Estate Planning For Your Furry Family Members

Pets occupy a very special place in the hearts of the people whose lives they share. Today, more and more people think of their pets not just as companions, but as part of their family. If you have a treasured furry (or feathered, scaly, etc.) friend, you may wan to explore your estate planning options that allow you to continue to provide for your pet even after you die.

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One choice available to you is leaving a provision for your pet in your will. It is important to understand that the law still considers pets to be merely property. This means that, once your property (which includes your pet) is distributed to the people named in your will, that is the end of the control you have. If the person you name becomes incapacitated, dies or has to move into a residence that does not allow pets, you will have no say in what happens to the animal. This concern is a very important consideration if your pet has a very long lifespan, such a horse, parrot or turtle.

Another option available for pet people is the pet trust. The vast majority of states recognize pet trusts within their statutes. Even if your state does not have statutes specifically recognizing pet trusts, all is not necessary lost. Kentucky, for example, recognizes trusts “for humane purposes,” and the law in that state has long stated that the care of a specific animal is such a humane purpose.

With a pet trust, you create a trust for the benefit of your pet, you fund it with cash or other assets to be used for the pet’s care and well-being and you name the person who will manage the trust’s assets. That trustee then disburses money from the trust, in accordance with the trust’s instructions, to the person you designated to care for your pet. You can also name alternate trustees who will take over in the event that the person you originally named can no longer serve as trustee.

You have a great deal of flexibility with how you construct your pet trust. The trust can take effect during your lifetime or upon the occasion of your incapacity or death. You can also include detailed care instructions in your pet trust. If your pet has food allergies and must only consume certain types of food, your trust can provide direction about obtaining the correct food. If your pet has a special medical condition and requires extra trips to the vet, those instructions can go in the trust, too.

Summary: Pets are extremely important and treasured members of many families. A pet owner who wants to provide for his/her pet after death should consider including the pet in his/her estate plan. A pet trust potentially offers significant flexibility for guiding the care and maintenance of your beloved friend.

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When is the Right Time to Create an Estate Plan? Now!

A common fallacy about estate planning is that creating an estate plan is a form of planning for death.  The reality is, there is no “Right Time” to create an estate plan, because you never know when you might need it and not having one can be risky business.

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One of the most commonly believed fallacies about estate planning is that creating a plan is a form of planning for death and, as long as you are young or healthy, estate planning is not an immediate priority. Nothing could be further from the truth! As one April 20, 2014 article in the Wall Street Journal reminds readers, “There’s no time like the present to make sure all your estate-planning ducks are in a row.”

Why is this so important and so urgent? Because estate planning is much more than establishing what happens after you die; it is also about documenting a clear set of instructions for what happens if you’re still alive and cannot speak for yourself.

That’s why some estate planning needs are universal. If you are in a serious accident and suffer major injuries that prevent you from managing your affairs, or perhaps from communicating at all, you need to have the proper documents already in place that give the person you want the authority to pay your bills, manage your investments, approve needed medical procedures or even authorize the termination of life-prolonging medical care.

With no plan in place, both you and your assets could be in significant risk. With no will, your assets will be distributed at your death according to your state’s intestacy laws. These laws may give part (or all) of your wealth to an estranged relative, and will definitely give your loved ones to whom you’re not related (either by blood or marriage) absolutely nothing. With no powers of attorney in place, your family may be forced to go to court and pursue a legal guardianship or conservatorship, which can be expensive and stressful, just to make decisions on your behalf. Your doctors may be forced to continue providing you with life-extending care, even though you have no hope of recovery and such care is against your wishes, if you don’t have a living will.

So, why is estate planning important? Because it gives you the ability to take control of a great many decisions both during life and after death. And why act now? Because no one knows for certain what the future may hold, and only a proper plan can give you the assurance that, whatever tomorrow brings, you’ll be prepared and your family will be protected.

This article is published by the Legacy Assurance Plan of America and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com

Protecting Your Estate Plan With a Broad No-Contest Clause

In one recent case from Michigan, that state’s Court of Appeals had to address a dispute about a man’s will. The man, Danial Span, had a daughter, Kayla. Span and Kayla’s mother divorced when she was 3 and, sometime later, he surrendered his parental rights and her stepfather adopted her in 2007. Two years prior, though, Span and the girl began forming a relationship. When he created his will in 2013, Span identified Kayla as his daughter, but left her nothing.

