What should I do to Plan?
The first step in planning is realizing the importance of doing it! There are several pieces of an estate plan that will ensure your loved ones receive their inheritance from you with the least amount of trouble, taxes and court delays. Engaging competent legal counsel will ensure that all of these pieces are in place with appropriate documentation and attention to detail. An attorney who specializes in estate planning will be able to help you collect all necessary information, decide what legal documents you need, and assist you in making the best choices for executing your wishes in case of death or disability.
What is Estate Planning?
Don’t let the term “estate” make you think estate planning is for people far wealthier than you. Your estate, no matter how modest, consists of everything you own – your car, home, savings, investments, insurance and personal possessions.
Regardless of the sum value of these things, you can’t take them with you when you die. So, estate planning is making decisions about who you want to receive an inheritance from you, what you want them to receive and when you want them to receive it. Under a good estate plan, you also decide who you want to make decisions for you if aren’t able to and what types of decisions that person can make.
If you have minor children, an estate plan also includes naming a legal guardian for them and who will manage assets on their behalf. A good estate plan in Utah often includes a will, living trust, medical directive, durable power of attorney, guardianship designations and other documents depending on your situation.
At Sundance Law we guide people living in Utah through the estate planning process and work with you to achieve your goals and secure your future and family.
How do I Protect my Family through Legal Planning?
The care you have taken of your family and assets during your lifetime doesn’t end upon your passing. If you fail to plan, then the state has a plan and it may not be the plan you had in mind.
Legal Planning can save your loved ones from the hassle of court proceedings, certain fees and taxes, the surprise of unexpected inheritances, some creditor claims and potential family disputes. Not planning forces your family to make crucial decisions about your assets at an emotionally charged time. They may have no idea (or worse, differing ideas) about what you would have wanted. And if there are no legal documents in place, the court may become the decision maker.
Having the right legal documents in place protects your family and assets because (1) it let’s you decide to whom (and when) your assets will be distributed, (2) helps assets stay in the family and not go to certain creditors or your least favorite Uncle: Sam, and (3) saves your family time and energy.
Sundance Law Group focuses on securing you, your family and your business through proper legal planning.
How do I make sure the right people are making decisions for me if I become incapacitated?
It’s one thing to plan for your passing; it is in everyone’s future. It’s another thing to think about the possibility of serious injury or incapacity. However, as uncomfortable as that topic is, it is very important that you legally document who you want making decisions for you if you can’t make decisions for yourself. If you don’t, then a court will decide who will make decisions for you (and it may not be the person you want). Some of these legal documents must be notarized and/or witnessed by another person so it is important to get legal guidance to make sure they are done correctly.
Once you become incapacitated, you can no longer designate who will make decisions for you. It is too late. Your loved ones may be forced to ask a court to make that designation. This court process can be costly and time-consuming for your loved ones so it is important that you legally formalize your decisions while you are able to.
An attorney who specialized in estate planning will be able to assess which legal documents you need (such as a Durable Power of Attorney, Medical Directive, HIPAA Authorization) and guide you through the process of not only selecting a decision maker but also deciding which powers they should hold.
How do I protect and provide for my special needs child?
Special needs children and adults are particularly vulnerable to financial abuse. Therefore, careful planning is particularly important if you have a child with special needs or a child that qualifies (or could potentially qualify) for government assistance. If you fail to plan, then the assets you have left to your special needs child could go to the government and may not be managed by the person you choose.
Proper Structure and Language is Crucial
Many strategies exist for protecting assets for special needs children. Often a dedicated trust can be established that protects your special needs child. You decide who will manage the assets and can ensure that they benefit your child without disqualifying them for benefits. (The trust must be drafted in a particular way to achieve this result.) An experienced estate planning attorney can assess your particular situation, walk you through the different options that are available in Utah, and help you draft the needed legal documents to protect your special needs child.
How do I make sure my property goes to the people I choose?
You’ve worked hard and have been careful with your money so you want to make sure it goes to the people YOU choose.
