Back To School, Back To Reality
While the summer has been fun (and a scorcher, at that), reality is slowly coming back to everyone, as the beginning of school season is, once again, approaching. This new era brings with it some estate planning considerations. The number-one thing on your mind, if you already have an estate plan, should be to ensure that it is up to date and, if necessary, revised.
A lot can change in a short period of time—we all know that. Though the rule of thumb is to edit and update your estate plan every three to five years, big changes might have occurred in far shorter a time frame than that. In this article, we’ll talk about revising your estate plan: the dos, don’ts, and must-knows.
What Does Revising Mean In This Context?
In the context of your estate plan, revising refers to looking over the different documents in your plan to make sure that they are still aligned with your current situation. Are the people listed in the documents still in your life? Have things change with them? In the next section, we’ll discuss the times when revision is the most necessary, though this list is not exhaustive, and there are many other changes that could occur that would make updates a must-do.
When Do You Truly Need to Revise?
Listed below are some major life events that require you to go back and look at your estate plan, ensuring that the plan reflects the current changes, if applicable.
Divorce
Alas, the divorce rate is pretty high, with around half of marriages saying goodbye the legal way. If you divorce your spouse, you will need to go back to your estate plan and ensure that, in the documents, your significant other is no longer listed as a beneficiary or a power of attorney. Even if you two had an amicable split, it’s best to change that role rather than leave it.
Marriage
On the reverse, getting married is a happy occasion to change your estate plan to include your new spouse. You will want them to be a beneficiary or take on important roles in the plan, so this is another occasion where meeting with your attorney would be an excellent idea.
New Family Members
Whether you’re gaining new family members through marriage, birth, adoption, or however else, you’ll want to make sure they are included in your estate plan, if you are close to them. Don’t think to yourself that you’ll get to it “eventually”—do it now, lest something happen, leading it to be too late.
Role Change-Ups
Almost every estate plan has roles delegated to other people, including powers of attorney, guardians, and executors. These roles are vitally important to the administration of the plan, and you want to continuously make sure that the person you’ve asked to carry out that role is still fit.
If illness, addiction, or injury, for example, have rendered your named power of attorney incapacitated, you’ll need to remove them from that role. If you’ve divorced your spouse, but they’re still executor of your will, you’ll need to make alterations. If your proposed designees are of sound mind and still close to you, they, obviously, can stay.
What Happens If You Ignore Your Estate Plan?
A whole lot of conflict, that is what can happen. In addition to people being left out or included who should not be, families can challenge wills post-mortem, leading to expensive inter-family strife. For your loved ones’ sake, it is important to keep up with your estate plan.
Hopefully, this short guide has inspired you to contact your estate planning attorney to look over your plan again. And, lest we forget, we hope you have a great start to the upcoming school year!
Estate Planning for Cryptocurrency
In this article, we will discuss estate planning for cryptocurrency. While this guide will not be the be-all-end-all to planning for this digital currency, it will cover some important fundamentals, including definitions, strategies, advantages, and disadvantages.
What Is Cryptocurrency?
If you’ve been following the financial headlines over the past decade or two, then you’ve probably seen information about cryptocurrency pop up. This digital currency is a medium of exchange, but it is unique because it does not rely on a bank or central authority to govern it. It is decentralized and largely unregulated. The crypto market can be volatile, but it can also be quite lucrative. It is easy to see why people who are not afraid of risk-taking invest in this digital asset.
Advantages & Disadvantages of Cryptocurrency
As with any financial instrument, cryptocurrency has its benefits and downsides. Its “pros” include:
- Accessibility. Anyone can buy this liquid currency, so long as they have the funds. Some coins even allow you to purchase currency in fractions.
- User Anonymity. If you want, for whatever reason, to remain anonymous, the crypto blockchain allows you to do so. This anonymity is a big draw for a lot of people who value their privacy.
