There is no question that advanced planning of your estate and belonging’s is a good idea. If everything is spelled out to your family and it is fair, there will be no reason for them to have a conflict when you leave. Far too often this preparation is delayed, however, and families allow greed and selfishness to tear their family apart. People do not realize what happens to a person’s estate once the owner is gone. The first process is probate, where estate planning attorneys determine who gets what. This process can take years and years, especially if all benefiting parties are not in agreement. On the other hand, if the owner had taken the time to prepare for this event, he could have spelled everything out and the attorneys would simply follow the instructions left.
If a son knows what his inheritance will be, and everything is stated in a will and/or trust, there is nothing for him to argue about with his siblings about what he deserves. Even if he doesn’t get as much as another sibling, there will be no question as to what the intention of the owner was. Another scenario that is common involves the home of the deceased. If no legal actions are taken beforehand, this home will be a hotbed of emotion and argument. One sibling may want to keep the property in the family for sentimental reasons. Another sibling may want to sell it and receive their portion in cash. A third may think they deserve a larger portion because he was the one to maintain the property. According to estate law in Santaquin, Utah an estate plan must spell out exactly what is to be done with all assets, including the home.
Use a Lawyer for Your Will and Estate Planning
One common mistake is putting property into joint names with an adult child so that it automatically passes to the child when you die and “saves” you attorney fees. This idea has many pitfalls. If the child dies before you, you’re back to square one. Perhaps not a problem if you have time to fix that, but what if you’re in an accident together and you never get a chance to change things? Or what if you just never get around to it? Now your heirs will have to probate your assets, which will cost them far more than it would have cost for you to see an estate planning attorney. Creditors are also a consideration. Did you know that your child’s creditors could use your property to collect on the child’s debts? If your child is on title, the child is an owner.
Creditors can lien real estate for collection of a judgment. They can garnish bank accounts. When that happens, it’s up to you to try to undo it. Proving something is really all yours, recovering funds, releasing a frozen bank account, or removing a lien can be very difficult and does not always work. It usually requires help from a lawyer – costing more than you would have spent on an estate planning attorney. Another popular idea is to leave everything to one adult child because that child “knows what you want to do with it” and will divvy things up when you pass on. This can take many forms, including joint title, naming just the one child in a self-made Will, or simply telling that child what you want without discussing it with anyone else or taking any formal steps. What could possibly go wrong? Plenty! For one thing, as with the prior example, the child could die before you or at the same time as you. You’re also putting your child in a difficult position if there is any dissension at all between your children. You may not think that your little darlings would behave that way, but money and grief do strange things to people tempers flare, siblings don’t get along, and sometimes the child who was supposed to divide the property decides to keep everything instead. Stories of feuding among children abound, ultimately costing expensive legal fees and leaving behind broken relationships. Even if you’re certain this won’t happen to you (famous last words), consider the other extreme: Will your child feel so guilt-ridden or self-effacing that your child gives everything to the siblings and keeps nothing?
Writing your own Will or Trust can also spell trouble. If you fail to follow required formalities, the document will be invalid. If there is anything ambiguous in what you wrote, a court will decide what you meant. That is expensive and like rolling a dice. If you think it’s easy to be clear, think again. Take the case of the man whose Will directed that his daughter receive a large monetary gift if she survived him by 30 days, and that his second wife receives everything else. Daughter died on day 28. Who gets her share? The Will said wife gets everything “else.” The Will did not say what to do if daughter did not survive. Does the second wife get it or does it go to the man’s children from his prior marriage? Where do you think those children think it should go? A court will probably have to get involved and this is going to cost a whole lot more than having a lawyer write the Will!
Choosing The Estate Plan You Want Or The Estate Plan You Need
There comes a time when you must decide what your estate plan will ultimately look like. Plans for your estate come an many different forms, but one key distinction to make between choices is the plan you want versus the plan you need. The plan that you want may not always be the plan that you need. Most people that decide that it is time to make a plan for their estate already have a general idea of how they want to give away their assets and who they want to give them to before they even speak with an attorney. These people consider the lawyer as just the person that makes sure everything is done properly and legally. When they speak with an attorney they already have an idea in their mind how things will play out. This is the estate plan that they want. This idea may be perfectly fine and work out wonderfully for all involved and the estate attorney just has to put it on paper to carry it out. Oftentimes this is not the case. The estate strategy that a client wants may cause trouble in the form of family fighting or a lengthy probate proceeding. The strategy they want may cause the family to fall apart because they did not plan ahead. The client did not ask the estate lawyer if their plan had any adverse consequences or would cause family strife. The estate lawyer has no duty to speak up and suggest a different plan and it is up to the client to ask if the plan they choose is going to the best for everyone involved.
