Wills & Trusts Kit For Dummies

Title Page
Copyright Page
Table of Contents
Introduction
About This Book
A Special Note for Residents of Louisiana
Conventions Used in This Book
Foolish Assumptions
Icons Used In This Book
Beyond the Book
Where to Go from Here
Part 1 Getting Started with Your Will or Trust
Chapter 1 Ensuring That Your Last Wishes Are Honored
The Good, the Bad, and the Ugly: What Can Happen When You Don’t Plan Your Estate
Reaping the Benefits of Planning Your Estate
Planning for your care while you’re alive
Ensuring that your assets go where you want
Making things easier for your family
Looking Out for Common Pitfalls
Benefits and dangers of jointly titling real estate, property, and bank accounts
Benefits and dangers of having your assets “pay or transfer on death”
Benefits and dangers of life estates
Danger of subjecting an asset to Medicaid spend-down rules
Potential for increased tax exposure
Realizing What Happens If You Don’t Have an Estate Plan
Following the laws of intestate succession
Determining the custodian of your minor children
Creating Your Will or Trust
Deciding who should create it
Understanding the process
Thinking about your kids, money, life insurance, and more
Telling Your Family about Your Estate Plan
Chapter 2 Making Crucial Decisions
Going It Alone
Are you comfortable doing it yourself?
How complicated is your estate?
Choosing a Will or Trust for Your Estate
What a will can do for you
What a trust can do for you
You may benefit from having both
Going with a Pro
How lawyers and accountants can help
Do you save money in the long haul?
Working with a Professional
Hiring a lawyer
Meeting with your lawyer
Reviewing and executing the documents
Taking the final steps
Safeguarding Your Estate Plan
The problem of the disappearing document
Storing your will or trust
Registration of wills and trusts
Chapter 3 Gathering Per  tinent Information
Asking Yourself Some Basic Questions
Identifying Your Assets
Real estate
Personal property
Titled personal property
Savings
Investments
Insurance policies and annuities
Retirement savings
Pensions
Considering Community and Jointly Owned Property
Valuing Your Property
Chapter 4 Planning Your Bequests
Calculating Your Assets
Determining Your Intended Heirs and Beneficiaries
Individuals
Institutions or charities
Other bequests
Thinking about Your Family Circumstances
Talking to your family
Jealousy and rivalry
Pressure from your family
Property That Pays or Transfers on Death
Estate Planning for Second Families
Giving your new spouse a life estate
Using trusts to hold your assets
More tools to consider
Estate Planning for Your Business
Inheritance of your sole proprietorship
Inheritance of your share of a business
Appointing the People Who Will Carry Out Your Estate Plans
Choosing your personal representative or trustee
Choosing a successor
Discussing your estate plan with your helpers
Finding Professionals to Assist You
Getting help from a lawyer
Hiring an accountant
Using professional trust services (institutional trustees)
Chapter 5 Providing for Your Children and Dependents
Choosing a Guardian
Making the decision
Choosing a guardian other than the noncustodial parent
Managing Your Child’s Assets
Providing for Your Child’s Needs
Your child’s education
Your child’s special needs
Your child’s financial stability
Chapter 6 Dipping into Your Pocket: The Tax Man (and Others)
Tallying Up Your Estate’s Tax Liabilities
Federal estate taxes — a moving target
The generation-skipping transfer tax
State estate taxes
Gift taxes
Minimizing Tax Costs and Liabilities
Leaving your estate to your spouse
Making gifts
Using trusts to avoid estate taxes
Creating a Family Limited Partnership
Seeing the Big Picture: Tax Avoidance Should Not Dictate Your Estate Plan
Paying Your Estate’s Debts
Medical costs and Medicaid reimbursements
Payment of bills, loans, and mortgages
Payment of funeral expenses
Covering Administration Costs
Court costs
Legal fees
Administrator’s fees
Trustee’s fees
Part 2 Everything You Need to Know about Wills
Chapter 7 Writing and Signing a Will
Deciding Whether a Will Serves Your Needs
Simplicity often leads you to a will
Assets not covered by a will
Exploring the Types of Wills
The statutory will
The handwritten (holographic) will
A will of your own
Other wills
Elements of a Will
Who you are
What are your assets
