Decisions You Need to Make BUT Don t Want to Think About. Walt Blackmore

Transcription

1 Decisions You Need to Make BUT Don t Want to Think About Walt Blackmore

2 Disclaimer I am NOT an attorney. This information is from just personal experiences with several estates and a little reading and attorney consultations. I am not providing legal advice.

3 General Topics To Trust OR Not To Trust Information for Decision-Making Pay Now or Pay Later Who Do You Trust? Did You Leave Your Spouse A Mess? But I Don t Want That!!! Avoiding Family Fights Maintaining Your Estate or Trust

4 TO TRUST OR NOT TO TRUST Why do I need a Trust? Avoid probate and associated costs and time Large estate can be passed to heirs while minimizing taxes and legal issues Heir, spouse or other individual with special needs and/or protection provisions No change of titles required You can restrict protests

5 Do WE/I Really Need a Trust? Must I have a Trust to Avoid Probate? Not necessarily Many assets can have Transfer or Pay on Death to designated beneficiaries, thus requiring NO title changes

6 Do WE/I Really Need a Trust? Must I have a Trust to Avoid Probate? Not necessarily Many assets can have Transfer or Pay on Death to designated beneficiaries, thus requiring NO title changes Small estate check with state or attorney to verify all numbers No real property assets without designated title chain Total real property <$75,000 Total personal property <$50,000 Mobile home and trailers are included here Total estate <$100,000

7 Do WE/I Really Need a Trust? Must I have a Trust to Avoid Probate? Not necessarily Many assets can have Transfer or Pay on Death to designated beneficiaries, thus requiring NO title changes Small estate check with state or attorney to verify all numbers Must have will Must be filed within 6 months

8 Do WE/I Really Need a Trust? Must I have a Trust to Avoid Probate? Not necessarily Many assets can have Transfer or Pay on Death to designated beneficiaries, thus requiring NO title changes Small estate check with state or attorney to verify all numbers Must have will Must be filed within 6 months Even small estate may need informal probate for judge to certify Will and Executor

9 Title Type and Text are Critical Not all titles fully covered by Joint Tenants with Right of Survivorship Surviving spouse may die prior to completion of probate Surviving spouses often pass within 6 months or less of each other

10 Title Type and Text are Critical Not all titles fully covered by Joint Tenants with Right of Survivorship Transfer on Death or Pay on Death accounts may have similar issues as in above Secondary beneficiaries need to be designated If no secondary beneficiaries, Transfer or Payment is made to estate which can force probate

11 Title Type and Text are Critical Not all titles fully covered by Joint Tenants with Right of Survivorship Transfer on Death or Pay on Death accounts may have similar issues as in above Simple Title Transfers DO NOT avoid or mitigate potential tax issues Upon death, an EIN number is assigned and Estate falls under IRS rules for small businesses

12 PAY NOW OR PAY LATER Estate Information for Decision-Making $ Small Estate without Trust Initial Will cost $0 to $250 Even small estate needs informal probate for judge to certify Will and designation of Executor; make take 5-6 months and $1000-$1500

13 PAY NOW OR PAY LATER Estate Information for Decision-Making $ Small Estate without Trust $$ Simple Uncontested Arizona Probate with Will A simple Will may cost up to $1,000 Probate may take 5-6 months and $2,000 to $2,500 Any titled item without designated beneficiary requires judge to change title Cannot occur until days after Affidavit or Judge s order (8 or 9 months total) Title must be changed in state it is titled; Title may be transferred to another State

14 PAY NOW OR PAY LATER Estate Information for Decision-Making $ Small Estate without Trust It s Not Fair $$ Simple Uncontested Arizona Probate with Will $$$ Full Probate cost can be as high 30% of estate and May take 18 months to several years $$$$ Anyone may protest any issue by letter, forcing Full Probate Legal Process

15 PAY NOW OR PAY LATER Trust Information for Decision-Making $$ Initial cost - $1,500-$5,000 containing: A Will A Medical Directive Instructions for Personal Property disposition Can have special contingencies for individuals and for anyone who protests restrictions

