Why Wills Need to be Updated

Lives change and laws change. People come and go in our lives, through birth, death, marriage and divorce. Change is a constant factor in everyone’s lives. If your estate plan doesn’t keep up to date, says Next Avenue in the article “8 Reasons You May Need to Update Your Will,” you could create real problems for those you love. Here are eight reasons why people need to review their wills to ensure that your estate plan reflects your current life.

Moving to a new home. If you’ve moved to a new state since the last time your will was written, your will needs a review. Remember, wills are administered under the laws of the state where you live so the new state’s laws apply. An out-of-state will could present issues. If the number of witnesses required to make a will valid in your old state of residence was one but the new state requires two witnesses your will could be deemed invalid.

Selling one home and buying another. If your will does not reflect your current address, it’s going to be very difficult for your executor to properly transfer ownership or manage the sale of the house. Most wills incorporate specific language about homes that includes the address.

You’ve done a good job of downsizing. Kudos to you for cleaning out and getting rid of unwanted items. If you no longer own things that are itemized in a will, they’ll be skipped over. However, do you want to give heirs something else? Without specific instructions, they won’t know who gets what.

Did you already give away possessions? Avoid family conflicts by being clear about who gets what. If you already gave your oldest daughter an antique dining room set but your will says it goes to the youngest son, things could become awkward. Similarly, if you gave one child something with a higher market or sentimental value than what you gave to another, it could create tension in the family. Updating your will is an opportunity to adjust these gifts.

Charity relationships change. The same organization that mattered greatly to you ten years ago may not have as much meaning—or may have changed its focus. Update your will to reflect the charitable contributions that matter to you now.

Finances change. If a will spells out exact amounts and the money is gone, or if your accounts have increased, those numbers may no longer be accurate or reflect your wishes. The dollar amounts may create a challenge for your executor. What if you designated a gift of stock to someone that wasn’t worth much at the time, but is worth a small fortune now? Amending a will can ensure that your gifts are of the value that you want them to be.

One child is now your primary caregiver. If one child has dedicated the last five years to taking care of you, you may want to update the document to show your gratitude and compensate them for lost earnings or expenses. If you do, explain your reasons for this kind of change to other children, so that there’s no misunderstanding when the will is read.

A beneficiary has passed away. If you are a surviving spouse, that alone may not be reason to update your will, if—and this is a big if—your will included alternate recipients as a plan for this situation. If there were no alternate recipients, then you will need to revise your will after the death of a spouse. If you listed leaving items to a beneficiary who has died, instructions on how to distribute these items or assets to someone else can be done with an amended will.

Your estate planning attorney will be able to review your will and your estate plan with you to determine what items need to be updated. Your documents may need only a tune-up, and not a complete overhaul, but it is advisable to review estate plans every three or four years.

Reference: Next Avenue (August 22, 2019) “8 Reasons You May Need to Update Your Will”

 

Will My Family Have to Pay Off My Credit Cards When I Die?

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Credit card debt won’t vanish when you pass away. Your estate will settle your debts using your assets, says Yahoo Finance’s recent article, “What Happens to Credit Card Debt When You Die?”

The executor of your estate will use your assets to pay off your credit cards. However, if your debts wipe out all your assets, your heirs may be left with little or no inheritance.

If you’re worried about your family being stuck with your debts after you die, know your rights and work with an estate planning attorney to help protect your assets.

When a family member dies, relatives typically won’t have to pay off his or her credit card debts. However, there are some exceptions. A spouse or other family member might have to pay debts, if he or she:

  • Co-signed for a loan or credit card;
  • Jointly owned property or a business;
  • Lives in a community property state (California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin); or
  • Is required by state law to pay a debt, like health care expenses or to resolve the estate.

An authorized credit card user doesn’t have to pay off the deceased’s debts unless one of the conditions listed above is applicable. If it’s a joint account, the surviving cardholder must keep making on-time payments to avoid late fees and negative credit reporting. If sorting out debts is causing stress, a family can check the deceased’s credit reports.

Unless you have a living trust or make other arrangements, a probate court will determine your financial affairs after you die. In most states, the executor named in the will is responsible for handling the final details of your estate.  When the deceased has credit card debt and assets the big question is if the assets are available to the creditor. If the deceased had a life insurance policy proceeds go to beneficiaries before any of the debts are repaid. If the deceased had assets, credit card debts and other debts, the executor must know that the beneficiaries can’t get money before the bills are paid.

