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Estate Planning - Major Aspects of Personal Finance Management

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An estate plan is a document consisting of multiple trivial elements such as the living will or healthcare proxy or also known as medical power of attorney and assignment of power of attorney. Some people also include trust into their wills. Once you merge all these things together, you have to get it certified under the legal laws of both the federal and state governments. Basically everyone needs to have a will, to inform the world where you wish to allocate your assets to after you leave the world. In fact, it is the best way to consign guardians for your children.

Those dying without a proper estate planning, having no will to display upon their deaths are known to be dying intestate. However, this implies that your heirs need to struggle through several legal procedures in order to take over the assets. Having a trust does not guarantee the ownership transfer; it is insufficient because you still need a will to be in charge of your trust to inherit them to your beneficiaries. In addition, it is advisable that you discuss the plan with your children to avoid future discord, especially if you know your heirs may come in strong disagreement with one another.

To begin with your estate plan, you have to garner all appropriate information such as insurance policies, investments, real estate or business interests, financial condition, and any retirement savings. Then ponder to yourself several questions like who you wish to assign to the job of handling your financial affairs if you happen to be incapacitated. Then consider whom you intend to inherit your assets to and give thoughts into plotting the responsibility of your medical decisions should you be bedridden and unconscious.

Some people think that having infinite amount of money indicates a good estate planning but this is not always the case. Leaving all your properties and cash to your spouse does not imply it will be exempted from estate tax because you will instead increase his or her taxable estate. Subsequently, if your spouse leaves the money to your children upon his or her death, they will end up paying higher estate taxes. At all cases, having a will is the best item to solve all hassles.

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Boulder Utah 9 estate planning pitfalls to avoid

Levels of Estate Planning

estate planning taxes

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Why Plan Your Estate?

The knowledge that we will eventually die is one of the things that seem to distinguish humans from other living beings. At the same time, no one likes to dwell on the prospect of his or her own death. But if you postpone planning for your passing until it is too late, you run the risk that your intended beneficiaries - those you love the most - may not receive what you would want them to receive either because of extra administration costs, unnecessary taxes or squabbling among your heirs.

This is why estate planning is so important, no matter how small your estate may be. It allows you, to ensure that your assets and other possessions will go to the people you want, in the way you want, and when you want. It permits you to save as much as possible on taxes, court costs and attorneys' fees; and it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.

All estate plans should include, at minimum, two important estate-planning instruments: a durable power of attorney and a will. The first is for managing your property during your life, in case you are ever unable to do so yourself. The second is for the management and distribution of your property after death. In addition, more and more, Americans also are using revocable (or "living") trusts to avoid probate and to manage their estates both during their lives and after they're gone.

Your Will

Your will is a legally binding statement directing who will receive your property at your death. It also appoints a legal representative to carry out your wishes. However, the will covers only probate property. Many types of property or forms of ownership pass outside of probate. Jointly owned property, property in trust, life insurance proceeds and property with a named beneficiary, such as IRAs, insurance policies or 401(k) plans, can all pass outside of probate.

Why should you have a will?

Here are some reasons.

First, with a will you can direct where and to whom your assets (what you own) will go after your death. If you died instate (without a will), your estate would be distributed according to state law. Such distribution may or may not accord with your wishes.

Many people try to avoid probate and the need for a will by holding all of their assets jointly with their children. This can work, but often people spend unnecessary effort trying to make sure all the joint accounts remain equally distributed among their children. These efforts can
be defeated by a long-term illness of the parent or the death of a child. A will can be a much simpler means of affecting one's wishes about how assets should be distributed.

The second reason to have a will is to make the administration of your estate run smoothly. Often the probate process can be completed more quickly and at less expense to your estate if there is a will. With a clear expression of your wishes, there are unlikely to be any costly, time-consuming disputes over who gets what.

Third, only with a will can you choose the person to administer your estate and distribute it according to your instructions. In Illinois this person is called your "personal representative". If you do not have a will naming him or her, the court will make the choice for you. Usually the court appoints the first person to ask for the post, which is most closely related to you at the time of death.

Fourth, for larger estates, a well planned will can help reduce estate taxes.

Fifth, and most important, through a will you can appoint who will take your place, as guardian of your minor children should both you and their other parent both pass away.

Filling out the worksheet that our office provides will help you make decisions about what to put in your will. Bring it and any additional notes to our office and our estate planning professionals will be able to efficiently prepare a will that meets your needs and desires.

Estate Administration- Probate Procedure

Probate is the process by which a deceased person's property, known as the "estate", is passed to his or her heirs and legatees (people named in the will), the entire process, supervised by the probate court, usually takes about one year. However, substantial distributions from the estate can be made in the interim.

The emotional trauma brought on by the death of a close family member is often accompanied by bewilderment about the financial and legal steps the survivors must take. The spouse who passed away may have handled all of the couple's finances. Or perhaps a child must begin taking care of probating an estate about which he or she knows little about. And this task may come on top of commitments to family and work that can't be set aside. Finally, the estate itself may be in disarray or scattered amount many accounts, which is not unusual with a generation that saw banks collapse during the Depression.

Here we set out the steps the surviving family members should take. These responsibilities ultimately fall on whoever was appointed executor or personal representative in the deceased
family member's will. Matters can be a bit more complicated in the absence of a will, because it may not be clear who has the responsibility of carrying out these steps.

First, secure the tangible property. This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to
take an inventory; this will become a difficult, if not impossible, task. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.

Second, take your time. You do not need to take any other steps immediately. When bills do need to be paid, they can wait a month or two without adverse repercussions. It's more important that you and your family have time to grieve. Financial matters can wait. When you're ready but not a day sooner, meet with one of our attorneys to review the steps necessary to administer the deceased's estate. Bring as much information as possible about finances, taxes and debts. Don't worry about putting the papers in order first; our attorney will have experience in organizing and understanding confusing financial statements.

In general rules of estate administration include the following steps:

1. Filing the will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a will, heirs must petition the court to be appointed "administrator" of the estate.

