ESTATE PLANNING

Estate planning is not just for the rich. If you die without a valid will, you will not be able to name a guardian for your children, and your probate property will be distributed as required by Kentucky statutes, which may not be the distribution you would have wanted.

Under Kentucky law, if you die intestate, real estate that is probate property (except possibly real estate that was a gift from a parent, which is treated differently under the law) and personal property that is probate property generally go one-half to your surviving spouse, if any, and then after payment of funeral expenses, costs of administration of your estate, and debts, go to:

• your children and their descendants; if there are none, then
• your father and mother; if neither is living, then
• your brothers and sisters and their descendants; if there are none, then
• your husband or wife; if there isn't one, then
• your grandfathers and grandmothers; if there are none, then
• your uncles and aunts and their descendants (i.e. your cousins); if there are none, then
• your great-grandfathers and great-grandmothers; if there are none, then
• the brothers and sisters of your grandfathers and grandmothers and their descendants; if there are none, then
• your closest living kin; if there are none, then
• your husband or wife's kin (in the same order as set out above).

Wills

A will is your written instructions for how your property is to be distributed after your death. A will is the only way for you to nominate a guardian for your children if you (and your spouse, if you have one) die while your children are still minors (under age 18). A will is also the only way to name an executor--the person who will make sure your property is distributed as you wish, debts that are owed to you are collected, and debts you owe are paid. If you die without a valid will, someone, usually a family member, will have to petition the court to be appointed administrator of your estate, and if a guardian is needed for minor children someone will have to apply to be guardian. Making these decisions in advance through a will makes things easier for your family after your death.

Living Wills

A living will, also called an advance directive, is not really a will at all, because it has nothing to do with distributing property. Your living will is the way you can be sure that your family and your doctors will honor your wishes about health care if you become terminally ill and unable to make decisions about your health care. Specifically, through a living will, you can direct that life-prolonging treatment be withheld or withdrawn (or that it not be), direct that artificially provided food and water be withheld or withdrawn (or that it not be), designate one or more adults as surrogates to make health care decisions for you, and/or direct that all or parts of your body be donated for education, research, science, therapy, or transplantation purposes.

Trusts

A trust is a way for you--the settlor--to give money or other property to someone--the trustee-- for the benefit of someone else--the beneficiary. With some trusts, the settlor, trustee, and beneficiary are all the same person. Property you put in a trust is not part of your probate estate when you die, so it does not have to go through the probate process. There are several types of trusts. A living trust, also called an inter vivos trust, is a trust you create while you are alive. A testamentary trust is one created upon your death (in your will). A trust can be revocable, meaning you can change its terms, or irrevocable, meaning that you, the settlor, cannot change it. The type of trust that is appropriate for you, if any, depends on your goals, financial situation, and other factors. One common use of a trust is to leave money or other property to minor children but specify that they will not have control of it until they are 21, 25, or some other age.

Powers of Attorney

A power of attorney is a legal document that gives someone you choose--your spouse or anyone else--the legal authority to handle your financial affairs (all of them or just certain things you choose) for you. You may wish to execute a power of attorney, for example, if you are going out of the country for a time, which would make it impractical for you to handle your day-to-day financial affairs.

A durable power of attorney is the same type of legal document, but remains in effect even if you become unable for health reasons to act for yourself while you are still alive. A durable power of attorney can take effect immediately, or not for many years, such as when your doctors determine you are unable to act for yourself.

The person you name to handle your affairs is called your "attorney-in-fact", although he or she doesn't have to be, and usually isn't, an attorney.

Probate

Probate refers to the court-supervised process of distributing a person's probate property after death, paying the estate's debts, and dealing with claims against the estate and will contests. An executor or administrator of an estate may distribute the estate to the beneficiaries and heirs no sooner than six months after he or she qualifies as executor or administrator, unless the Court orders that administration of the estate may be dispensed with. Administration may be dispensed with in several situations, including (but not limited to) when there are no probatable assets or when the spouse's $15,000 exemption is more than the probatable assets.

Will Contests

A will contest is a legal proceeding challenging the validity of someone else's will. A will can be invalid for many reasons. For example, it may have been improperly executed, it may have been signed only under duress, or it may be forged or a result of other fraud. If you believe that you would have inherited more from someone if his or her will did not exist and that the will may be invalid (perhaps the circumstances surrounding the will are suspicious), you should consult an attorney. Only a small percentage of will contests succeed, so it is important to carefully consider the facts and the law that applies to those facts before deciding to pursue a will contest.