While most adults have the legal capacity to care for themselves and determine their own choices, some do not have this ability and must have others who stand in for them. This typically happens when an adult has a disability or medical condition that prevents him or her from maintaining mental capacity. In such situations, a court must step in and appoint a guardina, a person who has the legal authority to make specific types of decisions on behalf of the incapacitated adult. There are, however, alternatives to guardianships that allow incapacitated adults to maintain as much of their decision making rights as possible. The types of alternatives available differ by state so you should consult a local estate planning attorney for specific advice.

• Power of Attorney: A power of attorney is a document a person can create that gives someone else the right to make decisions for the grantor. You can only grant power of attorney if you already have legal capacity, so those with disabilities typically cannot create power of attorney. Adults with capacity can create powers of attorney that take effect if the adult ever loses that capacity.

• Trust: Parents or relatives of a person with disabilities can create a trust that provides financial support for a person with disabilities. Similar to a power of attorney, the trust is a private instrument and, once created, does not have to be approved by a court.

• Limited Guardianships: States allow for different kinds of guardianships, some of which allow the incapacitated adult to make various types of decisions. These different types of guardianships can differ widely, but all require a court to grant guardianship powers.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

If you were smart enough to create a Will in the first place, you should exercise that same intelligence to create a new Will when your life changes. To help you, here is a list of the top five things that may occur in your life to necessitate drafting a new Will and revoking your existing will.

1. You are now happily married! If you created a Will while you were single, you should probably draft a new Will after marriage. In many states, you and your spouse can draft joint Wills.
2. You are now unhappily married! If you are contemplating divorce, in the midst of separation, or are already divorced, you should create a new Will. Although most state laws treat divorcing spouses as having predeceased you, your state may have different probate laws.
3. You have new children. If you created your Will when you were childless, you should create a new Will to incorporate your new additions. If you added another child to your existing brood, creating a new Will makes it unlikely to unintentionally omit your new bundle of joy.
4. You divorce and then remarry. In this case, you may very well have blended families. You should make sure you talk to your estate planning attorney about how your state’s probate laws treat stepchildren.
5. You want to disinherit someone or add someone to your Will. You will have to revoke your old Will or amend it by a codicil to change your existing bequests.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

Small estate probate administration exists in some form in all states. This process allows estates below a specific value to be probated without all the requirements of formal, supervised probate. Even if your state does not require the estate administrator of a small estate to have a probate attorney, you’d be better off at least talking to one if you are named executor or administrator. Probate laws differ by state, and only a qualified probate attorney will know all the technical details that you’ll need to know to properly administer a small probate estate.

Qualification: Even before you begin the small estate probate process you may have to talk to an attorney to make sure you qualify. Each state determines what kind of estate qualifies for simplified procedures, and each has its own different standards. For example, states typically set a dollar limit for small probate estates, but how they determine what qualifies as probate property differs.

Procedures: Small estate probate typically requires interested parties to file affidavits with the court. Anyone claiming property must file an affidavit that states what property he or she is entitled to take and do so within a specific time period. However, states may have different forms claimants have to file depending on whether the decedent died intestate or left behind a Will. They may also require the individual claimants to file their forms or have the estate administrator do it.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

When you establish a living trust you create a unique relationship between several key people. The settlor is the person who creates the trust and gives the beneficiary the right to use that property. The settlor, sometimes called a trustor or grantor, must also appoint a trustee. The trustee administers or manages the estate so the beneficiary can use the property and must do so in accordance with the terms the settlor establishes. But can the settlor also serve as the administrator and name him or herself as the trustee? Generally, yes, though there are a couple of issues you need to consider.

The settlor of a living trust can name him or herself as the trustee. However, the grantor must be careful to manage the trust carefully or the ability of a trust to avoid estate tax may be compromised. Also, testamentary trusts are not capable of having a settlor who serves as trustee. A testamentary trust is established through the settlor’s last will and testament, a document that only takes effect when the settlor dies. Further, regardless of the type of trust you create, you cannot be a settlor and serve as both trustee and beneficiary. You should speak to an estate planning attorney if you’re considering creating a trust and serving as trustee or beneficiary so you don’t run into problems later.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

The Washington State Legislature created a relatively simple procedure for helping insolvent decedents. The Washington Creditor’s Claim Procedure allows creditors to settle their debts outside of probate. Often, small estates are not subject to probate procedures pursuant to Washington State law.

Often called a Personal Property Affidavit or Small Estate Affidavit, the Revised Code of Washington sets forth a procedure for individuals with small estates to avoid probate procedures. A Small Estate Affidavit allows a resident to avoid probate using a statutory form if their assets do not exceed $100,000 and only include personal property. In this case, a Washington State resident can devise all of their personal property using the Small Estate Affidavit without going through probate. A resident with more debts than assets cannot use the affidavit to convey property and avoid their creditors. As such, if you are a Washington State resident without real property and your net worth is $100,000 or less, you can use the statutory form if you take care of your debts owed to creditors.

According to the Washington Revised Code, personal representatives or executors of a decedent’s estate must strictly comply with the statute triggering the limited period for creditors to make claims against the estate. Failing to comply with the strict statutory requirements may give creditors up to 24 months to make their claims and prohibit you from making distributions to heirs for the entire period.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

Continuing the three-part blog series covering Washington State’s law allowing personal representatives and executors to expedite the allowable statutory limitations period in which creditors can file claims against a decedent’s estate, this final blog covers the mechanics of the Washington State Creditor’s Claims Law.

