Estate Planning Blog Articles

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What Is Needed in Estate Plan Besides a Will?

Having a will is especially important if you have young children, says FedWeek’s recent article entitled “Estate Planning Doesn’t Stop with Making a Will.”  In your will, you can nominate guardians, who would raise your children in the event neither you nor your spouse is able to do so.

When designating a guardian, try to be practical.

Remember, your closest relatives—like your brother and his wife—may not necessarily be the best choice.

And keep in mind that you’re acting in the best interests of your children.

Be sure to obtain the consent of your guardians before nominating them in your will.

Also make sure there’s sufficient life insurance in place, so the guardians can comfortably afford to raise your children.

Your estate planning isn’t complete at this point. Here are some of the other components to consider:

  • Placing assets in trust will help your heirs avoid the hassle and expense of probate.
  • Power of Attorney. This lets a person you name act on your behalf. A “durable” power will remain in effect, even if you become incompetent.
  • Life insurance, retirement accounts and payable-on-death bank accounts will pass to the people you designate on beneficiary forms and won’t pass through probate.
  • Health care proxy. This authorizes a designated agent to make medical decisions for you, if you can’t make them yourself.
  • Living will. This document says whether you want life-sustaining efforts at life’s end.

Be sure to review all of these documents every few years to make certain they’re up to date and reflect your current wishes.

Reference: FedWeek (Dec. 28, 2022) “Estate Planning Doesn’t Stop with Making a Will”

Is Estate Planning and Writing Will the Same Thing?

An estate plan is a broader plan for your assets that may apply during your life as well as after your death. A will states where your assets will pass after you die, who will be the guardian of your minor children and other directions. A will is often part of an estate plan, but an estate plan covers much more.

Yahoo’s recent article entitled “How Is Estate Planning Different From Will Planning?” says that if you’re thinking about writing your will or creating an estate plan, it can be a good idea to speak with an experienced estate planning attorney.

A will is a legal document that describes the way you want your assets transferred after your death. It can also state your wishes when it comes to how your minor children will be cared after your death. Wills also nominate an executor who’s in charge of carrying out the actions in your will.

Without a will, your heirs may spend significant time, money and energy trying to determine how to divide up your assets through the probate court. When you die intestate, the succession laws where you reside determine how your property is divided.

Estate planning is much broader and more complex than writing a will. A will is a single tool, and an estate plan involves multiple tools, such as powers of attorney, advance directives and trusts.

Estate planning may include thinking through topics even beyond legal documents, like deciding who has the power to make healthcare decisions on your behalf while you’re alive, in addition to deciding how your assets will be distributed after your death.

Therefore, wills are part of an estate plan. However, an estate plan is more than just a will.

A will is just a first step when it comes to creating an estate plan. To leave your family in the best position after your death, create a comprehensive estate plan, so your assets can end up where you want them.

Reference: Yahoo (Oct. 20, 2022) “How Is Estate Planning Different From Will Planning?”

Should Each Child Get Equal Inheritance?

Every estate planning attorney has conversations with their clients about how adult children should inherit. While most people assume siblings should all inherit equally, in many situations, equal is not always appropriate. There are many situations where an equal inheritance might be unfair, says a recent article, “How Should Your Children Inherit? 4 Scenarios Where ‘Equal’ Is Not Appropriate,” from Kiplinger.

The Caretaker Child Lives With the Parent. When one of the children lives with the parent and has taken on most, if not all, of the responsibilities, it may be fair to treat the child differently than siblings who are not involved with the parent’s care. Taking care of paying bills, coordinating health care appointments, driving the parent to appointments and being involved with end-of-life care is a lot of responsibility. It may be fair to leave this child the family home or leave the home to a trust for the child for their lifetime. The parent may wish to leave the caretaking child a larger portion of the inheritance to recognize the additional help they provided.

