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Monday, 23 January 2017 09:14

ABLE Tennessee Program & Special Needs Trusts

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ABLE TN : What is it and how does it work in conjunction with Special Needs Trusts?


 

The State of Tennessee recently implemented the ABLE TN program. ABLE accounts (Achieving a Better Life Experience) allow individuals with disabilities to plan and save for future expenses, while benefiting from tax-free earnings on the investments.  The private funds saved through ABLE TN will supplement benefits provided through private insurance, Medicaid benefits, Supplemental Social Security Income, as well as other sources.

Accounts are easy to set up and manage and no legal representation is required. An account may be created by the beneficiary, parents/guardians, or a third party.

Beneficiaries are limited to one ABLE account at a time. An individual who has been diagnosed with a disability on or before age 26 may qualify by meeting one of the following:

  • the individual is eligible to receive Supplemental Security Income (SSI)
  • the individual is eligible to receive Social Security Disability Insurance (SSDI)
  • the individual has been diagnosed by a qualified physician with a physical or mental disability resulting in marked and severe functional limitations that is expected to last no less than 12 months
 

Income Tax Benefits

The investment appreciation and income earned in the account will be federal and state income tax free – as long as the funds are used for qualified expenses.

 

Qualified Expenses

ABLE accounts may be used for a variety of qualified disability related expenses. Since the needs of each individual may vary depending upon their unique disability and/or circumstances, the expenses include, but are not limited to:

  • Housing

  • Transportation

  • Education

  • Health, Prevention, and Wellness

  • Training and Support

  • Assistive Technology

  • Employment Support

  • Financial Management

  • Legal Fees

  • Personal Support Services

  • Administrative Services

 

Impact on Federal Benefits

There is no impact on federal means-tested benefits if your ABLE TN account is less than $100,000.

 

Minimum/Maximum Contributions

An account can be opened with as little as $25, with a maximum annual contribution of $14,000 per beneficiary. The maximum lifetime contribution limit is $350,000.  (For example, if you fund the maximum annual amount of $14,000 for 25 years, you will reach the $350,000 lifetime maximum.)  However, note that funds in excess of $100,000 will be treated as a resource with regard to the federal means test.

 

Investment Options & Special Needs Trusts

ABLE TN offers 14 diverse investment options for participants to choose from. The plan allows changes to your investment selections twice per calendar year.

An individual may have a Special Needs Trust (SNT), an ABLE TN account, or both. Since there is no state residency requirement and because an ABLE TN account can be used in tandem with a SNT it should prove to be a useful tool.

 

For more information, or to open an account, visit AbleTN.gov.

 

 

Wednesday, 15 December 2010 12:43

Privacy Statement

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At Cumberland Trust & Investment Company your privacy is important to us. We respect every individual's right to privacy and security of information that personally identifies you or your Account with us. That is why we are committed to our Privacy Policy, which is outlined below.

We will safeguard, according to strict standards of security and confidentiality, any nonpublic personal information our customers share with us. We do not sell personal information to anyone.

We collect personal information, such as your name, address and social security number, from forms or agreements that you complete. We also collect information about your transactions with us or others, such as your account balance, investment history and parties to transactions. We may share nonpublic personal information with companies that perform administrative or other support transactions that you request or authorize. We require these companies to protect the confidentiality of your nonpublic personal information and to use it only for the purposes for which the disclosure is made. We do not otherwise share nonpublic personal information we collect about you or any of our other customers with anyone, except as required or permitted by law.

We protect the integrity and privacy of your information in a number of ways. We restrict access to nonpublic personal information about you to those employees who need to know that information to provide products or services to you. We maintain physical electronic and procedural safeguards to guard your nonpublic personal information.

The accuracy of your personal information is important. If you need to correct or update your personal or Account information, please call us at 615-783-2540. We will be happy to review, correct or update your personal or Account information.

Monday, 25 October 2010 12:38

Protections Offered by a Trust

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PROTECTIONS OFFERED BY A TRUST


 

Trusts, while a valuable component of estate planning, are not limited to serving only as a way to disburse assets upon death. Trusts offer an excellent way to plan for the future. Trusts can:

  • Provide for the management of assets while a person is still living and govern how assets will be distributed upon death.

  • Provide a measure of protection when beneficiaries may lack the maturity or expertise to manage their own affairs.

  • Help beneficiaries avoid the unnecessary expenses of probate.

  • Provide regular disbursements to someone who is unable to manage large sums of money.

  • Provide income for the trust creator during his or her lifetime with the remainder left to a charity or institution.

