Bonus children (also known as stepchildren) and estate planning
I have a dear friend who refers to her stepchildren as her bonus children and I think it is a beautiful way to describe a family with children from a former relationship and so I have adopted this term here. Many clients form new relationships with bonus children-- that is, a family where one or both spouses have children from a previous relationship. Estate planning for these families can present unique challenges. It’s challenging to combine the interests of a current spouse and any mutual children with the desire to provide for one's children of a previous relationship.
Hopefully, the children of the prior relationship are an integral and loving part of the new family relationship, looked upon and treated by both spouses as if mutual children. However, there may be estate-planning issues about the bonus children and the new spouse, which could raise a number of concerns. For example, usually spouses leave their assets to each other first and then the children after both spouses are deceased. If all assets are left to the new spouse, the prior children may not be provided for, as the deceased spouse would have wished, since there is no legal obligation to support stepchildren. In addition, the surviving spouse may, at his or her death, leave all the assets to a new partner or his or her own children, to the exclusion of the children of the first spouse to die. On the other hand, if assets are left for the prior children at the death of their parent, there may not be sufficient assets remaining to provide for the current spouse or family.
Even with a harmonious family with bonus children, lack of planning may lead to unforeseen difficulties. In cases where death occurs without a will or trust, statutory intestacy rules may remove from the current marriage up to one half of the deceased spouse's estate and give it to the children from the previous marriage, even if the prior children are all grown and in less need of the assets than the spouse and minor children of the current marriage. If the prior children are minors, an ex-spouse may gain control of the assets. Finally, there just may not be enough assets available to adequately provide for the needs of all the members of the family.
Estate planning is an excellent way to create clarity in the family of bonus-children partners – with the couple agreeing to and spelling out what goes to whom - when. At a minimum, each spouse should have a Will. Otherwise, assets may eventually (upon the death of the second spouse) be distributed in a manner contrary to what the parties intended (the old third-party interloper scenario comes to mind).
A more proactive approach is to use a trust to provide for the surviving spouse, and still protect a portion of the assets for the children of a prior marriage. This type of trust is known as a Qualified Terminable Interest Property (QTIP) trust. Property passing to a QTIP trust is eligible for the marital deduction, so the property is not taxed at the death of the deceased spouse, leaving the entire amount available for the surviving spouse’s support. Such a trust can generate income for the benefit of the surviving spouse during his or her lifetime. At the death of the surviving spouse, those assets could then be distributed among the mutual and/or prior children pursuant to the wishes of the previously deceased spouse.
If the children from the previous marriage are young, after the death of the surviving spouse, the assets from the QTIP Trust can be held in a further trust for the children, under the control of an independent trustee, to ensure that the assets do not fall under the control of an ex-spouse.
It is not uncommon for a client with a much younger spouse to create benefits for the children from the prior marriage by purchasing life insurance. In such a case, rather than requiring the children to wait many years until the death of their step-parent to receive benefits, the client purchases a life insurance policy that is made payable to the children so they receive those cash benefits immediately upon the client’s death. Having the policy owned by the children (or perhaps even better, by an Insurance Trust for their benefit) and funding the purchase over time by making gifts to the children or the Trust can even provide those benefits without any transfer tax!
Other techniques are also available to balance benefits passing to a new spouse with benefits for the children of a previous relationship. Marital agreements are important planning tools, and contractual agreements to name beneficiaries or make a will are also used to ensure long term planning for bonus children when as we all know we can’t predict our futures. With careful consideration, estate planning for the blended family can provide orderly, equitable and compassionate distribution of estate assets, while also minimizing or eliminating confusion or even animosity between the bonus family, both here and now; and upon the death of a spouse in relation to the surviving beneficiaries.
If you have questions about these estate planning tools give me a call or shoot me an email or if you have a friend with bonus children please share!
A few things to do before the New Year
Its a busy time of year. The holidays can seem like a mad dash. Shopping and attending festive events keeps us on our toes and if you are like me your "to-do" list seems to grow in length, despite all the lines I've already crossed off. Not to add pressure to your season of cheer but if you take the time to do these things now - you'll start the New Year ahead of the game! 1. Charitable donations — If you need a tax deduction in 2013, now’s the time to make that charitable contribution. Now is also the time to sort out clutter and get it your favorite charity thrift store. Save your receipts.
2. Annual exclusion gifts — An individual can give up to $14,000 per donee in 2013 without impacting his or her lifetime or estate exclusion. A married couple can give $28,000 per donee. Be careful if you use a check to make annual exclusion gifts because, unlike charitable donations, if the gift-check is cashed after Jan. 1, the date of the gift will not relate back to the date of its delivery. It will be deemed to be a gift given in 2014.
3. Review your testamentary documents. Is your estate plan still appropriate for your situation and are your fiduciary choices for personal representative and agents under your powers of attorney, legal guardian, and trustees still appropriate? If so great. If not the holidays are a time spent with family and friends - who might be a better choice?
4. Review beneficiary designations — Retirement plans and insurance policies are controlled by beneficiary designations, not your will or revocable trust. It is important to ensure that your beneficiary designations are consistent with the provisions of your will, and vice versa.
5. Update your important documents locator and contacts before you head off for that holiday trip.
Mediation techniques for the holidays.
In thinking about the holidays and how we look forward to them, I am also well aware that many times I have heard stories about how the holidays end up being fraught with hurt feelings and arguments instead. Mediation techniques can help. Without going into the whole mediation process and why it works – I can demystify the first and most important part of any mediation session – in the hope that you can use this technique to minimize conflict or heal hurt feelings if they creep into your holiday season.
If you and friends or family members are upset because someone is hurt or not feeling respected have a sharing. I recommend a formal structure and that all parties agree to abide by the rules before beginning, usually by a show of hands.
Here is the structure:
- Have everyone sit in a comfortable quiet room where everyone can see everyone. If there are more then two people a circle is nice. Make sure everyone is comfortable.
- Select one person as the timekeeper.
- Agree in advance to listen to each other and not interrupt or respond to what the other is saying. Hold the space by keeping a calm demeanor and eye contact. If you must, take notes while the other is talking rather then interrupt, but hopefully given that this is a family sharing this won’t be necessary.
- Allow each person ten minutes to talk about how they are doing, how they feel about being together for the holidays, what they enjoy about it, why they feel there is conflict and how they feel about it, and whatever else surfaces that the person feels to talk about.
- At the end of the ten minutes the timekeeper should ring a bell and everyone should close their eyes and sit in silence for a few minutes before the next person begins.
- After everyone has gone allow a few minutes of silence before taking a group hug. Don’t try to analyze what anyone has said or try to fix anything. Just breathe knowing that everyone has had a chance to speak and be listened to.