2. Marshalling, or collecting the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an "inventory", with the probate court. It's generally best to consolidate all of the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set by our firm on your behalf, so that you can keep track of all expenditures.

3. Paying bills and taxes. If an estate tax return is needed--generally if the estate exceeds $5,200,000 in value as of 2016 -- the estate must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all of the information available in time, you can file for an extension and pay your best estimate of the tax due.

4. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. If the estate does earn income during the administration process, it will have to obtain its own tax identification number "TIN" in order to keep track of such earnings and file an estate income tax

notion in addition to the decedent's final income tax return.

5. Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which in Illinois is 6 months from the date the estate, notice of death in the newspaper. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and costs of closing out the estate.

6. Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work

Avoiding probate through joint ownership or trusts can eliminate some of these steps. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.

Guardianship and Conservatorship

Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions due to a mental disability, the court will appoint a substitute decision maker, called a "guardian". Guardianship is a legal relationship between a competent adult (the "guardian") and a person who because of incapacity is no longer able to take care of his or her own affairs (the "ward"). The guardian is authorized to make legal, financial, and health care decisions for the ward. Depending on the terms of the guardianship, the guardian may or may not have to seek court approval for various decisions, but generally the guardian acts without being required to incur the expense of court approval.

Some incapacitated individuals can make responsible decisions in some areas of their lives but not others. In such cases, the court may give the guardian decision-making power over only those areas in which the incapacitated person is unable to make responsible decisions (a so-called "limited guardianship"). In other words, the guardian may exercise only those rights that have been removed from the ward and delegated to the guardian. Guardianships are consuming and expensive. Prefer planning with Power of Attorneys for health care and financial matters will significantly reduce cost and time in the event you became incapacitated. (See Page for detailed discussion of Power of Attorney).

Incapacity

Generally a person is judged to be in need of guardianship when he or she shows a lack of capacity to make responsible decisions. A person cannot be declared incompetent simply because he or she makes irresponsible or foolish decisions, but only if the person is shown to lack the capacity to make sound decisions. For example, a person may not be declared incompetent simply because he or she spends money in ways that seem odd to someone else. Also, a developmental disability or mental illness is not, by itself, enough to declare a person incompetent.

Process

Anyone interested in the proposed ward's well being can request a guardianship. An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward's county of residence. The proposed ward is entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford lawyer.

At the hearing, the court with the help of the Guardian ad Litem attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be responsible.

Guardian

A guardian can be any competent adult-the ward's spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received
special training). A competent individual may nominate a proposed guardian through a durable power of attorney in case she ever needs a guardian.

The guardian need not be a person at all--it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be found, courts in many states can appoint a public guardian, a publicly financed agency that serves this purpose. In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward's life - people who are both aware of and sensitive to the ward's needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.

Reporting Requirements

Court often give guardians broad authority to manage the ward's affairs. In addition to lacking the power to decide how money is spent or managed, where to live and what medical care he or she should receive, wards also may not have the right to vote, marry or divorce, or carry a driver's license. Guardians are expected to act in the best interests of the ward, but give the guardian's often-broad authority; there is the potential for abuse. For this reason, courts hold guardians accountable for their actions to ensure that they don't take advantage of or neglect the ward.

The guardian of the property inventories the ward's property, invests the ward's funds so that they can be used for the ward's support, and files regular, detailed reports with the court. A guardian of the property also must obtain court approval for certain financial transactions. Guardians must file an annual account of how they have handled the ward's finances. Guardians must offer proof that they made adequate residential arrangements for the ward, that they provided sufficient health care and treatment services, and that they made available educational and training programs, as needed. Guardians who cannot prove that they have adequately cared for the ward may be removed and replaced by another guardian.

For more information, please see Part II of this article

Go Forward

Do you want a Free Initial Consultation with an Estate Planning Lawyer?

Call 1-800-564-2707 today.

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Bluffdale Utah County UT estate planning 5 year lookback

Estate Planning - Why Should I Care?

estate planning for business owners

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Why Plan Your Estate?

The knowledge that we will eventually die is one of the things that seem to distinguish humans from other living beings. At the same time, no one likes to dwell on the prospect of his or her own death. But if you postpone planning for your passing until it is too late, you run the risk that your intended beneficiaries - those you love the most - may not receive what you would want them to receive either because of extra administration costs, unnecessary taxes or squabbling among your heirs.

This is why estate planning is so important, no matter how small your estate may be. It allows you, to ensure that your assets and other possessions will go to the people you want, in the way you want, and when you want. It permits you to save as much as possible on taxes, court costs and attorneys' fees; and it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.

All estate plans should include, at minimum, two important estate-planning instruments: a durable power of attorney and a will. The first is for managing your property during your life, in case you are ever unable to do so yourself. The second is for the management and distribution of your property after death. In addition, more and more, Americans also are using revocable (or "living") trusts to avoid probate and to manage their estates both during their lives and after they're gone.

Your Will

Your will is a legally binding statement directing who will receive your property at your death. It also appoints a legal representative to carry out your wishes. However, the will covers only probate property. Many types of property or forms of ownership pass outside of probate. Jointly owned property, property in trust, life insurance proceeds and property with a named beneficiary, such as IRAs, insurance policies or 401(k) plans, can all pass outside of probate.

Why should you have a will?

Here are some reasons.

First, with a will you can direct where and to whom your assets (what you own) will go after your death. If you died instate (without a will), your estate would be distributed according to state law. Such distribution may or may not accord with your wishes.

Many people try to avoid probate and the need for a will by holding all of their assets jointly with their children. This can work, but often people spend unnecessary effort trying to make sure all the joint accounts remain equally distributed among their children. These efforts can
be defeated by a long-term illness of the parent or the death of a child. A will can be a much simpler means of affecting one's wishes about how assets should be distributed.

