Using Instruction Letters as Part of Your Estate Plan

Your Will is one of the most important documents you will make when planning your estate. Without it, disputes among family members often arise, and some property may even be given to the state if no heirs can be found. But another, informal document--an "instruction letter"--can go a long way toward providing additional clarity for your beneficiaries and the Personal Representative of your estate.

While this letter is not a legal document, inclusion of certain elements can h...elp make the estate process go more smoothly. For instance, the PR needs to know where to find certain documents or how to log into certain online accounts. In addition, an instruction letter should cover three main areas:

* Funeral Wishes (whether you have already reserved and/or paid for a plot; if requesting cremation, where you would like your ashes spread; whether you would like to donate your body or tissues)

* Financial Details (assets, both monetary and otherwise; any outstanding debts; contact information of employers or financial planners)

* Personal Effects (where certain items are located; how to care for pets; personal messages to your survivors)

Specific items to include in your letter of instructions:

1. The location of your original Will.

2. Complete instructions for the burial/cremation.

3. Exhaustive list of friends, relatives, and others who should be contacted upon your death.

4. The location of all important documents, such as deeds, divorce papers, birth certificate, any other legal documents and records.

5. Any information related to membership in societies, lodges, or other such organizations. Many of them offer death benefits for named beneficiaries.

6. Where documents related to life insurance may be found, name of insurer(s), policy number(s), etc.

7. All bank account information, including the names of banks and account numbers.

8. A listing of any U.S. Savings Bonds (include names, denominations, and serial numbers).

9. A listing of any stocks or bonds (and where they can be found).

10. Any pension plan information.

11. Income tax returns, both state and federal, from the past few years.

12. A statement regarding your reasons for any unusual gifts or percentages of gifts given in your Will.

13. Location of any outstanding or recurring bills, plus a list of any outstanding personal debts.

14. Where bills and records of payment are located.

15. Any large gifts that you have given in the past few years.

Of course, the content of any instruction letter will vary according to each individual's unique needs. The main goal is to help your PR and your beneficiaries handle the process as smoothly as possible. If you have questions about prepare an instruction letter or any other aspect of estate planning, give us a call at 253.858.5434 to see how we can help. We proudly serve clients throughout Washington and Idaho and are available to meet in person, by phone, or via Skype or FaceTime.

Duties of a Personal Representative

A Personal Representative (a "PR" or also called an "Executor") of an estate is an individual or institution appointed by the Court to administer the estate of a person who has died. As a fiduciary, a PR must settle and distribute the estate of the decedent as efficiently as possible by following the directions outlined in the Will and the probate laws of the state where the estate is being administered.

The PR's primary duty is to protect the estate in a manner consistent with the decedent’s wishes. Although this may appear relatively simple, it is important that the PR understand the responsibilities associated with the position. As a word of caution, failure to adhere to these duties and responsibilities can result in the filing of lawsuits against the PR for breach of fiduciary duty.

Generally speaking, a PR is responsible for identifying the assets of the estate, protecting the estate property, giving notice to interested parties (heirs, creditors, and taxing authorities), preparing an inventory, paying valid claims (including debts and taxes) against the estate, representing the estate in claims against others, and distributing the estate property to the beneficiaries.

If you have been named as PR of someone's estate or have questions about probate in general, give us a call at 253.858.5434 to see how we can help.

Seattle Meetings on 6/3 and 6/6

Clients and Colleagues - I will be working in Seattle this Friday (June 3rd) and Monday (June 6th) and have a couple time slots available for meetings both afternoons. If you would like one, give us a call at 253.858.5434 to set something up.

Forgiving Loans in Your Will

Many parents make loans to their children, e.g., to buy or house or to start a business. In your Will, you can leave instructions for forgiving these debts after your death. When you do, your forgiveness functions much the same as giving a gift; those who were indebted to you will no longer be legally required to pay the money they owed. Keep in mind, however, that releasing people from the debts they owe you may diminish the property that your other beneficiaries receive und...er your Will.

