Why a Will Is the Foundation of an Estate Plan

An estate planning lawyer has many different tools to achieve clients’ estate planning goals. However, at the heart of any plan is the will, also known as the “last will and testament.” Even people who are young or who have modest levels of assets should have a will—one that is legally valid and up to date. For parents of young children, this is especially important, says the article “Wills: The Cornerstone of Your Estate Plan” from the Sparta Independent. Why? Because in most states, a will is the only way that parents can name guardians for their children.

Having a will means that your estate will avoid being “intestate,” that is, having your assets distributed according to the laws of your state. With a will, you get to determine who is to receive your property. That includes your home, car, bank and investment accounts and any other assets, including those with sentimental value.

Without a will, your property will be distributed to your closest blood relatives, depending upon how closely related they are to you. Few individuals want to have the state making these decisions for their property. Most people would rather make these decisions for themselves.

Property can be left to anyone you choose—including a spouse, children, charities, a trust, other relatives, a college or university, or anyone you want. There are some limits imposed by law that you should know about: a spouse has certain rights to your property, and they cannot be reversed based on your will.

For parents of young children, the will is used to name a legal guardian for children. A personal guardian, who takes personal custody of the children, can be named, as well as a property guardian, who is in charge of the children’s assets. This can be the same person, but is often two different people. You may also want to ask your estate planning attorney about using trusts to fund children’s college educations.

The will is also a means of naming an executor. This is the person who acts as your legal representative after your death. This person will be in charge of carrying out all of your estate settlement tasks, so they need to be someone you trust, who is skilled with managing property and the many tasks that go into settling an estate. The executor must be approved by the probate court, before they can start taking action for you.

There are also taxes and expenses that need to be managed. Unless the will provides directions, these are determined by state law. To be sure that gifts you wanted to give to family and loved ones are not consumed by taxes, the will needs to indicate that taxes and expenses are to be paid from the residuary estate.

A will can be used to create a “testamentary trust,” which comes into existence when your will is probated. It has a trustee, beneficiaries and directions on how distributions should be made. The use of trusts is especially important, if you have young children who are not able to manage assets or property.

Note that any assets distributed through a will are subject to probate, the court-supervised process of administering and proving a will. Probate can be costly and time-consuming, and the records are available to the public, which means anyone can see them. Many people chose to distribute their assets through trusts to avoid having large assets pass through probate.

Talk with an experienced estate planning attorney about creating a will and the many different functions that the will plays in settling your estate. You’ll also want to explore planning for incapacity, which includes having a Power of Attorney, Health Care Proxy, and Medical Directives. Estate planning attorneys also work on tax issues to minimize the taxes paid by the estate.

Reference: Sparta Independent (Dec. 19, 2019) “Wills: The Cornerstone of Your Estate Plan”

What Estate Planning Documents Do You Need?

Wouldn’t your children be relieved to learn that you’ve done all the necessary advance planning so that if you should become incapacitated, someone has been properly appointed to help with health care and financial decisions? The Tennessean suggests that you “Give your loved ones peace of mind with legal documents” so that your spouse and your family will be able to take the necessary steps to give you the care and dignity you (and they) deserve.

Here’s a checklist of the documents that everyone should have in place:

Power of Attorney for Health Care. When you have mental capacity, you can make your own decisions. When you do not, you need someone to be appointed who knows your beliefs and wishes and has the ability to advocate for you. Ideally, you should name one person to be your agent to minimize arguments. Talk with your family to explain who has been named your power of attorney for health care, and if need be, explain why that person was chosen.

Power of Attorney for Finances. There are different kinds of POA for finances. The goal of the POA for finances is so they can make decisions on your behalf, when you become incapacitated. Some states use “springing” POA—but that may mean your family has to go through a process to prove you are incapacitated. Check with an estate planning elder law attorney in your state to see what the laws are.

Advance Directive. This describes what kind of life sustaining treatment you do or do not want if you are in a coma, are terminally ill or have dementia. You can direct whether you want CPR, tube feeding, and other life-sustaining procedures to be withheld, if your quality of life is diminished and there is no hope of improvement. This will help your family to know what you want in a time when emotions are running high.

