs helps clarify which approach makes sense for your situation. But you don’t have to figure this out alone. Work with an experienced attorney – who’s also your trusted advisor – who can walk you through your specific circumstances so you’re confident you’re doing the right thing by those you love.

How I Help You Create a Plan That Actually Works

As a Personal Family Lawyer® Firm, we don’t push everyone toward one type of trust. Instead, we start by helping you understand what will actually happen if you become incapacitated or when you die, based on the specifics of your family dynamics and your assets. We’ll walk you through the real costs, the real timeline, and the real experience your loved ones will face. Then we’ll help you evaluate what matters most to you and make an informed decision that fits your desires and budget.

If a living trust makes sense for your situation, we won’t just create the document and send you on your way. We’ll help you fund the trust properly, making sure assets are retitled correctly and nothing is overlooked. Then, we’ll make sure your plan stays up to date throughout your lifetime, and you have support when you need it throughout life.

Most importantly, we’ll be there for your family when you’re gone or if you become incapacitated. That ongoing relationship makes all the difference. Your loved ones won’t be left alone trying to figure out what to do. They’ll have a trusted advisor who knows you, knows your wishes, and can guide them when you can’t.

If you’d like this kind of care for yourself and the people you love, use this link to schedule a complimentary 15-minute discovery call to get started today:

The post Testamentary Trust vs. Living Trust: Part 2 appeared first on Law Office of Ruby Steinbrecher.

Both options use the word “trust,” which makes them sound similar. But the experience your family will have after your death depends entirely on which type you choose. More importantly, these different approaches serve different goals, and understanding what you’re actually trying to accomplish is the most critical part of making the right choice.(aka

In this two-part series, I’ll help you understand what each type of trust actually does and how to choose the approach that matches what matters most to you and your loved ones. Here in Part 1, let’s dive into what happens when you create a trust in your will and help you evaluate what you’re really trying to achieve. 

What Happens When You Create a Testamentary Trust

A trust created in your will, called a testamentary trust, only comes into existence after you die, and after your executor has navigated a court process to establish the trust. Your will might say something like “upon my death, I direct that my assets be held in trust for my children until they reach age 25.” This provision offers some protection by controlling when your children receive their inheritance. But it doesn’t keep your family out of court.

All wills must go through probate court. Therefore, when you die with a will containing trust provisions, your loved ones must go through probate before the trust can be created. This process typically takes months, sometimes years. While your loved ones wait for the process to unfold, your assets are basically frozen, potentially putting your loved ones in an unstable financial position. 

Here’s what the probate process looks like: 

• Your family must first locate your original will and file it with the probate court. 
• The court then officially appoints your named executor, who must notify all potential heirs and creditors of your death. 
• Your executor must gather all your assets, have them appraised, pay your debts and taxes, and prepare detailed accounting reports for the court. 
• Only after the court reviews and approves everything can your assets be distributed into the newly created trust, which must be approved by the judge.

Your family may also face significant costs. Probate involves court filing fees, legal fees, appraisal costs, and sometimes accounting fees. These expenses come directly out of your estate, reducing what’s left for your loved ones. In many states, attorney fees and executor fees are calculated as a percentage of your estate’s value. And because probate is a public court process, anyone can access information about what you owned and who you left it to.

Here’s what really matters: you’re essentially doing double the work to achieve the same outcome you could have accomplished with a living trust, but with added expense, a longer timeline, and far greater possibility for family conflict. You’re creating a trust that provides the same protections a living trust offers, but you’re forcing your family to go through an entire court process first. And that’s only part of the problem. Because a will only takes effect when you die, it also leaves a critical gap in protection while you’re still alive.

What a Will Can’t Do While You’re Still Alive

A will only takes effect when you die, which means it does nothing to protect you if you become incapacitated first. Most people rely on a Power of Attorney, or “POA,” to authorize someone to manage their finances if they’re unable to do so. But here’s the catch: a POA automatically ends the moment you die.

That creates a dangerous gap. The second you pass, your POA’s authority disappears — but your executor has no power either until the probate court officially appoints them. Accounts get frozen, bills go unpaid, and your family can’t touch a thing while they wait. A living trust eliminates this gap entirely. Because it exists right now, your successor trustee has uninterrupted authority to manage your assets through incapacity and seamlessly at your death — no court approval required, no delay, no financial limbo for your family.

All of this brings us to the most important question: what are you actually trying to accomplish? The gaps we’ve just covered – probate delays, frozen accounts, the POA cliff – aren’t inevitable. They’re the result of choosing a planning tool without first understanding your real goals.

What Are You Really Trying to Accomplish?

Before you can decide between a testamentary trust and a living trust, you need to get clear about what you’re actually trying to achieve. Most people know they want “a trust” because someone told them trusts are good planning tools. But trusts accomplish different things depending on how they’re structured.

Is your primary goal avoiding probate court? If keeping your family out of court matters to you, then how you create your trust makes a huge difference. A testamentary trust doesn’t avoid probate. A living trust does. If probate avoidance is your main concern, that answer alone might determine your choice to create a living trust.

Do you want to control how and when your beneficiaries receive their inheritance? Maybe you have young children, and you don’t want them inheriting everything at age 18. Both testamentary trusts and living trusts can accomplish these distribution goals. From a distribution control standpoint, both types of trusts can be structured identically. However, assets will not be available for your children during the probate process, so if availability is a concern for you, a living trust may be a good choice.

Do you want to protect your assets if you become incapacitated before you die? This is where the timing of trust creation makes a critical difference. A testamentary trust doesn’t exist until you die, so it offers no protection during your lifetime. If you become unable to manage your affairs, your family would need to pursue guardianship or conservatorship proceedings in court. A living trust, however, allows your chosen successor trustee to step in and manage things for you without court intervention.

Understanding your true priorities helps clarify which approach makes sense. If your goals center entirely on controlling distributions and you’re not concerned about probate costs or delays, then a testamentary trust might suffice. But if you want probate avoidance, incapacity protection, or immediate access to trust protections when you die, then the timing of when you create the trust becomes critically important.

Next week, in Part 2, I’ll explain how living trusts work and how to make the final decision about which approach fits your situation.

