Jennifer C. Rydberg, Attorney at Law
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Kent Estate Administration and Probate Law Blog

Estate planning to include your business

Kent area residents who own their own businesses are proud of what they have grown and cultivated. These businesses are the result of a family's hard work, and keeping them going after the owner has passed away is important.

Planning for a business succession is important. Without a plan, the business could go into bankruptcy and never recover. Creating an estate plan for a business is a way for a business to prevent this from happening and ensure it will continue for many decades to come. A business plan can help a business transition from one generation to another. For example, an estate plan can give an option for a buy-sell agreement. This is a good strategy for those businesses that have multiple owners and can allow the other owners to buy out a deceased owner's interest. It can also prevent the beneficiaries of the deceased owner from becoming unintentional owners.

Planning ahead for long term care needs is a good idea

No matter what we do, we will all get old one day. Older people tend to need more skilled medical care, which can be expensive. Planning ahead for long-term care is often an important part of estate planning.

75 percent of older adults will require some type of long-term care when they get older. Whether as the result of age or a disease like Alzheimer's, the vast majority of us will need specialized care. When planning for these events, many like to use Medicaid to pay for care facilities. In order for this to happen, careful planning needs to occur. A person has to transfer their home and assets at least five years before using Medicaid. For many, preparing for these asset transfers long before the care is needed is a necessity.

Estate documents all Kent residents need

The importance of estate planning can never be emphasized enough. Having the necessary documents in place can ensure a person's assets, children and health care needs are protected. This is important even for "millennials."

According to a recent survey, more than half of Americans do not have essential estate planning documents in place. Many people have a problem thinking ahead, whether it be from not worrying about it or just avoiding the topic altogether. But, here are certain estate documents that are essential.

When is the best time to do estate planning?

Most Kent area residents have estate planning on their to-do list. But, like many things that should be done, it is often pushed to the side until a better time. So, when is a good time to work on estate planning?

Clearly, the best time to complete an estate plan is before a person needs it. A person never knows when their estate plan will be implemented, so everyone should have theirs completed. Life can change quickly and regardless of age, everyone needs an estate plan. A will is a basic document that can list who receives a person's assets and who is in charge of the estate. A trust is a good choice for those who have more complicated assets. Along with a will or trust, health care directives are important for everyone. A health care emergency can happen to anyone and having these directives in place before something happens can ensure a family knows what to do.

What happens to a loved one's debts when they pass away?

In many cases, when someone passes away they leave behind loans for their homes and cars. Family members who are left behind often wonder what needs to happen in these situations.

A car or home equity loan is a secured loan. This means that if the loans are not paid, the lender can foreclose on the house and use the proceeds to pay the loan. Or, they can repossess the car and sell it to use the proceeds to pay off the car loan. If the proceeds of the sales do not pay off the loan, the lender can have a claim against the other assets in the estate. Many home loans have a due-on-transfer or due-on-sale clause, where if the home is sold or transferred the entire amount of the loan is due in full. Car loans have a similar clause.

Testamentary and temporary guardianships

Kent area parents understand how important it is to care for their children. When parents make plans for their children, they should consider what would happen to the children if the parents unexpectedly pass away.

There are two main types of guardianships. A testamentary guardianship is a person who is designated in a parent's will to care for a child if the parents die. If the guardian named is unable or unwilling to take care of the child, the court will appoint a different guardian. This type of guardian has full control over the person's life, including living arrangements, medical care and financial matters.

Mistakes that can be made when estate planning

Estate planning is important for everyone in the Kent area. Making a plan for what happens after you die can make sure assets go to the right people and your wishes are honored. But, there are some estate planning mistakes that you should avoid.

The main estate planning mistake that should be avoided is not having an estate plan at all. If a person does not create a plan for their estate after they die, then state law will determine the distribution of assets. This can have unintended consequences as to whom receives the assets and it may not be the estate holder's plan. Another mistake that can be made is not regularly reviewing existing estate planning documents. Beneficiaries may have changed, estate tax laws can be different or life circumstances can change. Any of these can affect an existing estate plan.

Elder law estates

Those who are advanced in age in the Kent area know how important having an estate plan can be. There are specific documents that an older person should have when it comes to estate planning.

First, a person should have a will or a trust. A trust is a good choice in order for the estate to avoid probate. A will is good for an individual who wants to give certain assets to certain people. This can help reduce the family disputes over their inheritance. In addition to a will or trust, a person also needs a power of attorney. A designated person to make legal and financial decisions when a person is incapacitated is a very important document to complete. A designated health care proxy, sometimes known as a health care power of attorney, is also important to make medical decisions for another person when they are incapacitated. In addition to a power of attorney, a living will is a document that can help guide medical professionals in making decisions about medical care. A living will specifies what a person would want done to them medically at the end of their life.

Unmarried couples and estate planning

There are many unmarried couples in Washington. Many of these couples have been together for decades and, for whatever reason, have not found it necessary to get married. These couples may have important estate planning topics they may want to explore.

One major issue that unmarried couples run into is what happens to assets when one of them dies. Couples may think that if they have lived together for many years that would be enough to ensure their partner receives their estate if they pass away. But, this is not the case. A survivor in an unmarried couple partnership is not entitled to any of their partner's benefits. They would also not receive notice of probate proceedings or any support that is awarded to those who are legally married. Unless there are estate planning documents in place, an estate is passed to biological relatives. An unexpected disability may also mean that relatives would make medical decisions for a person instead of their partner, unless a power of attorney document is in place.

You can plan for pets in an estate plan

Many Kent area residents have pets. Dogs, cats, birds and other animals are valuable members of our families. Those who have pets may want to consider what would happen to them after they pass away. Using an estate plan to include care for pets is a good way to protect them.

A pet trust can be created to protect animals in the event of a pet owner's incapacity or death. Hundreds of thousands of animals are placed in shelters each year because their owner passes away. A pet trust is a legal document which ensures the pet will receive the care the owner would want. A pet trust contains a trustee, who is in charge of handling the finances, the caretaker for the trust, the pets and who the remainder beneficiary should be. A pet trust needs to have property attached to it so that it is funded for the life of the pet. The remainder beneficiary is who will receive the rest of the property when the pet dies. A pet trust should contain enough money to cover the cost of care for the animal. It is important to know how long a pet is expected to live, as some can live decades, and make sure there is enough money for food and veterinary bills.

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