Slides Lesson 19

7/28/2019 Slides Lesson 19

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Thisfirstvideoinestateplanningisaboutmakingyourdesiresknown.Wewill examinethe

manyfacetsofestateplanning:includingthewhy,how,what,whenandwho.


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Sincethere arepeoplewhodonotmaketheirwishesknown,thestateshaveasystemfor

distributingyourpropertyafteryourdeath.Theyarecalledtherulesofintestacy. Each

stateisdifferentsoIrecommendyoustudyyourstatesrulesanddecideifyouresatisfied

withthem.Ifyouare,thentheywouldbegoodenough.

However,what

ifyou

wanted

something

different,

like

wanting

your

spouse

to

inherit

all

yourestate?Insomestatestherulesofintestacywoulddivideyourestatebetweenyour

spouseandyourchildren.Rulesofintestacygenerallyfollowmarriagefirstandthen

bloodlinessecond.Thusyoursecondcousinsareinlineaheadofyourthirdcousins,and

theyarebothaheadofyourstepchildren.

Generally,inplanningforinheritance,youshouldsuccessivelyaskwhatifuntilyour

honestansweristoletthestatefigureitout,orgiveitalltocharity.

Theprobateprocessiswhatthestatesusetomakesurethatyourdesiresarecarriedout

andthatyourheirsanddebtorsaretreatedfairly. Itsalegalisticcourtrunprocessthatcan

bebothprotractedandexpensive.Estatesthatconsistofmorethanafewtensof

thousandsofdollarswillgenerallyneedalawyer.

Nowthatwevediscussedthewhy,letsmoveontothehowofEstatePlanning.


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Ifyouaresilent,itmeansyouacceptyourstate'srulesofintestacy.Otherwise,you

havetomakeyourwishesknowninalegalway.

Therearegenerally fivewaysofmakingyourdesiresknown.Itwilltakeacombinationof

mostofthesetohandleamodestestate.Youshouldbepreparedandexpecttouse

mostofthesemethodstomakeyourwishesknown.Wewillreviewallofthesein

moredetailhere.

Remember,EstatePlanningrequiresyoutothinkindetailaboutwhatyouwantto

havehappenwhenthingsgowrong.Ifyoucanimagineit,thereisagoodchance

thatagoodattorneycanwriteit.


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Onewaytobypassprobateistotitleanaccountornamebeneficiaries.These

structureshavetheforceoflawandsupersedesawill,trust,orprobateaction.

Annuities,lifeinsurance,andretirementaccountshavedesignatedbeneficiaries.

Whenstartingtheaccount,theownerdesignatesbeneficiarieswhowillreceivethe

proceedsoftheaccountuponthedeathoftheinsuredpersonortheowner.

Bytitlingpropertythesuccessorownercanbeestablished. Themostcommonform

ofownershipthatpassespropertyatthedeathofanownerisJointTenantswith

RightsofSurvivorship.

ADueonDeathclause,inafinancialaccount,hasasimilareffect.


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Awillisyourspecificinstructionstothestateastothedispositionofyourproperty

thatisnototherwisedesignated.

Sincechildrenaretreatedsimilartopropertyinmanypartsofthelaw,awillcan

alsocarryyourinstructionsaboutguardiansforyourchildren.

Suchadocumentrequirestheratificationofacourttobeimplemented.The

processofthisratificationisknownasprobate.

Havingawillbyitselfmeansthatyouhavenotsetupatrustduringyourlifetime.

Dontworry welltalkabouttrustsinaminute!

However,youCANhaveyourwillestablishatrustuponyourdeath. Thiswouldbe

calledatestamentarytrust. Iwouldtalkspecificallywithanestateplanning

attorneytoseeifthatmakessenseforyou.

IfyouDOhaveatrustthatactsasyourmaininstrumentoftransferringyourassets,

itspossibleyouhaventmovedallofyourassetstobeheldbythattrust. Inthat

event,youwouldstillhaveawillthatpoursanythingoutsideofyourtrustinto

yourtrust. Itactsasasafetynettomakesurethatuponyourdeath,yourtruststill

governsyourassets.


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AnAdvancedMedicalDirective,oftencalledalivingwill,isyourspecificinstructions

tothestateastolevelofeffortthatshouldbeputforthtoprolongyourlifeifyou

areneardeath.Finaldirectivesarewellrespecteddocumentswithdoctors,

hospitals,andnursinghomes.

Considerwhathappenswhentheresanemergency.Whentheparamedicsarrive,

theyarenotgoingtoaskaboutanonresuscitationorder.Theyaregoingtostart

workingonthepatient.


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APowerofAttorneyisyourspecificdirectionstotheworldtoacceptthewordof

someotherpersonasyourdecisionmakerinsomesetofcircumstances.

