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Why Self-Help Is a Recipe for Estate Planning Disaster

Seek an Experienced Professional

Many people who decide to prepare estate planning documents consider a range of self-help options. Admittedly, the market is glutted with DIY alternatives for estate planning, such as software programs, online legal document services, paralegals, typing services, and pre-printed forms from stationary stores to name a few examples. Although the price associated with these DIY options can seem appealing, the ultimate cost can be disastrous in terms of frustrated intentions, avoidable tax liabilities, and increased estate administration costs incurred because the documents are not drafted properly.

Estate planning is a complex area of practice that requires knowledge of many areas of law, including property law, tax law, health care law, family law, probate law, real estate law, and more. Given the complex nature of estate planning, pro-forma solutions built on boilerplate forms is an extremely risky proposition. This blog highlights a number of common self-help traps that an experienced Virginia Beach estate planning attorney can assist clients in avoiding an estate planning disaster.

Failing to Engage in Proper Planning

Without legal representation, many people draft a simple will or a skeleton type living trust though the document does not fit their legacy succession needs. When a strategy is not employed to develop a comprehensive estate plan, key needs are often overlooked, such as a durable power of attorney that authorizes someone to manage your financial affairs in the case of incapacity. When developing an estate plan becomes a matter of filling in blanks on a pre-printed form or typing in responses to generic computer prompts, the actual ‚??planning‚?Ě part of creating an ‚??estate plan‚?Ě is overlooked. While you might decide a living trust is preferable to a simple will, for example, this does not mean that you do not need a will at all. Even if you construct your estate plan around a living trust, you still need a pour-over will that provides instructions for distribution of any assets that are not transferred to the living trust.
Lack of Nuance and Awareness of State Law

Although much of the language in a certain category of estate planning documents might be similar, the language needs to be carefully tailored to meet your unique situation, including your specific assets, family structure, intentions, and other factors. If a template is used that does not allow for significant customization to fit your unique circumstances, your assets may pass to the wrong individual, or the document could be vulnerable if it is contested. Further, every state has specific requirements in terms of the substance, formalities and enforcement of various types of estate planning documents. If you rely on cookie cutter DIY estate planning documents, there is a risk that your estate planning devices might run afoul of state law. If you make a living trust the foundation of your estate plan to avoid probate, you might force your loved ones to deal with the additional cost, delay, and lack of privacy associated with probate proceedings if the trust is not properly set up.
Transferring Real Property to a Minor

While many parents or grandparents elect to leave a significant portion of their estate, including real property to minors, this is a process that must be done carefully. Execution of a quit claim deed to a 12-year-old grandchild is not advisable. This approach can result in your grandchild being saddled with a hefty gift tax liability, but there are ways around this trap for the unwary. Since minors cannot legally execute contracts, simply deeding a home over to a minor means that the owner of the property lacks the legal ability to execute a contract to secure a mortgage on the property or execute a sale to a third-party. The bottom line is that careful planning is needed when leaving assets to minors.
Lack of Follow Up

Many people think that estate planning is a one-time process involving the drafting of documents. Contrary to this belief, estate planning is an ongoing process. If you experience a significant life event like a divorce, the birth of a child, incapacitating injury, or remarriage, you might need to significantly revise your estate planning documents. Similarly, there are steps that must be taken to fully implement estate planning devices that go beyond document preparation. One of the most common errors among DIY estate planners involves failing to fund a living trust. The process of funding a trust essentially refers to the process of undertaking the necessary procedures to transfer assets into the trust. When someone fails to properly transfer assets into the trust, the asset might need to be handled through the probate process, which can defeat a key reason for establishing the trust.

The Value of a Special Needs TrustĖThe Estate Planning Dilemma Facing a Disabled Loved One

Do you have a loved one with a physical or mental disability, you face a difficult dilemma?

