I am just back from the Capitol and have encouraging news to report.
The Senate has voted favorably on the Pet Trust Statute. It now goes to the Floor of the House for action. We will keep everyone informed.
There are real benefits to a Revocable Living Trust, as part of a client's estate plan. In my opinion, three stand out. They are:
(1) Avoiding probate;
(2) Easily continued business/personal affairs during any period of incapacity; and
(3) Avoiding ancillary probate.
For many of our clients, the third -- ancillary probate -- makes the case. If you own real estate in more than one state, you will need to file probate in each state. And while your executor/personal representative may get away without having an attorney in your "home" state, you will most definitely need to hire one in the other state. Both time and money are increased. You will not, with a properly funded Revocable Living Trust, need to file probate at all in either state. Certainly that's a significant savings and, thus, if you own property in more than one state, it's advisable to have a Revocable Living Trust.
Not quite there yet. Progress has been made, however. I previously blogged that in the Bill pending in the Senate had language requiring Probate Court approval of any Pet Trust. I was always negative on this language. Through discussion and hard work by several people, it is possible that language may be removed from the Bill.
Alternate language requiring any Pet Trust to have a trust protector may be inserted. Put simply, the trust protector is someone/somebody other than the trustee. The function of the trust protector is to ensure that the trustee is properly looking out for the pet(s). Increasingly, estate planners are using trust protectors in their trust agreements and it's particularly beneficial in the case of a Pet Trust where the pet beneficiary can not speak for itself.
So, the Bill is still pending in the Senate. It's on their calendar and hopefully will be amended as indicated above. Assuming it gets favorably voted out of the Senate, it will go to the House. All of this must happen before the Legislature adjourns on June 3, 2009. We're pushing! Let's hope we finally get it done.
Some further development. Through on-going negotiations, it is possible that the language requiring probate court approval of any Pet Trust may be removed from the Bill. For many reasons, including the logistical problems, and the unnecessary expense, I'm very much in favor of deleting this language. This is on-going and we will keep you informed.
Following the trend, Maryland's Legislature recently enacted a Pet Trust Statute there. This was nicely reported at www.pettrustlawblog.com. I encourage all to visit Attorney Meek's Blog where he very nicely blogs about many relevant items for per owners. Keep it up Dan!
My hope is that Connecticut will follow the nation's lead, and most recently, Maryland and enact a Pet Trust Statute. We can then all applaud.
As part of a yearly review of our clients existing estate plans, we are sometimes presented with life insurance policies that no longer provide appropriate benefits. The existing policies may no longer be necessary as part of the overall plan. But don't just stop paying the premium and let the policy lapse. We review with the clients whether a Life Settlement might be appropriate. In a Life Settlement, the client sells the existing policy in the secondary market, the third-party takes on ownership of the policy and the client gets a cash payment which can be more than the cash value of the policy.
With the cash, the client can invest it elsewhere, buy a different life insurance policy or even donate it to charity. Some guidelines to think about as to whether you are a good candidate for a Life Settlement include: (1) at least 65 years of age and oftentimes best to be 70+ years of age; (2) life expectancy of at least two years; and (3) the policy to be sold must be beyond the contestable period. Most importantly, you along with your advisor should conclude that the policy to be sold is truly no longer a valued part of your overall estate plan.
A recent example we were involved with will help demonstrate the potential benefit of a Life Settlement. The client was an 80 year old female who had about 8-10 years ago purchased a universal life policy. Originally, the policy was purchased as part of her estate plan with the thought that the policy would be used to take care of an estimated estate tax liability. As the years passed, through good continued planning, she was now at a point where her expected estate tax liability had declined and thus the policy really was no longer needed. It had also become somewhat expensive for the client to keep up with the premiums. We put her in touch with a Life Settlement broker who was able to get her a $302,000 cash payment which she used to make a charitable donation. The client and the charity benefited from this transaction.
Take a look at your existing life insurance policies and talk with your advisors about whether a Life Settlement is right for you.
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