A general power of attorney and a health care power of attorney are two very important estate planning documents. Both allow other people to make decisions for you in the event you are incapacitated. Because the individuals chosen will have to coordinate your care, it is important to pick two people who will get along.
A general power of attorney allows a person you appoint -- your agent -- to act in your place for financial purposes when and if you ever become incapacitated. A health care power of attorney is a document that gives an agent the authority to make health care decisions for you if you are unable to communicate such decisions.
While the health care agent is the one who makes the health care decisions, the person who holds the general power of attorney is the one who needs to pay for the health care. If the two agents disagree, it can spell trouble. For example, suppose your health care agent decides that you need 24-hour care at home, but your general power of attorney agent thinks a nursing home is the best option and refuses to pay for the at-home care. Any disagreements would have to be settled by a court, which will take time and drain your resources in the process.
The easiest way to avoid conflicts is to choose the same person to do both jobs. But this may not always be feasible -- for example, perhaps the person you would choose as health care agent is not good with finances. If you pick different people for both roles, then you should think about picking two people who can get along and work together. You should also talk to both agents about your wishes for medical care so that they both understand what you want.
If you have questions about whom to name for these roles, or you haven't yet executed these all-important documents, contact my office for help.
Showing posts with label power of attorney. Show all posts
Showing posts with label power of attorney. Show all posts
Tuesday, November 23, 2010
Wednesday, September 29, 2010
Prevent Your Power of Attorney from Being Ignored
A durable power of attorney is one of the most important estate planning documents there is. It allows someone you appoint -- your agent or "attorney-in-fact" -- to act in your place for financial purposes when and if you ever become incapacitated. However, many people experience difficulty in getting banks or other financial institutions to recognize the authority of an agent under a power of attorney.
Banks are often reluctant to accept powers of attorney for fear of being sued if the power of attorney isn't valid. A certain amount of caution on the part of financial institutions is understandable. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss.
To prevent problems later, contact your bank when you execute your power of attorney to find out what information it needs to accept the document. Many banks or other financial institutions have their own standard power of attorney forms. If this is the case, get the bank's form and sign it in addition to your own power of attorney form. While, it isn't legally necessary, signing the bank's form can save your agent a lot of trouble and time down the road. In addition, you can provide the bank with copies of your power of attorney. It is also a good idea to update your power of attorney frequently so the bank knows it is current.
If a bank is giving you a hard time about accepting a power of attorney, you can try talking your way up the chain of command. You can also have the lawyer who prepared the power of attorney call the bank. If that doesn't work, you may have to have a lawyer deal with the bank.
Banks are often reluctant to accept powers of attorney for fear of being sued if the power of attorney isn't valid. A certain amount of caution on the part of financial institutions is understandable. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss.
To prevent problems later, contact your bank when you execute your power of attorney to find out what information it needs to accept the document. Many banks or other financial institutions have their own standard power of attorney forms. If this is the case, get the bank's form and sign it in addition to your own power of attorney form. While, it isn't legally necessary, signing the bank's form can save your agent a lot of trouble and time down the road. In addition, you can provide the bank with copies of your power of attorney. It is also a good idea to update your power of attorney frequently so the bank knows it is current.
If a bank is giving you a hard time about accepting a power of attorney, you can try talking your way up the chain of command. You can also have the lawyer who prepared the power of attorney call the bank. If that doesn't work, you may have to have a lawyer deal with the bank.
Saturday, May 15, 2010
What is a Durable Power of Attorney?
For most people, the durable power of attorney is the most important estate planning instrument available--even more useful than a will. A power of attorney allows a person you appoint -- your "attorney-in-fact" -- to act in your place for financial purposes when and if you ever become incapacitated.
In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney.
A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.
A power of attorney may also be either current or "springing." Most powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.
However, attorneys report that their clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a durable power of attorney. A certain amount of caution on the part of financial institutions is understandable: When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.
While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."
In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney.
A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.
A power of attorney may also be either current or "springing." Most powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.
