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A Wellness Check on Your Estate Plan

By: Attorney Katherine S. Breckenridge, Esq.

Published March 21, 2019 – INSIDENOVA / Culpeper Times

Estate Planning : Not Looking for a Fair Fight – A Wellness Check on Your Estate Plan

“I’m not looking for a fair fight!” The statement has resonated in my mind throughout these last two weeks and I agree; I’m not looking for a “fair fight.” Indeed, I’m not, nor I would hope are you.

Living life purposefully is an incredible focus. Exploring the implications, the layers, and the variations in one sitting, or in a lifetime of sittings, is just not feasible. I share there is one aspect of this life that I know I have gotten right – at least for me, from my perspective. My faith is that. I claim that victory – trusting, “If God is for us, who can be against us?” Romans 8:31 NIV

There are no promises that such a faith will make this life easy, in fact, there are days that life may be so much more challenging. I am okay with that; I believe the ultimate score is in my favor.

As I age, I have gotten better at assessing whether I am living life purposefully, a goal being to become more disciplined in the service provided and the witness affected. It is a work in progress. I think of it as a wellness check. Such an assessment works well in most areas of one’s life, including planning for your care while you are on this earth, the use of your assets for your benefit, and the ease of distribution of those assets upon your passing.

As an estate planning attorney, I encourage clients to ask pointed questions about the estate planning documents they have in place, such as a trust, a last will and testament, a power of attorney, an advance medical directive, and an operating agreement if they own interests in an LLC.

Such estate planning tools are made available within the Code of Virginia enabling you to protect and to plan ahead. The goal in having estate planning documents in place is to not leave any loose ends, to have affected the appropriate level of risk management.

Have you done a wellness check on your estate planning documents lately? The following are questions you may want to ask regarding your estate planning documents as you assess whether they meet your needs and intents.

When may you need your revocable trust modified?

Questions: Does an adult child, who may be a named beneficiary in your trust, lack the capacity to manage money or has the potential to carry a large amount of debt? Are you concerned that your adult child may face marital challenges? Have your named successor trustees become estranged from you? Have you only named one successor trustee? Does the language in your trust create by-pass trusts upon your death that accounts for the Federal Estate Tax Exemption when the exemption was at a much lower level than the current level? Do you want to name different beneficiaries? Do you want to leave a specific bequest to a person or charity? Have you made provisions for your pets? Do you want to consider the inclusion of Trust Protector language?

Considerations: Using revocable trusts effectively and properly funding such trusts can mean that your real property (land and land with improvements), your tangible personal property (the physical items you can touch), and your intangible personal property (cash, savings, and wealth management) may pass outside of the probate process.

Have you properly funded your revocable trust?

Questions: Have you transferred your real property into your trust? Have you assigned your business interests into your trust? Are the assets in your cash and savings accounts held by your trust? Are the appropriate assets in your wealth management portfolio owned by your trust? Is your tangible personal property held by your trust?

Considerations: That “initial $10 funding” into a revocable trust at establishment of the trust does not do much good after spending the time and resources just to discover upon one’s incapacitation or death that the funded value is $10.

If you have not funded your revocable trust correctly and the asset does not pass by survivorship or through the naming of a beneficiary, it is likely that a probate estate will need to be established and the asset will pass through probate and using the pour-over language in your Last Will and Testament, will pour-over into your trust and then be administered and distributed per the terms of your trust.

Is your Last Will and Testament comprehensive enough to meet your intents?

Questions: Does the language in your Last Will and Testament consider to whom an asset will transfer if your named beneficiary fails to survive you? Have you named successor Executors? Have you included guardianship language in the event you die and leave behind minor children? Do you have a specific bequest you would like to include? Is it possible that one of your beneficiaries may have special needs and be in receipt of means tested government funding, and the inclusion of special needs trust language should be considered? Have you entered into a pre-nuptial or post-nuptial agreement and the respective document is not referenced in your Last Will and Testament?

Considerations: In addition to reviewing your Last Will and Testament, a conversation with your banker and financial advisor may be helpful as you examine each cash, savings, and wealth management account to make sure the interests are held as you expect, and that if not held by a trust you have named primary and contingent beneficiaries.

Is your Power of Attorney comprehensive?

Questions: Does your power of attorney give your agent the authorities necessary to help you? Is your power of attorney effective when you may need the help the most? Have you named successor agents? Do you trust the agents you have named? Does your agent have the authority to affect long-term care planning for you?

Considerations: Keep in mind, that if you do not have a power of attorney in place, the alternative you leave for family, friends, or even a stranger is a petition for guardianship of your person and conservatorship of your estate.

Does your Advance Medical Directive reflect your wishes?

Questions: Does your advance medical directive set forth the medical care that would be acceptable to you in the event you are unable to make a medical decision for yourself? Does your advance medical directive sufficiently address your end-of-life wishes? Have you named individuals as an agent and successor agents who have enough courage to advocate for your wishes?

Considerations: Using an advance medical directive helps you set the parameters for your medical care and end-of-life wishes. An advance medical directive allows you to select who has the authority to make decisions on your behalf. The same document may also help remove the guilt from the one making such decisions because the actions taken were based on your memorialized wishes.

If you own an interest in an LLC, does the Operating Agreement for your LLC include protections for your interests?

Questions: Have you maintained the decision-making authority? How do you maintain control of your LLC even in the event of accepting a capital infusion in the nature of an investor? Do you have a right of first refusal on interests held by others so that the interests of the company you built do not become attenuated upon their deaths? Have you planned for the possibility of your incapacitation so that you may still benefit from a stream of revenue? Do you want your company to continue after your death?

Considerations: You worked hard to make your LLC successful. A well-drafted operating agreement provides means to maintain control even when you are no longer able to manage your interests.

Wellness Check Action

If you answered “yes” to any of the above questions, it may be an indication that having a conversation with your estate planning attorney that includes a discussion about the “wellness check” of your estate planning documents will be well worth the time invested.

Estate planning is not meant to be about a “fair fight.” Estate planning is designed so that if you take advantage of it, there should be no fight at all.