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Top 5 Estate Planning Nightmares You Can Avoid with a Will

In the realm of estate planning, a common adage rings true: “Failing to plan is planning to fail.” As an experienced estate planning attorney, I’ve witnessed firsthand the turmoil and heartache that can ensue when individuals neglect the crucial step of drafting a will. This blog post is a clarion call to take control of your future and protect your loved ones from the all-too-common nightmares that arise from inadequate estate planning.

Family Disputes and Conflicts

The absence of a will can be the catalyst for family disputes that echo for generations. Imagine a scenario where siblings are torn apart, not by grief, but by the ambiguity of asset distribution. A will acts as a clear voice from beyond, guiding your family during a time of loss and preventing disputes that can irreparably fracture familial bonds.

Unintended Beneficiaries

Imagine your hard-earned assets falling into the hands of a distant relative you barely know, or worse, someone you wouldn’t have chosen to benefit from your estate. This isn’t just a hypothetical situation—it’s a reality for many who pass away without a will. Your will is a beacon, ensuring that your assets find their way into the right hands—those you specifically choose.

Delays and Additional Expenses

The probate process without a will is akin to navigating a ship through a storm without a compass. The journey is longer, fraught with legal complexities, and often more costly. By drafting a will, you provide a map that steers your estate through the probate process swiftly and efficiently, sparing your loved ones from unnecessary financial and emotional burdens.

Loss of Control Over Asset Distribution

Without a will, you relinquish control over who inherits your assets. State laws, devoid of personal sentiment, take the helm. This loss of control is especially critical if you have minor children or dependents whose future you wish to secure. A will is your tool to ensure that your specific wishes for your children’s guardianship and the distribution of your assets are honored.

Increased Legal Challenges

An estate without a will is fertile ground for legal disputes. These battles can drain your estate’s resources and leave your loved ones embroiled in legal quagmires. A well-crafted will is a shield, protecting your estate from the arrows of litigation and providing a solid legal foundation that upholds your wishes.

In conclusion, the nightmares of estate planning can be easily avoided by drafting a will. It is a fundamental step in ensuring your peace of mind and the well-being of your loved ones. Remember, a will is more than just a document; it’s a testament to your life, wishes, and legacy.

Don’t let indecision today lead to turmoil tomorrow. I invite you to take the first step in securing your legacy and safeguarding your family’s future. Contact me for a free consultation to discuss your estate planning needs. Together, we can craft a will that reflects your wishes, protects your assets, and provides clarity and comfort to your loved ones in times of need.

Remember, planning today creates peace of mind for tomorrow. Let’s embark on this journey together.

Key Takeaways

  1. Prevent Family Disputes: A will is essential to avoid familial conflicts over asset distribution, ensuring your wishes are clearly understood and respected.
  2. Control Over Beneficiaries: It enables you to designate precisely who receives your assets, preventing unintended beneficiaries from inheriting your estate.
  3. Efficient Probate Process: Drafting a will streamlines the probate process, reducing delays, complexities, and additional expenses for your loved ones.
  4. Guardianship of Dependents: A will allows you to make critical decisions about the future of your minor children or dependents, ensuring they are cared for as per your wishes.
  5. Legal Protection: Having a will minimizes the risk of legal challenges, protects your estate from potential disputes, and preserves its value for your beneficiaries.

Frequently Asked Questions

Why is a will important if I don’t have a large estate?

A will is crucial regardless of the size of your estate. It ensures that your assets are distributed according to your wishes, no matter how modest. It also helps appoint guardians for minor children and can minimize legal complexities for your loved ones.

Can I write my own will, or do I need an attorney?

While writing your own will is possible, consulting an experienced attorney is advisable to ensure that it meets legal requirements and accurately reflects your wishes. An attorney can help avoid common pitfalls that might render your will invalid or ineffective.

What happens if I die without a will?

If you die without a will, your estate will be distributed according to state intestacy laws, which may not align with your personal wishes. This can lead to unintended beneficiaries receiving your assets and complicate matters for your loved ones.