Two caveats for forgiving debts in your Will are:

* You may not be able to use your Will to forgive debts if your estate is insolvent. If there isn’t enough money in your estate to pay your own debts, you may not be able to forgive debts owed to you.

* If you made the loan while you were married, you may only have the right to forgive half the debt. Washington and Idaho are both community property states - if the debt is owed to your marital community, you cannot cancel the whole amount due unless your spouse agrees to allow you to cancel his or her share of the debt—and puts that agreement in writing.

When you make your will, carefully describe any debt you wish to cancel, including the name of the person who owes it, the approximate date the debt was incurred, and the amount you wish to forgive. This information is important so that the debt can be properly identified.

Although forgiving a debt is likely to come as a pleasant surprise to those living with the expectation that they must repay it, do not use your Will to explain why you are forgiving the debt. Instead, explain your reasoning in a separate letter that you keep with your Will.

If you have questions about forgiving debts owed by your children (or others) in your Will, or other questions about estate planning or probate, give us a call at 253.858.5434 to see how we can help. We proudly serve clients throughout Washington and Idaho and are available to meet in person, by phone, or via Skype or FaceTime.

Seattle Meetings on 5/20/16

Clients and Colleagues - I will be working in Seattle all day on Friday (May 20th) and still have a couple time slots available for meetings in the afternoon. If you would like one, give us a call at 253.858.5434 to set something up.

Uninsured Motorist (UIM) Insurance Claims

What do you do if you have been involved in an auto collision and the other driver just ran away or does not have insurance? What if you were a pedestrian or riding a bike and were hit by a driver who drove off or does not have any auto insurance? What should you do?

Fortunately, there may be a solution. If you have uninsured motorist or underinsured motorist (UIM) coverage on your auto policy, you will be able to make a claim against your own insurance company for your losses without any detriment to you. Even if you personally do not have auto insurance coverage, you still may be covered. For example, if you were a passenger in someone else's car and the owner of the vehicle you were in has UIM coverage, it should cover you. If you live with someone who is related to you who has UIM coverage, it also may cover you. Even if you are a pedestrian or bicycle rider, if you or a relative you live with have UIM coverage, it may cover you. If you think any of these may apply, be sure to tell your lawyer right away.

The UIM insurance company pays when the other driver doesn't have any (or enough) insurance. UIM insurance coverage covers the following losses:

* Ambulance, paramedic, hospital and medical bills, including dental, x-ray, MRI, and prescriptions;
* Loss of wages, earnings, and income;
* Pain, suffering, disfigurement, emotional distress, and loss of enjoyment of life activities; and
* Loss of future earnings and earning capacity.

Are you worried about making a claim against your own insurance company? You should not be! Remember, UIM coverage is not a gift from your insurance company. You already paid a premium for it, so don't think you're taking advantage of your insurance company or doing anything wrong because you have to make an UIM claim. You also don't have to worry that your premium will go up if you make a UIM claim since most states prohibit premium increases if the collision was not your fault.

If we can be of service to you, your family, friends, neighbors, or co-workers, give us a call at 253.858.5434 to set up an appointment for a free initial consultation.

Trusts and Financial Institutions

Trusts have been around a lot longer than the modern banking system. Yet this month, we've had two banks (well, one mortgage lender and one credit union) who act like they've never heard of a Revocable Living Trust or a Special Needs Trust and can't seem to figure out just how Trusts operate, much to the detriment of their customers/our clients.

If you've set up a Trust, or you're Trustee of a Trust for someone else's benefit, and you're getting flack from a bank about setting up accounts, investments, or transferring assets, give us a call at 253.858.5434 to find out how we can help you "educate" these financial institutions to do right by their customers.

Seattle Meetings on 5/13/16

Clients and Colleagues - I will be working in Seattle all day on Friday (May 13th) and still have a couple time slots available for meetings in the afternoon. If you would like one, give us a call at 253.858.5434 to set something up.

