Estate Planning

While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones.  Proper estate planning not only puts you in charge of your finances, but it can also spare your loved ones the expense, delay, and frustration associated with managing your affairs when you pass away or become disabled.

 

Wills & Trusts

One of the most baffling issues in Estate Planning is whether to use a Will or a Revocable Living Trust to accomplish your goals.  

The main distinction between a Will and a Revocable Living Trust is the use or avoidance of the probate system.

"Probate" is the process of administering the estate of a deceased person.  During probate, the instructions contained in the will (if there is one) are followed as to distribution of property, and claims against the deceased person's estate are resolved by the court.  

Many states, such as California, have complex probate rules and mandatory fees which can make the probate process very long, confusing, and expensive.  

For most people in Washington, however, this process is quick, straightforward, and not particularly expensive.  

As a rule, Steven Wee Law Office does not recommend the use of a Revocable Living Trust.  There are several reasons for this:

  1. Expense.  The creation and ongoing maintenance of a Revocable Living Trust is much more expensive than the creation of a simple will.  The cost in attorney's fees is higher. The cost to transfer all assets into the trust is an additional expense. Finally, every Revocable Living Trust must have an associated "Pour-Over Will" to direct any assets that were not transfered to the trust (so you ultimately wind up with a will either way).
  2. Maintenance.  It is difficult for people to remember to transfer all of their assets over the course of their lifetime into the Revocable Living Trust.  Should you forget to do that, even once, you could end up having to go through the probate process anyway, thereby negating the value of the entire exercise.
  3. Complexity.  Trusts are often very long and complex, making it difficult for people to understand their own estate planning documents.  This makes it difficult to feel comfortable that you have made the plans you intended, and it makes it difficult for those who must work with the document after your death to ensure they are following your wishes.
  4. Liability to Creditors.  Avoiding probate doesn't take advangtage of the short probate creditor claim statute of limitations.  In trust situations, claims for payment can be made years after the date of death.  In probate, creditors have mere months to make their claims, after which any claims are barred by the court.

There are some situations which favor the use of a Revocable Living Trust, such as when there is complex ongoing business involved or a high need for privacy.  Wee & Watts, Attorneys at Law can help you determine which instrument is best for your situation, and craft the document to achieve your estate planning goals.

 

Planning for Children

It is important that your estate plan address issues regarding the upbringing of your children.  If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations.

You may also want to provide for special counseling and resources for your spouse if you believe they lack the experience or ability to handle financial and legal matters.  You should also discuss with your attorney the possibility of both you and your spouse dying simultaneously, or within a short duration of time.  A contingency plan should indicate the person(s) you’d like to manage your assets as well as the guardian you’d like to nominate for the upbringing of your children.  The person in charge of the finances need not be the same person as the guardian.  In fact, in many situations, you may want to purposely designate different persons to maintain a system of checks and balances.  Otherwise, the decision as to who will manage your finances and raise your children will be left to a court of law.  Even if you are lucky enough to have the person(s)  you would have wanted selected by the court, they may have undue burdens and restrictions placed on them by the court, such as having to provide annual accounting.

Other issues to consider in this respect is whether you’d like your beneficiaries to receive your assets directly, or whether you’d prefer to have the assets placed in trust and distributed based a number of factors which you designate, such as age, need, and even incentives based on behavior and education.  All too often, children receive substantial assets before they are mature enough to handle them properly with devastating results.
 
You should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children. Carefully consider the age and financial condition of a potential guardian. Some guardians may lack child-rearing skills you feel are necessary.  Make sure that your plan does not create an additional financial burden for the guardian.

 

Community Property Agreements

Community property agreements change the character of both marital partner's assets to community property.  For estate planning purposes, this allows all the property of the first spouse to die to be transferred to the surviving spouse without probate.

There are some good reasons for doing this, for example, to relieve the surviving spouse of the responsibility of administering an estate during a very stressful and emotional time.  There are, however, many potential downsides to creating a community property agreement, which affects the character of property, the claims of creditors, the inheritance of children, etc.  Wee & Watts, Atttorneys at Law can help you determine whether a community property agreement furthers your estate planning goals

 

Health Care Directives

A Health Care Directive or Living Will is a legal document that a person uses to communicate his/her wishes regarding life prolonging medical treatments. It is important to inform your health care providers and your family about your desires for medical treatment in the event that you are not able to speak for yourself.  Save your loved ones and care providers the burden of guessing what you would have wanted in an already stressful situation - create a Health Care Directive today.

 

Providing for Incapacity

If you become incapacitated, you won’t be able to manage your own financial affairs.  Many are under the mistaken impression that their spouse or adult children can automatically take over for them in case they become incapacitated.  The truth is that in order for others to be able to manage your finances, they must petition a court to declare you legally incompetent.  This process can be lengthy, costly, and stressful.  Even if the court appoints the person you would have chosen, they may have to come back to the court every year and show how they are spending and investing each and every penny.  If you want your family to be able to immediately take over for you, you must designate a person or persons that you trust in proper legal documents so that they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home.  A will does not take effect until you die and a general power of attorney may be insufficient.
 
