A trust is a very useful legal arrangement which may save you, your heirs, and beneficiaries a great deal of money, time, and trouble, as well as help to keep important matters private.
A trust is what one might consider an “extra” document to a basic estate plan (but an “extra” that can be super helpful, for the reasons discussed below). Over the last several blog posts, I discussed the six basic documents that should be part of most everyone’s estate plan:
In such cases, as well as others (talk to your estate planning lawyer!), a trust may be helpful.
WHAT IS A TRUST? HOW DOES IT WORK?
A trust will ensure that your wishes are followed and your assets appropriately handled after your death. A trust is simply a legal agreement among three parties—settlor, trustee, and beneficiary—that provides instructions on how and when to pass assets to the trust’s beneficiaries. Let’s look at the role of each of these three parties, then delve more deeply into how trusts work.
SETTLOR
A settlor—sometimes called the “donor, “grantor,” or “trustor”—is the person who creates the trust and has the legal authority to transfer assets into it.
TRUSTEE
The trustee is the person who agrees to accept, manage, and protect the assets delivered by the settlor. The trustee has a fiduciary duty to administer the assets according to the trust’s instructions, and distribute the trust income and principal according to the rules outlined in the trust document. Distribution is done in the best interests of the beneficiary.
A trustee can be one, two, or more people. A trustee can also be what is known as a “corporate trustee,” such as a financial institution (like a bank) or a law firm that performs trustee duties and charges fees for their services. There are no formal requirements for being a trustee, and nonprofessionals frequently serve as a trustee for family members and friends.
BENEFICIARY
The beneficiary is the person or entity benefiting from the trust. The beneficiary can be one person or entity or multiple parties. Trust beneficiaries don’t even have to exist at the time the trust is created (such as in the case of a future grandchild or a charitable foundation that has not yet been established).
TRUST PROPERTY
A trust can be either funded or unfunded. “Funded” means that the settlor’s assets—sometimes called the “principal” or the “corpus”—have been placed into the trust. A trust is “unfunded” until the assets are in it. Please note that failing to fund a trust is a common estate planning mistake!
TRUST ASSETS
Trusts can hold just about any kind of asset: real estate, intangible property, business interests, and personal property. Common trust properties include farms, buildings, vacation homes, stocks, bonds, savings and checking accounts, collections, personal possessions, and vehicles.
“IMAGINARY CONTAINER”
Think of a trust as an “imaginary container” that holds and protects your assets. After the trust is funded, the trust property will remain in the same place as before the trust was created—your land will remain where it always was, your artwork on the wall, your money in the bank, your comic book collection in the den. The only difference is the asset will have a different owner: “The Jane Jones Trust,” rather than Jane Jones.
TRANSFER OF OWNERSHIP
Putting property in a trust transfers it from personal ownership to the trustee, who holds the property for the beneficiary. The trustee has what is called “legal title” to the trust property and, in most instances, the law treats trust property as if it were now owned by the trustee. Each trust has its own taxpayer identification number, just like an individual.
Do not be mistaken, trustees are not the full owners of trust property. Trustees have a legal duty to use trust property as directed in the trust agreement and as allowed by law. However, the beneficiaries retain what is known as “equitable title”—the right to benefit from trust property as specified in the trust.
ASSETS TO BENEFICIARY
The settlor provides terms in a trust agreement directing how the fund’s assets are to be distributed to a beneficiary. The settlor can provide for the distribution of funds in any way, so long as it is not against the law or against public policy. The near-limitless flexibility of trusts is a primary advantage for setting one up.
TYPES OF TRUSTS
A joke among estate planners says that the only limit to trusts is the imagination of lawyers. It’s true, though, that the number and kind of trusts are virtually unlimited.
Let’s start by taking a look at the four primary categories of trusts:
INTER VIVOS AND TESTAMENTARY TRUSTS
Trusts that are set up during the settlor’s lifetime are called “inter vivos” trusts.
