Planning for how your heirs and loved ones will inherit what you have built over a lifetime is a weighty and important topic. If you die without a Will, most states in America have laws which explain how to distribute your assets. The law in your state considers you to have died “in testate” which is a fancy way of saying you didn’t have a Will. Each states’ laws differ on how a deceased’s assets are distributed “in testate”, but many state laws are very similar. It is typical of many state laws that estate assets are distributed in a successive fashion to the deceased person’s heirs. Determining who is an heir of a person who died without a Will usually goes something like this:
• Children
• Grandchildren
• nieces & nephews
• the decedent’s siblings
• the decedent’s parents, etc.

That is not a rule, but an example of how your estate will be distributed without proper planning.
Having a Will does not necessarily avoid probate. Probate is also not necessarily bad. The probate process was created so that the Court in the deceased’s state, and county-of-death, can effectively administer the deceased’s assets under the dictates of the Will. This can solve a lot of headaches for the personal representative or executor – especially when there is any kind of fighting among the deceased children and/or heirs. Sadly, fighting over the deceased’s assets is more common than people often think. Having a Court look over this process can be a life-saver for the personal representative.

A deceased person often has assets in many different forms. Some of these assets will be found to be “probate assets” and some of them will be considered “non-probate assets” under the law of their state. It is important to differentiate between what is a “probate asset” and what is a “non-probate asset”. Probate assets are usually those assets which are owned by the deceased person in their name only. What does this mean? It means those assets which the Court can transfer, under the Will, in the probate process. Still confused? Here is an example: the decedent’s home (or “real property”) is a transferable asset which is subject to probate. Thus, it is a “probate asset”.

What is a “non-probate asset”? A non-probate asset is any asset held by the deceased person hat can be transferred without going through the probate process. Non-probate assets can include: real estate held as a joint tenant with rights of survivorship, joint bank accounts, other joint accounts, pay-on-death (POD) accounts, a transfer-on-death (TOD) account, or property held within a Trust which was created by the deceased person prior to death. If a Will or Trust is created, the deceased person will have appointed either a personal representative (under the Will) or a trustee (under the Trust) to administer the deceased’s assets upon his or her death. The initial duty of the personal representative or trustee is to figure out how to lawfully deal with the assets. This is where an attorney comes into the picture. Hiring a good attorney is of the utmost importance in properly collecting and distributing a deceased person’s assets upon death.

Next, the attorney and the personal representative of the deceased’s person’s estate must determine what kind of assets the deceased person had and whether those assets are “probate assets” or “non-probate assets”. As was discussed above, there are specific kinds of assets which must be discovered and sorted. It is often the personal representative’s job to discover those assets, hunt them down, and report their existence to the attorney for review. The total amount of probate assets will provide the attorney and personal representative with a means to determine what approach must be taken to transfer the deceased person’s property to his or her heirs. Furthermore, a second reason that this step must be taken is to determine whether the deceased person’s estate will be required to file a federal estate tax return and the tax return of the deceased’s particular state.

That is the initial process for discovering assets and how to work with an attorney to administer the deceased person’s estate. Again, hiring the right estate planning lawyer to properly administer the deceased person’s estate can be of the utmost importance and a life savor to the appointed personal representative or trustee.

What Is The Role Of An Executor In Estate Planning?

An executor, also known as a personal representative, administers an estate after someone dies. That person follows instructions in the will (and state laws) to pay bills, file taxes, sell property, distribute assets, and more. A standard estate plan can cost anywhere from a few hundred dollars to several thousand dollars. Online services are the least-expensive option, but they’re not customized to your needs. You might save money if your employer offers a legal benefit program that includes estate planning. Consult with an attorney to review the most cost-effective options for your situation.

What Documents Do You Need For Estate Planning?

Some of the most common documents include a last will and testament, power of attorney, living will, and health care proxy. Some people also need one or more trusts. Insurance policies could also have a place in your estate plan. The specific documents required depend on your circumstances.

Will Estate Planning

A will is a written document which gives instructions how and to whom they will maker (testator) wants to bequeath his/her property after death. An oral will can be made only by members of military and merchant navy in active service when they don’t have time to execute a written will due to exceptional conditions like war. Any person above 18 with sound mental health can make a will. It must be dated and signed by the testator and certain number of witnesses, depending on the laws of the state. A hand written will, called ‘holographic will’, valid in 25 states, does not require witnesses. Though preparing a basic will is very simple many people neglect to prepare one thinking that the end is far away. Should a catastrophe strike a court will decide how the property will be distributed. The right time to prepare a will is when you are in full control of all your mental faculties. Though wills made on the death-bed are perfectly valid, there’s a greater possibility of it being contested by a disgruntled beneficiary on the grounds of your mental inconsistency.

