Estate Planning Reminders
We want to thank you for allowing us to represent you in your estate planning. We appreciate your confidence and hope that you will call us in the future to provide you with other necessary legal services. Even when the estate process has concluded, it is important to protect the final result. Sadly, many good estate plans are not properly administered due to complications after their execution. We aim to help you avoid this dilemma. The following discussion is a list of techniques and considerations which we have found help people protect their plans.
Since good estate planning is a continuous process, we would like to remind you about the following matters:
DESTROYING OUTDATED AND DRAFT ESTATE PLANNING DOCUMENTS
The originals of old Wills and drafts of your current Will can lead to confusion and disputes among heirs. It is strongly recommend that you destroy these unnecessary documents. It is also recommend that you destroy any revoked trust agreements, durable powers of attorney and advance medical directives.
WHERE SHOULD YOU KEEP YOUR ESTATE PLANNING PAPERS?
It is recommended that you keep the originals of your estate planning papers where you keep your other important legal documents (i.e. your deeds, insurance policies, titles to vehicles, etc.). These documents should be kept in a secure place, but remain accessible to your agent and executor. A trusted family member, such as your spouse, should also know where you keep them.
It is recommended that you consider a safe deposit box at your bank or a locked fire proof file box. In Virginia, neither the state nor your bank will seal your safe deposit boxes at your death. If you choose to keep your documents in a safe deposit box, however, you should designate another person as an authorized person to open the box in the event of your death or disability. You must execute a written instrument at your bank to authorize this third person to enter your safe deposit box. The authorized person should not necessarily have a key, but should be able to obtain a key if he or she needs to access the box. Additionally, you should not keep all of the originals of your advance medical directives and durable powers of attorney in the safe deposit box. You might need them on a weekend or at night when the box is not accessible. It is recommended that you keep one original advance medical directive and one original durable power of attorney at home for ease of access.
If you choose to keep the originals of your estate planning documents at home, It is recommended that you keep them in a locked, fire proof file box. These file boxes can be obtained at most office supply stores. It is additionally recommended that you give a copy of your advance medical directive to your regular physician for his records. A wallet card will be provided to you to inform health care providers that you have an advance medical directive. It is suggested that you carry the card with you at all times.
HOW OFTEN SHOULD YOU REVIEW YOUR ESTATE PLANNING PAPERS?
Your will, durable powers of attorney, trust, and advance medical directive are effective indefinitely. You should, however, regularly review them to ensure that they continue to meet your needs. The laws concerning these documents change regularly. Your circumstances will change over time.
It is recommended that you review your estate plan at least every five years or whenever you have a significant change in your property, health, or family. For example, you should have your estate planning documents reviewed when you change the State in which you live, when there is a death or disability in your immediate family, when there is a significant change in the value of your assets, upon the birth of a child, or when your children reach the age of majority. We will be happy to review your estate planning upon your request. At that time, we will ask you to fill out a client questionnaire with new information concerning your family and your property.
MEMORANDUM FOR DISPOSITION OF TANGIBLE PERSONAL PROPERTY
If your Will authorizes the disposition of your tangible personal property by a separate memorandum, you should prepare the memorandum if you wish to give a specific item of tangible personal property to a particular person. Tangible personal property includes jewelry, furniture, silver, china, clothing, motor vehicles, and art work. It does not include cash, stock, mutual funds, bonds, certificates of deposit or real property.
We will be happy to provide you with a form memorandum to use. If you wish to make a gift of an item of your tangible personal property, you should complete the form, sign it and date it. I suggest keeping the memorandum with your Will. You may change this memorandum at any time by a new memorandum signed and dated by you. I suggest that you call us for a new form when you wish to change the memorandum.
IS IT SAFE FOR YOU TO CHANGE YOUR DOCUMENTS BY MAKING CHANGES BETWEEN THE LINES OR IN THE MARGINS?
No! Such changes will usually not be effective
DO YOU NEED TO REVIEW YOUR JOINT ACCOUNTS AND YOUR DESIGNATIONS OF BENEFICIARY? . We executed your documents using witnesses and a notary public who were present while you signed the documents, and present while each of them signed the documents in your presence. It is recommended that you call us if you wish to make a change. We store your documents on our computer network system to facilitate the preparation of amendments.
