What to Watch for in Online Estate Planning

Some Online or special software prepared Estate Planning Documents can work well.  Others, not so well.

I tend to see three problems that Online documents generally fall victim to:

First, inconsistent and sometimes contradictory provisions can be included, many times by accident.  Often these Online “form” Wills or Trusts have alternative provisions covering the same topic.  The purpose is for the person creating the document to choose between the alternatives.  If the creator doesn’t understand that purpose, these conflicting provisions will be added to the final formalized Will. What unwittingly happens is that the creator intended to leave clear instructions for his or her estate, but in some cases actually inflicted greater harm than not drafting an Estate Plan.

Second, the aspect of Estate Planning that requires the most care is hardly given a second thought in Online documents, the Signing. Many perfectly good documents can become invalid only because the necessary formalities were not observed while the document was being signed.  Generally, a person should gather two witnesses and a notary public together. Have all of them sign at the same time and in the presence of each other and then have the notary certifies that he or she watched the document being signed by all the others.

Finally, certain people believe saving a few hundred dollars on documents that are intended to direct the disbursement and receipt of their lifetime accomplishments is a great deal. However, they realized the importance of creating an Estate Plan, but didn’t quite understand that importance or they would not have taken that shortcut.  Also, the choice of guardians for minor children is often of even greater importance than the disposition of one’s possessions.  To cut corners on a document that will determine the family in which your minor children will be raised is a foolish choice.

While not proclaiming that it cannot be done, you should be very cautious about using an Online document for a task as important as this, especially without the availability of Counsel.

Schedule a conversation with Justin Jeppesen to take the first step towards creating your complete estate plan! With our Free Initial Consultation we help our clients explore their own situations and plan for their futures. If you have more questions, we'd love to help! Contact Jeppesen Law now: (208) 477-1785.

www.jeppesenlaw.com

 

Does a Will Matter to Me, I'm Single Without Children

Most people hear that they should create a Will or Trust. But, why? Why do you need to create a Will or Trust? Depending on your situation, you might not feel the need to and that’s ok. If you decide you don’t need to create a Will or Trust, you should at least understand what you are facing in order to make an informed decision.

Every person has a different family dynamic. That dynamic changes what will happen if you die without a Will or Trust, which is called Intestate Succession. The Idaho Code (our law) describes the Intestate Estate as any part of the estate of a decedent (deceased person) not effectively disposed of by his Will. Idaho Code 15-2-101.

In this post, we will cover a single person without children. What will happen to his estate, or his stuff when he passes away. But, Estate Planning also covers what will happen if you become incapacitated or incompetent, so we will cover that too.

First, if you do not have a spouse or children, then everything you own will be divided equally between your legal parents. Mom receives half and Dad receives half, even if Mom and Dad are remarried to other people. For some, that is a very clear cut understanding and that is what they would want to have happen. For many others, that is the last thing that they would want to have happen.

With intestate succession, the main idea to remember is that your wishes and wants are disregarded. They do not have a voice. So, you may know that Dad raised you and Mom was never around. Or, Mom raised you and you met Dad once or twice in your lifetime. Does not matter one bit, Mom receives half and Dad receives half.

Sometimes Mom or Dad die before you (predecease). What happens then? Since you have no spouse or children to give gifts to, your estate will go to Mom and Dad’s children evenly.

But, you were an only child, Mom cared for you and is now hurting financially, and Dad had three other children with three other women. Does not matter. Dad, who predeceased you, his other three children will evenly split one-half of your assets, while your Mom (who was your real caregiver, as Dad was never around) receives the other half.

Last scenario. Mom and Dad predecease you and they did not have any other children. Your assets are now split evenly between Mom’s parents and Dad’s parents. In this case, the chances are that most grandparents will predecease everyone previously mentioned. What happens then? Your assets will end up in the hands of your Aunts and Uncles, or their children.

If this is ok with you, maybe having a Will is not necessary. Just remember, your wishes and wants do not matter in Intestate Succession.

Still, what is the point of planning if Idaho already creates a plan for you? Answer, Idaho’s plan is limited. It only covers death and assets. There is more to planning than that.

