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Revocable vs Irrevocable Trusts

Revocable vs Irrevocable Trusts and How Each Is Used

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Understanding how trusts work is a key factor in your estate planning process. Trusts can be a vital part of protecting your assets while ensuring that your needs are covered while you age, and that those you leave behind are cared for when you’re gone.

There are, however, two different kinds of trust, and each has its own qualities, benefits, drawbacks and uses. You’ll need to pick the right one to make sure your estate plan is established properly. Discover the difference between a revocable trust vs an irrevocable trust, how each is used, and how to choose the right kind of trust for your family.

The Revocable Trust

The revocable trust, also called a living trust or revocable living trust, is a trust that you can make changes to whenever you need. This means that after it’s set up, if you have second thoughts, you can amend it. If, for example, you include a spouse in the trust, but your marriage dissolves and you want to remove them, you can.

You can also cancel a revocable trust entirely, or change the contents wholesale via an amendment and restatement of the trust. Because these trusts are so malleable, the assets placed into them are still considered yours. That means that when estate taxes and creditors come calling, the assets of the trust are fair game. If you’re sued, a creditor can come after it. When you make Medicaid plans, your trust’s assets will count.

Irrevocable Trusts

An irrevocable trust, on the other hand, is essentially set in stone. Once the trust has been signed, it can’t be changed except under very specific circumstances. In some cases, a living trust can be established in such a way that when the trust maker dies, or when some other specific condition is met, it becomes irrevocable. Indeed, a typical revocable living trust becomes irrevocable upon the trust maker’s death, and it can be established to break into separate irrevocable trusts at this time.

When Each Kind is Used

Revocable living trusts are generally used for three reasons. The first is to avoid probate court. Those assets held in a revocable trust when you pass on will automatically pass to the named beneficiaries outside of the probate process. The second is to prepare for mental disability. If you become mentally incapacitated, your trustee can manage the funds on your behalf.

Finally, revocable living trusts protect property privacy after you die. A trust agreement is a private document and cannot become public record, unlike a will, which is entered into court records.

Irrevocable trusts are generally used to place assets outside of estate taxes and to protect them against lawsuits, creditors and other liabilities. The assets become the property of the trust, and not the trust maker, and so are protected. Finally, they’re often used to establish charitable planning with your estate.

Getting Help with Trusts and Estate Planning

If you’re still confused about how trusts work or which kind is right for your family, don’t worry; you’re not alone. Proper estate planning requires help from a knowledgeable Montana trusts lawyer like Tanko Law. Read some more about us, and get in touch for a consultation today.

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What Happens During the Probate process

What Happens During Probate?

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“Probate” is an ominous sounding term that comes up whenever you have to settle the estate of someone who has passed away. It can be a long and frustrating process, but in the end, all it means is that the courts are making sure your estate is in legal order. We live in a complex society where taxes and property are closely regulated, which can make passing things on to your heirs tricky.

So how does probate work? It all starts with authenticating the will and moving on from there. Learn all about the probate process, what happens at each step of the estate settlement, and why it’s always a good idea to have a probate lawyer.

Starting the Probate Process

The probate process begins as the court authenticates the will of the deceased. If there is a will, the judge will verify its authenticity, and will confirm that it is the most recent and valid will that was signed and filed before the decedent passed away.

The Estate Representative

Every estate must have a personal representative to oversee all of the important affairs. Often, but not always, this will be the person chosen by the decedent to administer their will when the will was written. If there is no will left behind, it will generally be the next of kin, appointed by the court.

Accounting for Assets

At this step, the personal representative must locate and account for all of the assets of the decedent, both those specifically stated in the will, and any others for which the estate will need to account. Generally speaking, anything with real material value is considered an “asset,” from antique furniture to wedding rings and family heirlooms.

Next, the assets, pending circumstances may need to be properly appraised for their value as of the date of death. This can be done by hiring appraisers or using account statements left behind.

