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The Importance of Having a Will
Jun 11, 2020

For some people, a will feels like a plot hook in a movie instead of a necessary document in their own lives.  People often look at their existing debts – student loans, mortgage, credit cards, etc. – and think that they won’t really have much to leave behind, so they see no point in going through the estate planning process.  In many instances, people have more than they think, but many have not taken the time to contemplate the totality of the assets they have accumulated (i.e., real property, life insurance, retirement plans, etc.).  In fact, a well drafted will contains many important provisions that can make a huge difference to the loved ones left behind.  Below are some key issues that can be addressed by having a will. 


1.  Keep the Probate Costs Down

When an individual dies, the law requires that (in, most instances) the decedent’s estate goes through a legal process to make sure that all debts, expenses, and taxes are paid and subsequently, that the right people inherit the remaining assets.  The legal term for this process is “probate,” and it is done through the authority of the courts.  While a will does not provide for the avoidance of probate, it can reduce the cost of the probate process.  The provisions of a will should include the designation of fiduciaries (i.e., personal representative(s), trustee(s), guardian(s), etc.) and provisions waiving the statutory limitation on funeral expenses.  Absent a will, these designations are determined by the law of the decedent’s jurisdiction at the time of his or her death and a judge.  The cost in terms of attorney hours can be substantially reduced if these issues are included in a will. 


2.  Designating a Personal Representative

When an individual dies, someone needs to take responsibility for the issues that need to be addressed.  In addition to the probate process, funeral and burial arrangements need to be made, and physical and legal transfer of assets need to happen. A well drafted will designates a personal representative or executor to accomplish these and other tasks.  Otherwise, a combination of law and judge-made decisions that will control these aspects of the process.  Depending on the composition of the family left behind, this can lead to significant issues.  For example, imagine a man married again, and, at the time of his passing, there are three children from the first marriage, and the children do not have an amicable relationship with the widow.  The tense relationship between the children and the surviving spouse can lead to the probate process being adversarial which can contribute to additional costs.


3.  Waiver of Bond

Under probate law in most jurisdictions, a personal representative has to answer to the court and to the heirs and creditors of the estate for their actions.  As part of the legal process, most jurisdictions require the personal representative to obtain a bond to protect against the potential fiduciary breaches by the personal representative and against possible mismanagement of the estate.  For example, in the District of Columbia the bond has to cover the entire value of the estate, and bonding companies generally charge a premium that is a percentage of the total value of the bond (i.e., the estate).  If a person owns real estate, has significant investment accounts and retirement plans, among other assets, the total estate can be hundreds of thousands to millions of dollars, which can potentially cause the required bond to be a significant financial burden to the personal representative.  However, most wills drafted by an estate planning attorney waive the bond requirement for the personal representative, proactively preventing this issue. 


4.  Planning the Funeral

Typically, when an individual dies, their loved ones are left to plan the funeral and final disposition of the decedent’s remains.  Imagine being in a state of grief and/or shock at the death of your loved one and having no idea what the decedent would prefer with regards to burial or cremation and the associated ceremony.  Grief does strange things to people; it is not unheard of for arguments to break out between loved ones over how best to honor the decedent.  A will can contain specific provisions for the type of ceremony, celebration, and disposition of remains desired.  This can offer some solace to the loved ones making the plans, giving them confidence that they are fulfilling explicit wishes. 


5.  Planning for Young Children

Under the Uniform Trust for Minors Act, which has been adopted in some form in most jurisdictions, an inheritance left to minor children must be placed in a custodial account until the beneficiary reaches the age of majority (age 18 in most jurisdictions).  As with other legal issues, if there is no will, the court will make a determination about who will serve as custodian of such account.  Most parents do not want to leave this decision to the courts, nor do they want to have a sizable inheritance distributed in a lump sum to their child at the age of 18.  Instead, parents can create a testamentary trust for any minor children under their wills; this allows the parents to appoint a trusted individual or institution to act as trustee and an appropriate provision for distributions to the children.  In addition, a will can designate a guardian for minor children, which is of critical importance if both parents have died.  While the court will still have to approve the designation, a well-crafted will has enormous sway over the court’s decision. 


6.  Control Over Inheritance

If a person dies without a will, there are strict rules for inheritance that cannot be bypassed by the court.  Family dynamics and the decedent’s intent do not always align perfectly with the beneficiaries dictated by law.  An unmarried couple, a family with a special needs child, family estrangement, or any number of other factors can have ramifications.  Only a will, providing for the inheritance as a person truly desires can resolve this issue. 

For financial, logistical, and emotional reasons, the benefits of having a will in place are clear.  At Jayde Law PLLC, we specialize in helping people plan for their future, including the preparation of a detailed, legally enforceable will.  Contact us for a free consultation. 

