TEN QUESTIONS ABOUT ESTATE PLANNING
1. Do I need an estate plan if I don’t have significant assets?
Yes. Estate planning isn’t just for the wealthy. Everyone benefits from having basic documents in place that:
- Name guardians for minor children
- Designate who will make healthcare decisions if you cannot
- Specify who will handle your financial affairs if you become incapacitated
- Direct how your assets (regardless of value) should be distributed
- Avoid the time and expense of probate for your loved ones
Even with modest assets, proper planning ensures your wishes are followed and reduces burdens on your family during difficult times.
2. What’s the difference between a will and a revocable living trust?
A will takes effect only after your death and must go through probate—a court-supervised process that can be time-consuming and expensive in Alaska.
A revocable living trust takes effect immediately and:
- Avoids probate completely when properly funded
- Provides for management of your assets if you become incapacitated
- Remains private, unlike a will which becomes public record
- Can be changed or revoked during your lifetime
- Allows for more complex and nuanced distribution instructions
- Provides seamless management of assets across multiple states
Both documents name beneficiaries, but a trust offers significantly more privacy, flexibility, and probate avoidance.
3. What happens if I die without an estate plan in Alaska?
Without an estate plan, Alaska’s intestacy laws determine who receives your assets—which may not align with your wishes. The court will appoint an administrator for your estate and guardians for any minor children without your input. Your estate will go through probate, potentially creating delays, additional expenses, and public proceedings your family must navigate while grieving.
Several unwanted consequences can occur:
- Estranged Family Members: Assets could go to estranged relatives you haven’t spoken to in years simply because they fall into the legal line of succession.
- Disinherited Ex-Spouses: In some cases, an ex-spouse might receive assets if divorce proceedings weren’t properly finalized.
- Excluded Stepchildren: Stepchildren you’ve raised receive nothing unless you legally adopted them.
- Unequal Distributions: Alaska’s formula doesn’t account for which children might need more support or which relatives you were closest to.
For married couples, your spouse may not receive everything; assets could be divided between your spouse and children according to state formulas. For unmarried couples, your partner may receive nothing regardless of your relationship length.
4. How often should I update my estate plan?
You should review your estate plan every 3-5 years and update it whenever significant life events occur, such as:
- Marriage, divorce, or remarriage
- Birth or adoption of children or grandchildren
- Move to a different state
- Significant changes in assets or liabilities
- Purchase or sale of a business
- Death of a named executor, trustee, or guardian
- Major changes to laws
- Changes in your personal wishes or family dynamics
Regular reviews ensure your plan continues to reflect your current situation and wishes.
5. How does having a blended family impact my estate planning needs?
Blended families—those with children from previous relationships—face unique estate planning challenges. Without proper planning, unintended consequences can occur:
- Your current spouse and children from a previous relationship may end up in conflict
- Children from a previous marriage could be unintentionally disinherited
- Family heirlooms might not stay within your family.
- Your spouse’s future remarriage could redirect assets away from your children
Our firm helps blended families create balanced plans that:
- Provide for your current spouse while ensuring your children ultimately receive their inheritance
- Use specialized trust provisions to protect both spouse and children’s interests
- Address how family heirlooms and sentimental items will be distributed
- Include clear guidance to prevent misunderstandings and reduce potential conflicts
- Account for various “what if” scenarios, such as remarriage or the premature death of beneficiaries
With thoughtful planning, you can create harmony between all family members while ensuring your assets ultimately benefit those you choose.
6. What does “funding a trust” mean and why is it important?
Trust funding refers to the process of transferring your assets into your trust by changing titles, beneficiary designations, or assignments. This critical step is often overlooked.
An unfunded trust is like an empty safe—it provides no protection for assets left outside it. Assets not properly transferred to your trust may still require probate, defeating a primary advantage of having a trust.
Our firm not only creates your trust documents but also provides comprehensive funding services to ensure your assets are properly titled and transferred, maximizing the benefits of your trust-based estate plan.
7. How can I protect assets for a child or family member with special needs?
Standard inheritance can disqualify someone with special needs from essential government benefits. A properly structured Special Needs Trust allows you to provide for supplemental care while preserving eligibility for programs like Medicaid and Supplemental Security Income (SSI).
Our firm creates specialized trusts that:
- Maintain benefit eligibility
- Provide funds for quality-of-life enhancements
- Include appropriate trustees who understand benefit regulations
- Incorporate flexible provisions as benefit laws change
- Address long-term care and housing concerns
This specialized planning ensures your loved one with special needs receives both government benefits and the additional support you wish to provide.
8. Can I use online forms or software to create my estate plan?
While online tools may seem cost-effective initially, they often create significant problems later. Generic forms:
- May not comply with Alaska’s specific legal requirements
- Cannot assess your unique family dynamics or asset structure
- Provide no guidance on properly executing documents
- Offer no assistance with trust funding or asset retitling
- Don’t address Alaska-specific issues like Alaska Native Corporation shares
- Cannot adapt to your specific questions or concerns
The cost of correcting problems from inadequate planning typically far exceeds the initial savings. Our personalized approach ensures your estate plan actually works when your family needs it most.
9. How do I ensure my digital assets are properly handled after my death?
Digital assets—from online accounts and cryptocurrencies to digital photos and intellectual property—require special planning. Alaska law provides mechanisms for fiduciaries to access digital assets, but only with proper authorization in your estate documents.
Our comprehensive digital asset planning:
- Includes specific authorization language in your estate documents
- Creates a secure digital asset inventory
- Addresses password management and access credentials
- Provides instructions for different types of digital assets
- Respects privacy concerns while ensuring access for those who need it
This emerging area of estate planning prevents your digital legacy from being lost or inaccessible to loved ones.
10. What potential asset protection features can Alaska trusts offer for descendants?
Alaska’s trust statutes may provide asset protection advantages for descendants’ trusts (trusts you create for your children or other beneficiaries), though results can vary based on individual circumstances:
- Spendthrift Protection: Alaska law includes spendthrift provisions that may help protect trust assets from certain creditors of a beneficiary, particularly when properly structured.
- Discretionary Trust Benefits: When structured as a discretionary trust (where distributions are at the trustee’s discretion), Alaska law may provide additional layers of protection against some creditor claims.
- Potential Divorce Protection: Alaska statute contains provisions that may help prevent trust assets from being considered marital property in a beneficiary’s divorce, though outcomes depend on many factors including the jurisdiction of the divorce.
- Extended Rule Against Perpetuities: Alaska allows trusts to continue for up to 1,000 years, which may enable long-term planning across multiple generations.
- Directed Trust Options: Alaska law permits the separation of trustee duties, allowing for specialized management of different trust functions.
- Privacy Considerations: Alaska provides certain privacy protections for trust arrangements, which may be beneficial in some circumstances.
These features make Alaska trusts worth considering for parents who want to provide for their children while adding potential layers of protection. However, asset protection is complex and depends on many factors including proper drafting, administration, and the specific circumstances of any future claims. Our firm can help you understand how these provisions might apply to your unique situation and design a trust that appropriately balances protection with your other goals.
To schedule a consultation to plan for your future, call us at (907) 375-0750.