How I Help You Identify What Matters Most

As a Personal Family Lawyer® Firm, we don’t focus on the documents themselves because we believe documents are the byproduct of good planning. Planning starts with getting clear on what matters most, so our Legacy Vision Planning process starts with education and understanding during a Legacy Vision Planning Session. During your session, you’ll get clear about what would actually happen to your family when you die or if you become incapacitated. We’ll walk through the real costs, the real timeline, and the real experience your loved ones will face. Then we’ll identify your true priorities so you can make an informed decision and create the right plan for you.

Click here to schedule a complimentary 15-minute discovery call to get started:

The post Testamentary Trust vs. Living Trust: Part 1 appeared first on Law Office of Ruby Steinbrecher.

You signed a Power of Attorney (POA), named someone you trust, and filed it away with your important documents. You felt the quiet relief of having that handled. But here’s what most families don’t discover until they’re already in a crisis: a perfectly valid POA can be rejected by your bank, and there may be very little your family can do about it in the moment. What that means is that they would have to go to court to get access to your financial accounts, be able to pay your bills, and make financial decisions when you can’t. 

I’ve seen this happen far too often. I’ve gotten calls from clients’ adult children who are standing at a bank counter, valid POA in hand, being told the document is “too old” or that the bank has its own form. By the time anyone calls me, they’re in crisis mode, and the options are much more limited than they would have been six months earlier.

My job is to make sure that never happens to your family.

What I See When the Plan Isn’t Complete

Here’s the scenario I hear most often. A parent has a stroke. The adult child, named as an agent on a durable POA for years, goes to the bank to pay bills, cover care expenses, and keep the household running.

The bank says no.

Or: they need to send it to their legal department. Or: the document is too old. Or: they have their own form, and this one isn’t it.

The adult child has done nothing wrong. The document is perfectly valid under state law. And yet the family is completely stuck, during one of the worst moments of their lives.

This is not rare. I hear versions of this story far too often. Getting the bank’s legal department to accept the document can take two to four weeks, assuming it clears at all. The utility bills do not wait. The mortgage does not pause.

The bottom line: When I work with a family, I close this gap before a crisis arrives, not while one is happening.

Why Banks Push Back and What I Do About It

Banks aren’t acting in bad faith when they reject a valid POA. They have one concern: protecting themselves from liability. If they let the wrong person access an account based on a forged or revoked document, they can be sued. And once the account holder has lost capacity, there is no one left for the bank to call to confirm the agent is who they say they are. So they err on the side of caution. Sometimes extreme caution.

Here’s what I do with every client to reduce or eliminate this risk:

1. Register the POA with the bank now, while you can still confirm it. I go with clients, or walk them through the process of bringing the POA to every bank while the account holder is alive and capable. The bank reviews it, places it on file, and there’s a record. When a crisis happens later, the document is already known. This one step eliminates the most common friction. If a compliance officer raises a question, you are there to answer it rather than your adult child during a crisis.
2. Use the bank’s own forms. Many large institutions, including Chase, Fidelity, Vanguard, and Schwab, have their own internal POA forms they prefer or require. I find out which institutions use proprietary forms and make sure we complete those alongside the attorney-drafted document. That gives your family two clean paths instead of one point of failure. It is one of the most practical protections I build into a plan.
3. Update the document on a regular schedule. Banks are more comfortable with recently executed documents. I build a review schedule into every plan so your POA doesn’t age into a liability. Every three to five years is a reasonable cadence. An aging document is not just a compliance risk: it is an invitation for a bank to say no at the worst possible time.
4. Make sure the durability language is explicit. A standard POA terminates the moment someone becomes incapacitated. That’s the opposite of what you need. I make sure every POA I draft or review includes clear durable language. If you have a document and you are not certain whether it is durable, that is worth a conversation before you need to find out.
5. Include specific banking authority. I name the types of acts your agent is authorized to perform: wire transfers, account closures, investment decisions. The more specific the authorization, the harder it is for a compliance officer to say no. Specificity is not about distrust. It is about giving every institution a clear reason to cooperate.

The bottom line: I don’t just draft the document. I make sure it works at every institution that holds your money.

What Happens When the Plan Is Already in Place

Here is what the first 24 hours look like for a family that has done this work.

The call comes. A parent has been hospitalized. The adult child named as agent does not go to the bank with a stack of documents and a knot in their stomach. They call me.

I already know the family. I know which institutions hold the accounts. I know whether the trust is funded and who the successor trustee is. The bank already has the POA on file: we registered it together when we last updated the plan. The investment accounts are held in the trust, so there is no POA question at all. The successor trustee has a clearer path to step in, and the bank has a familiar process to follow.

What can take two to four weeks of waiting, rejection, and escalation takes an afternoon.

The bottom line: That is the difference between a plan that exists and a plan that works.

The Solution I Recommend for Every Family

All of the above helps. But there’s an approach that sidesteps the problem entirely, and it’s the reason most families I work with choose to create, and fund, a revocable living trust rather than relying on a POA.

When your assets are held in a trust, the trust owns those accounts, not you as an individual. The bank’s relationship is with the trust, not with any particular person. When the original trustee becomes incapacitated, the successor trustee steps in. There is usually far less friction with the bank. No waiting period. No question about whether the document is “too old.”

Banks understand trusts. They have clear, well-established procedures for working with trustees. The framework is familiar and legally unambiguous in a way that a POA during incapacity simply is not.

I still include a POA in every plan. It covers assets outside the trust, interactions with government agencies, and situations a trustee cannot handle. A separate healthcare directive covers medical decisions. But for the core problem, the one that leaves families stranded at a bank counter on a Tuesday afternoon, a funded revocable trust is the most reliable tool in the plan.

The bottom line: A POA is a necessary document. It is not, by itself, a complete plan. And the difference between those two things is exactly what I’m here to help you see. That is what a Legacy Vision Plan® is designed to make sure of: not just that the documents exist, but that everything is in place and will actually work when your family needs it.

What I Do Before You Ever Need This Plan to Work

The work I do with clients on this is not just about drafting documents. It’s about testing the plan before it’s needed.

I check whether the POA has been registered at each institution, confirm that trust assets are actually titled in the trust name, and schedule a review before the documents age into a problem. A trust that hasn’t been funded isn’t protecting anything.

The families whose plans held up called before the crisis. The ones who call after are the ones I wish I had reached sooner.

The bottom line: My job is to make sure you’re in the second group, not the first.

What You Can Do Right Now

If you already have a POA, here are three things worth doing this week:

• Call your bank. Ask whether they have a preferred POA form. If they do, let’s get it completed.
• Check the date. If your document is more than five years old, let’s talk about updating it, even if it’s technically still valid.
• Ask whether key accounts are held in a trust. If they are not, that’s the most important conversation we can have.

