Estate Planning Blog Articles

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How Do I Write a Will?

You should get the basic estate planning documents in order and revisit them regularly. Everyone should have a will, but it’s only one of several significant estate planning documents in a comprehensive plan.

US News’ recent article entitled “10 Steps to Writing a Will” says that many of a typical household’s assets, such as retirement accounts, can be transferred outside of a will by naming beneficiaries. Documents, like financial and medical powers of attorney, can also be more powerful in determining the outcome of an estate.

Find an Experienced Estate Planning Attorney. Most situations will require an estate planning attorney, especially when you have a large estate, a blended family, or other complex situations.

Select Beneficiaries. A common mistake people make when planning their estate is failing to name or update beneficiaries on key accounts that work with the plans outlined in their wills. The beneficiary listed on bank accounts, life insurance and other financial accounts will have control over the will.

Choose the Executor. The executor of your will has the task of carrying out your wishes detailed in the will.

Choose a Guardian for Your Minor Children. If you have minor children, you must designate a guardian in your will. That way you can name the person you want to care for your children, in the event you die while they are yet minors.

Be Specific About Who Gets What. One of the most time-consuming aspects of creating a will may be deciding which assets to include and determining who will receive what. Consider the types of assets being allocated to heirs to help with decision-making and management.

Be Clear About Who Gets What. Think practically about how your property will be distributed. A big reason children stop speaking after a parent’s death is because there’s boilerplate language directing tangible assets, such as artwork, collectibles, or jewelry, to be divided equally among children.

Attach a Letter. You can attach an explanatory letter to your will. This letter may provide additional detail about certain wishes. This is also called a “Letter of Last Instruction.”

Sign the Will Properly. If you fail to execute your will properly, it may result in the document being deemed invalid. An experienced estate planning attorney will know precisely what is required as far as witnesses and notarization.

Find a Place for Your Will. Inform a person you trust about the location of your will as well as any other important legal papers and passwords to financial institutions. In addition, it’s wise to store the original copy somewhere secure, such as in a fireproof safe.

Review and Update Your Will. A will should be updated every few years.

Reference: US News (May 31, 2021) “10 Steps to Writing a Will”

When Should You Update Your Estate Plan?

Updating an estate plan is not usually the first thing on one’s mind when large life events occur. However, if you fail to update your estate plan, over time the plan may not work—for you or your loved ones. Reviewing estate plans at least once every three or four years will help to reach your goals and protect your family, explains the article “Do I Need to Update My Estate Plan?” from Arkansas Business.

Two key documents are used to distribute your assets: your last will and testament and trusts. As your children and other family members mature, those documents should change as may be needed.

If you have a revocable trust, you need to review the dispositive provisions and the trust funding. One of the biggest mistakes in estate planning, after failing to have an estate plan, is failing to fund or manage the funds in a trust.

Trusts are created to avoid probate and establish a process for distributing assets in case of disability or death. However, if assets are not retitled to be owned by the trust, or if the assets don’t have an appropriate beneficiary designation to transfer assets to the trust at the time of your death, they won’t perform as intended. As new assets are purchased, they also need to be incorporated into your estate plan.

Relationships you have with people who have responsibilities for your estate plan may change over time. Those need to be updated, including the following:

Trustee—The person or institution administering and managing a revocable trust, when you can no longer do so.

Guardian—The individual who will have legal authority and responsibility to raise your minor child(ren).

Executor—The person who is in charge of administering and managing your estate.

Health Care Agent—The person you authorize to make medical decisions in the event of incapacity.

Another common point of failure for estate plans: neglecting to update beneficiary designations for assets like life insurance, retirement plans and any asset that customarily passes to an heir through a beneficiary designation.

A regular review of your estate plan with your estate planning attorney also allows your plan to incorporate changes in tax laws. The last few years have seen many significant changes in tax laws, and more changes are likely in the future. Strategies that may have been extremely effective five or ten years ago are probably outdated and might create costs for your heirs. A review with an experienced estate planning attorney can prevent unnecessary tax liabilities, unexpected inheritances and family feuds.

