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Law Office of Michael D. DellaMonaca

Have a Plan for Life

What Happens If a Spouse Is Not on the Deed?

When one spouse has paid for or inherited the family home and the other spouse has not contributed to its purchase or upkeep, the spouse who purchased the home has to take proactive steps. Otherwise, the other spouse will inherit the home and have the right to live in it, lease it, visit once a year or do whatever he or she wishes to.

It’s their home, says a recent article from the Houston Chronicle titled “Navigating inheritance when husband is not on the deed,” and remains so, until they die or abandon the property.

In this case, the woman is the buyer of the home and she wants her son to have the house. The son will eventually own the home, but as long as the husband is alive, the son can’t take possession of the home or use it, unless given permission to do so by the husband.

The husband may remarry, and if so, he and his new wife may live in the home. If she dies before he does, according to Texas’ homesteading laws, the homestead rights don’t transfer to her. At that point, the son would inherit the home and the new wife would have to move out.

The husband doesn’t get to live in the house for free. He is responsible for paying property taxes and maintaining the house. If there is a mortgage, he must pay the interest on the mortgage, but the woman’s son would have to make principal payments. The son would also have to pay for the homeowner’s insurance.

However, there are options:

  • Move to another state, where the laws are more in the woman’s favor.
  • Sell the home.
  • Ask the husband to sign a post-nuptial agreement, where he waives his homestead right.
  • Get divorced.
  • Gift or sell the home to the son now and rent from him.

The last option is risky. If the son owns the home, there is no protection from the son’s creditor’s claims, if any, and the woman would lose her property tax homestead exemptions. If the son needs to declare bankruptcy or sell the home, or dies before his mother, there would be nothing she could do. If the son married, his wife would be an owner of the home. He (or she) could even force his mother out of the home.

Speak with an estate planning lawyer to see if gifting the house to your son is a good idea for your situation.

Reference: Houston Chronicle (Nov. 13, 2019) “Navigating inheritance when husband is not on the deed”

Should I Use a Bank as My Executor Instead of a Family Member?

You can choose anybody you like to be the executor of your will but consider who will do the best job.

Executors are legally responsible for several tasks, including identifying everything in the estate, collecting all the assets and paying the debts and liabilities. Finally, the executor makes distributions to beneficiaries, in accordance with the terms of the will.

nj.com’s recent article on this topic asks “Should I choose a bank to be the executor of my will?” The article explains that there are a few advantages to designating a bank as an executor.  Banks are in the business of managing money and are experienced in administering estates. This typically means they may be able to settle the estate more quickly and efficiently than a family member. However, this isn’t always true.

Banks have policies and procedures in place to make certain that the assets are protected from mismanagement and theft. Banks are impartial parties that cannot be influenced by beneficiaries. This can be a big headache for a family member asked to be executor. Relationships can deteriorate over the enforcement of the terms of a will especially when one sibling is named executor and has the authority over the administration of the estate—perhaps to the detriment of her brothers and sisters.

One distinction from using a family member is that while an executor is entitled to compensation, family members frequently waive this. However, banks charge fees for serving as executors, and these fees may be higher than you’d expect.  For example, the bank’s fee might be up to 4% of the first $100,000, then decrease incrementally until it’s just 0.5% of values over $9 million.

One other note to keep in mind is that many banks won’t serve as executor unless the estate is substantial enough to meet the minimum fees charged by the bank to serve as the executor.  You should speak with your estate planning attorney to determine who would be best to serve your needs.

Reference: nj.com (November 5, 2019) “Should I choose a bank to be the executor of my will?”

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When Can Parent Legally Make an End-Of-Life Decision?

Twenty-one-year-old Damaire was brought to Erie County Medical Center in the early morning hours. Damaire’s father was told that the person found Gordon on the side of the road, wrapped in a blanket and dropped him off at the hospital. He was brain dead. He had no gunshot or stab wounds and there were no signs of blunt-force trauma.

“I thought I would be seeing my son hurt some type of way that was very bad,” said Gordon’s father Mister Sommerville. “But, when I got there I saw my son had no trauma…and they can’t explain to me why he’s lifeless.”

Sommerville was told by his son’s mother Regina Gordon-Sayles that their boy was brain-dead at the hospital.

WKBW’s recent article, “A man was found brain-dead, but neither parent could legally make an end-of-life decision” reports that Gordon-Sayles said that she was a single mother of five and said that Sommerville had not been involved in Damaire’s life. However, he became very involved when it came time to make a decision about his passing.  Damaire’s mother was set to remove her son off the respirator, but his father refused to consent. “I was so confused about why I needed another consent,” said Gordon-Sayles.