- No Central Authority. Crypto is not tied to any bank or government, and it is totally decentralized.
- High Return Potential. The flip side of the market’s volatility is that coins worth a few cents one day could yield hundreds, if not thousands, of dollars the next.
But, crypto also comes with “cons” to consider, such as:
- High Loss Potential. There are two sides to that aforementioned volatility, and purchasers of crypto might suffer extreme losses in just a matter of moments on the market.
- Limited Use. When compared to cash, credit/debit card, and bank transfer, cryptocurrency is far less accepted at major vendors.
- No Government Regulation. While some might appreciate the lack of oversight, others are wary about crypto’s freedom from government regulations.
Do Estate Plans Cover Crypto?
Estate plans can cover cryptocurrency, as well they should. After all, it is an asset you own that you may want to hand down after you die. Plus, the market is constantly shifting, so who knows how much value your coins could have one day? Some people do believe crypto is the future of payment (while others, obviously, disagree).
The nature of crypto (and NFTs, for that matter) can make it difficult to place into a traditional estate plan, though the laws are still evolving. Keeping a digital legacy, regardless, is important. This organized, updated list contains information about your digital assets, including quantity, type, passwords, keys, and information that a fiduciary would need to access your crypto.
It is currently difficult to put your crypto assets in the name of a revocable/irrevocable trust. But, you can still include this currency in your will. It will have to pass through probate, however. The most important thing to note when it comes to this digital currency is the ability to track it. Your executor cannot execute your will if they do not have information on how to access your coins.
Challenges In Estate Planning For Crypto
The unique nature of this currency brings with it a lot of challenges. Trustee companies tend to know little about cryptocurrency, according to Bloomberg, but estate planning attorneys are likely to be more knowledgeable. Because there isn’t much personal information associated with crypto and it requires a private key to get in, this asset must be handled differently than others.
If you are thinking of investing or have already made investments into cryptocurrency, it is important that you talk to an estate planning attorney, if you haven’t already. You will want to protect this asset the way you do your other holdings, in order to keep it available to your heirs.
Personal vs. Business Asset Protection
In this article, we are going to talk about two different categories of asset protection. Though there many different types of asset protection, we’ll be looking into the nature of the asset: whether it is personal or business-related. This distinction matters, as far as legal tools, planning, and taxes go.
To start, we’ll look at some definitions.
Terms To Note
Personal assets are items of present or future value that are owned by an individual or a household. Some common examples of personal assets include cash and its equivalents, checking and savings accounts, CFDs, physical cash, Treasury bills, money market accounts, and more. These assets are not owned by a company, corporation, or “entity.” They belong to a person or a household.
Business assets, by contrast, are items of value that are owned by a business, company, or corporation. These assets deliver value to the business, as they are used for functions such as funding operations, driving growth, and producing goods or services. Examples of business assets include machinery, raw materials, inventory, patents, royalties, and other intangible items, and intellectual property.
Asset protection is a term that refers to the goal of guarding your property from creditors, taxes, and other judgements. This set of legal techniques follows a body of common and statutory law. The goal is to insulate your assets, all while following the letter of the law and staying miles away from tax evasion or perjury.
Personal Asset Protection
Now that we’ve covered the definition of personal asset protection, it’s time to look into the various legal tools and techniques that can be used to insulate your personal property. These include:
- Homestead Exemptions. A homestead exemption helps people save money on property taxes every year. In Florida, everyone with title to property (equitable or legal) is eligible to receive a homestead exemption up to $50,000. The first half of that $50,000 is applied to property taxes. This removes part of your home’s value from the overall taxation, appraising it as though it were worth a good deal less.
- Certain Types of Trusts. Asset protection trusts are three-party relationships that hold a person’s assets to shield them from creditors. APTs are self-settled in Florida if the person who creates the trust is also the trust beneficiary.