Carefully Structure Your Plan
It is important that you carefully evaluate your property and determine the best way to pass it to your loved ones. An attorney specializing in estate planning is in the best position to help you legally structure your plan to avoid common legal pitfalls and to ensure maximum tax savings. For example, before she came to see me, a client added her son to the deed of her home. She didn’t realize it but her son could potentially pay thousands more in taxes than necessary if she would have structured the transfer to him differently. We restructured the transaction to ensure maximum tax benefits.
In many cases you can arrange your legal plan to protect your property from a number of situations, such as: individuals or companies to whom your beneficiaries may owe money, from your beneficiaries’ divorcing spouses, certain taxes, and being spent on addictive behaviors. If you have a loved one who is eligible (or may become eligible) for government assistance – such as a child with special needs — careful planning is required to ensure your money is not lost to the government. Advanced planning also allows you to structure charitable gifts to ensure maximum tax benefits.
An experienced estate planning attorney can advise you on the best structure to accomplish your goals.
Properly Execute Legal Documents
Once you have determined the best structure to transfer your property, an attorney can document your plan and make sure it is legally executed. This is important because each state has different rules as to what makes a will, trust, power of attorney and medical directive valid. For example, a couple used on online will service to prepare a will. They printed out the will and then took it to a local bank to get it notarized. One of them subsequently died. The wife who survived was shocked to find out that her husband’s will had not been properly executed because it required two people to witness it to be valid. An attorney can ensure this doesn’t happen. Make sure the attorney is located in your state and has experience in estate planning rather than some other area of the law.
What happens to my young children and teens if something happens to me?
If you (and the other parent of your children) die and you don’t have a legal plan, the results can be tragic. The following case study illustrates what can happen without a plan:
Bob and Judy have been married for 10 years and have three children: Elena (8), Dustin (6) and Chloe (3). They have talked to each other about the need for a legal plan and even discussed who they would want to care for their kids if something happened to them. Unfortunately Bob and Judy never legally documented their wishes.
Bob and Judy are in the car together one night. As they go through an intersection they are hit by another car. Both are killed instantly.
Bob and Judy’s kids are being watched by a neighborhood babysitter. When the police call and then arrive at the house the babysitter has no idea who should take the kids. She looks through the information Bob and Judy gave to her but it just includes their cell phones and the kids’ medical information. Not knowing where the kids should go, the state takes the kids into protective custody so the courts can sort out who should take them and be appointed their guardians.
When Bob and Judy’s families are notified of their deaths they are devastated. Most of their relatives are out of town so they make arrangements to travel to Utah. When they arrive, the kids are still in protective custody. Both Bob’s parents and Judy’s sister (and husband) think Bob and Judy would want them to care for the kids. Both are adamant that they would be the best guardians for the kids and each of them hire an attorney to petition the court for guardianship. (Actually, Bob and Judy had wanted Bob’s brother, John, and his wife to be their kids’ guardians, but John didn’t petition for guardianship because he didn’t want to offend Bob’s parents.)
Relationships between the families become tense as the attorney’s for both sides present evidence of why it is in the kids “best interest” for each side (rather than the other side) to be the children’s guardians. As part of this process, Bob’s parents try to show how Judy and her husband are unfit to be guardians because of past marital difficulties. Judy and her husband try to show how Bob’s parents are unfit because of their age, small living area and past bouts of anger. These proceedings become expensive and tensions run high between the families.
Fortunately Bob and Judy had a home, a large savings account, and a life insurance policy naming the kids as beneficiaries. Because the children are under 18, however, the court must appoint a conservator to manage the assets and life insurance money for the children. Bob and Judy’s home and savings account must go through probate — delaying any payments from these accounts to their children. This process becomes time consuming and expensive because the family does not agree on who should manage the children’s money and because Bob and Judy have creditors that must be notified and debts that must be satisfied.
In the end, Bob’s parents obtain guardianship of the kids but only after the kids have spent substantial time in state custody and the relationship between Bob’s family and Judy’s family has been substantially harmed. Also, while Bob’s parents manage the kids money, each one obtains full access to the money at age 18. As is typical when people receive inheritances at young ages, each of the kids had spent their entire inheritance within 18 months of receiving it.