The first debt the estate has to pay is secured debt, like a mortgage or car loan. The estate then usually pays administrative and legal fees followed by unsecured debt, like credit cards. Creditors are required to submit their claims against the estate by a deadline determined by state law. If that claim meets the deadline, and the estate has sufficient assets, it must be paid. The rules vary by state, and arrangements made prior to death will impact the amount of debt that must be paid.

Ask an experienced estate planning attorney about a living trust so that assets held in a trust won’t be subject to probate. The trust will own the assets and they’ll be distributed according to the trust. These laws vary by state, so speak with an estate planning attorney licensed to practice in your state.

Reference: Yahoo Finance (August 19, 2019) “What Happens to Credit Card Debt When You Die?”

 

How to Help Your Elderly Parent Without Ruining Your Relationship

If you have elderly parents, you might have to step in at some point and provide caregiving services. Whether that concept means hands-on personal assistance with things like bathing, dressing, grooming, feeding or handling their finances and making decisions for them this change in your roles can be challenging for you and your parent. Here are some issues to consider about how to help your elderly parent without ruining your relationship.

It’s Usually Not “Leave It to Beaver”

Many people grow up seeing fictional families on television and wishing their parents and siblings got along better. Very few families measure up to the imaginary ones of fiction. You and your parent probably did not have the kind of relationship in which you would regularly get together for coffee or shopping. Quite a few people have strained interactions with their parents.

Relationships carry the baggage of the past. It is not helpful for people to tell you to forget about the past. Your parent is the same person with whom you have had conflict, which means he or she will continue to do things that upset you. If your parent was extremely authoritarian or independent, it will be difficult for him or her to accept someone telling them what to do – especially one of their children.

Patience versus Doormat

You should try to be understanding of what your parent is going through, losing independence and feeling less valuable or powerful. He might get confused and forget you already did things, he now accuses you of not doing. He might also be dealing with chronic pain and other health issues.

You should, however, set boundaries. Getting old does not give your parent a right to be physically, verbally, or emotionally abusive. Be firm with your parent, if any of these things happen. Being a dutiful son or daughter does not include being a doormat. Calmly inform your parent of the behavior that is not acceptable. You might need to have someone in social services arrange for counseling to help your parent adjust to the reality of aging and needing assistance.

The Silver Lining

For some people, this stage of life is a time to deal with unfinished business. You can talk out problems or questions. You might be able to resolve conflicts that could have caused you regrets down the road. The best approach for this goal to tread lightly. Just because your parent is frail, you do not have the right to beat her up verbally with a long list of criticisms and complaints.

Address only one piece of a small issue in a visit and do not dredge up unpleasant topics in every visit. You do not want your parent to dread seeing you. Be the kind of person you might wish your parent had been when you were a child – kind, compassionate and nurturing.

Those of you who have enjoyed a happy, healthy relationship with your parents can deepen your mutual affection and interaction. Since your parent is no longer rushing around to work and raise a family, you can have uninterrupted conversations and create memories to treasure. People who have had strained relationships might get to reach the point, at which they have pleasant times with their elderly parents.

With elderly parents, it is wise to make sure that they have current estate planning documents in place so that if something happens to them, their effects will be distributed per their wishes. Contact an experienced estate planning attorney before it is too late.

References:

A Place for Mom. “Parenting the Parent: Caring for Elderly Parents.” (accessed August 21, 2019 ) https://www.aplaceformom.com/planning-and-advice/articles/caring-for-elderly-parents

 

Understanding Why a Will is Important

These questions presented by The Westerly Sun in the article “Making a will is an important legal step,” may seem very basic but many people don’t really understand how wills work and why they are such an important part of estate planning. Let’s go through these fundamentals about wills.

A will is a legal document that must be prepared under very strict standards to explain your wishes about how you want your estate–that is, your property, money, tangible possessions, and real estate—distributed after you die. A will also does more than that. A will, which is sometimes referred to as a “Last Will and Testament,” also makes clear who you want to be in charge of your minor children, if both parents should die. It also is how you name a person to be in charge of your affairs after death, by naming them as executor of your estate.

A complete estate plan includes a will, and several other documents, including a power of attorney, trusts and a health care proxy. The goal of all of these documents is to make it easier for your surviving spouse or loved ones to take care of you and your possessions, if you become too ill to speak on your own behalf, or when you die.

Your will provides instructions about what happens to your estate. Who should receive your money and property? These instructions must be followed by the person you choose as your executor. The local probate court must give its approval, and then the estate can be distributed.

