While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps in elder law you can take to protect yourself and your loved ones. Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones of the expense, delay and frustration associated with managing your affairs when you pass away or become disabled.
Providing for Incapacity – Estate Planning
If you become incapacitated, you may not be able to manage your own financial affairs. Many are under the mistaken belief that one’s spouse or adult children can automatically take over for them if they become incapacitated. The truth is that in order for others to be able to manage your finances, they must petition a court to declare you legally incompetent. This process can be lengthy, costly, and stressful. Even if the court appoints the person you would have chosen, the individual may have to come back to the court every year and show how he or she is spending and investing each and every penny.
If you want your family to be able to immediately take over for you, it’s essential that you work with an attorney to create the proper legal documents to designate a person, or persons, that you trust so they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and refinance your home. Many people mistakenly believe that a simple will can effectively protect you in the event that you become incapacitated, but the truth is that a will does not take effect until you die.
In addition to planning for the financial aspect of your affairs during incapacity, it’s critical that you establish a plan for your medical care. The law allows you to appoint someone you trust – for example, a family member or close friend to make decisions on your behalf about medical treatment options if you lose the ability to decide for yourself. You can do this by using a durable power of attorney for health care where you designate the person to make such decisions on your behalf. In addition to a power of attorney for health care, you should also have a living will which informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.
If you leave your estate to your loved ones using a will, everything you own will pass through probate. The process is expensive, time-consuming and open to the public. The probate court is in control of the process until the estate has been settled and distributed. During this process, it is not unusual for the probate courts to freeze assets for weeks or even months while trying to determine the proper disposition of the estate, making it difficult for your family to pay for living expenses. If you are married and have children, you want to make certain that your surviving family has immediate access to cash to pay for living expenses while your estate is being settled. With proper planning, your assets can pass on to your loved ones without undergoing probate, in a manner that is quick, inexpensive, and private.
Providing for Minor Children – Estate Planning
It is important that your estate plan address issues regarding the upbringing of your children. If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations. You may also want to provide for special counseling and resources for your spouse, if you believe they lack the experience or ability to handle financial and legal matters. You should also discuss with your attorney the unfortunate possibility of both you and your spouse dying simultaneously, or within a short duration of time. A contingency plan should include a list of persons you’d like to manage your assets and name a guardian you’d like to nominate to raise your children in your absence. The person, or trustee, in charge of the finances need not be the same person as the guardian. In fact, in many situations, you may want to purposely designate different persons to maintain a system of checks and balances.
You should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children. You will also want to give consideration to the age and financial condition of a potential guardian. Some guardians may lack child-rearing skills you feel are necessary. If you fail to plan, the decision as to who will manage your finances and raise your children will be left to a court of law.
Another issue to consider during the planning process is whether you’d like your beneficiaries to receive your assets directly, or to have the assets placed in trust and distributed subject to conditions and circumstances such as age, need and even incentives based on behavior and education. All too often, children receive substantial assets before they are mature enough to handle them in a prudent manner.
Estate Planning for Death Taxes
The IRS will want to review your estate at death to ensure you don’t owe them that one final tax: the federal estate tax. Whether there will be any tax owed depends on the size of your estate and how your estate plan is structured. Many states have their own separate estate and inheritance taxes that you need to be aware of. There are many effective strategies that can be implemented to reduce or eliminate death taxes, but you must start the planning process early in order to properly implement many of these strategies.
Charitable Bequests – Planned Giving
Do you want to benefit a charitable organization or cause? Your estate plan can provide support for such organizations in a variety of ways, either during your lifetime or at your death. Depending on how your planned giving is set up, it may also allow you to receive a stream of income for life, earn higher investment yield, or reduce your capital gains or estate taxes.
A well-crafted estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, probate at death, estate taxes and unnecessary delays. You should consult a qualified estate planning attorney to review your family and financial situation, your goals and explain the various options available to you. Once your estate plan is in place, you will have peace of mind knowing that you have provided for yourself and your family.
