An Estate Plan Should be in Writing

January 25, 2019

Make plans for handling an issue, before it becomes an issue. A plan not written down is really just a wish. I wish my son could handle my affairs. I wish my friend could speak for me in the hospital if need. I wish my special needs child would be eligible for needed government aid. Without committing something property to writing, these become more of what paves the road to hell. The legal issues that may surround a health problem, can go from bad to worse if you are not protected by legal documents expressing your wishes, according to the New Jersey Herald in “The importance of putting plans in writing.” The message hits home especially hard, when the friends experience problems that could have been resolved earlier with correct planning. In one example, a woman’s friend began to experience unexpected health problems. Her husband is incapacitated and there are no children to step in and help. The couple’s lack of legal documents has made a difficult situation even worse. Although discussing concepts like end-of-life care can be challenging, all adults should have specific plans in place, even if their estate plan is basic: a last will and testament, a living will and a power of attorney. It is never to early to put these documents into place. If you are a student about to enter college, your parents ability to help or get information may disappear legally at age 18. That newly minted adult should at least have a designated power of attorney and a medical directive, in case they are unable to manage their own affairs or make healthcare decisions. Unfortunately, many people still think estate planning is only for wealthy people who want to pay less taxes. Tax planning can help lighten tax liability for some. However, there are far more important reasons to do estate planning. The main reason for estate planning is to set down expectations and wishes, while you are alive and after you pass. An estate planning attorney will help review the benefits of having a power of attorney and a healthcare directive. They can help, if the situation occurs where your loved ones have to make decisions for you. The amount of time, expense and frustration of going through a guardianship process can be avoided, if these items are in place. An estate planning attorney can also help you with completing beneficiary forms for non-probate assets, preparing a funeral plan, planning a personal property memorandum and discussing elder care and planning for incapacity. Making decisions in advance regarding who will care for minor children, if young parents cannot and who will be the person’s executor and handle all the details of their estate, are all necessary. Many couples choose joint ownership and consider that their estate planning. However, that’s not enough. What happens when the last “surviving” joint owner passes? There are many other issues that need to be addressed. An estate planning attorney can advise you in creating an estate plan

A Revocable Living Trust Might Be a Good Fit

January 24, 2019

There are many kinds of trusts. They aren’t just for the wealthy. Our practice has featured the preparation of wills and trusts exclusively since 1995. In the intervening years, we have prepared thousands of each such plans, and now work extensively implementing them after a client has died. Our caseload is now about 45% administration of wills and/or trust. We are often asked by clients which is better. That depends on many factors. But Trusts seem like a much better choice often, after the time comes to use the planning. If maintained and funded, a trust can be more cost effective, private and easier to administer. On the other hand, I know many attorneys who scoff at the notion of using a trust for people who are not millionaires. Probate, they often assure, is not so bad. And is a trust necessary? Everyone needs an estate plan. However, everyone should also at least consider a trust, according to The New York Times in “Life After Death? Here’s Why You Should Have a Trust.”It turns out that many people who are not wealthy, can also benefit from having a trust. There are many different kinds of trusts which serve different purposes. One is a revocable trust, which the owner can change. They are considered by many to be the “work horse” of modern estate planning. A revocable trust can avoid the need for a public probate court proceeding after the person dies, saving time and keeping money from being immediately available to heirs and executors alike. Trusts are also useful for times when people become incapacitated and need someone else to take care of their finances. Because many more people are living longer and the number of people with dementia is increasing, there are more situations where trusts are useful to the family and caregivers. A will is different than a trust and is a public document. The probate process requires a disclosure of assets, bank and other financial accounts and the names of beneficiaries. That information remains private with a revocable trust. Other considerations regarding trusts: You should have any type of trust set up by an estate and trust attorney. A house, real property, bank or investment accounts can be placed into a trust. A revocable trust does not always end at the death of the original owner. However, just how long it may last, depends upon the laws of your state. People also use trusts to protect their assets from others or to assure the long-term care of someone who is disabled. You can have a professional manager, family member or friend as a trustee or co-trustee of a trust. Sometimes having a licensed professional who has federal reporting requirements can provide an extra layer of protection. An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include taking a close look at trusts. Reference: The New York Times (March 22, 2018) “Life After Death? Here’s Why You Should

