Estate Planning
Estate planning is a term which can have different meanings in different contexts. We consider estate planning to be a review of a client’s needs and drafting of appropriate documents to outline a client’s wishes in preparation for incapacity and/or death. Estate planning services are generally provided on a fixed fee basis according to a client’s needs and circumstances (please see fee schedule for more information).
What Services are Included?
- Review and analysis of the community property/separate property nature of your current and anticipated assets;
- Review and analysis of your existing wills and codicils, community property agreements, trusts and related documents, if any;
- Consultation regarding how you wish to dispose of your assets;
- Discussion of the estate tax consequences of achieving your goals and possible alternative methods to attain those goals;
- Analysis of the probate vs. nonprobate nature of your assets including a review of any beneficiary designations of nonprobate assets;
- Preparation of documents required to implement your plan; and
- Supervision of execution of the final documents, to ensure they are legally valid.
When we provide estate planning services to a client, we include a Will, Durable Power of Attorney, Health Care Directive (a.k.a. Living Will), and a Community Property Agreement, if appropriate.
Planning Process
When a client contacts our office for estate planning we schedule a one to two hour initial conference, where items 1 through 5, above are addressed. Prior to the initial meeting, we will send a questionnaire that provides the client a format to organize the information needed to implement their estate planning objective.
At the initial client meeting we will review and discuss all relevant information to answer the client’s questions and to discern the specific information that will be required to prepare draft documents for the client to review.
After the first meeting, drafts of estate planning documents are prepared and given to the client for review. Desired revisions are addressed by email or telephone communication with the client but can also be reviewed at the time of signing. This signing appointment should be made within a reasonable time after the drafts are received and reviewed.
Click SINGLE or COUPLE to view and print client questionnaires.
Wills
In its most basic form, a Will is a person’s written statement of their wishes for distribution of their assets upon their death. Wills can be very simple, consisting of only a few pages, or very complex with trusts and tax savings provisions.
For many of our clients, a simple Will may be sufficient, but even a simple Will must meet certain requirements to allow proper administration upon death. The most important of these requirements is that the Will be properly witnessed by two disinterested witnesses. To be “disinterested” a witness must not be a family member or beneficiary under the Will, nor be the named Personal Representative or Trustee. When we assist with the preparation of your estate planning, our staff provides the appropriate witnesses for your Will.
A Will designates a Personal Representative (Executor) to handle the administration of the estate. The Personal Representative’s job is to collect and value all of the assets in order to pay debts and taxes and finally, make distributions in accordance with the Will. By including the necessary language in the Will, a client can authorize their Personal Representative to administer the estate with limited court oversight.
When clients have beneficiaries who are minors (under age 18), a trust for those beneficiaries is almost always included in the Will because minors may not legally receive assets directly. When clients have minor children, provisions for a guardian are also included. Without a trust or similar provision, court supervision of the minor’s guardian and/or inheritance is almost always required. Court supervision could include an appointment of a Guardian Ad Litem (a trained attorney or social worker who will investigate the family situation and whether any inheritance is due to the minor) when the estate goes to Probate and continued court review as frequently as every year. The cost for such supervision can be in the thousands of dollars. When the Will provides directly for supervision of a minor’s inheritance, (i.e. use of a trust for the minor beneficiary) such court supervision is usually waived.
Any trust which is included in the Will is generally referred to as a “testamentary trust.”
There are other forms of testamentary trusts that we may include in a client’s Will. Some of these are for disabled beneficiaries or those receiving government benefits based on disability and financial need. For clients with large estates, a trust may be included for tax purposes. In other situations, like second marriages, or where spouses have separate children, trusts can provide for the surviving spouse while ensuring ultimate distribution to children. During our initial appointment we will evaluate the need for a trust and discuss the options.
Revocable or Living Trusts are a completely different type of trust and are discussed further here.
Powers of Attorney
A power of attorney allows an individual to designate a person (the “principle”) whom they trust (their “agent”) to make decisions if they ever become unable to make such decisions personally (incapacity). A power of attorney is essential to ensure that if incapacity occurs, court involvement won’t be required in order for family (or friends) to care for your financial and/or medical needs. The term “durable” is often misunderstood, but is used to indicate that the power of attorney will continue to be effective during the individual’s incapacity. Typically we prepare two powers of attorney for each client as follows:
General Durable Powers of Attorney: As the title implies, a General Durable Power of Attorney is not for a specific purpose, but authorizes broad powers for the designated agent. Powers to be authorized are specifically mentioned in the document and include authority to handle banking, payment of bills, and most other routine and non-routine financial and business transactions.
Each spouse needs a General Durable Power of Attorney even though many assets may be jointly owned. Certain transactions cannot be handled by a spouse without a power of attorney and access to information may likewise be very limited. For example, a tax return cannot be filed with only one spouse’s signature and a spouse will not have access to their spouse’s retirement accounts or various insurance. Accordingly, it is typical for a married individual to name their spouse as the primary agent and another close friend or family member as an alternate.
The term “durable” signifies that the power of attorney will be effective despite any later incapacity of the principal.
Durable Power of Attorney for Health Care Decisions: This type of power of attorney designates who the client would like to make medical decisions and have access to medical information when the client is unable to handle these decisions personally. Usually a client will designate a close family member or friend to be their agent. Without such a document, the persons closest to the client may be unable to get information, visit or advocate for the client’s wishes if the worst should happen.
Special Power of Attorney: Unlike a General Power of Attorney, a Special Power of Attorney does not give general powers, but is only for a specific purpose. For instance, a special power of attorney can be used to allow an agent to sign documents for the purchase or sale of real estate owned, or to be purchased by, the principal. A Special Power of Attorney can only be used for the particular purpose it is created and often has a specific expiration date after which it will no longer be valid.
Health Care Directive
Also called a “Living Will” or “Advance Directive,” this document provides a way for an individual to indicate whether they wish to have life-sustaining procedures withheld or withdrawn if their attending physician diagnoses them with a terminal condition or if two physicians diagnose them to be in a permanent unconscious condition. The directive we prepare also includes an opportunity for the client to indicate their wishes regarding organ donation at death.
Community Property Agreement
A community property agreement is a contract between spouses or registered domestic partners that converts separate property to community property upon the death of either spouse, and vests the ownership of all of the property in the surviving spouse.
Most often people think that they don’t need a community property agreement because Washington is a community property state and all property automatically goes to the surviving spouse upon the first spouse’s death. This is not exactly true.
Washington State law presumes that if you are married, all property owned by a husband and wife is community property. There are many exceptions to this overly broad statement; however, it remains the basic law. What does each spouse own when all their property is community property? The answer is each spouse owns FIFTY percent of the community property assets. That’s right – FIFTY percent, not 100%, and each spouse can give their fifty percent any way they want in their will. To prove they wanted it to go to their spouse, a probate would be required (with or without a will). This is the time a community property agreement is quite valuable. No probate would be required if a community property agreement and the death certificate for the deceased spouse is recorded in the county records wherever the deceased spouse owned real estate. Like most good things, there are potential downsides to community property agreements. Because a community property agreement is a contractual obligation between spouses, later changes to a Will do not overcome that obligation. Similarly, provisions in a Will to utilize tax planning can be accidentally wiped out by a community property agreement. You should discuss the risks and benefits of a community property agreement with your attorney.
Codicil
A codicil is an amendment or modification to an individual’s will. A codicil must be executed with all the formality of a will. When a prior client wants to make a change to a will we previously prepared for them, we often simply make the change and execute a new will.