What Can’t I Forget in My Will Now that I’m 50?

Yahoo News’ recent article entitled “If You’re Over 50, Don’t Leave This Out of Your Will, Expert Says” fills us in on what we can’t forget in a will after the big 5-0.

Incapacity. A 2021 survey from Caring.com says that almost two-thirds of adults do not have a will. Even those thinking about estate planning do not consider a plan for addressing the possibility of incapacity.

Ask an experienced estate planning attorney to create a power of attorney, so in the event you are incapable of making decisions because of your mental state or disability, you have someone you trust doing it for you.

More than a will. A will should be one component of a comprehensive estate plan that addresses who gets what when you die, but also who can take care of business, if you are not able to care for yourself. Naming a person in advance lets you to avoid having court involvement and lets you take control of your future.

The law has many ways for you to select who will have authority and care for you, if you become incapacitated. This is something that you can and should discuss with an experienced estate planning attorney.

Will backups. Designating loved ones you trust should be the rule in all facets of estate planning. However, it is critical to be certain that you have backups (“successors” or “alternates”), in the event that a person you’ve selected can’t fulfill their role.

Many people around age 50 who see their thriving, productive children making their way in the world fail to consider the thought that their children may not be available or able to serve a role. Designating more than one backup might not seem like it is a big deal, but you should consider the possibility that a loved one might be incapacitated, predecease you, or be unavailable.

Keep your will current. As your life changes, so do your needs. Therefore, it is vital to be sure that your will is up-to-date. You should review your will regularly (at least every few years) to make sure that it still reflects your current thinking.

You should also be sure you know where an original copy of the will is located. It is important to keep track of it. You can leave it locked away with your attorney or some other secure place, but you need to know where it is.

Reference: Yahoo News (Feb. 6, 2022) “If You’re Over 50, Don’t Leave This Out of Your Will, Expert Says”

How Do You Pass Down a Vacation Home?

If your family enjoys a treasured vacation home, have you planned for what will happen to the property when you die? There are many different ways to keep a vacation home in the family. However, they all require planning to avoid stressful and expensive issues, says a recent article “Your Vacation Home Needs and Estate Plan!” from Kiplinger.

First, establish how your spouse and family members feel about the property. Do they all want to keep it in the family, or have they been attending family gatherings only to please you? Be realistic about whether the next generation can afford the upkeep, since vacation homes need the same care and maintenance as primary residences. If all agree to keep the home and are committed to doing so, consider these three ways to make it happen.

Leave the vacation home to children outright, pre or post-mortem. The simplest way to transfer any property is transferring via a deed. This can lead to some complications down the road. If all children own the property equally, they all have equal weight in making decisions about the use and management of the property. Do your children usually agree on things, and do they have the ability to work well together? Do their spouses get along? Sometimes the simplest solution at the start becomes complicated as time goes on.

If the property is transferred by deed, the children could have a Use and Maintenance Agreement created to set terms and rules for the home’s use. If everyone agrees, this could work. When the children have their own individual interest in the property, they also have the right to leave their share to their own children—they could even give away or sell their shares while they are living. If one child is enmeshed in an ugly divorce, the ex-spouse could end up owning a share of the house.

Create a Limited Liability Company, or LLC. This is a more formalized agreement used to exert more control over the property. An LLC operating agreement contains detailed rules on the use and management of the vacation home. The owner of the property puts the home in the LLC, then can give away interests in the LLC all at once or over a period of years. Your estate planning attorney may advise using the annual exclusion amount, currently at $16,000 per recipient, to make this an estate tax benefit as well.

Consider who you want to have shares in the home. Depending on the laws of your state, the LLC can be used to restrict ownership by bloodline, that is, letting only descendants be eligible for ownership. This could help keep ex-spouses or non-family members from ownership shares.

An LLC is a good option, if the home may be used as a rental property. Correctly created, the LLC can limit liability. Profits can be used to offset expenses, which would likely help maintain the property over many more years than if the children solely funded it.

What about a trust? The house can be placed into an Irrevocable Trust, with the children as beneficiaries. The terms of the trust would govern the management and use of the home. An irrevocable trust would be helpful in shielding the family from any creditor liens.

A Revocable Trust can be used to give the property to family members at the time of your death. A sub-trust, a section of the trust, is used for specific terms of how the property is to be managed, rules about when to sell the property and who is permitted to make the decision to sell it.