However, attorneys report that their clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a durable power of attorney. A certain amount of caution on the part of financial institutions is understandable: When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.
While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."
Tuesday, April 27, 2010
What Is Estate Planning?
The definition of Estate Planning is easy: it is a plan for your estate. Your estate is what you own; it is your stuff.
If you become mentally incapacitated, perhaps by accident or illness, you can no longer manage your stuff. You can't buy or sell what you need, pay you bills, or file your taxes. Someone will have to do this for you. If you plan for this with Powers of Attoney or Trusts, you get to choose who helps you manage your stuff. If you don't, a judge will choose someone for you after an expensive court proceeding. You may not agree with the judges choice and it may be a stranger who is charging you hourly.
When you pass away, the ownership of you stuff must pass to someone else (sorry). If you plan in advance for this, you get to choose who gets what, when they get it and how they get it. You even get to avoid taxes that will be due if no planning is done. You can do this by getting a Will or Revocable Living Trust. You can also control who gets what with beneficiary designations such as with life insurance and retirement accounts. Bank accounts can be designated Payable on Death (POD) to your beneficiary. You can also own an asset jointly with someone else so that they become the sole owner if you die. If you do not plan in advance, the law sets forth who gets what.
A typical Estate Plan may have a Will, Trust, Financial Power of Attorney, Healthcare Power of Attorney and a Living Will. This planning is really not so much for you but for your loved ones. If you have an Estate Plan, check to see if it needs an update. If you don't have a plan, get one. Your loved one's will thank you someday.
If you become mentally incapacitated, perhaps by accident or illness, you can no longer manage your stuff. You can't buy or sell what you need, pay you bills, or file your taxes. Someone will have to do this for you. If you plan for this with Powers of Attoney or Trusts, you get to choose who helps you manage your stuff. If you don't, a judge will choose someone for you after an expensive court proceeding. You may not agree with the judges choice and it may be a stranger who is charging you hourly.
When you pass away, the ownership of you stuff must pass to someone else (sorry). If you plan in advance for this, you get to choose who gets what, when they get it and how they get it. You even get to avoid taxes that will be due if no planning is done. You can do this by getting a Will or Revocable Living Trust. You can also control who gets what with beneficiary designations such as with life insurance and retirement accounts. Bank accounts can be designated Payable on Death (POD) to your beneficiary. You can also own an asset jointly with someone else so that they become the sole owner if you die. If you do not plan in advance, the law sets forth who gets what.
A typical Estate Plan may have a Will, Trust, Financial Power of Attorney, Healthcare Power of Attorney and a Living Will. This planning is really not so much for you but for your loved ones. If you have an Estate Plan, check to see if it needs an update. If you don't have a plan, get one. Your loved one's will thank you someday.
Saturday, February 20, 2010
General Durable Power of Attorney
Your Durable Power of Attorney
For most people, the durable power of attorney is the most important estate planning instrument available--even more useful than a will. A power of attorney allows a person you appoint -- your "attorney-in-fact" or "agent" -- to act in your place for financial purposes when and if you ever become incapacitated.
In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney.
A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.
A power of attorney may also be either current or "springing." Most powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.
However, attorneys report that their clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a durable power of attorney. A certain amount of caution on the part of financial institutions is understandable: When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.
While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."
For most people, the durable power of attorney is the most important estate planning instrument available--even more useful than a will. A power of attorney allows a person you appoint -- your "attorney-in-fact" or "agent" -- to act in your place for financial purposes when and if you ever become incapacitated.
In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney.
A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.
A power of attorney may also be either current or "springing." Most powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.
However, attorneys report that their clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a durable power of attorney. A certain amount of caution on the part of financial institutions is understandable: When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts. In addition, many attorneys counsel their clients to create living trusts in part to avoid this sort of problem with powers of attorney.
While you should seriously consider executing a durable power of attorney, if you do not have someone you trust to appoint it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."