You might wish to provide financial assistance to your loved one for special tools and resources, which can improve your family member‚??s quality of life.¬† However, this altruistic act can go terribly wrong.¬† The current system designed to deliver public benefits for medical care and financial assistance to the disabled often penalizes such acts of love and support.¬† These types of financial gifts from family members frequently disqualify a disabled individual from receiving needed public benefits.¬† This unintended consequence of an act of kindness by a loved can be circumvented through the use of a special needs trust.

The traditional approach to handling legacy succession for disabled loved ones was to ‚??disinherit‚?Ě the child receiving government assistance based on financial means testing.¬† The disabled family member‚??s share was left to another family member (usually a sibling) with the understanding that the funds would be used for the care and support of the disabled family member.

Inadequate Estate Planning

Leaving assets or money to a disabled loved one can disqualify a disabled individual from receiving Medicaid, SSI, state benefits, and other forms of government assistance that are subject to means testing.¬† Even a well-crafted ‚??spendthrift‚?Ě trust will not prevent this harsh outcome because these types of government assistance are referred to as ‚??necessary services.‚?̬† Trust law permits public entities that provide these services to reach the assets of a properly drafted spendthrift trust.

Protect Yourself and Your Family with a Special Needs Trust

Special needs trusts provide the opportunity for parents to leave assets to a disabled child without exposing the assets in the trust to the reach of government entities or disqualifying the recipient from public assistance.  For example, this type of trust allows a parent to make financial resources available to a disabled family member without risking access to health care benefits throughout Medicaid or Supplement Security Income (SSI) for disabled low-income individuals with special needs.

The special needs trust (SNT) involves a legal relationship between the individual (grantor) who gifts funds to a trustee solely for the benefit of the disabled beneficiary.¬† The basic objective of the fund is to protect the assets in the trust, which is to be utilized to enrich the beneficiary‚??s (i.e. disabled family member‚??s) quality of life.¬† The traditional approach without use of a special needs trust posed potential issues because the sibling managing the funds might experience legal problems with creditors, suffer an incapacitating injury, or die before the disabled child.

Care must be exercised in the creation and administration of any type of special needs trust. The language of the trust agreement must clearly articulate the intent of the grantor that the assets are not to belong to the disabled child.  The document also must indicate that the funds are intended for limited and specific purposes for the benefit of the disabled loved one.  The person designated as the trustee must fully appreciate the rules governing this type of trust to avoid undermining the legal status of the trust as an independent legal entity.  The process of drafting a special needs trust should be undertaken by an experienced Virginia Beach estate planning attorney because government authorities could closely scrutinize the trust.

If you have questions about setting up a trust that will provide financial support for a disabled child without threatening the child‚??s eligibility for public benefits, you should speak to an experienced Virginia Beach estate planning lawyer.

A Durable Power of Attorney: A Critical Part of Your Virginia Estate Plan

Certainly, the will gets the most attention when people think about a basic estate plan, but you could also benefit from a durable power of attorney. In many situations, this is actually the most important part of your total estate plan, because it gives you the opportunity to appoint another individual to manage your finances if you become incapacitated.

The best reason to have a durable power of attorney in Virginia is by considering the repercussions of going without one: a family has to wait for the court to appoint a guardian or conservator to handle your affairs, and this costs money and time. Furthermore, an ideal person to manage your affairs might not be appointed, so often it‚??s better to have someone you select yourself.

There are some myths surrounding durable power of attorney that lead some people to avoid them altogether. It‚??s important to bear in mind that giving another individual power of attorney does not invoke your rights in any way in the short term: it simply gives another individual that power in the event that you are not able to do so. As long as you are competent, you have the power of revoke the power of attorney.

Even if you are not sure that you have a preferred individual you‚??d like to appoint, you might consider a limited durable power of attorney that would nominate an individual to serve as your guardian with the oversight of the probate court. Using a guardianship or conservatorship can help with this. Having a durable power of attorney, or considering how guardianship and conservatorship can help, may give you peace of mind that someone is helping you manage your affairs in the event that you are no longer able to do so.

