I always knew everyone was “advised” to have a will. However, just thinking about it felt like stepping into a quagmire in the middle of a legal jungle. I would be sinking in the muck of trying to understand hidden government traps, while the only people offering me help spoke another language and I wasn’t sure if they wanted to eat me. Metaphorically, of course; and yes, I’m talking about lawyers. We did have a will written up years ago and put it in our chest freezer. Twenty years later, things had changed, if you can imagine. Most of the children had grown into adulthood, one had been born, one had died. Our life experiences had altered who we wanted to handle our left-over earthly affairs when we die (there always seems to be a paper trail), and if we live incapacitated (hopefully I will be blissfully unaware of being incapacitated). And who might be trusted if we had any money left when we turned in our chips.
When there was a chance to attend an estate planning meeting with my AAAI group (American Association of Individual Investors), I was interested, but apprehensive. A presentation would be given by Sandra L. Clapp, Attorney. My husband wanted me to go and report back to him, even though he has been uncooperative about finalizing our most recent attempt at a will. (*waves at dear hubby*) I figured I could probably survive an hour of convoluted legal terms. Maybe.
I learned several things in that hour that I think you might like to know. Some are happy. Some are just odd. Some have the potential to make life a little less scary. But first, for my report to my husband, as well as clarity of presentation, here are some basics about this process that is called estate planning and involves words like will, trust, power of attorney, and decanting. Right. Decanting. Apparently lawyers take perfectly wonderful words and turn them into legalese, even if the words are not yet part of laws, regulations, and tax codes. I must admit, though, that the whole presentation of was very friendly and understandable. Here are some definitions as I comprehended them; or for you to look up and verify. Sometimes it just helps to know what to ask about! There will be a test, unfortunately, every time someone you care about is incapacitated or dies.
Words to define:
- Testator - the person who makes a will (which implies it is about what he himself owns)
- Will (basic)- a written document to describe how a person’s property is to be distributed after death; parents usually also state who should take care of minor or impaired children
- Trust - a contract creating a (non-person) legal entity wherein property is handled by a designated person(s), apart from the rest of personal property and finances of the person(s) creating the trust
- Revocable – can be altered
- Irrevocable – future control is relinquished
- Probate – the process by which the state validates the will, and decides if accounts are clear to pass on inheritance
- General Power of Attorney (GPA)- authorizes someone to take over and make any decision that a person needs to make, but is unable to
- Intestacy – when, due to lack of a will, the state decides what to do with everything
- Living Will – a document to declare a person’s desire for levels of life support if a person is unresponsive and/or terminally ill
- Durable Power of Attorney for Health Care (POAHC)- a document to assign someone the right and responsibility to make health decisions for an individual should he not be able to
- POST – Physician’s Order of Scope of Treatment wherein details of medical care can be specified for doctors
- Assets – anything that is owned
- Predator – someone who is judged likely to take advantage
- Creditor – someone to whom money is owed
- In perpetuity/Dynasty Trust - forever
- Decanting (… since I brought it up …) – Distributing property from one trust to another
- Guardian – a court appointed person to function with power of attorney, should it have not been specified in a will or other necessary documents
- Estate – the total property (not just real estate, but anything of value) owned by a person
Next, here are some things I think I learned, or at least things I now know enough about to know that I need to know more about them. Was it easier when I didn’t know what I didn’t know? Anyway, it all has to do with dates, new laws, taxes, and making sure people know what has been decided; and are mostly particular to the state of Idaho.
- Idaho has fairly simple laws about wills and probate. Come live in Idaho. Don’t live in California.
- Idaho recognizes a handwritten will, called a “holographic will.” Such a will does not need to follow any formalities, but must be written by and signed by the testator. There is no need for it to be notarized in this case.
- A typed will needs to be signed by at least 2 other people, who are validating that they believe the testator signed the will. For further legal verification, all signatures can be verified by a notary. This avoids any need to testify in court later.
- A will can be revoked if the next will expressly revokes it in its text.
- A typed will that has been lined through and written on has very little, if any, legal validity.
- It is very useful to have a hierarchy of person’s designated in the will for both responsibilities and beneficiaries. This helps when unexpected changes occur between will writings.
- The living will and POAHC (see above definitions) work together by the nature of what they are. It may very well be in everyone’s best interest if the same person making these decisions is also granted GPA, since financial consideration are generally an issue. These can be long term or short term documents. That is, they are easy to change if the ability to make decisions returns.
- Since the new HIPPA privacy “acts” have been made law, care should be taken to specify about family and friends being able to get information or there could be a lot of very frustrated people during an already difficult time.
- A revocable trust has no tax advantages.
- If you try to set up a trust while you are living in order to simplify estate transfer after you die, it requires putting and keeping all assets in it. This can be complicated.
- Anything can be put in a trust
- A trust might be particularly useful if property is owned in another state, particularly California. Yeah.
- A trust can be set up to protect an inheritance from creditors, predators, or money mismanagement. I found this website to give a very helpful explanation of trusts in general.
- There are only 3 basic choices to be made in a living will: 1) try everything possible to keep me alive, 2) don’t do anything mechanical, but please given me a specified combination of food and water, and 3) don’t do anything to keep me alive.
- There are ways set up to allow inheriting children to received portioned amounts of your tax deferred savings so that they don’t get taxed at high rates.
- There are no Idaho State estate taxes, but the state does receive a portion of what the Federal government collects.
- The exemption for Federal estate taxes in currently just over 5 million dollars and goes up 10% every year. Please don’t ask me to explain this any further.
- It can be very helpful to leave a letter of instruction and direction for the person(s) who might need to find all your important documents and records (i.e. will, GPA, titles and deeds, accounts).
- Make a separate list of all tangible property.
- Idaho has a new GPA form that is basically a checklist, as of 2008. Supposedly it can help avoid snags if the new form is used, but older documents are still valid.
And there we have some insight into all the ways the government sees fit to save us from mismanaging what money we still have during old age or after our deaths – if they have still left us any to manage. I know some families don’t get along, but I fail to see why these people in power have decided they have to regulate all of us. No, I do see. They have to keep track of the money. They might want some of it.