What Is a Conservatorship?

A conservator is appointed by a judge. This person handles the estate of an incapacitated adult, as well as their finances, their basic affairs and everyday care. Administrative matters such as Medicare, insurance, pensions, and medical coverage are all also managed by the conservator. The conservator must keep meticulous records that are subject to review by the judge.

The Advocate’s recent article entitled “Alzheimer’s Q&A: What is adult guardianship?” explains that a conservatorship typically lasts as long as the individual lives. The conservator may change because of death, relocation, or an inability to manage the conservator duties and responsibilities. A judge also has the power to replace the conservator, if he or she is repeatedly making poor decisions or neglecting required responsibilities.

A conservator can be wise in some situations because it lets family members know that someone is making the decisions. It also provides clear legal authority to deal with third parties. There is also a process in which a judge will approve any major decisions. However, appointing a conservator can be expensive. An experienced estate planning attorney or elder law attorney must complete court paperwork and attend court hearings. A conservatorship can also be time-consuming due to the required ongoing paperwork.

A big question is when it is appropriate to seek conservatorship. If the individual has become mentally or physically incapable of making important decisions for himself or herself, then it would be smart to have a court-appointed guardian. Moreover, if the person does not already have legal documents in place, like a living will or power of attorney, then the conservatorship would benefit in covering decisions about personal and financial matters.

Even if the individual has a power of attorney for both health care and finances, he or she might need a conservator to make decisions about his or her personal life. This can include topics, such as living arrangements and who is allowed to visit. It is not always easy to determine if an individual can make decisions, but a judge understands that a conservator is viable for those with advanced Alzheimer’s or other forms of dementia.

Families that want to set up a conservatorship need to file formal legal papers and participate in a court hearing before a judge. Evidence of the physical and mental condition of the individual requiring conservatorship must be clearly presented. The person who is the subject of the conservatorship has the opportunity to contest it. Ask an experienced estate planning or elder law attorney who specializes in conservatorships about your specific situation.

Reference: The Advocate (Jan. 25, 2021) “Alzheimer’s Q&A: What is adult guardianship?”

 

Am I Named in a Will? How Would I Know?

Imagine a scenario where three brothers’ biological father passed away a decade ago. The father wasn’t married to the brothers’ mother, plus, he had another family with three children, grandchildren, and great grandchildren. The father never publicly acknowledged that the three boys were his children. They’ve now heard rumors that he left them something in his will—which may or may not exist. The father’s wife has also passed away.

Nj.com’s recent article entitled “How can we find out if our father left us something in his will?” explains that a parent isn’t required to leave his or her adult children an inheritance.

If a person doesn’t leave a will when they die, the intestacy laws of the state in which he or she dies will dictate how the decedent’s property is divided.

For example, if you die without a will in Kansas, your assets will go to your closest relatives. If there were children but no spouse, the children inherit everything. If there is a spouse and descendants, the spouse inherits one-half of your intestate property, and your descendants inherit the other one-half of your intestate property.

In Illinois, if you’re married and you pass away without a will, the portion given to your spouse is based upon whether you have living descendants, such as children and grandchildren.

In New Jersey, if the decedent is survived by a spouse and children—this includes any children who are not children of the surviving spouse—the surviving spouse gets the first 25% of the intestate estate, but not less than $50,000 nor more than $200,000, plus one-half of the balance of the intestate estate. In that state, the descendants of the decedent would receive the remainder.

Note that an intestate estate doesn’t include property that’s in the joint name of the decedent and another person with rights of survivorship or payable upon death to another beneficiary. In our problem above, the issue would be whether the three boys would’ve been entitled to a percentage of the property permitted under the state intestacy statute, or under a will if you could prove there was one.

However, the time for the three boys to make a claim against their father’s estate would have been at his death. A 10-year delay is a problem. It may prevent a recovery because there are time limitations for bringing legal actions. However, they may have other claims, and there may be reasons you are not too late.

Litigation is very fact-specific, and the rules are state-specific. The boys should talk to an estate litigation attorney, if they think there are enough assets to make at it worth their while. Also, you should contact an experienced estate planning attorney to create an estate planning package.

Reference: nj.com (Dec. 29, 2020) “How can we find out if our father left us something in his will?”

 

Does a Trust Have to Be Funded to Be Valid?