How Legal Planning Helps
Legal planning can help avoid the many pitfalls illustrated by the above example. It puts you in the driver’s seat and allows you to choose who will be your children’s guardians, who will manage their money, and when (and how) that money will be distributed to them. At Sundance Law we focus on helping parents develop a legal plan to protect their young children and teens.
How do I Protect my Young Children and Teens?
Life happens and as much as we like to think we are invincible, unfortunately we aren’t. If something happens to you (and your child’s other parent) and you don’t have a legal plan in place, then a judge will decide who will raise your children and who will manage your children’s money.
What Happens If I Don’t Plan?
Because a judge does not know your parenting style and values, the judge may choose a person to be the guardian of your kids that you would absolutely not want to raise them. The judge could also select a person to manage your children’s money who you know will do so poorly or won’t do so in your kids’ best interest.
Also, without legal planning, kids often get their full inheritance at 18 years old. Most young people are not prepared to manage a sudden inheritance at this age. This money can get wasted and not be around to help them later in life. This is an especially bad result since they won’t have you there to offer guidance when it is all gone.
Legal Planning Puts you in the Drivers Seat and Protects your Children.
Legal planning allows you to choose who will take care of your minor children if you die or become incapacitated. (Note that it is important to coordinate this decision with the other parent because in Utah the most recent document executed by the last parent to die is the document that governs this decision.) It also let’s you choose who will manage your children’s assets. By the way, this person can be different than the person who will care for your children.
By creating a plan, either in a will or in a present trust, you can also control (subject to certain limitations) how your money is distributed to your children after you die. Many parents will have their child’s money held in trust and then have it distributed to the children at certain ages. Also, a lifetime trust can be established. By doing this, a trustee of your choosing manages the money and, depending on how the trust is drafted, it can protect the money from your children’s creditors, predators and divorcing spouses.
Also, with legal planning you appoint someone to manage your assets if you become incapacitated. If you become incapacitated, your spouse or your family may need to access your accounts and property to care for your minor children. Without legal planning, they may be forced to hire a lawyer and petition the court for access to your accounts and property. This process can be lengthly and costly. By having a Durable Power of Attorney or a Trust in place, you can designate someone you trust to access your assets on your behalf if you become incapacitated. This way your children can be readily be cared for if something happens to you.
Sundance Law Can Help You Protect Your Children.
At Sundance Law we are parents ourselves. We give careful attention to working with you to create a legal plan to protect and provide for your greatest treasures — your children.
What is the difference between a Living Trust and a Will?
A will is a legal document that states how certain property a person owns will be distributed when they die. It also appoints a person to oversee the distribution of such property together with the probate court. A guardian can also be appointed for minor children in a will. A will does not take effect until after a person dies and must be signed with certain formalities to be effective.
Generally, when a person dies with a will, it is filed with the probate court in the county where such person lived. The assets governed by the will then go through the county’s probate court process. Depending on where the probate takes place, this process can take anywhere from 4 – 18+ months and cost thousands of dollars.
A will does not govern certain property that is controlled by beneficiary designations or by titling. These assets (including property titled jointly with rights of survivorship, payable on death accounts, life insurance, retirement plans and accounts, and employee death benefits) pass directly to the beneficiaries named and aren’t controlled by a will.
A trust is an agreement that gives a person(s) – the “trustee(s)” — the right to manage the assets placed in the trust and directs how those assets should be distributed. A living trust (also called a revocable trust or intervivos trust) is a trust that is created while a person is still living. The creator generally gives themselves broad powers to change the trust during their lifetime and appoints themselves as trustee. In most cases, the creator of the living trust chooses to enjoy all the benefits from the trust assets during their life while maintaining complete control over those assets just as they did prior to creating the living trust.
Once the creator dies or becomes incapacitated a successor trustee will manage the trust assets and distribute them in the way the trust directs. Often the trust will direct the assets be either distributed outright to the beneficiaries or held in the trust for the benefit of those who will eventually receive them.
If a person elects to create a living trust, they should also have a will. A will governs property that may not have been placed in the living trust, appoints a personal representative in case one is needed, and designates guardians for minor children. Often if a person has a living trust, their will simply provides that all property passing under the will goes into the person’s living trust.
Why Form a Living Trust?
