Posted on Leave a comment

If You Own a Home, You Need a Trust!

The largest asset most people own is their family home.  It is not only the center of their family life, but security for the surviving spouse and children. It is often the major source of wealth providing an inheritance to one’s survivors.

A trust is legal arrangement or contract into which you can place your home, bank and investment accounts as well as other assets so that they can be used by you or your future heirs.

Trusts typically offer much greater control than a will over who will receive your assets and how and when the beneficiaries will receive their share of your estate.

Trusts are not just for the rich or for older adults.  In fact, it could be argued that those with modest means have the greatest need to preserve what they do have!

One of the principal reasons people put their house in a trust is because assets in a trust do not go through probate when you die. Using a will to distribute your property after you die guarantees that everything will go through probate. Probate is a public court process.  It allows anyone to see everything that was in your estate when you died, how much it was worth, and who received all your things.

One of major disadvantages of probate is that it is expensive.  18 States have fees that are directly based on the size of the estate.  Most others use the “reasonable compensation” standard.  Reasonable compensation however is in the eye of the beholder, meaning the probate judge.  Here in Hawaii reasonable compensation typically runs between 3%-7% of the “gross estate value.”  When calculating the “gross estate value” the mortgage on real estate is not considered.  In September of 2021 the median sales price of a single-family home on Oahu was $1,287,867.  3% – 7% of that amount is $38,636 – $90,151.  The required publication cost in the local newspaper of the notice of opening of a probate estate is over $1,000 just to start.

Another major disadvantage of probate is the significant time involved.  It is not unusual for it to take 7-15 months to complete the process during which time the heirs do not have access to their inheritance.  In complicated or contested cases, the time can run into decades and require huge legal fees and court costs.

Some say that trusts are complicated and expensive.  That use to be true, but with today’s technology and internet access, those excuses are no longer valid.  My company, Interactive Estate Document Systems, www.ieds.online makes comprehensive law-firm quality estate planning document packages, including trusts available quickly and affordably, for less than the cost to publish the opening of a probate estate.

There are many other reasons for establishing a trust for your assets including creditor protection for your heirs, placing conditions on passing property to your heirs, blended families and many others that we will explore in later articles.

Posted on Leave a comment

It’s Estate Planning Awareness Week

October 18 through October 24th is IEDS.online’s favorite week of the year! Why…? Because it’s National Estate Planning Awareness Week and we are so happy that Estate Planning is getting the recognition it deserves.

At Interactive Estate Document Systems, it’s Estate Planning Awareness Week every week, and that’s because we’re passionate about helping individuals build their legacies. But for the general population, this week is a great time to gain better insights on why Estate Planning is so important, and why it’s crucial to set up an Estate Plan sooner than later.

Estate Planning is a crucial aspect of financial wellness, yet it is so often disregarded. In fact,  56 percent of Americans don’t have an updated Estate Plan in place according to the National Association of Estate Planners & Councils. That’s more than half of us! So in honor of Estate Planning awareness week, we’re going to:

  • Debunk common Estate Planning myths
  • Provide expert Estate Planning tips

Debunking Common Estate Planning Myths

So why do the remaining 44 percent of Americans not have an Estate Plan in place? It turns out that there are many misconceptions surrounding Estate Planning. In this article, we’ll share some of the most common statements and questions we hear, and debunk each of them. If you are in the large group of individuals who haven’t set up an Estate Plan yet, we hope this information will help you reconsider.

“I don’t really know what Estate Planning is.”

Estate Planning is the process through which a legal plan is put into place, in case anything were to ever happen to you. You can think of an Estate Plan as a written game-plan for your loved ones. In it, you can designate your beneficiaries, how your assets will be divided, and who will be responsible for handling various aspects of your legacy. Not only will your Estate Plan help ensure your loved ones are cared for long-term, it will help alleviate the stress that comes with dealing with logistics. This will help your loved ones have the proper space to grieve.

“Isn’t Estate Planning just for older people?”

Somehow, Estate Planning has become associated with older generations. Perhaps it’s because we seldom see examples of young people planning their estates in mainstream media. The harsh reality is that accidents and tragedies happen even to the young. Are you a young person and have people that you love and want to protect? Then, you need an Estate Plan. Almost everyone over the age of 18 should plan for the unexpected.

“I thought Estate Planning was only worthwhile for the wealthy.”

Another common misconception is that Estate Planning is only for the wealthy. To the contrary, Estate Planning is a process that isn’t limited to just wealth or assets. For example, your Will could designate the division of sentimental possessions amongst your family members. If anything were to happen, it would be clear who would receive particular items, which will help cut down on confusion and unnecessary conflict. In another example, you could take out a life insurance policy as a part of your Estate Plan and name a beneficiary. This way, you could ensure that your partner or child would be cared for in the case of your absence.

