King & Wood, P.A.

Is Having a Will Important?

“In an unpredictable world, having a will is one of the most important steps you can take to protect your loved ones and your legacy.”

A last will and testament is a legal document outlining your wishes for the distribution of your property, the care of any dependent minor children and the declaration of who you want to be your executor. As explained in a recent article, “Do I Need a Will?” from mondaq, your will is a powerful tool giving you control over your estate and protecting your final wishes.

All wills become a matter of public record after they are filed with the court in the probate process. This is when the court determines if the will is valid, i.e., meets the requirements of the law in your state and if the executor, the person who you named to be in charge of distributing your assets and managing your estate after you die, is acceptable to the court.

There are many advantages to having a will, not the least of which is the peace of mind of knowing your wishes have been expressed, documented and will be carried out. Without a will, your estate is going to be divided according to your state’s laws. You or your family members may not like how the state does this. However, there won’t be much they can do about it.

Parents of young children or children with special needs must have a will to name a guardian for their offspring. Without a will, the court will decide who will raise your children and where they will live.

Having a comprehensive estate plan helps prevent family conflicts. Your clear instructions should leave no doubt about your intentions. Families in the middle of grieving the loss of a loved one are often susceptible to fighting when they otherwise would be able to work out issues without drama.

Having a will also allows you to create a legacy by giving assets to a charity you care about. Your estate planning attorney can help you with a number of gifting strategies to make donations over time, minimize tax liabilities and provide heirs with income streams.

The first step in creating a will is identifying an experienced estate planning attorney you feel comfortable with. The next step is to create an inventory of your assets, including everything from bank accounts, investment accounts, retirement funds, personal items and real estate property.

Some assets don’t pass through a will. Accounts like 401(k)s and IRAs usually have beneficiary designations and pass directly to the person or people named by you when you opened the account. Make sure that these designations are still correct so the right people receive these assets.

Depending on your income and asset level, estate planning has many tax implications. You’ll want to take advantage of any tax-saving opportunities.

Once you’ve reviewed these materials, your estate planning attorney will create the documents. The will needs to be put in writing, signed and witnessed. You may need one or two witnesses, depending on where you live. Remember that your will needs to be updated to keep pace with changes in your life and the law.

Having a will created by an experienced estate planning attorney will help you avoid common mistakes, understand complex concepts and create a plan for the future for you and your family.

Reference: mondaq (Dec. 19, 2024) “Do I Need a Will?”

Top Myths of Estate Planning

“Having a plan in place ensures that your finances and health care are handled by someone you trust.”

There are far more than five myths about estate planning. However, the article “5 common myths about estate planning, debunked” from Utah Business examines the most common ones. Estate planning is crucial to safeguarding your financial future and asset disposition and ensuring that the right people are involved in caring for you in case of incapacity. Estate planning is for your life and your legacy.

Biggest myth of all: You only need a Will for estate planning. Your estate plan begins with a Last Will and Testament. However, a comprehensive estate plan addresses more than the distribution of assets. Trusts are used to ensure that assets are transferred to the right beneficiaries in a timelier manner than they would be if passed through your will. Your estate plan should include a Power of Attorney, Health Care Directive and a Living Will.

Myth 2: Only seniors need estate plans. Anyone of legal age who has a family and owns property needs a will. Young families need an estate plan to protect their children and ensure that the parent’s assets and any life insurance proceeds are managed and distributed to their children according to the parent’s wishes. Parent’s wills need to include naming a guardian to raise children in the unlikely event of both parents dying while the children are still minors. Without naming a guardian, a court decision will determine who raises your children.

Myth 3: Only rich people need wills. An argument could be made that estate planning is more critical for people who aren’t rich, protecting and growing more modest estates. A well-crafted estate plan will protect the estate from creditors, deter litigation between family members and minimize tax liabilities so wealth can be passed to the next generation.

Myth 4: Estate planning is only about what happens after death. Estate planning addresses what should happen in case of incapacity because of illness or an accident. If you can’t communicate your wishes, these documents allow others to act on your behalf. A Power of Attorney appoints someone to handle your financial and legal matters. Standard POAs aren’t the best option, since they may allow someone too much or insufficient control. You’ll also want a Health Care Power of Attorney so someone you name can take over your medical care and talk with your doctors and health insurance company. Another reason for placing assets into a trust is that the successor trustee may manage assets in the trust if you are incapacitated.