Reference: Arkansas Business (Sep. 2021) “Do I Need to Update My Estate Plan?”

What Items Should Not Be Stored in a Safe Deposit Box?

We’re reminded daily about living in a digital world where anything of importance is stored in the cloud. However, if you were thinking about getting rid of your safe deposit box, says the article “9 Things You’ll Regret Keeping in a Safe Deposit Box,” from Kiplinger, think again.

By all means keep your prized possessions like baseball cards in a safe deposit box. Some documents also do belong in a bank vault. However, it’s not the right place for everything.

Even if the bank’s ATMs are open 24/7, access to the safe deposit box is limited to hours when the bank is open. If you need something in an emergency on a weekend, holiday or at night, you’re stuck. The same goes for natural disasters, which seem to be happening more frequently in certain parts of the country. Reduced operations and branch closures happened because of the pandemic and today’s hiring problems might mean a longer wait even during regular business hours at a bank branch.

Here’s a look at what not to put in your safe deposit box:

Cash money. Most banks are very clear: cash should not be kept in a safe deposit box. Read your contract with the bank. The FDIC does not protect cash, unless it’s in a bank account.

Passports. Unless you travel often enough to keep a passport next to your wallet, it may be tempting to put it in the safety deposit box. However, if an emergency arises, or you get a great last minute travel bargain, you won’t have quick access to your passport.

An original will. Keeping copies of your will in a safe deposit box is fine, but not the original. After death, the bank seals the safe deposit box until an executor can prove they have the legal right to access it.

Letters of Intent. A letter of intent, or letter of instruction, is a letter to your family, telling them what your wishes are for your funeral or memorial service and giving details on specific bequests. However, if it’s locked up in a safe deposit box, your final wishes may not see the light of day for months. Keep the letter of intent with your original will. You might also wish to send the letter of intent to anyone who is designated to receive a specific item.

Power of Attorney. Similar to the will, the POA needs to be accessible any time, day, or night. Keep it with your original will and provide copies to anyone who might need it. The same goes for your Advance Directives for Health Care or Living Will. It won’t do you any good to say you don’t want to be kept alive on a heart and lung machine if your agents can’t get to these documents.

Valuables, Jewelry or Collectibles. The FDIC does not insure safe deposit boxes or their contents. There are no federal laws governing safe deposit boxes and no law says the bank has to reimburse you for stolen items. Protect valuables with a supplemental policy or a rider to your homeowner’s insurance policy and keep them at home.

Spare House Keys. How likely are you to be able to get to your house keys even if the bank is open, if your key to the safe deposit box is in your home? Enough said.

Illegal, Dangerous, or Liquid Items. When you opened your safe deposit box, you signed a contract listing what you may and may not keep in a safe deposit box. Firearms, explosive, illegal drugs, and hazardous materials are among the things prohibited from being kept in a safe deposit box. The same goes for less dramatic items: if you have a collection of rare whiskey, keep it at home.

Reference: Kiplinger (Sep. 24, 2021) “9 Things You’ll Regret Keeping in a Safe Deposit Box”

Where Do You Score on Estate Planning Checklist?

Make sure that you review your estate plan at least once every few years to be certain that all the information is accurate and updated. It’s even more necessary if you experienced a significant change, such as marriage, divorce, children, a move, or a new child or grandchild. If laws have changed, or if your wishes have changed and you need to make substantial changes to the documents, you should visit an experienced estate planning attorney.

Kiplinger’s recent article “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?” gives us a few things to keep in mind when updating your estate plan:

Moving to Another State. Note that if you’ve recently moved to a new state, the estate laws vary in different states. Therefore, it’s wise to review your estate plan to make sure it complies with local laws and regulations.

Changes in Probate or Tax Laws. Review your estate plan with an experienced estate planning attorney to see if it’s been impacted by changes to any state or federal laws.