If you’re not sure whether what you have will actually function when your family needs it, let’s find out together.

As your Personal Family Lawyer®, I don’t just create documents. I don’t create one-size-fits-all plans. I make sure the plan I build with you will actually work when the people you love need it to. That means testing it against the real institutions holding your money and making sure every gap is closed. That’s what a Legacy Vision Plan is designed to do.

Schedule a complimentary 15-minute discovery call and let’s find out where your plan stands:

The post The Document That Fails When You Need It Most appeared first on Law Office of Ruby Steinbrecher.

You spend a lifetime working, saving, and building a life for the people you love. Yet research shows that an estimated 70% of wealthy families lose their wealth by the second generation, and around 90% lose it by the third. 

That kind of loss usually is not just about bad investing. It is about something deeper: no shared purpose, no shared story, and no shared plan.

In this article, you learn:

• What a family mission statement is (and is not).
• How it works together with your legal planning to protect both money and relationships.
• Simple steps to start your own family mission statement, even if you are not ultra-wealthy.

Why Money Alone Won’t Hold Your Family Together

Most people believe that if you leave “enough” money and the right legal documents, your work is done. Unfortunately, real life doesn’t work that way.

Research on failed wealth transfers shows that most family wealth disappears because of breakdowns in communication, lack of trust, unspoken expectations, and heirs who are unprepared for responsibility. That’s the human side of planning – the part most people never talk about. Instead, we tend to focus on the documents – a will, trust, power of attorney, and health care proxy. We don’t stop to consider that there are humans involved.

But this is where conflict often begins. Adult children may have different interpretations of your intentions. A surviving spouse may feel overwhelmed without guidance. Siblings may not agree on how assets should be used or what “fair” really means. Even in loving families, grief can magnify old wounds, create misunderstandings, and lead to decisions made from fear rather than clarity.

A family mission statement cannot prevent every disagreement, but it gives your loved ones an anchor: a shared understanding of why your resources exist and how you hope they will be used. When you pair that shared purpose with an estate plan that keeps your loved ones out of court and out of conflict, you dramatically increase the likelihood that your wealth and your relationships stay intact for generations.

Turning Your Estate Plan into a Family Playbook

A family mission statement is a short written declaration of your family’s values, purpose, and goals around life, money, and legacy. It is not a legal document, and it does not replace your will or trust. Instead, it gives context and direction to the legal plan you create.

Think of it this way. Your legal documents say what happens to your assets. Your family mission statement explains why and how you hope those assets are used.

My estate planning process is built around this idea. The goal is not to merely create a set of documents. The goal is to create a plan that actually works for the people you love when you cannot be there. That includes:

• A complete inventory of what you own, so nothing is lost or forgotten.
• Clear instructions about who does what, and how to get help.
• Regular reviews so your plan keeps up with changes in your life, the law, and your assets.

Your family mission statement sits right alongside all of this. Here is how it can support your plan:

• For blended families, it can clarify your intention to care for children from prior relationships and a current spouse, so no one is left guessing.
• For young adult children, it can explain why their inheritance may be held in trust, or why distributions are tied to education or work, helping them feels supported rather than controlled.
• For all families, it offers a shared “north star” you can revisit at family meetings, during life and after a death or incapacity.

When clients work with me, I help them see what would happen to their assets and their loved ones if they become incapacitated and when they die, and then design a plan that reflects their values, goals, and family dynamics. The family mission statement becomes part of that conversation.

Once you understand how these pieces fit together, the next step is to put your mission on paper in a way that feels real and usable, not stiff and corporate.

Simple Steps to Create Your Own Family Mission Statement 

You do not need $50 million, a private banker, or a formal “family office” to benefit from a family mission statement. You only need a willingness to be honest about what you care about and a bit of time to talk.

Here is a simple way to start:

Identify your core values.

Set aside time and list the words that matter most to you: things like generosity, learning, faith, adventure, service, or stability. Ask yourself: If my children remembered three things about what I stood for, what would they be? 

Connect values to money.

For each value, write how you want money to support it. For example:

• If you value education, maybe you want resources set aside for school, training, or starting a business.
• If you value family time, perhaps you want to fund annual trips or reunions instead of more “stuff.”
• If you value generosity, maybe you want to support specific causes or encourage your children to give a percentage of their own income.

This is where your mission starts to shape how your trust, beneficiary designations, and overall plan are designed.

Write a rough draft.

Aim for three to six sentences. Use simple language. For example:

“In this family, life is a gift and relationships matter most. Money exists to support education, meaningful experiences, and generosity, not to create entitlement. We work hard, care for one another, and use what we have to make life better for the people we love and the communities we touch.”

Your statement will be your own, but it should feel truthful enough that you are willing to read it out loud to the people you love.

Share it in a family meeting.

The real power of a family mission statement is in the conversation, not just the words. Consider inviting your spouse, partner, and adult children to a simple “family meeting” over dinner or on a weekend afternoon. Share your draft, ask for their reactions, and invite their input. The goal is not to have a debate, but to create connection and understanding.

Tie it back to your legal plan.

Once you have a mission statement, create or update your estate plan. I can help you look at whether your current plan, or the plan you still need to create, actually reflects your mission. If your mission says “family comes first,” but your legal plan leaves your family to fight it out in court, something needs to change.

Over time, you can revisit your mission statement during regular family check-ins, or when you review your plan if you work with me. Regular reviews are so important because over time, your family will change and your mission will evolve. But by having it written down and connected to a plan that works when you and your loved ones need it to, you give your loved ones a roadmap they can follow long after you are gone.

How I Can Support You

You work too hard for your wealth to disappear within a generation, and you care too much about your family to leave them with confusion, conflict, or a court process they have to face alone.

A family mission statement is an excellent start, but it only reaches its full power when you pair it with a Legacy Vision Plan that keeps your family out of court and out of conflict, and gives your loved ones a trusted advisor to turn to when something happens.

If you are ready to align your money, your legal planning, and your deepest values, I invite you to schedule a 15-minute discovery call. During this complimentary call, you can ask questions, learn about my process and flat-fee options, and decide whether a Legacy Vision Plan is right for you and the people you love.

The post Why Your Family Needs a Mission Statement appeared first on Law Office of Ruby Steinbrecher.