Identify Creditors and Pay Bills

The decedent’s creditors will need to be repaid from the estate before any assets are divided. Often, publishing a death notice is required in the local papers to alert creditors. At this point, any creditors have a limited time to make a claim for owed funds against the estate.

Any final bills left behind then need to be paid, including claims from creditors. If a claim isn’t believed to be valid, it can be rejected. At this point the creditor must petition the court to determine its validity.

Income Tax

Now, the final tax returns for the decedent must be prepared and filed by the personal representative. This will reveal whether an estate tax is owed, and any taxes whether personal or estate must be paid from the estate funds. Assets may be liquidated to accomplish this. Normally, the estate has 9 months to pay estate taxes.

Distributing the Rest

Finally, the rest of the estate will be distributed to the beneficiaries. After this is done, the estate can be finally closed.

Working with a Probate Lawyer

The probate process seems simple, but there are a lot of complexities that can arise, and it’s best to have a probate lawyer in your corner to take care of these issues. For example, heirs may challenge the will, claiming the right to certain assets. A creditor may try to collect more than you think they are owed.

The right probate lawyer can make the difference between a stressful and complex process, and a smooth estate closing. Learn more about the probate process, and call Tanko Law for a consultation and help today.

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Am I too young to have a will?

Are You Too Young to Have a Will?

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“Am I too young to write a will?”

It’s a common question, and all too often what it really means is, “I’m only in my 20s or 30s and I really don’t want to think about or face my own mortality just yet.” It’s often couched in excuses like not having that many assets yet, or not having the experience to know how to do it right, but generally, it’s all back to the “facing mortality” issue.

While sometimes you may be legally too young to file a will, it’s never too early to start thinking about your estate plan and getting your life in order. Learn whether you are ever too young to have a will, and why it’s always a good idea to secure the services of an experienced estate planning attorney.

Am I Too Young to Have a Will?

Every state is different, but in general you will need to be at least 18, a legal adult, to be considered of sound mind and legally responsible to file your last will and testament. Once you reach the age of legal adulthood, however, there are no restrictions on when you can write your will, except for mental incompetence for one reason or another.

When Should I Write a Will?

The decision when to write a will is really a personal one and will be different for every person. If you think you’re too young to get your house in order, however, consider that Cory Monteith of the popular show Glee died at the age of 31. Anton Yelchin of Star Trek fame died at the age of 27. Paul Walker from Fast and Furious was 40.

The answer is, you’re never too young to have a will and make sure your final wishes are followed.

Determining When to Write a Will

Even people of moderate means can have assets they want to dispose when they pass away. The first step in determining if you should write a will is to figure out what your assets are. These can be anything from a house to savings accounts, from investments to a car, to things like your blogs, photos, music, social media accounts, video games and even collectibles. That Fender Stratocaster, Meerschaum pipe collection or that original 1974 copy of Dungeons & Dragons in your bookcase could have real value.

A will allows you to state your wishes as to whom you wish to gain access to these things when you die, and how they will be distributed.

How to Write a Will

The first thing to do is catalog all of your assets, make a list of beneficiaries, and simply state who should get what. That’s the beginning and the basis for the whole thing, and you can do that on your own. The next step is to call on the services of a qualified estate planning attorney like Tanko law.

We have helped people across Montana with their estate planning, wills and trust needs for many years, and we’re ready to help you as well. Give us a call for more information and a consultation today!

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Will or Trust: Which is Best for You?

Will or Trust: Which is Best for You?

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There are a lot of confusing concepts you might encounter when it comes to end of life and estate planning needs. Most people think that all they need is a quick will and they’re covered. Then they discover other terms like trusts, powers of attorney and the like, and suddenly what seemed straightforward suddenly gets confusing.

What is a trust? How does it relate to a will? Should you choose one or another, or can you have both? What is the process for setting all of this up to make sure that your estate plan is as solid as it possibly can be? Discover the differences between setting up a will vs. trust, learn which is the better choice for your estate planning needs, and how they can work together.

Will vs. Trust

The first thing to understand when you’re considering a will vs. trust is that they’re not mutually exclusive. There are circumstances where a will is vital (indeed, most estate plans should have one) and others where a trust is the right move to make. Let’s look at each.