Myth 5: Once your estate plan is created, you’re all set. Your car and home require ongoing maintenance—and so does your estate plan. Life and laws change, and your estate plan won’t work if it’s outdated. Triggering events like marriage, divorce, birth, relocating, or big changes to your financial situation require a review of your estate plan.

Consult an experienced estate planning attorney to create or review your estate plan. You’ll breathe easier knowing you’ve taken steps to protect yourself and your loved ones.

Reference: Utah Business (June 12, 2024) “5 common myths about estate planning, debunked”

Why Do I Need to Name an Executor?

“An executor participates in the probate process and manages assets during it. This individual has a fiduciary duty to act in the best interests of the estate. This is the highest duty owed under the law.”

When someone dies, they leave behind an estate consisting of their assets. Someone has to manage the estate property, taking on tasks like paying creditors and ensuring that assets are distributed according to the decedent’s wishes. The executor of an estate, also called a personal representative, is the person who takes on this role, as explained in the article “What Is An Executor Of An Estate?” from Forbes.

If the deceased has a last will, it includes the name of the person who serves as their executor. However, if there is no will, or if the will doesn’t name an executor, a court will appoint someone—not necessarily a family member—to serve in this role.

The executor is responsible for carrying out the wishes of the decedent, including gathering all of the important documents, including the last will, filing any required court paperwork, managing assets until they are distributed and facilitating the transfer of money and property to beneficiaries.

In most cases, assets must pass through probate, a legal process in which the court validates the will, issues letters testamentary giving the executor the right to do their job, oversees the distribution of assets to beneficiaries and ensures that creditors are paid.

If you have an estate plan created by an experienced estate planning attorney, they will ask you to choose someone to serve as your executor. This needs to be someone you can count on to fulfill your wishes, who you trust implicitly and who you know will be able to manage submitting and completing paperwork for the court, the IRS and any other government agencies.

Can a beneficiary also be an executor? A beneficiary often does serve as the executor since many people name their spouse or adult child to act as their personal representative and manage their estate after their death.

An executor has a lot to do:

• Obtaining a copy of the will, death certificate and other paperwork.
• Inventorying the deceased individual's assets, determining which passes through probate and which passes outside of probate.
• Managing the deceased's assets, such as paying the mortgage and utilities.
• Submitting the will to be probated in the relevant court.
• Notifying all parties who may have a claim against the estate.
• Overseeing the probate process.
• Paying any debts.
• Facilitating the transfer of assets.
• Filing taxes for the person’s last living year and the estate tax.

The executor often retains the services of an estate planning attorney to manage these tasks, ensuring that they are carried out properly and in a timely manner.

Reference: Forbes (Feb. 5, 2024) “What Is An Executor Of An Estate?”

When was Your Last Estate Plan Check-Up?

“Like your preventive doctor visits, you should regularly check in on your estate plan to ensure that it’s in good shape for when it’s needed.”

For most people, estate planning includes preparing a last will and testament, trusts and important advance directives to prepare for incapacity, including Power of Attorney and a designation for a health care surrogate. Creating a comprehensive estate or updating an estate plan is on many people’s “to-do” lists, says a recent article from Kiplinger, “Estate Plan Check-Ups: Don’t Just Set It and Forget It.” Like most items on those never-ending lists, the goal is to get it done and move on to the next task. However, unlike some duties, the estate plan needs to be reviewed regularly.

Think of taking care of your estate plan as you do your annual physical, which is necessary even if you are healthy in the future. Your estate plan may be healthy now. However, you want to be sure it stays that way by having check-ups on a regular basis. If you have not gone for your physical or had your estate plan reviewed in a while, there are two appointments you need to make for 2024—one with your physician and the other with your estate planning attorney. Here is why:

Life is all about changes, from birth to death, marriage to divorce. Each of these life events may impact your estate plan. If your will was created before you were married or had children, it needs an update. The same is true if you leave your entire estate to an adult child who has proven to be less than responsible about money or choosing good friends.