  • Protect assets from future lawsuits, creditors, or divorce.

  • Ensure that government assistance continues while the basic level of care is supplemented for a child with special needs.

  • Provide for the management of an individual's assets should he or she become incapacitated.

  • Ensure that assets such as a family business are left undivided.

  • Ensure that estate taxes are minimized as much as possible.

 

Monday, 25 October 2010 12:38

Important Roles in a Trust

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IMPORTANT ROLES IN A TRUST


 

There are three parties central to the creation of a trust, each with a unique role to play.

The Grantor

The Grantor is the creator of the trust. This person has built an asset base and wants to ensure that those assets are distributed according to his or her wishes. The grantor does not have to be significantly wealthy or have a large number of properties or assets. The grantor may be a parent with a large life insurance policy who wants to guarantee that his or her children are provided for without receiving a large sum of cash all at once.

The grantor has ultimate control in setting up the trust: determining which assets will be transferred into trust; who will serve as trustee while he or she is living and after his or her death; and how the trust property will be administered during or after his or her lifetime.

The grantor also specifies the purpose of the trust; if and by whom it may be altered; powers given to the trustee; and when disbursements are to be made. In some cases, the creator of the trust may also name himself as co-trustee to be responsible in part for administering the trust. The grantor must be legally competent when the trust is created.

The Trustee

The trustee is responsible for managing and administering the trust and strictly adhering to the terms of the trust as well as applicable state law in performing its duties. The trustee must be legally competent to accept the trust property he or she is to manage.

The trustee is held to strict fiduciary standards. This ensures that the trustee can only use assets from the trust property for the beneficiaries, not for the trustee’s benefit.

The Beneficiary

This person or group of people benefits from the trust, eventually receiving some or all of the property placed in the trust. While the trustee holds the “legal title,” beneficiaries have the “equitable title,” meaning that the assets should be used for their benefit as stipulated in the trust document. The beneficiaries of the trust must be clearly identified or ascertainable. This could be something such as naming all current beneficiaries and then allowing for the inclusion of others born after the trust’s inception.

Current beneficiaries are entitled to receive current income or principal distributions from the trust either at the discretion of the trustee, or as required by the terms of the document. Remainder beneficiaries are those beneficiaries that succeed the interest of the current beneficiaries. In many cases, the principal of the trust is distributed to remainder beneficiaries. A beneficiary can be a person or an institution.

 

QUESTIONS EVERY FINANCIAL ADVISOR SHOULD ASK HIS OR HER CLIENTS


 

Financial advisors must know their clients’ full financial picture in order to create a comprehensive wealth building and management plan, but some clients may not associate estate planning and trusts with information they should share with their financial advisor. It’s up to the financial advisor to ask the following questions:

 
For Testamentary Planning:
  • Do you have a will?
  • Does the will have appropriate tax planning strategies?
  • Does your estate plan adequately provide for the unique care needed for your family?
  • Does your will set up a testamentary trust?
  • Who is named trustee to manage those assets?
 
For Current Trusts:
  • Are you currently the beneficiary of a trust?
  • Is the trust performing as well as the rest of your portfolio?
  • Did you know it is possible to separate the investment function from the trust administration function?
  • Did you know it is very simple to move a trust to a trustee that will work with all of your key advisors?

 

If the advisor determines that a corporate trustee is named in a client's will, it would be a good opportunity to educate the client that after his or her death the asset management of the trust assets will likely shift to the corporate trustee. In many cases, the client may not have thought of the ramifications of naming a corporate trustee that provides asset management services.

If the advisor determines that his or her client is the beneficiary of an existing trust, it should be noted that it is usually neither difficult nor expensive to move the trust to an independent trustee like Cumberland Trust. Upon the appointment of Cumberland Trust, the financial advisor can comprehensively manage the client's trust assets along with the client's other assets.

 

Monday, 25 October 2010 12:19

Why Create a Will?

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WHY CREATE A WILL?


 

A will is one of the most important documents you will ever create and it has many crucial functions, including:

  1. Determining exactly who receives the property that you have accumulated over a lifetime. This property may include the family home, stocks and bonds and valuable collectibles. Without a will, your state’s laws will dictate who receives your estate.
  2. Creating a trust for your spouse and/or children can provide financial security for your family.
  3. Providing for friends, charities or institutions. If the state determines how your estate is distributed, these will be overlooked.
  4. Minimizing inheritance taxes by taking advantage of estate planning. Without careful planning, your estate’s value can be significantly lessened by taxes.
  5. Expressing what is important to you. A will can allow you to distribute heirlooms and assets to specific individuals or institutions.

