Month: October 2018

Five Situations Where You Need an Emergency Fund

Posted by Galeet Levy on

Saving for the future is always a good plan. But what happens when an emergency occurs and you are not prepared. It is common for people to forget to put money into an emergency fund until circumstances make having one essential. Here are some common situations where having an emergency fund may prevent financial stress and prevent you from going into debt.

 

  1. You or your spouse loses a job

A job loss can happen to anyone at anytime. Having a safety net that covers your expenses for three to six month is crucial. This will allow you to keep current on your bills while you cut back expenses and search for new employment.

  1. Emergency medical or dental bills

Even with health insurance, emergencies and unexpected expenses and high deductibles still occur and can put you in a financial rut if you don’t have enough

  1. Unexpected home or vehicle repairs

You may have homeowners or renters insurance, and vehicle warranties may cover many repairs, however they do not cover everything. Repairs are inevitable, regardless of the age of your home or vehicle. For unexpected repairs it is helpful to have a stash of cash to pay for them

  1. Tax-time surprises

Most people only think about taxes in April, when they are due. They eagerly plan what they will do with their refund. But sometimes you are surprised with a tax bill that is much higher than what you had anticipated. Having an emergency fund can help cover the financial shock.

  1. Last minute travel

This sort of travel usually entails an ailing loved one, a funeral or other family related emergency. You need to get somewhere fast on short notice. Having money saved will alleviate the need for using credit cards to pay for the trip.

 

 

Funding Your Trust

Posted by Galeet Levy on

In order for a Revocable Trust to work correctly it must be funded, that is, your assets must be put in the name of your trust.   The Trust can only govern what it owns.   By funding your Trust, the Trust governs those assets. We tell our clients the importance of funding their Trust all the time.   Since there are different types of assets, there are different ways to fund them into your trust. Bank accounts, for example, are funded differently than life insurance. The rights to royalties or money owed to you are funded in a different manner. Here are three ways to fund assets into your trust.

Change of Title/Ownership

Changing title or ownership applies to assets such as bank accounts and real property. These assets are funded into your Trust by changing the owner of the asset from your individual name to the name of the Trust.

Here is an example:

Current name on ABC Bank Checking Account: John A. Smith

New Title on ABC Bank Checking Account: John A. Smith as Trustee of the John A. Smith Revocable Trust dated April 1, 2010.

Important Fact: The date of your Trust is part of the name.

Assignment of Ownership Rights

These are things such as monies owed to you.   If you loan money to someone and have not been paid back yet, you can assign the debt to your Trust. The same goes for royalties, copyrights and patents. Even oil and mineral rights are assigned to Trusts.

These are done through “Assignments of Interest” and require specific language. Contact your Estate Planning attorney if you need one, and they can draft one depending on your asset. Different assets require different language.

Change of Beneficiary

Many people have assets that are beneficiary driven. Meaning that you can’t change the title, but you can change the beneficiary. These are assets such as IRAs, 401Ks and Life insurance policies.

If you would like to fund these assets into your trust so the money is divided equally, or is used in the manner in which you chose, it is best to name your Trust as the beneficiary.

It may be best to contact your attorney or Financial advisor to help you change the beneficiary on these accounts/assets. For many of these you can contact the financial institution that has these assets and ask them for a Change of Beneficiary form and update your beneficiary that way.

 

At Hornstein Law we know the value and importance of funding your Trust and we are always available to discuss funding. Give our office a call, at 818.887.9401, with any questions. We cannot stress the importance of this enough.