Powers of Attorney. A power of attorney is a document in which you authorize an agent to act on your behalf to make business, personal, legal, or financial decisions, if you become incapacitated.  It must be accurate and up to date. You should also review and update your health care power of attorney. Make your wishes clear about do-not-resuscitate (DNR) provisions and tell your health care providers about your decisions. It is also important to affirm any clearly expressed wishes as to your end-of-life treatment options.

A Will. Review the details of your will, including your executor, the allocation of your estate and the potential estate tax burden. If you have minor children, you should also designate guardians for them.

Trusts. If you have a revocable living trust, look at the trustee and successor appointments. You should also check your estate and inheritance tax burden with an estate planning attorney. If you have an irrevocable trust, confirm that the trustee properly carries out the trustee duties like administration, management and annual tax returns.

Gifting Opportunities. The laws concerning gifts can change over time, so you should review any gifts and update them accordingly. You may also want to change specific gifts or recipients.

Regularly updating your estate plan can help you to avoid simple estate planning mistakes. You can also ensure that your estate plan is entirely up to date and in compliance with any state and federal laws.

Reference: Kiplinger (July 28, 2021) “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?”

Do I Need to Update My Estate Plan?

Given a choice, most people will opt to do almost anything rather than talk about death and life for others after they are gone. However, estate planning is essential to ensure that your life and life’s work will be cared for correctly after you’ve passed, advises the article “Is Your Estate Plan Up to Date?” from NASDAQ.com. If you own any assets, have a family, loved ones, pets or belongings you’d like to give to certain people or organizations, you need an estate plan.

Estate planning is not a set-it-and-forget it process. Every few years, your estate plan needs to be reviewed to be sure the information is accurate. Big life changes, from birth and death to marriage and divorce—and everything in between—usually also indicate it’s time for an update. Changes in tax laws also require adjustments to an estate plan, and this is something your estate planning attorney will keep you apprised of.

Reviewing and updating an estate plan is a straightforward process, once your estate planning attorney has created an initial plan. Keeping it updated protects your wishes and your loved ones’ futures. Here are some things to keep in mind when reviewing your estate plan:

Have you moved? Changes in residence require an update, since estate laws vary by state. You also should keep your advisors, including estate planning attorney, financial advisor and tax professional, informed about any changes of residence. You’d be surprised how many people move and neglect to inform their professional advisors.

Changes in tax law. The last five years have seen big changes in tax laws. Estate plans created years ago may no longer work as originally intended.

Power of Attorney documents. A Power of Attorney authorizes a person to act on your behalf to make business, personal, legal and financial decisions. If this document is old, or no longer complies with your state’s laws, it may not be accepted by banks, investment companies, etc. If the person you designed as your POA decades ago can’t or won’t serve, you need to choose another person. If you need to revoke a power of attorney, speak with your estate planning attorney to do this effectively.

Health Care Power of Attorney and HIPAA Releases. Laws concerning who may speak with treating physicians and health care providers have become increasingly restrictive. Even spouses do not have automatic rights when it comes to health care. You’ll also want to put your wishes about being resuscitated or placed on artificial life support in writing.

Do you have an updated last will and testament? Review all the details, from executor to guardian named for minor children, the allocation of assets and your estate tax costs.

What about a trust? If you have minor children, you need to ensure their financial future with a trust. Your estate planning attorney will know which type of trust is best for your situation.

A regular check-up for your estate plan helps avoid unnecessary expenses, delays and costs for your loved ones. Don’t delay taking care of this very important matter. You can then return to selecting a color for the nursery or planning your next exciting adventure. However, do this first.

Reference: NASDAQ.com (July 28, 2021) “Is Your Estate Plan Up to Date?”

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How Does Probate Work?

Having a good understanding of how wills are used, how probate works and what other documents are needed to protect yourself and loved ones is key to creating an effective estate plan, explains the article “Understanding probate helps when drafting will” from The News Enterprise.