What Is a Will?

The will is the primary document in your end of life plan. It lays out all of your final wishes, and even talks about the establishment of any trusts you have set up. It’s signed and witnessed and issues instructions as to how your property will be divided among your heirs when you die. It can be revoked and amended at any time up till your death. You can also use it to appoint guardians for any minor children you have.

Living Trust

A trust allows for property management during your life and after your death. You can serve as your own trustee (the person who manages the trust) or you can appoint someone else to do so. If you are your own trustee, you can appoint a successor upon your death or in case of becoming incapacitated, without court intervention.

A living trust can also manage your property when you become disabled due to illness, accident or other means. It allows you to avoid the publicity and expense, as well as the stress, of dealing with courts when your estate comes into play.

Advantages of a Living Trust

A living trust helps you to avoid probate when you pass away. It allows you to plan for becoming potentially incapacitated. It lets you maintain control of what happens to your property after you’re gone, and can be used for any size estate. Finally, it can protect the privacy of your financial affairs.

Drawbacks of a Living Trust

Living trusts are not easy to draw up or secure. They can be expensive to set up. They must be actively funded, and the trust only can control the assets that are placed into it. Those assets then become the property of the trust, only accessible under specific situations. It’s also more difficult to change or revoke a trust than a will.

How to Decide Which is Best?

Deciding whether a will or a trust is best can often best be done with the help of an experienced professional in wills and trusts. For years, Tanko Law has helped people make these decisions across Montana, and we’re ready to help you as well. Call us today for a consultation about your will vs. trust questions.

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5 Common Trust Mistakes to Avoid

5 Common Trust Mistakes to Avoid

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Trusts are an essential tool in estate planning. They’re an outstanding way to ensure that your needs and wishes are met, while still protecting your assets from probate. It’s guaranteeing that those who rely on you will have their financial needs met. This can also include you, should you become disabled or otherwise unable to make your own decisions.

Unfortunately, there are a lot of mistakes that people make when setting up trusts, and if you don’t take the right steps, you can find that your trust doesn’t do what you need it to. In the worst situations, the wrong move can even invalidate your trust. Learn five common trust mistakes you must avoid, and how seeking help from an experienced trust and estate planning attorney can be essential.

Common Trust Mistakes

When you set up your trust, there are a number of steps you need to take. You need to take them in the right order, without overlooking details. One wrong step and you can find that your trust runs out of funds before it needs to. You may even find that it is invalidated entirely. You need to ensure that you avoid the most common trust mistakes, so your trust is solid from start to finish.

Things to Consider When Creating a Trust

The first thing you need to do when creating a trust is name the beneficiaries. These often include children and grandchildren, and the trust can be amended as they age to meet their evolving needs. You also need to review the trust regularly to ensure that the point when the beneficiaries will get their inheritance remains appropriate.

The trustee may in some cases be required to defer beneficiary payments. Make sure you select the right person to serve as trustee, to avoid undue tension in the family or among other relationships. It may be better to hire a professional trustee over a family member.

Mistakes to Avoid in Your Trust

The five most common mistakes to avoid when you set up your trust include:

  1. Failure to fund the trust: If you fail to fund the trust, there won’t be any money in there to deliver to the beneficiaries. You can’t set up a trust if there are no assets to put into it.
  2. Failing to clarify instructions: Your trust needs clear instructions for how it is to function, to whom funds should go, how payment should be made, and when.
  3. Not listing a beneficiary: Once again, the point of a trust is to benefit someone. If you don’t specify who that beneficiary is, the trust will just sit in limbo, unable to be accessed by anyone for any reason.
  4. Choosing the wrong trustee: Choosing the wrong trustee can be ruinous to your trust. It can create damage in formerly loving relationships and can lead to abuse of the trust.
  5. Ignoring the trust: After your trust is established, the job isn’t done. You need to review it and make periodic adjustments as necessary to ensure that it works the way you need when the time comes.

