Michigan Estate Planning Blog

Here’s Why Everyone Should Have a Will

 

There isn’t an estate planning attorney alive who doesn’t have horror stories of what happens to families when a loved one doesn’t have a will. The person without a will leaves behind a mess for loved ones to take care of, including the risk of minor children being placed in foster care. This should be enough to motivate you to call an estate planning attorney, says a recent article from Investopedia, “What’s the Worst Thing That Can Happen If You Die Without a Will?”

Having an estate plan in place does not have to be complicated. However, not having one is. Family conflict is more likely to occur, probate can drag on for months or years and take a big bite out of your estate’s value. If you don’t have an estate plan with medical directives, you might be kept alive by artificial means, even if you’ve told everyone in the family you don’t want this to happen.

Every state has its own laws about how assets are distributed when there is no will. For the most part, they follow bloodlines. Estranged relatives could end up owning everything, or one child could end up with an unwanted responsibility. Having a will lets you be intentional about distributing your assets.

Even close families fight over inheritance when there’s no will. Without documenting your intentions in a will, family members can end up in court, sometimes fracturing families permanently. This is probably not the legacy you’d want to leave behind.

Probate is a legal process where the court validates a will, appoints an executor and allows the executor to administer the estate. If there is no will, the court will appoint an administrator, who is likely to be a stranger. They’ll track down assets, pay debts and distribute what’s left after their fees are paid.

While the court-appointed administrator is handling the estate, heirs will need to wait for any inheritance and the fees, and the months may stretch on far longer than if there were a will and an executor named.

Estate planning is also a means to preserve wealth and pass it on to the next generation. For families who are just getting started, receiving an inheritance of any size could make the difference between owning a home or continuing to rent without the opportunity to build equity for their own descendants.

If you think of creating an estate plan and a will as a gift to your children and your grandchildren, it may be more comfortable than thinking of it as a reminder of your mortality. An estate planning attorney in your community will have the legal knowledge and understanding of how families work. You can leave a legacy of caring, planning for the future and take care of those you love with an estate plan.

Reference: Investopedia (April 11, 2025) “What’s the Worst Thing That Can Happen If You Die Without a Will?”

Should You Put Your Home in a Trust?

 

If you own a home, you know your name on the title proves ownership. If you decide you’d like to transfer ownership, the name on the title changes. According to an article from ABC 45 News, “How, and why, to set up a trust for your house,” you can transfer ownership of your home to a real estate trust.

One of many reasons to put your home into a trust is to make it easier for your executor and heirs if your estate plan includes passing the home to your children. Transferring your home to a real estate trust involves certain legal and tax benefits. Here’s a look at why this might be something to discuss with your estate planning attorney.

First, what is a real estate trust? A real estate trust is a trust designed to own real estate property, which is transferred into the trust by retitling the deed. Once this is done, like any other trust, the asset—the real estate property—is managed by the trustee for the benefit of the grantor and beneficiaries.

In most cases, the home's original owner names themselves as the trustee to maintain control of the property, although someone else can be named as a trustee. An adult child is often named as the trustee if the original owner is ready to take this step.

Trusts have many applications for estate planning as well as tax planning and asset protection. Depending on the type of trust your estate planning attorney determines is best, a trust can be established to protect the home from creditors as well as passing directly to heirs without needing to go through probate court.

If you need a revocable or living trust, the grantor (the person who creates the trust) can make changes or even close the trust at any time. This is appealing to some people because they want to be able to be in charge. When the grantor dies, the property is distributed to beneficiaries according to the directions in the trust.

If you put your home in an irrevocable trust, the asset is protected against lawsuits and creditors. The same protection doesn’t extend to a revocable trust, however. The irrevocable trust may be eligible for a stepped-up basis on the grantor's death, reducing estate taxes and capital gains taxes when the property is sold, if all required conditions are met.

Trusts are a popular means of circumventing the need to go through probate court, which can cost thousands and take months or years to complete.

Senior homeowners should consult with an estate planning attorney to learn how placing their home in a trust will impact their overall estate plan and Medicaid eligibility. If there is no estate plan currently in place, this is something to address as soon as possible. We don’t know what the future holds, but we do know that having an estate plan provides peace of mind for all concerned.

Reference: ABC 45 News (March 14, 2025) “How, and why, to set up a trust for your house”

What Should Be Included in Your Estate Plan?

 

Estate planning attorneys often have clients who are more than 100 years old. However, those clients have usually made all their estate planning decisions while they were far younger, like in their 70s or 80s! A recent article, “Guidelines for estate planning, from a Golden Valley attorney,” from Sun Post, explains what your estate plan should include and why.

People should have their estate plans in place long before they turn 100, to provide peace of mind for themselves and for their heirs and executors, who will need to take over their affairs in case of incapacity or when they ultimately die.

Everyone should have a healthcare directive, sometimes called a Power of Attorney for Healthcare or Healthcare Proxy. This allows another person to have access to medical information and acts to express your wishes if you can’t communicate your wishes because of illness or an injury.

One person should be appointed to follow your healthcare and end-of-life instructions. Making your wishes clear in a legally binding document ensures that your loved ones know what you want and will help them make decisions for your care during a healthcare crisis.

You’ll also want a financial power of attorney in place so someone else can manage your financial life. Some people opt to make their bank accounts payable to a trust or retitle the bank as a “Transfer on Death” (TOD) account. This lets someone gain access to your finances. Let’s say you needed to be hospitalized for an extended period—having these documents in place will allow bills to be paid, your home maintained and avoid penalties for late or non-payment.

Many people today have trusts to prevent the estate from going through probate. When a will goes through probate, it becomes part of the public record. Probate takes time and can be costly. While probate in some jurisdictions isn’t as bad as in others, it can delay settling your estate by months or years.

Everyone who is over 18 needs to have a will. A will describes how your assets are to be distributed. If you have family heirlooms, for instance, your will can clarify who you want to receive a necklace or piece of art. The will instructs your executor, so they know exactly what you want to happen.

Your will is also used to nominate a guardian for minor children. Parents should always have a will, so they can name the person they want to raise their children in case both parents die.

Not having an estate plan leads to all kinds of problems for families. For one thing, the distribution of assets, and who should be the guardian for children and executor of your estate, are all decided according to the state’s laws. You may not have wanted your first cousin to raise your children. However, the court will make the decision for you. It’s better to have a will.

If you already have a will but haven’t updated it in more than three years, it’s time to dust it off and have it reviewed by an experienced estate planning attorney. Changes in your life and tax laws could mean that your will isn’t going to work the way it once did.

A final note: ask your estate planning attorney about how to store your estate planning documents. If your documents are stored at a safe deposit box, they will be sealed upon death and won’t be accessed until a court order has been obtained. This can delay settling the estate and create complications for loved ones.

Reference: Sun Post (March 20, 2025) “Guidelines for estate planning, from a Golden Valley attorney”

How Estate Planning Can Transfer Ownership of the Family Home

 

Starting and finishing an estate plan will not only provide peace of mind but also save your heirs from the stress and expense of going through the probate process. This is especially true if your plan is to bequeath the family home to loved ones, says a recent article from Cleveland Jewish News, “Estate planning simplifies inheriting a home.”

If no estate planning is done, the amount of time and paperwork to pass the home to a family member can become overwhelming. Planned correctly, the transition is far more efficient and less costly.

There are a few different ways that this can be accomplished. An estate planning attorney will know the best way for your unique situation. For instance, if you own the home with a spouse, typically Jointly With Rights of Survivorship (JWROS), each owner has an undivided interest in the house. The surviving spouse will follow the rules in their jurisdiction. This usually requires filing a document with the county recorder’s office with an affidavit of survivor and death certificate, and the interest of the decedent will pass to the surviving tenant.

If two or more people own the home together but not JWROS, when one of the owners dies, their interest in the house will need to go through probate. This can get sticky, especially if their heirs have a different plan for their share of the house than the other person or persons who own the home. This is a common estate planning disaster, often leading to litigation.

Another way to protect the inheritance of a home is to have a Transfer-on-Death (TOD) designation affidavit. The owner can sign the document, and the house ownership will be transferred upon their death without going through probate. If you have a straightforward estate plan, ask your estate planning attorney if this option is permitted in your jurisdiction.

If you have a more complicated estate, significant wealth, minor children, or adult children with disabilities, it’s time to discuss trusts with your estate planning attorney.

If a trust is used, the deed for the home must be retitled so the trust owns the home. Upon the death of the original owner, the home is dealt with in accordance with the provisions of the trust.

These are just a few ways home ownership can be transferred to another person and remain outside of probate. Estate planning is a highly personal process, where many factors need to be taken into consideration before the best solution can be determined.

To find the best solution for your own situation, meet with an experienced estate planning attorney in your community. They’ll be able to prepare an estate plan to achieve your wishes for the future, protect your family and give you the peace of mind of knowing you’ve taken care of those you love.

Reference: Cleveland Jewish News (March 25, 2025) “Estate planning simplifies inheriting a home”

 

How Young Is Too Young to Have a Will?

 

Being young and healthy is unfortunately no protection against an early death, which is why all adults aged 18 and up and especially parents need to have an estate plan, including a will, says a recent article, “You’re Young and Barely Making Ends Meet. Why You May Need a Will,” from Barron’s.

Only about 22% of young adults aged 29—44 and nearly 15% of adult Gen-Zs, aged 19—28, have estate plans. This poses risks for their spouses, if they are married, and their children, if they are parents.

A last will and testament is used to distribute your assets upon death. This is the best-known aspect of estate planning. Still, it’s only one of several documents, including a living will, also known as an advance directive, which designates who may make medical decisions on your behalf in the event of incapacity. While someone in their 20s or 30s may not have children, they may still enjoy activities like rock climbing, bungee jumping and engaging in physically demanding pursuits. People in their 20s and 30s are statistically more likely to be injured in car accidents, skiing, or while travelling.

This doesn’t mean anyone should limit their activities. However, it does mean young adults need to have estate plans in place to express their wishes in case of incapacity or death and protect themselves and their loved ones. Once these documents are prepared and executed, parents or the individual named in the living will are allowed to communicate with doctors, access medical records and be involved in a young adult’s care. Otherwise, decisions may be made by doctors and not family members.

Young adults with small children need a will to name a guardian who will be responsible for raising their children in the event both parents die unexpectedly. If there is no will, or if the will doesn’t include a guardian, a court will decide who will raise the children.

Every adult should also have a power of attorney. This gives a person of your choice the legal ability to manage your finances, including paying bills. A power of attorney can be customized to permit your agent—the person named in the POA—to perform specific actions but not others. For instance, you may want the person to be able to access accounts and pay bills, but not to sell your Pokémon card collection.

Another important aspect of an estate plan is to verify the beneficiaries named on various types of accounts. Any assets with a named beneficiary, such as an IRA, investment account, or insurance policy, will not need to go through probate and can be transferred directly to the beneficiary. However, if the IRA you opened at your first job named your last girlfriend as the beneficiary and you’ve since broken up, make sure to change the name on the account. The beneficiary designation overrides the will, so it won’t matter if you left all your assets to your fiancé; your former partner will still inherit the account.

Estate planning attorneys assist individuals at all ages and stages of life with their estate planning needs. The estate plan you need in your 20s and 30s differs from the one you need in your 60s. However, at any age, an estate plan is essential for being a responsible adult.

Reference: Barron’s (March 15, 2025) “You’re Young and Barely Making Ends Meet. Why You May Need a Will”

Should You Have a Revocable Trust?

 

There are many good reasons to include a revocable trust as part of your estate plan, according to a recent article from Columbus Monthly, “Planning Ahead: When to Consider a Revocable Trust.” You might think trusts are only for the wealthy. However, that’s not true. An experienced estate planning attorney can easily establish a trust to protect assets and direct their distribution. Distribution can occur while you’re living or after you’ve passed away.

Trusts also distribute assets to beneficiaries outside of probate, which avoids the delays and costs associated with probate and, even better, keeps your private business confidential between you and your beneficiaries. When a will is probated, many courts require an inventory of assets. The will becomes part of the public record, and anyone—including ex-spouses, local realtors, thieves and angry relatives—can read your will and learn about your bequests.

A tip from the professionals: ensure an estate planning professional establishes your trust. Every state’s laws are different and what your brother-in-law in Idaho did might not work in Virginia. You should also ensure that the trust is properly funded. If you don’t fund the trust, it won’t work as you intended.

Revocable trusts are used to pass assets after you’ve died. The language of the trust is tailored to your specific wishes. For instance, you may want your children to inherit a certain amount of money every year or only when they have reached goals, such as completing college.

Trusts can be created to fund education, serve as a deposit for a home, or initiate distributions upon reaching a specific age. This is especially beneficial for parents of young adults, who understand that giving a twenty-five-year-old their entire inheritance all at once may not be as beneficial as making partial distributions over a twenty-year period.

One example of a well-structured trust is a woman who owns land that has been in her family since 1947. There are two houses on the property. The land has been placed in a trust to manage the property, and the trust language stipulates that multiple generations can continue to reside there until there are no family members who wish to live on the property. At that point, the trust allows the trustee to sell the property and distribute the proceeds to the living beneficiaries.

Trusts are also useful when a person becomes incapacitated and needs someone else to access the assets owned by the trust to manage the person’s financial affairs. A home, bank account, or all a person’s assets can be placed in a trust, and then the trustee can manage the person's affairs without needing to go to court and file for guardianship.

Whether or not you need a trust should be discussed with an experienced estate planning attorney. It has applications for protecting heirs in the event of a second marriage, incapacity and controlling assets. Your attorney will determine the type of trust that best suits your unique situation.

Reference: Columbus Monthly (March 10, 2025) “Planning Ahead: When to Consider a Revocable Trust”

How to Create an Estate Plan That Works

 

An estate plan tells your loved ones and the courts how you want to divide your property, as well as protecting heirs from the expenses and stress created when there is no estate plan. According to a recent article from AOL, “Estate planning checklist: 7 key steps to making a successful plan,” an estate plan also saves your family from months, even years, of dealing with courts and government bureaucracies in settling your estate.

How to start? Follow these steps.

Make a complete inventory of your assets, both tangible and intangible. This means real estate, cars, financial accounts, digital assets, life insurance, retirement accounts, pension accounts and personal property. Save your heirs from a scavenger hunt and protect assets from being lost.

