AZ Estate Planning News

AZ Estate Planning News

Knollmiller and Arenofsky Trust and Estate Planning

Posts filed under Estate Planning

Will My Heirs Have Hurt Feelings Over My Personal Items? Short Answer: Probably

English: Antiques being sold on Colaba Causeway

“The biggest estate-planning mistake is that people think it’s only about the money,” said Marlene Stum, a professor at the University of Minnesota and author of the “Who Gets Grandma’s Yellow Pie Plate?” workbook and website. “When it comes to their personal possessions, they say, ‘It’s just stuff.’ ”

In my opinion, the personal items in a home is often the biggest source of unhappiness among families when a loved one dies.   Without taking the time on how to resolve the distribution of personal possessions, you can unwittingly leave a legacy of rancor and resentment.

Baby boomers surveyed by Allianz Life Insurance Company selected personal possessions six times more often than financial inheritance as important in legacy planning.

Okay, where do we start?  How about asking your heirs what items mean something to them?   Then keep a list and resolve any overlapping interests.

Next, on a sheet of paper, titled Personal Property Distributions, and upon completion attached to the back of your Will, list who gets what and sign, date and number the sheet(s) 0f paper.  While writing the names on the pieces themselves seems like a great idea, it is unlikely supported in the law if there is  a dispute on who gets which items.

If you have a lot of sentimental items, and you do not want to list who receives them, perhaps a third party executor or successor trustee that will distribute the personal items will work better since their decisions will not be treated as biased or personal.
Starting the process early leaves time to work out ground rules and deal with different assumptions and opinions.  And it can be a chance to see the pleasure your treasures can bring to their new owners if you choose to give them the items you do not need now.
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“Only Older People Need Estate Plans”

Français : Enterrement à

Français : Enterrement à (Photo credit: Wikipedia)

It isn’t a surprise to anyone that those typically motivated to do estate planning are those that have their mortality staring back at them.  Examples include clients preparing for travel, life challenging illnesses or individuals in advancing years.

I don’t need to remind anyone that life can be cut short since all of us have been affected by a passing that came too soon and too fast.   In my practice, I’ve had parents pass without making their choice be known for a guardian of their children and recently an individual passed and because she didn’t have a will, it passed to an individual that the rest of the family kept shaking their heads saying “she must be turning in her grave that so-and-so inherited her estate.”

Sure, very few of us like planning for our passing.  But often, it is the things we least want to face that end up giving us the greatest peace once faced, tackled and then resolved.

Give us a call and we will be happy to assist you with the process, make the planning and implementation of your estate plan as simple as possible and will guarantee that the burden that gets lifted off your shoulders will give you great satisfaction.

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“I don’t need an estate plan since I’m unaffected by the estate tax”

Tax

coffin

While this is a common misconception, I believe it mixes up two ideas, estate planning and estate tax planning. Estate tax planing is actually a small, but important, part of the overall estate planning process.

Estate planning is about making sure your estate is in order and passes as you wish.  Estate tax planning is making sure the government gets as little of your estate as you can.

Estate planning uses a trust, or a will, to organize your affairs and distribute it to who you care about when you die.   Estate planning is for tax and non-tax reasons.   Of course no one is required to have an estate plan. Many would be unhappy to know that our legislature in Arizona has written an estate plan for everyone that hasn’t written an estate plan themselves.

Kevin P. McFadden, Knollmiller & Arenofsky, LLP

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Revocable Trusts, and Living Trusts, and Irrevocable Trusts! Oh, My!

Wizard of Oz

But wait, there’s more; there’s Loving Trusts, Family Trusts,  Grantor Retained Trusts and many more.

Let’s start with revocable vs. irrevocable trusts.  These are exactly what they say.  The revocable trust can be changed, amended,  and even thrown away.  The irrevocable trust however rarely can be changed except for very limited circumstances.

The revocable trust is the most common trust, the basis of an estate plan and typically what a client uses in lieu of a Last Will & Testament for the core estate plan.  The irrevocable trust is usually a more advanced estate planning trust IN ADDITION to the client’s existing estate plan (using a revocable trust).  I will wait for a discussion on when to use a irrevocable trust for a future blog.

