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While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones.  Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones of the expense, delay and frustration associated with managing your affairs when you pass away or become disabled.

Estate planning is a deliberate, premeditated, act of love. It is the combined work of the rational mind, which knows what to do with information, and the compassionate heart, which listens and teaches. How you plan your estate will have a profound effect on your family and the ones you love.

Providing for Incapacity

If you become incapacitated, you won’t be able to manage your own financial affairs.  Many are under the mistaken impression that their spouse or adult children can automatically take over for them in case they become incapacitated.  The truth is that in order for others to be able to manage your finances, they must open a guardianship proceeding, and petition a court to declare you legally incompetent.  This process can be lengthy, costly and stressful.  Even if the court appoints the person you would have chosen, they may have to come back to the court every year and show how they are spending and investing each and every penny.  If you want your family to be able to immediately take over for you, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home.  A will does not take effect until you die, so is of no help, and a power of attorney may be insufficient, as it provides authority but lacks guidance.

In addition to planning for the financial aspect of your affairs during incapacity, you should establish a plan for your medical care.  The law allows you to appoint someone you trust – for example, a family member or close friend, to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself.  You can do this by executing a health care power of attorney for where you designate the person to make such decisions.  In addition to a heath care power of attorney, you should also have a living will which informs others of your preferred medical treatments such as the use of extraordinary measures should you become terminally ill and are being kept alive by mechanical devices.

Avoiding Probate

If you leave your estate to your loved ones using a will, everything you own will pass through probate.  The process is expensive, time-consuming and open to the public.  The probate court is in control of the process until the estate has been settled and distributed.  If you are married and have children, you want to make certain that your surviving family has immediate access to cash to pay for living expenses while your estate is being settled.  It is not unusual for the probate courts to freeze assets for weeks or even months while trying to determine the proper disposition of the estate. Your surviving spouse may be forced to apply to the probate court for needed cash to pay current living expenses. You can imagine how stressful this process can be.   With proper planning, your assets can pass on to your loved ones without going through probate administration, in a manner that is quick, inexpensive and private.

Providing for Minor Children

It is important that your estate plan address issues regarding the raising of your children.  If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations.  You may also want to provide for special counseling and resources for your spouse if you believe they lack the experience or ability to handle financial and legal matters.  You should also discuss with your attorney the possibility of both you and your spouse dying simultaneously, or within a short duration of time.  A contingency plan should provide for persons you’d like to manage your assets as well as the guardian you’d like to nominate for the raising of your children.  The person, or trustee in charge of the finances need not be the same person as the guardian.  In fact, in many situations, you may want to purposely designate different persons to maintain a system of checks and balances.  Otherwise, the decision as to who will manage your finances and raise your children will be left to a court of law.  Even if you are lucky enough to have the person or persons you would have wanted selected by the court, they may have undue burdens and restrictions placed on them by the court, such as having to provide annual accounting.

Other issues to consider in this respect is whether you’d like your beneficiaries to receive your assets directly, or whether you’d prefer to have the assets placed in trust and distributed based a number of factors which you designate, such as age, need and even incentives based on behavior and education.  All too often, children receive substantial assets before they are mature enough to handle them properly, with devastating results.
You should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children. You will also want to give consideration to the age and financial condition of a potential guardian. Some guardians may lack child-rearing skills you feel are necessary.  Make sure that your plan does not create an additional financial burden for the guardian.

Planning for Death Taxes

The IRS will want to review your estate at death to ensure you don’t owe them that one final tax: the federal estate tax.  Whether there will be any tax to pay depends on the size of your estate and how your estate plan works.  Many states have their own separate estate and inheritance taxes that you need to be aware of. There are many effective strategies that can be implemented to reduce or eliminate estate taxes, but you must start the planning process early in order to implement many of these plans.

Charitable Bequests – Planned Giving

Do you want to benefit a charitable organization or cause?  Your estate plan can provide for such organizations in a variety of ways, either during your lifetime or at your death.  Depending on how your planned giving plan is set up, it may also let you receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes.

A well-crafted estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, avoiding probate at death, minimizing or eliminating estate taxes, and protecting against unnecessary delays.  You should consult a qualified estate planning attorney to review your family and financial situation, devise a plan to address your goals, and explain the various options available to you.   Once your estate plan is in place, you should enjoy peace of mind knowing that you have provided for yourself and your family in case the worst happens.