The problem is that neither parent could give legal consent to take their son off life support because Damaire hadn’t designated either parent as his health care proxy. Under Article 81 of the New York State Mental Hygiene Law, the matter would have to go to a judge who would start the process to appoint the best person to handle end-of-life decisions.

A medical power of attorney, also called an “Advance Directive” or “Health Care Proxy,” is a document that allows a person to provide someone with the authority to address health care decisions on their behalf, if they’re not able to do so themselves. You should contact an experienced estate planning attorney to prepare a Health Care Proxy.

Unfortunately, these situations occur more frequently than we would wish. Making a bad situation more heartbreaking is traumatic for the family.

The situation is a matter of liability for the hospital. Every person has the right to due process, when it comes to making decisions for themselves, even in death. However, if that person can’t make a decision for herself, a judge must intervene and appoint an appropriate party.

Damaire’s father didn’t like the care his son was getting at ECMC and wanted more of an investigation into why the young man was in a brain-dead state, when doctors found only marijuana in his system. Doctors told both parents that they were restricted in the type of drugs for which they could screen, without an autopsy.

Damaire’s case went before a judge to appoint a proxy. The judge decided to continue his investigation into the case and didn’t take any action for more than a week. Damaire’s heart stopped beating the next day. His mom said a friend of his told her the truth about what happened to him, days later.

“He got ahold of some fentanyl, and I don’t know if my baby was laced…I don’t know if he took it himself, but it had something to do with fentanyl.”

“I was told when it happened, my son went into attack mode, he dropped, and they put him on the porch because they didn’t want to be charged with it.”

Reference: WKBW (November 5, 2019) “A man was found brain-dead, but neither parent could legally make an end-of-life decision”

 

Why Shouldn’t I Delay Making Big Gifts?

The unified federal estate and gift tax exemption for 2020 will jump up to $11.58 million or effectively $23.160 million for married couples.

Market Watch’s recent article, “Get your estate plan in order (this means you),”says that, despite these huge big exemptions and the fact you’re not currently exposed to the federal estate tax, your estate plan may still need updating to reflect the current tax rules.

You may be exposed to the federal estate tax in the future, even though you’re okay right now.

Let’s look at some issues, regardless of whether or you’re “rich” enough to be worried about exposure to the federal estate tax. Year-end is a good time to conduct your estate planning self-check, so let’s get started.

Update beneficiary designations. A will or living trust doesn’t override the beneficiary designations for life insurance policies, retirement accounts and other types of investment accounts. This includes accounts, such as life insurance policies, annuities, IRAs, other tax-favored retirement accounts and employer-sponsored benefit plans. The person(s) named on the most-recent beneficiary form will get the money automatically if you die, regardless of what your will or living trust document might state.

Designate secondary beneficiaries. Designate one or more secondary (contingent) beneficiaries to inherit, if the primary beneficiary dies before you do. Consider this possibility.

Update property titles. If you’re married and own property with your spouse as joint tenants with right of survivorship (JTWROS), the surviving spouse will automatically get sole ownership of the property when the other spouse dies. The major advantage of JTWROS ownership is that it avoids probate. The property automatically goes to the surviving joint tenant.

Name guardians. One of the main purposes of a will, is to designate a guardian for your minor children (if any). The guardians must care for your children, until they reach adulthood.

Any life event could require changes in your estate plan. In addition, the federal and estate and gift tax rules have been unpredictable in the past, along with the state death tax rules. Talk with your estate planning attorney today.

Reference: Market Watch (November 11, 2019) “Get your estate plan in order (this means you)”

 

Death Is Very Taxing — What you Need to Know

When a person dies, their assets are gathered, their debts are paid, business affairs are settled and assets are distributed, as directed by their will. If there is no will, the intestate laws of their state will be used to determine how to distribute their assets. A big part of the process of settling an estate is dealing with taxes. A recent article from Wicked Local Westwood, titled “Five things to know about taxes after death,” explains the key things an executor or personal representative needs to know.

The Deceased Final Income Tax Returns. Yes, the dead pay taxes. The personal representative is responsible for filing the deceased final income tax return for both the year of death and prior year, if those returns have not been filed. The final income tax return includes any income earned or received by the decedent from January 1 of the year of death through the date of death. It’s common for a deceased person who is ill during the last months or year of their life to fail to file tax returns, so the executor needs to find out about the decedent’s tax status. Failure to do so, could lead to the representative being personally liable for paying those taxes.

Filing a Federal Estate Tax Return. The personal representative must file a federal estate tax return, if the value of the estate assets exceeds the federal estate tax exemption, which is $11.4 million in 2019. Even if the value of the estate does not exceed the federal estate tax exemption amount, a federal estate tax return should be filed if the decedent is survived by a spouse. This way, the deceased’s unused exemption can be used by the spouse at their death. Note that the filing deadline for the federal estate tax return is nine months after the date of death. An estate planning attorney can help with this.