This scenario plays out in homes across America every day. With an estimated $90 trillion in assets transferring from Baby Boomers and the Silent Generation to their heirs over the next two decades, families face not just financial inheritance but a staggering amount of physical possessions to sort, distribute, donate, or discard. Without guidance from you, your loved ones will spend months or even years trying to figure out what matters, what has value, and what you would have wanted them to do with it all.

Not only that, personal belongings are the number one source of conflict when someone dies. It’s not the bank account, the house or the insurance. It’s the “stuff.” The personal items that carry emotional or sentimental value matter the most to loved ones.

The good news? You can prevent this overwhelming situation through thoughtful planning today. In this article, you’ll learn how to organize your belongings, communicate your wishes, and create a plan that protects your family from drowning in stuff while preserving what truly matters.

Why Your Possessions Need a Plan Too

Most people think estate planning only covers financial assets like bank accounts, retirement funds, and real estate. But your estate includes everything you own, from your grandmother’s engagement ring to that collection of vintage records in the basement. Without clear direction about your personal property, you’re setting up your family for confusion, conflict, and countless hours of difficult decisions during an already painful time.

Consider the emotional weight your loved ones will carry. They’ll open every drawer wondering if they’re throwing away something important. They’ll argue over who gets mom’s jewelry or dad’s tools. Family relationships can fracture over items that have more emotional significance than monetary value, simply because no one knew what you wanted.
Sorting through a lifetime of possessions typically takes three to six months of intensive work. Your family will need to take time off work, travel back and forth if they live out of town, and make hundreds of decisions about items they may have never seen before.

Beyond the time and emotional toll, there’s real financial risk. Without proper guidance, valuable items might end up in donation bins. Collections built over decades could be sold for pennies on the dollar because no one knows their true worth.

What about you? Have you walked through your home recently and imagined your children or other heirs trying to sort through everything? Have you considered which items hold stories they don’t know?

With proper planning now, you can spare your family this overwhelming burden and ensure your possessions become meaningful gifts rather than sources of stress and conflict.

Start the Conversation Before It’s Too Late

The best time to address your belongings is while you’re healthy and can actively participate in meaningful conversations about your possessions. Waiting until a health crisis or until you’re gone removes your voice from the process entirely.

Begin by identifying items with special significance. Walk through your home room by room and note anything with emotional value, financial worth, or family history. That china set might have been your great-grandmother’s wedding gift. Those tools might have belonged to your father. Document these stories now, while you remember them.

Next, have honest conversations with your family about what they actually want. Many people assume their children will treasure certain items, only to discover they have different lifestyles and preferences. Your formal dining room set might not fit in their smaller home. Rather than making assumptions, ask directly what holds meaning for them.

Consider creating a personal property memorandum as part of your estate plan. This document, which can be updated without redoing your entire will, lists specific items and who should receive them. Unlike trying to divide everything in your will, which becomes difficult to change, a personal property memorandum remains flexible as your possessions and relationships evolve.

These conversations may feel uncomfortable at first, but they’re essential for preventing future conflict and ensuring your wishes are honored.

Make It Easier By Doing the Work Now

Start with the items you’ve been saving. Those beautiful dishes in the cabinet deserve to be used and enjoyed, not preserved behind glass. Wear the jewelry, use the silver, display the artwork. Create memories with your possessions instead of relegating them to storage.

Sort systematically by creating four categories: keep and use, give away now, designate for specific people, and dispose of. The “give away now” category is particularly powerful because you can see the joy your possessions bring to others during your lifetime.

For items with potential value, get proper appraisals. Collections of coins, stamps, antiques, or art should be professionally evaluated. Document the appraisal and include it with your estate planning documents so your family knows what they have and can make informed decisions.

Create an inventory of your items with stories or significance. A simple spreadsheet or notebook listing important items, their history, and their intended recipients can save your family countless hours of uncertainty.

Taking these steps now transforms what could be an overwhelming burden into a manageable process for your loved ones.

How Comprehensive Estate Planning Protects Your Family From the Burden

Traditional estate planning often overlooks personal property entirely, focusing on documents that address only financial assets and real estate. But your possessions deserve the same careful attention.

Real protection for your family goes far beyond having a set of documents in place. Your loved ones need a comprehensive plan that considers both the legal aspects of transferring assets and the practical realities they’ll face after you’re gone. They need clear instructions about where to find important documents, how to access accounts, and what steps to take first. Most importantly, they need guidance about what to do with your possessions while they’re grieving and facing the legal process of settling your estate. Should they hold an estate sale? Donate to specific charities? Keep certain items together as a collection? These decisions are so much easier when you’ve provided direction in your plan rather than leaving your family to guess.

You can also document the stories behind your possessions in your estate plan, explaining why certain items matter, sharing the history behind collections, and passing along the memories associated with your belongings. When your family inherits your grandmother’s ring, they’ll also inherit the story of how she wore it every day and what it meant to your family. These stories transform possessions from “stuff” into cherished connections to your memory.

Finally, review and update your plan regularly as your life and assets change. This ensures your plan will work over time and won’t fail your loved ones when they need it most.

How I Can Support You

Your possessions represent your life story, but without proper planning, they can become an overwhelming weight for your family. The choices you make now and the conversations you have today will make all the difference in how your family experiences your legacy.

I help you create a comprehensive Life & Legacy Plan so that your loved ones stay out of court and conflict and have a plan that works when they need it. Once you’ve created your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your assets protected. I’ll also touch base regularly to ensure your plan stays updated over time, taking the burden off your shoulders to make changes to your plan when needed. After all, you have enough to worry about each day.

Don’t wait until it’s too late. Click here to schedule a complimentary 15-minute discovery call.

The post What Happens to All Your Stuff When You Die? (And Why Your Family Is Dreading It) appeared first on Law Office of Ruby Steinbrecher.

The Hidden Risk of Trust Ownership

When you transfer your home into a trust, you change its legal ownership structure. While you might still live in the home and act as the trustee, depending on how your trust is structured, the trust becomes the legal owner of the property. If your trust is a revocable trust, this change of title won’t impact your taxes because you are still the owner for all tax purposes, but this title change could give your homeowner’s insurance company a reason to deny your claim. And, whether that denial turns out to be valid or not, or could be contested in a court proceeding against the insurance carrier, you don’t want to have to deal with any of that. 