A Qualified Personal Residence Trust allows parents to gift the vacation home at a reduced value, while allowing them to use the property for a set term of years. When the term ends, the vacation home is either left outright to the children or it is held in trust for the next generation.

Reference: Kiplinger (Feb. 1, 2022) “Your Vacation Home Needs and Estate Plan!”

Who Is the Best Choice for Power of Attorney?

Picking a person to serve as your Power of Attorney is an extremely important part of your estate plan, although it is often treated like an afterthought once the will and trust documents are completed. Naming a POA needs to be given the same serious consideration as creating a will, as discussed in this recent article “Avoid powers of attorney mistakes” from Medical Economics.

Choosing the wrong person to act on your behalf as your Power of Attorney (POA) could lead to a host of unintended consequences, leading to financial disaster. If the same person has been named your POA for healthcare, you and your family could be looking at a double-disaster. What’s more, if the same person is also a beneficiary, the potential for conflict and self-dealing gets even worse.

The Power of Attorney is a fiduciary, meaning they are required to put your interests and the interest of the estate ahead of their own. To select a POA to manage your financial life, it should be someone who you trust will always put your interests first, is good at managing money and has a track record of being responsible. Spouses are typically chosen for POAs, but if your spouse is poor at money management, or if your marriage is new or on shaky ground, it may be better to consider an alternate person.

If the wrong person is named a POA, a self-dealing agent could change beneficiaries, redirect portfolio income to themselves, or completely undo your investment portfolio.

The person you name as a healthcare POA could protect the quality of your life and ensure that your remaining years are spent with good care and in comfort. However, the opposite could also occur. Your healthcare POA is responsible for arranging for your healthcare. If the healthcare POA is a beneficiary, could they hasten your demise by choosing a substandard nursing facility or failing to take you to medical appointments to get their inheritance? It has happened.

Most POAs, both healthcare and financial, are not evil characters like we see in the movies, but often incompetence alone can lead to a negative outcome.

How can you protect yourself? First, know what you are empowering your POAs to do. A boilerplate POA limits your ability to make decisions about who may do what tasks on your behalf. Work with your estate planning attorney to create a POA for your needs. Do you want one person to manage your day-to-day personal finances, while another is in charge of your investment portfolio? Perhaps you want a third person to be in charge of selling your home and distributing your personal possessions, if you have to move into a nursing home.

If someone, a family member, or a spouse, simply presents you with POA documents and demands you sign them, be suspicious. Your POA should be created by you and your estate planning attorney to achieve your wishes for care in case of incapacity.

Different grown children might do better with different tasks. If your trusted, beloved daughter is a nurse, she may be in a better position to manage your healthcare than another sibling. If you have two adult children who work together well and are respected and trusted, you might want to make them co-agents to take care of you.

Your estate planning attorney has seen all kinds of family situations concerning POAs for finances and healthcare. Ask their advice and don’t hesitate to share your concerns. They will be able to help you come up with a solution to protect you, your estate and your family.

Reference: Medical Economics (Feb. 3, 2022) “Avoid powers of attorney mistakes”

What’s Elder Law and Do I Need It?

Yahoo News says in its recent article entitled “What Is Elder Law?” that the growing number of elderly in the U.S. has created a need for lawyers trained to serve clients with the distinct needs of seniors.

The National Elder Law Foundation defines elder law as “the legal practice of counseling and representing older persons and persons with special needs, their representatives about the legal aspects of health and long-term care planning, public benefits, surrogate decision-making, legal capacity, the conservation, disposition and administration of estates and the implementation of their decisions concerning such matters, giving due consideration to the applicable tax consequences of the action, or the need for more sophisticated tax expertise.”

The goal of elder law is to ensure that the elderly client’s wishes are honored. It also seeks to protect an elderly client from abuse, neglect and any illegal or unethical violation of their plans and preferences.

Baby boomers, the largest generation in history, have entered retirement age in recent years. Roughly 17% of the country is now over the age of 65. The Census estimates that about one out of every five Americans will be elderly by 2040.

Today’s asset management concerns are much sophisticated and consequential than those of the past. Medical care has not only managed to extend life and physical ability but has itself also grown more sophisticated. Let’s look at some of the most common elder law topics:

Estate Planning. This is an area of law that governs how to manage your assets after death. The term “estate” refers to all of your assets and debts, once you have passed. When a person dies, their estate is everything they own and owe. The estate’s debts are then paid from its assets and anything remaining is distributed among your heirs.

