QUESTIONS AND ANSWERS ABOUT

LEGAL ASPECTS OF ESTATE PLANNING

(Q). 1. Do I need a Will?

(A). 1. If you don't have a Will, you can't:

(a) Leave all to spouse if you have children

(b) Control who will receive your assets

(c) Help heirs minimize taxes

(d) Leave anything to charity

(e) Choose who will administer your estate

(f) Waive bond for Personal Representative

(g) Avoid guardianships

(h) Choose the guardian of your kids

(i) Keep large sums from falling into the hands of 18-year-olds

(Q). 2. How often should my Will be reviewed?

(A). 2. Your Will should be reviewed every 3 years or when:

(a) You've married or divorced

(b) There has been a death or birth

(c) You have moved to another state

(d) Your estate has changed

(e) Tax laws have changed

(f) You have changed your mind

(Q). 3. Can't I just write in any changes on my Will?

(A). 3. Don't try to change your Will yourself. It may be ignored by the Court, result in the complete revocation of the Will, or end up in litigation.

(Q). 4. Why not just put everything in joint names with my children?

(A). 4. (a) Residence - You lose part of the homestead exemption

(b) Residence - You lose income tax exemption of gain on sale

(c) Bank - Child can withdraw all without your consent

(d) Property other than bank accounts - You can't transfer without child's consent

(e) No flexibility - Your Will won't apply to jointly owned property

(f) Could create conflict among children after your death

(g) Child's creditors can seize joint assets

(h) What if child dies first?

(i) Your children lose the favorable "stepped-up" income tax basis they would otherwise receive at your death

(Q). 5. Avoiding probate also avoids estate tax, correct?

(A). 5. Wrong. The following non-probate assets are subject to estate tax:

(a) Jointly owned property

(b) Life Insurance

(c) Retirement plan death benefits

(d) Assets of a revocable living trust

(Q). 6. What happens to my property if I become comatose, mentally incompetent or senile?

(A). 6. You can't write checks, transfer property or sign any legal documents. Unless you have planned for your incapacity, your family may be required to have you declared incompetent and have a court supervised guardian act for you.

(Q). 7. What can I do to avoid having to go through this process?

(A). 7. (a) Durable Power of Attorney

(1) Takes effect immediately when signed

(2) Gives unlimited powers

(3) Is valid even if you are incompetent

(4) Is revoked at death

(5) Doesn't avoid probate

(b) Living Trust

(1) You can be Trustee until death or incapacity

(2) Spouse or anyone else you choose takes over as Trustee on your incapacity

(3) Trustee directs investments, manages assets and pays your bills, medical expenses, etc. during your incapacity

(4) On your death, assets in Trust pass to your designated beneficiaries without probate

(5) You can amend or revoke the Trust at any time

(Q). 8. How can I make sure that the right medical care decisions will be made if I become incapacitated?

(A). 8. (a) Life Prolonging Procedures Declaration or "Living Will"

(1) Express in writing your wishes as to "pulling the plug" in the event you are unable to communicate with the doctor

(2) Applies only if you have been diagnosed as terminal, end-stage or persistent vegetative state and there is no medical hope of your recovery and your death is imminent

(3) Gives you the option to also request no artificial feeding or water

(4) Can be revoked at any time - even orally

(b) Designation of Health Care Surrogate

(1) Appoints an individual selected by you to make decisions about your health care if you are unable to communicate

(2) Applies even if your death is not imminent