Will
Most people have heard of will but many people might be unfamiliar with the requirements to write one in Washington and why it is important to have a will. This section will briefly address the main purpose of a will:
A will in simple terms determines who will get your assets you own on your death (your estate). It will also often determine who will manage your estate on your death and appoint someone as your personal representative. This person will pay your creditors, pay beneficiaries, and complete taxes on your behalf after your death. The will can also determine some other issues such as what happens when a gift you were going to give to someone has already been given away.
Stay tuned for another article which discusses wills in more depth or reach out to Jordan for more information.
Power of Attorney (Financial and Healthcare)
There are two types of power of attorney documents you can have a financial and healthcare power of attorney. You should have both because they both have very different functions.
Why would I want a power of attorney?
There are several reasons, one of the biggest is how your property and healthcare would be managed in the event that you became incapacitated and could not make your own decisions with respect to management of your assets and healthcare.
In the case of managing your assets, in the event you don’t have a power of attorney but are not able to manage your assets, your family or friends might be required to go through a fairly cumbersome court process called Guardianship. Many considerations are determined by a judge and not you or your family/friends.
When you enact a power of attorney, you allow for who you would want to manage your assets to truly be in the driver’s seat. The Washington state RCW 11.125 Uniform Power of Attorney Act is broad and grants a lot of general powers of authority to an agent so long as the power of attorney document references the specific section of the RCW 11.25 which grants the extensive powers, and it does not specifically state it excludes a power listed in the Act. Nevertheless, your document should still be as clear as possible as it will be interpreted by financial institutions and there are certain specific areas of authority that must be granted in the power of attorney document.
Briefly touching on the case of healthcare power of attorney, many people think they will be able to make decisions such as give informed consent for the loved one regarding
healthcare, simply because that is what their loved one would have wanted. However, unfortunately, Washington state has a law RCW 7.70.065 which governs who will get to give informed consent in the case of incapacity and it is not always the people that the incapacitated person would have wanted to make decisions. This document also enables the agent to receive HIPAA protected information that they would not normally be able to receive. There are other benefits to a healthcare power of attorney but are too in-depth for the purpose of this article.
I see a lot of law firms offer a “durable power of attorney” What is a durable power of attorney and how does it differ from a standard power of attorney?
A durable power of attorney remains in effect even if you become incapacitated while a standard power of attorney will not be effective if you become incapacitated. What does this mean practically? This means that if you give someone the ability to manage your assets through a power of attorney while you are living, if you become incapacitated but do not have a power of attorney, the power of attorney will become void. Thus, that person who had the power and is your agent will no longer be able to act as your agent.
The power of attorney must have explicit language saying that it is effective upon disability to be a durable power of attorney.
However, the durable nature of a power of attorney does not impact whether the power of attorney is an immediate power of attorney, meaning it take effect immediately or whether it is springing, meaning it does not take place until a specific event occurs.
For more information on drafting a power of attorney and whether it should be effective immediately or upon some future event please contact Jordan.
Healthcare Directive
What is a healthcare directive?
Washington Natural Death Act Chapter 70.122 allows for someone to write a directive “ directing the withholding or withdrawal of life-sustaining treatment in a terminal condition or permanent unconscious condition.” RCW 70.122.030 (which even has language for a healthcare directive). This document may also be combined with a healthcare power of attorney.
In more plain language, this document allows for you to determine if in the event of you needing life support or some other type of life sustaining treatment, you would want that treatment. Note there are some instances where a healthcare directive would not be sufficient and you would need a mental health directive
Nonprobate Assets
Many people wish to avoid the probate process when they pass away. The probate process is a court process determined by law, used to distribute assets to beneficiaries either in a will or distribute assets to the heirs under law if the person dies intestate (without a will).
Though the probate process can be simple and isn’t necessarily too costly in Washington, it can be helpful to use nonprobate assets to make the process as smooth as possible and avoid court.
Here are a few common nonprobate tools attorneys may use:
Transfer on Death deeds:
This allows for real estate property to pass directly to the person named in the deed upon the death of the grantor. This deed is not effective until death. Therefore, the grantor still retains full control of the property throughout their lifetime and may revoke the deed during their lifetime if they follow the proper protocol to do so.
Beneficiary Designations Payable on Death:
You may place people who you want to inherit bank accounts, CDs, investment accounts, etc. as a beneficiary on the account. This is often called a Payable of Death designation and many institutions have a form that you can use to make this designation. Much like TODs this designation is not permanent and may be changed during your lifetime.
Trusts:
This is by far the most popular nonprobate option attorneys use. This is because the trust can be very extensive and set-up with terms as detailed as a will but yet, it does not pass through probate. In addition, its terms are private and there are different tax consequences, although these differences would usually benefit those with a very high level of wealth. It also has benefits which allow assets given to one’s beneficiaries to be protected from creditors and potentially even a spouse in the event of a divorce.
Trusts can either be revocable or irrevocable. If they are irrevocable, any property you put in trust cannot be taken out. If they are revocable, then you may freely transfer property to and from the trust during your lifetime. Note, there may still be some tax consequences for transfers. Revocable trusts, however, do become irrevocable at the time of the trustor’s death (the person who created the trust).
More to come on this specific type of estate planning tool.
Retirement Accounts:
These often pass directly to the beneficiary outside of the probate process.
There are also other types of agreements which can help to distribute property outside of probate such as community property agreements, prenuptial agreements, postnuptial agreements.
More Information
If you are interested in more information or in creating an estate plan, please reach out to Jordan, so she can help you craft a plan that best fits your needs.