Issue 35.10

There are many reasons you should have a Trust.  One reason is to avoid probate.  Probate is the court procedure to appoint a personal representative, determine who gets your property, and oversee its distribution.  This can be a slow and costly process even with a modest and uncomplicated estate.  If you transfer your assets to a Trust during your lifetime, when you die they belong to your Trust, not to you.  Your assets won’t have to be probated to be given to the people you have named in your Trust.  This keeps the courts out of your family affairs, and keeps your estate plan private and confidential.

You may want a Trust to avoid the potential for double probate if you own real estate in more than one state.  Each state in which you own real estate will require probate in each of those states.  If you own real property in different states, you can put all of that property in your Trust so there will be no need to probate any of that property when you die.  The Trust will continue to own the property at your death, so there will be no reason for the different states to become involved in how the property is distributed.

You may want a Trust to provide for minor children.  If you leave assets to minor children in a Will, your children will get full access to that property when they reach the age of majority.  In most states, that age is 18.  An 18 year old may not be ready to manage inherited money.  With a Trust, you decide what age a child is to receive their share - 18, 25, 35, 70, or any other age.

You may want a Trust to provide for a disabled child, or a child who should not receive money outright due to alcohol or drug abuse.  Using a Trust, you can name another person to be the Trustee of that child’s money to make sure the money is used for that child’s benefit.  You gain the assurance that the money will be there for the child’s needs, and that it will be used appropriately and not squandered.  You protect the child’s share for the benefit of the child when you use a Trust.

You may want a Trust to avoid paying estate taxes.  The estate tax is scheduled to return in 2011 and will affect you if your estate is worth over $1 million.  A Trust can be used to exempt some or all of your assets from the estate tax.  You can also receive immediate tax benefits by setting up a Trust that provides income to you for your lifetime, but makes a gift to charity at your death.  Doing so provides income and estate tax benefits for you and your family.

You may want a Trust to avoid having your heirs challenge your Will.  A Trust can provide extra protection to keep that from happening.  To prove a Will is invalid, the challenger has to show that you were incompetent at the time the Will was executed.  But since you interact with your Trust throughout your life, and move assets into and out of your Trust from time to time, it is more difficult to prove your Trust is invalid.  We usually have repeated assurances that you intended for your trust to be effective at your death.  If you set up a Trust, it is tougher on the challenger to claim that you were incapacitated, not only when the Trust was set up, but also during every transaction that you carried on during your lifetime.  For this reason, your Trust is easier to defend than a Will.

Your Free Consultation is available by calling Sean Sullivan, a shareholder with the firm of Brindley Sullivan, PC, 382 S. Bluff St., Ste. 150, St. George, UT 84770, (435) 673-9220.

Issue 31.10

There will be nothing more important to your family than your estate plan when you pass away or become unable to manage your own affairs.  Make sure your family is prepared by reviewing the items below. 

• Account Registration
Have you registered your accounts with the correct persons on the accounts, or as the “pay-on-death” beneficiary?  If you have created a trust, have you registered your accounts in the name of the trust? 

• Beneficiary Designations
Are your life insurance, retirement accounts, or other accounts showing the correct beneficiaries?  Are these beneficiary designations consistent with your overall estate plan?  Do they work correctly with your trust if you have one in place?
• Utah Advance Health Care Directive (Living Will)
Have you named the person you want making health care decisions for you when you can’t?  Is it clear what your family is to do regarding the administration of life-prolonging procedures?  This document conveys your wishes when you are no longer able to communicate them.
• Durable Power of Attorney.
Have you named someone to make financial decisions on your behalf should you become incapacitated?  Your Durable Power of Attorney makes it clear who you trust to manage your financial affairs if you are ever unable to do so.  This document is even more critical to those who do not have a trust.
• Will
Do you have a current will? At a minimum, you should have a well prepared will that makes it clear what you intend to be done with your property when you pass away. 
• Trust
You might consider a trust if you are concerned about estate taxes, avoiding probate, leaving assets to children, protecting assets during incapacitation or eventually needing assistance with money management and paying bills.  A trust is a tool that effectively manages all these issues. 

Take the time now to make sure your affairs are in order.

If you have questions or need assistance, you should contact my office for a free consultation at (435) 673-9220, 382 S. Bluff, Suite 150, St. George, Utah. 

Sean Sullivan is a shareholder in the firm Brindley Sullivan, PC.