Another part of estate planning in elder law concerns powers of attorney. This may arise as a voluntary form of conservatorship. This power can be limited, such as assigning your accountant the authority to file your taxes on your behalf. It can also be very broad, such as assigning a family member the authority to make medical decisions on your behalf while you are unconscious. A power of attorney can also allow a trusted agent to purchase and sell property, sign contracts and other tasks on your behalf.

Disability and Conservatorship. As you grow older, your body or mind may fail. It is a condition known as incapacitation and legally defined as when an individual is either physically unable to express their wishes (such as being unconscious) or mentally unable to understand the nature and quality of their actions. If this happens, you need someone to help you with activities of daily living. Declaring someone mentally unfit, or mentally incapacitated, is a complicated legal and medical issue. If a physician and the court agree that a person cannot take care of themselves, a third party is placed in charge of their affairs. This is known as a conservatorship or guardianship. In most cases, the conservator will have broad authority over the adult’s financial, medical and personal life.

Government programs. Everyone over 65 will, most likely, interact with Medicare. This program provides no- or low-cost healthcare. Social Security is the retirement benefits program. For seniors, understanding how these programs work is critical.

Healthcare. As we get older, health care is an increasingly important part of our financial and personal life. Elder law can entail helping a senior understand their rights and responsibilities when it comes to healthcare, such as long-term care planning and transitioning to a long-term care facility.

Reference: Yahoo News (Jan. 26, 2020) “What Is Elder Law?”

How Do I Conduct an Estate Sale?

At some point in your life, you may be called upon to hold an estate sale after a relative dies or goes into a nursing home.

Deciding how to sell or dispose of can be daunting. US News & World Report’s recent article entitled “Estate Sales for Beginners” gives you everything you need to know about how to hold a successful estate sale.

There’s no rule that says you have to do an estate sale. However, it can be a long process. Keep these things in mind.

Allow Time to Prepare. Estate sales are more complicated than a simple one-day yard sale, if you want to do it correctly and realize a profit. It can be emotionally stressful and challenging time, so ask for help and support from friends, family and professionals. Give family members a chance to “shop,” and decide how you want to do this. It can be done by lottery for certain items that several family members want, or you can sell some of the belongings cheaply to family members. After your family goes through everything, you might see that it’s not worth the time and effort to have a sale. Maybe you just keep some things, donate some and haul the rest away.

Decide if You Want to Hire a Professional. You can hire an estate sale service. They’ll take a commission, such as 30% to 45% of the sale’s gross profits, but you may find the cost is worth it. The service will handle most of the logistics.

Consider Selling Some Stuff Yourself. If there are a few big expensive items, you may want to sell it while the estate service provider or auction house handles everything else. This allows you to have the ability to negotiate, if the potential buyer wants to negotiate, instead of letting an estate sale company do it; and second, you don’t then have to pay the estate sale company’s commission on that item.

Make the Event as Professional as Possible. If you do it yourself, you need to advertise the event and mention some of the items people will find at the sale, like antiques or sterling silver. You can have some music playing softly in the background to brighten the mood and make people want to linger longer, so they keep looking and buying. People like to negotiate, so you don’t get too set with your prices. Have a policy that the more someone buys, the larger the discount.

Most estate sales last one to two days.

Reference: US News & World Report (Dec. 22, 2021) “Estate Sales for Beginners”

Should I Withdraw more than RMD?

As most know, once a person hits 72, the IRS require you to take a certain minimum amount from your IRA each year. Many do take only the minimum, believing that this will leave more assets to grow tax deferred. However, recent tax changes are a reason to revisit one’s IRA distribution strategy.

MSN’s article entitled “Should You Take an Extra Big RMD This Year?” says that although some people are worried about paying more in taxes this year than they need to may want stay to the bare minimum of their required minimum distribution (RMD), others seek to find a broader tax strategy.

Those people may want to consider going big with their RMDs. Let’s look the wisdom of taking more than the required minimum distribution from your IRA.

The article gives us four considerations to help with your RMD decision about possibly taking more than the IRA RMD in any year:

Your tax bracket. Determine the amount of additional income you can recognize this year, while still staying within your current tax bracket. Taxpayers in the 10% and 12% tax brackets should be especially cognizant of maximizing ordinary income in these relatively low tax brackets.
Your income. See what your income’s projected to be next year and consider whether you (or you and your spouse) will have other sources of income in future years, such as an inherited IRA, spouse’s IRA RMD or annuity income to add to the mix.
Your beneficiaries. Look at the way in which your current tax rate compares with the tax rates of your IRA beneficiaries. If you have a large IRA and children with high incomes of their own, your heirs could be pushed into a much higher tax bracket when they start their inherited IRA distributions.
Your Medicare premiums. An increase in income can also result in higher Medicare Part B & D premiums in coming years. As a result, consider this in the context of total savings.

