Suze O Deluxe-Estate Planningapps.suzeorman.com/dt/Estate_plan.pdf · 2015. 4. 2. ·...

SUZE ORMANThe Ultimate Protection Portfolio™

Estate Planning Documents

This product provides information and general advice about the law. But lawsand procedures change frequently, and they can be interpreted differently bydifferent people. For specific advice geared to your specific situation, consultan expert. No book, software, or other published material is a substitute forpersonalized advice from a knowledgeable lawyer licensed to practice law inyour state.

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ISBN 13: 978-1-4019-0345-9ISBN 1-4019-0345-2

11 10 09 08 7 6 5 41st printing, November 20034th printing, May 2008

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Please locate the documents listed in the “Estate PlanningDocuments Checklist” below and file each of them in yourProtection Portfolio.

You may not have all the documents listed here, so thisbooklet (along with the Protection Portfolio CD-ROM) isintended to help you obtain and complete them. But even if youalready have them, I strongly urge you to listen to the audio clipson the CD-ROM tomake sure you have the correct documents

❑ Advanced directive and durable power of attorney forhealth care

❑ Financial durable power of attorney❑ Will❑ Pour over will❑ Revocable living trust❑ Contracts for funeral or memorial arrangements, and

documentation of prepaid fees to cemetery and/or funeral home

ESTATE PLANNING DOCUMENTS CHECKLIST

Estate PlanningDocuments

S U Z E O R M A N — T H E U LT I M A T E P R O T E C T I O N P O R T F O L I O ™2

in place and that you truly understand the uses and ramifica-tions of each one of them.Whenever you sign your name to anylegal document, it’s essential that you know what every clausemeans. This is the reason I created the CD-ROM.

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The Importance of the Advanced Directiveand Durable Power of Attorney for Health Care

As far as I’m concerned, the advanced directive and durablepower of attorney for health care is the single most importantdocument that you need to have in your portfolio.Most of theother documents that we’ll be discussing are intendedmore forthe benefit of your heirs and the people you leave behind afteryou die. But this one is for you.

I hope that you won’t ever be incapacitated or hospitalized,and that a long, healthy life awaits you. But just in case, I urgeyou tomake the simple arrangements for an advanced directiveand durable power of attorney for health care. Do this for your-self and for the people you love, and do it now, while you’restrong and healthy. It might be the most important documentyou ever sign.

The advanced directive and durable power of attorney forhealth care directly affects the quality of your life and the qual-ity of your death—that is, the manner in which you leave thisworld. The right to die, which means the right not to be put onlife support, is something we’ve only had in the United Statessince 1990, and it’s a right explicitly granted to us in decisionsby the U.S. Supreme Court. Since that time, however, courts indifferent states have made it clear that unless you put yourwishes in writing, a doctor doesn’t have to unplug you from lifesupport—nomatter how devastated your body is, nomatter howmuch competency you’ve lost, no matter how much of a veg-etable you’ve become from whatever it is that has befallen you.

The reason this should be important to you—not onlyemotionally, but financially—is that most health-insurancepolicies put a cap on the maximum amount they’ll pay for anillness. This maximum varies from policy to policy, but theaverage is about $1 million. So, after your insurance company

has paid out about $1 million in benefits, it’s done. The rest isup to you and your loved ones.With the cost of hospitalizationskyrocketing, I’m sure you can imagine that it wouldn’t take longto reach the maximum if you happened to be on a life-supportsystem in a hospital. And yet the medical bills would keep pil-ing up. Having an advanced health care directive and durablepower of attorney for health care is part of being responsible toyour family, not only on an emotional level, but on a financiallevel as well.

On your Protection Portfolio CD-ROM, you’ll find anadvanced directive and power of attorney for health care doc-ument that you can customize to use in any state.You’ll also finda link to Caring Connections, a program of the National Hos-pice and Palliative Care Organization (NHPCO),where you canprint out copies of your own state’s forms. Forms can also beprocured atmost hospitals or public health services in your area.

Advanced Directive for Health Care Section

Also known as a living will, a directive to physicians, ahealth-care declaration, an advanced health-care directive, or amedical directive, the advanced directive for health care is a writ-ten document that dictates what youwant to have happen to youif you’re incapacitated.You can choose from three basic options:

1. You want to prolong your life for as long as pos-sible, without regard to your condition, yourchance of recovery, or the cost of treatment.

2. You want life-sustaining treatment to be pro-vided unless you’re in a coma or an ongoingvegetative state.


3. You don’t want your life to be prolonged un-naturally, unless there is some hope that bothyour physical and mental health might berestored.

Durable Power of Attorney for Health Care Section

A durable power of attorney for health care (whichmay alsobe called amedical power of attorney, a health-care proxy, or anappointment of health-care agent or surrogate) is a documentthat designates someone who will have the authority to makehealth-care decisions for you if you’re unable to due to an inca-pacity. The person appointedmay be called a health-care agent,surrogate, an attorney in-fact, or a proxy. (In Nebraska, he orshe must be at least 19. In all other states, the agent must be 18or older.)

In the durable power of attorney for health care, you mustdecide in whose hands you want to put your life—that is, whowill make the final decision to take you off life support, if thedecision ever has to be made. It’s best to have an agent and twoalternates, in case the person you’ve chosen isn’t available.Choose people who love you, yet are strong enough to do whatyou would want them to do. This isn’t an easy position to be in.

I want you to take a moment to consider whom you’d wantto be the agent and alternates for your durable power of attor-ney. This is one of the most important decisions you’ll make,so please don’t rush into it. Give it some careful thought, andwhen you’ve made up your mind, write the names of yourchoices in the following box.

E S T A T E P L A N N I N G D O C U M E N T S 7


Once you’ve decided whom you want to ask, get in touchwith your chosen agent and alternates and find a time when youcan discuss your decision with them in private. As difficult asthis conversation may be, please don’t put off this step. Themoment you need this document, it’s too late to create it.

Common Questions about the Advanced Directive andDurable Power of Attorney for Health Care

In the following section, I’ve answered the questions I’mmost often asked about the Advanced Directive and DurablePower of Attorney for Health Care.

• I already have a living will. Do I still need thedurable power of attorney for health care? Yes,because a living will (also known as an advanceddirective) and a durable power of attorney havedifferent purposes. In the document provided onyour Protection Portfolio CD-ROM, theadvanced directive and durable power of attorneyare combined into one document. The durable

AGENT AND ALTERNATES FOR DURABLEPOWER OF ATTORNEY FOR HEALTH CARE

I will ask __________________________ to be my agent for mydurable power of attorney for health care.

I will ask __________________________ to be an alternate agent formy durable power of attorney for health care.

I will ask __________________________ to be an alternate agent formy durable power of attorney for health care.

power of attorney for health care allows you todesignate a person who can make the decision totake you off life support (and dictate under whatcircumstances) and to make less drastic medicaldecisions, too. An advanced directive, on theother hand, gives guidance to a doctor as to whattypes of treatments you’d want, but it doesn’tauthorize anyone to make decisions for you. Thedurable power of attorney for health care shiftsthe decision-making power from the doctor toyour agent as soon as your doctor determinesthat you’re no longer able to make decisions foryourself (for example, if you were unconscious ordelirious). You can tell your agent your prefer-ences for treatment, but if there are unexpectedcircumstances, the agent won’t be locked intowhat was written in a directive years before.

• If there aren’t any circumstances under which I’dwant to be taken off life support, then I don’t needto bother with the durable power of attorney, right?Quite the contrary—you can state in yourdurable power of attorney for health care thatyou want heroic measures taken to save your life,no matter what kind of prognosis you mighthave for recovery. That’s the point of the durablehealth power of attorney—it lets your family andyour doctors know definitively what your wishesare, if and when you can’t communicate them.

• What should I keep in mind when selecting anagent for my durable power of attorney for healthcare?Whomever you select as your agent must bestrong enough to act in accordance with your


wishes, even if your loved ones strongly disagree.You should choose someone you have confidencein, who lives no more than a day’s travel away,and with whom you’ve discussed your prefer-ences for health care. Also consider whether youragent has too much of a conflict of interest (if,say, the person who can authorize pulling theplug also stands to inherit a lot of money fromyou). If the person you’re considering has anyhesitation about acting in that role, you shouldappoint someone else. If possible, it’s also wise toappoint several alternate agents.

• Can I make both of my daughters co-agents on mydurable power of attorney for health care? Thedocument provided on the Protection PortfolioCD-ROM doesn’t allow co-agents. Here’s why:Even if you’re very specific about your wishes,your agents will probably have a lot of discretionto determine whether your medical circum-stances meet the qualifications for carrying outyour instructions. If your co-agents were to dis-agree with each other about anything, it’s likelythat no action would be taken, thus making allyour planning worthless. In most cases, yourchild will consult with his or her siblings anyway,and you can express ahead of time your prefer-ence that he or she do so.