Creating a will may be difficult, but it is not costly or time consuming, and it will ease the burden on your loved ones, while providing peace of mind for you.

 

Monday, 25 October 2010 12:17

What Happens to My Estate When I Die?

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WHAT HAPPENS TO MY ESTATE WHEN I DIE?


 
When you’ve selected Cumberland Trust as executor or co-executor of your estate, you can be assured that your estate and your heirs will be handled with care. Here’s a general timeline of events that happen after your death.

 

Upon death: While we, as personal representative of the estate, have no authority to act until the will is probated, we often meet with family members soon after death to answer immediate questions. The first question may concern funeral arrangements which are made by family members or other designated persons. The charge is paid from the estate. Bank accounts and assets in the sole name of the deceased are “frozen” until the executor qualifies upon probate of the will in Probate Court. No additional checks should be written on any account in the sole name of the decedent. Any checks payable to him/her should not be deposited but should be collected and delivered to Cumberland Trust. If there are joint survivorship bank accounts, the surviving party may continue to write checks and withdraw funds.

Probate of will: The will is usually probated as soon after death as practical although there are no immediate time requirements. The will is offered for probate in Probate Court by an attorney, (generally the same attorney who drafted the will and represented the deceased). Most courts require an attorney and although Cumberland Trust has licensed attorneys on staff, as a trust company we do not engage in the practice of law.

Next there is usually a conference with the family and primary beneficiaries to explain the will and determine immediate financial needs and questions. Copies of the will are required to be furnished to the primary beneficiaries. In the case of persons receiving cash or other bequest, they are furnished a copy of that portion of the will containing the specific bequest. In both cases, it is Cumberland Trust’s responsibility to carry out the statutory requirements.

Assembly of assets: The administrative officer must determine what assets were owned by the deceased, and therefore, part of the estate, for probate or tax reasons. This property may include cash, stocks, bonds, life insurance to the estate or to named beneficiaries, real estate, business interests, household effects, trust accounts, and jointly owned cash, stock, bonds or real estate.

Any safe deposit box will be inventoried as required by Tennessee law. Cash, stocks and bonds taken into the possession of the executor; stocks transferred; dividends, interest and accounts collected; life insurance claims filed; real estate, household furnishings and collections appraised by qualified appraisers unless the size of the estate is small and there are few death tax issues; deeds examined; titles verified; insurance policies on real estate passing to the executor checked for adequate coverage; business interests valued; buy-sell arrangements for businesses carried out; inquiry letters sent to banks, savings and loan associations and brokers to locate accounts of the deceased; income and gift tax returns and other personal and business records obtained and studied. We should have copies of all personal tax returns, bank statements and canceled checks for at least the last five years preceding death.

Payment of debt: Any bills for accounts, debts and funeral expenses of the deceased should be sent to Cumberland Trust. We will cause the Notice to Creditors to be published, and notify known creditors by mail that they have four months from the date of publication to file claims against the estate. For debts of $1,000 or more, Tennessee law requires that a specific claim be filed with the Court. If the family has paid some accounts before the will is probated or before Cumberland Trust has funds, a record should be kept for reimbursement.

Inventory and cash requirements: As soon as possible, but within 60 days of the probate of the will, an inventory will be prepared and filed with the Probate Court unless the will excuses the filing of an inventory or all the necessary beneficiaries waive the filing requirement. Such a waiver will maintain the confidentiality of the estate’s make up, though complete asset information is always given to the proper beneficiaries. However this inventory lists only the taxable estate, such as life insurance to named beneficiaries, real estate and jointly owned property. At the same time, we value the entire estate and estimate the cash requirements for bequests, debts, funeral expenses, taxes and administrative expenses. The assets or investments are reviewed and considered along with the estimate of cash requirements. Many estates do not have adequate cash or insurance payable to the estate to meet the cash requirements. Therefore, stocks and bonds, or possibly business interests will be sold to provide funds. In consultation with family members, we will determine which assets should be sold and the timing of the sales. The need for cash, market conditions, investment quality of the assets, wishes of the beneficiaries and investment objectives of the beneficiaries of any trusts are considered in making the decisions. Assets are reviewed continually during the entire administration. We promptly invest all cash received or raised in temporary investments to produce maximum daily income until the funds are needed. 

