END OF LIFE PLANNING


Estate Planning

  What is Estate Planning?

           Estate planning is simply planning to make sure that your property passes according to your wishes at your death. Regardless of how little you own, you should plan to ensure the intended persons receive your property after your death.
The will selects the personal representative who administers and determines who receives the property in your estate. Examples of probate property, which is distributed according to your will, include real estate, bank accounts, vehicles, jewelry and other personal effects titled in your name alone when you die.

           Other documents determine the recipients of property that passes outside of your Will based on decisions and transactions made during your life. Examples include assets titled as joint tenants with right of survivorship or tenants by the entireties, beneficiary designated assets such as life insurance, annuities and IRAs and assets titled in the name of a revocable trust.


  Wills

       A will helps avoid disputes among the beneficiaries of your estate and gives you control over how your property is distributed.

         In a will, you name a personal representative to administer your estate and direct how your property is to be distributed.
If you die without a will, your assets, including your home, money and other property is distributed according to intestacy laws. The intestacy laws were created to distribute property to your spouse and/or next of kin as decided by the Legislature and do not take into account your unique situation.

          Even if you are satisfied with the intestacy laws, you should have a Will to select a personal representative to administer your estate. The personal representative named in a Will is commonly referred to as the “executor.” The executor collects estate assets, pays the estate debts and taxes, and makes distributions to the beneficiaries you have designated in your Will. Even if all of your assets were to pass outside of probate, your estate needs to have a personal representative to tie up your affairs (e.g. file your final personal income tax returns).

           A brochure containing information on wills and the probate process and additional forms are available on the internet on the website for the New Castle County Register of Wills. http://www.nccde.org/152/Register-of-Wills .  In New Castle County, wills can also be sent to the Register of Wills to be indexed and kept for a current fee of $10.

          Whenever there is a death in New Castle County, the Register of Wills must be involved if: (1) the decedent (the person who died) had a will, (2) The decedent did not have a will, but died with over $30,000 in probate assets. (If the estate is less than $30,000, only the next of kin may receive what is known as a "Small Estate Affidavit" instead in order to transfer property), or (3) the decedent had any solely held real estate in Delaware.  An estate needs to be probated in the county in which the decedent resided.


  Non-Probate Property

          Your Will distributes property that you own outright but does not apply to all property. Jointly-held property, accounts and other assets held in trust, life insurance policies, annuities, IRAs and many retirement accounts do not pass according to the provisions your will. These items pass by law or by contract to the designated beneficiaries. Be sure these beneficiary designations are carefully reviewed when developing your estate plan.

      Joint Property

             There are several ways of owning property with another. The most common ways are “tenants in common,” “tenants by the entireties,” and “joint tenants with right of survivorship.”   People often transfer property into joint ownership with family members or friends, in the mistaken belief that this will reduce estate administration costs and/or avoid probate and taxes. While joint ownership may be appropriate in some situations, it often results in unexpected outcomes, disappointments and hardships. When you transfer your property so that you own it jointly with another, you make an immediate gift to that person of the property, which could adversely affect your estate plan and your lifetime rights in the property. There also may be income tax, federal estate and gift tax, and inheritance tax consequences.  The gift may prevent you from receiving Medicaid benefits if you enter a nursing home.  Once the property is held jointly, you lose control over the property, and the property is subject to claims by your children’s creditors.  The same problems can arise if you add joint owners other than a child or children.
You should obtain legal advice from an attorney who is able to explain the tax and other consequences to you prior to putting any property in joint name.

           Titling bank accounts, CDs, and stock in joint names is easy to do, but canalso be a mistake. Banks and other financial institutions may provide forms to make an account a joint account, but the bank’s officers and employees are not capable of advising of the potential dangers of joint ownership.

           If you want certain property to go to a particular person you should discuss with your lawyer whether this should be done by putting the property in joint names, by passing it to the intended person through the will, or making some other arrangement. If your goal is to provide for the management of your affairs in the event you become incapacitated, an attorney can advise you of the merits of a general power of attorney or a revocable living trust.

  Trusts

           A trust is a special way to own and control property. A person creates a trust by executing a trust document, which places property in the trust and designates a trustee to safeguard and distribute property. The trustee then controls trust assets for the beneficiaries you select and distributes income and principal at such times and in such amounts as you direct. The rules governing investment and distribution of trust funds are controlled by a trust document.