The document provided on the CD-ROMdoes give you the ability to make your other chil-dren alternate agents. This means that you’d havea second or third alternate agent if your firstagent were unavailable for any reason.



• If I want to change the agent I designated on mydurable power of attorney for health care, whatshould I do? Included on your Protection PortfolioCD-ROM is a document to revoke a durablepower of attorney for health care. If your circum-stances ever change, and you decide that you actu-ally want to revoke the person you’ve appointed asyour agent, you can do so simply by using thisrevocation document. Fill in the revocation docu-ment and then deliver a copy to every person andinstitution that had a copy of your originaldurable power of attorney for health care.

Providing the institutions with the revoca-tion document is the only way for them to knowthat your previous durable power of attorney forhealth care is no longer valid. If, in fact, you dothis, know that you no longer now have adurable power of attorney for health care inplace, so you’ll have to create another one. Thiscan easily be done using the advanced directiveand durable power of attorney form provided onyour Protection Portfolio CD-ROM. Please makesure you keep both the revocation and yourrevised advanced directive and durable power ofattorney for health care in your Protection Port-folio.

• Once I draw up my advanced directive and durablepower of attorney for health care, is it good forever?Yes, although you can and should revoke it andcreate a new one if the person whom youappointed as your agent dies, you decide toappoint a different agent, or you change yourmind about what kind of medical treatmentyou’d want in dire circumstances.


• If an advanced directive and durable power ofattorney for health care is such an important docu-ment, why don’t more people have one? I think theanswer to this question is that so many of us aresimply afraid to confront our own mortality.Signing a paper such as this makes death seemlike an imminent reality, and that can provokefrightening and painful feelings. Another reasonpeople don’t sign such a power of attorney isthey think they’re too young to contemplate suchthings. But I promise you, no matter what yourage, this is one of the most important things youcan do to protect yourself and your finances.

• Where should I store my advanced directive anddurable power of attorney for health care? Youshould always keep the original in your ProtectionPortfolio. Give a copy of the form to the personyou’ve chosen to act as your agent, and send copiesto your doctor and your health-insurance com-pany to be kept as part of your medical records.

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Financial Power of Attorney

A financial power of attorney is a document that author-izes another person to act for you as if that person were you.Thisperson is called your agent or your attorney-in-fact.You can cre-ate a very broad power of attorney, which allows your agent todo things that usually only you can do, such as write checks fromyour bank accounts, pay your bills, or sign documents on yourbehalf.Alternately, you can create a very limited power of attor-ney, whichmay authorize the agent you name to do just one par-ticular thing for you.

Inmy opinion, the best power of attorney is one that is: (1)authorized by a specific state law (also known as a statutorypower of attorney); (2) is a general power of attorney; and (3)survives the incapacity of themaker. These three factors will giveyou the greatest ease in getting people and institutions to co-operate with you when you transact business through a powerof attorney. Finally, your power of attorney needs to be“durable”to remain in effect if you become incapacitated. This is themain reason for any power of attorney.

Keep inmind, however, that a general power of attorney hasbeen called a “license to steal,” since it’s like signing a blankcheck.Also, certain institutionsmay refuse to honor your powerof attorney if it’s not in the form the institution itself prefers—even if it’s a statutory form.

Common Questions about the Financial Power of Attorney

In the following section, I’ve answered the questions I’mmost often asked about Financial Power of Attorney.

• Can an institution refuse to honor my financialpower of attorney? Yes. Because powers of attor-ney are so easily abused, certain institutions mayrefuse to honor one if it’s not on the form theinstitution itself prints—even if it’s a statutoryform. For example, the IRS requires you to com-plete their transmittal Form 2848 in order toprocess any non-IRS power of attorney.

Also, if you try to limit the scope of thepower of attorney or make it too specific, bro-kerage houses may not want to accept it becausethey feel it doesn’t cover all the types of actionsthey deem necessary.

Explanation of the Use of California Probate Code

You may have noticed that the financial power of attorney onyour Protection Portfolio CD-ROM is labeled “California ProbateCode Section 4401.” The fact that the document is a California statu-tory power of attorney doesn’t mean that it won’t be valid in otherstates—it’s valid in all 50 states and will protect you no matter whatstate you happen to live in. The reason that I chose to provide youwith a form governed under the California Probate Code is that Cal-ifornia has a specific piece of legislation that makes it possible foryou to sue an institution—and have your attorney’s fees paid by thatinstitution—if the institution refuses to honor the power of attorney,causing you damages. This is a very persuasive element, and it hasmade the difference between having this document accepted ornot accepted in some important circumstances.


• What’s the difference between a power of attorneyand a durable power of attorney? A power ofattorney authorizes someone to make legal andfinancial decisions on your behalf while you’realive. But, generally, if you become incapacitated,the power of attorney becomes void. A durablepower of attorney stays in effect even after you’reincapacitated, which is when you really needsomeone you trust making decisions for you.The financial power of attorney included onthe Protection Portfolio CD-ROM is a durablepower of attorney.

• What happens to your financial power of attorneyupon your death? After you die, the power ofattorney is no longer effective, and your agentshould not try to transact any business for youthen—he or she can no longer legally sign any-thing as your agent. Such an act constitutes anethical breach that could be used against youragent if there were any disputes with heirs, credi-tors, or the IRS.

• How should an agent (attorney-in-fact) sign docu-ments and checks? If your name is John Smithand your agent (the person signing for you) isMary Smith, then she would sign as follows:John Smith by his attorney in fact Mary Smith.

After you die, the power of attorney is nolonger effective, and your agent should not tryto transact any business for you then.

• If I want to change the person I’ve designated asmy agent (attorney-in-fact), what do I need to do?


Included on your Protection Portfolio CD-ROMis a document to revoke a financial power ofattorney. If you decide that the agent you’veappointed is no longer someone that you’d wantto act in that capacity, then fill in the revocationform and deliver it to every person and institu-tion that originally had a copy of the financialpower of attorney.

Providing the institutions with your revoca-tion document is the only way for them to knowthat your previous financial power of attorney isno longer valid. If you do this, you’ll no longerhave a financial power of attorney in place. You’llhave to create a new one, which can easily bedone using the financial power of attorney docu-ment provided on you Protection PortfolioCD-ROM.

• Where should I store my financial power of attor-ney ? Since this document grants another indi-vidual the ability to make financial decisions foryou, it isn’t something you want to give out untilit’s absolutely necessary. I recommend that yousimply keep the document and all copies of it inyour Protection Portfolio. Then tell your attorney-in-fact that should something happen to youthat causes you to be incapacitated or unable totake care of your financial matters, he or she canfind the document granting financial power ofattorney in your Protection Portfolio. This way, ifyou do decide to revoke the financial power ofattorney in the future, you don’t have multiplefinancial powers of attorney on file with differentfinancial institutions.


Your Will

One of the most important steps in being responsible toyourself and others is to make sure that you have a will. Ofcourse, thinking about your death or the death of a familymember is no easy assignment, and neither is contemplating aserious illness or incapacity. But planning for the future can, andprobably will, give you a sense of control over your life. It’s free-ing to know that you’ve protected those you care most about.

A will is a legal document that states where you want yourassets to go after your death.However, the title to your propertywon’t automatically transfer to your designated beneficiaryafter your death. Your will must be “probated” in court, whichis a lengthy and costly procedure.

Probate is a court procedure in which the judge first has toauthenticate your will and make sure it’s valid, then sign acourt order to transfer your property over to your beneficiaries.This sounds simple, but in some states it can take six monthsto two years to complete the process, and it can be quite expen-sive. Take California, for example:

Estate Size Probate Fee, California*$100,000 $8,000$200,000 $14,000$300,000 $18,000$400,000 $22,000$500,000 $26,000$600,000 $30,000$1,000,000 $46,000

*Combined basic fees for executor and attorney.

If your estate is small, from$5,000 to $100,000 (depending onthe state),youmight be able to avoidprobatewith a simplewill andaprocess calledprobate affidavit. It costs very little,doesn’t takemuch

time,andmakes it easy for your survivors to receivewhat youwantthemtohave.Probate affidavit forms are available frommost banksatnocost.Be careful, though—yourestate couldbeworthmore thanyou think.

I urge you to discuss your estate—the sum total of your prop-erty andmoney—with your spouse or life partner,with your chil-dren, andwith anyone elsewhowill be financially affected by yourdeath.Also, if you’remarriedorhold joint assetswith someone else,please take time now to learn everything you can about your jointfinances, so that if you’re theone left behind,youwon’t have to copewith financial confusion on top of your grief. On your ProtectionPortfolio CD-ROM,you’ll find a will that you can customize to fityour individual needs.

TERMINOLOGY OFWILLS

TERM

Administrator

Beneficiary

Estate

Executor

Testator

DEFINITION

When there is no will, this is the person who isappointed by the probate court to collect theassets of the estate, pay its debts, and distributethe rest to beneficiaries.

