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Estate Planning and Administration

Estate Planning

 

State laws are very specific about what can and can't be in a will, trust, or medical or financial power of attorney; who can and can't serve as a personal representative, trustee, health care surrogate or attorney in fact; who can and can't be a witness to a will, trust, or medical or financial power of attorney; and what formalities must be observed when signing a will, trust, or medical or financial power of attorney. Contact us for sound legal guidance and preparation of your estate planning needs.

Wills

Most people know about wills and their basic purpose – to ensure that one’s hard earned assets go to the right beneficiaries when an individual passes away. However, wills can be used for a lot more than simply dictating who gets a person’s antique lamp collection. Here’s a list of some of the very valuable things a will can do: 

  • List who gets what. The most common purpose for a will is to name which individual, or group of individuals, will receive particular property belonging to a person when he or she passes away.
  • Name guardians for children. Typically, a will is the document that states who should raise a person’s children if something happens to the parent. The will also usually contains at least one alternate in the event the first choice cannot serve.
  • Establish trusts. In many cases, a person may not want a child or loved one to receive all of the property that they are inheriting at once. Or a person may want the beneficiary to be able to use the property for a while, and then for it to pass on to someone else. In that situation, an individual may choose to use a trust. A trust holds property on someone else’s behalf. In wills, trusts are commonly established for minor children, so that someone else can manage the children’s money until they reach a certain age when their parents believe they will be able to manage it. Trusts are also commonly used in second marriage situations – a person may want to allow a spouse to have access to certain property while the spouse is living, but for that property to ultimately pass to the decedent’s children. Trusts can help accomplish that goal.
  • List funeral wishes. Although this is also done in other documents too, a will commonly states whether an individual wants to be buried or cremated, and where the body should be buried or the ashes should be spread. Sometimes, wills contain other information about funeral wishes too like where it should take place and even what readings might be recited.
  • Tax planning. Wills can be great tools for tax planning in order to avoid federal or state estate or inheritance taxes. This can sometimes be accomplished by setting up various trusts.
  • Naming executors and trustees. A will usually states who will be the executor of an estate, which is the person who will carry out a deceased individual’s wishes listed in the will. Wills can also name the trustee of any trusts established in a will, which is the person who will be in charge of carrying out the instructions of the trusts.

While wills can serve as powerful estate planning tools, they are only effective if they are properly drafted to suit the needs of each individual. An estate planning attorney can review all your options with you and establish a will in a manner that ensures your wishes will be honored.

TRUSTS

Many people have preconceived notions about trusts and believe that they are only for high net worth individuals who wish to leave large trust funds to their children. However, this is far from the truth; trusts can be invaluable tools in the estate plans of millions of individuals.

Trusts are simply an arrangement in which one party holds property on behalf of another party. Trusts are created by the person doing the estate planning (the settlor), who authorizes another person (the trustee) to manage the assets for the benefit of a third party (the beneficiaries). There are many reasons for establishing trusts including tax minimization or providing for the needs of underage beneficiaries.

Some types of trusts that may be useful in estate planning are:

Trusts for minors

Many people leave money to their children or their grandchildren in a trust as part of a comprehensive estate plan. This is typically done to ensure the money is there for the children’s benefit while they are younger-for support, education, medical expenses, etc. Once the children reach a certain age or achievement level (such as obtaining a bachelor’s degree), they may receive money from the trust to do with as they please.

Many parents put off estate planning because they do not think they have substantial assets to protect. This outlook is common among young adults who think they have plenty of time to accumulate wealth and plan for it at a later date. However, in failing to create a proper estate plan, many parents cannot adequately protect their children. All parents, with or without significant assets, should have an estate plan in place to set forth their wishes for their children which includes, among other things, the nomination of a guardian in the event that they have an untimely passing while the child is still a minor.

  • In your estate plan, you can appoint a guardian (also known as a conservator) for your children upon your passing. If there is no plan in place, the court will appoint a guardian based on what it deems to be in the best interest of your children. Unfortunately, the court-appointed guardian may not be your first choice and in some cases, he or she may actually be your last choice. From just a few brief hearings, it is often impossible for the courts to determine who is best suited to care for your children in your absence.

    In some cases, where no clear-cut guardian is named, children may be sent to Child Protective Services to remain with a foster family until the court decides on a suitable guardian to take on the responsibility. For many parents, this scenario is reason enough to create an estate plan to protect their children.

    Nominating a guardian can be a very difficult decision and one that should not be made without serious consideration. The individual selected should provide stability for your children in the difficult transition and ultimately continue care in a fashion with which you are comfortable. You should consider the following traits and circumstances when determining who is best suited to raise your children:

    • Age: You will want to make sure they are old enough to provide proper care (at least 18 years of age in most states) but young enough to remain in good health until your children reach adulthood.
    • Commitment: Ensure that the guardian does in fact want to take on this responsibility.
    • Temperaments: Carefully consider what kind of person will mesh well with your children. If you have young or energetic children, you may want to make sure the guardian exhibits patience.
    • Religious and moral beliefs: Do they share the same values as you and your spouse? Would they instill these in your children?
    • Nature of existing relationship with children: You will want to make sure that this person has a good bond with your children and that there is a mutual comfort level.
    • Location: If you prefer that your children not move out of their current home and/or school district, you will want to make sure that the appointed guardian resides close to you and intends to stay there until your child reaches the age of majority.
    • Does the proposed guardian have other children? If so, does the guardian have enough time and adequate resources to devote to his/her own children in addition to yours?
    • Finances: Can the candidate financially provide for your child if there are not enough funds available from your estate?

