How Does a Trust Work?

In my last post I gave my top 3 reasons you might want to establish a trust. In this one I’m going to explain to you how a trust works. People often create trusts to help manage their assets. There are many different types of trusts. I will go into detail on the types in a future post.

The person who creates a trust is called a grantor (may also be called settlor or trustor). The grantor writes the rules governing how the trust will operate and what assets will be placed in the trust. If the grantor creates a revocable trust the rules can be changed at any time. If the trust is irrevocable the rules cannot be changed.

When creating the trust the grantor will appoint a trustee. The trustee’s job is to manage the trust and its assets. The trustee must follow the rules set up by the trust, though some trusts do allow the trustee discretion in making decisions. The grantor will often appoint himself as trustee. If you do this you will also need to name a successor trustee for when you die or in case you become incapacitated.

After the trust is created it receives a gift from the donor. This is usually the grantor although the trust can be set up to receive gifts from others. The trustee will collect the gifts and make investments according to the rules of the trust. The trust will end up with three things: 1) the principal, which is the gifts and money placed in the trust, 2) income, which is the money earned by the principal from interest and dividends, and 3) profits from increases in value of the principal, called capital gain. The rules of the trust will determine how these are distributed.

The people who receive these benefits are called beneficiaries. These are the people for whom the trust was created. Beneficiaries can be anyone the grantor chooses – family, friends, businesses, charities, etc. The trust itself should lay out how and when the trustee should distribute the trust assets to the beneficiaries.

This is just a basic overview of how a trust works. If you would like more information or would like to create a trust please contact Sharkey Law today .

Top 3 Reasons to Create a Trust

A will is an important and essential part of any estate plan. However, if you have a substantial amount of assets or you would like to place restrictions on how and when your assets are distributed you may want to consider establishing a trust. A trust gives you greater control over the distribution of your assets and may give you a better peace of mind that your family will be taken care of to the best of your ability when you die. I’m going to give you my top 3 reasons why you should establish a trust.

#1: A Trust Allows Control over When Particular Assets are Distributed

Say you have one child – a 19 year old daughter. If you and your spouse die at the same time you would likely want your assets to go to your daughter. Most of your physical assets will probably be sold off as your estate is reduced to cash. This could be a good sum of money. Would it be a good idea to make that check out directly to a 19 year old girl? Maybe if you want her to have the best wardrobe in college. It would probably be a better idea to establish a trust for her benefit with somebody more responsible as the trustee until your daughter reaches a more mature age of your choosing. Until then the trustee can use the trust assets to take care of your daughter – tuition, insurance, living expenses, and anything else you may list in the trust instrument. If you have any heirs who may not be fiscally responsible a trust may be a good option for you.

#2: A Trust Avoids Probate

Probate is the legal process that inventories and distributes a person’s property after death. Many people aim to avoid probate because it is time consuming and expensive. It can easily cost thousands of dollars and take several months or even a year or more to resolve. If you create a trust, all of your property will be in the trust’s name, not yours. When you die the trust property won’t go through probate. Instead, the trustee can transfer your property to the beneficiaries you named in the trust quickly and easily. In many cases, the whole process takes only a few weeks, and there are no lawyer or court fees to pay. When all of the property has been transferred to the beneficiaries the trust ceases to exist.

#3: A Trust Allows You to Plan for Incapacity

The third benefit of establishing a trust could occur during your lifetime. All of the assets in a trust are controlled by the trustee. Since certain assets can’t wait months to be managed, in the event you become ill or incapacitated your successor trustee can step in and take over control. This will allow the relatively smooth transition from you managing your money to your trustee managing it on your behalf. For your protection, the trust document should list the criteria which will determine incapacity before a trustee can act in your stead. If you regain capacity, the trust should be drafted to allow you to resume acting as trustee.

These are my top 3 reasons for establishing a trust. If any of these concern you contact Sharkey Law today to discuss your options.

Do You Need a Will?

Most people have a general familiarity with what a will does. They know it is a document that determines who gets what when they die. A will is the simplest estate planning device. For most people a will is all the estate planning they want. The primary goal of most younger couples is to ensure their children are cared for if both parents were to die. This applies to single parents as well. A will enables parents to handle this situation. Finally, many people don’t want to deal with the time and cost associated with establishing an extensive estate plan. A will allows them to handle the distribution of property as they see fit with as little hassle now as possible.

Property You Can’t Leave in a Will

There are certain types of property that you cannot leave by a will. This applies to property that you have already agreed to transfer by other means, including:

  • Property involved in a contract
  • Property transferred into a living trust
  • Property held in joint tenancy
  • Proceeds of a life insurance policy with a named beneficiary
  • Money in a pension plan, individual retirement account, or any other retirement plan with a named beneficiary
  • Money in a pay on death bank account or stocks in a transfer on death account with a named beneficiary

Dying Without a Will

If you don’t make a will or establish some other legal method to transfer your property after you die your property will be distributed to your spouse and children under the intestate laws of your state. If you aren’t married and don’t have children your property will go to your next closest relatives. If no relatives qualify to inherit your property then it will go to the state.

