Question: I would like to make a significant contribution to my favorite charity. However, I want to continue receiving the income for my life. Is this possible?
Answer: Yes, there are several methods to make a donation to charity, yet continue to receive the income for your life. A charitable gift annuity is one simple method to accomplish your goal.
A charitable gift annuity is an arrangement in which a donor irrevocably transfers money or property to a charitable organization in exchange for its promise to pay a lifetime annuity to one or two beneficiaries. An annuity is a fixed sum payable in annual or more frequent installments over the life or lives of the annuitants. Upon your death, or end of the term, the remaining asset goes to the charity. Generally, a donor would also receive a tax deduction when creating the annuity. Additional questions should be directed to your charity or an estate planning attorney.
Back to Top Question: I was recently widowed, and do not have significant assets. A friend has suggested that I need a Will. Since I plan to leave everything to my children in equal shares, is a Will really necessary?
Answer: Yes. You should know that if you die without a Last Will and Testament, State statutes provide one for you, and these statutes will determine how your estate will be administered and your assets distributed. This distribution plan may, or may not, be similar to the distribution plan you have in mind. Additionally, if you die with minor children, a court will decide who will serve as a guardian for those children.
On the other hand, a Will allows you to nominate a guardian for your minor children and to set up a Trust to ensure that your children's financial needs are met and to protect the children's assets until they reach adulthood. Even if all of your children are adults, a Will is still important to meet your stated desire to split your estate equally among all of your children. If any of your assets are jointly owned with a child, those assets will pass outside your Will, and will not be split among all your children. A Will also permits you to name a Personal Representative of your estate. This person will pay your estate's debts, collect its assets and make distributions according to your Will. Your attorney should discuss with you your assets, including jointly owned assets, before preparing your Will to ensure that your wishes can be met so that all of your children receive an equal share of your estate upon your death.
Back to Top Question: I have just completed my estate plan, and am wondering where I should store my original documents.
Answer: You have several options for storage of your estate planning documents. Many individuals like to store their Wills in a bank safety deposit box. While North Dakota law permits a family member to enter a safety deposit box to locate a Will, please be aware that you will not want to store your Will there if it includes funeral or burial instructions. Some individuals address this issue by giving a copy of their Will to a trusted child or relative, while storing their original Will in a safety deposit box. Other alternatives are to place your Will in a fire-proof safe located in your home, or store it at your attorney's office. Whatever alternative best meets your needs, it is prudent to inform a child or relative that you have executed or signed a Will and where it can be located.
As to the other documents that you signed as part of your estate plan, DO NOT place them in your safety deposit box, as your agent will not be able to gain access without the Power of Attorney in hand. Therefore, you may wish to give this directly to your agent or keep it in a home safe to which your agent would have access in the event of an emergency. Similarly, in the event of a medial emergency requiring your agent to act, your agent may not be able to wait to gain access to your Health Care Directive, so you would want to file that document with your primary care facility or give it to your agent.
Back to Top Question: My father is in a nursing home and his dementia has gotten quite severe since the first of the year. One administrator at the nursing home says he needs a guardian and another has said he needs a conservator. Is there a difference?
Answer: Yes. Under North Dakota law, a guardian and a conservator have different duties and responsibilities, although it is common that the same person serve as both a guardian and a conservator. A guardian and/or conservator is appointed by a court after an interested party has alleged the person in need of assistance (the ward) and a court has determined that the ward is indeed incapacitated. A court-appointed guardian is given authority to act for an incapacitated ward and is granted limited or full powers over a variety of matters such as living arrangements, including nursing home placement, medical care, education or rehabilitation, and legal issues involving the ward. A court-appointed conservator is given the authority to manage the incapacitated ward's assets to ensure assets are available to meet the ward's needs. A legal professional can help determine if your father's needs can be best met by the appointment of a guardian, a conservator, or both.
Back to Top Question: What is a Durable Power of Attorney?
Answer: A Durable Power of Attorney is a legal document by which one person (the principal) appoints another to act on his or her behalf (the attorney-in-fact). A Power of Attorney is "Durable" if it is drafted to remain in effect even if the principal becomes incapacitated. This could eliminate the need and expense of a court-appointed guardian or conservator should you become incapacitated. A Power of Attorney may also be drafted for a specific, limited purpose, such as permitting the attorney-in-fact to sign real estate closing documents because the principal is out of town on the closing date.
The term "Power of Attorney" is often used to generally refer to two separate legal documents. One is usually titled "Durable Power of Attorney," and it appoints an agent, or attorney-in-fact, who has authority to act for the principal in legal and financial matters. The other document is a "Health Care Directive," which is commonly called a "Health Care Power of Attorney." This document appoints an attorney-in-fact to make health care decisions if the principal is unable or unwilling to make those decisions himself or herself.
