Having a Will Affects Your Family

So most of us know what a will is: a legal document wherein you can state how you want your assets and property to be distributed and who you want your beneficiaries to be. However, a lot of people seem to take the importance of having a will quite lightly, especially if you are married and you have children. So it is important that you know all the basic information when it comes to having a will - and how it will affect you and your family, especially your children.

It is usually not the case that the surviving spouse will inherit all of the diseased person's property and assets; this is just a false belief of most people. According to the law, the surviving spouse will only get about one-third to one-half of the property and the children will get the remainder. However, it is still important to specify the distributions to your children so that they will be able to get their rightful portion of the inheritance.

If you have children but you are single, then your entire property will go directly to your children, as stated in the state law. However, to make sure that your ex-spouse or anyone else does not try to usurp the control over the children's inheritance, then you had better name a person you trust to take charge of your children's affairs, in order for them to get their fair share of the property and estate.

However, your surviving spouse may renounce your will and instead propose that they take a specific share of property as supported by the state law. In order for this to be avoided, you should create a will and specifically state how you want your property to be handled after your death. It would also be better to know the state law to avoid misunderstanding and miscommunication. If you want to protect your children's rights and if you want them to get their fair share of the inheritance, having a will is very important.

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What Do You Mean Probate?

A couple of years ago, a client came into my office trying to figure out how to transfer the title of their deceased father's house into that client's name. The father didn't have a Will or any resemblance of an estate plan, so I kept asking questions. It turned out the father had another son who they didn't talk to anymore and quite a bit of furniture and other household goods. While it was a pretty modest estate the house had to be sold to help pay for the probate expenses, it was going to take at least 9 months before everything was going to be resolved, and this was all based on the hope that his brother was going to actually cooperate, which rarely happens.

On my last blog I made some references to "non-probate planning," without really defining probate. Simply put, probate is the department in the courts that deals with passing property to heirs at a person's death. However, the process itself is not as simple as the definition. There are a multitude of steps and rules that need to be followed. Is there a Will? What property is passing through the will? Who gets what? What if two of the heirs want the same piece of property? Is there enough money in the estate to pay the expenses, or will the heirs have to pony up their own money? The list of questions goes on and on and rarely is the answer simple. Here are a few of the more common questions I get. If any of this relates to you, make sure you talk to an attorney before acting. This is only generic advice, and may not directly apply to your situation.

When my parent dies am I responsible to pay off their debts? Basically, the answer is no. The only way you should pay any debts off or agree to pay debts off of the parent is if you were already obligated to pay off that debt to begin with. Otherwise, those should be dealt with accordingly when settling the probate estate.

Should I open up a probate estate if there's more debt than assets? Probably. This answer depends on the situation (type of debt, type of property, etc.). The ultimate goal in these estates is to maximize the value of the assets to pass to the heirs while still paying off the necessary creditors pursuant to what the law provides.

If there is a Will, does that mean the property does not have to go through probate? No. This is a very common misconception. First off, everyone does need a Will. The Will provides a safety net in the event part of the person's estate plan is not executed accordingly, is not modified when a triggering event occurs, or some extraneous event causes a probate case to be opened by a 3rd party (i.e. creditor, disinherited heir, etc.). However, the Will does not avoid probate.

The good news is that probate is completely avoidable, and planning to do so is one of the essential elements of every estate plan I put together for my clients. There are quite a few methods that can be used, and some are better than others. The key elements to having an effective non-probate plan are to implement your plan immediately after you execute the rest of your estate planning documents; review and update it when necessary; and make sure it accurately reflects your chosen estate plan.

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Can I Include Funeral Plans/Body Arrangements In My Will?

The simple answer to this is yes. If the funeral arrangements are complicated, it should be written out in details as to the instructions you would like to leave so your executors know exactly what you want. The Will can then state your preference as to whether you would like to be buried or cremated, or where you would like to be buried or cremated and if you want your ashes scattered or buried etc... If there are any particular arrangements that you would like to make, whether you wish to be buried in a particular place then all these wishes should be set out clearly in your Will.

Many people express their wishes as to what they would like to have happen to their body in their Will. Many ask for their body to be used after death for medical research. Bodies that are donated in this way are used by doctors and medical students. Medical students benefit from the bodies donated in this way to help with their studying and for research into the structure and function of the normal human body. If you would wish to do this then drafting your Will in accordance to these wishes is essential. If this is not possible, it is advisable (sometimes it is appropriate to do both) to make arrangements with your chosen medical school or your local hospital direct. Medical schools and hospitals will provide the necessary documentation and a contact address of your executors. It is therefore advisable to let your executors know that you have made these specific arrangements; therefore they will be able to act quickly in the event of your death.

Organ transplants, such as kidney, liver, heart and heart-lung transplants have now become routine operations and the process is developing every year. In your Will you can state whether you would like to leave specific organs to be used for transplants.

