Is an Estate Plan Battle Looming?

Some people don’t create an estate plan before they die. Or, if they do, they failed to have an estate plan created with an experienced estate planning attorney and their will is unclear, or even invalid. They might die with debts conflicting with their wishes. These and other situations can lead to a long and expensive probate period, as described in the article “In-fighting Families, Wills, Laws & Other Things That Could Hold Up Probate” from yahoo!.

How long does it take for an estate to move through the probate process? It depends upon the complexity of the estate and how well—or poorly—the estate plan was created.

What is probate? Probate is the process where the court oversees the settlement of an estate after the owner dies. If there is a will, the court authenticates the will and accepts or denies the executor named in the will to carry out its instructions. The executor is usually the decedent’s spouse or closest living relative.

How does probate work? Probate is governed by state law, so different states have slightly different processes. The first thing is authenticating the will and appointing an executor. The court then locates and accesses all of the property owned by the decedent. If there are any debts, the estate must first pay off the debts. When the debts have been paid, the court can distribute the remaining assets in the estate to heirs.

If there is no will, the person is said to have died intestate. The court may then appoint an administrator to carry out the necessary tasks of paying debts and distributing assets. The administrator is paid from the estate.

How long does it take? It depends. If the decedent had placed most of their assets in trust, those assets are not subject to probate and are distributed according to the terms of the trust. If there are multiple properties in multiple states, probate has to be conducted in all states where property is owned. In other words, probate could be six months or three years.

Estate size matters. Certain states use the total value of the estate to determine its size, rather than examine individual properties. Possessions subject to probate usually include personal property, cash and cash accounts, transferable accounts with no named beneficiaries, assets with shared ownership or tenancy in common and real estate.

Possessions not typically subject to probate include insurance proceeds, accounts owned as Joint Tenant with Rights of Survivorship, accounts with a beneficiary designation and assets owned in trusts.

Probate varies from state to state. Probate is not nationally regulated, and state-level laws vary. An estate could be swiftly completed in one state and take a few months in another. Some states have adopted the Uniform Probate Code (UPC), designed to streamline the probate process by creating standardized laws. However, only 18 states have adopted this code to date.

Fighting among heirs makes probate take longer. Even small disputes can extend the probate process. If there are estranged family members, or someone feels they deserve a larger share of the estate, conflicts can lead to probate coming to a full stop.

An experienced estate planning attorney can help structure an estate plan to minimize the amount of assets passing through probate, while ensuring that your wishes are followed and loved ones are protected.

Reference: yahoo! (Nov. 21, 2022) “In-fighting Families, Wills, Laws & Other Things That Could Hold Up Probate”

Could Your Estate Plan Be a Disaster?

You may think your estate plan is all set.However, it might not be. If you met with your attorney when your children were small, and your children are now grown and have children of their own, your estate could be a disaster waiting to happen, says a recent article “Today’s Business: Your estate plan—what could go wrong?” from the New Haven Register.

Most estate planning attorneys encourage their clients to revisit their estate plan every three to five years, with good reason. The size of your estate may have changed, you may have experienced a health issue, or you may have a new child or a grandchild. There may be tax law changes, statutes may have been updated and the plan you had three to five years ago may not accomplish what you want it to.

Many people say they “have nothing” and their estate is “simple.” They might also think “my spouse will get everything anyway.” This is wrong 99% of the time. There are unintended consequences of not having a will—accounts long forgotten, an untimely death of a joint owner, or a 40-year-old car with a higher value than anyone ever expected.

Your last will and testament designates who receives your assets and provides for any minors. A will can also help protect your wishes from a challenge by unwanted heirs after your passing.

The federal estate tax exemption today is $12.6 million, but if your will was created to minimize estate taxes when the exemption was $675,000, there may be unnecessary provisions in your plan. Heirs may be forced to set up inherited trusts or even sub-trusts. With today’s current exemption level, your plan may include trusts that no longer serve any purpose.