Call a Wills and Trust Attorney

If you need help establishing your estate plan in Montanan and avoiding common trust mistakes, a qualified estate planning attorney like Tanko Law can help. Call us today for a consultation about your needs.

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You’ve Been Named Personal Representative of a Will — Now What?

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You’ve Been Named Personal Representative of a Will — Now What?

Being named the Personal Representative of a loved one’s estate can be a great honor. After all, it means that they trust you with their final wishes. They think you honest, responsible and trustworthy enough to see to their final affairs. However, it can also be overwhelming. There are a lot of decisions to make, and some will be hard calls. This can be especially true if the estate is a complex one.

What then is involved in being the Personal Representative of a will, and how can you make sure you take all the necessary steps? Discover what it means to be an estate Personal Representative, how to make the right decisions to enforce a loved one’s will and how an estate planning attorney can help.

The Responsibilities of the Personal Representative

The Personal Representative of a will has a metric ton of responsibilities to face. They need to understand the probate process, the legal terminology involved and have to interact with people at all levels, from government officials to grieving family. You’ll need to oversee investments and fill out a great deal of paperwork.

You may also face complex decisions involving the assets left behind. Your control might only extend to some of these assets, and those you cannot access may be taxable. You will have to deal with the direct beneficiaries to ensure these taxes are paid. Finally, you’ll have to play the role of diplomat, dealing with disagreements among heirs who dispute their inheritance.

Specific Duties

There are a number of very specific duties you’ll need to perform. You will have to file a copy of the will with the probate court. You’ll need to inform the deceased’s debtors of their passing, including banks, credit card companies, and government agencies. You will have to set up a bank account to deal with funds and bills related to the estate.

You will have to organize the estate and its assets into an inventory. Any properties will need to be maintained until sold or allocated. You will be responsible for the distribution of assets. Finally, you’ll need to determine if you have to go through probate court and if so, represent the estate in proceedings.

Hiring an Estate Planning Attorney

The process of administering an estate can be an overwhelming experience. Making the wrong decision or failing to pay a bill can cost a great deal in terms of not just money but the stress on you and the other heirs. The legal terminology and processes you have to go through can be confusing to someone without the right training and knowledge.

An estate planning attorney can be your best ally in this process. The right attorney can help you to make the right decisions and guide you through all the legal requirements and processes you need to navigate. If you’re in Montana and you need help with probate issues or being the Personal Representative of an estate, call Tanko Law for help today.

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Estate Planning Considerations for Blended Families

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Estate Planning Considerations for Blended Families

Blended families present a broad number of complications, and finances are just part of the issue. It can get even trickier when it comes time to make your final end of life plans. You may have children from previous and current marriage as well as stepchildren you wish to provide for. While you certainly want to provide for your new spouse, there may be several reasons to provide for a prior spouse as well.

Estate planning when you’re dealing with multiple families can be tricky at best. Here are some topics to consider when estate planning for blended families, and how a qualified estate planning lawyer can guide you through the process.

Estate Planning for Blended Families

There are a number of complications that arise when dealing with estate planning for blended families. They begin with the idea of simply broaching the topic. Your new spouse might be hesitant to talk about the issue, or you simply may not want to face the stress and complexities of making inheritance decisions.

There’s no way around the fact that this is a complex process, but it’s also a very necessary one. You need to be sure that your final wishes are going to be followed, that your assets will be properly protected, and a proper estate plan is the only way to do that.

Communication Is Key

The first thing to understand is that communication is an absolutely essential key to the process. Sit down with your spouse and address the concerns and needs you both have about the issue. You might even discover that you both agree on many issues, which can alleviate some of the stress from the process. If, however, you have different ideas, you’ll want to work it out in advance, while you’re healthy and can make those hard choices with a sound mind.

It’s not just your spouse you want to talk to, however. Talk with your children, particularly if they’re going to inherit less than they might expect so that there are no surprises when you pass on.