Decide who you want to care for your family. If you have children who are underage, name a guardian in your will. The guardian often serves as the conservator, managing the children's financial assets. Check on your life insurance policies, which provide funds for your family after you’ve passed.

Ask potential executors if they are willing to do the work. The executor carries out directions in your will. It can be a big responsibility. They’ll need to gather and manage assets, notify heirs, Social Security, Medicare, pay estate taxes, secure and possibly sell your home, and more.

Have an experienced estate planning attorney set up at least three key elements: a will, power of attorney and advance healthcare directive.

The Will names a guardian and an executor and gives directions for distributing assets. The biggest estate planning mistake people make is not having a will. When this happens, the court assigns someone to manage your estate, and your family will have to live with whatever the court-appointed person decides.

A Power of Attorney allows someone to care for your business affairs if incapacitated. A Medical Power of Attorney, or Healthcare Proxy, will enable you to name someone to be involved with your healthcare, speak with your doctors and health insurance company and help make decisions for you. These documents should be customized to convey your wishes as to how much or how little you want these people to be able to do.

An advanced healthcare directive is used to state your wishes if you are incapacitated about what kind of treatment you do or don’t want to receive if you are at the end of your life. For instance, if you don’t want to be resuscitated or if you don’t want CPR to be performed, this information goes into the AHD. This document can be challenging to consider. However, it is a blessing to spare your family from having to guess your wishes during a time of crisis.

Discuss the use of a trust with an estate planning attorney. Trusts are not just for wealthy people. Some trusts take assets from your taxable estate and distribute them directly to beneficiaries outside of probate. Many kinds of trusts serve different purposes, so your estate planning attorney will help you understand which is best for your purposes.

Determine who to leave your assets to and how to structure your estate. If you have young children and you don’t establish the correct trusts, they may inherit everything when they turn 18 or 21. This is rarely a good idea.

Tax planning is a part of estate planning. While you may not face federal taxes, your state may have its estate tax, and some states still have inheritance taxes. Rates and exemptions are different in every state.

The incapacity planning part of an estate plan is for you. However, the rest is for your family, to take care of them and show them how much you care about them and their futures.

Reference: AOL (Feb. 4, 2025) “Estate planning checklist: 7 key steps to making a successful plan”

How Do You Pick an Executor?

 

Most people consider a spouse, an adult child, or a sibling the executor. If there’s no spouse or no children, usually another family member, like a nephew, niece, or responsible child of a close friend, is a good alternative. Who you name to be your executor is an important decision and one to be made with care, according to the article “The right executor is key to honoring your wishes” from Cleveland Jewish News.

The executor needs to be trustworthy, understand financial matters and have the time to take on the many tasks of this role. Rarely is there a perfect candidate. However, someone with the skills and can be trusted to fulfill the decedent’s wishes is the right pick.

It’s not unusual for a family member to not be fit for an executor's responsibilities. No matter how much you love your spouse, if they can’t manage financial matters or have a history of making poor financial decisions, you may want to name someone else to serve as your executor.

Figuring out who can be the executor as far in advance as possible is as important as having an estate plan. Here’s a list of some of the duties of the executor:

• Gathering death certificates, usually from the funeral home, to notify various entities.
• Submitting the Last Will and Testament to the probate court for review.
• Notifying the Social Security Administration.
• Notifying your state’s Department of Motor Vehicles
• Establishing an estate account and applying for a tax ID number.
• Notifying financial institutions, financial advisors, CPAs, employers and health insurance companies.
• Gathering and managing all financial assets while the estate is being settled.
• If the decedent owned a home, ensure that the house is secured and maintained while the estate is settled.
• Contacting beneficiaries and coordinating with trustees if there are trusts.
• Paying estate taxes and personal taxes.
• Managing digital assets.
• Distributing the assets to heirs.

When the executor does their job, most of the time, it all goes smoothly. However, if the executor ignores the decedent's wishes, the court can remove the executor. Someone who makes perfect sense as an executor on paper may not always be the best candidate for the job.

If you don’t have a will, the court will appoint someone to manage your estate and follow state law to determine who will receive your money and assets.

Everyone must have a last will and a comprehensive estate plan, whether they have a modest home or a mansion. Having someone who will carry out your wishes is the only way to be sure that the wishes expressed in your estate plan will be carried out.

Reference: Cleveland Jewish News (Feb. 3, 2025) “The right executor is key to honoring your wishes”

An Estate Plan To-Do List to Get Planning Done

 

Even if your New Year’s resolutions have fallen by the wayside, don’t let the resolution to create or revise your estate plan pass without tackling it. A recent San Francisco Bay Times article, “Kickstart 2025 With 5 Estate Planning Resolutions to Secure Your Future,” offers a step-by-step list of the tasks to complete your estate plan.

Start by locating your estate planning documents. Review them to be sure they’re up to date. If your will includes people no longer living or beneficiaries you’re no longer feeling generous towards, you’ll need to make those changes.

Review your estate plan with an eye on the people you’ve named for specific roles. Will the executor or trustee be a good fit? What about the person you’ve named as Power of Attorney? Your estate plan should also include a Healthcare Proxy. As you age, you need to be sure the people in these roles can still physically get to the bank or the hospital and navigate online banking or healthcare portals on your behalf.

Digital assets are now part of everyone’s life. However, not everyone addresses their digital assets in estate plans. You’ll need to review and record your digital accounts, from emails to social media to cryptocurrency, and create a list of the accounts, login information and passwords. If you have two or three-factor identification, you’ll need to be sure your digital executor can access your mobile phone or email to confirm their identity. Many people use password managers to gather their information. However, a notebook will do as long as your digital executor knows its location.

If you haven’t reviewed your healthcare directives in a while, you’ll want to do so. Your wish to be kept off any life-support systems while in your thirties may have changed as you have gotten older. After COVID, many people who would have never wanted to be on a respirator learned that it was lifesaving, not life-ending. Speak with your healthcare proxy about your wishes, so they know what you want and your estate planning attorney to ensure that they are documented properly.

An experienced estate planning attorney can help you avoid or minimize the probate process. For instance, placing assets in a trust can take the asset out of your taxable estate if the right trust is used. The assets in the trust won’t go through probate and will remain private. If using Payable on Death accounts makes sense for your estate plan, be sure that the accounts you want to transfer to someone else on your death are titled correctly.

An estate planning attorney will guide you through the process to ensure that you have the right documents, so your loved ones can help you if you become incapacitated and know your wishes when you die. It’s a gift to those you love, easing their burden and building your legacy.

Reference: San Francisco Bay Times (Feb. 5, 2025) “Kickstart 2025 With 5 Estate Planning Resolutions to Secure Your Future”

Why Is Estate Planning Important?

 

Estate planning is part of long-term planning, no matter what the size of a person’s investment portfolio or their total net worth. It protects the individual and their property, which is why everyone needs an estate plan. Estate planning is an umbrella term used to refer to everything from asset allocation after death to planning for incapacity and end-of-life healthcare decisions, according to a recent article in The Daily News, “What to know about estate planning.”

Typical components of an estate plan include a last will and testament, power of attorney, healthcare directives and trusts. Most surveys conducted in the last few years show only a third of all American adults have a will, and more than half think they don’t need an estate plan because they don’t own enough assets.

Here’s all you need for an estate plan to protect yourself and your loved ones:

A will is the document used to distribute assets after your death. Working with an estate planning attorney who knows the laws of your state is the best way to ensure that your wishes are followed. Trying to do this on your own or with an online platform puts your will at risk of being deemed invalid by the court, which would put your entire estate into the hands of your local probate court.

The will is used to name an executor to carry out the directions you’ve expressed in the will. It is also used to name a guardian if you have minor children. Without a will, or if a will is found to be invalid, the court will name someone to take over distributing your assets. If you have young children and both parents are deceased, the court will decide who should raise your children.

Trusts are used to protect assets, minimize taxes and safeguard assets for beneficiaries. There are many different types of trusts, and an experienced estate planning attorney will know which type is best for your family. For instance, if a family member is disabled, you may need a Special Needs Trust. Your estate planning attorney will also discuss whether you need a Revocable or Irrevocable Trust.

Trusts are used to shield assets from creditors and may be part of Medicaid planning. Another benefit is that assets in a trust don’t go through the probate process. If you are concerned about disgruntled family members poring over your will—which becomes a public document after it is entered into probate—you may wish to use a trust to keep your estate and your assets private.

Planning for incapacity is an integral part of an estate plan. Suppose you become incapacitated without any estate planning. In that case, your family will need to go to court to be able to speak with your doctors, talk with the health insurance company and take part in your healthcare decision-making. Court proceedings are costly and take time; they are not something you want to be embroiled in during a health emergency.

Your estate plan should include a Power of Attorney, which names another person to act on your behalf if you are incapacitated. You’ll also want a Healthcare Proxy to permit another person to make medical decisions on your behalf. An Advanced Directive will express your wishes for what kind of care you want if you can’t communicate your wishes.

Having an estate plan expresses your wishes for more than your property distribution. If you don’t have an estate plan, contact an estate planning attorney to discuss your intentions for assets, beneficiaries and your future. Most people are surprised at how relieved they feel once this task is taken care of. The peace of mind knowing you and your family are protected is well worth the effort.

Reference: The Daily News (Jan. 30, 2025) “What to know about estate planning”

Think of Estate Planning as a Gift to Loved Ones

 

When you think of a gift for your family, you might think about matching sweaters or a family vacation. However, the gift of an estate plan will be remembered because it demonstrates your ability to take care of your family and could help build wealth across generations. A recent article from CNBC Money Report, “Here’s why estate planning is a gift to your family,” explains how this works.

Remember, there’s no relationship between creating a will and signing documents and something happening to you immediately afterward. This notion keeps many otherwise responsible adults from taking care of their estate plans. Don’t fall prey to it.

Another point is that families fight over money and possessions, even when relationships are good. Without clear instructions provided in an estate plan, a family undergoing the loss of a parent is vulnerable to fighting and litigation.

You’ll want to have a Last Will and Testament and, depending on your situation, possibly trusts, a Power of Attorney for financial and legal matters if you are incapacitated and a Healthcare Proxy (sometimes called a Healthcare Power of Attorney), so someone can make medical decisions and talk with treating doctors in case you can’t communicate.

What happens when there is no estate plan? The courts will make all of your decisions, regardless of the wishes of your loved ones. Your entire estate will go through probate, and a stranger could be named to take charge of it, with a hefty fee to compensate them for their services.

If you have minor children and no will, the court will name a guardian to raise your children. Will it be someone you would have picked or your distant cousin who lives hundreds of miles away? There’s no way to know.

Assets titled properly or those with a named beneficiary will go directly to those named on the accounts without going through probate. This is one of the attractions of trusts, which never become public.

Part of creating an estate plan includes reviewing your accounts and beneficiary designations to ensure that the people named as your beneficiaries are still correct. If you have any old accounts you haven’t looked at in decades, now is the time to ensure that you’re not leaving your pension to an old college pal—unless that’s your intention.

Estate planning is about empowering the present and planning for the future. Chances are you’ve read many news articles about celebrities with massive estate problems because they failed to plan. Leaving a mess for your family to deal with is probably not the legacy you had in mind.

Give yourself and your loved ones the peace of mind knowing you’ve taken care of your estate plan. Be remembered as someone who cared enough to do the right thing. Consult with an experienced estate planning attorney today.

Reference: CNBC Money Report (Jan. 7, 2025) “Here’s why estate planning is a gift for your family”

What’s the Difference Between a Living Will and Last Will and Testament?

 

Estate planning serves to make your wishes known, plan for the future and enjoy peace of mind knowing that you have protected yourself and your family. Young adults, unmarried people and parents juggling family and work also need an estate plan, according to a recent article from Success, “What to Consider When Making a Will—and the Difference Between a Will and a Living Will.”

A Last Will and Testament and a Living Will are essential parts of every estate plan. However, their similar names can lead to confusion. They serve two very different purposes.

A Will provides directions to be followed when administering your wishes. The will names an executor who manages the estate and distributes assets in the probate estate. A guardian for minor children is also part of a will. This is why it’s so important for parents with young children to have an estate plan, including a will. If there is no will, a court will decide who will raise the children if both parents die.

Young adults, who generally believe they are immortal, often engage in high-risk activities and travel to exotic places. They should have a will and, equally importantly, a living will. This document is used to express preferences for medical care if one is seriously ill or injured and cannot communicate their wishes.

Similarly, young adults should also have an Advance Directive or a Medical Power of Attorney so someone they choose can make decisions if they are incapacitated, whether by illness or injury.

A Power of Attorney is needed to allow someone else to handle financial and legal matters in case of incapacity. Taken together, the will, living will and advance directive allow someone else to take over for you while you are living or after you have died.

Digital assets need to be addressed for anyone with an online life—which means almost everyone, especially younger people. Access to bank accounts, utility companies, photos stored online, social media accounts and digital property is a part of contemporary life. Settling an estate without this information will be difficult, if not downright impossible.

Estate plans need to be reviewed every three to five years and when significant life events occur, like marriage, divorce, the birth of a child, or a big change in financial circumstances. An experienced estate planning attorney can guide you through this process, making it far easier than expected.

Reference: Success (Dec. 23, 2024) “What to Consider When Making a Will—and the Difference Between a Will and a Living Will”

New Year’s Estate Planning Resolutions for 2025

 

You're in good company if your New Year’s resolutions included estate planning. Many people who put off creating or reviewing their estate plans in 2024 have resolved, once again, to take care of this vital task in 2025. A recent article from Coeur d’Alene/Post Falls Press, “Estate Planning in 2025: A New Year’s Resolution worth keeping,” reviews the basics of estate planning.

Last Will and Testament. It expresses how you want assets to be distributed and who your executor should be—the person in charge of asset distribution. Suppose you’ve had significant changes in life, like moving to a new state, welcoming a new family member through birth, adoption, or marriage, losing a loved one, or changing beneficiaries. In that case, you’ll need to review your estate plan.

Revocable Living Trust. Many kinds of trusts exist. However, a Revocable Trust is most commonly used to help heirs avoid a lengthy and expensive probate process. Trusts allow assets to pass directly to beneficiaries, and their contents remain private, which many prefer.

Power of Attorney Documents. A POA designates who you want to make decisions for you if you become incapacitated. A Durable Power of Attorney is used to name the person you want to be in charge of your financial affairs and should be drafted to meet your unique needs. For instance, you may want someone to be able to pay your bills and maintain your home but not sell your coin collection. A Medical Power of Attorney allows someone of your choosing to be involved in your healthcare decisions and talk with healthcare providers.

