Eventually,
we all need to plan for what we want to do with our property when we die. Estate planning is the process in which
people identify their property and establish a mechanism to transfer it to
their heirs or others. You don’t have to be wealthy to need an estate plan –
there are no minimum value requirements. Property ranging from a necklace of
sentimental to a summer home can call for basic estate planning.
Estate planning includes
tools such as Wills, Trusts, and Powers of Attorney. These instruments give people the ability to
plan for guardianship of minor children, distribution of property, and health
care and financial decisions.
********************
A
Will is a legal document that directs how you, the testator, want your
estate
to be distributed upon your death. A will also gives you the
opportunity to appoint a guardian for your children, if any, to perform
all of the roles that parents play in the upbringing of the children,
such as school and medical decisions.
If
you die with a Will, you die testate. The testator appoints an executor to
carry out the directives of their Will.
Those who receive personal property under your Will are called legatees,
and devisees if they are receiving real estate.
In
contrast, if you die without a will, you die intestate. The court appoints an administrator to administer your estate. Those who receive from an intestate estate
receive by a decree of descent and distribution, and are called your heirs at
law. In an intestate estate, your estate
must be distributed equally to your heirs at law, even though it may have been
known by surviving family members, or others, it was not your wish or intention
to do so.
Administration
of a testate or intestate estate typically begins shortly after death, at the
Probate Court located in the county of your last domicile, or residence.
Administration would only include assets standing in your individual name at
the time of your death. Some examples are bank accounts, automobiles, life
insurance with no named beneficiary, and real estate. Information filed in the Probate Court
regarding your estate is generally open to the public.
You
can see why it is important to have a Will.
If there are certain people and/or organizations you want to benefit and receive from your estate, or if there is a specific person or
persons you want to handle the administration of your estate, you need to have
a Will to specify those wishes and to name that person.
********************
An inter‑vivos trust is a
mechanism to avoid the expense and delay of probate court proceedings. It
operates very simply by having the person creating it (or in the case of a
married couple both parties) convey and transfer all that they own to himself
or herself as trustee of this trust. This would include their house, bank
accounts, stocks, bonds, IRAs and anything else of value. These assets would
then be managed by the party(ies) as (Co)Trustee of the trust for their own
benefit. Upon the death of the Trustee, or the surviving Trustee in the case of
a married couple, title to these assets would pass to the named successor
Trustee for distribution to the named beneficiaries. There are no assets to
pass through probate because the party passing away does not "own"
anything, everything is "owned" by the trustee (himself or herself)
for his or her own benefit. By virtue of
the Trust Declaration the successor Trustee then has the power to convey the
property according to the instructions of the decedent.
The savings in
administration and legal fees can be very significant. Appraisal fees can run
$300 to $800, and attorney fees can run $3,000 to $5,000 depending on the size
of the estate. While the whole issue of fees for attorneys and fiduciaries in
handling estates is currently unclear due to recent N.H. Supreme Court rulings
one thing is clear, the use of a Trust will keep administration fees to a
minimum.
There are some drawbacks to
this scheme which relate to the power given the successor Trustee due in large
part to the fact that there is no third party supervision as there is with a
probate court judge.
********************
A Power of Attorney is a legal instrument which you,
the principal, grant a person or organization, the attorney-in-fact or agent,
the authority to handle your affairs if you are unable to do so, such as if you
are ill, traveling, or become mentally incapacitated. A General Power of Attorney authorizes your
agent to act on your behalf in a variety of different situations with unlimited
authority. A Special Power of Attorney
authorizes your agent to act on your behalf in specific situations with limited
authority. A Health Care Power of
Attorney allows you to appoint someone to make healthcare decisions for you.
The general, special, and health care powers can all be made Durable by adding
certain text to the document, which would provide that the power will remain in
effect or take effect if you become mentally incompetent.
In order to execute a power of attorney, the principal must be at least 18 years
of age and understand the nature and effect of the document being signed. Once executed, powers of attorney remain in
force until they are either revoked by the principal, terminated by the death
of the principal or if the purpose for which it was created has been
fulfilled. If you do not have a valid
power of attorney and you are unable to conduct your own affairs because you
are ill, traveling, or become mentally incapacitated, it will become necessary
for a person to petition the Probate Court to be named your guardian so that
decisions can be made for you by that guardian.
With a valid power of attorney, this procedure would not be necessary
and the agent would be able to act on your behalf as you have designated.
Starting
to think about your estate planning is the first step, making an appointment to
talk with a qualified professional is the next. Buchanan, Maynard & Parodi, PLLC is a full service
law firm with experienced staff and attorneys who can help members identify
their estate planning needs.
Ready to get started? If so, you can download and print our Estate Planning Questionnaire*.
Once complete, send it in by mail, email, fax or drop it by our office.
One of our experienced attorneys will review your information and
contact you to discuss what the next step should be. If you have any
questions while completing the questionnaire don't hesitate to call us
to discuss it by phone or to set up a personal appointment.
*You will require Adobe
Acrobat Reader® installed on your system to view PDF files. Click on the link for your free download.