- You don’t have to agree or necessarily come to resolution– sometimes it’s enough just to feel like you are heard and seen by your loved ones and the same for them.
If feelings are still ruffled after this perhaps let time work its magic. It’s my understanding that people don’t deliberately hurt their loved ones but that most of the time hurt feelings arise because people don’t understand each other or where they are coming from. Sharings can help create intimacy and support – not because someone is actually jumping in to fix things, but because love and support can be as simple as really listening and really being seen. I hope this helps with your holidays and throughout the year!
Recovering from the flood
Here it is Mid-November and its hard to believe that over almost two months have passed since the epic flood. My September Footnote never went out - and to be honest this month is the first month that I feel like I am back in full swing after much flood-related distraction. The flood. I live up Lefthand Canyon in Jamestown so it was intense. As I watched the small creek next to our house rise higher and higher that Thursday I really got a sense of the impermanence of life and how little control I actually have as mother nature showed up in full regalia. I spent four days thereafter, stranded without power, phone, internet or access to the outside world and then was finally helicoptered out by the National Guard - and I am ever so grateful and feel so lucky - truly blessed because so many of my neighbors and members of our community were so much more affected.
Here I am being escorted to safety after my helicopter ride off the mountain - Luke was eager to put that experience behind him.
Landing in Boulder, I was so fortunate to have a good friend invite us and our 4-legged friend to stay at her house. I received such an outpouring of love and encouragement from so many dear friends and family. I was truly touched. I am finally back home as Boulder County has jerry-rigged a road that allows residents access up the Canyon and in settling back in up here I would like to acknowledge our community. My friend's neighborhood in North Boulder was hit pretty hard and soon after the flood there were busloads of volunteers from the University going door to door to help muck out basements, etc. My friend Heidi Lawrence organized a group of volunteers to help the hundreds of families that were displaced from her children's school in Longmont - and still had time to reach out to me to see if I was okay. A total stranger brought a generator to a neighbor up here allowing her to stay in her home until the power was restored. Dear friends of mine came all the way from Magnolia though Golden to take me to lunch the day after I was evacuated just to give me a hug and some moral support. These are a few of the myriad examples of how our community came together to help one another. I could go on and on but instead will just say - every gesture of caring and generosity that I experienced both first hand and through the grapevine touched me deeply. I am proud to be a part of this Colorado Community.
I hope that all of you who were affected by the flood are making progress in getting back to "normal". Instead of a legal topic of interest this month, I am just sending out my gratitude to all. If you have any questions of a legal nature related to the flood and its legacy - give me a call. I would be happy to answer questions as a way of giving back!
With Warm Regards,
Tanya aka Arani
Tanya R. Shimer LLC
Important Documents Locator and Contacts
Clients always ask me how to store their estate planning documents and other important papers once their estate plan is done. I always recommend that they fill out the attached Important Document Locator and Contact Sheet as a part of this process so that family members and friends know who to contact and where to locate important records if necessary. I also recommend that they store their estate planning documents as follows:
Originals. Your original Will should be kept in a safe place, preferably in a fireproof safe or safe deposit box. Your original powers of attorney can be kept in your reference notebook. If you have revised or updated your documents, any old/former documents—including any copies—should be shredded.
Reference Set. If I did your estate plan, you have been provided with a reference set of your documents in an estate planning binder, creating complete set for your records. The copy of the will in this binder is not signed—you have only one valid, executed will, which you should keep pursuant to #1, above. If you decide to provide anyone with a copy of your will, be sure to copy the unsigned, reference will and not the original, signed will.
Copies for Agent. You should provide your agents with copies of your executed Powers of Attorney, both General and Medical. This will enable them to have the documents and act upon them without the necessity of obtaining copies once a disability or other unfortunate circumstance occurs. They should also be told about your complete estate planning binder (if you have one) and where it is located.
Copies for Physicians. You should also provide your physicians with copies of your executed Medical Power of Attorney and Living Will. They will then be able to keep these important documents in your files so that your agents will not have to search for them in the event of illness or accident.
Copies for Home. For clients living alone, especially aged clients, I recommend that copies of your Medical Powers and Living Will be kept in a readily accessible location such as your refrigerator or freezer in the kitchen, along with a note on the refrigerator door indicating that the documents may be found inside. First responders are taught to check the refrigerator door for important medical and pharmacological information. Finding the Medical Power of Attorney and Living Will along with other such information will make their treatment decisions easier, and better insure that your dignity is protected.
Fill out the Important Document Locator and Important Contact Information forms that follow. Keep them in a safe but obvious place such as the inside of a desk drawer or kitchen cabinet near the telephone. This will help your family members and friends in the event of an emergency and also might result in you feeling more organized and in control of your life!
Important Documents Locator and Contacts
DOCUMENT
LOCATION
NOTES
Durable Power of Attorney
Medical Power of Attorney
Original Last Will and/or Trust Documents
Living Will/MOST declaration
Property Deeds
CD Certificates
Personal Banking Accounts
Promissory Notes
Automobile Registrations
Birth, Marriage and Death Certificates
Medical Insurance
Passports
Retirement/Pension Accounts
Life Insurance Accounts
Credit Card Accounts
Stock and Bond Certificates
Long-term care insurance
Safety deposit box information/key
Internet accounts and passwords information
IMPORTANT CONTACTS
NAME
TELEPHONE NUMBER/EMAIL
Agent for health care power of attorney
Agent for general durable power of attorney
Person named as personal representative in will
Attorney
Accountant
Insurance Providers
HomeAutoLife InsuranceLong-term Care
Primary Care Physician
AdultsChildren
Personal friend/housesitterfamiliar with home
Veterinarian
Child care provider
Children’s school contact
Children’s local guardian
Children’s preferred babysitter
If you have a hard time printing these sheets I am happy to email you a copy either as a PDF or as a word document that you can customize to suit your needs. Just send me an email and let me know.
Traveling in India - how it helped me become a better attorney - a few snapshots
I admit this is a cacophony of photos and there is no "theme" tying them together - and that too is India. These are just a few of a myriad of photos - chosen randomly - and if you double-click on them you'll get an enlarged view. Enjoy!
