SEATTLE , W
Estate Planning Basics
This page contains answers to some basic questions about wills and estate planning.
Below, find a discussion of some of the basic estate planning documents that almost everybody should have at a minimum,
and some brief discussion of a few additional matters. Estate planning is a technical area of the law and often involves
sophisticated tax planning efforts as well as careful consideration of family matters, business goals and other concerns. Professional assistance is recommended.
What should I do to be sure my estate will be resolved as I would want it, in the event of my death?
The amount of planning and prearrangement appropriate for each individual varies with (1) the nature of that person's estate and
such factors as the value and nature of their personal property or real estate, investments, and business; (2) family concerns
such as the need to plan for the ongoing care of dependent children or other family members; and (3) any number of other personal
issues and priorities, including such things as how to fairly provide for children from prior marriages, a desire to make charitable
donations, etc. In general, we advise our clients that they will be doing their family members a great favor if they put some time into
thinking about these issues.
If you are taking the time to read this, you will probably want (at least) (1) a simple will, (2) a power of attorney, and (3) a directive to physicians.
A will names a personal representative to handle the affairs of your Estate, and it tells that personal representative
how to distribute all property you may have at the time of your death. It may also name a caregiver for your children, it may provide for money to be placed in trust
for the care of family members or for charitable purposes, or it may contain provisions that help avoid or reduce inheritance taxes which currently apply to Estates
over $2,000,000 in Washington State (note: this "threshold" is changing; consult with an estate planning professional to be sure you have current information). Your will
only becomes effective upon your death and until that time it is fully revocable or changeable unless, in the meantime,
a Court has determined that you are no longer competent to make such decisions or unless you have signed a binding contract with your spouse, termed a "contract
for mutual wills." (See next paragraph.)
Sometimes, when spouses have children from prior marriages, the execute a contract for mutual wills in order to put in place a
binding agreement that neither will alter their will, at least with respect to the provisions favoring the children of the other, after their spouse has died. This
enables you to assure that, while your spouse will receive the full benefit of your assets, he or she will not be able to pass what you may believe should be your
childrens' inheritance on to some other person or persons.
Note: if you prepare no will, Washington State has laws of intestacy which will dictate how your estate should be distributed
to next of kin. If you have no kin surviving at the time of your death, your property would be turned over to the State.
A power of attorney can be effective immediately, or it may only be effective upon the occurrence of some future event, such
as a planned business trip or the possibility that you might one day become incompetent to handle your own affairs. A power of attorney may be general, allowing your
named "attorney in fact" to handle all business and health care decisions, or it may be very specific, such as allowing them to handle an impending sale of
your home. The power of attorney tells a bank, business, or medical person that you would wish the "attorney in fact" to handle the matters specified. The
power of attorney does not give anybody the right to act against your wishes. Until or unless a Judge determines that you are no longer capable of running your affairs
(see guardianship information), you can revoke the power of attorney at
A directive to physicians (also known as a living will or a health care directive) tells medical personnel what you would want
done in the event that you may require extensive medical care or prolonged treatment. In general, these documents are created because someone wants not to be subjected
to invasive or intensive medical care after such time as they may have lapsed into an incurable coma or similar debilitative state.
Other estate planning devices include such things as living trusts, family limited liability corporations, and investment planning
or distribution arrangements you might make with banks or investment houses, and deeds to real estate. The variety of estate planning arrangements is nearly endless,
and many of the principles and techniques are highly sophisticated.
Depending on the nature of your estate and of your goals and priorties, you may wish to put in place a very simple or a very sohpisticated
estate plan in order to make suitable arrangements regarding family members, investment programs, estate or gift taxes, and a variety of other issues. If you already
have an estate plan, we recommend that it be reviewed by an attorney any time significant changes in your family or financial situation may occur, or if your plan is
several years old.
Should I establish a revocable living trust?
One of the most common questions I hear from people who are thinking about their estates is that of whether or not they "need" a living trust. The answer
to this question is maybe.
A revocable living trust is a mechanism whereby you might transfer your property and other investments to a trust where they will be held for your benefit during your
lifetime but they will not be yours in an outright sense. Upon your death or some time subsequent, these assets will be transferred to your heirs without any need for
a probate (see Washington Probate).
The most common reason to establish a revocable living trust is to avoid the need to take your estate through a probate proceeding
following your death. However, while many people fear what they perceive to be long delays in distribution and massive legal costs associated with the probate process,
the reality turns out to be that in most cases the cost and complexity of a living trust are no less than those associated with a probate. For routine estates, the
Washington probate process is relatively simple and the proceeding need not be overly costly (I know, that's easy for an attorney to say but its true). There are no
real tax planning advantages specific to the revocable living trust because all of the tax savings obtained through a living trust can equally be obtained through the use
of a will and probate. In addition, the use of a living trust requires greater care in keeping accounts and propert titled correctly and, in a large number of cases
where there is a living trust but where there is not a professional trustee, we find that the parties did not properly administer the trust so that when the person who
established the trust dies, there has to be both a trust administration AND a probate.
If you reside in one state and own real estate in another, a living trust may well create significant savings in probate costs.
There may be other situations, too, where the living trust has its advantages. Consult an attorney if you have questions about this issue. However, in Washington
State most people who carefully consider the pro's and con's of a living trust are likely to conclude that the expense, effort and complexity associated with a revocable
living trust is not warranted.
What if I do not own any real estate and I have a relatively small collection of property and investments--should I worry
about any of this?
Maybe so; maybe not. Especially in the case of smaller estates and where you would want your assets distributed to your next of kin as the law identifies them, the
will may not be be essential. However, the cost of preparing a will is quite small, and everyone should think about what will happen to their family, their assets, their debt, etc. In a very real sense, the
preparation of a carefully thought-out Estate Plan shows consideration for your family members or those others who may be dealing with your affairs following your
death: it provides a road map as to how to handle various matters as you would have intended, and it often helps avoid or reduce confusion or tension between those
who care about you.
If yours is truly what the law views as a "small estate," or if you have made other arrangements so that everything you own
is set up to transfer to other people upon your death, and if you have no dependent children, a will may not be essential. Financial assets held in what the law
defines as "small estates" (under $100,000 total) can often be transferred through a non-probate procedure to the legal next-of-kin without a will, the
transfer of title to your car may be accomplished with a form provided by the Department of Licensing, and various other alternatives may exist.
See Washington Probate); scroll down to "Small Estate Procedure," "Non-Probate Assets," and "Other Procedures" .