Making a Will
Having a will ensures that your property passes to your named beneficiaries. A will can be revoked or modified during your lifetime. If you die intestate, or without a will, the descent and distribution laws of Washington, D.C. will appoint an administrator for your estate and distribute your assets according to a list of succession, which might not be as you intended.
A will should include the following:
- Property distribution
- Provisions for children
- Executor to administer the estate
Probate is the court-supervised administration of decedents’ estates. It determines your will's validity, inventories your estate, and transfers the estate's assets to your heirs after all taxes and debts are paid. Having a will and other planning tools might not avoid probate entirely, especially with large estates. However, there are ways to dispose of assets during your lifetime to avoid probate, including:
- Revocable living trusts: A revocable trust can hold nearly any asset and you can continue to control your assets as trustee. A revocable trust becomes irrevocable when you die. It's then managed by your appointed successor trustee. These trusts can provide marital and creditor protection for your children.
- Joint ownership: With joint ownership of real or personal property, your property has a right of survivorship and title automatically passes to the surviving joint owner at your death.
- Payable or transfer on death designations: Stocks, bonds and bank accounts can have POD or payable-on-death designations, or TOD transfer-on-death designations. These transfer rights to the accounts upon your death.
- Irrevocable life insurance trust: You can transfer ownership of a life insurance policy to a trust to reduce the value of your estate for estate tax purposes. However, you'll have to sacrifice control of the policy and you cannot change the beneficiary.
- Totten trust: Also called a revocable grantor trust, a Totten trust is used for bank accounts. As the depositor, you're the trustor, trustee, and sole beneficiary during your lifetime. A contingent beneficiary takes over the account at your death.
- Small estate exemptions: Washington D.C. has a small estate affidavit procedure for personal estates valued at $100,000 or less if they include no real property.
Financial Power of Attorney
This instrument appoints someone to handle your financial affairs during your lifetime. A durable power of attorney takes effect immediately and continues if you become incapacitated. You can limit your agent’s power, or designate your document as a 'springing' durable power of attorney, which makes it effective only when a physician certifies that you've become mentally incapacitated.
Health Care/End-of-Life Decisions
- Living will: Also known as a health care directive, this sets forth your intentions regarding end-of-life health measures.
- Power of attorney for health care: A durable power of attorney for health care appoints someone who becomes an attorney in fact for you and makes critical health care decisions when you're mentally incapacitated. Your incapacitation must be certified by two District physicians. This document also allows you to opt in favor of life-prolonging care. Washington, D.C. forms are available online for a fee, or they can be obtained at hospitals or health care facilities. You can modify a power of attorney for health care by destroying the old one and creating a new one, but make sure that all your health care providers have a copy of the new one so there's no confusion.
Additional Planning Considerations
Some individuals might also benefit from other estate planning considerations, such as:
- Estate taxes: As of 2013, only very large estates valued at $5.25 million or more are subject to federal estate taxes. Washington D.C. has a small estate proceeding for estates valued at $40,000 or less.
- Life insurance: Life insurance can provide a valuable financial cushion if your children, spouse or other dependents need support after your death. If you have other sources of benefits like a pension, group life insurance, or a large IRA, this could be an unnecessary expense.
Consult a Washington, D.C. Estate Planning Attorney
State and federal estate laws are constantly changing. Consult a Washington, D.C. estate planning attorney to ensure that your assets, personal, medical and financial affairs are managed according to your intentions.