Are your personal assets protected from your business liability? Business Foundation Checklist
For the last six months I have been a part of a wonderful business- coaching group by Cheri Ruskus of the
Besides affording me the opportunity to learn and share with an amazing group of women entrepreneurs, I also have a new perspective and much better understanding on how to run my business from a business perspective rather then a lawyer's perspective. I am grateful and most pleased because I am sure that it will help me advise my clients better in running their businesses as well.Many of my clients own businesses and/or rental properties. I encourage them to meet with me on a yearly basis to review their business compliance and or landlord obligations - with the goal of making sure that their
personal assets
(such as their residence, savings, retirement, etc.) are protected should anything happen related to the business or rental property. If you don't have a proper business legally set up for either a business you are running or properties you are renting-- then your personal assets are at stake and up for grabs if your business or rental incurs liability. If you do have a proper legal foundation and your business is properly recognized, your personal assets will most likely be protected should something happen. I am always happy to meet with business owners and or property owners to review their business compliance needs and make sure their personal assets are protected. Check out the business compliance checklist below - for a quick self review.
Business success is not just about creativity and breaking through - its also about planning and having a solid legal foundation
Business Foundation Check List
Does your business follow these simple steps:
- Have you filed the appropriate documents with the secretary of state and if so are they kept up to date?
- Do you have a working operating agreement or bylaws for your company and is your company notebook current?
- Do you use a bank account (usually a checking account) in the name of your entity?
- Can you ensure that you can document all moneys put into your entity in return for your ownership.
- Is it clear that any interactions your entity has with other commercial enterprises or individuals that you are acting on behalf of your entity and not as an individual?
- Do you use letterhead on all of your correspondence and contracts?
- Do you include the entity designation ("Inc.," "Limited," "Ltd.," "LLC") whenever possible on business identifiers such as business cards, advertisements, etc.?
- Do you sign documents in your representative capacity, and not as an individual:
YOUR ENTITY NAME ______________________________________________
by: YOUR NAME, YOUR TITLE (Manager, President, Owner, etc.)
- Have you ensured that all assets that are meant to be owned by your company are titled in the name of your entity and not in your name personally.
- Are you careful to never commingle the funds or assets of your entity with your personal funds and assets. If you need to fund the operations of your company with your personal assets, document the transfer as either a loan or a contribution to the capital of your entity. If you need to use assets of the company for personal reasons, distribute the assets out of the company to yourself first as income, profit distributions, or a return of your capital contribution?
- Have you held your annual meetings - yes - annually?! This is one of the first things a judge will look for in deciding whether to allow a creditor or other to go after your personal assets.
Five Criteria to help choose a Medical Power of Attorney
In completing your POAs its important to choose an appropriate agent. Here are five criteria to think about in relation to choosing an agent for your medical power of attorney.
1. Personal belief: Since the concept of withholding artificial-life support runs contrary to the teachings of some religions and is a very personal decision, it is helpful to find a healthcare agent who understands your feelings in this regard and whose own beliefs are not completely contrary to your own.
2. Communication: It is important to choose someone you are comfortable speaking with about your health care wishes and it should be clear to you that not only do they understand them but they will be able to communicate these to your health care providers and family members if necessary.
3. Practical reality: Its critical that the person you choose is willing to accept responsibility and agree to act as your agent - "ready and able to serve".
4. Voice: In choosing an agent be sure that they will be able to speak up and stand firm on your behalf - even if faced with physicians who are advising otherwise or other close family members who disagree.
5. Availability: Make sure this person is likely to be accessible and capable of serving as your agent well into the future.
How to choose a guardian for your children - 10 tips to help make this decision
Naming Guardians For Your Children: 10 Criteria to Help Clarify This Most Important Decision
1. Relatives: In considering such an important decision - look beyond the most obvious choices. Make a list of all the people you know who you would trust to take care of your children. You don't need to limit your list to close family members. While siblings and parents can be excellent choices, consider also extended family members who are old enough to raise your children - cousins, aunts, uncles, nieces, and nephews.
2. Friends: can make excellent guardians as well -so to the above list, consider adding close friends, the parents of your children's friends (who most likely have quickly become your friends, as well), even teachers or child care providers with whom you and your children have a special relationship.
3. Financials: Don't overemphasize the size of someone's home. Don't eliminate anyone from consideration because you don't think they have the finances to take care of your children. You should be able to take care of the expenses associated with raising your children through appropriate life insurance. In fact, if necessary, you can instruct your trustee to provide funds for your chosen guardian to build an addition to their home or move to a larger home to accommodate your children.
4. Nurturing Environment: Ask yourself who will provide the most loving, nurturing, supportive environment for your kids. Consider who on your list would truly love your children if appointed their guardian. If they have children of their own, how will your children fit in with family? Who do you see your child with - day in and day out - back and forth to school, summer holidays, sports events, doctors appointments, hugs, etc.
5. Values. Ask yourself who on your list most closely shares your values with respect to your religious beliefs, moral values, child-rearing philosophy, educational values, and social values.
6. Practical considerations. How would raising children fit into their lifestyle?
--If someone you are considering is older, do they have the necessary health and energy?
--Do they have other children? How would your children get along with theirs? How close do they live to other important people in your children's lives.
--If a couple divorced, or one person died, would you be comfortable with either of them acting as the sole guardian? If not, you need to specify what you would want to happen.
7. There is no such thing as "perfect." Most likely, no one on your list will seem perfect, but if you truly consider what matters to you most, you will make the right choice. Trust your instincts. If one couple or person meets all of your criteria, but doesn't feel right, don't choose them. By the same token, if someone feels much more right than any of the others on your list, there's a good reason for it. Make your primary choice and a secondary choice. It's essential that both you and your spouse agree.
8. Consider selecting a temporary as well as a permanent guardian. Temporary guardians may be appointed if both parents become temporarily unable to care for their children - for example, as the result of a car accident. Depending on your choice for permanent guardians, you may want to designate different people to act as temporary guardians. If your choice for a permanent guardian lives a considerable distance away, choose someone close by to serve as temporary guardian. If you're temporarily disabled, you'll want your children close by. And you won't want their lives unnecessarily disrupted by moving them to a new town and school. If you have no relatives or close friends nearby, consider families of your children's friends.
9. Talk with everyone involved. If your children are old enough, talk with them to get their input as well. And be sure to confer with the people you'd like to choose, to ensure they're willing to be chosen and would feel comfortable acting as guardians.
10. Follow through. Once you've made your choice, there are steps you can take to make sure the potential guardians you've chosen will have the guidance and support they need.
--Create a set of guidelines to convey information about your children, your parenting values and your expectations for your children.
--Make sure your estate planning is complete and that you will have the funds to provide for your children's care in trust. This also enables you to set out the terms of the trust in advance (at what ages money should be distributed and for what expenses).
--Keep your guardian choice up to date - if something changes in regards to your choices - make sure your documents are updated.
I hope this information helps clarify this most important decision. The most important thing to remember really is that if you don't make this decision - someone else may end up trying to decide this for your children - for you.
Medical Power of Attorney: Your Agent and You!
