Picking Estate Fiduciaries

A fiduciary is someone who monitors assets for you, with your best interests in mind. This may be a financial institution, a property management company or a trustee. Fiduciaries are not only an important part of life; they are also essential during your disability and after your death. During the estate planning process, you must take care when choosing your attorney-in-fact, health care agent, successor trustee, or estate executor.

Loyalty

Every fiduciary that you name must be loyal to you and to your heirs. You are placing a great deal of responsibility into the hands of your chosen agent, and you must be sure that person will act honestly in all actions. It is against the law for any fiduciary to use your assets for his or her gain.

Reliable

You must also choose a fiduciary you and your family can rely on. Your agent must have the time and willingness to handle the matters you have asked of him or her. Your family must be able to count on the chosen fiduciary completing all assigned duties.

Good with Finances

Your selected advocate must be organized and able to manage finances. The most complicated of fiduciary duties revolve around managing your financial assets if you become disabled as well as after your death. An estate executor or successor trustee must handle every single asset and debt that you have. This process requires organization and attention to detail.

Reasonable

Your fiduciary may have to work with family members who are in disagreement over the state of your final affairs. Pick a fiduciary that can remain emotionally and intellectually apart from issues and make reasonable, rather than emotional, decisions. The ability to deal with and put aside family arguments after the death of a loved one is perhaps the hardest duty your fiduciary will face. Choose someone who has the strength to accomplish this feat.

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Estate Planning - Living Wills and Durable Powers of Attorney For Health and Finance

Estate planning frequently involves more than just having a Will. Living wills as well as durable powers of attorney for health care and finance protect your estate in case your are incapacitated, but not deceased.

A living will permits you to express your wishes regarding resuscitation and life maintaining measures in the event you later become incapable of communicating your desires. It can help you try to avoid what some believe to be an undignified existence by allowing you to decline medical treatment, food, and water if these things are "artificially" keeping you alive. The choice is yours to make and physicians will honor your wishes if the proper documents are submitted.

A durable power of attorney for health care, on the other hand, allows you to appoint another person to make decisions for you regarding your medical care in the event you cannot. This power is broader than the living will. It, too, covers situations where you may be terminally ill and need resuscitation or other life maintaining measures to stay alive. Your agent, or attorney-in-fact, can decline these treatments if you give them that power. It also applies to situations where a health care decision is required but you cannot make that decision yourself (i.e., you are unconscious as a result of injury). Your agent could authorize or decline medical treatment on your behalf.

A durable power of attorney for finance allows you to appoint another person to make decisions for you regarding your real and personal property. This power is broad and covers situations where you are terminally ill or unconscious as a result of injury, but still living. Your agent, or attorney-in-fact, can manage your financial affairs as you so wish.

If you decide to create either a living will or a durable power of attorney for health care and/or finance, you will need to consider several things before you complete the documents. You will have to provide the name and contact information for the individual(s) that you nominate to make decisions for you in the event that you cannot make them.

Be sure to inform the person you nominate of your wishes. You can permit or refuse to permit donation of your organs for transplant. You can also permit or refuse to permit donation of your body for scientific or educational purposes. Some people wish to spend their last days at home rather than in a hospital. Some people wish to nominate one person to act as their attorney-in-fact for health care and another for their finance. You can express your wishes regarding these issues in these documents. Finally, you can express your wishes about funeral arrangements.

Please consult with an attorney if you desire to execute or have questions regarding estate planning documents.

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3 Things to Consider in Choosing an Estate Planner Or Why You Should Have One at All

Estate planning or inheritance planning is a speciaialized art, one that comes with practise and experience.

To go back one step though, you might ask yourself why the need for an estate planner - in an act of modesty I have witnessed so often that I have lost count, people always say their affairs are much too simple to warrant engaging an estate planner. Often this is false modesty.

An estate planner would at a minimum be a qualified and competent in drafting a will, from the information required to compose the will, he would be able to inform the client of the likely situation if nothing were done - after all, doing nothing is sometimes a viable option. Many clients would on account of the simplicity of their estates require nothing more than a will and a complete set of power of attorney documents, which can often be had for well under a couple of hundred pounds.

A decent estate planning professional would provide a service hard to replicate by any other professional.