          Trusts can have several important advantages, including professional management, protection against overspending, avoiding probate fees, and caring for young and/or disabled beneficiaries.  They are not right for everyone.
Trusts can be created by will (testamentary trusts) or during the life of the person creating the trust (living trusts) by a trust document. Living trusts and wills that contain testamentary trusts cost more money than simple Wills because they are more complicated and are designed for each individual.

Anatomical Gifts

          Organ donations may be made in various ways.  You can execute an advance health-care directive, a document or card designed to be carried on the person signed by the donor in the presence of two witnesses, a Declaration of Disposition of Last Remains or by indicating consent on your driver’s license.   When you apply for or renew your driver’s license, you will be asked if you want to be an Organ and Tissue Donor.  If you agree a red heart is placed on your driver’s license and you will be provided a Uniform Organ Donor Card to carry with you. 

        You may sign up on-line at (https://citizen.dmv.de.gov/public.ejs?command=PublicOdHome).  Your family may not revoke your designation as a donor after your death.  Additional information can be found at http://www.donatelife-de.org/.

Funerals

           The Federal Trade Commission (FTC) rules require funeral homes to give price information by telephone, and if you meet in person to make funeral arrangements, you must be given a writ­ten price list.  The rules apply to pre-need arrangements in addition to arrangements after someone has died.

           You are not required to purchase unwanted goods or services, and the funeral home must tell you this in writing.  You also must be told in writing about any specific law if a particular item is required and under what circumstances the item is required, such as embalming.

            You cannot be required to purchase a casket if there is to be a cremation.

           You are entitled to an itemized bill with the total cost of each of the goods and services you have selected.  Items such as obituary notices, flowers, pallbearers, etc. may be estimated and the funeral provider may pay these bills for you, treat them as cash advances and bill you later.  You must be told if there is a service fee (or mark-up) in addition to the cost of the items, or if the funeral provider receives a discount, commission or rebate.

           The FTC rules provide other protections which can be read in more detail at http://www.consumer.ftc.gov/articles/0070-shopping-funeral-services

           For any who are interested , there is a guide for funeral homes called Complying with the Funeral Rule at http://business.ftc.gov/documents/bus05-complying-funeral-rule.

          Since the personal representative of the estate controls the decedent’s money, it may make sense for the personal representative to make the funeral arrangements.  If family members pay for the funeral, they can be reimbursed from the decedent’s estate, if the estate has sufficient assets.  If the estate assets are not sufficient to pay for the decedent’s funeral, then the person making the arrangements will be responsible to pay for the portion that is not covered.

          Funeral or burial arrangements may also be pre-planned during your lifetime.  Such “pre­paid funeral contracts” are controlled by Delaware law.  If you purchase such a plan, all of the money you pay must be held in trust in a bank in an interest-bearing account.  The funds, together with interest accrued, are held until the financial institution has received a certified statement that the services and goods have been provided as required by the funeral or burial plan con­tract.  If the pre-paid funeral contract is revocable, you may cancel it by giving 15 days written notice to the financial institution, and you will receive a refund of all money you have paid plus interest.  If the pre-paid funeral contract is for a person receiving Medicaid payments for long-term care, the contract must be irrevocable.

         Some people may choose a “no-cost exit” by donating his or her body.  The University of Florida maintains a list of programs which accepts donations at http://old.med.ufl.edu/anatbd/usprograms.html which currently lists two programs close to Delaware – at Humanity Gifts Registry, Health Sciences Center, 130 South 9th Street, Suite 1455; Philadelphia, PA  19107; 215-925-7469; and Anatomy Board of Maryland, 655 West Baltimore Street, Room B-O26; Baltimore, MD  21201; 401-547-1222.       

   
Disposition of Last Remains

         A Declaration of Disposition of Last Remains (“Declaration”) helps avoid disputes among your family members and gives you control over what services you receive after death, as long as the cost has been pre-paid or the estate has sufficient funds to pay for the services. 

           A Declaration fills the void left by other estate planning documents – the powers granted pursuant to a Power of Attorney expire with the decedent; a personal representative named in a will or by the Register of Wills may not be appointed until weeks after the date of death and after a memorial service has been conducted.  Without a Declaration, the closest next of kin, such as a spouse, decides what services the decedent will receive.

          In Delaware an adult, 18 years or older, may specify what is to become of his or her body, called cremains, if you direct your body to be cremated.  The Declaration must be in a written document, signed by the declarant and notarized, and with two (2) witnesses if the Declaration includes an organ donation.  In the Declaration you may authorize a specific individual (it does not need to be a family member) to handle the disposition and ceremonial arrangements after your death.  The form authorized by statute also allows the declarant to make an organ or tissue donation, as discussed above.