You can modify the will through a codicil that adds/removes certain provisions from the original will. You can also replace the original will by preparing and executing a new will. Change in your marital status, birth of a child, death of a beneficiary, substantial alterations to property, change of law or your desire to change the beneficiaries may require altering of will.

It is not necessary to notarize the will or to file it in court. Just keeping the document in a secure place and making it accessible to your executor will do. However, signing of an affidavit before a notary public by you and your witnesses will simplify the court procedure should the validity of the will be challenged. If the value of your property is below the estate tax exemption limits ($1.5m), a basic will is all you need. It should give details of the persons/organizations to whom/which you want to bequeath your property; guardian(s) to manage the property in case you have minor children, and the executor of will. Preparing a basic will does not require much skill and can be done with some help. However, if you want to make elaborate arrangements for disposing of property, or if the property involved is considerable (and there is a possibility of the will being contested), you better seek professional help so that your beneficiaries won’t face problems after you are gone.

Estate Planning in Light of Divorce

Married individuals who are considering a divorce should make sure they re-plan their estate. Most couples have each other as beneficiaries and designate each other as powers of attorney while they are married, but in light of a divorce, both individuals must revisit these issues.

The following list provides a few of the details you should consider in terms of your estate:
• Will: An individual’s will can be changed at his or her own individual discretion, and does not require anyone’s approval. If you have deemed your marriage to be over, it is important for you to change the beneficiaries on your will as soon as possible, without waiting for the divorce to be finalized. Otherwise, the spouse you are divorcing might get your assets to the detriment of your children, parents, or any other person to whom you might want to leave your property.
• Power of Attorney: Spouses generally designate each other as their powers of attorney while they are married. This means that your spouse can make decisions about your house, car, investments, finances, and many other decisions if you are unable to do so yourself. This is another issue that needs to be revisited in the estate.
• Health Decisions: Health proxies make decisions about your health if you are unable to do so. For example, should or should you not have surgery, should you receive medicine, etc. These decisions are better left to someone else if you are about to go through, or are going through, a divorce.
A number of other pertinent issues need to be modified or thought of for your will if you are going through a divorce. If you or someone you know is planning on a divorce, it is in your interest to seek the help of an experienced attorney.

Death and Taxes: Will Your Estate Be Taxed At Death?

As the saying goes, “nothing is certain but death and taxes.” In the context of estate planning, this reality drives the estate planner’s desire to minimize taxes upon death as much as possible. In fact, the world of estate planning is consumed with the minimization of taxes in all of its forms. Attorneys and advisers have clients jump through legal and financial hoops in order to avoid or delay the payment of taxes, whether estate, capital gains, gift, income, etc. It is imperative that clients know if their assets will be taxed upon their death so that they can properly seek advice from their estate planning professional. This article provides a general overview of estate taxes.

What Is Taxable?

Very generally, any property that a person owns at his passing is taxable including bank account, cash, securities, real estate, cars, etc. are includable in his gross estate. Contrary to popular belief, the death benefit of life insurance policies a person owns are taxable unless properly structured. Joint property, including joint bank accounts, is 100% includable in the estate of the first joint property owner to die except to the extent that the other joint owner can show that he contributed to the property. Business, corporate, and LLC interests are also includable in the gross estate as are general powers of appointment.

Deductions From The Gross Estate:
To determine the taxable estate, we need to reduce the gross estate by the applicable deductions. The IRS allows the following deductions from the gross estate which reduce the gross estate:
1. Marital Deduction: One of the primary deductions for married decedents is the Marital Deduction. Both jurisdictions allow for an unlimited marital deduction which means that assets passing outright to a citizen spouse will not be taxed at the death of the first spouse. There are often very good financial, legal, and tax reasons not to leave everything to the surviving spouse as will be discussed in the upcoming article dealing with credit shelter/bypass trusts
2. Charitable Deduction: If the decedent leaves property to a qualifying charity, it is deductible from the gross estate.
3. Mortgages and Debt associated with the properties.
4. Administration expenses of the estate including executor/administrator, accountant’s and attorney’s fees.
5. Losses during estate administration.