How often should I update my will?

Reviewing and possibly updating your will every 3-5 years or after major life events such as marriage, divorce, the birth of a child, or significant changes in your financial situation is recommended. This ensures your will remains relevant to your current circumstances.

Can a will reduce taxes on my estate?

A well-planned will can help in minimizing estate taxes. An estate planning attorney can guide you in structuring your will and other estate planning tools to maximize tax efficiency and preserve the value of your estate for your beneficiaries.

Don’t Gamble with Your Future: Why Choosing the Right Estate Planning Attorney Matters

Introduction

Estate planning: two words that encapsulate the entirety of your life’s work and the legacy you wish to leave behind. It is a profound yet often misunderstood aspect of personal finance and legal preparedness. As an experienced estate planning attorney, I’ve seen firsthand the turmoil and heartache resulting from inadequate or nonexistent estate plans. This post aims to illuminate the crucial role of a skilled estate planning attorney in securing your future and the well-being of your loved ones.

Understanding Estate Planning

Estate planning is not merely drafting a will; it’s a comprehensive approach to managing your assets, health directives, and your legacy after you pass away or if you become incapacitated. Common misconceptions, such as the notion that estate planning is only for the wealthy or that it can be postponed until later in life, often deter people from taking the necessary steps. In reality, estate planning is a vital process for everyone, regardless of the size of their estate.

The Risks of DIY Estate Planning

In the era of do-it-yourself solutions, it’s tempting to cut corners and opt for online templates for estate planning. However, this approach is fraught with risks. Personalized advice is crucial since every individual’s situation is unique. DIY estate plans often fail to account for state-specific laws, complex family dynamics, or future changes in assets. Real-life cases abound where such oversights have led to legal battles, unintended disinheritance, or significant tax burdens for heirs.

The Value an Estate Planning Attorney Adds

A dedicated estate planning attorney brings a wealth of knowledge and experience. We don’t just draft documents; we craft a plan tailored to your specific needs, considering intricate legal frameworks and tax implications. Our expertise ensures your estate plan is robust, flexible, and up-to-date with current laws. Furthermore, we navigate the emotional and complex aspects of estate planning, offering peace of mind that your affairs are in competent hands.

What to Look for in an Estate Planning Attorney

When seeking an estate planning attorney, consider the following:

  1. Experience and Expertise: Seek attorneys with significant experience in estate planning. They should have a strong track record in handling cases similar to yours.
  2. Communication Skills: Your attorney should be someone you can talk to openly and who can explain complex legal concepts in understandable terms.
  3. Reputation and Reviews: Research their reputation. Online reviews and referrals from friends or financial advisors can be valuable resources.

The Process of Working with an Estate Planning Attorney

Working with an estate planning attorney typically involves:

  • Initial Consultation: Discussing your goals, family dynamics, and financial situation.
  • Document Preparation: Drafting wills, trusts, powers of attorney, and other necessary documents.
  • Regular Updates: Estate plans should evolve with your life changes. Periodic reviews are essential.

This process is not a one-time event but an ongoing relationship to ensure your estate plan remains relevant and effective.

Financial and Emotional Benefits of Proper Estate Planning

A well-constructed estate plan offers significant benefits:

  • Financial Savings: Minimize taxes, avoid probate costs, and prevent legal disputes.
  • Peace of Mind: Knowing your loved ones will be cared for and your wishes will be honored.

These benefits extend beyond the financial; they offer a sense of security and clarity for you and your family.

Key Takeaways

  1. Estate Planning is Essential for Everyone: It’s not just for the wealthy; everyone should have a plan to manage their assets and health directives.
  2. DIY Comes with Risks: Online templates and DIY solutions are often insufficient and may lead to legal complications.
  3. Professional Guidance is Key: An experienced estate planning attorney can provide tailored advice and ensure your plan is legally sound and up-to-date.
  4. Choose the Right Attorney: Look for experience in estate planning, strong communication skills, and positive client reviews.
  5. Ongoing Process: Estate planning is not a one-time task. It should be reviewed and updated regularly to reflect life changes.