A last will and testament expresses wishes for property distribution after death. It’s different from a living will, which formalizes choices for end-of-life decisions. The last will and testament also includes provisions for care of minor children, disabled dependents and sometimes, for animal companions.

The will does not become effective until after death. However, before death, it is a useful tool in helping family members understand your goals and wishes, if you are ever incapacitated by illness or injury.

The will has roles for specific people. The “testator” is the person creating the will. “Beneficiaries” are heirs receiving assets after the testator has died. The “executor” is the person who oversees the estate, ensuring that directions in the will are followed.

If there is no will, the court will appoint someone to manage the estate, usually referred to as the “administrator.” There is no guarantee the court will appoint a family member or relative, even if there are willing and qualified candidates in the family. Having a will precludes a court appointing a stranger to make serious decisions about a treasured possession and the future of your loved ones.

A will is usually not filed with the court until after the testator dies and the executor takes the will to the court in the county where the testator lived to open a probate case. If the person owned real estate in other counties or states, probate must take place in all other such locations. The will is recorded by the county clerk’s office and becomes part of the public record for anyone to see.

Assets with named beneficiaries, like life insurance proceeds, retirement funds and property owned jointly are distributed to beneficiaries outside of probate. However, any property owned solely by the decedent is part of the probate action and is vulnerable to creditors and anyone who wishes to make a claim against the estate.

The best way to protect your family and your assets is to have a complete estate plan that includes a will and a thorough review of how assets are titled so they can, if possible, go directly to beneficiaries and not be subject to probate.

Reference: The News Enterprise (Aug. 17, 2021) “Understanding probate helps when drafting will”

Who Inherited from the Painter Bob Ross?

Like many painters before him, Bob Ross’s image only took hold after his untimely death. He’s now a pop culture icon, and is featured as bobbleheads, Chia pets and has his own cereal.

However, there’s a reason why we see so much more of the gentle painter than ever before. That’s because of a legal battle for ownership of Ross’s name. That was the only item of value in his estate, which is rare for celebrities of his caliber.

Wealth Advisor’s recent article entitled “Here’s Who Inherited Bob Ross’ Estate, And Where They Are Now” reports about what happened to his estate, who controls it and where they are today.

The Daily Beast wrote that Ross is “a smash hit on social media, where he feels more like a Gen-Z influencer than a once semi-obscure PBS celebrity who rose to fame in the 1980s on the back of his bouffant hairdo, hypnotic singsong baritone and a timeless message about the beauty of the world around us.”

However, he wouldn’t have become a household name, if not for Bob Ross Inc. The battle began when the artist met Bill Alexander, a celebrity painter who had a show on PBS, in 1978. Alexander gave him a job as a traveling art instructor. Ross met Annette and Walt Kowalski at a class, who recently lost their son, and who wanted to learn how to paint.

The Kowalskis convinced him to come to Washington, D.C. to teach. They eventually made a deal: they’d give him a stipend and room and board, if he’d teach more classes that they’d arrange in the area. PBS then asked Ross to do a show like Alexander’s, and Dennis Kapp, the owner and CEO of the art-supply company Martin F. Weber, wanted to develop a line of supplies with him too. Soon, The Joy of Painting was born. However, to look after the supply company with Kapp, Ross and his wife Jane, and Annette and Walt signed documents to create Bob Ross Inc., with all four of them being equal partners.

At the end of the 1980s, all four partners were making $85,000, and in the early ’90s, Ross made around $120,000. However, he wanted to branch out, and when he did, the happy days were at an end. When Ross’s health started to decline, Walt “declared war” and sent Ross documents saying the Kowalskis owned everything, but they’d agreed that Ross and his heirs would get 1% of the revenues for the next decade. Ross never signed anything, and in fact, he quickly changed his last will to make it harder for the Kowalskis to steal his name and likeness.

Those changes to his last will included “a clause specifically addressing his name, likeness and the rest of his intellectual property. All of those rights were to go to Steve and one of Bob’s half-brothers.” His third wife replaced Annette as the administrator of his estate. In July 1995, the painter lost his battle to cancer.

