Estate planning is the process of accumulating and disposing of an estate to maximize the goals of the estate owner. The various goals of estate planning include ensuring the greatest amount of the estate passes to the estate owner’s intended beneficiaries, often including paying the least amount of taxes and avoiding or minimizing probate court involvement. Additional goals typically include providing for and designating guardians for minor children and planning for incapacity. Rego Law handles estate planning in Bristol, RI. Contact us for a free initial phone consultation to discuss your will, trust, or other need.
- Living Wills
- Powers of Attorney
- Health Care Directives
- Elder Law Issues
- Intestate (Without a Will)
- Testate (With a Will)
Wills, Trusts, and Powers of Attorney
The tools involved in estate planning include the will, various types of trusts, beneficiary designations, powers of appointment, multiple forms of property ownership (joint tenancy with rights of survivorship, tenancy in common, tenancy by the entirety, etc.), gifting, and power of attorney, specifically the durable financial power of attorney and the durable medical power of attorney. After widespread litigation and media coverage surrounding the Terri Schiavo case, virtually all estate planning attorneys now advise their clients to also create a living will. Note that many people (and even some attorneys) confuse a living will with a durable medical power of attorney. The former controls solely those decisions that must be made at the end of the patient’s life, while the latter is used to give decision-making authority to someone else (usually a family member or close friend). This person, the attorney-in-fact, then makes all medical decisions leading up to the person’s death but has no such power to make end-of-life decisions for the patient. Those decisions are made by the patient in the living will; in the absence of a living will, and where the patient is incapable of making end-of-life decisions for themself, such choices are left to family members.
The tax code allows wealthy people to set up charitable remainder trusts and qualified personal residence trusts to own their personal residence yet leave it to their children without estate tax.
Because the United States tax code does not tax life insurance proceeds as income, a life insurance trust could be used to pay estate taxes. However, if the decedent holds any incidents of ownership, such as the ability to remove or change the beneficiary, the proceeds will remain in their estate. For this reason, the trust vehicle is used to own the life insurance policy, and it must be irrevocable to avoid inclusion in the estate.
Probate Law – Guardianships
Probate is a legal procedure overseen by the probate court system that determines the validity of a will. It identifies a decedent and assets so the estate can be administered, inheritances distributed to beneficiaries, creditors and taxes paid, and so forth.
At Rego Law, we assist clients by representation in probate matters and also litigate claims against the estate such as contested wills, alleged breaches of fiduciary duty, alleged abuses of power of attorney, pay on death disputes, protection of beneficiary rights, and trust litigation, to name a few.
As probate lawyers, we provide legal assistance to executors, conservators, and trustees in relation to their administrative duties and offer representation for individuals and corporate entities in their claims against estates.
Glossary of Terms:
Codicil: A supplement or addition to a will. A codicil may explain, modify, add to, subtract from, qualify, alter, or revoke existing provisions in a will. Because a codicil changes a will, it must be signed in front of witnesses, just like a will.
Disinherit: To deliberately prevent someone from inheriting something. This is usually done by a provision in a will stating that someone who would ordinarily inherit property — a close family member, for example — should not receive it. In most states, you cannot completely disinherit your spouse; a surviving spouse has the right to claim a portion (usually one-third to one-half) of the deceased spouse’s estate. With a few exceptions, however, you can expressly disinherit children.
Durable Power of Attorney: A power of attorney that remains in effect if the principal becomes incapacitated. If a power of attorney is not specifically made durable, it automatically expires if the principal becomes incapacitated. See durable power of attorney for finances and durable power of attorney for healthcare.
Estate Planning: The art of continuing to prosper when you’re alive and passing your property to your loved ones with a minimum of fuss and expense after you die. Planning your estate may involve making a will, living trust, healthcare directives, durable power of attorney for finances, or other documents.
Estate: Generally, all of the property you own when you die.
Gift Taxes: Federal taxes are assessed on any gift, or combination of gifts, from one person to another that exceeds $12,000 in one year. Several kinds of gifts are exempt from this tax: gifts to tax-exempt charities, gifts to your spouse (limited to $120,000 annually if the recipient isn’t a US citizen), and gifts made for tuition or medical bills. In addition to the annual gift tax exclusion, there is a $1 million cumulative tax exemption for gifts. In other words, you can give away a total of $1 million during your lifetime — over and above the gifts you give using the annual exclusion — without paying gift taxes.
Guardianship: A legal relationship created by a court between a guardian and his ward – either a minor child or an incapacitated adult. The guardian has a legal right and duty to care for the ward. This may involve making personal decisions on their behalf, managing property, or both. Guardianships of incapacitated adults are more typically called conservatorships.
Healthcare Directives: Legal documents that allow you to set out written wishes for your medical care – and to name a person to make sure those wishes are carried out. See living will and durable power of attorney for healthcare.
Inheritance Taxes: Taxes some states impose on people or organizations that inherit property from a deceased person’s estate. The taxes are based on the value of the inherited property.
Living Trust: A trust you can set up during your lifetime. Living trusts are an excellent way to avoid the cost and hassle of probate because the property you transfer into the trust during your life passes directly to the trust beneficiaries after you die, without court involvement. The successor trustee – the person you appoint to handle the trust after your death – simply transfers ownership to the beneficiaries you named in the trust. Living trusts are also called inter vivos trusts.
Living Will: A legal document in which you state your wishes about certain medical treatments and life-prolonging procedures. The document takes effect if you can’t communicate your own healthcare decisions. A living will may also be called a healthcare directive, advance directive, declaration, or directive to physicians.
Medicaid: A program established by the federal government and administered by the states to help pay medical costs for financially needy people. Need is defined by the program of the state in which the applicant resides. Medicaid operates in addition to Medicare to help pay for some of the medical costs that Medicare does not cover.
Medicare: A federal government program that assists older and some disabled people in paying their medical costs. The program is divided into two parts. Part A is called hospital insurance and covers most of the costs of a stay in the hospital and some follow-up costs after time in the hospital. Part B, medical insurance, pays some of the cost of doctors and outpatient medical care.
Power of Attorney: A document that gives another person legal authority to act on your behalf. If you create such a document, you are called the principal, and the person to whom you give this authority is called your attorney-in-fact. If you make a durable power of attorney, the document will continue in effect even if you become incapacitated. For examples, see durable power of attorney for finances and durable power of attorney for healthcare.
Will: A document in which you specify what is to be done with your property when you die and name your executor. You can also use your will to name a guardian for your young children.
Workout: A debtor’s plan to take care of a debt, by paying it off or through loan forgiveness. Workouts are often created to avoid bankruptcy or foreclosure proceedings.