Why even think about estate planning? Getting your affairs in order for your estate can create future financial security for your family, preserve your hard-earned assets for future generations, help you organize your affairs before you become incapacitated and decrease anxiety for future of your loved ones, knowing they will be well taken care of. This article will discuss several benefits of estate planning.
Be empowered to be the one to decide the ones to receive your property upon your death and the conditions under which they receive it, rather than your property descending to your heirs according the Utah statutory scheme at your death. Given the rise in divorced, remarried, single parent and other nontraditional family lifestyles in our society, this becomes especially important. While no one has control over when and how they will depart this world, people can exert control over how their property is distributed upon their deaths. A major consideration is that by naming persons to receive your assets upon your death, you can also potentially avoid family feuds over who gets what. So many of our clients believe that their descendants would never become involved in contested legal proceedings over their estate, but unfortunately, it happens often.
Estate planning allows you the opportunity to organize your estate in advance of disability that comes with accident, illness or advanced age. Many times we meet with family members who lament the fact that mom or dad didn’t “take care of things” before they lost the ability to do so. Conditions which occur over time including forms of Alzheimer’s and dementia, slowly rob people of their abilities to manage their affairs, and mental deterioration may not be apparent in the early stages. By the time a person realizes or acknowledges that he or she is suffering from such a disease, it may already be too late for them to competently design an estate plan or appoint representatives to act on their behalf. Be sure to effectuate your estate plan while you are healthy enough to make decisions which are effective under the law so you can develop an estate plan and appoint agents with the assistance of your attorney. This process involves identifying your assets and deciding the natural objects of the disposition of your property after death. Through the course of this process, you have the opportunity to gather all important documents evidencing your assets and obligations and organize them for the benefit of your heirs and beneficiaries. Prior organization benefits your heirs when you are gone. Even if you think you don’t have much in the way of assets, it is still a benefit to you and your loved ones to organize your affairs before advanced age, illness or an accident makes doing so not practical to accomplish.
An heir is someone entitled to receive a decedent’s property under a state’s default laws when the decedent dies without a will. Heirs are not determined by the wishes of the deceased person. There is no investigation into whom the decedent likes or was most closely associated with. The list of people who will inherit based on the state’s default plan varies depending on the state where you live. Utah recognizes spouses, children, and grandchildren as heirs. Utah will also allow other relatives, such as siblings, nieces, and nephews to be heirs, but whether those individuals are considered heirs is fact specific. For example, a sibling is an heir if a person dies having no descendants and one or both of the decedent’s parents are deceased as well.
However, even if you have signed a will, the default heirs are still critical to the process. They have no rights under the will, but they have certain rights under the law. One such right is the right to be notified if a will is to be probated, because heirs are considered interested parties in the judicial probate process. Heirs also have the right to challenge a will’s validity. There are a few tools that one can use to discourage individuals from challenging a will, but the right to challenge the will still exists. As a result, it is critical that you understand who your state considers to be your heirs.
A descendant is a member of an individual’s direct family line by blood or adoption as a child, grandchild, great-grandchild, and so forth. Another term that is used interchangeably is “issue.” Someone’s issue is a descendant. As discussed above, children and grandchildren are heirs, so a descendant can be an heir and receive money and property by default under Illinois law. To disinherit a descendant, their intent must be properly documented. Because descendants are part of the direct bloodline, the law does not allow them to easily be disinherited.
“Beneficiary” is often used interchangeably with “heir,” but its meaning is very different. A beneficiary is someone who is part of your stated plan because they are someone you have designated to receive your money or property through written documents such as wills, trusts, retirement account, or insurance policy beneficiary designation forms. Anyone you select can be your beneficiary, but you must have a valid legal document in place to communicate your intent.
One common question that arises during discussions about beneficiaries is whether pets can be beneficiaries to ensure that they are cared for when their owner dies. Currently, the law does not allow someone to name a pet as a beneficiary, but Utah does allow a trust to be created to benefit a pet, with the trust named as the beneficiary of an account or property. Naming a minor child as a beneficiary also requires careful thought. This option is typically allowed under the law, but anyone considering it should keep in mind that when the owner of the account or insurance policy passes away money released to the minor will actually be in the hands of the child’s guardian until the child reaches the age of majority (eighteen in Utah), at which time the child gains immediate access to the inheritance. This outcome may not be what you want, because you may not get to choose the guardian, and the child will have unfettered access to the money and property at a relatively young age.
Another often misused term is “next of kin.” The next of kin is the decedent’s closest living blood relative. A number of states have expanded this term to also include a spouse. The role of next of kin is critical, especially when end-of-life or medical decisions are required for individuals who cannot make or communicate decisions for themselves. In such instances, the absence of legal documentation such as a healthcare power of attorney may require that the next of kin be contacted and asked to make certain decisions. The next of kin’s power may be limited, but it is not unusual for the next of kin to be one of the people considered if legal action regarding someone becomes necessary.
