Is a Trust for You? It Depends on Your Specific Need.

If you’re looking to avoid probate, limit possible estate taxes, or assume greater control over how your estate is distributed after you pass, a trust may be for you. But making an appointment with your estate attorney and saying you want to establish a trust is like going into a bakery and saying you want to purchase a cake. The baker is likely to ask a number of questions: What’s the occasion? How many people are we feeding? Which flavors would you like?

Similarly, an estate planning attorney should ask a series of questions when clients request a trust because a trust is a uniquely drafted document that’s created to reflect the circumstances of your particular situation. As your legal advisors our first question must be “Why do you think you need one?” This allows us to determine whether a trust is an appropriate planning tool.

One of your biggest challenges is knowing how each type of trust differs and the goals a particular trust can help you accomplish. Even more, do you even need a trust in the first place?

To appropriately determine need, it is helpful to understand the 3 primary classes of trusts: revocable, irrevocable, or testamentary.

A Revocable Trust

A revocable trust, also known as a living trust, is beneficial because provisions of the trust may be changed during the creator’s lifetime. Assets may be placed in trust and removed, the creator (also called the grantor) is entitled to all the benefits and income of the assets that are owned by the trust, and, if they desire, they are empowered to terminate the trust as well.

Only after death do the terms of the trust become unchangeable and the property held in the trust transfers to your beneficiaries. At that time, your heirs benefit because a revocable trust allows them to avoid probate, the lengthy, often expensive, legal process that takes place when it’s time to distribute your estate.

A revocable trust can also be effective if you own property in multiple states and would therefore be subject to probate in several states. However, if those two properties are owned inside of a revocable trust, you’ll likely be able to avoid probate entirely, thus making the process of administering your estate quicker and less costly.

A revocable trust also should designate a successor trustee who is empowered to manage the assets held in the trust should you become incapacitated in any way. This is particularly useful as individuals age and require the assistance of adult children to help manage their finances and pay bills. Because the adult child may be named as the successor trustee of the trust, they are automatically empowered to take over if necessary, without the need for access through a power of attorney or guardian appointment.

Finally, a revocable trust offers families a degree of privacy in their estate planning. Because a Will becomes a publicly available document once probated, many individuals may choose to have the dispositive provisions of their estate plan contained within a trust, which is only available to the named beneficiaries after someone dies.

A revocable trust can be funded or unfunded. Funded means the assets are typically placed into the trust when you establish it. An unfunded trust, by contrast, is actually nothing more than the trust document itself. That said, it is not void but rather inoperative until it is funded.

Sometimes, for whatever reason, the originators of the trust neglect to fund it. This is essentially sub-optimal handling as indefinitely not funding or not having a plan to fund a trust essentially negates what the trust is intended to accomplish. In other circumstances, however, a trust can remain unfunded until you die at which time your Will provides that any assets in the estate be placed into the trust.

An Irrevocable Trust

In contrast to a revocable trust, assets in an irrevocable trust can’t be removed or amended after they’ve been placed in the trust. Essentially this means that you relinquish control of the assets you place in an irrevocable trust, and they are removed from your estate, protecting you from possible estate taxes. Because the IRS and some states tax estates that are above a certain value, you can use the trust to reduce the value of your estate.

By placing assets into the trust and naming your heirs as beneficiaries, you can try to reduce your estate to a level below the tax exemption amount. Keep in mind that this amount fluctuates each year. In 2021, the exemption is $11.7 for an individual or $23.4 for a married couple. For people who pass away in 2022, the exemption amount will be $12.06 million. For a married couple, that comes to a combined exemption of $24.12 million.

Many people also choose to create irrevocable trusts and gift assets into them during their lifetime to preserve those assets from being depleted by long term health care costs that may arise as they age.  There are a number of complex issues involved in gifting assets, however, which should be thoroughly evaluated with an experienced estate planning attorney.

A Testamentary Trust

A testamentary trust is established after you pass away and is created through a Will, in which case the terms of the trust are spelled out in the Will. Testamentary trusts are often used as a tool to help you create a trust for minor children. In addition, you can leave assets in trust for your adult children if you want to ensure that their inheritance ultimately passes to your grandchildren as opposed to your son or daughter’s spouse. A testamentary trust may in some cases shield your assets from your beneficiaries’ creditors or a divorce proceeding as well.

From the Grave

Despite the different types of trusts, 2 universal themes are huge motivators for establishing a trust: flexibility and control. You will have the flexibility to avoid probate and minimize estate taxes. Plus, you will have the control to ensure that your assets become a true financial legacy for your family. The terms you set up at the establishment of the trust or that you designate to go into effect upon your death will enable you to control—even from the grave—and dictate that your grandchildren and future generations of your family will benefit from the wealth you have accumulated during your lifetime.