Both Wood Cross Utah and the federal government impose separate estate taxes on decedents who pass away with a certain amount assets. The government figures that death should be a taxable event because almost everything else you did in life was. Wood Cross Utah and the federal government tax estates at different levels and at different rates. Uncle Sam does, however, give taxpayers a deduction for the amount they paid in state taxes.

Federal Estate Taxation:
The federal government currently taxes estates valued at over $5.12 million at a rate of 35% in 2012. If Congress does not act, the federal estate tax is scheduled to be 55% on gross estates of over $1 million in 2013 and beyond.

Wood Cross Utah Estate Taxation:
Wood Cross Utah taxes the estates of Wood Cross Utah residents if they are over $1,000,000. Non residents pay the tax only if their estate includes real property or tangible personal property located in Wood Cross Utah and worth over $1 million. Wood Cross Utah estate tax rates range from 5.6% to 16% for estates over $10 million and are expected to remain the same for the foreseeable future. Wood Cross Utah requires estates with a gross estate of over $1,000,000 to file form along with a federal estate tax return, even though one may not be required by the IRS (because the estate is under the federal filing threshold). The tax thresholds mentioned above assume that the decedent did not make taxable gifts during his lifetime. A taxable gift is a gift made to a person above the annual gift tax exclusion amount, currently at $13,000. If taxable gifts were made, they reduce estate tax exemption amount to the extent that gift tax was not paid on them. It is possible to avoid the sting of the estate tax by fully utilizing each spouse’s estate tax exemption, deferring taxes until the death of the second spouse and completely escaping taxes by gifting properly during life and/or after death. To speak to an estate planning attorney for an evaluation of your financial situation and to see which options can minimize or eliminate your potential estate tax liability.

How to Choose an Estate Attorney

Planning your estate is no small task, and making sure everything is done correctly can be critical to the financial wellbeing of your heirs and loved ones. Estate planning is more complicated than simply drafting a will.

It also works to minimize taxes and other fees and sets up contingency plans for your health care should you become incapacitated. Because estate planning is literally a matter of life and death, you should only trust a qualified attorney that specializes in this field.

What Will the Attorney Do?

It’s tempting to save time and money by drafting your own will or investing in a will kit. It is impossible, however, for any of these simplified methods to accomplish all of your wishes, because every situation is unique. Also, there is not software in the world that can provide qualified advice that stems from experience. A qualified estate planning attorney will be able to help you navigate through laws governing property rights, taxes, wills, probate and trusts.

What to Look For

Only an estate planning attorney who currently practices in the related fields will be able to provide you with sound legal advice concerning your estate plan. Look for an estate planning attorney that is a member in good standing of the national bar association. Also, confirm that the estate planning attorney you are considering is up to date with continuing education requirements. Also, make sure every attorney you screen has malpractice or liability insurance, in case they make a mistake. There are several things to look for in an estate planning attorney. Make sure to interview each prospect extensively to make sure you feel good about your final decision. Some of the questions to ask are:
• How long have you practiced in the estate planning field?
• How would you rate your level of experience and qualifications in estate planning law?
• Are you a member of any bar associations or estate planning organizations?
• Are you current with the bar’s continuing education requirements?
• Does your firm back you up with liability or malpractice insurance?
• How do you deal with complicated family conflicts?
• Can you give me an example of a very simple case you’ve had versus a very complicated one?

Beyond the myriad questions you will want to ask, make sure you have your feelers on and really get a sense of the person. Does the attorney make you feel safe and taken care of? Does he or she come across as someone that will be sympathetic toward you loved ones in their time of mourning? Likewise, does he or she come across as a fast-talking money-hungry type? Trust your instincts. Aside from trusting your instincts, make sure you also do your homework. Ask the attorney for references and actually call the references.

Ask for Referrals

You can certainly look in the yellow pages or online for a qualified estate planning attorney in your area. However, the vetting process will be much longer and more complicated if you are starting from scratch. On the other hand, if you contact an attorney whom comes highly recommended by a trusted friend or family member, there is a built-in degree of confidence that no money can buy. Ask around – at work, church, among friends, or even at your children’s school. Someone you know is bound to have a good (or even a bad) story about an estate planning attorney. Even if you don’t come across a recommendation of a specific attorney that can help you, you might be able to avoid working with a bad one by heeding warnings from friends.

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!