Downs Law Firm, P.C.
Downs Law Firm, P.C.
Preparing a will is one of the most important steps a parent can take to protect their family.
Your work isn’t done just because you have a will. There are many myths floating around about wills, trusts and estate planning. Those myths can easily confuse people who haven’t taken the time to bust them, before getting on to the real work … taking care of the family, according to the Cleveland Jewish News in “Estate planning myths common, but debunkable.” One common myth is that a trust is completely creditor protected. While there are some trusts that achieve this goal, there are many that don’t. It is easier to provide that to your beneficiaries that to yourself. Another myth is that once an estate plan is completed, there’s no need to revisit or make changes. We look at the planning you put in place as essentially an ongoing rough draft. Perhaps the biggest myth around estate plans is that they are only needed by wealthy people. Actually, everyone needs a will. A property power of attorney can save your loved ones thousands of dollars and massive aggravation. People chat with their friends and neighbors and pick up snippets of information, which is usually incorrect. As with any kind of story, once a piece of information has moved through a few different people, it becomes confusing, even if it started out accurate. The value of such “Street lawyers” is usually what you pay for it. Unless it comes from an estate planning attorney, don’t get any legal advice at a neighborhood or family gathering. The results can be disastrous. If you think having a trust alone is enough to prevent your heirs from having to pay any taxes, your kids will be in for a big and expensive mistake. If you don’t set up guardianship for your minor children, then the court will appoint a guardian. It’s entirely possible that it may be a person you would never have wanted to raise your children. If a separate financial trustee is not named, there won’t be any checks and balances on how the money left for your children is spent. If you don’t have an estate plan in place, and especially if your family includes minor children, make an appointment to speak with an estate planning attorney who can advise you on an estate plan that fits your unique circumstances. Reference: Cleveland Jewish News (Sep. 20, 2018) “Estate planning myths common, but debunkable”
The government will be more than happy to distribute your assets. Years ago a friend of mine told me of his final moments with his father. He was in the hospital signing documents with the lawyer and his father. Dad was on his death bed, dying several hours later. The family business went to him, as he had worked in the business for over two decades. It was what he was promised all along but did not make the final time with his Dad as he would have wanted. If that hadn’t happened, state law would have controlled, leaving promises unkept. Dying intestate will result in your state of residence deciding where your assets will go. However, it doesn’t have to be like that, because creating an estate plan will leave the decision in your hands, according to KREM.com in “Head off a small-business skirmish: Draw up your will or estate plan today.” Here’s a tale from another law office that makes it all very clear. A business owner died unexpectedly. He had never completed his divorce from his first wife after 20 years. He had been in a relationship with another woman for 10 years and they had two children together. Since he never divorced his wife, she inherited his business. No one likes to consider that they will die, or in this case, that it is really time to deal with their marital status. He probably thought he had plenty of time to plan. However, the result was not pretty. Here’s how you can avoid your own unintended consequence: Preplan. A business owner needs to do a complete estate plan, so your property, family and business will be protected, if you should become incapacitated or die. You’ll need the following: Disability insurance. This is a relatively affordable product that replaces up to 60% of your income, if injury or illness prevents you from working. Life insurance. Consider the cost of providing food, shelter, education and care for your family. How would that be replaced, if you died tomorrow? Another thing life insurance can do is keep a business alive after the owner dies. Proceeds can be earmarked in your estate plan to be used to meet business costs and spare your loved ones from selling the business for a low amount, because they need to raise funds fast. Create a succession plan. How will your business go forward without you? Have your documents prepared. Hire an estate planning attorney who can protect your business and your family. Here’s what you’ll need: A will and/or a trust. You need a will, especially if you have small children. This is because you’ll want to name guardians for them. A will does go through probate. However, this is only true if your assets are not placed in trusts. Your estate planning attorney will create a plan that fits your needs. Health care directives. This gives a family member or friend the ability to make health care decisions, if you are unable.