Generally a person forms a living trust for 5 reasons:
- To Avoid the Hassles of Probate. Assets placed in a living trust do not have to go through the probate process. Probate is a court-supervised process where assets are inventoried, creditors and beneficiaries are notified, and assets are distributed. The probate process can be lengthy and costly depending on where a person lives, the number of creditors and beneficiaries involved and the number of disputes between potential beneficiaries. While Utah has a more streamlined probate process than most states, generally assets in a living trust can be accessed easier and with less expense than assets going through the probate process. Also, even if a person presently lives in Utah, forming and funding a living trust protects that person if they move to another state with a lengthy and expensive probate process.
- To Avoid Probate in Multiple States. If a person owns real estate in multiple states, then a probate will need to be opened in each state. This places an unnecessary burden on a person’s loved ones. Creating a living trust and putting property into the trust brings all of a person’s assets together under one plan. This structure avoids the hassle and expense of going through the probate process in multiple states.
- To Preserve Privacy. A probated will is a matter of public record whereas a trust is private. When a deceased person’s will goes through probate, anyone can see what that person owned, what debts they have, who will receive their property and when such property will be received. While the general public may not care about the value of your estate, predators care who inherits what and how much – especially if those beneficiaries are younger. Many people want their information to be private so they elect to form a living trust.
- To Avoid a Conservatorship: A conservatorship is a court case where a judge appoints someone to manage the assets of an adult who cannot manage their own finances. Often the process of obtaining a conservatorship in Utah (or any state) is lengthy and expensive. If a person has established and funded their living trust, then generally this process can be avoided. The trust will state who can manage the trust assets if the person becomes incapacitated.
- Faster Access to/Control of Assets. A living trust generally allows for assets to be accessed faster after a person dies. This may be especially important if assets need to be accessed quickly, a large transaction needs to be closed, or if there are immediate needs.
Why Should I Review My Estate Plan Regularly?
Your Life and the Law Changes
I am sure when you completed your estate plan you felt relief and confidence that all was in place for your loved ones. However, time marches on. Just as your life changes, your trust needs to change to fit your new circumstances. The little ones who were on your lap when you first set up your trust, may have little ones of their own now. The assets you own likely have multiplied or increased in value. The people you listed as executors or trustees may no longer be able to aid you and family dynamics may have changed. It is important to note that most older trust documents fail to include incapacity planning or government benefit provisions for trustees, such as Social Security, Medicare or Medicaid. Estate planning laws regularly change requiring plans to be updated. Regular reviews of your plan are essential to make sure everything happens as you expect and hope they will when the time comes.
Failing to keep your trust current and funded properly can have regrettable outcomes. Consider Marianne’s own story:
“Shortly after I became a new attorney, my grandmother died. While she paid an attorney to draft a will and a revocable living trust for her, the attorney simply provided her with the documents and never followed up. My grandmother apparently did not understand the need to transfer her assets into the trust and never did so. Consequently, at her death, her entire estate needed to be probated even though she had paid for documents that could have avoided this process. My father and I spent many hours (and late nights) ascertaining the assets she owned (it was not organized), and taking those assets through probate. Additionally, even though my grandmother lived frugally, her assets (especially her home) had appreciated significantly. Because she didn’t have an ongoing relationship with her attorney, the attorney never addressed tax issues that arose with her appreciated assets, resulting in a large tax at her death.”
Marianne’s thrifty and caring grandma would have been appalled to learn that the legacy she intended for her beloved family was reduced significantly by avoidable fees and taxes. She would also have been sad to learn that her family spent hundreds of hours on issues that could have been easily taken care of when she was alive.
Schedule a Review Today
You have already taken important steps in providing for those you care for. You have a plan and legal documents in place. Let us at Sundance Law review with you whether or not these documents still meet your needs and ensure that you have the plan in place today that will give you peace of mind and security for your loved ones.
How do I select Personal Representative or Trustee?
If you are drafting a will or trust, you will be required to select a personal representative (executor) to administer your estate and/or a trustee to carry out the terms of any trusts you have established. Here are some considerations for selecting the right person or professional for the job.