Records: We will keep accurate records of all receipts and disbursements, including debts, administrative expenses, taxes, bequests and sales and purchases of assets. These records are necessary for income, estate and inheritance tax purposes and for inventories and court accountings if required. Statements of transactions and assets held are furnished to beneficiaries who share in the residue of the estate either directly or as a beneficiary of a trust on a periodic basis.

Inheritance and estate taxes: The Tennessee Inheritance Tax and Federal Estate Tax returns are due, and any taxes payable, within nine months after death. Barring unforeseen matters, we file all the required returns by the filing date. Each residuary beneficiary will be provided a copy.

There is a Federal Estate Tax exemption, which is called a Unified Tax Credit. This credit may be used against taxes on both lifetime transfers by gift and transfers at death and is determined by a schedule that is part of the tax code. Any credit used against taxable gifts made during life will reduce the exemption available against the Estate Tax at death. Tennessee Inheritance tax laws now allow the same credit and exemption for beneficiaries.

In addition to the exemptions and credits, there may also be an exemption from Federal and Tennessee tax for property passing to, or for the benefit of, the surviving spouse. If the will is so drawn, it may be possible to defer all Estate Taxes and Inheritance Taxes until the death of the surviving spouse.

Income taxes: Federal and Tennessee Income Tax returns may be required. This will include final personal income returns for the year of death and fiduciary returns during the administration of the estate. In consultation with the family accountant or estate attorney, we will determine whether to report the estate’s income on a calendar or fiscal year basis. If distributions of income are made to beneficiaries during estate administration, this income will generally be includable on their personal federal tax return, therefore income tax information will be furnished to each beneficiary in a timely manner.

Executor’s charges for administration: Cumberland Trust’s fee for the administration of an estate is a percentage of the gross estate value as finally determined for death tax purposes. We may charge an additional fee for extraordinary services such as litigation, retaining and operating a business or farm, and their sales or liquidations.

Settlement of estate: Few estates can be closed in nine months after death as some believe. If estate and inheritance tax returns are required, often six to 12 additional months following the filing of the returns are required for audit and tax clearances by the respective authorities. A Tennessee inheritance tax return is required on all estates, even though no tax may be payable. Proper tax clearance letters are needed before the estate can be closed by the court and fully distributed. The issuance of these tax clearances is determined by the taxing authorities and is not within our control. We desire to make distributions as soon as possible and some partial distributions may be made prior to receiving clearances. However, no partial distributions will be made prior to the expiration of the statutory period during which creditors of the deceased may file their claim with the Probate Clerk, unless the distributee shall have first satisfied the refunding bond requirements set out in Tennessee Code Annotated 30-2-704.

Post mortem considerations and elections: There are numerous post death opportunities, known as post Mortem Elections and Equitable Adjustments, that must be reviewed during the months leading up to the filing of death tax returns. Cumberland Trust will consult with the family accountant or estate attorney as to whether each selection may be available to the estate and its advantage or disadvantage. Due consideration will be given to the allocation of the available Generation Skipping Tax exemption; Qualified Terminal Interest Property (QTIP); the use of Qualified Disclaimers and the statutory right of a surviving spouse to take an Elective Share against the will.

Final accounting: Unless waived by the will or beneficiaries, Tennessee laws require that a final accounting be filed with the Probate Court, and possible interim accountings after 15 months, showing all receipts, disbursements and distributions. Since most people prefer privacy, filing of an Affidavit and Release in lieu of the detailed accounting is allowed. This method is less costly and allows us to close the estate sooner.

Trust under the will: If the will provides for Cumberland Trust to serve as trustee, we will be acting both as executor and trustee until final distribution is made to us as trustee. This means that monthly or quarterly benefits, as provided by the will, may begin early in the estate and continue without interruption. 

Co-fiduciaries: Occasionally a will may name another person as co-executor or co-trustee to act with us. We will perform the same duties, including the accounting and disbursing of funds, although we must obtain the approval of the co-fiduciary on purchases, sales, or discretionary decisions. Many co-fiduciaries who serve with Cumberland Trust delegate part or all of their responsibilities and authority to us—both to relieve themselves of the burden and to prevent delays in decision making.

Your will: A will should be reviewed periodically and possibly revised. Often the death of a family member or friend, with or without inheritance from that person, may make a current will inadequate or make a will more essential than before. We are happy to work with your attorney who should prepare your will.

 

Monday, 25 October 2010 12:16

What a Special Needs Trust Can Provide

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WHAT A SPECIAL NEEDS TRUST CAN PROVIDE


 

A general support special needs trust can pay for virtually any service needed by the beneficiary. These supplemental trusts, however, have stringent rules on how distributions can be made to a beneficiary.