A Special Needs Child. If the parent has been the primary caregiver for a special needs child, the estate plan must take this into consideration to ensure the child will be properly cared for after the parents die or are unable to care for the child. Depending on what government benefits the child receives, this usually means the parents need to have a Special Needs Trust or Supplemental Needs Trust created. Most government benefits are means-tested. To remain eligible, recipients may not have more than a certain amount of personal assets. The Special Needs or Supplemental Needs trust could receive more or less than an equal amount of the estate the child would have inherited.

In this scenario, siblings are generally understanding. The siblings often know they will be the ones caring for the family member with special needs when the parents can no longer provide care and welcome the help of an elder law estate planning attorney to plan for their sibling’s future.

An Adult Child With Problems. It’s usually not a good idea to leave an equal portion of an inheritance to an adult child who suffers from mental illness, substance abuse, is going through a divorce or has a life-long history of making bad choices. Putting the money into a trust with a non-family member serving as a trustee and strict directions for when and how much money may be distributed may be a better option. In some cases, disinheriting a child is the unpleasant but only realistic alternative.

Wealth Disparities Among the Siblings. When one child has been financially successful and another struggles, it’s fair to bequeath different amounts. However, wealth can change over a lifetime, so review the estate plan and the wealth distribution on a regular basis.

How To Decide What Will Work For Your Family? Every family is different, and every family has different dynamics. Have open and honest discussions with your estate planning attorney, so they can help you plan for your family’s situation. If possible, the same frank discussion should take place with adult children, so no one is taken by surprise at a time when they will be grieving a loss.

Reference: Kiplinger (Dec. 18, 2022) “How Should Your Children Inherit? 4 Scenarios Where ‘Equal’ Is Not Appropriate”

Can I Contest Dad’s Will While He’s Still Living?

The Maryland Daily Record’s recent article entitled “Wills cannot be challenged until testator dies, Md. appeals court says” explains the Court of Special Appeals said a will or revocable trust is only a draft document until its drafter, or testator, has died.

As a result, those challenging a living person’s will or trust would be merely “presumptive heirs” who have no legal standing to challenge a legal document that’s not yet final.

“Pre-death challenges to wills may be a waste of time – the testator might replace the will with a new one, die without property, or the challenger might die before the testator,” Judge Andrea M. Leahy wrote for the Court of Special Appeals.

The appellate court’s decision was the second defeat for Amy Silverstone, whose legal challenge to her mother Andrea Jacobson’s will was dismissed by a Montgomery County Circuit Court judge for lack of standing.

Silverstone argued that the will should be declared void based on her claim that her aunt unduly influenced her mother. The mother suffers from dementia and memory impairment.

This undue influence led Silverstone’s mother, Andrea Jacobson, to change her will in 2018 to expressly “disinherit” Silverstone and her son, Silverstone alleged.

The mother’s new will stated that Silverstone and her son shall not “in any way be a beneficiary of or receive any portion of the trust or the grantor’s estate.”

The disinheritance came amid a falling out between mother and daughter, according to court documents.

Silverstone’s challenge to the will and related trust is premature while her mother is alive, the court held.

Reference: The Maryland Daily Record (Dec. 12, 2022) “Wills cannot be challenged until testator dies, Md. appeals court says”

Does My Estate Plan Need an ‘ePlan’?

Modern estate plans should include what’s known as an “ePlan” to manage online accounts and online data. There are four specific steps to creating an effective ePlan, says American Legion’s recent article entitled “Estate planning and online accounts.”

  1. Create a List of Accounts and How to Access Them. Your list should specify the username, password account number and a description of what’s included in each account. Make sure to keep this list up to date.
  2. Store and Protect Your Info. Develop a plan for storing information, including saving the list you compiled and backing up important data files and account information. Since an ePlan account list contains sensitive information, such as usernames and passwords, it’s important to maintain the security and confidentiality of this list.
  3. Designate a Digital Executor. The laws of many states give access to online accounts to the executor of an estate. However, in some cases, state law may restrict access, if the executor doesn’t have the password or an estate plan does not clearly grant powers to the executor to access these accounts.
  4. Give Your Executor “Digital Directions.” Draft a letter of instruction to the digital executor and tell him or her how to manage your online accounts and digital assets. It may also include suggestions on the distribution of accounts, assets, files and information to family.

