Estate Law

+ Will

A will is a legal document in which you express instructions for the disposition of your property after your death. In addition to providing for property distribution at death, a will may also nominate a guardian for your minor children and appoint an executor to handle your affairs at your death. A will may be changed at any time during or life or revoked entirely. However, at your death, your will becomes irrevocable.

One specific area that a will covers is the naming of beneficiaries. In your will, you may name beneficiaries to receive your assets according to the instructions in your will. These beneficiaries can include but are not limited to family members, friends, spouses, domestic partners, or charitable organizations. You may also list specific gifts to include in your will. These gifts could be jewelry, money, stocks, or your home.

You may also nominate a person to be responsible for your child's personal care if you and your spouse die before the child turns 18. Similarly, you may also name a guardian to be responsible for managing any assets given to the child until he or she is 18 years old. The person responsible for your child’s personal care and his or her assets does not necessarily need to be the same person.

Your will may also nominate an executor. An executor is a person charged with collecting and managing your assets, paying any debts, expenses, and taxes that might be due, and then, with the court's approval, distributing your assets to your beneficiaries according to the instructions in your will.

+ Revocable Trust

A living trust / revocable trust is a legal document that substitutes for a will, in part. Upon creation of a living trust, your assets are put into the trust. These assets will be administered by a trustee during your lifetime for your benefit. Upon your death, your assets will be transferred to your beneficiaries.

A trustee is a person that is subject to strict responsibilities and standards and is considered to be a fiduciary. The trustee is charged with holding and using the trust assets solely for the benefit of the trust’s beneficiaries. Initially, most people name themselves as the trustee of their own trust. If you choose to have yourself named as trustee of your trust, then during your lifetime, you can remain in control of your assets. You can name a successor trustee who will manage the trust’s assets upon your incapacity or death.

A living trust can be amended or revoked at any time by the person who created it so long as they remain competent. A living trust, for this reason, is often referred to as a revocable trust.

A living trust will do all the following if properly prepared: (1) give the trustee the legal right to manage and control the assets held in your trust; (2) instructs the trustee to manage the trust’s assets for your benefit during your lifetime; (3) names the beneficiaries that are to receive your trust’s assets upon your death; (4) gives guidance and certain powers and authority to the trustee to manage and distribute your trust’s assets.

A common advantage to having a living trust as opposed to a will is that your assets in your living trust can be managed by the trustee and distributed with your instructions without court supervision and involvement. Avoiding probate often can save your heirs time and money. Probate can take more time to complete the distribution of property in the trust.

A disadvantage to a living trust is that living trusts are not under court supervision and can in some cases result in trustees not acting in the best interest of you or your beneficiaries. Furthermore, the cost of preparation of a living trust can often be higher than the preparation of a will.

A common misconception is that a living trust will eliminate estate taxes. A living trust may contain provisions that will postpone or reduce estate taxes; however, it will not necessarily eliminate them entirely. Furthermore, all persons should be aware that estate planning laws are uncertain. While qualified lawyers attempt to plan according to what laws are currently in place or anticipated in the future, the future is always uncertain in this area

+ Probate

Probate is a court-supervised process for transferring a deceased person’s assets to the beneficiaries listed in his or her will. The process is typically initiated by the executor named in your will, however, in the event that a will cannot be located or if you died intestate (without a will), then a family member or friend may initiate the probate process.

The probate process begins by filing a petition with the court and seeking appointment. Once an executor or administrator is appointed, then the executor may take charge of your assets, have your assets inventoried and appraised, pay your debts, and after receiving court approval, distribute your assets to your beneficiaries or heirs.

If your total assets amount to less than $100,000.00, then less complex procedures are available for handling estates and transferring your property. Similarly transferring property to a spouse may not require probate.

Probate has several advantages and disadvantages. One advantage is that the probate court is accustomed to resolving disputes regarding the distribution of assets and can navigate through any problems if necessary. Another advantage is that a probate is a court process, therefore, a judge is reviewing the personal representative’s handling of the estate and protecting the beneficiaries’ interests. A disadvantage to probate is that it is a public process. Therefore, the value of your assets and the distribution of your assets is a public court record. Another disadvantage to some is that a probate may take longer than a trust administration and may cost more since your probate attorney’s fees are based on a statutory fee schedule.

+ Trust Administration

After the death of the trustor, certain steps must be taken to comply with state law, to preserve the federal estate tax exclusion amount, and to change title to assets. This is called "trust administration," and the complexity of the administration depends on the number and type of assets, their total value, and whether the trust includes tax planning provisions.