Insurance companies base their coverage decisions on legal ownership. If there’s a mismatch between the property’s legal owner and the named insured on your policy, the insurer might deny your claim. Imagine discovering after a major fire that your insurance company denies your claim because your policy doesn’t reflect your trust ownership. This nightmare scenario happens more often than you might think, but it’s easily avoidable with proper planning.

Aligning Your Insurance with Your Trust

The solution starts with notifying your insurance company as soon as you transfer your home into a trust. Most insurance companies are familiar with trust ownership and can easily update your policy to reflect this change. They typically handle this by adding the trust as an additional insured party or including a trust endorsement on the policy.

When updating your policy, consider these key elements:

Property Coverage: Ensure the policy’s replacement cost accurately reflects current building costs in your area. Construction prices have soared recently, and many policies haven’t kept pace.

Liability Protection: Your policy should protect both you personally and the trust from liability claims if someone is injured on your property.

Additional Structures: Don’t forget to include coverage for detached garages, workshops, or other structures on your property under the trust’s ownership.

Most insurers make these updates with minimal or no additional premium costs, but the protection they provide is invaluable. This small administrative task could save you hundreds of thousands of dollars if disaster strikes.

Common Mistakes That Put Your Property at Risk

When disaster strikes, homeowners find out too late that they weren’t fully protected. But you can protect yourself if you’re aware of the most common pitfalls:

Delayed Notification: Many people wait months or even years to inform their insurance company about the trust transfer. During this gap, they’re paying for insurance that might not protect them. Instead, notify your insurance company as soon as you create or update your trust.

Incorrect Trust Names: Insurance policies must list the trust’s exact legal name. Even small discrepancies could cause problems during a claim. If your trust is “The Johnson Family Living Trust dated January 15, 2025,” that’s exactly how it should appear on your insurance policy.

Overlooking Policy Reviews: Your insurance needs will change over time. Regular reviews ensure your coverage keeps pace with your home’s value and your family’s needs.

Multiple Property Confusion: If you own multiple properties in trust, each property’s insurance policy must correctly reflect the trust ownership. Don’t assume that updating one policy covers all your properties.

Creating a Comprehensive Protection Plan

Avoiding all these pitfalls is an inherent part of my comprehensive estate planning process called Legacy Vision Planning. If you have a DIY estate plan, a plan you downloaded from a cheap legal site, or even a plan drafted by a traditional estate planning attorney, you’ll get a set of documents, sure, but you won’t get a comprehensive plan that addresses all the potential consequences that arise. That’s why my Legacy Vision PlanningⓇ process includes:

• A current inventory of your assets so we can look at how your property is owned and what properties could be at risk;
• Regular, ongoing reviews of both your plan and insurance documents to ensure they remain synchronized. Major life events like marriages, divorces, or deaths in the family might require updates to both your trust and insurance policies;
• Guidance on how to accurately and fully transfer your assets to your trust; and
• Much, much more.

We Help You Protect What Matters Most

As your Personal Family Lawyer® Firm, I ensure your Life & Legacy Plan works as intended, including proper alignment with your insurance coverage. I’ll help you avoid costly mistakes and maintain comprehensive protection for your home and family. Our process includes regular reviews to keep your plan current and effective.

Don’t wait for a crisis to discover gaps in your protection. Contact me today to schedule a Legacy Vision Planning® Session, where together, we’ll review your current trust and insurance arrangements and ensure they work together seamlessly.

Click below to schedule a complimentary 15-minute consultation:

The post Trusts & Homeowner’s Insurance: What You Need to Know So You Don’t Get a Claim Denied In the Future appeared first on Law Office of Ruby Steinbrecher.

Think about it this way: Would you still wear the same clothes you bought ten years ago without checking if they still fit? Probably not. Similarly, your estate plan, including your trust, needs to be reviewed regularly to ensure it still “fits” your current life situation, assets, the law, and your wishes. Let’s explore why regular estate plan reviews are so crucial and how often you should be checking in on your plan.

Life Changes, and Your Trust Should Too

Life rarely stays the same for long. Since you created your trust, you’ve likely experienced changes in your personal and financial life. Each of these changes can impact how effective your trust will be in protecting your assets and providing for your loved ones.

Consider major life events like marriage, divorce, or the birth of children or grandchildren. These milestones fundamentally alter your family structure and potentially your wishes regarding who should benefit from your estate. For example, if you’ve recently welcomed a new grandchild, you might want to include them as a beneficiary. Or if you’ve gone through a divorce, you’ll likely want to remove your ex-spouse from your trust.

Your financial situation evolves as well. Perhaps you’ve purchased new property, started a business, or received an inheritance. These assets need to be properly incorporated into your trust. Otherwise, they may end up going through probate, defeating one of the primary purposes of having a trust in the first place.

Even changes in your relationships can necessitate updates to your trust. The person you appointed as successor trustee five years ago might no longer be the best choice. Without regular reviews, your trust may not accomplish what you intend, potentially leading to conflict among your loved ones or assets being distributed in ways you never would have wanted.

Laws Change, Even When Your Wishes Don’t

Even if your personal situation has remained relatively stable, the legal and tax landscape constantly evolves. These changes can significantly impact how your trust operates and its effectiveness in protecting your assets.

Tax laws, in particular, frequently change with new administrations and shifting political priorities. For instance, the Tax Cuts and Jobs Act of 2017 doubled the federal estate tax exemption, dramatically changing estate planning considerations for many families. If your trust was created before this change, it might contain provisions that are no longer necessary or beneficial under current law.

State laws governing trusts and estates also change regularly. These modifications can affect everything from how your trust is administered to the rights of beneficiaries. Without regular reviews, your trust might not take advantage of beneficial new laws or might run afoul of new requirements.

By reviewing your trust periodically, you can ensure it remains compliant with current laws and takes advantage of any new beneficial provisions. This proactive approach helps protect your assets and your loved ones from unexpected legal complications.

How Often Should You Review Your Trust?

Given the importance of keeping your trust updated, you might be wondering how frequently you should review it. While there’s no one-size-fits-all answer, there are some general guidelines that can help you determine the right schedule for your situation.

As a baseline, I recommend reviewing your trust every three to five years, even if you don’t think anything significant has changed. This regular schedule helps ensure you don’t overlook gradual changes that might have occurred in your life, your assets, or the law.