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Span’s 2013 will also contained a “no-contest” clause in it that, as with many such clauses, dictated that any person who challenged the will would forfeit their entire inheritance they were scheduled to receive under the terms of the will. In Span’s circumstance, the exact language of his no-contest clause stated that any beneficiary who “contests in any court any of the provisions of” the will would be treated as if she predeceased Span.

A week after Span signed his will, he died. Catherine Jock, Span’s personal representative (and the sole beneficiary of his estate) submitted the will for probate. The daughter challenged the will. The basis of her contest centered on Span’s mental capacity and the validity of the signature on the will. The personal representative, acting on behalf of the estate, tried to enforce the no-contest clause against the daughter. The trial court concluded that the personal representative could not enforce the no-contest clause against the daughter because the specific nature of the daughter’s challenge was one challenging the execution of the will and the testator’s capacity, and was not an attack on any provision in the will.

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Because the appeals court upheld the trial court’s ruling that went against the daughter on the substantial portion of her will contest, it did not need to reconsider the trail court’s ruling on the no-contest clause. Nevertheless, the case of Span’s will is a clear reminder of the need to approach no-contest clauses carefully. The language used in Span’s no-contest clause is fairly common. If your desire is only to prevent your potential beneficiaries from launching a challenge against a specific term (or terms) in your will, then such a clause could be beneficial.

However, contests that challenge a provision (or provisions) within a will are only one avenue for upsetting an estate plan. For some disgruntled people, their ends may be accomplished just as effectively by getting your plan invalidated in its entirety. If your goal is to protect yourself from both types of challenges, then, if no-contest clauses are enforceable in your state, you might benefit from using a clause with broader language than what Span had in his 2013 will. A experienced estate planning lawyer can help advise you about the whether no-contest clauses are enforceable in your state and, if they are, what degree of breadth would best match your planning goals.

Summary: For residents of states that allow no-contest clauses in estate plans, such provisions can offer a degree of protection against an unfair or frivolous court contest that would seek to undo your plan. Court cases have clarified whether or not the clauses are enforceable in a given state and, if they are allowed, how far they can go in protecting your plan. Depending on what your goals are, a broadly-worded no-contest clause may be able to give you the best protection against litigation by a disgruntled heir.

 

#LegacyAssurancePlan – How a Detailed Estate Plan Can Potentially Save Your Family Headaches, Heartaches… and Maybe Legal Fees, Too

 

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Creating a carefully crafted and detail-oriented estate plan is important for several reasons. One, the more decisions you make and clearly communicate to your loved ones, the fewer decisions they’ll have to make on their own while they deal with the stress of carrying out final arrangements and the pain that comes with loss. Without a clear plan, they may have to agonize as they desire to do what you would have wanted, but feel unsure what that preference would have been.

Another important potential benefit that comes with detailed planning is that it reduces the possibility for conflict. With anything that remains an uncertainty when you die, the possibility will exist that your loved ones may fall into disagreement about what should be done and what you would have wanted. Last summer, the case of Teffany Teresa Love and her final arrangements, which went all the way to the Tennessee Court of Appeals, offers some insight about this point.

What was the issue that took this woman’s loved ones to the probate court and eventually to the appeals court? It wasn’t her money, her house, her vehicles or her financial accounts. It was her headstone. On one side, her grave marker contained just her married name, “LOVE.” On the other side, it read “Teffany Teresa ‘Terri’ West.” The name West referred to a man named Bobby West, who claimed to be Terri’s biological father. Terri died with no estate plan; the stone and inscriptions were chosen by her husband and her two adult daughters. The problem arose when Terri’s adoptive father, Joseph Gullett, sought to take over administering Terri’s estate for the express purpose of changing her headstone to read “Teffany Teresa ‘Terri’ Gullett.” Ultimately, the appeals court sided against the adoptive father, concluding that the right to control the deceased woman’s headstone went, like the right to control her remains, from her husband (first) to her adult daughters (second). Since the husband and daughters all agreed, “West” remained on the stone.