Monday, November 16, 2009
Creating an Estate Plan Today or Updating One Needs to Address Areas That Were Once Never Considered
If you have a will detailing your assets, make certain that you create it or update it to include not only the list of financial accounts but your usernames and passwords, too! Without log-in information, survivors usually need to go to court for legal authority to gain account access. The process varies from state to state; it doesn't always require a lawyer but it always takes time. In addition, the process can involve the heir approaching the individual online companies to heed her authority - a task that can be very frustrating. Many married couples today already face this issues when trying to get a simple balance on a credit card that is only in one spouse name. Companies today are reluctant to release any information at all-regardless of avoiding potential litigation for personal information violations.
Try contacting customer service and telling them, 'I've been appointed as my late brother's administrator. Please give me his user ID and password”. Eventually, of course, this type of problem is solved when you can reach a real human being who doesn't act like this is the first customer ever to die. But these people have to be sought out within every institution.
The process can be even more complicated if someone is incapacitated rather than dies. If there's no power of attorney, then you have to have a guardian or conservator appointed to have access to these records. Furthermore, some companies won't release any information without a specific court order.
The time to gather all of this information can be lengthy and the costs associated with it, can be more than most families expect. It is definitely an area that can be avoided if you plan for it in your estate plan or be sure to update your existing plan with all of your usernames and passwords.
Try contacting customer service and telling them, 'I've been appointed as my late brother's administrator. Please give me his user ID and password”. Eventually, of course, this type of problem is solved when you can reach a real human being who doesn't act like this is the first customer ever to die. But these people have to be sought out within every institution.
The process can be even more complicated if someone is incapacitated rather than dies. If there's no power of attorney, then you have to have a guardian or conservator appointed to have access to these records. Furthermore, some companies won't release any information without a specific court order.
The time to gather all of this information can be lengthy and the costs associated with it, can be more than most families expect. It is definitely an area that can be avoided if you plan for it in your estate plan or be sure to update your existing plan with all of your usernames and passwords.
Sunday, November 1, 2009
Health Care Power of Attorneys
The Health Care Power of Attorney
If an individual becomes incapacitated, it is important that someone have the legal authority to communicate that person's wishes concerning medical treatment. A health care power of attorney allows an individual to appoint someone else to act as their agent for medical, as opposed to financial, decisions. The health care power of attorney is a document executed by a competent person (the principal) giving another person (the agent) the authority to make health care decisions for the principal if he or she is unable to communicate such decisions. By executing a health care power of attorney, principals ensure that the instructions that they have given their agent will be carried out. A health care power of attorney is especially important to have if an individual and family members may disagree about treatment.
In general, a health care power of attorney takes effect only when the principal requires medical treatment and a physician determines that the principal is unable to communicate his or her wishes concerning treatment. How this works exactly can depend on the laws of the particular state and the terms of the health care power of attorney itself. If the principal later becomes able to express his or her own wishes, he or she will be listened to and the health care power of attorney will have no effect.
Appointing an Agent
Since the agent will have the authority to make medical decisions in the event the principal is unable to, the agent should be a family member or friend that the principal trusts to follow his or her instructions. Before executing a health care power of attorney, the principal should talk to the person whom he or she wants to name as the agent about the principal's wishes concerning medical decisions, especially life-sustaining treatment.
Once the health care power of attorney is drawn up, the agent should keep the original document. The principal should have a copy and the principal's physician should keep a copy with that individual's medical records.
Those interested in drawing up a health care power of attorney document should contact an attorney who is skilled and experienced in estate planning and elder law matters. Many hospitals and nursing homes also provide forms, as do some public agencies.
If an individual becomes incapacitated, it is important that someone have the legal authority to communicate that person's wishes concerning medical treatment. A health care power of attorney allows an individual to appoint someone else to act as their agent for medical, as opposed to financial, decisions. The health care power of attorney is a document executed by a competent person (the principal) giving another person (the agent) the authority to make health care decisions for the principal if he or she is unable to communicate such decisions. By executing a health care power of attorney, principals ensure that the instructions that they have given their agent will be carried out. A health care power of attorney is especially important to have if an individual and family members may disagree about treatment.