However, certain life events should trigger an immediate review, regardless of when you last updated your trust:

• Marriage, divorce, or the death of a spouse
• Birth or adoption of children or grandchildren
• Death of a named trustee, guardian, or beneficiary
• Significant changes in your financial situation
• Moving to a new state, as trust laws vary by state
• Major changes in tax or estate planning laws

The Consequences of an Outdated Trust Can Be Severe

Failing to review and update your trust regularly can lead to serious consequences that undermine your initial reasons for creating it. These consequences can range from financial losses to family conflicts that could have been avoided with proper planning.

One of the most significant risks is that assets you’ve acquired since creating your trust may not be properly funded into it. Trust funding—the process of transferring assets into your trust’s ownership—is crucial for avoiding probate. If you’ve purchased new property, opened new accounts, or acquired valuable assets without transferring them to your trust, these items will likely go through probate despite your efforts to avoid it.

An outdated trust can also lead to unintended beneficiaries receiving your assets. If you haven’t updated your trust after major life changes, your assets might go to people you no longer wish to benefit—or might not go to those you do want to include.

Family conflict is another potential consequence of an outdated trust. Unclear or outdated provisions can leave your loved ones arguing over what you really intended. These disputes can damage family relationships and lead to expensive, time-consuming litigation.

Tax consequences can also arise from an outdated trust. Changes in tax laws might mean your trust no longer minimizes estate taxes effectively. Without updates to address these changes, your beneficiaries might face larger tax bills than necessary, reducing their inheritance.

Finally, know that reviewing your trust doesn’t always mean you’ll need to make changes. Sometimes you’ll find that your current trust still perfectly reflects your wishes and circumstances. Even then, the review process is valuable for refreshing your understanding of your plan and giving you peace of mind.

Don’t Leave Your Family’s Future to Chance

Your trust is more than just a legal document—it’s a reflection of your care for your loved ones and your desire to provide for them even when you’re no longer here. By reviewing your trust regularly, you demonstrate that same care and foresight. You also save your loved ones from potential confusion, conflict, and costly legal proceedings during an already difficult time.

As your Personal Family Lawyer® Firm, I’m here to support you in this ongoing process. I understand that reviewing legal documents isn’t high on anyone’s list of favorite activities, but I work to make the process as simple and painless as possible, and build it into my own service ongoing, once we are working together. Don’t leave your family’s future to chance. Schedule a plan review with me today and ensure the plan you’ve created will work exactly as you intend when your loved ones need it most.

Book a call here to learn how to get started:

The post Why Reviewing Your Trust Regularly Isn’t Optional—It’s Essential appeared first on Law Office of Ruby Steinbrecher.

Indeed, proper estate planning is as much a part of responsible homeownership as having homeowners insurance or keeping your home’s roof well maintained. When it comes to including your home in your estate plan, you have a variety of different planning vehicles to choose from, but for a variety of different reasons, putting your home in a trust is often the smartest choice.

Although you should consult with us your Personal Family Lawyer® to identify the best estate planning strategies for your particular circumstances, in this two-part series we’ll discuss how trusts work (both revocable and irrevocable), and then outline the most common advantages of using a trust to pass your home to your loved ones compared to other planning strategies.

What Is A Trust?

In simplest terms, a trust is an agreement between the “Grantor” (the person who puts assets into the trust) and the “Trustee” (the person who agrees to hold those assets) to hold title to assets for the benefit of the “Beneficiary.” Now, when the trust is a Revocable Living Trust, this agreement is typically made between YOU as the Grantor, and YOU as the Trustee, for the benefit of YOU as the beneficiary.

Why would you want to make an agreement with yourself, to hold title to assets for yourself, for the benefit of yourself? Well, it’s because by doing so you remove those assets from the jurisdiction of the court in the event you become incapacitated or when you die, and instead, you give the power to transfer those assets to your successor Trustee to handle without government or court intervention and keep it all totally private. This saves your family significant time, money, and headache.

Types of Trusts

While there are numerous different types of trusts available, when it comes to passing your home to your heirs, the two most commonly used trusts are a revocable living trust and an irrevocable trust.

Revocable Living Trust

When using a revocable living trust, or living trust, you are free to change the trust’s terms or even terminate the trust completely at any point while you are living, thus the term “living” trust. You typically act as your own trustee during your lifetime, and then you name someone (and ideally more than one someone in succession) as a successor trustee to take over management of the trust when you die or in the event of your incapacity.

At that point, your successor trustee will be responsible for managing the assets, and eventually distributing the trust assets to your chosen beneficiaries according to the instructions contained within the trust’s terms. Because you remain in control of the assets held by a living trust, the assets are still considered part of your estate for estate tax purposes, and assets held in a living trust are not protected from your creditors or lawsuits during your lifetime. This is a very important and often misunderstood point.

A revocable living trust does not protect your assets from creditors or lawsuits, and it has no impact on your income taxes. That said, as long as the assets are held by a living trust, they can be protected from your beneficiaries’ creditors, lawsuits, and even a divorce settlement. More on this below.

The key benefit of a living trust is to pass your assets (including, and especially your home) without any need for court or government intervention, and to ensure your home (and other assets) pass in the way you want, to the people you want.

Irrevocable Trust

Unlike a revocable living trust, an irrevocable trust is (as the name implies), irrevocable. This means that the terms of the trust cannot be changed, and the trust cannot be terminated once it’s been executed. When you transfer assets into an irrevocable trust, you relinquish all ownership of the assets, and the trustee you have named takes total control of the assets transferred into the name of the trust. Because you no longer own the assets held by the trust, those assets are no longer considered part of your estate, and they typically won’t be subject to estate taxes upon your death, and they eventually will not be vulnerable to creditors or lawsuits, as long as the trust is properly constructed.

Although avoiding estate taxes and gaining protection from creditors and lawsuits may sound like a huge benefit, irrevocable trusts come with some serious restrictions and can be quite complex to set up. Because you no longer own the assets held in an irrevocable trust and generally cannot change the trust terms or terminate the trust once it’s been executed, putting your home in this type of trust should only be done with very clear and specific legal guidance by a lawyer who specializes in asset protection.

In light of these factors, if you are looking to set up an irrevocable trust in order to qualify for Medicaid, lower your estate tax liability, or for some other reason, meet with us to discuss your options.

Putting Your Home Into A Trust

For a trust to function properly, it’s not enough to simply list the assets you want the trust to cover. When you create your trust, you must also transfer the legal title of your home and any other assets you want held by the trust from your name into the name of the trust. Retitling assets in this manner is known as “funding” your trust.