“It’s too complicated and expensive – I’ll get around to it eventually.”

The point of Estate Plans is to protect your legacy in the case that something unexpected were to happen. Many individuals are tempted to delay the process of Estate Planning because they are under the impression that it would be costly, complicated, or time consuming. Companies like Interactive Estate Document Systems have revolutionized the industry in a way that makes Estate Planning accessible to everyone. IEDS.online offers an online service that is quick, easy and affordable, allowing you to set up your Estate Plan in minutes. You can do all of this from the comfort of your own home and can get started with very little information.

“I don’t need a Will because all my assets are co-owned with my partner.”

If you have a partner, then you have all the more reason to get the proper documents in place. Your partner will have the right of survivorship for any co-owned assets, but both of you still need to have proper documents. You have no ability to predict which spouse will survive the other. In addition, there are sometimes tragic incidents when something unexpected happens to both partners simultaneously. By having an Estate Plan, you can both ensure that everything ultimately goes to the surviving spouse, or another beneficiary of your choice in case something were to happen to both of you.

“Well I already did my will When I first married. Why would I look at it again?”

Your personal circumstances change with every passing life event. You may be surprised by how often your assets, your wishes, desired beneficiaries, and designations will change over the years. Any additions or changes to your family are especially important times to review your Estate Plan to ensure it stays up-to-date. We suggest setting a reminder for yourself to review your  Estate Plan every three to five years.

10 Estate Planning Tips from the Pros

In the spirit of Estate Planning Awareness Week, we also wanted to share some top Estate Planning tips to help you get started. These are brought to you by our Founder and Head of Legal, Dan Plaskett:

  1. Take an inventory of your tangible and intangible belongings. People often think Estate Planning is all about liquid assets, which are included. But also make sure you take stock of your physical belongings and sentimental valuables.
  2. Think about what is needed to take care of your family’s needs. Create a list of all of your family’s needs, including financial, healthcare, education, and childcare needs. When putting your Estate Planning Documents into place, be sure to designate how these needs will be covered.
  3. Review your beneficiaries on a regular basis. With every life event, your beneficiaries can change. Common events that will cause beneficiary changes or additions include births, deaths, marriage, and divorce. It’s important to update your beneficiaries as soon as possible to ensure that everyone you care for will be covered by your plan.
  4. Look up the estate tax laws in your state. Estate tax is the taxation on the property being transferred from you to a beneficiary as a part of your Estate Plan. Although you can’t necessarily avoid estate tax, there are ways in which it could be reduced. Be sure to consult your tax professional.
  5. Set a calendar reminder to update your Estate Plan. In addition to updating your beneficiaries, there are many aspects of your Estate Plan that will change and shift as life goes on. This includes your inventory of assets and even your desire of how to divide up your assets. Family needs are also another major area that changes often. It’s helpful to set up a regular calendar notification to remind you to review and update your Estate Plan.
  6. Consider a plan for long-term care. An Estate Plan is also important in the case that you require long-term health care and are not able to make your own decisions. You can make arrangements to ensure that your long-term health care costs are covered, as well as provide any special instructions to your caregivers. This will help relieve some burden from your loved ones. [Ready to set up your health care documents so that your end-of-life wishes are clarified? IEDS.online has you covered]
  7. Discuss probate laws with your attorney. Probate laws are different in every state and county, and it’s important to be aware. Probate is the process through which a Will is vetted or “proved” in a court of law. Once the Will is proved, then your executor can start taking actions as instructed in your Estate Plan. Note that setting up a Trust is a great way to avoid the probate process all together.
  8. Include plans for funeral expenses and final arrangement wishes. When a family is grieving the loss of a loved one, it can be painstaking to arrange for a funeral and carry out final wishes. Although this is necessary, you can really show your love for your family and dear ones by including specific plans to cover funeral expenses and how you’d like your final wishes carried out. This will provide your loved ones with a game plan which can help them avoid any complicated guesswork or paying for expenses.
  9. If you own your own business, then you should also include instructions for how your business will be handed over. In other words, this is your succession plan. Designate who will be the executor of your business, and who will have control over business decisions and assets.
  10. Keep your documents organized. Along with your Estate Plan will come many associated documents and statements that are meant to assist your executors in carrying out your wishes. You’ll want to keep your documents in a safe, secure place, and you’ll want to keep them neatly organized. That way, your loved ones will be able to easily locate information as necessary.

No one really wants to spend time thinking about life after they are gone. Perhaps that is the primary reason why many of us procrastinate on setting up an Estate Plan. However, it can be incredibly powerful to shift your mindset surrounding Trusts and Wills. They’re not just for the elderly; they’re not just for the wealthy. They are the ultimate way you can convey your love and care to those closest to you. It will also give you a sense of control and the feeling of peace of mind.

