Frequently asked questions
What should I expect when creating an Estate Plan?
Estate planning is seldom something that can be achieved in a single appointment. An initial appointment with an attorney generally consists of reviewing existing (potentially outdated) estate planning documents, identifying family, property, and any significant life changes or events that have occurred. An attorney should guide the discussion to help identify estate planning objectives (relevant tax strategies, legacy strategies). Be frank, open and honest with an attorney. The second step often includes some investigative work on the client’s part if they need to confirm the value or titling of their property. Documents will then be drafted by an attorney and reviewed by the client for accuracy. The next step is finalizing the documents. The final step is a meeting with the attorney and staff to execute the documents, and assist with changing beneficiary designations, if necessary.
How do I prepare for an Initial Estate Planning Appointment?
When an attorney meets with clients to discuss an estate plan, the attorney often has several objectives. First, the attorney needs information about the client, his or her family and loved ones. Second, the attorney needs to know what the client owns, how the property is characterized, and how it’s titled, including whether there are designated beneficiaries, including ”Pay on Death” or ”Transfer on Death” beneficiaries. How property is characterized and titled affects how it is distributed at death. Third, the attorney wants to know what the client’s goals are and what is important to the client. What is important to each person varies considerably and can change over time. Sharing these things not only establishes a foundation for a thoughtful discussion about a client’s estate planning goals, the client also demonstrates the required capacity to execute estate planning documents.
What is a Fiduciary?
A fiduciary has a duty to always act in the best interest of the principal (you). Paramount among the many responsibilities of the fiduciary is the duty of loyalty owed to the principal. Fiduciaries are often granted broad authority; therefore, persons named to act in such roles must be trustworthy. Alternate persons or fiduciaries acting jointly may be necessary. Naming a person as a fiduciary is not a gift; the responsibilities can be time consuming, burdensome, and complex. Have a conversation with the person(s) you intend to name as your fiduciaries. Specifically, inquire whether they are willing to assume that role and whether they understand your intentions. The following is a list and descriptions of various fiduciaries. A fiduciary is someone who makes decisions and/ormanages assets for you.
• Attorney-in-Fact:
an individual entrusted to make decisions for health-care and finances during life when the principal is
incapacitated.
• Personal Representative or Executor or Administrator:
an individual who administers an estate of a loved one at death.
• Guardian of Minor Children:
an individual who has custody/control of minor children.
• Trustee:
an individual entrusted with the holding, management and distribution of trust assets for the benefit of
oneself and/or others.
• Trust Protector:
An individual or entity who oversees the trustee’s actions and management of the trust assets, and who may
have authority to remove or replace the trustee.
• Attorney-in-Fact:
an individual entrusted to make decisions for health-care and finances during life when the principal is
incapacitated.
• Personal Representative or Executor or Administrator:
an individual who administers an estate of a loved one at death.
• Guardian of Minor Children:
an individual who has custody/control of minor children.
• Trustee:
an individual entrusted with the holding, management and distribution of trust assets for the benefit of
oneself and/or others.
• Trust Protector:
An individual or entity who oversees the trustee’s actions and management of the trust assets, and who may
have authority to remove or replace the trustee.
Why is there so much legalese?
Documents are drafted in such a way to (1) protect a client from a potential risk of harm from an adverse party or event, and (2) ensure a client’s intentions are expressed clearly and precisely. The best way to effect these dual purposes is to use legal language, terms, and phrases that have been tried and tested with the court and the IRS to withstand challenges. Estate planning attorneys draft language that is “legally clear” but this often creates legal documents which are much longer and contain more “legalese” than clients may prefer.
What happens if a Person Doesn’t Plan?
If a person becomes INCAPACITATED without a plan, RCW 7.70.065 provides “fall-back” provisions for delegating health-care decisions. Where a patient has not planned and is not competent to give informed consent, the health care facility and/or medical professionals may obtain informed consent from the following hierarchy of individuals: a court appointed guardian; an attorney-in-fact under a valid Durable Power of Attorney; (1) the patient’s spouse or state registered domestic partner; (2) the patient’s children who are at least 18; (3) the patient’s parents; and (4) the patient’s adult siblings. Importantly, where there is more than one in a class (ie: more than one child or sibling), the decision must be unanimous.