Last Will and Testament. Have a will created, if you don’t already have one. This directs distribution of your assets to your wishes and does not leave them to the laws of your state. Not having a will means your family will have to go through many more court proceedings and people you may not want to receive your worldly possessions may get them.

Trusts. Talk with your estate planning attorney about placing assets in trust, so they are not subject to the public process of probate. Your wishes will be followed, and they will remain private.

Reference: Tennessean (Nov. 16, 2019) “Give your loved ones peace of mind with legal documents”

Estate Planning, Simplified

Estate planning attorneys hear it all the time: “My children will have to figure it out,” “Everything will go to my spouse, right?” and “It’s just not a priority right now.” But then we read about famous people who don’t plan, and the family court battles that go on for years. Regular families also have this happen. We just don’t read about it.

A useful article from The Mercury titled “Estate planning basics and an estate attorney meeting preparation” reviews the basics of estate planning and explains how following the advice of an experienced estate planning attorney can protect families from the financial and emotional pain of an estate battle.

Estate planning is not just concerned with passing property and assets along to heirs. Estate planning also concerns itself with planning for incapacity, or the inability to act or speak on one’s own behalf. This is what happens when someone becomes too ill or is injured, although we usually think of incapacity as having to do with Alzheimer’s disease or another form of dementia.

Lacking an estate plan, all the assets you have worked to accumulate are subject to being distributed by a court-ordered executor, who likely doesn’t know you or your family. Having an estate plan in place protects you and your family.

Living Will or Advanced Directive. A living will provides directions from a patient to their doctor, concerning their wishes regarding life support. This alleviates the family from having to make a painful and permanent decision. They will know what their loved one wanted.

Springing Durable Power of Attorney. This document will allow someone you choose to make financial and legal decisions on your behalf, if you are not able to. Some attorneys prefer to use the Durable Power of Attorney, rather than the Springing POA, since the Springing event may need a physician to state that the individual has become incapacitated, and it may require the court becoming involved. Powers of attorney can be drafted to be very limited in nature (i.e., to let one single task be accomplished), or very broad, allowing the POA to handle everything on your behalf.

Durable Power of Attorney for Health Care. This lets a person you name make health care decisions for you, if you are not able to do so. The decision-making power is limited to health care only.

Should Your Health Care POA and Your Financial/Legal POA be the Same Person? Deciding who to give these powers to can be difficult. Is the person you are considering equally skilled with health care, as they are with finances? Someone who is very emotional may not be able to make health care decisions, although they may be good with money. Think carefully about your decision. Just remember it’s better that you make this decision, rather than leaving it for the court to decide.

Last Will and Testament: This is the document people think of when they think about estate planning. It is a document that allows the person to transfer specific property, after they die in the way they want. It also allows the person to name a guardian for any minor children and an executor who will be in charge of administering the estate. It is far better that you name a guardian and an executor, than having the court select someone to take on these roles.

The estate planning process will be smoother, if you spend some time speaking with your spouse and family members to discuss some of the key decisions discussed above. Talk with your loved ones about your thoughts on death and what you’d like to have happen. Think about what kind of legacy you want to leave.

Estate battles often leave families estranged during a time when they need each other most. Spend the time and resources creating an estate plan with a qualified estate planning attorney. Leaving your family intact and loving may be the best legacy of all.

Reference: The Mercury (Oct. 27, 2019) “Estate planning basics and an estate attorney meeting preparation”

A Will is the Way to Have Your Wishes Followed

A will, also known as a last will and testament, is one of three documents that make up the foundation of an estate plan, according to The News Enterprises’ article “To ensure your wishes are followed, prepare a will.” As any estate planning attorney will tell you, the other two documents are the Power of Attorney and a Health Care Power of Attorney. These three documents all serve different purposes, and work together to protect an individual and their family.

There are a few situations where people may think they don’t need a will, but not having one can create complications for the survivors.