Those that arise upon the death of the settlor, generally by operation of a will, are called “testamentary” trusts. There are advantages and disadvantages to both types of trusts, and how one decides depends upon the goals and purposes of the settlor.
REVOCABLE AND IRREVOCABLE TRUSTS
Inter vivos and testamentary trusts can be broken down into two more categories: revocable trusts and irrevocable trusts. A revocable trust, just as you might infer from the name, can be changed at any time during the settlor’s lifetime. The settlor can alter parts of the trust or even revoke the entire document.
IRREVOCABLE TRUST
An irrevocable trust, again, is as it sounds – it’s a type of trust that can’t be changed by the settlor after the agreement has been signed and the trust has been formed and funded. The terms of an irrevocable trust can’t be modified, amended, or terminated without the permission of the settlor’s beneficiary or beneficiaries.
A revocable living trust becomes irrevocable when the settlor dies because he or she is no longer available to make changes to it. A revocable trust can be designed to break into separate irrevocable trusts at the time of the grantor’s death for the benefit of children or other beneficiaries.
You might wonder, “Why make a trust irrevocable? Wouldn’t you want to maintain the ability to change your mind about the trust or its terms?”
Not necessarily.
Irrevocable trusts, such as irrevocable life insurance trusts, are commonly used to remove assets from a person’s estate and thus avoids the assets being taxed. Transferring assets into an irrevocable trust gives those assets to the trustee and the trust beneficiaries forever. If a person no longer owns the assets, they don’t comprise or contribute to the value of his or her estate, therefore they are not subject to, say, estate taxesupon death.
REVOCABLE LIVING TRUSTS
There is no “one size fits all” trust—different kinds of trusts offer different benefits (and drawbacks) depending on a person’s circumstances. Age, number of children, health, and relative wealth are just a few of the factors to be considered.
The most common trust my clients use is a revocable living trust (sometimes referred to by its abbreviation, “RLT”).
A revocable living trust is created while you’re alive and can be revoked or amended by you. An RLT has huge advantages:
MONEY-SAVING
Establishing a revocable living trust helps avoid costly probate—the legal process required to determine that a will is valid. Probate generally eats up about two percent (2%) of an estate, which can add up to a chunk of change you’d probably rather see go to your beneficiaries.
Avoiding probate also means avoiding other fees, such as court costs, that go along with it.
TIME-SAVING
A revocable living trust not only eliminates the costs of probate, but the time-consuming process of probate as well. Here in Iowa, probate can take several months to a year, or sometimes even longer, perhaps leaving beneficiaries without their inheritances until th end of the probate process. The transfer of assets through a trust is much faster.
FLEXIBILITY
Don’t want your sixteen-year-old niece to inherit a half-million dollars in one big lump sum? I agree, it’s probably not a good idea.
A revocable living trust offers flexibility for the payout of an inheritance because you set the ground rules for when and how distributions are made. For example, you might decide your beneficiaries can receive certain distributions at specific ages (21, 25, 30, etc.), or for reaching certain milestones, such as marriage, the birth of a child, or graduation from college.
DRAWBACKS
Despite the significant advantages of establishing a revocable living trust, there are drawbacks people should be aware of. For starters, trusts are more expensive to prepare than basic estate plan documents such as a Will. However, the costs associated with sitting down with a lawyer and carefully creating a trust is, in my opinion, greatly outweighed by the money your estate will save in the end.
Creating a trust can also be an administrative bother because assets (farm land, business, stock funds, etc.) must be retitled in the name of the trust. All things considered, this is a small inconvenience that is greatly outweighed by the smooth operation of a trust when you pass away.