When Ross died, Bob Ross Inc. was totally owned by the Kowalskis. However, they wanted it all, including his name and likeness. Then what one of Ross’s good friends calls “Grand Theft Bob” began.

Steve did not know about the final amendment until 20 years later when his uncle Jimmie, the estate’s executor, informed him. When Ross died, he was worth $1.3 million. Half of that was his third part of Bob Ross Inc., and there was also cash, stocks and property to divide.

The Kowalskis went after Ross’s art supplies and artwork and made “claims against the estate for business and personal reimbursements,” charging Ross’s widow with hefty lawsuits and suing PBS and the children’s show Ross guest-starred on. In 1997, Jimmie, Ross’s brother, settled the lawsuit, practically handing over everything to the Kowalskis. In 2012, their daughter Joan took over, opening up the realm of merchandising for the company.

However, there was still a “grey zone” in how Bob Ross Inc. could truly own Ross’s name and likeness. After learning about that amendment in Ross’s will, Steve went after Bob Ross Inc. but didn’t win his case against Bob Ross Inc.

Joan did strike a deal with him: if he surrendered his rights to Ross’s name and likeness, he could print his name on anything he wanted.

The good news was that Steve was able to return as an art instructor, and thanks to Bob Ross Inc., Ross was bigger than ever. That helped class sizes, and students came in masses to learn the iconic style. Steve gets to run his father’s estate, and fans welcomed him back to the painting world. Despite the fact that the Kowalskis got everything, they were the only ones who could have kept Ross’s name from disappearing.

As for all of Ross’s paintings the Kowalskis seized, they ended up in an unprotected warehouse until the Smithsonian took a collection of them.

Reference: Wealth Advisor (June 28, 2021) “Here’s Who Inherited Bob Ross’ Estate, And Where They Are Now”

What Happens If You Inherit a House with a Mortgage?

Nothing in life is certain, except death and taxes, says the old adage. The same could be said about mortgages. Did you know that the word “mortgage” is taken from a French term meaning “death pledge?” A recent article titled “What happens to your mortgage when you die?” from bankrate.com explains the options for homeowners who wonder what might happen to their home, mortgage and loved ones, after they die.

When a homeowner dies, their mortgage lives on. The mortgage lender still needs to be repaid, or the lender could foreclose on the home when payments stop, regardless of the reason. The same is true if there are outstanding home equity loans or lines of credit attached to the property.

If there is a co-borrower or co-signer, the other person must continue making payments on the mortgage. If there is no co-signer, the executor of the estate is responsible for making mortgage payments from estate assets.

If the home is left to an heir through a will, it’s up to the heir to decide what to do with the home and the mortgage. If the lender and the terms of the mortgage allow it, the heir can assume the mortgage and make payments. The heir might also arrange for the property to be sold.

A sole heir should reach out to the mortgage company and discuss their options, after conferring with the family’s estate planning attorney. To assume the loan, the mortgage must be transferred to the heir. If the property is sold, proceeds from the sale are used to pay off the loan.

Heirs do not need to requalify for the mortgage on a loan they inherited. This can be a good opportunity for someone with bad credit to repair that credit, if they can stay current on the mortgage. If the heir wants to change the terms of the mortgage, they will need to qualify for a new loan and meet all of the lending institution’s eligibility requirements.

Proof that a person is the rightful inheritor of the property or executor of the estate may be required. The mortgage lender will typically have a process to specify what documents are needed. If the lender is not cooperative or balks at any requests, the estate planning attorney will be able to help.

If you own a home, it is very important to plan for the future and that includes making decisions about what you want to happen to your home, if you are too ill to manage your affairs or for when you die. You’ll need to document your wishes,

Reference: Bankrate.com (July 9, 2021) “What happens to your mortgage when you die?”

Have You Considered Estate Planning for Fido?

