Tag Archives: Maine trusts

Second marriages: pre-nuptial and post-nuptial agreements

By Sally Wagley, Maine elder law and estate attorney

Some clients who marry later in life do not think, before the wedding, about the usefulness of a prenuptial agreement. In the flush of romance, these clients may not have their minds on practical matters, such as ensuring that their assets will remain separate should they divorce and ensuring that children from previous marriages will inherit.

After the wedding, when things calm down, these clients may turn their attention to these sobering issues. They may, at that point, wish they had executed a prenuptial agreement. Is it too late for these clients to execute an agreement of this kind?

No, it is not too late for these clients. Post-nuptial agreements under which each member of the couple agrees to forego certain spousal rights in the event of divorce or upon death. In this situation, each one will need to see advice from his/her own lawyer, as a single lawyer would face a conflict of interest in representing them both. Also, each one has to make full disclosure to the other of all financial assets that each has, so that there are no secrets between them in this regard.

Second marriages: the “elective share,” your spouse’s right to part of your estate when you die.

The law in Maine is such that, absent an agreement to the contrary, a married person cannot disinherit his or her surviving spouse. The law gives the surviving spouse the right to go to court to demand that he or she receive at least one-third of the deceased’s “augmented estate.” The determination of the amount that the surviving spouse can receive takes into account not only the assets in the deceased spouse’s name but also some of the surviving spouse’s assets.

We have many clients who marry later in life, sometimes for the second time. Each spouse has accumulated assets separately and may have children from a previous marriage. One or both spouses may wish to favor his or her own children in the will, choosing not to leave anything to the surviving spouse or perhaps to leave only a modest amount. For those clients who die without being aware or without addressing the “elective share” issue, the deceased’s children may be in for an unpleasant surprise, should the surviving spouse choose to seek more from the estate than what was left to him or her in the deceased’s will.

Clients who are either planning to marry or who are already married, who wish to agree that neither will file for the elective share against the other’s estate can put this in writing in a prenuptial or postnuptial agreement.

Big changes in Maine and federal estate tax

by Sally M. Wagley, estate planning and elder law attorney

 Everything in life changes – especially the law on estate tax.

Since I started practicing as an estate planning lawyer in Maine almost 14 years ago, estate tax laws have changed many times.   This last year, 2011, has been particularly eventful:

  •  The federal estate and gift tax exemption increased from $3.5 million to $5 million dollars (after a very brief period during which the federal estate tax was repealed altogether).  
  • The Maine estate tax exemption will increase from $1 million to $2 million dollars, effective January 1, 2013.   

 If you are a Maine resident and have accumulated significant wealth, a simple will may not be enough. You may need an estate plan which aims to reduce or even eliminate estate tax, thus preserving what you’ve saved for the next generation or for charity.  Strategies  include: 

  •  Trusts for the benefit of spouse, children, grandchildren or other family members;
  •  Gifts to charity, including gifts to charitable trusts;
  •  Bequests which skip a generation;
  •  Annual gifts of up to $13,000 per person to family members;
  •  Funding college savings plans for grandchildren. 

Since the laws on estate tax change so often (and will continue to change), I like to incorporate flexibility into clients’ estate plans, enabling surviving family members to make decisions at the time of your death based on the law in effect at that time, based on the size of your estate and based on th e needs of surviving family members.   An example is a will which gives your surviving spouse the ability to “disclaim” his or her inheritance from you, directing assets to one or more tax-saving trusts, if it appears at that time to be beneficial.    This is just one of a number of approaches to formulating a tax-oriented estate plan.

The information provided here is for educational purposes only, and should not be construed as legal advice or an answer to a specific legal problem. 

Sally M. Wagley practices in the areas of elder law,  estate planning and estate administration, with the firm of Levey and Wagley, P.A. in Winthrop, Maine, www.leveyandwagley.com.   

Using a trust or LLC to keep your vacation home in the family

Here in Maine (“Vacationland”), one of our favorite activities is going “up to camp.”  People treasure their waterfront property and hope that it will remain in the family for generations.   While it is impossible to control the future from your grave, you can increase the chances of the property staying in the family by placing the property in a trust or a limited liability company (LLC). Such an arrangement typically provides:


  • Who will make decisions about the property. If you use a trust, the decision maker(s) will be called “trustees” if you use a trust.  You might appoint one of your children as trustees, or perhaps all of them, to act as a group.
  • The arrangement will state how decisions are to be made about the property: Will one person make decisions unilaterally?  Or will decisions be made by a group, by majority vote?
  • Who will pay property taxes, insurance, utilities and maintenance?  Will it be shared by all members of the family who get to use it?  What if one person can’t afford these expenses?
  • How will a schedule be arrived at, enabling different family members to use the property?
  • What if one of the beneficiaries isn’t using the property much and wants out of the arrangement?  Will other beneficiaries be required to buy him or her out? If so, how will they decide on a price?
  • What happens if a beneficiary dies?  Does that beneficiary’s share go to the other beneficiaries?  Or does it go to the deceased beneficiary’s children?

