Robert W Jones Legal Blog

Probate is a lengthy and complicated process, which is why so many advice articles are spent explaining what you can do to avoid the entire probate hassle. The article below details what to expect from the probate process. As you read you will see that having to deal with probate is best left as a last resort and having a proper estate plan in place will avoid this. Be sure to read our other articles on this blog explaining how to plan for your estate to avoid probate.

Probate usually works like this: After your death, the person you named in your will as executor — or, if you die without a will, the person appointed by a judge — files papers in the local probate court. The executor proves the validity of your will and presents the court with lists of your property, your debts, and who is to inherit what you’ve left. Then, relatives and creditors are officially notified of your death.

Your executor must find, secure, and manage your assets during the probate process, which commonly takes a few months to a year. Depending on the contents of your will, and on the amount of your debts, the executor may have to decide whether or not to sell your real estate, securities, or other property. For example, if your will makes a number of cash bequests but your estate consists mostly of valuable artwork, your collection might have to be appraised and sold to produce cash. Or, if you have many outstanding debts, your executor might have to sell some of your property to pay them.

In most states, immediate family members may ask the court to release short-term support funds while the probate proceedings lumber on. Then, eventually, the court will grant your executor permission to pay your debts and taxes and divide the rest among the people or organizations named in your will. Finally, your property will be transferred to its new owners.

To learn more about the probate process–and reasons for avoiding it–see Nolo’s article Why Avoid Probate?

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Is it worth your while to avoid probate? The short answer is yes. Planning your estate properly and carefully in order to avoid the probate process invariably will lead to saving money in the long run. Probate laws vary from state to state so it is important to get information from a professional about how your state specifically handles probate law. The article below summarizes 8 ways to avoid dealing with the hassles of probate.

Probate’s problems have been well documented and well publicized. And if you’ve experienced the probate process firsthand, after the death of a parent or spouse, you probably don’t need any convincing that avoidance is the best strategy. But in case you still aren’t sure why planning to avoid probate is worth some effort, here are some factors to consider.

Where you live makes a big difference. Some states have adopted a law called the Uniform Probate Code, which simplifies probate court proceedings. In these states (check the appendix to see whether yours is among them), probate is likely to be simpler, quicker, and cheaper than in states that cling to the old-fashioned ways. The whole process is just paperwork, with no court hearings. Some other states have also simplified their probate court procedures.

Your family situation makes a difference. Probate usually entails notifying the deceased person’s heirs—that is, the people who would have a legal claim to inherit if there were no will. (This is true even if the person does leave a valid will.) That’s usually not a problem if there’s a surviving spouse or children, because they would inherit everything under state law. But if the deceased person was elderly and didn’t leave a spouse or any direct descendents, it can be an unexpected headache to try to locate heirs. The executor may have to track down long-lost aunts and uncles and their offspring—people no one in the family may have heard from in many years.

Probate is a waste of money. The cost of probate varies widely from state to state, but it’s commonly estimated that probate attorney, court, and other fees can eat up as much as 5% of the value of property left behind at death. As a result, that much less goes to the people or charities you wanted to get it. If the estate is complicated or disputed, the fees can be even larger.

Probate’s cost might be justified if the process really did something for families. But in most instances, there is no conflict, so there’s no need to be in court.

For example, say a man leaves a will that gives everything to his widow and children, as is common. No one is challenging the validity of the will, and the family is perfectly willing to pay whatever bills he left and divide up the property according to his wishes. Why have a lengthy court proceeding, formal notification of relatives and creditors, and expensive publication of death notices in the “legal notices” column of a newspaper? The property merely needs to be handed over to the new owners, which is what probate-avoidance methods let you do. The successful use of living trusts and other probate avoidance techniques by millions of Americans is convincing evidence that if probate were gone, we wouldn’t miss it.

Lawyers’ fees, set by statute or local custom, often bear no relation to actual work done. Courts are supposed to keep an eye on fees, but in practice they very seldom intervene. And lawyers are almost always paid first—before the beneficiaries.

