THE IMPORTANCE OF ESTATE PLANNING

Shanece M. Dedeaux, Esq.

DEDEAUX LAW, PLLC

AGENDA

• What is Estate Planning
• The Importance of Estate Planning
• Types of Estate Planning Instruments
• Last Will and Testament
• Advance Healthcare Directives
• Powers of Attorney
• Life Insurance
• Retirement Accounts
• Trusts

Black Homeowners Meet Up

2

Sunday, August 25, 2024

INTRODUCTION

• This presentation will provide an overview of Estate Planning Instruments. In context of the Black homeowners and securing generational wealth, there will be a more thorough discussion surrounding Trusts. Also related, we will discuss implications of Guardianships and what that may mean for Real Estate and other assets.

BLACK HOMEOWNERS MEET UP

3

SUNDAY, OCTOBER 15, 2023

WHAT IS ESTATE PLANNING?

Definition: Estate planning is the process of arranging for the management and disposal of your assets in the event of your incapacity or death.

Why it matters: Ensure your assets are distributed as you wish, minimize taxes, and provide for your loved ones.

THE IMPORTANCE OF ESTATE PLANNING

The Importance of Estate Planning

5

Sunday, October 15, 2023

TYPES OF ESTATE PLANNING INSTRUMENTS

• A will
• Trusts
• Testamentary Trusts
• Intervivos Trusts (Living Trusts)
• Revocable
• Irrevocable
• Advance Healthcare Directives
• Powers of Attorney
• Life Insurance
• Retirement Accounts

​

6

Sunday, October 15, 2023

THE WAY TO GET STARTED IS TO QUIT TALKING AND BEGIN DOING.

Walt Disney

7

OCTOBER 15, 2023

LAST WILL AND TESTAMENT

THE WILL

8

SUNDAY, OCTOBER 15, 2023

TRUSTS

• Definition: A legal entity that holds and manages assets during your lifetime and/or after your death. (Note: There are several types of trusts that will be discussed later on in this presentation)
• Pros: Avoids probate, maintains privacy.
• Cons: Can be more complex and costly to set up.

​

Trusts

9

Sunday, October 15, 2023

ADVANCE HEALTHCARE DIRECTIVES

• Definition: Legal documents that express your medical wishes and designate a healthcare proxy.
• Pros: Ensures your medical preferences are respected.
• Cons: May not cover every scenario.

Advance Healthcare Directives

10

Sunday, October 15, 2023

LIFE INSURANCE AND RETIREMENT ACCOUNTS

Life Insurance

• Definition: A policy that pays out a death benefit to beneficiaries upon the insured's death.
• Pros: Provides a source of income to beneficiaries.
• Cons: Premiums can be expensive.

Retirement Accounts

• Definition: Accounts such as 401(k)s and IRAs where you designate beneficiaries.
• Pros: Allows for the transfer of assets directly to beneficiaries.
• Cons: Tax implications may apply.

11

Sunday, October 15, 2023

POWERS OF ATTORNEY

POA

• Definition: Legal documents that designate someone to make financial and legal decisions on your behalf.
• Pros: Ensures your financial affairs are managed if you become incapacitated and avoids Guardianships.
• Cons: Requires careful selection of the attorney-in-fact.

STANDARD POWER OF ATTORNEY

• Powers of attorney can be limited or broad in both scope of authority granted and in the duration for which they remain in effect.
• traditional or nondurable powers of attorney become ineffective upon the principal's incapacity.

DURABLE POWER OF ATTORNEY

• Powers of attorney are “durable” if they are effective even after the principal loses capacity.
• A Durable Power of Attorney can avoid the issuance of a guardianship.

Powers of Attorney

12

Sunday, October 15, 2023

BACK TO TRUSTS…

TESTAMENTARY TRUSTS

• A testamentary trust may be provided for in a trustor's will to become effective upon the death of the trustor. Such a trust differs from an inter vivos trust (living trust), whether revocable or irrevocable, that is established while the trustor is alive.