Frequently Asked Questions

Why can’t I just use an online template for my will?

Online templates are generic and may not adequately address your specific needs or comply with state-specific laws. An estate planning attorney can provide a customized plan considering your unique situation and legal requirements.

At what age should I start thinking about estate planning?

It’s wise to start estate planning when you have any significant assets or responsibilities, such as owning a home, having children, or starting a business. It’s never too early to start planning for the future.

How often should I update my estate plan?

You should review and possibly update your estate plan every 3-5 years or sooner if you experience significant life changes like marriage, divorce, the birth of a child, or substantial changes in your financial situation.

What happens if I don’t have an estate plan?

Without an estate plan, the distribution of your assets will be determined by state laws, which may not align with your wishes. This can lead to family disputes, unnecessary taxes, and legal complications.

Is estate planning only about distributing my assets?

No, it’s more than that. Estate planning also includes making arrangements for your healthcare decisions if you become incapacitated, designating guardians for minor children, and potentially reducing taxes and other expenses.

Can I Prevent Children from Fighting over my Estate?

Even the best of sibling relationships can become strained after the death of a parent. This is especially true if the estate includes real estate, like a family or vacation home. More than one adult child often wishes to inherit the asset for sentimental and financial reasons, according to the recent article “Estate Planning: Reducing risk of family in-fighting” from Lake County News.

Sometimes, a family discussion between parents and children about the planned property division can reach an agreement, becoming part of the parent’s estate plan. However, there are times when this isn’t possible.

When the family is a late-in-life blended family, gaining consensus among the siblings may be more difficult, especially if the two sets of children were never close or never got along.

Some children may expect their biological parents to leave the assets brought into the second marriage to their biological children. Stepparents need to take steps to ensure that their separate property goes to their own children. Their stepchildren don’t have to approve of the gift. However, it is crucial for proper estate planning to be done in advance.

If the parent wishes to give each child an equal share of their inheritance and the inheritance includes real property, it may be best to use cash gifts to equalize their shares. The monetary gifts might be funded through life insurance proceeds or by having the successor trustee borrow against the real estate.

This may mean the child who inherits the real property will take it subject to the loan, which they will pay off, or refinance the debt upon distribution.

Families who own businesses require special consideration because some children may be actively involved while others are not. Succession planning will need to be done, including placing the business in a partnership or a corporation. The children involved in the business may be made general partners or executive officers in the corporation. In contrast, the children not involved in the business could be made passive partners or given ownership interests without an active participation role.

Suppose the estate includes valuable heirlooms or items with great sentimental value. Conversations about the individual items should occur while parents live. In that case, the wishes should be incorporated into the will.

If it seems as if the family can anticipate disputes over possessions or assets, an experienced estate planning attorney can prepare an estate plan designed to withstand challenges. This type of protection varies depending on the circumstances and the anticipated nature of the challenges.

One common scenario is a disgruntled child pressuring the parents to change their will to favor the child. If a no-contest clause is used, where anyone who disputes the will and loses the lawsuit will also lose what they would have otherwise inherited from the estate, other siblings may lose out entirely. Preparing a will for challenges requires a lot of strategy and planning .

In some states, it is possible to petition the court to confirm the terms of the trust while the grantor is living. This forces any contest to occur while the parent is still living and can testify to their intentions. In some high-value estates, this is a pre-emptive strategy to be considered.

Reference: Lake County News (Dec. 9, 2023) “Estate Planning: Reducing risk of family in-fighting”

Should You Gift Kids Inheritance Now, or After You’ve Passed?

This is a genuine dilemma facing millions of parents and grandparents as they prepare to pass an enormous amount of wealth—$73 trillion—to the next generation. There are pros and cons to both approaches, according to the article, “Give the Kids Their Inheritance Now or Make Them Wait? 3 Things to Keep in Mind,” from Barron’s.