Unlike health-care decision making, there are no statutory “fall-back” provisions for delegating general/financial authority. If a person becomes INCAPACITATED without a plan, a family member, friend, or other interested person must petition the court to manage his or her financial affairs (pay bills, manage accounts). This person is called a “guardian” and is largely responsible for the day-to-day decision making of an “incapacitated person.” A guardian is required to file annual reports and accountings as to the incapacitated person’s finances and welfare with the court and seek approval from the court for his or her actions as guardian. While guardianship is necessary for protecting our community’s most vulnerable, it results in a loss of liberty, autonomy, and privacy. Guardianships are often costly because of the considerable liability involved.
If a person DIES without a plan, the laws of the State of Washington dictate who will receive the person’s property and who will act as the personal representative. This is known as an “INTESTATE” probate administration. Washington State law attempts to follow what most people would want. Nonetheless, failing to plan can cause delay, extra cost, and transfers of property to unintended persons.
Unlike health-care decision making, there are no statutory “fall-back” provisions for delegating general/financial authority. If a person becomes INCAPACITATED without a plan, a family member, friend, or other interested person must petition the court to manage his or her financial affairs (pay bills, manage accounts). This person is called a “guardian” and is largely responsible for the day-to-day decision making of an “incapacitated person.” A guardian is required to file annual reports and accountings as to the incapacitated person’s finances and welfare with the court and seek approval from the court for his or her actions as guardian. While guardianship is necessary for protecting our community’s most vulnerable, it results in a loss of liberty, autonomy, and privacy. Guardianships are often costly because of the considerable liability involved.
If a person DIES without a plan, the laws of the State of Washington dictate who will receive the person’s property and who will act as the personal representative. This is known as an “INTESTATE” probate administration. Washington State law attempts to follow what most people would want. Nonetheless, failing to plan can cause delay, extra cost, and transfers of property to unintended persons.
What is a Health Care Directive?
A Health Care Directive, often referred to as a “Living Will,” gives direction in advance about end of life care, and is conditioned on the occurrence of a future medical condition. RCW 70.122.030 provides statutory form language, but this language can be modified to fit a client’s unique wishes.
Where the use of life sustaining treatment only prolongs the moment of death AND where a person is (1) in a terminal condition where death is imminent; OR (2) in a permanently unconscious condition, a Health Care Directive can evidence a person’s wishes.
After executing a Health Care Directive with an estate planning attorney, it should be discussed with family and/or the person named as the health care agent (attorney-in-fact). It may also be something to share with a physician.
Where the use of life sustaining treatment only prolongs the moment of death AND where a person is (1) in a terminal condition where death is imminent; OR (2) in a permanently unconscious condition, a Health Care Directive can evidence a person’s wishes.
After executing a Health Care Directive with an estate planning attorney, it should be discussed with family and/or the person named as the health care agent (attorney-in-fact). It may also be something to share with a physician.
What is a Durable Power of Attorney?
A Power of Attorney is a document that allows the “principal” (the person executing the document) to name another person (“attorney-in-fact”) to make decisions to manage their affairs (health care and/or general/financial).
A Durable Power of Attorney lasts through incapacity. For this reason, a Durable Power of Attorney is often referred to as one of the most important estate planning documents to have in an Estate Plan.
It is important to remember that not all Power of Attorney instruments are the same. The scope and effectiveness of the document may be tailored to the principal’s specific circumstances and needs. The instrument may give only very limited authority or it may give broad authority, allowing the attorney-in-fact to do everything the principal could do. A Power of Attorney may be created for health-care decision making, general/financial decision making, or both.
Whether and when an attorney-in-fact has authority will be determined by the instrument. A Power of Attorney may be effective “immediately” or “springing.” If it is effective immediately, an attorney-in-fact has immediate authority to act on the principal’s behalf. If the Power of Attorney is “springing”, an attorney-in-fact will not have authority to act on the principal’s behalf until certain requirements are met.
A Durable Power of Attorney lasts through incapacity. For this reason, a Durable Power of Attorney is often referred to as one of the most important estate planning documents to have in an Estate Plan.
It is important to remember that not all Power of Attorney instruments are the same. The scope and effectiveness of the document may be tailored to the principal’s specific circumstances and needs. The instrument may give only very limited authority or it may give broad authority, allowing the attorney-in-fact to do everything the principal could do. A Power of Attorney may be created for health-care decision making, general/financial decision making, or both.
