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Trusts are a nuanced part of estate planning and can make sure that assets are passed on to your loved ones in a controlled manner. While there are many terms and concepts to grasp when it comes to understanding trusts, it also helps to appreciate that there are several types of trusts. This article examines just a few of the most common trusts which can be used advantageously to achieve various estate planning goals.

# 1 – Bypass Trust

Sometimes referred to as a credit shelter trust, these trusts are primarily used for tax reduction. The trust, however, also has several non-tax related benefits. For example, bypass trusts can protect assets from poor investment decisions as well as creditors and financial scams. Bypass trusts can also help to guarantee that children or beneficiaries are the ultimate recipients of the trust’s assets. As a result, these trusts are commonly used when one spouse has been previously married. The challenge presented by bypass trusts, however, is deciding how much to transfer into the trust. There’s no universal answer as to the extent of an estate to transfer to a bypass trust, but an experienced estate planning attorney can help you make this decision.

Difficult times bring out the extremes in people. While the news is full of stories about altruism during the COVID-19 pandemic, there are countless examples of individuals who have come out with scams designed to capitalize on people’s confusion and fear. Besides being at increased risk of experiencing the most serious COVID-19 symptoms, senior citizens are also at an elevated risk of being the target of scams. To better protect senior citizens and help family members make sure their loved ones stay safe, this article reviews some of the most common scams that have been documented during the pandemic. Knowing about these disreputable tactics in advance is one of the best steps that senior citizens can take to protect themselves.

# 1 – Promises Covid-19 Cures

Major pharmaceutical companies like Pfizer are nearing the introduction of a COVID-19 vaccine to the general population, but there is still no known cure for coronavirus. As a result, anyone who tries to sell you a cure or a vaccine is lying. Some of the various offerings that the Federal Trade Commission and the United States Food and Drug Administration have identified that are falsely billed as cures or vaccines include:

Sometimes creating an estate plan means more than just simply designating who will receive your assets. Instead, it sometimes becomes critical to think about how a loved one will receive what you leave them. Fortunately, estate planning presents the opportunity to contemplate the particular needs of your beneficiaries as well as the structure of such transfers. One of the most common but serious obstacles that exist in passing assets to a loved one is if a beneficiary is financially irresponsible.

Understandably, after decades of working hard, you want to make sure that the assets you pass on to loved one can be fully utilized. If a loved one does not treat assets with the same serious nature that you do, however, this intent can quickly defeat your estate planning goals. Fortunately, there are estate planning strategies that are available to make sure that assets last a long time and are responsibly managed. This article considers just some of the critical issues to remember about passing assets on to a beneficiary who is financially irresponsible.

# 1 – The Role of Trusts

The field of estate planning involves various types of documents. While some of these documents have long-recognized roles, people have less exposure to others and are more uncertain about the role they can play in estate plans. One commonly asked question is what the difference is between power of attorney and guardianship forms. While these documents can function similarly in some situations, they are vastly different in others. As a result, this article considers the relationship between guardianship and power of attorney documents.

The Role of Guardianship

Guardianship refers to a legal relationship established where a court assigns a person the legal right to make decisions for another individual who cannot make these choices on their own. Most times, the family member, friend, or other individual seeking guardianship files a petition in Probate Court in the county where the “ward” lives. A medical examination by a physician is often required to establish this person’s condition. If it is decided that the individual can meet essential requirements involving health or safety, the court will appoint a guardian to make decisions for this individual. Additional details about the guardianship system in New York can be found in Article 81 of the state’s Mental Hygiene Law. 

The general consensus is that Social Security replaces around 40% of your pre-retirement income. The reality is that half of all single people depend on their Social Security benefits to replace close to 90% of their pre-retirement income, says the Social Security Administration (SSA). From the start, the only way for you to survive retirement is to cut your living expenses to 40% of your working income.

 For married couples, the outlook is better. One spouse, usually the one who may never have worked or earned less than the other spouse, is able to receive Social Security benefits based on the other spouse’s work record. Because that spouse is married, his or her Social Security benefits will be higher than a single person. According to the SSA, only 21% of married couples depend on their checks for at least 90% of their retirement income.

 If you are single and divorced, in some circumstances, you too can receive Social Security benefits based on your ex-spouse’s work record, even if your ex has remarried. You may be surprised to learn that there are few eligibility requirements you’ll have to meet in order to claim benefits based on your ex’s work record. To qualify for Social Security benefits based on your ex’s work record:

Many of you may recall when President John F. Kennedy founded the Peace Corps in 1961 and may have even signed up as a volunteer to help provide social and economic development assistance abroad. Borrowing on this model, an initiative is underway to establish an internal national volunteer care corps to help older adults age in place by relying on the assistance of volunteers to help people manage their day-to-day living needs.