- LLCs. A Limited Liability Company is a mix of partnership and corporation. It is a business structure that has the same pass-through taxation as a partnership/sole proprietorship, combined with the limited liability of a corporation. Individual business owners can classify their companies as LLCs to protect personal assets.
Though this list is by no means exhaustive, those legal tools are common ways that people protect personal assets from creditors. Likewise, there are several techniques that can insulate business assets.
Business Asset Protection
There are many ways to insulate your business assets. Some of these include:
- Business Type. There are several different types of business structures in Florida, and each has their own role in shielding a business owner. Deciding how to classify your business can help protect your assets in the long run in the event of lawsuits or creditors.
- Insurance. Insurance is a good idea, no matter whether you are a business or individual. This failsafe protects your company if there is a lawsuit, disaster, or other problem. When it comes to insurance, don’t be afraid to splurge on an expansive policy. You never know when you might need it.
- Equity Stripping. Another possible way that businesses can protect their assets is through equity-stripping. This process removes the equity/value of an asset, making it unappealing to creditors. This is usually done via a separate company so that the overall assets remain the same. Once equity has been stripped, creditors cannot attack as easily.
As always, the best plan of action is to talk to a lawyer to ensure that your personal and business assets are as protected as possible. Legal counsel will be able to guide you in what tool to pick based on the facts you give them. Contact our attorneys today.
July Is An Unlucky Month For Weddings
If you’re currently in a state of newlywedded bliss, this article might not be for you, as it is going to be a huge bummer. Let’s face it: the stats on marriage don’t look too great. The divorce rate is 44.2%. This means that if you know ten couples, four probably won’t make it. Some say that January is the most common month for divorces, while others say that it is July or August. Some even claim it is March (perhaps after Valentine’s Day’s pink-and-red haze wears off).
Whatever the month, there’s no denying that divorce is a real thing. In this article, we’re going to discuss divorce and its impact on your estate plan. If you feel, for whatever reason or inkling, that this information applies to you, read on.
What Is Divorce?
A divorce is the end of the legal contract known as marriage. When a court issues a divorce decree, that signals that your marriage is officially over in the eyes of the law. Divorce can take months, if not years, to finalize. According to experts, a breakdown of the marriage (arguing, lack of commitment, infidelity, etc.) is usually the biggest reason for a divorce.
Divorce And Your Estate Plan
Divorce might change your relationship with your ex, but it does not automatically take your ex-spouse off your estate plan as a beneficiary. Chances are, unless you saw a split coming from a mile away, your ex is in your estate plan as a beneficiary. If the divorce decree contains a stipulation to change your beneficiary designation, that’s one thing. If it contains no such clause, you’ll need to talk to an attorney.
With a lawyer, revise powers of attorney, trusts, wills, and other documents with your ex-spouse in order to move forward. You don’t want to leave any stone unturned, and that is why it is important to sit down with a lawyer and go through your estate plan document by document.
What Does The Law Say?
In Florida, the law provides that a provision of a will that affects the ex-spouse of a married person is void upon divorce, annulment, or dissolution of the marriage. The divorce will not invalidate the entire will, though it does remove the spouse as a personal representative or beneficiary. It treats the spouse as though he or she has died and therefore cannot inherit or execute.
Keeping this in mind, most lawyers agree that after a divorce, someone in Florida should not just rely on this law to cover them. Go through your estate plan and ensure that the documents officially have your ex-spouse removed. Neglecting this task will cause awkwardness at best. At worst, your ex-spouse might get a benefit from your estate when you really don’t want him or her to.
Protecting Assets From An Ex
Along this same line, you might be in a position where you want to protect assets from an ex. There are different financial tools that can help you with this, such as trusts, retirement accounts, and more. The bottom line is that divorce law and estate planning law often find themselves tied together. You don’t want to navigate this process without a lawyer. You might find yourself missing something important or getting an unfair shake from opposing counsel or the court.