If you have a valid will, it is admitted to probate (a court process) upon your death, and then your wishes are followed. If you don’t have a will, you are said to have died “intestate.” The laws of the state will decide what will happen to everything you own that is subject to probate. Usually this means that assets are distributed to family members based on their degree of kinship with you.  This may not be what you wanted. If you have children, and especially if you have children with special needs, the court will appoint a guardian for those children. You may not want Aunt Jennifer raising your daughters, but that may end up happening.

Properly prepared by an experienced estate planning attorney, a will is a binding legal document that carries great significance. No one likes to think about dying, or becoming incapacitated, but by planning ahead, you can determine what you want to happen, and protect those you love.

Reference: The Westerly Sun (August 18, 2019) “Making a will is an important legal step”

 

Why You—and Everyone—Needs an Estate Plan

At its essence, estate planning is any decision you make concerning your property if you die or if you become incapacitated. There are a number of things to keep in mind when creating an estate plan, says KTUU in the article “Estate planning dos and don’ts.”

The first task is not what most people think. It’s very basic: making a list of all of your assets and how they are titled. Remember, the estate plan is dealing with the distribution of your assets—so you have to first know what those assets are. If you are old enough to have lived through the sale of several different financial institutions, do you know where your accounts are? Not everyone does!

Next, you need to be clear on how the assets are titled. If they are joint with a spouse, Payable on Death (POD) or Transfer on Death (TOD), jointly with a child or owned by a trust, they may be treated differently in your estate plan than if you owned them outright.

Roughly fifty percent of all adults don’t make a plan for their estate. That becomes a huge headache for their loved ones. If you don’t have an estate plan, your property will be distributed according to the laws of your state. What you do or don’t want to have happen to your property won’t matter, and in some instances, your family may be passed over for a long-lost sibling. It’s a risk.

In addition, if you don’t have an estate plan, chances are you haven’t done any tax planning. Some states have inheritance taxes, others have estate taxes, and some have both. Even if your estate’s value doesn’t come anywhere close to the very high federal estate tax level ($11.4 million per person for 2019), your heirs could inherit far less if state and inheritance taxes take a bite out of the assets.

For a blended family, there are a number of rules in different states that divide your assets. In Alaska, for instance, if some of the children of one spouse are not the children of the other spouse, there is a statutory formula that depends on how many children there are and which of them are living. Different percentages of money are awarded to the children which becomes complicated.

Another reason to have an estate plan has to do with incapacity. This is perhaps harder to discuss than death for some families. Estate planning includes preparing for what the individual would want to happen if they were injured or too sick to convey their wishes to others. Decisions about health care treatments and end-of-life care are documented with a Living Will (sometimes called an Advanced Care Directive), so your loved ones are not left wondering what you would have wanted and hoping that they got it right.

One last point about an estate plan: be sure to check beneficiary designations while you are doing your estate plan. If you own retirement accounts, life insurance policies, or other assets with named beneficiaries, the assets will pass directly to the named beneficiary regardless of the instructions in your will. If you opened an IRA when you had one child and have had other children since then, make sure to include all of those children and the proportion of their shares. There may be tax implications if only one child receives the assets and there may also be family fights if assets are not distributed equally.

If you have not created an estate plan for yourself, you need to contact an experienced estate planning attorney to help you.

Reference: KTUU (August 14, 2019) “Estate planning dos and don’ts”

 

When Do I Need a Power of Attorney?

Without a valid Durable Power of Attorney, the answer really depends on what documents need to be signed.

A Durable Power of Attorney is a legal document signed by the “Principal,” granting the authority to another individual to make decisions on the Principal’s behalf. This document is only in effect during the lifetime of the Principal.

nj.com’s recent article on this topic asks “Who can sign for an incapacitated person if there’s no power of attorney?” The article noted that to have the authority to conduct financial transactions concerning the assets solely owned by the incapacitated person who failed to execute a power of attorney, a Guardian will have to be appointed by the court.

A Guardianship is a legal relationship established by the court in which an individual is given legal authority over another when that person is unable to make safe and sound decisions regarding his or her person or property.

If it’s not an emergency, a guardian also will need to be appointed to make medical decisions for an incapacitated person who hasn’t signed a health care proxy. This is a legal document that gives an agent the authority to make health care decisions for an incapacitated person. It will take effect if the person is incapacitated or unable to communicate. The agent will make decisions that reflect the wishes of the incapacitated individual.

Speak with an experienced estate planning attorney if you believe you need a Durable Power of Attorney prepared before you become incapacitated.