Reference: MSN (Nov. 23, 2021) “Should You Take an Extra Big RMD This Year?”

Why are Siblings Battling over Mom’s Estate?

Sisters Jean Mamakos and Irene Savadian — both retired nurses in their 70s —have been locked in a bitter fight with their three other siblings over their mother’s $2.7 million estate.

The New York Post’s recent article entitled “Nasty family feud over mom’s will lands two retired sisters in jail — and one may lose her home” explains that Frances Perrenod, who died in 2006, named Mamakos and Savadian as the executors of her estate. All five of her children were named as beneficiaries. Perrenod was a homemaker and her husband, Charles, who died in 1988, manufactured specialized miniature light bulbs.

Since the siblings started their legal challenges in 2008, their objections have included the payment of legal fees to settle the estate with money from it; the cost to pursue mineral rights owned by their mother; and allegations that the executors delayed the sale of their mom’s Forest Hills home. They sold the Tudor home, which the family moved into in 1957, in 2014 for $1.8 million.

Anette Klingman, the oldest sibling who is an attorney, told The Post that her sisters were mismanaging the estate and taking money out of it to which they weren’t entitled. She was joined in her opposition to them with sister, Yvette Ravina, and her brother Charles Perrenod Jr., who died in 2020.

One of the disgruntled siblings also started a proceeding in South Carolina to take Irene Savadian’s house.

However, it really got ugly in April 2016, during a lunch break in a proceeding in Surrogate’s Court in Queens, Mamakos and Savadian said. Queens Surrogate Judge Peter Kelly said that the sisters were in contempt of court. At issue was a $100,000 distribution made to each beneficiary, a check the three disgruntled siblings refused to cash, Mamakos said. The judge ordered the two sisters to return their checks, but Savadian refused. Because Kelly said the sisters’ actions were “entwined,” both were sent to Rikers Island, where they were strip-searched and spent 21 days behind bars.

The two retained a lawyer for $50,000 to get them released from the lockup. However, when they were released, the discovered that Judge Kelly had replaced them as executors, naming their sister, Ravina.

In 2018, a final judgment in the estate was entered against Mamakos and Savadian for $1.8 million. It included the return of money they used for legal and other expenses to settle the estate. Judge Kelly ruled against a motion to vacate the judgment in October 2021, which the sisters are now trying to appeal.

Ravina started a lawsuit in South Carolina to take Savadian’s $400,000 house.

“We didn’t steal any money from my mother. We tried to get a good settlement for our siblings,” Savadian said. “It backfired against us.”

Reference: New York Post (Jan. 22, 2022) “Nasty family feud over mom’s will lands two retired sisters in jail — and one may lose her home”

Does the Executor Control Bank Accounts?

Executors administering probate assets usually have to deal with several different financial institutions. If good planning has been done by the decedent, the executor has a list of assets, account numbers, website addresses and phone numbers. Otherwise, the personal representative or successor trustee starts by gathering information and identifying the accounts, as described in a recent article “Dealing with the back offices of banks and brokerages” from Lake Country News.

The accounts must be identified, retitled to become part of the estate, or liquidated and moved into the estate account.

If the decedent had a financial advisor who handled all of their investments, the process may be easier, since there will only be one person to deal with.

If there is no financial advisor who can or will personally manage the assets, the executor starts by contacting the back office department of the institution, often referred to as the “estates department.” The contact info can usually be found on the institutions’ website or on the paper statements, if there are any.

Expect to spend a lot of time on hold, especially in the beginning of the week. It may be better to call on a Wednesday or Thursday.

The first call is to introduce the executor, advise of the death of the decedent and learn about the company’s procedures for transferring, retitling, or otherwise gaining control of the account. The bank usually assigns a case number, to be used on all future communications.

If possible, obtain their name, direct dial, and direct email of whoever you speak with. It may only be with one assigned representative, or a different person every time. It depends upon the organization. Take careful notes on every interaction. You may need them.

Some of the documents needed to complete these transactions include an original death certificate, a court certified letter of administration or trustee’s certification of trust and a letter of authorization signed by the client to allow the institution to communicate with the executor or successor trustee.