During the turbulent time of divorce, we understand that estate planning is likely the furthest thing from your mind. Some divorces are a terrible, heartbreaking tragedy. Others inspire less-negative emotions. No matter where you are on this spectrum, it’s important to contact WFP‘s legal counsel immediately to ensure your estate plan is updated after the marriage ends.
Cryptocurrency Trustee Services: How Does It Work?
If you’ve seen the news, whether tech, political, or otherwise, within the past few years, chances are that the word “cryptocurrency” has popped up on your feed. Cryptocurrency is a type of decentralized coinage. This digital asset is not reliant on a bank, government, or other central authority. Though cryptocurrency has its naysayers because of its volatile price and fluctuations, it seems that this digital asset is here to stay.
No matter whether you’re mining Bitcoin, Litecoin, Ethereum, or any other major, minor, or exotic coin, cryptocurrency can have an impact on your estate plan. It is, after all, an asset, and it therefore falls under the umbrella of estate planning. In this article, we’ll discuss cryptocurrency trustee services and how they work.
Can Cryptocurrency Be Placed In A Trust?
A trust is a tri-party fiduciary relationship. The donor, also known as a grantee, transfers title of an asset to a trustee. This second party holds the asset for the beneficiary of the third party, also called the beneficiary. At the donor’s authorization, the trustee eventually transfers title to the beneficiary.
Though you might think of a trust as holding only cash or property, cryptocurrency can be placed in a trust. This has a lot of benefits. Namely, your cryptocurrency will not be subject to an expensive, complex probate process if you pass away.
Some Upsides To A Crypto Trust
Before discussing who administers a trust, it is important to talk about why putting cryptocurrency into a trust could be a good idea. It’s understandable why some crypto holders might be wary. After all, they’ve chosen a decentralized currency for a reason. That said, here are some of the upsides to a crypto trust that you should know:
- Lessens Risk Of Loss. How do you access your cryptocurrency? Chances are, you have a wallet, password, key, and other digital safeguards that come with owning this type of asset. When you die, who knows these safeguards? If you put your crypto into a trust, there is a lower risk of it being lost after you die, as other people will have necessary information.
- Privacy. In addition to avoid the hassle of probate, a process that can cost your beneficiaries time and money, a trust allows you to keep your crypto private. It isn’t going through probate court, so hackers and scammers won’t catch wind of it. Everyone knows about high-profile crypto hackings, and you don’t want to give these cybercriminals any reason to latch onto you.
- Helps Beneficiaries. Your intended crypto recipient(s) won’t have to access and manage your Bitcoin or other crypto before it’s their time to do so. This relieves them of a rather immense burden, and a trusted individual with far more experience, such as a trust services company, will take over the reins. According to CNBC, 10% of people have some type of digital asset. So, companies and individuals have emerged that handle trustee services for cryptocurrency.
Trustee Services
A trustee can be an individual, corporation, or other custodian. A trust company is a business tasked with the management, administration, and eventual asset-transfer to the trust’s beneficiary. This company acts as a custodian, and, though it can be nerve-wracking to give up control of your crypto to a company, there are some good reasons to go with a service, as opposed to appointing an individual (family member, friend, etc.).
Benefits of Trust Service Companies
These companies can provide a lot of services to their clients from one central location. This saves a lot of time and effort, as clients do not have to coordinate financial assets, broker information, tax advisors, financial planners, and other services. These companies do charge fees, but their experience in protecting assets and managing investments makes them an attractive choice for some grantors.
If you own cryptocurrency, talk to an attorney about setting up a trust and potentially working with a trust services company. Our attorneys can help answer any questions or concerns you may have about the process.
Corporate Formation FAQs
In this article, we will discuss the set steps to forming a corporation in Florida. A business law attorney can help you with anything you need, as they are experienced in this field. Listed below is a brief overview of the steps for forming a corporation.