A Will names a legal representative called a Personal Representative (PR) that is charged with administering your estate after you pass away. The PR is tasked with representing your estate in probate court, notifying your Creditors of your passing (which is actually a good thing for you), accounting for all of your assets, and distributing your assets at the close of probate. If your estate is Intestate, you have no PR. Anyone in the world can apply for this position. There are also PR fees and because of that, there are professional PRs that charge a hefty price for their services. That can be avoided by naming a PR in your Will.

Part of your Will package should include Powers of Attorney. These come into play if you become incapacitated or incompetent. They represent you in financial situations or health care situations. I don’t know about you, but I want someone I know and trust to make financial or medical decisions for me if I can’t. Imagine needing a Guardian because an accident or Alzheimer's left you unable to care for yourself. Would you want to choose who will care for you if you can’t do it yourself?

But, if you don’t plan and this becomes a need, again anyone can apply for the job. These people can then seek reimbursement from you for the court costs and attorney’s fees spent.

Everything we plan for, will eventually need to be addressed. The planning we do now serves three purposes; 1) limits those who can represent you to those people that you choose, 2) limits costs from reimbursement and fees paid out, and 3) limits time spent in court. This last one is a valuable consideration.

So, if you are comfortable with your assets being distributed as mentioned above, you are willing to roll the dice that nothing will ever put you in the situation of needing a power of attorney or a guardian, and you do not shy away from the extra costs involved, then you might not need to create a Will or Trust. Your call.

Schedule a conversation with Justin Jeppesen to take the first step towards creating your complete estate plan! With our Free Initial Consultation we help our clients explore their own situations and plan for their futures. If you have more questions, we'd love to help!

Contact Jeppesen Law now: (208) 477-1785.

Estate Planning with Digital Assets

     With each passing day, our society becomes more technology dependant. To illustrate this point, try going an entire day without the use of a smart phone, laptop, touchscreen, or old fashioned desktop.

     As always, the world of estate planning has fallen behind on this trend. Traditional estate planning concerns physical assets, like a house, vehicle, or bank account. In light of this ever increasing involvement of technology in our lives, what should happen to our digital assets when we are incapacitated or pass away? Is there anything we can do?

     First, let’s start with whether there is anything we can do. Here in good old Idaho, we have actually made a proactive step. Nationally, a legal group think-tank called the Uniform Law Commission set out to create a uniform law for all states to either adopt, modify, or reject, called the Fiduciary Access to Digital Property During Incapacitation or After Death act. Idaho was the fifth (5th) state in the US to adopt a law concerning the ability to access digital property. 

      Idaho Statutes § 15-3-715(28), signed into law March 16, 2011, gives the personal representative of a deceased person’s estate the powers “to take control of, conduct, continue, or terminate” a deceased person’s e-mail account, social networking account, microblogging account, or short messaging service Web site. Idaho Statutes § 15-5-424(3)(z) also grants similar powers to a person’s conservator. Unfortunately, these laws fall short of the current scope of online accounts and digital property, and they only apply to personal representatives and conservators.

     But, fear not, although this law falls short of the current technological landscape for online accounts, this is only a default rule. This means you can give any trusted person more access than the default rule calls for. In our will or trust agreements, we authorize more access than the statute allows.

     Jeppesen Law, PLLC provides to all of our estate planning clients a digital property inventory. On the inventory, the client writes down all usernames and passwords for all of their digital property. They store it in a safe place. If the time comes that a power of attorney or personal representative needs access to online accounts, they have all the information they need to ensure you are taken care of.

     What type of information is included on the digital property inventory? Aside from the accounts listed in the Idaho Statute, we include utilities, bank accounts, mortgage companies, services, and anything that would require a monthly fee to be paid.

     Why do we include so much information? We are preparing for incapacitation. If you are temporarily incapacitated, you would still want your house payment to stay current, with the lights on, internet to still work, and you wouldn’t want your car repossessed.

     Essentially, your attorney-in-fact stands in your place to ensure your bills are paid when you would pay them.

     Schedule a conversation with Justin Jeppesen to take the first step towards creating your own estate plan! With our Free Initial Consultation we help our clients explore their own situations and plan for their futures. If you have more questions, we'd love to help! Contact Jeppesen Law now: (208) 477-1785.