Will Contests

A Will can always be contested, but the result can be uncertain. You have to have a basis to contest a Will; you must show that there is either something wrong with the Will or that there was something wrong about the conditions under way the Will was made. For example, you can challenge a Will by claiming that:

* the Will does not meet formal requirements, such as proper signatures or witnesses;
* the person signing the Will did not have the capacity to make a Will; or
* the person signing the Will did so under suspect conditions, like fraud, mistake, or undue influence.

If the Will you want to contest includes a “no contest” clause, you may risk losing any inheritance the Will provides to you. Many Wills contain a no contest clause which says something along the lines of “I disinherit anyone who challenges this Will.” No contest clauses are meant to discourage Will contests by disgruntled heirs.

In reality, however, good faith challenges are rarely thwarted by a no contest clause. So if you have good reason to contest a Will, a no contest clause shouldn’t deter you. Also, the likelihood of a court upholding a no contest clause varies greatly by state and by circumstance. So just because a Will has a no contest clause doesn’t necessarily mean it will be enforced.

A more practical risk to a Will contest is the time and money that it will cost to mount the challenge. To challenge a Will, you’ll need to hire a lawyer and pay court fees. And the issue will likely take months, if not years, to resolve. Will contests are complicated and you will need the help of an experienced lawyer. Give us a call at 253.858.5434 if we can be of service to you, your family, friends, neighbors, or co-workers.

Boise Meetings, May 26th and 27th

Idaho Clients, Colleagues & Friends - I'm going to be in Boise May 25-29 and have time to meet with new or existing clients on Thursday the 26th or Friday the 27th. Give us a call at 253.858.5434 to set something up!

Handling Wage Garnishments for Small Businesses

Handling an employee's wage garnishment can be challenging for small business owners. When notified of the need to garnish wages by a court, business owners aren't always clear on their responsibilities and obligations.

A wage garnishment is any legal procedure where some portion of a person's earnings is withheld by an employer for the payment of a debt. Situations that incur wage garnishment typically include judgments, child support, and unpaid taxes.

When an employer receives a Writ of Garnishment, the employer is obligated to make the appropriate deductions from the employee's wages and direct payments to a designated agency or court. Wage garnishments are time-sensitive and failure to timely process the garnishment can lead to penalties.

Having your business's lawyer help you process an employee's wage garnishment can protect you against undue liability and lawsuits. We can help you interpret the Writ of Garnishment, accurately calculate the deductions, and assure that payment is timely made to the appropriate agency or court. Give us a call at 253.858.5434 to find out how we can help!

7th Anniversary Party

This weekend marks the 7th anniversary of the founding of the Law Offices of P. Stephen Aita, PLLC, so if you're in the Tacoma/Gig Harbor area around 6:00 this Friday, April 29th, come to 7 Seas Brewing Co. (3006 Judson Street in Gig Harbor) and join us in raising a glass to seven great years!

"Super Wills"

You know what term I like? "Super Will." In 1998, Washington became the first state to pass a "Super Will" law (technically the Testamentary Disposition of Nonprobate Assets Act, RCW Chap. 11.11). Washington's "Super Will" law allows you to make provisions in your Will that govern the beneficiaries of nonprobate assets. Previously-designated beneficiaries of nonprobate assets may be overridden by the provisions naming beneficiaries in your Will, if the Will expressly describes the nonprobate assets at issue.

To effect control of a nonprobate asset with a Super Will, a Personal Representative must notify the financial institution holding nonprobate assets, the nonprobate beneficiaries, and the testamentary beneficiaries in the form provided in the statute. Without such notice, the financial institution holding the nonprobate asset may rely on the form of the nonprobate asset and its beneficiary designations.

If a nonprobate beneficiary receives a nonprobate asset to which he is not entitled because of a Super Will's provisions, the testamentary beneficiary or Personal Representative may petition the court for control of the asset. Where a financial institution holding a nonprobate asset is aware of a dispute contesting right to the nonprobate funds, the financial institution may hold the nonprobate asset until it receives an Order from the court or an agreed consent of all nonprobate and testamentary beneficiaries. The financial institution may also require a bond from the person to whom it makes transfer of the nonprobate asset in twice the amount of the asset's value.