Look for someone with good financial sense. A personal representative or trustee doesn’t need to work on Wall Street to be a solid choice to manage your trust. Choose someone with good financial judgment and common sense. It is also fitting to find someone who is willing to ask for professional help, when needed. It goes without saying that a trustee should be someone you trust.
Select someone who can work well with your beneficiaries. This person should have the ability to say “no” to a beneficiary who wants to act outside the trust terms, but also be someone whom the beneficiaries can trust and work well with. Select someone who will inform and communicate with beneficiaries, follow the trust terms and act in the beneficiary’s best interest. If there is high conflict in an immediate family, it may be best to choose a close friend or professional to manage your trust.
Take into account longevity. Anticipate the length of time your trustee will be needed to administer your trust. You’ll want to choose someone in good health and of a reasonable age so that they will be around to do just that. If you choose a corporation or professional trust company, then choose one that is likely to be in business in the future.
Think about the possibility of a team. It may be appropriate to designate co-trustees, especially in cases of trusts that will last a very long time or that have a significant amount of assets to manage. The biggest benefit of this situation is that tough decisions aren’t left in one person’s hands. One drawback, however, is the possibility of tension arising between family members designated as co-trustees. A corporate or professional trust company is another option for a co-trustee.
Always name a successor trustee or personal representative. Often a trustee or personal representative is unavailable to serve when needed, whether because of death, distance or disability. You should keep in mind that your trust may outlive the person you hoped to administer it. You should name one or two successor trustees (backup) in your trust and then give directions for how additional successor trustees will be appointed if your choices are not able or willing to serve.
Revisit your choice every few years. The perfect pick today may not be the perfect pick 5 years from now. For example, you may have selected your brother-in-law as trustee, but what if your sister and he divorce and he becomes estranged from the family? It would likely be unwise to keep him as trustee. Life’s circumstances change and your planning should reflect these changes.
What should I consider when selecting a Guardian for my child?
Choosing who to care for your minor children in the event of your passing may well be one of the most difficult decisions you face as part of your planning process. The following is a list of suggestions to help you weigh your options. The first thing to remember, though, is that nobody is going to parent your child exactly like you would. Looking for that “perfect” fit may keep you from making any choice at all, in which case the courts will decide for you. Your children may end up being raised by someone you DON’T want, and that is unacceptable. Walk through these suggestions and make a list of what is most important to you. Then make the best decision possible.
Consider a wide group of people. Guardians don’t have to be immediate family members. Look at aunts, uncles, cousins, or friends. The important thing is the potential guardian’s commitment to loving your child. Be sure to be sensitive to your spouse as you discuss possible candidates from either side of the family tree.
Look for compatible attributes and personality. Anticipate how the guardians will interact with your child. Are the people you are considering outgoing or reserved? Loving and affectionate or more hands off? How do they like to spend their time? Camping out or urban hotels? Sports or arts? Importantly, is there already a connection between them and your child?
Think about shared values and philosophies. Parents often want to make sure the things they value most will be present in the home of the guardians they choose. What are the values of the person you are considering regarding education? Work? Religion? Responsibility? Family? What is their philosophy of childrearing in general? If you don’t know, ask.
Take into account longevity. It may be tempting to choose grandparents as guardians. Think carefully about their stamina and ability to look after young ones, or to be in touch with the needs of modern teens. You will want your chosen guardians to see their responsibilities through to adulthood and be in good enough health to handle the rigors of parenting.
Envision the new situation. Try to picture what life would be like with the addition of your child to the guardian’s life. Do they have the financial stability to take on that responsibility? If there are other children in the home, how will your child fit in? Will your child have to relocate a long distance to become part of this family? Will they need to purchase a larger house to accommodate your child?
Make a backup plan. Your first choice of guardian may not say yes to your request, or they may become unable to fulfil that responsibility when and if the time comes. Always have a next-best option in line.
Think about immediate temporary guardians. It may take a while for out-of-area guardians to be notified and make their way to your minor children. Think of someone in the area who is able to take custody right away for a short period of time.
At Sundance Law we can help you walk through the process of choosing a guardian for your minor child and ensuring your choose of guardian is legally documented so your children are protected and cared for.