InEstatePlanning,aPowerofAttorneyisimportantasitrelatestoincapacity. This

simplymeansthatifyouincapacitatedorunabletomakedecisions,youcangive

someonethepowertoactonyourbehalf.

DurablePowersofAttorneyforhealthcareseemtoholdupoverlongperiodsof

time.APowerofAttorneyforhealthCareallowssomeonetomakemedical

decisionsforyouifyouareunabletospeakforyourself.Similarly, aPowerof

Attorneyforfinancialaffairsallowssomeonetopayyourbills,payyourtaxes,or

evensellyourpropertyifneededtohelpsupportyou.Inthemedicalarea,aPower

ofAttorneyisalmostcasuallyrecognized.

FinancialPowersofAttorneyneedtobekeptuptodate. Financialinstitutionare

notparticularly

inclined

to

accept

the

signature

of

someone

you

appointed

as

your

agenttenyearsago.

Sinceapowerofattorneyallowsyoutorepresentaperson,theyautomatically

expireatdeath.Thismeansthatyoucannotactonthatpersonsbehalfanymore

sincetheyarenowdeceased. Thepersonthatdoesactonthedeceasedsbehalf

wouldbethetrustsexecutor,thesuccessortrustee,thecourt,orsomeother


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person.


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AnotherwaytomakeyourdesiresknownisthroughaTrust.Atrustestablishesaseparate

legalentityandprovidesinstructionsonthedispositionofyourproperty. Wewilldiscuss

trustsinthesecond ofthisweekslessons.


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Sowhatassets shouldbeputinatrust?

Thebiggerandmorecomplicatedtheinheritance,themoreconsiderationshouldbegiven

tothewayitstransferred.Ifyourestateisofmodestsize,alivingTrustshouldsuffice.

Ifthere

are

business

interests

in

your

estate,

special

consideration

will

be

needed.

For

instance,couldyourheirsrunthebusiness? Dotheywanttorunthebusiness? Ifnot,

thereneedsbesomesortofactionthatwillfacilitatethesaleofthebusiness.

Ifyouhaveusedtitlingandbeneficiariestopassmostproperty,willtherebesufficient

liquiditytopaytaxesandtoadministeryourestate?


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Itsalsoimportant toconsider WHENyouwanta particularassettobecomeavailabletoan

heir.

Oneoptionisbeforedeath asagift. This iscertainlyadesirableoptionifyouhave

sufficientresourcesforyourownretirement.

Anotheroption issoonafterdeathasaninheritance.Thisisacommon scenario.

Lastly,whenistherighttime? Ifyouwant topostponethetransferofassetstosomeone

untilsometimeafteryourdeath,youwouldneedtodothisthroughatrust.Perhapstheres

achild whowouldnotbecapableorlegallyabletocontroltheasset.Orperhapsyouhave

concernsthattheassetsmightbesquanderedandmaybeyouwanttorestricttheflowof

theassettoanheir. Forexample,itscommonthatextremelyrichpeopledonotallow

theirchildrentoinheritmoniesuntilthechildrenareintheirthirties,asawaytoencourage

themtogetoutontheirownforawhile.


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Therearepotentiallyseveralgroups thatyoumightwanttobenefitfromyourproperty.You

willwanttobesuretheyarecapableofhandlingtheinheritance,otherwiseyouneedto

considerplacingitintrust. Bydoingthis,youareabletodictateyourwishesfrombeyond

thegrave. Youmaybeabletosavepeoplefromthemselvesorevenensureyourwishes

areupheldthroughvariouscircumstances

Considerthefollowingscenario: Youreinasecondmarriageandyouwantyourcurrent

spousetohavetheassetsavailabletoherifsheneedsthem,butyouwantwhateveris

leftovertogotoyourchildrenfromapreviousmarriage,notherchildren. Forthis

scenario,youwouldneedsomeformofatrust.

Thereareanynumberofsituationswhereyouwantapersontohavebeneficialuseof

someassetaslongastheylive,butyouwanttodirectittosomeotherpersonafterthe

firstbeneficiarydies. ThesesituationsrequiresomeformoftrusteitherasaTestamentary

Trustinyourwilloraspartofalivingtrust.

Finally,aretherepeoplewhomyouwanttospecificallydisinherit?PeoplewhoshouldNOT

getanythingfromyourestate? Thissituationrequiresspecificinstructionandprobably

shouldpromptyoutoseealawyer.


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Sothereyouhaveabriefsurveyof:

TheWhy

TheHow

TheWhat

TheWhenand

TheWho

for

Estate

Planning

In thenextlessonwewillturnourattentiontoTrusts.

Documents

Slides Lesson 19