Understanding Guardianships

A guardianship is a court supervised proceeding in which those who are minors or those who are adults unable to make their own decisions are considered for placement with friends or family if their current guardian or parent dies. The guardian is court appointed, which means that the guardian is appointed without any input from parents, usually because the parents left behind no specific instructions for what should happen in their absence.

In a guardianship, the guardian will manage the assets and well-being of the minor or dependent children. This process is far more complex than other methods available, though. For example:

• A guardianship requires annual accountings of the assets of the dependents
• Limitations on decision making to some level occur
• Bond requirements are often in place
• Restrictions on how money can be spent or invested for the benefit of the dependent are in place
• More lawyer and court involvement in the lives of the minor or dependents is common.

There are ways to avoid this from occurring though, and that is something many parents are striving to do. If there is no trustworthy person that is available to take care of your children then a guardianship may be the best option for your child, but with activities and assets monitored and under court control, this is not the right option for many.

How Trusts Offer Protection

One of the best ways to avoid the effects of a guardianship is to develop a trust before you die, so that you have the last say in what happens with your children should you be unable to care for them. There are several factors to consider:

• In a typical trust for adult children, it allows for the assets you have to move to your children without any risk of the court limiting access. A living trust, the child manages his or her assets without any guardian control.

• For minors or dependent children, a testamentary trust can be helpful. This allows you to leave assets to a minor child with a trustee to oversee the trust.

For those who wish to control what happens to their children and dependents after their death, using a trust is often the best route to go. You can leave assets and overall guardianship guidelines behind as part of your will and estate plan. These, when created properly, can protect your loved ones and ensure that they are able to benefit from your estate without the risk of the court becoming involved in their lives. For many parents, knowing their child is protected, long term, is the best route to take to avoid problems down the road should something happen.

Given these differences, should you hire an elder law attorney or should you hire one that focuses on estate planning? It depends on your circumstances.  Both are good options to consider and are far better choices than choosing to do it on your own. Understanding the differences can help, but one thing to keep in mind is that most of these professionals can help you to construct the type of document you need to accomplish your goals.

A closer look at elder law

Perhaps the most important thing to know is that in elder law planning, the goal is to plan for your life’s needs prior to death. This means providing for your medical needs, your living expenses and even long-term health care. While estate planning does this as well, it also focuses on your estate after your death, giving you more opportunities to achieve what you hope to before and after your death.

Often, elder law focuses primarily on the prior to death laws. This may include providing you with help and guidance for things like:

• Nursing facility care
• Care if you become disabled or incapacitated
• Care including conservatorships and guardianships
• Disability planning resources

In short, with elder law you are planning for those years prior to your death, in case something happens that leaves you unable to make decisions yourself or when you need help to ensure your wishes are carried out when you cannot state what those wishes are.

Differences with estate planning

Estate planning attorneys can help with the creation of plans prior to death as well, especially in terms of planning for the monetary aspects of these needs. When you are working with an estate planning attorney, though, you are often going to focus specifically on your goals for long-term estate planning. Not only will this plan help to provide for your needs up until your death, but also after your death as well. It is often more of a comprehensive plan for all of your needs.   Estate planning may also include things like trusts and guardianships as well as advanced medical directives which help address these other important issues.

Elder law or estate planning, the decision is up to you based on what your goals are. However, most parties can meet all of your goals overall, not just one or the other. Take the time to consider what you need and want from your estate plan. Contact a professional to help you to make it happen and get it in place. It is never too late to make key decisions that will affect your life and your heirs.

In short, all wills are documents that legally outline your goals for your estate. There are various ways to make those wishes take place.

• A Simple Will covers basic needs. This includes the distribution of assets, and is often preferable for those with limited assets and smaller estates.

• A Guardianship and Trust is a document outlining your goals for your children, including those children who are minors, or those who are disabled and unable to care for themselves. This document will specify your instructions in terms of who will take guardianship of the children, as well as who will manage the children’s estate after your death. This includes all funds and assets you plan to leave to your child after your death.

• Revocable Living Trusts are another type of will planning tool. This will allow you to create assets that pass on to your heirs according to your wishes, but that do so by avoiding probate court. If you wish to leave money or assets to family, friends or charities, this is a good way of reducing tax implications on the funds. You can also change these trusts throughout your lifetime, as you need to.

• Pourover Wills are yet another type of will. It compliments a revocable living trust by addressing any assets that are not included in the trust. It works to transfer those assets into the trust at the time of your death.

Selecting the right type of will is a complex process. Because of taxes and legal requirements that do change frequently, it is up to you to choose the right will for your goals and based on the size and type of estate you have. It is always a good idea to work with a trusted attorney for this process since the attorney ensures the will is legally binding and fills all necessary requirements. If a will is not valid, anything you planned for will not occur. To ensure this does not happen, plan to create the right type of will for you with an estate planning attorney.