Young Adults Need An Estate Plan

When a young person dies, it is generally sudden and unexpected. With youth and health, Estate Planning is not a priority. Except when death happens and those you leave behind would have been better off if you took the time to create a Will or a Trust.

When Glee star Cory Monteith passed away, he had an estate worth over $800,000 and had not taken the time to create a Will or Trust. Because of this lack of planning, it took over a year and a half for his estate to settle. You see without creating an Estate Plan of your own, your estate follows intestate rules found in Idaho’s State Statutes.

If you were in Cory’s position, single and without children, your mother and father would receive an equal share of your remaining assets.

In Cory’s situation, his divorced parents fought that entire time over whether his father was deserving of receiving one-half of Cory’s estate. Mom claimed Dad was an absentee father, who hadn’t seen Cory in years, and refused to pay child support. Eventually, Dad signed an agreement stating he did not want his legal share of Cory’s estate, but this was after much public humiliation.

Because the Probate court process is public, the bickering between his parents became news-worthy. Granted, if Cory had a Will, his estate would have still gone through Probate. However, with a Will, Cory could have dictated who he wanted to leave his estate to.

To add insult to injury, Cory’s money was probably being used to defend the State’s laws giving both parents an equal share of their son’s estate.

What about what Cory would have wanted? He had a serious relationship with Glee co-star Lea Michelle, certainly he would have wanted to leave her something. Tough. Without making your own Will or Trust, your particular wants are irrelevant. The Probate court will rely on the intestate statute of the state you live in, which generally provides what a general distribution would look like for someone in a similar situation.

Have you ever wondered how old intestate laws are? Most of them are very old. Imagine how different society and what we consider family is now, compared to a law originally written in the 1700 or 1800s.

So, regardless of how old you are, if you want certain people to receive a portion of your estate, or more importantly, if you have people you absolutely do not want to see receive any of your estate, make your decision known. Create a Will or Trust, otherwise a bunch of guys who are long gone will make that decision for you.

Schedule a conversation with Justin Jeppesen to take the first step towards creating your complete estate plan! With our Free Initial Consultation we help our clients explore their own situations and plan for their futures. If you have more questions, we'd love to help! Contact Jeppesen Law now. (208) 477-1785

See Danielle Mayoras & Andy Mayoras, Cory Monteith Shows How Even Young Adults Need Wills, Forbes, Jan. 28, 2015.

New Year's Resolution to Review Your Estate Plan

Welcome to the New Year!

We hope your 2014 was full of memories, triumphs, and lessons learned. As you turn to the New Year and begin to list achievements you will accomplish in 2015, have you thought about updating your current Estate Plan?

    This may not seem like a typical item to place on your do-to list, but think about it this way. 2014 provided many opportunities for your life situation to change since your created your current Estate Plan.

Many of us have experienced additions to our lives; a new spouse, new child, new grandchild, new home, new investments, or new inheritance. Sadly, many of us have also experienced loss to our lives in 2014. Whatever your situation may be, your 2015 life looks different than your 2014 life.

First, locate your current Estate Planning documents. If you have difficulty finding them, imagine how difficult it would be for a grief stricken family member to find them. If your attorney gave you a folder to hold your documents, make sure all the documents you created are there. Locate the original, whether it be in the folder, a file, safe, or with the attorney who drafted the document.

After locating the originals, store them some place safe and make sure that others can find them if you are not able to retrieve them yourself. If the originals are with the drafting attorney, make sure that your loved ones know who that attorney is and how to reach the attorney.

Second, review the documents to make sure that the documents still accomplish your current goals and wishes. Life changes have a way of altering the goals of our Estate Plan. Are the people you have named to specific responsibilities still your desired choice for that responsibility? Are those people still willing and able to perform the names responsibility?

If you have minor children, are your chosen Guardians still the people you wish to have your children raised by? Has their life changed to a degree this year that has created doubt or concern about their ability or desire to take on your children in case something were to happen to you?

Schedule a conversation with Justin Jeppesen to ensure your estate planning documents are in order! With our Free Initial Consultation we help our clients explore their own situations and plan for their futures. To help jump-start your own planning, download and complete the Client Information Form.

If you have more questions, we'd love to help! Contact Jeppesen Law now.