 Introducing the National Volunteer Care Corps

The National Volunteer Care Corps is a government initiative run by the Administration for Community Living, a division of the U.S. Department of Health and Human Services. The National Volunteer Care Corps seeks to build an army of domestic volunteers to help older people live better and longer in their homes, especially if they can still take care of their primary needs. From teens, to college students, or civic minded adults, volunteers would perform the following tasks:

The Consumer Financial Protection Bureau (CFPB) recently released a set of helpful guides to help individuals manage the financial affairs of loved ones or others who are unable to do so and require a fiduciary to take of such matters. The guides cover multiple topics to help fiduciaries, including how to spot financial exploitation and avoid scams as well as a “Where to go for help” section with a list of relevant resources for more information.

One of the guides included is “Help for agents under a power of attorney” which lists the four basic duties that fiduciaries with a power of attorney need to keep in mind when managing the affairs of another. Those include to act only in the beneficiary’s interest, manage the beneficiary’s property and money carefully, keep the money and property of the beneficiary and fiduciary separate, and to keep good records of all transactions.

Another helpful guide included in the series is “Help for court-appointed guardians of property and conservators” which someone the court names to manage money and property for someone else whom the court has found cannot manage it alone. This can also apply to instances where a fiduciary is named to act in the interest of another person as a guardian, managing that person’s healthcare and other personal decisions. Other times, a court may be appointed to manage the governmental benefits of an individual and the CFPB also provides outlines for these responsibilities too.

When planning an international trust, a Clifford Trust will allow a grantor to transfer high net worth assets that produce taxable income into an estate’s trust with the option of reclaim at time of trust expiry. Though used little at present, the Clifford Trust offers the opportunity for high net worth beneficiaries tax relief. If planning an international trust involving foreign national beneficiaries, a Clifford Trust will protect heirs from withholding tax at time of transfer (12 Int’l Bus. Law. 394 (1984)).

Rules to ‘Clifford Trust’ Tax Shelters

Prior to the Tax Reform Act of 1986, Clifford Trusts have been used to tax-shelter assets through transfer of earned income to children from a parent or grandparent’s estate. Post-enactment of the Act, it was mandated that Clifford Trust income be taxed to the grantor, making these trusts nearly obsolete since with exception of use as an effective legal means for large tax expense avoidance and to avoid withholding by international trusts involving foreign national family beneficiaries.

When retirement investors are considering assets for estate or trust transfer, one of the main priorities is the impact of risk. In the past several years, cryptocurrency assets have increased in popularity. Until 2017, Bitcoin and other digital currency assets were also considered as tax-exempt “property” under federal Internal Revenue Service (“IRS”) guidelines. Recent IRS rule reform of tax-exempt treatment of cryptocurrency assets reflects a growing concern about the lack of direct oversight of digital currency within the regulatory environment. Identified as the most significant risks of cryptocurrency asset transfer within policy formation at this time: pricing transparency, price manipulation, as well as the potential for fraud scams, custody disputes, and liquidity issues.

How CFTC & SEC Oversight Will Help

Regulatory oversight of price transparency and control over price fixing, and price manipulation is uneven across national and international markets. For this reason, digital currency cannot be traded on regulated financial markets. Derivatives like Bitcoin futures trading on the CBOE or CME offer investors the least risky investment for profit.

A Kings County Surrogate’s Court judge recently removed the executor to an estate without a hearing over the individual’s failure to comply with the court’s order to properly account of the estate’s assets. The case is a prime example of how and why someone can be removed as the executor from estate if he or she fails to comply with their fiduciary duty to faithfully discharge the responsibilities of the executorship.

The petition to remove the executor was brought by a co-beneficiary to the estate, the sister of the former executor, after the executor failed to open a separate trust account and to file federal or state income tax returns for the trust. Additionally, the petition charged that the respondent’s neglect of the real property held by the limited liability company caused it to sell for a price much less than two previous offers to purchase the real estate, which the executor had rejected.

Prior to suspending the executor from his role of managing the estate, the co-beneficiary filed two-petitions with the Surrogate’s Court. The first, seeking the executor’s removal from management of the estate and the second asking the court to compel the executor into account and file the estate. The court subsequently issued a 45-day order for the executor to account for the estate and file the necessary paperwork.