Funding your trust properly is extremely important because if an asset, such as your home, hasn’t been properly funded to the trust, the trust won’t work, and your family will have to go to court in order to take over ownership of the property. Given this, it’s critical to work with us, your Personal Family Lawyer® to ensure your trust works as intended.

The Benefits Of Putting Your Home In A Trust

While both wills and trusts are the most commonly used estate planning vehicles to pass on wealth and other assets to your loved ones, putting your home in a trust has a number of distinct benefits compared to using a will.

Avoiding Probate

One of the primary advantages of using a trust to pass on your home to your heirs is the avoidance of the court process known as probate. Unlike a will, assets held in trust do not have to go through probate. During probate, the court oversees the will’s administration, ensuring your assets are distributed according to your wishes, with automatic supervision to handle any disputes.

However, probate can be a long and expensive process, which can be emotionally draining for your loved ones. Depending on the complexity of your estate, probate proceedings can drag out for months or even years, and your family will likely have to hire an attorney to represent them, which can result in costly legal fees that can drain your estate. Plus, probate is open to the public, which can make things risky for those you leave behind, especially if the wrong people take an interest in your family’s affairs.

Unlike a will, if your trust is properly set up and maintained, your family won’t have to go through probate to inherit your home. Instead, your home will immediately pass to your loved ones upon your death, without the need for any court intervention. Avoiding the delay of probate can be especially critical when it comes to a home to ensure the property is properly maintained, since the home may fall into disrepair while probate is being completed.

Finally, unlike wills, trusts remain private and are not part of the public record. So, with a properly funded trust, the entire process of transferring ownership of your home can happen in the privacy of your Personal Family Lawyer®’s office, not a courtroom, and on your family’s time.

Protection Against Incapacity

In addition to passing on your home to your loved ones when you die, putting your home in a trust can also protect your home in the event you become incapacitated by serious illness or injury. In contrast, a will only goes into effect upon your death, so it would be useless for protecting your home in the event you become incapacitated.

If you do become incapacitated with only a will in place, your family will have to petition the court to appoint a conservator or guardian to manage your affairs related to homeownership, including paying your mortgage and property taxes, keeping up with your home’s general maintenance, and overseeing the sale of your home. Like probate, the process of petitioning the court to appoint a conservator or guardian can be costly, time-consuming, and stressful.

And there’s always the possibility that the court could appoint a family member as a guardian that you’d never want to manage your family home. Or the court might select a professional guardian, putting a total stranger in control of your family’s most precious asset and leaving it vulnerable to crooked guardians, who could potentially sell your home for their personal financial gain.

With a trust, however, you can include provisions in the terms of the trust that appoint someone of your choosing—not the court’s—as successor trustee to manage your home’s ownership and/or sale if you’re unable to do so yourself due to incapacity. For example, your trust could authorize your successor trustee to sell your home in order to pay for the costs of long-term care should you require it.

Control Over Asset Distribution

Because you can include specific instructions in a trust’s terms for how and when the assets held by the trust are distributed to a beneficiary, a trust can offer greater control over how your assets are distributed compared to a will. For example, you could stipulate in the trust’s terms that the assets can only be distributed upon certain life events, such as the completion of college or marriage, or when the beneficiary reaches a certain age.

In this way, you can help prevent your beneficiaries from blowing through their inheritance all at once, and offer incentives for them to demonstrate responsible behavior. And as we mentioned earlier, as long as the assets are held in trust, they’re protected from the beneficiaries’ creditors, lawsuits, and divorce, which is something else wills don’t provide.

Avoiding Family Conflict

If you leave your home to your loved ones using a will and you designate more than one person to inherit the property, there’s a potential for conflict because each individual gets an undivided interest in the home. Given this, these individuals must agree on what to do with the home—keep it or sell it—and they may not see eye-to-eye, which can create unnecessary drama that can tear your family apart.

For example, if one of your children wants to keep the home and live in it, but the other prefers to sell it in order to pay off their debts, the child who wants to sell could go to court in order to force their sibling to sell the property. However, this potential for conflict can be avoided by putting your home in a living trust.

If you name more than one beneficiary for your home in your living trust, you can name a neutral third-party as successor trustee to decide what happens to the home, and then manage the distribution after a clear determination is made. For example, the trustee could allow one child to live in the home, while the other could receive other estate assets of equal value, or the trustee could come up with some alternative solution to stave off the potential for conflict.

Transfer On Death Deed

In some states you can use what’s known as a Transfer On Death (TOD) deed in order to transfer ownership of your home to your heirs without the need for probate. Initially created as an inexpensive alternative to living trusts, a TOD deed allows named beneficiaries to assume ownership of your home without undergoing probate or trust administration.

However, TOD deeds come with some major drawbacks, and they may end up creating unintended problems for your loved ones. To this end, before you rely on a TOD deed as a cheaper alternative to passing your house via a trust, consider the following factors:

• If your property is held joint tenancy, your joint tenant becomes the sole owner upon your death and has full control of the property, and your TOD deed would be inapplicable.
• Unlike with a living trust, a TOD deed cannot be used to manage, sell, or borrow against the property during your incapacity. This means that if you become incapacitated, the beneficiary of your TOD deed would be unable to access your home in order to sell or refinance the property to pay for your care, as your trustee could if you had the property in a living trust.
• If the beneficiary of the TOD deed is a minor upon your death, a court-appointed guardian will need to be named to control your property until the child reaches legal age. With a living trust, however, the person you named as successor trustee can manage the property until your child reaches legal age.
• Using a TOD deed in order to transfer ownership of your home to try and lower the value of your assets doesn’t count as a Medicaid spend-down, so it will not help you qualify for the program. Plus, depending on the state, the property may even be subject to the Medicaid Estate Recovery Program (MERP) after you die. As mentioned earlier, if you want to qualify for Medicaid and protect your home from MERP, meet with your Personal Family Lawyer® to discuss creating an irrevocable trust.

Given these potential complications, using a TOD deed to transfer ownership of your home as an alternative to a living trust is almost never a good idea. Instead, your Personal Family Lawyer®, can help you find better ways to transfer ownership of your home that will keep your family out of court and out of conflict.

Find The Solution That’s Right For Your Family

Although putting your home in a living trust can be an ideal way to pass your home to your loved ones, each family’s circumstances are different. This is why your Personal Family Lawyer® will not create any documents until we know what you actually need, and what will be the most affordable solution for you and your family—both now and in the future—based on your family dynamics, assets, and desires.