The second reason to have a will is to make the administration of your estate run smoothly. Often the probate process can be completed more quickly and at less expense to your estate if there is a will. With a clear expression of your wishes, there are unlikely to be any costly, time-consuming disputes over who gets what.

Third, only with a will can you choose the person to administer your estate and distribute it according to your instructions. In Illinois this person is called your "personal representative". If you do not have a will naming him or her, the court will make the choice for you. Usually the court appoints the first person to ask for the post, which is most closely related to you at the time of death.

Fourth, for larger estates, a well planned will can help reduce estate taxes.

Fifth, and most important, through a will you can appoint who will take your place, as guardian of your minor children should both you and their other parent both pass away.

Filling out the worksheet that our office provides will help you make decisions about what to put in your will. Bring it and any additional notes to our office and our estate planning professionals will be able to efficiently prepare a will that meets your needs and desires.

Estate Administration- Probate Procedure

Probate is the process by which a deceased person's property, known as the "estate", is passed to his or her heirs and legatees (people named in the will), the entire process, supervised by the probate court, usually takes about one year. However, substantial distributions from the estate can be made in the interim.

The emotional trauma brought on by the death of a close family member is often accompanied by bewilderment about the financial and legal steps the survivors must take. The spouse who passed away may have handled all of the couple's finances. Or perhaps a child must begin taking care of probating an estate about which he or she knows little about. And this task may come on top of commitments to family and work that can't be set aside. Finally, the estate itself may be in disarray or scattered amount many accounts, which is not unusual with a generation that saw banks collapse during the Depression.

Here we set out the steps the surviving family members should take. These responsibilities ultimately fall on whoever was appointed executor or personal representative in the deceased
family member's will. Matters can be a bit more complicated in the absence of a will, because it may not be clear who has the responsibility of carrying out these steps.

First, secure the tangible property. This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to
take an inventory; this will become a difficult, if not impossible, task. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.

Second, take your time. You do not need to take any other steps immediately. When bills do need to be paid, they can wait a month or two without adverse repercussions. It's more important that you and your family have time to grieve. Financial matters can wait. When you're ready but not a day sooner, meet with one of our attorneys to review the steps necessary to administer the deceased's estate. Bring as much information as possible about finances, taxes and debts. Don't worry about putting the papers in order first; our attorney will have experience in organizing and understanding confusing financial statements.

In general rules of estate administration include the following steps:

1. Filing the will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a will, heirs must petition the court to be appointed "administrator" of the estate.

2. Marshalling, or collecting the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an "inventory", with the probate court. It's generally best to consolidate all of the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set by our firm on your behalf, so that you can keep track of all expenditures.

3. Paying bills and taxes. If an estate tax return is needed--generally if the estate exceeds $5,200,000 in value as of 2016 -- the estate must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all of the information available in time, you can file for an extension and pay your best estimate of the tax due.

4. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. If the estate does earn income during the administration process, it will have to obtain its own tax identification number "TIN" in order to keep track of such earnings and file an estate income tax

notion in addition to the decedent's final income tax return.

5. Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which in Illinois is 6 months from the date the estate, notice of death in the newspaper. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and costs of closing out the estate.

6. Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work

Avoiding probate through joint ownership or trusts can eliminate some of these steps. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.

Guardianship and Conservatorship

Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions due to a mental disability, the court will appoint a substitute decision maker, called a "guardian". Guardianship is a legal relationship between a competent adult (the "guardian") and a person who because of incapacity is no longer able to take care of his or her own affairs (the "ward"). The guardian is authorized to make legal, financial, and health care decisions for the ward. Depending on the terms of the guardianship, the guardian may or may not have to seek court approval for various decisions, but generally the guardian acts without being required to incur the expense of court approval.

Some incapacitated individuals can make responsible decisions in some areas of their lives but not others. In such cases, the court may give the guardian decision-making power over only those areas in which the incapacitated person is unable to make responsible decisions (a so-called "limited guardianship"). In other words, the guardian may exercise only those rights that have been removed from the ward and delegated to the guardian. Guardianships are consuming and expensive. Prefer planning with Power of Attorneys for health care and financial matters will significantly reduce cost and time in the event you became incapacitated. (See Page for detailed discussion of Power of Attorney).

Incapacity

Generally a person is judged to be in need of guardianship when he or she shows a lack of capacity to make responsible decisions. A person cannot be declared incompetent simply because he or she makes irresponsible or foolish decisions, but only if the person is shown to lack the capacity to make sound decisions. For example, a person may not be declared incompetent simply because he or she spends money in ways that seem odd to someone else. Also, a developmental disability or mental illness is not, by itself, enough to declare a person incompetent.

Process

Anyone interested in the proposed ward's well being can request a guardianship. An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward's county of residence. The proposed ward is entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford lawyer.

At the hearing, the court with the help of the Guardian ad Litem attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be responsible.

Guardian

A guardian can be any competent adult-the ward's spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received
special training). A competent individual may nominate a proposed guardian through a durable power of attorney in case she ever needs a guardian.

The guardian need not be a person at all--it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be found, courts in many states can appoint a public guardian, a publicly financed agency that serves this purpose. In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward's life - people who are both aware of and sensitive to the ward's needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.

Reporting Requirements

Court often give guardians broad authority to manage the ward's affairs. In addition to lacking the power to decide how money is spent or managed, where to live and what medical care he or she should receive, wards also may not have the right to vote, marry or divorce, or carry a driver's license. Guardians are expected to act in the best interests of the ward, but give the guardian's often-broad authority; there is the potential for abuse. For this reason, courts hold guardians accountable for their actions to ensure that they don't take advantage of or neglect the ward.

The guardian of the property inventories the ward's property, invests the ward's funds so that they can be used for the ward's support, and files regular, detailed reports with the court. A guardian of the property also must obtain court approval for certain financial transactions. Guardians must file an annual account of how they have handled the ward's finances. Guardians must offer proof that they made adequate residential arrangements for the ward, that they provided sufficient health care and treatment services, and that they made available educational and training programs, as needed. Guardians who cannot prove that they have adequately cared for the ward may be removed and replaced by another guardian.

