_location_geocentric domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /var/www/parklinlaw_c_usr/data/www/parklinlaw.com/wp-includes/functions.php on line 6114Estate planning is the process through which a person makes plans for the transfer of their estate after their death. The estate is what the person owns ranging from houses, land, vehicles, investment, retirement and personal effects like cash, jewelry and clothes among others. The process also comes with a number of goals and objectives and people need to ensure that they have set them out in order to meet them. Some of these objectives assigning the children a guardian, making sure that the properties are transferred to the beneficiaries and to pay the least amount of taxes on it.
Some of the terms that a client needs to keep in mind while thinking of this process includes the will, which states the person receiving the property and at what amounts, the trust which establishes the person or the organization that will take care of their properties on behalf of their beneficiary and the power of attorney, which gives the person or a company the legal power to handle the affairs in case they are not able to do so. It is also important for the clients to start the process when they are legally competent. This means that they should be at least 18 years old and should be of sound mind. Being in good health and free from stress is also required when the clients want to carry out estate planning.
When thinking of carrying out this process, it is important that the clients select a competent and reputable estate planning attorney. Since the process is more than just writing up a will, the clients need to ensure that they have ensured that the attorney they have selected is able to handle all other activities that are required. In order to do this, it is recommended that they compare the services of different lawyers before making their pick. While doing this, they will learn of the lawyers’ educational background and their experience. By selecting one who is experienced, the clients will have an easier time with the process because the lawyers will have the information they require.
While at the law firm, it is important for the clients to meet the person who will be working on their case so that they can determine if they are comfortable with them. Finding a lawyer that they can easily relate to is very important because the planning process requires the clients to provide all types of information about their property. If they are not comfortable with the lawyers, it is recommended that they avoid them and select a different one. On top of it all, it is important for them to ensure that the lawyer they have selected is trustworthy.
If you’re thinking about setting up an estate plan, you probably want to accomplish one or more of the following goals:
Even with the best of intentions, however, there are many estate planning traps that can sabotage your goals. Below are some common estate planning mistakes that can undermine your estate plan, and advice on how to avoid them. Remember, your estate plan will speak for you when you cannot, so it’s imperative to get it right. Always seek the guidance of a certified elder law/estate planning attorney.
MISTAKE 1: Permitting the provisions of your will to conflict with the beneficiary designations of your assets.
Why it’s a mistake: Your beneficiary designations trump your will. For example, if your will says that your two children will share everything equally, but you name only one child as the beneficiary of your largest asset, that child will inherit the asset in its entirety. That’s not much of a foundation for family harmony!
How to avoid it: Review all your beneficiary designations, and make sure they are in synch with your will.
MISTAKE 2: Believing that your will provides protection if you become disabled.
Why it’s a mistake: A will is a death instrument only. Basically, it’s a blueprint that describes who will get what asset after you’re gone. A will has absolutely no impact on what happens if you become incapacitated. If you haven’t made legal provisions for incapacity and you become incapable of making your own personal, financial and medical decisions, you could find yourself the subject of a costly court guardianship.
How to avoid it: Create a health care surrogate (health care power of attorney) to ensure that if you become incapacitated, someone you know and trust can make your medical decisions. Create a Durable Power of Attorney appointing someone to make your financial decisions, or alternatively, create and fund a revocable living trust.
MISTAKE 3: Making one or more children co-owners of your assets in order to avoid probate of the asset.
Why it’s a mistake: Even if you have implicit faith in your child’s integrity, if he/she runs into financial difficulties, your child’s creditors could go after your assets. Co-ownership also means that after you die, that asset will belong to your child, which may be in conflict with your will or trust (see Mistake #1).
How to avoid it: You may make your child a beneficiary of your asset, or allow the asset to pass to your child through your will or trust.
MISTAKE 4: Creating a living trust (aka revocable trust) but failing to transfer your assets into it.