How to Form a Corporation in Florida
1. Choose the Name
Your corporation’s name has to include “Corporation,” “Company,” or “Incorporated,” as well as their applicable abbreviations. Additionally, the name has to be different from other businesses that have registered with the Department of State. You can check the Division of Corporations business name database, accessible at http://search.sunbiz.org/Inquiry/CorporationSearch/ByName, to make sure your name is unique. FYI, you cannot reserve a name ahead of time.
2. Prepare/File Your Certificate
This is where you might need the help of an attorney. In order to legally create your corporation, you have to file Profit Articles of the Incorporation with Florida’s Department of State Division of Corporations. You can file the articles online or via the mail. The articles must have:
- The corporation’s name
- Principle office street address
- Purpose
- Number of shares the company can issue
- The names/addresses of initial directors and/or officers
- The name, signature, and address of an agent that gets service of process
- Name/address of incorporator
3. Appoint Your Corporation’s Registered Agent
All corporations in Florida have to have agent for service of process, and that individual or company has to be listed on the articles. This entity accepts legal papers on behalf of the corporation in the event it is sued. The registered agent can be a human being, or it can be an entity authorized to conduct business in Florida. Prior to designation, the agent has to agree to accept service of process for your corporation.
4. Create Bylaws
These internal corporation documents set out the basic ground rules about how to operate your corporation. You do not file bylaws with the state, and there is no legal requirement to have them. That said, it is a very good idea to have corporate bylaws, as they set your corporation’s operating rules on paper. This shows creditors, banks, and the IRS that your corporation is legitimate. There are plenty of sample bylaw forms online.
5. Appoint Directors/Hold Meetings
Directors are appointed when you name them in your articles, and the person must appoint them after you form the corporation. These directors are on your board until shareholders’ first meeting. After this first meeting, directors should do the following, if applicable:
- Appoint corporate officers
- Select a corporate bank
- Adopt bylaws
- Authorize issuance of stock shares
- Adopt an official stock certificate
- Adopt a corporate seal
- Set the fiscal year
- Record these actions in fiscal minutes
6. Issue Stock
Next, the corporation can issue stock to shareholders in exchange for shareholders’ contribution of cash, property, and/or services. Small corporations issue paper stock certificates, and you’ll need to enter the shareholder’s contact information and full name into the transfer ledger. In Florida, corporate stock’s default is no par value. But, if you want to establish par value, you can. Again, this is a step that would be best carried out by a business attorney, as the law can be somewhat complex.
7. File an Annual Report
In Florida, if you want to maintain an active status, your for-profit corporation has to file a yearly report. The report’s first version is due the year after you form your corporation. File online between January 1st and the first of May. Reminder notices will be sent to the email address you have provided to the State.
8. Get an EIN
An EIN is an Employer Identification Number. This federal number is mandatory. You can get an EIN by filing an online application on the IRS website, for which there is no filing fee.
We strongly advise that you contact a business law attorney to help you form your corporation, as they law can be difficult for laypeople to maneuver.
A Word to the Wise Before Going on Vacation
Vacation is a great time to kick back and relax, and we don’t want to rain on your parade. Unfortunately, that’s just what this article might do. Vacation and summer can be risky, and there are statistics to prove that statement. While you should definitely still go, we suggest updating and reviewing your estate plan before you leave. Make sure everything is in order, just to be safe.
Is Vacation Dangerous?
Millions and millions of people go on vacation every year with no issues. That said, there are some interesting travel statistics to note. As it turns out, your vacation itself might not be too treacherous, as Be Travel Wise noted that between 74% and 80% of deaths overseas are caused by natural ailments like heart problems. 18% to 24% are caused by accidents, while only 2% are from infectious disease, a la Cabin Fever (just kidding!).
The holidays themselves can be a little unpredictable. AAA says that over 33% of Americans travel during the holidays, which leads to a 34% increase in car accidents. Lastly, Benenden lists slip and falls, sunburn and heatstroke, food poisoning, and road accidents as five of the “most common types of accidents” while vacationing.
