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Estate Planning

Financial Planning for Women N ovember 2013. Estate Planning. Presented by Dr. Jean M. Lown. Disclaimer: Education, NOT legal advice!. Taking care of business. Sign up for drawing for financial consultation Drawing will be held at the evening session Personal Finance Action Plan HO

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Estate Planning

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  1. Financial Planning for Women November 2013 Estate Planning Presented byDr. Jean M. Lown Disclaimer: Education, NOT legal advice!

  2. Taking care of business • Sign up for drawing for financial consultation • Drawing will be held at the evening session • Personal Finance Action Plan HO • Commit to taking action! • Estate Planning HO

  3. Estate Planning • “ the process of accumulation, management, conservation, and transfer of wealth considering legal, tax, and personal objectives.” • Goal of estate planning is effective and efficienttransfers.

  4. Overview: How Your Estate is Distributed

  5. Wills Property distribution & Guardianship

  6. Wills • Document in which a person tells how assets should be given away after death • Transfer the portion of your estate not covered by contract • To ensure property goes to desired heirs

  7. Why Write a Will? • Absolutely necessary if you have children • Utah Legislature wrote a will for you • Without a will… Assets will go to spouse, parents, siblings… • Not to your roommate or favorite charity • Without a will, your property may not go to your desired heirs

  8. Personal Representative • AKAExecutor • Named in will • Carries out provisions of will • Manages assets until they are passed to heirs

  9. Will Names Guardian(s) • Person responsible for caring for child(ren) • Name one person, not a couple • May name different person to handle child’s finances • Can change! • Not set in stone • Do it today! • Avoid family fight

  10. Without a Will… • Estate transfers to various relatives according to state law • Property may not go to desired heirs • Judge decides on guardianship • May not be the person you would choose to raise your child(ren)

  11. Do you need an attorney? • Not with a simple, uncomplicated estate

  12. You may not need an attorney • Simple situation? • Attorney’s assistant will fill-in computer form • Buy computer program & fill in yourself • Nolo Press website: www.nolo.com • Complicated family situation? • Remarriage w/ kids from previous union? • Multiple ex-spouses? • Lots of assets? • Educate yourself & then contact attorney

  13. Before it’s too late… Wesley Bedrosian

  14. Personal Representative? • Who me? Yes, you! • The Executor’s Guide (Nolo Press)

  15. Probate Process • Probate –court-supervised process • Ensures transfer of a decedent’s assets to beneficiaries • According to will or state law • Allows creditors to present claims against an estate • Non-Probate Assets • avoid probate process • P.R transfers assets directly to heirs

  16. Why Avoid Probate?-time consuming- costly in some statesup to 5% of estate

  17. Transfer Your Estate (continued) • Will (goes through probate process) • Non-Probate Property – • does not go through probate • includes assets transferred to survivors by contract & beneficiary designation • Life insurance proceeds • Financial accounts (retirement accounts, POD acc’ts) • Joint ownership assets • Assets in Trusts

  18. Transfer Your Estate by Naming Beneficiaries • Beneficiary: person or organization designated to receive a benefit • Beneficiary designation • legal form signed by asset owner • Specifies who gets property when owner dies • Primary Beneficiary • Secondary (Contingent) • in case the first-named beneficiary has died

  19. Avoid Probate: Transfer Your Estate by Ownership • Joint Ownership (JTWROS) • Married couples • Joint owner automatically inherits the property • Most couples own house JTWROS • Community property • NOT Utah

  20. Avoid Probate Summary • POD bank accounts • Fill out bank's form • Transfer on death • Vehicles; securities • TOD real estate deed • Not UT, ID or WY • Retirement accounts • name beneficiary • Joint ownership • Community Property • Not UT; yes ID • Small estates may avoid probate • w/ affidavit • Simplified probate

  21. Questions?

  22. Use of Trusts to Transfer Assets

  23. Trust • Legal arrangement between • grantor (creator) of trust & trustee, person designated to control & manage trust assets

  24. Why Establish A Trust? • Avoid probate (w/ living trust) • Control distribution of assets • Protect assets from creditors • Provide privacy for heirs • Avoid battle over will • Provide for special needs person • If you own property in > one state • Avoids having to probate in > 1 state • Reduce/avoid estate taxes

  25. Trust Vocabulary • Grantor: person who establishes a trust • Also called: settler, donor, or trustor • Beneficiary: person for whose benefit a trust is created • Trustee: the person or corporation to whom the property is entrusted to manage for the use & benefit of beneficiaries • Corpus: assets in trust - Also called: trust estate or fund

  26. A trust is an empty cookie jar • Grantor MUST legally transfer assets into the trust! • Trust is an empty legal document… until funded

