We all have a rendezvous with Death, but few of us like to think about it. That may be why almost half of American adults do not have a last will and testament. Estate planning is one of the most awkward and uncomfortable areas of law and that’s really saying something! Because it’s distressing and disagreeable, most folks put it off until the very last minute while others don’t get to it at all. This is always a mistake.
No Will, No Way
When a person passes away without a will (intestate), the distribution of assets must be settled in probate court. As a general rule, spouses and blood relatives will receive the lion’s share of the estate, while friends and loved ones are not entitled to anything under state law. To ensure that your assets are allocated according to your wishes, you must contact estate planning lawyers.
What Do They Do?
First and most importantly, they draw up legally-binding wills that cannot be disputed or contested in court. Most people do not realize how important this simple document is to those they leave behind. Even tight-knit families can encounter unforeseen disputes when the estate of a loved one must be divided. Add grief, resentment, and anger to the mix, and you have a recipe for disaster. It’s no surprise that fighting over inheritance is a story as old as the pyramids.
Who Needs Them?
You might be young and as fit as a fiddle, but according to the experts, anyone who has substantial assets should have a last will and testament. Yes, the process is mostly about assets, but is also involves medical directives in the event that you should become incapacitated. It may be unlikely, but the tragic truth is that people of all ages sustain catastrophic injuries every day in America. And without specific medical directives in place, your family may be unable to determine exactly what you want done in any given circumstance. For example, they may not know whether you would want to be left on a life-support system for a prolonged period of time. This ambiguity can and has lead to protracted legal battles in the past.
At the end of the day, life is unpredictable. Most of think we have all the time in the world, but that is seldom the case. Estate planning and administration may initially seem morbid and uncomfortable, but it is also thoughtful and considerate. After all, the worst thing we could ever do to our loved ones is to leave them with an imbroglio if we should pass before our time.
It Takes About An Hour
Why do people fear dentists? Because nobody likes people poking at their teeth and gums! Even if it is necessary, some folks avoid the dentist at all costs. The same could be said about estate lawyers. Because no one wants to think about his or her own mortality, we often delay dealing with the inevitable. The good news is that most lawyers can draw up a last will and testament in short order. It might take a bit longer than a dental cleaning, but it shouldn’t take up your entire afternoon.
Why Do I Need a Will If I Have a Trust?
If you’ve spent any time at all talking about estate planning, you’ve probably wondered why you would need a Will if you have a Trust. That is a common question. Before we explore the answer, let’s review some basic differences between the two.
Most people are familiar with a Will (or “Last Will and Testament” to be fully formal), but many do not really know what a “Trust” is. Think of a Trust as being a special box into which you place your assets (bank accounts, stocks, your home, rental properties, etc.) The person you appoint to take care of the box is called the “Trustee”. This person is not the “Executor”. An Executor is appointed in a Will, approved by a court, and only has authority after you die. A Trustee generally does not need court approval, and can handle things during your lifetime and after your death. This is why it is sometimes called a “living” Trust.
There are many differences between a Will and a Trust, but the most basic differences are:
• A Will only takes effect when you die, but a Trust can be operative both during your lifetime and after your death.
• Property given to someone under a Will must be distributed to them outright, with no strings attached. Property given under a Trust can be given outright, or it can remain in Trust and be supervised by the Trustee. It is possible to setup a Trust through a Will, but the result is still a Trust.
• There is more potential to reduce your estate taxes if you use a Trust rather than a Will.
• A Trust allows you to better protect your heirs from creditors, divorce, and other relatives (or step-relatives).
• Property given under a Will must go through the Probate Court. That process is very expensive in Perry Utah, it is time consuming, and it is very public. A Trust does not have to go through the Probate Court, can remain a private matter, the expenses of probate can be avoided, and the decedent’s final affairs can be handled quickly. For most people, having a Trust is well worth the expense of setting one up — a cost which is, by the way, generally far less expensive than a probate. It is customary (though not required) to name the same person as Trustee and as Executor, so that control of both Trust and non-Trust assets are centralized in one person.
So, why do you need both? Having a Will even if you have a Trust is like having a safety net. It is very common for people to accidentally leave something out of their Trust. The family home is a good example. People buy a new home, or refinance the existing one, and forget to title the property back to their Trust when they are finished. When the person dies, the house is not part of the Trust, so “who gets it” is decided by the Will. Ideally, the Will states that all assets pass to the Trust. This way, final distribution of assets still follows the plan laid out in the Trust. Without a Will, the State will decide who gets any assets that are not in the Trust. That may or may not be the people you wanted to have that property. A good estate plan will always include a Will, even if it has a Trust. Regardless whether you decide to have one or both, you should always get help from a lawyer. In the long run, do it yourself estate planning usually results in more expense and unintended consequences.
Probate Lawyers Assist With Estate Planning
An essential part of estate planning includes writing a Last Will and Testament in which an estate administrator is designated to handle the execution of the terms of the Will. A well written Will saves time and money during the probate process by expediting the transfer of assets and helps to prevent costly and time-consuming family disputes. Additionally, estate planning should include a Power of Attorney to designate a trusted family member or friend to make decisions in the case of incapacitation. There are available legal strategies for avoiding probate to protect inheritance property and other assets. These may include the establishment of trusts, gifting in allowable amounts, and joint ownerships that automatically transfer properties to the beneficiaries. Consult with an attorney to discuss your options and take the necessary measures to protect your assets and your loved ones when that inevitable day comes.