Thinking you have divided assets equally between children by creating a trust that names all as equal heirs, while placing only one child’s name on other assets is not an equally divided estate plan. Instead, as described in the article “Estate Planning: Fund the trust” from nwi.com, this arrangement is likely to lead to an estate battle.

One father did just that. He set up a trust with explicit instructions to divide everything equally among his heirs. However, only one brother was made a joint owner on his savings and checking accounts and the title of the family home.  Upon his death, ownership of the savings and checking accounts and the home would go directly to the brother. Assets in the trust, if there are any, will be divided equally between the children. That’s probably not what the father had in mind, but legally the other siblings will have no right to the non-trust assets.

This is an example of why creating a trust is only one part of an estate plan. If it is not funded, that is if assets are not retitled, it will not work.

Many estate plans include what is called a “pour-over will” usually executed just after the trust is executed. It is a safety net that “catches” any assets not funded into the trust and transfers them into it. However, this transfer requires probate, and since probate avoidance is a goal of having a trust, it is not the best solution.

The situation as described above is confusing. Why would one brother be a joint owner of assets, if the father means for all of the children to share equally in the inheritance? When the father passes, the brother will own the assets. If the matter went to court, the court would very likely decide that the father’s intention was for the brother to inherit them. Whatever language is in the trust will be immaterial.

If the father’s intention is for the siblings to share the estate equally, the changes need to be made while he is living. The brother’s name needs to come off the accounts and the title to the home and they all need to be re-titled in the name of the trust. The brother will need to sign off on removing his name. If he does not wish to do so, it’s going to be a legal challenge.

The family needs to address the situation as soon as possible with an experienced estate planning attorney. Even if the brother won’t sign off on changing the names of the assets, as long as the father is living there are options. Once he has passed, the family’s options will be limited. Estate battles can consume a fair amount of the estate’s value and destroy the family’s relationships. It would be wise to reach out to your estate planning attorney to review your estate plan. If you have not prepared estate planning documents, contact an experienced estate planning attorney to prepare them for you.

Reference: nwi.com (Jan. 17, 2021) “Estate Planning: Fund the trust”

 

Can I Fire the Executor of My Will?

If you are wondering how to change the executor of a will after the fact, KAKE.com’s recent article entitled “How to Change the Executor of a Will” says that the process is pretty simple. Even so, you should work with an experienced estate planning attorney to make certain that it is completed correctly, and it’s legal.

The executor of a will is the individual you name to be responsible for carrying out the terms of your will. By designating an executor, you’re giving him or her the authority to handle certain tasks related to the distribution of your estate. Typically, you can name anyone as executor. However, minors aren’t allowed to serve as executors, and some states don’t let convicted felons do the job either.

It’s okay to name a beneficiary of your will as executor. An executor must undertake certain tasks, such as the following:

  • Getting death certificates
  • Starting the probate process
  • Making an inventory of the decedent’s assets
  • Notifying the decedent’s creditors of his or her death
  • Paying any outstanding debts and closing bank accounts; and
  • Distributing assets to the beneficiaries named in the will.

The executor can’t change the terms of the will. They can only make sure that its terms are carried out. An executor can be paid a fee for their services, which can be a percentage of the value of the estate or a reasonable hourly rate. State laws vary on this compensation approach. It would be best to contact an experienced estate planning attorney to assist you.

There are a few reasons why making a switch of executors may be necessary, such as if:

  • Your original executor dies or becomes seriously ill and can’t fulfill his or her duties
  • You named your spouse as executor but you divorce
  • The individual you originally designated as executor no longer wants the responsibility
  • Your relationship with your executor has deteriorated; and
  • You think someone else would be better equipped to execute your will.

Note that you don’t need to give a specific reason to change the executor of a will. There are two ways to do this: (i) add a codicil to an existing will; or (ii) draft a brand-new will. A codicil is a written amendment that you can use to change only the provisions of your will needing changes without having to write a new one. The codicil must be executed with the same formalities as your original will.

If you need to change more than just the executor, you might want to draft a new will, which entails the same process as the one you followed when making your original one. You should also destroy all copies of the original will to avoid confusion and potential challenges to the terms of the will after you die. It’s wise to use an experienced estate planning attorney to help you replace an existing will.