That after all is the peace of mind that you derive from establishing and reassessing your estate plan early and periodically during your lifetime. At Phelan, Frantz, Ohlig & Wegbreit, we become your partners in providing the thoughtful guidance that will help you safeguard your legacy.

Call us at 908.232.2344 to develop a plan and determine the best wealth transfer vehicles personalized to your unique needs so that you can best provide for and protect your loved ones.




5 important questions to help you choose Fiduciaries who are right for the job

Developing and managing your estate plan is much like being the CEO of a company. To have your plan run smoothly, you need to make spot-on decisions when selecting the individuals to fill the requirements of the plan’s important Fiduciary roles. Fiduciaries are granted certain rights and powers to be exercised on your behalf and without your supervision if you are incapacitated, unable to handle your own affairs or deceased.

You can have all the right documents in place, leave instructions as to where your important papers are located and update your investment accounts and beneficiary designations. But, if you choose the wrong people to manage your affairs, your plan may not operate as you had envisioned.

No Honorariums. Conscientious decision-making

Like any important decision made by a CEO, choosing the right Fiduciaries requires careful forethought, consideration and evaluation. In reality, you are choosing individuals to do a job. There’s no other way to look at these selections. In some roles, Fiduciaries also get paid for their work.

Fiduciary roles are not honorary positions and need not be assigned to immediate family members.  These selections should be made thoughtfully and wisely. And, as CEO, you should choose the individual with the best qualifications, skill set and temperament for the job.

Across the board, Fiduciary roles require expertise, the right skill set, propriety and the characteristics of utmost loyalty to your wishes and values, along with responsibility and trustworthiness.

Here are five important questions to consider when you put on your CEO hat to make these designations:

1.  What are these Fiduciary positions?Fiduciaries


Role – Assists in the management and control of your financial and life affairs in the event you become incapacitated

Duties – Assumes the right to pay your bills, sign documents and conduct financial transactions on your behalf, may also make decisions about your living situation in cases of ongoing incapacity

Skill set – Someone who’s responsible about managing money and has the good sense to know what he/she doesn’t know and seeks guidance from a professional such as your financial advisor or estate attorney; has the ability to handle challenges to his/her authority when others (including family members) challenge decisions being made on your behalf


Role – Individual charged with wrapping up your final affairs.  This individual is appointed in the Will and charged by the court to oversee the administration of your estate by collecting assets, paying final debts, and making distributions under the terms of your Will; an Executor is entitled to compensation from your estate

Duties – Finds all your important documents, takes charge of your property, pays creditor claims, files tax returns, distributes the assets of the estate to beneficiaries and files the final accounting with the court.  Unless you have appointed a Funeral Agent, your Executor also is tasked with making arrangements for your burial or cremation.

Skill set – Again, an individual who’s responsible about managing money; someone with good discretion who communicates clearly and is good at conflict resolution because sensitive relationships among heirs sometimes exist; is quick to reach out for assistance from professionals if and when needed


Role – Appointed pursuant to a Will or standalone Trust, this individual will manage and invest trust assets as well as administer the trust agreement using the terms you created; position is entitled to compensation

Duties – This can be a long-term responsibility, because Trusts are often established to handle funds for many years after you die, typically for the benefit of minor/young beneficiaries or for those who have special needs. If you have a business, he/she will manage it until it is sold or transferred to the next generation.

Skill set – A financial or legal background is helpful; also, someone who does not have any conflicts with beneficiaries


Role – This appointee makes healthcare decisions for you if you are unable to make them yourself because you are incapacitated

Duties – Communicates with medical professionals overseeing your care and makes certain the protocols they are using align with your wishes regarding methods, extent and scope of care

Skill set – Understands complicated medical terminology, protocols and outcomes; knows how you would make healthcare decisions regarding your care and is stalwart in carrying out your wishes; is able to remain calm under pressure


Role – A guardian is appointed when you have minor children (children under 18 years of age) or adult family members with special needs

Duties – A guardian of a minor is a person who has the powers and responsibilities of a parent concerning the child’s support, care, education, health, and welfare.

Skill set – An individual who will parent with your parenting style, who will make the well-being of your children a priority and who will love your children as you do.

2.  Are two individuals (co-Fiduciaries) better than one?

Appointing co-Fiduciaries to serve together is a good idea, especially if at least one of your appointees lives out of your geographic area. It also provides an opportunity to allow family members to share responsibilities, and, in some cases, check and balance each other. Make sure that the two people you choose will get along and act in concert. Don’t select two just because you want both to feel honored or to avoid an argument between the two of them.

3.  How about backups?

Always have backups. Life changes, the unexpected happens and a Trustee, for example, may serve for years which makes backups critical. Also, if you’re a parent appointing a guardian, a backup ensures that your wishes will dictate, influence and inform a decision should something happen to the first guardian as opposed to a decision made through the guardian’s choice.