Medical power of attorney: When choosing an agent for your medical power of attorney for health care its important to select someone who will respect your wishes for the care and control of your body should something happen to you. They need to have a good idea of what your feelings and beliefs are in this deeply personal area. Here are some areas to explore with your agent about you:
Lifestyle: How essential are these in terms of your quality of life?
1. Being able to eat and drink 2. Being able to enjoy entertainment, movies, TV, reading, listening to music 3. Physical movement and being able to get outdoors 4. Attending outside activities such as church or other programs 5. Avoiding pain and discomfort 6. Being with loved ones 7. Being self‐sufficient and able to communicate
8. Spirituality. How much of your comfort and support comes from your spiritual practices such as personal pray, meditation, or interaction with a spiritual or religious community?
9. Last days. What are your wishes in regards to the last days of your life? For instance, quiet meditation, lots of friends, or close family members only.
By getting your powers of attorney in place and conveying your wishes to your agent your wishes will be honored and your loved ones spared confusion and last minute guess work.
Disclaimer -- Content is general information only. Information is not provided as advice for a specific matter, nor does its publication create an attorney-client relationship. Laws vary from one state to another. For legal advice on a specific matter, consult an attorney.
Do I need a Revocable Living Trust? or Will a Will do...
Estate Planning: The Use of a Last Will versus a Revocable Living TrustMany clients come in asking about setting up a Trust as opposed to a Will in terms of their estate planning. Trusts are very trendy right now, especially in states like California where the probate process is expensive and complicated.
Each of these estate-planning tools has pros and cons. The following information is meant to make sure you understand the differences and enable you to make an informed decision about which estate-planning method is right for you.
When a Last Will is used, it does not become an effective document until death. A Last Will requires the property of the decedent to go through the probate process prior to being distributed. Probate is the process by which a Last Will is presented to the court, the court authorizes the representative of the estate to take possession of the decedent’s assets, the creditors of the decedent are notified, and, approximately four months later, the representative pays the creditors and then distributes the assets to the intended beneficiaries.
When a Revocable Living Trust is used, the assets titled in the name of the trust are not part of the decedent’s estate, and do not need to go through the probate process. As soon as the individual who set up the trust dies, the alternate trustee named in the trust is entitled to take control of the assets without any court involvement. Importantly, this process also happens when the person who set up the trust becomes incapacitated.
Colorado has an informal probate process. The probate court is minimally involved with the process, and thus most probates here are both inexpensive and efficient. However, as noted above it does take about four months to complete the process. In a Revocable Living Trust based plan, the immediate ability of the alternate trustee to access the assets in the trust upon the incapacity or death of the settlor of the trust is definitely an advantage if time is a consideration.
If you choose to use a revocable-living trust based estate plan, your personal residence, vacation home, and investment accounts and other types of property are usually transferred into the name of the trust, requiring retitling of these assets, but tax advantaged retirement accounts are usually not. This process of retitling the assets is one of the two disadvantages of using a Revocable Living Trust when compared to a Last Will-based estate plan. The second disadvantage to the Revocable Living Trust is that it is typically more expensive than a Last Will based plan.
I generally recommend a Last Will based estate plan here in Colorado because of our informal probate process. I recommend a Revocable Living Trust based plan to my clients who meet any of the following criteria:
➢ complex asset management needs or diverse types of investment assets since Revocable Living Trusts provide a very strong asset management tool; ➢ property outside the state of Colorado (since such property can be placed in the Trust, no additional probate proceeding will need to be opened in the other states); ➢ the need for privacy (Wills are filed at death and become pseudo-public documents) or the wish that their at-death disposition not be public; and ➢ impending disability (at the disability of the individual, the alternate trustee will be able to take control of the assets in the trust).
Feel free to call or email me if you have further questions regarding the differences between these two types of plans.
Can I provide for my pets in my estate plan?
Clients often ask me if they can provide for their pets in their estate plans. The answer is yes – Colorado does allow for Pet Trusts – and many people use these as a means to ensure that their beloved companions (dogs, cats, horses, exotic birds etc.) are provided for if they are either disabled or upon their death.
Pet Trusts are extremely useful in a number of situations. For most household pets, Pet Trusts are used as just-in-case planning, very similar to naming a guardian in your Will for minor children. For pets with a very long lifespan, such as many types of tropical birds, Pet Trusts may be viewed as a necessity so that pet owners can provide certainty of care for pets that will almost certainly outlive their human companions. Pet Trusts are also useful to provide continuity of care for pets in the event of the disability of a human companion.
In general, trusts need certain types of beneficiaries before they will be recognized and upheld by the law. Typically, these types of beneficiaries have been either ascertainable individuals or charities. Therefore, historically, it was difficult to provide for the continuing care of pets after death. In the past, estate planning to care for pets involved leaving assets to a trusted friend or family member with the understanding that they would use the assets to care for the pet. Although this method has certainly worked, there have undoubtedly been times when the pets have not been taken care of in the way that their human counterparts would have expected or the pets have not been cared for at all, with the trusted friend or family member using the assets for self-benefit instead of the benefit of the pet. Finally, the most obvious choice of an individual to care for a pets physical needs may not be the best choice of an individual to manage the assets placed in the trust for the benefit of the pet.
Several states now have legislation that specifically authorizes the establishment of trusts to benefit pets and other animals. Colorado law, reflected in Colorado Revised Statues Section 15-11-901, allows a pet owner to put aside assets and ensure that the assets are used for the benefit of the pet.
My best friend, Luke.
PET TRUSTS IN COLORADO
Many Colorado estate planners draft their Pet Trusts to allow pet owners to leave assets for the benefit of their pets as well as to allow the pet owners to designate both a Pet Guardian to manage the care of the pet and a Trustee to manage the assets in the trust and make appropriate distributions to the guardian. Because of this separation of duties, the creator of the Pet Trust can ensure that the best person is selected to care for the pet and the best person is selected to manage the assets funding the trust for the pet.
SPECIFICS OF THE COLORADO PET TRUST
Under Colorado law, Pet Trusts operate in the following manner:
- Assets can be placed in trust for the benefit of a pet.
- The trust can be written so that if the pet is pregnant at the time the trust goes into effect, the trust will remain in force to provide care for the offspring of the pet.
- The trust will remain in effect until there is no living animal covered by it, unless an earlier termination is provided for in the trust itself.
- The trustee is not allowed to use any portion of the principal or income of the Pet Trust for the trustee’s benefit or in any way that is not for the benefit of the animals covered by the trust.
- The creator of the trust has complete freedom to designate where any assets left in the trust upon its termination should go.