Trusts and 10 Quick Tips About Them

These blog articles have one goal, education through communication. The conversational tone of these articles is meant to further that goal. With that in mind, lets dig into…

The Trust.

The Trust is one of the five pillars of estate planning. In Super Easy Ways to Understand Basic Estate Planning Terms, we commented that a trust allows for some pretty cool and specific distributions which can be used to help impart your values and beliefs unto your beneficiaries. This is so true, but the problem with a trust is that it is one of the five pillars that is most heard of or reference, but least understood aspects of estate planning.

    For our conversation, the term trust will refer to a revocable living trust, a revocable trust, life trust, family trust, grantor trust, or AB trust. This is because they all are essentially describing the same item.  That is where a living person creates an “entity” that has separate legal existence from the person that created it, and this “entity” holds property for the benefit of beneficiaries.

The Grantors generally maintain full control over the trust property while they are alive, with the ability to revoke, amend, or modify the provisions of the trust. One of the provisions in the trust is to appoint a trustee or trustees of the trust to manage and operate trust. In most trusts, the husband and wife are the primary, or first, trustees in charge of managing and operating the trust property. The Grantor can be the primary trustee because a trust exists the moment it is signed, and that existence is separate from the Grantor.

    In addition to the immediate existence and existence separate from the Grantors, trusts come with many benefits and very few downfalls.

   

    Personal and real property can be transferred into and out of trust with relative ease. Transfer requires retitling the asset.

The need for going through the probate process is eliminated (see The Absolute Beginner's Guide to Answering: Will Or Trust for more on probate). Probate is not required because the trust is the owner of the assets. Since the trust has a separate existence from the Grantors, the trust “stays alive” even if a Trustee or Grantor passes away, and the trust property continues to be governed according to terms of trust. On a side note, this is a great way to ensure all of your assets don’t end up in the hands of your minor children when they reach 21. By eliminating probate, you eliminate the expenses tied to probate, the delay of receiving property through the probate process (especially helpful for the surviving spouse), and you increase the level of privacy by avoiding the public nature of probate.

For a surviving spouse or other beneficiary, they can have immediate and continuous access to cash flow from the estate. This is because a will, or having no estate plan at all, requires a court order stating which person or people are entitled to receive the estate’s assets. Death, or naming a new trustee, doesn’t change how trust or its assets are handled, because the property is continuously governed by the terms of the trust.

A trust reduces the chance of someone contesting your estate plan after your passing. A trust takes away the need for the document which is usually challenged, the last will and testament. This a a great aspect, because if someone challenges your plan, whether it be a will or a trust based plan, the trustee must defend your plan in court. The trustee uses the assets of the trust to pay for the defense. The result is often a smaller estate to pass on to your loved one.

After mentioning a number of great benefits of a trust, I have to bring up a major downfall associated with a trust. This downfall is not a side effect of the trust itself, but more of the implementation of the trust. A trust with no property transferred into it is almost useless. Because the trust has a separate existence from the Grantor, any of the Grantor’s property not actually transferred into the trust, is not owned or controlled by the trust. If you work with Jeppesen Law, PLLC, we ensure that your trust begins and stays properly funded throughout its existence. We do this by either funding the trust ourselves or assisting you in funding the trust.

Call the office to set up an appointment to create your own trust or to have us review your current trust to ensure it is adequate and fully funded. (208) 477-1785.

The Absolute Beginner's Guide to Answering: Will Or Trust?

Good morning and welcome back!

Having a plan makes any life decision easier.   Knowing what to do is made simpler if we know what terms mean. In Super Easy Ways to Understand Basic Estate Planning Terms, we covered five of the most basic definitions of estate planning. Included in those definitions were the terms will and trust. Let’s dig into those a little more. “To will or to trust, that is the question.”

Generally, estate planning takes off in one of two courses. There is the will course. And there is the trust course. Briefly, a will is a document that is created now, takes effect only when the creator passes away, and it ultimately distributes your possessions at the time of your passing. On the other hand, a trust is a document that is created now, goes into effect now, and it ultimately distributes your possessions as a will would, BUT that distribution can happen at different times, and not just at your death.

So, how do you decide between the will or the trust course? There are a number of considerations to take into account. Each consideration should be weighed according to a value you place on it.

