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”

 

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”

 

Should You Update Your Will When You Move?

In the excitement of a move from one state to another, people often forget that their estate plan may no longer be valid. That is because each state has its own laws about estate planning, according to a recent article “Moving to a new state? If so, make sure those estate plans have been updated” from CNBC. Once you’ve moved to a new state, you’ll want to find a local estate planning attorney to help.

A surprising 4.7 million Americans moved out of their home states last year, and while they may have had checklists including the obvious—driver’s license, finding a physician, and a new barber—finding a new estate planning attorney to update their estate plan may not have been at the top of the list. Or even the middle.

Many think a will that worked in one state is automatically valid in another, but that is not true. Other documents may not be valid, including power of attorney, living will or advance directive, health care proxy and any other estate planning documents.

The time immediately after a move is the right time to review documents for another reason: if your POA agent is now 1,400 miles away, is it realistic for that person to have that role? You probably need to find someone else. The same goes for your healthcare Power of Attorney.

Healthcare powers of attorney and other medical directives vary from state to state. What if the medical providers in your new state don’t recognize and won’t accept a medical POA from another state? If your documents are not accepted, your agent may not be able to make the decisions you had empowered them to make. Your family may need to go to court to confirm the validity of your documents. That is not something you want to force upon your family during a health crisis.

Certain states do not allow non-residents to serve as executors. Only three states allow a non-resident executor, and then only if they are directly related to you. Other states impose other restrictions, including requiring the non-resident to post a bond to protect your estate or appointing an in-state agent.

When people consider moving to another state, it’s often to lower their taxes. However, establishing a new state as your domicile and getting the tax benefit depends on many factors. Those factors include where you work, are registered to vote and what state issued your driver’s license. Also important is: the address on your estate planning documents. If your estate planning documents have your old address while you are trying to establish a new state of residence, you could run into an expensive tax snag.

Speak with your new estate planning attorney about how your assets are titled, including your trusts. Certain types of titling are not recognized in different states. Community property, tenants by the entirety and joint tenancy, with or without right of survivorship, are all treated differently in different states.

Estate taxes also differ from state to state. While federal estate tax only applies to decedents with estates valued at more than $23.4 million (for 2021), state estate taxes, inheritance taxes and gift taxes are imposed at lower levels. Most states do not impose estate taxes on transfers to a surviving spouse, but you’ll want to know what the future will bring beforehand.

An estate planning attorney in your new home state will help you navigate the difference between your old estate plan and the one that will work in your new state.

Reference: CNBC (Dec. 14, 2020) “Moving to a new state? If so, make sure those estate plans have been updated”

Can an Executor be Replaced?

The executor of a last will and testament is the person responsible for carrying out the instructions in a will. Giving a person this role is giving them the authority to handle many tasks concerning an estate, as explained in the article “How to Change the Executor of a Will” from KAKE.com. The person you name can be anyone you wish, from a spouse to a trusted family member, an adult child or even an estate planning attorney. Minor children may not serve as executors and some states do not permit convicted felons from serving as executors.

What does the executor do?

A beneficiary, a person who receives an inheritance from the estate, is permitted to serve as an executor, but the executor who is a beneficiary may not witness the will if they have a direct interest in it. The executor usually is in charge of:

  • Getting death certificates
  • Creating an inventory of the decedent’s assets, unless one exists already
  • Contacting an attorney to begin the probate process
  • Notifying financial institutions, including banks and investment firms of the person’s death
  • Obtaining a tax ID number for the estate and opening an estate account
  • Distributing assets to the persons named in the will.

The executor may not change the terms of the will, only carry out the instructions. They may collect a fee for their services, usually a percentage of the estate’s value. Regardless, whether they collect their fee is an individual decision.

Can you change the name of the executor on your estate?

There are many reasons why you might wish to change the person you originally named as executor to your estate. This is an important task, and if there have been changes in your life, then your estate plan and will should reflect those changes. Some of the reasons for changing your executor:

  • If the original executor dies, or becomes seriously ill and cannot fulfill their duties
  • If your spouse was the executor, but is now your ex-spouse
  • The person originally named as executor does not want the responsibility
  • Your original executor now lives many miles away.

There are two different ways to change the executor of your will. It is recommended that you discuss which of these two ways are better for your unique situation. Simple solutions often turn into estate planning nightmares.

How is a Codicil Used to Change the Executor?

A codicil is an amendment to a will that changes the terms, without changing the entire will. You specify the changes you want to make to your will, the name of the person who you now want to serve as executor from now on and the date the change needs to take effect. Estate laws are different in every state, so check with your estate planning attorney on the best way to do this. In some states, you’ll need at least two witnesses to be present when you sign and date the codicil. Remember that beneficiaries may not witness the codicil. Be careful to keep your will and the codicil in a safe place.

Why Change the Entire Will to Change Only the Executor’s Name?