YOU CAN TRUST ME TO TALK ABOUT THE BEST TRUST(S) FOR YOU
Interested in learning more about trusts or questioning if you need one? Feel free to reach out at any time by email, gordon@gordonfischerlawfirm.com, or on my cell, 515-371-6077.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2021/06/Everything-You-Need-to-Know-About-Estate-Planning-Day-6-cropped.jpg6831024Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2021-06-06 09:00:572022-01-10 14:35:49In Trusts We Trust (Everything* You Need to Know About Estate Planning: Day 6)
One way we can show our loved ones how much we care about them is by making our wishes known for when we’re no longer there to tell them. Estate planning is one of the best ways to do that, especially concerning what’s to be done with our physical body after death. One of the six main documents that are part of any estate plan is called the “disposition of final remains.” In this document, you can detail how you want your body to be treated after you pass away, along with any ceremonial requests. You may be as general or specific as you wish.
Let’s now turn to the Disposition of Final Remains.
If you’ve ever had someone close to you die, and been tasked with making arrangements for the wake, funeral, and burial or cremation, you know it can be difficult. Not only are you dealing with the heartache and grief of losing a loved one, but now you’re also tasked with the organizational aspects of death.
If you die without an estate plan, and without clear instructions in a disposition of final remains document, you’ll be leaving your loved ones with a huge headache on top of the inevitable heartache. Perhaps even worse, ambiguity surrounding disposition of final remains can lead to tension between family members if they disagree over what would be best. Therefore, taking the time to think through your final services is a wonderful gift, and a great way to show your loved ones how much you care.
Let’s go through some of the basics related to this important, valuable document.
WHAT DOES “FINAL DISPOSITION” MEAN ANYWAY?
Final disposition sounds, well, final. Indeed, this is about what you ultimately want to be done with your physical body following death. This may include burial (sometimes referred to interment), cremation, removal from the state (if you want to be buried in a different state), and other types of disposition. If you wish, you may also detail preference that a funeral or other type of ceremony (maybe even a party) to be held. If you’ve purchased a burial plot or want to be laid to rest in the family mausoleum, you would include those details here.
Again, your instructions in the Final Disposition of Remains may be as general or specific as you wish. Some of my clients have insisted that there be only the shortest and simplest of memorial services. Others have wanted a marching band and fireworks shooting their ashes into the sky. (Yes, that is a thing). It’s completely up to you.
CHOOSE A DESIGNEE
In the disposition of final remains document, you can designate one or multiple adults to assume responsibility for carrying out your wishes, similar to how you designate an executor to carry out the wishes as written in your will. Your designee or designees (sometimes also referred to as “representatives”) can be whomever you choose, just be sure to speak with them to make certain they are comfortable and accepting of the role.
Of course, the designee must be a competent adult. The document also allows for alternate designees to be named in the event the primary designee is unable to act.
CAN I CHANGE MY MIND?
Your wishes may change over time and that’s OK! The disposition of final remains is revocable, meaning you can change the document at any time. For example, you can name a new and different your designee if s/he becomes unable or unwilling. Regardless of whether or not you want to amend your disposition of final remains document, you should review your estate plan annually to see if any major life events require updates.
HOW DO I START?
It’s always a good time to make a plan that saves your loved one’s headaches and heartache after your death. The disposition of final remains document is a key part of your estate plan, so a great place to get started is my free Estate Plan Questionnaire.
Questions or want to discuss your personal situation? Contact me at any time via email or phone (515-371-6077).
*OK, not everything. But many things, let’s say, an excellent start.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2021/06/Everything-You-Need-to-Know-About-Estate-Planning-Day-5.jpg6831024Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2021-06-05 09:00:142022-01-10 14:35:49Disposition of Final Remains: Save Your Loved Ones Headaches & Heartache (Everything* You Need to Know About Estate Planning: Day 5)
You’ve probably heard you need to have a financial power of attorney in place, but the whole thing seems a little ambiguous . . . what does this important legal document (which is a necessary part of a complete estate plan) actually mean? Let’s cover the basics.
Let’s move on, now, to the financial power of attorney.
WHAT IS A FINANCIAL POWER OF ATTORNEY?