What about all the other names?  Family Trust, Living Trust, Revocable Trust, Loving Trust, and Grantor Trust are pretty much the same thing. These trusts are great vehicles for holding your assets so that when you become unable to take care of yourself, or pass away, someone you have named can step in and take care of your affairs in your absence.  Great tools to avoid probates, conservatorships, court involvement and the best of all, far more private than a basic will.

If we can explain more, please feel free to call our office at 480-345-0444.

Kevin P. McFadden, Knollmiller & Arenofsky, LLP

 

 

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Estate Planning Mistaken Belief #2

IF I HAVE A WILL, MY FAMILY WILL AVOID PROBATE

historic deeds and probate court

I am unsure how this mistaken belief ever came about since a Will is almost synonymous with probate.

By way of background, using a Will as your primary estate planning document, your estate may be probated. Without a Will, your estate will still go through the probate process, but the state laws of intestacy,  discussed before in this blog, are applied to your estate and possibly overcome your wishes.

Probate is a court supervised proceeding, where your Will is “proven” in court. If the Will is proven to be valid, then title on your assets, after payment of your debts and expenses, can be legally transferred to your heirs according to your wishes.  Since this is a court supervised process, it is also a public process, meaning the full details of your Will are public and available to anyone wishing to view the court records. This includes the information about who your heirs are, where they live, and often the assets of the estate.

Sandusky County Courthouse

As if the public airing of your final wishes and disposition of your assets is not bad enough, notices must be sent out to all parties with an interest in your Will, usually to all family members, to your creditors, and public notices of your death must be posted. This is to notify and allow anyone who may have a claim against your estate the time to file that claim and have it included in the probate process.

Further, for those individuals with property in more than one state, upon death there will not only be a probate process in the state of residence, but also the need for what is known as an “ancillary probate” in each of the other states where property is owned.

Because of this, most people would choose to avoid probate if they could. Why would anyone voluntarily choose to allow their estate to be probated? There are other methods to use, such as using a living trust as your primary estate planning document instead of a Will, which can avoid most of the time, expense and publicity associated with the probating of a Will.

In short, using a Will as your primary estate planning tool will not keep you, or rather your heirs, out of probate. It does mean however, that your probate will likely be more organized than it otherwise would have been had you died without a Will.

Kevin P. McFadden, Knollmiller & Arenofsky, LLP

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Estate Planning Misunderstandings #1

Near Myths

Estate Planning Misunderstanding #1

Estate planning is only for the old.  

(This is the first in a series of estate planning misunderstandings.)

The fact is, if you are an adult, you already have an estate plan. We all do. It was drafted on our behalf by the legislatures of the state in which we reside, and is governed by the state laws of intestacy. If you die “intestate”, meaning without a Will or a trust, these laws govern who will inherit your assets.  If you have minor children, these laws also govern who will be chosen to be their guardian and the trustee of their inheritance until they reach the age of 18. It will also give your children complete and unfettered access to their inheritance upon reaching that age.  Might it be harmful to an 18-year-old to have unrestricted access to any significant sum of money? As you might imagine, the state laws of intestacy might not arrive at the same choices that you would make.

It may also mean that your family may also have to endure a lengthy, public and possibly costly probate in order to administer the estate. Additionally, all of the proceedings and the choices made by the probate court will be public record, open to review for anyone who cares to.

If instead you may want to take control and create your own plan, one that reflects your choices and your wishes.   Then regardless of your net worth or age, estate planning in some context is appropriate for you.  It may involve little more than drafting a Will to distribute your assets according to your wishes, and appointing a guardian in the Will for any minor children, along with Powers of Attorney for Health Care and for Finance (two separate documents).  

Kevin P. McFadden, Knollmiller & Arenofsky, LLP

Special thanks to attorney Robin C. Bevier from Northern California where I shamelessly relied upon his excellent article.

 

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