The Difference Between a Durable and Non-Durable Power of Attorney

We are constantly stressing the importance of having a well-rounded estate plan, elements of which include both a will and a power of attorney. Before having either document drafted, it is imperative to understand the nuances of both. For example, did you know that there are two types of powers of attorney? There is a durable power of attorney and a non-durable power of attorney. Knowing the difference between the two is necessary to make sure you create a document that suits your needs.

Non-Durable Power of Attorney
A Non-Durable Power of Attorney automatically terminates if you become incapacitated, and at death. This means the agent you appointed in the document will lose authority after any one of those circumstances occurs. When that happens, a court will have to appoint a conservator for you to handle your personal and business affairs.

Durable Power of Attorney
A Durable Power of Attorney, which usually includes a “financial” or “general” power of attorney, will become or will continue to be effective even if you become incapacitated. A Durable Power of Attorney can be created by including certain specific statements in the document. These statements need to be very well drafted, and they make the difference between a durable and non-durable power of attorney. As with the Non-Durable Power of Attorney, a Durable Power of Attorney becomes ineffective immediately upon the death of the creator of the power.

The Power of Attorney is a very important document in your estate plan, but it can also be the most dangerous document you will sign. It can be dangerous because they often grant broad, mostly unchecked, power to someone else to handle your finances. That said, it should still be included as part of your estate and financial planning. It can be used in many ways to save you money and time in the long run, and it does not cost a lot of take much effort to draft and execute one. Creating a Power of Attorney can save the hassle of going to probate court to have a conservator appointed if you have an illness or accident that prevents you from handling your personal and business matters. They are an essential tool to help fund your living trust if you become incapacitated.

If granting broad powers to someone to conduct business on your behalf is a concern, limitations can be placed in the document, limiting its effectiveness unless you are incapacitated. All of this should be discussed with your attorney and understood by you.

It’s also important to remember to “refresh” your power of attorney. If it is more than 3-5 years old, many financial institutions are reluctant to accept the power of attorney, even if it is legally valid.

The Astill Law Office has provided high quality legal services for over 30 years. We represent individuals and business owners and specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Power of Attorney or estate planning in general, contact The Astill Law Office at 801-438-8698.

Who Should I Appoint as My Executor?

A Personal Representative, formerly known as an Executor, is the individual you appoint to administer your estate when you die. He or she will be responsible for administering your estate, paying your outstanding debts, and distributing your property according to your wishes. The person you select should be someone you trust and someone you are confident will carry out your final requests. There are a number of things you should consider when appointing your Personal Representative.

Usually, people pick their spouse or an adult child or sibling as their Personal Representative. If this is the route you are considering, remember to consider whether the appointment of one child or sibling will put a strain on any other family relationships.

It is also important to pick a Personal Representative who is capable of handling financial matters and maintaining detailed records; and they have to have a thick skin. Even the most harmonious of families experience some friction in administration of an estate. If a person is incredibly busy, they might not be the best choice as administering an estate generally takes a substantial amount of time.

You should always consider alternate Personal Representatives in case the initial person is unable or refuses to accept the position. Finally, let the individual know you have chosen them so they have a chance to let you know whether they are up for the task. You should also review your decision periodically to make sure your choice remains a wise one. We had a client some years ago who named a favorite brother. By the time the person died, the brother had become a drug addict and ruined his life. At that point it was a very bad choice.

There is not a perfect description of Personal Representative qualities, because your personal circumstances will determine the suitability and choice of an individual. Generally, though, your Personal Representative should be someone who is capable of managing your estate and has a good understanding of your affairs. You should discuss your choices with a qualified estate planning attorney so that you pick the right person for your circumstances.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

What is my Lawyer’s Role in Estate Planning?

We continuously stress the legal pitfalls surrounding wills or trusts drafted without an attorney. This is because as experienced estate planning attorneys, we have seen far too many sad cases where an individual’s intent is not honored because of a poorly drafted document. Only a qualified estate planning attorney can help you understand and apply the many laws that apply to your personal estate situation.

Creating Your Estate Plan without an Attorney
A do-it-yourself (DIY) will or trust program or form is not a substitute for an attorney. It cannot provide you with the wide range of legal advice that an experienced attorney can give you. It also cannot assure you that your will is validly formed, or that assets passing outside of your will or trust are properly handled. Only an experienced estate planning attorney can consider state law nuances that may apply to your situation, and address relevant tax, legal and personal issues. Recently we had two different clients who come to us with DIY wills and trusts. They did not accomplish the intended result. Luckily it was not too late. In another case, because of the poor drafting done, we had to go to Court to get permission to change a trust. The clients spent 5-10 times what a trust would have cost originally if done by a qualified estate planning attorney at the outset.