Why it’s a mistake: A revocable trust can offer many benefits – for example, probate avoidance – but it remains just a piece of paper until it is “funded.” Funding means that the trust actually owns your assets. (Note: Certain assets should not go into your living trust while you’re alive, but may pass into your trust when you pass away. Examples of such assets are your 401k, 403b or IRA.)
How to avoid it: Consult your elder law attorney about what assets belong in your trust. Then contact your financial institutions to retitle the appropriate assets into the name of your revocable trust.
MISTAKE 5: Leaving specific assets to specific people.
Why it’s a mistake: Other than certain pieces of personal property – jewelry, for example – it’s generally a bad idea to leave certain assets to certain people. The reason: the value of the asset may fluctuate, skewing the value of what gets passed down to your heirs. By way of example, let’s save you want your son and daughter to share your estate equally. You leave your $200,000 house to your son and your brokerage account of $200,000 to your daughter. However, over time, if the value of one or the other asset changes, your children could end up getting significantly unequal shares of your estate.
How to avoid it: Generally speaking, it’s better to leave your heirs percentages of assets rather than specific assets.
MISTAKE 6: Assuming that your child with the most business experience is the best candidate to serve as your Personal Representative, Trustee, or Agent.
Why it’s a mistake: Most people appoint one or more of their adult children as fiduciaries, but overestimate the importance of business acumen. In reality, of equal or greater importance is general trustworthiness, and having the time to do the job properly. For example, the fact that your daughter is an accomplished CPA is fine — but if she has a demanding job and young children, and lives at a great distance, serving as your Personal Representative may prove too much of a burden for her. Her selection could also stoke family tension if she cannot attend to her duties on a timely basis, thus delaying the distribution of assets to beneficiaries.
How to avoid it: Talk to whomever you are thinking about appointing as a fiduciary to determine if they are willing and able to serve. In some cases, it may be better to appoint a third-party fiduciary like a bank or brokerage trust department. A third-party fiduciary may also be a good idea if you want to avoid the discord that can arise when a parent designates one child as a fiduciary, thereby giving that one child “the power of the purse” over his/her siblings.
MISTAKE 7: Assuming that Medicare will pick up the tab for a nursing home if you ever need long-term care.
Why it’s a mistake: Contrary to common belief, Medicare does not pay for long-term care, but only for skilled nursing care on a limited basis. Given greater longevity, more and more of us will require long-term care at some point in our lives and the astronomical expense can wipe out the average family in no time. Thus, planning for this eventuality should a cornerstone of most people’s estate plans.
How to avoid it: Long-term care insurance can be a good investment. However, if you cannot afford it or if you cannot qualify for health reasons, assets may often be preserved with strategies that incorporate Medicaid planning and/or Veterans benefits planning into your estate plan. Consult a certified elder law attorney for advice.
MISTAKE 8: Thinking that your will allows your estate to avoid probate.
Why it’s a mistake: When you die, any assets passing under your will must go through the probate court. The probate court will then direct the distribution of your assets to the beneficiaries named in your will, ensure creditors are paid, etc.
How to avoid it: If one of your estate planning goals is to keep your estate out of probate, a will is not the way to go. Instead, consider a revocable trust (aka living trust).
MISTAKE 9: Thinking that if your estate is not taxable, it avoids probate.
Why it’s a mistake: It’s a common misconception that only taxable must go through probate. The reality is that the need for probate and an estate’s tax status are unrelated. A modest estate not subject to estate tax may go through probate if the decedent relied on a will to transfer assets. A large, taxable estate may not be probated if the decedent utilized effective probate-avoidance strategies such as a living trust (aka revocable trust).
How to avoid it: Regardless of the size of your estate, a will is not the estate planning vehicle of choice for anyone intent on making sure his family avoids dealing with the probate court. Other estate planning strategies should be investigated with the advice of a certified elder law/estate planning attorney.
MISTAKE 10: Relying on a do-it-yourself websites or books to draft your documents, in order to save money.