    In the event that the guardian you have selected in your estate plan is unable to raise your children upon your passing, you should have two alternates who also meet the aforementioned criteria. This will ensure that your children are left in the hands of trusted relatives or friends and not in the court system.

    If you have multiple children and would like to appoint different guardians to raise them separately, you may also outline multiple guardian appointments in your estate plan, however, this situation is generally not ideal for close siblings.

    All appointed guardians must ultimately be approved by the court at the time of the parents’ passing. If a biological parent is still living, they will usually be named the guardian of the children unless evidence is presented that this individual is unfit to provide care to the children in question.

  • Special needs trusts-If you currently provide care for a child or loved one with special needs (such as mental or physical disabilities), you must have contemplated what may happen to him or her when you are no longer able to serve as the caretaker.While you can certainly plan for them to receive money and assets upon your passing, such a bequest may prevent them from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medicaid programs. If you do not leave them any assets, the benefits provided by these and other programs are generally limited to the bare necessities such as food, housing and clothing. As you can imagine, these limited benefits will not provide the resources that would allow your loved one to enjoy a richer quality of life. Fortunately, the government has established rules allowing assets of the individual with special needs to be held in trust, called a “Special Needs” or “Supplemental Needs” Trust without resulting in disqualification for SSI and Medicaid, as long as certain requirements are met.

  • Our law firm can help you set up a Special Needs Trust so that government benefit eligibility is preserved while at the same time providing assets that will meet the supplemental needs of the person with a disability (those that go beyond food, shelter, and clothing and the medical and long term support and services of Medicaid). The Special Needs Trust can fund those additional needs. In fact, the Special Needs Trust must be designed specifically to supplement, not replace public benefits. Parents should be aware that funds from the trust cannot be distributed directly to the disabled beneficiary. Instead, it must be disbursed to third parties who provide goods and services for use and enjoyment by the disabled beneficiary.

    The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved one’s eligibility such as:

    • Annual check-ups at an independent medical facility
    • Attendance of religious services
    • Supplemental education and tutoring
    • Out-of-pocket medical and dental expenses
    • Transportation (including purchase of a vehicle)
    • Maintenance of vehicles
    • Purchase materials for a hobby or recreation activity
    • Funds for trips or vacations
    • Funds for entertainment such as movies, shows or ballgames.
    • Purchase of goods and services that add pleasure and quality to life. This may include computers, videos, furniture or electronics.
    • Athletic training or competitions
    • Special dietary needs
    • Personal care attendant or escort     

    Special Needs Trusts are a critical component of your estate planning if you have disabled beneficiaries for whom you wish to provide for after your passing. Generally, Special Needs Trusts are either stand alone trusts funded with a separate asset like a life insurance policy or they can be structured as a sub-trust in your existing living trust.

  • Marital trusts. Married couples sometimes include trusts in their wills, or separately, for the benefit of their spouse, typically for two reasons: (1) taxes, and (2) property protection. In previous years, marital trusts were needed for some couples to take advantage of estate tax exemptions, and they may be needed in the future as the laws are expected to change. Marital trusts can also protect property from a spouse to ensure that it ultimately goes where it needs to go. For example, a husband with grown children from a previous marriage may decide to let his wife use his property after he passes, but puts it into a trust so that after she passes away it goes to his children.
  • Revocable living trusts. Revocable living trusts are documents completely separate from wills although they often work hand in hand with wills to carry out the decedent’s wishes. Revocable living trusts are primarily used to avoid probate in states where probate is particularly cumbersome, or in a few other instances, such as when a person owns real estate in multiple states.
  • Irrevocable life insurance trusts. Irrevocable life insurance trusts (or ILIT’s) can be used in order to move a person’s life insurance proceeds outside his or her estate for estate tax purposes.
  • Spendthrift trusts. Spendthrift trusts are generally established to protect the beneficiaries’ assets from both themselves and creditors. These trusts usually have an independent trustee which has complete discretion over the distribution of assets of the trust.

In short, there are many different types of trusts, each of which can be customized to serve a valuable purpose in accomplishing the wishes of those making gifts or planning an estate. An experienced estate planning attorney can help you assess your finances and goals to determine the best vehicles to preserve your wealth and your legacy. 

Medical Decision Making Documents

A Living Will allows you to express your wishes regarding medical care and end of life treatment decisions.  A Healthcare Proxy on the other hand appoints an individual to make those decisions for you. A Healthcare Proxy allows an agent to make healthcare decisions on behalf of the Principal when the Principal cannot make those decisions him or herself.

Asset Preservation Planning

Many individuals are increasingly using the legal system to unjustly deprive others of their life's work. In fact, millions of new lawsuits are filed in the United States every year, many of which are frivolous or settled for sums greater than the actual liability.