In general, a health care power of attorney takes effect only when the principal requires medical treatment and a physician determines that the principal is unable to communicate his or her wishes concerning treatment. How this works exactly can depend on the laws of the particular state and the terms of the health care power of attorney itself. If the principal later becomes able to express his or her own wishes, he or she will be listened to and the health care power of attorney will have no effect.
Appointing an Agent
Since the agent will have the authority to make medical decisions in the event the principal is unable to, the agent should be a family member or friend that the principal trusts to follow his or her instructions. Before executing a health care power of attorney, the principal should talk to the person whom he or she wants to name as the agent about the principal's wishes concerning medical decisions, especially life-sustaining treatment.
Once the health care power of attorney is drawn up, the agent should keep the original document. The principal should have a copy and the principal's physician should keep a copy with that individual's medical records.
Those interested in drawing up a health care power of attorney document should contact an attorney who is skilled and experienced in estate planning and elder law matters. Many hospitals and nursing homes also provide forms, as do some public agencies.
Tuesday, September 1, 2009
Last Will and Testament
If you own assets in your name alone, they may pass from you to the people you love, as long as you leave a Will. Without a Will, your assets pass according to the State’s rules, also known as intestacy. The State may not pass your assets to the people you care about. You should be sure.
Also, you should know that...
• Assets will pass through your Will to your loved ones if the Will is written properly.
• You can reduce your estate tax liability by using a trust in a Will.
• You can protect the ones you love by creating a trust in your Will which can protect that person from creditors.
• You can protect you.
• It is important that you give your family the tools to help you if you cannot help yourself, your children from divorce or, you may protect your children who are not good with money, or those who have other problems, such as addiction or mental illness.
• You can protect disabled beneficiaries by creating a Supplemental Needs Trust for them, which preserves assets for the family, while keeping their eligibility for public benefits.
• Your Will must go through probate - using the courts to divide your property.
Also, you should know that...
• Assets will pass through your Will to your loved ones if the Will is written properly.
• You can reduce your estate tax liability by using a trust in a Will.
• You can protect the ones you love by creating a trust in your Will which can protect that person from creditors.
• You can protect you.
• It is important that you give your family the tools to help you if you cannot help yourself, your children from divorce or, you may protect your children who are not good with money, or those who have other problems, such as addiction or mental illness.
• You can protect disabled beneficiaries by creating a Supplemental Needs Trust for them, which preserves assets for the family, while keeping their eligibility for public benefits.
• Your Will must go through probate - using the courts to divide your property.
Friday, August 14, 2009
Who Needs Estate Planning?
Estate planning isn’t about how much money you have, it's about protecting what you have for you, during your life and for those you love, after you’re gone. It ensures what you have gets to the people you love, the way you want, when you want.
If you were to die today, are you comfortable everything will be taken care of the way you wanted? Estate planning is legally ensuring things will be handled the way you want by providing sufficient instructions.
Estate Planning really is for everyone. It doesn’t matter if you have $40,000 or $400,000. You still have to plan for the future. Whether it’s to name a guardian for your minor children or ensure your children don’t blow through your assets if you unexpectedly die or become disabled (Terri Schiavo case).
Estate planning can only be done by attorneys, and it can be as simple as a Will, Health Care Proxy, Living Will and Power of Attorney. It can also include a revocable, probate-avoidance trust, asset protection trusts, multi-generational tax-saving trusts, tax-saving charitable trusts, private family foundations, and many other fact-specific strategies.
Keeping your Estate Plan Current...
Once completed, your estate plan should be reviewed and kept current with life events such as birth, death, marriage or divorce of anyone included in your plan. In addition, you should review your plan if there is a significant increase or decrease in your finances or if the laws related to your estate plan change.
If you were to die today, are you comfortable everything will be taken care of the way you wanted? Estate planning is legally ensuring things will be handled the way you want by providing sufficient instructions.
Estate Planning really is for everyone. It doesn’t matter if you have $40,000 or $400,000. You still have to plan for the future. Whether it’s to name a guardian for your minor children or ensure your children don’t blow through your assets if you unexpectedly die or become disabled (Terri Schiavo case).
