Financial Planning for Women
November 2013
Presented by
Dr. Jean M. Lown
Estate Planning
Disclaimer: Education, NOT legal advice!
Taking care of business
• Sign up for drawing for financial
consultation
– Drawing will be held at the evening session
• Personal Finance Action Plan HO
– Commit to taking action!
• Estate Planning HO
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Estate Planning
• “ the process of accumulation,
management, conservation, and transfer
of wealth considering legal, tax, and
personal objectives.”
• Goal of estate planning is effective and
efficient transfers.
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Overview:
How Your Estate is Distributed
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Wills
Property distribution
& Guardianship
Wills
• Document in which a person tells how
assets should be given away after death
• Transfer the portion of your estate not
covered by contract
• To ensure property goes to desired heirs
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Why Write a Will?
• Absolutely necessary if you have children
• Utah Legislature wrote a will for you
• Without a will… Assets will go to spouse,
parents, siblings…
• Not to your roommate or favorite charity
• Without a will, your property may not go to
your desired heirs
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Personal Representative
• AKA Executor
– Named in will
– Carries out provisions of will
– Manages assets until they are passed to heirs
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Will Names Guardian(s)
• Person responsible for caring for child(ren)
– Name one person, not a couple
• May name different person to handle
child’s finances
– Can change!
– Not set in stone
– Do it today!
– Avoid family fight
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Without a Will…
• Estate transfers to various relatives
according to state law
– Property may not go to desired heirs
• Judge decides on guardianship
– May not be the person you would choose to
raise your child(ren)
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Do you need an attorney?
• Not with a simple, uncomplicated estate
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You may not need an attorney
• Simple situation?
– Attorney’s assistant will fill-in computer form
– Buy computer program & fill in yourself
• Nolo Press website: www.nolo.com
• Complicated family situation?
– Remarriage w/ kids from previous union?
– Multiple ex-spouses?
• Lots of assets?
– Educate yourself & then contact attorney
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Before it’s too late…
Wesley Bedrosian
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Personal Representative?
• Who me? Yes, you!
• The Executor’s Guide (Nolo Press)
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Probate Process
• Probate – court-supervised process
– Ensures transfer of a decedent’s assets to
beneficiaries
• According to will or state law
– Allows creditors to present claims against an
estate
• Non-Probate Assets
– avoid probate process
– P.R transfers assets directly to heirs
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Why Avoid
Probate?
-time consuming
- costly in some states
up to 5% of estate
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Transfer Your Estate (continued)
• Will (goes through probate process)
• Non-Probate Property –
– does not go through probate
– includes assets transferred to survivors by contract &
beneficiary designation
• Life insurance proceeds
• Financial accounts (retirement accounts, POD acc’ts)
• Joint ownership assets
• Assets in Trusts
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Transfer Your Estate by Naming
Beneficiaries
• Beneficiary: person or organization
designated to receive a benefit
• Beneficiary designation
– legal form signed by asset owner
– Specifies who gets property when owner dies
• Primary Beneficiary
– Secondary (Contingent)
– in case the first-named beneficiary has died
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Avoid Probate: Transfer Your
Estate by Ownership
• Joint Ownership (JTWROS)
– Married couples
– Joint owner automatically inherits the property
– Most couples own house JTWROS
• Community property
– NOT Utah
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Avoid Probate Summary
• POD bank accounts
– Fill out bank's form
• Transfer on death
– Vehicles; securities
• Retirement accounts
– name beneficiary
• Joint ownership
• Community Property
• TOD real estate deed
– Not UT; yes ID
– Not UT, ID or WY
• Small estates may
avoid probate
– w/ affidavit
– Simplified probate
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Questions
?
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Use of Trusts to Transfer Assets
Trust
• Legal arrangement between
– grantor (creator) of trust & trustee, person
designated to control & manage trust assets
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Why Establish A Trust?
•
•
•
•
•
•
•
Avoid probate (w/ living trust)
Control distribution of assets
Protect assets from creditors
Provide privacy for heirs
Avoid battle over will
Provide for special needs person
If you own property in > one state
– Avoids having to probate in > 1 state
• Reduce/avoid estate taxes
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Trust Vocabulary
• Grantor: person who establishes a trust
– Also called: settler, donor, or trustor
• Beneficiary: person for whose benefit a
trust is created
• Trustee: the person or corporation to
whom the property is entrusted to manage
for the use & benefit of beneficiaries
• Corpus: assets in trust
- Also called: trust estate or fund
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A trust is an empty cookie jar
• Grantor MUST legally transfer assets into
the trust!
– Trust is an empty legal
document…
until funded
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Two Categories of Trusts
• Living (inter vivos) Trust
– takes effect while the grantor is still alive
• Revocable (to avoid probate)
• Irrevocable (transfer property to reduce taxes)
• Testamentary Trust (in conjunction w/ will)
– Takes effect upon grantor’s death
– Do NOT avoid probate
– Often to create a trust for minors
• Property must be managed by adult
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Irrevocable Living Trusts
• Assets bypass probate
• Grantor gives up 3 rights
– to control property
– to change beneficiaries
– to change trustees
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Revocable Living Trust
•
•
•
•
Avoid probate
Protect & manage assets
Deal with incapacity/incompetence
Grantor can change trust’s terms or cancel
it while alive
• Sets up a testamentary trust at death
• Like a will; but more difficult to contest
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Testamentary Trusts
• Take effect at death of grantor
• To manage $ after death
– Income for spouse & children
• Underage children ($ guardian)
• Disabled adult children
– Maintain eligibility for government benefits
• Pass $$$ to adult children at older ages
– To give assets to grandchildren while the
income supports spouse & children
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Living Trust vs. Will
http://www.nolo.com/legal-encyclopedia/living-trust-v-will.html
•
•
•
•
•
Name beneficiaries
Leave property to kids
Avoid probate
Privacy
Requires property
transfer
• Protection from court
challenges
• Requires Notary
• Name beneficiaries
• Name guardians
• Name manager for
children’s property
• Name executor (PR)
• Instruct how to pay
taxes & debts
• Simple to make
• Requires witnesses
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Consult a Lawyer if…
• Close relative—someone who would
inherit might challenge your decisions
• Children from previous marriage don't get
along with your current spouse
• You are in a relationship your closest
relatives don't approve of.
• You have a history of mental illness
• You don't plan to leave much to your
closest relatives, & they fear you are being
unduly influenced by someone
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Questions?
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Letter of Last Instructions