Reference: KAKE.com (Dec. 29, 2020) “How to Change the Executor of a Will”

 

The Difference between Power of Attorney and Guardianship for Elderly Parents

The primary difference between guardianship and power of attorney is in the level of decision-making power, although there are many intricacies specific to each appointment, explains Presswire’s recent article entitled “Power of Attorney and Guardianship of an Elderly Parent.”

The interactions with adult protective services, the probate court, elder law attorneys and healthcare providers can create a huge task for an agent under a power of attorney or court-appointed guardian. Children acting as agents or guardians are surprised about the degree of interference by family members who disagree with decisions.

Doctors and healthcare providers don’t always recognize the decision-making power of an agent or guardian. Guardians or agents may find themselves fighting the healthcare system because of the difference between legal capacity and medical or clinical capacity.

A family caregiver accepts a legal appointment to provide or oversee care. An agent under power of attorney isn’t appointed to do what he or she wishes. The agent must fulfill the wishes of the principal. In addition, court-appointed guardians are required to deliver regular reports to the court detailing the activities they have completed for elderly parents. Both roles must work in the best interest of the parent.

Some popular misperceptions about power of attorney and guardianship of a parent include:

  • An agent under power of attorney can make decisions that go against the wishes of the principal
  • An agent can’t be removed or fired by the principal for abuse
  • Adult protective services assumes control of family matters and gives power to the government; and
  • Guardians have a responsibility to save money for care, so family members can receive an inheritance.

Those who have a financial interest in inheritance can be upset when an agent under a power of attorney or a court-appointed guardian is appointed. Agents and guardians must make sure of the proper care for an elderly parent. A potential inheritance may be totally spent over time on care.

In truth, the objective isn’t to conserve money for family inheritances, if saving money means that a parent’s care will be in jeopardy.

Adult protective services workers will also look into cases to make certain that vulnerable elderly persons are protected—including being protected from irresponsible family members. In addition, a family member serving as an agent or family court-appointed guardian can be removed, if actions are harmful.

Agents under a medical power of attorney and court-appointed guardians have a duty to go beyond normal efforts in caring for an elderly parent or adult. They must understand the aspects of the health conditions and daily needs of the parent, as well as learning advocacy and other skills to ensure that the care provided is appropriate.

Ask an experienced elder law attorney about your family’s situation and your need for power of attorney documents with a provision for guardianship.

Reference: Presswire (Jan. 14, 2021) “Power of Attorney and Guardianship of an Elderly Parent”

 

Wealthy Women Face Challenges in Estate and Tax Planning

Election cycles often mean changes to estate and tax planning strategies around estate planning, charitable donations and capital gains, but that’s not the only challenges facing wealthy women now, says a recent article “For Wealthy Women, Tax and Estate Planning is Weak Link” from Think Advisor. Preparing for big changes, from presidential elections to death or divorce, is all too often a surprise, even for accomplished and financially successful women.

Statistically, women do outlive men so there needs to be a plan for the unexpected. As attitudes shift and more women build their own wealth, they are less likely to stay in unsatisfying marriages. Although the overall rate of divorce in America is declining, the number of “gray” divorces is increasing.

One essential step in planning for high net worth women is to consider what assets they will need to continue their current lifestyles and what assets would be at risk, in case of death or divorce.  Some assets are not available to singles, like the Spousal Lifetime Access Trust, an irrevocable trust available to couples but not to singles. For those considering divorce who have a SLAT agreement, speak with your estate planning attorney, as the SLAT may include a provision that terminates spousal trust rights upon divorce. Women should not assume that these or other assets will be available to them in case of a divorce.

There are also future costs associated with losing a spouse. If women do not have long-term care insurance, it should be purchased, if she still qualifies. These policies become more expensive as time goes by, so the 40s and 50s are the ideal time to invest in them. Timing and tax policy changes from a new administration make this a good time to begin planning for any changes that may come in the next year. Women with substantial net worth should be making plans for gifting and trusts now. The gift tax lifetime exemption remains at $11.7 million, but even if there is no legislative action, on January 1, 2026, this will return to $5 million.

Dramatic changes in asset valuation resulting from the pandemic may make this a good time to transfer shares to children and grandchildren, including real estate holdings and closely held family businesses.

The effects of COVID-19 have provided a global lesson in preparing for the unexpected. Among many other issues has been a huge backlog in most surrogate courts. Even families who had an estate plan in place, found their estate planning hampered by waiting for courts to appoint executors.

