Wills allow you to set out your wishes to protect the people you care for and the assets you have accumulated during your life. A will contains the instructions for a probate and does not prevent a probate.
If you die without a will, your estate will be subject to state law regarding who inherits your property. While your assets may still be subject to a probate, you will not be in control of the decisions regarding your estate.
Many provisions of a will are designed to provide the personal representative flexibility and simplicity and to avoid unnecessary work and expense.
A will allows you to:
- Select guardians for your minor children;
- Choose fiduciaries, such as personal representative (also known as the executor), trustee, or custodian;
- List who receives your property;
- Control the timing of distributions by incorporating trust provisions (for example distributing property to your children over time); and
- Capitalize on tax advantages.
Health Care Directive
A Health Care Directive is a legal document that combines the elements of the living will and the durable health care power of attorney. It is designed to allow you to choose the individual(s) who will make your health care decisions if you are unable to speak for yourself.
What does a Health Care Directive do?
- Includes a designation of legal agents to make important health care decisions.
- Contains contact information to assist emergency personnel or medical professionals to contact your loved ones.
- Contains HIPPA release for ease of administration regarding your medical records.
- Provides direction to assure loved ones of their decisions regarding your health care in a difficult time.
A Health Care Directive can include your thoughts on health care decisions such as:
- Where you would like to receive health care and/or a preferred doctor;
- Your thoughts on pain relief;
- Goals, fears, concerns regarding health care;
- Your wishes about final arrangements (burial or cremation);
- Religious or spiritual beliefs;
- Organ donation.
Making your Health Care Directive effective:
- Ensure your agents can access your document. You may even consider giving them a copy.
- Put your Health Care Directive on file with your clinic or local hospital.
- Communicate your wishes, both within the document and narratively to your agent.
- Take your Health Care Directive with you if you are admitted for care.
Revocable Living Trust
A Revocable Trust is a document that contains many of the provisions of a will. It is designed to hold some or all of your assets. The Trust can generally be changed or amended at any time.
Initially, you will be the trustee of your revocable trust. Typically, you will notice little difference in your assets from a control or tax standpoint. The Trust allows for easy administration and control without a probate.
Key Advantages of a Trust:
- Assets may be transferred upon death without delays, expenses, and public notices;
- The back-up trustee can immediately take over management of the trust assets if you are unable due to death, injury or illness. This can be especially vital for business or landowners who need to ensure that someone will have the authority to keep their operations running;
- A trust may incorporate tax planning to maximize available tax exemptions and minimize the taxes upon death; and
- The distributions may be subject to certain age or purpose restrictions, such as distributions for college expenses and/or distribution when the child reaches age 30.
An Irrevocable Trust is generally set up for estate tax planning purposes. You cannot change or terminate the trust after it is created. Generally, any assets placed in the trust cannot be retrieved by the creator of the trust and, thus, the assets are not included in the creator’s taxable estate at death.
Power of Attorney
A Power of Attorney is a document in which you give another person(s) the authority to act on your behalf regarding financial matters.
If you would be seriously injured or ill and become unable to make your own financial decision, your agent could pay your bills and manage your assets.
Without a Power of Attorney, it may be necessary for someone to obtain a conservatorship from the court. This process is much more time consuming and costly than preparing a Power of Attorney. Also, when you draft a Power of Attorney, you choose the person(s) who handles your affairs.
The authority given to another through the Power of Attorney will depend on its specific terms. A few potential uses of Power of Attorney would include:
- Pay real estate taxes and utility bills;
- Gain access to funds for children;
- Manage financial accounts;
- Handle real estate matters;
- Sign legal documents.
A Living Will or Heath Care Power of Attorney allows you to express your wishes about your health care and/or name an individual to make your health care decisions for you if you become incapacitated.
Estate Tax Planning
The goal of estate tax planning is to avoid or minimize estate taxes at your death. Estate tax planning can involve using a trust or other forms of ownership, such as family limited partnerships. Lifetime gifts may be appropriate for tax planning or other reasons.
When to Review/Update Your Plan
- You change your mind;
- Death of a loved one;
- You no longer believe your fiduciaries can serve or you no longer like your choices for fiduciaries;
- Your financial situation changes significantly;
- You have your 1st child;
- You get married or divorced.
Transfer on Death Deed (TODD)
A Transfer on Death Deed operates much like a beneficiary designation for real estate; it is an actual deed recorded with the county recorder, which specifies who will inherit title to the real estate upon your death. It does not transfer any ownership in the property during your life, so the property can be sold and you will continue to receive all of the proceeds.
The Transfer on Death designation can be removed or changed at any time during your lifetime. Upon your passing, those listed to inherit the real estate need only file an Affidavit with the County to obtain full legal title.
Entities, such as partnerships or LLC’s, can assist a family in the joint ownership of property. Certain entities not only create an effective way to manage property by centralizing management but can also have significant tax benefits and liability protection for real estate, such as family cabins or hunting property.
Quit Claim Deed
There may be benefits in some circumstances to gifting property during your lifetime to your heirs by deed. Transferring property during your life in this manner may protect it from future estate taxes or Medical Assistance claims should you need nursing home care. While it is important to understand the consequences of such a transfer, it can be highly effective in protecting assets and continuing your legacy property.
IRA and Retirement Accounts
Qualified, tax-deferred assets, such as IRAs or similar retirement accounts, generally utilize beneficiary designations to determine inheritance upon the owner’s death. Proper designations can provide significant tax advantages for heirs or charities. It is important to understand how these beneficiary designations can impact the accounts you leave to the beneficiaries.
For many of our entrepreneurial clients, the most important asset they own is their business. Developing a path for the continuation of your business and ensuring that you receive the value you built over the years requires careful planning and expertise. We have the experience and knowledge of all the latest planning tools to customize a succession process for your personal needs and expectations.
Here are some of the things we can assist you with:
- Developing Successors
- Cashflow Analysis
- Life Insurance Planning
- Transaction Financing
- Review of Tax Implications
- Sale Documents
- Buy/Sell Arrangements
Estate planning may also include consideration of beneficiary designations and /or distribution options on retirement plans, life insurance and other accounts, as well as reviewing how assets are or should be titled (e.g., individually, joint tenants in common, life estate). Planning for payment of nursing home costs and qualifying for medicaid/medical assistance are complex issues on which we can also advise you.