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James A. Jones, Attorney At Law
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Tacoma Washington Elder Law Blog

Considering online assets when making estate plans

When people in Washington think about making a will or a trust, they may think first of their bank accounts, real estate and other forms of physical property. However, digital assets are becoming increasingly important in the estate planning world. As people live more of their lives online, access to digital accounts can be a critical aspect of planning for the future. Writing a will is often just the first step in developing an estate plan; people need to review their documents in the years to come to reflect changes to their lives as well as alterations to tax and estate law.

At the same time, they may also want to review their wills to make sure their digital assets, including email accounts, social media pages, cryptocurrency wallets and other online items, are addressed. Beneficiaries may struggle with obtaining access to these accounts if there is not a plan in place to transfer knowledge and information after a person passes on. This is particularly true as many sites and companies do not have provisions to pass accounts on to survivors after the original account holder passes away.

How do living trusts work?

For many people, estate planning means drafting a last will and testament. Although almost every person should have a will, there are other documents that may also be appropriate to include in an estate plan.

For example, if you have significant assets or a complicated estate, a living trust may offer you more benefits than a will can offer. However, people generally know less about living trusts than they know about wills, which can sometimes make them shy away from implementing living trusts in their estate plans.

Carrie Fisher estate valued at nearly $7 million

Washington fans of actress Carrie Fisher may be surprised to learn she was diligent about her estate plans. There have been multiple media reports of other well-known celebrities who have failed to take such steps prior to their deaths. According to probate court papers filed by Fisher's estate executor, her assets are valued at just under $7 million. The executor is seeking a final distribution of her assets.

In the document regarding Fisher's estate, the executor states all administration-related expenses have been paid to date. He also states he has performed his duties as stipulated by Fisher's estate documents. The will the actress had, which was created in early 2016, will become part of a trust she established, officially known as the Carrie Fisher Living Trust. The executor will also serve as the trustee. The beneficiary of Fisher's trust is her daughter, who also has a career in acting.

Estate planning misconceptions remain for many

Most Washington residents, if asked, would likely acknowledge that everyone should have some form of estate plan in place. Despite that, a significant percentage of adults have not taken basic steps towards accomplishing that objective. Other than a reluctance to recognize one's own mortality, one reason for this seeming inconsistency may be confusion and lack of understanding as to what exactly an estate plan entails. Perhaps a clear understanding of the purpose the various documents in an estate plan serve will help provide greater incentive for individuals to prepare for the inevitable and better secure their future.

One misconception that financial planners regularly see is confusing financial planning and estate planning. Both are necessary and certainly interrelated, but they are not the same. Another commonly held view is that a trust is only a tool for high-asset estates, yet a trust can be valuable in saving any estate the added expense of probate and should be considered by anyone who owns real property. Although a will and a trust can serve some of the same purposes, they are not interchangeable documents, and each has different advantages.

Beneficiary designations and estate planning

When Washington residents think about planning for the future and distributing their assets, they may consider making a will or even a trust, envisioning that this will make sure their wishes are carried out. However, what many people do not realize is that some of the largest and most important assets a person may have are often not controlled by a will at all, because they do not go through probate. Life insurance policies, retirement plans and investment funds often have a pay-on-death beneficiary, who will receive the payout after the original owner passes away.

In many cases, people have insurance policies or retirement investments through their employers, and they may have signed beneficiary forms as part of a large stack of paperwork when they were first hired. This may mean that their wishes are not currently reflected in those beneficiary details; in some cases, people may have named their now-deceased parents as beneficiaries when they first started a job, while others named a now-former spouse. For many people with high-powered corporate jobs, a significant portion of their estates may pass through these kind of beneficiary designations rather than through the probate courts.

Common errors in beneficiary designations

Beneficiary designations can be an important part of an estate plan for people in Washington, but they are often mishandled. Retirement accounts, annuities and life insurance are among the assets that are passed using a beneficiary designation.

One common error is not naming a beneficiary at all. What happens to the asset at that point depends on the type of asset and the rules of the financial organization. The asset might go directly to the probate estate, which could cause delays and incur tax. Some people who do complete beneficiary forms fail to do so clearly. For example, if two family members have the same name, such as a senior and a junior, the form needs to clarify who the asset should pass to. This type of error could also lead to a delay or even litigation.

Choosing the right type of trust in estate planning

Tacoma residents who are creating an estate plan might wonder whether they should use a trust and if so, what kind. A living trust is one of the most flexible because it leaves the grantor in control of the assets. The person can move assets in or out of the trust, change beneficiaries or even cancel the trust.

People who have a loved one with special needs who gets benefits from the government can set up a special needs trust. This type of trust can help support the person without endangering the person's access to the government benefits. Another type of trust is an incentive trust. This puts certain requirements on the beneficiaries. For example, the beneficiary might be required to complete a college education before getting distributions. With a charitable trust, distributions can be made to charity and to the trust owner or other beneficiaries.

How to make estate planning less stressful

Many Washington residents do not look forward to the estate planning process. This is because there are a lot of stressful elements to it. For instance, an individual may not know which documents to include or who to leave money or other assets to. It can also be stressful for the simple fact that no one wants to think about dying.

However, there are ways in which individuals can make the estate planning process an easier one. One possible strategy is to seek the help of an attorney who may be able to provide insight into how it should be structured and how to structure it in accordance with applicable laws. Once the plan is created, the attorney can help review it to ensure that it still does what a client wants and needs it to.

Milestones for revising an estate plan

There are several points throughout a person's life when it may be a good idea to update an estate plan. A person who turns 18 should, at minimum, have powers of attorney that name people to make healthcare decisions and take over finances if the person is incapacitated by illness or injury.

Most people revise the estate plan when they get married. The plan may need another revision if they have a child. The estate plan might need to name the surviving spouse as the full beneficiary. Otherwise, minor children may inherit a portion of the estate. The surviving spouse might then have to go to court and get approval as a guardian to manage the children's inheritance until they turn 18. An estate plan should also name a guardian for minor children in case both parents die at the same time.

The necessity of an estate plan

People in Washington should not put off creating an estate plan just because they have no children or close relatives. An estate plan does not just establish how assets are to be handled after a person's death. This document also addresses what should occur if individuals are unable to make decisions for themselves.

Adults should create an estate plan so that the proper legal documents are in place in case they become incapacitated and are not able to make decisions for themselves. Necessary documents can include a durable power of attorney for financial and legal decisions and an advanced directive for medical care. Without these legal documents, there are certain decisions that cannot even be decided by a person's spouse. It will also be necessary for a person's relatives to have to go through guardianship proceedings in court in order for someone to be appointed to make decisions on the incapacitated person's behalf.

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