A Qualified Terminable Interest Property (QTIP) Trust is an estate planning tool that married couples can use to minimize uncertainty and maximize tax advantages.

A Qualified Terminable Interest Property (QTIP) Trust is an estate planning tool that married couples can use to minimize uncertainty about the future and maximize certain tax advantages. Since no one can predict how much they will own at the time of their death, which spouse will die first, whether the surviving spouse will remarry, or what the estate tax rate will be when they die, a QTIP trust can help deal with and minimize these uncertainties without the need for a crystal ball.

The most common form of QTIP Trust is a testamentary QTIP Trust, which is created when the first spouse dies. Basically, this QTIP Trust is a marital trust established as part of a married couple’s estate plan to hold money and property for the surviving spouse’s benefit. This Trust may be the only one created at the first spouse’s death, or it may be part of a multiple Trust arrangement where, after the first spouse’s death, the Family Trust (or "Credit Shelter Trust" or "Applicable Credit Amount Shelter Trust") receives an amount equal to the federal estate tax exemption and the Marital Trust receives the rest. A QTIP Trust is more restrictive than a typical Trust in that the QTIP Trust limits the surviving spouse’s ability to use or control the Trust’s assets, such as money and property. However, for couples who have or may have accounts and property valued at more than the lifetime estate tax exclusion amount, a QTIP Trust is especially appealing because it qualifies for the unlimited marital deduction, which delays the payment of estate tax, if any, until the surviving spouse dies.

However, QTIP Trusts can also be created and funded while both spouses are living. These types of QTIP Trusts are called inter vivos (during lifetime) QTIP Trusts. The grantor spouse (usually the wealthier spouse) puts property into the QTIP Trust for the benefit of the other spouse (the “beneficiary”) during the beneficiary spouse’s lifetime. At the beneficiary spouse’s death, the Trust’s remaining assets will go to the grantor spouse’s children or wherever the grantor has decided. If the grantor spouse is still living at the beneficiary spouse’s death, the grantor spouse can even become the income and principal beneficiary and the QTIP Trust property will be excluded from their estate.

WHAT ARE THE REQUIREMENTS OF A QTIP TRUST? Whether they are created after death or during life, QTIP Trusts must meet certain requirements:

* The QTIP Trust must grant the beneficiary spouse a “qualifying income interest for life.” Either all the trust’s net income must be paid at least annually to the beneficiary spouse, or the beneficiary spouse must have the right to annually withdraw all the Trust’s net income. This right to income cannot be subject to any contingencies. For example, the right to income cannot terminate upon the surviving spouse’s remarriage.

* Only the beneficiary spouse can have the power to appoint the Trust property.

* The beneficiary spouse must have the right to demand that the Trustee convert non–income producing assets into income-producing assets.

* The QTIP Trust must be irrevocable.

* For an inter vivos QTIP Trust, the beneficiary spouse must be a U.S. citizen.

It is permissible, though not required, to also give a beneficiary spouse the right to distributions from the Trust principal (either discretionary or according to certain standards). However, no person other than the spouse can be a beneficiary of the QTIP Trust during the beneficiary spouse’s lifetime.

WHO TO NAME AS TRUSTEE OF A QTIP TRUST. The Trustee of a QTIP Trust is responsible for managing the Trust’s accounts and property, filing the Trust’s tax returns, and other administrative tasks required in following the terms of the Trust. Because being a Trustee can be a heavy responsibility, some people choose a third party, such as a financial institution or an attorney, to fill the role.

A grantor can, however, name a trusted family member, including the beneficiary spouse, as Trustee of a QTIP Trust. A grantor considering this option should keep in mind that such an arrangement may introduce distrust or even discord into relationships. For example, the surviving spouse of a second marriage, acting as Trustee, may choose to invest in accounts or property that will provide a larger amount of income, but the children of the grantor’s first marriage (who are the ultimate QTIP Trust beneficiaries) may prefer that the surviving spouse Trustee invest in accounts or property that will preserve or grow principal. Such competing interests may cause conflict between the parties.

BENEFITS OF A QTIP TRUST. QTIP Trusts serve two main purposes: (1) they can allow the maximization of estate tax benefits by using the unlimited marital deduction, and (2) they allow a grantor spouse to put restrictions on their property rather than leave the property outright to their spouse. These restrictions are useful in second marriages when there are children from the first marriage or when there are concerns about a spouse remarrying and giving away all the couple’s money and property to a new spouse.

Example 1: Alisha and Ben are in their late 30s, have been married for ten years, and have two young children. Alisha has a successful business. Alisha has faced some health challenges and realizes that she will probably not outlive Ben and that Ben, as a young widower, may likely remarry. When creating their estate plan, Alisha and Ben include provisions for a QTIP Trust that, if Alisha dies first, will allow Ben to receive the income from Alisha’s business (and the other QTIP Trust accounts and property) for his lifetime but does not allow him to sell the Trust’s property or give them away to a new spouse. Alisha has the peace of mind of knowing that her business and the other Trust assets will eventually pass to her children after Ben’s death.

Example 2: John is a successful businessperson in his late 60s who has three adult children from his first marriage. John has recently married Kate, his former high school sweetheart, who had never married. John wants to ensure that Kate is provided for both during life and after his death, but he also wants to ensure that his children receive the bulk of his money and property. John transfers a portion of his money and property to a QTIP Trust for Kate’s benefit and the remaining amount to a Trust for his children’s benefit. The income generated by the QTIP Trust’s assets will provide for Kate during her life, and John’s children will receive the remaining property, if any, in the QTIP Trust after Kate’s death. John’s children do not have to wait for Kate to pass away before receiving an inheritance because they can benefit immediately from the accounts and property in the other Trust.

CONTACT US. For married couples, providing for the surviving spouse is usually a top priority. However, couples may also have additional priorities that they want to honor with their estate plan. A QTIP Trust can offer an effective solution by allowing you to provide for your surviving spouse, maintain control over the ultimate transfer of assets, and take advantage of the unlimited marital deduction. To learn more about QTIP Trusts and how we can help your estate planning goals, give us a call at 253.858.5434 to set up an appointment today. We represent clients throughout Washington and Idaho and are available to meet in person, by phone, or via video conference.

Most personal injury claims settle well before trial. But how do you know if the settlement offer you receive is reasonable?

If you get injured in an auto collision, you can file an insurance claim or a personal injury lawsuit to recover your financial losses. Most injury claims will settle out of court. But how do you know if the settlement offer you receive is reasonable? The simple answer is that there is no simple answer. A settlement that’s fair and reasonable for one case may not be suitable for your case. Learn about the factors you should consider before accepting a settlement offer.

MULTIPLE FACTORS MAY AFFECT YOUR SETTLEMENT OFFER. Always remember that a settlement is just that, settling. The insurance company will probably not be happy about giving you any amount of money. Likewise, you will probably not be satisfied with the amount that you get offered. Settlements can be tricky and depend upon several variables.

* What jurisdiction are you in?

