Articles Posted in Estate Planning

In the last post, I shared about how incapacity is defined and what may cause it. Here are ways incapacity relates to specific estate planning documents:

Power of Attorney

A power of attorney is a legal document that is used to appoint someone you trust to make decisions for you.

You’ll likely come across the term “incapacitated” while planning with an attorney for your future and addressing challenges that may come along with aging. In this post, I’ll write about how incapacity is defined as well as what can cause it, and next week I’ll write about what this concept means in relation to elder law and estate planning.

Incapacitated Definition

When someone is incapacitated, they are unable to make personal decisions or understand legal documents. A person who is incapacitated requires someone to make decisions on their behalf. Individuals such as an agent under a health care power of attorney or a guardian might be the ones to make decisions for a person who is incapacitated.

Using a trust as part of your estate plan can be beneficial in a number of ways, including maximizing tax code provisions to shield assets from gift and estate taxes, protecting assets from creditors or ex-spouses, or helping heirs be more responsible with their inheritance.

Revocable living trusts can be a vital part of your estate plan, but in order to help you, they can’t just be drafted and forgotten. A trust needs to be properly funded, including additions that are warranted. If you don’t move certain assets (such as cash, securities, real estate, artwork, and other types of property) into the trust before you pass away, the trust will not serve the purpose you intended in your estate plan.

If you are making a trust part of your estate plan and have already made the necessary arrangements, be sure to retitle assets in the name of the trust. This may be easier said than done, and depending on the type of asset, specific requirements will need to be met. Simply transferring assets to a trust is not enough. A transfer of ownership of real estate, for example, typically requires you to jump through extra hoops.

In the last post, I shared 9 questions you can ask yourself to begin creating your estate plan. After you have answered these questions, here are next steps you can take to get your estate plan in writing:

The Next Step

Although the specific documents you use to create your estate plan may vary depending upon your needs and your particular situation, some of the basic documents that most people will want to create are a financial power of attorney, an advance directive, and a will.

People often start the New Year with goals for themselves for the year such as improving their health or writing a book. Making a last will and testament or other estate planning documents is also a common goal at the start of the year. How can you begin this process?

To begin, it’s important to understand what estate planning does as well as the ways it helps you and your loved ones. Estate planning is a way to protect you and those closest to you during your lifetime as well as after your death. You can be in control of much of what happens and who will be in charge of certain things if you become incapacitated or after you pass away. Expressing your wishes in legal documents can prevent conflicts between loved ones and can prevent unnecessary loss of time and money.

Here are nine questions to answer to formulate your estate plan:

Talking to your children about your estate plan

A key part of the smooth implementation of your estate plan is having a conversation with your children where you are open and transparent about your plan. Having this conversation with them can help prevent future conflicts and can give them more confidence to know what to do when needed. Although it might be much easier said than done, avoiding these difficult conversations or keeping your estate plan a secret can have major repercussions.

Here are some important topics to cover with your children when talking about your estate plan:

In the last post, I began writing about including care for your pet as part of your estate plan. One option for doing this is to establish a pet trust.

A pet trust is a type of trust established for the care of one or more animals that outlive their owners. Pet trusts are recognized in all fifty states, especially for the care of animals with longer life expectancies, such as turtles or birds, as well as for animals that are more expensive to care for.

Pet trusts will remain in effect for the duration of the pet’s life. If there are multiple pets, the pet trust will remain in effect until the passing of the last surviving pet. When establishing the trust, the owner has a number of important decisions to make, and the trust is able to be fully customized.

Often, pet owners consider their pets to not just be their most valuable possessions but to be members of their family. Those who own pets want to do all they can to care for their animals, so it is important to consider what may happen if your pet outlives you and to have a plan in place for this possibility. Here are some options for your estate plan to make sure your pet will be well cared for in the event that you pass away:

Animals in the Eyes of Law

Animals are considered personal property – like a car, jewelry, and other material possessions – under the law. If the person who owns a pet does not have an estate plan, their pet will be distributed to their “heirs-at-law” or to the people who are their closest living relatives according to a genealogical chart. If this person does have an estate plan, their pet will still be distributed to the individual set to inherit their personal property unless there is a specific provision regarding their pet in the estate plan. In cases where beneficiaries or heirs of someone’s estate do not wish to take care of the pet, people often end up surrendering the pet to a shelter.

It is unlikely that you need to be reminded of April 15th (or the next business day if the due date falls on a weekend or holiday) being the tax filing deadline date as we are often reminded of this date every year. However, if you are the person serving as executor of your loved one’s estate, do you know the filing date of an estate tax return?

This due date varies. In general, you must file a federal estate tax return within nine months of the date of death. Filing this return in time is one of your responsibilities as executor of the estate.

If you fail to file the return on time, interest and penalties could be added on top of any federal estate tax that is due.

In the last post, I shared about specific things to keep in mind while reviewing your estate plan. Here are 10 more:

11. Charitable Contributions

If you have chosen any charitable organizations for planned donations, make sure these organizations still align with your intentions, goals, and values.