When you establish a living trust, you’ll fund assets into it and, while you’re alive, you will serve as trustee. However, you’ll need to nominate a successor trustee to step in and manage the trust in case of your disability. Your successor trustee will also administer the trust, paying debts and taxes and distributing the trust assets when you pass away. In many cases, a family member, such as a spouse or an adult child, is the obvious choice for successor trustee. But what happens when you just don’t have a family member who is capable of serving or who is willing to take on the responsibility? You have a couple of options.
Don’t Overlook Friends
You might want to consider naming a trusted friend to serve in the capacity of successor trustee. In fact, a friend who is neutral and who is not involved in your family’s dynamics might be an excellent choice when it comes to making fair decisions and not playing favorites when it comes to administering the trust. If you decide to name a friend to serve as your successor trustee, you’ll want to discuss your decision with him or her and make sure your friend is willing and prepared to handle the job.
Consider a Bank Trustee
What if there are no friends you feel comfortable nominating? You may want to consider naming the trust department of a bank or another financial institution to act as your successor trustee. An institutional trustee can offer expert trust administration services and can often minimize conflict among beneficiaries by acting as an objective decision maker when it comes to issues concerning the trust. Banks charge fees for managing trust assets, and the fee you’ll pay generally depends on the value of the assets in your trust.
If you are interested in selecting an institutional trustee, you should talk to your estate planning attorney. He or she can fully explain the advantages and disadvantages of this option, guide you in selecting an appropriate bank or financial institution, and ensure that your trust is properly drafted.
There are two ways to establish a pet trust. You can establish a living trust for your pets (in legal terminology this is called an inter vivos trust), or you can use your will to establish a testamentary trust, which will only take effect when you pass away.
Living Pet Trust
When you establish a living trust on behalf of your pet, the trust becomes effective immediately. Once the trust is established, you’ll transfer assets into it and serve as the initial trustee. You’ll also name a successor trustee to take over for you in case of your incapacity or death. You retain control of the trust while you’re alive and mentally competent, so you can change the terms of the trust and even terminate it at any time.
As a practical matter, a living pet trust might not do much of anything as long as you’re in good health. In the event of your incapacity, though, your successor trustee will be empowered to quickly take control of the trust and manage it on behalf of your pet. And, of course, when you pass away, your successor trustee will be in charge of the trust, allowing your pet’s needs to be met without interruption.
Testamentary Pet Trust
A testamentary pet trust, on the other hand, is established using your will. This means that it only becomes effective after you pass away, so it can’t be used to provide for the care of your pet in the event of your disability. On the other hand, a testamentary trust can be less expensive to establish and there’s no need to transfer money into it while you’re alive. Instead, you can direct that a portion of the assets of your estate or your life insurance proceeds be transferred into the trust.
Your estate planning attorney can help you determine which type of trust is appropriate for you and your pet.
When it comes to inheriting from a parent, adopted children have the same rights as biological children. If a parent dies without a will or trust, then state law determines what portion of that parent’s estate goes to the children – adopted or not. If the parent has an estate plan, then the terms of the parent’s estate planning documents control what share of the parent’s estate each child is entitled to.
However, it is only after an adoption is finalized that the adopted child enjoys the same status, for inheritance purposes, as that of a biological child. If you’re going through the adoption process, you know that it can be a slow and sometimes frustrating journey. And if you were to pass away before the adoption became “official,” the new addition to your family would likely be left without inheritance rights.
This is why, for parents in the process of adopting a child, a meeting with an estate planning attorney might be in order. An experienced attorney can help you update your estate plan so that your soon-to-be adopted child is provided for. Your attorney can also help you make other adjustments to your plan, too, such as making sure you’ve nominated an appropriate guardian and that the beneficiary designations for assets like your life insurance policies, retirement, and investment accounts are up-to-date.
How much of each day do you spend online? If you’re like many Americans, the answer is a lot, and we’re spending more time online with each passing year.
Now, think about what you do online. Do you shop? Operate a business? Store family photos? Communicate with family, friends and work associates through Facebook, Twitter, or LinkedIn? And of course, there’s online banking and all those day-to-day email transactions.