In many cases, surviving spouses (mostly women) found themselves unable to move an estate plan forward, gain access to assets, even to pay household bills. Families who have been lucky enough to escape the impact of COVID-19 so far, should take the opportunity to plan for the unexpected, including the creation of a revocable trust, so the trustee can swiftly access assets and start managing right away, rather than waiting for courts to clear.

Reference: Think Advisor (Jan. 6, 2021) “For Wealthy Women, Tax and Estate Planning is Weak Link”

 

How do I Settle an Estate if I’m Named Executor?

If you are asked to be an executor, you should learn some of the basics of the job before agreeing to the task. An executor is the individual named to distribute a decedent’s property that passes under his or her will. The executor also arranges for the payment of debts and expenses.

WMUR’s recent article entitled “Settling an estate” explains that if the executor is not willing or able to do the job, there’s usually an alternate executor named in the will. If there’s no alternate, the court will designate an executor for the estate.

Depending on the estate, it can be a consuming and stressful task to address all of the issues. Sometimes, a decedent will leave a letter of instruction which can make the process easier. This letter may address things like the decedent’s important documents, contact info, a list of creditors, login information for important web sites and final burial wishes.

One of the key documents is a will. The executor must get a hold of an original and review it. You can work with an estate planning attorney to determine the type of probating (a process that begins with getting a court to approve the validity of the will) is needed.

The executor should conduct an inventory of the decedent’s assets,some of which may need to be appraised. If the decedent had a safe deposit box, the contents must be secured. Once the probate process is finished, assets then may be sold or distributed according to the will.

Asset protection is critical and may mean changing the locks on property. The executor may be required to pay mortgages, utility bills and maintenance costs on any property. He or she must change the name of the insurance on home and auto policies. Any brokerage accounts will need to be re-titled. The final expenses also need to be paid.

The funeral home or coroner will provide death certificates that will be needed in the probate process, and for filing life insurance claims.

If the decedent was collecting benefits, such as Social Security, the agency will need to know of the decedent’s death to stop benefits. Checks received after death must be returned. The executor will file a final federal and state tax return for the decedent, if necessary. There also may be an estate and gift tax return to be filed.

There’s a lot for an executor to do. It can be made easier with the help an estate planning attorney.

Reference: WMUR (Dec. 23, 2020) “Settling an estate”

 

How to Plan for a ‘Fragile’ Beneficiary

Frequently, estate plans will include an inheritance for a minor beneficiary. If you have minor children, you should spell out exactly what you want as far as who will care for your children and how your children’s financial needs will be met.

Wealth Advisor’s recent article entitled “Handle with care: Tips on planning for the fragile beneficiary” explains that if a minor child inherits property outright, the court will usually appoint a conservator to handle the property until the minor reaches 18. Because of this some parents make use of a trust which lets the assets be available for a minor’s benefit but held under terms you set when establishing the trust. A trustee oversees this. Contact an experienced estate planning attorney to assist you in setting up an estate plan to establish a trust.

A beneficiary with a disability. In some cases, a loved one with a disability may be receiving needs-based government benefits. To make certain that an inheritance doesn’t disrupt those benefits, many parents or guardians ask an experienced estate planning or elder law attorney to create a special needs trust (SNT). This is an irrevocable discretionary trust created by the parent in many cases for the benefit of a child with special needs. When set up correctly, the special needs trust won’t be considered an available resource for the purpose of determining eligibility for needs-based government benefits.

Incentive planning. Another aspect of estate planning is to use your assets to influence your loved one’s values and future behavior. A trust with incentive or disincentive provisions may help guide the choices and actions of your family, even after you have died.

Advanced planning for successful beneficiaries. If you plan to leave assets to a beneficiary who has the potential to incur significant personal liability due to his or her profession, ask your estate planning attorney about an irrevocable discretionary lifetime trust. If an inheritance is left to such a person without any protections, it may be attached by a judgment creditor upon distribution. A successful beneficiary may also need tax planning. If the beneficiary’s inheritance is properly left in a lifetime trust with the help of an experienced estate planning attorney, it may be removed from his or her taxable estate for federal estate tax purposes.

Although estate planning may be thought of as a way to transfer your assets to your family in a tax-efficient manner, it is also a way in which you can motivate, and at times protect, your loved ones.

