Guam Lawyers – Estate Planning

A recent decision by the Supreme Court of Guam highlights the need for all who own property to document how their property is to be used during their lifetime and how it is to be distributed upon their passing.

Issued in February, the case Ramiro v. White concerns money left by a decedent in multiple bank accounts. When opening his first four bank accounts, the decedent named several beneficiaries on the bank’s form. The decedent then opened other accounts, for which no beneficiaries were named.

Upon the decedent’s death, the beneficiaries were informed that they were only entitled to the first set of bank accounts because the decedent named them specifically on the beneficiary form. The bank’s position is that because the decedent did not identify the beneficiaries at the time he opened the other bank accounts, a probate proceeding would need to be opened to distribute the funds in the remaining bank accounts. The beneficiaries took the bank to court and argued that the first beneficiary form should apply to the newer accounts and that the beneficiaries were entitled to the funds in all accounts.

The trial court determined that the first beneficiary form was ambiguous with respect to which accounts were included. The trial court looked at other evidence and found that the decedent did not intend to include the beneficiaries in the new accounts. The beneficiaries appealed to the Supreme Court of Guam arguing that the initial form was not ambiguous and that the court erred by looking at other evidence. The Supreme Court of Guam disagreed and affirmed the lower court’s decision.

Situations like Ramiro v. White are quite common in Guam because many people do not take the time, for whatever reason, to document their intent on how to utilize their assets if they should become disabled or how to distribute the assets of their estate upon their death.

You should take the time and look to a professional who can help prepare an estate plan that documents your intentions. The process can be painstaking but can also be reassuring. A well-developed plan will help alleviate the need for family members to ask a court to interpret your intentions and allows you and your family to enjoy time together knowing that there will be no issues upon your passing.

An estate plan is an arrangement for the use, conservation and transfer of wealth. Estate planning is much more than drafting a will. A good estate plan addresses the following: the creation of an estate, the increase of an existing estate to meet the needs of the owners and his or her family, and the preservation of the estate from unnecessary taxes and costs.

A good plan should provide for the best utilization of assets during the owner’s lifetime. The plan should provide for lifetime needs, such as funds for children’s education, income for retirement, replacement of income in the event of disability and management of the estate in the event of incapacity.

A good plan should also provide for the disposition of assets upon death in such a way that the estate being passed on is maximized and is left in accordance with the wishes of the decedent and the needs of the family.

The first step is to determine your objectives. Only after you determine your objectives can an estate planner help determine the best tool to carry them out. Tools include obtaining a marital deduction and the community property exclusion, bypassing taxes, avoiding probate, using revocable living trust, purchasing life insurance, handling business interests and making charitable gifts.

Planning will force you to come to grips with matters that you may not want to think about. For instance, how will you provide for your needs in the event of early retirement or disability? Who do you trust to manage your estate in the event of your death? Who will receive your estate? How will your spouse and children be taken care of? These are questions many of my clients have a difficult time answering, and, in fact, some have taken a year to get through these questions because planning requires divulging financial and other private facts about personal family matters that tend to make one uncomfortable.

Tax-saving methods are frequently employed to achieve objectives. By minimizing taxes, you may have a larger estate to enjoy during your lifetime and may also leave a larger estate to satisfy the needs of your family after your death. It is important to note, however, that tax savings is only one aspect of estate planning. In other words, tax planning is generally not the primary objective; a tax plan should never be used if the plan conflicts with what you really want to achieve. For instance, you should not gift income-producing assets to save income taxes when you don’t really want your family members to have the income.

The big takeaway here is that we all should take the time to document our intentions. While it’s a challenging process, I can guarantee that it is not as financially taxing or as stressful as asking a stranger — a court — to interpret your intentions. If you would like to speak to one of our Guam Lawyers you may call (671) 472-6813.

— Vincent C. Camacho is the managing principal for the Iriarte Camacho Calvo Law Group LLC and is part of the Estate Planning Group. He may be reached at vcamacho@icclawgroup.com.