- The appropriate use of the trust funds can be enforced by a Trust Protector designated in the trust instrument, by any person having custody of an animal for which care is provided by the trust, by any beneficiary designated by the trust creator to receive assets at the termination of the trust, or, if none of the above, by an individual appointed by a court if someone makes an application to the court to review the use of the funds.
- If there is ever a situation in which a Pet Trust comes into effect but there is no trustee able or willing to serve, a court has the authority to designate a trustee and make other orders and determinations so that the intent of the creator of the pet trust will be carried out.
WHEN TO SET UP A PET TRUST
- Pet Trusts can be set up at death, at disability, or immediately upon signing a trust instrument.
- Pet Trusts are typically set up in a Last Will so that upon the death of the creator of the Will, the Pet Trust is established and funded.
- However, Pet Trusts can also be established in a Revocable Living Trust so that upon the disability of the creator of the Revocable Living Trust, a Pet Trust will be established to provide for continuity of care of the pet or pets.
- Additionally, at any other time, any individual can set up a stand-alone Pet Trust to establish a Trustee and fund a trust for the benefit of a pet.
Copyright Tanya R. Shimer LLC. All Rights Reserved.
Colorado Law and Pre- and Postnuptial Agreements.
What is a Marital Agreement? Pre- and postnuptial agreements (marital agreements) are important tools for couples to manage their assets and avoid conflict, both before and during their marriage and as part of the process of separating if the marriage ends. Prenuptial agreements are contracts executed prior to marriage and post-nuptial agreements are contracts made between the spouses during the marriage, that allow the parties to agree to and delineate the division of assets should a legal separation, divorce or death occur. These agreements are legally binding contracts which can protect both parties by creating a plan that if conscionable will be enforceable and predictable – thereby taking the potential conflict out of the difficult process of separating.
Every couple should consider a marital agreement as a potential tool to enable them to plan for the future, protect their assets and avoid conflict. Couples who do not have a marital agreement are subject to the provisions of the Colorado Uniform Dissolution of Marriage Act, which will determine their rights in the case of separation or divorce; and the Colorado Probate Code, which will determine the rights of the surviving spouse and other heirs, upon death if proper estate planning has not been completed.
How Colorado Law Works for Couples without a Marital Agreement Individuals that are married and living in Colorado have statutory rights if the marriage terminates by divorce. Colorado law defines two types of property that can exist during the marriage. Separate property is the property owned prior to the marriage, and all property received by gift or inheritance during the marriage. Marital property includes all property earned by either spouse during the marriage, including deferred compensation; and all income and appreciation on separate property, whether realized or not - regardless of how the property is titled. When a couple divorces in Colorado, each party keeps his or her separate property - if it was kept separate during the marriage and not co-mingled with marital property. If the parties cannot reach an agreement about the division of property during a divorce, the court is directed to divide the marital property in the proportion that it deems just after considering all relevant factors.
In addition to dividing marital property, a divorce court can award maintenance if it finds that one of the parties lacks sufficient income or property to provide for his or her reasonable needs. The amount and length of a maintenance order is determined by the court’s just determination after considering all relevant factors. Colorado courts have been unpredictable in awarding maintenance and thus it could have a significant financial impact on both parties. Why Should Couples Consider Marital Agreements Marital agreements can be used to define the parties’ rights in regards to the appreciation of separate property and all marital property accrued during the marriage. Couples who have children from previous marriages are able to provide for these children and protect their inheritance in the event of a divorce from a subsequent spouse. If one of the spouses owns a business, a marital agreement can ensure that the new spouse does not become entangled in the company should a separation occur. Marital agreements identify, define, and resolve legitimate issues related to the couples’ finances, estate plans and business interests – while the parties are free of the emotional turmoil created during a separation process. Advantages of premarital agreements for both parties include: Avoiding litigation costs Protecting against fears of family members such as children from previous marriages Protecting family assets Protecting business assets Protecting against creditors Predetermined and thus predictable disposition of property
Contents of a Colorado Prenuptial Agreement A marital agreement may address the following issues: 1. Spousal Maintenance: whether it is waived, set at a predetermined amount, based on years of marriage, etc. 2. Division of property and debts: whether assets acquired after the marriage are kept separate; whether future appreciation on existing assets are separate property; how to apportion pension funds, retirement benefits or other intangible assets. 3. Inheritance: a spouse may agree to waive his or ability to take an elective share of the estate thereby protecting children from a previous marriages’ legacy. 4. Rights and obligations under insurance policies, employee benefit plans, and other assets such as these. 5. Waiver of Rights Upon Death: a common provision in prenuptial or postnuptial agreements designed to prevent probate laws or prior wills from trumping the terms of the prenuptial or postnuptial agreement. 6. Alternative Dispute Resolution: a provision requiring the complaining party to mediate or arbitrate any dispute and preventing him or her from filing a costly lawsuit. 7. Attorney’s fees: who pays for attorney’s fees if the parties are unable to abide by the terms of the agreement. If the parties have children during the marriage, a marital agreement cannot legally bind either party to agreements made regarding child support, physical custody, parenting time and decision-making authority. The parties may agree on proposed terms for these issues but these terms would be subject to the court’s later approval.
What does a Marital Agreement do? A marital agreement allows the engaged or married couple to negotiate around Colorado law in order to define separate property and marital property. By means of a marital agreement you can define separate property to include all income from and appreciation on your separate property. You can also protect your earned income by defining that as separate property, so that assets purchased or investments made with your earned income will remain your separate property upon divorce. Thus, by altering the definitions of separate property and marital property from those provided by statute, you can protect not only the core of your separate property which you amassed prior to your marriage, but also the earnings from and appreciation on that property. If you wish to restrict your spouse's rights upon divorce to your earned income, including retirement benefits, you can do that as well. Spouses can waive their rights to maintenance payments in a marital agreement or they can agree to a certain amount of maintenance to be paid to the less wealthy spouse in the event of a divorce. However, if at the time of a divorce, the court determines that the spousal maintenance terms in the agreement are unconscionable, the court can render that portion of the prenuptial null and void.
Finally, a marital agreement can allow couples to determine what rights a surviving spouse will have upon the first spouse's death. For example, in many marital agreements, each spouse waives his or her right to reject the terms of the others' will and elect to take up to half of the estate outright (depending on the length of the marriage). Such a waiver ensures that the estate plan of the first spouse to die will be honored by the surviving spouse.
Why Couples Choose to Alter Spousal Rights Provided by Law. Couples choose to alter their statutory rights for a number of reasons. Some people simply wish to have certainty as to property rights and maintenance payments upon a potential divorce. By entering into a marital agreement, they eliminate much of the financial uncertainty associated with a divorce. A fairly negotiated marital agreement can provide some assurance to the wealthier spouse as to the extent of the financial impact of a divorce and provide the less wealthy spouse with some guarantee to his or her entitlement to property distribution and maintenance.