In the first instance, one would be urged to avoid kits; forms; templates; books indeed anything that requires of you more than basic biographical or factual information - the DIY approach often assume that the person making the arrangements is skilled and experienced in such matters - I saw a client recently who wanted to leave the majority of her assets to her children, but a small gift to her sister - the manner in which she worded her request meant the sister would have got her gift free of inheritance tax, while her children would have been lumbered with a hefty inheritance tax bill - on explaining the potential consequence of her preferred wording she agreed that she wanted her children to have no inheritance tax liability while it was of secondary importance if the value of the gift that her sister received would have been diminished by any taxes.

In the main, you are buying the experience of your estate planner. The DIY approach fails to bring context to your estate planning. While a do it yourself will might be cheaper, than engaging the services of a professional, like most things in life, what we pay for is what we get. A suitably experienced solicitor, paralegal or estate planner would be adept at finding out the personal and financial details of your life and document the basis of arriving at the will that you finally draw up.

The point of engaging the professional is not merely to produce the document - while this might be seen as some as an end in itself, but to guide you through the process of ensuring that when you are no longer of this world, your wealth is applied in the manner you would have wanted. That your loved ones get the maximum inheritance you would have wanted them to, with a minimum of fuss; expense and interference from outsiders including the taxman.

A client recently said to me that it was all very well leaving his wealth to his family, but he failed to see the merit of lumbering them with a mountain of paper work and potential liability to taxation - his was rather an interesting point as there were 2 factors for him to consider, the first was that if the status quo applied at the time of his death, as there was [relatively] little cash in the estate, a good proportion of the assets he was looking to bequeath would have had to have been sold to meet the tax liability, the second point was that with simple manipulation of his estate, there potential liability to inheritance tax was reduced to zero. This brings to mind what a client told me only last week 'I hear the government is broke, but my money would do far more good in my family than in the treasury'.

In sum a professional estate planner would save you and your family far more than he or she costs you - plus to put a cash value on the hassle that is avoided, it pays to consult a professional.

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A Guide To Understanding Estate Planning Documents

When it comes time to consider estate planning, many people can procrastinate without understanding the consequences of their delay. No one is truly comfortable thinking about what happens in the case of injury, disability, or even death, especially if young children are involved. However, one of the best ways to achieve peace of mind is to have a complete estate plan in place to make sure your family is taken care of when the time comes.

There are five primary documents when it comes to estate planning, ranging from a Will to a Power of Attorney. Let's take a moment to look at these five documents that help us make sure our families are taken care of. Laws can vary by state, so it's important to have each document drawn up by a local attorney who's familiar with each state's regulations and guidelines.

Will

The Will is what many people think in terms of complete estate planning. This document primarily addresses three important questions, but only comes into effect upon one's death. First, it designates who controls the administration of one's estate after someone passes away. Second, it establishes who receives the assets. Third, it designates legal guardians and conservators to handle the medical and financial decisions if there are any surviving minors. This document is vital in securing the foundation of your final matters if you do not have a Revocable Living Trust.

Power of Attorney: Medical and Financial

There are two main types of power of attorney documents everybody needs:  a Financial Power of Attorney and a Medical Power of Attorney. These two documents are only effective while one is alive. They grant a person control of financial and medical affairs in the case of disability, a coma, or any circumstance that would prevent you from making your own decisions. Each document helps prevent the expense of a court proceeding to determine who is allowed to manage your financial and medical decisions when you are unable to do so. 

Living Will

The Living Will, also known as an advanced medical directive, is used to officially state, in advance, whether one wants to refuse or terminate the use of artificial life support should the situation arise. This document also allows an individual to state in advance whether he or she should receive food and water in the event the Living Will is in effect. By establishing your desires in advance, it helps remove such burden from your family's shoulders.

Living Trust

A Living Trust, also known as a revocable trust or revocable living trust, is an alternative to the standard Will. It is a tremendously flexible document that can provide for the management of one's assets while alive and upon his or her passing. This method of estate planning enables exceptional control over one's assets. If drafted properly, it limits or eliminates certain taxes and offers a tremendous degree of asset protection for one's heirs should they ever get divorced or have other creditor problems. 

These five documents cover several of life's circumstances and should be a part of everybody's base estate plan. 

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What You Don't Know About Your Estate Planning Could Hurt You!

