In fact, in many cases, relying on a basic Will alone can lead to more confusion, cost, and conflict than you ever intended. Did you know you can even get others (your beneficiaries and loved ones) kicked off of benefits if you don’t leave their inheritance to them in the correct manner?

What a Will Does and Doesn’t Do

At its core, a Will is a legal document that lays out your wishes for what happens to your assets after you die. It names an executor (also sometimes referred to as a personal representative), identifies your beneficiaries, and specifies who gets what. That part is clear.

But here’s what a Will doesn’t do:

• It doesn’t avoid probate.
• It doesn’t help during your lifetime if you become incapacitated.
• It doesn’t protect your home or life savings from the cost of long-term care.
• It doesn’t prevent family disputes over care, inheritance, or decision-making.

So, while a Will might be part of your estate plan, it’s not the whole story. And it’s certainly not the best standalone strategy for many families today.

The Realities of Probate and Incapacity

Let’s start with probate. This is the court process that verifies your Will and oversees the distribution of your assets. Probate can be time-consuming, expensive, and public. Even with a valid Will, your family may be tied up in court for months or even years before they can access what you left behind.

Then there’s incapacity. A Will only takes effect when you pass away. It has no power while you’re alive. If you become ill or injured and can’t make decisions for yourself, or take care of young children, a Will won’t authorize someone to pay your bills, manage your property, appoint a legal guardian, or make medical decisions on your behalf. That requires powers of attorney, advance directives, and possibly more.

And for those who may need long-term care in the future (which, statistically, is most of us past a certain age) a Will offers zero protection against the high cost of nursing home care. Without the right planning in place, you could lose your life savings to pay for care before your heirs ever see a dime.

Why Trusts Are No Longer Just for the Wealthy

In a more complex legal and healthcare environment, many families are turning to trusts as a better alternative. A properly drafted and funded trust can:

• Avoid probate entirely
• Allow someone you trust to manage your assets if you’re incapacitated
• Provide protection from nursing home costs with proper Medicaid planning
• Keep family matters private and out of court
• Set clear terms for how and when your beneficiaries receive assets

And it’s not just something for the ultra-wealthy. A trust is often the simplest way to keep things smooth for your loved ones, especially when life gets complicated.

There’s nothing wrong with wanting simplicity. But in estate planning, real simplicity isn’t found in a bare-bones document. It’s found in clarity. In giving your family a clear path forward when things are hard. In protecting what you’ve built and easing the burden for the people you love.

The post The Myth of the “Simple Will” in a Complex World appeared first on Desert Law Group | Kimberly T. Lee.

Probate involves validating the deceased’s Last Will and Testament (“Will”) in front of a court, if one exists. The Will appoints an executor or personal representative, and oversees the distribution of assets. The process generally includes:

• Filing the Will: If there is a Will, it must be filed with the probate court in the county where the deceased lived. The court will confirm its validity.
• Appointing an Executor: If the deceased named an Executor in the Will, the court will formally appoint them. If there is no Will, the court will appoint an administrator, typically a close relative.
• Inventory of Assets: The Executor is responsible (usually with help from an attorney) for identifying and cataloging all assets owned by the deceased, including real estate, bank accounts, investments, and personal belongings.
• Paying Debts and Taxes: The Executor must settle any outstanding debts and pay applicable taxes from the estate before distributing assets to beneficiaries.
• Distribution of Assets: Once debts and taxes are settled, the Executor distributes the remaining assets to the beneficiaries as per the instructions in the will or according to state laws if there is no will.

The duration of the probate process varies widely based on several factors, including the complexity of the estate, the number of assets, and the jurisdiction. On average, probate can take anywhere from a few months to over a year. Complications such as disputes among heirs, challenges to the Will, or the need for asset appraisals can further extend this timeline.

As mentioned above, probate can be avoided through a couple of different estate planning strategies. It is important to consult with an attorney to review pros and cons of any of these techniques.

