Estate Planning

The Reason Married People Need A Will

Thursday, 09 July 2009 09:34

Many married people have never prepared a will, although they recognize that this is something that should be done. Perhaps the rather morbid title, “Last Will and Testament,” has caused them to delay taking action.

If you do not prepare a will, the state will draw one for you, and chances are very good that your survivors will not like the provisions. The legal term for dying without a will is “intestacy,” and the distribution of your property will be based on the intestacy laws of the state in which you reside at the time of death.

In the absence of a will, the Probate Court will appoint an administrator, such as a family member or local attorney. Then after a complicated procedure, all of your assets will be distributed according to the state’s formula.

Your estate consists of personal property (furniture, jewelry, clothes, automobiles), investments (cash, savings, securities), real estate, employee benefits (group insurance, retirement or profit sharing) and other items such as the proceeds of a lawsuit against someone who accidentally caused your death.

You cannot rely on joint property title as a substitute for a will because it does not solve problems arising with the second death. Some forms of joint title do not pass entirely to the surviving spouse.

Having a will drawn can prevent family disputes, and will give you the opportunity to be certain that your property will be distributed promptly to the parties designated as beneficiaries.

Your will should designate an Executor to carry out your bequests efficiently and promptly and with less expense than if there had been no will. See our posting on selecting an executor for your estate for more information. The will should also provide for flexibility in the administration of your estate. You may also wish to provide special bequests to non-profit organizations. Having a will prepared will also help establish a relationship with an attorney, which could be extremely valuable in the future. Naturally, a will should be periodically reviewed and updated to reflect changing personal circumstances and new tax laws.

Perhaps you’ll find it easier if, instead of thinking of Last Will and Testament, you think of fulfilling your wishes and controlling your own assets.

Brock and Associates, LLC is a financial planning firm specializing in asset protection and generational wealth preservation.

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Why Heirs Shouldn't Be Executors

Monday, 27 April 2009 09:31

One of the most important provisions of a will is that which appoints an Executor for the estate.  It is the Executor’s responsibility to carry out the provisions of the will and settle the estate.

Many wills name a spouse or member of the family as Executor, but the complexity of our society is making the corporate Executor increasingly popular.  The Executor must do the following:

• Take possession of, protect and conserve all property
• Collect all debts, claims and notes due
• Determine identity, location and the degree of all possible heirs
• Handle all business interests and settle all affairs
• Review debts and pay all obligations
• File state and federal estate returns and pay taxes

A substantial number of legal documents must be filed, notices published and tax returns prepared.  There will also be appraisals and a significant amount of accounting to be performed.  These tasks are difficult and time consuming for the novice and frequently heart rending for the spouse or child.

Not only can it be emotionally difficult for a family member to execute the estate, it also has the very real risk of dividing the family.  Sibling disputes are common when one of the children is assigned the task of distributing the estate.

Local laws limit executor fees, whether paid to an individual or a trust company, but a professional Executor’s efficient management has often been known to more than offset the fees.

Your attorney will be consulted by the Executor to assist in the legal matters of settling the estate, and you should review the advisability of naming a corporate trustee as either Executor or as an alternate Executor if an individual is incapable or unwilling to serve.

Choosing your executor is a delicate task.  We encourage you to come and meet with one of our qualified advisors.  They will be able to discuss with you the approach you should take to select your Executor.

Brock and Associates, LLC is a financial planning firm specializing in retirement, estate, and tax planning.

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Power of Attorney Rationale - Can Someone Act For You?

Friday, 06 March 2009 09:56

Most of us have wills that will conclude our circumstances after death.  Have we also provided for the eventuality that often precedes death - incapacitation?  Insurance records reveal that a 35-year-old is four times more likely to become disabled than to die before reaching 65.

If injury or illness struck you, could your family gain access to bank accounts and the safe deposit box?  Is someone empowered to cash checks payable to you?  How would they pay pressing bills?  Could they take care of your investments, make claims on your behalf or otherwise manage your assets?  A local court could appoint a guardian, or conservator, of course, but the legalities might consume time and money.

Those who have done a great deal of work with older citizens recommend granting a power of attorney to a trustworthy individual, authorizing that person to act in his or her place in such a situation.  An ordinary power of attorney will not be sufficient, because it becomes ineffective just when it is needed most, when the grantor becomes incapable of independent actions.

Either a durable power of attorney (“valid notwithstanding my incapacity”) or a spring power of attorney (“becomes effective only when I become incapacitated”) is needed.  Not just older people need this power of attorney.  Younger individuals can also be struck with disabling afflictions or accidents.

It is important to give a power of attorney only to someone who can be trusted completely.  The power of attorney can be canceled upon recovery, but in practice, you would have to get back all copies.  That may not be easy, considering there can be copies of which you may be unaware.  If the person who held the canceled power were to go to your bank to take out your savings, it is possible that bank officials may not have received notice the arrangement had been voided.

In addition, your bank, insurance company or other institution will recognize a power of attorney only if it follows a special format.  A Living Will or Medical Power of Attorney is a different matter, having to do with medical decisions, and does not replace the critical need for a durable or spring power of attorney.  It is best to consult your attorney about this issue.

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