Fiduciary income tax returns. A personal representative and trustee may have to file fiduciary income tax returns for an estate or a trust. The estate is a taxpayer and the representative must get a tax identification number and file a fiduciary income tax return for the estate, if income is earned on estate assets or received during the administration of the estate. A revocable trust becomes irrevocable after the death of the trust creator. A tax identification number must be obtained, and a fiduciary income tax return must be filed for any income earned by trust assets.

Estate taxes and trust taxes can become complex and confusing for people who don’t do this on a regular basis. An estate planning attorney can be a valuable resource, so that taxes are properly paid and to make the most of any tax planning opportunities for estates, trusts and their beneficiaries.

Reference: Wicked Local Westwood (Nov. 5, 2019) “Five things to know about taxes after death”

What Happens to Older Pets, When People Go into Nursing Homes

Americans love their pets. Cats, dogs, birds, fish and exotic animals bring families joy and companionship. There are millions of pets in homes all over the United States. A family might have a cat or dog for ten years or much longer. An older person might have a pet to increase a feeling of safety and to ward off loneliness and depression. Let’s explore what happens to older pets when people go into nursing homes.

Although some assisted living centers allow some pets, with restrictions on the size, type, and number of animals, nursing homes do not allow residents to keep their pets in the facility. The options a person has will depend on many factors, such as available relatives or friends who could take in the pet. Some of the more common things that happened to older pets, when the owner goes into the nursing home include:

  • The pet gets to continue living in the home, because the nursing home resident’s spouse, friend or other relative remain living in the house. This situation is usually the best option for the pet. He stays in familiar territory and does not get disrupted by having to live somewhere else.
  • A friend or relative takes in the pet for the older loved one. The animal has to adjust to a different location, owner and schedule. However, at least he has a home.
  • The pet gets re-homed through a rescue organization. Sometimes these groups are breed-specific, like the entities that find homes for retired greyhound racing dogs.
  • The animal gets taken to a shelter. Some shelters serve as no-kill adoption centers, but many are not. If the pet gets adopted, he gets a chance at life with a new family. If no one takes him, he will likely get euthanized.
  • The pet gets abandoned. Tragically, millions of animals get left every year to fend for themselves. While life on the streets is hard enough for a young, strong cat or dog, an older pet is unlikely to survive.
  • The animal has the good fortune of getting rescued by a no-kill sanctuary or a non-profit agency that takes in older pets.

There are not enough no-kill sanctuaries or agencies to meet the need of all of the older pets without homes. However, with a little detective work, you can probably find one or two in your area. Posting the question on social media can help you find a place for a pet to get to live out his golden years.  You can also check with local pet rescue and lost pet groups on social media for suggestions about where to take an older pet, so he does not get abandoned or euthanized.

Why Adopting an Older Pet Can Be a Good Idea

Although a cute puppy is hard to resist, an older animal can be a better pet for a family with children. Older pets tend to be more settled and patient than high-energy young ones. The older pet is also likely already trained, so you will have less work on your hands. You can have the satisfaction of knowing that you saved an innocent life.

References:

Huffpost. “Pet Retirement Home Rescues Dogs In Their Golden Years.” (accessed November 8, 2019) https://www.huffpost.com/entry/vintage-pet-rescue_n_5c141e0de4b049efa7524659

 

How Can I Upgrade My Estate Plan?

Forbes’ recent article, “4 Ways To Improve Your Estate Plan,” suggests that since most people want to plan for a good life and a good retirement, why not plan for a good end of life, too? Here are four ways you can refine your estate plan, protect your assets and create a degree of control and certainty for your family.

  1. Beneficiary Designations. Many types of accounts go directly to heirs, without going through the probate process. This includes life insurance contracts, 401(k)s and IRAs. These accounts can be transferred through beneficiary designations. You should update and review these forms and designations every few years, especially after major life events like divorce, marriage or the birth or adoption of children or grandchildren.
  2. Life Insurance. A main objective of life insurance is to protect against the loss of income, in the event of an individual’s untimely death. The most important time to have life insurance is while you’re working and supporting a family with your income. Life insurance can provide much needed cash flow and liquidity for estates that might be subject to estate taxes or that have lots of non-liquid assets, like family businesses, farms, artwork or collectibles.
  3. Consider a Trust. In some situations, creating a trust to shelter or control assets is a good idea. There are two main types of trusts: revocable and irrevocable. You can fund revocable trusts with assets and still use the assets now, without changing their income tax nature. This can be an effective way to pass on assets outside of probate and allow a trustee to manage assets for their beneficiaries. An irrevocable trust can be a way to provide protection from creditors, separate assets from the annual tax liability of the original owner and even help reduce estate taxes in some situations. Contact an experienced estate planning attorney to discuss options.
  4. Charitable Giving. With charitable giving as part of an estate plan, you can make outright gifts to charities or set up a charitable remainder annuity trust (CRAT) to provide income to a surviving spouse, with the remainder going to the charity.