For more information, please see Part II of this article

Go Forward

Do you want a Free Initial Consultation with an Estate Planning Lawyer?

Call 1-800-564-2707 today.

Mainpage

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Bluffdale Utah estate planning lawyer

Estate Planning: What to Think About Before Meeting Your Lawyer

estate planning ideas

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I had a potential client call me earlier in the week asking me if he needed a will. The caller wasn't married and had no children or grandchildren. He didn't own any real property. All of his bank accounts had payable on death beneficiaries and he owned minimal personal property. He had the perfect plan; nothing was going to pass through probate so he didn't think he needed a will.

Maybe he doesn't need a will. I didn't know exactly since self-help estate planning frequently leads to mistakes or property that doesn't have the proper designations. In this situation a will is prophylactic. It ensures that if a mistake is made or a beneficiary designation fails, that property passes to the intended recipient.

I turned the discussion from planning for death to what type of planning he had for his life. I asked if he had a power of attorney for finances. His answer was no. "Do you have an advanced health care directive (aka health care power of attorney)?" "No."

The lack of such planning concerned me since I knew he didn't have a significant other or children to care for him if he were unable to care for himself. What would happen to him if he had a stroke or suffered from dementia or Alzheimer's? Perhaps his siblings would step in to care for him - but how? They would have to spend his money to set up a conservatorship and guardianship or other court proceedings. These processes take time and money to set up and are expensive to administer.

To help deal with his finances he could execute a springing power of attorney for finances that would give a sibling or trusted relative the ability to manage his finances if he became incapacitated and unable to do so. It's called a springing power of attorney because it only becomes effective upon incapacity. The power of attorney can provide broad powers and sets forth detailed instructions concerning what the designated agent can and cannot do on the individual's behalf. More importantly, it would allow the caller to designate who he wanted to manage his finances - not a judge. Drafting and executing a power of attorney in this situation is relatively inexpensive when compared to the cost of setting up and maintaining a conservatorship.

In Oregon, an advance health care directive would assist the caller by designating a health care agent to make health care decisions on his behalf when he's unable to. It would potentially eliminate the need for guardianship proceedings. The representative can make decisions based on directions that are left in the directive. Among the decisions the representative can make is whether to withhold or remove life support, food or hydration. The advance heath care directive does not authorize euthanasia, assisted suicide or any overt action to end the person's life.

This example is a part of the problem with self-help planning. Although the caller was very thorough with his death planning he didn't give any thought to his life. In this caller's case, life planning was much more important than death planning, but he hadn't given it any thought.

Give us a call if you need additional information or to prepare your estate plan.

Go Forward

Do you want a Free Initial Consultation with an Estate Planning Lawyer?

Call 1-800-564-2707 today.

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Bluffdale Salt Lake County UT subchapter s estate planning

Estate Planning - Consider Your Options Before it is Too Late

s corp estate planning

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If you're reading this article, it's probably not for entertainment value. And if you're reading for entertainment, then you're either a masochist or you're actually interested in what I have to say. It could be both, I guess. Whatever the reason, estate planning is an important topic, regardless of your station in life.

So what does it mean to have an estate plan? The better question is: why does it matter? This is not easy stuff. It deals with death and dying and the future. Of course, nobody wants to think about this stuff. But unfortunately, it's the pink elephant in the room. And it's not all that bad, actually.

Generally, an estate plan is a set of instructions that spell out how your property should be managed and distributed during your life and after death. The attorney (yours truly) is basically a conduit that channels your wishes onto paper in a way that make sense and have the most effect. Okay, maybe it's not that simple, but this should give you some idea. The estate plan should be a reflection of your life and vision. And don't confuse the word "estate" with a gated 8000 square foot villa with your initials on the entry gate. Your estate is all that you own in real estate and other assets.

At one point or another, most of us who own property think about what will happen to our property when we die. We think about stuff like, "Who will get my 1984 Honda Civic?" That's a legitimate concern. Nobody is going to want it, but the concern is no less legitimate. But what if you become disabled? And what happens when you get old and feeble minded? There may come a time where we will live out our lives without sufficient mental and/or physical capacity to manage our own affairs. Look, we all know or knew someone who started to "lose it." We can all remember thinking this or saying something like, "hey, is it me, or is Uncle Joe beginning to lose it?"

Enter the estate plan. The estate plan deals with the management of your property and financial affairs. There are two main types of estate plans: one is built around a Will and the other around a Revocable Living Trust. Each has it pros and cons. But as long as you have your wits about you, you can always make changes to the plan along the way. That being said, it's important to have an estate plan in place now because you don't know when you might become the "Uncle Joe."

THE WILL

A Will is the most common document used to specify how an estate should be handled after death. The person or entity designated to receive your property under the Will is called a Beneficiary. The person whose property is to be disposed by the Will is the Testator or Testatrix.

Like a Trust, the Will can set out different instructions, such as who gets certain property or who will be the guardian of Testator's minor child in the event that no parent is alive. It can be used to disinherit someone. It can set conditions on inheritance, such as the requirement that the Beneficiary first reach the age or 25 or graduate from college.

And then there's the dreaded P word - PROBATE. There's no getting around it. When a person dies and leaves property in a Will, probate is the legal proceeding that is used to wind up his or her legal and financial affairs. It's best described as a court-supervised process by where assets are gathered, valued, and distributed according to the Testator's last wishes as stated in the Will.

Probate proceedings are held in Superior Court for the county in which the Testator lived. The Executor (the person who administers the estate) is responsible for protecting a deceased person's property until all debts and taxes have been paid, and seeing that what's left is transferred to those who are entitled to it. Their job includes making an inventory of the estate's assets, locating creditors, paying bills, filing tax returns, and managing the estate assets. Finally, when this is all done, a petition is filed with the court requesting a distribution to the Beneficiaries. The whole process can take many months and sometimes years to complete.