A person or organization designated to receiveyour assets upon your death.

The sum total of your financial interests, both moneyand property. Your estate is made up of everythingyou own at the time of your death, including life insur-ance, less your outstanding debt.

The person you appoint in your will to settle yourestate. This person will have the administrativeresponsibility of paying your bills, dealing withthe probate court, supervising the process ofsecuring your assets, and making sure yourwishes are carried out.

The person who created the will.


In addition to the information supplied on the CD-ROM, I’velisted the following will benefit statement definitions in thisguidebook to help you make the choice on how you want yourassets distributed (these choices will be presented on the CD-ROM program when you create your will).

WILL BENEFICIARYSTATEMENT DEFINITIONS

DEFINITION

This statement means that if the beneficiaryyou’ve named dies before you do, then you wantthe share that beneficiary would have taken to goto their child, children, or lineal descendants.

This statement means that if one of the benefici-aries dies before you, then their share goesaway—it doesn’t go to their children. So if yougive equal shares to seven nieces and nephewsand one dies before you, then there will just besix shares, even if the deceased nephew had hisown children.

This statement means that you can choose todistribute your estate in amounts designated bypercentages. This allows you to distribute yourestate into equal or unequal shares and betweenindividuals and organizations.

This statement allows a beneficiary to be namedto receive a specific gift, such as your home.Specific gifts are usually not the best idea—sincemost people don’t know when they’re going todie, there may be unintended consequenceswhen leaving a specific asset to someone. Theasset may have been sold before you die leavingthe beneficiary with nothing. You may have spentall your other assets, leaving other beneficiarieswith nothing. However, there are cases where it’svery clear that a specific asset should be given toa specific beneficiary.

TERM

Right ofRepresenta-tion

Equal Sharesto Lapse

Percentages

Specific Gifts


Common Questions about Wills

In the following section, I’ve listed the questions I’m mostoften asked about wills, along with the answers.

• How do I get a will? There are a few ways you cando this. First, you can have a lawyer draw one up.This should cost from a couple hundred to athousand dollars, depending on where you liveand how complex your affairs are. You can alsobuy a form will (which should cost about $10 ata stationery store) and fill in the blanks. Or youcan complete and print out the will on your Pro-tection Portfolio CD-ROM.

If you use any of these methods to draw upyour will, you’ll also need to sign it, and whileyou’re signing it, have two people witness yoursignature (unless you live in Vermont, whichrequires three witnesses). Your witnesses willthen need to sign the will, too. If you live inLouisiana, you must sign the bottom of eachpage of your will in addition to signing the sig-nature page in order for your will to be valid.

• Who can witness a will? A witness must be anadult who won’t be receiving any gifts in the will.And it’s best if a witness isn’t related to you.

• What if I want to make changes to my will?Instead of creating a codicil to your will, I rec-ommend that you use the Protection Portfolio tocreate a new, updated will, incorporating thechanges you want at this time. This ensures thatall of your wishes are contained in a singledocument.


• What’s a holographic will? A holographic will isa will you write by hand on a piece of paper. Itcosts you nothing. Just make sure that the paperyou use has no other writing on it, or the willwon’t be considered legal. The entire will needsto be in your handwriting and dated and signedby you. If you make a mistake, don’t cross itout—start over. Anything crossed out makes thewill null and void. Don’t have anyone witness aholographic will because, again, this will make itnull and void. If you want to change a holo-graphic will, you must redo the entire thing.Holographic wills aren’t legal in every state.

• Can wills be contested? Yes. Anyone who thinksthat he or she should have something that thedeceased left to someone else in the will has theright to come to court and ask for it. Then thejudge has to decide. Also, although people com-monly use wills to designate the guardians theywant for their children, their recommendationisn’t binding. It can only express a wish.

• How old do I have to be to have a will? In moststates, you need to be 18 years old or older tomake a will. If you’re younger than this and thinkyou need a will, see an attorney.

• Can I leave assets to beneficiaries other than myspouse and children? If you want to leave morethan half of your estate to someone other thanyour spouse, see a lawyer. If you have no spouse


and you want to leave more than half of yourestate to someone other than your children, seea lawyer.

OWNERSHIP ISSUES THAT AFFECTPROPERTY LEFT BY AWILL

TYPE OF OWNERSHIP

Co-owned property,such as real estate,cars, securities, smallbusinesses, and copy-rights

Property with namedbeneficiaries, such aslife insurance, retire-ment plans, bankaccounts, and livingtrusts

Property controlled bycontract, such as part-nership interest orstock in a corporationcontrolled by share-holder approval

RULES FOR LEAVING PROPERTY

If you co-own property, you need to figureout the percentage you own and whetheryou have the right to gift it to someoneelse. See the chart on the next page called“Rules for Co-owned Property.”

If you named a beneficiary on youraccount or policy, then the asset will bedistributed to the individual you named—not the beneficiary you named in yourwill. Please check all your accounts tomake sure you have the correct benefici-ary listed.

Most contracts dictate how these proper-ties are distributed, and in a dispute, thecontract supersedes your will. See alawyer if you want to distribute your prop-erty differently than is specified in yourcontract.


RULES FOR CO-OWNED PROPERTY


You can give away your share of prop-erty unless a different beneficiary is inplace, you’re restricted by a contract,or martial-ownership laws forbid yourdoing so. (See charts “Rules for Mar-ried People in Community-PropertyStates” and “Rules for Married Peoplein Common-Law-Property States” onpages 29 and 30 of this booklet.)

You can’t give away your share of joint-tenancy property. It automatically goesto any surviving joint tenants.

You may still include joint-tenancyproperty in your will to prepare for thepossibility that: (1) The entire propertyends up in your estate because theother joint tenant dies before you; or(2) the property is converted to ten-ancy in common.

You can’t give away your share of prop-erty held in tenancy by the entirety. Itautomatically goes to your spouse.

You may still include tenancy by theentirety property in your will to pre-pare for the possibility that: (1) Theentire property ends up in your estatebecause your spouse dies before you;or (2) the property is converted to ten-ancy in common.

HOW PROPERTY IS HELD

Tenancy in Common

Joint Tenancy (also calledJoint Tenancy with Rightof Survivorship)

Tenancy by the Entirety


• Can I leave assets to young beneficiaries?Moststates allow you to leave assets for young peopleto a custodian to manage until the young personis between 18 and 25, depending on the state.This is called the Uniform Transfers to MinorsAct and it appears in the will provided on yourProtection Portfolio CD-ROM. Since you can’tchange the age at which the young person getsthe money (as it’s set by law), the form uses themaximum age. There are only two states thatdon’t allow this: South Carolina and Vermont. Ifyou’re concerned about young beneficiaries inthese states, use a trust instead of a will.

• What if I don’t have a will? The answer is that youdo have a will, whether you know it or not. Evenif you haven’t personally drawn up a will, thestate you live in has something called intestatesuccession rules. These rules determine exactlywho receives any assets held in your name whenyou die without a written will. Usually, yourspouse and children receive your property first. Ifyou aren’t survived by a spouse or children, yourgrandchildren might be next in line, followed byyour parents, siblings, nieces, nephews, andcousins. If you die without any relatives whomanyone can find, your assets will pass to the state.


RULES FOR MARRIED PEOPLE INCOMMUNITY-PROPERTY STATES(ARIZONA, CALIFORNIA, IDAHO, NEVADA, NEWMEXICO,

TEXAS, WASHINGTON, ANDWISCONSIN)


You can give away your separate prop-erty, except in the following cases:

• The property is held in jointtenancy

• The property has a beneficiarydesignation

• The property is restricted fromtransfer by a contract

You can give away your half of commu-nity property, except in the followingcases:


• The property has a different bene-ficiary designated on the accountor policy


HOW PROPERTYIS OWNED

Separately

Community Property


For additional information about wills, you can also visitthe resource center at myWebsite, www.suzeorman.com.

RULES FOR MARRIED PEOPLEIN COMMON-LAW STATES

(ALL STATES EXCEPT ARIZONA, CALIFORNIA, IDAHO, NEVADA,NEWMEXICO, TEXAS, WASHINGTON, ANDWISCONSIN)


You can give away your separate prop-erty, except in the following cases:


• The property is held in tenancy bythe entirety



You can give away your share of jointlyowned property, except in the follow-ing cases:


• The property is held in tenancy bythe entirety



HOW PROPERTYIS OWNED

Separate Property

Marital Property


Pour Over Will

Later on, I’m going to ask you to consider whether you need arevocable living trust,and then I’ll providedirectiononhowtodrawone up. Even if you have a trust, however, you still need a will.

When you have a revocable living trust, your will takes theform of a“pour over will.”What this means is that any assets notowned by you as a trustee of your trust when you die can beadded to the trust, or “poured over” by your will into yourtrust.A pour over will covers anything youmay have left out ofyour trust by mistake.

If you don’t have a revocable living trust, you’d simply usea standard will, rather than a pour over will.