Giving too much too early could put parents in an economic bind in their later years. Therefore, this needs to be considered in light of today’s longer life spans. However, if you can afford to make a generous gift and your children could use the money now for a good purpose, it’s hard to justify making them wait.

How much to give is as critical as when to make the gift. The predominant concern is if you give your children too much, they won’t be motivated to earn their own wealth, or other family members will resent the gift. Estate planning attorneys and financial advisors routinely speak with families about these issues. These conversations always consider the values they want to instill in their children.

In some cases, parental support can help a child while working at an entry-level (i.e., low paying) job in their dream career. Covering the cost of rent for a few years can offer young adults a support net until they achieve financial stability.

This is very different than paying the expenses of a young adult with no career goal whose primary focus is a robust social life.

Anyone can make a yearly gift to any other person of up to $17,000 tax-free, or $34,000 per couple, but there are ways to make gifts without triggering gift taxes. Direct tuition payments to schools are tax-free. Unlike putting money into a 529 account, there is no limit to how much can be paid directly to a college or university. Parents and grandparents could also help with a downpayment on a child’s home without paying gift taxes.

Gifts don’t have to be large to have an impact. Some parents and grandparents give their children or grandchildren a small amount to start saving for retirement. A gift of a few thousand dollars during their 20s can grow into a nice sum over many decades. If the recipient has earned income, you can contribute to their IRA or Roth IRA accounts.

If assets are limited, consider giving personal possessions, such as jewelry or family heirlooms, to younger generations. You’ll get to see them enjoy their gifts, without putting your own financial situation at risk.

Whenever the decision is made to make these gifts, families should talk about their values and intentions around money.

If there are concerns about children losing an incentive to work because of the family’s wealth, a spendthrift trust might pass wealth along while controlling its distribution.

Remember that today’s generous federal estate tax rules are set to expire in 2026. Currently, individuals can gift up to about $13 million ($26 million for couples) tax-free in their estate plans. If the exemptions expire, this amount will be cut by approximately half.

Reference: Barron’s (Nov. 4, 2023) “Give the Kids Their Inheritance Now or Make Them Wait? 3 Things to Keep in Mind”

Why You Should Put Your House in a Trust

Putting a home into a trust has several benefits, from avoiding the lengthy probate process to providing potential tax advantages. This article discusses some of the intricacies of trusts and the importance of consulting with an experienced estate planning attorney.

What Is a Trust and Why Is It Important?

A trust is a legal arrangement where one person (the grantor) transfers ownership of their assets, like a house, to a trustee. The trustee holds and manages these assets on behalf of the named beneficiaries. One main benefit of putting property in a trust is to avoid probate, which can be a time-consuming and expensive legal process. The trust allows assets to be transferred to beneficiaries without the intervention of a probate court.

What Role Does the Trustee Have?

With a revocable living trust, you, as the original homeowner, will usually name yourself as the trustee, so you have control of the trust and the property. However, the original owner can name someone else as the trustee. This can be helpful in case the original owner dies and the real estate is distributed to the grantor’s beneficiaries according to the terms of the trust agreement. The trustee manages the property for the benefit of the grantor and any named beneficiaries of the grantor’s estate.

Benefits of Putting Your Home in a Trust

Avoiding the Cost and Time of Probate

By transferring ownership of your home into a trust, you can ensure that it passes directly to your chosen beneficiaries upon your death without the need to go through probate. Probate costs are borne by the estate and, thus, the beneficiaries. Probate also takes time, and while probate is in process, homes need maintenance, taxes need to be paid and costs add up. If the house is sitting empty, it can become a target for thieves and property scammers. If the trust is an irrevocable trust, it can also help protect assets from potential creditors and may even provide estate tax advantages.

Keeping the Transfer of the Home Private

If the house goes through probate, the transfer of property becomes part of the court and public record, and anyone will be able to see who inherited the home. When family dynamics are complicated, this can create long-lasting family battles.

