Wills, Trusts and All That Good Stuff
Disclaimer: The materials and content within this podcast are intended as general information only and are not to be considered a substitute for professional legal advice or a consultation with a lawyer.
1. Family Law Tip of the Week
If you are trying to increase your time with your children, these 4 tips will help maximize the chances of you getting what you want:
a. Exercise all the time you have already been awarded with the kids.
b. Stay involved with your kids’ school, teachers and activities.
c. Stay involved with what is happening with your kids medically. If they are suffering from an issue, do what you can to address it.
d. Take action to be the best parent you can be. Take classes, read books, do therapy AND talk to the ex about what your kids need.
2. Wills, Trusts and All That Good Stuff
Jessica Gush has been an estate planning attorney in the Phoenix area for the past 5 years. She has recently opened her own business, Practice Builders, helping Arizona attorneys who want to expand their areas of focus. Today, Jessica talks with The Family Law Insider about why estate planning is important for all families.
One of the most common things Jessica hears from people is that they don’t have “that much” in terms of property and money, so they don’t need an estate plan. There are estate plans that are perfect for everyone. You need to get a plan that meets your goals and your family’s needs. By working with a good estate planning attorney, you will get a plan that works for you and your situation.
In the event you don’t have a will, the law of the state in which you reside will control where your “stuff” goes when you die. Without a will, however, there is a possibility your estate will have to go through probate. In Arizona, probate is complicated and could take months (or years) to go through. There are lots of legal requirements involved, and it could be very costly.
Basic Emergency Documents
If you don’t want your property to be distributed according to the default rules of the state, you need a will. The will is just part of a greater group of legal documents called “emergency legal documents”:
Aside from the will, there is a medical power of attorney and a general durable power of attorney. With the medical power of attorney, you can designate who you want to talk to the doctors about medical procedures (for you) in the event of an emergency. A general durable power of attorney will assist the person you designate in taking legal and financial action on your behalf in the event you are unable to do it yourself. (FYI – the person who you designate to hold your medical power of attorney can be different than the person who holds the general durable power of attorney.)
In addition to the powers of attorney and will, there is also a living will included in the emergency documents packet. The living will is instructions to your medical power of attorney about how you want the end of your life to look. A common memory people have is of Terri Schiavo’s case in which her family was arguing over “final” medical care decisions. By having this document, you will give your family (who will be grieving) direction.
The final document included in the emergency packet will be funeral and burial instructions. This will answer questions about creamation vs. burial and whether there is a plot already in existence, etc.
DIVORCE TIP: In the case of a divorce (and wills), ex-spouses should coordinate about guardianship of their children-in-common should both of them pass away. This is an appropriate conversation to have when custody is being negotiated.
GENERAL TIP: Keep your estate plan current. A plan that worked 5 years ago might not work for you today (especially if you have since gone through a divorce). After you get a divorce, review your documents to make sure they say what you want and update accordingly.
DIVORCE TIP: While you are going through a divorce, be aware that if you die, because the divorce is not final, things could still go to your ex (depending on what your will states or what the default state laws say). If you don’t want this to happen, take action to protect yourself.
GENERAL TIP: Post divorce, also take a look at your life insurance, 401K and retirement beneficiary designations and change them accordingly.
When we refer to non-emergency documents, we are talking about a living trust and a revocable trust. These two terms are used interchangeably. Both of these documents are set up so one generation can decide how to pass their assets to the next generation. The will then becomes a pour over will (as opposed a stand-alone document.)
There are several benefits to using a trust as opposed to just a will:
a. Trusts help you avoid probate (which – again – is complicated, invasive and costly).
b. Trusts give you more flexibility in how your assets will be distributed to the next generation and the power the next generation will have over those assets.
c. Trusts give you creditor protection for the beneficiaries in case of future lawsuit or divorce (as long as the assets remain in the trust).
DIVORCE TIP: This protection doesn’t apply to child support arrears; you can’t use a trust to evade child support.
d. You can minimize your estate taxes, depending on the limits Congress sets (which can change).
e. No two families are the same with the same goals. A trust is the most flexible planning tool to make sure your goals are met.
Players in the Trust
The trustor/grantor is the person who sets up the trust. The person who gets the “stuff” is the beneficiary. The trustee has the duty to manage the assets in the trust in such a way that benefits the beneficiary.
The trustee is in a high-trust position. The trustee has to manage the assets in a manner that is prudent so that the assets are there to achieve your goals.
TIP: Regarding your children, there is a difference between the decisions a guardian (who makes day-to-day decisions) and a trustee (who will be making financial decisions) would make in the case of your death. The trust/will duo give you the ability to make these two individuals “different,” although in same cases, this person might be the same.
There are more documents that can be prepared and more ways to make your plan increasingly robust, but the documents set forth above represent an excellent set of basic documents.
Jessica has recently started Practice Builders in which she recruits and trains other attorneys who want to incorporate estate planning into their practice. You can find Jessica at yourpracticebuilders.com, and her phone number is 914-837-1410.
3. Thoughts From the Life Coach
In today’s thought, James talks about keeping your relationship together, avoiding divorce and conquering the world!