Estate planning in Virginia can be tricky. That‚??s why it pays to have an experience estate planning attorney like Linda Shin to help you traverse this complicated aspect of the law. Call her today at 757-490-7802 for an appointment.

How to Include a Living Trust in Your Estate Planning

Life can change in the blink of an eye. Now, you have an estate, believe or not, and it is made up of all the things that you own whether it be a home, car, accounts, investments, etc. Despite the size it may, you must make sure it is taken care of correctly when you are no longer present. Estate planning in Virginia can entail quite a bit, as you have options as to how to take care of it. One of these options is living trust; if it is an option you are considering, there are a few ways to go about including it in your planning.

Contact an Attorney

Having to complete a part of your estate planning is like other legal matters that require the expertise of a lawyer. In this case, with a living trust, it also requires writing the living will and not a poorly writing will writing on your own. An expert is able to complete the specific technical language that the legal field requires to run smoothly. They will get on your way to planning your estate.

Consider What Property to Include

In planning the living trust, what you have consider is the property you will include in the trust. As a result of no probate fees, the living trust can allow you to include those most valuable property items for a lower cost. You will need to think about including house, real estate, stock, precious metals, etc.

Complete Appropriate Paperwork

To complete the living trust, it is not only necessary to write the document but to also address the deeds that must be added to the trust. Each time you add an asset to the trust you must sign a new deed. This whole process may seem burdensome but in the end, the benefits of having living trust in your estate planning can pay off.

Estate Planning for Children with Special Needs

Estate planning with normal circumstances can be difficult enough, but new challenges arise when you are planning your estate around children with special needs. Every parent wants the best for their children even after the parent has died. This is why proper estate planning in Virginia is necessary and almost mandatory when dealing with a special needs child.

Make Room for Aid

One of the unique challenges of planning your estate for special needs children is making sure you leave enough for your child to live comfortably while budgeting around state and federal aid. A child‚??s eligibility for need-based aid is jeopardized when there is too much left for them in a will.

Create a Trust  

There are three types of special needs trusts you can engage in to secure your special needs child‚??s future when estate planning in Virginia. The first, and most common, is the third party trust, which is drafted for intended use in the future while leaving no current funding. This option is the most popular because it is the least intrusive and most forgiving when it comes to qualifying for aid. A first party trust is generated from gifted money or court settlements. The underlying issue is the payback clause wherein if the special needs individual dies, the government is able to seize their assets. The third option is a pool trust which is made for people who intend to put their money in which various other people after which the trust will be controlled via a nonprofit organization. Planning for children with special needs requires even more attention and careful consideration.

Checklist: Must-Haveís For Healthcare Directives

Using a medical power of attorney or advance healthcare directive is a wise decision in your Virginia estate planning because it outlines your wishes and gives your family clarity about what you want to happen to you. This guideline will help you ensure that you are prepared to put your advanced healthcare directive together.

Discuss with your physician the various options for health care towards the end of your life. If you are towards the end of life, do you want to be cared for in a nursing home, at your own home, or a hospital? These are important decisions that you must make.

Make sure that your key family members or other loved ones are familiar with your decisions. You should never assume that they know what you want, and this is a critical reason to have this discussion even if you have not put your advanced healthcare directive together yet.

Discuss your advanced healthcare directive with your Virginia estate planning attorney. It‚??s never a good decision to attempt to do this on your own, because only an experienced professional is knowledgeable about state-specific requirements that make your document is valid.

Consider carefully who you will designate as the individual to carry out the wishes you explain in your document. You will need to ensure that this individual, as well as other key people, are clued into your preferences. This might include close friends, family, and your doctor. Your copy of your Virginia advanced healthcare directive should be kept in a safe location where it can easily be accessed. If there‚??s another individual you can name in the event of a medical emergency, this is a good decision, too.

Contact Linda Shin of the Cedar Law Center today at 757-490-7802 to craft your advanced medical directive document and to find out about educational seminars that will help you gain a better understanding of estate planning in Virginia.

 

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