Estate Planning

The Key Takeaways:
• A living trust document has more provisions than a will because it deals with issues while you are living and after you die, while a will only deals with issues that occur after your death.
• A properly prepared and funded living trust will avoid court proceedings at incapacity and death. A will provides no such protection and can, in fact, ensure court intervention at both events, which can be very costly (in time, privacy and dollars) to your family.
 
Instructions at Death and Incapacity
Both a will and a living trust contain instructions for distributing your assets after you die. But a living trust also contains your instructions for managing your assets and your care should you become incapacitated.
 
A Living Trust Avoids the Costs of Court Interference at Incapacity and Death
A properly prepared and funded living trust (one that holds all of your assets) will avoid the need for a court guardianship and/or conservatorship if you become incapacitated. The person(s) you select will be able to manage your care and your assets privately, with no court interference.
 
A will can only go into effect at your death, so it can provide no instructions regarding incapacity. In that case, your family would almost certainly have to ask the court to establish a guardianship and/or conservatorship for your care and your assets—a process that is public, time consuming, expensive and difficult to end.
 
Costs to Transfer Assets…Pay Now or Later
There may be some minor costs to transfer assets into your living trust when you set it up, and then from your trust to your beneficiaries after you die. But these will be minimal if you and your successor trustee do much of the work yourselves. With a will, the probate court (with its costs and attorney fees) is the only way to transfer your assets to your heirs after you die. So you can pay now to set up your trust and transfer titles, or you can pay the courts and attorneys to do this for you after you die.
 
If you would like more information about wills and living trusts, please contact our office.

Probate can be easily avoided, but most estates are dragged through the process. Why? Many people fail to create an estate plan, so probate is required. And – others plan with just a Will, so probate is required. As a result, assets end up at the mercy of a probate judge, open to public scrutiny, and delayed passing to beneficiaries.
 
Probate can drag on for months – or even years. Here are some of the most common reasons why probate takes so long:
 
1. Many Beneficiaries. In general, estates with many beneficiaries take longer to probate than estates with just a few beneficiaries. Why? It takes time to communicate with each and every beneficiary and, if documents need to be signed, there are always beneficiaries who fail to return their signed documents in a timely manner. Regardless of advances in modern technology and communications, it simply takes a long time to reach multiple beneficiaries, spread out across the United States or in a foreign country.
 
2. Estate Tax Return. Estates, required to file an estate tax return at the state and/or federal level, are usually complicated. And, the personal representative can’t make a final asset distribution until she is absolutely sure that the estate tax return has been accepted and the estate tax bill has been paid in full. At the federal level, it can take up to a year before the IRS gets around to reviewing and accepting an estate tax return.
 
3. Angry Beneficiaries. Nothing can drag out the probate process like a family feud. When beneficiaries don’t get along or won’t speak to each other, the personal representative may be forced to go to court to get permission to do just about everything. That takes time.
 
4. Incompetent Personal Representative. A personal representative, who is not good with money, irresponsible, disorganized, or busy with his job or family, will drag probate on and on. Why? Because a personal representative must efficiently and effectively handle the responsibilities and duties that go along with serving. It’s a lot of work.
 
What Can Be Done to Speed Up Probate?
The best way to speed up probate is to avoid it altogether. Avoidance is the only way to eliminate probate delays. If properly drafted and funded, a Revocable Living Trust will avoid probate perils, stresses, and delays. If you would like more information about Revocable Living Trusts, please call our office.

Legally, you have the right to draft your own documents; however, that doesn’t mean you have the right to have them actually work. Do-it-yourselfers accidentally disinherit children, fail to protect assets from lawsuits, trigger probate, invite court interference, give assets outright to a drug addicted beneficiaries, and incur huge fees to straighten out a big mess.
 
Creating an effective set of estate planning documents involves many moving parts and deep analysis. An estate planning attorney will consider your family situation and financial status coupled with where you live and where you own real estate. Your goals and concerns are also carefully considered.
 
With a myriad of variables at play, how can a book of generic forms, computer program, or website possibly address all correctly? It simply can’t.
 
Even attorneys, who don’t focus on estate planning, are hesitant to write their own estate plans. Instead, they turn to their colleagues who understand probate and trust laws and are experienced in putting together estate plans that work.

