Estate Planning FAQ
You may have had a power of attorney for the loved one who has just died, and you may erroneously believe that the power of attorney is still in force. Unfortunately, the power of attorney you may have had in place is no longer valid following the death, and it is important to understand that distinction.
A previous power of attorney does not give you the power to handle the estate after the death of your loved one. The only person who has that power is the individual named as the executor or the personal representative. That individual will be named and appointed by the court.
Asset protection is very important when a loved one dies, and what you do now can make a big difference later on. The death of a loved one can present a golden opportunity for individuals and companies that do not have your best interests at heart, from shady financial advisors to greedy relatives.
The best way to protect the assets is to open the estate right away. The court will name an executive or personal representative, and that individual will be charged with protecting the assets and distributing them in accordance with the wishes of the deceased.
In most cases, the answer to this question will be yes. Many people erroneously believe that they will not need to open a probate estate, but this is rarely the case.
If you fail to open a probate estate, you could be liable for taxes and other claims. Even if you do not think a probate estate is necessary, it is important to discuss your options with an experienced estate attorney.
The simple answer to that is yes, they can be. But of course, there is a much more complex answer.
The presence of a valid will can greatly simplify the estate process, so it is important to determine if such a document exists. You can start by looking through the deceased’s possessions and documents for a will, but in many cases, the will may be stored elsewhere.
You can check with the bank where the deceased had his or her accounts – the will may be stored in a safe deposit box. You can also check with the attorney who handled taxes and other matters for the deceased. If you still come up empty, you can contact an experienced estate attorney to continue the search for a valid will.
There is a great deal of confusion about how debts are handled when an individual dies. Some people think that these debts simply disappear when the debtor dies, but that is not always the case. While some debts are forgiven on death, others follow the deceased and become part of the estate.
The good news is that the family members of the deceased will probably not be on the hook for the outstanding debts. If the assets in the estate are less than the debts and tax obligations, those debts do not become the responsibility of the loved ones left behind. Unfortunately, many people do not understand this, and they end up paying off debts for which they have no financial or legal responsibility.
You should not simply assume that everyone who needs to know about the death will find out. With physical newspapers becoming rarer and rarer, you cannot rely on the obituaries to get the word out, and word of mouth may not be as reliable as you would think.
It is important to notify everyone you know when a loved one dies. Not only will they want to attend the memorial service, but they may have an interest in the estate as well. You should also contact an estate attorney about the notification process, including required death notices in the local newspapers and elsewhere. This will provide the notification you need to protect yourself legally and prevent others from contesting the estate.
The death certificate is an important document, and you should make sure you get it. The death certificate should become available after the funeral process has been completed, and most funeral homes will help loved ones get the documentation they need.
If you do not receive a death certificate from the funeral home, you should ask the funeral director for one as soon as possible. You will need a death certificate to claim certain benefits, and for the estate process as well. If you need additional copies of the death certificate, you should contact your local Department of Vital Records.
The IRS has an interest in the estate, and you should check the tax status of your deceased loved one as soon as possible. It is easy to forget about taxes when handling an estate, but the IRS will be there to remind you.
If you are unsure about the tax situation, you should contact the person who handled returns for the deceased. They should have copies of past tax returns, and they should be up to speed on any outstanding audits, tax debts or other issues.
Even the most thorough and well-organized estate plan is meaningless if you don’t transfer the appropriate assets into your revocable living trust before you die. It’s like building a ship to keep your assets safe during a flood, and then failing to actually put your valuables in the ship before the storm comes. Most estate attorneys should be well-practiced in establishing trusts, but some of them won’t do anything beyond that. It would be ideal if your attorney has an assistant or department that helps with funding your trust, but at a minimum, they should at least provide detailed written instructions on how to carry it out, and be there to guide you through the process as much as possible
If you have a will, bring a copy to show the attorney. They’ll review it to see if everything is in order, or if there are some holes that need to be fixed. If you don’t have a will, that will be the first item of business. The attorney will help you draft a will that fulfills your unique needs, and nominates a trusted individual to serve as your estate’s personal representative after you die. This person will be in charge of directing your estate and following your final wishes; selecting the right person for the job is an important step in the estate planning process.
In 2017, the IRS has set the individual estate and gift tax exemption at $5.49 million. If you’re married, you and your spouse can leave up to $11 million to your heirs without qualifying for the estate tax. If your net worth is greater than $11 million, or if your net worth is on the rise and may cross the threshold before you pass away, you’ll need to work with the attorney to shield your assets from the estate tax. The most common way to do that is with a revocable trust, but the attorney will help you assess what strategy is best for you.
Typically, clients will use a power-of-attorney to give someone the authority to manage their finances, and a medical authorization to give someone the authority to make medical decisions. While they are separate documents, you can elect the same individual to fill both roles. You can also draft an advance directive regarding your health, such as a do-not-resuscitate (DNR).
Probate court can be an expensive, time-consuming process; often, the best strategy is to position as many assets as possible in a manner that will bypass the probate process. There are many ways to do this, and no single solution is right for everyone, but common solutions include joint accounts with rights of survivorship, payable-on-death (POD) or transfer-on-death (TOD) designations, primary and contingent beneficiaries on life insurance and retirement accounts, trusts, and real property held in joint tenancy or as tenants by the entirety.