Bottom line, vacation can come with its own perils, and you need to face this risk not by avoiding vacation, but by updating your safeguards.
What to Review
General Recommendation
Generally, the rule of thumb is that you should review and update your estate plan every three to five years. You should also take a look at it if you are experiencing a major life change, such as a birth, death, marriage, or illness/incapacitation. Other than that, reviewing it before you go on vacation also isn’t a bad idea. Though this might not qualify as a “life change,” it does qualify as a period of heightened risk. Below are some of the documents you should make sure to review:
- Power of Attorney. These documents appoint a trusted individual to manage your financial and/or healthcare affairs in the event that you are too sick or injured to do so. You can rest easy knowing that someone you trust is making decisions on your behalf when you are unable to.
- Healthcare Directive. This very personal document lays out your wishes to doctors and nurses for end-of-life care and other medical procedures. It makes sure your “DNR” and other orders are honored, even when you cannot communicate them.
- Guardianship Papers. If you have minor children, these papers appoint a legal guardian to your kids if something happens to you and your spouse while on vacation. Make sure to discussed with your proposed guardian before putting them down on paper.
- Everything Else. Though the three documents above are the most imperative in this context, it wouldn’t hurt to glance over everything else (trusts, last will and testament, etc.) to ensure that those papers are in order, too.
What If I Don’t Have an Estate Plan?
If you don’t have an estate plan, there is no time like the present. These plans are vital to ensuring that your end-of-life care and assets are taken care of. Talk to an estate planning attorney today to learn how to start the process.
Though this article might seem like a bit of a bummer, estate planning is about accepting risks and facing them head-on. We’re sure you will have a great time on vacation, but it never hurts to pick up the phone and contact your estate planning attorney, just to be safe.
We’re Halfway Through 2022 – How’s Your Planning?
Ready for a sobering reminder? It’s nearly halfway through 2022. It appears time is flying by, and soon it will be the Fourth of July. Summer is upon us, and you don’t want to wait until fall or winter to get your estate plan drafted, if you haven’t done so already.
In this article, we’ll discuss the potential ramifications of not having an estate plan, in the hopes of motivating you to get going on this vital legal toolset. Also, if you have an estate plan, you’re not off the hook—there are some maintenance recommendations you should follow.
Tax Issues
There is a reason that estate planning is a process often associated with the wealthy: estate taxes. Federal estate taxes only really impact the super-wealthy, as the exemption is $11.7 million. That said, inheritance and state taxes are two other matters. Estate taxes are paid by the deceased’s estate. Inheritance taxes are levied on the heirs of the deceased. Though Florida does not impose either of these taxes, you’ll have to pay quite a bit if you qualify for the federal estate tax.
Estate planning can help you legally maneuver around these taxes through trusts, irrevocable gifts, joint accounts, and more. These remove assets from the estate, but you’ll need a plan to actually execute these documents.
Time and Money Wasted
If you die intestate, your estate will have to go through probate court, an expensive, time-consuming process. While your estate is in probate court, no one can access your assets and carry out your wishes. They are, effectively, frozen until the courts comb through your estate, apply laws, pay debts, and make their own decisions about how to allocate assets. In Florida, probate takes between six and nine months on average. The probate cost ranges from $1,500 to 3% of your estate’s value, depending on the size. Having an estate plan can make this process far less time-consuming and costly.
What About Loved Ones?
As mentioned, when you die without an estate plan, the court makes decisions on your behalf. The court does not know you or your family, and their actions might not align with your wishes. Assets might be passed to the wrong heirs or creditors. Your minor children, if you have them, will get a guardian appointed by the court. This guardian may not have been the one you would have picked. An estate plan ensures your wishes are honored to the fullest extent of the law.
