Privacy and Estate Planning

Posted on September 25, 2018

Article written by Trey T. Parker, Esq.

In discussing estate planning with my clients, this question sometimes arises during a consultation – “Is there a way that I can keep my estate plan private, even after I die?”  In other words, they want to limit who will have knowledge of the contents of their estate or to whom they are leaving it.  Many of my clients simply do not want anyone to know how much money they have, or believe that knowledge of their estate plan could lead to fighting among family members or prevent their children from working toward their own financial independence.  For clients with such concerns, I often recommend using a revocable living trust, which offers greater privacy than a last will and testament.

Unlike dying intestate or with a simple will, a revocable living trust, if properly funded, can avoid the courts and its probate system.  Therefore, using a trust can ensure that plans and affairs do not become a matter of public record upon death or incapacity.

The more complicated question, however, is whether the beneficiaries of a revocable living trust, such as children and other family members, can also be excluded from knowing the particulars of the estate plan.  Like most questions regarding the law, the answer is “maybe.”

Virginia has adopted the Uniform Trust Code, which addresses the rights of beneficiaries to information about the trust.  The Code requires that certain information must be provided to all beneficiaries of a trust.  In determining what information must be provided, the Code distinguishes between “beneficiaries” and “qualified beneficiaries,” with qualified beneficiaries being entitled to greater information.  Depending on the type of beneficiary, they may be entitled to a copy of the trust instrument, a listing of trust assets and their respective market values, and all liabilities, receipts and disbursements of the trust.  Although such information provides beneficiaries with the ability to enforce their rights under a trust, it can also provide unscrupulous beneficiaries with the opportunity unnecessarily to scrutinize its administration.

Fortunately, the Uniform Trust Code, as adopted in Virginia, allows a Settlor to modify or waive some of these reporting requirements.  However, the trust instrument must include a specific waiver to achieve that result.  A well-drafted revocable living trust will have extensive language addressing this issue in accordance with the goals of the client.

If you would like to learn more about this topic, or other differences between wills and revocable living trusts and how each can achieve your estate planning goals, please consider signing up for one of our no-cost educational workshops.

Posted in Estate Planning

Have you named a guardian for your children?

Posted on September 13, 2018

Content provided by WealthCounsel.

Modified and edited by James W. Garrett.

As a parent, you spend time every day making sure your children are provided with life’s necessities – things like good nutrition, clothing, education, physical activity and shelter. In addition to attending to your children’s physical needs, you also spend time teaching your children values and modelling good behavior. You also do many other things for your children– far too numerous to list.

But, what if you are no longer around to care for and raise your children? Have you thought about who among your family or friends could step in and care for your children if you couldn’t? With all the considerations about your children’s wellbeing weighing on your mind from day to day, it can be easy to forget about one of the most important factors in keeping them well cared for and secure: naming a guardian in your estate pl

If you are the parent of a minor child, have you provided for a guardian in your Will? Since nearly 65% of adult Americans do not have a Will, the odds are you haven’t done this.

If you have a Will, when was the last time you thought about this issue? If you have no idea or it’s been several years, it’s probably time “to dust off” your Will and review your selection of a guardian. Children change a lot from year to year as they mature from infants into their teenage years. Their care needs and who would make a good guardian can change over time as well. Is the person you previously appointed as their guardian still the best choice? Because your children’s lives are constantly evolving, something that worked even a few years ago may be out-of-date now.

Back-to-school time is a good reminder to revisit your estate plan and guardianship designations. Here are the specific areas you’ll want to address:

  • Review and refresh of guardianship nominations: Is the guardian you named in your Will for your children if something happens to you still the person you would want to fill that role? Is the named guardian still available to do so, and would your children be satisfied with this choice of guardian?
  • Consider writing the “ultimate babysitter note:” When entrusting your children to a babysitter, you probably leave a note to remind the sitter of how you want your children to be cared for during your absence, including emergency contact information. Similarly, wouldn’t it be a good idea to leave some instructions for your guardian to guide him or her on how you want your children to be raised? If you haven’t written the “ultimate babysitter note” for your guardian, you ought to consider doing so.
  • Review and refresh your estate plan: It’s always a good idea to keep your estate plan as up to date as possible. The addition of a new child to your family by birth or adoption may mean your plan requires substantial changes. If either of these events occurred since the last time you updated your estate plan, it is imperative that you don’t wait to make any necessary alterations to your plan. This is also the case if one of your children has turned 18.
  • Is your child between the ages of 18 and 25? Suppose you have a daughter who has turned 18. She has become an adult under the law. Although your young adult no longer needs a legal guardian, she may continue to be dependent on you for several years – particularly if she attends college. Did you know that when your child turns 18, you no longer have legal authority over her? Although she may no longer need a guardian, she needs someone who can legally act on her behalf in the event of an accident or illness. Unless your child signs a Power of Attorney naming you as her agent, you will have to go to court to obtain the legal power to manage her property and legal affairs. Unfortunately, going to court to obtain legal powers over your child takes time and expenses. It’s far better to obtain legal authority over your child’s affairs in advance by having your child name you as her Agent using a Power of Attorney.

Back-to-school time means a flurry of activity for most parents. Although shopping for supplies and attending school functions may dominate your to-do list, remember to set up an appointment with us to review your estate plan for any necessary updates that could impact your children’s wellbeing. We’re always here to help. Give us a call today.

Posted in Estate Planning

Lessons from Celebrity Estate Planning Mistakes

Posted on August 30, 2018

Article Written by Rhiannon M. Hartman, Esq.

Hardly a day goes by without the news of another celebrity passing away – Aretha Franklin, Kate Spade and Anthony Bourdain most recently and notably.  Upon each famous death, there is often an outpouring of (among other things) disbelief at how their affairs were not settled properly prior to death.  Celebrities – they’re just like us in one important respect – the tendency to ignore critically important estate planning tasks until it’s too late.  The following are several common estate planning mistakes, as illustrated by the estates of the rich and famous:

  1. Having No Estate Plan

Unexpected deaths are unfortunately familiar to all of us, and celebrity deaths are no exception.  The mistaken belief that there will be time to plan later is common.  Unfortunately, there are no second chances in estate planning.  Having a plan in place, that can always be adjusted later if your circumstances change, is far better than having no plan at all.

The public recently learned that Aretha Franklin, despite her multimillion dollar estate, passed away with no will or trust.[1]  Her longtime attorney lamented the fact that despite his strong recommendation, she “never got around to” establishing a trust.[2]  He also pointed out that unfortunately, “any time they don’t leave a trust or will, there always ends up being a fight.”[3]  As of now, a niece has asked to be appointed administrator of the estate, and each of her four sons have filed as interested parties.[4]  Additionally, Franklin has a history of conflicts with creditors, which could complicate the administration of her estate.[5]  While the exact details of the distribution of Franklin’s estate remain to be determined, there are many complications that could have been easily avoided through her execution of a comprehensive estate plan.

Another recent example of this mistake is the musician Prince, who at age 57 had no estate plan at all when he died.  Unfortunately, this has led to litigation over his estimated $300 million estate among his siblings and other individuals exerting claims to an inheritance from his estate.[6]  Although the vast majority of individuals do not have an estate as large and complex as Prince’s, they still share the common goal of wanting to ensure their estates pass to intended beneficiaries, in the time and manner desired.   To ensure that your estate is distributed as you want, and not subject to costly litigation, conflict, and distribution to unintended individuals, an estate plan is critically important.

  1. Not Updating your Estate Plan

It is essential to have an estate plan.  However, it is just as important to keep the plan up to date in light of legal, financial and family changes, to continue to ensure that your estate will be distributed in the intended manner.  Unfortunately, it is not uncommon that individuals with established estate plans fail to update or amend their documents in the event of marriage, remarriage, divorce, or birth of children.

When Whitney Houston passed away, her estate plan was almost twenty years old.  The Will had been drawn up prior to the birth of her only child, Bobbi Kristina, and at a time when she had a more modest estate.  By the time of Whitney Houston’s death, her Will’s terms required her daughter to inherit ten percent of the estate at age 21, outright.  When the Will was written, the ten percent distribution may have seemed somewhat reasonable.  However, the estate had grown significantly, and Whitney Houston’s sudden death resulted in Bobbi Kristina inheriting a substantial estate without any controls on its use or distribution.[7]  As evidenced by the tragedy, publicity and controversy surrounding Bobbi Kristina’s short life, there is some indication that she was financially exploited and surrounded by unscrupulous people.[8]   An update to Whitney Houston’s estate plan that would have allowed protection for the significant wealth and for her vulnerable daughter, would have been preferable to such a young person inheriting assets outright.