Your estate planning attorney will tell you that your estate plan is unique to your situation. A big part of an estate plan is about protecting your family, making sure assets pass smoothly to your designated heirs and eliminating stress for your loved ones.

Reference: Forbes (November 6, 2019) “4 Ways To Improve Your Estate Plan”

 

What Is an Ethical Will and Do You Need One?

When an estate planning attorney suggests that clients create ethical wills they aren’t asking the clients to create another last will and testament. Instead, it is to create something that can explain their intentions to their loved ones. According to the article “How to create an ethical will” from Herald Net, an ethical will is also known as a legacy letter.

This can be a kind and loving gift to your family since it allows you to express your feelings and thoughts. If you’re not accustomed to sharing your feelings, that will make it even more special to your loved ones. It’s an opportunity to say all the things you never felt comfortable saying. You may want to express your wishes, regrets and gratitude. You may also want to pass long the life lessons that have been valuable for you.

An ethical will also provides an opportunity for you to explain how you came to the decisions you did about your will and the money and possessions you are passing along. You might want to explain why a certain child is being given a piece of artwork or why another is being left assets in a trust and not an outright gift.

If you are more comfortable with making a video, you can also do that. An audio or video recording often becomes a treasured piece of family history since it allows generations who may have never met you to see and hear you.

Start by writing down some notes about what matters to you and what you think you might want to share with the family. Take your time. Remember you aren’t writing the Great American Novel but creating a gift of love.

Once you’ve gathered your thoughts move on to the next draft. Once it’s complete to keep this document safe and in a secure location. If you have a waterproof and fireproof safe where you keep important papers in the home, the ethical will should also go in there. Remember that safe deposit boxes are sealed at death so if you want your loved ones to read this it should not go in the safe deposit box.

One last thought—some people like to share their ethical will with family and friends while they are still living. This allows them to enjoy their reactions and have a discussion about whatever they have shared in the document. Others prefer to wait until after they have passed. It’s a very personal decision.

Talk with your estate planning attorney about how the ethical will works with your estate plan.  Make sure there’s nothing in the ethical will that contradicts your last will and testament. That could create problems for the family.

Reference: Herald Net (Nov. 6, 2029) “How to create an ethical will”

 

What Does an Executor Actually Do?

Investopedia’s recent article, “The Executor’s Checklist: 7 Tasks Before They Die,” reminds us that being executor of an estate means significant responsibility. It can be a daunting task, if you’re unprepared. Here are some simple steps to take while the testator is still alive to make the executor’s job easier.

  1. Be sure to Have the Location of the Will and Other Estate Planning Documents. This is a no-brainer. You make the executor’s job easier if the testator keeps the original will, deeds, partnership documents, insurance policies, or other important papers in an agreed-upon spot with copies at a backup location.
  2. Retitled Accounts Where Appropriate. If the testator has a spouse, mostly like they want assets to flow directly through to the widow(er), so make accounts as joint and make sure that properties and titles are in both names.
  3. Make a List of the Testator’s Preferences. Another way to make things easy on the executor and the family is to include funeral preferences which need to be in writing and signed by the testator.
  4. Draft a Possessions List and Their Recipients. A big issue that many executors overlook is distributing personal possessions that have little financial value but great sentimental value. Along with the testator, an executor can create a list for the dispersal of personal items, as well as a system of distribution. The testator can include their reasoning for who got what gift. Sharing the list with those involved may also eliminate some hurt feelings. An organized dispersal can make an executor’s job easier and help with issues of fairness.
  5. Create an Annual Accounting Sheet and Updating Schedule. If the testator keeps track of the estate electronically on an annual basis, the executor will have a good idea of assets when it’s required. This e-document will also decrease the time spent searching for that jewelry the testator gave to a granddaughter or tracking down the funds that were supposedly in a now-empty investment account.
  6. Create a Sealed Online Accounts Document. An executor should also have a record of the testator’s online presence to deactivate accounts. This document simplifies work for the executor.
  7. Meet the Relevant Professionals. Executors should be familiar with the accountant, estate planning attorney and other professionals the testator uses. They may have further advice specific to the testator’s situation.

Preparation will greatly decease the odds of any complications when carrying out your duties as an executor. Take these actions while the testator is still alive to help make certain that the executor carries out the testator’s wishes. Contact an experienced estate planning attorney to create your estate planning documents.

Reference: Investopedia (July 11, 2019) “The Executor’s Checklist: 7 Tasks Before They Die”