The reasons for your changing your executor’s name may have occurred in combination with other changes in your life that warrant a review of your entire estate plan. This should be done every three or four years, or every time there are big life changes or big changes to tax laws. If you don’t review your estate plan, you can miss out on new opportunities to protect more of your estate for your family.

What If I Don’t Name an Executor?

Not having an executor is similar to not having a will. If you do not have either, the court will assign an executor to be in charge of distributing your estate, according to the laws of your state. You may not like how the law distributes your assets, but you will have given up any control. It’s much better for all concerned for you to have a will and make certain to have an executor.

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

Should I Add that to My Will?

In general, a last will and testament is an easy and straightforward way to state who gets what when you die and designate a guardian for your minor children, if you (and your spouse) die unexpectedly.

MSN’s recent article entitled “Things you should never put in your will” explains that you can be specific about who receives what. However, attaching strings or conditions may not work because there’s no one to legally enforce the terms. If you have specific details about how a person should use their inheritance, whether they are a spendthrift or someone with special needs, a trust may be a better option because you’ll have more control, even from beyond the grave.

Keeping some assets out of your will can actually benefit your future heirs because they’ll get their inheritance faster. When you pass on, your will must be “proven” and validated in a probate court prior to distribution of your property. This process takes some time and effort, if there are issues—including something in your will that doesn’t need to be there. For example, property in a trust and payable-on-death accounts are two types of assets that can be distributed to your beneficiaries without a will.

Don’t put anything in a will that you don’t own outright. If you jointly own assets with someone, they will likely become the new owner. For example, this applies to a property acquired by married couples in community property states.

Property in a revocable living trust. This is a separate entity that you can use to distribute your assets which avoids probate. When you title property into the trust, it is subject to the trust’s rules.  Because a trust operates independently, you must avoid inconsistencies and not include anything in your will that the trust addresses. Contact an experienced estate planning attorney to discuss.

Assets with named beneficiaries. Some financial accounts are payable-on-death or transferable-on-death. They are distributed or paid out directly to the named beneficiaries. That makes putting them in a will unnecessary (and potentially troublesome, if you’re inconsistent). However, you can add information about these assets in your letter of instruction (see below). As far as bank accounts, brokerage or investment accounts, retirement accounts and pension plans and life insurance policies, assign a beneficiary rather than putting these assets in your will.

Jointly owned property. Property you jointly own with someone else will almost always directly pass to the co-owner when you die, so do not put it in your will. A common arrangement is joint tenancy with rights of survivorship.

Other things you may not want to put in a will. Businesses can be given away in a will, but it’s not the best plan. Wills must be probated in court and that can create a rough transition after you die. Instead, work with an experienced estate planning attorney on a succession plan for your business and discuss any estate tax issues you may have as a business owner.

Adding your funeral instructions in your will isn’t optimal. This is because the family may not be able to read the will before making arrangements. Instead, leave a letter of instruction with any personal wishes and desires.

Reference: MSN (Dec. 8, 2020) “Things you should never put in your will”

 

How to Plan for ‘Black Sheep’ Kid in Will

Every family has unique circumstances as far as wealth, financial planning and plans for the future. Therefore, it is critical that you consider your individual beneficiaries’ circumstances, when it comes to estate planning.

Kiplinger’s recent article entitled “Estate Planning for ‘Black Sheep’ Beneficiaries” explains that this may take the shape of child with a substance abuse issue, a lack of financial acumen and responsibility, or a mental illness. You also may want to reward certain behaviors in the future. All these situations can be addressed thoughtfully and effectively in your estate planning documents with the help of an experienced estate planning attorney. Let’s dispel some of the common myths surrounding these issues:

Myth #1: You are required to split your estate evenly among your children. Disinheriting a beneficiary happens a lot. It can occur for a variety of reasons that have nothing to do with disapproval of a potential beneficiary’s lifestyle choices. Regardless of the reason for disinheriting completely or making unequal distributions, it’s best to discuss this in your estate documents or in a separate letter. Give the reasons for your decision to head off any possible claim against the estate or even just hard feelings among family members.

Myth #2: Once you’ve disinherited your black sheep, it’s irreversible. Not so. You should review your estate planning choices regularly because situations change (hopefully for the better), and you can revise your estate plan to provide incentives for your beneficiary to continue making progress.

Myth #3: You have no control of the issue after you pass away. While there’s no direct control after you die, you can, however, make specific instructions in your trust to reward and motivate your black sheep to behave in a certain fashion. You can also treat the share of inheritance for one beneficiary differently than others. Therefore, a financially responsible child may be allowed to access such a share of the estate in one lump sum; but you create a trust for the second child who has issues.

Myth #4: Trusts are huge hassle. Certain trusts permit you to name a person to help your beneficiary manage their inheritance. This can be a family member or friend, as well as a professional trustee who will assume the administrative responsibilities of a trust.

Don’t avoid the subject of estate planning. Work with an experienced estate planning attorney and discuss the options available.

Reference: Kiplinger (Dec. 8, 2020) “Estate Planning for ‘Black Sheep’ Beneficiaries”