Make plans for handling an issue, before it becomes an issue. A plan not written down is really just a wish. I wish my son could handle my affairs. I wish my friend could speak for me in the hospital if need. I wish my special needs child would be eligible for needed government aid. Without committing something property to writing, these become more of what paves the road to hell. The legal issues that may surround a health problem, can go from bad to worse if you are not protected by legal documents expressing your wishes, according to the New Jersey Herald in “The importance of putting plans in writing.” The message hits home especially hard, when the friends experience problems that could have been resolved earlier with correct planning. In one example, a woman’s friend began to experience unexpected health problems. Her husband is incapacitated and there are no children to step in and help. The couple’s lack of legal documents has made a difficult situation even worse. Although discussing concepts like end-of-life care can be challenging, all adults should have specific plans in place, even if their estate plan is basic: a last will and testament, a living will and a power of attorney. It is never to early to put these documents into place. If you are a student about to enter college, your parents ability to help or get information may disappear legally at age 18. That newly minted adult should at least have a designated power of attorney and a medical directive, in case they are unable to manage their own affairs or make healthcare decisions. Unfortunately, many people still think estate planning is only for wealthy people who want to pay less taxes. Tax planning can help lighten tax liability for some. However, there are far more important reasons to do estate planning. The main reason for estate planning is to set down expectations and wishes, while you are alive and after you pass. An estate planning attorney will help review the benefits of having a power of attorney and a healthcare directive. They can help, if the situation occurs where your loved ones have to make decisions for you. The amount of time, expense and frustration of going through a guardianship process can be avoided, if these items are in place. An estate planning attorney can also help you with completing beneficiary forms for non-probate assets, preparing a funeral plan, planning a personal property memorandum and discussing elder care and planning for incapacity. Making decisions in advance regarding who will care for minor children, if young parents cannot and who will be the person’s executor and handle all the details of their estate, are all necessary. Many couples choose joint ownership and consider that their estate planning. However, that’s not enough. What happens when the last “surviving” joint owner passes? There are many other issues that need to be addressed. An estate planning attorney can advise you in creating an estate plan
There are many kinds of trusts. They aren’t just for the wealthy. Our practice has featured the preparation of wills and trusts exclusively since 1995. In the intervening years, we have prepared thousands of each such plans, and now work extensively implementing them after a client has died. Our caseload is now about 45% administration of wills and/or trust. We are often asked by clients which is better. That depends on many factors. But Trusts seem like a much better choice often, after the time comes to use the planning. If maintained and funded, a trust can be more cost effective, private and easier to administer. On the other hand, I know many attorneys who scoff at the notion of using a trust for people who are not millionaires. Probate, they often assure, is not so bad. And is a trust necessary? Everyone needs an estate plan. However, everyone should also at least consider a trust, according to The New York Times in “Life After Death? Here’s Why You Should Have a Trust.”It turns out that many people who are not wealthy, can also benefit from having a trust. There are many different kinds of trusts which serve different purposes. One is a revocable trust, which the owner can change. They are considered by many to be the “work horse” of modern estate planning. A revocable trust can avoid the need for a public probate court proceeding after the person dies, saving time and keeping money from being immediately available to heirs and executors alike. Trusts are also useful for times when people become incapacitated and need someone else to take care of their finances. Because many more people are living longer and the number of people with dementia is increasing, there are more situations where trusts are useful to the family and caregivers. A will is different than a trust and is a public document. The probate process requires a disclosure of assets, bank and other financial accounts and the names of beneficiaries. That information remains private with a revocable trust. Other considerations regarding trusts: You should have any type of trust set up by an estate and trust attorney. A house, real property, bank or investment accounts can be placed into a trust. A revocable trust does not always end at the death of the original owner. However, just how long it may last, depends upon the laws of your state. People also use trusts to protect their assets from others or to assure the long-term care of someone who is disabled. You can have a professional manager, family member or friend as a trustee or co-trustee of a trust. Sometimes having a licensed professional who has federal reporting requirements can provide an extra layer of protection. An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include taking a close look at trusts. Reference: The New York Times (March 22, 2018) “Life After Death? Here’s Why You Should