Reference: nj.com (July 22, 2019) “Who can sign for an incapacitated person if there’s no power of attorney?”

 

Where Should I Keep My Estate Plan?

Many people ask their attorney to hold the original documents of their estate plan. This prevents the plan from being misplaced at home and keeps it away from prying family members.

Forbes’ recent article, “Keeping Your Estate Planning Documents Safe,” explains that because of the expense of storage and the move to paperless offices, some estate planning attorneys are now having their clients hold the original documents however, it leaves the client with the problem of where to put the originals.

If you need a safe and secure place for them, here are some options.

No safe deposit boxes. Avoid placing the original documents in a safe deposit box, because the authority to get into the box is inside the box! If you pass away or are incapacitated—and nobody has access to the safe deposit box—they’ll need a court order to get access. For them to get the court order, they need the documents inside the box. It’s like the chicken and the egg.

Get a fireproof safe. A fireproof safe is a great place to keep these important documents.

Make copies. Get a set of hard copies in another location that is easily accessible. You can now use the safe deposit box to hold a set of copies of your documents. Your estate planning attorney should also have a set of copies.

E-records. You  can also electronically download your estate planning documents to your computer for safe storage as well.

Notification.  You should notify your children, loved ones or family members where your original estate planning documents are located should they need to access them. Also, your primary care doctor should be given a copy of your Health Care Proxy for emergency purposes.

Don’t lose it if the originals are misplaced or destroyed. If the original documents somehow vanish, your family may still be able to use a set of copies. For instance, a photocopy of a will can be probated once the executor has attested that she has made a diligent search to find the original which hasn’t turned up.

Remember that this isn’t a “one and done” task. You should review your documents with your estate planning attorney every few years to make certain the people you’ve named in them are still alive and your intentions haven’t changed.

Reference: Forbes (August 16, 2019) “Keeping Your Estate Planning Documents Safe”

 

Can a Trust Be Amended?

A son has contacted an elder law attorney  now that mom is in a nursing home and he’s unsure about many of the planning issues, as reported by the Daily Republic. The article, “Amending trust easier if parents can make informed decision,” describes the family’s situation.

There is one point to consider from the start. If the son been involved in the planning from the start by meeting with the attorney and discussions, he might have less uncertainty about the plan and the details.

As for the details: mom is in her 90s with some savings, a few annuities, a CD and a checking account. She was left with five acres of land which is her home and a duplex on it and 12 additional acres with a rental property on it. Everything she owns has been placed in a trust. The son wants to be able to pay her bills and was told that he needs to have a Durable Power of Attorney with the correct powers and to be named trustee in her trust.

He reports that his mom is good with this idea but he has a number of concerns. If mom is sued, will he be personally liable? Would the Durable Power of Attorney give him the ability to handle her finances and the real estate in the trust?

If his mom has a revocable or living trust, there are provisions that allow one or more persons to become the successor trustee in the event that the parent becomes incapacitated or dies.  If she has appointed him as trustee in the trust he would become the trustee (or alternate trustee if her spouse, had passed).

Usually the Durable Power of Attorney is created when the trust is created so that someone has the ability to take control of finances for the person.

The trust should also show whether the successor trustee would be empowered to sell the real estate. Trusts can be drafted in a way that the client wants it written and the successor trustee receives only the trustee powers that are given in the document. As for the liability, the trustee is not liable to a buyer during the sale of a property. There are exceptions, so he would need to speak with an experienced estate planning attorney to help with the sale.

More specifically, assuming the trust does not name the son as a successor trustee and also does not give the son a power of attorney, the bigger question is are the parents mentally competent to make important decisions about these documents?

Given the age of these parents, an experienced estate planning attorney will be concerned and rightfully so, about their competency and if they can freely make an informed decision, or if the son might be exercising improper influence on them to turn over their assets to him.

There are a few different steps that can be taken. One is for the son, if he believes that his parents are mentally competent, to make an appointment for them with an estate planning attorney, without the son being present in the meeting, in order to determine their capacity and wishes. If the attorney is not sure about the influence of the son, he or she may want to refer the parents for a second opinion with another attorney.  If the parents are found not competent, then the son may need to become their conservator, which requires a court proceeding.

Planning in advance and discussing these issues are best done with an experienced estate planning attorney, long before the issues become more complicated and expensive to deal with.

Reference: Daily Republic (Aug. 10, 2019) “Amending trust easier if parents can make informed decision”

 

What Happens when Both Spouses Die at the Same Time?