Yes. Your will or trust does not govern the disposition of your joint accounts, life insurance policies, annuities, IRAs or retirement accounts. The ownership of the assets in your joint accounts will normally pass to the surviving co-owner by virtue of survivorship. Your life insurance policies, annuities, IRAs and retirement plan accounts will pass at your death to your designated beneficiary. Please review your joint accounts and designations of beneficiary to insure that they will pass at your death in accordance with your wishes.
If you are married and have executed a will or revocable living trust that creates a credit shelter trust to reduce estate taxes, you and your spouse should not own your investment assets jointly with the right of survivorship. Assets in the joint account will pass to the surviving spouse and will not fund the credit shelter trust after your death. This may result in the unnecessary payment of estate taxes after both of you are deceased. To insure that your investments are available to fund the credit shelter trust, it is recommended that you and your spouse own your investments in your individual names without the right of survivorship or, if you have executed revocable living trusts (RLTs), transfer title of your investments to the trustees of your RLTs.
You should review your designations of beneficiary to ensure they are consistent with your estate plan. If you executed an irrevocable insurance trust, the trust should be the owner and designated beneficiary of the insurance policies funding the trust. If you executed a revocable living trust, you should designate the trust as the beneficiary of the life insurance that you own which insures your life. The trust should not be designated as the beneficiary of any policies insuring your life which your spouse owns.
Generally, if you are married, you should designate your spouse as the beneficiary of your IRAs and retirement plan accounts. This will permit your surviving spouse to “roll over” the death benefits to the surviving spouse’s IRA and continue to defer the income taxation of the account. The designation of beneficiary form should also designate a successor beneficiary if your spouse does not survive you. On occasion, however, you will wish to designate a trust as the beneficiary of your IRA or retirement plan account. This is very common in second marriages or where the account owner does not wish for his beneficiary to have complete control over the death benefits. However, the rules relating to designating a trust as a beneficiary of an IRA or retirement plan account are technical. Please call us or another attorney prior to designating a trust as a beneficiary of these accounts.
Please call us if you have any questions concerning designations of beneficiary or joint ownership of property.
WHAT RECORDS DO YOU NEED TO KEEP FOR YOUR FAMILY AND SURVIVORS BESIDES YOUR ESTATE PLANNING DOCUMENTS?
We recommend that you keep the following records:
• Your deeds, title insurance policies, and settlement statements.
• Your motor vehicle titles.
• Your insurance policies (life, auto, property, liability, disability and long term care).
• Your certificates of deposit, stock certificates and bonds.
• Your tax returns from the last four years and income tax basis records.
• Your loan documents.
• Your retirement plan documents.
• Your bank, brokerage and mutual fund statements from the last four years.
• A letter to your family, agent, and executor containing the names of your advisors (i.e.. lawyer, tax return preparer, insurance agent, and banker), a list of your assets including account numbers, a list of your
creditors including account numbers, and any instructions or advice you choose to leave for them. These instructions should include your wishes for funeral arrangements. Please remember to update this letter on a regular basis. It is recommended that this be done annually.
Your family, agent, executor and trustee should know where these documents are located.
DO YOU NEED TO PLAN TO REDUCE ESTATE TAXES?
If your assets, life insurance, and retirement plan assets exceed the federal estate tax exemption amount, then an estate tax may be imposed at your death. For 2014, there is an exemption of 5.34 million per person for the estate tax. It is indexed annually for inflation. This is a unified exemption with the gift tax, and the credit is portable across spouses if unused. Thus, 10.68 million can be transferred between a married couple and their children without an estate tax problem.
The Hook Law Center is experienced in planning to avoid the estate tax through a variety of techniques. Please contact us if you feel you may be subject to the current estate tax.
DO YOU NEED TO PLAN FOR THE PAYMENT OF LONG-TERM CARE?
In Southeastern Virginia, the average cost of long-term care is $5,000 per month. Medicare pays for very little nursing home care. Medicaid pays for nursing home care for indigent senior citizens.
If you are over 60 years of age and cannot pay for nursing home care out of your income, we recommend that you consider long-term care insurance. As a certified Elder Law Attorney, I will be happy to help you review long-term care policies.
ABOUT THIS HANDOUT
This guide is provided as a courtesy to help you recognize potential estate planning issues. It is not intended as a substitute for legal advice. It is distributed with the understanding that if you need legal advice, you will seek the services of a competent elder law attorney. While every precaution has been taken to make this explanation accurate, we assume no responsibility for errors or omissions, or for damages resulting from the use of the information in this explanation.