Estate Planning

Establishing an estate plan, tailored your individual objectives, is always a worthwhile endeavor, especially for those who remain behind, as they are not left in an overwhelming muddle of confusion, wondering what to do next.

Understanding the following basic estate planning terms may assist in your decision making:

Will:

A Will is a legal document in which you state your intentions and directions regarding the disposition of personal, real, and financial property after death. The Will is, so to speak, your rule book, not someone else’s or the state’s. The executor or personal representative is the person whom you appoint to manage the disposition of your property. It is his or her job (fiduciary duty) to follow your instructions. The Will is also the legal document in which you may wish to appoint guardians for any of your minor children.

According to an article in Forbes magazine (A. Ebeling, 3/01/2010), 65% of Americans have no Will or estate plan in place when they die. For those who do not have a plan, the state has one for you.

If a person dies without a Will, they are said to have died “intestate” and state law determines how property will be distributed.

A Will does not take effect until after death. So, a Will does not help manage a person’s affairs when he or she is incapacitated, whether by illness or injury.

Wills do not avoid probate. A Will is the legal document submitted to the probate court for “proof” and administration under the supervision of a judge.

If you decide to be proactive and take action in having your Will prepared, you are stating your directions and instructions regarding the disposition of your personal, real, and financial property after your death.

It is your rulebook – not someone else’s or the state’s.

The executor or personal representative named in your Will is the person to whom you have appointed the responsibility of gathering your property, paying your debts, and making final distribution according to your instructions. An executor, or personal representative, must act in your best interest. They act as your fiduciary.

A Trust, on the other hand, avoids probate and immediately provides for someone (a successor trustee) to  “step into your shoes” if you are unable to manage your affairs because of incapacity or injury.

Those preparing a trust will also prepare a “pour-over” Will to assure that assets not re-titled (funded) to the trust are given to the trustee(s) of the trust. This “pour-over” Will avoids probate.

Living Trust:

Your revocable living trust is an agreement between the “Settlor” and the “Trustee” to hold the trust assets for the benefit of the beneficiary of the trust. The Settlor is the person setting up the trust and the Trustee is the person who manages the trust. In order to form the trust, the Settlor transfers property to the Trustee to hold in the name of the trust. Since this is your trust, you are the Settlor and you are the initial Trustee of the trust. The trust provides that, for your lifetime, you are also the sole beneficiary of the trust.

Trust Agreement:

The Trust is fully revocable or changeable during your lifetime. You should continue to use your Social Security Number on all accounts; as long as you are acting as the Trustee, no special tax identification number is required and no special accounting or tax returns need be filed. The Trust names you as the Trustee of your own property and, in the event you are unable to continue as Trustee, you may designate a successor Trustee.

The principal purpose of the Trust is to avoid probate of the assets of your Trust and the time and expense which is involved in a probate proceeding. The Trust essentially acts in place of a Will to make sure that your property passes to your beneficiaries with a minimum of hassle and expense. It is extremely important that all assets which are to be included in your Trust (i.e., real property, savings accounts, stocks, and bonds, etc.) are actually titled in the name of the Trust. There will be more detail on this when I return the executed documents to you. Another important advantage to your Trust is that it allows your designated successor Trustee to promptly take over the management of your affairs if you should become unable to manage your affairs due to illness, accident, Alzheimer’s, etc. This avoids the potentially embarrassing, expensive and lengthy court process of a guardianship.

Certification of Trust:

The Certification sets forth the existence of the Trust and your unlimited right as Trustee to deal with any account or asset held in the Trust. The Certification acts as a short version of the Trust Agreement and gives any third party all the information required from the Trust without getting into the dispositive provisions, which are (and should remain) confidential.

Assignment of Personal Property:

This Assignment acts as the method of transferring all personal property assets (generally they do not have a title or an ownership document) to your Trust (thereby avoiding the necessity or possibility of having to probate such assets); this Assignment also transfers your digital assets and/or rights (including any “social media”, on-line accounts and/or email accounts) to the Trust. The form you can use to specifically designate the distribution of specific items of personal property is also included.

Pour-Over Will:

Your Will is commonly referred to as a “Pour-Over” Will. Under the terms of the Will, any assets held by you which have not previously been transferred into your Trust will be added to the Trust at the time of your death (but may have to be subject to a probate administration in order to do so). The purpose of this is to make sure all of your assets (whether in your Trust or not) are distributed according to the dispositive plan set forth in the Trust.

The Durable Power of Attorney for Management of Property and Personal Affairs:

The Durable Power of Attorney is a “general power of attorney”. This document is primarily intended to give your named agent the power to deal with any trust or non-trust assets in the event of your incapacity. However, this document gives your agent broad powers to dispose of, sell, convey and encumber your real and personal property; if you have any concern about granting such broad powers, please make that known.

HIPAA Authorization and Waiver:

The HIPAA Authorization and Waiver is a “stand-alone” document to authorize your health care providers to release information concerning your otherwise confidential medical information to the individuals you have designated to act on your behalf in the event of disability and to any other individuals who you would also want to have such access.

Durable Power of Attorney for Health Care:

This document allows you to name the person(s) whom you wish to make health care decisions for you if you are unable to make the decisions yourself.

Summary of Estate Planning Provisions:

This is a paragraph by paragraph explanation of the trust (as well as additional explanations of the other estate planning documents) to assist you with your review.