Will Affidavit

In the past, after you died, in order to prove that a will wasvalid, the witnesses who signed the will had to come to probatecourt to testify to the fact that they saw you sign your will.Now, in most states, signing such an affidavit can be doneahead of time, at the signing of the will, so that witnesses don’tneed to be called in to court. However, in Washington, D.C.;Maryland; and Vermont, witnesses can’t sign in advance, soyou’ll want to make sure that your executor has their contactinformation in case there’s a need to go to court after yourdeath. In California, Ohio, andMichigan, you don’t need to fillout an affidavit—the will is all that’s needed. For all other states,an appropriate will affidavit has been provided on your Protec-tion Portfolio CD-ROM.

When you fill in your personal information on the CD-ROM to create a will, if you need a will affidavit, the programwill alert you and provide the appropriate form based on thestate you live in.


How to Change TangiblePersonal Property in Your Will

To avoid having to redo your will every time you changeyour mind about who you want to receive certain items of per-sonal property, you can simply write a letter to the executor ofyour will instructing him or her of the change. Following, you’llfind an example of this informal way of writing a letter to yourwill’s executor. If you write directions in your own handwrit-ing, it makes your letter a stronger statement. Typically, you’lldirect some of your possessions to specific people; almost neverwill you direct the disposition of each and every thing.

Tangible personal property includes your furniture, jewelry,artwork, personal papers, cars, tools, clothes, computers, appli-ances, cameras, electronic equipment, pets, and so on.

Sample Letter to an Executor toAdd or Change Personal Property

February 15, 2005

Dear Mr. Smith, executor of my will dated_____________________:

Please give my 1956 Chevrolet car to my grandson John Smith.

Please give my wedding ring, gold jewelry, and watch to my daughterMary.

Please give my tools and computers to my son John.

Please give my collection of china and crystal to my friend LindaSmith.

Yours,

_________________________________Name

_________________________________Signature


Revocab

leLiving

Trust

Revocable Living Trusts

Of all the documents I’ve ever talked to you about, of all thethings you’ve ever heard me mention on TV or in any book, arevocable living trust is the document I’ve probably most oftensaid is indispensable. It’s certainly one of the most importantdocuments you can have to protect yourself.

On the Protection Portfolio CD-ROM, I’ve included a rev-ocable living trust for you to personalize, based on your indi-vidual situation.After you listen to the information about trustson the CD-ROM, you may have additional questions. The fol-lowing section is an added resource devoted to what you needto know about trusts.

Explanation of the Use of a California Trust

You may have noticed that the trust on your Protection Portfo-lio CD-ROM provides that it’s governed by the laws of the state ofCalifornia. This means that no matter what state you live in, Califor-nia law will be applied to the interpretation of your trust. Californiatrust law is very modern and user friendly, and the laws of Califor-nia are more favorable to the consumer than those of any otherstate, in my opinion.

The reason that your trust is valid in your home state, eventhough it’s governed by California law, is based on the same lawsthat allow a person to incorporate in Delaware even if they’ve neverset foot in that state. The specifics of this principle are found insection 268(1) of the Restatement of the Law Second, ConflictLaws, (St. Paul, Minn.: American Law Institute Publishers, 1969)which states:

“As with testamentary trusts, a settlor may designatewhich state’s local law will govern construction of theterms of the trust regardless of whether or not the desig-nated state has any connection with the trust.”

Should You Consider a Trust?

Whether you need a revocable living trust to avoid probatedepends on the state in which you live, the size of your probateestate, and which assets you’re leaving to your beneficiaries. Ifthe assets you want to leave are larger than allowed for in the fol-lowing state list, then you should seriously consider a revoca-ble living trust.

The state guidelines in the chart on the following pages arebased on state laws for informal probate. Informal probate ischeaper and faster than full probate, but can usually only be usedwhen there are no disagreements among the inheritors. Some-times this procedure is limited to spouses and children. If yourstate allows informal probate, then youmay not need a trust, sothe dollar amounts are based on limits for informal probate.(Please note: Rules and procedures for informal probate canchange; please check with your local probate court.)

That said, however, there are some additional considerationsthat may indicate the use of trust. Consider a trust if:

• There’s a possibility that there will be beneficiar-ies under the age of 25.

• You have children with special needs, meaningthat they will never be able to support them-selves financially due to a physical or mentaldisability.

• You own real estate of any value in more thanone state.

• Your estate is worth close to S1,000,000.

If any of these conditions apply to you, have a trust preparedby an experienced trust lawyer.


DO I NEED A REVOCABLE TRUST?STATE LIST

Use a revocable trust if the value of the netestate exceeds $3,000.


Use a revocable trust if the value of the netestate exceeds $100,000 or real estate exceeds$50,000.

Use a revocable trust if you have more than aprincipal residence and $50,000.

Use a revocable trust if you have real estateworth more than $20,000 or assets other thanreal estate worth more than $100,000.


Use a revocable trust if you own real estate. Ifyou don’t own real estate, use a revocable trustif the value of the net estate exceeds $20,000.

Use a revocable trust if you own real estate. Ifyou don’t own real estate, use a revocable trustif the value of the net estate exceeds $30,000.

Use a revocable trust if your assets are worthmore than $40,000.

Use a revocable trust if you own real estate orthe value of the net estate exceeds $75,000.

Use a revocable trust unless you don’t wish tomake distributions to anyone but your heirs atlaw, you know that there will be no arguments,and you know you’ll have no debts when youdie.

Use a revocable trust if you own real estate or ifthe value of all assets other than real estateexceeds $100,000. The court will take 3 percentof assets transferred under $100,000 as a fee.

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District ofColumbia

Florida

Georgia

Hawaii


DO I NEED A REVOCABLE TRUST?STATE LIST, cont’d.

Use a revocable trust if the value of thenet estate exceeds $75,000 and there isreal estate.

Use a revocable trust if the value of thegross estate exceeds $100,000.

Use a revocable trust if the value of thenet estate exceeds $25,000.

Use a revocable trust if the value of thenet estate exceeds $50,000, or if you’releaving assets of more than $15,000 tosomeone other than a spouse or child.

Use a revocable trust if the value of thenet estate exceeds $20,000 and includesreal estate. (The simplified probate proce-dures are generous in Kansas, but theydepend on the approval of a judge, sothere are no consistent guidelines.)


Use a revocable trust if you own realestate or other assets worth more than$50,000, or if you want to leave assets tosomeone other than a family member.(Executor gets a minimum of 2.5 percentof estate value.)





Use a revocable trust if the value of thenet estate exceeds $20,000 or you ownreal estate.

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota



Use a revocable trust if the value of thenet estate exceeds $500.





Use a revocable trust if the value of thenet estate exceeds $10,000 or if you ownreal estate.


Use a revocable trust if the value of thenet estate exceeds $30,000 or includesreal estate.






Use a revocable trust if the value of thenet estate exceeds $140,000 or you ownreal estate worth more than $90,000.

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon






Informal probate is available regardless ofthe value of the net estate, so use a revo-cable trust if there’s a possibility that yourbeneficiaries won’t agree on how to dis-tribute your assets.


Informal probate is available regardless ofthe value of the net estate, but inheritorsmust all agree. So use a revocable trust ifthere’s a possibility that your beneficiarieswon’t agree on how to distribute yourassets. You must also authorize an inde-pendent administrator in the will. Therewill still be several filings with the courtfor informal probate.




Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia


• What is a revocable living trust? A revocable livingtrust is a written document stating who controlsyour assets while you’re still alive (typically, you)and what will happen to those assets once you’regone. It’s called “revocable” because you canchange it at any time, “living” because you createand fund it while you’re alive, and a “trust”because you entrust it with the title to yourproperty. Its purpose is to hold your assets whileyou live, and carry out your wishes when you canno longer do so for yourself.

• How is a revocable living trust different from a will?Revocable trusts are an increasingly popular alter-native to wills. Although a will states who you


Informal probate is available regardlessof the value of the net estate. Use arevocable trust if there’s a possibility thatyour beneficiaries won’t agree on how todistribute your assets. There will still beseveral filings with the court for informalprobate.


Use a revocable trust if the value of thenet estate exceeds $50,000 or if you’releaving assets to someone other than aspouse or a child.


Washington

West Virginia

Wisconsin

Wyoming


want your assets to go after your death, it takeseffect only with a court order.With a revocableliving trust, the court is removed from the equa-tion. You take the necessary actions while you’realive to pass assets directly to your beneficiariesonce you die. You do this by signing the title ofyour assets over to the trust. The property is heldin your name as trustee for your trust—and foryour benefit while you live. You can always addthings to the trust, take things out of it, andamend it if you change your mind about who youwish to get what.When you die, the trust passesyour property directly to the people you want tohave it—and it does so without probate.