The Washington Legislature passed the Creditor’s Claims Law that allows creditors to receive their debts within a relatively short period thereby allowing heirs to receive their inheritances quicker. Without the statutory provision, creditors would have 24 months to make their claims for unpaid debts after a decedent’s death. With the statutory provision, creditors have only four months to claim their debts after the estate publishes a Probate Notice to Creditors in a local newspaper of general circulation. Whereas before the state passed this statute, heirs had to wait at least 24 months to receive their inheritances, they are only required to wait four months after the state passed this statute. Creditors have up to four months to perfect or make their claims for unpaid debts against estates.

You can contact our office to schedule an appointment to discuss your estate planning options and potential claims from creditors. We can help you determine if you can take advantage of the Washington State Creditor’s Claims Law.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

When individuals die without sufficient assets to pay their existing debts, funeral expenses, administrative expenses, and burial costs, they are insolvent. An insolvent individual’s beneficiaries will not inherit anything under their Will or under the Washington State intestacy laws.

Most decedents in Washington State are solvent when they pass away and are able to pass at least some of their assets to their heirs and beneficiaries. If your spouse or other loved one dies away without any assets, you may be required to pay creditors for joint debts. However, you are not typically responsible for a decedent’s existing debts without a contractual promise to pay for them. You are not typically required to open a probate case on your insolvent loved one’s behalf without a liability to pay for their debts.

If you are a personal representative responsible for repaying creditors and distributing a decedent’s assets, you may be able to circumvent the normal timeframe of 24 months to repay creditors. By circumventing the 24-month period, you can distribute the decedent’s assets quicker and ask for a personal discharge of your legal duties relatively quickly. Typically, you will have to publish a Notice to Creditors and give the creditor actual written notice of the decedent’s death to trigger the expedited time allowable to file a claim for an unpaid debt.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

Continuing the discussion of estate planning to cover your beloved pets, this last blog within the three-part series covers the monetary considerations. You should make sure that you set aside enough funds within your trust or will to take care of your pet’s daily living needs and to cover unexpected events. If your pet becomes ill and requires extensive veterinary care, hospitalization or surgery, you want to make sure your pet trust covers these expenses.

If you decide that drafting a will and incorporating a specific bequest made to someone whom you trust can effectively address your concerns, you should make sure you leave this person enough money to take care of your pet. You can provide your beneficiary with a generous bequest to address your pet’s needs. By providing your beneficiary with a significant monetary or property bequest, you may be giving him extra incentive to take personal responsibility for the care of your animal.

Although a beneficiary to your will may not have to follow any written directives, you may feel better providing this individual with specific directions or instructions as to how he should properly address your pet’s medical and feeding needs. If your pet has special dietary restrictions or requires special veterinary care, you should leave detailed instructions for your pet’s caretaker.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

Making gifts to a trust may or may not impose federal gift taxes. In general, the Internal Revenue Service does not tax gifts made by taxpayer-donors to their irrevocable trusts. An irrevocable trust is one that a grantor cannot change. If a grantor places the gift in the trust without retaining any control of the property and without retaining the ability to change the designation of the gift, the trust may be an irrevocable trust.

Trusts are also useful estate planning tools for certain individuals. For example, if you have a niece who loves to spend money gambling, you may think twice before leaving a significant bequest to her since you may be afraid that she will throw her money away in casinos pretty quickly. However, if you create a trust for her, you may be able to control how much money your trustee gives her to ensure she will not dissipate her inheritance too quickly. As the beneficiary of your trust, your niece will be responsible for paying income taxes on her trust income. However, trusts must pay separate income taxes. Similar to the separate entity rules regarding corporations and shareholders, the IRS considers trusts as separate entities, and trusts retaining property in excess of the federal tax limits will have to pay income taxes on the retained income.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.

Contrary to popular belief, trusts rarely produce large tax savings. Many people create trusts to avoid placing their assets through probate courts. Thus, although trusts can help you save money on probate expenses, they may not reduce your federal estate taxes. If you create an irrevocable living trust, you may be able to reduce your income tax liabilities because you can effectively remove the assets within your irrevocable trust from your probate assets. You may also want to create a trust to help preserve privacy. Because wills are made as part of public records in probate courts, you can preserve anonymity and the identity of your beneficiaries by creating a trust.

You can create a revocable or irrevocable living trust. An irrevocable living trust is one that is not modifiable. You cannot change the terms of an irrevocable trust instrument or change your beneficiaries. However, if you create a revocable living trust, you can change the terms your trust document or revoke the entire instrument. Although a revocable living trust is more flexible than an irrevocable living trust, you may be able to reduce your tax liabilities by creating an irrevocable trust. This is because the federal tax code considers a gift to an irrevocable living trust as property of the trust since you retain no control over its disposition. However, since you can change the disposition or beneficiary of a revocable living trust, you may not receive any tax benefits. Carefully considering tax implications is an important part of estate planning.

Byrd : Garrett, PLLC is a member of the American Academy of Estate Planning Attorneys.