Making the Process Simpler for Your Executor

If you have multiple real properties or homes in different states, the properties would be subject to the probate process in the state where located. Thus, if you have a vacation home in Arizona but live in Michigan, your executor will have to navigate probate in both states.

Revocable Trust vs. Irrevocable Trust: Which One Is Right for You?

There are primarily two types of trusts: revocable and irrevocable. A revocable trust, often called a revocable living trust or a living trust, can be altered or revoked entirely by the grantor while they’re alive. It allows homeowners the flexibility to make changes to the trust terms or named beneficiaries. A revocable trust lets a grantor control the property and make changes to the trust during their lifetime. The grantor retains the right to modify or dissolve the trust. The grantor can act as a trustee, manage the property, or appoint someone else. Upon the grantor’s death, the revocable trust becomes irrevocable, meaning no further changes can be made.

On the other hand, an irrevocable trust, once established, cannot be easily altered or terminated. Assets in an irrevocable trust are considered outside of the grantor’s estate, providing protection against creditors and potential tax advantages.

Working with an Estate Planning Attorney to Set Up Your Trust

Creating a trust starts when you engage an experienced estate planning attorney to help you decide the type of trust that best suits your needs for protecting your real and other property. It is essential to work closely with your attorney to complete each step so the home ownership is properly transferred to the trust.

  • Make a list of possible beneficiaries and trustees who you will include in the trust and gather their contact information.
  • Work with the estate planning attorney to transfer the title of your property to the trust. This involves drawing up a new property deed that names the trust as the property owner and getting it notarized in front of a notary public.
  • Record the deed and title to the property with the office that holds local property records.
  • Regularly review and update the trust, especially after major life events, to ensure that it remains aligned with your wishes.

The Role of an Estate Planning Attorney in Putting Your Home in a Trust

Working with an experienced estate planning attorney is essential when setting up a trust. They can provide guidance on the most suitable type of trust for your situation and ensure that all legal formalities are correctly observed. An attorney can help draft the trust document, ensuring that it aligns with state laws, and provide advice on transferring assets into the trust. Moreover, they can act as a valuable resource for questions or concerns, ensuring that the trust serves its intended purpose effectively.

In Conclusion

Putting your house into a trust is a strategic move for estate planning and avoiding probate. Furthermore, if the trust is irrevocable, it may help protect assets from potential creditors and provide estate tax advantages. Whether you opt for a revocable or irrevocable trust, it’s imperative to consult with an experienced estate planning attorney to ensure that your assets, wishes and beneficiaries are well-protected. Remember, a well-structured trust is more than just a legal document; it’s a legacy planning tool.

Now Is the Time for Estate Planning

Individuals in their twenties are usually focused on their careers, acquiring assets and enjoying life—death is one of the last things on their minds, according to a recent article from The National Law Review, “Don’t Wait until Time Is Up.” However, unexpected things happen, even to healthy young people.

Estate planning documents, including Power of Attorney, Healthcare Proxy and Living Will, should be prepared because they go into effect as soon as they are executed, allowing others to carry out legal, financial and health wishes in case of incapacity.

Thirty-somethings may have reached various milestones, such as marriage, having children, owning property, starting a business, or working in the family business. This is also a time when life-changing events occur, such as divorce, death in the family, inheritance, moving to another state and more. Estate planning documents should be in place now, including a will and ancillary documents. This may also be the time to establish trusts to accomplish estate planning goals.

If you are getting married, already married, divorced, or remarried, it’s time to call your estate planning attorney. Estate planning is often negotiated as part of prenuptial, postnuptial and separation agreements. Upon getting married or remarried, your estate plan must be updated to include your new spouse and/or remove your ex-spouse. A new spouse may have elective rights to a portion of their spouse’s estate if they remain married at death and the deceased spouse has failed to provide for their surviving spouse.

