Estate Planning and Administration
You are never too young to begin planning your estate. In fact, you may experience feelings of freedom or relief by taking care of such affairs, even if there is not yet an urgent reason to do so. Since most of us think more clearly when we are not under pressure, advance planning presents many advantages and rewards for you and your beneficiaries.
Planning ahead also relieves family members of having to take on this responsibility during stressful times. Estate planning – regardless of the assets involved – is a thoughtful and loving legacy to leave your surviving family members.
Equally important and often overlooked, parents of minor children should arrange their own personal affairs and include in the plan provisions relating to the care and custody of their children, and the control and management of assets.
Estate Planning is a very important part of our practice and includes the following areas:
- Allocation of Assets
- Estate Tax Planning
- Guardianships and Trusts for Children
- Provisions for Pets
- Charitable Bequests
- Living Trusts
- Irrevocable or Testamentary Trusts
- Advance Directives and Powers of Attorney
- Living Wills
- Durable Power of Attorney Appointments
- Health Care Power of Attorney Appointments
- Beneficiary Designations
- Retirement Assets
- Bank Accounts
- Provisions for Single-Parent Families, Blended Families and Special Needs Children
- Provisions for Non-Related Beneficiaries
- Provisions for Business Interests
- Provisions for Grandchildren
- Special Concerns
- Reviewing and Updating Your Current Plan
Allocation of Assets
Every adult, regardless of marital or financial status, should have at least a basic will. An experienced attorney, knowledgeable in current laws, should prepare even the simplest of wills. Each individual’s and couple’s needs are unique, and boilerplate forms may not provide the best solution for specific situations.
When compared to the value of the assets to be protected, the cost for a professionally prepared will is minimal. Some assets can be important solely for their emotional or historic significance to you or family members, even though they may have little monetary value. If there are certain items that you want to be sure will go to specific individuals, a will is the best way to ensure that outcome. Also, properly drawn wills often eliminate potential disputes among heirs and family members, especially by those who are not among your intended beneficiaries.
Estate Tax Planning
The transfer of family wealth from one generation to the next may be subject to state and federal death taxes, depending upon the value of the estate. With advance planning, the tax liability can be reduced and possibly eliminated. We can evaluate the potential death tax liabilities and discuss with you estate planning options that can reduce those future liabilities.
For many individuals, estate planning includes testamentary charitable gifts. Often the decision to include charitable giving in an estate plan is made as part of estate tax planning.
Guardianships and Trusts for Children
Parents of minor children have greater peace of mind when custodial guardianship provisions have been clearly stated in a will. Without naming a presumptive guardian, the court will not know the parents’ wishes. This may result in otherwise avoidable family disputes or the court appointment of a person or persons who are not of your preference.
All parents should consider protecting their children’s futures by naming a custodian or guardian. If at all possible, this should be done before the birth of the first child.
In addition, parents should set aside assets in trust to be managed and distributed as the parents direct for the benefit of minor children.
Provisions for Pets
Even the most responsible pet owners rarely consider what will happen to their surviving animals when they die. Another issue to consider is what will happen if the pet owner should become incapacitated and unable to arrange for the interim or long-term care of his or her pets. People owning several animals are especially vulnerable and could place their beloved pets in jeopardy if no provisions have been made for their care. This need never happen to an animal, because arrangements can be made to designate a caretaker for surviving pets if the owner dies or is unable to care for them.
There are several different kinds of trusts. A living or “inter vivos” trust can provide for the management and distribution of your property, both during your lifetime and after you die. A trustee, usually the creator of the trust, is named to preserve and protect the assets that are owned by the trust. A successor trustee is also appointed to take over the trust after you die. The successor trustee cannot change the terms of the trust. Most living trusts can be revised or revoked during your lifetime.
Some of the benefits of a living trust include the ability to avoid probate court, privacy for your family, and the ability to best manage taxes arising due to your death.
Irrevocable or Testamentary Trusts
In an irrevocable trust you give up your ownership rights of the assets placed in the trust, forever. There are several types of irrevocable trusts, but in each you are “gifting” assets to the trust, with those assets being controlled by the terms of the trust and managed by a trustee. You cannot cancel an irrevocable trust, hence the term “irrevocable”. An irrevocable life insurance trust (ILIT) or qualified personal residence trust (QPRT) can help to maximize the value of assets reaching the next generation.
An attorney who understands tax issues, your financial situation, your long-term needs and goals, as well as other available options, can determine whether this type of trust would benefit you.
Is a Trust Right for You?
Much is being said about trusts these days and some people are promoting them as the ultimate answer to all estate planning needs. However, a trust may not be right for you. Every person and situation is different. At Beasley & Gilkison, we take the time to get to know you and to understand your situation, wishes and needs. We advise you of the tax implications for you and your beneficiaries of the different trusts. If a trust makes sense for you, we can prepare a proper one, although a will or some other document may be all you need. A no-cost, initial consultation will help answer your questions.
Advance Directives – Including Health Care Designations and Powers of Attorney [Return to Estate Planning]
A combination of documents allow you to appoint a person or persons to manage your affairs and to provide instructions regarding what measures should or should not be taken to prolong your life if you are in coma or become otherwise incapacitated and are unable to make your wishes known. Some or all of these documents may be necessary to adequately convey your wishes and protect your interests.
Living wills help to ensure that your wishes will be honored in the event of a medical crisis. A living will not only lets you make your wishes known regarding the medical measures that will be taken if you are gravely ill and cannot speak for yourself, but it also relieves family members of the burden of making critical decisions – decisions that can result in long-standing guilt feelings, family feuds and even lawsuits. A thoughtful legacy you can leave to your family is to ensure that all of your wishes have been expressed and properly documented.