Some people slog through probate without hiring a lawyer, but in most states the system does little to encourage them. Just finding the right court can be a challenge. Depending on where you live, your will may be headed for Surrogate’s Court, Orphans’ Court, Circuit Court, Superior Court, or Chancery Court. Encouragingly, more probate courts are now putting good information and forms on their websites. And in a few states, good do-it-yourself materials are available; for example, Nolo publishes How to Probate an Estate in California , by Julia Nissley.

Probate takes too long. It depends on where you live and what you own, but it’s not uncommon for probate to take a year, during which time the beneficiaries generally get nothing unless the judge allows the immediate family a “family allowance.” In some states, this allowance is a pittance, only a few hundred dollars. In others, it can amount to thousands. In any case, the family is forced to ask a court for use of its own money—a demeaning and absurd situation.

Delay can be more than an annoyance; it can cause major life disruptions. A student about to enter college may not be able to if a parent’s assets are tied up in probate for months or years. A surviving spouse may not be able to move to take a new job. And it’s especially hard to run—or sell—a small business with the court looking over your shoulder.

Probate is public. Few people ever stop to think that a will—a very personal document, which may reveal much about both financial and family circumstances—becomes a matter of public record after its writer dies. Like all other probate documents, wills are examined and filed, and can be inspected by anyone who goes to the courthouse and asks.

If you’re rich or famous, you can count on public scrutiny. In any bookstore, you can find books of nothing but the wills of famous people; Michael Jackson’s will popped up on the Internet almost instantly after it was filed in court. Obviously, few people generate intense public interest—but if you’re well known in your community, reporters may sniff around just to see if there’s anything they consider newsworthy. And con artists have been known to use public records to gather information about surviving family members who might be vulnerable to scams.

If, on the other hand, you arrange for your property to pass outside of probate—via a living trust or payable-on-death bank account, for example—the transaction is private. No documents are filed with a court or other government entity; what you leave to whom remains private. (There is one exception: Records of real estate ownership are always public.)

Each state requires a court proceeding. The only thing worse than regular probate is out-of-state probate. Usually, probate takes place in the county where the deceased person was living. But if there’s real estate in another state, it’s usually necessary to have a whole separate probate proceeding there, too. That means finding a lawyer in each state and financing multiple probate proceedings. No fun there.

Read more here 

It is not simply enough to have money saved. It is very important to have your estate well planned for unforeseen circumstances or in preparation of death. By having your affairs in order, you can help to guarantee that your assets will be properly taken care of and distributed in the manner of your choosing should you pass away or become incapable of making the appropriate decisions.

Our experienced estate planning attorneys have provided the following self exam to help you determine if you are “Fiscally Fit.”

__________ 1. Have you done anything to plan your estate?

__________ 2. What is the date of your Will or Trust? Have the documents been reviewed in the past three years? Are they still valid?

__________ 3. Have you and your spouse planned your estates to double your tax-free transfers and, if so, are your properties titled correctly to carry out the plan? Does your trust allow you to avoid probate?

__________ 4. Are you giving away the right type of asset?

__________ 5. Have you and your spouse both used each of your available $2,000,000 generation skipping exemptions?

__________ 6. Are you taking advantage of the $12,000 annual transfer exclusion which is limited to “Present Interest” gifts?

__________ 7. Have you set up a trust that will qualify for the present interest exclusion?

__________ 8. Is your Executor or Trustee the right choice today? May they be changed after your death?

__________ 9. Do you have a durable power of attorney and if so, may the attorney-in-fact make gifts of your property?

__________ 10. If your spouse is not a U.S. citizen, have you established a Qualified Domestic Trust?

__________ 11. Does your will name a guardian or custodian for minor children, or an adult spouse or child with a special need?

__________ 12. Have you created a trust to exclude life insurance proceeds from your taxable estate?

__________ 13. Did you know that federal estate taxes have a flat 45% rate with an estate more than $2,000,000?

__________ 14. When did you last review the beneficiary designations on your IRA? Have you reached age 70½? Have you properly funded your trust with IRA benefits?

If you cannot accurately and confidently answer any of the above questions, then you owe it to yourself and your family to become “Fiscally Fit.”