One way to avoid probate is to establish a trust – whether revocable or irrevocable. Assets placed in a trust bypass the probate process allowing a more seamless transfer to beneficiaries. Another route for avoiding probate is joint ownership on an asset. Again, this must be done only after careful consideration and consultation with an attorney as there may be other unintended consequences of joint ownership. Beneficiary designations and outright gifting of assets are other ways of avoiding probate, but may not actually accomplish your overall estate planning goals. 

While it can seem daunting, knowing what to expect during the probate process, and taking proactive steps can help minimize its impact on your heirs. 

The post What is Probate (and Can I Avoid It)? appeared first on Desert Law Group | Kimberly T. Lee.

A well-written and executed will can go a long way toward keeping the probate process on the short and easy end of the spectrum; but even with a will, much of your probate experience will depend on elements outside your realm of control. There are certain steps that must be followed to complete the probate process, including:

* The appointment of an executor or personal representative

* Verification of the will

* Taking an inventory of assets belonging to the deceased (which can be very difficult if good records have not been kept)

* Giving notice to creditors

* Paying valid claims against the estate

* Preparing and paying taxes

* Notifying beneficiaries (not all of whom will be easy to find)

* And eventually distributing the assets to the beneficiaries or heirs

If just reading the above takes your breath away, imagine having to organize and execute all of those steps—and possibly more! The good news is that if you find yourself serving as executor of a loved one’s will or estate, you don’t have to go through the process alone. Our office can help you navigate the tangled probate maze from beginning to end—from filing the first court documents to protecting your eventual inheritance—ensuring that your probate experience goes as quickly and smoothly as possible. Don’t hesitate to contact us and find out what your first (or next) steps should be.

The post Breaking Down the Probate Process appeared first on Desert Law Group | Kimberly T. Lee.

According to this article by Bonnie Kraham, how you dispose of these assets can be extremely important to the administration and taxation of your estate. One particularly dangerous method is referred to as “the empty hook” method, wherein “When the collector dies, the beneficiaries simply remove the artwork (from the hooks) in accordance with name tags on the items for the intended recipients. Thus, the estate is left with “empty hooks” of what may be part of a sizable taxable estate for estate tax purposes.”

The problem that arises with the “empty hook” method is that wealthy families who collect artwork or antiques as investments often have records of their purchases and sales, as well as a list of valuable items for insurance purposes. Any of these documents and records would be reviewed during probate or administration of the estate. “If you don’t fully disclose the value of your art collection, or don’t properly plan to gift art in compliance with estate tax rules and regulations, you can pass on tax fraud, instead of art, to your beneficiaries.”

Perhaps the best way to hold and legally dispose of your art or antiques collection upon your death is to transfer ownership of these valuable assets into a trust. “Transferring your art collection to a trust may be the most effective, efficient and transparent way to administer your estate after death . . . Trusts are private documents and, although the tax reporting remains the same for trust assets, trusts protect the privacy of an art collector or artist, which can be an emotional protection for the beneficiaries.”

Contact our office for more information.

The post How to Protect and Pass On Artwork, Antiques, and Other Valuable Assets appeared first on Desert Law Group | Kimberly T. Lee.

The repeal of the estate tax in 2010 also brought with it a repeal of the “step up in basis,” meaning that heirs selling inherited assets were taxed based on the original acquisition cost of the assets, not on their value as of the date of the taxpayer’s death.  This generally resulted in a higher tax paid on assets than the normal estate tax rate—not good for taxpayers. But 2010 estate don’t have to go by these rules. The legislation passed in December of 2010 gave 2010 estates the opportunity to elect whether they wanted to use the 2010 estate tax laws, or the new laws for 2011.  This article in Forbes explains what this means:

“The 2010 Tax Relief Act restored the estate tax for individuals dying in 2010 with a $5 million per person exemption and a maximum rate of 35%. It also repealed the modified carryover basis rules for property acquired from a decedent who died in 2010. However, estates of individuals dying in 2010 can elect zero estate tax and the modified carryover basis rules that would have applied before they were repealed. That means the basis of assets acquired from the decedent would be the lesser of the decedent’s adjusted basis (carryover basis) or the fair market value of the property on the date of the decedent’s death.”