Durable Powers of Attorney

A durable power of attorney (sometimes called a DPoA) is a written document that specifically gives authorization to others to act on your behalf. It is very common for more than one person to hold such a power. The DPoA typically gives the holders the ability to buy, sell, or lease assets, sue on your behalf, collect from creditors, and even operate your business. The DPoA also usually grants certain tax powers such as the right to sign and file income tax returns and the right to make or disclaim gifts. Special powers can be included so as to enable your agent to make gifts or even adjust your estate plan if you can’t.

Healthcare Power of Attorney

A healthcare power of attorney is a document that allows a person or persons of your choosing to make your medical decisions for you if you cannot. It covers decisions on issues that may arise before you are terminally ill—such as operations, transfusions, nursing care, various treatments, and tube feeding. Also, it provides health care providers with your permission to disclose to your chosen agents your medical information which is essential to assist in correct decision making.

Living Will

A living will is a document in which you can state whether or not life-sustaining procedures should be used to prolong your life after it has been determined that you will never recover from or survive the disease or condition that you have. With modern medical technology improving by the minute, the possibility of prolonging life can go far beyond what we’ve ever imagined. Yet many people do not want to suffer the loss of their dignity and possibly their net worth as the necessary payment for prolonging their lives when death is imminent and irreversible. In short, they want to retain the right to control decisions regarding their medical care, including the withholding or withdrawing of life-sustaining procedures. The living will laws typically contain safeguards to ensure peace of mind, such as a requirement that two physicians examine the patient and determine that recovery is no longer likely before life-sustaining treatments may be withdrawn. A living will also may set forth more specific provisions than those established by law.

Assured Access to Advance Directives

Because at Iden Law Offices, we want to be certain that your planning decisions will work for you when you need them, we encourage our clients to enroll in a program which maintains an electronic copy of your key advance directives, and which issues the client an “Emergency Medical Information Card” in your wallet which provides authorized medical care givers access to your advance directives from anywhere in the world, seven days a week, 24 hours a day, 365 days a year.

For Your Adult Children

We also assist young adults by providing advanced directives to authorize their parents’ access to key health care information at the event of an emergency.

A proper estate plan must address all possible situations. One area that is often overlooked by clients and their attorneys is disability. If you are unable to manage your financial or healthcare decisions, who will? Under what authority? With what instructions? Advance directives are tools to address these important concerns.

Durable Powers of Attorney

A durable power of attorney (sometimes called a DPoA) is a written document that specifically gives authorization to others to act on your behalf. It is very common for more than one person to hold such a power. The DPoA typically gives the holders the ability to buy, sell, or lease assets, sue on your behalf, collect from creditors, and even operate your business. The DPoA also usually grants certain tax powers such as the right to sign and file income tax returns and the right to make or disclaim gifts. Special powers can be included in the DPoA to enable your agent to make gift and even adjust your estate plan if you cannot.

Healthcare Power of Attorney

A health care power of attorney is a document that allows a person or persons of your choosing to make your medical decisions for you if you cannot. It covers decisions on issues that may arise before you are terminally ill—such as operations, transfusions, nursing care, various treatments, and tube feeding. Also, it provides health care providers with your permission to disclose to your chosen agents your medical information which is essential to assist in correct decision making.

Living Will

A living will is a document in which you can state whether or not life-sustaining procedures should be used to prolong your life, after it has been determined that you will never recover from or survive the disease or condition that you have. With modern medical technology improving by the minute, the possibility of prolonging life can go far beyond what we’ve ever imagined. Yet many people do not want to suffer the loss of their dignity and possibly their net worth as the necessary payment for prolonging their lives when death is imminent and irreversible. In short, they want to retain the right to control decisions regarding their medical care, including the withholding or withdrawing of life-sustaining procedures. The living will laws typically contain safeguards to ensure peace of mind, such as a requirement that two physicians examine the patient and determine that recovery is no longer likely before life-sustaining treatments may be withdrawn. A living will also may set forth more specific provisions than those established by law.

Assured Access to Advance Directives

Because at Iden Law Offices, we want to be certain that your planning decisions will work for you when you need them, we encourage our clients to enroll in a program which maintains an electronic copy of their key advance directives, and you carry an “Emergency Medical Information Card” in your wallet which provides authorized medical care givers access to your advance directives from anywhere in the world, seven days a week, 24 hours a day, 365 days a year.

