ESTATE PLANNING //

Plan & Protect Your Family’s Future.
While it is not pleasant to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones. An estate plan is just a formal legal arrangement for the management of your personal and financial affairs, as well as the distribution of your assets, when you are not able to handle these matters yourself. A well-crafted estate plan gives you exclusive control over what happens if you become mentally incompetent and when you pass away. There should never be a one-size-fits-all approach taken when it comes to estate planning. Consult with O’Diam & Estess Law Group to review your family and financial situation, discuss your goals and learn about the various options available to you. Once your estate plan is in place, you will have peace of mind knowing that you have provided for yourself and your family, no matter what the future holds.

Why do I need an estate plan?

  • Providing for Incapacity – If you want your family to be able to immediately take over for you if you become incapacitated, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home. The law allows you to appoint someone you trust to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself.
  • Avoiding Probate – If you leave your estate to your loved ones using a Will, everything you own will pass through probate. The process is expensive, time-consuming and open to the public. With proper planning, your assets can pass on to your loved ones without undergoing probate in a manner that is quick, inexpensive and private.
  • Providing for Minor Children It is important that your estate plan address the upbringing of your children. If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children without the burden of work obligations. You should also develop a plan that will come into effect if both you and your spouse die simultaneously or within a short duration of time, as well as whether your beneficiaries receive your assets directly or have assets placed in trust. 
  • Planning for Death Taxes – Whether there will be any federal estate tax to pay depends on the size of your estate and how your estate plan works. There are many well-established strategies that can be implemented to reduce or eliminate death taxes, but you must start the planning process early in order to implement many of these plans. In 2013, Congress set a “permanent” federal estate tax exemption for all estates worth less than $5.25 million (adjusted for inflation). Anything above that amount is taxed at 40%.
  • Charitable Bequests & Planned Giving Do you want to give to a charitable organization or cause? Your estate plan can provide for such organizations in a variety of ways, either during your lifetime or at your death. Depending on how your planned giving is set up, it may also let you receive a stream of income for life, earn higher investment yield, or reduce your capital gains and estate taxes.

FAQs

Q: What is estate planning?

When someone passes away, his or her property must somehow pass to another person. In the United States, any competent adult has the right to choose the manner in which his or her assets are distributed after his or her passing. (The main exception to this general rule involves what is called a “spousal right of election” which prohibits the complete disinheritance of a spouse in most states.) A proper estate plan involves strategies to minimize potential estate taxes and settlement costs, as well as to coordinate what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan) and other property in the event of death or disability. On the personal side, a good estate plan should include directions to carry out your wishes regarding health care matters. Then, if you ever are unable to give the directions yourself, someone you trust will know when you would want them to authorize extraordinary measures and when you would prefer they pull the plug.

Q: Why is estate planning important for me?

Sadly, many families don’t do proper estate planning because they don’t believe that they have “a lot of assets” or otherwise believe that their kids can just come in and divide their assets by themselves. If you don’t make proper legal arrangements for the management of your assets and affairs after your passing, the state’s intestacy laws will take over upon your death or incapacity. This often results in the wrong people getting your assets, and very often results in much higher estate taxes.

Specifically, if you die intestate, the transfer of your assets is accomplished through a public, court-supervised proceeding called probate. This generally takes a minimum of six months, but typically a year or more. These public proceedings are expensive and time-consuming, and they tie up your assets for several months. Even worse, your failure to outline your intentions through proper estate planning can tear apart your family, as each person maneuvers to be appointed with the authority to manage your affairs. It is not unusual for bitter family feuds to ensue over modest sums of money or a family heirloom.

Q: What does my estate include?

Your estate is simply everything that you own, anywhere in the world, including:

Your home or any other real estate that you own

Any interests you may have in any business

Your share of any joint accounts

The full value of your retirement accounts

Any life insurance policies that you own

Any property owned by a trust, over which you have a significant control

All of your personal possessions

Q: How do I name a guardian for my children?

