Planning Your Future - Part 2 | Tax Tip of the Week | No. 205

You Really Need to Plan for This - Part 2

Our death and possibility of developing an incapacitating illness are not pleasant things to think about.  But planning for them, however, must be addressed.This is part two of a four part series of Tax Tips that will highlight some of the primary legal steps you should consider.  NOTE:  We are NOT attorneys.  Please consult with an attorney before following any of these suggestions

Capacity to Make a Will

If you develop a chronic illness, your basic estate planning document is still a will. While you may also have a revocable living trust, a will is needed to distribute any property not owned by the trust when you pass away.Many of your assets will pass to beneficiaries outside the probate process and will not be owned inside your trust. These include your qualified IRA and other retirement plans, life insurance policies that are transferred by beneficiary designation and any real property owned as joint tenants with right of survivorship. That real property will be transferred under property law to the surviving person.However, if your designated beneficiary under a qualified retirement plan or a life insurance policy passes away before you, or the other joint tenant with a real property asset passes away prior to your demise, the assets could be distributed to your estate and be subject to your will. Therefore, it is essential to have a proper will.With some types of chronic illness, you may have a loss of either physical or mental abilities. In this case, an heir could claim that you do not have proper capacity to sign the will and could contest it. Therefore, it may be helpful to emphasize to your witnesses that you clearly understand the process and have a good understanding both of your property and of the general provisions of the will. In addition, some individuals obtain records from their physicians that explain the various types of treatment. Your doctor may also discuss your ability to have control of your mental facilities during the estate planning process.

More on this subject next week…..

As always, give us a call with any questions or concerns you may have.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt - the guy behind TTW...until next week.