Estate planning can help ensure that your assets are secure after death. Living clients who become incapacitated due to illness or injury can also benefit from estate planning. The process prevents familial legal disputes, lowers taxes, ensures the payment of assets to any beneficiaries, and ensures the collection of money. A lawyer can protect assets by scheduling certain plans to be set in motion at an appointed time. These plans include a trust, a pour-over will, and a power of attorney.
A trust arranges for a third party, the trustee, to control assets on behalf of a beneficiary. A beneficiary inherits assets whether or not an asset is meant to go to a beneficiary. Another commonly used term is “heir,” which designates relatives who inherit in the absence of a will. The client chooses the third party for the beneficiary.
A Pour-Over Will
A pour-over will is often used in conjunction with a trust and ensures that all property that passes through the will upon death transfers to a trust, i.e. pours over into that trust. From there, the property is divided and distributed to the beneficiary as designated by the client.
Power of Attorney
A power of attorney is a legal document that designates a third party to step in to make decisions for you, should you become mentally incapacitated. This third party is called an agent. A power of attorney is vital because, without it, your family members may have to go to court to obtain control of your estate.
Agents Appointed Time
Each state follows its own laws about when the appointed third party begins making decisions as a legal agent. Perry, Utah law stipulates that a person can draft control that is enacted as soon as the agreement is signed or wait until incapacitation for it to go into effect. If the client arranges for the power to begin upon signing, the client must clarify that the agreement is durable. Otherwise, the agreement automatically ceases if the person suffers incapacitation. If a client doesn’t want the power to immediately transfer, a springing durable power of attorney must be enacted. This makes clear that the power remains untransferable until a doctor certifies incapacitation.
Duties of an Agent
The duties of the agent include paying ongoing fees or outstanding bills, depositing money into bank accounts, monitoring investments, collecting benefits from the government or insurance company, and handling other estate planning matters. The agent will know what to do because he or she will have a clear lawyer-assisted plan to follow that prevents having to guess about the timing of these important financial matters.
Estate Planning Tools: Durable Power Of Attorney – Factors To Consider
If something happens while you are alive, that makes it impossible for you to handle your financial affairs, sign legal documents or communicate your wishes to others; you could have trouble in many ways. Without a properly executed Power of Attorney, your family may need to get a court order just to handle your affairs. These can cost plenty and waste months of time. Even though a power of attorney is a relatively simple document and is readily available from many sources, I am still amazed at how many families and individuals do not have one in force. Follow these simple guidelines and make sure that you are protected should anything ever happen that would cause you to need one.
Factors To Consider:
• Your Agents: One of the most important decisions with a power of attorney is your selection of agents. Will you use a single agent or appoint co-agents? Who will be your successor agent(s) if someone is unable or unwilling to fulfill their duties? These are the questions you need to answer before you are ready. Your agent(s) should be organized, good with numbers and possess great common sense.
• Access Medical Records: Will you allow your agents to have access to your medical records? They may need this information to keep track of, or to dispute medical bills. But if you want or do not want them to have access to this information, you will need to specify inside your power of attorney.
• General or Specific Powers: Will your power of attorney provide your agent with broad general powers or very specific powers? You can decide on either, but the more specific you get, the more limited the powers your agent will be allowed. Most people will choose to provide a general power that will include handling most financial, business and personal matters.
• Beneficiary Changes: You can empower your agents with the ability to change your beneficiaries if you would like, but this can be a risky proposition. In most instances, you will not allow for this provision. You can also provide for the power to refuse potential inheritances. I think this can be helpful in situations where, if someone passes and is leaving you an inheritance, but you refuse it (or are deceased), it would go directly to your children instead.
• Effective Dates: When will your power of attorney take effect? When will it terminate? You can have it take effect immediately upon execution, you can have it take effect upon the certification of some medical condition or you can specify a certain time period. You might use this if you were going to be out of the country for 3 months or in a rehabilitation program for certain length of time. All powers of attorney terminate immediately upon the death of the individual, but you can set other dates or events as previously outlined.
• Hire Professionals: Will your agent have the power to hire professionals such as accountants, financial advisers, lawyers, etc? If you want them to be able to handle these on your behalf, you have to specifically allow them by including this power within your document. If not, you may want to specify who you are already working with and require their services if needed.
• Receive Compensation: Will your agent be allowed to receive reasonable compensation for time and efforts spent acting as your agent? Will they also be allowed to receive reimbursement for any expenses that they incur while acting on your behalf? In most cases you should allow both of these. Taking care of someone’s affairs can be time-consuming and there should be reasonable remuneration for these services. While you can specify either way, your agents may be unwilling to participate without it and this could cause bigger problem down the road.
Having a power of attorney drafted is a fairly simple and inexpensive process. You can hire an attorney, use online legal services or purchase a legal software package to assist you with the preparation. It is very important to follow the execution and filing recommendations for your state and county. Having proper witnesses and notarization of all signatures is a great safeguard for any legal documents, so make sure to get them done right.
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