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What are Some Questions that I Should Ask a Lawyer Who Does Estate Planning for People Over 50?

October 10, 2016 by mary.r

“Death, like taxes, is certain. And like taxes, it’s one of the least pleasant topics to contemplate, let alone discuss with others. Even so, a recent Gallup Poll* indicates half of American adults have faced up to the inevitable and written a last will and testament, directing where or to whom their worldly assets should be distributed when they leave this one.” If you are one of the 50% who have already created a legal document as part of your estate plan there is still some work to be done to ensure your document continues to meet your goals. If you are one of the 50% who has not created a will or trust, you need to start working on expressing your wishes in a legal document and then some. For people over 50, working with an estate planning attorney is wise, and here are some important questions you need to ask.

Do I have adequate life insurance and long term care in place? If you have minor children you should have a life insurance policy in place for the unexpected to make sure that your family and loved ones are taken care of financially. You should also have something in place in the event you need long term care down the road. There are many policies and options available to cover these possibilities. “Long-term care insurance policies reimburse policyholders a daily amount (up to a pre-selected limit) for services to assist them with activities of daily living such as bathing, dressing, or eating. You can select a range of care options and benefits that allow you to get the services you need, where you need them.” If you do not have a life or long term care policy and are unable to get one it would be prudent to put money aside for these expenses. Have your estate planning attorney review what you have in place now and make sure that you have adequate coverage or assets in place.
Is my will or trust up-to-date? This is an important item to review with your estate planning attorney. Whenever a life or financial event occurs you should have your will or trust reviewed for any needed updates. If you have additional children you will want to make sure they are included in the inheritance of your estate, and make sure that your estate plan makes provisions for their care. If you create a trust you should review it regularly to make sure your beneficiaries on all accounts and life insurance policies are listed correctly. Your estate planning attorney will guide you in determining when to name your trust as the primary beneficiary and when it is prudent to name an individual such as your spouse. You should also review your documents to ensure that your financial and medical powers of attorney are accurate. Sometimes relationships between loved ones can change and you will want to be sure that the people listed are still the individuals best suited for their respective positions.
Is my estate plan tax efficient? You want to plan ahead for retirement and possible tax consequences. Review your entire estate with an experienced estate planning attorney and explore possible tax savings vehicles such as a charitable remainder trust. There are avenues to achieve tax savings depending on your specific situation so work with a trusted expert to find those that best fit your estate plan. When looking at your long term financial plan keep in mind that once you reach 70 1/2 years of age you will be have to take Required Minimum Distributions from some of your retirement accounts.
Does my current estate plan match my goals? Do you want to save your existing accounts and assets to leave as an inheritance or are you hoping to retire early or with a higher standard of living? Consult with your estate planning attorney to make sure your accounts, assets and existing plan match your short and long term goals.
What should I do with my business? If you are 50 or older and a business owner you may be wondering what to do with your business when you are ready to retire. It’s good to start putting that plan together now; whether you want to retire tomorrow or in 30 years. There are many options for business owners; you can sell your business, leave it to your heirs, or establish a succession plan that is a melding of the two. Your financial circumstances and personal preferences will dictate how to move forward. Regardless of which choice is best for you, you will need properly drafted legal documents to successfully transfer or leave your business to others. Proper estate planning and business succession planning can make all the difference to your finances now and your heirs after your death.

Estate planning is so important to your present, future and legacy. Regardless of your age, if you do not have a will or trust in place; please start putting one together now. We often take tomorrow for granted even though it’s never guaranteed. If you are 50 or older and working with an estate planning attorney, ask the questions above to assist you in establishing your estate plan.

Why Estate Planning is Important if You are Single?

July 7, 2016 by mary.r

Estate planning for singles is as important as for estate planning for couples. Many people think of estate planning and think that is the opportunity to leave your assets to your children or spouse. If you are single you may think that estate planning is not something you need to consider. Single or married, estate planning is something you should do. Below are four reasons why estate planning is important if you are single.

Estate planning gives you the opportunity to decide what happens to your assets when you die. If you do not create and execute an estate plan, including a will or trust, your assets will be distributed as determined by state law. About money describes what can happen to your assets after death if you do not have a will or trust in place. “Here is what will happen under the Arizona intestacy laws if the deceased person is…

Survived by descendants and no spouse – In this case the deceased person’s descendants will inherit the entire probate estate, per stirpes.

