COMMON FORECLOSURE FAQ’S
What Is Estate Planning?
Your estate is made up of essentially everything you own, i.e. your car, checking accounts, furniture, home, investments, life insurance, personal possessions, and real estate. As morbid as it sounds, it is a “when” you die, not an “if” you die. When this happens, you want to make sure you have control over how your belongings are dispersed among your loved ones. In order to make sure your wishes are carried out, you will need to leave instructions that outline who you want to receive which items of yours, and when they receive it. At the end of the day, you will most likely want this to happen with as little amount of court costs, legal fees, and taxes as possible.
Estate planning should include:
- A way to transfer your business upon your disability, retirement, or death.
- Instructions for passing your values and your valuables.
- Instructions for your care in the event you are unable to care for yourself before you pass.
- Long-term care insurance to help pay for your care in the event of a long-term injury or illness, disability income insurance which can replace your income if you are unable to work due to injury or illness, and life insurance to provide for your family at your passing.
- The name of an inheritance manager and a guardian for any minor children.
- Updates as your financial and family situations change throughout the course of your lifetime.
What Happens if You Pass Away Without a Will?
In the event that you pass away without a will, this means that the laws of intestate succession will come into play. Essentially, this means that the specific laws of the state where you lived will decide the way in which your property is doled out after your death. This includes any securities, real estate, bank accounts, and other assets you own at the time of your passing. If you own real estate in another state than where you previously lived, then those state-specific intestacy laws will apply.
Your property is generally distributed to split between your family members that succeed you, which can include a surviving spouse, children, siblings, aunts and uncles, nephews, nieces, and any other relatives. If no relatives are found, then the estate usually goes to the state.
What Types of Documents Are Used in the Estate Planning Process?
Some types of documents normally used in the estate planning process include:
- Durable Power of Attorney for Health Care: In the event you are not able to provide consent, this appoints a person to make decisions on your behalf regarding your health care treatment.
- Durable Power of Attorney for Property: This selects a person who will act on your behalf as well as handle your finances if you are not able to do so.
- Family Limited Partnership: This can be used to manage and own your property, as well as allow for additional tax planning techniques to be used. These are usually for people who have big estates and require more personalized estate planning in order to lessen federal and state inheritance taxes.
- Living Trust: This is used as a way to manage your property and to hold a legal title. If you are unable to manage your property, then you can also choose a person to carry out the instructions you outline in the trust. A trust generally becomes effective immediately and continues throughout your lifetime, and continues to carry on once you pass away. Most trusts are revocable, meaning that the person who creates the trust can make changes in the future, and even end it if they want to. Trusts can also help you lessen the delays and expenses of probate.
- Living Will: If you suffer a permanent incapacity, then a living will gives medical professionals instructions regarding what kind of health care you want, and for how long.
- Will: This transfers any property you have in your name to either the person or organization that you want to have it. It also usually names someone who you select to be your executor who will carry out your instructions, as well as names a guardian if you have minor children. A will only becomes effective after your death.
How Do You Avoid Probate?
If the value of your assets is less than a certain value, or if the only beneficiary to your estate is your spouse, then most states have a summary procedure where probate is avoided. For example, the state of California allows you to avoid probate entirely if your estate amounts to less than $100,000. Any property that is held with a beneficiary designation does not count toward the total amount of $100,000. In addition, a maximum amount of $10,000 going toward the total amount of $100,000 can be in real estate. If this is the case, then you will need to have a trust for your assets to be dispersed outside of probate court. In order to lessen the chance of legal complications and to avoid probate, it is best to consult with an estate planning attorney.
How Do I Prove Trust Mismanagement?
The creator of the trust chooses a trustee who is legally responsible for distributing the trust to the beneficiaries. It is understood that the trustee has a fiduciary duty to act in the best interests of the beneficiaries, as well as in good faith. Needless to say, the trustee has a lot of power. If the fiduciary duty is broken and the trust is not managed as it was supposed to be, then this can have immense negative effects on the beneficiaries. If this is the case, then an estate planning attorney can help you prove trust mismanagement.
Some ways to prove that a trust has been mismanaged include:
- The trustee did not take the necessary actions to protect the best interests of the beneficiaries.
- The trustee acted in the best interests of only one of the beneficiaries and not the majority of the beneficiaries.
- The trustee has a conflict of interest and as a result acted in the best interest of someone who was not the beneficiary.
- The trustee was bribed into not acting in the best interests of the beneficiaries.
- The trustee profited from actions he took while he acted as the trustee, and as a result did not inform the beneficiaries of said profit.
How Do I Recover Damages for Trust Mismanagement?
Once your estate planning lawyer has proven that a trust was mismanaged, then then you will need to clearly outline how this mismanagement hurt you. Typically, a court will award you damages for the amount that the trust would have made if it was not for the mismanagement of the trustee. Pursuing damages for any type of trust mismanagement is not only important for the beneficiaries, but also for any people who could be affected by future trusts.