In addition to planning for the financial aspect of your affairs during incapacity, you should establish a plan for your medical care.  The law allows you to appoint someone you trust - for example, a family member or close friend -  to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself.  You can do this by using a durable power of attorney for health care in which you can designate the person to make such decisions.  In addition to a power of attorney for heath care, you should also have a living will which informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.

 

Planning for Estate Taxes

The IRS will want to review your estate at death to ensure you don’t owe them federal estate tax.  Whether there will be any tax to pay depends on the size of your estate and how your estate plan works.  Many states have their own separate estate and inheritance taxes that you need to be aware of. There are many effective strategies that can be implemented to reduce or eliminate taxes, but you must start the planning process early in order to implement many of these plans.

 

Charitable Bequests – Planned Giving

Do you want to benefit a charitable organization or cause?  Your estate plan can provide for such organizations in a variety of ways - during your lifetime or at your death.  Depending on how your planned giving plan is set up, it may also let you receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes.
 
A well-crafted estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, complex probate at death, estate taxes, and unnecessary delays.  You should consult a qualified estate planning attorney to review your family, you financial situation, and your goals and to explain the various options available to you.   Once your estate plan is in place, you will have peace of mind knowing that you have provided for yourself and your family.

 

Special Needs

If you currently provide care for a child or loved one with special needs (such as mental or physical disabilities), you likely have concerns about what may happen to them when you are no longer able to provide and care for them.

Whil you can certainly direct money and assets, such a bequest may prevent a child from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medicaid programs. However, public monetary benefits provide only for the bare necessities such as food, housing, and clothing. As you can imagine, these limited benefits will not provide loved ones with the resources that would allow  a richer quality of life. Unfortunately, if parents leave any assets to a child who is receiving public benefits, they run the risk of disqualifying the child from receiving them.  Fortunately, the government has established rules allowing assets to be held in trust, called a “Special Needs” or “Supplemental Needs” Trust for a recipient of SSI and Medicaid as long as certain requirements are met.

While you can certainly direct money and assets, such a bequest may prevent a child from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medicaid programs. However, public monetary benefits provide only for the bare necessities such as food, housing, and clothing. As you can imagine, these limited benefits will not provide loved ones with the resources that would allow  a richer quality of life. Unfortunately, if parents leave any assets to a child who is receiving public benefits, they run the risk of disqualifying the child from receiving them.  Fortunately, the government has established rules allowing assets to be held in trust, called a “Special Needs” or “Supplemental Needs” Trust for a recipient of SSI and Medicaid as long as certain requirements are met.

Wee & Watts, Attorneys at Law can help you set up a Special Needs Trust so that government benefit eligibility is preserved while simultaneously providing assets that will meet the supplemental needs of the person with a disability (those that go beyond food, shelter, and clothing and the medical and long term supports and services of Medicaid). The Special Needs Trust can fund those additional needs. In fact, the Special Needs Trust must be designed specifically to supplement not replace public benefits. Parents should be aware that funds from the trust cannot be distributed directly to the disabled beneficiary. Instead, it must be disbursed to third parties who provide goods and services for use and enjoyment by the disabled beneficiary.

The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved ones’ eligibility such as:

  • Annual check-ups at an independent medical facility
  • Attendance of religious services
  • Supplemental education and tutoring
  • Out-of-pocket medical and dental expenses
  • Transportation (including purchase of a vehicle)
  • Maintenance of vehicles
  • Purchase materials for a hobby or recreation activity
  • Funds for trips or vacations
  • Funds for entertainment such as movies, shows or ballgames.
  • Purchase of goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics.
  • Athletic training or competitions
  • Special dietary needs
  • Personal care attendant or escort

Special Needs Trusts are a critical component of your estate planning if you have disabled beneficiaries for whom you wish to provide after your passing.

 

Animal Care

When making arrangements to provide for your family, don't forget pets!  Like our other family members, pets are a big part of our lives, and as with any member of a family, it's important to arrange for their care shoudl you become incapacitated or die. Don't assume your friends or relatives will adopt or even temporarily care for your pets - many of the animals that are surrendered to shelters each year are there after finding themselves homeless after the death of their owners.  The creation of a pet trust allows you to plan for the care of your animal. Select two or three caregivers and discuss the details with them.  It is easier ot make these arrangements and less of a burden on your caregivers if you are able to designate resources to cover the cost of your pet's care, including food, medical needs, and other supplies.  

Steven Wee can help you with these arrangements so that your estate planning is truly comprehensive and doesn't leave any member of the family behind!


Steven Wee Law Office, P.S. is conveniently located in Spokane Valley, WA, near the I-90/Argonne intersection. We have had the privilege to serve clients from our own neighborhood as well as from distant communities throughout Eastern Washington and beyond.

**Disclaimer: The free information and help contained in these web pages is not intended to be legal advice, and does not create an attorney-client relationship. You should always consult with an attorney before taking any legal action.



© 2017 Steven Wee Law Office, P.S.
708 N. Argonne Rd., Ste. 1-B, Spokane Valley, WA 99212
| Phone: (509) 315-8087

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