Individuals who wish to determine if a Power of Attorney or Health Care Directive could meet their needs should consult an attorney.
Back to Top Question: Last year my father named me as his Agent in his Durable Power of Attorney. He is no longer able to attend to his affairs. What do I need to know when acting as his Agent?
Answer: As an Agent, your primary responsibility is to carry out your father's instruction and wishes. Your ability to act is defined within the Power of Attorney (POA) your father signed. As his Agent you should be aware of all of the terms set out in the POA document. This document may give you specific directives, or it may be very general in nature. To the extent possible, you should discuss decisions with your father. A copy of the POA should be given to each business with which you will need to transact business on your father's behalf. You should sign as the POA indicates to make it clear you are signing "as agent for" your father. Keep in mind that when you act as an Agent you are doing so as a fiduciary, and you must act responsibly and in your father's best interests. You should keep careful financial records, and you must keep his assets separate from your own.
Back to Top Question: What happens if I die without a will?
Answer: If you die without a Last Will and Testament, the law says that you died Intestate. Each state has its own intestate succession laws which will determine how your assets are distributed. Generally, these laws distribute your assets to your survivors (family members). This may, or may not be, what you would have wanted. For instance, intestate laws do not permit any distributions to charity. More importantly, they do not permit any distributions from your estate to go to non-family members. Under most intestate succession laws, any "interested party" (including your creditors!) can petition the court to serve as the personal representative of your estate to be in charge of the distribution of your estate.
Back to Top Question: What are the advantages of having a will in place?
Answer: There are many advantages to having a Will. Having a Will allows you to make your own personal wishes known to all of your family and friends. It permits you to name a personal representative that you believe will best carry out your wishes. If you have minor children, you are able to name a guardian or guardians for your children so that your children=s guardian is not decided by the courts. A Will allows you to fund a trust, which is a means of managing assets for the benefits for children or other persons who cannot manage money themselves. You can leave assets to non-family members or to charity in your Will.
When all of these issues are settled in your Will, there is less uncertainty, which means there is less delay in the distribution of your assets and there will likely be smaller associated legal costs. Lastly, a Will is a necessity for those individuals who have, or may have, a taxable estate at the time of death. A Will can structure distributions from your estate to maximize what your family receives and to minimize the amount of tax that will be owed.
Back to Top Question: What are the disadvantages of dying without a Will in place?
Answer: If you die without a Will, you have died without making your personal wishes known. This means that there is uncertainty about your estate. Who should serve as your personal representative? Who should receive the proceeds of your estate? How should your assets be protected and managed to meet the needs of your children? Who should serve as a guardian for your minor children? All of this uncertainty means delays in settling your estate, so your family may have to wait a substantial period fo time before they can receive any money from your estate. Usually, delays translate into additional legal fees and costs for the probating of your estate.
Back to Top Question: If I die without a will, won't my spouse get everything anyway?
Answer: Perhaps, but not necessarily. Some of your assets may be owned with your spouse as tenants in common, and not as joint tenants with the right of survivorship. Tenants in common property is distributed according to your Will, or by your state=s intestate succession laws. This means that your spouse may not be entitled to all of your assets. Also, you may not want all of your estate to go to a surviving spouse. For instance, if you have a taxable estate, you will want the estate tax protections of a carefully drawn estate plan. If you have children from a prior relationship, you may want to set aside some of your assets for those children.
Back to Top Question: I want to do a will, but my spouse won't. Should I do one anyway?
Answer: Yes. If you have a taxable estate, it is imperative to have a Will. Even if you do not have a taxable estate, your estate will benefit from a Will, even if your spouse will not sign one as well. First of all, your spouse may pre-decease you, which means you would likely receive most of your spouse=s assets. Since you are the second-to-die spouse, your Will will determine how your estate is distributed to other family members or charities. It will also name a personal representative, which would be important since you would not have a surviving spouse to act in that role.
Even if you were to die first, your Will is important. You could set aside assets for persons other than your spouse (Would your spouse realize the china hutch should go to your sister?) and to charities that are important to you.
Back to Top Question: What is the process involved in settling an estate? Does everything have to go through my will? What can be done with titling of property and beneficiary designations?
Answer: Settling an estate has 4 broad steps. First, the deceased=s assets must be gathered and protected until they are distributed to their next owner. Second, the decedent=s debts must be determined and the actual value of legitimate debts must be set. Third, the assets must be used to pay the just debts. Fourth, any remaining assets must be distributed in accordance with the Will or the state=s intestate succession laws.