As you can imagine, probate can also be very expensive. The Probate Code sets the maximum amount that attorneys and personal representatives (i.e. executors, administrators, etc.) can charge. As of 2016, the fees are four percent of the first $100,000 of the estate, three percent of the next $100,000, two percent of the next $800,000, one percent of the next $9,000,000, and one-half percent of the next $15,000,000. On top of that, a probate referee is appointed to appraise all of the non-cash items. This person usually takes one percent of the total assets appraised. All of this can add up very quickly. Although it's safe to say that most of us will probably not die with an estate valued at $15 million, the probate process can easily reduce the size of the estate by tens of thousands of dollars.

And of course there's the privacy issue, or lack thereof. When a Will is admitted to probate it becomes a matter of public record, including the details of what your assets are and who's in line to get them. Some may have legitimate reasons for following the probate matter, like a beneficiary's creditor who's looking to collect. Other unscrupulous types may want to know who to bamboozle.

THE REVOCABLE LIVING TRUST

A Living Trust is established with a document, usually a Declaration of Trust or a Trust Agreement. It's basically a relationship whereby property (real or personal, tangible or intangible) is held by one party for the benefit of another. A Living Trust conventionally arises when property is transferred to a separate Trustee to hold for the Beneficiary. However, that's not always necessary.

The person creating the Living Trust is called the Settlor or Trustor (these are synonymous). The Settlor appoints a Trustee to manage the Trust assets. The Trusee holds legal title to property for the benefit of another, also known as the Beneficiary. Although the Beneficiary does not own legal title to the property, he or she is said to own beneficial title. So you can imagine that the Trustee cannot do anything with the property that does not benefit the Beneficiary, like sell some off and pocket the money. It may be easier to think about a Trust like a Corporation. The Trustee is the CEO and the Beneficiaries are the shareholders. And it's not uncommon for Trustee to also be a Beneficiary, although it's advisable that a Co-Trustee be named as well.

A Living Trust should usually be accompanied by a Last Will and Testament, also known as a "pour-over will." The Will should say that property that is outside of the Trust is to be distributed to the Trustee of the Trust when the Testator dies. As long as the property outside of the Trust is valued at less than $100,000, probate can be avoided. The benefit is that property not previously placed in the Trust will get "poured" into it. Even if the property exceeds $100,000 and has to go through probate, it will eventually be distributed according to the instructions of the deceased instead of being distributed according to California law. It may also be a good idea to name the same person to be both the Executor of the Will and the Trustee of the Trust, since he or she will dealing with the same property.

WHAT DOES THIS ALL MEAN?

So what's the point of all of this mumbo jumbo? Well, just that it's easy to overlook the necessity of a proper estate plan. A Living Trust helps to protect you, your assets, and those people and/or entities who you want to leave your assets to when you're gone.

A good reason to create a Living Trust is to keep your estate plan private. Unlike a Will and probate, the Living Trust is a private contract between you (the Settlor) and the Trustee. It does not need to be filed with the county. The only way it can become public is if a dispute arises and someone files a lawsuit, which is possible.

Another major benefit of a Living Trust is that it has the ability to protect you in the event that you become disabled. The Trust can specify how your incapacity should be determined, how you should be taken care of if you're deemed disabled, and who will be able to manage your property if you can't. A Living Trust is written so that your Trustee can automatically jump into the driver's seat if you become ill or incapacitated. This will keep you and your property outside of court-supervised guardianship or conservatorship. The more you can keep the court out of your life and affairs, the better.

A Living Trust also allows you to dispense with your property in the manner that you choose. For example, many families have a child who has or had some problems in life. This may range from physical challenges to addiction to partying in Las Vegas with prostitutes every weekend. A Living Trust can provide for financial support to others without giving them direct control of the trust property.

Finally, a Living Trust makes it possible to avoid having to go through probate. How? It's simple - the property is titled in the name of the Trust when you die. Your Trust does not check out just because you do. Only those assets that are titled in your name at the time of death go through probate.

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Estate Planning: What to Think About Before Meeting Your Lawyer

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Estate Planning is not something that everyone wants to think about.  But it's an important thing to consider if you have a significant amount of property or wealth.  Even if you only have a small amount of wealth, you want to make sure that if you pass on, your property goes to the right people in your life.

Without the proper planning this may not happen.  Let's say for example you have no children and have yet to be married.  Let's say also that you spend all of your time working with a children's charity, and that if you did pass on you would want your money to go to this group. 

Without the proper planning, your money could go to your closest surviving family member.  This could be a sister that you don't get along with or a cousin you never knew.  If you know where you want your money to go, then estate planning should be a top priority. 

Nobody likes to think about death.  When you start to think about estate planning, you start to think about how you might die.  It's a sad thing to think about for many people.  But you should try your best to stay strong so that those that you love can get what you would've wanted them to have.

Another way to approach the issue is to do it with an experienced company.  Estate planning companies with experience dealing with this sort of thing can make the process much easier.  They know it's hard to think about these matters, so they make the questioning process as brief as possible for you.  Working with a professional in the field will make the whole process much easier.

You can do some shopping around to find the right company.  Your estate planning choices are some of the most important choices you will have to make in your lifetime.  You want to make sure that you choose the right company to handle them.

It is important to note that the estate planning process doesn't have to take a long time.  You generally know how you would like things to be worked out before you begin the process.  Your estate planner will just help to make your words legally binding, and remind you of issues you might have forgotten.

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Estate Planning - Why Should I Care?

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In my estate planning practice, it is not uncommon to meet with a new client who wants an estate plan prepared, but is a bit vague as to what should be included in that plan. Quite frequently, the initial conversation begins with the client saying something like, "I would like a will... or should I have a trust? Do I need anything else?" Actually, those are good questions to begin a discussion.