For more information regarding the estate planning process, or questions on any of the above questions please call us for an appointment 480-832-2000

See the original article here.

Estate planning can be a long and complicated process, but the more you plan now the easier it will be later. As with everything procrastination never pays off. There are key elements involved in planning your estate; some can be easily done on your own and some will benefit greatly from having a licensed professional help. The article below details ten elements of a strong plan. Read below to see how you can start as easily as possible and finish with the strong plan in place as possible.

What you need to know about estate planning, including why you may need a will and assigning a power of attorney.

1. No matter your net worth, it’s important to have a basic estate plan in place.

Such a plan ensures that your family and financial goals are met after you die.

2. An estate plan has several elements.

They include: a will; assignment of power of attorney; and a living will or health-care proxy (medical power of attorney). For some people, a trust may also make sense. When putting together a plan, you must be mindful of both federal and state laws governing estates.

3. 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. Ask yourself three questions: Whom do you want to inherit your assets? Whom do you want handling your financial affairs if you’re ever incapacitated? Whom do you want making medical decisions for you if you become unable to make them for yourself?

4. 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.

5. Trusts aren’t just for the wealthy.

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 without the cost, delay and publicity of probate court, which administers wills. Some also offer greater protection of your assets from creditors and lawsuits.

6. Discussing your estate plans with your heirs may prevent disputes or confusion.

Inheritance can be a loaded issue. By being clear about your intentions, you help dispel potential conflicts after you’re gone.

7. The federal estate tax exemption — the amount you may leave to heirs free of federal tax — changes regularly.

The estate tax hit $3.5 million in 2009, but was phased out completely in 2010, but only for a year. Unless Congress passes new laws between now and then, the tax will be reinstated in 2011 at $1 million.

8. 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.

9. 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.

10. 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.

Read the full article here for detailed explanations

Having a proper will in place is the best first step you can make to accomplishing your estate planning goals. However, there are some pitfalls to avoid that can make having a (bad) will in place turn against you. It is important to know what to look out for so it can be avoided. As always, it is your best option to plan with a licensed professional with experience. Follow the information in the following article to have the best prepared will possible.

By Liz Pulliam Weston

The worst mistake is not having a will. But there are plenty of other ways your well-intended document can make things go horribly awry.

Wills do more than distribute our stuff after we die. They also give our heirs a final, lasting impression of us and our intentions. That can be a good thing, if we’ve planned carefully and executed our estate plan meticulously. Or it can be a disaster, if we’ve made one of these common blunders:

Not having a will. All of us have something we care about: our spouses, our kids, our pets, the unrestored ’66 Mustang in the back shed. Not having a will means the state decides what happens to them. That can leave survivors vulnerable to contentious lawsuits, confusion and the heartache that we didn’t love them enough to plan for their futures, said attorney Colleen Barney, co-author of “Best Intentions: Ensuring Your Estate Plan Delivers Both Wealth and Wisdom.” If you really don’t have much or don’t expect anyone to fight over what you have, will-making software like Quicken Willmaker can do the trick. If your estate is larger or your family is contentious, invest in a lawyer’s help. A simple will should cost about $200. A more complicated estate plan, including a living trust, can run $1,500 or more.

Not updating a will. Life is nothing if not change. Your family, possessions and wealth can grow and shrink. The rules can vary as well: Congress is constantly fiddling with estate tax laws, while court and IRS cases can alter how those laws are interpreted. Each state has different laws as well. Have your will reviewed after every major life change and interstate move. If your estate is large enough to worry about estate taxes ($3.5 million in 2009, but disappearing this year before reverting to $1 million in 2011), reviews would be appropriate at least every few years and again after major estate tax legislation. For more on the estate tax, see “2010: The best year to die?”

Naming the wrong executor. This job, as I detailed in “Executors can inherit an unholy mess,” is a real pain in the patoot. You need someone who is calm, honest, organized and, most importantly, willing to serve, said Blanche Lark Christerson, a director in the Wealth Planning Strategies Group for Deutsche Bank Private Banking. Make sure you discuss the job requirements with your candidate and get his or her consent first, then include an alternate or two. Also, consider naming someone younger than yourself, particularly if you’re getting up there in years. You want to lessen the odds that your executor dies or becomes incompetent before you do.