In the absence of a will a judge determines who distributes your property and who will care for your children. If you desire to distribute any of your property to friends or others you need a will. Intestate laws will not do this. If you’re living with somebody who you’re not married to that person will not receive your property through intestate laws. Additionally, if you have minor children you will leave no guide as to who you want to raise them. Dying without a will and leaving all of these issues to be determined by intestate laws is not a wise choice and not in your best interest.

Should You Pay Your Traffic Tickets?

The obvious answer to this question is yes. Yet many drivers don’t do it. Why? Some forget, some don’t believe they did anything wrong, some don’t fully understand the consequences.

One consequence drivers face is possible jail time. This may seem drastic but it does happen on occasion. If you don’t pay your ticket the court can issue misdemeanor charges for ignoring a ticket and issue an arrest warrant. If arrested, you might be sentenced to jail time or community service hours. Is this a risk you’re willing to take? If you can’t pay the ticket by the due date contact the court and see if they will push back the date. Some courts will allow this as long as you follow their requirements.

Another risk of not paying your tickets is the possibility of having your license suspended. If you fail to appear in court or pay your ticket the judge may issue a notice explaining that you were found guilty and that your license will be suspended. Consider all the inconveniences that can come with a suspended license: reinstatement fees, possible retesting requirements, increased auto insurance rates and more. And if you get pulled over again while driving on a suspended license you’ll face even harsher penalties and could get your license revoked.

Even if your license is not suspended you will usually accumulate points on your license for a traffic offense. If you don’t pay your tickets you could be given more points on top of the initial points. Points on your record can result in an increase in insurance rates, higher fines, and an increased likelihood of license suspension.

If you don’t believe you deserved the ticket you can fight it in court. You can represent yourself but that can be risky. It is often in your best interest to hire an attorney. It might take someone well versed in traffic laws and the court system to help you avoid unwanted consequences. Going before a judge to state your case or contest your traffic ticket probably isn’t something you do regularly. A lawyer used to navigating the legal system might be the difference between a blemished or a clean driving record. Additionally, some cases require a court appearance even if you live out of state. If you can’t afford to take a day off from work it may be better for you to have a legal representative take your place. If you’ve recently received a ticket contact a lawyer today to see if legal representation is the right choice for you.

Contact Sharkey Law today to set up a consultation.

Shot Glass or Shotgun? Just Kidding, You Can Have Both.

Wilshire Gun will be opening in July in Oklahoma City. A group of local investors is transforming a former food distribution warehouse into an upscale indoor shooting range. The nearly $6 million renovation of the 35,000 square foot building will feature 24 firearm lanes, 10 archery lanes, a simulation room, classrooms, café, and a VIP lounge where the alcohol will be served.

Although the shooting and drinking will occur under the same roof they will be kept separate. The rule is shoot first, drink after. The range will be scanning driver’s licenses so those who leave to get a drink can not re-enter. “Guns and alcohol will never mix at Wilshire Gun,” says general manager Jeff Swanson. “We have an absolute zero tolerance policy. Once your order a drink your driver’s license is scanned and you are red-flagged and you’re not allowed into any of the shooting facilities either as a spectator and certainly not as a shooter for the remainder of the day.”

Larry McAlister, a spokesman for Wilshire Gun, notes that the “guntry club” model is unusual but not unique as there are others in Georgia and Texas. Swanson compares the business concept to a high-end bowling alley or luxury movie theater.

Co-owner Jane Moran states that “guns are the new golf” in the world of corporate events. She wants to create a clubhouse environment where business people can interact.

Staff will be trained in field sobriety and the range will be using cameras to monitor customers. But there are people who are still skeptical. Capt. Brent Fairchild with the ABLE Commission has voiced his concerns. “I guess you could go back to the old adage where there’s a will there’s a way, so no matter how many safeguards you do put in place there’s always someone who’s going to try to get around those.”

Really?

I’ve always thought about moving to Texas. It seems like a fun, laid-back place. With cowboys, big high school football games, and at least four different types of BBQ, it contains many of the things I dreamed about as a little boy. Apparently, many illegal immigrants from Central America share that same dream.

South Texas is now the main gateway for illegal immigrants crossing into the United States. Border Patrol agents in that area apprehended 154,453 immigrants last year. Many of these immigrants are from Central American countries including El Salvador and Guatemala. Because sending these immigrants back to their home countries is proving to be costly, Texas has decided to fly, bus, and then abandon them in other states.

