How to Prevent Family Fighting Over Mom’s Will or Trust
Most people believe that creating an estate plan is a private and personal business; something you do alone or with your spouse, between you and your attorney, with your children, grandchildren, or other beneficiaries kept on a strictly need-to-know basis. In an ideal world this would be true: parents and their adult children would always get along, and when those parents passed away their children would quietly and respectfully follow their wishes regarding the distribution of their estate.
Unfortunately, we don’t always live in an ideal world, and inheritance and estate planning can often cause tension between parents and children—sometimes before the parents have even reached retirement age! This does not have to be your family’s fate, however. Even if you suspect your children won’t like what you’ve put in your will or trust it may be possible to keep the peace and prevent family fights from breaking out—both in the here and now, and after your death.
Some people choose to simply keep their wishes secreted away in a safety deposit box when they know their family members will disapprove of the contents, and then let everyone fight it out on their own after the grantor has passed away; but this only puts off the bad feelings and can often cause lasting rifts among siblings at a time when they most need the love and support of family. Furthermore, this strategy of secrecy doesn’t address what happens if you become incapacitated and need one of your trustees or agents (in all likelihood one of your children) to take over your affairs.
A better option than secrecy is to invite your children to join you in a meeting with your estate planning attorney. This gives you an opportunity to share your plans in the presence of a knowledgeable professional who is on your side; it also gives your children the chance to ask questions and get clear and immediate answers. More often than not tension about mom and dad’s estate plan stems from a lack of understanding, or a worry that mom or dad have been taken advantage of. Having a family meeting with your attorney can be reassuring, educational, and put everyone one the same page moving into the future.
What To Do After A Death In The Family
Anyone who has lost a close friend or family member knows that what a difficult, painful, and overwhelming time it can be. We are often asked to help our clients through probate process when a loved one dies, but probate isn’t the only thing you’ll have to think about; in fact, it may not even be the first thing you should think about. We know that nothing can make this process easy, but we hope this brief guide can help make the process of dealing with the death of a loved one somewhat less overwhelming.
1. The first thing you’ll want to do is call close friends and family. They will share in your grief, and they can also share the responsibility of notifying others.
2. Contact a funeral director. This person can help walk you through the process of planning a memorial, making burial arrangements, and even writing an obituary. This can often be the most overwhelming task, not because it is particularly difficult, but because it has to be done so quickly; sometimes before the reality of death has had a chance to sink in with the survivors.
3. Find out if your loved one had a will. Contact their attorney (if they had one) and make sure you have the original for the probate court. If you aren’t sure how to file with will with the probate court you can contact an attorney, or check the website of the local probate office for the deceased.
4. Order multiple copies of the death certificate. You will need these for the insurance company, as well as for some of the steps below.
5. Collect the mail and contact all utility companies, credit card companies, debt collectors, etc.; call to notify them of the death and stop services.
6. Go through the deceased’s files and paperwork. This can be tedious, time-consuming, and confusing, depending on how organized your loved one was. This is important information you (or the executor or trustee) will need to file final tax returns and pass on to the probate court, so don’t be afraid to ask for help when you need it.
Dealing with the death of a loved one is one of the most difficult and overwhelming things you may ever have to do. If you are having a particularly hard time with the grieving process don’t be afraid to ask others to help with the more difficult items, or to hand the list over entirely to someone else if you feel unable to cope. This is when your own probate or estate planning attorney (or the deceased’s attorney, if they had one) can be especially helpful.
Although it sometimes feels as if time should stand still when someone we love passes away, life does go on, for better or worse. But the world is full of caring and knowledgeable people to help you through the process… if you only know where to look.
How Long Has It Been Since You’ve Updated Your Estate Plan?
Many people think that there’s no need to update your estate plan documents if none of your beneficiaries or fiduciaries have changed, but that’s exactly the kind of thinking that can lead to disaster. Estate planning documents are based not only on your own wishes, but also on federal and state tax laws. When an estate planning attorney drafts your documents we take into account a number of different factors, which means that you get the best possible result and an estate plan that should work like a well-oiled machine when the time comes; but it also means that your estate plan needs periodic review, just as your car needs an occasional tune-up.
Over the past few years income tax, estate tax, gift tax and IRA rules and regulations have gone through some sweeping changes. These changing tax laws—and your own changing financial situation—could mean that language originally meant to apportion assets in the most efficient manner could now result in leaving your surviving spouse, children, or loved ones without any assets at all.