Estate planning can only be done by attorneys, and it can be as simple as a Will, Health Care Proxy, Living Will and Power of Attorney. It can also include a revocable, probate-avoidance trust, asset protection trusts, multi-generational tax-saving trusts, tax-saving charitable trusts, private family foundations, and many other fact-specific strategies.
Keeping your Estate Plan Current...
Once completed, your estate plan should be reviewed and kept current with life events such as birth, death, marriage or divorce of anyone included in your plan. In addition, you should review your plan if there is a significant increase or decrease in your finances or if the laws related to your estate plan change.
Monday, July 27, 2009
I have a will, so why do I need an Estate Plan?
Many people mistakenly think that estate planning only involves the writing of a will. Estate planning, however, can also involve financial, tax, medical and business planning. A will is part of the planning process, but you will need other documents as well to fully address your estate planning needs.
Who needs estate planning?
You do—whether your estate is large or small. Either way, you should designate someone to manage your assets and make health care and personal care decisions for you if you ever become unable to do so for yourself.
If your estate is small, you may simply focus on who will receive your assets after your death, and who should manage your estate, pay your last debts and handle the distribution of your assets.
If your estate is large, your attorney will also discuss various ways of preserving your assets for your beneficiaries and of reducing or postponing the amount of estate tax which otherwise might be payable after your death.
If you fail to plan ahead, a judge may be needed to appoint someone to handle your assets and personal care. Your assets then will be distributed to your heirs according to a set of rules known as intestate succession.
Contrary to popular myth, everything does not automatically go to the state if you die without a will. Your relatives, no matter how remote, and, in some cases, the relatives of your spouse will have priority in inheritance ahead of the state.
Still, they may not be your choice of heirs; an estate plan gives you much greater control over who will inherit your assets after your death.
What is included in my estate?
Everything you own is included in your estate. This could include assets held in your name alone or jointly with others, assets such as bank accounts, real estate, stocks and bonds, and furniture, cars and jewelry.
Your assets may also include life insurance proceeds, retirement accounts and payments that are due to you (such as a tax refund, outstanding loan or inheritance).
The value of your estate is equal to the “fair market value” of all of your various types of property—after you have deducted your debts (your car loan, for example, and any mortgage on your home.)
The value of your estate is important in determining whether your estate will be subject to inheritance taxes or estate taxes after your death and whether your beneficiaries could later be subject to capital gains taxes. Ensuring that there will be sufficient resources to pay such taxes is another important part of the estate planning process.
Who needs estate planning?
You do—whether your estate is large or small. Either way, you should designate someone to manage your assets and make health care and personal care decisions for you if you ever become unable to do so for yourself.
If your estate is small, you may simply focus on who will receive your assets after your death, and who should manage your estate, pay your last debts and handle the distribution of your assets.
If your estate is large, your attorney will also discuss various ways of preserving your assets for your beneficiaries and of reducing or postponing the amount of estate tax which otherwise might be payable after your death.
If you fail to plan ahead, a judge may be needed to appoint someone to handle your assets and personal care. Your assets then will be distributed to your heirs according to a set of rules known as intestate succession.
Contrary to popular myth, everything does not automatically go to the state if you die without a will. Your relatives, no matter how remote, and, in some cases, the relatives of your spouse will have priority in inheritance ahead of the state.
Still, they may not be your choice of heirs; an estate plan gives you much greater control over who will inherit your assets after your death.
What is included in my estate?
Everything you own is included in your estate. This could include assets held in your name alone or jointly with others, assets such as bank accounts, real estate, stocks and bonds, and furniture, cars and jewelry.
Your assets may also include life insurance proceeds, retirement accounts and payments that are due to you (such as a tax refund, outstanding loan or inheritance).
The value of your estate is equal to the “fair market value” of all of your various types of property—after you have deducted your debts (your car loan, for example, and any mortgage on your home.)