4.  And what about professional Trustees?

This is a circumstantial decision. A professional Trustee is more objective, so this makes sense if there’s a pattern of family discord. But it costs money. Think carefully and make sure your situation commands this alternative.

5.  Can a Fiduciary be a Beneficiary, too?

Yes, and usually is. And this works in most circumstances, unless you anticipate conflict. In that case, choosing an objective person is preferable. Indeed, there’s much to consider when filling Fiduciary roles. Ensuring you choose the right individuals can make or break your estate plan—even more so because Fiduciary responsibilities must be carried out during a challenging and grief-filled family time.

Your estate planning attorney: always on hand to help

Your estate planning attorney will help you evaluate your options based on the nature and extent of your assets, the personal qualities of the individuals you consider and the unique nature of your family dynamics. After all, like all capable leaders, as CEO of your estate plan, you will know when it’s time to reach out.

At Phelan, Frantz, Ohlig & Weqbreit, LLC, we take our responsibility to provide families with conscientious estate planning and guidance very seriously. Please contact us if we can be of assistance to you in developing and/or reviewing the appropriate estate plan for your family, including your designation of individuals to fill these important Fiduciary roles.


Procrastination is often the biggest enemy of estate planning!

We’ve all heard stories like this: A couple is about to head out on a prolonged business/pleasure trip involving considerable air travel. Panic sets in five days before their departure when it dawns on them that they don’t have Wills. Though immediate outreach to their attorney may enable them to get documents drafted and executed before they leave, this scenario is hardly ideal.  Harried or rushed actions can result in improper or faulty planning, which in turn may lead to family misunderstandings and disputes, assets going into the wrong hands, court cases, and the corresponding expense in legal fees and/or taxes.

As the saying goes, there’s no time like the present, even when planning for events likely to occur in the distant future. The New Year is the perfect time to get started or review a plan you already have to make sure it is on track.

Wherever you are in your estate planning process, our eight-point New Year’s checklist will help you get off on the right foot.

1. Make an appointment with an experienced estate planning attorney

There’s no better way to get the wheels turning than to sit down with an attorney experienced in estate planning. In this initial visit, your attorney will familiarize you with all the issues you must consider.

Estate planning is serious business and far more than a last-minute scramble to execute a Will. Its goal is to ensure the seamless transfer of assets to your heirs. It also safeguards your assets and the care you receive during times of critical illness if and when you cannot advocate for yourself. Estate planning takes considerable thought, important family conversations and the painstaking development of a plan geared to your unique family situation.

2. Take inventory

Assimilating information on your assets, tangible and intangible, is critical. This means listing what they are and how they are held. Some of these assets will pass to your survivors under your Will, others will pass to beneficiaries outside of your Will.

Tangible Assets include Real Property, land and whatever is built on it, typically your house, and Personal Property, which includes your physical possessions: jewelry, art and antiques and other collectibles; television sets, computers and other electronics. These will be just some of the items on the list.

Intangible assets include the things you own on paper: bank accounts, stocks, bonds, insurance policies, and retirement accounts (IRA’s). Items like bank accounts and stocks and bonds in a brokerage account likely will pass through your Will or to a joint account holder. Items like your insurance policy, IRA or 401(k) already have named beneficiaries and will pass to your survivors outside of your Will regardless of what your Will dictates.  Reviewing these distinctions is a KEY piece of crafting an appropriate estate plan.

3. Get organized

Getting organized is another vital step. It requires that you create a spreadsheet that itemizes all of the above items, again both tangible and intangible. Make copies of deeds and mortgage documents related to real estate, make copies and place originals and copies in a safe place. Ideally, your estate attorney will retain the original and a trusted designee named in a legal document will securely retain the other.

All documents should be recorded on a spreadsheet which accurately identifies the institution or institutions in which an asset is held and account numbers and passwords to the accounts, and contact information for the representative in the institution who handles your account. It is imperative that your estate attorney and the designated fiduciaries have copies of these spreadsheets or knows where to find them.

If you have a safety deposit box that holds important documents or information, make certain your attorney and survivors know the box number and in which bank the box is located. It is advisable to provide your attorney and your designees an extra key.

Note: Once you and your attorney have actually developed a plan, you will have created a Will, Durable Power of Attorney, Living Will and Advanced (Healthcare) Directive, essential documents which may be held in your safety deposit box and/or with your attorney as well as with other fiduciaries and designees.

4. Designate Fiduciaries (Financial), Healthcare Proxy and Create the Necessary Documents

Fiduciary roles refer to any person or institution that has the power to act on your behalf in situations in which you are no longer capable of acting or advocating for yourself and following your death. Plus, any adult can serve as your Healthcare Proxy. Fiduciaries can assume many roles in your estate, and, depending on a particular fiduciary designation, can act either before or after your death…or in both situations.