* How long have you undergone treatment?

* What is the extent of your injuries?

* Are you fully healed at the time of the settlement offer?

* Have your property damage issues been fully resolved?

* What are the policy limits of the opposing party and your own insurance coverage?

Even these questions presuppose liability and causation issues. When the insurance company is ready to settle, the guidance of an experienced lawyer can be invaluable in deciding whether or not to accept a settlement offer. First, however, you can take a look at your case to get a basic understanding of what a fair offer from an insurance company might be.

1. Determine the Extent of Your Injuries. If you were in a collision and sustained injuries, document the time and money you have spent on medical treatment. This is often quantifiable. It may just be a matter of keeping a record of:

* Doctor’s visits

* Prescription costs

* Property loss

* Time off of work

Special damages are those that are easily quantifiable – medical and prescription bills, mileage to and from the doctor or pharmacy, missed work, etc. General damages are a bit more subjective. They typically include pain and suffering, loss of quality of life, emotional distress, or loss of time with friends and family fall into this category.

2. Be Certain that You Are at a State of Maximum Medical Improvement. To properly assess the settlement you need, you want to be at a state of maximum recovery or, at the very least, a position that you are comfortable with regarding your physical health. If money is “on the table,” you do not want to settle your claim if you are not comfortable with the amount or degree of treatment that you have received. If you are not finished with your medical treatment but want to pursue a settlement, take into account your possible future medical costs as well as pain and suffering. Your doctor should be able to advise you as to the extent of your injuries and the possible future treatments necessary. Your lawyer should be able to give you some idea as to what “future medicals” have gotten awarded for similar injuries in past cases.

3. Settle Your Property Damage Issues Properly. If you were in an auto collision, never allow your vehicle to sit idly in a body shop or at a mechanic’s. These businesses charge storage fees, and those fees grow fast. Instead, have your insurer, or the other party’s insurer, promptly assess the damage to your vehicle and bring it to a location where storage fees will not be an issue. If the vehicle is considered totaled, the insurance companies almost always go by the National Automobile Dealers Association (NADA) value of the car in making restitution. If your car has unique or custom parts, advise the adjuster. Also, be aware that if the insurer decides your car is totaled, you have options if you disagree. You can ask for the cash value minus what is known as the salvage amount.

4. Treatment Is Key. If you are injured, you need to go to the doctor and keep track of those bills. Between work and family, it may be challenging to take the time for medical appointments. However, if you want to build a case, you have to seek treatment. You cannot build a case and claim damages without showing you received treatment. There is simply no other way to prove injury than to show that you went to the doctor.

5. Is Adequate Insurance Coverage? Just because a car crash is the fault of another person, that person’s insurer may not be able to cover all of your damages. For example, in the state of Washington, drivers are only required by law to carry $25,000 of liability insurance. However, these policy limits can add up quickly when severe injuries occur. For this reason, many drivers carry uninsured/underinsured motorist (UIM) insurance coverage. This coverage ensures a driver or their passengers against the risk of severe injury or the inability of a liable party to meet the damages connected with the collision.

Many people are unwilling, or even afraid, to utilize their UIM insurance for fear of retribution from their own insurer. However, the fact of the matter is that Washington law prohibits any insurer from adjusting the premiums of their insured for the use of their UIM coverage.

DO YOU NEED A LAWYER? You do not need to hire a lawyer to secure a settlement. Just remember that finalizing a case can be tricky, and the reasonableness of an offer depends on your needs. Your lawyer can:

* Analyze your past and future treatment expenses

* Communicate with insurance companies on your behalf

* Negotiate for the best settlement offer

Your best course of action may be to hire an experienced attorney to help guide you through all the pitfalls you may encounter.

It may be a good idea not to accept the first offer you receive. Insurance companies often throw out lowball offers, hoping you are desperate for any amount you can get. In addition, settlements can often be negotiated, so you shouldn’t accept an offer without your lawyer reviewing it.

HOW DOES A SETTLEMENT GET PAID OUT? Money from a personal injury settlement may get paid out as a one-time lump sum or a series of payments in the form of a structured settlement. While structured settlements can be customized to suit your needs, you may not be able to change the terms later.

HOW LONG DOES IT TAKE TO GET PAID AFTER A CASE IS SETTLED How long you have to wait for your settlement money will depend on your particular case. After your claim has been resolved and settlement negotiations are finished, you may receive funds in as little as one week. On the other hand, you may have to wait as long as several weeks. Additional delays are not uncommon.

DO YOU PAY TAXES ON PERSONAL INJURY SETTLEMENTS? The money you receive from your case, including your settlement, may be considered part of your gross income. Under 26 C.F.R. §1.104-1, the compensation you receive for physical injuries or illness is not included in your gross income and is not taxable. However, compensation for lost wages or earnings is taxable. Your lawyer can review your settlement or court award to determine if you have to pay taxes on any of it.

ALWAYS REMEMBER THE STATUTE OF LIMITATIONS. One thing that often gets overlooked when it comes to pursuing financial compensation is the statute of limitations. Each state has its own time limit on how long you have to file a claim. If you pass this time limit, you can’t file a claim anymore and will forfeit your ability to win a settlement. You should never wait until the last minute to start filing your claim. To increase your chances of getting the best settlement possible, always prepare your case early and be mindful of the statute of limitations in your state. As more time passes, it will become harder for you to win a fair settlement that accurately reflects the damages you sustained.

SEEK LEGAL ADVICE RIGHT AWAY. Even though there’s no legal requirement to hire a lawyer when you pursue a settlement, you should still do so. Hiring a lawyer is one of the best decisions you can make to ensure that you get a reasonable settlement offer that covers your damages. We are ready to help. Contact us today at 253.858.5434 to learn more about your legal options and what we can do to assist.

Pros and Cons of Using a Transfer on Death Deed (TODD) to Convey Real Estate Outside of Probate

A Transfer on Death Deed (“TODD”) is a great alternative to transfer Washington real estate and avoid probate. It works equally as well for any Washington property owner, whether a U.S. Citizen, U.S. Tax Resident, or Canadian Non-U.S. Resident.

In 2014, Washington authorized a new way to convey real estate outside of probate. The TODD allows a property owner upon death to transfer their interest in real estate to one or more designated beneficiaries. In order to become effective, however, the TODD must be recorded during the life of the property owner at the County Auditor’s Office where the property is located.

PROS

1. A property owner may name more than one person as a beneficiary. A property owner may even name a contingent beneficiary or class of beneficiaries who receive the real estate if the original beneficiary dies. This alternative may make sense if the property owner believes all the beneficiaries will share equally in the management, care, and expense as future owners of the real estate.

2. Non-Taxable with the IRS until death (and upon death only if subject to federal estate tax).

3. Exempt from Washington State Real Estate Excise Tax.

4. The property owner retains full control and power over the real estate until death. Therefore, the property owner may sell, lease, or otherwise use the real estate. The beneficiaries have no right in the real estate until the owner’s death.