Whether an estate plan includes a traditional last will and testament or a trust, planners should direct that any asset left to a child with potential creditors or divorces be left in a Descendants Trust, also commonly referred to as an Inheritor’s Trust. This is a trust written into the last will and testament or trust document that does not come into effect until after the death of the creator, which will protect the child’s inheritance from outside invaders, including creditors or divorcing spouses. To the extent that assets are left in the trust, creditors do not have access and the assets are considered separate and apart from the marital estate. Typically, the Descendants Trust provides that any income generated from an asset in the trust shall be paid to the beneficiary and principal distributions can be made for health, education, maintenance and support if the child is his or her own Trustee. If there is an independent trustee, then assets can be paid at the discretion of the trustee. An independent trustee is a person not related by blood or marriage to the beneficiary and is not subordinate to the beneficiary, i.e. does not work for the beneficiary. However, your lawyer can customize the language to provide for you and your beneficiaries’ specific circumstances. While a beneficiary can be their own trustee, if there is a concern about the child’s “questionable spending habits,” a trust creator can consider naming someone else to be trustee for him or her, or naming a co-trustee to act with the child. This could be a sibling or another trusted individual.
It is important to remember that many assets are disposed of by beneficiary designation, such as retirement accounts and life insurance. This means that once you draft the Descendants Trust in your estate plan, you must designate the trust created for their benefit as the beneficiary for their share of your assets. This will ensure that the asset passes to their trust and not to them directly. However, be cautious when designating a trust as the beneficiary of retirement assets. With the passing of the Secure Act, leaving a retirement account to an adult child (directly or in a trust) will result in the child having to take the entire principal within ten years – unless the child is disabled. The principal of the retirement account continues to grow tax-deferred but the distributions are taxable as ordinary income to the recipient. For a trust can be designated as a beneficiary of a retirement account, there must be certain provisions included so that the trust can accept the retirement account. Accordingly, be sure to discuss any beneficiary designations with your estate planning attorney before executing same.
There’s nothing that can prevent someone from dying, since physical death is an absolute certainty that no one can escape. The fear for some people, though, is not what’s going to happen to them after they pass on, but more on who’s going to take care of their loved ones, especially if the people he’ll be leaving behind are either very young children or are incapacitated, or both. You can’t have control of what’s going to happen to you after death, but you sure can decide what’s going to happen to your assets once that event transpires. It’s called estate planning. This is the process by which a person (or even a family) arranges the transfer of his assets in anticipation of his death. And in estate planning, there are several documents to consider. Here are some of them:
Preparing a will to protect your assets and your heirs is always an excellent idea, but many people try to do this themselves and end up leaving out critical information. If the document doesn’t have all of the elements required by law, it could be declared invalid after your death, putting your estate at risk and causing unpleasant strife between your potential beneficiaries. To minimize that risk, be sure that all of the features outlined below are included.
A Clearly Designated Executor — Consider A Will Attorney
You should appoint someone you know and trust as the executor. Although many people choose a family member, you could also appoint a will attorney, as he or she would be completely impartial. Be sure that whomever you appoint is willing and able to take on the responsibility. Taking things through probate and distribution can be a lengthy, complex process. If you don’t choose someone, the courts can appoint an executor for you, and it may not be the person you would have chosen.
Clear Division Of Assets
It’s easy to write a will that says you want each of your children to select a few items that have sentimental value from your home, but this often leads to family feuds over valuable assets. Clearly outline who gets what to avoid this kind of trouble. If you want to divide your assets equally between several people, talk to a will attorney about getting your real estate and personal property appraised before writing estate plan. This makes it easier to divide your assets equitably.
Many people assume that their descendants can choose the funeral arrangements, but this is a burden that your children would probably rather avoid. It’s difficult for surviving family members to cope after a loved one passes away, and adding to that burden can cause a great deal of pain. Outlining where and how you want your funeral to be handled, including how much it should cost, means one less worry for your loved ones.
Guardianship Of Minors
Regardless of whether your child is six or sixteen, a will attorney can advise you on how to appoint a guardian for your child or children. This is the person making day-to-day decisions for the child and ensuring that he or she is properly cared for. You should choose a guardian who can raise your child in a manner similar to how you are raising your child to minimize confusion.
Instructions About Pets
Pets aren’t recognized as people by the courts, so you cannot leave money directly to your dog or cat, although many people have tried. Pets are considered personal property, and as such must be left to a specific person. Choose someone who can love and cherish your pet as much as you do. If you want to leave that person some funds to help with your dog or cat’s expenses, consult with a will attorney who can advise you on setting up a specific fund for that purpose.
When someone passes away, it’s inevitable that there are some outstanding debts and obligations that have to be paid by the estate. If you include clear instructions and account for these duties in your will, that’s one less burden for your children. If all of this leaves you confused, you aren’t alone. Most people who try to prepare their own wills quickly realize that consulting with an attorney is the best way to ensure that their heirs are protected and that their wishes are carried out properly. If you have any questions about how to structure your estate, contacting a will attorney should be your first step.