Most folks recognize that their estate plan should provide for the distribution of their assets upon their death. That, of course, is an essential element of an estate plan, but there is more to consider in a well-designed plan. Prior to meeting with your attorney for the first time you should also be thinking about such things as who you want to handle your affairs should you become incapacitated; whether you would want your doctor to keep you alive should you be near the point of death with little chance of recovery; who you want to have the authority to sign important legal papers for you if you are unavailable; and, who you would want to raise your children if you suddenly die. There is a wide variety of personal circumstances which impact estate planning, but let me offer the following as items you should consider even before you meet with a lawyer to discuss your own estate plan.

Should I have a will or a trust?

This is typically among the first questions posed by clients during an initial meeting. Many are aware that a trust will avoid probate, but that is true only if the trust is properly funded, meaning that all of their assets are transferred into the trust. Not every estate plan needs a trust, however, and it may not be necessary for you to incur the additional cost of having your lawyer prepare a trust, when a will is suitable for your needs. And, contrary to what some folks think, having a trust does not avoid estate taxes.

A trust may be the right choice for you, if it is unlikely that you will acquire more assets in the years ahead. What can often happen, however, is that folks will have a trust established and thereafter acquire new assets that they neglect to place in the trust. Then when they die the assets outside of the trust have to go through probate which defeats the intent of establishing a trust in the first place. So, before deciding upon a trust as the main element of your own estate plan, take some time to consider your future investment plans and major acquisitions.

There are some other advantages to a trust, which might make it the right choice for you. For example, should you become incapacitated, your trustee will be able to step in and manage your assets without having to seek a court appointed conservator. In that sense, a trust document is more all-encompassing and flexible than an ordinary will.

What else should I consider in my estate plan?

Estate planning isn't just about deciding who gets your wealth when you die. It is also about making decisions as to what you want to happen should you become seriously ill or incapacitated.

Every estate plan should include an advance directive, which used to be called a living will. This document allows you to appoint a health care representative to make health care decisions for you, including end of life decisions, when you are unable to do so.

Similarly, we recommend that you give a durable power of attorney to a family member or trusted friend in order to allow your appointed agent to manage your financial and business affairs when you are unavailable or otherwise incapacitated. A durable power of attorney remains in effect so long as you are alive and should provide that it will be effective even in the event of your incapacity.

What about my bank accounts, life insurance and investment accounts?

Careful estate planning should include a review of all of your assets, including checking the beneficiary designations you have listed in your retirement plan and in regard to your investment and bank accounts. With such beneficiary designations, these assets will be transferred outside of the probate process to those persons you have previously designated as beneficiaries on these accounts. It is important that you review your beneficiary designations to ensure that your choice of beneficiaries is in accordance with your current intentions as to disposition of your estate.

A thorough review of your portfolio and consideration of the issues described above before meeting with your estate planning attorney will allow you to realize the maximum benefit from your meeting. It will also help your attorney to focus his or her discussion with you on aspects of the process that are most relevant to your goals and needs.

© Call today for your free initial consultation.

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Estate Planning - The Benefits of Peace of Mind

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A CONTRACT is defined from the Latin word contractus. An agreement between two or more parties, especially one that is written and enforceable by “law.” To enter into by contract; establish or settle by formal agreement. An agreement between two or more parties which creates obligations to do or not do the specific things that is the subject of that agreement.

OWNERSHIP from the word possessore, is defined as someone who has the legal right to possession with the legal right to transfer possession to others.

ESTATE, (inheritance) patrimonio (possession) a term used in common “law” used to denote the sum total of all possessions by a person at the time of his/hers death.

A TRUST is a CONTRACT. A legal arrangement between two or more persons defining the ownership and distribution of his/hers possessions, under the “law.”

ESTATE PLANNING AND TRUSTS therefore is the written legal agreement (contract) outlining a contractual obligation between the parties.

WHAT IS AN ESTATE TAX?

An ESTATE TAX is a tax on your possessions on the date of your death, up to 55%. Take inventory of what you own: Cash, Savings and checking accounts, CDs, Stocks, Mutual Funds, Bonds, Treasuries, Exempts, Jewelry, Cars, Stamps, Boats, Paintings, and other collectibles, Real Estate ... main home, vacation spot, investment realty, your Business, Interests in other businesses, Limited Partnerships, Partnerships, Mortgages and notes receivable you hold, Retirement plan benefits, IRAs, Amounts that you expect to inherit from others.

Your federal death (estate) tax, up to 55%, is based on the "fair cash value" of your property on the date of your death, not what you originally paid. State probate and death taxes are based on the "location" of your property. Thus, if you own property in different states, each state has to be probated and each will want their fair share.

The only real alternative to a will arrangement is to set up a trust structure during lifetime which, with careful planning, can operate to eradicate these delays, administration costs and taxes as well as giving a large number of additional benefits. For these reasons the use of TRUSTS is increasing dramatically.

The problem is: Many Americans have no plan. They incorrectly assume joint ownership takes care of things, or they believe that their property is not worth enough to be concerned.

Such practices can be shortsighted, cost money, and raise unnecessary and unexpected problems, long time delays, and high administration costs. For one thing, most people have a larger estate than they may realize. For another, joint ownership will not necessarily beat probate hungry lawyers or the estate tax man and will often mean that considerable sums become payable in inheritance tax or estate duty.

A will is not a substitute for a trust. A will does not avoid probate. Many individuals seek to put order to their affairs by making a comprehensive will. Under this arrangement the Executors named in the will would apply for a grant of probate, take possession of the assets of the deceased and then distribute those assets according to the terms of the will.

ITEMS INCLUDED IN YOUR TAXABLE ESTATE:

For example, many people believe the higher exemption amounts that can pass tax free eliminate any need for estate planning. This type of thinking is fundamentally flawed, for example:

1) Certain Types of Property have special rules for estate taxes. Property that spouses jointly own, half the value is included in the estate of the first spouse to die, no matter whose funds bought it or that survivor automatically inherits it. And the full value is counted in survivor's estate could result in a bigger estate tax at that time.