Family Disputes
This isn’t just the province of daytime court dramas or Jerry Springer. Family disputes over inheritance and wills do occur, and they can get pretty nasty. An estate plan helps prevent these conflicts (or at least ameliorate them), as the plan will clearly and succinctly lay out what you want done with your assets.
You will be of sound mind when you create the plan, and you can communicate your wishes to your family. Let them express their feelings while you are still alive, as that will allow you to squash conflicts before they can take over the court system. An estate planning attorney is likely well-versed in settling these disagreements; he or she can help. Without an estate plan, your wishes are left up to interpretation (read: disagreement).
Maintaining Your Estate Plan
If you have an estate plan, good job! Note, you’re still not totally off the hook. According to Fidelity, the rule of thumb is to review your estate plan every three to five years. Conversely, you should review it when there is a significant life event (illness, death, marriage, new birth, etc.). Some people choose to go above and beyond, reviewing it annually or semi-annually.
Hopefully, this article has spooked you enough to motivate you to set up an estate plan. Without an estate plan, you won’t just inconvenience your loved ones after you die; you’ll also run into issues if you become sick or incapacitated. Contact an estate planning attorney today to learn more and get this process started.
Memorial Day: Thinking About the Idea of a Legacy
Memorial Day, this year in 2022, takes place on Monday, May 30th. Almost all of us have a day off of work that day, and we use that time to reflect on the many men and woman of the Armed Forces who have given their lives to protect America and its citizens. The annual holiday is a somber one, and it is very important to understanding the core what makes America what it is today.
The fallen military personnel have left a legacy that will be remembered for years. In this article, we’ll talk about legacies and how they can apply to civilians’ daily lives.
Estate Planning and the Military
If you are a military member reading this, you should know that the Armed Forces provides quite a few estate planning services, up to and including the preparation of documents. Military attorneys can help you with functions like power of attorney (both limited and general), wills, healthcare decisions, and more. If you want to start your estate planning process or broaden your current estate plan, you need to talk to a lawyer specific to the military.
Tools to Leave a Legacy
Two-thirds of Americans do not have an estate plan, according to CNBC. This shocking fact means that the majority of the population are leaving decision-making up to the state in the event that they die or become incapacitated. The court system is not prepared to handle this many people, and it is important that that number is reduced.
To start, here are some basic documents that will help you protect your legacy in the event that you die:
- Will. This is a final expression of where you want your assets to go after you die. In a will, you can name beneficiaries who will receive your property after you have passed on. Though a will has to go through probate, it is a good start for most estate plans. Dying intestate without a will is very damaging to your family.
- Trust. A living trust does not need to go through the probate process, and it allows you to transfer title of your assets immediately to a trustee. At a time of your choosing, such as upon your death, the trustee will transfer the asset to the beneficiary. Like the will, this is another way to preserve your legacy by ensuring your heirs get your property when you die.
- Power of Attorney. This trusted individual makes decisions on your behalf when you are too sick to do so yourself. If incapacitated, it is important that you have someone who is able to take care of your financial and healthcare wellbeing in a responsible, effective way.
- Healthcare Directive. A “Do Not Resuscitate” command is a common one seen in a healthcare directive. This legal document lays out your end of life wishes, i.e. whether you want to be resuscitated or not and if you have any specific cultural or religious requests with regards to your healthcare. Even if you cannot verbalize the wishes because you are too sick, the healthcare directive will ensure doctors and nurses honor them.
- Guardianship. Your minor kids will need a guardian in the event something happens to you and your spouse, if applicable. Including guardianship papers in the estate plan by selecting a trusted individual who you know will take care of your kids’ day-to-day needs.
Dealing with Familial Disputes
There is no foolproof way to ward against familial disputes about your will or any of the other legal documents within your estate plan. If someone is disappointed, then they may try to challenge. That being said, there are some tips to keeping the process harmonious and challenge-free. Here are some ways to minimize familial disputes during the estate planning process:
- Hire a lawyer. A lawyer is the best way to ensure that your will is filled out correctly and in compliance with the law. He or she has also been around the block a few times and will know how to minimize family fights, as he or she has likely had quite a bit experience with estate planning tiffs.