Note that Google, Facebook, Twitter, Apple and other companies have policies for when an account holder dies. These policies may permit an account holder to designate a “Legacy Contact” to manage the account; require specific documentation before a deceased person’s account can be closed, such as a copy of a death certificate; or automatically close an account after an extended period of inactivity, such as three months.

Digital estate planning is a new and dynamic field. By adding an ePlan to your estate plan, you can be certain your executor will take the right steps to preserve and protect these accounts and that valuable and sentimental data can be passed on to family and loved ones.

Reference: American Legion (Dec. 13, 2022) “Estate planning and online accounts”

How to Talk to Parents about Estate Planning

Research from the National Alliance for Caregiving (NAC) and AARP shows that more than 50 million Americans currently serve as unpaid caregivers. This number has increased by nearly 25% since 2015. Statistically, baby boomers and women take on the biggest caregiving burden when it comes to providing care for aging family members. As life expectancy increases, and baby boomers advance well into senior years of their own, the need for caregiving will only continue to rise.

Forbes’ recent article entitled “Holiday Season Tips For Caregivers” says that as the number of seniors in America continues to grow, we find ourselves on the verge of the largest transfer of wealth in history. It is estimated that 45 million Americans will transfer some $68 trillion over the next 25 years.

As a result, having estate planning conversations has become more important than ever.

Discussions about money and mortality can be challenging and emotional. Here are some tips on how to broach this sensitive subject with family and loved ones.

Schedule a time: This can be an overwhelming topic, but don’t ignore it. Scheduling dedicated time to open the dialogue and creating a timeline to complete the basic estate planning documents can make the process more manageable and keep everyone involved accountable.

Share your wealth of knowledge: Share your knowledge about what the documents mean, how and when they come into play, as well as what happens if there’s no estate plan in place. Remind them that this is their chance to ensure that their wishes are carried out.

Ask questions: Provided the person is in a sound state of mind, they’re in a position to be involved in the decision-making. Ask open-ended questions like what steps have already been taken and document as much as possible without judgment.

Share your plan: Sharing your ideas and discussing your own plans can ease tension and help eliminate fears. It shows others that they’re not alone in the planning process.

Leave the conversation open-ended: The key to these planning conversations is empathy because many seniors are experiencing a variety of emotions. Reassure them that you’re available for future conversations and will plan to check back in at the times set forth in the timeline you created together.

You should also ask an experienced estate planning attorney for assistance.

Reference: Forbes (Nov. 29, 2022) “Holiday Season Tips For Caregivers”

Are My Children Entitled to My Money?

Let’s say that one of your children hasn’t had contact with you since COVID in 2019. She’s been off the radar and never calls. You may not feel obligated to give them an inheritance.

Nj.com’s recent article entitled “We want to cut one child out of our will. Can we?” says that adult children aren’t legally entitled to an inheritance.

Unfortunately, will contests generally happen where a child who’s left less, or disinherited, thinks that a sibling has wrongly influenced a parent to leave more to him or her.

This is particularly problematic if the parent is elderly and/or in ill health and completely reliant on that child for assistance.

A will contest is a probate proceeding where interested parties dispute the validity of a will.

The most common legal grounds for disputing the validity of a will are undue influence, duress, mistake and the decedent’s lack of capacity when they signed the will.

To properly avoid a will contest, you should work with a qualified estate planning attorney who will document his or her file and prepare a will for you with appropriate language.

Note that it isn’t necessary or advisable to provide an explanation as to why you’re disinheriting a child. That’s because if you give a reason, that reason may cause controversy.