First, when spouses with jointly owned property don’t have a will, it is because they know that when the first spouse dies, the surviving spouse will continue to own the property. However, with no will, the spouse might not be the first person to receive any property that is not jointly owned, like a car.  Even when all property is jointly owned—that means the title or deed to all and any property is in both person’s names –upon the death of the second spouse, a case will have to be brought to court through probate to transfer property to heirs.

Secondly, any individuals with beneficiary designations on accounts transfer to the beneficiaries on the owner’s death, with no court involvement. However, the same does not always work for POD, or payable on death accounts. A POD account only transfers the specific account or asset.

Other types of assets, such as real estate and vehicles not jointly owned, will have to go through probate. If the beneficiary named on any accounts has passed, their share will go into the estate, forcing distribution through probate.

Third, people who do not have a large amount of assets often believe they don’t need to have a will because there isn’t much to transfer. Here’s a problem: with no will, nothing can be transferred without court approval. Let’s say your estate brings a wrongful death lawsuit and wins several hundred thousand dollars in a settlement. The settlement goes to your estate, which now has to go through probate.

Fourth, there is a belief that having a power of attorney means that they can continue to pay the expenses of property and distribute property after the grantor dies. This is not so. A power of attorney expires on the death of the grantor. An agent under a power of attorney has no power, after the person dies.

Fifth, if a trust is created to transfer ownership of property outside of the estate, a will is necessary to funnel unfunded property into the trust upon the death of the grantor. Trusts are created individually for any number of purposes. They don’t all hold the same type of assets. Property that is never properly retitled, for instance, is not in the trust. This is a common error in estate planning. A will provides a way for property to get into the trust, upon the death of the grantor.

With no will and no estate plan, property may pass unintentionally to someone you never intended to give your life’s work to. Having a will lets the court know who should receive your property. The laws of your state will be used to determine who gets what in the absence of a will, and most are based on the laws of kinship. Speak with an estate planning attorney to create a will that reflects your wishes, and don’t wait to do so. Leaving yourself and your loved ones unprotected by a will, is not a welcome legacy for anyone.

Reference: The News Enterprise (September 22, 2019) “To ensure your wishes are followed, prepare a will.”

How Does a Probate Proceeding Work?

A Will, also known as Last Will and Testament, is a legal document that is used in probate court, if a person dies with assets that are in their name alone without a surviving joint owner or beneficiary designated, says the Record Online in the article “Anatomy of a probate proceeding.” The probate process proves the will is valid.

Probate is a judicial or court proceeding, where the probate court has jurisdiction over the assets of the person who has died. The court oversees the payment of debts, taxes and probate fees, in addition to supervising distribution of assets to the person’s beneficiaries. The executor of the will is to manage the probate assets and then report to the judge.

Without a will, things get messy. A similar court proceeding takes place, but it is known as an administrative proceeding, and the manager of the estate is called an administrator, and not the executor.

To start the probate proceeding, the executor completes and submits a probate petition with the probate court. Some executors do this on their own, but most hire an estate planning attorney to help. The attorney knows the process, which keeps things moving along.

The probate petition lists the beneficiaries named in the will, plus certain relatives who must, by law, receive legal notice in the mail. Let’s say that someone disinherits a child in their will. That child receives notice and learns they have been disinherited. Beneficiaries and relatives alike must return paperwork to the court stating that they either consent or object to the provisions of the will.

A disinherited child has the right to file objections with the court, and then begin a battle for inheritance that is known as a will contest. This can become protracted and expensive, drawing out the probate process for years. A will contest places all of the assets in the will in limbo. They cannot be distributed unless the court says they can, which may not occur until the will contest is completed.

The will contest can be resolved in two ways: with a settlement between the parties involved, or with a jury trial. It is always possible that the disinherited person could prevail and be awarded any amount of the inheritance, regardless of what the decedent said in their will.