You likely have information scattered in various places on the internet, and for each online account, you have a username and a password. This is your digital estate. If you passed away tomorrow (or even if you became incapacitated) would your family members know where to find all of your online accounts and all of your digital information? And, just as important, would they be able to access these things?
Appoint a Digital Executor
One way to make sure that your estate plan is complete and that your family is truly prepared for your death or disability is to name a “digital executor” to be responsible for accessing and dealing with your online accounts and other electronic information. This person does not have to be the same as the executor named in your Will, but it should be someone who is comfortable with technology and in whom you have full confidence.
What Your Digital Executor Needs to Know
Once you’ve selected a digital executor, you’ll need to make sure he or she knows two things:
The location of your digital information. Your digital executor should know how to access your online accounts and the names and locations of important files. This means you’ll need to maintain a list of these accounts and files, along with an up-to-date username and password for each. The list should be kept in a secure location – you can choose to give it to your digital executor, or let your digital executor know where to find it in the event of your death or disability.
What to do with your digital information. If you become mentally disabled or pass away, what should happen to your digital information? Do you want your Facebook or other social networking accounts to be closed? What should happen to your emails? What about any photographs or important documents you’ve stored as digital files? You’ll want to think through these issues and leave instructions for your digital executor to follow.
Once you’ve made these important decisions, you’ll want to update your estate plan to formalize your choice of digital executor.
Imagine you had a close friend who was quite elderly and lived alone. Not too long before your friend’s death, his children hired a new, live-in caregiver for him. This caregiver was a much younger woman who immediately hit it off with your friend, and she began spending the bulk of her time with him. You and his children didn’t like this arrangement very much, because it seemed that the new caregiver was isolating him from his family and friends.When your friend passed away, it was revealed that, shortly before his death, his new caregiver had taken him to her attorney’s office, and he had made a brand-new Will, leaving her his entire estate and disinheriting his children.
You don’t believe this Will is valid; can you, as his friend, contest it? Probably not, and here’s why:
In order to file a Will contest, you have to have what is known in legal jargon as “standing,” meaning that you have to have a personal stake in the outcome of the case. Who has standing to file a Will contest?
1.Heirs at Law. The family members of the decedent who would stand to inherit under state law, absent a Will, but who are not included in the decedent’s Will, would generally have standing to file a lawsuit challenging the Will.
2.Prior Beneficiaries. An individual or entity named as a beneficiary in a previous Will of the decedent, but who is cut out of the decedent’s final Will, generally has standing to file a Will contest. This might include relatives who would not qualify as heirs at law, friends of the decedent, or even charities that once stood to gain from the decedent’s estate.
So, in the above scenario, as a friend of the decedent, unless you were named as a beneficiary in a prior Will, you would not have the right to file a Will contest.
A final note: it’s important to remember that the simple fact that an individual has standing to challenge a decedent’s Will does not mean that he or she can prove the necessary grounds for invalidating the Will.
The act of pre-planning your funeral can be a wonderful gift to your loved ones. It relieves them of the need to guess what your wishes would have been and to make difficult and rushed financial decisions in the midst of their grief.
By taking the time to make plans now, while you’re healthy and unhurried, you can think clearly about your wishes for your funeral or memorial service, and you can also consider the manner in which your loved ones would like to say their final goodbyes. You can settle on the type of service you want as well as whether you want to be buried or cremated. When making your funeral plans, you can go into as much detail as you wish, down to planning who will officiate and choosing musical selections or poetry readings.
Once your plans are in place, what’s the best way to communicate them to your loved ones? Often, people include their basic wishes for final rites in their Will, but this should not be the only method you use to communicate your plans. Often, a Will is not even located and read until well after a decedent’s funeral has come and gone.
You’ll likely want to write down your funeral plans in a separate document, which you make available to your loved ones. And, above all else, you’ll want to discuss your plans and wishes with your family members, so that they know what to expect and where to find your written instructions.
If you have a Durable Power of Attorney for Finances, you know that it’s the document with which you appoint a trusted person, called your agent or attorney-in-fact, to pay bills and make financial decisions on your behalf. But do you and your agent know that when you pass away, your agent’s authority to act under the Power of Attorney terminates?