Laws impacting estate plans change often. Changes in tax laws, estate planning regulations and inheritance rules could have already made your estate plan ineffective or invalid. Regular reviews with your estate planning attorney can ensure that your will takes advantage of new opportunities presented by these changes.

If your net worth has changed over the years, for better or worse, your estate plan needs to reflect those changes. Let’s say you own two pieces of real estate—a home and a vacant piece of land. If your old estate plan leaves the house to one child and the vacant land to another, their values may have changed dramatically in the last few years.

Beneficiary designations are part of your estate plan, even if they are not in your will or advanced care directives. Any account with the ability to name a designated beneficiary should be checked whenever you update your estate plan. If you do not, you may be passing assets on to ex-spouses or excluding new family members.

By regularly updating your estate plan, you can ensure that it reflects your wishes and will be effective in protecting your loved ones.

Reference: Kiplinger (Jan. 26, 2024) “Estate Plan Check-Ups: Don’t Just Set It and Forget It”

What Does Your Estate Plan Include Besides a Will?

“When you chose to write a will, you have taken an important step in the direction of planning for your family and beneficiaries.”

A last will and testament is a part of your estate plan, one of several essential documents to explain your wishes. However, a will is only the first step, and having an estate plan becomes more important as conditions and your life change says the article “Planning Ahead: Your estate plan does not end with a will” from The Times Herald.

Assets Need to Be Divided into Those Titled in Your Name Alone, Jointly Titled and Beneficiary Designations

There are different rules for how your assets are distributed upon your death. Looking at your assets and how they are owned will clarify what will happen when you pass. The review could be a surprise, especially if you haven’t updated designated beneficiaries in a while. You might be spared any shocks if you’re married and have traditionally titled assets.

If assets like your home, bank and investment accounts are titled jointly with your spouse (known as Tenants by the Entireties), those assets will pass directly to your spouse upon your death. If you have IRAs, 401(k)s, 403(b)s, or similar retirement accounts or life insurance policies, you likely named your spouse as the beneficiary. If you’ve remarried, make sure those beneficiaries are updated.

There are exceptions. You may have kept certain assets in your name only, especially if you have been married more than once. These generally will pass by will, unless they pass by beneficiary designation.

Consider how assets will pass if you become a widow or widower or are single or divorced. In most cases, your assets are mainly in your own name. You may not have named “secondary beneficiaries,” which you could have done when the original documents were drafted. It’s not too late to do this now.

Ask yourself if you want your adult children to inherit directly or if you want assets to go to grandchildren. Note that minors cannot inherit property, so talk with your estate planning attorney about creating a trust if you wish assets to go to grandchildren. When creating a trust, you can decide if you want the funds to be given to the beneficiaries in small sums over many years, when they reach certain milestones, or to be used solely for their education.

Consider the Entire Picture—Beneficiary Designations

Many people hold assets in the equity of their home or tax-deferred funds, like IRAs. Updating these beneficiary designations is a critical step for your estate plan. A difficulty might arise if you are single, divorced or widowed and don’t specify how you want these funds to be distributed.

Keep the Paperwork in a Safe Place

Once your paperwork for your will, life insurance and tax-deferred funds are completed, keep them in a safe place and tell your beneficiaries where they are located. Online access can be tricky or impossible. So many financial institutions have been bought and sold that we can’t count on their having documents properly archived.

Reference: The Times Herald (Jan. 14, 2024) “Planning Ahead: Your estate plan does not end with a will”

What Does Your Estate Plan Include Besides a Will?

“When you chose to write a will, you have taken an important step in the direction of planning for your family and beneficiaries.”

A last will and testament is a part of your estate plan, one of several essential documents to explain your wishes. However, a will is only the first step, and having an estate plan becomes more important as conditions and your life change says the article “Planning Ahead: Your estate plan does not end with a will” from The Times Herald.

Assets Need to Be Divided into Those Titled in Your Name Alone, Jointly Titled and Beneficiary Designations

There are different rules for how your assets are distributed upon your death. Looking at your assets and how they are owned will clarify what will happen when you pass. The review could be a surprise, especially if you haven’t updated designated beneficiaries in a while. You might be spared any shocks if you’re married and have traditionally titled assets.