Jeppesen Law, PLLC places its emphasis on families with young children. So, that is generally where we would start the discussion. If you have young children, they tend to need the protection of a trust. But, if you are passing your possession on to older, more experienced beneficiaries, then a will is a good option.

  

Do you want to manage how your possessions are deployed after you pass away? Some great examples are provisions encouraging and rewarding beneficiaries for post-secondary education, philanthropic work, or for caring for other people, such as being a stay at home parent. Maybe you are just unnerved by the idea that if you pass away with a minor child, that child will get everything, at the age of 21 and not know how to handle it. If this is a concern of yours, a trust is a great option to consider as it provides great flexibility in distributing your assets throughout the beneficiaries' lifetime.

Privacy - If privacy is a concern, you should know that “where there is a will, there is probate.” We also talked about probate in Super Easy Ways to Understand Basic Estate Planning Terms, as being an open to the public, court process. That means all the information filed with the probate court is available to the anyone who might be curious. Generally, if a trust is done properly and properly maintained throughout the years, you will avoid probate and its public nature.

Cost - This is generally a consideration people take into account. A will costs less upfront. This is true because a will is more simple to create than a trust, but ends up costing more in the long run. The benefit of a trust is that it is a one-time fee, while a will costs you at the beginning and the end during the probate process. If you are a married couple, the total cost of a will and the probate process will more than double the cost of a trust. (See Jeppesen Law's Pricing Schedule).

Organization of your possessions -  A will does not organize your belongings. This is an unfortunate aspect of will based plans. Generally, the person charged in the will to have responsibility over organizing your possessions is a family member. This can be difficult if this person is not the surviving spouse, or it can be difficult if the surviving spouse did not participate in the family’s financial planning. A properly formed trust holds these possessions during your life, so there is no need to “find” them after you pass.

Three other areas worth consideration:

Access to assets - With a trust, generally you have immediate and continuous access to assets. This is true for you during your life and for your named beneficiaries after you pass. However, any possessions distributed through a will technically need to begin the probate process by petitioning the probate court for permission to sell or use any of the assets.

Incapacitation - Trusts are set up to proceed in case of your incapacitation. A will does not have this ability as it is only controlling at your death. A durable power of attorney has a limited time period of coverage for incapacitation. But, any prolonged duration generally requires filing a guardianship proceeding in court.

Challenges - Trusts generally avoid these problems as trusts are private, making it difficult for challenges to be filed. A will and the probate process are public, so anyone claiming an interest may challenge the will.

                There you have it, an absolute beginner’s guide to answering whether a will or a trust is the right choice for you. These are not all the considerations that one might possibly ponder, nor are these very detailed overviews of each consideration. They are just meant to get an absolute beginner to start thinking about these considerations.

Super Easy Ways to Understand Basic Estate Planning Terms

Welcome Back!

In Estate Plan?! I Ain't Rich! we covered the idea that estate planning is for everyone, not just the very wealthy. Once you come to grips with the idea that you need to take control of your own plan, you are faced with another road block.

Estate Planning Terms! What are these words? Is this a new language? It looks like English, but doesn’t read like English. What does it mean? (And these were just the first thoughts I had when I opened my first Wills, Estates, and Trusts textbook.)

With anything in life, to play the game effectively, you must understand the terms. I’ve found that a basic understanding puts people at ease and an attempt at advanced understanding puts people to sleep (except for your friendly family advisor who geeks out on this). So, what you need to know to fake until you make it; probate, last will and testament, trust, power of attorney, and health care directive.

Probate. This is an often misunderstood proceeding. Generally, this a court proceeding where one person is asking the court to determine how someone else’s property should be distributed after the second person passes away. The goal of probate is to get an order from court allow for distribution of the property. This is either done according to a will or the state’s law of intestate succession. That is you die without a will or trust and the state attempts to guess at how you would distribute your property. Often, it guess incorrectly and family rivalries and old bitterness arises.  

Last will and testament. This is a document prepared by you which distributes your property according to your wishes, allows you to select someone to represent your estate before the probate court (this person is usually called a Personal Representative), and allows you to nominate the guardians for your minor children. One drawback is that this document is not controlling until you pass away. But it is an invaluable document to have. Instead of the court guessing what it should do, a will allows you to tell the court exactly what you would like to happen with your children and property. Don’t like people making decisions for you? Me neither.

