Estate Planning Brochure

Regardless of the size of your estate, it is always a good idea to have a will. At
minimum, your will allows you to name the person you would like to administer your
estate in probate, your executor or executrix. Without a will, the Probate Court will
name an administrator. This might be someone you would not choose or approve
of given a choice.

Your will also allows you to name the persons to whom you would like to leave your
property. Without a will, your property will be divided by the Probate Court under
the statutory descent and distribution laws. Your property then could wind up being
distributed other than how you would have liked.

If you have minor children, your will allows you to name as guardian the person(s)
you would like to care for your children. The absence of a will can lead to much
family turmoil in this respect.

A word about the probate process is helpful to understand some benefits of the
living trust. Probate is a public process that begins with proving the will, or
establishing that there is no will. The opening of the estate is published in the
newspaper. A executor or administrator is appointed. That person must obtain a
bond from an insurance company. An inventory of estate assets is filed with values
established by an appointed appraiser. If it is necessary to sell estate assets,
such as the home or its contents, the Probate Judge must first grant permission.
The estate remains open for a minimum of six months to allow any claimants
against the estate to come forward. The estate is closed with a final accounting to
the probate court indicating that all the bills have been paid and all distributions
properly made to the beneficiaries.

The living/revocable trust has at least four advantages over the simple will:
A.) Avoids probate;
B.) Allows delayed distribution to beneficiaries;
C.) Preserves the unified estate and gift tax credit for married couples; and
D.) Allows lifetime administration of your estate in case you become
incapacitated.

A. Avoids probate. Some people do not like probate. They don't like the
procedural burden, the expense or the public nature of it. When Norman Dacey
wrote the book How to Avoid Probate!, he was recommending the revocable living
trust. Trusts had been used for decades by the rich, but living trusts have since
become quite popular for everyone.

The living trust avoids probate because you put all your property in the name of
your trust. That means when you die, the property is not part of your probate
estate. Your trust owns it. If you own a home or other real estate, you deed the real
estate to your trust. You still have complete control over all your property because
you are the Trustee of your own trust. Revocable means changeable. You can
transfer your property in or out of the trust anytime.

B. Delayed distribution. Some people are concerned about leaving an estate to
minor children. With a will, the child's inheritance is held by the child's guardian
until the child reaches age 18, the age of majority. Some think this is too young to
receive an inheritance. The teenager might blow the inheritance on immature
pursuits. Probate jurisdiction of a will, however, expires when the child reaches
age 18.

The living trust can allow your Successor Trustee to hold the inheritance until the
child is older. Many trusts specify, for example, that the principal trust fund will be
distributed to the children in thirds when they reach ages 25, 30 and 35. In the
meantime, the interest can be paid out to the beneficiaries or kept in the trust fund.

The Successor Trustee is usually given broad discretion to pay from the trust fund
for education, medical needs and other worthy causes for the beneficiary.

C. The unified credit. There is a tax on the privilege of giving things away. It is a
unified schedule of taxation on gifts and estates. The tax starts at 35% and goes
up. Against this tax, however, everyone has a credit. For tax year 2021, you can
gift or bequeath up to $11,700,000 worth of property before taxation starts.
Married spouses do not need this credit as between them. They have an unlimited
marital deduction. One spouse can leave the other a zillion dollars with no tax.
Trouble is, the first spouse's unified credit was not used; it was lost. That is where
the trust is helpful. By using specific language, the trust preserves the credit of the
first spouse to die.

D. Lifetime administration. In this age of medical miracles, people can live long
while legally incompetent (incapacitated). This can often mean that a loved one
must obtain a guardianship from the probate court to administer the estate of a
living person. This is probate during your lifetime with the same public procedures
as those discussed above. The living trust avoids the need for appointment of a
guardian because your Successor Trustee is already designated to take over.
Furthermore, your trust owns the estate.

Your living trust will be accompanied by a Statement of Conveyance by which you
convey all your personal property (all property that is not real estate) into your trust.
Your real estate is conveyed to your trust by Warranty Deed to yourself as Trustee.
Because you are Trustee of your trust, you have complete control over the
property. You can do with it whatever you want. Anyone preparing a living trust will
also need a pour-over will. This simple will leaves to your trust any property you
have not already conveyed to it.

You might recall the Karen Quinlan case where a young woman was brain dead
after a car crash. She was kept alive artificially for seven years despite the pleas
of her family for death with dignity. Courts finally allowed doctors to "pull the plug"
after it was established that Karen had expressly said she would not have wanted
to be kept alive this way. Almost immediately, all the States, including New
Hampshire, passed living will laws to allow the expression of intent, yes or no, on
the question of terminating the artificial means. The living will is just an
authorization, not a mandate, for terminating artificial means of life.

This takes the living will a step further by naming an agent to make health care
decisions for you in case you are incapacitated.

This powerful document allows your named designee to step into your shoes in the
legal sense. That person then has the power to administer your estate in case you
cannot. Such a power of attorney would be prepared even with a trust because it
is easier for your Successor Trustee to use than the long trust document. Because
the power of attorney is so powerful, it is often accompanied by an escrow letter to
the lawyer's office asking that it be held until you or your doctors indicate that it is
needed.