Overview of the process

Probate administers the estates of deceased individuals. It takes care of all claims under a valid will. Probate decides on the instructions of the deceased and decides upon an executor of the estate. It also decides upon the interests of the heirs and others claiming interest in the estate.  Probate takes time and can become quite costly and time intensive, but one solution for avoiding probate is to create a revocable living trust.

What does the trust do?

The trust takes your property and transfers it to another party (the trust) for the benefit of a third party (your heirs). The trustee hold legal titles and your heirs hold equitable titles in the property, and has a fiduciary responsibility to the heirs.

The rules governing trusts are set down when the trust is created.

Trusts can and will do the following:

• Pass assets to heirs without probate
• Save time and money
• Plan for possible incapacity or disability
• Allows the grantor to act as trustee
• Be amended, altered or revoked

Trusts will not save on estate taxes and state inheritance taxes. The cost of the trust should also be weighed against the cost of probate, but often times you will find one clearly outweighs the other, especially when you factor in the time and hassle factors.

The use of revocable living trusts has become more and more popular. It is an option you should consider in planning your estate.

And don’t forget to contact Flanders and Wade –Attorneys at Law for help.

Basics of contesting a will

Contesting or challenging a will is a legal step taken to request that the court take a closer look at a will of a deceased person, to ensure it is legally binding. It can be a costly process in some cases and it can take time. However, if there are errors in a will, or the document is not legally binding in another way, this process allows the court to order the will not valid, thus allowing the process to go through the probate court.

Protecting your last wishes

If you are in the process of planning or creating a will, it is a good idea to ensure your will is iron clad, legally, to avoid such occurrences. If you are facing a will that you do not believe should be allowed to be upheld, working with an experienced estate planning attorney can help you to get it voided. The person who believes that a will is invalid for some reason will need to file a petition that outlines the reason for this.

Some of the reasons why the court will agree to the contesting include the following.

• The person who writes the will (called the testator) does not have the mental capacity or the competency to make decisions for him or herself.
• The will does not meet all requirements set forth by state law, including all statutory requirements.
• The will is not signed by the testator.
• The testator is under undue influence when writing the will, (being pressured into creating the will in a specific way.)

Potential outcomes

For anyone to contest the will, that person must show how one of these situations has occurred. This can be very difficult to do and in some cases, it is not possible. If the objections to the will are agreed to be heard, the court will open the will, examine the specifics of the charges and will make a decision about how to proceed. Even when the contestant (the person who is questioning the authenticity of the will) gets the court to open the will for examination, it is not always possible for the reason to be proven.

It is a good idea to consider the ramifications of contesting a will before you do so. It is time consuming and costly. If you decide to go forward with this process, it is best to work with a trusted attorney that specializes in estate planning and will contesting. This gives you the best opportunity to avoid the risk of not winning the case.

The problem with probate is that the court can potentially render the will invalid and then decide where your estate should go and it will levy taxes on your estate that could deplete its value by half in some cases.

Why a Revocable Living Trust?

There are numerous types of trusts. Each one has a specific job to carry out, based on the wishes and needs of the actual creator. There are several reasons, though, that revocable living trusts are the route to take.

• These are created when you are alive and you are able to execute the trust, or manage it, until you pass away or you become unable to do so otherwise. This means you can continue to manage the property you put into the trust long term.

• If you decide to make changes or even dissolve the trust during your lifetime, you can do so. You, as the creator of the will, do not need permission from anyone to change the details of the trust whenever you decide there is a need to.

• Trusts, including this type, do not need to be filed in probate court. The trustee, who you name, will then distribute any and all assets contained within the legally binding trust as necessary. There is less of a delay ensuring your heirs receive what you leave to them.

• There is no public record on file about your assets when you use a revocable living trust. This is not the same as with a will, which creates such a file that everyone can see. This means you have more privacy when creating and managing your will.

Realize that a revocable living trust is just one of several estate planning tools that may fit your particular needs. However, it is a good one for many estates, large and small, because it helps to protect against taxes and avoids the probate process. That equates to time and money well spent caring for your family.

What is a living will?

A living will is the oldest version of an advanced health care directive. It was first suggested in 1969 in a law journal by Luis Kutner, an Illinois attorney. It originally drew from existing estate law at the time, whereby a person could control the distribution of his or her assets after death.

The living will brought forward the concept of an individual controlling his or her health care decisions in the case where that person can no longer indicate what they want done with their health care. It became a form or “will” used while the person was still alive and therefore a “living will”.

What is a living will used for?

A living will details specific instructions about health care treatment to be followed by health care providers and caregivers. Sometimes it will forbid the use of certain medical treatments. It may also tell providers and caregivers about the use of food and water. It is used when the principal is incapacitated or unable to provide informed consent. The instructions in a living will can be either fairly general or very specific.