Creating Your Estate Plan with an Attorney
An estate planning lawyer will help you organize your estate and explain the implications of various estate planning tools and techniques. An attorney will explain the pros and cons to different tools based on your personal situation. There are several estate planning options, but not every single one is right for every family or individual. An estate planning attorney will also guide you through the complexities of estate planning laws that apply to you, and help you understand what can happen if certain actions are taken. The attorney can anticipate difficulties that may arise in the event of your disability or death and can advise you how best to plan for those contingencies. An estate planning attorney can also ensure that your estate planning documents are validly drafted and leave no room for interpretation. This minimizes the chances that your will or trust will be challenged.

Ultimately, your affairs will be carried out how you want them to be. An estate planning attorney’s role is to make sure that your wishes are carried out according to your plan.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Can you Designate your Family Trust as the Beneficiary of your IRA?

Surprisingly, one of the most challenging assets to deal with in planning for your estate at death is your IRA. “Why is this so difficult?” you ask. Here we present a few challenges and solutions.

First, IRA benefits pass by contract, according to your beneficiary designation. People sign wills and create trusts thinking they take care of everything, but unless you mindfully integrate your IRA with your estate plan, it is not part of your estate plan.

Second, there are complicated tax regulations dealing with IRAs. There are also rules about inheritors’ distributions of the IRA. These rules and regulations are complicated, and most people have not spent enough time to understand them.

Third, the IRS has caused some of the confusion. We’ll tell you why below.

One typical estate planning solution is to name the surviving spouse as the primary beneficiary of your IRA (if you’re married of course), and name the contingent beneficiary as your Trust. Clients and financial advisors routinely question this recommendation. Why? Because the IRS’ own Publication 590 says that “A trust cannot be a ‘designated beneficiary’ (an important term under the Code) even it is a ‘named beneficiary’.” Wow! Can anyone interpret that for me? We have interpreted it and it’s just plain wrong as you will see.

Taxpayers and financial advisors read that sentence and conclude that they can’t designate their Family Trust as an IRA beneficiary, but they are wrong! The incredible thing is the very next sentence in Publication 590 explains how a trust can be named as “your beneficiary”, with some stipulations. The proper type of trust can be named as an IRA beneficiary and at your death, and if you follow the stipulations, the IRS ‘looks through’ to the individual beneficiaries and they are deemed to be the inheritors for tax purposes, not the Family Trust. So the short answer is a properly drafted Family Trust can be named as the beneficiary of your IRA!

    The obvious next question from our clients is ‘Why do I want to name my trust? Isn’t it simpler to just name my spouse and children so it goes directly to them?’ Good question! Here’s just some of the answers I give:

  • Are any of your children minors? Or if not a minor, just how good are they with money? Are you ready to hand them several thousand dollars (if not hundreds of thousands)? Do you expect them to use it properly? If so, then why did we just create a trust to hold their assets until they reach age 25 or 30 or even 40 under the terms of your Will or Trust?
  • What happens if one of the named beneficiaries dies? The truth is we don’t know and neither do you unless you read your IRA custodial agreement…and each one is different! So if you have several IRA accounts or even 401(k) accounts, without reading each one, you can’t know what the result is if a beneficiary dies before you do.
  • Have you looked at your beneficiary designation for that IRA you created years ago? Many clients are surprised to find that when they signed their first beneficiary designation, they had one or two children and now have 3 or 4 children and guess what?…they haven’t updated it. All of their children aren’t named. People tend to ignore this stuff.
  • Do you have a Special Needs child? They will lose governmental benefits until they use up all of their inherited IRA money.
  • Are you concerned about possibilities of drug or alcohol abuse with your child? Only a trust can handle this issue.
  • Do you have a grandchild or other person you want to benefit? How do you handle this?

The simplest answer is to create a good estate plan with a Will and Trust, handling all the issues you care about in your family, then designate the Trust as the beneficiary of your IRA and 401(k)! This integrates the IRA with your estate plan and you do not have to worry about where the IRA benefits will go with each family change.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about trusts or estate planning in general, contact The Astill Law Office at 801-438-8698.

