ESTATE, TRUST and PROBATE

Estate Planning for Couples and Individuals

Careful estate planning for all couples is essential to the security of the family.  Every family is different, meaning your family’s estate plan should be in alignment with your family’s situation and wishes. To make sure your loved ones are fully protected and secure, you’ll need the following documents to help make the estate planning process faster and go smoother:

Last Will and Testament – A last will and testament allows the drafter of the document to control the distribution of their assets upon death. The law provides that if a person dies without a will, their legal next of kin will be the recipients of their assets. In most cases, that would be a spouse, children, parents, siblings, siblings children, aunts and uncles or first cousins, in that order. With a will, the property may be divided and distributed as the drafter chooses. Also, a will is the only document which allows parents to name legal guardians for their children should tragedy strike.

Durable Power of Attorney – This document allows the drafter to authorize another person to make financial decisions for them should they become unable to do so or they pass. It authorizes, among other things, the payment of debts, the collection of payments, the redistribution of assets, the withdrawal of assets from a bank account and the sale of property. Because of the important nature of these powers, there is an attached affidavit that the authorized party must complete before the powers become effective. This affidavit is a built-in protection mechanism to avoid misuse of these powers.

Designation of Guardian for Property Management and/or Personal Needs – If a person were to be judicially declared incompetent or incapable of managing their property or themselves, the court would appoint a guardian for that purpose. The guardian is usually a family member. This document allows the drafter to designate who that guardian would be.

Living Will – A living will states exactly what measures a person wants or does not want if certain specifically outlined medical conditions arise. It does not, however, authorize another person to make those decisions for the drafter of the living will.

Medical Power of Attorney / Health Care Proxy – This document allows a designated person to have access to medical records and make specified medical decisions for the drafter should they become incompetent to do so themselves.

Priority Visitation Directive – A priority visitation directive specifies who the drafter prefers to have priority visitation privileges, usually over family members. It tells a hospital administrator, floor supervisor and any other hospital personnel that the possessor of the document shall not be denied access to the hospitalized drafter of the directive.

Affidavit of Burial or Cremation – This document ensures that a funeral director or funeral home administrator follows the instructions given them by the person designated in the affidavit.

Important Estate Planning Issues

Figuring out which family members get how much of one’s estate, which items go to which family members and how to ensure your estate and its possessions are distributed accordingly has become increasingly complex due to the changing nature of modern family make-ups. At Chianese & Reilly Law, we’ll sit down with you and walk you through the estate planning process. Below are some of the areas where most estate planning complications and challenges arise and what you should consider to avoid common estate planning mistakes.

Property Ownership – Estate planning can be more complicated for same sex couples. The first thing to consider is getting a title for your property. This title indicates full ownership.

For married and unmarried couples, there are three ways to pass down property ownership: Tenants by Entirety, Tenants with Rights of Survivorship and Tenants in Common.

“Tenants by Entirety” is the most secure way to own property as a couple because it allows spouses to own property together as a single legal entity with automatic rights of survivorship. Under a Tenancy by Entirety, creditors of an individual spouse may not attach and sell the interest of a debtor spouse: only creditors of the couple may attach and sell the interest in the property owned by tenancy by the entirety.  “Joint Tenants with Rights of Survivorship” (JTWROS) is the most secure way for unmarried couples to own property because the property automatically passes to the surviving partner.

You must, however, keep accurate records as to individual contributions to the property because the IRS considers the first to die as the owner of the property in full.  The last way a couple can own property is “Tenants in Common” which allows a couple, or additional owners, to own indivisible parts of the property. Unlike JTWROS, with a “Tenants in Common,” their share passes through their will when they die, instead of going directly to the surviving owner.

Marital Agreements – While no one wants to think about dying, nobody doesn’t want their marriage relationship to fail either. Marital agreements assist couples in dividing up of and distribution of the couple’s possessions should the marriage dissolve.

For unmarried couples, drafting a domestic partnership agreement will help ensure the couple’s assets are divided equally and fairly between the two parties. It is important to note that a domestic partnership agreement isn’t the same as a domestic partnership agreement. These types of agreements, as well as pre- and post-marital agreements are legal contracts drafted and reviewed by attorneys.

The following are the most recognized reasons why couples should consider drafting these agreements:

They can be used to memorialize the partner’s respective contributions toward the acquisition of major assets, such as real property, investments and so forth, and provide a mechanism for division of assets and liabilities in the event of dissolution of the relationship.  This can also be addressed in a separate document called a “Joint Tenancy Agreement.”

They define financial obligations to one another (and/or to the partner’s, children), both during the partnership and after dissolution.

They may also be useful to prove the contributions of each partner for purposes of estate tax and acquiring stepped-up basis for a deceased partner’s interest.

They can define separate and joint property for the purposes of equitable distribution upon the dissolution of the relationship.

Other Benefits of Marital Agreements

If you are unmarried and have a Domestic Partnership Agreement, these agreements are important because they may provide the basis upon which a court may grant the parties a particular right or benefit ascribed to legally married couples exclusively if the relationship dissolves.  As dissolutions are often messy and contested, these agreements provide the court with a clear declaration of the intentions of the parties.

If you are married and have a pre or post marital agreement, you get to define the terms of the dissolution.  As long as there is full financial disclosure and independent legal representation for both parties, the parties can define separate and marital property and provide for spousal support if appropriate.  Marital agreements create a clear path to a considered and fair dissolution.

Trust Planning

Families who have children or are legal guardians over minors would benefit from setting up a trust for the minors. Trusts allow the drafter of the trust to transfer his or her assets to an intermediary party who will then hand those assets to the named beneficiary (usually the minor).

There are two types of trusts: revocable and irrevocable.  Revocable trusts help bypass probate and irrevocable trusts assist in estate tax planning.   If you have children that are minors, you should consider creating a will with a testamentary trust (a trust that does not come into existence unless you, or you and your spouse or partner, both die).  This trust allows you to control the way money is distributed to a minor and by whom. Trusts are also advisable for people who own property in states other than those in which they reside. This will help to avoid costly and redundant probate proceedings.

If you have any questions regarding estate planning, marital agreements or trust planning, contact our office at Chianese & Reilly Law and we’ll be happy to discuss your concerns, questions and goals.   

If you have any questions regarding Estate Planning for Same Sex Couples, please email me at: Brown@awclawyer.com.

For more information about pre-Obergefell estate planning, check out my Florida Coastal Law Review article on Estate Planning for Same-Sex Couples.