Information regarding a person’s wishes for services such as pain relief, antibiotics, hydration, feeding, resuscitation, and the use of ventilators may be included. People are more likely to complete a living will if they avoid the use of technical jargon.

Benefits of creating a living will

Living wills and other advanced health care directives arose as a result of advanced in medical technology and sophisticated medical means to sustain life. There is evidence that dying in a medical facility can be unnecessarily prolonged, painful and expensive.

• Ensure your wishes are followed in the event of an unforeseen medical emergency
• Protect your dignity as a patient
• Establish boundaries or limits that address the financial burden on families which can be considerable.

If you want more information or need to speak with an attorney about a living will in Northern Virginia, contact the Law Firm of Flanders and Wade for a free consultation.

What should you be focusing on while creating your last will and testament? The following is a good place to start.

5 tips for creating a great last will and testament

1. Make a comprehensive list of all of your assets. This should include both physical assets like your homes as well as money and investments.
2. List all of your beneficiaries. These people will receive something from you after you pass on. You may wish to list who will get what, but at this point, it is a good first step to just know who you want to honor through your will.
3. Who will be your executor? This is the person who will execute your will after you die. This person should be someone that you trust to do a good job, a job that is reflected as what you wish to happen (rather than his or her wishes.)
4. Consider your needs for doing more than just planning a will. In many cases, you may want to do more than just list your assets. You may wish to protect those assets. Discuss options for creating a living trust.
5. Consider what you should not put into your will. A will is a good place to leave behind assets, but it is not the only option for telling your story. Use a living will to discuss what you want and why you want it in full. Keep in mind that you do need to ensure all of your wishes are clearly stated in a legally binding way, according to estate planning laws.

For many people, the last will and testament is one of the most important ways to ensure that after they die, there is some type of organization and management about their assets. Realize that you should have an attorney with extensive estate planning experience construct your will for you. This is the best way to ensure that your will is going to be legally binding after your death and therefore your goals and needs will be met as a direct result.

As you plan your own will, the key is to realize that the only way your wishes can be legally binding is if the will and other estate planning tools you use actually follow the law. In other words, small mistakes, even pen scratches on the document, can make it voidable. This is not what you want to occur and with the aid of an attorney, you can create a legally binding will you do not have to worry about.

Common problems with DIY estate planning

A DIY estate plan is one you put together yourself, usually without any help from your attorney. Here are some common problems associated with these types of wills.

• You may make mistakes in the actual document’s creation. A variety of factors plays a role here, including the creation of the will itself. If you do not follow the requirements of your state to create the will, it is not likely to be upheld.

• You may make decisions or details in the will that are not legally possible. For example, you may be unable to give assets to some of your heirs if those assets are to be split between your spouses. Your state’s laws on marital property play a role here.

• You may not have the will legally notarized, or there may be others contesting the will’s validity. This often occurs when the person who witnesses the document, or helps you to create it, is mentioned in the will. To safeguard your wishes, realize that you need a third party not mentioned in the will to actually craft it to ensure that the will is not contested in court.

Is the risk worth the reward?

The fact is, do it yourself wills and estate plans are something many people are actively researching and considering. However, one simple reason is enough to keep individuals in check. That is taxes. Taxes are complex and ever changing. Anything you include in your will is likely to be a step you take to minimize the amount of taxes your estate has to pay.

If you do not take steps to actually create an estate plan that minimizes taxation, all of your wishes and hopes may become nothing more than hopes. With the aid of an attorney, on the other hand, you will spend some money on the planning but gain the peace of mind from knowing your estate is protected and your final wishes can be carried out.

Important changes in the new estate laws

The new estate tax law passed for 2011 is actually an extension of the so-called “Bush tax cuts” except that the new law includes a provision allowing married people pool their estate tax exemptions – a feature widely known as “portability”.

What this means is that a surviving spouse can keep his or her own $5 million estate tax exemption and add any portion of the exemption that was not used by the deceased spouse. This is a new provision.

The question becomes what does this change really mean to previous estate planning and should people and families change their estate plans because of this additional portability.

The short answer is no.

Understanding portability

Here is an example of how portability works:

A spouse dies with an estate valued at $8 million. He or she has made $2 million in lifetime gifts. Now, the surviving spouse can use $3 million in unused estate tax exclusion and add their own $5 million for a total $8 million exemption.

The problem is that the rules are only in effect for two years.  And unless you are expecting to pass away before then, no one should change their plans for some potentially temporary reason.

The other problem is that mere portability does not address the totality of estate planning. Setting up a trust, on the other hand, can clear the issues revolving around the total exemption amounts for both spouses, including items like appreciation and credit protection.

Professional estate planners and attorneys will advise that relying on portability as a definitive benefit to the estate is not well advised since it can change at any time by Congress.

Find out more about why estate planning, estate tax and probate are still important in Virginia, after the most recent law changes by contacting Flanders and Wade today.