In addition to the expense and time that probate takes, while the process is going on, assets are frozen. Only when the court gives the all clear does the judge issue what are called “Letters Testamentary,” which allows the executor to start the process of distributing funds. They must open an estate account, apply for a taxpayer ID for the account, collect the assets and ultimately, distribute them, as directed in the will to the beneficiaries.

Can a will contest, or probate be avoided? Avoiding probate, or having selected assets taken out of the estate, is one reason that people use trusts as part of their estate plan. Assets can also be placed in joint ownership, and beneficiaries can be added to accounts, so that the asset goes directly to the beneficiary.

By working closely with an estate planning attorney, you’ll have the opportunity to prepare an estate plan that addresses how you want assets to be distributed, which assets may be placed outside of your estate for an easier transfer to beneficiaries and what you can do to avoid a will contest, if there is a disinheritance situation looming.

Reference: Record Online (August 24, 2019) “Anatomy of a probate proceeding”

Your Estate Plan Decides or the State Decides

It’s something that everyone needs, but often gets overlooked. Estate planning makes some people downright uncomfortable. There’s no law that says you must have an estate plan—just laws that will impact how your property is distributed and who will raise your children, if you don’t have a will. Planning is important, says WMUR 9 in a recent article “Money Matters: Estate planning,” if you want to be the one making those decisions.

An estate plan can be simple, if you only own a few assets, or complicated if you have significant assets, more than one home and multiple investments. Some strategies are easier to implement, like a last will and testament. Others can be simple or complex, like trusts. Whatever your needs, an estate planning attorney will be able to give you the guidance that your unique situation requires. Your estate planning attorney may work with your financial advisor and accountant to be sure that your financial and legal plans work together to benefit you and your family.

There are circumstances that require special estate planning:

  • If your estate is valued at more than the federal gift and/or estate tax exclusion, which is $11.4 million per person in 2019
  • You have minor children
  • There are family members with special needs who rely on your support
  • You own a business
  • You own property in more than one state
  • You want to leave a charitable legacy
  • Your property includes artwork or other valuable collectables
  • You have opinions about end-of-life healthcare
  • You want privacy for your family

The first step for any estate plan is a thorough review of the family finances, dynamics and assets. Who are your family members? How do you want to help them? What do they need? What is your tax picture like? How old are you, and how good is your health? These are just a few of the things an estate planning attorney will discuss with you. Once you are clear on your situation, you’ll discuss overall goals and objectives. The attorney will be able to outline your options, whether you are concerned with passing wealth to the next generation, avoiding family disputes, preparing for a disability or transferring ownership of a business.

A last will and testament will provide clear, legal direction as to how your assets should be distributed and who will care for any minor children.

A trust is used to address more complex planning concerns. A trust is a legal entity that holds assets to be used for the benefit of one or more individuals. It is overseen by a trustee or trustees, who can be individuals you name or professionals.

If you create trusts, it is important that assets be retitled so the trust owns the assets and not you personally. If the assets are not retitled, the trust will not achieve your goals.

Some property typically has its own beneficiary designations, like IRAs, retirement accounts and life insurance. These assets pass directly to heirs according to the designation, but only if you make the designations on the appropriate forms.

Once you’re done with your estate plan, make a note on your calendar. Estate plans and beneficiary designations need to be reviewed every three or four years. Lives change, laws change and your estate plan needs to keep pace.

Reference: WMUR 9 (Aug. 1, 2019) “Money Matters: Estate planning”

Advance Planning Key for Alzheimer’s Patients

A retired physician and his wife have allowed a local television station to report their family’s journey with Alzheimer’s over the course of the last four years. The series continues with WCCO CBS Minnesota’s article “’All Lined Up Before You Need It’: Alzheimer’s Association Shares Steps for Estate Planning,” with four steps to take, if you notice that a family member is having memory lapses or trouble with simple tasks.

The Quinn family—Dr. Paul Quinn and his wife Peg—had some tough conversations years ago, when Paul’s memory was better, and when he was able to be completely honest with his wife about his wishes and what the couple would need to do moving forward.

Peg Quinn said that getting everything lined up long before it’s needed, is very important.