For Your Adult Children

We also assist young adults by providing advanced directives to authorize their parents’ access to health care key information at times of emergency.

If you become mentally incapacitated, you won’t be able to manage your own financial affairs. Many are under the mistaken impression that their spouse or adult children can automatically take over for them in case they become incapacitated. The truth is that in order for others to be able to manage your finances, they must petition a court to declare you legally incompetent. This process can be lengthy, costly and stressful. Even if the court appoints the person you would have chosen, they may have to come back to the court every year and show how they are spending and investing each and every penny. If you want your family to be able to immediately take over for you, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home. A will does not take effect until you die and a power of attorney may be insufficient.

In addition to planning for the financial aspect of your affairs during incapacity, you should establish a plan for your medical care. The law allows you to appoint someone you trust – for example, a family member or close friend to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself. You can do this by using a durable power of attorney for health care where you designate the person to make such decisions. In addition to a power of attorney for heath care, you should also have a living will which informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.

Most people are interested in reducing probate costs and estate taxes, but the greatest concern of most clients is how best to avoid burdening their loved ones, to provide for their loved ones’ needs, and to pass along the wisdom they have acquired in life. We frequently have new clients who have a will and/or trust document, but they have no idea what their documents provide or how they work. Regardless how complex your situation or planning needs, at Iden Law Offices, our focus is on making sure you understand your choices and crafting the best plan for your needs with documents written in plain English. Only then can you truly achieve peace of mind.

People often don’t consider disability with regard to their estate plans, but it is important to plan for the care of you and your loved ones should you become mentally disabled. Without a trust designating someone to handle your affairs and powers of attorney in place, a guardian must be appointed in a legal proceeding that could be lengthy, costly, and publicly embarrassing. With proper planning, however, you can control who handles your financial and legal affairs, designate who will make health decisions for you and who will care for your children. In addition, you can give these designees an “instruction manual” on how you want them to fulfill their responsibilities.

If you are in a long term relationship that does not include marriage, you need to take particular care to create an estate plan or your loved one could be left out of the decision-making process regarding your care in disability in addition to the benefits of your estate. If you should die without a will or trust, the government will impose a statutory distribution plan, called intestate succession, for the orderly distribution of your estate to blood relatives. At Iden Law Offices, we are sensitive to the unique needs of our unmarried clients with life partners and would like to help you attain peace of mind knowing that your loved ones will be able to be there for you in sickness and to receive the benefits of your love after your death.

Many people have preconceived notions about trusts and believe that they are only for multi-millionaires who wish to leave large trust funds to their children. However, this is far from the truth; trusts can be invaluable tools in the estate plans of millions of individuals.

Trusts are simply an arrangement where one party holds property on behalf of another party. In an estate planning context, trusts are created by the person doing the estate planning (the settlor), who authorizes another person (the trustee) to manage the assets for the benefit of a third party (the beneficiaries). There are many reasons for establishing trusts including probate avoidance, privacy or providing for the needs of underage beneficiaries.

Some types of trusts that may be useful in estate planning are:

• Trusts for minors. Many people leave money to their children or their grandchildren in a trust as part of a comprehensive estate plan. This is typically done to ensure the money is there for the children’s benefit while they are younger for support, education, medical expenses, etc. Once the children reach a certain age or achievement level (such as obtaining a bachelor’s degree), they may be granted more access and control so as to be able to receive money from the trust to do with as they please.
• Special needs trusts. Special needs trusts are tools that enable a person to leave property to an individual with special needs. Many individuals with special needs receive government benefits. If they were to suddenly inherit money, they might be disqualified from those benefits until the inheritance was spent. Special needs trusts protect those individuals’ government benefits while allowing them to receive benefits from the trust to supplement their care and lifestyle.
• Marital trusts. Married couples sometimes include trusts in their wills, or separately, for the benefit of their spouse, typically for two reasons: (1) taxes, and (2) property protection. In previous years, marital trusts were needed for some couples to take advantage of estate tax exemptions, and they may be needed in the future as the laws are expected to change. Marital trusts can also protect property from a spouse to ensure that it ultimately goes where it needs to go. For example, a husband with grown children from a previous marriage may decide to let his wife use his property after he passes, but puts it into a trust so that after she passes away it goes to his children.
• Revocable living trusts. Revocable living trusts are documents completely separate from wills although they often work hand in hand with wills to carry out the decedent’s wishes. Revocable living trusts are primarily used to avoid probate when a person owns real estate in multiple states, or where they wish to keep their planning private.
• Irrevocable life insurance trusts. Irrevocable life insurance trusts (or ILIT’s) can be used in order to move a person’s life insurance proceeds outside his or her estate for estate tax purposes.
• Spendthrift trusts. Spendthrift trusts are generally established to protect the beneficiaries’ assets from both themselves and creditors. These trusts usually have an independent trustee who has complete discretion over the distribution of assets of the trust to the beneficiary.