5. Fully revocable if the property owner changes their mind upon recording a revocation at the County Auditor’s office.

6. Merely record the Death Certificate to effectuate the transfer and perfect title in the beneficiary) subject to estate tax compliance, if any.

7. The beneficiary gets a stepped-up basis for capital gains tax purposes, meaning that they assume the fair market value of the real estate at the date of death for future taxable events. Usually, a stepped-up basis is higher in value than the original cost basis in the property. A higher value should help reduce the amount of the capital gain in the event of a future sale.

CONS

1. As the TODD must be recorded at the County Auditor’s Office in order to become effective it also becomes a public record. Therefore, it is possible for a disgruntled family member to discover the TODD if they search the county records where the real estate is located. This situation may be awkward if the disgruntled family member is not a designated beneficiary in the TODD.

2. The TODD may be subject to challenge by an aggrieved heir who may not be a beneficiary.

3. The real estate is subject to possible creditor claims.

4. Not recommended for minor beneficiaries.

The above list is not exhaustive. There are other pros and cons. It is best to coordinate the TODD with the rest of your estate plan to avoid any conflict. Further, other nonprobate methods may also be considered, including a Community Property Survivorship Agreement, Revocable Living Trust, joint tenancy with rights of survivorship (JTWROS), and or other probate avoidance tools and techniques.

With any of the above nonprobate alternatives there may be federal or state estate tax reporting obligations. A tax return may have to be filed. And it may be necessary to obtain a transfer clearance certificate from the IRS or the Washington State Department of Revenue upon death prior to transferring the real estate.

Want more information? Give us a call at 253.858.5434 to set up an appointment today.

There is more to include in your estate plan than just a Will or Trust Agreement to make sure your assets are transferred seamlessly to your heirs upon your death.

Many people believe that having an estate plan simply means drafting a Will or a Trust Agreement. However, there is much more to include in your estate plan to make certain all of your assets are transferred seamlessly to your heirs upon your death. A successful estate plan also includes provisions allowing your family members to access or control your assets, should you become unable to do so yourself.

Most estate plans should include:

* A Will (including guardianship nominations for minor children) and/or Revocable Living Trust

* A Durable Power of Attorney

* Beneficiary designations on nonprobate assets

* A Healthcare Power of Attorney

* A Directive to Physicians (also called a "Living Will")

In addition to these items, a well-thought out estate plan also should consider the purchase of insurance products such as long-term care insurance to cover old age, a lifetime annuity to generate some level of income until death, and life insurance to pass money to beneficiaries without the need for probate.

WILLS AND TRUSTS. A Will or a Trust may sound complicated or expensive -- something only rich people have. That is an incorrect assessment. A Will or Trust should be one of the main components of every estate plan, even if you don't have substantial assets. Wills ensure property is distributed according to an individual's wishes. Some trusts help limit estate taxes or legal challenges. However, simply having a Will or Trust isn't enough. The wording of the document is critically important.

A Will or Trust should be written in a manner consistent with how you've given the nonprobate assets that pass outside of the Will. For example, suppose you've already named your sister as a beneficiary on a retirement account or insurance policy (assets that typically pass outside of a Will to a named beneficiary). In that case, you don't want to give the same asset to a second cousin in the Will because it could lead to a Will contest. Not to mention that both individuals could become bitter toward each other (and you) during a legal battle.

Always name a guardian and a backup guardian for your minor children in your Will. If you do not name a guardian, the court may decide to place your young children with a family member (not of your choice) or even put them in the state's custody.

DURABLE POWERS OF ATTORNEY. It's essential to draft a Durable Power of Attorney (DPOA), so an agent or a person you assign will act on your behalf when you cannot do so yourself. Absent a DPOA, a court may be left to decide what happens to your assets if you are found to be mentally incompetent, and the court's decision may not be what you wanted.

This document can give your agent the power to buy and sell real estate, enter into financial transactions, and make other legal decisions as if they were you. This type of DPOA is revocable by the principal at a time of their choosing, typically when the principal is deemed to be physically able, mentally competent, or upon death.

In many families, it makes sense for spouses to set up reciprocal DPOAs. However, it might make more sense in some cases to have another family member, friend, or a trusted advisor who is more financially savvy act as the agent.

BENEFICIARY DESIGNATIONS. As noted earlier, a number of your assets can pass to your heirs without being dictated in the Will (e.g., 401(k) plan assets). This is why it is important to maintain a beneficiary — and a contingent beneficiary — on such an account. Insurance plans should contain a beneficiary and a contingent beneficiary as well because they might also pass outside of a Will.

Named beneficiaries should be over the age of majority and mentally competent. If they aren't, a court may end up getting involved in the matter.

HEALTHCARE POWER OF ATTORNEY. A Healthcare Power of Attorney (HCPOA) designates another individual (typically a spouse or family member) to make important healthcare decisions on your behalf in the event of incapacity. If you are considering executing such a document, you should pick someone you trust, who shares your views, and who would likely recommend a course of action you would agree with. After all, this person could literally have your life in their hands. A backup agent should also be identified if your initial pick is unavailable or unable to act at the time needed.

DO I NEED AN ESTATE PLAN? If you own a house and/or have kids, you should have an estate plan. Estate planning can be done no matter what your financial status as it includes important information like naming guardians for your underage children and ensuring your assets go to your named beneficiaries.

WHAT HAPPENS IF I DIE WITHOUT A WILL? If you die without a Will, state law will determine who will inherit your possessions and assets.

THE BOTTOM LINE. A Will is a great place to start, but it's only the beginning. There is more to estate planning than deciding how to divvy up your assets when you die. It's also about making certain your family members and other beneficiaries are provided for and have access to your assets upon your temporary or permanent incapacity.

If you have estate planning questions or are interested in talking about making a Will, Durable Power of Attorney, or other documents, give us a call at 253.858.5434 to set up an appointment today. We represent clients throughout Washington and Idaho and are available to meet in person, by phone, or via video conference.

"Testamentary capacity" is required to execute a valid Will. So what is "testamentary capacity"?

Testamentary capacity is another way of describing the soundness of mind required of a “testator,” which is the term for a person who executes a Will. Testamentary capacity is a requirement to execute a valid Will in Washington. In Washington, testamentary capacity can be considered met when the following occurs:

"[A] person is possessed of testamentary capacity if at the time he assumes to execute a will he (or she) has sound mind and memory to understand the transaction in which that person is then engaged, to comprehend generally the nature and extent of the property which constitutes his estate and of which he is contemplating disposition to recollect the objects of his bounty."

If “lack of capacity” is used as the basis for a contest to a Will, the court would look at evidence of the testator’s mental or physical condition. Then they may examine the physical condition of the testator’s Will itself, as well as a testator’s activity to ascertain whether or not this individual had sufficient capacity at the time they executed the Will. These factors and the evidence being reviewed to evaluate them would be highly subjective when any person whose mental or physical capacity is being questioned.

Testamentary capacity can change from one day to the next.