Making a Plan

After you’ve spoken with everyone involved, it’s time to make the plan. Will you leave everything to your spouse? To your children? Divided amongst the parties? Do you want some control to be maintained to keep the parties involved responsible? If so, you may consider a trust as opposed to a direct passing of assets.

Review any prior planning documents you had, including the designated beneficiaries listed in those documents. You want to be certain that no assets are accidentally passed to the wrong person, or that there aren’t discrepancies that people can use, or cause, to fight their inheritance in court.

Hiring an Estate Planning Lawyer

The right estate plan can avoid a great deal of conflict while ensuring that your final wishes are carried out as you intend. However, there are a lot of issues that can arise when dealing with estate planning for blended families, and you want to be sure that everything is done properly. That means working with a qualified estate planning attorney. If you’re in Montana contact the estate planning lawyers at Tanko Law for help today.

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can medicare seize a trust

Can Medicare Seize a Trust?

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The idea of placing a loved one in nursing care is an uncomfortable one for many people, for good reason. First, you’re trusting strangers — medically-qualified healthcare professionals but still strangers — with the day-to-day and long-term care of your beloved mother, father or elderly relative. Second, there are horror stories about nursing homes, like taking the resident’s property and selling it off to pay for an other’s needs, leaving your family member with nothing.

Some people have turned to the idea of living trusts in an effort to avoid these things. You may wonder, justifiably so, “Can Medicare seize a trust?”. Learn about how Medicare and Medicaid work in conjunction with trusts to protect your senior relative, and how a qualified Montana trusts attorney can help.

Medicare vs. Medicaid

The first thing to establish is that there is a difference between Medicare and Medicaid. Medicare is a form of health insurance available to seniors, paying for rehabilitative care for up to 100 days and only so long as the person is making rehabilitative progress. Medicare, like any insurance plan, has copays and deductibles that have to be paid. Without supplemental insurance, these can be substantial and can create financial difficulties. Medicare Advantage HMOs can help to offset these, depending on the individual plan.

Medicaid, on the other hand, is supplemental insurance designed for low-income recipients and can help to pay for long-term nursing care, but only if the senior in question meets strict criteria and is qualified. Medicaid only kicks in if the person has limited assets and a very low income. The law requires that existing assets be spent down until the eligibility threshold is met.

Spending Down Assets

It is this “spending down assets” requirement that generates the stories about homes and estates being seized. The rules for how these assets can be spent can be very tricky and complex, and making the wrong move can actually put you at odds with the IRS, a position in which nobody wants to find themselves.

Will Medicare Seize a Trust?

The answer to this question, quite simply, is no. Medicare does not seize or attach anything. Setting up a living trust can sometimes offer certain protections against a loss of assets, but it can also remove you from eligibility for Medicaid, especially if it’s not arranged properly. You need to be aware of all of the relevant laws and receive the best possible consultation when moving forward.

Generally speaking, you will only be permitted a very minimal amount of funds for personal uses while in a long-term nursing care. The majority of your assets must be used for your actual day-to-day care.

How Can I Protect My Assets?

The best way to protect your assets against the expenditure requirements is with the help of an experienced Montana trusts attorney. At Tanko Law, we have many years of experience setting up wills, trusts and all aspects of estate planning. Give us a call today for more information, and get started protecting your assets and planning your estate.

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The Pros and Cons of using a Trust

The Pros and Cons of Using a Trust to Protect Your Assets

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Estate planning is a stressful thing. Nobody likes to consider their own mortality, and making end-of-life plans puts it in square focus. However, it’s important for everyone to arrange these plans so that your descendants and assets are cared for, even ensuring that your affairs are kept in order should you become unable to make certain decisions for yourself.

One of the more popular ways to protect your assets, medical decisions and finances is by using a trust. A trust enables you to maintain a level of control over how your money is spent. There are, however, certain benefits and risks associated with this approach. Explore the various pros and cons of using a trusts when it comes to estate planning, and how an estate planning attorney can help you make the right choice.

What is a Trust?