A financial power of attorney (“POA”) is a legal document that designates someone (an “agent,” sometimes also called an “attorney-in-fact”) to handle your financial decisions on your behalf, if you are unable to do so while living, due to illness, injury, and/or lack of mental capacity.
IMMEDIATE VERSUS SPRINGING
There are two main types of financial power of attorney I offer my clients.
Immediate power—effective from the moment you sign it, without any medical certification; while immediate, you do not lose control of your affairs. (This is typically what I recommend.)
Springing power—becomes effective only upon medical certification that you are unable to carry on your legal and financial affairs.
WHAT HAPPENS IF I DON’T HAVE A FINANCIAL POA?
If you don’t have a financial POA, and you were to become incapacitated, any financial decisions would need to be made by a court-appointed conservator. Under a court’s direction, the conservator would handle your financial matters. To have a conservator appointed by a court is a quite expensive and time-consuming process, especially compared with the relative simplicity of executing a financial POA. Also, court proceedings generally being public, having a court consider whether or not you are “competent” to handle your own financial matters, is potentially embarrassing. Futher, you’d much rather leave your important financial decisions to a person you love and trust, over someone a court appoints (a court may not pick who you’d want).
AFTER I DIE, CAN MY AGENT CONTINUE TO OPERATE UNDER MY FINANCIAL POA?
A common misperception is that your agent will be able to use this power after your death. Not true! Upon death, your financial POA terminates and your will and/or trust kick in to guide decision making in your absence.
Put another way, at your death, your agent’s powers are automatically revoked. The representative appointed through the probate process will carry out your estate plan.
WHO SHOULD I CHOOSE TO SERVE AS AN AGENT UNDER MY FINANCIAL POA?
The agent you name will be managing your finances, so it is critically important to choose someone trustworthy; someone who will not abuse or exploit this power; someone who will listen to your wishes, goals, and objectives, as included in the document or otherwise communicated; and someone who will always look out for your best interests.
If there’s no person in your life you believe trustworthy or capable enough to be your executor, or you don’t want to burden with the role, you have another option: appointing a corporate executor or trustee. You can find corporate executors and trustees at banks and private investment firms. They usually charge a fee based on the size of the estate, but corporate executors and trustees have the advantages of experience, a dedicated staff, and impartiality. The latter quality is particularly important if there are complicated family dynamics, such as blended families or bad blood.
You also have the option of designating a successor agent who can take over if the original agent is unable or unwilling to serve. This is highly recommended.
WHO SHOULD RECEIVE A COPY OF MY FINANCIAL POA?
I recommend that the person named as agent and any person named as a successor agent should receive a copy of your financial POA. You may also wish to share a copy with your financial institution(s), such as your bank/credit union, as well as with your financial advisor and/or accountant.
CAN I REVOKE MY FINANCIAL POA?
Yes, you may revoke the financial POA at any time. You can also amend the financial POA (change it, revise it, etc.) at any time.
ARE THERE OTHER ESTATE PLANNING DOCUMENTS I NEED?
Yes, definitely! There are six “must have” estate planning documents. The financial power of attorney is one of these documents that create a basic, overall estate plan.
WHO NEEDS A FINANCIAL POA?
I’m a staunch believer that every adult Iowan needs an estate plan—including young professionals, newlyweds, the non-wealthy, and especially people with minor children—and, therefore a financial POA. A financial POA can even be incredibly important (but often overlooked) for college students.
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In Trusts We Trust (Everything* You Need to Know About Estate Planning: Day 6)
Estates & Estate Planning, Trusts, WillsA trust is a very useful legal arrangement which may save you, your heirs, and beneficiaries a great deal of money, time, and trouble, as well as help to keep important matters private.
A trust is what one might consider an “extra” document to a basic estate plan (but an “extra” that can be super helpful, for the reasons discussed below). Over the last several blog posts, I discussed the six basic documents that should be part of most everyone’s estate plan:
At the outset of this seven-part series of blog posts about estate planning, I explained the basics of a will. Then, I covered health care power of attorney, and also financial power of attorney. Most recently, I blogged about disposition of final remains.