• What’s the cost of a revocable living trust?Depending on the size of your estate, you shouldbe able to get a simple revocable living trustdrawn up by an attorney for between $500 and$3,000. If you decide you want the attorney tofund the trust—that is, to transfer your assetsinto it—it might cost you more. Once the trust isset up, making simple changes to it should costabout $200. Obviously, fees will vary dependingon the state where you live and how complexyour requirements are.


TERMINOLOGY OF TRUSTS

Definition

A person or organization designated toreceive your assets upon your death.

The person or persons for whom all assetsare being held in trust.

The sum total of your financial interests, bothmoney and property. Your estate is made upof everything you own at the time of yourdeath, including life insurance, less your out-standing debt.

The person or persons who will inherit every-thing in the trust after the current beneficiary(who is usually the trustor as well) dies.

The person who steps in to make decisionsabout the assets in the trust if and only if thetrustee or co-trustees can’t or don’t want toact in the decision-making process.

The person who creates a trust and owns theproperty that will be put into the trust.

The person or group of persons who controlthe assets in the trust. Most often the trustoris also the trustee. When you set up a trust,you don’t have to give away your power overyour assets. Most people continue takingcare of everything just as they did before thetrust existed.

Term

Beneficiary

Current Beneficiary

Estate

RemainderBeneficiaries

Successor Trustee

Settlor, Trustor, orGrantor

Trustee


Funding Your Trust

Funding your trust means transferring ownership of yourassets to the trust. By itself, your trust document means noth-ing; it’s only when your trust assumes ownership of the thingsyou intend to put into it that it becomes a valid legal tool. So toavoid probate, you must transfer the titles of all major assets,such as real estate, stocks, savings accounts, bonds, and limitedpartnerships, to the trust. This should be done as soon as is prac-tical after the trust is signed.

Funding your trust is all a simple matter of paperwork, butsince different institutions have different procedures for chang-ing title, it may be advantageous to have your lawyer handle itfor you. A thorough attorney will update the beneficiary des-ignations on your life-insurance policies, IRAs, and other retire-ment accounts at the same time.

Here’s an example of funding a trust: Let’s say that John andJane Doe own a house together in their own names. They decideto create and fund a trust to hold the title to their house andother assets.After they’ve established the trust, they record a newdeed that lists the owners of the house as John and Jane Doe,Trustees of the John and Jane Doe Revocable Trust. The housewould then be “in” the trust. The Does would also change thetitles on their bank accounts, stock-brokerage accounts, andother assets so that these are also held by the trust.

On the Protection Portfolio CD-ROM, you’ll find forms youcan use to fund your trust. As you’re listening to the informa-tion on the CD-ROM, you may find that you have additionalquestions about funding a trust, so the following section is aresource devoted to common questions about funding a trust.

In addition to the information supplied on the CD-ROM,I’ve listed the following revocable trust benefit statement defi-nitions in this guidebook to help you make the choice on how


you want your assets distributed (these choices will bepresented on the CD-ROM program when you create yourrevocable trust).

REVOCABLE TRUST BENEFICIARYSTATEMENT DEFINITIONS

Definition

In order to plan for the possibility that an adultchild may die before a parent or parents, we’veprovided the opportunity for you to set asidecertain funds within the trust that can be usedto help support an elderly parent or parentswithout making them ineligible for possiblepublic benefits. If you use this choice, the par-ent beneficiary may not serve as your Trusteeor Successor Trustee.

This statement means that if the beneficiaryyou’ve named dies before you do, then youwant the share that beneficiary would havetaken to go to their child, children, or linealdescendants.

This statement means that if one of the benefi-ciaries dies before you, then their share goesaway—it doesn’t go to their children. So if yougive equal shares to seven nieces andnephews and one dies before you, then therewill just be six shares, even if the deceasednephew had his own children.

This statement means that you can choose todistribute your estate in amounts designatedby percentages. This allows you to distributeyour estate into equal or unequal shares andbetween individuals and organizations.

Term

Parent Support

Right ofRepresentation

Equal Shares toLapse

Percentages


• What is the legal title of my revocable living trust?When you fund your trust, the legal title of yourtransferred assets must be changed. So instead ofholding title as [YOUR FULL NAME], the newtitle will be: [YOUR FULL NAME] as Trustee ofthe [YOUR FULL NAME] Revocable Trust.Or,if you and your spouse have created a trusttogether, you’d hold title as [YOUR FULLNAME] and [SPOUSE’S FULL NAME] asTrustees of the [YOUR FULL NAME] and[SPOUSE’S FULL NAME] Revocable Trust.

Although the terms revocable living trust andrevocable trust are used interchangeably in theProtection Portfolio materials, revocable trust isthe recognized legal description and should be

REVOCABLE TRUST BENEFICIARYSTATEMENT DEFINITIONS, cont’d.

Definition

This statement allows a beneficiary to benamed to receive a specific gift, such as yourhome. Specific gifts are usually not the bestidea—since most people don’t know whenthey’re going to die, there may be unintendedconsequences when leaving a specific assetto someone. The asset may have been soldbefore you die leaving the beneficiary withnothing. You may have spent all your otherassets, leaving other beneficiaries with noth-ing. However, there are cases where it’s veryclear that a specific asset should be given to aspecific beneficiary.

Term

Specific Gifts



used in the title of your trust documents. Youcan be identified as the trustor, grantor, and/orsettlor of the trust, and you’re also the trustee. Ifyou’re married, you and your spouse are the ben-eficiaries of the trust while you’re living.

• What is the date of my revocable living trust? Thedate you sign the trust in front of a notary publicand have it notarized becomes the date of yourtrust, also known as Under Declaration of TrustDated, or UDT. Even if you restate your trust at alater time, the original signature date will alwaysbe the legal date of the trust.

The UDT is very important because it’s oftenused to identify the trust. Financial institutionsoften request this date when you fill out thefunding documents for your trust, and you’ll alsoneed it to complete the funding documents onyour Protection Portfolio CD-ROM.

• What tax identification number should I use for thetrust? The tax identification number that’s usedfor your revocable living trust is your Social Secu-rity number. Married couples should chooseeither, but not both, of their numbers for thetrust. If the settlor whose Social Security numberis being used for the trust dies, change the trustassets to the surviving settlor’s Social Securitynumber by contacting your financial institutions.

• How are the titles of my bank, brokerage, andcredit-union accounts and safe-deposit box listedin the revocable living trust?Many people want to

keep their original trust and will in a safe-depositbox in case of fire. The title to the box and toyour bank accounts—including checking andsavings accounts, mutual funds, and certificate ofdeposit accounts (or CDs)—should be the legaltitle of your trust. You can use the ProtectionPortfolio CD-ROM to create the forms “MutualFunds Change of Ownership Letter” and “Bankand Credit-Union Instruction Letter” to changethe title to your accounts.

• Are stocks put in a revocable living trust? If youhold stock certificates, you’ll need to have newcertificates issued in the legal name of the trust.The transfer agent from the company who issuedthe stock will provide the new certificates. Thename of the transfer agent should be listed onthe stock certificate, but if it isn’t, you can con-tact the investor relations department of theissuing company. Complete and print the form“Request to Transfer Stock Ownership” fromyour Protection Portfolio CD-ROM to requestthe change of ownership.

• Should I put real property in a revocable livingtrust? The only way to change title to real prop-erty is by recording a deed in the office of theCounty Recorder where the property is located.When you purchase new property, take title inthe name of your trust so that the property willbe in the trust from the beginning.


It’s important to consult a local real-estatelawyer or title company to ensure that the deedsare created specifically for your location. Differ-ent states, and even counties within the samestate, have specific requirements that mustappear in the deed to preserve homesteadexemptions and property-tax rates. The cost isusually around $125 to transfer each deed.

When requesting that the property title bechanged to the title of your trust, you’ll want totake the following documents to your local titlecompany:

– Grant deed for each property

– Property-tax statement

– The cover and signature page of your trustor a certification of trust

When transferring real estate into the trust,make sure that you as the trustee are named asthe insured on the property-insurance policy.Contact your homeowners-insurance agent andinform him or her of the change to ensure thatyour property is covered under the policy.

• Do I need to change the name on my title insur-ance?When you first obtained title insurance foryour property, your name was on the title andyou were the named insured. Once you transfer


title to the trust, there is a new title holder—thatis, the trust.

Some newer title policies automatically pro-vide coverage for trustees of the trust under thecontinuation of coverage provisions of the pol-icy, but most older ones don’t. Check your policyto see whether it gives such coverage already. If itdoesn’t, or you aren’t sure if it does, call your titlecompany and ask them. If they inform you thatyour policy doesn’t cover the trustee, then asimple endorsement to the policy is available (fora nominal fee), which will offer such coverage.Purchase the endorsement and you’ll be covered.