One of the most important provisions of a will is the designation of a guardian of minor children. The guardian will take legal custody and responsibility for minor children if both natural parents die while the child is under legal age. Any new parent must execute a will or update their will to designate a guardian. Within the will, you may also request guidelines for guardians to file while raising minor children. The court must find and appoint a guardian if there is no will or the will does not designate a guardian.

If you die without a will, the state laws of intestacy control, which means your spouse and nearest heirs will inherit your estate. If this is not your intention and you want to leave assets to friends, charities, or other relatives, then you need a will.

An estate plan is also needed to streamline the probate and administrative process of the estate. An estate plan can be designed to effectively minimize the expense, delay, and loss of privacy of the probate process. This is typically done by establishing a Living Revocable Trust in addition to the will. The trust can be funded during your lifetime and controlled by you before death. Assets don’t pass through the will, avoiding the need for probate.

One of the first steps of probate is filing the will with the appropriate court when the will becomes part of the public record, and anyone can access it. Probate varies from state to state, and courts experiencing back-ups can delay admitting the will and appointing an executor to manage and distribute the assets. This process can take up to a year in some New York Surrogate courts.

Having an estate plan in place and updating it regularly can help protect assets and beneficiaries. If you haven’t already implemented it, now is the best time to begin.

Reference: The National Law Review (Sep. 12, 2023) “Don’t Wait until Time Is Up”

How to Include Digital Assets in Your Estate Plan

While owning digital assets hasn’t changed the principles of estate planning, it has made the estate pre-planning process more complicated, according to the article “Estate planning and cryptocurrency: 5 tips for leaving your digital assets” from Bankrate. The hurdle is the information needed to retrieve digital assets, including passwords, keys and digital asset locations. There’s no one to call, and the stories of millions in digital assets lost forever are already legendary.

Here are five tips for cryptocurrency owners:

Know where the crypto is held. Cryptocurrency held with a traditional broker or crypto exchange can be handled like other investment accounts, if a beneficiary is named on the accounts or otherwise specified in a will or trust documents. An owner might try to hide the account. However, it generally can be found if the executor knows where the crypto is located.

If crypto assets are self-custodied in an off-chain wallet, and no one knows where the wallet is or its existence, crypto can be hidden and may not be retrievable. A title or probate search will not reveal them; it may be gone forever without the password, private key, or seed phrases.

Understand crypto can easily be lost permanently. Anyone holding crypto on an encrypted hard drive could lose the asset forever, if no one but the owner knows where it is or how to access it. If a hard drive is lost, destroyed, or stolen, or if the key is lost, the crypto is gone.

Provide access to crypto accounts. Whether it’s traditional brokerage accounts or crypto on a hard drive, you’ll need to provide the means and info for your executor or heirs to access these assets upon your passing. The challenge is balancing access with the security of the accounts. There are ways to set up a centralized location to secure all known seed phrases, keys and passphrases and then locate them in the most secure place available. For example, a hard copy list may be stored with other important documents in a fire and waterproof safe.

Another problem is that if your executor is unfamiliar with digital assets, they may not know anything about how digital assets work, making accessing the accounts challenging. You may need to bring them into the digital world as part of your estate planning process.

Protect access to accounts with best practices. If crypto is sent to another person, it’s basically unrecoverable. Don’t include this information in your will, as it becomes a public document upon going through probate. It may be better to secure digital vaults or use reliable, reputable third-party services to store access information. Be careful about providing access to family members who may take advantage of their digital fluency before the estate plan is settled.

Don’t forget cryptocurrency is taxable. Any realized capital gain is taxable, and so are purchases using crypto when the value of the goods is worth more than the purchase price of the crypto. If the estate is over the federal or state exemption level, it can owe estate taxes, even when the crypto is hidden. Tax implications, including tracking the cost basis and gain and loss metrics, are especially important during the asset transition phase. Executors dealing with crypto must be careful to declare the estate’s taxable gains and losses. The estate must meet all tax obligations, crypto and traditional assets included.

