Trusts & Estate Planning

An individual who has been named as a personal representative or executor in a will has a number of important duties. These include gathering the deceased person's property and transferring it to the beneficiaries through a court-supervised process known as probate. In order to initiate this proceeding, the executor must first obtain what are referred to as letters testamentary. This document gives the executor the legal authority to administer the deceased person's estate.

While the process varies from state to state, the executor must petition the probate court in the county in which the decedent lived. This typically requires submitting the death certificate and completing a short application. The application includes a sworn statement that the person has been named as the executor in the will, as well as an estimate of the estate's property and debts.

The probate court will then hold a hearing to verify that the individual meets the qualifications to act as executor. Generally he or she must be a mentally competent adult and not be a convicted felon. If approved, the court will issue letters testamentary and officially open probate.

In short, the letters allow the executor to collect the assets of the deceased which may be held by  another person or an institution such as a bank. Since banks and other institutions may want to keep the document on file, it is necessary to obtain multiple certified copies. The executor can also carry out his or her other duties such as inventorying and appraising assets, paying debts, and transferring property to beneficiaries, according to the terms of the will.

Letters of Administration

In the event a person dies without a valid will in place, an heir of the decedent, typically a legal relative, needs to petition the probate court for letters of administration. In this situation, the court will hold a hearing to appoint this individual to act as the estate administrator, issue the letters and open probate. The administrator then manages and distributes the assets according to the state's intestacy laws which generally give priority to spouses, children and parents.

Settlement planning is a unique and expanding area of law that is designed to help individuals preserve benefits that have been received from a personal injury settlement, inheritance or judgment. The practice encompasses an array of legal services such as special needs planning, estate planning and financial planning. The objective is to assist clients with resolving claims and to create a structure to properly manage the funds.

Settlement planning is particularly designed for minors, individuals with disabilities, adults who lack capacity and individuals who are receiving public benefits. Without careful planning, those who receive a large settlement or other proceeds may have difficulty managing these funds.
Read more . . .

The world of estate planning can be complex. If you have just started your research or are in the process of setting up your estate plan, you’ve likely encountered discussions of wills and trusts. While most people have a very basic understanding of a last will and testament, trusts are often foreign concepts. Two of the most common types of trusts used in estate planning are testamentary trusts and inter vivos trusts.

A testamentary trust refers to a trust that is established after your death from instructions set forth in your will. Because a will only has legal effect upon your death, such a trust has no existence until that time. In other words, at your death your will provides that the trusts be created for your loved ones whether that be a spouse, a child, a grandchild or someone else.

An inter vivos trust, also known as a revocable living trust, is created by you while you are living. It also may provide for ongoing trusts for your loved ones upon your death. One benefit of a revocable trust, versus simply using a will, is that the revocable trust plan may allow your estate to avoid a court-administered probate process upon your death. However, to take advantage this benefit you must "fund" your revocable trust with your assets while you are still living. To do so you would need to retitle most assets such as real estate, bank accounts, brokerage accounts, CDs, and other assets into the name of the trust.

Since one size doesn’t fit all in estate planning, you should contact a qualified estate planning attorney who can assess your goals and family situation, and work with you to devise a personalized strategy that helps to protect your loved ones, wealth and legacy.

While the main objective of estate planning is to help individuals protect their assets and provide for  loved ones, there are other important considerations, such as planning for incapacity. In short, it is crucial  to plan for the type of medical care people wish to receive if a serious accident or illness makes them unable to make or communicate these decisions. By putting in place advance medical directives, such as a durable power of attorney for healthcare and a living will, it is possible to plan for these unexpected events.

Durable Power of Attorney for Healthcare

A durable power of attorney for healthcare is commonly referred to as a healthcare proxy. This estate planning tool enables individuals to designate a trusted family member or friend to make medical care decisions in the event of incapacity. This person essentially acts as an agent, and is responsible for working with doctors and other medical professionals to ensure they provide the type of medical care the incapacitated individual prefers. If a healthcare proxy is not in place, it will be necessary for loved ones to ask the court to appoint someone make these decisions. In the end, this advance medical directive protects individuals in the event of an emergency and relieves others of the burden of going to court.

Living Will

A living will is another important advance medical directive that clarifies the type of medical care an individual prefers to receive if he or she becomes terminally ill and cannot communicate decisions about end of life treatment. In particular, a living will establishes whether certain measures, such as a ventilator or a feeding tube, should be used to prolong the individual's life

Other Essential Healthcare Directives

In situations when an individual becomes critically ill and does not wish to receive extraordinary life prolonging measures, it is necessary to complete a do not resuscitate order (DNR). In the event of a medical emergency, a DNR notifies doctors, nurses and emergency personnel not to use cardiopulmonary resuscitation to keep an individual alive.