This woman’s case presents two clear potential reasons for engaging in detailed estate planning including final arrangement planning. First, if you have loved ones who you know (or fear) may fight over issues like your final arrangements, you can possibly reduce the risk of quarrels, and potential litigation, by making those decisions yourself and putting them in your plan. Second, as the Tennessee court pointed out, the law recognizes a specific order of priority in terms of who makes your final arrangement decisions. If you do not want your final arrangement decisions made by the person who would stand to hold that role according to your state’s laws, you need a plan where you make as many decisions as possible for yourself and, depending on your state’s laws, where you appoint the person you desire to serve as your agent for final arrangement decisions.

Summary: There are several things about estate planning that are true far more often than they are not. If you procrastinate, you may run out of time, because none of us knows what tomorrow will bring. If you fail to create a plan, the government will make one for you — and it may be one that you wouldn’t like. Once you make a plan, you have to maintain it in order to be sure it will work as best as it can. A properly created and maintained plan can give you a great deal of control over your affairs, even after you’re gone. Last, but not least, if that benefit of control is important to you, the more thought and detail you put into your plan, the more benefit it will give you.

Legacy Assurance Plan Of America – Minimizing Your Chances of Estate Plan Challenges

A 20th Century American theologian, Reinhold Niebuhr, composed something many now know as the “Serenity Prayer,” in which the speaker seeks “the serenity to accept the things I cannot change, The courage to change the things I can, And the wisdom to know the difference.” Estate planning can be a lot like that. One of the keys to success in estate planning is to plan to avoid the problems that are preventable, to understand that not all problems are avoidable, and the wisdom to know the difference.

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While you cannot always prevent people from mounting legal challenges to your estate plan, you can take steps to minimize the odds of that event happening. This is particularly true if your plan includes some less than “cookie-cutter” provisions, such as unequal distributions between children or grandchildren. One of the keys to reducing this risk of a challenge is communication. If you are leaving uneven distributions, sit down with your family and explain why you crafted the plan as you did. Alternately, you may consider documenting on paper the reasons for your decisions, so that the trustee of your trust or executor of your will has evidence in the event of a legal contest.

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Your estate plan is your legacy, so it should reflect your desires and objectives. However, if your loved ones better understand why you made the choices you did, it may help them be more accepting and less likely to go to court.

Another way to minimize the risk of challenge resulting from unequal distributions is to make gifts during your lifetime. If you have a loved one whom you believe deserves or needs a larger share of your wealth, you can make that happen outside your will or trust. Giving gifts to that loved one during your lifetime can offer multiple benefits, as it may allow you to create unequal total distributions while maintaining equal distributions within your will or trust, and it may also offer your some tax benefits, as well.

Additionally, you can use a negative financial motivator to attempt to reduce the chances of a challenge. You may include a “no contest” clause in your plan. This clause is language that says that a beneficiary who undertakes a legal contest to your plan forfeits the right to receive his/her distribution he/she otherwise would have received under your plan. Be aware, though, these clause are not legally enforceable in all states.

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Finally, an essential key to minimizing the risk of a court battle is to work with experienced legal professionals. Your experienced estate planning team can give you the advice you need to make sure that your plan is as “contest-proof” as it can be.

Summary: The estate plan you create is your legacy Assurance plan  and should reflect the estate planning goals you want to accomplish. Sometimes, a loved one may not agree with your goals and may seek to contest your plan in court after you die. While you cannot erect a plan that is completely “contest-proof”, you can take steps to minimize this risk. Your estate planning legal professional can help you understand your options for reducing this potential hazard.

Legacy Assurance Plan Of America – Planning to Protect Your Assets and Avoid Probate, Too

The process of estate planning involves taking inventory, not only of your wealth, but also of your needs and desires. Whether or not a particular planning technique makes sense for you may depend, in whole or in part, on whether your estate planning objectives do or do not include certain goals, as well as whether your estate does or does not include certain risk factors. Carefully assessing all of these things is an important early step in the process of reaching a well-thought out estate plan.

For many people, avoiding the probate process, with its potentially large fees and consumption of time, is a central objective. For a lot of those people, a revocable living trust may represent a viable way of leaving a legacy, providing for your loved ones and escaping the lost time and money that comes with going through probate administration. Depending on the makeup of your estate and the laws of your state, you may have other options in addition to living trusts that may allow you to avoid the probate process. In some states, the laws regarding death beneficiary designations have been broadened to the point that you may be able to transfer most or all of your wealth using pay-on-death or transfer-on-death techniques. In some cases, though, a living trust may still provide you with valuable benefits even though your state allows you to transfer your assets using death beneficiary designations.