The value of your estate is important in determining whether your estate will be subject to inheritance taxes or estate taxes after your death and whether your beneficiaries could later be subject to capital gains taxes. Ensuring that there will be sufficient resources to pay such taxes is another important part of the estate planning process.
Wednesday, July 22, 2009
10 Good Reasons to have an Estate Plan
No matter your net worth, it's important to have a basic estate plan in place.
An estate plan ensures that your family and financial goals are met after you die. It is a process. It involves people—your family, other individuals and, in some cases, charitable organizations of your choice. It also involves your assets (your property) and the various forms of ownership and title that those assets may take. Overall, it addresses your future needs in case you ever become unable to care for yourself. It is not only for the elderly – even young people are faced with unfortunate circumstances: health related, automobile accidents and so forth.
An estate plan has several elements and considerations.
1)A General Power of attorney or Living Trust can determine:
a)How and by whom your assets will be managed for your benefit during your lifetime if you ever become unable to manage them yourself.
b)When and under what circumstances it makes sense to distribute your assets during your lifetime.
2)A Will or Living Trust can determine:
a)How and to whom your assets will be distributed after your death.
3)A Living Will or Health Care Power of Attorney can determine how and by whom your personal care will be managed and how health care decisions will be made during your lifetime if you become unable to care for yourself.
4)For some, the establishment of a Trust may also be suitable.
What is involved in estate planning?
Taking inventory of your assets is a good place to start.
Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. A good place to start is to ask yourself the following questions:
1)What are my assets and what is their approximate value?
2)Whom do I want to receive those assets—and when?
3)Who should manage those assets if I cannot—either during my lifetime or after my death?
4)Who should be responsible for taking care of my minor children if I become unable to care for them myself?
5)Who should make decisions on my behalf concerning my care and welfare if I become unable to care for myself?
6)What do I want done with my remains after I die and where would I want them buried, scattered or otherwise laid to rest?
Once you have some answers to these questions, our office can help you create an estate plan, and advise you on such issues as taxes, title to assets and the management of your estate.
Everybody needs a will.
A will tells the world exactly where you want your assets distributed when you die. It's also the best place to name guardians for your children. Dying without a will - also known as dying "intestate" - can be costly to your heirs and leaves you no say over who gets your assets. Even if you have a trust, you still need a will to take care of any holdings outside of that trust when you die.
Trusts are not only for wealthy people.
Trusts are legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death. They also allow you to reduce your estate and gift taxes and to distribute assets to your heirs with less cost, delay and publicity. Some also offer greater protection of your assets from creditors and lawsuits.
Don’t I only have to discuss my estate plans with my family (heirs) to prevent disputes or confusion?
That would be nice, but upon death emotions rise and there are often hard feelings among those you loved. Inheritance can be a loaded issue and at times full of mixed emotions and even greed. By being clear about your intentions with your loved ones, you may help dispel potential conflicts after you're gone, however, there may be issues you do not wish to speak of. Discussing your true wishes in confidence with your attorney can help provide you with peace of mind.
The federal estate tax exemption
The amount you may leave to heirs free of federal tax - has hit $3.5 million in 2009.
The estate tax is scheduled to phase out completely by 2010, but only for a year. Unless Congress passes new laws between now and then, the tax will be reinstated in 2011 and you will only be allowed to leave your heirs $1 million tax-free at that time.
You may leave an unlimited amount of money to your spouse tax-free, but this isn't always the best tactic.
By leaving all your assets to your spouse, you don't use your estate tax exemption and instead increase your surviving spouse's taxable estate. That means your children are likely to pay more in estate taxes if your spouse leaves them the money when he or she dies. Plus, it defers the tough decisions about the distribution of your assets until your spouse's death.
There are two easy ways to give gifts tax-free and reduce your estate.
You may give up to $13,000 a year to an individual (or $26,000 if you're married and giving the gift with your spouse). You may also pay an unlimited amount of medical and education bills for someone if you pay the expenses directly to the institutions where they were incurred.
There are ways to give charitable gifts that keep on giving.