Who are your beneficiaries
What are your bequests
Reference to a tangible personal property memorandum
What happens with the residue (if any) of the estate
Payment of debts by the estate
Describing your funeral and burial wishes
Designating a personal representative
Designating a guardian for any minor children
Your signature
Executing a Valid Will
Choosing the right witnesses
Signing and executing your will
Chapter 8 Navigating the Land Mines
Identifying Common Land Mines
Disinheriting heirs, known and unknown
Avoiding invalidating part or all of your will
Lashing out from beyond
Handling simultaneous death of spouses
Realizing Why You Must Update Your Will
Your goals and wishes may change over time
Your assets may change over time
Family changes may invalidate your will
Family changes may dramatically alter who inherits under your will
Knowing What to Do If You Lose Your Will
Chapter 9 When You Already Have a Will
Reviewing and Updating Your Will
Changes in your family circumstances
Changes in your wishes
Changes in your financial situation
Changing Your Will
Adding to your will (amendment by codicil)
Executing a valid codicil
Revoking Your Will
How to revoke a will
What to do with a revoked will
Chapter 10 Estate Administration: What Happens in Probate Court
Navigating Probate Court
Discovering How Estate Size Affects Probate Procedures
Probate for small estates
Probate for larger estates
Understanding the Role of the Personal Representative
Giving notice to legal heirs
Collecting property for distribution
Notifying and paying creditors
Distributing bequests
Hiring a Lawyer
Overseeing Probate: The Judge
Avoiding Will Contests
Validity
Mental incapacity
Undue influence
Part 3 Trust Me! How Trusts Work
Chapter 11 The Anatomy of a Trust
What’s a Trust and Why You Need One
Benefiting from Trusts
They’re flexible
You can provide for your incapacity
You can avoid taxes
You can avoid probate
A trust can help protect your privacy
Selecting a Trustee
Choosing Your Beneficiaries
Transferring Assets into Your Trust
Staying in control
Giving (or limiting) your trustee powers
Cancelling the trust
Distributing trust assets
Putting Your Trust into Effect
When the Trust Ends
Chapter 12 Dead or Alive: Picking Your Trust
Why So Many Choices?
The Revocable Living Trust
The benefits
Possible drawbacks
Choosing from Other Trusts
Trusts to avoid the tax man: Asset protection trusts
Trusts for people who can’t manage money: Spendthrift trusts
Trusts for doing good: Charitable trusts
Trusts to avoid gift taxes: Crummey trusts
Trusts for people who receive government benefits: Special needs trusts
Trusts to protect your estate plan if you predecease your spouse: Bypass trusts
Trusts where you control the trust assets
Trusts that own life insurance: Irrevocable life insurance trusts (ILITs)
Trusts for multiple generations: Dynasty trusts (generation-skipping trusts)
Trusts to postpone estate taxes: Qualified terminable interest property trusts (QTIPs)
Trusts for your pet
Deciding Which Trust Is Right for You
Serving your personal needs
Serving the needs of your family
Thinking about the tax man
Chapter 13 When You Already Have a Trust
Creating the Trust Isn’t the End of the Story
Transferring Assets into Your Trust
Real estate
Financial accounts
Other assets
Reviewing Your Trust
Does the trust still serve your needs?
Does the trust still fulfill your goals?
Is the trust adequately funded?
Amending Your Trust
Restating a Trust
Revoking a Trust
What Happens If You Die?
Can you avoid probate?
Should you also have a will?
Part 4 Carrying Out the Intent of Your Will and Trust
Chapter 14 Planning for Your Incapacity
Planning for Incapacity Has Many Benefits
You avoid guardianship and conservatorship proceedings
You get to choose who cares for you
You ensure that your wishes are followed
Drafting a Living Will
Discussing your wishes
Executing a living will
Distributing copies of your living will
Reviewing your living will
Looking into Other Advance Directives
Healthcare proxies
Your medical advocate
Special instructions: Your wishes for your care
Executing a Healthcare Proxy
Distributing copies of your healthcare proxy
Revoking a healthcare proxy
Designating Your Financial Powers of Attorney
Selecting power of attorney
Deciding between durable powers of attorney or periodic renewal
Power now or power later?