When was the last time you reviewed your will to see whether you still want the same people listed to serve as guardians for minor children, executors, or trustees? If those people are no longer in your family, or if the named person is now your ex, or if they’ve died, you have an ineffective estate plan.

Many adults believe they are too young to need an estate plan, or they’ve set up all of their assets to be owned jointly and, therefore, don’t need an estate plan. If one of the joint owners suffers a disability and is receiving government benefits, an inheritance could put all of their benefits at risk. Minor children might inherit your estate. However, the law does not permit minors to inherit assets, so someone needs to be named to serve as their conservator. If you don’t name someone, the court will, and it may not be the person you would choose.

What about using a template from an online website? Estate planning attorneys are called in to set things right from online wills with increasing frequency. The terms of a will are governed by state law and often these websites don’t explain how the document must be aligned with the statutes of the state where it is signed. Estate plans are not one-size-fits-all documents and a will deemed invalid by the court is the same as if there were no will at all.

If you don’t have an estate plan, if your estate plan is outdated, or if your estate plan was created using an online solution, your heirs may inherit a legal quagmire, in addition to your coin collection. Give yourself and them the peace of mind of knowing you’ve done the right thing and have your will updated or created with an experienced estate planning attorney.

Reference: New Haven Register (Oct. 29, 2022) “Today’s Business: Your estate plan—what could go wrong?”

Why Naming Beneficiaries Is Important to Your Estate Plan

For the loved ones of people who neglect to update the beneficiaries on their estate plan and assets with the option of naming beneficiaries, the cost in time, money and emotional stress is quite high, says the recent article “Five Mistakes To Avoid When Naming Beneficiaries” from The Chattanoogan.

The biggest mistake is failing to name a beneficiary on all of your accounts, including retirement, investment and bank accounts as well as insurance policies. What happens if you fail to name a beneficiary? Assets in the accounts and proceeds from life insurance policies will automatically become part of your estate.

Any planning you’ve done with your estate planning attorney to avoid probate will be undercut by having all of these assets go through probate. Beneficiaries may not see their inheritance for months, versus receiving access to the assets much sooner. It’s even worse for retirement accounts like IRAs. Any ability your heir might have had to withdraw assets over time will be lost.

Next is forgetting to name a contingency beneficiary. Most people name their spouse, an adult child, or a sibling as their primary beneficiary. However, if the primary beneficiary should predecease you and there is no contingency beneficiary, it is as if you didn’t have a beneficiary at all.

Having a contingency beneficiary has another benefit: the primary beneficiary has the option to execute a qualified disclaimer, so some assets may be passed along to the next-in-line heir. Let’s say your spouse doesn’t need the money or doesn’t want to take it because of tax implications. Someone else in the family can more easily receive the assets.

Naming beneficiaries without taking care to use their proper legal name or identify the person with specificity has led to more surprises than you can imagine. If there are three generations of Geoffrey Paddingtons in the family and the only name on the document is Geoffrey Paddington, who will receive the inheritance? Use the person’s full name, their relationship to you (“child,” “cousin,” etc.) and if the document requires a Social Security number for identification, use it.

When was the last time you reviewed beneficiary documents? The only time many people look at these documents is when they open the account, start a new job, or buy an insurance policy. Every few years, around the same time you review your estate plan, you should gather all of your financial and insurance documents and make sure the same people named two decades ago are still the ones you want to receive your assets on death.

Finally, talk with loved ones about your legacy and your wishes. Let them know that an estate plan exists and you’ve given time and thought to what you want to happen when you die. There’s no need to give exact amounts. However, a bird’s eye view of your plan will help establish expectations.

If naming beneficiaries is challenging because of a complex situation, your estate planning attorney will be able to help as a sounding board or with estate planning strategies to accomplish your goals.

Reference: The Chattanoogan (Dec. 6, 2021) “Five Mistakes To Avoid When Naming Beneficiaries”

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Is an Estate Plan Battle Looming?

Could Your Estate Plan Be a Disaster?

Why Naming Beneficiaries Is Important to Your Estate Plan

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