Whether and when an attorney-in-fact has authority will be determined by the instrument. A Power of Attorney may be effective “immediately” or “springing.” If it is effective immediately, an attorney-in-fact has immediate authority to act on the principal’s behalf. If the Power of Attorney is “springing”, an attorney-in-fact will not have authority to act on the principal’s behalf until certain requirements are met.
What is a Burial or Cremation Directive?
RCW 68.50.160 provides that absent written instructions signed by the decedent in the presence of a witness, the following individuals in the following order have the authority to direct the disposition of a decedent’s remains: (1) a designated agent, (2) a surviving spouse or state registered domestic partner, (3) a majority of surviving adult children, (4) surviving parents, (5) a majority of surviving siblings, and (6) a court-appointed guardian.
In Washington State, it is important to put wishes to be cremated in writing to avoid family conflict and delay.
In Washington State, it is important to put wishes to be cremated in writing to avoid family conflict and delay.
What is a Beneficiary Designation?
Beneficiary designations are often used for IRAs/investment accounts and retirement accounts and life insurance policies.
When a beneficiary is designated for an account or policy, the beneficiary designation, not the Will or Trust, controls how the asset/account is distributed. It is important that beneficiary designations coordinate with an estate plan. Failing to do so could defeat the overall estate planning objectives.
When a beneficiary is designated for an account or policy, the beneficiary designation, not the Will or Trust, controls how the asset/account is distributed. It is important that beneficiary designations coordinate with an estate plan. Failing to do so could defeat the overall estate planning objectives.
What is “Joint Tenant with Right of Survivorship”?
Assets held jointly with “right of survivorship” are not controlled by Will or Trust and often pass to the joint tenant(s) upon death, outside of the probate or trust administration. “Payable on Death” or “Transfer on Death” designations also transfer assets at death outside of a probate or trust administration. Careful attention must also be made to JTWROS as such designations could result in an unintended bequest.
What is a Revocable Living Trust?
A Revocable Living trust may serve as a substitute for a Will, but also allows for the management of assets during life. A trust provides for the transfer of assets upon death outside of a probate administration, but only if assets are held “in trust.” It is necessary to also have a Will to direct that assets outside of trust “pour” into the trust at death. Be aware, a Trust cannot name a guardian for minor children; only a Will can do that.
In Washington, assets held in trust are subject to the same state and federal estate and income taxes as assets held in an individual’s name and are not afforded any protection from creditors.
In Washington, assets held in trust are subject to the same state and federal estate and income taxes as assets held in an individual’s name and are not afforded any protection from creditors.
What is Community Property?
Washington State is a “community property” state. While living in Washington, any property acquired with earnings (or debt incurred) during a marriage, is characterized as “community property.” Therefore, each spouse or registered domestic partner has a one-half interest (or liability) in the whole. A common misconception exists, however, that at the death of the first spouse or registered domestic partner, the deceased spouse’s or state registered domestic partner’s assets will pass automatically to the surviving spouse or state registered domestic partner. In fact, a spouse or state registered domestic partner may pass their community property interest in an asset to anyone they want, including those individuals who are not their spouse or state registered domestic partner. While the surviving spouse or state registered domestic partner may be entitled to the decedent’s one half interest in community property under the intestate laws of succession, the transfer of the decedent’s one-half interest to the surviving spouse or state registered domestic partner will typically require some court administration.
What is a Community Property Agreement?
In Washington State, married couples and state registered domestic partners can contract as to the character of their property. They can also contract for the transfer of that property upon the death of the first spouse or state registered domestic partner, thereby avoiding a probate administration. A Community Property Agreement can be a useful tool to transfer a decedent’s assets to the surviving spouse or state registered domestic partner without commencing a court administration.
What is a Will?
A Will directs (1) how property is distributed at death, (2) how debts and taxes are to be paid, (3) who administers the “estate,” (or in other words pays the last expenses and distributes the assets), (4) who will become guardian(s) of minor child(ren), and (5) who will manage assets held in trust. In Washington State, there are specific, statutory formalities that are required for a Will to be valid. A Will may include several different types of testamentary trusts for the purpose(s) of (1) tax planning, (2) holding title to real property outside of Washington, (3) providing for a second spouse, and (4) providing for minor children and/or disabled or incapacitated beneficiaries.
What is a Gift List?