Estate Planning is the process of looking at one's financial situation, preparing a plan for how income and property will be handled if a person should become disabled or die, and signing legal papers to implement the plan.

Most people are concerned about what will happen to their property when they die. If a person does not decide who should inherit from them and sign the appropriate legal documents, the law will "fill in the blanks" and make the decision for them. Under Illinois law, if a person dies without a will, or without some other legal mechanism for designating who will inherit from that person - such as naming a beneficiary on a bank account, insurance policy, or in a trust - that property will go to family members called "legal heirs."

For example, under Illinois law, property will go to the husband or wife of the deceased upon death, unless the deceased also has children, in which case only 50% goes to the husband or wife, and the other 50% is divided among the children. If the deceased person has no husband or wife, 100% is divided equally among the children. If the deceased person has no spouse and never had any children, the property goes to the parents and brothers and sisters, in equal shares. There are other legal rules governing who will inherit if certain family members died before the deceased person, or if none of the relatives listed above remain.

What Is a Will?

A will is a written statement directing who will wrap up the financial affairs, and who will receive someone's money and other property when the person passes away. The property left in the deceased's name at the time of death is called the "estate." The people named in the will to receive property upon the decedent's death are called "legatees." They may or may not also be the "legal heirs."

What is a Living Trust?

A "living" or "intervivos" trust is one that is set up and funded while the grantor is alive. Usually the grantor names himself or herself both trustee and beneficiary. In contrast, a trust which comes into being under the terms of a will, after the grantor's death, is called a "testamentary" trust.

One might set up a living trust to provide for a smooth transition to another trustee or beneficiary upon his or her death or incapacity. If the beneficiary of the trust dies, the property in the trust can pass to another beneficiary without the need for probate court proceedings. A living trust can also help avoid the need for appointment of a guardian. Where the grantor/trustee becomes incapacitated, a successor trustee can take over management of the trust.

What are Guardianships?

Parents or other family care givers may worry about who will care for, and protect, disabled children or adults, when the parents are no longer able to do so, either due to death or any other event which renders them unable to continue in their role as protector and/or care giver. It is especially important to assure that someone who has the knowledge, experience, and motivation, to adequately identify the disabled person's needs, and to find, and arrange for, the services necessary to meet those needs, can step in when needed.

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Keeping Insurance Proceeds Out of Your Taxable Estate

After you die, all the assets you owned in your individual name at the time of your death will be listed on your Federal Estate Tax Return. If the value of your estate is higher than the estate tax threshold for that year, an estate tax will be owed. In 2011, the estate tax threshold will be $1 million and the estate tax will be a whopping 55 (fifty-five) percent. Estate taxes must be paid in cash within nine (9) months of death. For every dollar you pass over the first million, your estate will be taxed 55 cents. A million dollars may sound like a large amount of money but it is really quite small when you consider that it includes life insurance proceeds, the value of your home, stocks, bank accounts, retirement accounts, jewelry, paintings, and anything else that you may have had titled in your name at the time you died.

One approach to providing ready cash to pay these taxes and other expenses is through life insurance proceeds. The proceeds may be paid to the Federal government instead of your heirs having to liquidate assets in order to pay the estate tax bill. Life insurance provides an income tax free death benefit but the value of the benefit is added to the total of assets in the estate if not structured properly. This creates a never-ending cycle of taxes and insurance policies. The way to avoid this result, limit or eliminate your estate tax, and provide tax free money to your beneficiaries is to hold the life insurance policies in an Irrevocable Life Insurance Trust, or ILIT.

An ILIT combines the protection a trust with the liquidity of life insurance benefits. Using the $13,000 per year gift tax exclusion, you can gift assets to the ILIT annually to cover the insurance premiums with no tax consequence. At your death, the proceeds are transferred to your heirs free of all income tax and all estate tax. This will provide the necessary liquidity your heirs will need to pay your funeral costs, estate taxes, probate fees and settlement costs.

Upon your death, the trustee of the ILIT will make appropriate distributions of cash proceeds to cover debts, taxes, and funeral expenses. The trustee could even purchase some or all of your business with the cash proceeds and professionally run the business until your children were old enough to take over. The trustee could also make appropriate loans to the spouse, children, and business.

An ILIT provides flexibility and tax advantages. For more information on ILITs and to determine if they are the right vehicle for you, please contact your South Florida estate planning attorney.

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