Example: H + W own a private home, fair market value at time of H death is $750,000. 1/2 of $750,000 is included in H's estate; therefore W now owns 100%. On the death of W the full $750,000 would be in her taxable estate; thus, a larger estate tax on the death of W.

2) What the Insurance Man Won't Tell You - Life insurance is taxed in your estate "if" you had any incidental ownership at death. This occurs if you can name new beneficiaries or borrow against policies or take out the cash value. Even insurance you give away, can come back to taxable in your estate if the donor dies and leaves it to you. Group insurance may be included too.

3) Pensions & IRAs - are taxable, except for pensions fixed before 1985.
Then there are several items the law also adds to your estate: Large gifts, non-charitable gifts that exceed $12,000 beginning in 2006 and property partly given away, where you retain the right to use it.

Example: A house that you give to your children but still use rent-free. (Incidentally giving your house to your children creates a problem for them, and for you, if they get sued, or they die before you.)

And stock you give away, but keep voting rights, if in a company that you control. Or the property of others over which you have certain rights such as the power under another's will to name who will get part of that estate. If you could name yourself, your estate or creditors, it's taxable in your estate. Including assets you give a child and keep the right to control.

ESTATE TAX LAWS CAN CHANGE:

Finally, estate tax laws can change. Thirteen times in 25 years, overhauls, tightenings for some, headaches for all. Congress is always tinkering with the idea that they know better than you, where your money should go.

Planning your estate is not an easy task. It takes time and effort. The place to begin is with yourself, your own goals and consideration of your heirs, their ages, abilities, needs and so on at a time when there's no pressure to implement.

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Estate Planning Issues During and After Divorce

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An estate plan is a document consisting of multiple trivial elements such as the living will or healthcare proxy or also known as medical power of attorney and assignment of power of attorney. Some people also include trust into their wills. Once you merge all these things together, you have to get it certified under the legal laws of both the federal and state governments. Basically everyone needs to have a will, to inform the world where you wish to allocate your assets to after you leave the world. In fact, it is the best way to consign guardians for your children.

Those dying without a proper estate planning, having no will to display upon their deaths are known to be dying intestate. However, this implies that your heirs need to struggle through several legal procedures in order to take over the assets. Having a trust does not guarantee the ownership transfer; it is insufficient because you still need a will to be in charge of your trust to inherit them to your beneficiaries. In addition, it is advisable that you discuss the plan with your children to avoid future discord, especially if you know your heirs may come in strong disagreement with one another.

To begin with your estate plan, you have to garner all appropriate information such as insurance policies, investments, real estate or business interests, financial condition, and any retirement savings. Then ponder to yourself several questions like who you wish to assign to the job of handling your financial affairs if you happen to be incapacitated. Then consider whom you intend to inherit your assets to and give thoughts into plotting the responsibility of your medical decisions should you be bedridden and unconscious.

Some people think that having infinite amount of money indicates a good estate planning but this is not always the case. Leaving all your properties and cash to your spouse does not imply it will be exempted from estate tax because you will instead increase his or her taxable estate. Subsequently, if your spouse leaves the money to your children upon his or her death, they will end up paying higher estate taxes. At all cases, having a will is the best item to solve all hassles.

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Estate Planning - Why Should I Care?

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Why Plan Your Estate?

The knowledge that we will eventually die is one of the things that seem to distinguish humans from other living beings. At the same time, no one likes to dwell on the prospect of his or her own death. But if you postpone planning for your passing until it is too late, you run the risk that your intended beneficiaries - those you love the most - may not receive what you would want them to receive either because of extra administration costs, unnecessary taxes or squabbling among your heirs.

This is why estate planning is so important, no matter how small your estate may be. It allows you, to ensure that your assets and other possessions will go to the people you want, in the way you want, and when you want. It permits you to save as much as possible on taxes, court costs and attorneys' fees; and it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion.

All estate plans should include, at minimum, two important estate-planning instruments: a durable power of attorney and a will. The first is for managing your property during your life, in case you are ever unable to do so yourself. The second is for the management and distribution of your property after death. In addition, more and more, Americans also are using revocable (or "living") trusts to avoid probate and to manage their estates both during their lives and after they're gone.

Your Will

Your will is a legally binding statement directing who will receive your property at your death. It also appoints a legal representative to carry out your wishes. However, the will covers only probate property. Many types of property or forms of ownership pass outside of probate. Jointly owned property, property in trust, life insurance proceeds and property with a named beneficiary, such as IRAs, insurance policies or 401(k) plans, can all pass outside of probate.

Why should you have a will?

Here are some reasons.

First, with a will you can direct where and to whom your assets (what you own) will go after your death. If you died instate (without a will), your estate would be distributed according to state law. Such distribution may or may not accord with your wishes.

Many people try to avoid probate and the need for a will by holding all of their assets jointly with their children. This can work, but often people spend unnecessary effort trying to make sure all the joint accounts remain equally distributed among their children. These efforts can
be defeated by a long-term illness of the parent or the death of a child. A will can be a much simpler means of affecting one's wishes about how assets should be distributed.

The second reason to have a will is to make the administration of your estate run smoothly. Often the probate process can be completed more quickly and at less expense to your estate if there is a will. With a clear expression of your wishes, there are unlikely to be any costly, time-consuming disputes over who gets what.

Third, only with a will can you choose the person to administer your estate and distribute it according to your instructions. In Illinois this person is called your "personal representative". If you do not have a will naming him or her, the court will make the choice for you. Usually the court appoints the first person to ask for the post, which is most closely related to you at the time of death.

Fourth, for larger estates, a well planned will can help reduce estate taxes.

Fifth, and most important, through a will you can appoint who will take your place, as guardian of your minor children should both you and their other parent both pass away.

Filling out the worksheet that our office provides will help you make decisions about what to put in your will. Bring it and any additional notes to our office and our estate planning professionals will be able to efficiently prepare a will that meets your needs and desires.