REVOCABLE TRUSTS

• A revocable trust is a trust created by a trustor that the trustor retains the right to revoke, either alone or in conjunction with another person during the trustor's lifetime.

IRREVOCABLE TRUSTS

• An irrevocable trust is a trust that the trustor has not retained the right to revoke. An inter vivos trust may be revocable or irrevocable, but revocable inter vivos trusts generally become irrevocable upon the trustor's death.
• A trust is irrevocable because the testator is no longer living to revoke the trust.

Sample Footer Text

13

Sunday, October 15, 2023

All trusts used in estate planning are either inter vivos or testamentary trusts. An inter vivos trust is a trust established during the trustor's lifetime, while a testamentary trust is established upon the trustor's death.

TESTAMENTARY TRUSTS

FUTURE LOOKING

• A testamentary trust looks to the future and does not at the time of execution of the will divest the trustor of property or any interest therein or vest a present property interest in the beneficiaries.

CARE FOR SPOUSE DURING THEIR LIFETIME

​

• There are numerous reasons for the decision to leave property in trust other than tax planning. If there is a surviving spouse, these may include a desire to allow property to be available for a spouse for the lifetime of the spouse while preserving the property left, or trust remainder, for other beneficiaries, most commonly children and issue or charities.

ASSET PROTECTION AND SPENDTHRIFT TRUSTS

​

• The objectives of insulating trust assets from third-party claims and limiting a beneficiary's access to trust assets has long been an element of estate planning. It is commonly employed when assets are being held for the benefit of minors, young adults, the elderly, vulnerable spouses, and beneficiaries who are in professions that may attract malpractice claims or other liabilities. These types of trusts are traditionally known as "spendthrift trusts.

14

Sunday, October 15, 2023

IRREVOCABLE TRUSTS

REASONS FOR IRREVOCABLE TRUSTS

​

• An individual may elect to structure his or her estate plan to provide that distributions are made to a trust for the benefit of one or more beneficiaries, rather than make an outright bequest to that beneficiary, for several reasons—tax and nontax motivated— including creditor protection, control and timing of distributions, and use of the generation-skipping transfer tax.

FLEXIBILITY TO AVOID LEGISLATIVE CHANGES

• A trustor may desire to create flexibility in the trust language for the provisions of the trust to withstand unexpected changes in law or life circumstances.

DIRECTED TRUSTS

• Washington law permits trustors to create what are commonly referred to as 'directed trusts.
• A directed trust is an irrevocable trust wherein the trustee is directed by a statutory trust advisor in implementing the trust's terms.

15

Sunday, October 15, 2023

REVOCABLE TRUSTS

TRUSTOR CALLS THE SHOTS!

​

While the trustor of a revocable trust is living, no beneficiary other than the trustor is entitled to receive any information or notice regarding the trust such that the control of assets held in the trust is essentially the same as if the trustor held title in his or her own name.

PROBATE AVOIDANCE

• The most common use of a revocable living trust is to avoid probate upon death.

PROPERTY MANAGEMENT

​

• A revocable trust for current management of assets is useful to provide for
• disabled or elderly persons;
• inexperienced persons with recently inherited wealth/young individuals.
• persons without time to manage their affairs due to travel, business, or lack of interest.

Revocable Trusts

16

Sunday, October 15, 2023

SUMMARY

You can protect your assets with adequate estate planning; both during your lifetime and after your death. Specifically, a thoroughly thought out and developed plan can significantly reduce the possibility to losing your assets to the county or bad actors looking for individuals that have not adequately planned for the distribution of their assets. Lastly, adequate estate planning can reduce legal costs and risks of litigation over your assets.

​

17

Sunday, October 15, 2023

THANK YOU

• Shanece M. Dedeaux
• dedeauxs@dedeauxlaw.com
• www.dedeauxlaw.com
• For Consultations, email sdedeaux@gravislaw.com or call 253-342-1021

18