When should you consider setting up a trust? You might consider a trust if you have:
In such cases, as well as others (talk to your estate planning lawyer!), a trust may be helpful.
WHAT IS A TRUST? HOW DOES IT WORK?
A trust will ensure that your wishes are followed and your assets appropriately handled after your death. A trust is simply a legal agreement among three parties—settlor, trustee, and beneficiary—that provides instructions on how and when to pass assets to the trust’s beneficiaries. Let’s look at the role of each of these three parties, then delve more deeply into how trusts work.
SETTLOR
A settlor—sometimes called the “donor, “grantor,” or “trustor”—is the person who creates the trust and has the legal authority to transfer assets into it.
TRUSTEE
The trustee is the person who agrees to accept, manage, and protect the assets delivered by the settlor. The trustee has a fiduciary duty to administer the assets according to the trust’s instructions, and distribute the trust income and principal according to the rules outlined in the trust document. Distribution is done in the best interests of the beneficiary.
A trustee can be one, two, or more people. A trustee can also be what is known as a “corporate trustee,” such as a financial institution (like a bank) or a law firm that performs trustee duties and charges fees for their services. There are no formal requirements for being a trustee, and nonprofessionals frequently serve as a trustee for family members and friends.
BENEFICIARY
The beneficiary is the person or entity benefiting from the trust. The beneficiary can be one person or entity or multiple parties. Trust beneficiaries don’t even have to exist at the time the trust is created (such as in the case of a future grandchild or a charitable foundation that has not yet been established).
TRUST PROPERTY
A trust can be either funded or unfunded. “Funded” means that the settlor’s assets—sometimes called the “principal” or the “corpus”—have been placed into the trust. A trust is “unfunded” until the assets are in it. Please note that failing to fund a trust is a common estate planning mistake!
TRUST ASSETS
Trusts can hold just about any kind of asset: real estate, intangible property, business interests, and personal property. Common trust properties include farms, buildings, vacation homes, stocks, bonds, savings and checking accounts, collections, personal possessions, and vehicles.
“IMAGINARY CONTAINER”
Think of a trust as an “imaginary container” that holds and protects your assets. After the trust is funded, the trust property will remain in the same place as before the trust was created—your land will remain where it always was, your artwork on the wall, your money in the bank, your comic book collection in the den. The only difference is the asset will have a different owner: “The Jane Jones Trust,” rather than Jane Jones.
TRANSFER OF OWNERSHIP
Putting property in a trust transfers it from personal ownership to the trustee, who holds the property for the beneficiary. The trustee has what is called “legal title” to the trust property and, in most instances, the law treats trust property as if it were now owned by the trustee. Each trust has its own taxpayer identification number, just like an individual.
Do not be mistaken, trustees are not the full owners of trust property. Trustees have a legal duty to use trust property as directed in the trust agreement and as allowed by law. However, the beneficiaries retain what is known as “equitable title”—the right to benefit from trust property as specified in the trust.
ASSETS TO BENEFICIARY
The settlor provides terms in a trust agreement directing how the fund’s assets are to be distributed to a beneficiary. The settlor can provide for the distribution of funds in any way, so long as it is not against the law or against public policy. The near-limitless flexibility of trusts is a primary advantage for setting one up.
TYPES OF TRUSTS
A joke among estate planners says that the only limit to trusts is the imagination of lawyers. It’s true, though, that the number and kind of trusts are virtually unlimited.
Let’s start by taking a look at the four primary categories of trusts:
INTER VIVOS AND TESTAMENTARY TRUSTS
Trusts that are set up during the settlor’s lifetime are called “inter vivos” trusts.
Those that arise upon the death of the settlor, generally by operation of a will, are called “testamentary” trusts. There are advantages and disadvantages to both types of trusts, and how one decides depends upon the goals and purposes of the settlor.