A gift list is a tool that directs the disposal of certain identifiable tangible personal property at death. A gift list is only valid if it is specifically referred to in a Will or Trust, and must be signed and dated. A gift list can be changed at any time without changing the Will or Trust, and without visiting an attorney.
What is a Special Needs Trust?
Special Needs Trusts or Supplemental Care Trusts are often used as a way of protecting the public benefits a beneficiary with disabilities may be receiving or may be entitled to receive in the future. The assets in these types of trusts may be used to enhance the beneficiary’s life without disrupting the public benefits the beneficiary is receiving for life’s necessities.
There are two types of Special Needs Trusts/Supplemental Care Trusts.
A third party special needs trust is a trust designed to hold the assets of someone other than those of the person for whom the trust is created. The terms of the trust may be included within the provisions of a Will. Alternatively, a separate instrument may be used. With this type of third party special needs trust, the assets do not belong to the beneficiary and therefore, there is no Medicaid payback upon the beneficiary’s death for any Medicaid benefits the beneficiary may have received during his or her life.
A self-settled/first party special needs trust is a trust designed to hold the assets of the person for whom the trust is being created. This type of special needs trust may require court approval and court reporting. With this type of self-settled/first party special needs trust, the have belonged to the beneficiary and therefore, there IS a Medicaid payback upon the beneficiary’s death for any Medicaid benefits the beneficiary may have received during his or her life.
There are two types of Special Needs Trusts/Supplemental Care Trusts.
A third party special needs trust is a trust designed to hold the assets of someone other than those of the person for whom the trust is created. The terms of the trust may be included within the provisions of a Will. Alternatively, a separate instrument may be used. With this type of third party special needs trust, the assets do not belong to the beneficiary and therefore, there is no Medicaid payback upon the beneficiary’s death for any Medicaid benefits the beneficiary may have received during his or her life.
A self-settled/first party special needs trust is a trust designed to hold the assets of the person for whom the trust is being created. This type of special needs trust may require court approval and court reporting. With this type of self-settled/first party special needs trust, the have belonged to the beneficiary and therefore, there IS a Medicaid payback upon the beneficiary’s death for any Medicaid benefits the beneficiary may have received during his or her life.
How often must an estate plan be changed?
Periodically reviewing an estate plan every few years or more is extremely important, especially if there are significant changes in circumstances. Significant changes include, but are not limited to, the death or disability of a family member, marriage, divorce or separation, births and adoptions, significant increases or decreases to asset values, acquisition of real property outside of Washington, a move to another state, and changes to the persons named as fiduciaries and/or beneficiaries.
It is also important to ensure that those assets passing outside the terms of a Will or Trust coordinate with the overall “Estate Plan.” This means periodically reviewing and ensuring that accounts are held and titled in specific ways and that beneficiary designations are up to date.
It is also important to ensure that those assets passing outside the terms of a Will or Trust coordinate with the overall “Estate Plan.” This means periodically reviewing and ensuring that accounts are held and titled in specific ways and that beneficiary designations are up to date.
What does it cost to create an estate plan?
Cost is an important consideration when creating an estate plan. Be aware at the onset how legal fees are generated. Ultimately, an attorney’s fees for services must not be unreasonable. Whether a fee is reasonable may depend on the following:
-time and labor required
-novelty and difficulty of questions involved
-skill required to perform services properly
-fee customarily charged for similar services in the locality involved
-the amount involved and the results obtained
-time limitations imposed by the client or the circumstances (emergencies)
-nature and length of the professional relationship
-experience, reputation and ability of the lawyer to perform requested tasks
-terms of the fee agreement, including disclosure to client of material terms
and knowledge of the lawyer’s billing practices
Some attorneys charge flat fees for estate planning documents or services. Others charge for services by the hour. Some attorneys do a combination of these billing practices. Be sure to ask questions and have a clear understanding of the billing practices before engaging an attorney.
-time and labor required
-novelty and difficulty of questions involved
-skill required to perform services properly
-fee customarily charged for similar services in the locality involved
-the amount involved and the results obtained
-time limitations imposed by the client or the circumstances (emergencies)
-nature and length of the professional relationship
-experience, reputation and ability of the lawyer to perform requested tasks
-terms of the fee agreement, including disclosure to client of material terms
and knowledge of the lawyer’s billing practices
Some attorneys charge flat fees for estate planning documents or services. Others charge for services by the hour. Some attorneys do a combination of these billing practices. Be sure to ask questions and have a clear understanding of the billing practices before engaging an attorney.