Drafting your durable power of attorney
Executing power of attorney
Revoking a power of attorney
Chapter 15 Those Cushy Retirement Funds
Exploring Retirement Savings Accounts
Retirement savings accounts available to anyone
Employment-based retirement savings accounts
Self-employed retirement savings accounts
Putting Off the Tax Man
Moving Assets from One Tax-Deferred Investment to Another
Designating a Beneficiary
Selecting your beneficiary
Changing your beneficiaries
Maintaining Control Over Your Accounts
The Tax Consequences of Putting Your Retirement Savings into Your Estate
Chapter 16 Life Insurance: Making Sure It Doesn’t Backfire
Taking a Look at the Different Types of Life Insurance
Term life
Whole life
Universal life
Variable life
Deciding Who Owns the Life Insurance
Ownership by a spouse
Ownership by a child or children
Ownership by a qualified plan
Ownership by a trust
Designating Beneficiaries for Your Insurance Policy
Spouse
Child or children
Another individual
Multiple beneficiaries
A trust
Your estate
Chapter 17 Your Castle: How It’s Owned Makes a Huge Difference
Ownership of Your Residence
Ownership by one person: Sole ownership
Ownership by two or more people
Life estates
Community property laws
Special issues for domestic partners
Should Ownership of Your Home Be Held by Your Trust?
The Drawbacks Of Adding Your Heirs to the Title
The cons outweigh the pros
Possible tax consequences
Possible Medicaid consequences
Leaving Real Property by Will or Trust
Remembering Other Properties
Vacation properties
Investment properties
Business real estate
Farmland
Part 5 The Part of Tens
Chapter 18 Ten Common Will Mistakes
Not Updating Your Will
Being Too Specific in Your Bequests
Forgetting to Address the Residue of Your Estate
Leaving Everything to Your Spouse
Leaving Nothing to Your Spouse
Including Items in Your Will That Pass Outside of Your Estate
Improper Witnessing of Your Will
Losing Your Will (or Making It Impossible to Find)
Forgetting to Leave Good Financial Records
Forgetting That Your Estate Needs Cash
Chapter 19 Ten Reasons to Have a Trust
You Avoid Probate
You’re Prepared for Incapacity
You Avoid a Will Contest
You Protect Your Heirs
You Can Protect Estate Assets from Creditors and Lawsuits
You Plan for Second (and Third, and Fourth) Marriages
You Plan for the Future of Your Business
You Can Transfer Real Property Located in Another State
You Have Continuity of Investments
You Avoid Taxes
Chapter 20 Ten Tax Traps to Avoid When Planning Your Estate
Not Planning Your Estate
Focusing Too Much on the Estate Tax
Assuming that the Estate Tax Will Not Change
Trying to Guess How the Estate Tax Will Change
Not Taking Advantage of Your Lifetime Gift Exclusion
Not Engaging in Business Succession Planning
Hiding Property Transfers and Gifts from the IRS
Having Your Estate Be the Beneficiary of Your Life Insurance
Not Preparing Your Estate to Pay Any Estate Tax Owed
Forgetting That Your Estate Will Grow Over Time
Part 6 Appendixes
Appendix A State Signing Requirements
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Appendix B State Inheritance Taxes
The Impact of Federal Estate Tax Reform
States That Don’t Tax Estates
States That Impose Only Inheritance Taxes
States That Impose Only Estate Taxes
States That Impose Both Estate and Inheritance Taxes
Appendix C Estate Planning Worksheet
Estate Plan
Personal information
Goals and priorities
Family information
Assets
Insurance policies and annuities
Retirement plans
Business interests
Additional assets
Debts
Bequests
Special needs heirs
Alternate beneficiaries
Your advisors
Estate planning documents
Will
Personal representative
Guardian for minor children
Bequests
Estate taxes
Disinheritance
Trust provisions
Funeral and burial arrangements
Living Trust
Trustees and alternates
Property to transfer into trust
Disinheritance
Distribution of trust assets
Conditions on distribution
Special concerns
Durable Power of Attorney
Choice of agent
Powers granted
Preferences for the sale of property
Healthcare Proxy
Choice of medical advocate
Living Will
When should treatments cease
Treatments that may prolong life
Comfort and pain relief
Place of death
Index
EULA