A trust is an asset pool held for the benefit of and use by a third party, or beneficiary. This beneficiary is doled out assets as controlled by a trustee. There are two basic kinds of trusts: those established in a will, or living trusts determined while you’re still alive.

Trusts last until a certain set of predefined conditions are met. For example, you could design a trust for a young heir to become accessible when they reach 18 years old, at which point the trust ends and the inheritance transfers completely to them. As the creator of the trust, you are the settlor. In the case of a living trust, you can also be the trustee.

Benefits of a Trust

There are several benefits to using a trust. The most important is that it tends to be more efficient than simply doling out assets in a will. It allows you specific means of allocating assets through using specific, controlled manners. It also helps to avoid estate taxes, and gives you control over how your beneficiary will receive your assets. In brief, a trust ensures a beneficiary won’t squander their inheritance.

A trust can also be used in case you become incapable of making decisions for yourself. It can guarantee your medical care is covered, and your daily expenses and bills are paid. If needed, it can provide for someone to take over as caregiver.

Problems with a Trust

The drawback of a trust is that it can be more complex to set up than a will. Arranging a trust takes effort, funding and time. More notably, you can’t simply take a trust back after you establish it. You have to take particular steps to revoke a trust, and then you’ll have to redefine how the assets are distributed. A revocable trust can circumvent some of these problems, but this adds an additional layer of complication.

Working with a Trusts Attorney

If you’re considering creating a trust for your property, you’ll want the best possible advice. A qualified Montana trusts attorney can make sure you take the right steps and avoid critical mistakes, ensuring your assets are well protected and your heirs are well cared for. For more information about trusts or to get started on creating a trust, call Tanko Law today.

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what happens if you die without a will in Montana

Who Receives Your Property if You Die Without a Will in Montana?

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You might be surprised how many people don’t make the proper plans for what happens to their property when they pass on. In fact, it’s estimated that 70% of people don’t make any estate plans whatsoever. It doesn’t mean that they aren’t concerned about their family and friends; it just means that they didn’t want to think about end of life plans until it’s too late. What happens if you die without a will in Montana?

When you die without a proper estate plan, your possessions and assets have to go through probate in order to be distributed among your living heirs. This can be a complicated process and it’s overseen by courts. Learn who receives your property if you die without a will in Montana, and how Montana probate laws function to ensure the disposition of your estate.

Probate Laws if You Die Without a Will in Montana

Montana probate laws exist to help people who are in need of determining how to distribute assets after a loved one dies without a will. Certain aspects of these laws are pretty straightforward, and they depend on who the survivors are. If there is only a spouse, for example, the spouse is entitled to the entire estate. If the survivors are a spouse and children of both the spouse and the deceased, again, the spouse gets all the property.

If the decedent’s parents are alive as well as the spouse, the spouse gets $200,000 plus 75% of the balance of the estate, and the rest goes to the parents. If there is a spouse and children from a previous marriage, and stepchildren, the spouse gets $150,000 plus 50% of the balance. Children get 50% of the balance. Stepchildren aren’t entitled.

The laws can get more complex if there are others left behind—grandchildren, grandparents, siblings and other relatives, depending on which relatives are still alive.

The Complexities of Probate

Probate laws are very complex, and they’re being revised all the time to deal with unforeseen circumstances. These statutes, overall, are known as the Montana Law of Intestate Succession. For example, laws have to deal with what happens when one member of a business dies, when that person was one of multiple owners of the business. There are also rules regarding the survival of heirs, for out-of-state property, contractual agreements, what happens if there are no heirs, when the only heirs are minor children and more.

Avoiding Probate

The best way to avoid probate is to have a solid estate plan in place. When someone dies without a will, the courts may take the desires of the surviving heirs into account, but they are not bound by law to do so. It’s important, in such cases, to have help from an experienced and qualified Montana probate attorney.

The right attorney can help you to create an estate plan that will avoid probate, frustration and headaches for your heirs at one of the most difficult time of their lives. If you are facing probate, an estate planning lawyer can ease the burden and clarify the process. If you need help in dealing with such an estate issue, contact Tanko Law today.

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