If there’s any sign of cognitive decline, there are legal and financial steps that must be pursued. Start with addressing the family budget and projected medical costs for long term care. If possible, gather all family members together for a planning session.

If they live in different parts of the state, or of the country, ask the family members to travel for a weekend family meeting. This is the kind of planning that is better when everyone is physically present.

Start by naming a power of attorney. It needs to be someone who is aware of the situation and will be able to make decisions on your behalf. An estate planning attorney can assist with making this decision.

Next, establish an advance directive with a focus on medical decisions. This may be the toughest part, since it is impossible to know how long someone will live with Alzheimer’s. The average patient lives four to eight years, according to the Alzheimer’s Association. The cost of care can add up fast—as much as $5,000 to $7,000 a month in some cases.

That’s why the next step—selecting an elder law estate planning attorney is so important. Planning for long-term care, qualifying for Medicaid and other benefits, is a complex challenge.

Dr. Quinn expressed his wishes to stay in his home as long as possible. However, his wife admits that he can’t stay focused on any projects for very long. The familiarity of their home makes life much easier for both of them, so they agreed early on to have in-home care, if it’s ever needed.

An estate planning attorney will help the family, by drafting estate planning documents and creating a plan as early as possible. A last will and testament must be created and executed before the person is legally incompetent. The same goes for a power of attorney and any health care power of attorney documents. Medicaid planning should be done as soon as possible, since there is a five-year look back period concerning transferring any assets.

Reference: WCCO CBS Minnesota (July 23, 2019) “’All Lined Up Before You Need It’ : Alzheimer’s Association Shares Steps for Estate Planning”

Why You Need a Last Will and Testament

A will and testament is the document that allows you to describe how you want your belongings and assets to be distributed after you die. It’s different than a “living will,” explains The Daily Sentinel, in the article “It’s important to have a Last Will and Testament.” A living will is a document used to detail how someone wants their end of life matters conducted.

In Colorado and some other states, the Living Will is referred to as an Advance Directive, which helps to avoid some confusion between what it accomplishes and the tasks of the will.

The will is also the document used to name the person who will be the personal representative, often referred to as the “executor”, to carry out the directions in the will.

When there’s no will, there is much more work to settle an estate. The distribution plan is determined by the laws of the state. It is not likely to be what the person had in mind, but by then, it is too late.

Every parent needs a will, because it is used to name a guardian for minor children or a child with special needs. This is not a decision that can be left to the law. There is no automatic solution based on state law, like there is for assets and belongings.

If there is a disagreement about who should care for the dependents, or how the assets should be used to care for the dependents, the only solution is to go to court and have the court decide what is in the children’s best interests. The time, expense and stress on the family is easily avoided, simply by having a properly prepared will.

There are occasionally questions about whether a general or special power of attorney can be used to name a person to handle affairs when someone dies. This is not true. The authority given to a person in a power of attorney automatically and legally terminates, when the person who gave that authority to another person has died.

Several years ago, a widow was preparing to create a will, but never did. She had no surviving parents or siblings, but she did have a son. She probably thought that the law would give him all her assets automatically.

Unfortunately, after the woman died, it was learned that the “son” was an informally adopted son who had never been legally adopted. According to the laws of the state, he had no legal right to her estate. She could have had a will prepared and he would have inherited everything. However, because she had no will, distant relatives who she did not even know, were the recipients of her estate.

This example may be a little extreme, but it is not uncommon. Many unexpected things occur when there is no estate plan, or an estate plan is prepared by an inexperienced person using a form they found online or at the local library.

Reference: The Daily Sentinel (June 1, 2019) “It’s important to have a Last Will and Testament”

What If Your Executor Doesn’t Want to Serve?

When you’ve finally come to determine who you trust enough to serve as your executor, you’ll need to take the next step. It involves having a conversation with the person about what you are asking them to do. You’ll need to ask if they are willing, says the Pocono Record in the article “Don’t assume person is willing to be your executor.” People are often flattered at first when they are asked about this role, but if they don’t fully understand the responsibilities, they may decide not to serve just when you need them the most.