Business owners, professionals such as doctors, dentists, lawyers, accountants, and property owners in particular should be aware of the risks associated with conducting their business, practicing in their respective fields, and taking responsibility for others. Without a massive overhaul of our legal system, the risk and potential liability will continue to rise much like it has over the past few decades. 

Assets can be at risk due to a number of vulnerabilities, including:

  • Professional malpractice liability
  • Personal liability of corporate officers and directors
  • Lawsuits by former business partners
  • Personal injury suffered on your premises
  • Personal injury resulting from a motor vehicle accident
  • Liability as guarantor for the debts of another
  • Liability arising from misconduct

Our law firm assists professionals, small business owners, property owners, and other clients in establishing well designed asset protection strategies to safeguard assets against potential litigation, judgments, liens, and fraud. Insurance alone does not always adequately protect against all of these threats.  We help clients protect their wealth using a variety of strategies including the use of special trusts, business entities and other legal arrangements.

 Shielding Assets from Creditors

Our firm has expertise in assisting clients with the arrangement of their finances, real property and other assets in a manner that minimizes their exposure to potential creditors.  We have extensive experience establishing trusts, determining insurance needs, creating estate plans and organizing investments and business entities. We strive to provide our clients with a high level of confidence that their accumulated assets will be protected.

 A creditor who initiates litigation against a person who has placed his or her assets into a trust, a foundation, or other entity may find that there are very few collectible assets actually owned by the person they wish to sue. Assets owned by a properly structured trust, foundation, or other entity are generally not subject to claims against their beneficiaries. In addition, placing assets into an asset protection entity may also remove those assets from a person’s taxable estate.

Probate and Estate Administration

When a loved one passes away, his or her estate often goes through a court-managed process called probate or estate administration where the assets of the deceased are managed and distributed.  If the assets of the deceased were owned through a well drafted and properly funded living trust, it is likely that no court-managed administration is necessary, though the successor trustee needs to administer the distribution of the deceased's assets.  The length of time needed to complete the probate of an estate depends on the size and complexity of the estate and the local rules and schedule of the probate court.

The probate process for each estate is unique, but usually involves the following steps:

  • Filing of a petition with the proper probate court.
  • Notice to heirs under the will or to statutory heirs (if no will exists).
  • Petition to appoint Executor (in the case of a will) or Administrator for the estate.
  • Inventory and appraisal of estate assets by Executor/Administrator.
  • Payment of estate debt to rightful creditors.
  • Sale of estate assets.
  • Payment of estate taxes, if applicable.
  • Final distribution of assets to heirs.

When someone with standing objects to a will or a trust, the estate might have to be litigated.  This is sometimes referred to as a “will contest.” These disputes can be complex and should be navigated by attorneys with expertise in such matters, including an intimate knowledge of probate court rules and procedures.

Probate Courts

Typically, if a will is involved, a probate court will determine whether or not it is valid and should be executed. If the will is found to be valid, the court will oversee the allocation of assets and will ensure that the named executor carries out the wishes of the decedent in a lawful and timely manner. The court also oversees the distribution of assets if the testator, or deceased person, died intestate, without a valid will.

Who Can Contest a Will?

A protesting party may only contest a will if he or she falls within one of two categories.  First, those mentioned in the will, known as the will’s beneficiaries, may formally challenge it.  Alternatively, if the challenger stands to inherit according to laws of intestacy (such as a family member), but is not named in the will, or is expressly disinherited, he or she may seek to contest.  If one is not named as a beneficiary in the will and is not a family member eligible for inheritance, known as a distributee, he or she may not pursue a formal challenge.

In order to successfully contest a will, the protesting party must prove that the will is invalid.  There are several scenarios under which a will may not be admitted, including but not limited to:

  • Undue influence - If the testator altered his or her will under the threat of force or other persuasion, it is said that he or she was under undue influence.
  • Mental incapacity - Similarly, if the testator is shown to have been in an incapacitated or otherwise impaired mental state at the time the will was executed, it may be considered void. 
  • Will does not follow procedure - A will may be contested if it was signed in the absence of witnesses, was not signed by the testator, or is otherwise not executed according to the law.
  • The will was revoked - If the will was revoked after it was signed, it will also be considered void.  A subsequent will, marriage, or legal action may also revoke a will.
  • Fraud - Lastly, the protesting party can contest if he or she has proof that the testator was deliberately misled by a third party. 

When there is no will

In instances where no valid will exists then intestacy laws which indicate what assets each family member is to receive go into effect.  Typically, inheritance is granted to family members according to a specific order.  Once the decedent’s debts have been paid from the estate, the remaining assets are distributed among the testator’s spouse, children, parents, siblings, grandparents, grandchildren, or great-grandchildren.  Family members who are half-blood relatives are generally considered as if they were full-blood.

Without the guidance of an estate litigation attorney, the rules involved in the process can be overwhelming and lead to serious errors or even forfeiture of one’s rights.  Whether you are an executor, trustee, beneficiary or someone improperly left out of a will, contact our estate litigation attorneys to discuss your options.


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| Phone: 877-541-5570

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