It is assumed that the person receiving government benefits has his or her most basic needs provided. The trust is intended to supplement or fill in any gaps in coverage and, occasionally, those gaps might broadly be categorized as housing, food or clothing.

Common special needs trust disbursements include:

  • Recreational and vocational activities
  • Hobbies and vacations
  • Educational and training opportunities
  • Communications equipment or computers
  • Professional services, including attorneys, accountants and claims processors
  • A pet, veterinary services, food and supplies
  • Medical costs not covered by Medicaid, such as vitamins and massages

As long as the items do not jeopardize eligibility for governmental programs and have a direct benefit for the beneficiary, the trustee may consider making distributions to provide a quality of life that suits the individual.

 

Monday, 25 October 2010 12:10

Key Documents to Leave Behind in Estate Planning

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KEY DOCUMENTS TO LEAVE BEHIND IN ESTATE PLANNING


 

Below is a list of key documents that should be kept together to provide necessary information to your family, loved ones, and advisors:


Personal Information

Your full legal name (including maiden name); Social Security number; date and place of birth; country of citizenship; marital status and date of marriage; spouse's full legal name, address and telephone; spouse's Social Security number; date and place of spouse's birth; country of spouse's citizenship; date of marriage to former spouse(s); parent's full legal names; children's full legal names

Military

Service number and date of discharge; military service, including branch, date and rank; service-connected disabilities

Employment

Current employer; employment benefits (life insurance, stock options, pension, etc)

Real Estate

Addresses of all real estate; purchase price; current tax assessment value; loan amount; how the property is owned; date of purchase; mortgage or deed of trust held by; location of deeds, title insurance, etc.; name of owner on the account; if leased, name and contact for lessee; where lease paperwork is located

Stocks & Bonds

Type of asset; purchase price; maturation date (if applicable); name of owner of accounts; name and account numbers for all financial accounts; financial advisor name and contact; current location of certificates or bonds

Automobiles

Location of title; holder of loan; make, model and year; loan amount; name of owner

Safe Deposit Boxes

Location of box; location of key; name of owner; name and contact information of those with access

Business Interests

Type of business; estimated value; type and amount of ownership; name and contact information of business contacts

Titled Assets

Location of assets; purchase price; description of all assets; location of title; current value

Insurance Policies

Agent contact information; location of policy; policy numbers; amount of coverage

Funeral/Burial

Name and lot numbers of cemetery; name and address of memorial gifts; prepaid funeral policy; location of deed to cemetery lot; specific wishes for ceremony

Tax Returns

Contact information of accountant; location of filed tax returns

Will

Dates; executor contact information; location of will and codicils; attorney contact information

Trusts

Date; trustee contact information; location of trusts; attorney contact information

Financial Team

Attorney, accountant and financial advisor contact information

Friends

List and numbers of friends to be contacted at your death

 

Monday, 25 October 2010 12:05

Asset Protection Trusts

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ASSET PROTECTION TRUSTS


 

In 2007, Tennessee joined the select list of states that offer asset protection trusts, known as Tennessee Investment Services Trusts. Also known as self-settled, these trusts can provide benefits for those creating them. An asset protection trust can be an excellent way for high-net-worth individuals to protect their assets from a lawsuit, bankruptcy, divorce or other similar financially damaging situation, while continuing to benefit personally from these assets. These trusts are particularly appealing to those whose occupations expose them to risk or liability. Regardless of occupation or net worth, everyone is exposed to liability, so any individual or family can benefit from an asset protection trust.

Under this law:

  • Assets (including homes) are insulated from creditors, yet individuals may take out income or principal and direct the investments of the trust.

  • Such a trust can exist for up to 360 years, thereby protecting family wealth for many generations.

  • Tennessee residents can keep their assets in state, while residents of other states may now create an asset protection trust in Tennessee with a Tennessee trust company.

When creating an asset protection trust, the grantor must sign an affidavit stating that he or she is not trying to avoid a legitimate creditor or one with a claim currently pending. Any assets placed in the trust are then subject by law to a two-year waiting period before they are protected. Also, the grantor cannot be his or her own trustee. The trust creator must appoint a corporate trustee authorized to do business in Tennessee or a third-party individual who resides in the state.

 

 
Contact Us
Corporate Headquarters:
Cumberland Trust
40 Burton Hills Blvd, Suite 300
Nashville, TN 37215
 
 
615.783.2540

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