Speak with an experienced estate planning attorney about how your state’s laws govern cryptocurrency and digital assets as part of a comprehensive estate plan.

Reference: Bankrate (September 5, 2023) “Estate planning and cryptocurrency: 5 tips for leaving your digital assets”

Three More Reasons to Have an Estate Plan

Even after COVID, most Americans still don’t have an estate plan. A 2023 survey reported in Kiplinger’s recent article, “Three Overlooked Benefits of Estate Planning,” found that 75% of respondents didn’t have an estate plan. Worse, 72% of all respondents over age 75 didn’t have an estate plan.

It’s an easy task to postpone. No one likes to think about death, their own or their spouse’s. However, not having an estate plan condemns your loved ones to deal with an expensive, time-consuming, stressful mess that can be easily avoided.

Estate planning involves the creation and execution of the documents needed to address healthcare, financial, and legal affairs in case of incapacity or death. This is done with a series of documents created by an estate planning attorney. The names of the documents vary by state, but their function is roughly the same:

  • Guardianship—if there are minor children, the will names who will receive custody of your children if you and your spouse both die.
  • Will—A legal document used to express your wishes to distribute your property, name a guardian and an executor.
  • Trust—A fiduciary agreement used to shield your estate from probate and allow further customization of your estate plan.
  • Durable Power of Attorney—A legal document naming a spouse, partner, or other third party to manage finances if you can’t manage your own decisions.
  • Advanced Care Directive—A document outlining the medical care you want or don’t want if you can’t make or communicate these decisions on your own.
  • Medical Power of Attorney—A document naming a third party to make medical decisions if you are incapacitated.
  • HIPAA Authorization—A document giving another person the right to view medical and insurance records and communicate with healthcare providers.

Why should you go through the trouble of having all these documents created? If focusing on the benefits of having an estate plan is the motivation you need to get going, here are several good reasons to have an estate plan.

Securing management of health care and finances if you’re incapacitated. No one likes to think they’ll ever be too sick to care for themselves or make their own decisions. However, this happens routinely to older Americans. Diseases like Alzheimer’s and other illnesses strike older adults with increasing frequency as they age. If you have an estate plan in place, family members can step in to take care of you if necessary. They’ll be able to pay bills to keep your household running smoothly, speak with your doctors and avoid going to court to obtain guardianship or conservatorship.

Fulfilling your wishes. Lacking a will, the laws of your state will determine how your property is distributed, with most states following a next-of-kin lineage. If you want your spouse to inherit everything and the state law divides your estate so 50% goes to a spouse and 50% is divided among the children, the state law will rule.

Another set of problems comes from outdated wills. If you named someone to be your executor thirty years ago and haven’t updated your will, they may no longer be in your life, or you may not want them administering your estate. Another problem is that if you’ve divorced a spouse and never updated your will, life insurance policies, or retirement accounts, your next call should be to your estate planning attorney and insurance agent.

Avoiding probate. Probate is a process where your will is filed with the court, reviewed by a judge,and approved—or not—to be administered. Depending on the jurisdiction, all documents, including your will, are available to anyone by searching the public records. An estate planning attorney can help you decide what assets you are willing to have to go through probate and what might be removed from your estate using trusts. Trusts provide more control over asset distribution and, depending upon the trust used, can provide protection from creditors and nuisance lawsuits. Trusts are also used in tax planning, which should go hand-in-hand with estate planning.

Estate plans have many benefits. Consider having an estate plan as part of your legacy to protect yourself during your lifetime and help your family.

Reference: Kiplinger (September 6, 2023) “Three Overlooked Benefits of Estate Planning”

How can You Make Changes to Estate Plan?

It’s rare for a person to put their estate plan together once and never change it. A recent article from Coeur d’Alene/Post Falls Press asks a good question: “Can you amend your estate plan by writing the changes on your existing documents?”

