On this page are the answers to some of the questions that new clients most often have. The answers to these questions should help you to understand a bit more about what planning you might want, and what issues are involved. Use the links below to jump to the sections you are interested in. Please bear in mind that your situation should always be specifically evaluated for your particular details and preferences. These answers are for informational purposes only and do not constitute legal advice.
+ What happens if I die without a will?
If you die without a will, then the law considers you to have died "intestate," and the laws of intestacy say what will happen to your assets and how. Essentially, intestacy laws are the State's way of taking a guess at how you want to distribute your assets and who you would want to be in charge of the process. Those laws basically boil down to saying that your next of kin will inherit from you, but it can be very complicated to determine who those next of kin are and what percentages they are entitled to inherit, especially if you are not survived by a spouse or children, or you have children from a relationship with someone other than your spouse. The best way to remove any doubts about what will happen with your assets when you've died is to create a comprehensive estate plan.
+ Do I need a revocable living trust?
Not necessarily. A revocable living trust is a very useful tool for achieving one specific purpose: avoiding probate. Avoiding probate makes it easier for your survivors to transfer your assets after you've died, and it is great to avoid the costs associated with probate. A revocable living trust simplifies things for those you've left behind, and there should be no need for them to go to court to wrap up your affairs. But to accomplish that, you have to create a more detailed and involved plan now—a level of planning that not everyone needs. You can learn more about probate in the next section on this page, or feel free to come in and chat with Tom about the specifics.
+ Do I need a power of attorney?
You should have one, yes! A durable power of attorney is a document that you can use to designate one or more people to make decisions on your behalf if you become incapacitated. When it comes to health care, there are laws that grant your immediate family the authority to make decisions for you, but the law dictates the order of priority for who gets to make those decisions. If you want to deviate from that order, you'll need to designate your preferred order on a power of attorney. As for financial decisions, without a durable power of attorney, financial institutions are unlikely to even give your loved ones information about your assets, let alone make decisions regarding them. Having a joint account holder can be one way around this problem, but a durable power of attorney is a safer approach that also has fewer tax implications.
+ What is the difference between a power of attorney and a health care directive/living will/advance directive?
Health care directives, living wills (not to be confused with a last will and testament), and advance directives are all terms for documents that give you the opportunity to express your wishes regarding serious—usually end-of-life—health care situations. When you use a health care directive, you are expressing when you want to be taken off of life support, and can make other similar decisions. This can be helpful for your loved ones, who might struggle to make those decisions themselves. On the other hand, a durable power of attorney for health care says who can make decisions for you in less critical situations.
+ What is the estate tax, and how should I prepare for it?
The estate tax is a form of death tax, and it is imposed by Washington State and the Federal Government. When a person has died, the government looks at whether all of the deceased person's assets total up to more than certain thresholds, and if the total is over the threshold, the excess amount is taxed. It is not always easy to determine which assets are counted toward that total (it's safest to assume that everything is counted), so you should consult with Tom or an accountant with estate tax experience to learn more.
Luckily for most of us, we do not have to worry about paying the estate tax, because we are entitled to large exemptions from the tax. In 2018 in Washington, the exemption amount is a bit more than $2 million. At the federal level, the exemption amount is about $11 million for 2018. If you believe that you are close to or above the $2 million threshold, you have some relatively simple approaches to minimize the estate tax. If you are significantly over the $2 million threshold, especially if you are well over the $11 million threshold, you may need more advanced estate tax planning.
+ What is Probate?
Probate is the process through which a deceased person's estate is legally closed, with court oversight. Although there are estate planning techniques that can avoid probate, if a loved-one has died, there is a good chance their estate or will has to go through probate before you can wrap things up. Luckily, Washington is one of the states with the simplest and fastest probate processes in the country, so it may be easier than you think
+ How long does probate take?
In Washington, probate will take a minimum of four months from the time the probate case is opened, and that four month period applies for most simple situations. In some situations, the probate will not be closed until two years have passed, but a probate that long is less common. Both timelines relate to how long creditors have to bring claims against the estate of the deceased person. Probate can take longer in contested cases or if there are very unusual complications.
+ How big does my estate have to be before it goes through probate?
For many people, the deciding factor for whether their estate will go through probate is not how big of an estate they have, but what assets are in that estate. In most cases, a person who has died while owning real estate needs to have their estate probated in order to sell or transfer the real estate and other assets. Even if a person does not own real estate, if the total of their probate assets (see the next question to learn about nonprobate assets) is over $100,000.00, their estate will likely have to go through probate.
+ Which assets are subject to probate, and which are nonprobate assets?
Nonprobate assets are those assets that transfer to someone upon your death via some means other than your will. These assets typically involve some form of written agreement, essentially a contract, which says that the asset will pass along to whomever you've identified. One of the most typical examples of a nonprobate asset would be a retirement account, which usually transfers to the person designated as a beneficiary of the account. Determining whether an asset is subject to probate or not can be tricky, so please talk to an attorney about your specific situation to determine which assets need more attention.
+ Can I use a will to avoid probate?
No, using a will by itself will not avoid probate. You need a comprehensive plan to ensure that all of your assets that would require probate transfer via some other means instead. One of the most common methods to avoid probate is to use a revocable living trust.