If you have children under the age of eighteen, you should designate a person or persons to be appointed guardian(s) over their person and property. Of course, if a surviving parent lives with the minor children (and has custody over them) he or she automatically continues to remain their sole guardian. This is true despite the fact that others may be named as the guardian in your estate planning documents. You should name at least one alternate guardian in case the primary guardian cannot serve or is not appointed by the court.

Q: What estate planning documents should I have?

A comprehensive estate plan should include at some of the following documents, prepared by an attorney, based on in-depth counseling which takes into account your particular family and financial situation:

A Living Trust can be used to hold legal title to your property and it provides a property management mechanism. You (and your spouse) are the Trustee(s) and beneficiaries of your trust during your lifetime. You also designate successor Trustees to carry out your instructions as you have provided, in case of death or incapacity. Unlike a Will, a Trust usually becomes effective immediately after incapacity or death. Your Living Trust is “revocable” which allows you to make changes and even to terminate it. One of the great benefits of a properly funded Living Trust is the fact that it will avoid or minimize the expense, delays and publicity associated with probate. Read the FAQ section on Living Trusts for more information.

If you have a Living Trust-based estate plan, you also need a Pour-Over Will. A Pour-Over Will is used first to name a guardian for minor children. Second, it protects against intestacy in the event any assets have not been transferred into the Trust at the death of the Trustmaker/Owner. It will also invalidate any previous Wills which you may have executed. Its function is to “pour” any assets left out of the Trust into it so they are ultimately distributed according to the terms of your Trust.

A Will, also referred to as a “Last Will and Testament”, is primarily designed to transfer your assets according to your wishes. A Will also typically names someone you select to be your Executor, who is the person you designate to carry out your instructions. If you have minor children, you should also name a Guardian, as well as alternate Guardians in case your first choice is unable or unwilling to serve. A Will becomes effective upon your death, and only after it is admitted by a probate court.

A “Durable Power of Attorney for Property” allows you to carry on your financial affairs in the event that you become disabled. Unless you have a properly drafted Power of Attorney, it may be necessary to apply to a court to have a Guardian or Conservator appointed to make decisions for you when you are disabled. This Guardianship process is time-consuming, expensive and emotionally draining.

There are generally two types of Durable Powers of Attorney: a “Present” Durable Power of Attorney, in which the power is immediately transferred to your Attorney In Fact; and a “Springing” or Future Durable Power of Attorney that only comes into effect upon your subsequent disability, as determined by your doctor. When you appoint another individual to make financial decisions on your behalf, that individual is called an “Attorney In Fact”. Anyone can be designated, but it is most commonly your spouse or domestic partner, a trusted family member or a friend. Appointing a Power of Attorney assures that your wishes are carried out exactly as you want, it allows you to decide who will make decisions for you, and it is effective immediately upon subsequent disability.

The law allows you to appoint someone you trust, such as a family member or close friend, to decide about medical treatment options if you lose the ability to decide for yourself. You can do this by using a “Durable Power of Attorney for Health Care” or Health Care Proxy, where you designate the person or persons to make such decisions on your behalf. You can allow your health care agent to decide about all health care or only about certain treatments. You may also give your agent instructions that he or she has to follow. Your agent can then ensure that healthcare professionals follow your wishes. Hospitals, doctors and other health care providers must follow your agent’s decisions as if they were your own.

A Living Will informs others of your preferred medical treatment should you become permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions regarding treatment. Almost all states have instituted Living Will laws to protect a patient’s right to refuse medical treatment. Even if you receive medical care in a state without Living Will laws, this document is useful to a court trying to decide what an unconscious patient would want. In conjunction with other estate planning tools, a Living Will can bring peace of mind and security while avoiding unnecessary expense and delay in the event of future incapacity. 

Some medical providers have refused to release information, even to spouses and adult children authorized by Durable Health Care Powers of Attorney, on the grounds that the 1996 Health Insurance Portability and Accountability Act, or HIPAA, prohibits such releases. In addition to the above documents, you should sign a HIPAA Authorization Form that allows the release of medical information to your Agents, your Successor Trustees, your family and other people whom you designate.

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