Survived by a parent or parents and no spouse or descendants – In this case the parents will inherit the entire estate in equal shares or the surviving parent will inherit the entire estate.

Survived by a sibling or siblings and no parents, spouse or descendants – In this case the siblings will inherit the entire estate, per stirpes.

…In the unlikely circumstance that the deceased person is not survived by any family members as described above, then the entire probate estate will escheat to the State of Arizona.” If you have strained family relationships or would like a distribution different than those listed above you should invest some time in estate planning. State laws are also subject to change. The guidelines given above could be changed and your assets distributed in a way that you do not agree with. If you are single, you can create a will or trust that dictates how to distribute your assets to family members, friends or charitable organizations. Use estate planning to establish who your beneficiaries are and how much of your estate each will receive. Don’t leave this to be determined by the state.

Estate planning allows you to be in control of your healthcare. If you are in a serious accident and need medical care you may not be in a position to communicate your wishes. The official website of the Arizona Medical Board describes advance care directives and why they are important stating, “Advance care directives, like a Living Will and/or a Durable Health Care Power of Attorney, allow others to follow your directions about your health care. They are your “blueprint” for what you do or do not want done in given situations. Advance care directives can provide specific instructions on how to proceed or the information your surrogates need to fulfill your intent. For a directive to be useful and effective, you must discuss your wishes with your primary care physician and close family members, especially the person you want to be in charge of carrying out your wishes.” The site goes on to explain that if you do not have a healthcare directive in place the healthcare provider may contact the following, in this order: your adult children, your parents, your siblings, and then close friends. An advanced care directive, will or healthcare power of attorney is critical to make sure that the person you designate is making vital healthcare decisions for you in the event of your incapacitation. You can also make sure that your wishes after death are carried out such as having a burial or cremation. It can be difficult to think about things like life support, levels of medical care in serious situations and death, but it is important for you to decide how you would like these situations handled. It is also important to make sure you communicate your wishes through your estate plan, especially if you are single, and do not have a spouse to automatically make these decisions for you. After consulting with an estate planning expert and completing your estate plan, you can file your healthcare directives with the state of Arizona at: http://www.azsos.gov/services/advance-directives.

Estate planning may give you the ability to keep your assets and distribution private. When working with an experienced estate planner you will want to communicate your wishes to keep your estate private. If you use a will to designate your beneficiaries and distribution of your estate you will may go to probate which is a public process. However, if you utilize a trust, you may be able to keep the terms of your estate’s distribution and beneficiaries private.

Estate planning can set your heirs up for success. You need to consider that depending on the size of your estate your heirs may face high estate and income tax penalties. Working with an estate planning professional you may strategically distribute your wealth to help your loved ones avoid high tax penalties. Different types of assets can also be taxed differently. It is important to consult with someone who understands the tax implications for each of your assets and can help you determine the best way to distribute them. You can also decide the timetable in which your assets are distributed. If you have two siblings you would like to make your beneficiaries and one is terrible with money while the other is not, you may setup a distribution so that the first sibling receives a portion of your estate every year for 10 years while the other sibling receives a lump sum. You know your loved ones best and how your estate could be structured to best benefit each individual person.

Whether you are married, single or divorced estate planning is a critical tool in executing your wishes for your medical care and asset distribution once you are gone. If you have friends or family that you would like to act for you as a healthcare representative, plan ahead. If you have accumulated wealth you would like to leave to specific people or charities, plan ahead. Your health and wealth decisions are both excellent reasons estate planning is important for single people and married people alike.

Types of Trust & Are They Only for Wealthy People

June 30, 2016 by mary.r

Knowing the types of trust is a must and knowing what is suitable to your current situation is a clever step in planning your affairs. Many people are under the misconception that trusts are only for people who are extremely wealthy. And while there are certain types of trusts, irrevocable trusts most commonly, that are used by individuals who are very wealthy and thus subject to the federal estate tax, revocable living trusts are a valuable estate planning tool that shouldn’t be overlooked.

While you should consider talking with an experienced estate planning attorney about your estate plan, here’s some information about trusts and wills that you may find helpful.