In general this tax election is a good thing, it allows executors to choose which tax formula will cost the beneficiaries the least in taxes; but it does mean a lot more paperwork and a lot more attention to detail.  If you are the executor of an estate of a decedent who died in 2010, don’t hesitate to call us.  We can answer your questions and help you explore your options.

The post Tough Decisions Await Executors of 2010 Estates appeared first on Desert Law Group | Kimberly T. Lee.

If you have been nominated (or are currently serving) as an executor or trustee there are a few things you’ll want to remember as you go about your duties:

1. The will or trust is your guide, the mission statement by which you should operate; read and understand the document completely, and have an attorney help you, if necessary.

2. You need to be pro-active—to an extent. If you are managing a large amount of money or assets over a period of time it is probably not in the best interests of the beneficiary to let those funds sit in a savings account. Create (with an advisor, if necessary) a financial plan for the trust assets.

3. Although you may be handling the estate assets, you should not have any personal financial dealings with the trust. You should under no circumstances borrow from or lend money to the trust. Keep your finances separate!

4. Communication and transparency is key! Keep detailed records of all of your actions and transactions regarding the will or trust, and send regular reports to the beneficiaries. Regular communication prevents unhappy surprises or angry lawsuits in the future.

5. You don’t have to do it alone. If you were picked as a trustee because of your financial knowledge and experience—great! But if you were picked because you are the oldest, or the most responsible, or the favorite you may feel overwhelmed by the job ahead of you. Don’t try to muddle through alone, get the help and support of an experienced attorney or advisor.

The post 5 Essential Tips for Executors or Trustees appeared first on Desert Law Group | Kimberly T. Lee.

Funeral home – This will likely be your first call. The funeral home you or your loved one has selected will be able to help you with a lot of the immediate details and tasks. The funeral director will also be able to help you obtain 10-20 copies of the death certificate, something you will need later.

Family and Friends – This probably goes without saying. Not only will you want to notify family and friends, but they can also help with a lot of the endless tasks and overwhelming details. Don’t be afraid to delegate.

Veteran’s office (if deceased was a Vet.) – If the deceased was a Veteran you may have to stop benefit payments; you may also be able to get assistance with the funeral or memorial service.

The deceased’s employer – You will need to do this not only to inform the employer of the death, but also regarding termination of health insurance.

Attorney or Tax Professional – You will need to know what to do about probating the deceased’s estate, filing tax returns, dealing with bank accounts, etc. An attorney or tax professional can help. It is especially important to find out if your loved one had any existing estate documents.

Office of Social Security – If your loved one was receiving benefits you’ll need to stop payments. You will also want to find out if survivors are entitled to any benefits.

Insurance company of the deceased – You will probably need to file a claim. This is something your attorney or accountant may be able to help with.

Local Newspaper – You’ll want to publish an obituary or notice of death, as well as information about the funeral or memorial service.

Credit card companies and utilities – Give notification of death and pay off any remaining balances.

Bank – Arrange to change any joint accounts or to open an account in your name. Do not close any accounts right away!

Although this list is a good starting point; a complete list of people to call and things to do will depend on where the deceased lived and the details of their estate. Contact your loved one’s estate planning attorney (or your own) to ensure that nothing is left to chance.

The post 10 Phone Calls to Make After the Death of a Loved One appeared first on Desert Law Group | Kimberly T. Lee.

That’s right, according to the recent article; those people who have recorded their wishes for end-of-life treatment have their wishes followed by agents and doctors over 80% of the time. According to a health and retirement study done between the years of 2000 and 2006, “researchers found that of the 398 incapacitated people who had used a living will to request limited care at the end of life, almost 83% received it…” and “…Of the 417 incapacitated people who had requested comfort care in a living will, 97% received it.”

Those are huge percentages, especially when you consider how easy it is to create a health care directive.