As you can see, there are many different types of trusts, each of which can be customized to serve a valuable purpose in accomplishing the wishes of those making gifts or planning an estate. An experienced estate planning attorney can help you assess your finances and goals to determine the best vehicles to preserve your wealth and your legacy.

When a loved one passes away with a will, his or her estate often goes through a court-managed process called probate administration where the assets of the deceased are managed and distributed. If your loved-one owned his or her assets through a well drafted and properly funded living trust, it is likely that no court-managed probate administration is necessary. The successor trustee will need to administer the distribution of the deceased’s assets as set forth in the trust document. This process is called trust settlement. The cost and complexity of trust settlement is much less than probate administration. The length of time needed to complete the probate of an estate depends on the size and complexity of the estate and the local rules and schedule of the probate court.

Each estate is unique, but most involve the following steps:

Filing of a petition for administration with the proper probate court.
Notice to heirs under the will or to statutory heirs (if no will exists).
Petition to appoint Personal Representative (in the case of a will) or Administrator for the estate.
Inventory of estate assets by Personal Representative.
Payment of estate debts to rightful creditors.
Sale of estate assets.
Payment of estate taxes, if applicable.
Final distribution of assets to heirs.

It is important that your estate plan address issues regarding the raising of your children. If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations. You may also want to provide for special counseling and resources for your spouse if you believe they lack the experience or ability to handle financial and legal matters. You should also discuss with your attorney the possibility of both you and your spouse dying simultaneously, or within a short duration of time. A contingency plan should provide for persons you’d like to manage your assets as well as the guardian you’d like to nominate for the raising of your children. The person, or trustee in charge of the finances need not be the same person as the guardian. In fact, in many situations, you may want to purposely designate different persons to maintain a system of checks and balances. Otherwise, the decision as to who will manage your finances and raise your children will be left to a court of law. Even if you are lucky enough to have the person or persons you would have wanted selected by the court, they may have undue burdens and restrictions placed on them by the court, such as having to provide annual accounting.

Other issues to consider in this respect are whether you’d like your beneficiaries to receive your assets directly, or whether you’d prefer to have the assets placed in trust and distributed based a number of factors which you designate, such as age, need, and even incentives based on behavior and education. All too often, children receive substantial assets before they are mature enough to handle them properly, with devastating results.

You should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children. You will also want to give consideration to the age and financial condition of a potential guardian. Some guardians may lack child-rearing skills you feel are necessary. Make sure that your plan does not create an additional financial burden for the guardian.

If your child or other loved one has special needs such as a mental or physical disability, you likely provide ongoing care for his or her health and day-to-day well-being, as well as for his or her financial matters.  You must have contemplated with concern about what may happen to them when you are no longer able to provide and care for them.  It is critical to designate someone who can continue to provide this care when you are no longer able.

While you can certainly provide that they receive money and assets, such a bequest may prevent them from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medicaid programs. However, public monetary benefits provide only for the bare necessities such as food, housing and clothing. As you can imagine, these limited benefits will not provide those loved ones with the resources that would allow them to enjoy a richer quality of life. But if parents leave any assets to their child who is receiving public benefits, they run the risk of disqualifying the child from receiving them. Fortunately, the government has established rules allowing assets to be held in trust, called a “Special Needs” or “Supplemental Needs” Trust for a recipient of SSI and Medicaid, as long as certain requirements are met.

Our law firm can help you set up a Special Needs Trust so that government benefit eligibility is preserved while at the same time providing assets that will meet the supplemental needs of the person with a disability (those that go beyond food, shelter, and clothing and the medical and long term supports and services of Medicaid). The Special Needs Trust can fund those additional needs. In fact, the Special Needs Trust must be designed specifically to supplement, not replace public benefits. Parents should be aware that funds from the trust cannot be distributed directly to the disabled beneficiary. Instead, it must be disbursed to third parties who provide goods and services for use and enjoyment by the disabled beneficiary.