What is a Probate Administration?
The ability to own property ceases immediately at death and all ownership of assets must be transferred to someone else. A probate administration is a process for formally transferring a decedent’s assets to legal heirs or beneficiaries and winding up his or her affairs after death. The process is governed by state law. A probate administration can be “testate” meaning that a decedent had a valid Will or it can be “intestate” meaning that the decedent died without a (valid) Will.
Can property be transferred outside of a probate administration?
Property can be transferred outside of a probate administration through the use of trusts, property agreements, and non-probate transfers (payable on death, transfer on death, joint tenancies with right of survivorship or beneficiary designations.) All manners of passing an estate should be coordinated with an attorney in order to facilitate the most time efficient, cost effective, and appropriate transfer methods for each asset.
How long does a probate administration take?
This is a common question without a straight forward answer. Typically, a probate administration lasts at least nine months, but an administration can sometimes last over a year or two depending on the complexity of the administration.
There are certain “waiting periods” that must expire before monies can be distributed. There is a creditor claim period and a will contest period that should lapse prior to making any distributions. Additionally, depending on the real estate market, the sale of real property may delay the completion of the probate administration.
Another factor affecting the length of a probate administration is the date of death. A probate administration of a person who dies nearer to the calendar year end will likely have a shorter administration period than that of a person who dies at the beginning of the calendar year because final income tax returns are due April 15th of the year after death.
There are certain “waiting periods” that must expire before monies can be distributed. There is a creditor claim period and a will contest period that should lapse prior to making any distributions. Additionally, depending on the real estate market, the sale of real property may delay the completion of the probate administration.
Another factor affecting the length of a probate administration is the date of death. A probate administration of a person who dies nearer to the calendar year end will likely have a shorter administration period than that of a person who dies at the beginning of the calendar year because final income tax returns are due April 15th of the year after death.
Who needs a Guardianship?
Guardianship is a court-supervised process established to protect those persons who cannot protect or care for themselves. Where (1) a person demonstrates an inability to adequately care for his or her person and/or estate; (2) there exists a significant risk of harm to his or her person and/or estate; and (3) there are no lesser-restrictive alternatives available to protect one’s person and/or estate, a guardianship may be established.
Guardianship is often appropriate for vulnerable adults who have not previously executed documents contemplating incapacity and/or who no longer have the requisite statutory capacity to execute such documents. Guardianship may also be appropriate in situations where a minor child receives an inheritance or settlement or where a developmentally disabled child turns eighteen.
Guardianship is often appropriate for vulnerable adults who have not previously executed documents contemplating incapacity and/or who no longer have the requisite statutory capacity to execute such documents. Guardianship may also be appropriate in situations where a minor child receives an inheritance or settlement or where a developmentally disabled child turns eighteen.
What is the Process to Initiate a Guardianship?
Guardianship can be a costly and burdensome process, not only to initiate, but to administer. In order to begin guardianship proceedings, a petitioner (often a family member or concerned individual) petitions (“requests”) that the court commence a guardianship action and requests that a Guardian Ad Litem be appointed. A Guardian Ad Litem is an independent party whose job it is to conduct an investigation by meeting with the alleged incapacitated person, reviewing medical records of the alleged incapacitated person, investigating and identifying financial assets, and summarizing their findings in a report to the court and making a recommendation. This recommendation will often include (1) whether the alleged incapacitated person is, in fact, incapacitated; (2) the scope of the guardianship (how it should be limited or specifically tailored in the least restrictive way to afford necessary protection); and (3) who is an appropriate guardian, whether a “lay” (family) guardian or a certified professional guardian.
What are the Responsibilities of a Guardian?
Upon a guardian being appointed, a guardian must report to the court annually, biennially or triennially, and sometimes more frequently. Specifically, the guardian has a duty to report about (1) the welfare of the incapacitated person and his or her assets, and (2) depending on the scope of the guardianship, to demonstrate to the court that the guardian is meeting the needs of and appropriately handling the affairs of the incapacitated person. Guardians are required to notify the court of any substantial changes to an incapacitated person’s welfare and property. If assets are more than $3,000.00 the guardian must obtain a bond or place those cash assets into blocked accounts. To manage, consolidate, and sell property typically requires notice to all interested parties and a court order.