16 PAY NOW OR PAY LATER Trust Information for Decision-Making $$ Initial cost - $1,500-$5,000 Upon death of Grantor, an EIN number is assigned and Trust falls under IRS rules for small businesses An EIN number is required unless all distributions are completed and the trust is abandoned in the year of death Income Tax Forms Must be filed under the EIN Number Capital Gains Taxes filed under EIN# are higher (20% instead of 15%)

17 PAY NOW OR PAY LATER Trust Information for Decision-Making $$ Initial cost - $1,500-$5,000 Upon death of Grantor, an EIN number is assigned and Trust falls under IRS rules for small businesses Upon death of Grantor, Trustee has near instant access to accounts to pay expenses and initiate distributions For Trust that is 3-5 years or older, financial institutions may require Trust Certification; attorney fee may be a few hundred dollars.

18 WHO DO YOU TRUST? Can you rely on the designated Executor or Trustee to follow your wishes? Executor and Trustee are held to same fiduciary standard Are they to be Bonded or not? If so Who Pays? Can individual(s) be compensated for time and/or expenses? Can individual(s) hire professional help and/or delegate responsibilities? Can the Trustee appoint an Ancillary Trustee?

19 WHO DO YOU TRUST? Can you rely on the designated Executor or Trustee to follow your wishes? Single individual or more than one? How are disagreements resolved?

20 WHO DO YOU TRUST? Can you rely on the designated Executor or Trustee to follow your wishes? Single individual or more than one? Felony Convictions, Bankruptcies, etc. may make individual(s) legally ineligible for position Rules Vary in each State

21 Will They Deal with Critical Issues? Is the Executor/Trustee able to deal with family conflict or collective wishes other than yours? Does the Executor/Trustee need to deal with Heirs with special needs? Do they have the knowledge or skills?

22 Dealing with Later Issues Is geographic location an issue? Distance between your current location and Executor/Trustee; evaluate regularly

23 Dealing with Later Issues Is geographic location an issue? Distance between your current location and Executor/Trustee; evaluate regularly How and why can Executor/Trustee be removed? > Mental capacity > Health Issues > Aging Issues > Lack of Performance > Most Important: What is the process to remove or change a trustees?

24 Dealing with Later Issues Is geographic location an issue? Distance between your current location and Executor/Trustee; evaluate regularly How and why can Executor/Trustee be removed? What is process by which others can decide issues for YOU? Independence

25 DID YOU LEAVE YOUR SPOUSE A MESS? Provide Tools for Executor/Trustee Complete list of real and personal property assets Copies and/or location of Titles for Real and Personal Property Photographs of each item are highly prized Insurance Appraisals or purchase prices are of great value Include all assets located in another state(s)

26 DID YOU LEAVE YOUR SPOUSE A MESS? Provide Tools for Executor/Trustee Complete list of real and personal property assets Complete list of all financial assets Bank Checking and Savings Account location and numbers Safe Deposit Box location and key Name and contacts for investment accounts Loan, mortgage or other liability information and contacts Loans and gifts to family members Note: Creditors have 45 days after death announcement to file a claim

27 DID YOU LEAVE YOUR SPOUSE A MESS? Provide Tools for Executor/Trustee Complete list of real and personal property assets Complete list of all financial assets, including location and key to safety deposit box Past Financial records: Past tax filings ALL open accounts: utilities, credit cards, e-bay accounts, including charitable donations Computer web sites and passwords

28 DID YOU LEAVE YOUR SPOUSE A MESS? Provide Tools for Executor/Trustee Complete list of real and personal property assets Complete list of all financial assets, including location and key to safety deposit box Past Financial records Are there any legacy issues? (Legal actions, Liens, Class action suits)

29 Knowledge Gives Control Knowledge and Guidance provide Smooth Transitions If transition is not smooth and quick then Paying bills may be a BIG issue Family bank accounts could be frozen and cash flow into account may stop Difficulty in paying mortuary and other final expenses paid? Out of what funds? How are taxes and insurance paid Who pays for asset maintenance and storage until probate, title transfer or ownership transfer is completed? Spouse, kids or other individuals may need some of this info during periods of illness and/or absences

30 BUT I DON T WANT THAT!!! Senior Living and End-of-Life Decisions Medical/Health Directive Do people know where it is? Will others honor our requests?