The birth of a child is a milestone event that merits a reexamination of an existing estate plan.  Other changes in life situation, such as divorce or separation, also necessitate a change to estate planning documents.

While the deaths of Kate Spade and Anthony Bourdain are too recent to know the details of their respective estates, both situations were similar in that they were each separated from their spouses at time of death.[9]  In the event of a major change in life situation such as a separation or divorce, it is critically important to update essential documents such as Powers of Attorney and Advanced Medical Directives, to ensure that an estranged or ex-spouse cannot make critical decisions in the event of incapacity.  It is also imperative to seek the advice of an experienced estate planning attorney to determine needed changes to the estate plan and beneficiary designations, to ensure that assets do not pass unintended to a surviving prior spouse.

  1. Failing to Fund a Revocable Living Trust

A trust is an excellent tool to avoid probate and ensure the privacy of estate matters.  However, a trust on its own is insufficient to ensure these important estate planning goals are fulfilled.  The protections and ease of administration that a trust can provide only apply if the trust is properly funded.  In other words, assets must be titled to the trust and beneficiary designations must be structured properly during the Trustmaker’s life, to avoid the assets passing through the probate system into the trust after death.

Unfortunately, although Michael Jackson had a Revocable Living Trust, he did not completely fund it with his estimated $600 million estate. [10] As probate is a public process, this has meant that many of his financial assets and estate planning goals have been made public and subject to challenge by many family members.[11]  To ensure the privacy of estate matters, as well as to ensure simplicity of administration of your estate, the creation and funding of a Revocable Living Trust is critically important.

Just as important as revisiting an existing plan, trust funding matters should also be reviewed on a regular basis.  It is not unusual for people’s assets to change over time, so revisiting the funding of your Trust with your estate planning attorney on a regular basis is essential to ensure that the estate is administered as efficiently as possible.

The Important Lesson

The key takeaway from these famous estate planning missteps is that it is critically important to create, and consistently update, a comprehensive estate plan.  The first step is to meet with your estate planning attorney to develop a plan that allows for management of your decisions to be made by trusted individuals in the event of your incapacity, and ensure an efficient distribution of your estate to your intended beneficiaries at time of death.  The next step is to continue to update your estate plan as your family and financial situation changes.  “Milestone” events such as the birth of a child, marriage, divorce, retirement, or death of a family member almost always merit a review of the plan, to determine whether any changes or needed.  However, a regular review every few years is also recommended to ensure your estate plan is current in light of any changes to state or federal law, and that critically important follow-up matters like funding your Revocable Living Trust have been completed.


[2] Id.

[3] Id.

[4] Id.








Posted in Estate Planning

Role of a Successor Trustee under a Revocable Living Trust

Posted on August 28, 2018

Article Written by Michael G. Montgomery, Esq.

During our Firm’s initial planning conference with clients, this question is often asked: “What is the role of my Successor Trustee upon my disability or death?”  This excellent question is typically answered either during the initial conference or at our Presentation/Signing Conference. The Successor Trusteeship begins when you—the Trustmaker—can no longer serve as Trustee, either upon your disability or death.  Let’s examine each event.


When a Revocable Living Trust (“RLT”) is established, the Trustmaker will always name in the Trust document an individual(s) (for example, the spouse or other family member) or an independent corporate Trustee (CPA, law firm, bank or trust company) to serve as the Successor Disability Trustee.  In our RLT, Article Four contains all the important Trustee instructions and provisions.  Upon disability, the Trustmaker has already determined who the Successor Trustee will be, as well as the parameters of the authority, so decisions can be made privately—without court or guardianship proceedings.

In fact, one of the significant benefits of the Revocable Living Trust over other Estate Planning documents (wills or testamentary trusts) is the importance of this disability protection to Trustmakers and the “Peace of Mind” it brings with it.  For instance, not only does the Trust contain important disability or incapacity instructions for the Successor Trustee, the RLT also dovetails with the Trustmaker’s Advance Medical Directive.  In short, the RLT manages and safeguards the Trustmaker’s assets while the Advance Medical Directive provides the authorization for making health care decisions on behalf of the Trustmaker.  In many cases, the Trustee and the health care Agent are the same parties, except where the Trustmaker has a corporate trustee serving under the RLT.