The best way for you to determine whether or not your estate plan should include a will, a trust, or some combination of the two is to meet with your Personal Family Lawyer® for a Family Wealth Planning Session, which is the first step in our Life & Legacy Planning Process. During this process, we’ll take you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you die or if you become incapacitated.

Sitting down with a Personal Family Lawyer® will empower you to feel 100% confident that you have the right combination of estate planning solutions to fit with your unique asset profile, family dynamics, and budget. In fact, we see estate planning as so much more than planning for death, which is why we call it Life & Legacy Planning—it’s about your life and the legacy you are creating by the choices you make today. Contact us today to learn more.

Give us a call to schedule your in-person or virtual appointment.

The post Why Putting Your Family Home In A Trust Is A Smart Move appeared first on Law Office of Ruby Steinbrecher.

Last week, in part one of this series, we discussed 529 plans and education savings accounts, which are both popular options for saving for college education. One of the main reasons for their popularity is their tax-saving advantages. The money you contribute to a 529 account grows on a tax-deferred basis, and withdrawals are tax-free, provided they are used for qualified education expenses, such as tuition, room and board, and other education-related fees.

That said, one of the downsides of 529 plans is that they come with strict limits on how you can use the funds (for education-related expenses only), and they also have a limited range of options for how you can invest your funds, primarily in various mutual funds. For these reasons, 529 plans and ESAs aren’t always the best fit for some families looking to save for their loved ones’ education.

Education Trusts

As we noted in part one, one alternative way to save for your offspring’s higher education is by using an irrevocable trust. Although there isn’t any income tax deferral on income earned by the assets held by these trusts, it is possible to structure a trust, so your beneficiaries could qualify for financial aid that they may otherwise be ineligible for with a 529 plan. Depending on your situation, qualifying for financial aid may prove even more valuable than savings on the income taxes owed on income earned by the trust.

Here in part two, we’ll further discuss how these trusts work and why they may be an attractive alternative to 529 plans, if you are looking to save for your loved ones’ education—whether that education is college or some other form of learning.

The Benefits Of Education Trusts

In addition to the issue of qualifying for financial aid, another benefit of such trusts is that you can not only save for a single child’s or grandchild’s education, you can also structure your trust to provide a pool of funds for the education of all family members. Moreover, when creating the trust, “education” can be broadly defined to include any type of learning institution or organization, such as trade schools, educational workshops, community colleges, and private academies, to name just a few options. 

Furthermore, you can provide that the trust can pay for alternative education, such as travel, retreats, business building programs, and other nontraditional educational experiences, which may prove even more valuable than college. Bottom line: when you set aside money to educate your family with an education trust, you get to decide exactly how your beneficiaries can use the funds by what is most in alignment with your family values. And as part of creating your education trust, we will work with you to create a written set of guidelines for the trustee, who will be the person making decisions regarding distributions to the beneficiaries. 

Trust Creation Options

In terms of how the trust is set up, you can create an education trust that is built into your revocable living trust or will, and as such, it would not get registered and funded until your death. Or you can create an education trust that exists and is funded during and throughout your lifetime. In either case, the disbursements from the trust are designated for a beneficiary or a pool of beneficiaries’ education.

While you can stipulate how and when the funds are to be distributed inside the terms of the trust agreement itself, we would almost always provide the trustee with broad distribution authority and discretion (to maximize the asset protection benefits of the trust), and create a separate writing to provide guidelines on distributions, and then give a trusted person, or group of people, the right to remove and replace the trustee with someone else should your first choice not work out for any reason.

If a single trust is established for multiple beneficiaries, you can require the assets to be distributed in a number of ways. You can stipulate that the funds are divided equally among the beneficiaries, disburse the funds in a set amount, by percentage, or you can leave the decision as to how much each beneficiary receives to the trustee’s discretion.   

Tax Implications

Education trusts typically aren’t set up as tax-saving vehicles, as is the case with a traditional 529 plan, which does provide tax savings. That said, as we noted earlier, 529 plans have much more restrictive rules for how their funds can be used. Moreover, you could save on taxes with a trust if it is drafted in a way that allows the trust’s income to be taxed at your beneficiary’s tax rate, which could be significantly lower than your personal tax rate.  

If you establish an irrevocable trust for education purposes, make sure you consider all of the tax impacts on income earned by the trust. For example, the trust would be taxed on income not distributed by year’s end, but you can have the trust drafted to pay out all income to the beneficiary or include other provisions that cause the trust to be taxed to the beneficiary (even if income is retained).

That income would be taxed at trust tax rates, which could be higher than the beneficiary’s rate—and possibly even higher than your personal tax rate—so it’s important you are clear about whether income should be distributed before year’s end for each year the trust earns income. 

If the education trust is irrevocable, meaning that the gift cannot be taken back, and the amount contributed each year is less than the annual gift tax exemption ($16,000 in 2022), then no gift-tax return is required to be filed. Conversely, if the gift to the trust exceeds that amount, then you will need to file a gift-tax return, reporting the gift and using up part of your lifetime exemption of $12.06 million if single and $24.12 million if married filing jointly.

Since there are so many variables involved and different ways to set up an education trust, it’s vital to reach out to us, your Personal Family Lawyer®, so we can walk you step-by-step through all of your options—and help you determine what’s best for your unique situation.

Potential Problems To Keep In Mind

One alternative to these plans (both 529 plans and education trusts) is to use money that has been saved for other purposes, such as funds you have saved for your retirement. However, it’s important to point out that using your retirement funds can affect your child’s eligibility for various need-based financial aid programs. To this end, retirement funds withdrawn to pay college expenses are reported on the Free Application for Federal Student Aid (FAFSA) as additional income.

Consequently, when using retirement funds, the expected family contribution used from FAFSA will be higher, which will therefore reduce your child’s chances of qualifying for financial assistance. Consult with us if you choose to tap into your retirement savings to fund college expenses, so we can ensure it’s done right and will have the maximum benefit for everyone involved.

Don’t Do-It-Yourself

To ensure you get the most benefit from your savings, don’t try to make these decisions on your own. As your Personal Family Lawyer®, we will work with you to determine the best way to set aside financial resources for the people you love, whether that’s using a 529 plan, an education trust, or some other option. Contact us today to learn more.

The post 3 Critical Considerations For How To Save For Your Child’s (or Grandchild’s) College Education (Part 2) appeared first on Law Office of Ruby Steinbrecher.