Naming couples to serve as guardians. Your sister is great with kids, but what if she divorces or dies in the same accident that claims you and your spouse? Are you comfortable having your children raised by your beer-swilling brother-in-law and whoever he marries next? If the answer is yes, name your sister as your first choice for guardian with your brother-in-law as backup. If not, find another alternate.

Checks and balances

Naming the same person to serve as guardian and trustee. Skills with children and money aren’t mutually exclusive. But the person you may trust most with your children could be hopeless with managing finances, said attorney and author Jon Gallo. Having separate people as guardian of the kids and trustee of their money can put an important check-and-balance system in place; it will be tougher for your guardian to burn through your child’s money, for example, if he has to justify his bigger expenditures to an outside party.

Leaving too much to a spouse. This is by far the simplest choice, but may not be the best for at least two reasons. First, if you have children, you’ll lose control over what happens to your assets if you bequeath them outright to your spouse, notes attorney Gerald Condon, co-author of “Beyond the Grave: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others).”

She could very well leave everything to her next spouse, for example, or the televangelist she becomes devoted to after your death. (Remember, just because she’s competent now doesn’t mean she won’t get a little dotty later, and challenging a will can be expensive even if she’s clearly gone off her rocker.)

Secondly, if your estate is large, you could be losing a valuable tool for minimizing taxes. Putting at least some of your wealth into a bypass trust will allow the assets to grow, and eventually go to your heirs, without triggering a second round of estate taxes on your spouse’s death.

Not leaving enough to a spouse. If you live in a common-law state — and 41 states are, along with the District of Columbia — you can’t disinherit a spouse. You typically must leave him or her one-quarter to one-half of your estate, depending on the state’s laws. Even if you live in one of the community property states, your spouse may have certain rights to your estate. In California, for example, a surviving spouse can claim all community property, as well as a share of the dead spouse’s separate property, if the will or other estate plan was made before marriage and not updated to include mention of him or her, according to attorney Denis Clifford, author of “Plan Your Estate.”

Improperly disinheriting a child. In only one state — Louisiana — does a child have a right to inherit by law. In the other states, though, a child has a good chance of getting a share of the inheritance if she isn’t mentioned in the will at all, Clifford said. If you really want to disinherit a child, mention her by name in the document. Try to resist the urge to add snotty comments, however, since that will create even more bad feelings and raise the possibility of a will-challenging lawsuit. Another approach: Leave the child something of value, with a “no-contest” clause that revokes the bequest if she challenges the will.

Read the full article here

There are many options for planning your estate. Another option we would like to shed some light on today is the revocable living trust. There are pros and cons to using this method and as always you should consult with a legal professional for the best results. With that in mind, the article below details exactly how a revocable living trust can be used and details the finer points of what it is exactly.

Many people use revocable living trusts as a method of transferring assets in the event of death to a named beneficiary. These trusts are very popular and are a common method of simple estate planning. These trusts do have drawbacks and fully understanding them and how best to sue them is an important decision.

A revocable living trust is an arrangement you make for management and distribution of your property. Like a will, the trust is “revocable,” meaning that you can modify or eliminate it at any time. Also the trust does not become in effect until death occurs of the trust originator.

These trusts are established by a written agreement or declaration which appoints a named trustee to administer the assets and which provides detailed instructions on how the property is to be managed and distributed. Using the trust can avoid delays in the ultimate transfer of an asset to the named beneficiaries. You can also use your trust to name a guardian for a specific situation such as a child or a family person with specific needs. A revocable living trust agreement or declaration is usually longer and more complicated than a will, and transfers of assets to the trustee can be time-consuming and expensive. Probate is the legal process for transferring your property when death occurs. Probate usually involves validation of your will, appointment of a personal representative, collection of your assets, notification and payment to your creditors, and transfer of your property to the beneficiaries under your will.

A revocable living trust avoids the probate process because your assets are collected and transferred to the trust prior to death. At death the assets forwarded to the named beneficiary already in their name of ownership.