There are any number of ways a person can inherit assets from another person. They may inherit assets from a trust, through a will or as a designated beneficiary of an insurance policy or retirement account. However, in each case, says Lake Country News in the article “Simultaneous and close together deaths,” the person inheriting the asset is living while the person they inherited from has died.

What happens if spouses die either at the same exact time or at a time that is very close to each other? The answer, as with so many estate planning questions, is that it depends.

The first question is did both decedents have estate planning documents in place? If so, what directions do the wills give? Are there trusts, and if so, who are the trustees? If they served as trustees for each other’s trusts, did they name a secondary trustee?

If real estate was owned as joint tenants with rights of survivorship, the estate of each deceased tenant receives an equal share of the asset unless it can be proven that a joint tenant survived the other.

Here’s an example: if a parent dies without a will and is survived by two children, but one of the two children dies only four days after the parent’s death, (i.e., fewer than 120 hours in California, the law presumes that the deceased child did not survive the mother). The sole surviving child’s estate receives the entire parent’s intestate estate.  A beneficiary who survives long enough to inherit, however, might die before receiving complete distribution of his or her inheritance.

A trust may provide for distributions to alternative beneficiaries. This is another reason why it is wise to have primary and secondary beneficiaries on all accounts that permit secondary beneficiaries. Not all accounts permit this. Similarly, a trust may provide for distribution to alternative beneficiaries. Otherwise, unless there has been advance planning, the undistributed inheritance becomes part of the deceased beneficiary’s estate where it will be distributed either according to the beneficiary’s will or according to the laws of intestacy of the decedent’s state of residence.

All of these instances are further reasons why it is so important for everyone to have a will and other estate planning documents prepared.

The legal and factual analysis associated with the distribution of a couple who die at the same time or in close proximity to each other varies from case to case. Speak with an experienced estate planning attorney to have an estate plan prepared to avoid your family having to unravel the knotty mess that is created when there is no will and no estate planning has been done.

Reference: Lake Country News (Aug. 10, 2019) “Simultaneous and close together deaths”

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What Goes into an Estate Plan?

The very idea of creating an estate plan can be intimidating, but this article from Brainerd Dispatch, “Navigating your estate plan,” wisely advises breaking down the process into smaller pieces making it more manageable. By taking it step by step, it’s more likely that you’ll be comfortable getting started with the process.

Start with Beneficiaries. This may be the easiest way to start. If you have retirement accounts, like IRAs, 401(k)s, 403(b)s or other retirement accounts, chances are you have already written down the name of the person who you want to receive your assets if you die. The same goes for life insurance policies. The beneficiary designation tells who receives the assets on your death. You should also note that there are tax ramifications if you do not have a beneficiary. Your assets could become taxable five years after you die without a named beneficiary.

Be aware that no matter what your will says, the name on your beneficiary designations on these accounts determines who gets the assets. You need to check on these to be sure the people you have named are still the people who you want to receive your accounts. You should review the designations every time you review your estate plan with your estate planning attorney which should be every three or four years.

Where There’s a Will, There’s a Way Forward. The will is a key document in your estate plan. It can be used to minimize taxes on your estate, ensure that your family has the management assistance they need, and if you have minor children, establish who their guardians should be. Don’t neglect updating your will whenever there is a big change to the law or changes in your life. Not having a will leaves your family in a terrible position where they will have to endure unnecessary expenses and added stress. Your assets will be distributed according to the laws of the Commonwealth of Massachusetts, and not according to your own wishes.

Directives for Difficult Times Health care proxies give your loved ones direction when a terrible situation occurs. If you become incapacitated, through an accident or serious illness, the health care proxy tells your family members what kind of care you want—or do not want. That  person can make medical decisions on your behalf. An estate planning attorney who is licensed will know what forms are accepted.

In addition, you’ll need a Durable Power of Attorney. This allows you to designate someone to step in and manage your finances in the case of incapacity. This is especially important if you are single because otherwise a court may name someone to be your financial guardian.

What About Trusts? If you own a lot of assets, own several piece of real estate or business entities or if your estate is complicated, a trust may be helpful. Trusts are legal entities that hold assets on behalf of a beneficiary or beneficiaries. There are many different types of trusts that are used to serve different purposes, from Special Needs Trusts that are designed to help families plan for an individual with special needs; revocable trusts are used to avoid probate and testamentary trusts are created only when you die. An experienced estate planning attorney will know which trusts are appropriate for your individual situation.

Reference: Brainerd Dispatch (Aug. 11, 2019) “Navigating your estate plan”