People who have children from a previous marriage may wish to protect their assets for these children's benefit. A marital agreement that addresses the rights of a surviving spouse can protect the deceased spouse's estate for the benefit of children from a previous marriage as well.
Sometimes parents encourage their adult children to enter into a marital agreement in order to protect assets owned by the child that were accumulated by previous generations. Usually, a wealthy family wants to ensure that assets that have been gifted to adult children do not become vulnerable to the spouse in a divorce situation.
Enforceability of a Marital Agreement. Colorado adopted the Colorado Marital Agreement Act in 1986. This statute allows the waiver of statutory property and maintenance rights of spouses either before or during a marriage. Thus, the general statutory rule is that marital agreements are valid and binding contracts. However, one party can have the agreement voided if he or she did not sign it voluntarily or if the other party did not provide a fair and reasonable disclosure of his or her property and financial obligations.
When one spouse challenges the validity of a prenuptial, the court will look at several factors to determine whether the agreement should be enforced. The two most important factors the court considers are the adequacy of the financial disclosure and whether either party was under duress when signing the agreement. Full and complete disclosure of all assets is required prior to the signing of the prenuptial agreement because a party cannot knowingly waive rights unless he or she has sufficient information about the potential value of those rights. Duress is reviewed as a question of fact and the court may consider factors such as the timing of the agreement (i.e., was the spouse forced to sign it right before the wedding, etc.) and whether each spouse had independent counsel. It is extremely important that both parties have their own legal adviser during the preparation and execution of a marital agreement.
© 2012 Tanya Shimer All Rights Reserved.
Estate Planning Basics: What should be covered in any estate plan
Foundational Planning – the Basics
The foundation of all estate plans contains:
Last Will or a Revocable Living Trust,
a Financial Power of Attorney,
a Medical Power of Attorney, and
a Living Will.
The combination of these documents allows you to designate how your assets and health will be managed if you ever become disabled. Further, the Last Will or Revocable Living Trust provides for the distribution of your assets upon your death – to the individuals or organizations you choose and in the manner you decide.
A good estate plan with careful planning should allow you to:
During life:
--Manage and enjoy your assets as completely as possible
--Transfer assets to the next generation while minimizing transfer tax upon the transfer or at death.
--Meet your charitable or religious contribution goals
If you become disabled:
--Have at least one primary and one alternate financial decision maker legally recognized and ready to assist you.
--Have at least one primary and one alternate medical decision maker legally recognized and ready to assist you
Upon death:
--Designate who will receive your assets at your death
--Specify how those individuals will receive your assets
--Designate a guardian and trustee for your minor children
--Minimize any transfer taxes
--Ideally and with careful planning, replace any value lost to taxes
Why do I need a will?
Wills are important. A will ensures that whatever personal belongings and assets you have will go to family or beneficiaries you designate. Without a will, the court makes these decisions.
If you have children, a will ensures that your wishes regarding your children will be clear. You will be able to designate a guardian for your children's daily care. By completing a will, you will also be able to name a trustee who will be responsible for taking care of your financial resources for your children until they are adults.
Depending on the size of your estate, careful estate planning in a will can create significant tax benefits. If you have a will and other foundational estate planning documents taken care of you will also avoid subjecting your family and loved ones to confusion and anxiety at a difficult because your wishes will have already been made clear to them.
What does a will allow me to do?
In your will, you can name:
Your beneficiaries. You may name beneficiaries (family members, friends, spouse, domestic partner or charitable organizations, for example) to receive your assets according to the instructions in your will. You may list specific gifts, such as jewelry or a certain sum of money, to certain beneficiaries, and you should direct what should be done with all remaining assets (any assets that your will does not dispose of by specific gift).
A guardian and trustee for your minor children. You may nominate a person to be responsible for your child’s personal care if you and your spouse die before the child turns 18. You may also name a trustee—who may or may not be the same person—to be responsible for managing any assets given to the child, until he or she is 18 years old or older, depending on your wishes.
A personal representative. You may nominate a person or institution to collect and manage your assets, pay any debts, expenses and taxes that might be due, and then distribute your assets to your beneficiaries according to the instructions in your will. Your personal representative serves a very important role and has significant responsibilities. It can be a time-consuming job. You should choose your personal representative carefully.
Asset protection/tax planning. A properly designed estate plan should:
-- protect your assets, your person, and your business from a possible future disability;
--protect your assets from liability during and after your life;
--distribute your assets tax efficiently at your death; and
--ensure that assets left to young beneficiaries are left inside of a structure such as a trust that will provide management and protection of these assets for them.
Special needs planning. Planning for a family member with special needs is often a difficult endeavor for families and is especially important for families with significant assets. Many planning techniques are available to ensure that a loved one with special needs is provided for without jeopardizing their ability to receive the public benefits they need and to protect them from fraud.
© 2012 Tanya Shimer All Rights Reserved.
Medicaid Planning and the Use of Trusts
Colorado Statutory Exception Trusts and Third-Party Special Needs Trusts: Planning with and using these tools in Colorado for Medicaid qualification and continued benefit
Medicaid is a public assistance program funded jointly by each state and the federal government.
Medicaid covers various medical services and is a needs-based program where eligibility is determined by three requirements:
1. The Categorical requirement, which refers to the medical needs of the individual;
2. The Income requirement, which limits the amount of income an eligible recipient may receive; and
3. The Resource requirement, which requires that to qualify for Medicaid benefits, the applicant must have no more than $2,000 in countable assets.
Medicaid Qualification
If an individual has more than $2,000 in countable assets, which would otherwise disqualify that individual from receiving Medicaid benefits, the individual may, with proper planning, convert assets to qualify.
First, the individual may convert “countable assets” into “exempt assets” by shifting value. This can be accomplished by, among other things, improving the home, purchasing a vehicle equipped for wheelchair transfer, or purchasing irrevocable pre-paid funeral services. Additionally, with enough time, an individual who may need to qualify for Medicaid in the future can give away assets to family members or others without adverse qualification consequences. It is important to consult with a trusted professional about these alternatives before implementing them.
The Resource Requirement and the Use of Trusts in Medicaid Qualification
There are two situations that could hinder the ability of an individual to either qualify for Medicaid or continue to receive benefits. The first situation arises when an individual with more than the maximum amount of “countable assets” needs to qualify for Medicaid and does not have the ability or time to convert enough of these assets to “exempt assets”. A Statutory Exception Trust may be a solution for this situation. The second situation arises when an individual has or will qualify for Medicaid but has family or friends who wish to provide assets to the individual for care. Without planning, the assets put aside for the Medicaid recipient would diminish the amount of value Medicaid would provide over the life of the recipient. A Third-Party Special Needs Trust may be a solution in this situation.