In selecting a trustee you have the option of selecting one person or a number of persons. You may also select a financial institution such as a bank or insurance company. Appointing an alternate trustee is often a good idea in case the first trustee is not available or indisposed.

Establishing a RLT is simple and the only requirement is being a competent adult. Husbands and wives can establish a trust together, and can provide that their community and separate property assets be held in different accounts. This is accomplished generally in two steps. The first thing is to sign a written designation establishing the trust. This involves establishing a bank account and obtaining a tax ID number, naming a trustee and putting into writing your desires and goals of the trust. In the declaration would be naming a guardian and other issues desired. The second this is top transfer ownership of the desired assets into the trust. These assets could be bank accounts, stock portfolios, real estate and any other asset requiring a deed or title to provide ownership.

The trustee must keep separate records for trust assets and might have to file separate income tax returns for the trust. If the trustee does not obey these rules, the trust may not avoid probate.

Other parts of a RLT could be the establishment of a “durable power of attorney.”A durable power of attorney is a simple and inexpensive way to avoid control of the assets by the courts. This brief document appoints another person as your “attorney in fact,” to handle your assets and to make medical-care decisions on your behalf if you become incapacitated.

A RLT does not avoid taxes such as income or estate taxes. All taxes due on your estate will still be due and payable. The exact cost of a revocable living trust can depend on the value and complexity of the estate. A simple solution is to ask your selected attorney about an estimate of the cost of the RLT in advance and to also get the estimate in writing. Many people use a service that is the go between the creator of the trust and an attorney. It is generally not advisable to sue these services but to work directly with the attorney. Most attorneys will include with the trust a review of youyr will and the durable power of attorney documents as a package deal.

Advantages of a Revocable Living Trust

• Avoidance of probate
• Avoidance of guardianship.
• Reduction of delays in distribution of your property.
• Privacy, the RLT documents are not recorded in the public record.

Disadvantages of a Revocable Living Trust

• Expense of planning: it cost money to create and manage a RLT. Changes in the future to an asset may also involve cost.
• Expense of administration: If you appoint a bank or trust company as trustee, you may have fees to pay.
• Inconvenience: once a trust is established it must be maintained.

Like all important decisions make certain you fully understand how the trust works and if it can accomplish your goals. Always seek and understand professional advice both legal and tax. Never enter into an agreement without fully understanding all aspects of the trust.

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Having a living will and/or a health-care proxy in place for yourself is almost always a good idea and can relieve some of the anxiety of thinking of the worst “what if” potentials that may come your way. These decisions can be stressful and it is important to work with an estate planning professional who is experienced and can offer the most help to anxious people. By having a living will a person is able to guarantee  that his or her wishes are fulfilled exactly the way the want. Read the article below for further information and the benefits of living wills and health-care proxies.

Making your medical wishes known through living wills and health-care proxies now can save a lot of heartache later.

A living will (also known as an advance medical directive) is a statement of your wishes for the kind of life-sustaining medical intervention you want, or don’t want, in the event that you become terminally ill and unable to communicate.

Most states have living will statutes that define when a living will goes into effect (for example, when a person has less than six months to live). State law may also restrict the medical interventions to which such directives apply.

Your condition and the terms of your directive also will be subject to interpretation. Different institutions and doctors may come to different conclusions.

As a result, in some instances a living will may not be followed. Nevertheless, a patient’s wishes are taken very seriously, and an advance medical directive is one of the best ways to have a say in your medical care when you can’t express yourself otherwise.

You increase your chances of enforcing your directive when you have a health-care agent advocating on your behalf.

You can name such an agent by way of a health-care proxy, or by assigning what’s called a medical power of attorney. You sign a legal document in which you name someone you trust to make medical decisions on your behalf in the event that you can’t do so for yourself.

A health-care proxy applies to all instances when you’re incapacitated, not just if you’re terminally ill.

Choose your health-care agent carefully. That person should be able to do three key things: understand important medical information regarding your treatment, handle the stress of making tough decisions, and keep your best interests and wishes in mind when making those decisions.

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Assessing your assets and goals is groundwork for a good estate plan.