If assets like your home, bank and investment accounts are titled jointly with your spouse (known as Tenants by the Entireties), those assets will pass directly to your spouse upon your death. If you have IRAs, 401(k)s, 403(b)s, or similar retirement accounts or life insurance policies, you likely named your spouse as the beneficiary. If you’ve remarried, make sure those beneficiaries are updated.

There are exceptions. You may have kept certain assets in your name only, especially if you have been married more than once. These generally will pass by will, unless they pass by beneficiary designation.

Consider how assets will pass if you become a widow or widower or are single or divorced. In most cases, your assets are mainly in your own name. You may not have named “secondary beneficiaries,” which you could have done when the original documents were drafted. It’s not too late to do this now.

Ask yourself if you want your adult children to inherit directly or if you want assets to go to grandchildren. Note that minors cannot inherit property, so talk with your estate planning attorney about creating a trust if you wish assets to go to grandchildren. When creating a trust, you can decide if you want the funds to be given to the beneficiaries in small sums over many years, when they reach certain milestones, or to be used solely for their education.

Consider the Entire Picture—Beneficiary Designations

Many people hold assets in the equity of their home or tax-deferred funds, like IRAs. Updating these beneficiary designations is a critical step for your estate plan. A difficulty might arise if you are single, divorced or widowed and don’t specify how you want these funds to be distributed.

Keep the Paperwork in a Safe Place

Once your paperwork for your will, life insurance and tax-deferred funds are completed, keep them in a safe place and tell your beneficiaries where they are located. Online access can be tricky or impossible. So many financial institutions have been bought and sold that we can’t count on their having documents properly archived.

Reference: The Times Herald (Jan. 14, 2024) “Planning Ahead: Your estate plan does not end with a will”

What Is the Biggest Mistake People Make on Their Wills?

“Have you managed to avoid the eight most common estate planning mistakes? Your family will thank you.”

Making mistakes in your estate planning can torpedo every effort made to protect your family after you die, warns a recent article from Kiplinger, “Common Estate Planning Mistakes.” Everyone benefits from a professionally-made comprehensive estate plan, a process for preparing your legal and financial affairs so assets and possessions are passed on after your death to the people or charities you want.

Not having an estate plan can create a world of trouble for those you love. The biggest estate planning mistake of all is not having an estate plan. After that, there are several others.

Procrastination. Suppose you unexpectedly become incapacitated and don’t have an estate plan. In that case, your family will be left guessing what you would want your medical care to be, in addition to needing to go to court to apply for guardianship so they can pay your bills and keep your household running. Everyone should have documents like Health Care Power of Attorney, Power of Attorney, HIPAA Release Form and Living Will in place.

Trying to make an estate plan on your own. Unless you’re an experienced estate planning attorney, there’s a lot you could leave out if you attempt a DIY estate plan. If there are errors, a court could declare your will invalid and it’s as if you never had a will in the first place. The laws of your state will be used to distribute your assets. It may not be what you had in mind.

Keeping estate planning documents in a safe or safe deposit box. Documents need to be where someone can get them in an emergency or after your passing. Safety deposit boxes are often sealed on the death of the owner. Give copies of your estate plan to your appointed executor or trustee, a trusted family member and your estate planning attorney.

Missing key documents. If your estate plan lacks key documents, your heirs might find themselves battling over the estate. Make sure your estate plan includes these documents:

• Last will and testament—This document outlines all final wishes and instructions for distributing your assets and how you want your affairs managed after you die. It also is used to name a guardian for minor children and an executor to oversee the instructions in the will.
• Beneficiary designations—Any account allowing for beneficiaries, including IRAs, pension plans, investment accounts and insurance policies, will pass directly to named beneficiaries. Be sure that these are up to date.
• Durable power of attorney for medical care—Allows another person to make medical decisions for you if you become incapacitated. Depending on your jurisdiction, it may include an advanced healthcare directive, which gives your instructions on whether or not to use life support.
• Funeral instructions—Do you want a traditional burial? Cremation? Tell your family your wishes for a funeral or memorial service.
• Proof of identity—Your Social Security card, birth certificate, marriage and/or divorce certificate and any prenuptial agreements will be needed for administering the estate.
• Deeds or loan documents for large assets—Collect paperwork for homes, boats and other big assets.