Asset Protection Strategies Require Full Disclosure and Careful Planning

When engaging in asset protection strategies, clients and their attorneys must be very careful not to act in a manner that defrauds creditors. Fraudulent attempts to protect assets not only derailed protection strategies entirely, but attorneys can lose their license to practice law for being involved. The key to proper and effective asset protection is that a client must fully disclose his personal and financial situations to his lawyer so that the lawyer can provide proper guidance.

Recently, the Iowa Supreme Court considered sanctions against a lawyer for allegedly committing an unethical act in helping the client protect assets by placing them in a Domestic Asset Protection Trust. Fortunately for the attorney, the Court ruled that he did not commit an ethical violation in assisting a client with asset transfers that the court determined to be fraudulent and which were done to defraud creditors.

This was an ugly case about an unwitting attorney and a horrible horrific incident in which his client was involved. A simple statement of the facts follows:
In January, 2003, RH shot and killed his neighbor, TL. RH was ultimately convicted of manslaughter. TL’s widow and TL’s estate sued RH and obtained a large judgment against him for wrongful death (similar to the O.J. Simpson case). After the shooting, but prior to conviction and a civil judgment against him, RH and his wife went to their lawyer seeking asset protection strategies. The lawyer assisted them in various transfers using revocable trusts and an irrevocable trust. The attorney was not aware of the conviction or the civil case, and had no idea that RH and his wife were trying to hide assets from the judgment creditors. If the lawyer had known, things might have been done very differently. For example, he should might have refused to do some of the asset protection transfers based on attorney ethical standards.

A district court held that the transfers were fraudulent, so TL’s estate was able to get some financial satisfaction. TL’s widow was understandably upset and filed a complaint against the attorney for assisting RH and his wife. The Iowa Supreme Court concluded that if an attorney knowingly assists a client in committing fraud, he could, and should, be sanctioned. However, in this instance, RH made misrepresentations to his attorney, who had reasonably believed what was said, and therefore concluded that the asset protection transfers were legitimate and could be made.

The lesson for all is this: Asset Protection is a valid estate planning strategy. However, strategies fail if the attorney is not aware of the all the client’s circumstances and/or the client isn’t completely honest with the attorney. The attorney can face sanctions if he allows or assists a client in defrauding creditors. Great care must be taken in this area of the law. It’s not something that can be undertaken independent of your attorney. Work on asset protection strategies with an attorney who is well versed in the law, and make full disclosures about your circumstances..

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about asset protection or estate planning in general, contact The Astill Law Office at 801-438-8698.

Who Should I Appoint as the Guardian of my Children?

There are many reasons why you should have a will as part of your estate plan. One of the main things to consider is that a will is the only tool to appoint a guardian of your minor children. It is really important to appoint a guardian to ensure your children are cared for in your absence. Appointing a guardian can also help avoid a future family legal battle. Just as there are many considerations in estate planning, there are many things to weigh when deciding on who you should appoint as a guardian.

    A guardian has the legal responsibility to take personal care of your children when you, the parent, cannot. Appointing a guardian is a very personal decision, and possibly one of the most important ones to be made in the estate planning process, because he or she will be parenting your children or will have the responsibility of placing the child with someone who will parent them. Therefore, it is important to pick someone who:

  • loves your children
  • is responsible
  • is capable of raising your children
  • has values similar to yours
  • has a relationship with the children
  • is liked by the children
  • lives nearby so that the children do not get uprooted
  • will provide your children with easy access to their other relatives

After you have chosen someone to appoint as the guardian of your minor children, you should discuss your selection with that chosen individual. This will help ensure they are willing to take on the responsibility and are prepared for the possible caregiving they will have to do. You should also consider appointing an alternate guardian in the event that the first cannot fulfill the duties or changes his or her mind. You should review your choice frequently. People and circumstances change over time and you don’t want to short-change your family.

And remember, even if you have a trust, you still need a will; only a will can be used to appoint a guardian.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

What are the Biggest Estate Planning Mistakes?

If you are currently working on your estate plan, you have probably heard a few horror stories about estate plans gone wrong. In such cases, usually a document was not properly drafted or a litigious family member caused a ruckus. Surely you are wondering what the top estate planning mistakes are, and how to avoid them. We have listed a few questions below that you should ask yourself to make sure you avoid these mistakes.

