Estate Planning

the driving document

Last Will & Testament

A will is a document that becomes effective at the time of your death. Generally, a will controls:

• who will care for your children by designating a guardian;
• who will take care of your estate by designating an executor;
• who will receive your stuff;
• and, when necessary, designating who will care for assets placed in trust for beneficiaries by designating a trustee

So, why do you need a will? Without a will, the state will direct how your assets are distributed and who will care for your children. Without a will you lose control. To learn more about wills and other estate planning topics, we encourage you to attend one of our free workshops.

avoiding probate

Revocable Living Trusts

A trust is a contract between the Grantor (the person who creates the trust), the Trustee (the one who controls the trust), and the beneficiaries (those entitled to benefit from the trust). You, as Grantor, determine how the trust will be operated by the Trustee and who benefits, how, and when. This type of trust is typically referred to as a Revocable Living Trust and is often used as a substitute to your will. It permits you to keep total control and access to all your assets during your lifetime and provides for the distribution of your assets to your beneficiaries at your death.

A well-established advantage to Revocable Living Trusts is the avoidance of probate, which is required if you use a will to distribute your assets after death. Other advantages of Revocable Trusts, when properly drafted, can include:

• Asset protection for your spouse after your death.
• Special needs planning for disabled beneficiaries.
• Asset management and protection for children who are not proficient in handling money.
• Protection of assets from a spouse’s subsequent remarriage after your death.
• Disability planning in the event you become disabled prior to death.
• Asset protection for your child if his or her marriage should fail to ensure your assets are not part of a divorce settlement.
• Keeping your affairs private (as opposed to open for public review in probate).
• No court intervention required (handled entirely by the Trustee you name in accordance with your detailed instructions).
• Plan for proper management of your business in your absence.

delegating financial authority

Power of Attorney

A financial power of attorney – also known as a durable power of attorney – appoints an attorney-in-fact (agent) to care for your finances while you are incapacitated. If you ever become incapacitated this document, with exceptions, allows your agent to manage your finances and transact on your behalf. Although you can limit the power, the document is generally powerful. Typically the agent can do the following on your behalf:

•  use your assets to pay expenses and support your family
•  buy, sell, maintain, and encumber property
•  collect government benefits
•  file and pay your taxes
•  buy, sell, and maintain insurance policies including annuities
•  invest your money
•  manage your retirement accounts
•  transact with banks

The agent you choose should be someone you trust a great deal because this is a powerful document that should not be mishandled. We take care in educating you about the power of this document and possible solutions to managing its power.

protecting your estate

Asset Protection

While a Revocable Trust permits you to maintain full control (as Trustee) and have access to all your assets (as beneficiary), an Irrevocable Trust, once created, may prohibit your right to control the trust or have access to your assets, but you get to decide to what extent.

It is a common misconception that irrevocable trusts, once created, cannot be changed. While that is true of many irrevocable trusts created to avoid taxes (tax reduction or avoidance trusts), it is not true of all irrevocable trusts. An irrevocable trust is a trust you create for the benefit of yourself or others and once created, you, as Grantor, must give up your right to something.

Debtor/Creditor law provides that whatever you can get, your creditors can get. You can have known creditors (e.g., bank or credit card debt) or unknown potential creditors (unforeseen lawsuits, nursing home, and divorce). A typical income-only irrevocable trust permits you to receive the income on your assets, but you must give up your right to your principal. In some irrevocable trusts, you can retain the right to change who gets your assets during your life and after your death and maintain 100% control of your assets until your mental disability or death (asset protection trusts).

court proceedings to transfer estate

Probate

Probate is the process by which property is transferred from the deceased individual’s estate to his or her heirs. 

Probate involves identifying the property belonging to the deceased individual and distributed it according to the deceased individual’s will or, if the deceased individual had no will, according to the state’s intestacy statutes. Probate is the process by which the title is transferred to the rightful heirs.

Probate can be complex if the decedent has not appropriately planned their estate. A well-drafted and often reviewed estate plan is crucial to a smooth probate process. If the deceased individual died intestate – without a will – or partially intestate – with a will that fails to dispose of all of the decedent’s property – then all or some of the deceased individual’s property will pass according to the state’s intestacy statutes which may not be aligned with the deceased individual’s desires.

No matter the situation, we are able to assist you in smoothing out the probate process.

overseeing trust documents

Trust Administration

Trust administration refers to the trustee’s duties in administering and carrying out the terms of a trust.

When the Grantor of a Revocable Trust passes away, the trust becomes irrevocable because the Grantor is no longer able to revoke the trust. The successor trustee or trustees named in the trust will continue serving as trustee of the trust and administer the trust according to its terms.

Until the trust property is fully distributed, the trust exists in an administrative mode. From the Grantor’s death until the trust property is fully distributed, the administrative trust is a separate taxpaying entity and should have its own taxpayer identification number.