1. How often should I review or revise my estate plan?
The precise answer to that question depends upon each person’s unique circumstances. A group of estate lawyers – who are also lawyers for workers compensation in Philadelphia – who were consulted for this article, generally advise clients that they should review their estate planning documents approximately every five years. But that is only a rough estimate. Things like the birth of a child, the death of a spouse, or the receipt of substantial inheritance should prompt one to review a plan more often. Additionally, in the case of taxable estates, generally over $1.5 million, tax law changes should prompt more frequent reviews.
2. What is the difference between a guardianship and a durable power of attorney?
A guardianship is a probate court process in which the court appoints a guardian (and/or a conservator) to safeguard the affairs of one who is under a legal disability. It is nearly always initiated by a family member retaining an attorney to petition the court for the appointment. It always requires a court hearing in which a judge decides whether a guardian is needed and, if so, who should be appointed. A durable power of attorney is an instrument used to avoid guardianship. We all have the right to execute a durable power of attorney in which we appoint an agent (and possibly successors) and enumerate what powers we give to the agent. The durable power of attorney, then, effectively replaces guardianship and avoids court involvement.
3. If I feel strongly about cremation what should I do to assure that my wishes are followed?
Many states have a system you might at first find objectionable. We can’t, per se, dictate how our burial or cremation will be handled, not even in a last will and testament. The law grants to our nearest next-of-kin the right to specify how to dispose of our remains. That said, however, if you prefer cremation we suggest you so direct that in your last will and testament. It will reassure your loved ones that cremation is your preference, and in the absence of family members it will allow a funeral director to make the arrangements you desire.
4. Does an estate need to be large to justify a living trust? Should it be of a certain minimum size?
The short answer is that no, it does not need to be large. Even small estates can benefit from trusts. But we should mention that size does matter where taxes are concerned. If your goal is to avoid probate and make your estate as easy as possible to administer, a trust is an excellent choice. You can retain total control over your home and assets (unlike the situation with joint ownership) while still avoiding probate when you pass away. On the other hand, trusts will have no effect on estate or inheritance taxes in most estates of less than $1.5 million. Currently, estates of less than that size are generally exempt from both Federal estate tax. Since no estate tax would be due, a trust wouldn’t change anything.
5. If I have a living trust do I still need a will?
Yes, you should. A will in these circumstances is generally referred to as a “pour-over will”. Even with a trust, your will is written to accomplish three distinct goals. It leaves express instructions to your executor about what assets, or group of assets, to use to pay estate taxes, if any. It disposes of your personal and household possessions. And it directs your executor to transfer, or “pour-over,” to your trust any other assets left solely in your name. That could be a savings bond or other security you never transferred to your trust, or it could be a refund or lawsuit proceeds accruing because of your death.