Families are often tempted to develop such an arrangement informally.  However, this type of arrangement is complex, requiring the consideration of many possible scenarios as well as tax considerations.  Therefore, it is essential to consult an attorney before deciding to go in this direction.  

 

Sally M. Wagley assists older and disabled people and their families in the areas of elder law,  estate planning and estate administration with the firm of Levey and Wagley, P.A. in Winthrop, Maine. Go to www.leveyandwagley.com.   

Using a Revocable Living Trust to Avoid Probate

“Probate” – a word that creates fear and dread in the hearts of many. (For more information on what “probate” is, see my previous blog, “What is Probate?”)  But the truth is:  While the probate process in some other states is complex, time consuming and expensive, Maine has a streamlined probate process which for most people is relatively fast and is no more expensive than alternatives to probate.

 Reasons to avoid probate.  Nevertheless, in some instances, it can make sense to make arrangements to avoid probate.  This is true if: 

  • You have real estate outside of Maine; or
  • You have concerns about privacy and want to keep the details of your estate plan private.

 Ways to avoid probate. A number of simple ways can be used to avoid probate, such as: 

  • Putting real estate, bank accounts and investment accounts in joint names;
  • Designating beneficiaries on investment accounts, retirement plans, annuities and life insurance; 
  • Using “transfer on death” designations (“TOD” or “POD”) on accounts.

 Using a Revocable Living Trust to avoid probate. A “revocable living trust” may also be part of a plan to avoid probate.   This is done as follows:   A lawyer writes up a trust document.   Under this document, you name yourself as trustee. This means that during your life, and for as long as you are mentally competent, you remain in control of your assets.  You are able to add assets to or remove assets from the trust, spend money from it, change the terms of the trust, or revoke the trust altogether. You also name a “successor trustee”:  a trusted person (such as a family member or bank) to take charge of the assets when you die, or possibly sooner, if you become mentally incompetent.  When you die, the successor trustee pays bills and then distributes money and property according to the directions in the trust document, to the people you name in the document and in the amounts directed by you.  This can all be done without anyone having to file papers in the probate court. This preserves your privacy.  And if you have real estate outside of Maine, it avoids the necessity of filing for probate in another state, which can indeed be expensive.

 When considering whether to have a trust of this type prepared, be aware that the fees will be higher than if you go with a simple will.  This is because, in addition to the drafting of the trust document, deeds must be prepared, transferring your home and other real estate to the trust. Your bank and investment accounts will also need to be transferred to the trust, and beneficiaries will need to be changed on your retirement plans and life insurance.    This will all require more time on the part of your attorney, for which you should expect to be billed. 

(This blog is by attorney Sally M. Wagley, a Maine elder law attorney with the firm of Levey & Wagley, P.A., in Winthrop, Maine.  The information provided on this website is for informational and educational purposes only.   This information should not be construed as rendering legal advice or offering an answer to a specific legal problem.)

Trusts 101

Clients frequently come into my law office asking “Should I (or we) have a trust?”  My answer is always “It depends on your situation and what your goals are.” 

Then I ask clients, “What are your goals?   What are the concerns you have that make you think about having a trust?”   These concerns may include:

  • Providing for a minor or young adult child
  • Providing for a disabled person
  • Providing for a pet
  • Avoiding probate
  • Minimizing estate tax
  • Preserving your assets against the high cost of nursing home care
  • Keeping your vacation home in the family.

There are many different types of trusts, for many different purposes:

  • A trust for a minor or young adult child;
  • A “special needs trust” for a disabled person;
  • A trust for the care of an animal;
  • A revocable living trust, to avoid probate;
  • A tax-oriented trust, to reduce estate taxes;
  • A trust to preserving your assets against the high cost of nursing home care;
  • A trust to hold your vacation home for the benefit of your family.

In the coming weeks, I will write about different types of trusts which can be useful depending on the client’s situation. Later this week:  Trusts for minor or young adult children.