Issue 29.10

You should have a Utah Advance Health Care Directive.  That document states that if you cannot make decisions or speak for yourself, your agent can make any healthcare decision that you could have made for yourself if you were able to communicate.  Your agent has the power to consent to or withdraw any healthcare.  Your agent has the power to hire and fire health care providers.  Your agent may also ask and questions and get answers from healthcare providers, and consent to you being admitted to a healthcare facility.  Your agent also has the power to get copies of your medical records and ask for consultations or second opinions as needed.

Your Utah Advance Health Care Directive also gives you an opportunity to be very specific about other issues that might come up regarding your health care.  For example, you may authorize your agent to consent in your participation in medical research or clinical trials, even if you may not benefit from the results.  You may give your agent the authority to donate your organs, or prolong your life, even if you have given instructions that you don’t want your life to be prolonged.

Your Utah Advance Health Care Directive states that you want your health care providers to follow the instructions you give them so long as you can make health care decisions, even if those instructions might conflict with directions you previously gave them in a signed health care directive.  It also provides that your health care provider should always provide comfort measures to keep you comfortable and as functional as possible. 

When you are near death, your Utah Advance Health Care Directive allows you to give certain instructions about whether you want to prolong your life or to withhold life-saving procedures and let you pass away.  These are commonly known as “living will” provisions.  You can specify whether you want your agent to make the decision as to when care should be stopped that is meant to prolong your life, or you may make that decision now without involving your agent.  You may also make the declaration that you want to prolong life as long as possible or you may choose not to provide any instructions about your end-of-life care. 

A Utah Advance Health Care Directive is a crucial part of any complete estate plan.

Sean Sullivan is a shareholder in the firm Brindley Sullivan, PC, who will meet with you for your first consultation without charge.  Call (435) 673-9220 to arrange a time to meet with him.

Issue 22.10

A living will should be part of every complete estate plan.  A living will is a declaration that you desire to die a natural death.  It states that you do not want extraordinary medical treatment or artificial nutrition or hydration used to keep you alive if there is no reasonable hope of recovery.  A living will gives your doctor permission to withhold or withdraw life support systems under certain conditions.

You must follow certain legal requirements to make your living will effective.  You must be 18 years old.  The directive must be in writing, dated, and signed by you or at your direction in the presence of a qualified witness.  It also must contain the specific language that the State of Utah requires.  Utah allows you to choose one of four options regarding your end-of-life wishes: (1) you can let your agent decide when to withhold life sustaining treatment; (2) you can make the decision yourself today to withhold life sustaining treatment; (3) you can choose to prolong life; or (4) you can choose not to decide right now.  That language generally states that if you have a condition that is terminal or that will leave you in a permanent vegetative state, life-sustaining procedures are to be withheld from you.

Tell your family members where you keep your original living will, and keep it in a place where they can find it easily.  It is recommended that you make several originals, giving one to your primary care physician, one to the hospital if they have a file for you, and keep one at your home.  Your attorney should also keep an original in his file.  I note that in the event you change your mind about your directive, you must retrieve each of those original living wills and destroy them or revoke them by some other means that leaves no question as to your intent. 

If you do not have a living will and you are unable to make your medical decisions, someone else must decide for you.  If two doctors diagnose that you are terminally and incurably ill or in a persistent vegetative state, extraordinary means or artificial nutrition or hydration may be withheld or stopped with the permission of one of the following, in the order named: your health care agent, your guardian if a court has appointed one, your spouse, the majority of your children, your parent, the majority of your siblings.

Sean Sullivan is a partner in the firm of Brindley Sullivan, 382 S. Bluff, St. George and can be reached at 435-673-9220. 

Issue 19.10

Planning for the treatment of your IRA at your death should include more than filling out the beneficiary form.  You should consider ways to leverage your IRA account to even greater wealth in how you pass it to your spouse or heirs.  You can keep more money in the hands of your heirs and out of the hands of the IRS with proper planning.

It is critical to understand that your IRA will pass to your heirs differently than other assets.  A common mistake is to believe that your IRA will be controlled by your will or trust.  That is not necessarily the case.  Your IRA will pass to whomever you have named on your beneficiary designation form on file with the IRA administrator regardless of what your will or trust says.  In other words, the contract you have with the IRA administrator will override your will or trust. 

The same is true for all property that passes by beneficiary designation.  Bank accounts, life insurance, annuities, and retirement accounts (such as 401(k)s and IRAs) are common assets that pass outside your will or trust as you have instructed on your beneficiary designation form.  If these types of assets represent a large portion of your estate, then your beneficiary form become a critical part of your estate plan.

The tax laws generally have three types of beneficiaries with different tax treatments:  your spouse, non-spouse individuals, and entities (such as certain trusts, your estate, businesses and charities).  Spouses receive the best tax treatment with the most flexibility in dealing with your IRA.  Non-spouse individuals can also have great flexibility if they are properly designated as your beneficiary.  Often the spouse and non-spouse individuals can allow your IRA to continue compounding on a tax deferred basis with proper planning. 