Why it’s a mistake: The do-it-yourself sites and books disclaim any liability; in fact, they advise you to check with an attorney! Remember, if you get your estate plan wrong, the errors will probably not be discovered until after you’re gone. And then, there are no do-overs!.
How to avoid it: See an experienced and certified elder law attorney in the state in which you reside. The Florida Bar certifies lawyers in elder law, as do many other states. Also, the National Elder Law Foundation certifies elder law attorneys nationally – it is the only body authorized by the American Bar Association to confer this credential.
When a client prepares a will, they assume that this document will allow them to pass all their property and cash assets to their beneficiaries without consequence. That is entirely incorrect. In fact, preparing just a will is a direct invitation to go to Probate Court. In Probate Court, a judge has to decide if the will is valid, if the beneficiaries are still around in order to inherit, and if there is a will contest among the remaining family members, before the inheritance can be made. The Probate Process is our judiciary’s attempt to assist individuals who have not taken the time to properly plan, in determining how assets are to be distributed, and to whom. Probate rules are set out in Utah Probate Code.
The only thing that a properly prepared will succeeds in doing is avoiding the Utah Statutory Intestate scheme for distribution of assets from going into effect. That provision is the legislature’s attempt to determine a person’s natural beneficiaries when those individuals were not identified in a written will or other document. This might mean that persons that you would otherwise not include in your list become a beneficiary of your estate and are entitled to inherit your money and other assets.
Probate costs between 10 and 30% of the gross estate. Yes, this is not a typo. All calculated fees are based on a person’s gross estate, and not a net estate. There are many fees that are assessed in the probate process, such as court filing fees, publication fees, service of process fees, probate examiner fees, realtor fees, and of course fees paid to the Executor and the Attorney for completing this process. These statutory fees provides the guidelines for how much an attorney and Executor are entitled to in compensation for completing the probate process. So, for a typical estate worth $500,000 gross, the cost for the services of the Executor and the Attorney for the Executor would be approximately $26,000.00. Since a gross estate includes a variety of assets, including real and personal property, cash and savings accounts, insurance policies without named beneficiaries, and much more, most people’s gross estate far exceeds the amount in this example, so the probate fees would be much higher. In addition, probate is often a long drawn out process, and even uncomplicated estates often take over two years to completely run its course through the courts.
A Living Trust is considered a legal entity, recognized by the Legislature and the Courts as having the capacity to transfer assets to beneficiaries without the need for the Probate process. A properly created and fully funded trust, in addition to a pour-over will, does the task of not only avoiding probate, but possibly eliminating or reducing taxes. A Living Trust or Revocable Trust is a contract between you, the settlor, and the successor trustee to distribute funded assets to your intended beneficiaries. A trust can own or have title to all assets in your estate, including real property, personal property, cash, savings and retirement accounts, life insurance policies and more. Using an Estate Planning attorney to properly draft, and then fund a trust with all your assets, effectively avoids the lengthy probate process. In addition, a properly drafted trust, utilizing all available tax exemptions, effectively reduces or eliminates Estate Taxes, which can be as much as 45% of the non-exempt amount.
Have you ever wondered what would happen to your house and financial obligations if you were not able to pay those payments, write those checks or make calls to handle your finances? What happens if you have a stroke, or are involved in an automobile accident which renders you unable to communicate, temporarily, with family members about what to do with those accounts or your assets? The reality is that your medical care could cease and you could lose your house and property while you were recovering from an illness. Without giving a trusted individual the Limited Power of Attorney granted in a Durable Power of Attorney to manage those financial responsibilities during your incapacity, all could be lost.
If you have minor children, you probably have had the thought or even the conversation with family members about what should happen to minor children if something happens to the custodial parent(s). But is the family entirely in agreement? Does everyone know what role each of them plays in your child’s life? Do they know where to get access to funds for their health care, education, maintenance and support should something happen to you? There is a very real possibility that if you and your spouse have not taken the time to write out your wishes adequately, that a family battle could ensue over guardianship of minor children, which might mean that the children have to go to foster care while the battle is being fought in court.
