Estate Planning

Social Security
If you are 65 or older, you qualify for Social Security—a federal retirement program that provides payments to retired workers. You should submit your application for Social Security retirement benefits for at least three months prior to the date benefits are to start, but no later than the month before reaching the age of 65. More information can be found here.

Medicare
Medicare is a federal health insurance program for people 65 and older with certain disabilities.

Medicaid
Medicaid is a jointly funded, Federal-State health insurance program for people with low incomes. It covers children, the aged, blind, pregnant women, and/or disabled and other people who are eligible to receive federally assisted income maintenance payments.

Probate is a legal proceeding, supervised by court, which transfers your property after your death. A personal representative is appointed by the court to probate a person’s estate. Probate proceedings can be formal or informal.

Informal probate allows the personal representative to administer the estate without the court’s supervision.

Formal probate can be supervised or unsupervised, and typically involves complex estates where a judge is needed to make determinations.

Probate proceedings must take place in the county of legal residence or where property is legally owned when not a resident of the state.

Non-probate assets are assets not subject to probate. Non-probate assets typically consist of: property held in joint tenancy, joint bank accounts, and assets with named beneficiaries, such as life insurance policies, annuities, IRAs, payable-on-death (POD) accounts, and real property with a valid transfer-on-death deed recorded with the county in which the property is located.

Debts and private student loans from a bank must be paid from the assets of your estate before there is any distribution of assets to your heirs.

Federal student loans may be discharged due to the death of the borrower, or of the student on whose behalf a parent’s PLUS loan was taken out. You can learn more about the discharge of federal student loans due to death here.

“Testate” and “Intestate” refer to the type of probate proceeding that will occur upon the death of the decedent. A testate probate proceeding is held for a decedent who has an executed will at the time of death. The decedent’s property is distributed according to the provisions in the decedent’s will.

An intestate probate proceeding is held for a decedent who does not have a will at the time of their death. The decedent’s property is distributed according to the provisions contained in the State’s Uniform Probate Code.

A will is a legal document that allows you to state how you would like your assets to be distributed after your death. If you die without a will, the state laws will dictate the distribution of your assets.

Some reasons to have a will include:

• You want to leave property to a friend;
• You want to leave property to a charity;
• You want to leave specific items to certain people;
• You want to disinherit someone who would otherwise inherit from your estate;
• You want to name a specific person for appointment as the personal representative of your estate; and/or
• You want to name a specific person(s) as the guardian of your minor child(ren).

If a careful and exhaustive search fails to produce the original will, it is presumed that the will has been revoked.

Contact any attorneys with whom your parent might have met, or with whom your parent may have discussed the creation of a will. Often, the attorney who drafts the will keeps a copy of the will, and provides the original to the testator to keep.

Additionally, many people keep important personal effects in a safe deposit box at their bank. Investigate where your parent conducted their bank transactions. There may be more than one bank, and/or more than one location. If a safe deposit box is located, an Affidavit in Support of Search of Decedent’s Safe Deposit Box can be completed and submitted to the banking institution

Contact your parents’ accountant, tax preparer, financial adviser, and/or other financial specialist. Often, a financial specialist will have advised a testator regarding tax and other financial laws and the implications thereof as applied to the provisions in that testator’s will. If this is the case, then your parent’s financial specialist might have a copy of your parent’s will.

A trust is an arrangement where the owner of property (called the “settlor”, “grantor”, or “donor”) transfers ownership of the property to a legally created entity, which we have named a “trust”. A second person or entity (called the “trustee”) holds, manages, and takes care of the property within the trust on behalf of, or for the benefit of, a third person(s) (called the “beneficiary” or “beneficiaries”). The trust contains all of the directions and rules by which the trustee must abide when holding, managing, and caring for the property within the trust. Note: it is possible for the grantor to be both the trustee and beneficiary of the trust as well.

There are two common trusts—living and testamentary

Living Trusts
Also known as inter vivos trusts, living trusts are ones created while you are alive, transferring property from yourself to the trust. A living trust allows you to name yourself as trustee, grantor and beneficiary during your lifetime. These trusts can be either revocable or irrevocable.

A revocable living trust can be amended or revoked at any time by the grantor. Because the grantor has the ability to amend or revoke the trust, and therefore still has control over the property in the trust, the property in the trust is still included in the grantor’s estate upon the grantor’s death. Therefore, revocable living trusts do not provide shelter for assets from federal or state estate tax.

An irrevocable living trust cannot be modified or revoked once it has been established. An irrevocable living trust is usually created to reduce estate and income taxes. It is unusual for the grantor to serve as the trustee of an irrevocable trust without losing the intended tax benefits.

Testamentary Trusts
By the terms of your will, testamentary trusts are created after your death. The assets to fund a testamentary trust usually go through probate. A common example of a testamentary trust is one created by a parent leaving assets to a child. The testamentary trust is administered by a trustee until the child reaches a stated age, at which point the assets are then transferred to the child.

A health care directive allows you to nominate an agent to make health care decisions for you when you are unable to do so. It is a document that gives instructions to your physician and other healthcare providers as to the circumstances under which you want to have life-sustaining treatment provided, withheld, or withdrawn. The health care directive also allows you to state specific instructions pertaining to your health care should you choose.

A durable power of attorney is a power of attorney that continues to remain valid should you become incapacitated or incompetent. The durable power of attorney should specify whether you want it to take effect immediately upon execution or only in the event that you are unable to make decisions for yourself. A durable power of attorney expires in the event of death.