REVOCABLE AND IRREVOCABLE TRUSTS
Inter vivos and testamentary trusts can be broken down into two more categories: revocable trusts and irrevocable trusts. A revocable trust, just as you might infer from the name, can be changed at any time during the settlor’s lifetime. The settlor can alter parts of the trust or even revoke the entire document.
IRREVOCABLE TRUST
An irrevocable trust, again, is as it sounds – it’s a type of trust that can’t be changed by the settlor after the agreement has been signed and the trust has been formed and funded. The terms of an irrevocable trust can’t be modified, amended, or terminated without the permission of the settlor’s beneficiary or beneficiaries.
A revocable living trust becomes irrevocable when the settlor dies because he or she is no longer available to make changes to it. A revocable trust can be designed to break into separate irrevocable trusts at the time of the grantor’s death for the benefit of children or other beneficiaries.
You might wonder, “Why make a trust irrevocable? Wouldn’t you want to maintain the ability to change your mind about the trust or its terms?”
Not necessarily.
Irrevocable trusts, such as irrevocable life insurance trusts, are commonly used to remove assets from a person’s estate and thus avoids the assets being taxed. Transferring assets into an irrevocable trust gives those assets to the trustee and the trust beneficiaries forever. If a person no longer owns the assets, they don’t comprise or contribute to the value of his or her estate, therefore they are not subject to, say, estate taxes upon death.
REVOCABLE LIVING TRUSTS
There is no “one size fits all” trust—different kinds of trusts offer different benefits (and drawbacks) depending on a person’s circumstances. Age, number of children, health, and relative wealth are just a few of the factors to be considered.
The most common trust my clients use is a revocable living trust (sometimes referred to by its abbreviation, “RLT”).
A revocable living trust is created while you’re alive and can be revoked or amended by you. An RLT has huge advantages:
MONEY-SAVING
Establishing a revocable living trust helps avoid costly probate—the legal process required to determine that a will is valid. Probate generally eats up about two percent (2%) of an estate, which can add up to a chunk of change you’d probably rather see go to your beneficiaries.
Avoiding probate also means avoiding other fees, such as court costs, that go along with it.
TIME-SAVING
A revocable living trust not only eliminates the costs of probate, but the time-consuming process of probate as well. Here in Iowa, probate can take several months to a year, or sometimes even longer, perhaps leaving beneficiaries without their inheritances until th end of the probate process. The transfer of assets through a trust is much faster.
FLEXIBILITY
Don’t want your sixteen-year-old niece to inherit a half-million dollars in one big lump sum? I agree, it’s probably not a good idea.
A revocable living trust offers flexibility for the payout of an inheritance because you set the ground rules for when and how distributions are made. For example, you might decide your beneficiaries can receive certain distributions at specific ages (21, 25, 30, etc.), or for reaching certain milestones, such as marriage, the birth of a child, or graduation from college.
DRAWBACKS
Despite the significant advantages of establishing a revocable living trust, there are drawbacks people should be aware of. For starters, trusts are more expensive to prepare than basic estate plan documents such as a Will. However, the costs associated with sitting down with a lawyer and carefully creating a trust is, in my opinion, greatly outweighed by the money your estate will save in the end.
Creating a trust can also be an administrative bother because assets (farm land, business, stock funds, etc.) must be retitled in the name of the trust. All things considered, this is a small inconvenience that is greatly outweighed by the smooth operation of a trust when you pass away.
YOU CAN TRUST ME TO TALK ABOUT THE BEST TRUST(S) FOR YOU
Interested in learning more about trusts or questioning if you need one? Feel free to reach out at any time by email, gordon@gordonfischerlawfirm.com, or on my cell, 515-371-6077.
If you want to simply get started on an estate plan (everyone needs at least the basic documents in place!) check out my estate plan questionnaire, provided to you free, without any obligation.
*OK, not everything. But many things, let’s say, an excellent start.