Living Will and Advanced Medical Directives. This is the document where you express your wishes if you are terminally ill and not likely to recover to what we consider a “normal” life. It addresses matters like receiving life support like artificial nutrition, respiration, and other means of being kept alive. These documents spare your loved ones the ordeal of guessing what you would want in a medical crisis and are a kindness to have in place.

Designated Beneficiaries. Regularly reviewing accounts with named beneficiaries should occur while you’re working on your estate plan. Most retirement accounts and pension funds allow you to name a beneficiary. These pass outside of the probate estate, so you’ll want to be sure they are up to date. You may also have bank or investment accounts with beneficiary designations, so check those.

Getting your estate plan done is one New Year’s resolution you’ll be glad to have kept!

Reference: Coeur d’Alene/Post Falls Press (Jan. 5, 2025) “Estate Planning in 2025: A New Year’s Resolution worth keeping”

Preparing for Life With an Estate Plan

 

A properly prepared estate plan includes a number of legal documents giving your specific and personal instructions to healthcare providers, financial institutions and the courts in charge of validating your will and overseeing asset distribution after you die.

According to a recent article from Kiplinger, “5 Key Components of an Estate Plan—and 7 Others to Consider,” if you don’t have an estate plan, your state’s government and local courts will make many decisions for you. Worse, your loved ones will need to petition courts to do anything for you, from making healthcare and end-of-life decisions to appointing someone to raise your children or sell your home.

An estate plan is prepared by an estate planning attorney who will know the various legal documents and strategies necessary to protect you and your loved ones. An estate plan includes the following documents:

Living Will. This document expresses your wishes for medical care, with as much detail as you want. For instance, do you want to have artificial nutrition through feeding tubes or blood transfusions if you are unable to give your consent? How do you want doctors to manage end-of-life care, if your body is living but your brain functions have ceased?

Without a living will, doctors will usually take an aggressive stance to keep you alive, even if you have something else in mind. Alternatively, your loved ones might have to make these decisions without knowing what you would have wanted. Having a living will and making sure your loved ones know what you want is a gift to them. Think of the guilt they’ll live with if they don’t know your wishes.

Healthcare Power of Attorney. This POA names someone you trust to make medical decisions when you can’t convey your wishes because of incapacity. They become your healthcare proxy, speaking with your doctors and deciding on treatment for you. Without one, your loved ones won’t be able to be involved in your care without going to court and petitioning to be named healthcare proxy.

You may remember the case of Terry Schiavo, a 26-year-old woman who had a heart attack and was only kept alive through artificial means. Her husband and parents were engaged in a court battle from 1990 to 2005 when a court ruled doctors could remove a feeding tube. Most of these situations don’t make headlines but are no less painful for families.

Financial Power of Attorney. This POA names someone to manage your money, access financial accounts, manage assets and run the day-to-day finances of your life when you are incapacitated. If you don’t have a POA, the court will name someone for you, whether you would have chosen them or not.

There are different kinds of POAs. The Durable POA is in effect the moment it is executed. The Springing POA is only executed when you become incapacitated and may lead to delays. Your estate planning attorney will know which is best for your situation.

Last Will and Testament. A will outlines your instructions for distribution of assets. If you have minor children or other dependents, it names a guardian for them. It also names an executor, the person who will be in charge of managing your estate. Without a will, again, the courts will decide who should receive your assets and raise your children.

An estate plan addresses the use of trusts to distribute your assets without court involvement. If your family includes a disabled individual, your estate plan includes plans for their future. For singles and childless couples, an estate plan spells out who will be able to make financial and healthcare decisions when you cannot.

Consult with an estate planning attorney today to give yourself and your family the peace of mind you all deserve.

Reference: Kiplinger (Jan. 6, 2025) “5 Key Components of an Estate Plan—and 7 Others to Consider”

Do You Need a Will or a Trust?

 

The start of a New Year is accompanied by wishes to make life better. Planning for the future and protecting the family means addressing your estate plan. A recent article from Parkland Talk, “Start the New Year Right: Why Estate Planning Should Be Your Top Resolution for 2025,” explains the basics of estate planning.

Everyone should have a will, a document setting out instructions for the disposition of your estate after you have died. For many families, a trust is part of an estate plan. This is a document creating a separate legal entity that takes effect once the trust is created. Trusts are used to own and manage assets during and after life. With a trust, you can assign another person to take care of assets in the trust if you become incapacitated.

Wills and trusts are very different legal documents, performing different tasks. The trust is effective while you are living and after you have died, while a will is only executed after you have died. For most people, both a will and a trust make up the foundation of an estate plan. Here are some of the differences:

A will and the property bequeathed in the will are subject to probate, while assets in the trust don’t go through probate.

Wills become part of the public record and can be read by anyone. At the same time, trusts remain private, their contents known only to the estate planning attorney who created them, the grantor—the person who created the trust—and the beneficiaries.

Wills are used to name a guardian for minor children.

Trusts let you control when and how minor children, grandchildren, or other beneficiaries receive assets in the trust.

You manage property in your will, while the trustee manages assets in the trust. An irrevocable trust is managed by the named trustee, while the grantor may be the trustee of a revocable trust.

A court does not get involved with the trust, while the executor, the person named to carry out the instructions in the will, is court-supervised during probate.

A will is only effective upon the death of the testator, the person creating the will. There are no provisions in a will for what should happen if the person should become incapacitated because of illness or injury. The trust is a tool for incapacity.

Both the will and trusts have their uses in a comprehensive estate plan. An experienced and knowledgeable estate planning attorney will help create an estate plan to best suit your needs.

Reference: Parkland Talk (Jan. 6, 2025) “Start the New Year Right: Why Estate Planning Should Be Your Top Resolution for 2025”

How Dying Without a Will Leaves Heirs an Extra Dose of Grief

 

Don’t delay having a will prepared by an experienced estate planning attorney, warns a frank article from Barron’s, “What Happens if You Die Without a Will? You Could Leave Heirs—and Pets—With Even More Grief.”

If you die without a will, a probate court will name heirs to receive assets and guardians to raise children. However, no one will be required to protect your pets. In worst-case scenarios, assets with no designated beneficiaries, including bank accounts, real estate property and retirement accounts, can end up in the state’s unclaimed property department.

If you’d rather choose who will be your heir, assign a person you know and trust to raise your children and want to ensure that your beloved animal companions live comfortably after you’ve passed, then you need a will.

A family member embarking on a search to identify property might be able to glean some information from the prior year’s tax returns. They’ll still first have to find the tax returns and then go to court to be appointed administrator of your estate. If you have digital assets, including cryptocurrency, and haven’t made a plan for someone to take control and manage those assets, your family may never see those assets.

Having assets titled with preferred beneficiaries is as important as having a will. Retirement accounts with named beneficiaries, including 401(k)s, supersede directions in a will. If most of your wealth is in a 401(k) or other accounts with the ability to name a beneficiary, make sure that those names are correct.

In community property states like California, spouses are entitled to community property, and asset distribution follows state law.

If you have children, and especially if they are still minors, you want to have a will to explicitly state who you want to raise your children if both parents die. While other family members can petition the court for guardianship, your children could become the center of a family blowup if more than one person wants to take custody.

If you care about what will happen to your pet, you must also plan for them. Even the most well-intentioned family member isn’t required to take your pet into their home. Shelters have many senior dogs and cats left behind when their owners die and are less likely to be adopted than kittens or puppies. Most states allow you to create a pet trust, where you set aside funds for the care of your pet and name a person to be the pet’s guardian and another person to be in charge of the trust. You can name the guardian to be the same person as the trustee, or you can keep the roles separate.

Unless you want to create a maelstrom for your family and let other people make important, life-altering decisions for those you love, schedule a meeting with an estate planning attorney to review your estate and create a will, along with other necessary estate planning documents.

Reference: Barron’s (Dec. 6, 2024) “What Happens if You Die Without a Will? You Could Leave Heirs—and Pets—With Even More Grief”

What Is a Living Trust?

 

Estate planning isn’t a one-size-fits-all process. Every family situation is different. What works great for your brother-in-law, may not work for you and your spouse. Living trusts pass wealth on to the next generation. However, they are one of many ways to accomplish estate planning goals. A recent article from msn, “Is a Living Trust Really the Best Way to Pass an Inheritance to Your Family?” takes a closer look.

A living trust is created to be a legal entity separate from the person who creates it, known as the “grantor.” Sometimes referred to as a “revocable trust,” it can be changed or dissolved at any time as long as the grantor is alive. Trusts are created by estate planning attorneys and tailored to the specific needs of the individual.

There are many benefits to using a trust. Assets placed in a trust pass directly to beneficiaries without going through probate. When someone dies, their will is submitted to the local court and reviewed by a judge who determines whether or not the will is valid and if the executor is acceptable to the court. Until the court approves the will and the executor, the estate is in limbo, and nothing can move forward.

Depending on how complicated the estate is and how well the local courts perform, it can easily take six months to a year for the court to approve the will. If the decedent owned property or other assets in different states, these all have to go through probate in each state.

A trust has a trustee and a successor trustee. If the decedent was the trustee, the person in charge of the trust, then the successor trustee can step in and manage the trust. If assets were placed in the trust to pay bills while the estate is being settled, the successor trustee can do this without waiting for probate to be completed. Beneficiaries can be given their inheritance upon the death of the decedent without delays from the probate process.

Most people don’t know this. However, a will becomes a public document in the probate process. Estranged relatives, ex-spouses, creditors and thieves can all view the will. This is why families who have suffered a loss are targets of scammers and recipients of phone calls and direct mail from people seeking to buy the decedent’s home or serve as financial advisors, assuming an inheritance is being received.

A living trust also allows for great flexibility to respond to changes in life. If a family member gets divorced or married, welcomes a new baby, or dies, the trust can be changed easily to adapt to new circumstances. The same is true for financial changes in life. If the grantor needs access to the assets in the trust, they can be taken out, or the trust can be dissolved. You can’t do this with an irrevocable trust.

Meeting with an estate planning attorney is the best way to determine if your circumstances warrant a trust and which is best suited to your goals. There are trusts to protect blended families, structure donations to charity, pass wealth to grandchildren and trusts for disabled individuals. A conversation with an experienced estate planning attorney will answer questions about trusts and provide peace of mind, knowing that you’ve done the right thing for your family.

Reference: msn (Dec. 1, 2024) “Is a Living Trust Really the Best Way to Pass an Inheritance to Your Family?”

Make Life Easier for Heirs: Get Your Estate Organized

 

The holiday season is not when most of us think about death and dying. However, we do think about gift-giving. Estate planning is a gift for your family. Wouldn’t you prefer a package wrapped in festive paper and decorated with ribbons than an unwrapped item hastily stuffed into a shopping bag? The article “5 Things to Do Now to Make Your Estate Simpler for Your Heirs” from The Wall Street Journal offers a starting point.

Update all estate planning documents. Failing to update estate planning documents, including finalizing new documents, can wreak havoc on families. One example is a woman who took about two decades to update her will and then died before signing the papers. Her will included giving assets to stepchildren she hadn’t seen in more than twenty years. Her adult children are spending thousands to have the new will enforced by a judge, even though it’s unsigned.

When did you last examine the beneficiary designations for all your financial accounts? Life insurance, retirement accounts, bank and investment accounts, pensions and other financial accounts provide an opportunity to name a person or people to receive the assets directly upon your death. If your old college pal is the person you thought of when you started your 401(k) with your first job, your wife may not appreciate his receiving hundreds of thousands of dollars upon your death.

Named beneficiaries receive assets directly from the financial institution and do not go through probate. No matter what language is in a will or even a living trust, these assets belong to the people you named to receive them. You should have a list of all of these accounts and know who the beneficiaries are.

Digital assets are now part of estate plans. There are very few people today who don’t have digital assets. These include the content in your emails, photos stored on the cloud, websites, content on social media platforms, online businesses and anything you’ve created online. Most people don’t understand the Terms of Service Agreement they make between the service provider and themselves when they click on the link to approve the TOSA. However, this is a legally binding contract delineating what the platform owns and what the user owns. You may not own books, movies, or other digital assets; you might have rented them unknowingly.

Digital assets need to be organized for heirs, since there isn’t a paper trail for them to follow like in previous decades. You can create a spreadsheet, use a password manager or a pad of paper. However, there should be a means for your digital executor to identify and access your digital assets.

Some digital platforms allow you to name a “legacy” contact who can take care of your digital assets after you’ve passed. You’ll need to go through each of your digital assets to find out which platform has this or related features. If it seems annoying, imagine how your heirs will feel trying to untangle your digital assets.

If your estate includes cryptocurrency, this is especially important. Millions of dollars of crypto have been lost because people have failed to secure their pass keys or digital wallets.

Deal with personal property now. Especially if you have multiple heirs, hoping the kids “work things out” could be a recipe for disaster. Make a list of your personal items and who you want to receive what. In some families, this is relatively straightforward. However, your adult children will be grieving after your passing and vulnerable to disputes. Another tactic: give items while you’re living.

Get your estate planning documents organized. Create a three-ring binder with all essential documents. Contact information for your estate planning attorney, CPA and financial advisor should be provided. Include a list of bills paid online, like utility, mortgage, taxes, health insurance, car insurance, etc. Also included are Power of Attorney, Health Care Power of Attorney, Living Will, Trusts and other estate planning documents. Tell your executor and adult children where the folder is.

An organized estate plan helps avoid family conflict. Having documents prepared, property assigned and accounts recorded all takes time. However, by doing so, you’ve minimized the work for loved ones and minimized reasons for quarrels during what will already be a difficult time.

Reference: The Wall Street Journal (Nov. 14, 2024) “5 Things to Do Now to Make Your Estate Simpler for Your Heirs”

How Does a Trust Work in an Inheritance?

 

It’s not easy to create an estate plan without the guidance of an experienced estate planning attorney. They can help work through the many moving parts and address concerns about how family members will respond to your plan to pass on assets. A recent article from msn, “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family,” says. At the same time, you may think keeping things simple with a last will and testament may be sufficient, but there are also good reasons to use a living trust.

If you have many beneficiaries, a living trust allows you to control assets while living and after you’ve passed. If you have a large family and want to include grandchildren, nieces and nephews in your estate plan, the living trust is easier than a will. Beneficiaries can be easily added or removed, as events like marriage, birth and divorce occur within the family.