The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved ones’ eligibility such as:

Annual check-ups at an independent medical facility
Attendance of religious services
Supplemental education and tutoring
Out-of-pocket medical and dental expenses
Transportation (including purchase of a vehicle)
Maintenance of vehicles
Purchase materials for a hobby or recreation activity
Funds for trips or vacations
Funds for entertainment such as movies, shows or ballgames.
Purchase of goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics.
Athletic training or competitions
Special dietary needs
Personal care attendant or escort

Special Needs Trusts are a critical component of your estate planning if you have disabled beneficiaries for whom you wish to provide after your passing. Generally, Special Needs Trusts are either stand alone trusts funded with a separate asset like a life insurance policy or they can be a sub-trust in your existing living trust.

Couples who are married enjoy many legal rights which are often taken for granted. For example, if a husband dies without having executed a will, the laws of intestacy determine what shares of his estate are to be shared by his wife and children and who has first choice to serve as executor of his estate. If the wife becomes disabled, the law grants to the husband the first opportunity to serve as guardian.

But for couples who choose to forego the institution of marriage, no such rights are afforded under law. An unmarried partner is treated as a stranger to the decedent, and will have no legal entitlement to share in the decedent’s estate or to serve as executor or guardian without specific legal documents in place. Moreover, an unmarried partner has no intrinsic right to participate in making medical decisions for their ailing partner.

It is critical for adults who are not married to affirmatively create legal documents to secure the rights and privileges that the law does not automatically provide. These documents include an appropriate health care power of attorney, a living will, and a durable power of attorney. And to maximize the opportunity for tax planning, creditor protection, and the management of inheritances, a will and often a revocable living trust are essential.

Dying can be a costly and time consuming exercise, particularly if there is no plan in place. Creditors, financial institutions, and other interested parties must be notified; funeral and burial arrangements must be carried out; debts must be addressed; taxes must be paid; tangible and intangible assets must be protected and eventually transferred to beneficiaries; and the decedent’s overall wishes must be carried out. There is quite a lot to do.

Proper estate planning identifies all of the “hurdles” that may arise post-death, and minimizes their affect. For example, if it is determined that substantially all of the client’s assets would be subject to lengthy and costly probate proceedings at death, the estate planning attorney may utilize various “trusts” and other planning techniques to eliminate the need for probate court at death. In addition, the estate planning attorney may devise plans empowering the client’s trusted family members to “seamlessly” retained control of and continue the operation of unique client assets – like businesses, farming operations, or even “legacy property” (like the family cabin).

Planning to keep a family business viable, and in the family, after the founder of the business has retired, become disabled, or died, is a significant challenge. Less than half of family businesses survive to the second generation, and less than a third survives to the third generation. The absence of planning is often the cause of these failures. Succession planning, including buy-sell agreements, key man insurance, and shareholder agreements is essential to protect your business, and provide for your family, after you are gone.

Understanding just what needs to be done for a particular client requires experience and knowledge of the various tools and techniques available. Equally important is a complete understanding of the particular client. Each client is different. Consequently, no one technique works for all clients.

Routinely, attorneys develop a myopic view of estate planning.   They are guided by the principle goal of passing as much wealth to the next generation as tax-free as possible.   While “financial wealth transfer” can, and should, be one of the goals – it should not be the primary goal.  Rather, the primary goal should be the preservation of the client’s values and the corresponding protection of the client’s intended beneficiaries.

Most people have definite convictions as to how they would like their beneficiaries to use their inheritance.  Similarly, there is usually a strong desire to protect the beneficiary’s inheritance from outside forces, like “creditors and predators.”

A comprehensive estate plan addresses many of the following family maintenance and protection issues:

Who could best serve as the “back-up parents” for minor children, providing the necessary care, love and nurturing environment;
How could “continuing trusts” be utilized to safeguard inheritances for minor beneficiaries or other beneficiaries who lack the ability to manage their inheritance;
How can inheritances for adult beneficiaries be held in trust so as to protect the beneficiaries from the potential future divorces, lawsuits, creditors and predators;
What types of activities, life styles, work ethics, etc. are your clients desiring to incent;
How can you minimize the potential risk of “affluenza” for beneficiaries who are going to receive sizeable inheritances;
What if the intended beneficiaries have (or may develop) “special needs” or disabilities.