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Non-legal instrument with suggestions &
recommendations for survivors
Letter of Last Instructions
 Not
a legal document
 Not a will or substitute for will
 Information that is needed
immediately
 to
help family decide & reduce
stress
 to ensure wishes are carried out
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Letter of Last Instructions

Individuals to be notified
of your death

Contact info: name,
address, phone, email






Funeral, burial;
cremation, memorial
service wishes
Location of will, trust
Financial advisor &
attorney contact info
Insurance policies



Safe deposit box location & #,
key, contents list
Location of personal papers
(not in safe deposit box)
Personal property distribution
Father’s full name; mother’s
maiden name for death
certificate
Obituary information
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Letter of Last Instructions
Where to keep it? Who to tell?
 Survivors must be able to locate quickly

 Tape
to bedroom mirror?
 Copies to parents, siblings, etc.

Start today
http://extension.usu.edu/files/publications
/factsheet/FL_FF-19.pdf
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Organ Donation Wishes

Each day
 77
people get a life saving organ transplant
 19 others die waiting for donated organ
http://organdonor.gov/
Driver license designation NOT enough
 Utah Donor Registry http://www.yesutah.org/

 http://www.yesutah.org/register
 Tell

family & your doctor of your wishes
US: opt-in; European countries: opt out
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Pre-plan Your Farewell

“Always go to other people’s funerals;
otherwise they won’t come to yours.”
Yogi Berra

Preplanning a funeral/wake/memorial
service/going away party/sky burial
http://extension.usu.edu/files/publications/facts
heet/FL_FF-09.pdf
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Advance Directive Documents
in case of incapacitation

Advance Directive –
 Document
names who will make financial,
medical, other decisions…
 If mentally incompetent and/or unable to
communicate your wishes

Only 1 in 5 Americans has Advance
Directive documents
 Ask
your parents and grandparents
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Advance Directive Documents

Living Will
 Wishes
for end of life care
 Keep
alive at all costs vs. do not want to live in
permanent vegetative state… & points in between
 Medical
Power of Attorney
 Authorize person to make health care
decisions on your behalf…
 if
you are unable to make decisions
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Prepare Advance Directive
Documents (continued)

Durable Power of Attorney


Limited Power of Attorney –



appoints a person to handle financial affairs if you
cannot
narrow in scope could be restricted to a certain time
period or certain tasks
Robert Kirby’s parents going on a church mission
Springing Power of Attorney –

takes effect if a specified event occurs, usually mental
incapacitation
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Advance Directive (Living Will)

Purposes:
 to
make your wishes known
 To relieve your loved ones of making difficult,
painful decisions when they may not agree
 Utah Advance Health Care Directive
 New law & forms effective January 1, 2008
 Repealed old law and forms!
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UT Advance Directive for Health Care
1. Name person to make health care
decisions for you when you cannot
2. Specify your health care wishes
3. Tells how to revoke or change directive
4. Makes your directive legal
5. Discuss with family & your doctor
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Utah Advance Directive/Living Will

http://aging.utah.edu/utah_coa/directives/index.html

Simple form
 Can
be edited & personalized
 Must be witnessed by one person who is not
 related
 heir
or beneficiary
 financially responsible for declarant
 health care provider
 health care agent
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Update Documents as needed:
5 Ds
1. Decade birthday
2. Diagnosis
3. Deterioration
4. Divorce
5. Death of someone close to you
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Who will inherit your digital
assets?
•
•
•
•
Email, Facebook, & blog?
Password protected financial accounts?
Family photos in the cloud?
License agreement for digital assets not
transferable
– Put digital assets in trust
– List in will who can inherit (but no passwords)
– Details in letter of last instruction
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Summary
•
•
•
•
•
•
•
Talk with loved ones
Make decisions for yourself & children
Put your choices in writing
Just do it!
Single best resource: http://www.nolo.com
Commit to a specific date (Thanksgiving?)
Start: Letter of Last Instructions &
Advance Health Care Directive
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• Questions?
Questions?
FPW Blog: http://fpwusu.blogspot.com/
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2014 Upcoming FPW
• No December program
• Dr. Craig Israelsen: 7Twelve asset
allocation
• Teresa Hunsaker: Which house
investments make sense?
• Financial Planner Lon Jeffries
• ACA- Health insurance in Utah
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