Statutory Exception Trusts
In those instances where an individual will have more than the $2,000 allowed under the resource requirement at the time of Medicaid qualification, one of two statutory exception trusts may enable the individual to become Medicaid qualified. These trusts operate by allowing a Medicaid applicant to place assets in trust, for the applicant’s future benefit, yet have the assets excluded from his or her countable assets. The first such trust is known as a Disability Trust and must be established for the benefit of a disabled individual who is under the age of sixty-five. At the termination of the trust, the remaining assets must be used to repay Medicaid for benefits received during the beneficiary’s lifetime. The second trust is known as a Pooled Trust and must be managed by a non-profit corporation such as The Colorado Fund for People with Disabilities. There is no age restriction as with the disability trust. At the termination of the trust, the remaining assets are retained by the trust for charitable purposes. Therefore, although the statutory exception trusts allow an individual with assets in excess of the $2,000 maximum under the Medicaid resource requirement to qualify for Medicaid benefits, the individual’s assets may not be preserved for transfer to family members at the individual’s death.
The Third-Party Special Needs Trust
In those instances where a family member or other person wishes to provide benefit to the Medicaid recipient, a Third-Party Special Needs Trust may be used to eliminate the reduction in benefits (or disqualification) that would otherwise happen if such person put assets aside directly for the care of the Medicaid recipient. These trusts are powerful tools to allow a loved one to ensure assets are made available for the disabled individual, during that person’s lifetime. After the death of the disabled individual, the remaining assets in the trust are not used to repay Medicaid or for charitable purposes but instead may be moved to other family members. The assets in these trusts are not available for Medicaid purposes because the trust is discretionary) and the trust is written so that it places a prohibition on distributions to the Medicaid beneficiary that would affect Medicaid qualification.
There is a third trust, known as a “Miller trust” or “Utah Gap Trust,” that can be used to provide an exception to the income requirement.
Planning with these trusts should only be initiated by families using the guidance of a trusted and experienced professional.
© Tanya Shimer. All rights reserved.
Once my estate plan is done, what do I do with my documents to ensure safe keeping?
Its important to store your legal documents I a safe place where your representatives can find them.
Many clients have asked how to care for their estate planning documents once they are completed, I suggest the following:
1. Originals. The originals are very important. They should remain in your care and control, and neither I nor anyone else should be entrusted with them. Your original signed will should be kept in a safe place, preferably in a fireproof safe or safe deposit box. Your original powers of attorney can be kept in your reference notebook. In addition, any old/former documents—including any copies—should be destroyed. Many clients ask whether copies of former estate planning documents should be retained “just in case.” The answer is no. All such documents should be destroyed to avoid any confusion as to their validity. Use your best judgment in storing and protecting these documents.
2. Reference Set. If I did your estate plan, you have been provided with a reference set of your documents in your binder. These are yours to be read and to which you may refer with any questions or concerns. The unsigned copy of your will in this binder is not to be signed or presented as a valid document—you have only one valid, executed will. If you decide to provide anyone with a copy of your will, be sure to copy the unsigned, reference will and not the original, signed will. With the quality of today’s copiers, I do not wish to be presented with a document purporting to be an original and have any questions as to whether or not it is the original or a copy.
3. Copies for Agent. You should provide your agents with copies of your executed Powers of Attorney, both General and Medical. This will enable them to have the documents and act upon them without the necessity of obtaining copies once a disability or other unfortunate circumstance occurs.
4. Copies for Physicians. You should also provide your physicians with copies of your executed Medical Power of Attorney and Living Will. They will then be able to keep these important documents in your files so that your agents will not have to search for them in the event of illness or accident.
5. Copies for Home. For clients living alone, especially aged clients, I recommend that copies of your Medical Powers and Living Will be kept in a readily accessible location such as your refrigerator or freezer in the kitchen, along with a note on the refrigerator door indicating that the documents may be found inside. First responders are taught to check the refrigerator door for important medical and pharmacological information. Finding the Medical Power of Attorney and Living Will along with other such information will make their treatment decisions easier, and better insure that your dignity is protected.
© 2012 Tanya Shimer All Rights Reserved.
Are your personal assets protected from your business liability?
Forming a business is only the first step in ensuring that your personal assets are kept separate from you business interests. - This is important because if you do not keep these separate there can be dire consequences- if something happens in your business to create a liability issue your personal assets may end up being up for grabs as well. Following the guidelines below will help to create and maintain your business as a separate entity- protecting your family and home from any business liability. First, it is extremely important to understand why Corporations, Limited Liability Companies (LLCs), and Limited Partnerships (LPs) are used to conduct business. These entities are legally created and regulated by state laws and thus are legally separate from the individuals who own them. To retain this separation between the owners and the entity, certain legal requirements and formalities regarding the maintenance and operation of the entity must be followed. If these requirements are not met, the separation between the owners and the entity may be disregarded—sometimes with disastrous consequences.
WHAT’S AT STAKE? If certain legal formalities and requirements are not met, your Corporation, LLC, or LP could be disregarded as an entity separate from its owners or managers and as a result your personal assets may be at risk for your business liability. The following is a brief summary of some of the consequences that may result:
- Loss of Limited Liability: If you were to ask a randomly selected group of small business owners why they elected to do business using one of the above legal entities instead of operating as a sole proprietor or general partnership, the answer you are most likely to hear is that they want to protect their personal assets from the liabilities of the business. This is the number one reason business owners incorporate or organize an LLC or LP. If you do not treat your business entity as separate from yourself, it is possible that the business entity will be disregarded at some time in the future by a court or government agency like the Internal Revenue Service. The result could be financially devastating. If the business entity could not pay its debts, whether from regular operations or from liability attaching as a result of lawsuit or government action, the personal assets of the owners would be made available to the creditors of the business entity.
- Continual / Perpetual Existence: Because business entities are legally separate from their owners, the death or disability of the owner does not mean that the business is dissolved (in the case of death) or unable to conduct business (in the case of disability). Changes is ownership and management are specifically addressed in the by-laws of corporations, in the operating agreements of LLCs, and in the partnership agreements of LPs.
- Access to Capital: A business entity is a more attractive vehicle for investors than a sole proprietorship. Private investors are able to invest in business entities with confidence. This confidence comes from being able to invest and receive either a debt obligation (which may be convertible into equity under certain circumstances) or a portion of the ownership of the entity.