A properly drafted will should clearly identify all beneficiaries and leave no ambiguity surrounding the intentions of the deceased (referred to as the “testator”). Unfortunately, estate planning documents, including wills or trusts, do not always clearly reflect the intentions of the testator. Even if the language of the documents is clear, parties may have other reasons to initiate a lawsuit or object to a will.
When someone with standing objects to a will or a trust, the estate might have to be litigated. This is sometimes referred to as a “will contest.” These disputes can be complex and should be navigated by attorneys with expertise in such matters, including an intimate knowledge of probate court rules and procedures.
Typically, if a will is involved, a probate court will determine whether or not it is valid and should be executed. If the will is found to be valid, the court will oversee the allocation of assets and will ensure that the named executor carries out the wishes of the decedent in a lawful and timely manner. The court also oversees the distribution of assets if the testator, or deceased person, died intestate, without a valid will.
Who Can Contest a Will?
A protesting party may only contest a will if he or she falls within one of two categories. First, those mentioned in the will, known as the will’s beneficiaries, may formally challenge it. Alternatively, if the challenger stands to inherit according to laws of intestacy (such as a family member), but is not named in the will, or is expressly disinherited, he or she may seek to contest. If one is not named as a beneficiary in the will and is not a family member eligible for inheritance, known as a distributee, he or she may not pursue a formal challenge.
In order to successfully contest a will, the protesting party must prove that the will is invalid. There are several scenarios under which a will may not be admitted, including but not limited to:
- Undue influence – If the testator altered his or her will under the threat of force or other persuasion, it is said that he or she was under undue influence.
- Mental incapacity – Similarly, if the testator is shown to have been in an incapacitated or otherwise impaired mental state at the time the will was executed, it may be considered void.
- Will does not follow procedure – A will may be contested if it was signed in the absence of witnesses, was not signed by the testator, or is otherwise not executed according to the law.
- The will was revoked – If the will was revoked after it was signed, it will also be considered void. A subsequent will, marriage, or legal action may also revoke a will.
- Fraud – Lastly, the protesting party can contest if he or she has proof that the testator was deliberately misled by a third party.
When there is no Will
In instances where no valid will exists then intestacy laws which indicate what assets each family member is to receive go into effect. Typically, inheritance is granted to family members according to a specific order. Once the decedent’s debts have been paid from the estate, the remaining assets are distributed among the testator’s spouse, children, parents, siblings, grandparents, grandchildren, or great-grandchildren. Family members who are half-blood relatives are generally considered as if they were full-blood.
Without the guidance of an estate litigation attorney, the web of rules involved in the process can be overwhelming and lead to serious errors or even forfeiture of one’s rights. Whether you are an executor, trustee, beneficiary or someone improperly left out of a will, contact our experienced attorneys to discuss your options.
While the golden years are supposed to be filled with the joys of retirement, grandchildren and travel, they are seldomly enjoyed without various other complexities that individuals encounter as they age including deteriorating health, financial concerns and family disputes. To meet these challenges, a unique area of law – elder law has taken on greater value to millions of aging Americans and their caregivers. This area encompasses many different legal disciplines, including estate planning, business succession planning, asset protection, Medicaid planning and veterans benefits.
Our attorneys are knowledgeable on the wide array of issues that impact the elderly and can assist you or your loved ones with the following matters:
- Healthcare planning including powers of attorneys and living wills
- Estate planning
- Long-term care planning
- Selecting the right long-term care facility
- Qualifying for public benefits such as Social Security, Medicaid and Veterans Benefits
- Conservatorships and guardianships
- Prevention of financial exploitation and elder abuse
Contact our Expert
While we communicate with caregivers, including spouses, children, doctors, social works and home aides, our central focus remains our elderly clients. We work diligently to make sure the seniors we represent are protected and continue to enjoy a high quality of life as they age. Contact our office today for a free consultation.