- Talk to your family. This one might seem obvious, but it bears mentioning. If a family member is shocked in a bad way, he or she might react by challenging. But, if you keep everyone updated on what you plan to do with your estate plan, they will know ahead of time. They can air their grievances, and the communication will prevent anyone from being caught off-guard.
- Prove capacity. One of the most common ways that people challenge a will or trust is by claiming someone was not of sound mind. This means that the person allegedly was unable to make sound decisions and understand the effects of those decisions. If you think a challenge to your mental capacity is possible, talk to your lawyer. He or she may suggest you get a full medical workup to answer the question of mental capacity. This evaluation could prevent your relatives from making a challenge based on capacity.
Have a safe Memorial Day, and remember to contact an estate planning attorney if you have any questions about how to handle your legacy.
Probate Administration FAQs
If you’ve ever had to engage with the probate system, then you know it can be capricious and difficult. However, having a baseline knowledge of what to expect from probate court will come in handy and make the process easier. In this article, we will discuss the “Frequently Asked Questions” about the topic of probate administration.
What is probate?
Let’s start with the basic question of what probate is. Probate, in very simple terms, is the legal procedure through which your “estate” (AKA, everything you own) goes through when you die. This legal proceeding entails the court distributing your estate to creditors and heirs.
What happens during probate?
Every probate is different in some way or another, but most follow a pretty concrete, step-by-step plan. Below are the steps of the probate process:
- An executor or lawyer submits a copy of your death certificate. This starts the probate process.
- Your will, if you have one, needs to be authenticated by the court. The court ensures it has been properly signed in compliance with the law. After the court approves the will, it is “valid.”
- The judge will then formally appoint someone (someone that you’ve probable named) as the executor. The executor will oversee the rest of the process and settle your estate.
- The executor will post your bond, if necessary, though that is not always required. Posting a bond will protect beneficiaries against any errors the executor makes during probate. Bonds can be pretty expensive.
- This is the biggest task: informing creditors and beneficiaries. They need to know that you have passed so they can collect inheritances (if applicable) and settle your debts.
- An assessment must be completed to determine the value of your estate. Everything you own when you died will be valued, and that number will be your estate’s value.
- Next, the executor will pay debts and fees from your estate.
- Remaining assets, if there are any, will be given to the correct beneficiaries. With this, the probate process will likely be considered over.
What must go through probate court?
Your will, obviously, has to go through probate court. If you do not have a will (i.e. if you die intestate), then everything you own goes through probate court. Regardless of what your will states, the following always goes through probate court:
- Any inheritance where your beneficiary died before you
- Non-titled property
- Sole-ownership property
- Partner-owned investment property
What does not have to go through probate court?
There are some assets that avoid probate court. If you plan it right with the help of an attorney, you can help avoid a lot of the probate process, should you have these assets:
- Items with a beneficiary named
- Items inside a living trust
- Payable on death (POD) items
- Transfer on death (TOD) items
- Jointly titled property with Survivor’s Rights
How much does probate cost?
The cost varies depending on where you live and how large the estate is. Court filing fees generally cost $300-$400. Attorneys’ fees vary between 3% and 5% of the value of the estate, but, again, that depends on the lawyer.
I’m confused. What now?
It is very understandable if you are confused by the probate process, and we have only scratched the surface of all there is to know about it. If you are confused, contact an estate planning attorney to help walk you through it. He or she will be able to guide you through this process (or avoid it), reducing stress on you and your family
Hopefully, this article has helped shed a little light on the often-complicated process of probate court. The grieving process is not easy on its own, and probate often makes things even more stressful, hence why getting a lawyer is a better idea than doing it alone.
Questions on probate? Contact WFP Law.