The living trust allows you to get very specific about exactly how much of which asset you want to pass to each beneficiary. If your heirs include minors, a living trust consists of a trustee who can manage their assets until they reach a certain age. You can also determine at what age you want beneficiaries to receive your wealth. You might, for instance, decide to give a grandchild their inheritance not when they reach the age of majority (legal age) but when they turn 30.

Do you own real estate property? This asset can be tricky to bequeath in a will, especially if you own property in multiple states. Your estate would have to go through probate in each state, which all have their own rules and laws. This becomes expensive and time-consuming. Retitling real estate property into a living trust means the properties don’t need to go through probate. Your estate planning attorney will help make this an efficient process.

Trusts should be in your estate plan if privacy is important to you. Most people don’t know their wills become public documents as part of probate. This means anyone who is interested can read your will. This could be an estranged family member who feels they were wrongfully left out of the will, an ex-spouse, creditors, salespeople and thieves.

The public nature of probate is another reason why wills should not contain any specific account information, like account names, numbers, or the amount of money in the accounts. For the same reason, the names of digital assets, including user names and passwords, should never be included in a will.

Trusts are one of many means of passing assets to heirs without anyone except the grantor (the person creating the trust), the trustee (the person in charge of managing the trust), and the beneficiaries knowing about the trust’s existence and what it contains. This is especially important if your situation includes someone you wish to keep in the dark about your assets or your intentions.

Meet with an experienced estate planning attorney to discuss the different ways to pass wealth to loved ones, including a will and trusts. Learning what options are available will allow you to make an informed choice.

Reference: msn (Nov. 2, 2024) “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family”

Planning to Protect Your Children’s Inheritance: Asset Protection

 

No one likes to think about the possibility of losing a lifetime of earnings through unfortunate events like divorce, spendthrift heirs, or litigation. However, ignoring these risks won’t prevent them. A recent article from Kiplinger, “Want Your Kids to Inherit? You Need an Asset Protection Plan, ” explains several asset protection strategies used to protect wealth from disappearing in nefarious ways.

Prenuptial agreements aren’t the most welcoming topic when your adult child announces their engagement. Still, this should be discussed and encouraged no matter how much you love your prospective new family member. A prenuptial agreement or prenup is a contract between two adults agreeing on how they will distribute assets in case of divorce. This legally binding document addresses assets, debts, spousal support, alimony, gifts and inheritances. It’s also helpful as a supporting document if one of the spouses should die unexpectedly. However, the couple should have a will, power of attorney and other estate planning documents created as soon as they are married.

Depending on the state, there may be laws concerning when the prenup is signed for it to be valid. Signing a prenup under duress could make it invalid, so this needs to be addressed in a timely manner.

Another option is to create a postnuptial agreement (postnup). Spouses may contractually agree to terms outlining the distribution of assets in the event of a divorce after the wedding.

Asset protection includes determining and formalizing how assets will be passed on to heirs. Parents should consider creating trusts as part of their estate plan. Trusts allow grantors (the person creating the trust) a much higher degree of control over who receives the assets in the trust and takes them out of the probate estate.

For example, the trust may call for a beneficiary to receive a portion of their inheritance at ages 30 and 40 and the balance at age 50. An heir with a drug dependency might be required to complete a rehabilitation program or maintain employment over a steady period of time before the trustee can distribute some or all of the assets in the trust.

If assets are left through a will, a number of vulnerabilities are created. First, they are part of the probate estate and subject to federal and state taxes. Second, the will becomes a public document when it goes through probate, so creditors can learn if someone is receiving an inheritance. Creditors may include ex-spouses, credit card companies and financial institutions.

An experienced estate planning attorney is familiar with the tools used to protect assets and ensure that they pass to the next generation according to your wishes. Protecting a lifetime of hard work is a worthy endeavor, creating a legacy and providing security for those you love.

Reference: Kiplinger (Nov. 9, 2024) “Want Your Kids to Inherit? You Need an Asset Protection Plan”

Wealth Protection Through Estate Planning

 

Without a well-prepared estate plan, wealth can be lost to taxes, administrative costs, or disputes among heirs, both in and out of court. With an up-to-date estate plan, changes to tax laws are proactively addressed and wealth can be protected and passed across generations. A recent article appearing in Medical Economics, “Estate planning is your first line of defense against wealth loss—Here’s what you should know,” explains how an estate plan creates a framework to minimize taxes, avoid the costs and complications of probate and ensures that your wishes for your estate are followed.

Documenting assets is one task that is done when creating an estate plan. When records are not clear, transferring assets can become complicated. A comprehensive record-keeping system can store documents like deeds, life insurance policies, asset inventories, family videos and photographs online.

Many financial records are already online through client portals by major financial companies. The key to incorporating these records into an estate plan is remembering where all the information is stored and being willing to share access information with a trusted family member or friend. The person you name as an executor of your will or a trustee for a trust is the most likely candidate to be provided with this information.

There are many steps to having a solid estate plan. However, there are also many missteps. Here are some of the most common pitfalls to avoid:

Failing to update an estate plan. All the documents in your estate plan, including a Will, Power of Attorney, Healthcare Proxy, HIPAA Release Form, Trusts, Advanced Directives and more, must be updated to comply with changing laws and changes in your life.

Making a careless decision about the executor or trustee can be disastrous. The eldest child does not have to be the one to be in charge of your estate. Neither does the person you love if their life is a trainwreck. The person to be named executor and/or trustee needs to be someone you know to be extremely responsible, reliable, good with money management and a solid moral compass.

Digital assets are often ignored when it comes to estate planning. However, this new asset class needs to be included. If you have email, you have a digital asset. You have digital assets if you have email, cryptocurrency, websites, social media content, online subscriptions and photos stored in the cloud. Suppose no plan is made to create an inventory of accounts and name a digital executor. In that case, your estate becomes vulnerable to identity theft, valuable cryptocurrency could be lost forever and there may be nothing your loved ones can do.

Most family fights have to do with unequal asset distribution after the death of a parent. A clear estate plan is one way to preclude confusion about what you want to happen after death. Talking about your estate plan while you’re still able to have these uncomfortable discussions is one way to help establish your wishes. You may want to create a Letter of Intent or make a video to express your reasons for making certain decisions. This may not be legally enforceable. However, it will serve to document your wishes.

Estate planning is not just about distributing assets after death. By establishing an estate plan, the family is better prepared to deal with the loss of a loved one and can focus on healing together instead of battling over their inheritance.

Reference: Medical Economics (Oct. 17, 2024) “Estate planning is your first line of defense against wealth loss—Here’s what you should know”

Millennials Need Estate Planning

 

One family jokes about their mother’s large blue binder, affectionately calling it “Mom’s Book of Life.” She has assembled physical copies of estate planning documents, including medical directives for next of kin, account information, passwords and a list of assets. Her adult children thought they were too young to deal with such matters, reports a recent article, “I’m Way Too Young For Estate Planning. Or Am I?” from The Wall Street Journal. On reflection, they realized they, too, needed an estate plan.

Someone as young as 18 could benefit from having an estate plan, and someone in their 30s definitely needs one. Once a young person becomes a legal adult, their parents no longer have any say in financial or health matters without properly prepared estate planning documents.

Everyone over 18 should have an advanced healthcare directive, sometimes called a healthcare proxy or healthcare power of attorney. This allows people of your choosing the ability to make decisions about your healthcare if you become incapacitated: too sick or severely injured and unable to communicate your wishes.

Adults of all ages also need a power of attorney. This document gives another person the legal authority to access and manage your finances in case of incapacity.

A will, also known as a last will and testament, is needed to direct how you want your assets to be distributed after death. Even if you don’t own a home or car, chances are you have some personal property and may want specific people to receive certain items. Creating a will and getting used to the concept of planning for the future is a good habit.

If you have an extensive online life, digital assets will also require some planning. An inventory of your digital assets, including email accounts, apps, social media, cryptocurrency, photos, videos, etc., should be created, so a digital executor can manage the accounts. Some platforms permit naming a legacy contact, while others require specific directions on what should be done with your content.

Student loans, 401(k)s from employers and other financial accounts should be inventoried. However, this information doesn’t go into the will. The will becomes a public document once submitted to the court for probate, so any specific account information should be kept in an inventory of assets and debts.

Creating an estate plan can open a conversation with older relatives and parents about their plans for end-of-life care, a difficult but important dialogue. Talking about their wishes before something happens will allow you or other relatives to know beforehand, rather than spending the rest of your life worrying about a decision made in an emergency situation.

Estate plans need to be changed as you go through your life. New partners or spouses may need to be added, or a deceased parent may need to be removed as an executor. Getting used to addressing these life matters is part of being a responsible and loving adult.

Reference: The Wall Street Journal (Oct. 18, 2024) “I’m Way Too Young For Estate Planning. Or Am I?”

Can an Irrevocable Trust Be Changed or Ended?

 

Headlines around Rupert Murdoch’s estate battle concern his wish to change an irrevocable trust to give one son an elevated role and more control of his empire. The other siblings have taken their father to court. According to a recent article from Market Watch, “No trust is set in stone. Even irrevocable trusts can have some wiggle room.” What does this mean for regular people who want to change irrevocable trusts?

Trusts are legal structures in which the person creating the trust, the grantor, passes assets to another person or entity, referred to as the beneficiary. Revocable trusts can, as their name implies, be changed by the grantor at any time. Trusts are used to pass wealth to heirs, pass assets without needing to go through probate, maintain privacy and remove assets from the taxable estate.

Irrevocable trusts are intended to be permanent and transfer control of assets when they are created. Many are used for tax planning, while others help families to help a parent become eligible for Medicaid. For blended families, irrevocable trusts ensure that assets are distributed to spouses and biological children as per the wishes of the grantor.

Despite the name, there are ways to make changes to irrevocable trusts by knowledgeable estate planning attorneys. For new irrevocable trusts, careful drafting of the trust with built-in flexibility is critical. Some common provisions today are for the grantor to have the ability to change the trustee, amend terms, change beneficiaries and even revoke the trust.

If the original grantor is incapacitated or dies, a “trust protector” can be named to change the trust.

Decanting the trust is another way to make a change. Just as it sounds, this process involves having the assets in one trust decanted (or poured) into another trust. One example is if a family has created a multi-generation irrevocable trust, and the next generation includes a person with substance abuse issues. The family doesn’t want this person to have access to large sums. The trust is “decanted,” and assets move from the original trust to another with more restrictive provisions.

Consult with an experienced estate planning attorney to be sure that any changes to an irrevocable trust align with your state’s laws. If you are creating a new irrevocable trust, discuss having flexibility built into the trust.

Reference: Market Watch (Sept. 28, 2024) “No trust is set in stone. Even irrevocable trusts can have some wiggle room.”

Curated a Collection? You Need an Estate Plan for It

 

If you’re wondering if you need an estate plan, the simple answer is yes. The reasons are many, but among them is the answer to this question posed in an article from Morningstar, “A dilemma of the ultrawealthy: Who inherits the wine and art collections?”

The number of zeroes appearing after your estate value doesn’t matter to the courts who will decide what happens to your assets after you die if you don’t have a will. If you don’t have a last will and testament, your family will have to go through months or even years of sorting through your affairs. The entire estate will go through probate, which is costly and takes time. Without an estate plan, your heirs will see any inheritance shrink after state and federal estate taxes.

A better way is to have an estate plan created. You need a Power of Attorney and Healthcare Proxy to allow a trusted person to make legal and medical decisions on your behalf if you become incapacitated. You need a will to name an executor, a person of your choosing, to manage your estate after your death. If you have young children, you want to name the person who will take care of them and not hope the court doesn’t pick a family member whose lifestyle and values don’t match your own.

What about the collection you’ve spent a lifetime diligently assembling, thinking it will have greater value for heirs than a traditional financial investment plan? Whether you have a coin or stamp collection, own a small fleet of midcentury cars, or enjoyed curating a wine cellar, your collection has limited appeal for your heirs. Younger generations aren’t as interested as you think in these items, either as a means of amassing wealth or something to fight with their siblings over when you’ve passed.

When faced with shrugs over who wants what from the collection, most people put their heads in the sand and expect the children to figure it out after they’re gone. For one sports memorabilia collector, the eye-opening moment came when he sat down with his adult children to discuss their role in continuing his collection. No one was interested.

His response was proactive. He created a spreadsheet of the assets meticulously documenting their provenance, value and where they could best be sold. He also included information tracking the life-cycle of the collectibles, documenting the family’s lack of interest in the collection and insurance protection.

Another example of the importance of documentation came from the experience of a woman whose uncle had a massive coin collection. Twenty boxes of coins were set out in the family’s den, and she spent evenings creating an equally massive spreadsheet. The spreadsheet was submitted to a reputable antiques company, which sent a representative to review and purchase the collection only because the documentation was thorough and the coins had some value. It must be said—the coin collection was valued at far less than expected.

Depending on the collection, your estate planning attorney may also suggest making a charitable donation to a local, regional, or major cultural center. If you have a collection of movie posters, for instance, a local independent cinema might be able to auction them off at a fundraiser.

Addressing collections of any kind and planning for their eventual sale or distribution should be part of your estate plan. An experienced estate planning attorney can help create an estate plan to protect your assets, even those your heirs don’t value the way you do.

Reference: Morningstar (September 3, 2024) “A dilemma of the ultrawealthy: Who inherits the wine and art collections?”

When Should I Start Doing Estate and Tax Planning?

 

Estate planning creates a legal framework to manage assets in the event of incapacity or upon death and should include tax planning to protect income and inheritances. A recent article from The Street, “Don’t Be a Grasshopper: The Importance of Proactive Tax and Estate Planning,” references Aesop’s fable of the Ant and the Grasshopper. The ants are always hard at work, preparing for winter, while the grasshoppers play all summer and starve when winter comes.

Fundamentals for estate plans include having an experienced attorney create a last will and testament to convey your wishes for asset distribution. This is also done through the creation (and funding) of trusts, which take assets out of your personal ownership and place them in a separate legal entity. One of the many benefits of trusts is that assets are distributed directly to beneficiaries, without needing to go through probate.