Lastly, it is also important to ensure that other healthcare providers and organizations can access an individual's medical records and history. For this reason, it is necessary to complete a HIPAA authorization - a document required by the Health Insurance Portability and Accountability Act.

In the end, the possibility of becoming ill and not being able to communicate is not something most of us want to think about. However, putting in place these important advance medical directives can give you and your loved ones peace of mind knowing that your wishes will be carried out.

When it comes to estate planning, many individuals believe that dividing assets equally among adult children is the best choice. However, there are situations in which leaving each child the same amount might not be practical. For this reason, it is important to know the difference between an equal inheritance and an equitable inheritance, in which each child receives a fair share based on his or her circumstances.

What is an equal inheritance?

In this situation, each child gets the same amount of the remaining estate after both parents have died.

This option works well when the needs of each child are the same, or the parents provided similar support to each child in the past. Moreover, each child must be mentally or emotionally capable and financially responsible.

It is important to note that cases in which an estate includes real property and other tangible assets, it may be necessary to determine the differences in value of these assets in order to leave each child an appropriate amount. Lastly, leaving an equal inheritance may be the best way to avoid the emotional and financial costs of disputes.

What is an equitable inheritance?

In some cases, leaving each child and equal inheritance may not be the right thing to do. For example, it may be wise to reward a child who has taken on the role of caregiver for an aging parent or to compensate him or her for lost time and wages. There are also circumstances in which children may have been given different amounts of money while the parents were alive either for a wedding, educational expenses or a down payment on a home.

Lastly, for those who have a disabled child who receives public benefits, it may be necessary to provide for living expenses and medical needs in a special needs trust. In all of these situations, an equitable distribution of the estate assets is the best option.

The Bottom Line

In the end, determinations about the distribution of an estate to surviving children should be made in a way that will preserve family harmony. For this reason, it is important to discuss your decisions with your children and engage the services of an experienced estate planning attorney.

Today, blended families have become increasingly common, and many individuals have step-children, that is, children of a spouse or partner. In situations where step-children have not been legally adopted, however, they do not have a legal right to an inheritance from a step-parent. For those who wish to leave step-children part of their estate , it is necessary to include them in an estate plan.

The easiest way to leave gifts to step-children is to name them in a will. As with any other gift, they can be given a percentage of the estate, or specific gifts. If there are other children involved, it is important to avoid confusion by naming each child and step-child by using their individual names, rather than terms such as "descendants," "heirs," or "children."

There are also a number of estate planning tools that can be utilized to include step-children in an inheritance. If the objective is to avoid probate, for example, a revocable living trust can be established in which a step-child is named as a beneficiary. Moreover, it may be necessary to provide for a disabled step-child who is eligible for public benefits by establishing a special needs trust. Lastly, a step-child can also be named as a beneficiary in a life insurance policy or a pay-on-death financial account.

While there is no legal obligation to leave step-children an inheritance, it may be the best choice for those who have a close relationship, or played a significant role, in raising them. However, this will reduce the amount of assets available to other children and beneficiaries. Because blended family relationships are complex and subject to emotional challenges, it is important to explain these decisions with all family members.

By engaging in an open and honest dialogue, you can minimize the potential for strife and the possibility of a will contest. In particular, it is important to clarify why you gave each recipient a gift, the selection of your executor, and your thoughts about the family.  Lastly, you are well advised to engage the services of an estate planning attorney who can help ensure your wishes regarding step-children are carried out.

There are many circumstances that can impact an estate plan, not the least of which is divorce. While ending a marriage is complicated, it is not only crucial to arrive at a fair and equitable distribution of the marital assets, but to preserve your estate as well.

While the laws vary from state to state, it is important to understand the difference between separate and marital property. Generally, separate property includes any property owned by either spouse before the marriage, as well as gifts or inheritances received by either party prior to or after the marriage.

Marital property, on the other hand, is any property that is acquired during the marriage such as houses, cars, retirement plans, 401(k)s, IRAs, life insurance, investments and closely held business, regardless of who owns or holds title to the property.

One way to protect an estate in the event of a divorce is to put in place a prenuptial agreement. This legal document specifies each party's property ownership and clarifies their respective property rights should they end the marriage. A prenuptial agreement can reduce the conflict that is normally associated with divorce, avoid court intervention regarding questions of property division and also serve as an effective estate planning tool.

In short, a well designed agreement will distinguish separate property from marital property so that those assets are not misclassified if one of the spouses dies. Moreover, a prenuptial agreement is beneficial to those who are entering into second marriages because it will help to preserve the rights of children from prior relationships. In addition, for those who marry later in life and acquire significant assets, a prenuptial agreement can protect the estate from claims by former spouses.

In the end, a prenuptial agreement can enable each spouse to protect their assets and provide for their loved ones in the event of divorce or death. If you are considering marriage, it is essential to put a comprehensive estate place that includes a prenuptial agreement.