More specifically, what is the ROLE of the Successor Disability Trustee?  Here is the checklist that we provide to clients, which we ask them to share with their Successor Trustee in case of disability:

  1. Carefully read the Trust document (especially Article Four) for specific instructions. Have two physicians write a private letter documenting the Trustmaker’s disability or incapacity.  One physician should be the Trustmaker’s primary care physician, if available.
  2. Notify the attorney who prepared the Trust document, who should be made aware of the disability in case the Trustee or a family member needs to call with questions.
  3. With the two physicians’ letters, have the attorney prepare a Certification of Trust for the Successor Disability Trustee to identify authority to assume the role. Several duplicate originals will be made for the Trustee.  The Certification will provide the Disability Trustee the authority to exercise the fiduciary powers and control over the disabled Trustmaker’s assets.
  4. Secure and inventory all property, especially real estate and valuable tangible personal property. Make sure you have the house and car keys, take care of any home maintenance items, and keep all insurance coverage in force.
  5. Check all property (investments, assets, vehicles, real estate, accounts, etc.) titles to make sure the property is owned by the RLT. If you identify any property (by the real estate deeds, car titles, bank account signature cards, investment account titles, insurance policies, etc.) that is owned by the Trustmaker individually, and not owned in the name of the RLT (or payable on death to the RLT), you should promptly seek legal counsel concerning how to transfer such property to the RLT, if appropriate.  Having property titled outside of the RLT ownership may result in having to conduct probate upon the Trustmaker’s death.  There will be a Power of Attorney document in the disabled Trustmaker’s estate planning portfolio that will authorize you or someone else to transfer the property to the RLT.
  6. Notify the bank or credit union, Trustmaker’s professional advisors, and appropriate others that you are now the Successor Trustee for the disabled person. They will want to see a copy of the doctors’ letters, the Certification of Trust for the Successor Disability Trustee or pertinent provisions of the Trust, and your personal identification.
  7. Transact any necessary business or personal finances for the disabled person. For example, you should apply for any disability benefits, pay insurance premiums, receive and deposit funds, pay bills (including mortgage, taxes and other obligations) and, in general, use the disabled person’s assets to take care of him/her until recovery (re-certification by two physicians).  Always act with the utmost honesty at all times and document MAJOR decisions and actions.  There should be absolutely no commingling of Trust assets with your own assets.  Keep a ledger of accounts payable and a copy of all statements and receipts.
  8. Collect all income due the disabled Trustmaker. Keep a ledger of income received.  Keep all check stubs and letters of explanation.
  9. Make assets productive, including the checking account. Review the Trust Articles related to the Trustee’s administrative and investment powers.  Always exercise prudence, reasonable care and skill when investing trust assets.  If you are an individual and lack the requisite skill or experience, use the Trustmaker’s professional advisors.  If necessary, retain a skilled investment advisor.


As in the case of disability, the Trustmaker, upon signing an RLT, will always name a Successor Death Trustee or co-trustees.  This individual may be the surviving spouse, family member, close friend, third-party corporate or professional trustee, or a combination of these parties acting as co-trustees.  Obviously, like the Disability Trustee, naming a Death Trustee is an extremely important decision and careful thought and advice should always be sought.  Always remember that the effectiveness and efficiency of your Successor Trustee is in direct relationship with having your assets and beneficiaries of life insurance and retirement plans appropriately titled (named) to your Revocable Living Trust.  For any assets not in the name of the RLT, the “Pour-Over Will” will allow the title to be changed at death into your RLT through probate.

The following is a suggested checklist for a Successor Death Trustee to consider upon the death of the Trustmaker:

  1. Inform the family of the Successor Trustee’s assumption of the trusteeship and assist them as needed: funeral arrangements, flowers, cemetery marker, announcement in paper, special wishes for memorial service, notifying friends, relatives, employer, professional advisors, etc. Before you begin, make sure you check the Trustmaker’s Estate Planning Portfolio (usually a red binder provided by Carrell Blanton Ferris & Associates) under these TAB sections for instructions (1) Memorial/Burial and (2) Location Lists (list of key advisors, list of close friends/ relatives, lists of important documents and personal papers).
  2. Provide the family with adequate time for grieving. There is no need to rush into your Trustee duties until the environment has settled.  Notify the attorney who prepared the Trust document in case you need to call with questions or seek assistance with your duties.
  3. Carefully read and understand the Trust document so you will know: (1) who the beneficiaries are; (2) what they are to receive and when; (3) how long the Trust will remain in effect after the death of the Trustmaker; (4) who, if any, are your co-trustees; and (5) your activities and duties per Trust instructions.
  4. Engage an attorney to prepare the Certification of Trust for the Successor Death Trustee. An attorney’s advice can be very helpful in ensuring that you understand what the Trust provides and your role therein.
  5. PLEASE NOTE: DO NOT change titles to any of the decedent’s assets, make life insurance death claims, or rollover the decedent’s IRA/401k or pension benefits until you have verified the claiming and tax options with a CPA or Estate Tax Planning Attorney.  There may be important post-death tax planning options available that can be LOST if you act without professional advice.
  6. Secure and inventory property, especially the home, other real estate, and valuable tangible personal property. Make sure you have the keys, make arrangements to keep the utilities on, keep all insurance in force, pay the mortgage payments, etc.  Start a list of all assets, ownership, beneficiary designations, and all debts/liabilities of the deceased.
  7. Order at least 10-12 certified Death Certificates, which may be required by financial institutions, insurance companies, the Clerk of Court, and other third parties holding assets of the decedent.
  8. Notify the decedent’s professional advisors and appropriate others (see List of Advisors in Estate Planning Portfolio) that you are now the Trustee for the deceased Trustmaker. Remind them not to change titles or execute IRA transfers until they receive written instructions from you in accordance with the terms of the Trust or beneficiary designations.  Also, you may need to change the home address with the post office.
  9. Notify life insurance companies, retirement plans, military affiliations/associations, and any others that will provide a death benefit. Remember, do not file a death benefit claim on the decedent’s life insurance, IRA, etc., until you have verified the tax options with a CPA or Estate Tax Planning Attorney.  Keep copies of all forms and correspondence.  The Social Security Administration will be notified by the funeral home.
  10. Collect all income due the deceased; keep a ledger of income received.  Keep all check stubs and letters of explanation.  NEVER commingle trust/estate assets with your assets.
  11. Collect and pay all contractual obligations, bills due, and taxes. Keep a ledger of accounts payable and keep a copy of all statements and all receipts.
  12. Make assets productive during the estate/trust administration process, if appropriate. Follow the applicable Article of the RLT for your Estate Administration procedures.  Always exercise prudence, reasonable care and skill when investing Trust assets.  If you lack the requisite skills or experience, use the decedent’s professional advisors.  If necessary, retain a skilled investment advisor.
  13. Make sure you keep any co-trustee and Trust beneficiaries fully informed from the death of the Trustmaker until the completion of the Trust Administration Process. They are generally permitted to have a copy of the Trust and supporting documents.
  14. Engage a skilled CPA or Estate Administration Attorney for preparation of the decedent’s final income tax returns and, if applicable because the decedent’s estate exceeds the available Estate Tax exemption, an Estate Tax return, due nine months from date of death.
  15. Begin (within the nine months) the creation and funding of additional subsidiary trusts pursuant to the terms of the RLT. For example, there may be Marital and/or Family Trusts for the benefit of a surviving spouse, Beneficiary Trusts for children or other beneficiaries, and in certain cases, a Common Trust/Elder Parent Trust or Grandchild(ren) Trust(s).  Your CPA or Estate Administration Attorney should counsel you on this process since effective estate/income tax saving results can be achieved if done properly.


Being selected and then serving as a “Successor Trustee” is one of the most important things you do for a loved one.  Indeed, it is a high honor that comes with a great deal of responsibility and accountability.  With proper help and counsel, you will do a very good job and earn the satisfaction of knowing that you have served the disabled or decedent Trustmaker and the Trust beneficiaries well.


Posted in Estate Planning, Legacy Fiduciary Services, PLC, Trust & Estate Administration

Irrevocable Life Insurance Trust

Posted on July 10, 2018

Article written by Jonathan B. Osler, Esq.