A trust can also be named as the beneficiary of your IRA, but doing so has tax consequences that should be considered as part of your plan.  Sometimes a trust is the proper beneficiary because you have minor children, a disabled or dependent child, or for some other reason need someone else to manage that person’s portion of the IRA.  A trust may also give direction about how the funds should be used after your death. 

A “stretch IRA” describes a named beneficiary’s ability to spread required distributions over the life expectancy of the beneficiary.  The only requirement is that an individual beneficiary is named as a designated beneficiary on the IRA.  This can also be accomplished using trusts if done properly on the designation beneficiary form.  This will allow your beneficiary to leave the money in the IRA longer, and achieve continued growth on a tax-deferred basis.

There are other aspects that should be considered when preparing your will, trust, and other estate planning documents.  The implications are too important to leave to chance.

Issue 17.10

There will be nothing more important to your family than your estate plan when you pass away or become unable to manage your own affairs.  Make sure your family is prepared by reviewing the items below. 

• Account Registration
Have you registered your accounts with the correct persons on the accounts, or as the “pay-on-death” beneficiary?  If you have created a trust, have you registered your accounts in the name of the trust? 

• Beneficiary Designations
Are your life insurance, retirement accounts, or other accounts showing the correct beneficiaries?  Are these beneficiary designations consistent with your overall estate plan?  Do they work correctly with your trust if you have one in place?
• Utah Advance Health Care Directive (Living Will)
Have you named the person you want making health care decisions for you when you can’t?  Is it clear what your family is to do regarding the administration of life-prolonging procedures?  This document conveys your wishes when you are no longer able to communicate them.
• Durable Power of Attorney
Have you named someone to make financial decisions on your behalf should you become incapacitated?  Your Durable Power of Attorney makes it clear who you trust to manage your financial affairs if you are ever unable to do so.  This document is even more critical to those who do not have a trust.
• Will
Do you have a current will? At a minimum, you should have a well prepared will that makes it clear what you intend to be done with your property when you pass away. 
• Trust
You might consider a trust if you are concerned about estate taxes, avoiding probate, leaving assets to children, protecting assets during incapacitation or eventually needing assistance with money management and paying bills.  A trust is a tool that effectively manages all these issues. 

If you can’t check off any of the items above, you should contact me to make sure you address those unfinished matters.  Call me at your convenience at (435) 673-9220 to set a time when we can visit about your questions. 

Issue 15.10

Part 2

If you and your child were to die in a common accident, special problems arise.  Finding out whether you or your child died first will determine who is entitled to your home.  If you live longer than your child, you will be the surviving joint tenant and your “estate” would own the house.  In that case your house would be given to your heirs.  If the joint tenant child lived longer than you, that child would be the surviving joint tenant, and when he or she died, that child’s estate would own the house.  In that case his or her spouse and children would be entitled to your home, not your heirs.  If it can’t be determined who died first, the likely result would be that one-half of your home would be included in your estate, and one-half in your child’s estate.

A costly and time-consuming lawsuit may be required to fix any of the problems listed above.  Usually the lawsuit attempts to establish that you placed your child on the deed to your home for convenience only, - that is, to avoid probate.  Avoiding probate is not worth the cost and family tension that would be created if one of these scenarios took place.

Unless you have truly exceptional circumstances and have discussed your situation with an experienced estate planning attorney, you should leave your home in your name only.  With a valid will and a simple probate procedure, or better yet, a properly prepared trust, you can ensure that your house is disposed of as you truly intend at your death.  You will also keep control of your home during your lifetime and avoid all of these and other potential problems.

Sean Sullivan is a shareholder in the firm Brindley Sullivan, PC.  Call (435) 673-9220 to arrange a time to meet with hi to discuss your estate planning needs.

Issue 13.10

Part 1

Should you list your child as a joint tenant with you on your home?  It is true that if your child survives you as a joint tenant on your home, your home will not have to be probated.  At your death, your child would immediately become the sole owner of your home.  Although owning property as a joint tenant with another person is probably the simplest method of transferring the property at your death, there are risks of owning your home with a child as a joint tenant.  Below are some of the disadvantages:

A creditor of your child may try to seize the child’s interest in your home, or file a lien against your home. 

Once your child’s name is on the deed to your home, you can only sell or refinance your home if your child cooperates with you and signs the necessary paperwork.  Your child can effectively cancel your own decision to deal with your home as you deem appropriate. 