During trust administration, major assets must be appraised and an inventory must be prepared to determine the net worth of the decedent for federal estate tax purposes. Income tax returns must be filed for the estate and for the decedent and a federal estate tax return may need to be filed.

If the trust became all or partially irrevocable as a result of the death, the decedent's heirs and trust beneficiaries must be notified of that fact and given an opportunity to request copies of the trust. State law also requires that the decedent's will be filed with the Superior Court in the county in which the decedent was living.

If there is an exemption trust and no trust administration takes place by the surviving spouse, then the exemption trust will not exist and will therefore provide no tax reduction benefit to the estate.

The couple's estate will pay higher estate taxes. During trust administration, the exemption trust must be properly funded, and other procedures must be followed, such as filing income tax returns, or the trust will be included in the surviving spouse's estate for federal estate tax purposes, increasing the federal estate taxes for the estate.

+ Advanced Health Care Directive/ Power of Attorney

Advance Health Care Directive - An advance health care directive can be used to appoint a family member or friend to make health care decisions for you if you are physically or mentally unable to make those decisions yourself. It works by you appointing an agent (and backup agents) during your lifetime and when you have the full competency to do so. This agent will then carry out your wishes for health care. The directive also describes how much, or how little, medical care you want. The agent's authority to take action is triggered only by a determination that the patient lacks mental capacity. Lack of capacity is determined by the patient's primary physician and by the agent.

Durable Power of Attorney for Finance Purposes - A financial power of attorney allows an agent to conduct financial transactions for the principal. Similar to the advance health care directive, you would appoint someone to act on your behalf for purposes of financial matters once you lack competency to do so for yourself. This person does not need to be the same person as your agent under the advance health care directive.

Transactions that an agent under a durable power of attorney for finances might assist you with may include depositing or withdrawing money from bank accounts, signing income tax returns, or transferring assets to a trust. Although a successor trustee can manage the trust assets if the trustor becomes incompetent, there are many financial matters that take place outside of the trust. For example, although a successor trustee can file income tax returns on behalf of the trust, he or she cannot file a personal income tax return for the trustor. The successor trustee also cannot transfer assets to the trust, but the agent under the power of attorney may have the power to make the transfers.

The powers given to the agent are often very broad and can give the agent complete control over the principal's assets. For that reason anyone who signs this type of power of attorney should carefully review his or her choice of agents and consider limiting the power of attorney to certain transactions. A "springing" power of attorney can also be used. This type of power of attorney will not take effect until a person becomes incompetent, as certified by a physician.

+ Joint Ownership

Joint tenancy is the co-ownership of an asset by two or more persons, who own the asset in equal and undivided interests. When a joint tenant dies, his or her interest in the asset vests in the surviving joint tenant or joint tenants. In other words, if two people own real estate in joint tenancy, and one of them dies, the surviving joint tenant then owns 100 percent of the property. This is a term called “right of survivorship.”

If a property is owned in joint tenancy, the surviving joint tenant will receive the deceased joint tenant's interest in the property, regardless of what that person's will or trust says about the property.

An exception would be if both joint tenants died simultaneously, in which case their wills would control their interest in the asset. Owning property in joint tenancy will avoid probate. Title to real property can be cleared after a death of a joint tenant by filing an affidavit of death of joint tenant.

+ Conservatorship

When an adult is unable to properly handle his or her assets, pay bills or make decisions regarding his or her health and personal needs a conservator can be appointed by the court. A conservatorship is the proceeding to appoint an adult to act for the person and / or the estate of the adult. This can be instituted by the County, usually upon recommendation of the mental health department, or by a concerned relative or friend. The Superior Court Judge can appoint a temporary conservator initially or wait until there is a hearing to make an appointment.

There will be an investigation by an appointed investigator who will file a report with the court regarding the application. The court may appoint an attorney to represent the proposed conservatee and there may be a contested hearing.

The person appointed as a conservator has many duties to perform, including, if the appointment is for the estate of the person, accounting for all funds received and disbursed. The court will require reviews of a conservatorship to determine if the conservatorship is still needed and to determine how the conservator has performed.

+ Guardianship

A person may be appointed as the guardian of children when the children’s parents are unable to properly provide for them. The court can appoint a temporary guardian upon initial application or may require a full hearing prior to making an appointment. The guardianship can be over the person and / or the estate of the minor. The appointment will occur only if the court determines that it is both in the best interests of the minor and that the continuation of the minor with the parents would be detrimental to the minor. The court can make orders regarding the minor’s visitation with parents and other relatives.

The court will require annual reviews of the guardianship to determine whether it should continue.