Moderator: Welcome to today's Consumer Law Viewpoint discussion with John Steffan and Coury Macdonald. Coury and John, thank you for joining us. Please get us started by explaining why people need estate plans. What happens if they don't create them?

John Steffan and Coury Macdonald: Thank you. We are pleased to be here. If you do not create an estate plan, meaning you have created no will or trust for yourself, then the government has created one for you. The government will determine who gets your money, when beneficiaries receive distributions, determine who will administer your estate and will set the costs of administration. It will most certainly not comport with your wishes. It could be the most expensive of estate plans available to you. You will pay the maximum required death taxes. You will have no peace of mind and no control. If you do not create any estate plan, it is termed "dying intestate."

Annandale, Va.: What, exactly, is a living trust?

John Steffan and Coury Macdonald: A living trust is a contract that eliminates living probate, it avoids death probate, it may reduce or eliminate death taxes, and it allows you to control your estate management during your lifetime and after your death. A living trust allows you to protect your children or other beneficiaries from their own personal problems, including bankruptcy, creditors and divorce. Most of all, it gives you peace of mind.

Germantown, Md.: Hi. How can I find a good estate attorney? What are the indicators of a good estate attorney? Another question for you, please: My husband and I are originally from a foreign country. We do not have any children or relatives in the U.S. Can we ask our relatives in our home country to execute our will? If yes, who will notify our relatives outside of the U.S.? Thank you.

John Steffan and Coury Macdonald: There are many criteria to consider in finding a good estate planning attorney. First and foremost, the attorney must be experienced in estate planning -- a specialist. Second, it is important the attorney should be backed by a professional estate planning organization. Third, it should be a community-based law firm with projected longevity so that you and your heirs can ask questions about documents prepared for you. Fourth, they should be reasonably priced. Fifth, the attorney should recognize that they are in a service industry. The best method of finding a good estate planning attorney is through referrals from other professionals, i.e., financial planners, CPAs, brokers. On your screen, there should be a link to a list of estate planning attorneys throughout the U.S.

Check with your attorney before you appoint a non-U.S. citizen to execute your will or trust. The executor or trustee would be in charge of notifying relatives outside the U.S.

Washington, D.C.: How can I prevent my future husband from collecting assets set aside for my children, i.e., my house, stocks, and retirement?

John Steffan and Coury Macdonald: A good family lawyer can prepare a prenuptial agreement that protects your separate assets from the claims of each other. There are other techniques that are available using irrevocable trusts and other such devices.

Richmond, Va.: May an adult child be the trustee and still a beneficiary of their parent's revocable living trust? After the parent dies and the trustee adult sells and/or distributes the parent's real and/or personal property held in the trust, is there any paper work or filings other than the final tax forms?

John Steffan and Coury Macdonald: An adult child may be both a successor trustee and beneficiary for a parent's living trust and typically they are in most estate plans. With regard to the administration of a living trust, there may indeed be paperwork associated with the administration, including final income tax and/or estate tax return filings, obtaining valuations and/or appraisals for assets, and accountings to beneficiaries, etc. Essentially, the administration of a living trust dramatically reduces paperwork and costs, cuts out the court probate process, and maintains confidentiality in the estate.

Arlington, Va.: Can real property be placed and held in a revocable living trust? Do you "conditionally" transfer the deed to the trustee when you file the trust instument on the land records? It seems that it would cloud the title to have a "revocable" authority to transfer land when a legitimate revocation might pop up later!

John Steffan and Coury Macdonald: Yes. Real estate is a prime example of an asset that should be funded into your living trust. The deed is not conditionally transferred; rather, the trust owns the property. The real estate can always be taken back out of the trust if necessary or if mandated by the trustors/grantors (persons who establish the trust). There is no cloud on title.

Arlington, Va.: I've been told that if you don't own property, you don't need a will. Is that true?

John Steffan and Coury Macdonald: If you die with any property that requires the physical transfer of title when you die, you should have some form of an effective estate plan in place for the reasons we gave to the initial question.

Washington, D.C.: Since my partner of nine years and I cannot get married, it is even more important that we get the correct planning documents. We are thinking we need wills, obviously, but also power of attorney, medical power of attorney, and living will, etc. What documents do you recommend and what approximate cost are we looking at in D.C.? Thanks.

John Steffan and Coury Macdonald: Whether it is a estate plan centered around a living trust or wills, every effective estate plan should include a durable powers of attorney for health care, living wills, general durable powers of attorney for finances or property matters. There may be other documents that are necessary, but they depend upon whether a will or trust is created for you, and may depend upon the value of your estate, and may depend upon your personal circumstances. These issues must be discussed with an experienced estate planning attorney. Costs range from attorney to attorney and depend upon what your needs are.

Rockville, Md.: Currently all liquid assests are in CDs with the owners as the parents and each child (there are two children in the family). The parents are ages 72 and 82. This was done as the parents can still pull the interest to live on and so it would be easly transferred upon the death of the parent. Is this as a good means to use to avoid any tax or probate issues? If not what would you suggest?