If you want to avoid a situation where you have a terminal illness or severally incapacitated and not able to refuse treatment that is keeping you alive, you can make a document called a living Will which is a document that expresses your wishes in the event of you becoming terminally ill or severally incapacitated. A living will can express your views and wishes on receiving treatment that might ease your suffering even though it would not prolong your life. It can also state your doctors to either withhold or withdraw certain treatment that could keep you alive, such as artificial nutrition and hydration.

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Wills and Life Estates

So what exactly is a life estate?

A life estate is a piece of property. Basically, if you own a life estate, you own that particular piece of property, usually a house and its contents, for the entire span of your life. However, you do not own it completely; it is not totally titled to you. Seems confusing?

Let's have an example. A widow wishes to remarry, and she and her new husband have decided to move into her house. However, she has children from her first marriage, and she wants to leave the house to them after she dies, not to her second husband and his family. This does not mean that the second husband cannot stay and live in her house. It just means that the house will not be inherited by the husband if she dies before he does.

The second husband will get a life estate in the house. He can live there and stay there for the entire span of his life, even if the widow dies before he does. He has complete liberty to do whatever he wants in and with the house, and while he has the responsibility of maintaining it and keeping it in good condition, he is not entitled to sell it to someone else. However, though he is entitled to the house, it is only for the span of his life. When he dies, the house will be inherited by the widow's children, or by whoever she wishes it to go to.

A life estate can be created in a will, and it can also be created through a property deed, a trust, or pre-nuptial agreement. However, if you wish to make life estate arrangements, it is best to consult a lawyer than to do it on your own. You don't want to regret your decision if something wrong happens or your wishes are not followed, especially because a lot is at stake.

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What Are Estate Taxes and Will They Apply to My Last Will and Testament?

Estate taxes are one of the most hotly debated tax law subjects today. Essentially what happens is that when you pass on your estate will go to your beneficiaries and heirs subject to your Last Will and Testament. However, your beneficiaries and heirs will have to pay tax on the portion of the estate that they receive. This is a tax that occurs not only at the federal level but also at the state level as well. One of the instances where the tax will actually not apply is when your entire estate goes straight to your spouse without going to anyone else. This is specifically an exception that is implanted into the tax law in order to have the surviving spouse not subject to tax. In 2010, the tax was actually completely repealed but it is to come back in 2011 as such the estates will again be subject to this tax.

Thus, on a general level the estate will be subject to estate taxes unless the entire estate goes to the surviving spouse. One of the ways that you can actually reduce the amount of estate taxes that you pay is to have an attorney prepare your Last Will and Testament. What they can do is actually utilize the latest in tax law provisions in order to increase your tax savings. One of the techniques that they can actually use is a disclaimer trust which in essence works like this. This trust created by an attorney works in the way that certain portion of the estate is actually disclaimed by the surviving spouse and it goes into the trust. In turn the trust will at a later time go to the surviving spouse's heirs and as such they can take advantage of the exclusions from taxes.

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Special Needs Trust - 7 Frequently Asked Questions About Special Needs Trusts

It's never easy to think about what will happen when you're gone. However, it's an eventuality you must plan for, especially if you have a child with special needs. Who will take care of them? Will they have the necessary monetary resources? These lingering questions can be answered years before if you have a special needs trust drawn up. Here are some of the most commonly asked questions about this type of trust:

My child has special needs. What will happen to him or her when I'm gone?

You may be anxious when thinking about the care your child will receive once you've passed. You might wonder if his or her quality of life will suffer with your absence. However, do you have the resources to ensure quality care without SSI or Medicaid assistance? If not, then your child will need these benefits and funds to supplement them. Hence the need for a special needs trust.

How does a special needs trust work?

It provides your child with benefits without losing public welfare assistance, like SSI and Medicaid. This type of trust comes in two categories: self-settled, where benefits like a settlement or inheritance don't interfere with governmental aid; and third party, where the disabled is given funds from family members and others.

Does my disabled family member need a trust?

It depends on the circumstances. Not every disabled person who has been awarded a settlement or inheritance needs a special needs trust to continue receiving government benefits. If your relative would have trouble overseeing the assets, may need benefits later or could be taken advantage of, then a trust is advisable.

Will the trust qualify them for Medicaid, SSI or other public aid?

No. The trust makes it easier to qualify for aid, although the individual must meet qualifications to receive assistance.

What will trust pay for?

It will provide the resources to pay for all types of medical treatments, like physical therapy, medications and devices. Daily living requirements, like a car, housing expenses, clothing and food, are also eligible to be paid for from the trust. SSI benefits may be reduced some if the trust is used to pay for food or shelter.

How are trusts taxed?

In order to establish and administer the trust, income, gift and estate taxes need to be considered and reviewed carefully by an attorney or accountant.

How does the beneficiary access the funds?

In establishing the trust, you must select someone to be the trustee. This person should not give your relative the funds directly, as this could disqualify him or her from future government benefits. Instead, the trustee should use the assets to purchase necessary items, like a personal care attendant, vacations, furnishings, medical expenses, etc.

New Year's Resolution: Make or Revise Your Will   How Inheritance Claims Can Prove Very Difficult   10 Top Terms Used In Wills and Will Writing   Special Needs Trusts - What Are They?   A Living Will - Your Medical Directive