Intestate Law is the State Writing a Will for You

January 18, 2019

Do you really want the state to determine where your assets end up? A key concept to planning your estate is that you already have a plan in place, whether you know it or not. If you die without a will, or die “intestacy”, meaning “without a Will”, the laws of your state essentially write a will for you. That may not result in your assets going where your would have preferred, according to The Daily News in “’Are You My Heir?’-Who Inherits When You Die Without a Will,” Each state has laws called “intestacy laws” that govern how probate assets are distributed, if someone dies without having a will and establishes the inheritance hierarchy based on a person’s family structure. For example, if you are married but have no children and no grandchildren, your estate will be passed to your spouse. If two people die and there are no descendants (children or grandchildren), their parents, if living, will inherit their assets. A child who is legally adopted has the same rights of inheritance as biological children. Children born outside of the marriage may not. If a child should predecease a parent, the living descendants of the child (if there are any) will inherit their share. In some states, heirs are limited to family members who share the same grandparents. If your family is not geographically or otherwise close, you may have heirs you have never met. Intestacy can become extremely complex, when there are children and grandchildren. Descendants inherit from their parents and grandparents in percentages dependent upon the total number of children and the number of children in each generation that follows. If a grandfather has three adult children who are living and one adult child who has passed, then the estate will be divided by three—a third each to each of the two living children and the final third to the grandchildren of the third (deceased) child. The children of the deceased child are heirs, even if the parent has died. Add non-marital children—children born outside of a legal marriage or step-children—and things start to get complicated. A court will have to determine the intestate inheritance, based on proof that the child is a descendant and if that relationship is established in a timely manner. If the father’s name is on the child’s birth certificate, that is generally enough proof of the relationship. It doesn’t matter if they have a close relationship or have never met. The same applies to marital children—whether they have been close and caring or are estranged. An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and makes reliance on state law unnecessary.Reference: The Daily News (Sep. 7, 2018) “’Are You My Heir?’-Who Inherits When You Die Without a Will”

Estate Plan? Don’t Forget Digital Assets!

January 16, 2019

The world has changed, and it really isn’t a good idea to ignore your digital assets when estate planning. Estate planning has generally been about tangible assets through the years. However, now attention needs to be also focused on the digital world in order to be thorough, according to the North Bay Business Journal in “Your digital life likely will outlive you, so here’s how to bring your estate plan into the modern age.” Don’t think you have a digital identity and digital assets? For most of us, we need to take a closer look. Here are a few of your digital assets to consider: bank accounts, email accounts, Facebook page, Linked In profile, online photo albums, blogs and websites. They’re likely to be around long after you are gone. This is still a relatively new area of estate planning. What often happens is that heirs think they can simply find and use the decedent’s user name and passwords to access their accounts. However, what they learn, is that they are legally not permitted to do so. A new law was passed in 2017 in California that attempted to bring order to this chaos. The Revised Fiduciary Access to Digital Assets Act allows executors and trustees to obtain disclosure of a person’s digital assets, after the original owner dies but only under certain conditions. In the recent past, federal and state laws have made it hard for executors and trustees to gain access to these assets without a court order. Just being the executor or trustee does not automatically give you the right to access assets. There must be evidence that the decedent consented to disclosure. Having these access provisions in wills, trusts and powers of attorney is an evolving area. The new law mainly gave social media platforms and privacy advocates what they wanted: a requirement of prior consent before disclosure. However, the end result is that it is easier to gain access to digital assets, if executors and trustees can show that the decedent did consent to disclosure. However, it’s still not that simple. Here are a few steps to help your loved ones deal with your digital assets: Inventory every digital asset that you have. Create a list of log-in and password information, plus any “secret questions/answers.” Having a password program like “Lastpass” can be a great tool to allow for access and control for your decision maker. Tell your trusted family member or friend where that list is. Store it with your other estate planning documents, possibly in your attorney’s vault. Do not include your digital asset inventory, as part of your will. If your estate goes through probate, all of your account information will become part of the public record. An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and will most likely include digital assets. If you already have an estate plan, revisit the package with your estate planning attorney and take your digital assets

Stan Lee Faced Challenges in Last Years of His Life

December 19, 2018

A solid estate plan can help avoid many of the challenges presented in the news lately. There have been a number of celebrities such as Stan Lee, Aretha Franklin and Prince in the news in recent years, who have passed away with controversies surrounding either estate plans or lack of estate plans. However, that does not have to be the case as long as a few steps are followed, according to MarketWatch’s article “Stan Lee’s tangled web of estate planning and how to avoid this mess.” Lee, publisher, and chairman of Marvel Comics, died at age 95 after a year-long illness. He is survived by his 68-year-old daughter, J.C., and has faced a number of unpleasant and public challenges in the last few years. His wife of nearly 70 years died in 2017, and earlier this year he was accused of sexually harassing nurses and home aides. Lee also reported that about $1.4 million were missing from his bank accounts and that $850,000 was stolen to purchase a condo. Lee had also retained and fired a number of business managers and attorneys in recent times. He said he had handled most of his money management by himself in his early years but then realized he needed help. Unfortunately, some of the people he trusted were people who later proved to be untrustworthy. This is the sad realization that many families face as the leader ages and capacities falter. It is yet unclear whether Lee had a will or any trusts in place. Many celebrities do not have these documents, putting heirs and potential beneficiaries in a position where they have to battle it out in a courtroom setting. Aretha Franklin and Prince are just two examples of high-profile, mega-million estate disasters. For the rest of us, estate planning is fairly straight-forward, as long as we get it done. There are a few steps everyone needs to take, including planning for incapacity or disability, getting important documents prepared, such as a will and power of attorney, and reviewing beneficiaries. What often happens is that as people age, they suffer cognitive decline in varying degrees and there’s a professional or a family member who believes this is occurring. In Stan Lee’s case, he signed a document stating that his daughter spent too much money, yelled and screamed at him and had befriended three men with intentions to take advantage of him (from the Hollywood Reporter). A few days after the document was notarized, Lee took it back. As people become less confident in what they’re doing, they are susceptible to being manipulated by other people. Having an estate plan set up years in advance of any cognitive decline, is one way to protect against these kinds of situations. For Lee’s estate, the sheer volume of documents will be a challenge. There may be many lawyers and business managers and accountants showing up, all claiming to have been brought onto the team with specific directions upon his death. Regular people can avoid a