Let’s say that, for example, an older person with dementia is currently having a “great day” and is demonstrating that they have a clear mind and good memory. In this circumstance, the court could find that this individual had sufficient testamentary capacity – though this would often only be done after careful consideration of all circumstances surrounding the case. Further, any person who has demonstrated some form of impairment to their speech or thought process (or other physical condition) can still possess sufficient capacity to execute a Will effectively.

The requirements to sign a Durable Power of Attorney differ from the requirements for testamentary capacity. Therefore, a person may be capable of signing a Will even if he or she cannot sign a Durable Power of Attorney.

If you find yourself having more questions than answers about testamentary capacity, we would be happy to walk your family through the ins and outs of testamentary capacity and how it could affect your estate plans. Please contact our office at 253.858.5434 to set up a confidential consultation today.

When someone dies without a Will, it can lead to a lot of fighting and arguing among the survivors, and it can also lead to a legal battle. It's important to make a Will before you die.

When a loved one dies, it can be a trying time emotionally for everyone involved. Often times after death, it can also be stressful to figure out the distribution of the deceased person’s assets, property, and belongings. When a person dies without a Will, it can lead to a lot of fighting and arguing among the survivors, and it can also lead to a legal battle. It is extremely important to make a Will before you die if you want your assets distributed a certain way. You should seek the advice of an experienced lawyer to help you prepare your Will and make your asset distribution less stressful for your survivors.

TESTATE OR INTESTATE? When it comes to Wills, there are two words that you may hear a lot: testate and intestate. These two words are used to described people and whether they have a Will or not. If you do have a Will at the time of your passing, then you died testate. If you do not have a Will when you die, then you have died intestate. When you die testate, it makes it much easier for your family and friends to determine what you wanted done with all of your assets, property, possessions, and everything else. If you happened to die intestate, then state law determines what happens to your property, assets, etc.

THE PROBATE PROCESS. In Washington, whether you left a Will or not, and absent the use of some probate avoidance technique like a Revocable Living Trust, the loved ones you have left behind will have to go through the probate process. The probate process can be complex and it is best that you hire a lawyer if you ever have to go through it. The court will need to appoint someone to serve as Personal Representative (formerly called an "Executor") of your estate, and then your property, possessions, and assets will all be distributed based on your Will (if you left one) or according to state law (if you didn't leave a Will). If you didn't leave a Will, the way everything gets distributed and dealt with may be vastly different from what you want, so if you can, make sure to sign a Will.

THE PERSONAL REPRESENTATIVE. When you make the decision to move forward on making a Will, you decide who gets your possessions, assets, and property when you die. The Personal Representative is who you appoint in your Will to carry out the Will’s instructions and organize your estate. It is important to appoint someone you trust, and someone who is responsible and has the ability to carry out the Will’s instructions as you wish. If you die intestate, you leave it up to the court to decide who the Personal Representative of your estate is, and it could be someone who you do not approve of. As long as what is proscribed in your Will is legal, your wishes and asset distribution will be carried out.

We are experienced lawyers who will guide you through the estate planning process and make sure you have your affairs exactly how you want them. We will help you develop a Will that will put your mind at ease. Call us 253.858.5434 today.

Have you prepared an estate plan yet? Estate planning can be a hard topic to bring up, but making sure your affairs are in order is a responsible step for any parent to take.

Have you gotten around to preparing an estate plan yet? It’s best not to wait. If you are a parent or guardian to minor children, you already know that taking care of them is the biggest priority of your life. Whether you’re still in the diaper years with your little ones or your kids are getting braces or learning to drive, there’s a lot that goes into making sure your children are well taken care of.

From college funds or savings accounts to the hopes and dreams you have for their lives -- chances are you’ve given plenty of thought to your child’s future. Planning for the future is part of being a parent. That can mean having a well-prepared estate plan too.

Estate planning can be a difficult topic to bring up to your loved ones, and no one ever wants to assume the worst might happen, but making sure that your affairs are in order is a responsible step for any parent to take.

WHAT IS ESTATE PLANNING? Estate planning can sound very formal and like it’s a formidable task, but it can actually be really simple. Estate planning is the process of setting things to be managed or handled according to your wishes, once you are no longer able to do so. Estate planning documents can cover things like who will make your medical and financial decisions if you’re not able to, and what will happen to your home, bank accounts, and valuable or sentimental belongings in the event of your death.

ESTATE PLANNING AS A PARENT. Just as your life changed when you became mom or dad, your estate planning needs will change when you have children. Though many parents don’t pass on until their children are well into adulthood, there are unfortunate instances when one or both parents die leaving minor children behind. This – maybe more than any other circumstance – is when estate planning is most necessary.

By law, children under the age of 18 cannot make decisions about things like legal contacts and documents, nor can they make legal decisions relating to material or non-material property (real estate, bank accounts, other assets, debts, and inheritance matters). Creating a Will and/or a Trust with minor children involved will bring an additional set of requirements to the table. But with our legal advice, your questions can be answered and a customized estate plan can be created for you and your children that fits your family's situation.

THINGS TO CONSIDER. Every family is unique and each family situation comes with special considerations that will be included in the estate planning process. Some things you may want to think about or talk with your spouse about as you start thinking about your estate plan are:

* Power of Attorney – If you become ill or incapacitated and cannot make your own medical and financial decisions, the person you give power of attorney to will be able to step in and make those decisions for you. A Power of Attorney may be needed temporarily (for example, if a person is temporarily unconscious but later regains consciousness) or at an end-of-life stage. A medical power of attorney gives someone the ability to make your medical decisions, and a financial power of attorney allows them to manage your financial affairs. In Washington, a Power of Attorney can also be given to make health care decisions for your minor child if both parents are incapacitated or otherwise unavailable.

* Potential guardians – Think about who in your child’s life would be able and willing to become their physical and legal guardian. Many times, this person will be a close family member such as a grandparent, an aunt or uncle, or maybe an older sibling, but may also be a friend, step-parent or other person you entrust to care for your child.

* Individual family factors -- The age of your children, age of potential guardians, and many other considerations may factor into your decision. For example, if your children are school aged, would staying in the area be preferable or would moving to another state be the better option? If you have very young children, would the age of a relative affect the care they may need? And, if your child has special needs or health concerns, would the guardian be able to provide the level of care your child would need?

* A Personal Representative – This person will make decisions related to the real estate, personal property, and financial assets that make up your estate. The Personal Representative may be the same person you’ve appointed as guardian, or it may be another person. A Personal Representative will manage the assets of an estate and distribute them to the beneficiaries.

* Assets -- You’ll want to make note of any and all assets you have that you will be leaving to your beneficiaries. Determining how you want things to be handled beforehand can keep things orderly and amicable when it comes time to settle any debts and divide your assets.

* Inheritance ages – If your minor children will be the main beneficiaries of your estate, they can’t officially inherit until they are 18. If there is a large amount of money or other property involved, sometimes the age of inheritance will be delayed or staggered, with the child receiving some or all of their inheritance at – for example -- 21, 25, 30, or later.