The law stipulates that your fiduciaries be legally competent individuals over 18 years of age and capable of managing their own affairs. But that’s where the requirements stop and where your careful thought and good judgement come in. Because these positions require the utmost honesty, loyalty and trustworthiness, the individuals you choose must be able to set aside their own personal inclinations and motivations to act in a manner consistent with your financial and health goals. Plus, if you have children who are minors, it is wise to appoint a guardian who will parent in a manner consistent with your parenting style and love your children as you would.

Each role requires a different skill set. To choose the most appropriate fiduciary, align the strengths and characteristics of the person you want to designate with the functions required for that position.  It is also advisable to have an alternate or backup in case logistically there is a problem with the primary person being available when it’s time to serve.

Keep in mind also that you must reach out to the individuals whom you want to serve in these roles and ask/confirm that they are willing to assume the associated responsibilities. While being selected may be considered an honor, these positions take time, require work and, in many cases, require a stalwart mindset.

5. Draft your Will

A Will is one of the main, if not the primary, components of every estate plan, even if you don’t have substantial assets. Wills ensure property is distributed according to your wishes and drafted according to state laws. In it, you state who you want to inherit your property, name the person (the Executor) who is in charge of distributing your assets as instructed in the Will, and address the contingency of the simultaneous death of you and your spouse, name a guardian to care for your young children.

Simply having a Will isn’t enough, though. The proper wording of the document is critically important, which is why it is highly recommended that you work with an estate attorney when executing this document. Sometimes, when individuals try to do this themselves with one of the Do It Yourself apps, they overlook important considerations or fail to comply with laws in their state. This can cause probate problems that may require your heirs to spend time and money attempting to rectify misstatements, omissions and other mistakes

6. Consider a Trust

A trust is legal entity that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when your assets pass to your heirs.

Trusts typically avoid probate, so your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred through a Will. And, because assets that you’ve held in a trust may be able to pass outside of probate, this saves your heirs time, court fees, and potentially reduces estate taxes as well. An irrevocable trust, for example, may not be considered part of your taxable estate, so fewer taxes may be due upon your death.

You can specify the terms of a Trust down to the letter, controlling when and to whom distributions may be made. What’s more, if you set up a revocable trust, the Trust assets remain accessible to you during your lifetime; you designate to whom the remaining assets will pass, even when there are complex situations such as children from more than one marriage.

A properly constructed Trust can also help protect your estate from your heirs’ creditors, future ex-spouses, or from beneficiaries who may not be adept at managing money. Again, working with an experienced estate attorney will ensure you set up a Trust with the best governance for your unique situation.

7. Make a Living Will

A Living Will, also called an Advanced Directive, is a written statement that details the type of care you want or don’t want if you become incapacitated. A Living Will bears no relation to your conventional Will or Living Trust used to bequest property upon your death. It’s strictly a document that spells out your health care preferences and addresses a number of possible end- of-life care decisions and whether you want or do not want them. While you may indicate you do not want heroic measures, you must define heroic and answer questions regarding whether you want:

Creating your Living Will requires you to think about your values as well as your wishes: Questions like how important it is to you to be independent and self-sufficient? What circumstances might make you feel like your life is not worth living? Would you want treatment to extend your life in any or all situations, or only if a cure seems possible?

Also, beyond treatments during illness, you can specify your wishes to donate your organs and tissues or donating your body to scientific study.

8. Draft a Power of Attorney

A Power of Attorney (POA) is a very important estate planning tool which allows a person you appoint—your Attorney-in-Fact or Agent—to act in your stead in financial and legal matters.

A POA grants broad authority to your agent to sign documents, pay bills, and conduct financial transactions on your behalf.  In other words, your agent will be authorized to handle “the business” of your life.

The Bottom Line 

As is evident from the above considerations, there is more to estate planning than deciding how to divvy up your assets and provide for your loved ones and other beneficiaries when you die. Estate planning also ensures that the right individuals have access to your assets upon your temporary or permanent incapacity so that your affairs can be handled appropriately and the care you receive will ensure the dignity and quality of life you deserve and desire.

While estate planning may seem like a bleak and uncomfortable task for the start of a new year, it is a necessary one to address. You can adjust your mindset to think of your estate planning in a positive light. Just consider: Thorough preparation now will give your family peace and comfort and a stress-free probate process at some future time when your family will be dealing with emotions of loss and sadness.

When you think of estate planning in this way, you will likely come to realize that planning today is a gift you are giving your loved ones for some time in the future. And giving a meaningful gift to your loved ones…there’s no better way to start a new year!

At Phelan, Frantz, Ohlig & Wegbreit, LLC, we take our responsibility to provide families with conscientious estate planning very seriously…in the new year and beyond.  Please enjoy the year ahead and contact us if we can be of assistance to you in developing and/or reviewing the appropriate estate plan for your family.