Put Not Your Trust in Money, Put Your Money in Trust

December 14, 2018

“Put not your trust in money, put your money in trust”, per Oliver Wendell Holmes, Sr. is embraced by estate planning lawyers and shows that trusts are not a passing fad. Everyone needs an estate plan, and when you understand what a trust does, your plan should probably include one, at least conditionally. According to The New York Times in “Life After Death? Here’s Why You Should Have a Trust.” It turns out that many people who are not wealthy can also benefit from having a trust. I consider a trust essentially a box to manage assets. There are many different kinds of trusts which serve different purposes and can be effective now or at death. One is a revocable trust, which the owner can change. They are considered by many to be the “work horse” of modern estate planning. A revocable trust can avoid the need for a public probate court proceeding after the person dies, saving time and keeping money from being immediately available to heirs and executors alike. Such a trust is created and holds assets during your lifetime. Other considerations regarding revocable trusts: You should have any type of trust set up by an estate and trust attorney. A house, real property, bank or investment accounts can be placed into a trust. A revocable trust does not always end at the death of the original owner. However, just how long it may last, depends upon the laws of your state. People also use trusts to protect their assets from others or to assure the long-term care of someone who is disabled. You can have a professional manager, family member or friend as a trustee or co-trustee of a trust. Sometimes having a licensed professional who has federal reporting requirements can provide an extra layer of protection. They are not a public record, unlike your will. Trusts are also useful for times when people become incapacitated and need someone else to take care of their finances. Because many more people are living longer and the number of people with dementia is increasing, there are more situations where trusts are useful to the family and caregivers. A trust can also be created in your Last Will and Testament. We rarely create a will without a trust. A trust created in a will is a “Testamentary Trusts” because it is within your Last Will and Testament, but it can manage assets in much the same way as a revocable trust would. The difference is mechanical: the Testamentary Trust receives asset often through a probate process, because wills work through probate. A Testamentary Trust can be a designated beneficiary of life insurance, retirement plans and annuities. Care should be taken in drafting and when doing so because of issues like stretching out IRA withdrawals. An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include taking a close look at trusts. Reference: The New York Times (March 22, 2018) “Life After Death? Here’s

The Queen is Gone, and She Didn’t Have an Estate Plan

December 11, 2018

We all procrastinate about something. The time may never seem right to deal with your inevitable death. Aretha Franklin. the “Queen of Soul” has passed away, leaving an $80 million estate and no estate plan, according to Investment News in “Aretha Franklin estate echoes planning problems of Prince.” Franklin was not married so the estate will pass to her four children. It’s similar to the situation that occurred when Prince died unmarried and without a will in 2016. Had she been married her estate could have passed tax-free to a spouse and there would have been planning opportunities available at that time. Franklin’s four kids will now receive equal shares of her estate. However, they will have to pay a considerable amount in taxes. She was a resident of Michigan, which does not have an estate tax, so there won’t be a state estate tax. However, the federal government takes 40% of portions of the estate valued over $11.18 million. In other words, a $27.5 million tax bill. Without the benefit of a trust being established by a will, those assets will be taxed again by the federal government at the time that the four heirs pass, when the money moves to her grandchildren. Celebrity estates, like that of Franklin, must undergo a complex valuation process to correctly assign an approximate future value of income. Like Prince, there are image rights and music royalties, and the buzz surrounding her death is likely to inflate its value and the tax that will be levied. While Michigan does not have an estate tax, the state does have a “postmortem right of publicity,” meaning that her heirs have the right to legally protect her image for commercial use. Her postmortem rights of publicity are expected to be extremely high, because of her iconic stature as a musician, songwriter and cultural touchstone. Estates of celebrities and creative artists are required to be valued and the appraisal must be reconciled with a parallel appraisal conducted by the IRS. Remember Michael Jackson’s situation? The estate initially valued his name and image at $2,015, while the IRS valued it at more than $434 million. One of Franklin’s children reportedly has special needs. This could put him in a precarious position. If he inherits a large sum of money, he will no longer be eligible for any government programs. Given the size of his inheritance that will not be a problem. For those with less wealth, however, that is why estate planners encourage the use of special needs trusts. This not only protects the child’s eligibility but protects them from misusing the money or being scammed by unscrupulous individuals. Even if you are not an entertainer with assets that total in the millions, an estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. Reference: Investment News (Aug. 22, 2018) “Aretha Franklin estate echoes planning problems of Prince”

With Estate Plans What is the Most Important Ability?

March 20, 2018

The most important ability in an estate plan is- Availability.

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