The U.S. Supreme Court has ruled that inherited IRAs are not protected in bankruptcy like those that you set up and fund yourself. The Court noted that true IRA owners are subject to penalties designed to encourage them to keep the money available for retirement. These penalties justify the “retirement funds” exemption for true IRA owners. Because money in an inherited IRA allows easy penalty free withdrawals, the Court held that the “retirement funds” exemption does not apply. This will likely make spousal rollovers more popular. A spouse who inherits an IRA has the ability to roll the assets into her own IRA to maximize tax savings and have the protection of the “retirement funds” bankruptcy exemption. If the spouse chooses not to rollover, the account is considered an inherited IRA and those assets would not be protected in bankruptcy.
 
One option to protect inherited IRAs is a Standalone Retirement Trust. If you would like more information about Standalone Retirement Trusts, please call our office.

It’s that time of year – the time for beautiful weddings, fun receptions, delicious cakes, special gifts, and romantic honeymoons. While this is a joyous time for everyone, it’s also time for you and your new spouse to plan for your future – for richer or for poorer, in sickness and in health.
 
Why Newlyweds Need to Plan Their Estates
Why should newlyweds care about estate planning? Because everyone – young or old, married or single – needs to protect themselves and those they love. Unfortunately, many couples spend more time planning their honeymoon than they do planning the best way to protect each other.
 
What Happens Without an Estate Plan?
This fallout of becoming incapacitated or dying without an estate plan is serious, expensive, and painful. It often causes financial ruin and family discord, lasting for generations.
 
Without an estate plan:

• You will leave your spouse and the rest of your family in the dark – they won’t know what you would want to happen if you became incapacitated or died. This often leads to family fights as each individual champions for what she thinks you would have wanted.
• You’ll leave a huge burden on your loved ones to make tough decisions about medical heroics and the withdrawal of life support.
• The court or state law, not you, will decide who makes health care decisions if you are unable to make those decisions yourself.
• A judge, not you, will decide who raises your children.
• The court can lock down your assets so even your spouse has to get court permission before making a financial move.
• Any assets you leave to loved ones can be taken by their divorcing spouses, bankruptcy creditors, medical crisis creditors, predators, and frivolous lawsuits.
• You may accidentally disinherit your spouse and your children.
• Your beloved pet could end up in a shelter or euthanized.

 
What Should You Do?
We invite you and your new spouse to telephone our office to set up a meeting. We’ll walk you through how to protect each other and those you love; how to protect your beloved pets; and how to protect your assets and make things easier for you and your families. Call now; we look forward to hearing from you.

The Key Takeaways

• Every adult, regardless of age or wealth, needs both a lifetime plan and an after-death estate plan.
• Planning for incapacity will keep you in control and let your trusted loved ones care for you without court interference – and without the loss of control and expense of a guardianship or conservatorship proceeding.
• Every adult needs up-to-date health care directives.
• You need to leave written instructions to make sure you are the one who selects who’s in charge of when and how your assets will be distributed.
• We all need the counseling and assistance of an experienced estate planning attorney.

What is an Estate Plan?
Your estate is comprised of the assets you own—your car, home, bank accounts, investments, life insurance, furniture and personal belongings. No matter how large or how small your estate, you can’t take it with you when you die, and you probably want certain people to have certain things you own.

To make sure that happens, you need to provide written instructions stating who you want to receive your assets and belongings, what you want them to receive, and when they are to receive it—that is the essence of an estate plan. If you have young children, you will need to name someone to raise them in your place and to manage their inheritance.

A properly prepared estate plan also will have instructions for your care (and the management of your assets) if you become incapacitated, even for a short time, due to illness or injury. Without the proper documents in place, your family will have to ask the court for permission to use your assets to take care of you and to oversee your care. That process is out of your control and it takes time and costs money, making an already difficult situation even more difficult for your family.

It might surprise you, but having a plan in place often means more to families with modest means because 1) they can least afford to pay unnecessary court costs and legal fees and 2) state laws, which take over in the absence of planning, often distribute assets in an undesirable way.

What You Need to Know
Don’t try to do this yourself. You need the counseling and assistance of an experienced estate planning attorney who knows the laws in your state and has the expertise to guide you in making difficult decisions such as who will raise your children and who will look after your care at incapacity. That attorney will also know how to carefully craft the appropriate estate planning documents, so that what you think will happen when you become incapacitated or die actually happens.

Actions to Consider

• Call or email our office now to set up an estate planning consultation appointment. We make tough topics easy to talk about.
• Don’t worry about how life will unfold; the best practice is to have your plan prepared now based on your current situation.