• What if I have business interests, partnerships, andLLCs? The title to all such accounts should be[YOUR FULL NAME] as Trustee of the [YOURFULL NAME] Revocable Trust for a single per-son, or [YOUR FULL NAME] and [SPOUSEFULL NAME] as Trustees of the [YOUR FULLNAME] and [SPOUSE FULL NAME] RevocableTrust for a married couple. You can use the forms“Assignment of Business Interests,”“Assignmentof Limited Partnership Interest,” and/or“Amendment to the [Company Name] LLC” onyour Protection Portfolio CD-ROM to changethe ownership of these accounts.

• What do I do if I have promissory notes? If youhold a promissory note signed by someone whoowes you money, the note can be assigned to thetrust by endorsing the back of the note as follows:


I assign my interest in the within prom-issory note to [YOUR FULL NAME] asTrustee of the [YOUR FULL NAME]Revocable Trust or in the married legaltitle as stated earlier.________________________________

(signature)

Dated:___________________________(date of assignment)

You should advise the payor of the note tomake future payments to you in your name astrustee(s). Secured notes should be assigned by aformal assignment that’s recorded in the samemanner as the original trust deed.

• Do I put pension plans, IRAs, life insurance, andannuities in a revocable living trust? These invest-ments make direct payments to the named bene-ficiary, so they already avoid probate. However, Istill recommend that you change the named ben-eficiary to the trust so that all of the protectionsof the trust apply to these assets as well. If you’resingle, name your trust as the primary benefici-ary. If you’re married, name your spouse as theprimary beneficiary and the trust as the contin-gent beneficiary. This designation will give yourspouse the greatest income-tax protection.

To name or change beneficiaries, request des-ignation of beneficiary forms from your insurancecompany, company pension plan, or the company


administering your IRA or pension plan, or youcan use the “IRA Beneficiary Designation Form”on the Protection Portfolio CD-ROM.

• Do I put automobiles in a revocable living trust?It’s not necessary to transfer automobiles intothe trust (unless they’re expensive investment-type cars), and transferring the title to the trustcan cause confusion with registration and insur-ance. Most states permit transfers of automobiletitle by affidavit at the time of death. This formshould be available from your state’s Departmentof Motor Vehicles.

• How do I provide for children with a trust? If youhave children, then the earlier you create yourrevocable living trust, the better. That’s true evenif you don’t have a lot of money. If your childrenare very young and something were to happen toyou, they might be at greater risk than you imag-ine. A court always has the last word when itcomes to who is appointed legal guardian ofyour children—a will can only express yourwishes. So, for example, if your children areunder 18 and all you leave them is a life-insurance policy, a guardianship for those assetswill be created upon your death. Each year theguardian will have to go back to court to accountfor the money spent on behalf of the children.When each child reaches 18, that child’s sharewill be legally signed over to him or her—lock,stock, and barrel—regardless of his or her abilityto handle the money. But by the time the chil-


dren get the money, there won’t be as much of itas there could have been, since every year therewill have been guardian fees and payments to alawyer to do the guardianship reporting. Thesefees are usually in the thousands of dollars.

Trusts don’t address the issue of guardian-ship—you need a will for that. But if you diewith a trust, you do get to make the importantdecision of how, when, and for what purposesyour children will receive the money you’re leav-ing them. You can assign one or more successortrustees (your chosen guardian, for example) andinstruct them to carry out your wishes as towhen your children should receive their moneyand how that money should he used until thattime—and poof, it’s done. The successortrustee(s) can take care of your children’s finan-cial lives on your behalf. No yearly court report-ing, no fees.

• Will a revocable living trust help me with estatetaxes?No. A revocable living trust won’t help withthe estate taxes on estates whose value rises abovethe unified credit exemption (see page 57 formore information on the unified credit exemption).A revocable living trust is primarily helpful intransferring legal title to your assets as quickly aspossible to beneficiaries, eliminating probate fees,and protecting you when you become incapaci-tated by providing for a smooth transition ofmanagement from you to your successor trusteewithout the need for court involvement.


• I’m part of a blended family. Is a revocable livingtrust still the best way for me to protect my family?Due to the number of blended families that exist,I’ve included a blended family version of the rev-ocable living trust on the Protection PortfolioCD-ROM. The blended family trust is designedto allow you to combine assets during your jointlifetimes. If you use the blended family trust, allassets transferred to the trust are then ownedequally by both you and your spouse. You eachhave the right to leave your half the way youwant when you die.

So, for example, if you were to die beforeyour spouse, you could leave one half of theassets in the trust to be distributed to thebeneficiaries that you choose, while the other halfof the assets would remain in the trust for thebenefit of your surviving spouse. You could alsochoose to leave part of your half to your childrenand the other part of your half to your spouse.

If you have concerns that your spouse might rewrite yourblended family trust to diminish your children’s share of your jointestate or leave them with nothing after you pass away, please seean attorney to develop a trust that will create an irrevocable trustshare at your death. Even if you decide not to combine assets andeach of you complete a separate trust, if you leave your estate—inpart or in full—to your surviving spouse, she can then bequeaththose assets to whomever she wants at her death.

NEED TO KNOW


• What happens if I become incapacitated or dis-abled? Your revocable living trust provides thelanguage to allow the person that you chooseto determine whether you’re “incompetent” or“disabled” to the extent that you’re unable tocarry out your usual business affairs. This personcan be your child or another person of yourchoosing, and isn’t required to involve the courtsin the determination. This process allows youto decide who will make this very importantdecision.

Once the determination of incapacity hasbeen signed, in order for the successor trustee totake over the management of the trust, he or shewill need to change the title of the assets of thetrust into the name of the successor trustee. Thesuccessor trustee will then need to contact yourfinancial institutions and let them know that thetrustee of your trust has changed and ask fortheir procedure for updating your paperwork.Each financial institution has different require-ments, so find out what they need and if theyhave a form available for you to use.

The Protection Portfolio CD-ROM providesa form that can be used for the determination ofincapacity. Be sure to keep the original determi-nation of incapacity form with your trust andsend a duplicate copy if your bank or otherfinancial institution asks you to provide one.

• How do I resign as the trustee of the revocable liv-ing trust? You may decide that you no longerwant to serve as the trustee of your revocable liv-


ing trust, and that you want to have your succes-sor trustee take over the management for you.This is a simple procedure of stating the facts asthey appear in your trust and having the docu-ment notarized. Once you have the resignationform finalized, your successor trustee can con-tact your financial institutions and let themknow that the trustee of your trust has changed,and ask for their procedure for updating yourpaperwork. Each financial institution has differ-ent requirements, so find out what they need andif they have a form available for you to use.

On the Protection Portfolio CD-ROM is aform that can be used for the resignation of atrustee. Be sure to keep the original resignationform with your trust and include a duplicate copyin case you’re required to provide a copy of thetrust to the bank or other financial institution.

• What does a successor trustee need to do first? Thefirst step is to contact the financial institutionsand let them know that the trustee of the revoca-ble living trust has changed. The successortrustee will need to have the assets of the trusttransferred to the new name of the trust: [SUC-CESSOR TRUSTEE NAME], Trustee of the[YOUR FULL NAME] Revocable Trust. Thistransfer needs to occur so that the successortrustee has access to the assets. The bank orfinancial institution should have an establishedprocedure and may require you to complete theirform to make the transfer.


• What is a certification of trust? A certification oftrust is used to identify the basic informationabout your trust, the trustees, beneficiaries, andauthorized agents, along with guidelines forauthorized transactions. Your financial institu-tion may request a certification of trust insteadof a copy of your trust when processing thetransfer of your accounts. The details containedin this form must match the language containedin your trust and any amendments to the trust,such as a resignation of trustee and appointmentof a successor trustee.

On your Protection Portfolio CD-ROM aform is provided that can be used for the certifi-cation of trust. Be sure to keep the original certi-fication of trust form with your trust and retaina duplicate copy in case you’re ever requested toprovide a copy of the trust to your bank or otherfinancial institution.

• What is the unified credit exemption? The unifiedcredit exemption is the amount that your benefi-ciaries can inherit from you without having topay federal estate taxes, as follows:

According to the Economic Growth and TaxRelief Reconciliation Act of 2001, estate taxes arebeing phased out over nine years, beginning in2002. According to the law as it now stands, ifyou die in the year 2010 there will be no estatetax due on your estate, no matter what its size;and the top gift-tax rate will be equal to thehighest individual income-tax rate (scheduled to


be 35 percent), with a $1 million unified creditexemption. But please keep in mind that unlessnew legislation is passed, in 2011 the act willexpire, and estate taxes, along with the highestunified credit exemption, will be reinstated at the2001 rate.

• Is there any trust that reduces estate taxes? Yes. AnA-B trust (also known as a tax-planning trust, acredit-shelter trust, a marital trust, or a bypasstrust) reduces estate taxes. If you have close to$1 million in assets, I urge you to see a trustattorney about an A-B trust.