MAKING A WILL. Once you have all of your information ready, you’ll want to make a Will. In the Will, you will appoint the Guardian for your minor children, Personal Representative of your estate, Trustee of any Trusts you may create for your kids, and state your wishes for your assets. There may also be state-specific tax and inheritance laws you’ll want to consider when creating a Will.

CREATING A TRUST. Assets may be given directly to beneficiaries or they may be placed into a Trust. There are different types of Trusts you may want to use to hold real estate, money and stocks, or other inheritance for your children. Trusts such as a Spendthrift Trust or a Special Needs Trust can be created for minor children, as can a Family Pot Trust. These types of Trusts allow for medical and education expenses to be paid for the child out of the Trust.

Your family is unlike any other and your estate plan should be customized to fit its needs. We can help you get started on your estate plan. Contact us today at 253.858.5434 to learn more about how we can help.

Handling Creditors' Claims in Probate, Providing Notice to Creditors, Responding to Claims, and Negotiating with Creditors

If you’re the Personal Representative of an estate in a probate matter, you should know that death does not automatically eliminate the decedent’s debts. If you want to understand how to handle creditors in probate, you must learn how to properly provide notice to creditors, respond to creditors' claims, and negotiate with creditors.

COMMON ESTATE CREDITORS. Common estate creditors include the government (the IRS, the Washington State Dept. of Revenue, and the Washington State Dept. of Social and Health Services) and both secured and unsecured debt.

Secured debts are attached to collateral which the lender can seize, sell, and use to pay back the debt if the borrower defaults on payments. Real estate mortgages and car loans are examples of secured debt.

Unsecured debt lacks collateral, like credit card debt and student loan debt. Unsecured debt is a lower priority creditor in an estate administration.

REQUIREMENTS FOR CREDITORS TO MAKE A CLAIM. Under the Uniform Probate Code, creditors must file a claim within the latter of:

(1) Four months after the first date of publication of the Probate Notice to Creditors in a legal newspaper; or

(2) 30 days of the creditor receiving an actual copy of the Probate Notice to Creditors in the mail.

In order for their claim to be valid, the creditor must file the claim with the Court and serve a copy of the claim on the Personal Representative.

HOW TO RESPOND TO CREDITORS' CLAIMS. Certain smaller claims are deemed accepted if the PR takes no action at all. The PR must respond to all other claims in writing. You can allow or reject the claim in whole or in part. You must file the allowance or rejection with the court and send a notice to the creditor with a copy of the allowance or rejection.

Note that if the PR does not have nonintervention powers, the court will have to approve or reject creditor claims.

Rejection of a Creditor's Claim can be contested, but the burden of proof falls to the contestant.

NEGOTIATING WITH ESTATE CREDITORS. If the estate has funds to pay the debts and creditors have filed a claim, you may wish to negotiate the debts to preserve the maximum amount for the heirs or beneficiaries. The first step to negotiating with creditors is to verify that the debt is authentic. Not all apparent debts are equally valid. Confirm that the supposed claim wasn’t previously paid by the decedent before their death. Sometimes companies don’t keep perfectly accurate records. Fraud does happen occasionally when false claims are made, so be careful to ensure that all claims are accurate.

Next, prepare a settlement offer. Contact the creditor and present the settlement offer as Personal Representative of the estate. Once you reach an agreement, get the settlement agreement in writing.

Once received, send the payment via certified mail along with a copy of the written agreement and a Receipt and Release for the creditor to sign and for you to file with the Court. Remember to request a return receipt so you have proof of delivery. Keep a copy of the payment and settlement for your records in case the creditor or a collection agency claims the debt was never paid.

INVOLVENT ESTATES. If the estate’s debts are greater than its assets, it is said to be “insolvent." If insolvent, not all debtors are going to be paid back in full. Where an estate is insolvent that court requires that all creditors who have filed a valid claim will get paid under a pro-rata division of the estate assets.

There are many factors to consider when handling creditors in a probate matter. If you’re the Personal Representative of an estate with significant debts, you may wish to consider hiring an experienced lawyer. They can help you observe all deadlines, meet the legal requirements, and negotiate with creditors. If you need help handling creditors in a probate, feel free to contact our office at 253.858.5434 to set up an appointment today.

Personal injury settlement amounts vary widely, and a case's value depends on many factors unique to the specific facts of the case.

Personal injury settlement amounts vary widely, and a case’s value depends on many factors unique to the specific facts of the case. People hear about jury verdicts reaching into the millions, but these are very rare cases that attract a lot of attention because they’re extraordinary. The truth is that a large majority of cases settle well before a trial, so the parties don’t have to endure long, arduous, and unpredictable jury trials.

We have extensive experience securing significant injury awards for injury victims. We provide clients with the information they need to make informed decisions about their cases. We handle all aspects of personal injury claims, including insurance negotiations, settlement agreements, litigation, and appeals. With our help, you can pursue a claim to hold the party responsible for your injuries legally accountable.

FACTORS AFFECTING YOUR PERSONAL INJURY SETTLEMENT VALUE. A number of factors affect the amount a victim obtains from a personal injury settlement, not the least of which is the extent of damages and injuries. After an auto collision, a victim’s goal usually includes getting back to their regular life. The purpose of compensation is to put victims in the same position they were in before the collision, or as close to it as possible. Determining that amount relies on quantifying a victim’s economic and non-economic damages.

ECONOMIC DAMAGES. Economic damages refer to the quantifiable monetary losses the victim incurred. These damages include direct expenses such as the victim’s:

* Medical treatment costs;

* Lost wages and benefits; and

* Property damage.

Medical expenses can include the cost of their onsite treatment, airlift or ground transportation to a hospital, and emergency treatment. Additionally, injury victims should be compensated for any rehabilitation or future medical treatment they need. However, insurance companies are often hesitant to include this compensation without compelling evidence.

The victim’s lost wages can be harder to calculate. In addition to missed work, the victim may experience lower productivity or even be unable to perform the job they had before the collision. An experienced lawyer can assist victims in maximizing their economic damages.

NON-ECONOMIC DAMAGES. After a severe auto collision, a person’s most tremendous losses may have nothing to do with direct financial costs. Non-economic damages refer to a host of losses that fall under the umbrella of “general damages.” These intangible losses include pain and suffering, mental anguish, humiliation, loss of enjoyment of life, disability, disfigurement, inconvenience, and more. Proving non-economic damages is critical to a full and fair recovery. However, these damages require you to tell a compelling story about how the incident impacted your life.

PUNITIVE DAMAGES.

Unlike other states, like Idaho, Washington does not permit punitive damages. Punitive damages are designed to punish the at-fault party for their conduct. However, Washington’s Supreme Court has explained that these damages are only authorized by statute. While Washington law prohibits punitive damages, a skilled attorney can help victims secure a settlement agreement that fully compensates them for their injuries.