Estate Planning: An Overview

15 Feb, 2023
Estate planning entails preparing your affairs for the future, including death and other life events. While older adults might give more thought to estate planning, it is an essential tool at any age. WHY IT’S IMPORTANT With estate planning, individuals and families can protect their interests during incapacity or after death. You can provide for a spouse, children, and dependent family members when you pass away. You can arrange your care and financial affairs should you suffer a severe accident or illness that renders you incapacitated. If you are a parent, you can appoint a guardian to care for and manage the inheritance of your minor children. If you own a business, you can prepare to transfer it to family members, colleagues, or other trusted individuals. You can make arrangements for your long-term care when you can no longer live on your own. You can also make funeral preparations, determine what happens to your body when you pass, and prepay for your funeral, all of which can help lessen the burden on your family members. WHAT IS AN ESTATE? Legacy planning entails passing on your estate. Your estate is everything you own, including: Savings and checking accounts Retirement accounts Investments Life insurance Annuities Houses and other real estate Cars Personal possessions, such as jewelry, furniture, and sentimental items When you die, your estate encompasses all your property upon death. If you sold or gave away property before death, it is no longer part of your estate, and you cannot transfer it upon death. Items you own with another person are also part of your estate. Depending on the type of asset, it might automatically pass to the other owner. For instance, if you own a home with your spouse as tenants by the entirety, it will pass to your spouse upon your death. WHAT IS AN ESTATE PLAN? An estate plan consists of legal documents and arrangements that determine the distribution of your assets when you die or outline your care if you become incapacitated. While a will can be a central component of an estate plan, a solid plan encompasses more than a will. It can also include legal tools that allow assets to pass outside of a will and probate (the process by which a court oversees the distribution of assets in a will). ESTATE PLANNING TOOLS In addition to your will, your estate plan could include the following: Purchasing jointly owned property or adding a joint owner to your property Designating a beneficiary on a pay-on-death bank account, retirement account, or annuity Buying life insurance to benefit your family should you pass away Creating a trust for a child Obtaining long-term care insurance to cover future nursing home or assisted living fees Executing power of attorney documents, naming health care and financial agents Making a living will, providing instructions for care should you become incapacitated Preparing a transfer on death instrument to pass ownership of your property to a beneficiary upon death WHAT IS AN ESTATE PLANNER? As professionals helping people make future arrangements, estate planners are attorneys who focus on end-of-life preparations. Estate planning attorneys assist people with drafting legal documents and understanding laws and taxes that could affect them and the loved ones they will leave behind. When creating estate plans, individuals may need to consult attorneys as well as other experts, including financial planners, accountants, life insurance advisors, bankers, and real estate brokers. WHAT DOES THE FINAL DISTRIBUTION OF ASSETS INVOLVE? The final distribution of assets is a conclusory step in the probate process before the court closes probate. When an estate goes through probate, the personal representative or executor must satisfy all debts, and the court must resolve all disputes before allowing the beneficiaries to receive the assets. At the end of the probate process, ownership of the assets of the estate is transferred to the beneficiaries. DO I NEED A LAWYER FOR ESTATE PLANNING? Although the law does not require that individuals secure legal representation to make estate plans, many find the support and guidance of estate planning attorneys invaluable. An estate planning attorney can help you identify the legal tools and strategies that suit your needs, as well as draft the necessary documents, such as wills, trusts, and powers of attorney. In addition to addressing tax concerns and drafting documents, these attorneys can help you avoid probate. Probate, the process by which the court oversees the distribution of assets in a will, can be expensive and time-consuming for surviving family members. It also opens the door for disgruntled people to challenge the validity of the testamentary document, further complicating asset distribution. An estate planning attorney could help you organize your assets to transfer outside of probate to make the transfers simpler, easier, and less vulnerable to challenges. When you are ready to create an estate plan, contact Jayde Law PLLC.

Three Things to Know About Being an Executor

01 Feb, 2023
An executor (or personal representative) is a person or entity you choose to carry out your last wishes outlined in your will. Your executor should be someone you trust is responsible enough to manage your estate after you pass away. Choosing an executor is a big decision when it comes to estate planning. So, what should you know about an executor? What should you consider before naming an executor? Here are answers to three common questions about executors. Can an Executor Decide Who Gets What? No. In most circumstances, an executor cannot decide who gets what property. Executors are responsible for carrying out the decedent’s wishes as outlined in the will. However, if the decedent did not distribute all their assets in their will, in some circumstances, the executor may be able to decide how to distribute the unassigned property. Can an Executor of a Will Be a Beneficiary? Yes. An executor can also be a beneficiary of the will. It is common for people to have their surviving spouse or children act as the executor of their estate. This choice can be cost-effective if you have a small or simple estate. Another benefit of having a family member act as the executor of your estate is they are familiar with your wishes. They know you, and they understand how you want your assets divided. If you forget to state where property goes in your will, an executor that knows you well is more likely to give those assets to the correct beneficiaries. How Long Does the Executor Have to Pay the Beneficiaries? The short answer is: It depends. The executor should work diligently to get each beneficiary paid as soon as possible. While the executor is responsible for ensuring beneficiaries receive the money or property they were left in the will, the probate process may delay beneficiaries from receiving a payout. Depending on the size of the estate and the debts and taxes the estate owes, it may take anywhere from six months to more than one year for a beneficiary to receive an inheritance. The probate process varies depending on the state, but the typical process goes like this: Submit the Will for Probate — Part of the executor’s responsibility to the estate is to file the will with the probate court. Filing the will begins the probate process. Once completed, the beneficiaries are one step closer to receiving their inheritance. The time executors have to file a will with the probate court varies by state. File an Inventory — An inventory of estate assets is required. As part of an inventory, the executor determines the total value of all estate property, money, and other assets. A completed inventory can then be used by the executor to determine whether federal or state taxes apply, or whether assets will be used to settle debts. Pay Taxes and Debts — Before the executor can distribute any assets to beneficiaries, estate debts and taxes must be paid. The executor is responsible for ensuring these payments are made. Creating a complete estate plan can be overwhelming. With the help of an experienced estate planning attorney, you can ease some of the anxieties you may be facing in thinking about estate planning. If you are ready to start the estate planning process give Jayde Law PLLC a call..
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