• How do I find a good will and trust attorney?Finding a good will and trust attorney is thehardest part of creating a will and a trust.Wordof mouth is the age-old method of choice, so askyour friends for recommendations—but pleasebe certain that the attorney you choose is wellversed in estate planning. If your friends can’trecommend a qualified attorney, you might want

UNIFIED CREDIT EXEMPTION

For DeathsOccurring In

20082009

Highest EstateExemption

$2,000,000$3,500,000

Highest Estate& Gift-Tax Rate

45%45%


to contact your local university, especially if ithas a law school. Call a professor who specializesin estate planning and ask whom he or shewould recommend.

Alternately, you can consult this professionalorganization:

The American College of Trust andEstate Counsel

3415 S. Sepulveda Blvd., Ste. 460Los Angeles, CA 90034310-398-1888310-572-7280 (fax)www.actec.org

After you’ve collected some names, pleasemake sure you interview at least three attorneysbefore you settle on one. Good attorneys areusually too busy for full interviews, but most willgive you an interview by phone. An attorney willplay a major role in making sure your estate is setup correctly, and your survivor will need his orher assistance after your death, so you’ll want tobe sure that not only you but also those aroundyou like this lawyer and feel comfortable in his orher presence.

How to Interview aWill and Trust Attorney

Ask a prospective attorney the following questions, and besure you get the following answers before going further. If youget another answer, you haven’t found the right attorney:


• How long have you been specializing in estateplanning? The only acceptable answer is at leastten years.

• What other areas of law do you practice?The answer should be no other areas.

• How many people have you drafted wills andtrusts for in the past five years? The only accept-able answer is at least 200 people.

• Will you be drafting the documents yourself, or willsomeone else be doing the paperwork? It’s okay ifsomeone else draws up the documents, as long asthat person is supervised correctly. In fact, thisarrangement may cost you less. You just need toknow one way or the other.

• How much do you charge? You want the attorneyto charge a flat fee to draw up a will and/or atrust. The fee should include drafting andexplaining the document (which could take afew hours if it’s a trust), as well as funding thetrust (doing the paperwork to transfer the titleson all your property and assets into the name ofthe trust).

• If I have other questions, will you charge me if Icall and ask? There should be no charge for sim-ple questions over the phone.

On your Protection Portfolio CD-ROM, you’ll find a work-sheet to use when you’re interviewing prospective attorneys.Remember, you’ll need to interview at least three attorneysbefore you decide on one.

Fina

lInstruction

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Final Instructions

To carefully prepare for your death is a supreme act of lovetoward those you’ll one day leave behind. It can be of great emo-tional help to your survivors, because having to deal with prac-tical chaos after a death makes the loss itself more painful andfrightening. It can also help your loved ones financially, becausecareful estate planning may save them thousands of dollars inprobate fees, estate taxes, and attorney’s fees.

By having a will and a trust, you’ve helped to ensure thatyour family members will be taken care of financially. Nowtake the time to prepare your final instructions so that you canhelp protect them emotionally as well.

Please review the “Final Instructions” form on the follow-ing page.You can also find a copy of “Final Instructions”on yourProtection Portfolio forms CD-ROM.Be sure to fill out the formand place a copy in your Protection Portfolio so that your fam-ily will be aware of your last wishes.

Name ___________________________________________________

Memorial Service__ At home__ At place of worship__ At funeral home__ Other_____________________________________________

Disposition of Remains__ Burial__ Cremation__ Embalming__ No embalming__ Open casket__ Closed casket

Funeral Home PreferenceCompany:____________________________________________Address:_____________________________________________Telephone: __________________________________________Contact: ____________________________________________

Cemetery PreferenceCompany: ___________________________________________Address: ____________________________________________Telephone: __________________________________________Contact: ____________________________________________

Documentation of Prepayment (please attach any paid receipts orcontracts to this form)

__ Memorial service__ Funeral__ Cemetery__ Burial plot

Special Instructions________________________________________________________________________________________________________________

FINAL INSTRUCTIONS FORM


Claiming Benefits

If you’re the one left behind in the event of a death, you’llneed to look into claiming benefits. Chances are good that yourspouse or life partner had a number of policies or accounts withbenefits that you may be eligible for. Please check these thor-oughly, following the instructions provided here for each typeof benefit.

Social Security Benefits

If the deceased had paid into Social Security for at least 40quarters, two types of benefits are possible—a death benefit orsurvivors benefits.You can apply for either one by telephone orin person at any Social Security office.

Death benefits provide qualified spouses or dependentchildren with $255 for burial expenses. Survivors can completethe necessary form at a local Social Security office, or a funeraldirector may complete the application and apply the paymentdirectly to the funeral bill.

Those who are eligible for survivors benefits have a varietyof benefits available to them, depending on their age and rela-tionship with the deceased. You may be eligible for survivorsbenefits if you match any of these descriptions:

• You’re a spouse, age 60 or older

• You’re a disabled surviving spouse, age 50 or older

• You’re a spouse under 60 who cares for depend-ent children under 16, or for disabled children

• You’re a child of the deceased under the age of18, or a child who is disabled


If you’re not already receiving Social Security benefits at thetime of your loved one’s death, here are some other points tokeep in mind:

• Apply promptly for survivors benefits. In somecases, benefits may not be retroactive.

• Try to have the necessary information close athand, but don’t panic if you don’t have it. SocialSecurity will ask for specific information anddocuments in order to process your application.It’s helpful if you have the right forms when youapply, but don’t delay applying if you don’t haveeverything. You’ll need either original documentsor copies certified by the agency that issuedthem. These will include:

– Proof of death, either from funeral homeor a death certificate

– Your Social Security number, as well asthe worker’s

– Your birth certificate

– Your marriage certificate, if you’re awidow or widower of the deceased

– Your divorce papers, if you’re applying asa surviving divorced spouse

– Dependent children’s Social Securitynumbers, if available


– Deceased worker’s W-2 forms or federalself-employment tax return for the mostrecent year

– The name of your bank and youraccount number, so that benefits can bedirectly deposited into your account

If you’re already getting Social Security benefits as a wife orhusband on your spouse’s record at the time of his or her death,you should report the death to the Social Security Administra-tion, which will change your payments to survivors benefits.

If you’re getting benefits on your own record, you’ll need tocomplete an application to get survivors benefits. Call or visityour local Social Security office and an official will check to seeif you can get more money as a widow or widower. To processyour claim, Social Security needs to see a certified copy of yourspouse’s death certificate.

Benefits for any children will automatically be changed tosurvivors benefits after the death is reported to Social Security.

How MuchWill You Get?

The amount of your Social Security benefit is based onthe earnings of the person who died. The more he or she paidinto Social Security, the higher your benefits will be. The amountyou’ll get is a percentage of the deceased’s basic Social Securitybenefit. The percentage depends on your age and the type ofbenefit you’re eligible for. Here are the most typical situations:

• Widow or widower, age 65 or older: 100 percent


• Widow or widower, age 60 to 64: about 71 to94 percent

• Widow, any age, with a child under age 16:75 percent

• Children: 75 percent

There’s a limit to the total amount of money that can bepaid to you and other family members each month. The limitvaries, but is typically equal to about 150 to 180 percent of thedeceased’s benefit rate. If the sum of the benefits payable to thefamily members is greater than this limit, the benefits will bereduced proportionately.

Veterans Benefits

If your loved one was already receiving monthly paymentsfrom the Department of Veterans Affairs (VA), you’ll need tonotify them of the death.

If the deceased was a veteran, he or she may be eligible forburial in one of the 115 national cemeteries, free of charge.Vet-erans assistance may provide transportation of the remains tothe nearest veterans cemetery and amarker or headstone, as wellas a flag. If you choose a veterans burial, you’ll have to documentthe fact that the deceased was a veteran, including his or her sep-aration papers (in the “Personal Documents” section of theProtection Portfolio CD-ROM, you’ll find a link to request acopy of these military records), and have proof of rank andbranch of the service, date of entry into and date of departurefrom the service, date of birth, date of death, Social Securitynumber (his or hers, as well as your own), and name andaddress of the executor or trustee of the estate.


If you use a private cemetery, you still can apply for a bur-ial allowance, flag, and a government headstone or markerfrom theVA. To apply, just look in the blue pages of your phonebook for the number of the VA office nearest you, For moreinformation, log on to www.cem.va.gov.

Employee Benefits

Many employers provide life, health, or accident insurancethat youmay be eligible tomake a claim against or continue afterthe death of your loved one. Additionally, the deceased may bedue a final paycheck for vacation or sick leave. Be sure to con-tact all past employers, include federal, state, or local govern-ments, to see if you’re entitled to death benefits, continuedhealth-insurance coverage for the family, or payments from anannuity or pension plan. If the deceased belonged to a union orprofessional organization, check to see if it offers death benefitsfor members.

Funeral and Burial Costs

Funerals and burials are among the most expensive pur-chases older people make. The average cost of a traditionalfuneral is $7,323. A large part of this cost is for embalming,which you should know isn’t required by law unless you’retransporting a body across state lines.Viewings are possible evenif you choose not to be embalmed, and the funeral home willrefrigerate the body for a minimal fee (or no fee at all). Be sureto ask about this option.