CALCULATING DAMAGES AND SETTLEMENT AMOUNTS. Determining the value of a settlement requires examining the components of the case. The total value involves the sum of economic and non-economic damages. Calculating economic damages is typically straightforward because you simply have to gather all receipts, invoices, and pay stubs and add everything up. However, non-economic damage is calculated differently.

The multiplier method is a common way to calculate less tangible, non-economic losses. To calculate damages under this method, an attorney may add up a victim’s economic damages and apply a multiplier to arrive at an approximate settlement value. The multipliers range from 1 to 5, depending on the severity of the injuries.

Some circumstances warrant a higher multiplier. These include collisions resulting in broken bones, traumatic brain injuries, and spinal cord damage. Further, injuries requiring significant follow-up or costly specialists may increase the multiplier. On the other hand, a multiplier may be lower in cases where there are only connective tissue injuries that were treated with chiropractic and massage and possibly physical therapy, no medication, no visible scars, or expenses for diagnosis rather than treatment.

In addition to the multiplier method, a settlement amount may depend on the effect of the injury on the particular victim. For example, a young teenager who suffers a scar on their face may experience more pain and suffering than another victim. Other considerations may impact a settlement claim. These factors include witness credibility, medical records, whether the injury victim actively participated in their treatment, pre-existing conditions, and the at-fault party’s admissions.

HOW A LAWYER CAN HELP VALUE A CLAIM. Only you know the true impact that an injury had on your life. However, a skilled lawyer can help you reach an agreement with the insurance company that fairly compensates you for what you’ve been through. For example, lawyers understand what motivates an insurance company to offer a fair settlement figure. The stronger the case you can present, the more likely the insurance company will fear losing at trial. This is the primary motivation for the insurance company to settle the case. A skilled lawyer can evaluate your case, gather compelling evidence, and present a strong case to the insurance company.

Although some injury victims choose to settle a case without a lawyer, those who place too low or too high a value on a case may find themselves at a disadvantage. Underestimating your damages leaves money on the table and placing too high a value on your claim may make settlement impossible. An experienced lawyer can help you come up with a fair settlement amount that is supported by the evidence.

If you’ve been injured in an auto collision and want to learn more about how to determine the settlement value of your claim, contact us at 253.858.5434. We offer all prospective clients a free consultation, during which we explain the process in clear, understandable terms. To learn more and to schedule a free consultation today, reach out to us today. Calling is free, and we will not bill you for our services unless we recover compensation on your behalf.

A Durable Power of Attorney allows you to appoint someone to act in your place for financial purposes if and when you ever become incapacitated.

For a lot of people, the Durable Power of Attorney is the most important estate planning instrument available -- even more useful than a Will. A Power of Attorney allows a person you appoint someone (your "attorney-in-fact" or “agent”) to act in place of you (the “principal”) for financial purposes when and if you ever become incapacitated.

In that case, the person you choose will be able to step in and take care of your financial affairs. Without a DPOA, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that they could implement immediately under a simple Durable Power of Attorney.

A Power of Attorney may be limited or general. A Limited Power of Attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A General Power of Attorney is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.

A Power of Attorney may also be either effective immediately or "springing." Most Powers of Attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the Power of Attorney be clearly laid out in the document itself, e.g., written certification by two treating physicians the principal is incapacitated.

However, we have noticed that clients are experiencing increasing difficulty in getting banks or other financial institutions to recognize the authority of an agent under a Durable Power of Attorney. A certain amount of caution on the part of financial institutions is understandable. When someone steps forward claiming to represent the account holder, the financial institution wants to verify that the attorney-in-fact indeed has the authority to act for the principal. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you may want to execute such forms offered by the institutions with which you have accounts.

While you should seriously consider executing a Durable Power of Attorney, if you do not have someone you trust to appoint it may be more appropriate to have the court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a Limited Durable Power of Attorney simply nominating the person you want to serve as your conservator or guardian. Most states require the court to respect your nomination "except for good cause or disqualification."

If you have questions about Powers of Attorney or other estate planning documents, give us a call at 253.858.5434 to set up an appointment today.

Placing assets in joint tenancy with rights of survivorship might be convenient and appropriate for some families, but there are some pitfalls to joint ownership as well.

Parents are often tempted to place their property in joint tenancy with one or more of their children. Because the child becomes a co-owner of the asset, the child can have easy access to the account to help the parent pay bills and manage the asset. Further, at the parent’s death, the asset automatically passes outright to the child. While this type of ownership might be convenient and the appropriate way to go for some families, it is essential to realize the potential pitfalls that come with joint ownership. Sometimes convenience comes at a high price.

WHAT IS JOINT TENANCY? First, let’s have a precise definition. Joint tenancy or "Joint Tenants with a Right of Survivorship" is a form of ownership. In this ownership, two or more persons own property, such as real estate or a stock account. During these owner’s lifetimes, they each own 100% of the asset, so that when one joint owner dies, the survivor still retains their 100% ownership interest.

THE DOWNSIDE. Putting your child’s name on your asset as joint tenant makes them a co-owner. As a result, you open the asset up to avoidable attacks and potential family conflicts. Let me give you a list of potential pitfalls of making your child a joint tenant with a right of survivorship:

* Matter of Convenience vs. Intent to Make a Gift: Much litigation arises from placing accounts in joint tenancy. The problem comes when the parent dies and the child who is joint tenant exercises the ability to claim the account. The child refuses to share with the other children. Meanwhile, the other children say the joint tenancy was merely for convenience. The other children say the parent wanted the asset divided equally, not to pass only to the one child.

Who is right? Only the dead parent knows, and the parent is no longer around to tell us the answer. Now the matter ends up in court. A judge listens to both sides. The judge then decides if the deceased parent created the joint tenancy for convenience or as a method to get the surviving joint tenant all the assets at death. This litigation is expensive and tears the family apart.

* Child’s Creditors: Making the child a joint tenant gives the child ownership rights. The child’s rights are now equal to the parent’s. While the child can now help with writing checks or making investments, the child’s creditors can now claim against the account for unpaid debts. The problem only gets worse if the child should ever file for bankruptcy.

* Child’s Access: Because the child is a co-owner, the child has complete access to financial accounts. We don’t like to think about it, but sometimes children can have problems. You've heard stories. Children empty a parent’s accounts because of mental health problems, gambling, and debts. Because you gave the child complete access to your account as co-owner, the child could spend all the money. You will have no recourse against the bank.

* Child’s Spouse: By giving the child account ownership, if the child divorces their spouse, the jointly held property could end up being drawn into the divorce litigation. The unexpected result is causing the parent unexpected expense and stress. Instead, the smart parent sets up protective Trusts protecting the inheritance from a child’s ex spouse.

* Thwarting the Will: The parents may have a well-drafted Will created by an experienced estate planning lawyer. The Will might create Trusts for the child to help shelter the parent’s gift to the child at death from the child’s creditors and spouse. By putting the asset into joint tenancy, this property instead passes directly to the child outside of the Trust, thwarting a well-crafted estate plan.