Financial institutions will often only accept their own forms, which then need to be prepared for completion and signature. Expect to be asked to notarize some documents. In many cases, the institution will require a new account be opened and the assets transferred to the new account.

Be organized—you may find yourself needing to submit the documents multiple times, depending on the financial institution. If hard copy documents are sent, use registered or express mail requiring a signature on delivery. If documents are sent by email, they should only be sent via an encrypted portal to protect both estate and executor.

This is not a quick process and requires diligent follow up, with multiple emails and phone calls. If the value of the estate is large and the assets are complex, it may be better to have the estate planning attorney handle the process.

Reference: Lake Country News (Jan. 15, 2022) “Dealing with the back offices of banks and brokerages”

How Do I Write My Will?

Remember that if you don’t write your will correctly, your wishes could end up going unfulfilled, says Claremont Portside’s article entitled “A Guide for Writing Your Will: Steps You Need to Take.”

While there are a lot of tools online, your best bet is working with an experienced estate planning attorney.

Schedule a meeting with an estate planning attorney to discuss your final wishes. The process of writing a will is relatively straightforward:

Decide who you want to inherit your assets
Remember to include your favorite charities, if you want
Note if any of your heirs has special needs or requires extra planning (e.g., if they’re not good with money)
Note if you have minor children who will need a guardian and can’t inherit outright at their age
List the specific items or assets you want each person to inherit
List any debts or liabilities
Designate an executor or personal representative
Determine how your estate should be managed, until it is distributed; and
Ask your attorney about tax implications.

Once prepared, retain a copy in a safe place and make copies for your executor, your spouse or partner, children older than 18 years old and any other heirs who live in another state.

When you begin this process, create a list of what you own and how much it’s worth. This can help ensure that your estate is distributed according to your wishes.

The executor of your will is responsible for ensuring that everything goes according to plan, so choose someone you trust.

Reference: Claremont Portside “A Guide for Writing Your Will: Steps You Need to Take”

Storing Passwords in Case of Death

Despite having the resources to hire IT forensic experts to help access accounts, including her husband’s IRA, it’s been three years and Deborah Placet still hasn’t been able to gain access to her husband’s Bitcoin account. Placet and her late husband were financial planners and should have known better. However, they didn’t have a digital estate plan. Her situation, according to the Barron’s article “How to Ensure Heirs Avoid a Password-Protected Nightmare” offers cautionary tale.

Our digital footprint keeps expanding. As a result, there’s no paper trail to follow when a loved one dies. In the past, an executor or estate administrator could simply have mail forwarded and figure out accounts, assets and values. Not only don’t we have a paper trail, but digital accounts are protected by passwords, multifactor authentication processes, fingerprints, facial recognition systems and federal data privacy laws.

The starting point is to create a list of digital accounts. Instructions on how to gain access to the accounts must be very specific, because a password alone may not be enough information. Explain what you want to happen to the account: should ownership be transferred to someone else, who has permission to retrieve and save the data and whether you want the account to be shut down and no data saved, etc.

The account list should include:

Social media platforms
Traditional bank, retirement and investment accounts
PayPal, Venmo and similar payment accounts
Cryptocurrency wallets, nonfungible token (NFT) assets
Home and utilities accounts, like mortgage, electric, gas, cable, internet
Insurance, including home, auto, flood, health, life, disability, long-term care.
Smart phone accounts
Online storage accounts
Photo, music and video accounts
Subscription services
Loyalty/rewards programs
Gaming accounts

Some accounts may be accessed by using a username and password. However, others are more secure and require biometric protection. This information should all be included in a document, but the document should not be included in the Last Will, since the Last Will becomes public information through probate and is accessible to anyone who wants to see it.

Certain platforms have created a process to allow heirs to access assets. Typically, death certificates, a Last Will or probate documents, a valid photo ID of the deceased and a letter signed by those named in the probate records outlining what is to be done with assets are required. However, not every platform has addressed this issue.

Compiling a list of digital assets is about as much fun as preparing for tax season. However, without a plan, digital assets are likely to be lost. Identity theft and fraud occurs when assets are unprotected and unused.

Just as a traditional estate plan protects heirs to avoid further stress and expense, a digital estate plan helps to protect the family and loved ones. Speak with your estate planning attorney as you are working on your estate plan to create a digital estate plan.

Reference: Barron’s (Dec. 15, 2021) “How to Ensure Heirs Avoid a Password-Protected Nightmare”

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