Did You Fund Your Trust?
Not funding a trust is one of the biggest estate planning mistakes. If there are no assets in the trust, the trust may be useless.

Did You Jointly Title Assets?
People sometimes title assets under tenancy by the entirety / joint-tenancy with-right-of-survivorship so those assets avoid probate. Though they will avoid probate, they will be subject to applicable federal and state estate taxes when the second person passes away. Since everything ends up in the hands of the survivor, they could end up in the hands of a new spouse or family. It is better to re-title these properties into the name of your trust. It often surprises people to learn that they have a well drafted trust and estate plan, but because of the way their assets are titled, it doesn’t work.

Do You Own Life Insurance in Your Own Name?
If your life insurance policy is titled in your name, the death benefit may be payable to a beneficiary directly, which may not be the result you want. What if they are a minor child? It will also be included in your taxable estate, possibly causing a large portion of it to be used for estate taxes. This can be avoided by creating an irrevocable life insurance trust.

Have You Left Assets Outright to Beneficiaries?
Assets that are left outright to heirs and beneficiaries are exposed to creditors. It is safer to leave assets in trust for the benefit of your heirs and beneficiaries. Not only that, but if you’ve named your children directly, are they old enough and skilled enough to avoid wasting what you’ve put together?

Have You Done any Mental Disability Planning?
If you do not plan what is to be done in case you suffer a mental or physical disability, the court will order and supervise guardianship and conservatorship appointment if and when the situation arises. You can use a living trust to choose who will decide when you are disabled, who the disability trustee will be, and how you want to be cared for during your disability.

Do You Have a Living Will?
Some people incorrectly assume that because they have a living trust they do not need a living will. A living will is needed to give physicians guidelines to follow in the event you are in a terminal condition or in a persistent vegetative state.

Have You Communicated with Your Trustees and Beneficiaries?
Let the people you have named as representatives, trustees, and beneficiaries in your estate plan know their role to ensure a smooth transition during the settlement of your estate.

Did You Know Where All Your Assets Are?
A scattered estate cay cause some assets to be left uncollected, undistributed, or lost. One client of ours suffered from dementia and it was only through diligent searching of his records (at great expense) that we found an annuity worth over $150,000!

Did You Put All Your Assets into Your Trust?
Remember, forgetting to fund a trust is one of the biggest estate planning mistakes. Do not forget about art, furniture, clothes, and other possessions. These may also be transferred into your trust using a bill of sale. Otherwise, these assets left outside the trust could be subject to probate. You should carefully consider your objectives for each type of asset.

Have You Updated Your Estate Plan?
Finishing your estate plan will feel really great, but you still are never really done! Each year, new laws and regulations are passed and family circumstances change. These things can affect your entire estate plan, so you have to review and update your estate plan with an attorney at least every five years. But you should review it every year. You may want to modify certain will or trust provisions, but do not go about this on your own, as that could have adverse legal affects.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

How Do I Choose an Attorney to Make My Will?

A will or a trust are essential components of your estate plan. A will can be used to appoint a guardian for minor children, create trusts for your minor or young adult children, transfer your personal effects, and distribute your estate. A trust can avoid probate and help manage your property if you become incapacitated. In order for your will to be effective, it needs to be executed in a very particular way. Trying to draft or change your own will or trust can lead to adverse legal effects (see our other blogs on DIY wills and trusts). Therefore, the first important step in the estate planning process is choosing the right attorney.

Many attorneys are willing to write a will or trust for you, but not very many attorneys actually have the requisite training, expertise, and experience for the task. Experienced and highly trained estate planning attorneys are knowledgeable about tax law, trust law, probate law, property law and business organizations, and can apply these skills to your specific situation. Lawyers do not learn about wills, trusts, probate and tax law in law school unless they specifically focus their education. If an attorney focuses his practice on other types of law, such as criminal law, divorce law, bankruptcy law, patent and trademark law, personal injury, or employment law, he or she probably will not have the focused training and experience of an attorney whose practice is concentrated on estate planning. Having a personal injury attorney write your will or trust is like having an orthopedic surgeon perform brain surgery on you. Would anyone really do that? Many people don’t realize just how specialized the law has become, just like medicine and other disciplines.