The only way to ensure that this is not the case with your estate plan is to have your documents reviewed every few years. Fortunately, depending on the extent of the update, the cost of a simple review and update is much less than the initial cost of creation. But the longer you wait between reviews the more likely it is that the changes needed to bring your plan up to date will be extensive—and thus more expensive.
Don’t let too much time pass between reviews of your plan. The cost of a review is minimal; but the cost to your family if you neglect your plan could be astronomical. Call our office today to schedule your “tune-up” meeting.
Divorced Couples Can Still Benefit from Joint Estate Planning
Creating an estate plan to protect your minor children is one of the most difficult—and most important—things you will ever do; this is especially true if you and your child’s other parent are separated or divorced. Relationships don’t always end amicably, but if you do have children it is definitely worthwhile to put aside your differences with your ex long enough to discuss estate planning for the sake of your kids.
There are three major things to consider when estate planning during or after a divorce:
1. Guardianship: According to the law, if you pass away guardianship passes to your child’s other biological parent; this is the case even if you had full custody (unless it is determined that the surviving parent is unfit). This is something to keep in mind when you are nominating guardians. If you and your ex can sit down and discuss guardians together and agree on a few alternates it will make everyone (including your child) feel more secure about the future.
2. Financial Inheritance: Although many divorced couples may feel comfortable with their ex as guardian, most are dead set against their ex having any control over their finances. How then can you leave your estate for the benefit of your child without leaving it in the hands of your ex? The solution is to put your child’s inheritance in trust until they come of age, with a person you know and trust acting as trustee. Your trustee will have the responsibility to keep and maintain the trust, giving distributions to the guardian for the benefit of your child. Keep in mind that your trustee and guardian will have to work together quite often, if you and your ex can agree on someone with whom you both are comfortable it will make the process much easier on your trustee, your ex, and your child.
3. Remarriage: When you marry there is an inevitable mingling of finances, and this is no different for a second or third marriage. However, if you don’t make provisions for your children in your estate plan your assets will end up going entirely to your new spouse when you die, leaving your child(ren) out in the cold. This can be easily addressed in your estate plan (or your ex’s estate plan, if he or she is the one getting remarried) as long as you talk to your attorney and take action now, before it’s too late.
If you are going through or have gone through a divorce please call our office and let us help.
Providing for Pets in Your Will or Trust
According to a recent article on BusinessInsider.com, there are some surprising new figures about American households and their pets. “In 2011, Americans spent a record $50.8 billion on pets, according to the American Pet Products Association. We share our homes with an estimated 86 million cats, 78 million dogs, 16 million birds and 160 million fish.”
These numbers perhaps aren’t so shocking when you consider how the role of animals in our lives has changed over the past few decades. Animals have gone from being mere pets or farm animals to being companions, guides, status symbols, and in most cases beloved members of the family. As such, most pet owners want to provide for them as they would a human member of the family.
Unfortunately, as mentioned in the article, “While we may consider our pets family members, our legal system considers them property. And because estate law prohibits us from leaving property (money, real estate, etc.) to property, we must instead provide for our pets through human intermediaries.” The best way to do this is through a pet trust, in which you can nominate a loving caregiver for your pet, as well as set aside some money to be distributed to the caregiver—either in one lump sum or in smaller distributions throughout the life of your pet.
A pet trust may be the most reliable way to ensure your pet will be provided for, but it certainly isn’t the only way. Another option is to simply name a caregiver for your pet in your will or trust and then include the caregiver as a recipient of funds in your will. For example: “If my cat Fluffy is alive at my death, I leave $3,000 for her care to Mary Johnson.” If you have more than one person who might serve as caregiver you should consider also naming back-up caregivers in the event that your first choice is unwilling or unable.
Pets provide so much unconditional love and support during our lives, the last thing we want is to leave them without a friend to care for them after our deaths. The next time you review your estate plan or talk to your attorney, be sure you’ve included a provision for your pet.
Republican Primary Inspires Discussion of Trusts
If you follow current events at all it is impossible to ignore the fact that we are now in the thick of the Republican primary race—and that the Presidential election will not be far behind. With the political machine in full swing there have been quite a few news stories about the candidates’ financial backgrounds, and more than a little talk of “blind trusts.”