Do you really want the state to determine where your assets end up? A key concept to planning your estate is that you already have a plan in place, whether you know it or not. If you die without a will, or die “intestacy”, meaning “without a Will”, the laws of your state essentially write a will for you. That may not result in your assets going where your would have preferred, according to The Daily News in “’Are You My Heir?’-Who Inherits When You Die Without a Will,” Each state has laws called “intestacy laws” that govern how probate assets are distributed, if someone dies without having a will and establishes the inheritance hierarchy based on a person’s family structure. For example, if you are married but have no children and no grandchildren, your estate will be passed to your spouse. If two people die and there are no descendants (children or grandchildren), their parents, if living, will inherit their assets. A child who is legally adopted has the same rights of inheritance as biological children. Children born outside of the marriage may not. If a child should predecease a parent, the living descendants of the child (if there are any) will inherit their share. In some states, heirs are limited to family members who share the same grandparents. If your family is not geographically or otherwise close, you may have heirs you have never met. Intestacy can become extremely complex, when there are children and grandchildren. Descendants inherit from their parents and grandparents in percentages dependent upon the total number of children and the number of children in each generation that follows. If a grandfather has three adult children who are living and one adult child who has passed, then the estate will be divided by three—a third each to each of the two living children and the final third to the grandchildren of the third (deceased) child. The children of the deceased child are heirs, even if the parent has died. Add non-marital children—children born outside of a legal marriage or step-children—and things start to get complicated. A court will have to determine the intestate inheritance, based on proof that the child is a descendant and if that relationship is established in a timely manner. If the father’s name is on the child’s birth certificate, that is generally enough proof of the relationship. It doesn’t matter if they have a close relationship or have never met. The same applies to marital children—whether they have been close and caring or are estranged. An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and makes reliance on state law unnecessary.Reference: The Daily News (Sep. 7, 2018) “’Are You My Heir?’-Who Inherits When You Die Without a Will”
The world has changed, and it really isn’t a good idea to ignore your digital assets when estate planning. Estate planning has generally been about tangible assets through the years. However, now attention needs to be also focused on the digital world in order to be thorough, according to the North Bay Business Journal in “Your digital life likely will outlive you, so here’s how to bring your estate plan into the modern age.” Don’t think you have a digital identity and digital assets? For most of us, we need to take a closer look. Here are a few of your digital assets to consider: bank accounts, email accounts, Facebook page, Linked In profile, online photo albums, blogs and websites. They’re likely to be around long after you are gone. This is still a relatively new area of estate planning. What often happens is that heirs think they can simply find and use the decedent’s user name and passwords to access their accounts. However, what they learn, is that they are legally not permitted to do so. A new law was passed in 2017 in California that attempted to bring order to this chaos. The Revised Fiduciary Access to Digital Assets Act allows executors and trustees to obtain disclosure of a person’s digital assets, after the original owner dies but only under certain conditions. In the recent past, federal and state laws have made it hard for executors and trustees to gain access to these assets without a court order. Just being the executor or trustee does not automatically give you the right to access assets. There must be evidence that the decedent consented to disclosure. Having these access provisions in wills, trusts and powers of attorney is an evolving area. The new law mainly gave social media platforms and privacy advocates what they wanted: a requirement of prior consent before disclosure. However, the end result is that it is easier to gain access to digital assets, if executors and trustees can show that the decedent did consent to disclosure. However, it’s still not that simple. Here are a few steps to help your loved ones deal with your digital assets: Inventory every digital asset that you have. Create a list of log-in and password information, plus any “secret questions/answers.” Having a password program like “Lastpass” can be a great tool to allow for access and control for your decision maker. Tell your trusted family member or friend where that list is. Store it with your other estate planning documents, possibly in your attorney’s vault. Do not include your digital asset inventory, as part of your will. If your estate goes through probate, all of your account information will become part of the public record. An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and will most likely include digital assets. If you already have an estate plan, revisit the package with your estate planning attorney and take your digital assets