Other estate planning documents include a Power of Attorney, which designates another person of your choice to handle financial and legal decisions on your behalf if you are incapacitated. The Power of Attorney ends upon your death, so it is only used while you are living. Similarly, a Medical Power of Attorney, sometimes known as a Healthcare Proxy, is used to give another person, also of your choosing, the power to be involved with your medical care, speak with your health insurance provider and be part of your health care decision making.

Which estate and tax planning strategies you need will depend in large part upon the size of your estate. If you own a home, a car and investment accounts, a will is needed to distribute your assets and different types of trusts may be needed. If the family includes a disabled family member, you should speak with an estate planning attorney about Special Needs Trusts. If long term care is a concern, a Medicaid Asset Protection Trust may be helpful to protect the well spouse and family.

Proactive planning can be a little more complex for those with significant wealth. Strategies like a Dynasty Trust or Irrevocable Trust may be needed for those whose estates reach estate tax exemption thresholds, which are likely to shrink considerably in the future.

When possible, communicate your wishes with the family so there are no surprises after your passing. Decide how transparent you can be with your children and grandchildren. In some families, this is accomplished with a series of family meetings. For others, holding a meeting in the estate planning attorney’s office with the attorney present to answer questions can be more productive.

Regardless of your estate size and family dynamic, taking the time to create or update an estate plan is a kindness to your loved ones. They’ll know you made an effort to prepare so they can celebrate your life and hold their memories close without the distraction of family fights or protracted court proceedings.

Reference: The Street (September 3, 2024) “Don’t Be a Grasshopper: The Importance of Proactive Tax and Estate Planning”

What’s the Primary Purpose of a Living Trust?

 

One of many options for people who want to pass an inheritance to loved ones is a living trust, also known as a revocable trust. There are several benefits, as detailed in this article from msn.com, “3 Benefits of Using a Living Trust to Pass an Inheritance to Your Family.”

Trusts are used to avoid the probate process. This is a court process where the court evaluates the will, decides whether or not it is valid and then supervises how the assets in the estate are distributed. If you’ve ever had the misfortune of experiencing the probate process, you know it can be stressful.

Probate takes time. While it varies depending on the jurisdiction, it can take months and sometimes years to complete. While the estate is in probate, heirs cannot access estate assets.

Probate can be expensive. There are court costs, administrative fees, legal fees and accountant's fees if the estate is complicated.

Probate is public, and trusts are private. Once a will is entered into probate, it becomes public information and anyone can access it. This includes estranged relatives, creditors, salespeople and thieves. They all look at the will to learn about the size of the estate, asset values, names of beneficiaries and where they live and whatever information is in the will.

The only people who have access to trusts are the estate planning attorney who created them, the trustee and the beneficiaries. This level of privacy is sometimes a bigger reason to have a trust than avoiding probate, especially for people who scammers could target.

Trusts allow flexibility. Living trusts are also called “revocable” because they can be changed during your lifetime. You can change the terms of the trust, the names of the beneficiaries, what assets you want heirs to receive, etc. If you have a big change in your financial situation, good or bad, the trust can be modified.

If a revocable trust sounds like a good option for your situation, speak with an experienced estate planning attorney. They’ll help you create a trust and estate plan to protect you and your loved ones.

Reference: msn.com (Aug. 21, 2024) “3 Benefits of Using a Living Trust to Pass an Inheritance to Your Family”

Do You Need a Will and an Estate Plan?

 

Dying without a will can cause your family to go through at least a year, maybe longer, of probate, fights over property distribution, and, in many cases, litigation against each other. This is probably not the legacy you have in mind, which is why this aptly-titled article, “You need a will and here’s why,” from Lincoln County Leader, is a good read.

Dying intestate, the legal term for dying without a will, means the local jurisdiction will be in charge of how your estate is handled. Each state has its own laws for distribution. In most states, distribution is based on kinship or bloodlines, so if you have relatives, they may be first in line for your inheritance.

In some states, when there is no will, the surviving spouse receives 50% of all assets, and the remaining assets are divided equally among the children. In other states, the spouse gets 30%, with the children receiving the balance. You must have a will if you want your spouse to receive 100% of your assets. If you have children but no spouse, they will usually inherit everything in equal shares.

If you have no children and no spouse, property distribution can become more complicated unless you have a will. The court may give your parents your estate if they are living. If your parents have passed, your siblings are the next likely heirs. The court will seek to identify your closest relatives by kinship, and they may inherit all of your worldly goods.

If there are family heirlooms, you want to give to a particular child, or if you want to have a portion of your estate go to a charity, it won’t happen without a will.

Today’s family often is a bit more complicated than in the past. Blended families need to have estate planning so biological children aren’t disinherited. Estranged relatives could end up with your precious heirlooms unless a will is in place.

What if your children are minors? A will is used to name a guardian for children, so they are brought up by the people you trust. The court will decide who will raise your children if you don’t name a guardian in your will. Also, minor children cannot inherit property, so if you die, your spouse will get their share as per your state’s laws, and the children’s inheritance will be overseen either by the court or by a person named by the court.

Having a last will and testament allows you to direct who is to inherit your assets, from personal items to financial assets. But you need to do more to protect yourself and your family, and this is part of the estate planning process.

When you sit down with an estate planning attorney, they will also review matters, including beneficiary designations (i.e., the people named to receive assets upon your death on life insurance, retirement accounts, and certain financial accounts). They’ll also advise you on documents like a Power of Attorney and Medical Power of Attorney, which allow you to name someone to take care of your financial and healthcare matters if you become incapacitated.

Taken all together, an estate plan provides security for your family, protects you while you’re living, and creates a legacy of caring about the ones you love.

Reference: Lincoln County Leader (Aug. 4, 2024) “You need a will and here’s why”

What are the Essentials of Estate Planning?

 

Once you’re familiar with the basics, estate planning isn’t quite as daunting as it may seem at first, says a recent article from The Atlanta Journal-Constitution, “Estate planning 101: A guide to management.” Estate planning includes the necessary planning to protect you while living and distributing assets after you have passed.

Your estate plan depends on many factors, including the size of your family, whether you’re married, widowed, or single and the amount of your assets, including your home, investment accounts, real estate, retirement accounts and digital assets.

One important thing to know: estate planning is not just for wealthy people. If you think you don’t have enough assets for an estate plan, you’re wrong: any adult needs an estate plan to protect themselves and their loved ones.

Consider your last will and testament as a gift to your loved ones. A will is a legal document containing instructions for distributing your property to heirs upon death. What constitutes a valid will varies from state to state, so you’ll want to work with a local estate planning attorney to create a will.

If you die without a will, your estate is considered “intestate,” and your property will be distributed according to the laws of your state and the probate court. Your family won’t have any say in whoreceives assets. They could go to a distant relative you’ve never even met. With a will, you get to decide (within the bounds of law, of course) what you want to happen with your assets.

Trusts are used to have further control over assets in an estate. Wills become part of the public record once filed in probate court. However, the contents of a trust remain private. The trust can be used to hold assets while you are living, and certain types of trust only become effective upon your death. Another benefit of a trust is that it can allow a trustee to manage assets in the trust if you become incapacitated.

Special Needs Trusts are created for people with developmental disabilities to provide support in addition to government benefits. Medicaid Asset Protection Trusts take assets out of a person’s estate, often as part of planning for long-term care costs. An estate planning attorney can recommend the type of trust best for your unique situation.

A power of attorney is a document used while you are living to give another person the ability to manage your affairs in case of incapacity. Everyone should have a POA for their financial and legal affairs and a Medical or Health Care Power of Attorney, so a trusted person can help with medical decisions and be involved in decision-making for medical care.

An executor is a person you name in your will who is in charge of your estate and estate management after you have died. You can name one or two people to be executors of your estate. However, be sure that they work well together to avoid any stalemates.

An experienced estate planning attorney can make this a relatively straightforward process, giving you the peace of mind of knowing you have taken the necessary steps to protect yourself and your loved ones.

Reference: The Atlanta Journal-Constitution (Aug. 1, 2024) “Estate planning 101: A guide to management”

Should All of My Assets Be in a Trust?

 

By now, you may have heard about the “great wealth transfer,” which refers to Americans inheriting as much as $72 trillion over the next twenty years. Do you have a plan in place for your family? A recent article, “Is a Living Trust Really the Best Way to Pass an Inheritance to Your Family?” from The Motley Fool, explains how this estate planning tool works.

How does wealth pass to heirs? One way is a Last Will and Testament. However, a Living Trust may be better. The Living Trust is the creation of a legal entity, the trust, which allows the person creating it—the grantor—to control the trust and the assets in it during their lifetime. When the grantor passes, the secondary trustee takes over, managing assets in the trust and distributing them according to the language in the trust.

A living trust isn’t for everyone. There are definite advantages. However, there are also some disadvantages you’ll want to understand before deciding if this is for you.

Living Trusts allow the grantor to maintain control of the trust and the assets within the trust. The grantor can change their mind about any aspect of the trust at any time. They can change beneficiaries, remove assets or even close the trust.

The Living Trust takes assets out of your probate estate, meaning the assets in the trust are distributed to beneficiaries with no court involvement. Probate is a lengthy, expensive and public process. It can take months or years to complete, and the will becomes part of the public record. Anyone who wants to, from nosy relatives to scammers, can read the will.

Those with significant wealth use trusts to keep their private business private. People with estranged family members use trusts to maintain privacy and prevent feuds.

However, there are some downsides to consider. There is some work and costs associated with trusts. Placing assets into a trust requires retitling those assets, such as real estate or investment accounts.

You should speak with an estate planning attorney, especially if your goal in creating a trust is to qualify for Medicaid. This is a different type of trust requiring the help of an experienced estate planning attorney.

A trust isn’t an instant tax shelter. An estate planning attorney should be consulted to create the proper legal entities if your main goal is to take assets out of your estate to avoid federal, state, or inheritance taxes.

Trusts aren’t do-it-yourself projects. To do this right, you’ll want the help of an experienced estate planning attorney. They’ll help you define your goals and then create a plan to achieve them.

Reference: The Motley Fool (July 5, 2024) “Is a Living Trust Really the Best Way to Pass an Inheritance to Your Family?”

Can You Get Around Probate?

 

As any estate planning attorney will tell you, probate takes time, costs money and adds stress to settling a loved one’s estate. A reporter shares her personal experience in a recent article appearing in Market Watch, “Inheritance isn’t automatic: The probate process can take almost two years and cost thousands of dollars.”

Most people have a vague notion of what probate is. They understand it to be a process where the family must file the will with the country court and wait for it to be approved before distributing assets. If there’s no will, they may think probate is the process of settling the estate.

Others think inheritance happens automatically, with heirs receiving 35% of an estate. This is not true. One of the easiest ways for assets to go to heirs outside of probate is to make the most of beneficiary designations. Certain financial accounts offer the option to assign someone as a beneficiary, usually investment, retirement and bank accounts. After the account owner dies, the heirs apply for their inheritance with a death certificate and proof of their identity.

A recent study showed that only 2% of people understood that the average period of time to probate an estate is 20 months. While there are some jurisdictions where probate happens more efficiently, most estates take a long time to go through the process.

How can you avoid probate or simplify your estate so fewer assets go through probate? Your estate planning attorney will be able to explain how using trusts takes assets out of the estate. Another is simplifying your life. If you have assets with multiple investment companies, for instance, consolidating them into one account with one financial institution could streamline the process for your heirs.

While you’re consolidating your accounts, check on your beneficiary designations. If you opened an investment account twenty years ago, you may have named someone who isn’t in your life anymore. They may be happy to receive a surprise inheritance from you. However, your family won’t be able to get the assets, even if your will says otherwise.

For an excellent example of how to manage an estate, consider the actor Matthew Perry. Most of his estate was transferred to heirs through trusts, which avoided large assets going through probate and kept his personal business private. One bank account had no named beneficiaries, so his family went to probate court to file his “pour-over will.” This is a will where assets not already in trust are directed to be added to the trust after death. Because the will was filed in court, reporters were able to obtain information about this one account. The rest was private.

Consult with your estate planning attorney to determine how to structure your estate best to avoid or minimize probate for your loved ones.

Reference: Market Watch (July 17, 2024) “Inheritance isn’t automatic: The probate process can take almost two years and cost thousands of dollars”

What are Risks of a DIY Estate Plan?

 

The number of online tools purporting to create estate plans easily and cheaply makes it tempting to forgo working with an estate planning attorney, but the long-term consequences of a DIY estate plan could be disastrous. A recent article from mondaq, “Risks of DIY Estate Planning” takes a close look at what can go wrong.

Estate and tax laws are both complicated and nuanced. Without an experienced estate planning attorney overseeing the creation of an estate plan, a homegrown plan isn’t likely to achieve the desired results. In addition, chances are good it won’t follow state law. If a last will and testament is found to be invalid during probate, it’s as if there was no will at all.

Estate planning needs to be created for each person’s unique situation. Do family members get along, or should the estate plan be designed to be litigation-proof? Are there large assets held in trust or corporations with complex tax consequences? If there are family members with special needs, have the proper trusts been established to protect them over their lifetimes?

Tax planning is often a significant part of an estate plan. Depending on your state and where you own property or businesses, your estate must consider many different types of taxes. Transfer tax, capital gains taxes, income taxes, and estate taxes are just a few of the taxes to be addressed. If the estate plan doesn’t dovetail with tax liabilities, beneficiaries could find themselves with a far smaller inheritance than anticipated.

Today’s modern family is not as straightforward as in the past. Families come in many different variations, all of which have their own special challenges. Blended families are fairly common, and a traditional “I love you” will, where one spouse leaves the other everything and vice versa, may result in some children being disinherited. Same-sex married couples with children need to be sure their children, biological and adopted, are protected with an estate plan designed to protect all members of the family.

Comprehensive estate plans should address asset distribution issues, guardianship for minor children, and name an executor and heirs. A Power of Attorney is needed so spouses may be involved in each other’s healthcare. Living Wills are required to clarify wishes for end-of-life care, as are Advanced Medical Directives. There are a host of documents to be created and decisions to be made, all of which require the knowledge and experience of an established estate planning attorney.

Reference: mondaq (July 1, 2024) “Risks of DIY Estate Planning”

What Information Should Be in a Will?

 

While it’s clearly more fun to plan for a baby shower than to contemplate your own mortality, making arrangements for the eventualities of life as we age—including incapacity and, yes, our own passing—does bring peace of mind. It’s necessary for everyone 18 and older, says a recent article from BestLife,

“The 10 Most Important Things to Include in Your Will, Experts Say.”
The reason is simple: if you are incapacitated and cannot speak for yourself regarding healthcare decisions or your financial life, you need someone to do so for you. This is as much a part of your estate plan as asset distribution.