The estate attorney has experience and expertise in these matters and will present you with the estate plan that best suits you and your goals. This is the estate plan that you need. The strategy you need may be different from the one you want and have some factors in it that you would not have originally thought of or wanted, but it is the plan that will potentially keep the family together and prevent fighting. The strategy you need may be tough to choose short term, but it is long term thinking that is smart thinking when making a strategy. Balancing the estate plan that you want versus the estate plan can be difficult because it is the client that must ultimately make the decision as to what estate plan they want. Before deciding on a plan it is important to look at the big picture and long term goals.
The Importance of Estate Planning
Many people believe that having an estate plan simply means drafting a will or a trust. However, there is much more to include in your estate planning to make certain all of your assets are transferred seamlessly to your heirs upon your death. A successful estate plan also includes provisions allowing your family members to access or control your assets should you become unable to do so yourself.
Wills and Trusts
A will or a trust may sound complicated or expensive—something only rich people have. That is an incorrect assessment. A will or trust should be one of the main components of every estate plan, even if you don’t have substantial assets. Wills ensure property is distributed according to an individual’s wishes (if drafted according to state laws). Some trusts help limit estate taxes or legal challenges. However, simply having a will or trust isn’t enough. The wording of the document is critically important.
A will or trust should be written in a manner that is consistent with the way you’ve bequeathed the assets that pass outside of the will. For example, if you’ve already named your sister as a beneficiary on a retirement account or insurance policy (assets that typically pass outside of a will to a named beneficiary), you don’t want to bequeath the same asset to a second cousin in the will because it could lead to a will contest. Not to mention that both individuals could become bitter toward each other (and you) during a legal battle.
Durable Power of Attorney
It’s important to draft a durable power of attorney (POA), so an agent or a person you assign will act on your behalf when you are unable to do so yourself. Absent a power of attorney, a court may be left to decide what happens to your assets if you are found to be mentally incompetent, and the court’s decision may not be what you wanted. This document can give your agent the power to transact real estate, enter into financial transactions, and make other legal decisions as if they were you. This type of POA is revocable by the principal at a time of their choosing, typically a time when the principal is deemed to be physically able, or mentally competent, or upon death. In many families, it makes sense for spouses to set up reciprocal powers of attorney. However, in some cases, it might make more sense to have another family member, friend, or a trusted advisor who is more financially savvy act as the agent.
Beneficiary Designations
As noted earlier, a number of your possessions can pass to your heirs without being dictated in the will (e.g., 401(k) plan assets). This is why it is important to maintain a beneficiary and a contingent beneficiary on such an account. Insurance plans should contain a beneficiary and a contingent beneficiary as well because they might also pass outside of a will. If you don’t name a beneficiary, or if the beneficiary is deceased or unable to serve, a court could be left to decide the fate of your funds. And frankly, a judge who is unaware of your situation, beliefs, or intent is unlikely to make the same decision you would have made.
Note: Named beneficiaries should be over the age of 21 and mentally competent. If they aren’t, a court may end up getting involved in the matter.
Letter of Intent
A letter of intent is simply a document left to your executor or a beneficiary. The purpose is to define what you want to be done with a particular asset after your death or incapacitation. Some letters of intent also provide funeral details or other special requests. While such a document may not be valid in the eyes of the law, it helps inform a probate judge of your intentions and may help in the distribution of your assets if the will is deemed invalid for some reason.
Healthcare Power of Attorney
A healthcare power of attorney (HCPA) designates another individual (typically a spouse or family member) to make important healthcare decisions on your behalf in the event of incapacity. If you are considering executing such a document, you should pick someone you trust, who shares your views, and who would likely recommend a course of action you would agree with. After all, this person could literally have your life in their hands.
Finally, a backup agent should also be identified, in case your initial pick is unavailable or unable to act at the time needed.
Guardianship Designations
While many wills or trusts incorporate this clause, some don’t. If you have minor children or are considering having kids, picking a guardian is incredibly important and sometimes overlooked. Make sure the individual or couple you choose shares your views, is financially sound, and is genuinely willing to raise children. As with all designations, a backup or contingent guardian should be named as well. Absent these designations; a court could rule that your children live with a family member you wouldn’t have selected. And in extreme cases, the court could mandate that your children become wards of the state.
Conclusion
There is more to estate planning than deciding how to divvy up your assets when you die. It’s also about making certain your family members and other beneficiaries are provided for and have access to your assets upon your temporary or permanent incapacity. A will is a great place to start, but it’s only the beginning.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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