John Steffan and Coury Macdonald: Joint tenancy planning does not guarantee that the joint tenant/child will receive the asset on the death of the parent. This also has no impact on death taxes. The value of all assets will be included at the full fair market value on the date of death for the application of estate taxes, irrespective of how title is transferred on death, whether by will, trust, beneficiary designation or pay/transfer on death. Generally, joint tenancy is not a good estate planning tool. The bottom line is that joint tenancy does not necessarily avoid any tax or probate issues.

Sterling, Va.: Is a document written by me that states how my personal belongings are to be disbursed a legal document in the state of Virginia?

John Steffan and Coury Macdonald: No, it is not a legal document. It is not binding. In order to be binding, it must be executed in accordance with the statutes in the commonwealth of Virginia governing testamentary documents. Alternatively, the personal property may be disposed of in accordance with the terms of a revocable living trust.

Washington, D.C.: Is is possible to avoid long-term gains taxes by placing said gains in an irrevocable trust, as a gift to a family member in a lower-tax bracket?

John Steffan and Coury Macdonald: Irrevocable trusts involve gifting from you to the trust. Generally, when you make a gift of an asset, the beneficiary takes your basis in the asset. If instead you make a bequest of the asset upon your death, the beneficiary receives a step-up in basis, meaning they take the asset at the value on your date of death. Although basis is one issue to consider, there are many others to review with the appropriate professionals. For instance, sometimes a beneficiary having to someday pay capital gains may prove cheaper than having to pay death taxes, which currently have a top rate of 50 percent.

Washington, D.C.: Who controls the trust after the originator dies?

John Steffan and Coury Macdonald: The person you appoint as successor death trustees. In many cases, it would be one of your adult children.

San Diego, Calif.: Do I have to go to an attorney to get a living trust or can I draft it myself?

John Steffan and Coury Macdonald: Always use experienced estate planning attorneys. This is too complex and risky for do-it-yourself work. It is better to pay a reasonable fee now to create an effective estate plan, rather than to pay the "piper" later for inadequately-drafted homemade documents.

Glen Echo, Md.: My living trust is about 10 years old. My wishes for the secondary trustee and for distribution of my estate have changed. Do I write a new trust or can I amend the old one? How does one amend a trust?

John Steffan and Coury Macdonald: You can amend your living trust with a properly prepared and executed amendment. Depending upon the age, terms and quality of your trust, it may be advisable to restate your trust to take advantage of recent changes in legislation and improve its quality and thoroughness.

Washington, D.C.: Obviously, a will is a legal document, which must be prepared by an attorney. However, I am concerned about the cost associated with preparing such a document.

John Steffan and Coury Macdonald: There are many reasonably priced estate planning attorneys. A simple will should not be expensive. Shop smart, but don't bargain hunt. You get what you pay for in estate planning.

Washington, D.C.: When a person is an executor of a will and has to put public notices in a newspaper, what is the obligation that it be a decent sized newspaper -- not a very small community paper?

John Steffan and Coury Macdonald: The statutes of each jurisdiction govern what are the appropriate newspapers, typically of general circulation, in which you need to publish legal notices. It does not necessarily need to be the paper with the largest circulation in your locality.

Alexandria, Va.: How common is it for law firms such as yours to get training from financial counselors and the like when helping someone prepare trusts and estates?

John Steffan and Coury Macdonald: Typically, we would work with financial planners, CPAs or other professionals, in developing an estate plan for a client on an as needed basis.

South Bethany, Del.: What is your opinion about using POD, payable on death, on bank accounts and brokerage accounts?

John Steffan and Coury Macdonald: There are typically much better methods of engaging in estate planning. Joint tenancy and POD can create more problems than they solve. As a general rule, these methods of transferring title or assets should not be used in lieu of proper estate planning.

Alexandria, Va.: Recently married. Bought my house before I met my wife. Deed and mortgage are in my name only, and it's not worth refinancing to add her. What is the best way to ensure a smooth transition of the house to her if anything were to happen to me? I read about a joint tenancy with rights of survivorship, but I don't quite understand it.

John Steffan and Coury Macdonald: You may add your wife to the deed as joint tenants with right of survivorship. A joint tenancy with right of survivorship is nothing more than a method of holding and transferring title to an asset. However, that may not be very prudent because it takes maximum advantage of the unlimited marital deduction (a tax trap for the unwary). There are other disadvantages. Check with your attorney before adding your wife to the deed.

John Steffan and Coury Macdonald: These have been general answers to general questions. It is always prudent to discuss these matters face to face with a qualified estate planning attorney. You may contact us if you would like a booklet on estate planning (EMail: John@SteffanMacdonald.com or Coury@SteffanMacdonald.com) or you may attend one of our public seminars. For more information on estate planning, visit our Web site (there are links for both on this page). Thank you for your participation.

Moderator: Our thanks to John Steffan, Coury Macdonald, Steffan & Macdonald, L.L.C., and all who participated.