If you donate to a charitable gift fund or community foundation, your investment grows tax-free and you can select the charities to which contributions are given both before and after you die.
An estate plan ensures that your family and financial goals are met after you die. It is a process. It involves people—your family, other individuals and, in some cases, charitable organizations of your choice. It also involves your assets (your property) and the various forms of ownership and title that those assets may take. Overall, it addresses your future needs in case you ever become unable to care for yourself. It is not only for the elderly – even young people are faced with unfortunate circumstances: health related, automobile accidents and so forth.
An estate plan has several elements and considerations.
1)A General Power of attorney or Living Trust can determine:
a)How and by whom your assets will be managed for your benefit during your lifetime if you ever become unable to manage them yourself.
b)When and under what circumstances it makes sense to distribute your assets during your lifetime.
2)A Will or Living Trust can determine:
a)How and to whom your assets will be distributed after your death.
3)A Living Will or Health Care Power of Attorney can determine how and by whom your personal care will be managed and how health care decisions will be made during your lifetime if you become unable to care for yourself.
4)For some, the establishment of a Trust may also be suitable.
What is involved in estate planning?
Taking inventory of your assets is a good place to start.
Your assets include your investments, retirement savings, insurance policies, and real estate or business interests. A good place to start is to ask yourself the following questions:
1)What are my assets and what is their approximate value?
2)Whom do I want to receive those assets—and when?
3)Who should manage those assets if I cannot—either during my lifetime or after my death?
4)Who should be responsible for taking care of my minor children if I become unable to care for them myself?
5)Who should make decisions on my behalf concerning my care and welfare if I become unable to care for myself?
6)What do I want done with my remains after I die and where would I want them buried, scattered or otherwise laid to rest?
Once you have some answers to these questions, our office can help you create an estate plan, and advise you on such issues as taxes, title to assets and the management of your estate.
Everybody needs a will.
A will tells the world exactly where you want your assets distributed when you die. It's also the best place to name guardians for your children. Dying without a will - also known as dying "intestate" - can be costly to your heirs and leaves you no say over who gets your assets. Even if you have a trust, you still need a will to take care of any holdings outside of that trust when you die.
Trusts are not only for wealthy people.
Trusts are legal mechanisms that let you put conditions on how and when your assets will be distributed upon your death. They also allow you to reduce your estate and gift taxes and to distribute assets to your heirs with less cost, delay and publicity. Some also offer greater protection of your assets from creditors and lawsuits.
Don’t I only have to discuss my estate plans with my family (heirs) to prevent disputes or confusion?
That would be nice, but upon death emotions rise and there are often hard feelings among those you loved. Inheritance can be a loaded issue and at times full of mixed emotions and even greed. By being clear about your intentions with your loved ones, you may help dispel potential conflicts after you're gone, however, there may be issues you do not wish to speak of. Discussing your true wishes in confidence with your attorney can help provide you with peace of mind.
The federal estate tax exemption
The amount you may leave to heirs free of federal tax - has hit $3.5 million in 2009.
The estate tax is scheduled to phase out completely by 2010, but only for a year. Unless Congress passes new laws between now and then, the tax will be reinstated in 2011 and you will only be allowed to leave your heirs $1 million tax-free at that time.
You may leave an unlimited amount of money to your spouse tax-free, but this isn't always the best tactic.
By leaving all your assets to your spouse, you don't use your estate tax exemption and instead increase your surviving spouse's taxable estate. That means your children are likely to pay more in estate taxes if your spouse leaves them the money when he or she dies. Plus, it defers the tough decisions about the distribution of your assets until your spouse's death.
There are two easy ways to give gifts tax-free and reduce your estate.
You may give up to $13,000 a year to an individual (or $26,000 if you're married and giving the gift with your spouse). You may also pay an unlimited amount of medical and education bills for someone if you pay the expenses directly to the institutions where they were incurred.
There are ways to give charitable gifts that keep on giving.
If you donate to a charitable gift fund or community foundation, your investment grows tax-free and you can select the charities to which contributions are given both before and after you die.
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