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Archive for August 2016

Service Your Estate Plan

When Is It Time To Service Your Estate Plan

If you own a car, then you know it requires regular servicing in order to perform well and be reliable. More than likely, your car came with a recommended schedule for service, based on how many miles it has been driven; after a certain number of miles, you need to change the oil, replace the brake pads, rotate the tires, and so on.

If you have a newer car, you probably have an irritating dash light that comes on when it’s time for services and stays on until the mechanic resets it. Either way, whether you pay attention to the odometer or rely on that dash light, it’s pretty easy to know when it’s time to service your car. And if you keep driving it without servicing it, it’s a sure bet your car will let you down.

Service Your Estate PlanLike your car, your estate plan needs “servicing” if it is going to perform the way you want when you need it. Your estate plan is a snapshot of you, your family, your assets and the tax laws in effect at the time it was created. All of these change over time, and so should your plan. It is unreasonable to expect the simple will written when  you were a newlywed to be effective now that you have a growing family, or now that you are divorced from your spouse, or now that you are retired and have an ever-increasing swarm of grandchildren! Over the course of your lifetime, your estate plan will need check-ups, maintenance, tweaking, maybe even replacing.

So how do you know when it’s time to give your estate plan a check-up? Well, instead of having mileage checkpoints, your estate plan has event checkpoints. Generally, any change in your personal, family, financial or health situation, or a change in the tax laws, could prompt a change in your estate plan. Use the following list to guide you.

It’s a good idea to review your estate plan every year. Set aside a specific time every year (your birthday, anniversary, family gathering) to review it.

Event Checkpoints to Review Your Estate Plan

You and Your Spouse, If Married

  • You marry, divorce or seperate
  • You or your spouse’s health declines
  • Your spouse dies
  • Value of assets change dramatically
  • Change in business interests
  • You buy real estate in another state

Your Family

  • Birth or adoption
  • Marriage or divorce
  • Finances change
  • Parent or relative becomes dependent on you
  • Minor becomes adult
  • Attitude toward you changes
  • Health declines
  • Family member dies

Other

  • Federal or state tax laws change
  • You plan to move to a different state
  • Your successor trustee, guardian or administrator moves, becomes ill, changes mind
  • You change your mind

Article Credit: EstatePlanning.com

Do All Assets Go Through Probate

Do All Assets Go Through Probate?

Not everything you own will automatically go through probate. The obivous assets that will need to be probated are those with a title that is in your name only. These might include bank accounts, investments, home, other real estate, vehicles, etc. If yours is the only name on the title and you are deceased, only the probate court can take your name off the title and put someone else’s name on.

Assets that generally do not go through probate are 1) jointly owned assets that transfer to the surviving owner; 2) assets that have a valid beneficiary designation; and 3) assets that are in a trust. However, these assets do not always avoid probate.

Do All Assets Go Through Probate1. Jointly Owned Assets

Jointly owned assets that transfer to the survivng owner do not go through probate. (This kind of joint ownership is “joint ownership (or joint tenants) with right of survivorship.”) But if the survivng owner dies without adding another owner, or if both owners die at the same time, the asset must be probated before it can go to the heirs.

You should be aware that transfer of this ownership happens immediately upon the first owner’s death. So, even if your will says you want to someone else to receive your share (like your children from a previous marriage) and you die first, the asset will still go to the surviving owner who can then do whatever he/she wants with it–and your children would likely be disinherited.

Another kind of joint ownership is tenants-in-common. With this kind of joint ownership, if you die first, your share will be distributted as directed in your will (or to your heirs if there is no will); it will not go to the other owner unless your will says so. This lets you control who receives your share, but the asset will still have to go through probate.

2. Beneficiary Designations

Some assets–including insurance policies, IRAs, retirement plans and some bank accounts–let you name a beneficiary. When you die, these assets will be paid directly to the person(s) you have named as beneficiary without probate. Well, that is the way it is supposed to work, but it doesn’t always happen that way.

  • If your beneficiary dies before you or at the same time as you, the proceeds will have to go through probate so they can be distributed with your other assets.
  • If your beneficiary is incapacitated, the probate court will probably take control of the funds through a guardianship/conservatorship. This is because the institution will not knowingly pay to an incompetent person and will usually insist on court supervision.
  • If you list “my estate” as beneficiary, the court will have to determine who “my estate” is. The funds will go through probate and be distributed with your other assets.
  • If you name a minor as a beneficiary, a probate court will probably have to establish a guardianship for the child. Most institutions will not pay directly to a minor or to another person for the child’s benefit; they do not want the potential legal liabilities and will usually require proof of a court-supervised guardianship.

3. Trust Assets

Assets in a trust, like a revocable living trust, avoid probate. However, if you have a trust in your will (called a testamentary trust), your assets will not avoid probate. The will and your assets will have to go through probate before  the trust can go into effect. Any assets you leave out of your living trust will probably also have to go through probate.

Article Credit: EstatePlanning.com