Your Agent’s Authority Ends at Your Death
This means that once you’ve passed away, your agent can no longer use your Power of Attorney to access your bank accounts, pay your bills, or transact other business on your behalf. Instead, the authority to take these actions passes to your Personal Representative you’ve appointed in your Will or the Trustee of your Revocable Living Trust.
The Importance of an Estate Plan
That’s why it’s important to have a complete estate plan and to keep it updated. Without a Will or a Trust, the process of paying your final bills and debts, along with distributing your assets, can become unnecessarily complicated. Absent these components of your estate plan, the probate court will need to choose a Personal Representative for your estate, and the court will likely closely oversee the bulk of that Personal Representative’s actions on behalf of your estate. This arrangement opens the door for delays in the administration of your estate and conflict among your loved ones.
If you don’t have an updated estate and incapacity plan, you’ll want to meet with a qualified estate planning attorney and put one in place. This simple act can pave the way to a smooth transition of your assets and can save your loved ones immeasurable stress and confusion.
You likely already know that it’s a good idea to review and update your estate plan when important transitions and events occur in your life. Divorce is one of the circumstances for which an estate plan update is particularly important, yet once the divorce is finalized, many people put off this essential step. The problem with failing to update your estate plan following a divorce is that, even though you and your former spouse have been declared separate individuals by the court, there are still some loose ends and unwanted connections that can remain. For example:
Your Will: Washington state law provides that the portions of your Will naming your spouse as executor or beneficiary are automatically revoked upon divorce. However, this leaves a void in your Will. You’ll need to make a new Will, naming a new executor to replace your former spouse and specifying new beneficiaries to receive the property that will no longer go to your ex.
Your Power of Attorney: If you named your spouse to serve as attorney-in-fact pursuant to a Financial Power of Attorney or as your agent under a Power of Attorney for Healthcare, these designations are also automatically revoked as a matter of state law. You’ll want to make a new estate plan naming replacements as soon as possible. Otherwise, if you become mentally disabled, your family might need to go to court to have a guardian appointed for you.
Your Beneficiary Designations: It’s easy to forget about life insurance policies, retirement plans, and other financial accounts for which you’ve designated your spouse as beneficiary. You’ll need to review these assets and update your choice of beneficiaries.
Your Trust: If you and your spouse had a joint Revocable Living Trust, it is not automatically revoked as a matter of state law. This means that your ex could still be your successor trustee and a beneficiary. You and your estate planning attorney will need to review the terms of your Trust, and you’ll likely want to put a new Trust in place that addresses your current estate planning needs and goals.
In short, if you’re divorced and have not yet updated your estate plan, you should meet with your estate planning attorney as soon as possible to put a plan in place that works for this new phase of your life.
Any estate planning attorney will tell you that planning your estate is a process and not a one-time event, and the same holds true when it comes to incapacity planning. Often clients are concerned that their end-of-life wishes won’t be honored when the time comes. And, while your Advance Directive is a key component when it comes to ensuring that your treatment preferences will prevail, it’s not the only step you need to take in this process.
An Advance Directive is the document with which you name a healthcare agent to make medical decisions on your behalf if you’re incapacitated and unable to make your own choices. It also allows you to communicate your end-of-life treatment preferences, in writing, to your doctors. This is where you’ll tell your doctors whether or not you want to be placed on a ventilator, or to receive other life-sustaining measures. Even with a well-drafted Advance Directive in place, though, your job is not finished.
What’s the next step in the process? Talk to your family members and to your doctors, in person, and explaining your end-of-life wishes and preferences. Make sure they know you have an Advance Directive, and make sure they know what’s in it. You’ll want to talk in detail to the person you’ve named as your healthcare agent and make sure that he or she understands your thoughts and feelings about end-of-life care and is prepared to advocate for you.
Taking this extra step can be beneficial in two ways. First, it will let you know whether those responsible for your care have any issues with the terms of your Advance Directive. This, in turn, will allow you to take the actions needed to resolve any problems ahead of time. Second, when you and your doctor have a face-to-face conversation about your wishes, it’s harder for your doctor to ignore those wishes later, when the time comes to implement them.