Effectively and legally changing your will or trust so the changes are enforced per your wishes is best done with an experienced estate planning attorney. People often hand-write edits and changes to the original documents, thinking this is the simple way to amend their wishes. Most attorneys have tales of family members coming into their offices with a handwritten addendum added to the front or back of a will or trust document, which has been written and attached after the document has been signed and executed.

These approaches are problematic, as they are never done in a way that meets the requirements for a legally valid amendment to a will or trust.

A legally enforceable change to a will is accomplished in one of two ways. One is to replace the entire document with a new will document, which should include explicit language stating all prior wills are revoked and replaced, or by adding a new document called a codicil to the old will document. The codicil must make clear exactly what part of the old document is being changed, and typically, it reaffirms the unchanged terms of the old will.

Changes to a trust are accomplished in most states in one of two ways. The first is by replacing the prior trust document with an entirely new trust document, although the name and creation date of the trust must remain the same, and it is explicitly not a revocation of the trust. This is called a trust restatement. The second way to change a trust is using a trust amendment, similar to adding a codicil of a will. A Trust Amendment is a new document added to the existing trust document. It states which part or parts of the original trust document are being changed.

Every state has specific technical requirements for a will codicil or trust amendment/restatement, which must be followed to enforce the changes legally. Just writing on the documents will never meet those requirements and will almost always lead to major disputes among family members and other interested parties.

Handwritten or holographic wills are legal in some states. However, those states have very specific requirements, and wills still need to go through probate. There are many ways to create major problems trying to use this method and only a few ways to do it right.

The good news is an experienced estate planning attorney can help with any modifications, large or small, to make your estate planning documents accurately reflect your wishes.

Reference: Coeur d’Alene/Post Falls Press (Aug. 16, 2023) “Can you amend your estate plan by writing the changes on your existing documents?”

Are CDs Good for My Estate Plan?

Certificates of deposit (CDs) are a low-risk way of saving funds for the short term and earning a modest return on it. When you take out a standard CD, your bank or credit union guarantees that they will pay you a set return on your money. In exchange, you agree to leave your money untouched in the account.

Investopedia’s recent article, “Can You Bypass Probate With CDs?” says that because CDs are a low-risk, time-constrained investment, they’re popular among seniors and often form part of inheritance settlements. When the owner of a CD passes away, it can be inherited in one of three ways. Therefore, it’s a way to pass on money without the CD going through probate.

CDs are treated like any other account as far as inheritance. While probate is frequently used to decide who will inherit particular assets after someone dies, other ways of passing on accounts can be much simpler and less expensive than probate.

There are three common ways to inherit property; only one involves probate. First, some property is jointly owned, passing directly to the co-owner without probate. This applies to joint accounts (including joint CDs) and real estate owned jointly.

The second category is contract property, like life insurance, retirement accounts and non-retirement accounts with beneficiaries designated upon death. These designations override instructions in the will and pass outside of probate directly to the named beneficiary. These accounts are often designated as payable on death (POD) or transfer on death (TOD). It is possible to add this designation to your CD account.

The third category is everything else. All property not covered above will generally have to go through probate.

If you want to avoid probate for the money you hold in your CD, there are two options available to you—you can either add a payable-on-death (POD) beneficiary to your account or hold it as a joint account. CDs can be held as joint accounts. However, the rules vary by state. In some states, if one joint account owner passes away, the other owner is automatically given full ownership of the account. If you inherit a CD in this way, it will typically continue to run in the way it was before. Once it reaches maturity, you can close it and withdraw the funds. In other states, if the joint owner of a bank account dies, the funds are divided between the surviving owner and the estate of the deceased.

Some CD accounts allow the owner to name a payable-on-death (POD) beneficiary. If the account owner dies, this person will automatically inherit the funds in a CD. These banks may terminate a CD when the account owner dies and allow the POD beneficiary immediate access to these funds. Other institutions will make them wait until the CD reaches maturity. In either case, the CD won’t have to go through probate.

Reference: Investopedia (August 23, 2022) “Can You Bypass Probate With CDs?”

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