Digital assets. These include websites, cloud storage, social media accounts and cryptocurrency, to name a few. By assigning a digital fiduciary and sharing key information, you help heirs avoid identity theft and lost assets.

Failing to update your plan. Your estate plan needs to reflect the changes in your life. If your estate plan is outdated, you may unintentionally disinherit beneficiaries.

Appointing the wrong person as executor or trustee. If your eldest child is a disaster with money management, don’t name them your executor. Consider a trusted person who is unbiased and able to manage money and family dynamics and talk with them about taking on this role before appointing them to this critical role.

Reference: Kiplinger (Dec. 30, 2023) “Common Estate Planning Mistakes”

Why a Trust Works for Multi-State Property Owners

“Whatever the case may be, owning real property in more than one state can be a problem after your death if you don’t want your estate tied up in probate court.”

If you own real estate when you die, it is most likely your estate will be required to go through probate. This can take months to years and becomes expensive, as explained in the article “Why a trust is so useful for those who own real property in multiple states” from Coeur d’Alene/Post Falls Press. However, here’s the thing to be aware of: if you own property in more than one state, your estate must go through the probate process in every state where you own property.

A few strategies must be considered for snowbirds with homes in northern and southern regions or who own out-of-state rental property.

Some families will add an intended heir to the title (deed) of the real estate while the primary owners are still living. This is rarely recommended, since it can open the door to any number of problems. If the intended heir has a financial crisis, like a lawsuit, divorce, creditor issues, etc., the jointly owned property is an attachable asset.

Another solution people try is the “Pay on Death Deed.” This is a special type of deed where the recipient gets the real property on the death of the owner. This strategy has a few problems. However, the main one is that not all states allow these types of deeds to be used.

An experienced estate planning attorney will know whether or not your state allows the Pay-on-Death-Deed.

The best solution for most people owning property in multiple states is using a living trust.

The living trust provides the same directions as a last will and testament about who should receive what assets from your estate after your death, including real property. It also names a trustee, who manages the assets in the trust and distributes them after your death.

A key reason to use a living trust is the assets owned by the trust are outside of the probate estate. These assets pass to beneficiaries according to the terms of the trust and do not go through the probate process.

Once the living trust is established, the trust may hold title to any real property, regardless of where the property is located. The trustee does not have to deal with the courts in multiple states.

There is a tendency to think trusts are only used by the very wealthy. However, this is not true. Anyone who owns real property and doesn’t want it to go through one or more probate proceedings benefits from using a trust.

An experienced estate planning attorney can establish the trust and guide you through putting assets into the trust.

Reference: Coeur d’Alene/Post Falls Press “Why a trust is so useful for those who own real property in multiple states”

What are the Basics of Estate Planning?

“Discussing estate planning with others can be uncomfortable and easily avoided, yet this is an important part of financial planning.”

Every adult needs to have an estate plan, regardless of how large or small their estate is. The pandemic prompted many Americans to realize this, according to a recent article from Forbes, “What Is Estate Planning? A Guide And FAQ For Investors.”

Estate planning starts with a last will and testament and key documents including a Power of Attorney, trusts and medical directives. Creating an estate plan allows a family to protect investments and other assets during disability or illness and ensure the distribution of property after death. At the same time, taxes and probate are minimized or avoided.

Estate planning provides many benefits to the individual and their families. One of these is relieving stress and uncertainty during a difficult time.

Estate planning also addresses planning for the care of minor children in the event both parents pass away.

A last will is a legal document addressing property, assets and investments and their distribution after the owner’s death. If there is no will, the state’s laws determine how the estate will be distributed. A will is also used to name a guardian for minor children, so every young family should have a will. Without a will naming a guardian, the court will make decisions about the children’s guardian, possibly appointing a person the parents might not have chosen.

Trusts are outstanding estate planning tools used to solve a wide variety of planning problems. There are Marital Trusts used to pass assets to a spouse without incurring estate taxes and Bypass Trusts used to hold assets for a surviving spouse but structured so that when the surviving spouse passes, the assets go to the named beneficiaries—typically children from a prior marriage.