Planning for incapacity includes having a Power of Attorney (POA) and possibly a lifetime or revocable trust. The POA assigns someone else to manage everyday financial matters. The Healthcare POA is used to designate someone else to make medical decisions on your behalf if you can’t do so. You’ll need to discuss these roles with the person or people being named to ensure that they are comfortable with the responsibilities. Be sure that your Healthcare POA knows your wishes regarding medical directives and will carry them out, even if they feel differently about your wishes.

Your Last Will and Testament is part of a group of documents, including the POAs mentioned above. A will is used to name an executor who administers your estate. The executor has a large task, including gathering information for all assets, filing final taxes and estate taxes, paying off debts, notifying family members and distributing assets. Your executor should be someone you trust and who has the financial acumen to take on all these tasks, as well as managing heirs who don’t always appreciate the executor’s responsibilities.

You’ll need backups for all the people in all roles. Let’s say you chose a respected friend of many years to be your executor. If they become ill or die themselves, who will oversee your estate? You need a second, or even a third, backup executor to be named in your will. The same goes for trusts. A successor trustee is necessary to be sure that your trust and its assets are in good hands.

Minor children or dependents are protected through a will that is used to name a guardian (and a backup guardian) for minor children. If no one is named, the court will decide who will raise your child(ren). Similar issues need to be addressed, such as when you would want your children to receive an inheritance—all at once or when they reach legal age. Could it be specific percentages based on age? Picking the right person and creating a plan will ensure that the children have a good life, even in your absence.

Keeping wills up to date is critical to ensuring that your wishes are followed at every stage of life. Everyone involved should know where the original copy of the will is located. Some estate planning attorneys will safeguard your will, while others recommend keeping it at home in a fire and water-proof safe. Whichever route you take, tell your executor and family members where it can be found.

Discuss the use of trusts with your estate planning attorney. Using trusts can minimize the amount of your estate needing to go through probate, which can be time-consuming and costly.

Don’t neglect your furry or feathered friends. If your lifestyle includes companion animals who are dear to you, consider who would take care of them if you became incapacitated or died. You can use a pet trust to provide assets for their care and name a caretaker, so they don’t end up in a shelter.

Avoid family battles by including your wishes for personal possessions with special meaning in your will. Family heirlooms, artwork and jewelry are among the items families fight over. Spare your family this stress by naming them in your will or gifting them while you are still living.

Digital assets have become a part of our modern lives. Suppose you leave a list of accounts, usernames, passwords and specific directions for your wishes. In that case, your executor will need to be able to manage your digital assets, including financial accounts, photos, subscriptions, airline miles, email and social media accounts.

If you wish to leave assets to a charity, you can do so in your will or make gifts before you die. Speak with your estate planning attorney about how to bequeath assets to a charity, which should be done in alignment with your overall estate plan.

Reference: BestLife (May 3, 2024) “The 10 Most Important Things to Include in Your Will, Experts Say”

How Younger Adults Take Charge of Estate Planning

However, recent anecdotal trends show a new, positive shift among millennials or Gen-Z individuals. According to a recent article from Forbes, “Why Gen-Z Is Suddenly Creating Wills And Trusts—And You Should Too,” within recent months, more and more millennials and Gen-Zers who are being told to create an estate plan are actually going ahead and doing so.

The article says Gen-Zers and millennials have become the “quiet leaders” of estate planning. Several things are driving this shift:

Digital Assets. Younger people, even those of modest means, have significant digital assets, including cryptocurrencies, online businesses and many social media accounts.

COVID. Living through a global pandemic and experiencing the unexpected loss of family members raised awareness relatively early in their adult years of the repercussions of not having an estate plan.

Changing Family Structures. “Modern Family” is more than entertainment. Today’s family is more likely to be different than the traditional family structure of the past, and clear directives are needed to prepare for asset distribution.

Valuing Philanthropy. Younger adults are more aware of the role nonprofits play, whether in their immediate communities or globally. They are also more likely to give a portion of their estate to nonprofit organizations.

Financial Savvy. Younger adults are more candid than past generations with their peers about money and how to protect it through estate planning as part of money management and investment strategies.

Having an estate plan can protect a legacy for family and children, while not having one could mean giving half of your estate to the government in taxes. An estate planning attorney can help to avoid or minimize probate, a court process requiring your will to become a public document. Probate can delay the distribution of property and can be costly.

Another reason to have a will is to minimize family conflict. Your family won’t be left guessing how you want your assets to be distributed. It is also less likely that there will be family fights or misunderstandings after you’ve passed.

Estate plans are not just for wealthy people but anyone who cares enough about their family to protect them. Younger adults embracing estate planning is a good sign for the future.

Reference: Forbes (April 17, 2024) “Why Gen-Z Is Suddenly Creating Wills And Trusts—And You Should Too”

How Does a Revocable Trust Work?

 

A revocable or living trust is a document created by you while you are living, creating a separate legal entity to hold title to property or receive property by being the designated beneficiary of financial assets. Real estate is moved into the trust by recording a deed for the real estate into your trust, according to the article “What are the pros and cons to putting my home in our trust” from Coastal Point.

There are many benefits to having property in a revocable trust, including probate avoidance, especially when you use one trust to hold property in more than one state, thereby avoiding having the estate go through probate in more than one state. Trusts are also used to make the administration of an estate easier and maintain property in further trust for beneficiaries within the initial trust. Trusts are also used to maintain privacy, since a revocable trust is never a public record in most states, unlike a last will and testament.

The revocable trust can be more expensive and time-consuming to set up initially. Nevertheless, they save the beneficiaries time and money after the death of the grantor (the person creating the trust). They can be a little more difficult for people to understand than the traditional last will and testament. However, the overall pros usually outweigh the negatives.

Probate is the process by which the court approves the validity of the will and the plan to distribute assets to beneficiaries. When someone dies, and their real estate and assets are not in a trust, the estate is probated, meaning an estate is opened at the Register of Wills in each state where the person owned real estate. The assets of the decedent are tied up for at least eight months, so any creditors of the decedent can submit claims against the estate. After the period of time required by each state, check with your estate planning attorney to find out about your state’s process. The estate can be closed, and assets can be distributed.

The main benefit of placing real estate in trust is to avoid probate. This not only saves time and expense but allows the property to pass immediately to the beneficiaries, be sold to a third party, or otherwise be disposed of following the instructions in the trust. Holding assets in trust also provides privacy and lets you be very specific about what you want to happen to those estates.

If the trust is revocable (as opposed to irrevocable), you also have a lot of flexibility. Changes can be made to the terms, contents and distributions as wished by the grantor. The trust can even be revoked entirely, if wished. A revocable trust remains private and is not part of the public record.

Be sure to fund the trust once it is created, either by retitling deeds or other asset ownerships. Knowing exactly how to title the property deed or make proper changes to account names is something your estate planning attorney can help with.

Reference: Coastal Point (Feb. 15, 2024) “What are the pros and cons to putting my home in our trust”

What are the Important Steps in the Estate Planning Process?

 

Estate planning is about taking charge of your legacy and your life. Despite all good intentions, only one in three Americans has an estate plan, according to a recent article from Kiplinger, “10 Things You Should Know About Estate Planning.”

An estate plan does not prevent death or illness. However, it does protect the family from stress and grief. By creating an estate plan, you provide your loved ones with clarity about what you want to happen to your property upon your death.

Equally importantly, the estate plan explains your wishes if you have a serious medical condition and can’t make decisions or communicate yourself. A financial Power of attorney (POA) names someone to oversee your finances and do tasks like paying bills if you are alive but incapacitated. A healthcare POA names someone to make healthcare decisions on your behalf. A healthcare directive explains your wishes for medical treatment in different situations.

What happens if you don’t have an estate plan? Each state has its own laws for what to do when someone dies or if they become incapacitated. Having an estate plan means you are making those decisions yourself. The court may assign someone to make healthcare and/or financial decisions for you. However, they may not be the person you would have selected or make the decisions you would have chosen.

Beneficiary designations supersede your will. Any account with beneficiary designations will go to the person named on the document, regardless of what your will may say.

Trust funds provide control of assets during life and after death. A trust is a legal entity holding property for someone else’s benefit. The trust can be set up to control exactly how you want your money and property distributed after death.

When you die, the court reviews your will to ensure that it’s been properly prepared and gives your executor the power to perform their tasks. This is called probate and can take time. A good estate plan can take much or all your assets out of your probate estate, speeding up the process of distributing assets faster.

Estate planning includes tax planning. In 2024, the federal exemption is $13.61 million, but 17 states and the District of Columbia levy a state estate tax. Some states also have inheritance taxes. Your estate planning attorney will help you incorporate tax planning into your estate plan.

Don’t neglect your pets. You can express your wishes in an estate plan. However, a pet trust is better. It is enforceable and provides specific information about how you want the pet to be cared for and who you want to care for it.

Digital assets need to be addressed to protect assets and prevent theft. Create an inventory of your accounts, usernames, passwords and name a person who will be your digital executor.

Review your plan every three to five years with an experienced estate planning attorney.

Reference: Kiplinger (Feb. 1, 2024) “10 Things You Should Know About Estate Planning”

What Is the Purpose of a Living Trust?

 

There are so many misconceptions around trusts, especially thinking trusts are only for wealthy people, according to a recent article, “2 Key Benefits of Living Trusts” from Forbes. During your lifetime, a living trust is an extension of yourself. There are no tax benefits or tax liabilities until you die, when living trusts provide benefits compared to assets not held in trust.

What happens to different types of assets after death?

If you own assets with beneficiary designations, these will be passed to beneficiaries outside of probate. These are typically retirement accounts, life insurance, some investment accounts, pensions and annuities.

If you have joint ownership of assets, they will become the property of the surviving joint owner(s) after death. The most common jointly owned assets are real estate, bank and investment accounts.

If you own assets as an individual, they will go through probate. While bank and investment accounts do permit transfer-on-death (TOD) and payable-on-death (POD) elections to bypass probate, this is not appropriate for every situation.

Two of the most common benefits of having a living trust are avoiding probate or reducing the probate estate and having greater control over the distribution of assets.

If one spouse passes and owns all liquid funds (and/or a privately owned business) in their own name, the survivor may be left without funds to pay bills while the probate estate is being settled. Having a living will means the survivor, if named as a beneficiary of the trust, has access to assets during probate.

Probate also incurs expenses and can take months to settle an estate. Any assets going to through probate become part of the public record, which can create a host of other issues. A large estate in probate can become a burden on the surviving spouse and family.

When assets go through probate, the court has the final word on how assets are distributed. This may align with your will, but it might not. Suppose assets are held in a living trust. In that case, probate or at least reduce the number of assets going through probate and control the distribution of the assets without your personal financial information becoming part of the public record.

Your estate planning attorney can create a living trust, naming you as the trustee and a person to serve as a successor trustee. Your successor trustee will be responsible for distributing the assets in the trust upon your death.

There are many ways to create the trust. The spouse is typically the successor trustee, with varying levels of access to assets during the surviving partner’s lifetime, with the remainder going to children or relatives. Trust laws are state-specific, so speak with an experienced estate planning attorney to create a trust that suits your unique situation.

Reference: Forbes (Jan. 24, 2024) “2 Key Benefits of Living Trusts”

Prevent Difficulties in Probate with Advance Planning

If you think gathering your papers, passwords, logins, account information and estate planning documents is a challenging task, consider your heirs trying to do it after you’ve passed and while they are grieving your loss. By preparing all the information they’ll need, you’ll make their inheritance process as easy as possible, says a recent article from Next Avenue, “6 Ways To Save Your Heirs from a Painful Probate.”

A List of Passwords for Hardware, Online Accounts and More Our cellphones, tablets, computers, online accounts and other technology all hold important information. If your executor tries to access information and accounts, they’ll need more than your passwords. If you have accounts with two-factor authentication, for instance, they’ll need to be able to access your email and/or cellphone to access other digital assets. The list should include things like social media usernames and passwords. The information must be kept somewhere safe where a spouse or executor can find it. Some tech platforms allow you to name a legacy contact with the right to access accounts after you pass. A password manager system might be helpful. However, this may add another layer of frustration for non-technical people.

List All Assets and Accounts with Contact Information. Whether you use a spreadsheet or a notebook, this is crucial information. Make sure to include investment accounts, checking and savings accounts, 401(k)s, IRAs, pension accounts, brokerage accounts, etc. Provide contact information for your estate planning attorney, accountant and financial advisor.

The information must be well organized because it will be a lot of data. Your executor will also need the accounts for running your household, paying utilities, mortgage, cable, etc. The same goes for health insurance, Medicare or Medicaid information, life insurance policies, car insurance and deeds to your home and car.

Tell the Executor and/or Heirs Where Your Information is Located. One estate planning attorney reports receiving a few monthly calls from grieving heirs who have no idea where the estate planning documents are, who takes care of the financial accounts, or how to access these accounts. Sometimes, the calls come from people who aren’t even clients but are hoping there might be some special resource known to estate planning attorneys to provide this information. There is no such thing.

Plan for the Unexpected A significant part of estate planning is planning for financial and healthcare decisions while you are still living. A living will details whether or not you want to be kept alive by heroic or artificial means, and a power of attorney authorizes someone to make decisions on your behalf. Without a POA, the person may recover from their medical emergency to find a financial mess of late bills, missed insurance premiums, or a host of issues that could have been dealt with on their behalf. Without healthcare surrogate documents and discussions of your wishes in difficult health situations, the family will need to make difficult healthcare decisions in highly stressful situations.

If the proper documents are not in place, the family must go to court to have someone named a guardian, who can then make health care decisions for you. The same process will be needed to have someone manage your financial affairs, called conservatorship. These are expensive and invasive court processes that can easily be avoided.

Talk with your estate planning attorney and family members to plan for the future. You’ll all feel better knowing that you’ll all be prepared when difficulties arise.

Reference: Next Avenue (Jan. 9, 2024) “6 Ways To Save Your Heirs from a Painful Probate”

What to Do Before Naming a Family Member or Friend to Be a Trustee

Here’s an all-too-common scenario: a husband and father of adult children had created a living trust to protect assets and eventually direct the family’s wealth to heirs. During his lifetime, the man had served as the trustee. His wife became the trustee when he died, as explained in the article “Before Naming Trustees, Get Their Consent” from Next Avenue.