Reference: Wealth Advisor (Dec. 22, 2020) “Handle with care: Tips on planning for the fragile beneficiary”

 

It Is Important to have a Digital Estate Plan

Just as you organize your physical possessions and financial accounts, you need to organize and plan for your digital estate. Otherwise, according to the recent article “Why You Need a Digital Estate Plan and How to Make One” from Next Avenue, you will leave a giant mess for your family.

Nearly 50 states have already passed laws that give a person’s family or their executor the right to access and manage some of their digital assets after they die. However, if the digital platform does not allow an executor or anyone to access and manage accounts, the problem will not be easily resolved.

Facebook has created a “Legacy Contact” and Google has an “Inactive Account Manager,” but they only work if you take the time to go through the process in advance. Sharing passwords and instructions or setting up an online password manager may or may not solve the problem for the 200 other accounts. Why?

Increasing security means that many accounts require confirmation codes, typically sent to a mobile phone or email address, before an account may be accessed. If the phone or email is locked, then access will be impossible. Two-factor authentication makes it harder for digital criminals to access your accounts, but it also makes it difficult for heirs and executors. Some people have taken a step into the future to have their accounts opened via facial recognition. How then do you access accounts?  Not all digital accounts and services have the same requirements for access.

Here is a way to think about your digital estate: what is the level of importance for each account? If it were deleted and all contents removed, how would it impact your life? Is it a “single sign on,” where credentials are needed to log into other accounts? Are there payment methods attached to the account, like automatic withdrawals or credit cards?

Many accounts may be dormant, like an old email address you stopped using ten years ago. However, what about the important accounts that are central to the business of your life, like checking and savings accounts, or personal email?

Tech giants like Google, Amazon, Microsoft, and Apple have made their way into many aspects of our lives. If you have a library of Ebooks, or an online gaming presence with digital assets, would you wish to maintain those assets? Think about all the auto payment accounts that you have—and how much money your estate would lose if those accounts could not be shut down.

Once you have identified all of your important accounts, examine them one by one to see what if they have a legacy process. Then start thinking about what you would like to happen to the accounts and their contents, in case of your incapacity or death. Having a digital estate plan today is not futuristic at all—it’s how we live, and our estate plans should be updated accordingly.

Your estate planning attorney will know what your state’s laws are for digital assets, just as they do for more traditional assets.  Last word: do not include your usernames or passwords in your will. A will becomes a public document upon probate, and this information must be protected from identity thieves if the accounts are to remain secure.

Reference: Next Avenue (Jan. 1, 2021) “Why You Need a Digital Estate Plan and How to Make One”

 

What to Do First when Spouse Dies

Forbes’ recent article entitled ‘Checklist for Handling the Death of a Spouse” tells us what to do when your spouse passes away:

Get Organized. Create a list of what you need to do. That way, you can tick off the things you have done and see what still needs to be done. Spending the time to get organized is critical.

Do an Inventory. Review your spouse’s will and estate plan, and then collect the documents you will need. Use a tax return to locate various types of financial assets.

Identify the Executor. The executor is the individual tasked with carrying out the terms of deceased’s will.

Get a Death Certificate. Request multiple copies of the death certificate, maybe at least a dozen because every entity will need that document.

Contact Your Professional Advisors. You will need to tell some professionals that your spouse has passed away. This may be your CPA, your estate planning attorney, financial advisors and perhaps bankers. These contacts will probably know nearly everything that is required to be done. You will also need to contact the Social Security Administration and report the death.

Take a Step Back. Take a breath. You should take the time to process your emotions and grieve with the other members of your family. Check on everyone and make sure the loved ones remaining are doing all right.

Avoid Making Any Major Decisions. Do not make any major financial decisions for a year. This includes things such as selling a house or making a lump sum investment. After the death of a spouse, you are emotional and looking for advice. It is easy to be pressured into making a decision that might not be in your best interests. Allow yourself permission to be emotional and not make any decision because you recognize you are grieving.

Make Certain Your Spouse’s Wishes Are Carried Out. The best way to honor your spouse is to make sure their requests and wishes are carried out. You are the only individual who can do that. Your spouse expects you to take care of their last wishes the way they had intended. Contact an experienced estate planning attorney to review the will, if any.

Reference: Forbes (Aug. 28, 2020) ‘Checklist for Handling the Death of a Spouse”