Trusts are also used to make donations to charities. Some are created to make a gift and create a steady income stream for beneficiaries.

Your estate planning attorney can recommend which type of trust works best for you.

Every adult should have a Power of Attorney in place. This gives someone the legal power to act on behalf of another person if they cannot act for themselves. The POA can be drafted to be broad, allowing the agent to act on all matters, or limited so the agent can only perform specific tasks.

Medical directives are perhaps the hardest to contemplate, since no one likes to imagine themselves at death’s door. These are also critical to give family members and healthcare providers information about what a person wants in the event of extreme illness. A Heath Care Proxy allows another person to make critical decisions for you.

Beneficiary designations are often ignored and can undo an estate plan. Let’s say that you have a life insurance policy purchased several decades ago, and in the intervening years, you divorced and remarried. Who is the beneficiary named on the life insurance policy? If it’s your ex-spouse, they’ll get an unexpected windfall when you die. All accounts with beneficiary designations should be reviewed every year or two to ensure that they are still appropriate.

Estate planning may seem daunting. However, working with an experienced estate planning attorney will make the process easier and ensure that your wishes are carried out and your family will be protected.

Reference: Forbes (November 28, 2023) “What Is Estate Planning? A Guide And FAQ For Investors”

Are You Neglecting Your Estate Planning?

“Estate planning is a vital part of financial management that often gets overlooked.”

Estate planning is about more than ensuring that assets are distributed according to your own wishes after you die. It’s also about what you’d like to have happen to your assets and who you want to be in charge of your health care decisions if you become incapacitated. A recent article from Go Banking Rates, “8 Key Signs You’re Neglecting Essential Estate Planning,” outlines the top signs showing that you need to take care of this critical task.

You don’t have a will? This is the biggest red flag of estate planning mistakes. A will, or last will and testament, is a critical legal document specifying how you want your assets to be distributed after you die. If you don’t have a will, the laws of your state will determine how everything in your estate will be given to heirs. If you have estranged family members, they may end up owning everything. There won’t be anything your beloved family members can do about it. All state’s laws are different, so speak with a local estate planning attorney to address this critical document.

How outdated are your beneficiary designations? Many people open accounts as young adults and forget to update them as the decades pass. If you’ve been married, divorced, had children, experienced loss, or if your beneficiaries are no longer part of your life, you will want to update your beneficiary designations. Your assets could very easily go to people like an ex-spouse or a former friend. Beneficiary information should be updated every few years to be sure that your current wishes are followed.

Do you have a Power of Attorney? Everyone of legal age should have a Power of Attorney. A Power of Attorney is a legal document giving a person of your choice the legal power to make decisions on your behalf if you cannot do so because of illness or an injury. Without a POA, your family will need to go to court to apply for guardianship to take care of various duties, like paying bills, managing investments, or maintaining your home.

Do you have an inventory of digital assets? If you pay bills online, are active on social media accounts, or own any digital assets like cryptocurrency, you need a plan for digital assets. Start by making a complete inventory of your accounts—you’ll be surprised at how much of your life is lived online. Some platforms have an option for naming a “legacy” contact—someone who can access your data and manage it after you pass. Your digital executor will also need usernames and passwords. Otherwise, they won’t be able to access your accounts.

Have you planned for taxes? Estate planning includes understanding the tax implications of assets. There may be estate taxes or state estate taxes due from your estate, and failing to plan could leave heirs with a smaller or no inheritance.

Do you need a trust? Trusts are valuable tools for addressing specific needs, from caring for a disabled family member to managing minor children's assets. Without trusts, these individuals could face unexpected complications that could otherwise be avoided.

If you own a business, do you have a succession plan? Business owners need a succession plan to protect their work and family. Planning for a smooth transition includes naming key employees, creating partnership or shareholder agreements and determining if the business can continue to operate and provide income to family members, including the retiring owner.

What about end-of-life care plans? Estate planning includes end-of-life care, including a living will or healthcare directives. Your family will be less stressed if you have documented your wishes for what kind of health care you want or don’t want if you become incapacitated.

Reference: Go Banking Rates (Nov. 25, 2023) “8 Key Signs You’re Neglecting Essential Estate Planning”