When the mother died, the trustee role was given to one of the adult children. The child was stunned because no one had ever told him about this responsibility.

Living trusts typically require trustees to work with estate planning attorneys and financial professionals to manage assets, distribute investment income to beneficiaries, oversee taxes, and sometimes, maintain or sell real property. This is not just for wealthy families. Families of modest means benefit from tax and estate planning aspects of trusts. They allow grantors (the person establishing the trust) to leave assets privately and, in some states, avoid probate, which is usually a public proceeding and can take time to complete.

Some heirs may not be happy with the person named to be the successor trustee. Some living trusts include special instructions for certain beneficiaries intended to control spending, if the grantor thinks the heir may be unable to manage their inheritance.

This can be avoided by having candid discussions with all family members about the parents’ future plans. Sometimes, having a family meeting at the estate planning attorney’s office—neutral territory and an expectation of mature behavior—may make the conversation less tumultuous.

The person named to be a successor trustee needs to be considered carefully. Just inserting someone’s name in the trust document without speaking to them first about the possibility of taking on the role and what it entails is a recipe for disaster.

Before the estate planning attorney completes trust documents, grantors need to think about who would do the best job, what relevant skills they have and who would be able to manage the family’s relationships if unpopular decisions need to be made.

If there are two adult children, the better choice isn’t necessarily the older of the two. The one with the greater financial acumen is the better candidate.

Suppose no suitable candidates from the family can be identified or no one is willing to take on the tasks. In that case, grantors may consider their estate planning attorney or a professional trustee from a financial firm. Although some grantors would prefer to have a family member as their successor trustee, this may not always be possible.

Once the candidate has been named and before the documents are completed, a meeting is needed to outline the trustee's responsibilities. Once the candidate fully understands what they must do and agrees to the role, the grantors might want to hold a family meeting to explain their choice and have an open, hopefully peaceful, discussion.

Reference: Next Avenue (December 22, 2023) “Before Naming Trustees, Get Their Consent”

How Does a Pour-Over Will Work?

 

A Revocable Living Trust allows a married couple or a single person to direct what they wish to happen to their possessions after death. It also indicates who will be in charge of carrying out their instructions without the involvement of a probate court, explains a recent article from Coeur d’Alene/Post Falls Press, “If you have a living trust, you also need a pour-over will.”

It should be noted that the Revocable Living Trust instructions only apply to assets placed into the Trust, referred to as “funding the trust.” This crucial step must occur as soon as the trust is created. Your estate planning attorney can help you get your assets into the trust. However, if you acquire any new assets over time, they, too, must be placed into the trust.

If you don’t remember to put them into the trust, they become part of your probate estate unless you take steps to prevent this from happening.

If you don’t have a will and assets are not included in your Revocable Living Trust, your assets will be distributed according to your state’s laws. This is probably not what you thought when you created the Revocable Living Trust.

However, this is a problem with a solution. Your estate planning attorney needs to create what is referred to as a “Pour-Over Will.” This type of will differs from a traditional one because it includes specific instructions to place any assets not already in your trust into your trust as soon as possible.

This type of will must go through the probate process. However, probate will only apply to assets left out of the trust. Having most of your assets inside the Revocable Living Trust will help probate to be less arduous for all concerned.

The goal of using a Revocable Living Trust is to avoid probate altogether. Therefore, combining the Revocable Living Trust with a Pour-Over Will adds another layer of protection all trust users should have in place.

If you are a parent with minor children, you should have had a will created by an experienced estate planning attorney as soon as your children were born. The will is used to name the person or people who you want to serve as guardians for your minor child or children if both of the child’s parents are deceased or unavailable to act as parents.

Without this provision in your will, a court will determine who will raise your child. Will it be the person you would have chosen? There’s no way to know unless you put this information into your will.

These details in estate planning go a long way in protecting your family and ensuring that your wishes are carried out.

Reference: Coeur d’Alene/Post Falls Press (Nov. 29, 2023) “If you have a living trust, you also need a pour-over will”

Estate Planning for Millennials and Gen Zers

 

Estate planning is increasingly on the mind of younger adults, far from the stereotype of being only of interest to older, affluent couples nearing retirement or dealing with health concerns. These younger generations have unique attributes, including pragmatic financial views and humanitarian concerns, according to a recent article, “Six Estate Planning Tips for Younger Generations,” from Kiplinger. Here are tips to make this process easier for any generation.

Start with a basic will, which guides how assets and possessions are distributed after one’s passing. Prepared by an experienced estate planning attorney, the will should minimize potential disputes, include a clear delineation of assets and beneficiaries and name an executor to manage the estate and guardianship for any surviving dependents.

Appoint a power of attorney and draft medical directives. Power of Attorney and Medical Directives are basic documents that state your preferences during incapacity. A POA grants a named individual the legal authority to act on your behalf for legal and financial matters, if you cannot do so. Medical directives establish your wishes regarding medical treatment and end-of-life care. While taking care of these matters, you may also want to consider becoming an organ donor.

Determine who you want to be your children’s guardian. Naming a guardian of your minor children isn’t pleasant. However, it ensures that you and your partner make this decision, not the court.

Consider a living trust. Living trusts offer a strategic means of managing assets and helping to ensure that your surviving loved ones maintain control of your assets after you have passed. The trust, established with the help of an estate planning attorney, grants ownership of certain assets or properties into the trust, which becomes their owner. A trustee is named to manage and distribute these assets in accordance with your wishes. In some instances, it makes sense to hire a professional trustee, especially if the trust will need to be managed for decades.

By taking assets out of your estate and placing them into a trust, these assets won’t go through the probate process. Probate involves your executor filing your will with a court after you die. The court reviews the will to validate it and grants the named executor the power to execute your final instructions. Probate can be lengthy, expensive and emotionally charged for the family. Your will is entered into the public record, so anyone who wants to can see your will and know your final wishes.

Don’t forget your digital assets. Younger generations are more aware of the value and footprint of their digital assets. They often name a specific digital executor in their estate plans to ensure that their many accounts and digital assets are managed after their passing.

Seek professional advice and update documents. Despite a plethora of online sites and apps, estate planning documents require the skillful handling of an experienced estate planning attorney. Estate laws are state-specific, so wills and trust documents must be created with local laws in mind. Your estate plan documents, from wills to insurance policies, should be reviewed every three to five years. Every time there’s a significant change in your life, like getting married, buying a home, having a child, or getting divorced, this should also be done.

Reference: Kiplinger (Dec. 3, 2023) “Six Estate Planning Tips for Younger Generations”

Don’t Make These Estate Planning Mistakes

 

Everything from life savings to digital assets to pets must be considered when creating an estate plan, according to the article “Seven Big Mistakes People Make When It Comes to Estate Planning” from Kiplinger. No matter how good your intentions are, some mistakes are commonly made. Use the tips below to avoid them.

Implementing the estate plan. Creating an estate plan with an experienced estate planning attorney is step one. However, there are further tasks to be done. For example, if trusts are created, they must be funded. This may mean retitling accounts or moving assets. If trusts are not funded, they won’t perform as planned. In addition, your trusted loved ones should be told about the existence of an estate plan and where documents can be found when needed.

Don’t ignore your own mortality. People often wait until it’s too late to start planning, thinking they have a world of time. None of us knows when we will become incapacitated or die. Don’t delay.

Neglecting to create a trust. Having a trust created by an estate planning attorney can help avoid the costs and delays of probate. A trust can also ensure opportunities to provide specific assets to beneficiaries and could be a better way to distribute assets to children, especially if they are not financially responsible.

Failing to create a deadline-driven checklist for your estate plan. Most people simply do better when they have a checklist with deadlines. The tasks are clearly identified, and the date keeps most people focused. This is essential to have a secure estate plan and avoid missing crucial steps.

Leaving room for misinterpretation. Vague wording can sink your estate plan. Use complete, legal names when designating beneficiaries. If there are a number of people in the family with the same name, include their date of birth to avoid any confusion.

Forgetting to distribute personal property. Create a home inventory, and if any items are of high value, have them valued by a qualified professional appraiser. Family members often fight just as much over personal possessions as financial assets—don’t underestimate the emotional impact of sentimental value.

Getting it done! Most people don’t have a will, power of attorney, named guardians for minor children, health care power of attorney, living will and more because they fail to finish what they’ve started. Even smart people procrastinate over estate plans. The result is loved ones having to deal with taxes, legal fees, inaccessible assets and even family litigation. Contact an estate planning attorney and get this done sooner rather than later.

Reference: Kiplinger( Nov. 21, 2023) “Seven Big Mistakes People Make When It Comes to Estate Planning”

What Kind of Trust Works Best for Your Estate Plan?

 

There are two major categories of trusts, one in particular that everyone should have. Regardless of their financial status, most people could have an estate plan incorporating a trust to eliminate the need for a will to go through probate, according to a recent article from Forbes, “Which Trusts Save Taxes, Which Do Not, And Which Are Illegal?”

Probate is the process by which a court reviews a will, approves it as valid and approves the named executor. Depending upon your jurisdiction, probate can take a very long time and be quite costly. Documents going through probate also become part of the public record, and anyone can read them. However, there is a way to keep your wishes private and avoid the expense of probate.

A revocable trust can be created, directing the disposition of assets. You will still need a will, but the will states that everything you own goes into the revocable trust. This is known as a “pour-over-will” since it pours all assets into the trust.

The trust is private, is not separately taxable and you may change it at any time. You may wish to add or subtract beneficiaries over time to be sure that the people inheriting your property are the ones you want.

A revocable trust is also tax neutral. Let’s say you transfer your house or stock into a living trust. It’s not considered a transfer for tax purposes.

The other major type of trust is an irrevocable trust. Generally speaking, once created and funded, assets in the trust may not be taken out of the trust, and the trust may not be amended. It is separately taxable and must file its own tax return. Transfers to an irrevocable trust can lead to gift taxes. However, it is an excellent means of saving income, gift, or estate taxes in the long run, depending upon how the estate is structured.

These trusts can be tricky, so be sure to work with an experienced estate planning attorney who is familiar with these trusts and the intricate details.

An estate planning attorney will craft an estate plan to achieve realistic goals of protecting assets, minimizing taxes and preparing the necessary documents to protect their clients.

Reference: Forbes (Nov. 24, 2023) “Which Trusts Save Taxes, Which Do Not, And Which Are Illegal?”

What Does the Executor of an Estate Do?

 

Being named the executor of an estate usually means you’ve lost someone close to you, and it’s a challenging time. The article “What to do when you’re the executor of an estate” from Bankrate explains what you’ll need to do and outlines the steps to stay on track.

The executor is the personal representative of a deceased person’s estate until the probate process is completed and all assets have been distributed. One of the key tasks is distributing assets according to the terms of the decedent’s will.

You can say no if you are not able or willing to serve as the executor. A secondary executor may be named in the will, or the probate judge can name a replacement. However, this task is doable if you set up a detailed checklist and work with an estate planning attorney.

Obtain the death certificate. The funeral home issues these; you’ll need them to notify banks, investment firms, life insurance companies, the Social Security Administration, the Department of Veterans Affairs and others. You’ll also need them for filing final tax returns. You’ll also need to notify Social Security to turn off payments going directly into the person’s bank account.

Locate the will and any trust documents. Hopefully, the person who notified you of the death will know where these documents are. Depending on the state where the decedent was domiciled, the last will needs to be filed within a few days to a month to a year after the death. If there are trusts, the trust documents name the trustees in charge of distributing assets owned by the trusts. Trust assets can be distributed immediately by the trustees without court approval.

Seek professional advice. After reviewing the will and trust documents, you’ll better understand how complex the estate is. You may want to consult with an estate planning attorney, CPA, appraiser, or other professionals whose expertise can help you avoid any mistakes. Trying to do it yourself could leave you personally responsible for mistakes, and the process may take far longer.

File “letters testamentary.” If the estate goes through probate, the court will legally confirm your appointment as executor with letters testamentary, sometimes referred to as surrogate certificates. These are legal documents proving your authority to act on behalf of the estate, pay bills, file tax returns, manage and distribute assets, deal with beneficiaries and open or close bank accounts.

Locate and protect assets. In the best scenario, the executor is given a complete list of assets and related information. This would include wills, trusts and paperwork related to insurance, investment accounts, prearranged funeral plans, bank accounts, real property, artwork, business interests and partnerships. A complete list of digital accounts is also needed.

Pay bills and taxes. The estate is responsible for paying debts, including income and estate taxes. If the debts exceed assets, beneficiaries are not responsible for paying them. The executor opens an estate bank account, which pays bills for the estate. Before paying debts, the executor must confirm the estate’s ability to pay. If a list of monthly bills, income and debts were not left for the executor, they’ll need to figure this out.

Don’t rush. It’s common for the executor to want to get the tasks done, distribute any inheritance to beneficiaries and have done with the process. However, if you rush and miss some important tasks, you could be found personally liable. It can take six months to a year to work through an estate. Keep careful records of all transactions and a copy of everything sent and received from creditors, beneficiaries, financial institutions, the IRS, the Social Security Administration and others.

Having an estate planning attorney can help. An attorney can also mediate between the executor and beneficiaries if things take a turn for the worse.

Reference: Bankrate (Nov. 17, 2023) “What to do when you’re the executor of an estate”

 

What Is the Difference Between a Living Will and a Last Will and Testament?

 

A Last Will and Testament is completely different from a Living Will, no matter where you live. Despite its title, “Do you understand the difference between a Living Will and a Last Will in Idaho?” this recent Coeur d’Alene/Post Falls Press article applies to all states.

A last will is the document most people think of when considering estate planning. Often called simply a “will,” this is the estate planning document used to give instructions about what should happen to your assets and possessions when you die and who you want to carry out your wishes in the document.

The will is only effective after you have died.

The person managing your estate after you pass is known as a “Personal Representative” or executor or executrix. Some states only use the phrase personal representative. However, the tasks are the same. Your executor (or your estate planning attorney) files your last will with the county probate court for review, ensuring that the will complies with your state’s laws and getting approval to serve as the executor. This is called “probating the will.”

There are ways to avoid having your entire estate go through probate. An experienced estate planning attorney may recommend trusts and other strategies.

The last will is also used to name a guardian for minor children, which is why every young family needs a last will, even if they don’t have a large estate. Doing so guides the court system and the family about your wishes for your children.