Questions to Ask
If your company’s attorney, or a friend or neighbor who is an attorney, offers to draft a will for you, ask them how much of their time is spent doing estate planning for clients and studying tax law. You should also ask them how many wills and trusts they have prepared in the last month. If they have only prepared one or two, or none, estate planning is not the focus of their practice. It is perfectly fine to say that you would like someone who is more specialized, and then ask for a referral.

When searching online for an estate planning attorney, look for someone who focuses their practice on estate planning and tax law. Membership in certain bar associations or estate planning organizations can indicate a level of dedication to the estate planning field and a commitment to keeping up to date on the law. Call a few different attorneys and ask them the same specific questions about their experience and qualifications before scheduling an appointment. You should also search online for any complaints that have been made against them. One client recently complained to me about his first estate planning attorney. While we were sitting there I “googled” the individual and found that he had two suspensions by our Bar Association against him. If the client had done that homework before he engaged his services, he could have avoided a lot of grief.

Also look at services where attorneys are rated by their peers. Martindale-Hubble is a peer review rating system. Lawyers are asked anonymously what they think of their peers so it’s a good system. Having an “AV” rating is the highest. Avvo is another online rating system that has become popular.

It is critical to use a competent estate planning attorney who is skilled in wills, trusts and tax law to advise you on your will and estate plan. Most importantly, it is important to choose an attorney you have confidence in and are comfortable with. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

How do I get my Trust Funded?

Creation of a trust and funding a trust are two entirely different matters. If your trust has been created properly, your efforts may be wasted if the trust is not properly funded.

“Funding” is the term used to describe all the different kinds of things that have to be done to get assets titled in the name of a trust. It is an essential part of the process, and usually is part of the job taken on by the lawyer who drafted the trust.

Some assets are fairly easy. The house title, at least for Utah properties, is easy to prepare. If there is out-of-state real property, we may need to involve a lawyer from the state where the property is — but even that is usually a fairly modest cost. A lawyer in, say, Indiana might transfer Indiana property to the Utah trust at a low cost, hoping that we will return the favor the next time she has a Utah property to transfer into an Indiana trust.

Other assets can be more complicated. Your bank, credit union, or brokerage house may resist or refuse to change accounts into the trust’s name. You need to closely follow up with them, because sometimes it will appear they have done it right, but then later you might find the title has not actually changed.
Assets that get changed after the trust is signed can be tricky. If you have refinanced your home mortgage, purchased a certificate of deposit from a new financial institution, or talked to your “personal banker” about accounts, you might have signed new title documents. You often will not even realize this is happening, and it if does, you need to make sure the new documents are titled in the name of the trust.

There are also beneficiary designations to consider. Life insurance, IRAs and other retirement accounts and annuities almost always have beneficiary designations. Constantly changing beneficiaries can actually disconnect assets from the rest of your estate plan.

In addition to all these funding issues, assets frequently get overlooked. Both large and small assets such as mineral rights or old life insurance policies can be easily forgotten.

It would be best to address all of these possible funding issues while you are still alive. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

What Do All These Estate Planning Terms Mean?

We get certain reoccurring questions from clients, and there appears to be a lot of confusion about the basic terms commonly used in estate planning. We thought maybe we could do a service by collecting some of the more common ones and defining them. Please feel free to suggest additional terms!

Will: A will is the document by which you declare who will receive your property, and who will be in charge of handling your estate.

Living Will: A living will defines what you want done to preserve your life. This does not distribute property. A living will is usually a standard form that can be signed and filled out. It can be replaced or combined with an Advanced Health Care Directive.

Personal representative: A personal representative, also referred to as an executor or administrator, is the person you put in charge of probating your estate. Your personal representative has no authority until you have died and your will has been admitted to probate.

Devisee: A devisee is a person named in your will and who will receive a distribution upon your death.
Heir: An heir is a person who will inherit from you when you die.

Intestate succession: Intestate succession is the set of rules governing inheritance when you die without a will.

Pourover Will: If any assets accidentally do not get put into your Trust before you die, a Pourover Will transfers those assets to your Trust.

Trust: A trust is a separate entity, providing who is to receive the benefit of your assets or income during your lifetime and upon your death, or upon the happening of specified events./p>

Testamentary trust:A testamentary trust is a trust created by a will. It will not exist until your estate has been probated, so it will not avoid probate.

Trustee: A trustee is the person who is in charge of a trust.

These are just a few very brief descriptions of some very complicated terms and documents. It is highly recommended that you seek the help of a qualified and experienced estate planning attorney to advise you on any of these matters. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.