Once your executor has agreed to act on your behalf and you have a last will and testament prepared by an estate attorney, tell your executor where your will is stored. Remember that they need to have access, in addition to knowing where the document is. If the will is kept at home in a fire-proof box or a document box that is locked, make sure to tell them where the key is located.

If you feel that the will would be safer in a bank’s safe deposit vault, you have a few additional tasks to complete. One is to make sure that your executor will be able to access the safe deposit box. That may mean adding them to the list of people who have access. They may be technically permitted to enter the box with a bank representative solely for the purpose of obtaining the last will and testament.  However, you should check with your branch first.

Once they have the last will and testament and it is filed for probate, the Register of Wills issues Letters Testamentary, which says that the executor has the authority to open the safe deposit box to inventory its contents, after proper notice is given to the state’s authorities. The executor must complete an inventory form for the authorities and any personal property in the safe deposit box must be appraised for fair market value as of the date of death. Inheritance tax will need to be paid on the value, if there is any due.

Communication is very important in the executor’s role. You may or may not want to allow them to see the will before you pass, but they will need to know where the original document can be found.

To make the next part of the executor’s job easier, create an inventory of your assets and include information they will need to complete their task. They’ll also need to know contact information and account numbers for homeowners and car insurance, veterans’ benefits, credit cards, mortgage, pensions, retirement accounts and any other assets.

Some people store their information on their computer. However, if the executor cannot access your computer or cannot get into the computer because they don’t have your password, you may want to create a hard copy document, as well as keeping information on your computer.

Taking on the role of an executor is a big job. You can show your appreciation, even after you are gone, by making all preparations for the information needed.

Reference: Pocono Record (May 1, 2019) “Don’t assume person is willing to be your executor”

Suggested Key Terms: Executor, Last Will and Testament, Safe Deposit Box, Letters Testamentary

There’s A Reason Why There are Laws about Wills and Estates

If this question sounds like something from a lawyer’s bar exam, that would be about right. It sounds like the first will should be in control, since his intentions were made clear in the first will, even if it was not executed correctly. This was explained by nwi.com in the article “Estate Planning: Will formalities are important.” However, there are many different factors that go into determining which of these three wills should be the one that the court accepts. This is a good illustration of why a will should be prepared with the help of an estate planning attorney.

First, is the third will valid? If there were no witnesses, it seems very clear that it is not. Except for very unusual circumstances, a will is only valid if it is in writing, signed by the person who is its “creator,” which is the “testator,” and witnessed by not one but two witnesses.

The next question is, how about that second will? Is it valid? Was the second will revoked, when the third was created, even though it was not properly executed?

There are two basic ways to revoke a will: physical destruction or written instrument. If the will was not destroyed, then the revocation of the second is considered to have occurred by the creation of the third will. Most wills contain a recital revoking all previous wills and codicils, which serves as a written revocation.

However, there’s a problem. Because the third will is most likely void, then it could not have revoked the second will. Will revocations also need to be witnessed, and since the third will was not witnessed, the recital contained in the third will revoking the prior wills is also void.

It, therefore, seems that the second will is valid in this situation. We say it seems, because there may be other factors that might also make the second will invalid: we don’t have all the facts.

The lesson from this article is that when it comes to wills, trusts and estate plans, the formalities really do matter. Procedures and formalities are considered more important than intent.

Another story that illustrates that point comes from an attorney who was involved in an estate matter where the person who made the will tried to take out several beneficiaries, by taking a razor blade to the document and physically removing their names from the will. The estate battle began after he died. The intention was clear—to remove the beneficiaries from the will. However, because the proper formalities were not followed, the beneficiaries were not properly removed from the will and they received their bequests after all.

If you have a will and estate plan and you wish to make changes to it, sit down with an estate planning attorney to discuss the changes you want to make, and have the documents properly revised, following all the required steps. Don’t try to do this yourself: your wishes may not be followed otherwise.

Reference: nwi.com (March 10, 2019) “Estate Planning: Will formalities are important”