Obviously the other states are not happy with this. Most of the families apprehended so far have been flown to Arizona and dropped off at a bus station in Phoenix. The Republican gubernatorial candidate of Arizona Scott Smith claims it is an “astonishing failure of leadership at every level inside the Beltway.”

Floridalma Portillo was a part of a group of around 400 Central Americans who were flown from Texas to Tucson. They were then shuttled to Phoenix because the Tucson Greyhound station ran out of space. When they arrived in Phoenix, Floridalma’s five year old son was struggling to breathe because his inhaler was lost during the shuffle. Her other son caught a cold after sitting on the floor of the detention center for hours. Floridalma said she fled Guatemala because of growing violence.

On a positive note, volunteers from the Phoenix Restoration Project have begun meeting these immigrants at the Greyhound station. They are handing out food, diapers, clothing, and other supplies.

Donald Sterling Saga

By now you have most likely heard about the racist remarks made by Los Angeles Clippers owner and CEO Donald Sterling. As a result he was given a lifelong ban from the NBA and fined $2.5 million, the largest that league bylaws would allow. He has also been removed as CEO of the team.

Sterling has a history of accusations of discrimination. In 2009, he agreed to pay $2.73 million to settle allegations that he refused to rent apartments to Hispanics and African Americans. In 2011, Sterling won a lawsuit against former general manager Elgin Baylor. Baylor sought roughly $2 million claiming he was forced out of his job with the Clippers due to age discrimination and harassment.

Commissioner Adam Silver intends to force Sterling to sell the Clippers, which would require a three-quarters approval from other teams. “The views expressed by Mr. Sterling are deeply offensive and harmful,” Silver said. “We stand together in condemning Mr. Sterling’s views. They simply have no place in the N.B.A.” Silver’s intention to force the sale is being supported by many of the players and other owners.

The forced sale of the team has brought up several issues of discussion, including free speech and property ownership. According to Forbes, the Clippers are currently worth $575 million. Can Silver force Sterling to sell?

The NBA’s strategy is to use moral and ethical contracts Sterling signed with the NBA in conjunction with the league’s constitution and by-laws to force the sale. The league’s constitution provides that the league may remove an owner if the owner does not fulfill contractual obligations to the Association. If this occurs, the other owners in the league can vote to force a sale by a three-quarters majority.

If this occurs, it is likely that Sterling will bring a lawsuit to attempt to prevent the sale. The lawsuit could take years to settle.

Sterling would likely argue that he did not willfully violate any of the provisions in the league’s Constitution since the recording was obtained illegally and leaked without his consent.

The league could counter this a couple of ways. First, it could use a provision in the Constitution which prevents the owners from bringing a lawsuit to review any decision made by the NBA in accordance with the removal procedure. If that does not work, the league could then use the moral and ethical contracts. These contracts, signed by Sterling, state that an owner will not take any action that materially and adversely affect a team or the league and that the owners will be upheld to the highest standard of moral and ethical behavior.

Another aspect of this scandal to consider is how it is affecting the Clippers financially. Several sponsors have pulled out from supporting the team when Sterling’s comments were made public, including CarMax, Sprint, and State Farm. Even though Sterling has been removed the sponsors have been slow to return. This will be a concern to shareholders of the team as well as prospective buyers.

What do you think? Should the NBA be able to force Sterling to sell the team? Comments are open below.

DACA Students Qualify for In-State Tuition

Students living in Virginia lawfully under the Deferred Action for Childhood Arrivals program qualify for in-state tuition as long as they meet Virginia’s domicile requirement, advises Attorney General Mark R. Herring.

“If the Commonwealth is to remain competitive in a global economy, we must embrace a strategy that maximizes our talent pool and helps all Virginians reach their full potential,” said Attorney General Herring. “These ‘DREAMers’ are already Virginians in some very important ways. In most cases they were raised here, they graduated from Virginia schools, and they have known no home but Virginia. They might be the valedictorian or salutatorian of their high school, but because they were brought here as children many years ago, an affordable education remains out of their reach. Instead of punishing and placing limits on these smart, talented, hard-working young people, Virginia should extend them an opportunity for an affordable education. It’s what the law requires, it makes economic sense for Virginia, and it’s the right thing to do.”

To qualify for in-state tuition the “DREAMers” will need to meet several requirements. First, they will have to be approved for DACA status. Second, they will have to be accepted to a local college or university. And finally, they must establish Virginia domicile.

This clarification by Herring has been applauded by many, including Senator Donald McEachin. “I am extremely pleased that our Attorney General has determined that DACA students can be eligible for in-state tuition,” said McEachin, who carried a Senate bill for tuition equity. “As a Commonwealth, we want to ensure that all students who seek a higher education have a chance to attain it — partly to help them become contributing, productive members of our communities, and partly because hardworking students simply deserve that opportunity. I am pleased that the Attorney General has joined me and my colleagues in working on this issue, and I am delighted to see our shared effort come to fruition.”