Estate Administration- Probate Procedure

Probate is the process by which a deceased person's property, known as the "estate", is passed to his or her heirs and legatees (people named in the will), the entire process, supervised by the probate court, usually takes about one year. However, substantial distributions from the estate can be made in the interim.

The emotional trauma brought on by the death of a close family member is often accompanied by bewilderment about the financial and legal steps the survivors must take. The spouse who passed away may have handled all of the couple's finances. Or perhaps a child must begin taking care of probating an estate about which he or she knows little about. And this task may come on top of commitments to family and work that can't be set aside. Finally, the estate itself may be in disarray or scattered amount many accounts, which is not unusual with a generation that saw banks collapse during the Depression.

Here we set out the steps the surviving family members should take. These responsibilities ultimately fall on whoever was appointed executor or personal representative in the deceased
family member's will. Matters can be a bit more complicated in the absence of a will, because it may not be clear who has the responsibility of carrying out these steps.

First, secure the tangible property. This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to
take an inventory; this will become a difficult, if not impossible, task. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.

Second, take your time. You do not need to take any other steps immediately. When bills do need to be paid, they can wait a month or two without adverse repercussions. It's more important that you and your family have time to grieve. Financial matters can wait. When you're ready but not a day sooner, meet with one of our attorneys to review the steps necessary to administer the deceased's estate. Bring as much information as possible about finances, taxes and debts. Don't worry about putting the papers in order first; our attorney will have experience in organizing and understanding confusing financial statements.

In general rules of estate administration include the following steps:

1. Filing the will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a will, heirs must petition the court to be appointed "administrator" of the estate.

2. Marshalling, or collecting the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an "inventory", with the probate court. It's generally best to consolidate all of the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set by our firm on your behalf, so that you can keep track of all expenditures.

3. Paying bills and taxes. If an estate tax return is needed--generally if the estate exceeds $5,200,000 in value as of 2016 -- the estate must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all of the information available in time, you can file for an extension and pay your best estimate of the tax due.

4. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. If the estate does earn income during the administration process, it will have to obtain its own tax identification number "TIN" in order to keep track of such earnings and file an estate income tax

notion in addition to the decedent's final income tax return.

5. Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which in Illinois is 6 months from the date the estate, notice of death in the newspaper. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and costs of closing out the estate.

6. Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work

Avoiding probate through joint ownership or trusts can eliminate some of these steps. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.

Guardianship and Conservatorship

Every adult is assumed to be capable of making his or her own decisions unless a court determines otherwise. If an adult becomes incapable of making responsible decisions due to a mental disability, the court will appoint a substitute decision maker, called a "guardian". Guardianship is a legal relationship between a competent adult (the "guardian") and a person who because of incapacity is no longer able to take care of his or her own affairs (the "ward"). The guardian is authorized to make legal, financial, and health care decisions for the ward. Depending on the terms of the guardianship, the guardian may or may not have to seek court approval for various decisions, but generally the guardian acts without being required to incur the expense of court approval.

Some incapacitated individuals can make responsible decisions in some areas of their lives but not others. In such cases, the court may give the guardian decision-making power over only those areas in which the incapacitated person is unable to make responsible decisions (a so-called "limited guardianship"). In other words, the guardian may exercise only those rights that have been removed from the ward and delegated to the guardian. Guardianships are consuming and expensive. Prefer planning with Power of Attorneys for health care and financial matters will significantly reduce cost and time in the event you became incapacitated. (See Page for detailed discussion of Power of Attorney).

Incapacity

Generally a person is judged to be in need of guardianship when he or she shows a lack of capacity to make responsible decisions. A person cannot be declared incompetent simply because he or she makes irresponsible or foolish decisions, but only if the person is shown to lack the capacity to make sound decisions. For example, a person may not be declared incompetent simply because he or she spends money in ways that seem odd to someone else. Also, a developmental disability or mental illness is not, by itself, enough to declare a person incompetent.

Process

Anyone interested in the proposed ward's well being can request a guardianship. An attorney is usually retained to file a petition for a hearing in the probate court in the proposed ward's county of residence. The proposed ward is entitled to legal representation at the hearing, and the court will appoint an attorney if the allegedly incapacitated person cannot afford lawyer.

At the hearing, the court with the help of the Guardian ad Litem attempts to determine if the proposed ward is incapacitated and, if so, to what extent the individual requires assistance. If the court determines that the proposed ward is indeed incapacitated, the court then decides if the person seeking the role of guardian will be responsible.

Guardian

A guardian can be any competent adult-the ward's spouse, another family member, a friend, a neighbor, or a professional guardian (an unrelated person who has received
special training). A competent individual may nominate a proposed guardian through a durable power of attorney in case she ever needs a guardian.

The guardian need not be a person at all--it can be a non-profit agency or a public or private corporation. If a person is found to be incapacitated and a suitable guardian cannot be found, courts in many states can appoint a public guardian, a publicly financed agency that serves this purpose. In naming someone to serve as a guardian, courts give first consideration to those who play a significant role in the ward's life - people who are both aware of and sensitive to the ward's needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.

Reporting Requirements

Court often give guardians broad authority to manage the ward's affairs. In addition to lacking the power to decide how money is spent or managed, where to live and what medical care he or she should receive, wards also may not have the right to vote, marry or divorce, or carry a driver's license. Guardians are expected to act in the best interests of the ward, but give the guardian's often-broad authority; there is the potential for abuse. For this reason, courts hold guardians accountable for their actions to ensure that they don't take advantage of or neglect the ward.

The guardian of the property inventories the ward's property, invests the ward's funds so that they can be used for the ward's support, and files regular, detailed reports with the court. A guardian of the property also must obtain court approval for certain financial transactions. Guardians must file an annual account of how they have handled the ward's finances. Guardians must offer proof that they made adequate residential arrangements for the ward, that they provided sufficient health care and treatment services, and that they made available educational and training programs, as needed. Guardians who cannot prove that they have adequately cared for the ward may be removed and replaced by another guardian.

For more information, please see Part II of this article

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