ALTERNATIVES TO JOINT TENANCY. Rather than using a joint tenancy, other options might address your goals while precluding the problems and pitfalls associated with a joint tenancy.

* Powers of Attorney. Rather than using joint tenancy with a right of survivorship, your lawyer can craft a power of attorney. This power of attorney gives the child the potential to assist the parent with the property. Most of these will be general powers of attorneys, granting the child broad powers to address a broad spectrum of matters. You could also have your lawyer prepare a special power of attorney with very narrow terms addressing only one issue, e.g., writing checks on one of your checking accounts. Most financial institutions also have preapproved special powers of attorney, crafted to apply only to that institution’s accounts.

A power of attorney makes your child your agent, but as an agent, your child’s spouse and creditors have no controls over your accounts. Should your child get divorced or file for bankruptcy, a power of attorney gives their spouse and creditors no authority to access your assets.

* Revocable Living Trust. Revocable Living Trusts are trusts created during your life into which you place your property. Generally, they are designed to avoid probate, but can also help a parent in need of a child’s assistance. The child can be made a co-trustee along with the parent. Thus, the parent maintains control, but the child can step in to help. Because the assets are owned by the parent’s Trust, not by the child as a joint owner, the child’s creditors and spouse have no claim to trust assets.

While joint tenancy with a right of survivorship is a valuable tool for estate planning, use this power wisely. Recognize potential complications. Developing an estate plan requires that your lawyer understand how you own all your property. Only then can your plan avoid being unexpectedly thwarted outside of the Will.

If you have more questions about Wills and estate planning, let us help walk you through the confusing process. We are ready to answer your questions. Feel free to contact our office at 253.858.5434 to set up an appointment today.

Sustaining an injury as a result of someone else's negligent actions can negatively impact your life in many ways. We can help you pursue fair and just compensation.

Sustaining an injury as a result of someone else’s negligent or reckless actions can negatively impact your life in many ways. Suddenly, you’re focusing on making a physical recovery while costly medical bills start to accumulate. Your injuries may be severe enough to prevent you from working, resulting in a loss of wages or income. Fortunately, Washington allows you to pursue compensation for these injuries by filing a personal injury claim. In most cases, a settlement is reached through a series of negotiations.

FIRST STEPS TO TAKE FOLLOWING AN AUTO COLLISION. It’s critical that you refrain from admitting fault or even discussing the incident with the other involved parties at the scene. While you’ll need to exchange important contact and insurance information, do not talk about the collision itself. It’s a good idea to contact the police so that an incident report can be created, which will provide an impartial account of the crash. Then, contact your insurance company to inform them of the collision. The sooner you contact them, the more time they will have to investigate.

WORKING WITH YOUR INSURANCE COMPANY. Washington drivers are required by law to carry a basic amount of insurance. When you sign a policy with an insurance company, you agree to inform them of any collisions and to cooperate in the subsequent investigation and processing of claims. If you fail to uphold your obligation, you could face higher premiums, policies that cannot be renewed, or even the cancellation of your policy. It’s also important to notify your insurance company right away so that you can tell your side of the story. If the other driver decides to take legal action against you, it’s best to have a record of your version of the events and to have given your insurance company ample time to investigate.

NEGOTIATING A SETTLEMENT. The sooner you reach out to an experienced lawyer following the collision, the more prepared you’ll be to successfully navigate the claims process. Your lawyer will help you understand your options for pursuing compensation from your insurance company, the other driver’s insurance company, or from the at-fault driver. For the most part, insurance companies strive to avoid going to court. They are usually willing to negotiate a fair settlement before a lawsuit is filed. However, it may take a bit of back-and-forth discussions between your lawyer and the other party before a settlement is reached. For instance, your lawyer may draft a demand letter requesting a specific amount, and the other party may reply with a lower offer. You’ll then go from there until you reach an amount that you find acceptable. In some cases, the other party may not cooperate, and you and your lawyer can decide whether to take your case to court.

If you or a family member have been injured in an auto collision through no fault of your own, give us a call at 253.858.5434 to set up an appointment for a free initial consultation today.

In the next 30 years, about $40 trillion will pass from the Baby Boomers to Gen X'ers and Millennials. We counsel clients on long-term multi-generational estate planning.

In the next 30 years, approximately $40 trillion will pass from the baby boomers to Gen X'ers and millennials. Given this sizable transfer of wealth, we as lawyers must be equipped to counsel not only our existing clients, but also our clients’ children, grandchildren, and even parents. This is where multi-generational estate planning comes into play.

Identifying estate planning and wealth transfer planning opportunities goes beyond the basics and into clients’ long-term goals with regard to their families.

It helps to create a multifaceted plan that considers:

* Estate planning, including wealth transfer and legacy concerns

* Tax planning

* Charitable goals

* Retirement plan success

* General financial planning (e.g., analysis of the family’s assets, net worth, sources and types of income)

* Business succession planning

As estate planning lawyers doing multi-generational planning, we frequently need to go beyond the basic Wills and other estate planning documents and talk about each client’s wishes, as well as their intentions for the future. We gather a great deal of information, including insight into the client’s family dynamic through a series of simple exchanges and conversations.

In order to get an estate plan started we ask our clients to consider the following:

* What do I want to leave behind?

* How do I want my wealth to affect my children’s lives? My grandchildren’s lives?

* What degree of control do I want after I’m gone?

Some of the common estate planning techniques for transferring assets or wealth to other generations includes some non-conventional methods such as family limited partnerships and other family business entities, complex irrevocable Trusts, and lifetime gifting strategies. We are equipped with the knowledge and experience to recognize the facts that fit a planning opportunity, educate each client on the strategy, and further suggest how a sophisticated money-saving technique or strategy suits a client’s plan.

Helping our clients explain what will happen with the estate to the beneficiaries is an important but somewhat overlooked part of where we add value during the estate planning process. Talking about death and money issues isn't everyone's favorite topic. So having a lawyer help families navigate these waters is extremely beneficial for most families and something that we have found helps put everyone's mind at ease. Many people don't fully understand how money or property gets distributed from a Trust or during the probate process. We can answer some of those questions on the front end and help alleviate any tension or angst among family members.

If you have estate planning questions or want information about transfer your wealth or family business to the younger generations, give us a call at 253.858.5434 to set up an appointment today. We represent clients throughout Washington and Idaho and are available to meet in person, by phone, or via video conference.

Everyone needs an estate plan -- it is a set of legal documents that give you control over what happens to your family and your assets if you become disabled or die.

The birth or adoption of a child, marriage, separation, planning for retirement, pandemic, or vacation away from the kids are some of the reasons people choose to make an estate plan. An estate plan is for everyone – it is a set of legal documents that give you control over what happens to your family and your assets if you become disabled or die. The process will give you peace of mind that you and your loved ones will receive proper care and assistance in the event of your death or incapacity.

Every family and individual can benefit from planning for the disposition of their property using a variety of legal tools, including Wills and Trusts. Families with minor children should have documents in place that appoint a guardian and create a children’s Trust to care for their children’s needs.