In the dark times of low estate tax exemptions, resourceful estate planners devised a number of clever methods to reduce or eliminate the estate tax exposure of their clients.  One such method, the irrevocable life insurance trust (or “ILIT,” pronounced like “eye-lit”), became an extremely popular way to soften the tax blow on beneficiaries of taxable estates.  Although ILITs once were a dime-a-dozen, their use has declined with the rising estate tax exemptions.  That said, many clients who created ILITs years ago continue to pay hefty annual premiums on the insurance policy held by the trust.  For those clients especially, it is important to understand the ILIT’s function, and to seek professional counsel to determine whether or not the ILIT’s costs outweigh its benefits in the current tax environment.

So, what is an irrevocable life insurance trust?  As the name suggests, the ILIT is a type of trust generally designed to hold life insurance. For the ILIT to work as intended, it must meet several requirements.  For example, the insurance policy must be held in an irrevocable trust (hence the name), meaning the terms cannot be changed once the trust is established.  Further, the grantor of the trust cannot serve as the trustee—the grantor’s spouse, friend, children, professional fiduciary, or some other third party must serve as the trustee.  If structured properly, the IRS will not include the value of the insurance policy in the ILIT as part of the grantor’s gross estate, and the trust’s beneficiaries will not pay any estate tax on the proceeds.  Consequently, the beneficiaries of the ILIT can use the tax-free insurance proceeds to offset the amount owed to the IRS in estate taxes.  In essence, the ILIT is a hedge against risk—one designed to reduce beneficiaries’ overall exposure to the estate tax.

Simple in theory and complicated in practice, the ILIT requires ongoing involvement on the part of the grantor, trustee, and beneficiaries.  For example, the grantor must jump through complex administrative hurdles simply to pay the premiums on the life insurance policy.  To accomplish this, the grantor gifts to the ILIT up to the annual exclusion amount ($15,000 in 2018) per beneficiary to cover the yearly premiums.  The trustee must then send something called a “Crummey letter” each year informing the beneficiaries of a specified window, usually 30 days, during which they technically have the right to withdraw the grantor’s gift to the ILIT.  The idea is that the beneficiary will leave the money in the trust, where it’s used to pay the insurance premiums; however, for the IRS to deem the gift to the ILIT tax-free, the trustee must notify the beneficiary of his or her right to withdraw the gift within the IRS-approved timeframe.  Again, although the expectation is that no beneficiary will withdraw the gift—after all, it’s in the beneficiary’s best interest that the premiums get paid—the trustee must send the Crummey letters each year, and document that the proper procedural formalities have been followed.   If the procedures above are not repeated each year and not properly documented, the IRS may include the value of the life insurance policy in the grantor’s estate, which defeats the purpose of the ILIT.  On the other hand, the upside to this arrangement is that because the grantor (indirectly) pays the premiums on the policy, there is an annual flow of cash out of the grantor’s estate; this helps to reduce the value of the estate or to slow its growth, thereby reducing estate tax liability in the long run.

You, the reader, may well have an ILIT and are wondering whether you should keep it.  Well, the answer to that question is complicated.  Your ILIT may have been an absolute necessity in the 1990s, when the estate tax exemption hovered at $600,000 for most of the decade.  But with estate tax exemptions per person exceeding $5,490,000 in 2017, and $11,200,000 in 2018, your ILIT probably seems like an anachronism—a relic of the past—and that may well be true.  However, whether you should keep your ILIT depends on a host of variables, including the current and expected value of your estate, your exposure to various personal and professional liabilities, and other considerations beyond the scope of this article.  But most importantly, we must plan for the possibility of a future reduction in the estate tax exemption; currently, the estate tax exemption will revert back to pre-2018 levels (inflation adjusted) in 2025, barring congressional action.  Thus, an ILIT that seems unnecessary today may be an invaluable part of your estate plan in just a few years.  Therefore, if you have an ILIT, you should take a moment to meet with an experienced estate planning attorney to review your current circumstances.  That will help you determine whether the ILIT remains an integral part of your comprehensive Estate Plan—one worth jumping through the hoops to maintain—or if the best long-term strategy involves terminating the ILIT.

If you have an ILIT you would like reviewed, or if you are interested in creating an ILIT, please contact our offices—we would be delighted to schedule you for a complimentary, one-on-one consultation to review your estate planning documents.   Additionally, if you are interested in learning more about estate planning in light of the recent changes to state and federal laws, please join us at one of our seminars.

Posted in Estate Planning