If anything were to ever happen to you, your loved ones will be so relieved to find out that you had a plan put into place to protect them. Instead of being stuck in a logistical nightmare, they’ll have the sacred space to celebrate your life and carry out your legacy.

In the spirit of Estate Planning Awareness Week, are you ready to take control of your future and set up an Estate Plan? It’s easy, secure, and can all be done online from the comfort of your home. Create your Comprehensive Estate Planning Document Package, today!

Posted on Leave a comment

Preparing for Coronavirus: The #1 Legal Document Every Adult Needs to Have

As the coronavirus continues to disrupt daily life and leave Americans uncertain of the future, you don’t have to feel helpless during this pandemic. In fact, now is a great time to be proactive and plan ahead should you or a loved one fall ill. One of the most important and relatively easy things you can do (and should do) is to select a medical agent and set up your advance healthcare directive.

What Is a Medical Agent?

A medical agent (also called a healthcare agent, healthcare surrogate, a healthcare proxy, or a medical proxy) is a person you authorize in a medical power of attorney to make decisions about your medical care if you are too ill to make them yourself or are otherwise unable to communicate your wishes.

Why is it important to choose a medical agent now?

As of April 26, there are 2,987,601 total cases of coronavirus. Of those, 206,712 have died and 57,503 are in critical condition (combined about 8.8%). So even if you get sick, you’ll likely have mild symptoms and recover quickly. However, since no one knows exactly how they will be affected by the virus, it’s best to plan for the worst and hope for the best. Part of that planning is making sure someone can make healthcare decisions for you if you fall ill and are unable to make those decisions for yourself.

Factors to Consider in Choosing Your Medical Agent

A medical agent is an important role, and the person you choose will have the power to make critical healthcare decisions—like consenting to a treatment plan, whether to accept or refuse medical treatment, and which healthcare providers or hospitals to use for your care. As a result, it is crucial to think carefully about who you choose to fill this role. Many people simply assume that their spouse or their oldest child should take on this role, but they are not always the best suited. Here are some factors to consider when selecting an agent:

1) Emotional maturity. People handle stress differently, and not everyone is able to set aside their emotions and make level-headed decisions when someone they love is suffering. In addition, some people are simply not assertive enough to act as a strong advocate in the face of differing opinions of other family members–or even health care providers–who suggest a treatment plan you have informed your medical agent you do not want. You should choose someone who is able to think rationally in emotionally difficult circumstances, even if that means you must look outside of your family to find the best person for the job.

2) Location. The person you choose to act as your medical agent should be someone who lives close by and is able to act on your behalf very quickly in the event of a medical emergency or if you need your advocate to serve in that role for an extended time period. In current times, many people might be under a mandatory or recommended stay-at-home order, or may not be available or willing to travel to another city or state.  Consider naming several alternate agents to account for someone’s potential unavailability.

3) Is willing/able to serve. Acting as a medical agent can be a time-consuming and emotionally draining job. Make sure that the person you choose is willing and able to set aside the time necessary to serve as your patient advocate. Don’t just assume the person you want to be your medical agent is willing: Be proactive and ask if he or she is willing to take on that role. Keep in mind that if you are elderly, you may want to avoid naming a friend or family member who also is older, as there is a greater chance that they will experience mental or physical decline at the same time as you, which could impede their ability to serve as your advocate when the time comes.

4) Will honor your wishes no matter what. Your medical agent has a duty to make decisions on your behalf that you would have made to the extent that he or she is aware of your wishes. This is the case even if your medical agent disagrees with your choices. As a result, your medical agent needs to be someone who is willing to set aside his or her own opinions and wishes to carry out yours. It may be prudent to appoint someone who has values and religious beliefs that are similar to yours to reduce the instances in which your agent’s opinions differ significantly from yours. Do not choose anyone that you do not trust to carry out your wishes.

 

People You Should Not Choose

Many states have laws prohibiting certain people from acting as your medical agent, even if they are otherwise well-qualified to act in that role:

1) Minors. Many states have laws expressly prohibiting a minor from being a patient advocate. The age of majority could be 18, 19, or 21 years of age, depending upon the state. Some states have exceptions to this prohibition for married or emancipated minors.

2) Your health care providers. Some states not only prohibit your health care providers from acting as your medical agent, but also preclude the owner, operator, or any employee of any facility in which you are a patient or resident from acting in that role. Some states that have adopted this prohibition make an exception for individuals who are related to you. A few states, such as Kansas, Missouri, and Kentucky, also have an exception if that person is an active member of the same religious organization as you.

Need help?

Medical directives may be among the most important legal documents you prepare – especially in light of COVID-19. Picking a medical agent can be tricky and we can provide information to help you think through your choice. We can also help with any other estate planning needs you may have—whether that’s setting up a financial power of attorney, last will and testament, or a trust. Please visit us online at https://ieds.online to see how we can help you and your family be prepared should you fall ill from the coronavirus.