But estate planning is not just about what happens to your property upon your death. A health care directive and power of attorney can help you make your wishes regarding end-of-life medical treatment effective and designate trusted people to carry out your financial and health care decisions in the event that you are unable to do so yourself due to incapacity or disability.

An estate plan attempts to eliminate uncertainties in the administration of one’s probate and end-of-life decisions as well as to maximize the value of an estate by reducing taxes and other expenses. An estate plan is an excellent way to put your values into action with charitable intent.

Our goal is to educate you regarding the tools available for estate planning, and to help you put your plan in place. We provide estate planning legal representation on a flat fee basis. Flat fees allow you to know what the cost will be ahead of time. After we've had a chance to meet and discuss your goals, needs, assets, and family circumstances, we will advise you as to which documents we recommend for your plan and you will know at that time exactly how much will pay in legal fees.

If you have estate planning questions or if we can be of service to you, your family, friends, neighbors, or coworkers, give us a call at 253.858.5434 to set up an appointment today. We represent clients throughout Washington and Idaho and are available to meet in person, by phone, or via video conference.

One of the questions we've been asked most often over the years by nonprofit leaders is, "Why should my nonprofit or church hire a lawyer?"

One of the questions that we have been asked most often over the years by nonprofit leaders is, “Why should my nonprofit or church hire a lawyer?" While we are (obviously) biased in our answer, we can confidently elaborate on numerous reasons why a nonprofit should have an active relationship with a lawyer knowledgeable about nonprofit matters.

Far too many nonprofit organizations and churches simply ignore legal issues altogether or at best attempt to rely on a board member who happens to be an attorney (even if that attorney practices in an area wholly unrelated to nonprofit law). Too often, nonprofits and churches forgo reaching out to qualified legal counsel for fear of the cost involved. This inevitably leads to unresolved legal issues that end up costing the organization more time and even more money later on, thus taking away from the organization's overall ability to achieve its mission. Here a just a few reasons why your nonprofit or church should consider hiring a lawyer:

FORMATION. When starting any nonprofit organization, there are a combination of state and federal laws to be followed, many forms that need to be submitted, and several documents that must be drafted, all before your organization is operational. Your new nonprofit may want guidance with filing, understanding categories of tax exemption, creating a corporate purpose statement, drafting a budget, and dealing with the IRS. Applying for tax exempt status with the IRS via Form 1023 is a long and complicated process. A knowledgeable lawyer can make this process smoother and allow the founders to focus on the important tasks of building the organization's programs, fundraising, and staffing.

REORGANIZATION. If your nonprofit or church is considering restructuring or using an alternative entity structure, you may be tempted to do this yourself. After all, creating corporation online is super easy, right? That is certainly true, but a tax exempt organization's use of partnerships, corporations, and LLCs can sometimes create unintended consequences and unforeseen problems. Likewise, mergers, acquisitions, and dissolutions can present surprising complications.

REINSTATEMENT. Most states, including Washington and Idaho, require annual reports to be filed with the state in order to remain in good standing. If your nonprofit has lost its active status, reinstatement is required. This requires paperwork and payment of fees. Similarly, if an organization fails to file its annual Form 990 with the IRS for three consecutive years, that organization's 501(c)(3) status will be automatically revoked. When that occurs, the clock starts ticking and the organization has a relatively narrow window to get its tax exempt status reinstated retroactively.

TAX EXEMPTION. Even once you have obtained tax exempt status, a knowledgeable lawyer can help you maintain that status. Few organizations lose their tax exempt status because of something they intentionally did—quite the opposite, most organizations that lose their status do so because of an unintentional failure to follow the sometimes complex rules and regulations the IRS has in place for tax exempt organizations. Counsel from a competent lawyer can help prevent these inadvertent violations of IRS compliance.

BOARD GOVERNANCE. A nonprofit's Board of Directors or Board of Trustees is tasked by the state and the federal government with the authority and responsibility to oversee and govern the organization, ensuring that its assets are used exclusively to further the organization's tax exempt purposes. This governance responsibility is multi-faceted and is comprised of compliance with laws at both the state and federal level. An experienced lawyer can help the Board navigate these issues, while also serving as a strategic advisor on other non-legal questions facing the Board. A lawyer can also serve as a mediator in times of conflict between Board members or between the Board and the Executive Director.

EMPLOYMENT ISSUES. Perhaps the most significant litigation risk to nonprofits is in the area of employment law. Whether it is compliance with state labor laws or federal antidiscrimination statutes, employment law for nonprofits is a complex web of interrelated laws that are highly dependent upon individual circumstances. From hiring to firing, a knowledgeable lawyer can help nonprofits make appropriate employment decisions that protect the organization and its employees.

DOCUMENT DRAFTING AND REVIEW. Nonprofits of all sizes deal virtually daily with what may be the most common legal issues they face: contracts and other formal documents. Even small organizations have to regularly deal with contracts from internet service providers, independent contractors, or other vendors. These contracts are often poorly written in difficult to understand language, so many nonprofit leaders often sign the documents without an in-depth review. Similarly, when a nonprofit needs to draft some sort of contract, it often resorts to searching the internet for a template. Both of these situations put the organization at a disadvantage and potentially cause an unnecessary expenditure or waste of organizational resources. A lawyer can review contracts presented to the organization and highlight areas of concern as well as areas for potential negotiation, often saving the organization money or shifting some of the liability to the other party. Likewise, a lawyer can draft an accurate contract that best accomplishes the organization's goals.

INTELLECTUAL PROPERTY. Though intellectual property often permeates throughout even small nonprofits, including in logos, websites, music, film, software, graphic design, and more, intellectual property is often one of the most neglected legal issues in the nonprofit sector. Many nonprofit leaders are shocked to learn just how much IP their organization has created, and often even more shocked at some of the default rules that govern that IP, such as the work-for-hire doctrine in copyright law. Establishing a relationship with a lawyer knowledgeable about the peculiar aspects of IP law that apply to nonprofits is a critical step in protecting one of the most important assets a modern nonprofit organization has.

OUTSIDE GENERAL COUNSEL. Finally, nonprofits and churches face all kinds of random legal questions on a regular basis. Having an active relationship with a lawyer allows an organization to effectively handle those questions and ensure the organization's tax exempt purpose is not threatened by the legal issues that arise.

LET US HELP. While having a full-time in-house attorney may not be realistic for your organization, getting the occasional outside counsel from a lawyer is much more realistic than you might think. At our law firm, we focus on the success of nonprofits and their missions. Our experience in the nonprofit sector gives us a unique insight into the challenges you face, and we are committed to assisting nonprofits in a way that is sustainable and approachable for organizations of all sizes. Whether you need legal counsel daily or just have a legal question a few times a year, we can advise you on the law and best practices for nonprofits.

If we can be of service to you, your nonprofit organization, or church, give us a call at 253.858.5434 to set up an appointment today. We represent clients throughout Washington and Idaho and are available to meet in person, by phone, or via video conference.