Many of our readers will already know that a blind trust is a vehicle which holds the wealth of a candidate (or a politician serving in office) in an effort to avoid any conflicts of interest. We thought this might be a good opportunity, however, to discuss trusts in general: Which trusts are out there, what are the differences between them, and what purposes do they serve?
Revocable Trust: A revocable trust is one of the most commonly used trusts because it is able to be revoked or changed so long as the grantor (the person who created the trust) is still living. There are many other trusts that fall under the category of “revocable trust”, including a pet trust (which addresses the physical and financial care of your pets), an education trust (which provides for your child’s educational expenses), and many more.
Irrevocable Trust: An irrevocable trust, logically, is one which cannot be revoked or changed after it has been signed. The irrevocability is what makes these trusts useful for tax planning and asset protection. Some types of trusts which fall under the category of “irrevocable trust” include life insurance trusts (which save the beneficiary on the policy from paying exorbitant estate taxes), spendthrift trusts (which reduce the beneficiaries’ estate taxes and protect trust assets from creditors’ claims), and more. It is important to note that any revocable trust becomes irrevocable upon the death of the grantor.
Charitable Trust: A charitable trust is one in which at least one of the beneficiaries is a charity or non-profit. These trusts allow the grantor to claim a portion of their contribution as a charitable deduction under income tax laws. A charitable trust can be either revocable or irrevocable to begin with, but if distributions will be made during the grantor’s lifetime the trust must be irrevocable.
Special Needs Trust: Sometimes also called a “Supplemental Needs Trust”, is a trust created for the benefit of a person receiving government benefits—this usually includes someone with a physical or mental handicap—and its purpose is to allow outside sources to provide the beneficiary with supplemental funds without endangering their right to receive government benefits. A special needs trust can be either revocable or irrevocable, but usually includes a clause instructing that the trust be dissolved if its existence disqualifies the beneficiary for government benefits.
We have only discussed some of the most commonly used trusts here, but there are many, many different kinds of trust which can be valuable for estate planning or asset protection. If you have any questions about trusts or estate planning, please contact our office.
Beware of Mistakes in Your Old Estate Plan
Do you already have an estate plan? Or perhaps you don’t have an estate plan per se, but over the years you’ve collected all of what you feel are the necessary documents to provide security and protection for your family and your assets after your death? Well, you may want to take a moment to review that existing estate play of yours. According to this recent article there are five common mistakes made in estate plans, and just one could end up derailing your goals for yourself or for your family.
Some of the common mistakes listed in the article are things that are very easy to fix once you’re aware of them—listing the wrong beneficiary on an old retirement account or life insurance policy, for example. All too often people get a new job or new policy and list the right beneficiary at the time, then that policy goes in a drawer or filing cabinet for years. During those passing years you may get married or divorced, or you may have children. Any of these big life events require changing those beneficiaries. Luckily, making that change is generally a quick and easy fix.
If you aren’t worried about your retirement or life insurance beneficiaries, consider what what will happen to your children in the event of an emergency. Many clients agonize over who to name as guardians of their minor children, but forget to review those decisions every few years. The energetic young couple you chose 7 years ago might now have children of their own, or have moved to another state, and may not be as ideal a choice as they once were. If you listed your parents 10 years ago you might decide in the intervening years that an aging couple is not quite as able as you thought to take on so much added responsibility.
The fact of the matter is that our lives are not static or stagnant, they are constantly growing and changing, and estate planning documents will need to grow and change with them. If it has been more than 2 years since you last reviewed your plan, it’s time to get out the magnifying glass and give your documents another good look. Chances are you won’t have any big changes to make, but those little details can turn into glaring problems when left neglected for too long.
The Family Vacation Home: A Place to Make Memories or Enemies?
A family vacation home—whether it’s a summer house on the beach or a winter skiing bungalow in the mountains—can be just the thing that brings a family together. Unfortunately, it can also be just the thing that tears a family apart when parents pass away and the time comes to decide what to do with this wonderful family treasure. This article in the Wall Street Journal mentions that “Tensions often mount when a family figures out what to do with a property that could be a lightning rod for sibling rivalries—not to mention a sizable chunk of an estate.”