31 BUT I DON T WANT THAT!!! Senior Living and End-of-Life Decisions Medical/Health Directive We are all stubborn. We don t want to give up control, but we may need help with: Housecleaning, yard work, paying bills, cooking, shopping Hearing and visual or other medical issues Driving; when to stop?

32 BUT I DON T WANT THAT!!! Senior Living and End-of-Life Decisions Medical/Health Directive We are all stubborn. We don t want to give up control. Assisted-Care Living We may all need it Could be Temporary, where doctor defines needs Could be Permanent Define - What do you want? Close to family, church, shopping, concerts, restaurants? What kinds of activities, etc.? Care through hospice so you don t need to move again?

33 Reduce Family Stress Define Your Final Arrangements Write Down Final Arrangement Desires Burial vs cremation; coffin or urn guidelines; headstone requests Location cemetery, mausoleum, ashes scattered (where?) Ceremony preferences: music, religious/other readings, location You don t have to make arrangements with specific cemetery or mortuary, but preferences will help Remember you are helping those who are left behind to deal with all of these decisions

34 Civil War Not in MY Family What causes Family Fights? Greed The Law of Inverse Relationship Applies: The person who has the least involvement with the Deceased imagines they have the biggest entitlement to the estate.

35 Civil War Not in MY Family What causes Family Fights? Greed Emotional Attachment Allianz Life Insurance study found personal items are 5 times more likely to create family conflict Who gets Grandma s cook book? Who gets Grandpa s tools?

36 Civil War Not in MY Family What causes Family Fights Greed Emotional Attachment Blended Families Remember: Each family is different, each has its own issues!

37 AVOIDING FAMILY FIGHTS Protests of Wills or Trusts can usually be avoided? You can specify that if someone protests, they don t receive anything You can specify a method for conflict resolution Keep everyone informed of YOUR wishes

38 AVOIDING FAMILY FIGHTS Protests of Wills or Trusts can usually be avoided? Discuss with heirs emotional attachments they may have to items Given the opportunity, it is incumbent on your heirs to let you know if they have an interest something Document gift promises in writing When more than one family member wants an item, YOU decide and let them know your decision in writing.

39 AVOIDING FAMILY FIGHTS Protests of Wills or Trusts can usually be avoided? Discuss with heirs what emotional attachments they may have to items Write down distribution of items Date it Give a copy to Executor/Trustee Give a copy to heirs!

40 CHANGES HAPPEN MAINTAIN YOUR ESTATE OR TRUST Documents need to be updated for: Estate/trust laws; federal and state income, inheritance, gift tax issues State of residence or purchase of property in another state Significant purchase(s) OR gotten rid of items?

41 CHANGES HAPPEN MAINTAIN YOUR ESTATE OR TRUST Documents need to be updated. Have family relationships changed? Do you need to change primary and/or secondary beneficiaries? What about your Transfer or Pay on Death beneficiaries?

42 CHANGES HAPPEN MAINTAIN YOUR ESTATE OR TRUST Documents need to be updated. Have Family Relationships Changed? Other things that need review: Executor or Trustee chains Is it necessary to change Legal or Accounting representatives? Does attorney have copy of ALL of your hand-written changes and updates

43 CHANGES HAPPEN Is the Estate or Trust Still Properly Funded Have you purchased of sold items that would affect funding issues? Are they properly titled?

44 CHANGES HAPPEN Is the Estate or Trust Still Properly Funded Do you have an inheritance that would affect funding issues? Do you watch the Antiques Road Show?

45 REMEMBER I am NOT an attorney. I am not giving legal advice. I don t want you to put anyone you care about through some of the problems that I had with these four trusts. I AM encouraging you to talk with an attorney, and more particularly, an attorney that specializes in estate planning. If you would like a copy or a list of references please contact me