If avoiding litigation is a priority, as an alternative to totally disinheriting a child, your attorney can also talk with you about the different forms of “no-contest” clauses that can be placed in a will.

This clause, also called an `in terrorem’ clause, indicates that if a beneficiary raises a claim with respect to the will, he or she will lose his or her inheritance.

There’s also typically a time limit to contesting a will. For example, in Minnesota, those with standing who want to contest a will must do so within a year after the death of the deceased person.

For a no-contest clause to be effective, a child must be a beneficiary of some amount in your will.

The courts will uphold this clause, unless it finds there is probable cause for bringing a court action.

Reference: nj.com (Dec. 2, 2022) “We want to cut one child out of our will. Can we?”

It Is Important to Update Your Estate Plan

Individuals who have a will, a power of attorney for health care, a financial power of attorney and a living will might believe they are done with estate planning. They’re only half right. There are many reasons an estate plan needs to be revised or updated, as explained in the recent article “10 reasons to update your estate plan” from American Legion.

New children, grandchildren, or a change in heirs. Most estate plans make provisions for children and heirs who are living when you die. If you have a specific transfer in your estate plan, a new child or one who has not been included in your will may receive a smaller inheritance, or no inheritance at all.

Here’s an example: Jane Doe has a $1 million estate and left a home valued at $400,000 to her first-born son Jason. She divided the rest of her estate, with 1/6 of the balance going to Jason and 5/6 to Justin. If a third child is born, depending on the laws of her state, the third child might receive nothing. Family strife or litigation could easily be the legacy she leaves. Thus, the arrival of a new heir is a reason to update your estate plan.

If you are married and move to a different state, there may be laws impacting ownership and inheritance. Some states are “common law” property states, others are “community property” states. If you move, clarify the ownership of your property as either separate or jointly owned.

Some states still have state inheritance or estate taxes. Many have taxes applied at lower levels than the federal exemption per person. Depending on who your heirs are and the state, you may be giving heirs a large tax liability, in addition to an inheritance.

Power of Attorney laws also vary from state to state, as do living wills or advance directives. You’ll want to be sure your medical planning documents reflect your state’s laws.

Selling or buying a major asset can change your plan and its results. If you transfer a property which has appreciated in value and a large estate tax is to be paid from your estate, beneficiaries could receive less than you intended.

Most estates contain cash, cash equivalents, stocks, real estate and retirement accounts. If your retirement accounts, including 401(k)s, IRAs, pensions, or other accounts, have become the largest portion of your estate, you should review the accounts and their tax impacts on heirs.

Families with unmarried brothers and sisters often receive an inheritance and remember their surviving siblings with an inheritance. However, if there are two or three unmarried siblings, one will inevitably become the survivor and hold most of the assets. If you have included a sibling in your estate plan, there is also the chance they will die before you.

Single people have different estate plans than married couples. A single person who transfers assets to a former spouse will not qualify for the unlimited marital deduction. If there is a divorce and beneficiary designations on retirement plans and insurance policies are not updated, the named person will receive the assets.

When a will is created, it names an executor and a successor executor. If the primary executor predeceases the person making the will, a new executor will need to be added. It’s always better to have two candidates for a position than one.

Estate plans are impacted by changes in asset value, changes in the family and changes in federal and estate law. Every three to five years, meet with your estate planning attorney to review your plan and be sure it still accomplishes what you want.

Reference: American Legion (Nov. 28, 2022) “10 reasons to update your estate plan”

The Basics of Estate Planning

No matter how BIG or small your net worth is, estate planning is a process that ensures your assets are handed down the way you want after you die.

Forbes’ recent article entitled “Estate Planning Basics” explains that everybody has an estate.

An estate is nothing more or less than the sum total of your assets and possessions of value. This includes:

  • Your car
  • Your home
  • Financial accounts
  • Investments; and
  • Personal property.