  27. Two Categories of Trusts • Living (inter vivos) Trust • takes effect while the grantor is still alive • Revocable (to avoid probate) • Irrevocable (transfer property to reduce taxes) • Testamentary Trust(in conjunction w/ will) • Takes effect upon grantor’s death • Do NOT avoid probate • Often to create a trust for minors • Property must be managed by adult

  28. Irrevocable Living Trusts • Assets bypass probate • Grantor gives up 3 rights • to control property • to change beneficiaries • to change trustees

  29. Revocable Living Trust • Avoid probate • Protect & manage assets • Deal with incapacity/incompetence • Grantor can change trust’s terms or cancel it while alive • Sets up a testamentary trust at death • Like a will; but more difficult to contest

  30. Testamentary Trusts • Take effect at death of grantor • To manage $ after death • Income for spouse & children • Underage children ($ guardian) • Disabled adult children • Maintain eligibility for government benefits • Pass $$$ to adult children at older ages • To give assets to grandchildren while the income supports spouse & children

  31. Living Trust vs. Willhttp://www.nolo.com/legal-encyclopedia/living-trust-v-will.html • Name beneficiaries • Leave property to kids • Avoid probate • Privacy • Requires property transfer • Protection from court challenges • Requires Notary • Name beneficiaries • Name guardians • Name manager for children’s property • Name executor (PR) • Instruct how to pay taxes & debts • Simple to make • Requires witnesses

  32. Consult a Lawyer if… • Close relative—someone who would inherit might challenge your decisions • Children from previous marriage don't get along with your current spouse • You are in a relationship your closest relatives don't approve of. • You have a history of mental illness • You don't plan to leave much to your closest relatives, & they fear you are being unduly influenced by someone

  33. Questions?

  34. Letter of Last Instructions • Non-legal instrument with suggestions & recommendations for survivors

  35. Letter of Last Instructions • Not a legal document • Not a will or substitute for will • Information that is needed immediately • to help family decide & reduce stress • to ensure wishes are carried out

  36. Individuals to be notified of your death Contact info: name, address, phone, email Funeral, burial; cremation, memorial service wishes Location of will, trust Financial advisor & attorney contact info Insurance policies Safe deposit box location & #, key, contents list Location of personal papers (not in safe deposit box) Personal property distribution Father’s full name; mother’s maiden name for death certificate Obituary information Letter of Last Instructions

  37. Letter of Last Instructions • Where to keep it? Who to tell? • Survivors must be able to locate quickly • Tape to bedroom mirror? • Copies to parents, siblings, etc. • Start today http://extension.usu.edu/files/publications/factsheet/FL_FF-19.pdf

  38. Organ Donation Wishes • Each day • 77 people get a life saving organ transplant • 19 others die waiting for donated organ http://organdonor.gov/ • Driver license designation NOT enough • Utah Donor Registry http://www.yesutah.org/ • http://www.yesutah.org/register • Tell family & your doctor of your wishes • US: opt-in; European countries: opt out

  39. Pre-plan Your Farewell • “Always go to other people’s funerals; otherwise they won’t come to yours.” Yogi Berra • Preplanning a funeral/wake/memorial service/going away party/sky burial http://extension.usu.edu/files/publications/factsheet/FL_FF-09.pdf

  40. Advance Directive Documents in case of incapacitation • Advance Directive – • Document names who will make financial, medical, other decisions… • If mentally incompetent and/or unable to communicate your wishes • Only 1 in 5 Americans has Advance Directive documents • Ask your parents and grandparents

  41. Advance Directive Documents • Living Will • Wishes for end of life care • Keep alive at all costs vs. do not want to live in permanent vegetative state… & points in between • Medical Power of Attorney • Authorize person to make health care decisions on your behalf… • if you are unable to make decisions

  42. Prepare Advance Directive Documents (continued) • Durable Power of Attorney • appoints a person to handle financial affairs if you cannot • Limited Power of Attorney – • narrow in scope could be restricted to a certain time period or certain tasks • Robert Kirby’s parents going on a church mission • Springing Power of Attorney – • takes effect if a specified event occurs, usually mental incapacitation

  43. Advance Directive (Living Will) • Purposes: • to make your wishes known • To relieve your loved ones of making difficult, painful decisions when they may not agree • Utah Advance Health Care Directive • New law & forms effective January 1, 2008 • Repealed old law and forms!

  44. UT Advance Directive for Health Care 1. Name person to make health care decisions for you when you cannot 2. Specify your health care wishes 3. Tells how to revoke or change directive 4. Makes your directive legal 5. Discuss with family & your doctor

  45. Utah Advance Directive/Living Will • http://aging.utah.edu/utah_coa/directives/index.html • Simple form • Can be edited & personalized • Must be witnessed by one person who is not • related • heir or beneficiary • financially responsible for declarant • health care provider • health care agent

  46. Update Documents as needed: 5 Ds 1. Decade birthday 2. Diagnosis 3. Deterioration 4. Divorce 5. Death of someone close to you

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