I was meeting with a young couple the other day (I will refer to them as “John” and “Jane”). They had indicated that they did not know anything about estate planning, but they did know the “pains” that their family members could incur without any plan. John’s mom had recently dealt with the passing of her sister, John’s aunt, and the experience was heart wrenching – the time, money and in-fighting tore at the family.
Since they “knew nothing” about estate planning, I started at the basics – Everyone should have health care documents (Durable Health Care Power of Attorney, Living Will, HIPAA authorization, and Mental Health Care Power of Attorney). I explained how you just don’t know when you will need your loved one to use those powers on your behalf. Jane shared a story regarding her grandmother and how Jane helped care for her. She said that without the health care powers, it would have been much more stressful and burdensome to help get her grandma the care she needed.
I then told them about a “Last Will.” I told them about the two things it does really well: 1) It tells the court how you want your assets distributed (i.e. who gets your stuff) and 2) It gives you the ability to nominate a guardian for your minor children. In this case, Jane and John were newlyweds, without children, so I explained that if and when they had children it would be important to have their Will updated to reflect their guardianship choices. I then explained how a Will is only effective on the person’s death, thus all Wills need to be probated (i.e. have the court get involved) to determine the validity of the Will. Since the Will is only effective on death, the person writing the Will is no longer available to tell “the world” that this is in fact their wishes. Because of the experience John and his family went through, one of their goals was to avoid court, so they hoped there was an estate planning tool that achieved this goal.
I then explained what a Revocable Living Trust (RLT) is. Much like a Will, the RLT distributes the person’s assets to the people he or she wants. However, since a Trust is a private agreement, and is effective during the life of the person who makes the trust (called a “trustor”), the courts do not get involved. At this point, John exclaims, “Why doesn’t everybody have a trust?!?!?!“
We laughed. I explained that most Americans do not even have a Will, let alone understand about what a Will does or does not do for them. Death and incapacity (i.e. severe injury) are not topics that are freely thought about, let alone discussed; especially for young couples, just starting their lives together, like John and Jane. I commended them on being so proactive, getting their base estate plan in place and agreed with John that EVERYONE should have a trust in place.
The Attorneys of Morris Hall:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down. The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
Contributed by MH Attorney James P. Plitz
Living Trusts: Calculating the Benefits