This is complex, I know, but Super Wills can be a pretty cool estate planning tool, depending on the client's particular circumstance. If you have questions about Super Wills, or any other aspect of estate planning, give us a call at 253.858.5434 to see how we can be of service.

Probate and Estate Settlement

Probate and estate settlement is the legal process by which debts are paid and assets are distributed following a death. We can help you organize your deceased loved one’s assets and liabilities, educate you about the probate process, and handle all communication between various third parties. We also represent fiduciaries and beneficiaries in trust and estate settlement negotiations and disputes.

A Personal Representative is required to settle the estate while complying with the terms of Will, if available, and state probate law. We provide helpful guidance in the following matters:

* Determining and initiating procedures with the Superior Court (in Washington) or the District Court (in Idaho) in the proper county;
* Meeting statutory deadlines;
* Notifying creditors, beneficiaries, and heirs;
* Satisfying creditors’ claims;
* Distributing property; and
* Fulfilling requirements to close the probate estate.

If we can be of service to you, your family, friends, neighbors, or co-workers, give us a call at 253.858.5434 to set up an appointment. We proudly serve clients thoughout Washington and Idaho and are available to meet in person, by phone, or via Skype or FaceTime.

Four Mistakes to Avoid in a Family Business

Running a family business is the most natural thing in the world--and the most unnatural. Handle it well, and it can make you rich, capitalize on bonds no ordinary colleagues could share, and keep your family employed for generations. Handle it badly, and it can instead keep lawyers like me employed for years.

If you've committed any of the following oversights, take care of them as soon as you can make a date with your lawyer. And if you're considering launching a company with your family members, don't even think about cutting corners and making these potentially fatal mistakes:

1. You mix your family finances with the business's.

A lot of family businesses start out as a side job or a hobby that eventually turns into a money maker. When you start to outgrow that stage, you need to look into creating a legal entity like an LLC or a corporation. This is especially important if a number of family members might be liable, as would be the case if, say, they signed for loans or contributed cash or otherwise could be considered partners. Without this protection, you all could end up bankrupt if something goes wrong.

For most small family businesses, an LLC is a great choice. It gives personal liability protection like a corporation, without formalities like a Board of Directors. An LLC is taxed as a pass-through entity, so business profits flow through to the owners and the LLC pays no separate tax on profits. Also, having a legal entity allows for easier transition planning.

2. You muddle along with no employment agreements

You may not want to discuss with Dad what will happen if he calls in sick too many times or with Grandma how much she has to pay you, but everyone in a family business has to make their expectations clear early on--about employment, operations, even dissolution. And you have to put the agreements in writing. It may seem awkward to talk about it now, but it will be ten times more awkward after something goes wrong. And something will.

3. You never bother to get the license.

For most businesses, you have to obtain state and city licenses. Zoning permits or variances may also apply, particularly if you allow customers to visit your home office. It's usually pretty easy to find out the requirements--one visit to the state Dept. of Licensing website can get you all the information (and forms) you need. Business licenses are often inexpensive, but if you're operating without one, the fines can be pretty costly.

4. You have no succession plan.

The last thing you want to think about in a family business is what will happen to the company if you are hurt or die. It's no fun to think about, but you should consider who will run the business, either temporarily or permanently, if you can't run it. Spend time with this person and get them acclimated to what you do and how you do it--introduce them to vendors, suppliers, payroll, payment issues, website access, and a host of other contacts and tools they will need to take over. Let others know you've designated a successor and mention it in your Will.

Remember that if you do not have a formal business entity like an LLC, your business technically passes with you. With the right structures in place you can leave your ownership (or fractions of it) to your loved ones in your Will, and they can keep running the business without interruption. After all, that was the point of having a family business in the first place, wasn't it? To keep it in the family.

If you're thinking about starting a family business, give us a call at 253.858.5434 to see how we can be of service.