Estate planning is the process of deciding which people or organizations are to get your possessions or assets after you’ve died.

It’s also how you leave directions for managing your care and assets if you are incapacitated and unable to make financial or medical decisions. That is done with powers of attorney, a healthcare directive and a living will.

Your estate plan details who gets your assets. It also designates who can make critical healthcare and financial decisions on your behalf should you become incapacitated. If you have minor children, your estate plan also lets you designate their legal guardians, in case you die before they reach 18. It also allows you to name adults to safeguard their financial interests.

Your estate plan directs assets to specific entities or people in a legally binding manner. If you want your daughter to have your coin collection or your favorite animal rescue organization to get $500, it’s all mapped out in your estate plan.

You can also create a trust to safeguard a minor child’s assets until they reach a certain age. You can also keep assets out of probate. That way, your beneficiaries can easily access things like your home or bank accounts.

All estate plans should include documents that cover three main areas: asset transfer, medical needs and financial decisions. Ask an experienced estate planning attorney to help you create your estate plan.

Reference: Forbes (Nov. 16, 2022) “Estate Planning Basics”

Can You Prevent Family Fights over Inheritance?

Inheritance battles can create new conflicts, inflame long-standing resentments and squander assets intended to make heir’s lives better. What can families do to prevent estate battles when a loved one’s intentions aren’t accepted is the question asked by the recent article, “Warning Signs Of Estate Disputes—And Ways to Avoid Them,” from mondaq.com.

Here are the more common scenarios leading to family estate battles:

  • Siblings who are always fighting over something
  • Second or third marriages
  • Disparate treatment of children, whether real or perceived
  • Mental illness or additional issues
  • Isolation or estrangement
  • Economic hardship

There are steps to take to minimize, if not eliminate the likelihood of estate battles. The most important is to have an estate plan in place, including all the necessary documents to clearly indicate your wishes. You may want to include a letter of intent, which is not a legally enforceable document. However, it can support the wishes expressed in estate planning documents.

Update the Estate Plan. Does your estate plan still achieve the desired outcome? This is especially important if the family has experienced big changes to finances or relationships. An estate plan from ten years ago may not reflect current circumstances.

Make Distributions Now. For some families, giving with “warm hands” is a gratifying experience and can remove wealth from the estate to avoid battles as everything’s already been given away. The pleasure of seeing families enjoy the fruits of your labor is not to be underestimated, like a granddaughter who is able to buy a home of her own or an entrepreneurial loved one getting help in a business venture.

Appoint a Non-Family Member as a Trustee. Warring factions within a family are not likely to resolve things on their own, especially when cash is at stake. Appointing a family member as a trustee could cause them to become a lightning rod for all of the family’s tensions. Without the confidence of beneficiaries, accusations of self-dealing or an innocent mistake could lead to litigation. Removing the emotions by having a non-family member serve as a professional trustee can lessen suspicion and decrease the chances of legal disputes.

Communicate, with a facilitator, if necessary. Families with a history of disputes often do better when a professional is involved. Depending on the severity of the dynamics, this could range from annual meetings with an estate planning attorney to explain how the estate plan works and have discussions about the parent’s wishes to monthly meetings with a family counselor.

A No-Contest Clause. For some families, a no-contest clause in the will can head off any issues from the start. If people are especially litigious, however, this may not be enough to stop them from pursuing a case. An experienced estate planning attorney will be able to recommend the use of this provision, based on knowing the family and how much wealth is involved.

Addressing the problem now. The biggest mistake is to sweep the issue under the proverbial rug and “let them fight over it when I’m gone.” A better legacy is to address the problem of the family squabbles and know you’ve done the right thing.

As we head into the holiday season, efforts to bring families together and prepare for the future will allow parents, children and grandchildren to enjoy their time together.

Reference: mondaq.com (Nov. 4, 2022) “Warning Signs Of Estate Disputes—And Ways to Avoid Them”