If your child survives you, that child may claim that you gave the house to him or her alone, and not to your other children.  Since that child is the only one named on the deed, your other children will have an uphill battle to clear the title.  One alternative is to name all of your children as joint tenants with you on the deed, but in that case only your surviving children will share in the home after your death.  If any child dies before you or before the home is sold, his or her interest in the home will be gone.  No interest in the home would “trickle down” to that deceased child’s children.  The home would be divided only between your surviving children.  In addition, you would have exposed your home to the creditors of all your children.

Sean Sullivan is a shareholder in the firm Brindley Sullivan, PC.  Call (435) 673-9220 to arrange a time to meet with hi to discuss your estate planning needs.

Issue 11.10

If you are remarried, there are six basic considerations in planning your estate which should be addressed.  Consider the following:

1. Children of previous marriages will occasionally throw up roadblocks if they feel that an outsider threatens “their” inheritance.  If you intend to leave any of your estate to your new spouse, you should consider telling your children what your plan is.  Doing so will give you a chance to reason with the children, and for them to voice any concern they may have.  It will also make the transition when you are deceased much easier.  If your children know what to expect, they will be less likely to challenge your estate plan upon your death.  Good communication is critical.  

2. Prenuptial agreements or postnuptial agreements are highly recommended if you want to preserve your assets for your children.  They will also protect each of you from your respective step-children.  Some clients avoid mentioning the subject of a prenuptial or postnuptial agreement because they don’t want to appear selfish or distrustful.  Most make it clear that gifting between the spouses may occur, in order to make it clear that when property is given to a spouse, it is intended to be that spouse’s property.  It’s also generally a better approach to establish what property is “mine, yours or ours” for the benefit of each other, and to give a clear outline to your children of your intentions concerning your property. 

3. Insurance policies, pension and retirement plan beneficiary designations need to be reviewed.  Is the beneficiary or ownership correct?  If you are naming children as beneficiaries of a retirement plan, your new spouse needs to consent to that designation under federal law.  An annual review of your all beneficiary designations should be a part of your estate plan.

4. You will need someone to handle both medical and financial issues if you are disabled.  You should decide now who will act as your agent to make those decisions for you.  Consider whether a child or your new spouse would be best to make those critical decisions.

5. If you have retirement income, check with your pension representative about the rights to survivor income if you should pass away before your new spouse.  The same thing can be said about social security benefits.

6. If you have custody of minor children from a prior marriage, you should consider who should act as the guardian of those children when you can’t care for them.

Sean Sullivan is an attorney and shareholder in the firm of Brindley Sullivan, PC, in St. George, Utah, and may be reached at (435) 673-9220.

Issue 7.10

Creating a durable power of attorney can be helpful to your family in the event you become incapacitated.  An accident, health crisis, or diseases of age may render you unable to manage your affairs, such as paying bills, managing investments, and making important financial decisions.  A “durable” power of attorney allows the person you choose ahead of time to act for you.  This person is called your “agent.  Your agent has authority to act for you during any time that you are incapacitated. 

Making a durable power of attorney gives your agent the authority to act for you but only according to the terms of the power of attorney.  Your agent must act in your best financial interest at all times and in accordance with your wishes in accordance with your power of attorney document. 

A durable power of attorney can give your agent broad powers over your property.  Broad powers are usually necessary to be sure that your agent has the flexibility and power to deal with the many issues that might come up in managing your affairs.  Because an agent’s powers are often so comprehensive, some worry that the agent might abuse those powers.  If that is a concern, you should consider the use of special power of attorney known as a “springing” durable power of attorney.  A springing durable power of attorney restricts your agent from acting on your behalf until you are determined to be incapacitated.  At that time, and only at that time, your agent’s authority “springs” into existence.  In your springing durable power of attorney, you set the standard for how your incapacity is to be established, such as by the written statement of your physician, by two physicians, or by a trusted family member or advisor, for examples.  Describing how your incapacity is to be established avoids costly and public court proceedings to determine your incapacity.  An attorney can help you decide which form makes the best sense for your circumstances. 

Great care should be taken in choosing your agent.  That person should know your general intentions concerning your property, and be financially secure, competent, trustworthy, and willing to take on the burden of your affairs.  If you do become incapacitated without having created a durable power of attorney and you have financial affairs that need to be addressed, your family will have to petition the court to determine your incapacity and appoint a conservator to manage your property.  Because of that unwanted possibility, most estate plans should include a durable power of attorney.

Sean Sullivan is a shareholder with the firm of Brindley Sullivan, PC, 249 E. Tabernacle, Ste. 102, St. George, UT 84770, (435) 673-9220.