There are a number of issues that can be brought to the surface when adult children or grandchildren try to share a family property. “One big friction point in such an arrangement is how to pay the costs involved in maintaining a home—including taxes, insurance, utility bills.” But that’s only the beginning. “Other factors to consider: How the family gets along, where they live, what happens when the children who inherit a home get married and who is going to use the property.”
Fortunately, this is one family fight that can be prevented (or at least softened) by a little bit of forethought and planning. One of the first suggestions in the WSJ article is to leave family property to the next generation in a trust funded by life insurance. “That way, a professional trustee can manage the property, and the insurance proceeds can cover expenses.” A Qualified Personal Residence Trust (QPRT) or a Dynasty Trust can both be useful for this purpose.
Another beneficial safeguard is to form a Limited Liability Company (LLC) for the property. An LLC can help establish an operating agreement to “cover rights of use and property management,” as well as shield heirs from estate taxes.
Having a good plan in place for your family vacation home can be the determining factor which allows the property to continue to serve as a place where your entire family can come together, to create happy memories that will last a lifetime.
Don’t Forget the Final (And Crucial) Step to Setting Up Your Trust
Once you’ve worked with your attorney to create the perfect trust to protect your family, you’ll need to re-title any assets you’d like to be protected into to name of your trust. This is called Funding. Funding a trust is not difficult at all, but when you don’t know where to start it can seem daunting. The result is that even the best of us may be tempted to procrastinate, sometimes to the point of negligence.
Here are a few tips to get you started on the process. Each trust will be different, but the following suggestions are a foundation to begin funding just about every revocable trust:
* Bank Accounts: For this you will need your Certification of Trust. This is the document your bank will require to put your account(s) in the name of your trust. With this document it’s a quick matter to stop by the bank some afternoon and ask them to make your trust the owner of your accounts. NOTE: You should NOT be required to change the name on your checks or bank cards!
* Real Property: Check your records to make sure your home is in the name of your trust. Even if you know you transferred your home into your revocable trust, refinancing will often result in your home being taken out of it. If your home is not owned by the trust, contact your attorney to have it put back in.
* Stocks and Investments: Contact your broker, financial advisor, or transfer agent to change the title of the investment accounts to the name of the trust. For stocks owned outside of an investment account, ask for the certificate to be re-issued in the name of your trust.
* Personal Property: Tangible personal property such as antiques or artwork often cannot be titled in the name of a trust. But you can tell your attorney you’d like to sign an Assignment of Personal Property, sometimes called a Comprehensive Transfer Document. This states your intention to hold all of your tangible property in the name of, and for the benefit of, your revocable trust.
Don’t let your trust turn into an empty shell. The funding process is much easier than you think. Once you get started you’ll gather momentum quickly. Before you know it your assets and your family will all be safely protected, and you can truly heave that big sigh of relief.
3 Steps to Help Protect Your Family and Your Future in 2012
We all want to ensure our loved ones are protected and provided for, but sometimes the process of doing so can appear overwhelming, and prevent you from even taking the first steps. When it comes to protecting your family and your future with an estate plan, the process can actually be as easy as 1… 2… 3…
1. Assessment. The first step to creating a plan that can protect your family, your future, and your family’s future begins with simply taking stock of what you have and where you are. Begin by making a list of all your assets, including your house, stocks, investments, bank accounts and personal property. Next consider your responsibilities and goals: what are your plans for the future or for retirement? Who do you wish to provide for in your will? Do you have a spouse or children who might benefit from a trust?
2. Implementation. Now it’s time to put all that information you gathered in step one into play. The particulars of your estate will have a great impact on how you build your estate plan: A small estate and straightforward inheritance plan may require only a well-drafted will, while a larger estate may benefit from the asset protections found with a trust. Your goals for the future and your wishes for your family will have an equally large impact on your choice of estate planning strategies as well, including whether to include an education trust for young students, a pet trust for your furry family members, or a retirement trust to protect your own investments. An estate planning attorney can help you understand your options and implement the strategy you feel works best for your family.
3. Follow-Through. Once your estate plan is drafted, signed, and tucked safely away you’ll want to ensure that it continues working as you intend it to. The best way to do this is to review your plan with your estate planning attorney every 2 or 3 years. Your family and financial situation is likely to change over the years—estate taxes and laws change as well—and all the hard work you put into creating your plan can be undone if you don’t keep up with the changes.