Disposition of Final Remains: Save Your Loved Ones Headaches & Heartache (Everything* You Need to Know About Estate Planning: Day 5)
Estates & Estate Planning, Powers of Attorney, Wills, Wills, Trusts & EstatesOne way we can show our loved ones how much we care about them is by making our wishes known for when we’re no longer there to tell them. Estate planning is one of the best ways to do that, especially concerning what’s to be done with our physical body after death. One of the six main documents that are part of any estate plan is called the “disposition of final remains.” In this document, you can detail how you want your body to be treated after you pass away, along with any ceremonial requests. You may be as general or specific as you wish.
SIX “MUST HAVE” DOCUMENTS OF YOUR ESTATE PLAN
As discussed in 12 Things Every Iowan Should Know About Estate Planning, there are six documents that should be part of most everyone’s estate plan:
At the outset of this seven-part series of blog posts about estate planning, I explained the basics of a will . Then, I covered health care power of attorney, and also financial power of attorney.
Let’s now turn to the Disposition of Final Remains.
If you’ve ever had someone close to you die, and been tasked with making arrangements for the wake, funeral, and burial or cremation, you know it can be difficult. Not only are you dealing with the heartache and grief of losing a loved one, but now you’re also tasked with the organizational aspects of death.
If you die without an estate plan, and without clear instructions in a disposition of final remains document, you’ll be leaving your loved ones with a huge headache on top of the inevitable heartache. Perhaps even worse, ambiguity surrounding disposition of final remains can lead to tension between family members if they disagree over what would be best. Therefore, taking the time to think through your final services is a wonderful gift, and a great way to show your loved ones how much you care.
Let’s go through some of the basics related to this important, valuable document.
WHAT DOES “FINAL DISPOSITION” MEAN ANYWAY?
Final disposition sounds, well, final. Indeed, this is about what you ultimately want to be done with your physical body following death. This may include burial (sometimes referred to interment), cremation, removal from the state (if you want to be buried in a different state), and other types of disposition. If you wish, you may also detail preference that a funeral or other type of ceremony (maybe even a party) to be held. If you’ve purchased a burial plot or want to be laid to rest in the family mausoleum, you would include those details here.
Again, your instructions in the Final Disposition of Remains may be as general or specific as you wish. Some of my clients have insisted that there be only the shortest and simplest of memorial services. Others have wanted a marching band and fireworks shooting their ashes into the sky. (Yes, that is a thing). It’s completely up to you.
CHOOSE A DESIGNEE
In the disposition of final remains document, you can designate one or multiple adults to assume responsibility for carrying out your wishes, similar to how you designate an executor to carry out the wishes as written in your will. Your designee or designees (sometimes also referred to as “representatives”) can be whomever you choose, just be sure to speak with them to make certain they are comfortable and accepting of the role.
Of course, the designee must be a competent adult. The document also allows for alternate designees to be named in the event the primary designee is unable to act.
CAN I CHANGE MY MIND?
Your wishes may change over time and that’s OK! The disposition of final remains is revocable, meaning you can change the document at any time. For example, you can name a new and different your designee if s/he becomes unable or unwilling. Regardless of whether or not you want to amend your disposition of final remains document, you should review your estate plan annually to see if any major life events require updates.
HOW DO I START?
It’s always a good time to make a plan that saves your loved one’s headaches and heartache after your death. The disposition of final remains document is a key part of your estate plan, so a great place to get started is my free Estate Plan Questionnaire.
Questions or want to discuss your personal situation? Contact me at any time via email or phone (515-371-6077).
*OK, not everything. But many things, let’s say, an excellent start.
Why Every Iowan Should Have Financial Power of Attorney (Everything* You Need to Know About Estate Planning: Day 4)
Estates & Estate Planning, Powers of Attorney, Wills, Wills, Trusts & EstatesWhat IS a Financial power of attorney, anyway?
You’ve probably heard you need to have a financial power of attorney in place, but the whole thing seems a little ambiguous . . . what does this important legal document (which is a necessary part of a complete estate plan) actually mean? Let’s cover the basics.