A living will is also a way for you remain in control of your own health care decisions, even when you are no longer able to communicate with others.
Whatever your wishes, it is important to make sure that your doctor, your hospital and close family members have a copy of your living will. You should have your doctor’s assurance that he or she will honor your requests before finalizing a living will.
It is always best to discuss your wishes with your family members and those close to you so that they will understand what you deem important and what you expect from those involved.
Durable Power of Attorney Appointments
Through a durable power of attorney, you designate someone to act on your behalf regarding your financial, personal or business affairs if you are unable to do so. You may also name a guardian. If you are out of town, out of the country, ill, or incapacitated, the person you designate may conduct business and sign binding documents in your name.
The term “durable” means a power of attorney appointment remains in effect even if you become incapacitated at a later date.
Powers of attorney can be broad in scope, or they can be restricted to specific matters. It is important to understand that there are many variations available. Not only will we explain your options and their ramifications before drawing up a power of attorney, but also we will discuss the issues you should consider in selecting the person to serve as your power of attorney.
Health Care Power of Attorney Appointments
If you become unable to make your own decisions regarding your health care, a health care power of attorney allows you to designate someone to make those decisions for you. Even if you are only temporarily incapacitated, this power of attorney allows the person you choose to make health care decisions on your behalf until your mental capabilities are restored. This document takes effect only upon your incapacity as certified by a medical doctor.
Choosing the Best Agent
The person you choose to act as your power of attorney on your behalf is your “agent”. Because of the decision-making power and responsibility that can be given in a power of attorney document, your choice of that individual should be carefully considered. This person should be someone you trust to act in your best interests and who also knows you well enough to be aware of the decisions you would make if you could. They should sincerely care about you and your welfare. Usually, a spouse or close family member is chosen, but your agent can be any adult.
You should not be concerned if you ask someone to be your agent and he or she declines. This usually happens when the person being asked to assume this responsibility is too emotionally connected to you and feels overwhelmed by the potential responsibility. The most effective agent is someone who cares about you but can also remain calm and focused during a crisis.
It is a good idea to designate an alternate agent in case your first choice is unable to fulfill his or her responsibilities under the power of attorney for any reason.
You should discuss your wishes in detail with the person or persons you choose as agents and provide them with a copy of the document to keep in their possession.
Beneficiary Designations [Return to Estate Planning]
A beneficiary can be anyone you designate to receive your non-probate assets after you die. Your assets may include, but are not limited to, insurance benefits, retirement assets, bank accounts, investment accounts, real estate, motor vehicles and other tangible personal property that you own. Though beneficiaries are often a spouse, children, siblings or other family members, beneficiary designations should be made under any circumstances when you wish to ensure that your property or assets are received by the person or people of your choice – regardless of their relationship to you.
A will allows you to divide your probate assets in any way you choose. If you have no will, prevailing state law will dictate who your beneficiaries are and how your estate will be allocated. In the event you have no will and no legal heirs, your assets ultimately go directly to the state. Beasley & Gilkison can assist you in finding alternatives.
Provisions for Single-Parent Families, Blended Families and Special Needs Children
There are many different living situations that the courts and our laws must address today. If your family falls into one of the above categories, we recommend that you investigate how best to protect the rights of your surviving children, how to address the inheritance issues of step-children versus birth children and how to provide for the unique needs of children with medical or physical challenges.
Provisions for Non-Related Beneficiaries
Friends, partners or other non-related parties will find a carefully drawn will to be a valuable tool in protecting the survivors’ interests in jointly-owned or jointly-acquired assets. If you wish to leave certain assets or items to someone not legally related to you, a proper will is one way to make your wishes known.
Provisions for Business Interests
Business owners, regardless of the size or structure of their business, should plan for the efficient transfer of property and assets to family members or to the desired designee.
Beasley & Gilkison has the experience to help design an effective business succession plan for a business owner.
Planning for College
Parents and grandparents may wish to establish a trust or 529 Plan (Section 529 of the Internal Revenue Code) to provide for the educational or other needs of surviving children or grandchildren. There are several types of 529 Plans that prepay public college or university tuition. Our attorneys can explain the differences between the plans and the requirements of each.
Special Protection for Loved Ones in Need
There are cases in which a parent may not have confidence in the ability of a loved one to manage his or her inheritance. Factors such as poor financial habits, marital troubles or immaturity may pose questionable concerns. There are legal remedies to provide for such loved ones and to better protect their inherited assets.
Beasley & Gilkison is well versed in all areas of estate planning and can address any of the foregoing situations.
Updating Your Plan [Return to Estate Planning]
Even after you have executed your estate planning documents, we recommend that you review them periodically to make sure they are current. You can use the following list of events to help determine whether and when revisions may be necessary:
- Chronic Illness
- Death of a spouse
- Death of beneficiaries
- Major changes in your estate
- A move to another state
- Change in business interests
- Acquisition of property
- Birth or adoption of children or grandchildren
- Serious illness of a family member
- Change in tax, probate or property laws
- Change in status or attitude of beneficiaries
- Financial irresponsibility of an heir
- Charitable interests
- Estate Administration
Estate administration is the process of identifying, valuing, maintaining, and distributing a person’s property after he or she has died. Estate administration can be formal or informal and may need to be conducted through a probate court, depending upon the circumstances. Whenever administration of a person’s estate becomes necessary, we provide legal assistance and guidance as needed and utilize all skill, knowledge, experience, and resources at our disposal to complete the process efficiently. We also strive to minimize taxes and administrative costs to the greatest extent possible.
Mark A. Ervin