State law determines who can take these steps on the decedent=s behalf, and guides how and when they can be done. Some of this work can be done by a surviving spouse or a personal representative, but other steps should only be done through an attorney.
All assets do not have to go through a Will. There are two classifications of assets. The first is non-probate property. This is property that does not pass under your Will or by intestate succession laws. It passes to another person by some other legal means, such as joint ownership or beneficiary designations. The second it probate property, which is everything else.
Non-probate property can often pass to the joint owner or beneficiary as soon as the decedent=s death certificate is available. However, in some circumstances there are tax ramifications to the probate estate because of the non-probate property, and in rarer circumstances non-probate property may be needed by the probate estate to meet large debts, so it is always a good idea to consult an attorney before collecting and distributing any assets.
Certain assets can be titled with a joint owner or with beneficiary designations to avoid probate. This is particularly helpful if a person=s estate is quite small (for instance, only personal property and one checking and one savings account), as it saves the costs of a probate proceeding. Many families also find it helpful to have at least one small account with a beneficiary designation so that the funds are more immediately available to the surviving spouse and children for expenses during the time the rest of the decedent=s estate is tied up in probate.
Back to Top Question: What will power of attorney documents do for me if I am unable to manage my affairs? What problems could occur if I don=t have them in place?
Answer: Power of Attorney documents allow you to designate a person to serve as your agent, that is, to take any action for you that you could do for yourself. It is common to have two different Power of Attorney documents. One is to name an agent for financial, legal and insurance matters. The other is to name an agent to make healthcare decisions. The format of Power of Attorney documents are set by state law, and you should make sure that you have one that follows the requirements of the law of the state where you live. If it does, you should be confident that your agent has the legal authority to act on your behalf in the event that you are not able to do so yourself.
If you do not have Powers of Attorney, you have no legal agent to act for you if you are not able to act for yourself. That means no one else can pay your bills, handle your banking, file insurance forms, or make healthcare decisions for you. When that happens, a legal proceeding for the appointment of a guardian (to make your personal decisions) or a conservator (to manage you financial affairs) may be necessary. This is a proceeding in open court that is costly and time consuming.
Back to Top Question: What happens upon death of first spouse?
Answer: It is often not necessary to probate the estate of the first-to-die spouse. If all of the first spouse=s assets were held in joint tenancy with the surviving spouse, or had a beneficiary designation, then the spouse or beneficiary can collect the assets without going through the probate process. However, if the first spouse has even one solely owned asset, a probate proceeding will be necessary to distribute that asset.
Back to Top Question: Do couples who hold their property jointly with mutual right of survivorship really need to do wills?
Answer: Yes. First of all, it is problematic to rely on joint ownership to take care of all assets. If property is not titled correctly, then it may not be joint. Secondly, it is not uncommon that one of a couple inherits or acquires property during his or her lifetime that is not put into joint ownership with a spouse. Third, relying on joint ownership does not address a situation where both die together, or how the estate should be distributed on the death of the second-to-die spouse.
Back to Top Question: What are the drawbacks of drafting my own will using pre-printed forms or do-it-yourself software?
Answer: It is difficult to predict whether a pre-printed Will or do-it-yourself software will comply with the laws of the state in which you live. Therefore, you may sign a Will that you think is valid, but it is not under your state=s laws. Also, these Will products may not address your personal situation, and the distribution choices may not meet your needs. If the forms or software to not ask the correct questions, then your Will may not address all of the issues it needs to. If you have a taxable estate, disabled children or children from a prior relationship, these products are almost always inadequate.
Back to Top Question: What are the advantages of having an attorney draft my will?
Answer: An attorney can use his or her expertise to draft a Will that will not only comply with state law, but also best meet your own desires and wishes. Part of the estate planning process should be a comprehensive review of your family and their needs, as well as your income, property and debts. All of this information affects different components of your Will, and your attorney should be able coordinate all of your wishes and then explain to you how your assets will be managed and distributed under different scenarios.
An attorney-drafted Will is essential if your estate is, or could be, taxable upon your death. It is also necessary if you have a unique family situation and want to provide for the needs of a disabled child or grandchild, or want to protect assets for someone who cannot manage money without assistance. If you want to disinherit a child, you should also seek the advice of an attorney to determine how that must be accomplished under your state law.
Back to Top Please understand that the above is provided to be thought-provoking only, and is not intended to be legal advice for your unique circumstances. Always consult your personal attorney before making decisions which have legal consequences.
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Fargo, ND 58103
Phone: (701) 364-0154
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Please understand that the contents of this web site are provided to be thought-provoking only, and this information is not intended to be legal advice for your unique circumstances. Always consult your personal attorney before making decisions which have legal consequences.