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Another objective some people have is asset protection. These people want to have the peace of mind that their money will pass to their loved ones, not their creditors. Implementing certain types of irrevocable trusts may protect your assets in some situations.

In the past, people with issues regarding creditors have avoided creating living trusts because they were less advantageous than probate when it can to putting creditors “on the clock” to make a claim for payment. The executor of an asset must give notice to all of a deceased person’s creditors and then, once that notice is sent, the creditor only has a few months to demand payment. If that period passes before the creditor acts, the creditor forfeits that claim forever. With living trusts, the creditor’s time period to act could be two years or more.

Today, though, in some states, the trustee of a living trust has the option to serve notice on creditors when a trustor dies. Submitting this optional notice to creditors subjects them to the same limited time-period as a creditor who received notice from a probate estate’s executor. This way, you can have both the asset protection of a limited time period for creditor action, as well as the probate-avoidance and other benefits that come with a living trust.

Legacy Assurance plan of America Probate-Attorney-living trust  All of this is meant to highlight the multitude of options that exist for your estate plan, in order to ensure that your plan best fits your needs and goals. The key, of course, is to take that first step and being putting your plan in place right away.

Summary: Estate plans can be customized to meet a variety of different desires and objectives. Your plan may include revocable trusts, irrevocable trusts death beneficiary designation ownership techniques, or a combination of tools. Whether you seek to avoid probate, protect your estate against creditors or achieve other goals, a well-thought out plan can get you to the outcome you seek.

Estate Planning For Families With Special Needs Loved Ones: Beyond Just Creating a Supplemental Needs Trust

If you have a child or other loved one with special needs who receives benefits through programs with needs-based qualification rules, you are probably already aware that your loved coming into money can have harmful consequences. The receipt of substantial assets, including through inheritance, can disqualify your loved one from continuing to receive the benefits upon which he or she has come to rely. One way to leave a portion of your wealth to your loved one with special needs, while avoiding this disastrous disqualification scenario, is the creation of a supplemental needs trust (also called a special needs trust.) However, if your estate also includes IRAs, you’ll want to take care regarding how you fund this special needs trust.

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One plan that is almost always the wrong move is to name your loved one with special needs as the death beneficiary of your IRA. Your death would create a “Catch-22” of bad choices. Taking the required minimum distribution from the account very likely will result in your loved one losing eligibility and losing his/her benefits. Failure to take required distribution will trigger severe penalties from the IRS.

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In certain situations, the solution to this problem is to name the special needs trust you’ve created for your loved one as the beneficiary of your IRA. The rules governing needs-based program eligibility say that, as long as the beneficiary does not possess direct control over the assets in a special needs trusts, that wealth does not count against him or her. This generally means having a trustee manage the trust who is not the beneficiary.

In some cases, though, naming your loved one’s special needs trust as the beneficiary of your IRA can be tricky. The rules controlling IRAs allow you greater flexibility when you name a person as the beneficiary. An individual has a specific life expectancy, so the tax code allows for the stretching out of distributions from the inherited account over the span of that beneficiary’s life expectancy. This lets you keep a larger amount of principal in the account, which can continue to grow income tax-free. If the special needs trust you’ve created names your loved one as the primary beneficiary during his/her lifetime, but then names a favored charity to receive the assets that remain after your special needs loved one’s death, then that stretching option is not available.

 

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So what should you make of all this? More than anything, it is that leaving an inheritance to a loved one with special needs requires prompt and very thoughtful planning. It is important to work with an experienced estate planning team who can lay out all of your options and explain them in an understandable way. That way, you can have the peace of mind that you’ve not only taken care of your loved one, but have done so in the most financially efficient way possible.

Summary: Leaving a portion of your assets for the benefit of a loved one with special needs, and who receives needs-based benefits, requires engaging in careful estate planning. Implementing a special needs trust is often a vital component of such a plan. If you have wealth in an IRA, you can use that asset to benefit your special needs loved one, but you should be very diligent in this area of your planning in order to ensure that you neither place your loved one’s benefits at risk nor trigger certain tax penalties related to how the IRA’s funds are distributed.