There is no down side to recording your wishes and nominating a trusted agent to help ensure those wishes are followed—it brings you peace mind, it brings comfort to your family members, and our office can help you execute one quickly and easily. Knowing all this, as well as the fact that studies now show how truly effective they are in getting you the treatment you desire… there’s really no reason to delay any longer. 

The post One More BIG Reason to Have a Health Care Directive appeared first on Desert Law Group | Kimberly T. Lee.

You may assume that the receiving end of estate planning is the fun and easy part, but that is not always the case. Coming into an inheritance presents its own questions and challenges; financial, logistical, and personal.

Financial

Receiving an inheritance always means you have to think about taxes. Estate taxes, income taxes, capital gains tax, property taxes… The estate tax this year is extremely unclear, and you will definitely want to have an attorney and an accountant help you with it. Whether or not you have help, you will absolutely want to keep paperwork on everything. This includes paperwork from any transfers of inherited property made by you, as well as any and all of the original paperwork you can find for the inherited assets.

Logistic

There is a lot more to an inheritance than simply getting money and spending it. Are you the nominated guardian of young children, holding those assets in trust for their benefit? Or perhaps you are the beneficiary of a trust, and your receipt of the assets is subject to the terms of that trust. Do you have to use the money for education or a specified purpose? Do you need to approval of a trustee before you can spend it? Hopefully you are working with a trustee you know and trust.

Personal

Inherited property is almost always very personal and fraught with emotion. Should you really sell the house grandma lived in for decades and use the money to take a cruise? (If so, wait until after taxes to pay for the trip.) Would your parents have wanted you to use the money to pay for a wedding, or save it for your retirement? Do you want to take the summer home that’s been in your family for generations and own it jointly with your new spouse, or keep the property on your side of the family?

Whatever you choose to do with your inheritance, it’s likely you’ll need some guidance from a knowledgeable and trustworthy professional. We’re happy to help. Our knowledge of the probate system, estate taxes, and creating vehicles to protect your assets can answer your questions regarding the receiving end of estate planning as well as the planning.

The post The Receiving End of Estate Planning appeared first on Desert Law Group | Kimberly T. Lee.

A Will: A will is a formal declaration of your wishes. It is a document you create to declare the extent of your privately held property (it does not cover joint tenancy property with right of survivorship or assets that have payable-on-death beneficiaries) and what your wishes are for the distribution of that property. You name an executor to carry out your wishes, and you can even include a nomination of guardian for young children in your will. A will does not go into effect until after you die; before then it is simply a legal document that set forth your private wishes. However, once you have passed away your will no longer remains private, it now becomes a matter of public record, available to anybody who would like to view it, and overseen by the court in a sometimes lengthy and expensive process called probate.

A Trust: A trust is a far more extensive and comprehensive tool than a will. In fact, there are many different kinds of trusts, each of which may be used for specific situations. Most trusts created for estate planning purposes are revocable living trusts (or RLTs.) An RLT is a document created not simply to distribute your property, but to own your property on your behalf, to be invested and spent for your benefit or the benefit of your named beneficiaries. As such, a trust takes effect as soon as you sign it and your property is protected by and subjected to the trust parameters as soon as you place them in the name of your trust. There is a lot of flexibility available with a trust, and yours can be created to fit your unique situation. Most RLTs name the trust creators as the initial trustees, nominating individuals or professional fiduciaries to take over as trustee when the creator becomes incapacitated or passes away. The benefit of a trust is that when the creator passes away, property is not merely distributed and that’s the end of it; the creator can instruct the trustee to distribute the money in any number of ways, even to the extent of creating new trusts for each beneficiary for asset protection purposes. Trusts can also last for generations to maximize the tax benefits and the protection for the heirs.

Wills and trusts are important tools in estate planning, each one working in unique situations. Call our office to review your situation to determine which one is best for your family. 

The post Do You Need A Will or A Trust? appeared first on Desert Law Group | Kimberly T. Lee.