Estate Planning
Estate Planning
Tim will help you identify your specific objectives and then draft the combination of documents required to provide the legacy and distribution schedule you desire for your loved ones. These documents will:
- Clearly communicate your wishes;
- Minimize tax consequences;
- Seamlessly pass your estate to your loved ones and to the causes and institutions which are most important to you;
- Maintain privacy and avoid or reduce the potentially time-consuming probate process;
Estate planning involves more than establishing your final directives following death. It’s also about contemplating transfer of your assets and authority when you reach the point that you cannot handle your own affairs. Estate planning is a comprehensive process that begins with foundational documents including:
Explanations of Selected Estate Tools
Will
A will, or last will and testament, is a legal document that specifies how a person’s assets and property should be distributed after their death. A will can be used to name guardians for dependents, children, or pets. It is a menu of actions to be carried out immediately following death.
Durable Medical Power of Attorney
A durable power of attorney (DMPOA) is a legal instrument that directs another responsible party to make medical and treatment decisions on the behalf of the person executing the document (principal). There are two types of DMPOA: ‘springing’ and ‘non-springing’. A Springing DMPOA occurs upon the occurrence of an event or upon incapacity of the principal. A Non-Springing DMPOA takes immediate effect. DMPOA’s remain in effect after a person becomes incapacitated. Once executed, DMPOA’s can be revoked at any time by a Principal provided they remain legally competent.
General Power of Attorney
A general power of attorney (POA) is a legal document that allows a trusted person to act on another persons behalf in legal and financial matters. The person granting the power is the ‘principal’ and the person receiving the power is the ‘agent’ or ‘attorney-in-fact’.
A general POA can give the agent the authority to:
- Manage bank accounts;
- Buy, sell, or invest in property;
- Purchase and maintain insurance;
- Enter into contracts;
- Apply for public benefits;
- Manage the principals’ business;
- Collect debts;
- Cash checks;
- Sue on behalf of the principal.
A ‘general’ POA may become ‘durable’ so that it remains valid if the principal becomes incapacitated. Co-agents and successor agents can be named in the event that the agent is unavailable or unable to act.
Revocable Trust (RT)
A Revocable Trust (RT) functions in much the same way as a will except that it may operate long after death. A RT may avoid the probate process, saving time and money. It is an excellent tool where there is real estate located in multiple states or a college education to be funded at some point in the future. It also offers privacy from the public proceedings of probate. A person establishing the trust (Settlor) may fund it, maintain access to trust assets and, may change its terms and beneficiaries while the Settlor has capacity. The trust agreement is a settlor’s road map with instructions to be followed over a period of time by the trustee. The trustee is a fiduciary, entrusted by the settlor with control, management and asset distribution for named beneficiaries. A RT itself is usually not a separate taxable entity.
Irrevocable Trust (IT)
An irrevocable trust is a legal arrangement that allows a person to transfer assets to a beneficiary while giving up ownership and control of those assets. The grantor, settlor or creator of the IT transfers assets to the trustee, who manages the trust. The grantor gives up all ownership rights to the assets and the trust. Terms of an IT are legally binding and cannot be changed without the consent of the beneficiary or a court order. People often create irrevocable trusts to reduce estate taxes and protect assets from creditors or lawsuits. Assets in an irrevocable trust are not included in the grantor’s taxable estate, which can help the grantor’s family avoid significant taxes. Assets in an IT are also protected from creditors and lawsuits that could diminish the estate. An IT must obtain and Employer Identification Number and pay taxes when the taxable threshold is met.
Special Needs Trust
A special needs trust (SNT) is a legal devise that helps people with disabilities receive non-governmental financial support while not forfeiting access to government benefits if they would otherwise exceed the threshold for public benefits. SNTs can be used to pay for medical expenses, transportation, housing, and home care. An SNT may state how much money a beneficiary needs, how often they should receive money from the trust, and what the money may be spent on. SNTs preserve the beneficiary’s’ access to public benefits like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Medicare, Medicaid, and HUD/Section 8 subsidies.
Instructions For Final Disposition
Any adult may authorize the disposition of their remains after death. By way of example, instructions for final disposition may designate cremation or burial. Instructions may identify the location of where ashes are to be spread or whether there is to be a burial and funeral service. A personal representative may be identified as the individual responsible for completing the deceased’s final wishes but this person must also be identified in the will of the deceased.
Transfer on Death Deed
A Transfer on Death Deed (‘TODD’) allows the owner to designate a person or persons who will become the new owner of real property when the original owner dies without the need for probate. There is no transfer until the owner dies. The owner maintains control of the property until the owner dies and does not require permission from the grantee beneficiary to sell the property, borrow money on it, or give it away.
A property owner can revoke a TODD at any time and can record a new TODD providing for a different beneficiary to get the property. The new beneficiary does not have to be notified of the recording of the TODD and does not have to be notified if the TODD is revoked. Since the grantee beneficiary has no claim on the property during the lifetime of the owner, the property can’t be taken by the grantee beneficiary’s creditors while the owner is still alive. A TODD will not disqualify an owner from receiving Medicaid assistance for nursing home care, because the owner has not given the property away. No matter what is stated in a deceased’s will, a TODD will control the distribution of property. The grantee beneficiary gets the owner’s interest in the property subject to any claims against the property when the owner was alive.