Power of Attorney.  A document where one person gives power to act (called an Attorney in fact) on behalf of another, when that person cannot act for themselves. Generally, this requires a doctor’s determination of incapacity. The use of this document hopes to avoid Guardianship court proceeding. A power of attorney can be active as soon as it is signed, or it can spring into action with a physician’s determination of incapacity. There are legitimate reasons for either option.

Trust. - A document which contains all of your assets and provisions for distribution of your assets. Trusts are controlling and active as soon as you sign it, unlike the will which only takes effect after you pass away. A trust allows you to manage property while you are alive and also allows for distributions while you are alive as well when you pass away. Trusts allow for some pretty cool and specific distributions which can be used to help impart your values and beliefs unto your beneficiaries.

An additional benefit of a trust is probate avoidance. If all of your property “held” in trust, there is no need for probate. This provides access to assets immediately after someone passes away.  Probate often requires a waiting period to allow the probate court to issue an order appointing someone as personal representative before assets are available for use (this is a law that many people unintentionally break).

Health Care Directive. Also called a Living Will or Advanced Directive. I like to refer to it as a health care directive because the terms living will and will are easily misused but have very different responsibilities. This document nominates someone to act on your behalf for healthcare purposes and allows you to make your own end of life decisions (ie life support, nutrition and hydration). With a health care directive you get to decide how your care is handled. The person appointed by you is guided by what you put in the health care directive. Your “agent” works with the doctors and helps to interpret your wishes.

           Wow! Even the basics can get heavy. But there you have it, a basic understanding of the pillars of estate planning and the court process associated with it.

Estate Plan?! I Ain't Rich!

The term “Estate Plan” conjures up images of Scrooge McDuck swimming in his pile o’ gold or the rolling green hills of country club golf courses. So when people hear the term, have these mental pictures, realize that does not describe them, and they automatically dismiss the following conversation because it cannot possibly be relevant to them. They don’t even have a pool in their backyard, let alone enough gold to swim in.

This is typical because the term estate planning is often misused. Not because people use it incorrectly, but because they use the most narrow interpretation of it. Generally, the most common misconception of estate planning is that it is only relevant to multi-millionaires who are planning for retirement and minimizing their tax liabilities. This description is not incorrect, yet it represents a very small category of estates.

Estate planning is really planning for what you have, who you want to pass it to, and how you want to take care of those people you love after you pass away. A more appropriate image is that of a gift, with its own name tag of who you plan on giving it to.

But we already established that you ain’t rich. That’s fine, neither am I. You have much more to gift to your loved ones than just a bank account, home, or life insurance policy. What do people stand up to share at funerals? Life stories, adventures, lessons learned, and memories made with the individual that passed. Your assets are just a part of your whole estate plan. You can use an estate plan to share values, beliefs, dreams, aspirations, hopes, and stories. This sharing is usually done through one of two avenues, a living trust or a will.

A living trust is a document that comes into existence immediately after being signed and continues permanently, unless you decide to revoke it. It operates very much like a business as it has its own name, it can give and receive property, and after the creator passes away, it can get its own tax identification number. A trust’s key terms include who is in control of trust property, (if it is a revocable living trust, that is generally you the creator) and how to distribute your property once you pass away. This second aspect plays a huge part in sharing your values, beliefs, dreams, aspirations, hopes, and stories with the beneficiaries of your trust. Future posts will cover the different aspects of trusts in more detail.

A will is also a document that is signed, but doesn’t come into existence until the creator passes away. This means that the demands made and the provisions contained in a will are not controlling until after death. The most common will is a simple will and unlike the trust it does not have the same characteristics of a business. A will is more simple to set up than a trust, but it is not as flexible. It is also simple to destroy, replace, or amend. Also unlike a trust, a simple will is limited in its ability to share ideas, thoughts, and values. It is more of a checklist of who gets what of your goodies. Future posts will cover the different aspects of wills in more detail.

           Estate plans are for everyone, especially people with young children. Many parents fail to plan because they falsely believe they aren’t rich enough to do so. If you pass before your children are able to know you, they won’t want the money you were able to give them. They will want the knowledge of who you were, what you believed in, and what your goals were. Do you doubt that?