Types of Trust

Irrevocable trusts vs. revocable living trusts

Wealthy individuals often set up an irrevocable trust for estate and tax considerations. The benefit is that an irrevocable trust removes all incidents of ownership, which means that the trust’s assets are removed from the grantor’s taxable estate. It also relieves the grantor of tax liability on the income generated by the trust’s assets.

When a grantor puts assets into an irrevocable trust, he or she removes all rights of ownership to the asset that the trust contains. This type of trust can’t be modified or terminated without the beneficiary’s permission.

Individuals will be subject to the federal estate tax if their estate (cash, real estate, and other assets) is worth $5.43 million or more, $10.86 per married couple.

Here are the main differences between irrevocable trusts and revocable living trusts:

Irrevocable Trust

Removes ownership of trust’s assets
Used for tax purposes, since the value of the assets in the trust aren’t calculated in the total value of the estate at the time of death
Commonly used among people with large estates who are subject to federal estate tax
Cannot be modified or revoked without beneficiary’s consent or special power of appointment
Assets are protected from creditors since they no longer belong to the grantor
Trustee is generally an independent person chosen by the grantor

Revocable Living Trust

Grantor retains ownership of assets in the trust
Assets in the trust are calculated into the total value of the estate at the time of death
Commonly used among individuals who don’t want their estate to go through probate
Can be modified or revoked by the grantor
Assets are not protected from creditors since they still belong to the grantor
Grantor usually also serves as the trustee

Will a revocable living trust work better for me than a will?

This depends on your situation. Certain personal or family situations are better suited for a living trust, like if you have concerns that your beneficiaries might not be able to manage financial affairs or if you have a disabled child for example, but some people are fine with just a will.

Yes, a revocable living trust, if used properly, will keep your estate out of probate court and can ensure that your assets pass to your beneficiaries in a timely manner after your death, but it is also important to keep in mind that although your loved ones may not have to pay probate court fees, trusts aren’t free, and that cost should be taken in to consideration when deciding whether or not a revocable living trust is the right option for you and your family. A living trust costs between $1000-$3000 while a simple will can cost $300 or less. That cost alone is enough to make some people stick to a will alone.

However, you should also take these comparisons into consideration:

Privacy: A revocable living trust also ensures that your family’s business isn’t made public in court and public documents after you die, so if that is important to you, this type of trust might be a good option. Court intervention isn’t necessary with a living trust unless there is an issue due to improper drafting.

Disability: A will itself doesn’t offer any provisions for if you become disabled, while a living trust will continue to manage assets if the grantor becomes disabled. However, if you do have a will, a power of attorney can be used in conjunction in order to provide instruction in case you do become disabled.

Creditor Protection: Neither a will nor a living trust will offer protection from creditors while you are alive. If you have a will, creditors have a specific amount of time that they are allowed to make a claim after you die. If they miss that window of opportunity, they will be barred from making a claim forever. This type of issue doesn’t come up often with living trusts because most people direct in the trust that debts be paid.

Ease of Disposition of Assets: wills normally take longer to settle after death and incur more costs than living trusts.

Cost: Wills don’t usually cost much unless you are doing tax planning. Living trusts tend to cost a little more than wills. There isn’t a big cost difference between wills and living trusts if you are doing tax planning. After death, the amount that it will cost to prove (probate) the will in court varies. If there is a contested probate, ancillary probate or another issue, it can be very expensive. Living trusts don’t usually cost much at all once you die.

Can I have both a living trust and a will?

Yes, estate planning attorneys recommend it. That’s because there are some things that a will can do that a trust simply can’t. For example, most people don’t put everything they own into their living trust. So the items that are left out need to be listed in a will so they can be distributed according to your wishes after your death. A will can be used like a catch all to name someone to get all the rest of the property that you haven’t left to a beneficiary or left to someone in a trust.

If you have questions about estate planning in Arizona, please reach out to an experienced attorney. At Bredemann & Shellander, P.L.C., we specialize in estate planning in Arizona and Pride ourselves on taking the time to understand your unique situation so we can guide you through the estate planning process. We are happy to look over your estate plan for free or help you build your perfect estate plan from start to finish. Give us a call at 800-836-4135 or schedule a free consultation online.