SIX “MUST HAVE” DOCUMENTS OF YOUR ESTATE PLAN
As discussed in this previous blog post overview , there are six documents that should be part of most everyone’s estate plan:
In a follow-up blog post, we considered the basics of a will.
And, in my latest blog post, we discussed the power of attorney for health care.
Let’s move on, now, to the financial power of attorney.
WHAT IS A FINANCIAL POWER OF ATTORNEY?
A financial power of attorney (“POA”) is a legal document that designates someone (an “agent,” sometimes also called an “attorney-in-fact”) to handle your financial decisions on your behalf, if you are unable to do so while living, due to illness, injury, and/or lack of mental capacity.
IMMEDIATE VERSUS SPRINGING
There are two main types of financial power of attorney I offer my clients.
WHAT HAPPENS IF I DON’T HAVE A FINANCIAL POA?
If you don’t have a financial POA, and you were to become incapacitated, any financial decisions would need to be made by a court-appointed conservator. Under a court’s direction, the conservator would handle your financial matters. To have a conservator appointed by a court is a quite expensive and time-consuming process, especially compared with the relative simplicity of executing a financial POA. Also, court proceedings generally being public, having a court consider whether or not you are “competent” to handle your own financial matters, is potentially embarrassing. Futher, you’d much rather leave your important financial decisions to a person you love and trust, over someone a court appoints (a court may not pick who you’d want).
AFTER I DIE, CAN MY AGENT CONTINUE TO OPERATE UNDER MY FINANCIAL POA?
A common misperception is that your agent will be able to use this power after your death. Not true! Upon death, your financial POA terminates and your will and/or trust kick in to guide decision making in your absence.
Put another way, at your death, your agent’s powers are automatically revoked. The representative appointed through the probate process will carry out your estate plan.
WHO SHOULD I CHOOSE TO SERVE AS AN AGENT UNDER MY FINANCIAL POA?
The agent you name will be managing your finances, so it is critically important to choose someone trustworthy; someone who will not abuse or exploit this power; someone who will listen to your wishes, goals, and objectives, as included in the document or otherwise communicated; and someone who will always look out for your best interests.
If there’s no person in your life you believe trustworthy or capable enough to be your executor, or you don’t want to burden with the role, you have another option: appointing a corporate executor or trustee. You can find corporate executors and trustees at banks and private investment firms. They usually charge a fee based on the size of the estate, but corporate executors and trustees have the advantages of experience, a dedicated staff, and impartiality. The latter quality is particularly important if there are complicated family dynamics, such as blended families or bad blood.
You also have the option of designating a successor agent who can take over if the original agent is unable or unwilling to serve. This is highly recommended.
WHO SHOULD RECEIVE A COPY OF MY FINANCIAL POA?
I recommend that the person named as agent and any person named as a successor agent should receive a copy of your financial POA. You may also wish to share a copy with your financial institution(s), such as your bank/credit union, as well as with your financial advisor and/or accountant.
CAN I REVOKE MY FINANCIAL POA?
Yes, you may revoke the financial POA at any time. You can also amend the financial POA (change it, revise it, etc.) at any time.
ARE THERE OTHER ESTATE PLANNING DOCUMENTS I NEED?
Yes, definitely! There are six “must have” estate planning documents. The financial power of attorney is one of these documents that create a basic, overall estate plan.
WHO NEEDS A FINANCIAL POA?
I’m a staunch believer that every adult Iowan needs an estate plan—including young professionals, newlyweds, the non-wealthy, and especially people with minor children—and, therefore a financial POA. A financial POA can even be incredibly important (but often overlooked) for college students.
Do you have a financial POA? How about a full estate plan in place? Why or why not? I’d love to hear from you. Email me at gordon@gordonfischerlawfirm.com or call (515-371-6077).
*OK, not everything. But many things, let’s say, an excellent start.