The specific issues an estate planning attorney addresses vary by client. Financial, family, employment and economic status are all factors which are considered when crafting an estate plan.
Last Will and Testament
A Last Will and Testament or "Will" is a document executed pursuant to state statute to meet certain formalities. As an example, in Washington State these formalities include the use of two witnesses. A Will generally includes the names of the spouse, children and grandchildren, to include legitimate and illegitimate, naturally born and adopted, descendants of the person executing the Will. A Will may also include an indication of the extent to which property is owned, how title is vested and method of distribution after satisfaction of claims against the decedent's estate. A Will becomes the vehicle for direction to the Personal Representative named in the Will regarding the gathering of the decedent's assets, payment of creditors, and distribution of the assets to the beneficiaries named in the Will.
Many estate plans include the use of Trust to reach their objective of spendthrift, protection, financial management for a minor or disabled child or a surviving spouse who lacks the management skills to administer an estate. The ownership of real estate in multiple jurisdictions, the importance of segregating separate and community property, and the potential for a Will challenge may all be factors in a client's decision to rely on a Revocable Living Trust to effect the transfer of wealth to their heirs.
Power of Attorney
Virtually all estate planning includes a review of a client's Powers of Attorney and Health Care Directive also known as a Living Will. Probably the most important estate planning document for clients is a Power of Attorney. Powers of Attorney come in two forms: Financial Durable Power of Attorney and Medical Durable Power of Attorney.
The Financial Durable Power of Attorney only becomes effective upon disability, generally of the Principal (even though it may be drafted to be effective immediately). The document allows the named individual (known as the Attorney-In-Fact) to act on behalf of the person executing the document. The Principal has very broad discretion in deciding the limits of power to give the Attorney-In-Fact. As an example, the Principal may grant the Attorney-In-Fact the power to enter the Principal's safe deposit box, pay bills, transfer real estate, sell investments, transfer property to Trusts, nominate a guardian, gift property or any other authority they may choose. Providing for management of one's estate prior to a period of disability or incapacity often avoids the imposition of a guardianship which compared to a Power of Attorney, becomes a very costly and more restrictive alternative.
A Medical Durable Power of Attorney allows the Principal to name an Attorney-In-Fact to make health care decisions on behalf of the Principal. Generally the Medical Durable Power of Attorney also provides for the nomination of a guardian and allows the Attorney-In-Fact access to health care records. The Medical Durable Power of Attorney is typically used in conjunction with the Health Care Directive or Living Will.
Health Care Directive
Advances in medicine afford many individuals the opportunity to manage terminal illnesses and postpone the moment of death. The Health Care Directive provides an expression of the individual's wishes in the event of terminal illness, permanent unconsciousness or suffering from an advanced progressive illness. Issues such as tube feeding, blood transfusion, ventilation and Cardio Pulmonary Resuscitation are all raised in the Health Care Directive prepared by our office.
Special Needs Trust
A Special Needs Trust is utilized to preserve assets which would otherwise be required to be spent down to qualify an individual for Medicaid. Given certain restrictions a Special Needs Trust can be either funded by the individual receiving government benefits or a third party. Parents, grandparents, aunts and uncles wishing to assist a family member with special needs through the use of a Special Needs Trust may establish such in their Will. The use of a Special Needs Trust as opposed to outright distribution under the terms of their Will has the effect of maximizing available resources which often can significantly improve the quality of life of the person with special needs.
A Special Needs Trust can also be established with the assets of a disabled person. The establishment of a Special Needs Trust by a disabled person is allowed by administrative rules both at the State and Federal level. Generally, establishment of a Special Needs Trust can only be accomplished if the disabled person is under 65 years of age. The Special Needs Trust must be established by a parent, grandparent, guardian or the court. The rules governing a Special Needs Trust established by a disabled person require that upon termination of the Trust, the State of Washington be reimbursed for Medicaid benefits paid. Neither of these requirements (under age 65 and repayment to the State) are a factor when establishing a third party Special Needs Trust as discussed previously.
Often Special Needs Trusts are established with the funds of a disabled person upon receipt of an insurance settlement. In such a case, a Guardian ad Litem is often appointed to make a recommendation to the court regarding approval or rejection of the Trust being presented for court approval.
A Special Needs Trust may be terminated when the disabled individual regains capacity, upon death, or at a point when it is not economical for the Special Needs Trust to continue in effect. As discussed earlier, in the case of a third-party Special Needs Trust, any remaining balance in the Trust may be distributed to family members. There is no statutory requirement that the State of Washington be reimbursed for any expenditures when a client's estate plan includes a third-party Special Needs Trust.