How is the last will different from a living will? It’s a completely different document, serving an entirely different purpose.

A living will is used while you are still alive and serves a very narrow set of circumstances. A living will is used to state what medical treatments you do or don’t want to be administered if you are terminally ill and death is imminent or if you are in what is called a “persistent vegetative state.” This means your body is alive, but your brain is no longer functioning.

In the living will, you can state whether or not you will receive CPR, artificial or natural hydration and nutrition, mechanical respiration and any other means used to keep your body alive. The Living Will is often used with another document, known as a Physician’s Order for Scope of Treatment, or POST, regarding options for medical treatments.

An estate planning attorney can prepare a living will and other documents, including a Power of Attorney and a Health Care Power of Attorney, all of which are needed to protect you while you are living and a last will.

Reference: Coeur d’Alene/Post Falls Press (Nov. 19, 2023) “Do you understand the difference between a Living Will and a Last Will in Idaho?”

How Does a Living Trust Protect Your Legacy

 

Want to leave assets of any kind to loved ones? You’ll need to plan ahead. There are a number of options used to pass wealth to the next generation, including a last will and testament. This is a legal document designating someone to be in charge of your estate after you die and telling them how you want your assets to be divided.

Another means of passing assets along is explained in the recent article from The Motley Fool, “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family.” A living trust is a legal entity created while you are living to hold assets and designates someone to manage and disburse them based on specific directions in the trust document. You don’t have to be wealthy to have a trust.

While these two instruments sound similar, they have unique elements, making one better than another in certain situations. For many people, a living trust can benefit the individual making the trust (the grantor) and their families. Here are a few to consider.

Maintaining privacy. Wills must go through probate, a court-supervised process to review the decedent’s assets, approve their executor and rule on the will's validity. Because the will is under the court's review, it becomes public information. In most jurisdictions, anyone who wants to see your will can. They can also see who received what assets.

f you have concerns about maintaining your privacy or the privacy of your heirs, it may be worthwhile to create a trust. This will keep your assets and your heir’s receipt of assets private. The only people who know what’s in a trust are the grantor, the trustee who manages the trust and the beneficiaries.

Avoiding long delays. Since a trust doesn’t go through probate, it may be possible for the trustee to make distributions of assets much faster. The executor typically needs to file the will for probate and wait for the process to be concluded. Only then can they carry out the directions of a will.

When assets are in a trust, the trustee can implement the terms of the trust more quickly. This can significantly help loved ones, especially if they have paid for long-term care, hospital bills, funeral expenses, etc. If they were relying on an inheritance to cover these costs, the faster the trust can reimburse them, the better.

Managing assets if you become incapacitated. One of the biggest advantages of having a trust over a will is its value during your lifetime. A will doesn’t take effect until you die. On the other hand, a living trust with a successor trustee allows the successor to manage the trust if you become incapacitated and cannot serve as the primary trustee.

Whether you have a trust or not, you will want to name a Power of Attorney who will manage your financial and legal affairs if you cannot do so. However, financial institutions can be challenging when dealing with a POA.

Changing the trustee does not impact the trust’s status as a separate legal entity. The successor trustee steps in, and financial institutions will generally be on notice as long as the initial trust documents specify who the successor trustee will be.

Talk with your estate planning attorney about using a living trust as part of your estate plan. It may be wise to use a combination of a will and a trust to achieve your desired outcome. Do remember estate planning is not just for what happens after you die but for preparing to care for yourself and your family while you are living. A living trust could serve you and your family well, during life and after death.

Reference: The Motley Fool (Oct. 31, 2023) “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family”

When Should You Update Your Estate Plan?

 

We know we need to see our doctor for annual checkups and see the dentist every six months, not to mention getting a good night’s sleep, brushing and flossing our teeth. In the same way, your estate plan needs regular maintenance, according to an article from The Street, which asks, “When Is It Time to Update Your Estate Plan?”

Far too often, estate plans are created with the best intentions and then lie dormant, in many cases, for decades. Provisions no longer make sense, or people in key roles, like executors, either move away or die.

Failing to update an estate plan can lead to a beloved child being disinherited or an animal companion ending up in a shelter.

This is an easy problem to solve. However, it requires taking action. Scanning your estate plan once a year won’t take long. However, when certain events occur, it’s time to bring all your estate planning documents to an estate planning attorney’s office.

Here are a few trigger events when you may want to make changes:

Welcoming a new child into the family. Wills and trusts often contemplate future children. However, when the children arrive, you’ll need to update wills, trusts and beneficiary designations. Life insurance policies, investment accounts and retirement accounts allow you to name a beneficiary, and the proceeds from these accounts go directly to the beneficiaries, bypassing probate.
If no beneficiary is named or cannot be located, the asset usually goes back into the estate, meaning it goes through probate and there may be tax liabilities.

Charitable giving goals often change over time. An organization with great personal meaning in your twenties may be less important or may have closed. If you’ve become involved with a charitable mission and want to leave assets to the organization, you’ll want to create a charitable bequest in your will or trust. Those changes need to be reflected in your estate plan.

People’s ability to serve in fiduciary roles may have changed. If the people you assigned certain roles to—like trustees, executors, agents, or the guardian named for minor children—may no longer be suitable for the role. The person you selected to serve as a guardian for minor children may not be available or willing to manage adolescents. If your trustees are over 70, you may want to name an adult child to serve in this role.

Reviewing insurance policies needs to be done regularly. In some cases, the value of life insurance proceeds may be subject to estate tax. Proper planning should be able to avoid this by making certain the policy is not included in your taxable estate.

If you are considering taking out a new life insurance policy, revisit your existing plans with your estate planning attorney. It may make sense for you to create an insurance trust, which allows you to exempt certain assets from your taxable estate.

Are pets an important part of your life? If so, you may want to make plans for who should take care of your pet if you pass away. In many cases, a pet trust works to name a trustee to manage funds for the pet’s care and formally outlines how you want your pet to be cared for.

Reviewing your estate plan every three to five years with your estate planning attorney or whenever a significant life event occurs will ensure that your wishes are followed.

Reference: The Street (Oct. 30, 2023) “When Is It Time to Update Your Estate Plan?”

The Team Behind a Successful Estate Plan

 

 

Most advisors stick with their areas of knowledge. The estate planning attorney drafts the necessary documents, your CPA files tax returns and the investment advisor fine tunes assets. However, coordinating these professional silos is critical to ensuring your estate plan works, says a recent article from Forbes, “Your Estate Plan Must Be Coordinated To Work.”

Communication needs to extend past advisors to key loved ones and people you name in roles, such as agents, trustees and executors. Many people find these discussions awkward. However, preparing heirs and fiduciaries for their roles and setting expectations is a crucial step to avoid issues during transition periods. Some of the most significant estate planning problems arise when the baton is passed, such as if you fall and become incapacitated. You need to be sure your agents know what is expected of them and when they will be called upon to perform their respective tasks.

Coordinating advisor actions will save time and expense in the long run. Your estate planning attorney, CPA, trust officer, wealth advisor and insurance broker should know what each other is doing on your behalf. Many people shy away from doing this because of concerns about cost. However, not doing it can lead to much larger expenses.

You want to foster coordination and collaboration, in a controlled and cost-effective manner. One way to do this is to have advisors prepare a summary of key points, facts and decisions following your meetings, so you can circulate it to other advisors. This way they all know what is being done and can share their knowledge and experience if they think something is wrong or won’t work as planned.

One example of what can happen when advisors are not coordinated is paying bills from incorrect accounts. For instance, if you incur legal fees for the estate plan but pay them from a trust account or business entity, a creditor could argue this is a personal benefit from a trust you are not a beneficiary of, or you’ve violated the business purpose of an entity, which could expose all trust or entity assets.

Your estate planning attorney should know how your assets are titled, which are owned jointly, or other designations used to avoid the terms of your will and/or any trusts. Beneficiary designations, wills and titles must be planned and coordinated to avoid derailing your estate plan.

If you die and an asset is owned in your name only, the asset will go through probate and be distributed according to the terms of your will. If you are incapacitated, your agent, under your financial Power of Attorney, must act concerning the asset to help pay bills.

Many people opt to have assets held in a joint name so that on death, the asset will pass to the named joint owner without going through the will and probate. If the person named as the joint owner is not the same as the POA, you may have created a logistical nightmare. How will the POA pay bills if the joint owner does not cooperate?

Coordinating professional advisers is as important as coordinating family members. There are many different agents and positions to be appointed. People often sign a financial POA with their estate planning attorney, and no one looks closely at any conflicting appointments.

The same kind of issues occur with health care agents. There are several different health care documents, and you’ll want to coordinate them to eliminate the possibility of conflicting appointments. The key to achieving this is diligence, communication and follow-up.

Reference: Forbes (Oct. 31, 2023) “Your Estate Plan Must Be Coordinated To Work”

 

What Should I Know about Lady Bird Deeds?

 

Enhanced life estate deeds, also called Lady Bird deeds, can be a great tool to transfer ownership of real property at death. This type of deed got its nickname when President Lyndon B. Johnson used one to convey property to his wife, Lady Bird.

Florida Today’s recent article entitled, “Real estate transfers: Is a 'Lady Bird deed' right for me?” explains that Lady Bird deeds are a type of life estate deed designed to automatically transfer property ownership upon the death of the original owner to another individual. However, they don’t require the original owner to give up use, control, or ownership of the property while alive.

The beneficial receiver of the property upon death doesn’t get any immediate rights or ownership interests in the property. Their consent isn’t needed to sell, convey, or change the use of the property while the original owner is alive. The Lady Bird deed is rendered obsolete if the original owner sells or conveys the property in their lifetime. However, if the original owner passes away, the property subject to the Lady Bird deed is automatically conveyed to the beneficial recipient without needing to pass through probate.

With a traditional Life Estate deed, the original owner must give up control when adding a beneficial recipient. This means the original owner is prohibited from selling, conveying, or encumbering the property without explicit consent from the beneficial recipient. The original owner also can’t change or end a traditional Life Estate deed without consent from the beneficial recipient.

Here are the benefits of a Lady Bird deed:

Properties can be conveyed at death without having to pass through probate.

The original owner remains in full control of the property while they’re alive.

Recording a Lady Bird deed doesn’t impact the current owner’s homestead protection and exemptions.

Any property subject to a Lady Bird deed doesn’t violate Medicaid’s five-year look-back period and isn’t subject to gifting taxes or penalties, since the beneficial owner doesn’t immediately possess any ownership rights.

Here are the downsides of a Lady Bird deed:

Doesn’t protect non-homestead properties from any judgment liens issued against the original owner during their lifetime.

A Lady Bird deed can be an effective tool to transfer property outside of probate. However, as in any real estate transaction or estate planning endeavor, it is necessary to have a knowledgeable estate planning attorney to discuss your desired outcome and best course of action for your specific situation.

Reference: Florida Today (June 9, 2023) “Real estate transfers: Is a 'Lady Bird deed' right for me?”

 

Why Do I Need an Estate Planning Attorney?

An experienced estate planning attorney provides numerous benefits because estate planning is a necessary process to help ensure that your assets are distributed as you wish after you pass away. An attorney can help you work through the complex legal and financial issues involved in estate planning and ensure your assets are protected and your family is cared for.

Digital Crime’s recent article, “The Benefits of Having a Will and Estate Planning Lawyer,” says that many folks are hesitant to plan their estates because they find the process overwhelming or don’t know where to begin. An experienced estate planning attorney can help you understand the different estate planning options available to you and counsel you through the process, making it easier and less stressful.

Another benefit of working with an estate planning lawyer is the ability to tailor your plan to meet your specific needs and goals. It’s not a one-size-fits-all process; an experienced attorney can help you design your plan to reflect your unique circumstances.

An estate planning attorney can also help you minimize taxes and other expenses associated with estate planning. That’s because the tax laws concerning estate planning are complex and challenging to navigate without professional legal help.

An experienced attorney can help you craft your estate plan to minimize tax liability and ensure that your assets are distributed efficiently and cost-effectively.

Also, a will and estate planning lawyer can help you avoid potential legal disputes and challenges to your estate plan. Estate planning documents are legal documents. As such, any errors or omissions can result in legal disputes that can be time-consuming, costly, and emotionally draining for your family. An experienced estate planning attorney will help you avoid these problems by ensuring that your estate plan is properly drafted and executed in accordance with state and federal law.

Finally, an experienced estate planning attorney can help you stay up to date with changes in the law and your circumstances.

Planning your estate can be a complex and daunting process, but working with a will and estate planning lawyer can make it easier, more efficient, and more effective.
Reference: Digital Crime (April 12, 2023) “The Benefits of Having a Will and Estate Planning Lawyer”

What Are the Details About Probate?

Probate is started when an individual files a petition for probate in the state's probate court system.

The petition is normally filed by the executor of the deceased's will or by a member of the deceased's family. The person filing the petition must also file the original last will and testament and a copy of the certified death certificate.

In the initial hearing, the probate court appoints the executor for the deceased's estate. This individual is responsible for distributing the deceased's estate to the proper beneficiaries, among other administrative duties.

The court grants the executor with Letters Testamentary (or Letters of Administration), which gives the executor the authority to pay bills, sell assets and perform other tasks, says Investopedia’s recent article, “What Is Probate Court?”

The executor will then notify those to whom the deceased owed money (creditors), notify beneficiaries, inventory the deceased's assets, pay outstanding bills, sell assets if necessary to pay what's owed, pay taxes and file a final tax return.

Once this is done, the executor distributes the remaining assets to the beneficiaries, according to the will.

The probate court oversees the executor's activities and addresses any issues that may come up. The executor normally must give an accounting of exactly how the estate was handled. Once the court approves this, it closes the probate process.

If a person dies without a will, the probate court distributes their assets to their next of kin, according to the relevant state's probate laws. This is known as the law of intestate succession. This sets out the distribution of assets between surviving spouses, children, grandchildren, siblings, parents, aunts, uncles, and other relatives.

At a probate court hearing, the judge will detail the executor’s responsibilities under the will, including contacting any beneficiaries and creditors, appraising the deceased's assets, and paying any outstanding creditors and taxes.

At the second court hearing, the judge will typically verify that these items have been completed and then close out the estate, so that the transfers of money and other assets in the estate may commence.

Investopedia (September 21, 2022) “What Is Probate Court?”