Additional costs such as flowers, obituary notices, acknowl-edgment cards, burial liners or vaults, and special transportation


can add an additional $1,000. In-ground burial costs at leastanother $2,400. Some of the services you’re likely to be offeredand/or charged for include:

• Funeral-director services for initial conference,consultations, paperwork, and overhead (this feeis added to all bills)

• Transportation of the body to the funeral homeand to the place of final disposition

• Care of the body, including embalming and“casketing,” or dressing the body

• Cremation

• Use of facilities for a viewing, wake, or visitation,and the funeral or memorial ceremony at thefuneral home

• Purchasing flowers

• Preparing obituary notices

• Providing music

Traditionally, caskets were sold only by funeral homes.Today, however, cemeteries and third parties sell caskets—evenon the Internet. Collect price lists from several funeral homesto compare costs of a particular model. Under the federalFuneral Rule, a funeral home can’t charge you extra if you pro-vide your own casket from an outside source. No casket isrequired if you choose direct cremation, immediate burial, orto donate the body to science.


A grave liner or vault is an outer burial container that sur-round the casket in the grave to prevent the ground from sink-ing, as settling occurs over time. Inmany locations, both funeralhomes and cemeteries sell vaults and liners. In some areas it’spossible, and less expensive, to purchase an outer burial con-tainer from a third party.You can collect outer burial containerprice lists from several providers to compare the costs of a par-ticular model. (Keep in mind that even if you’ve already pur-chased a burial plot, you’ll most likely be charged an openingfee when the time comes to use the plot.)

The term “immediate burial” refers to a simple, low-costfuneral. The body is interred without embalming, usually in asimple container. There is no viewing or ceremony with thebody present.A package price for immediate burial will includethe funeral director’s fee, transportation, and care of the body.It may not include the charge for a container, casket, or simplepine box.

If you choose a direct cremation package, the price usuallyincludes the funeral director’s fee and transportation and careof the body. It may not include the charge for cremation.

The Funeral Rule requires funeral homes to provide price listsso that you know what options are available to you and exactlyhow much they’ll cost. Funeral homes, but not cemeteries, mustdisclose prices by telephone and offer price lists for review at eachfacility. Many funeral homes will mail you a price list, although thelaw doesn’t require this. To obtain a copy of the Funeral Rule, call877-FTC-HELP or log on to www.ftc.gov/bcp/rulemaking/funeral.

NEED TO KNOW


Most of us are unprepared to make wise financial deci-sions about a funeral and burial.We have little or no experiencewithmaking funeral arrangements. The emotions surroundingthe death of a loved one—or contemplating our own mortal-ity, if we’re prearranging our own funeral—may cloud ourjudgment. It’s never easy to make funeral and burial arrange-ments, but finding out about them in advance is easier than cop-ing with them at a time of need. If you want to know everythingabout the funeral industry, read Jessica Mitford’s book TheAmerican Way of Death Revisited. It’s very informative andhumorous. In the meantime, here are some pointers:

• Shop around for the best prices.Most of us selecta funeral home or cemetery based on location,reputation, or personal experience. There’s noth-ing wrong with that, but you may pay too muchif you only call one facility. Call or visit at leasttwo funeral homes and cemeteries to compareprices.

• Compare prices for the entire package, not just asingle item. Every funeral home should have sep-arate price lists for general services, caskets, andouter burial containers. Only by using all threelists can you accurately find the total costs and beable to compare prices.

Use the “Funeral-Home Cost” worksheet onyour Protection Portfolio CD-ROM to helpcompare your findings.

• Be sure you buy only what you planned to buy. Tryto keep in mind that the amount you spend on afuneral and burial isn’t a reflection of your feel-ings for the deceased.


_____ In the Estate Planning Documents folder in your ProtectionPortfolio, locate your loved one’s final instructions form.

_____ If death took place in the hospital, you’ll be asked thename of the funeral home or cremation society of yourchoice, which will then make arrangements to transportthe remains. Find out how much they’ll charge to trans-port the body.

_____ If death took place at your home or anywhere other thana hospital, then you have to contact the funeral home orcremation society of your choice, which will make thearrangement to transport the remains. Find out how muchthey’ll charge to transport the body.

_____ If you don’t know which funeral home you want to use,ask your friends, your clergyman, or the local coroner.

_____ Ask a close friend or family member to help notify familyand friends of the death of your loved one.

_____ Make funeral, burial, or cremation arrangements. Be clearabout embalming, as it’s expensive and not required by law.

_____ Order at least 15 certified copies of the death certificate.You’ll need them in order to collect insurance proceedsand to change the name on bank accounts, deeds, andother assets.

_____ Try not to leave the house vacant, as this may haveconsequences for insurance coverage. Call the insurancebroker to make sure coverage continues.

WHAT TO DOWHENSOMEONE YOU LOVE DIES


_____ If you don’t already have one, open a bank account inyour own name.

_____ If you don’t have a credit card in your own name, requestone. After you’ve received your own card and credit limit,advise the credit-card company of your loved one’s death.

_____ Before paying any credit-card debts that aren’t yours,check with your attorney or executor. If there isn’t enoughmoney in the estate to pay off the debts, the probate hasa “schedule” specifying debts given priority and the orderin which the debts are to be paid—which is why I wantyou to check with your attorney before you begin payingthe debts.

_____ Go to your Protection Portfolio and remove your lovedone’s insurance policy. In addition to life insurance, checkto see if other forms of insurance covered the deceased.Some loans, mortgages, and credit-card accounts arecovered by credit life insurance, which pays off accountbalances. Contact each insurance company about how toclaim the policy benefits.

_____ Contact your local Social Security, Veterans Administra-tion, and deceased’s employer’s human resource office,or visit their Websites to see if there are any benefits youqualify for.

_____ Your own will or trust should be changed now, for mostlikely you left everything to the person who has just died.Make sure you change the beneficiary designation onyour IRA, life-insurance policies, pension plans, 401(k)plans, and other investment or retirement plans.

WHAT TO DOWHENSOMEONE YOU LOVE DIES, cont’d.


Begin Today

Thinking about your own death or the death of a familymember is no easy task—neither is contemplating serious ill-ness or incapacity. But planning for your future doesn’t have tobe a morbid subject. In fact, it can, and probably will, provideyou with a sense of control over your own life. It’s freeing toknow that you’ve protected those you care about the most.

If you plan carefully, you and your family can save thousandsof dollars in probate fees, estate taxes, and attorney fees, as wellas spare yourselves the nuisance of going through an un-necessarily complicated and lengthy probate process. Inmy expe-rience, once you’ve begun to take steps to protect your future andthe futures of the people you care about, you’ll have started downthe path toward securing your own financial freedom.


About the AuthorSuze Orman has written six consecutive New York Times best-

sellers:Women&Money; TheMoney Book for the Young, Fabulous &Broke; The Laws ofMoney,The Lessons of Life;TheRoad toWealth;TheCourage to BeRich; andThe 9 Steps to Financial Freedom, aswell as thenational bestsellers, Suze Orman’s Financial Guidebook and You’veEarned It, Don’t Lose It. In addition, she has created Suze Orman’sIdentity Theft Kit, SuzeOrman’s FICOKit, SuzeOrman’sWill&TrustKit, Suze Orman’s Insurance Kit, The Ask Suze Library System andSuze Orman’s Ultimate Protection Portfolio.

Orman has written, co-produced, and hosted six PBS spe-cials based on herNewYork Times best-selling books, and she is thesingle most successful fundraiser in the history of public television.She twice won a Daytime Emmy Award in the category of Out-standing Service Show Host, and her latest PBS Special “Women& Money” began airing nationwide on PBS in March 2007.

Orman is a contributing editor toO,TheOprahMagazine in theUnited States and South Africa and to O at Home. She has a bi-weekly column, Money Matters, on Yahoo! Finance, and writes asyndicated newspaper column entitledWomen&Money. Suze hoststhe award-winning The Suze Orman Show, which airs every Satur-day night on CNBC and on XM & Sirus radio, and also hosts theFinancial FreedomHour onQVC television. In September 2007,HayHouse Radio began airing Suze’s radio show,The Spirit of Wealth.

Orman, a CERTIFIED FINANCIAL PLANNER™ profes-sional, directed the Suze Orman Financial Group from 1987–1997,served asVice President of Investments for Prudential Bache Secu-rities from 1983–87, and from 1980–83 was an Account Executiveat Merrill Lynch. Prior to that, she worked as a waitress at theButtercup Bakery in Berkeley, California, from 1973–80.

CertifiedFinancial PlannerBoardof Standards Inc.owns the certificationmarksCFP®,CER-TIFIEDFINANCIALPLANNER™and in theU.S.,which it awards to individualswho suc-cessfully complete CFP Board’s initial and ongoing certificate requirements.

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