In Montana, a pet is “any domesticated animal normally maintained in or near the household of its owner.” In Kansas, the statutes define an “animal” as “any live dog, cat, rabbit, rodent, nonhuman primate, bird or other warm blooded vertebrate or any fish, snake, or other cold-blooded vertebrate.”

Wealth Advisor’s recent article entitled “Estate Planning For Pets” explains that a pet is tangible personal property—just like guns, cars, or jewelry. When a pet owner passes away, pets pass to beneficiaries by provisions in an owner’s will, by directives in an owner’s trust document, or by a priority list of heirs contained in the state probate laws, if an owner does not have a will or a trust.

Pet owners should select a willing care giver and make a care plan for their pet that will lower the pet’s stress in the first days after you are gone. Writing down your wishes can help your heirs avoid potential problems, if there is a need to cover expenses for food, medical requirements and transportation of the pet to the beneficiary.

For example, in Montana, an honorary trust for pets is valid for only 21 years, no matter if a pet owner writes a longer term in the trust document. As a result, the trust terminates the earlier of 21 years or when the pet dies. Unless indicated in the trust document, the trustee may not use any portion of the principal or income from the trust for any other use than for the pet’s care.

Pet owners have options, when funding a pet trust. Funds could come from a payable on death (POD) designation on financial accounts to the pet trust. Another option is a transfer on death (TOD) registration with the pet trust as beneficiary for stocks, bonds, mutual funds and annuities. The pet owner could also direct the trustee in the pet trust document to sell assets, like a vehicle, house, or  boat, and place those funds in the trust for the care of the pet.

Life insurance is perhaps another option for funding for a pet’s care. States typically do not consider a pet to be a “person,” so Puffball cannot be a beneficiary of a life insurance policy. A pet owner can fund a living or testamentary pet trust, by naming the trustee of the trust as the beneficiary of a life insurance policy. As an alternative, a pet owner may have a certain percentage of an existing policy payable to the pet trust.

Pet owners should talk to an experienced estate planning attorney about the best way of naming the trustee of a pet trust as a beneficiary of a life insurance policy.

Reference: Wealth Advisor (June 14, 2021) “Estate Planning For Pets”

Can I Write a Perfect Will?

The Good Men Project’s recent article entitled “10 Tips to Writing the Perfect Will” says that writing a perfect will is hard but not impossible. The article provides some tips to keep in mind:

  1. Include Everything. If you have items that are very important to you, make sure they are in the right hands after your death.
  2. Consult an Experienced Estate Planning Attorney. It is a challenge to write a will, especially when you do not know all the legal processes that will take place after your death. An estate planning lawyer can educate you on how your estate is being distributed after your death and how to address specific circumstances.
  3. Name an Executor. An executor will manage and distribute your assets after you die. Select a trustworthy person and be sure it is someone who will respect you and your will.
  4. Name the Beneficiaries. These people will get your assets after you pass away. Name them all and include their full names, so there is no confusion.
  5. Say Where Everything Can Be Found. Your executor should know where all of your property and assets can be found. If there is any safe place where you keep things, add it to your will.
  6. Describe Residual Legacies. This is what remains in your estate, once all the other legacies and bequests are completed. If you fail to do this, it will be a partial intestacy. No matter that the legacies would be distributed according to the will, the intestacy laws will control the residue, which may not be to your liking.
  7. Name Guardians for Your Minor Children. Appoint a guardian to take care of any minor children or the court will appoint their guardians, again this may not be to your liking.
  8. Be Specific. An ambiguous will creates issues for the executor and may require court intervention. Be specific and include heirs’ full names. Account numbers, security boxes and anything of the sort should also be included in your will for easy access.
  9. Keep it Updated. If you experience a major life event, update your will accordingly.
  10. Get Signatures from Witnesses. Once your will is completed, you need witnesses who are at least 18 and are not beneficiaries. Sign and date the will in front of these witnesses, and then ask them to date and sign it too.

If you have any questions about wills, speak to an experienced estate planning attorney.

Reference: The Good Men Project (May 28, 2021) “10 Tips to Writing the Perfect Will”