- Potential Tax Benefits: The owners of corporations and LLCs taxed as corporations may be able to receive tax benefits by sheltering business income in the entity—thus reducing the owners’ overall tax liability.
- Commercial Credibility: American consumers are more accustomed to purchasing goods and services from businesses than sole proprietors. This instant reputability is another leading reason individuals use a legally separate entity as the business vehicle of choice.
- Employee Benefits: Under certain circumstances, the ability to offer more comprehensive and deductible fringe benefits may result from the use of a business entity.
THE CHALLENGE All too often, the requirements of just keeping a small business running leave little time for the owner or owners to engage in corporate/LLC/LP “housekeeping” and “maintenance.” Without some level of diligence on the part of the owners, a gradual merger of the life of the business and the life of one or more of the owners or managers may begin. When this happens, the separate legal status of the business entity begins to fade.
WHAT YOU NEED TO DO TO PROTECT YOURSELF AND YOUR BUSINESS The following steps should be taken by all business entities, even those owned and managed by only one person.
Compliance with the Secretary of State:
As an initial matter, you should ensure that your business entity is in good standing at all times with the Colorado Secretary of State. You will receive an annual report from the Colorado Secretary of State each year (for entities other than Limited Partnerships). It is important that you complete and return this annual report with the required fee. Even if your entity is delinquent in annual filings or other matters, it is usually very easy to bring your entity into compliance with the Secretary of State. Typically, this will involve the filing of a delinquent annual statement or, possibly, reinstating your entity if it has been deemed dormant or inactive.
Internal Governance in Compliance with State Law:
It is important to keep your internal entity governance up to date. This step can not be over emphasized in its importance. Being in good standing with the Secretary of State is only the initial step in having your business entity recognized as separate from you (as the owner) at some future time whether in court or by a government agency. The most important action item is to ensure that your business document binder remains up to date. (This binder is universally referred to as the “Corporate Book” irrespective of whether you own a corporation, LLC or LP.) The binder should contain your entity’s organizing documents (articles of incorporation or articles of organization), the operating documents (by-laws, operating agreement, or partnership agreement), evidence of ownership (signed stock certificates, membership certificates, or partnership certificates), transfer ledgers, resolutions and agreements to extraordinary actions (opening bank accounts, signing a lease, making tax decisions, appointing officers, etc.), minutes of each annual meeting (discussed further below), tax documents (such as the Request for Employer Identification Number on Form SS-4 [the tax identification number for domestic business entities], S-Corporation Election on Form 2553, Tax Returns on the applicable forms [1065, 1120, 1120-S, etc.]), required permits and licenses for your type of business, leases, loan documents, and any other documentation that is evidence of your respect for the separation of the business entity from yourself.
Annual Meeting:
Reviewing the actions of the entity and planning for any upcoming changes on an annual basis is important. The documentation of this annual review/meeting in the Corporate Book is one of the first items a future judge will review if ever asked to disregard your entity.
You should also make sure the following tasks are accomplished and used in the daily running of your company:
- Open a bank account (usually a checking account) in the name of your entity.
- Ensure that you can document all moneys put into your entity in return for your ownership.
- In any interactions your entity has with other commercial enterprises or individuals, make certain that it is clear that you are acting on behalf of your entity and not as an individual.
- Use letterhead on all of your correspondence and contracts.
- Include the entity designation (“Inc.,” “Limited,” “Ltd.,” “LLC”) whenever possible on business identifiers such as business cards, advertisements, etc.
- Always sign documents in your representative capacity, and not as an individual:
YOUR ENTITY NAME
______________________________________________ by: YOUR NAME, YOUR TITLE (Manger, President, Owner, etc.)
- Ensure that all assets that are meant to be owned by your company are titled in the name of your entity and not in your name personally.
- Never commingle the funds or assets of your entity with your personal funds and assets. If you need to fund the operations of your company with your personal assets, document the transfer as either a loan or a contribution to the capital of your entity. If you need to use assets of the company for personal reasons, distribute the assets out of the company to yourself first as income, profit distributions, or a return of your capital contribution.
If you have any legal questions about how to conduct your business, please do not hesitate to contact Tanya R. Shimer LLC for guidance.
What does a will actually do?
Your will is a legal document in which you give certain instructions to be carried out after your death. For example, you may direct the distribution of your assets (your money and property), and give your choice of guardians for your children. It becomes irrevocable when you die. In your will, you can name:Your beneficiaries. You may name beneficiaries (family members, friends, spouse, domestic partner or charitable organizations, for example) to receive your assets according to the instructions in your will. You may list specific gifts, such as jewelry or a certain sum of money, to certain beneficiaries, and you should direct what should be done with all remaining assets (any assets that your will does not dispose of by specific gift). A guardian and trustee for your minor children. You may nominate a person to be responsible for your child’s personal care if you and your spouse die before the child turns 18. You may also name a trustee—who may or may not be the same person—to be responsible for managing any assets given to the child, until he or she is 18 years old. A personal representative. You may nominate a person or institution to collect and manage your assets, pay any debts, expenses and taxes that might be due, and then distribute your assets to your beneficiaries according to the instructions in your will. Your personal representative serves a very important role and has significant responsibilities. It can be a time-consuming job. You should choose your personal representative carefully. Asset protection/tax planning. A properly designed estate plan will, at a minimum: (i) protect your assets, your person, and your business from a possible future disability; (ii) protect your assets from liability during and after your life; (iii) distribute your assets tax efficiently at your death; and (iv) ensure that assets left to young beneficiaries are left inside of a structure such as a trust that will provide management and protection of these assets for your beneficiaries.
Why do I need a will?
Wills are important. Regardless of how much or how little money you have, a will ensures that whatever personal property and assets you do have will go to family or beneficiaries you designate. Without a will, the court makes these decisions.If you have children, a will is essential, to ensure that your wishes regarding your children will be clear. In your will, you will be able to designate a guardian for your children who will be responsible to care for your children should something happen to you. In addition to naming your children’s guardian, by completing a will, you will also be able to name a trustee who will be responsible for taking care of your financial resources for your children until they are adults. There are other benefits to having a will, and depending on the size of your estate careful planning can reap significant tax benefits. You will also avoid subjecting your family and loved ones to confusion and anxiety at what is already a difficult time by making your wishes clear.
© Tanya Shimer. All rights reserved.
TRS Law Blog
The purpose of this blog is to provide information to my clients and others about estate planning and small business law. I hope that the blogs posted here are informative and help people to understand their legal rights and responsibilities. I am always happy to answer questions about any of the topics posted here, either by telephone or by email. If you have a question about a topic related to the areas of my practice let me know. Warm Regards,
Tanya