Estate Planning Blog

Iconic Designer Leaves a Fortune for Beloved Cat
Iconic Designer Leaves a Fortune for Beloved Cat

Iconic Designer Leaves a Fortune for Beloved Cat

Iconic Designer Leaves a Fortune for Beloved Cat.

“The smallest feline is a masterpiece.” Leonardo da Vinci

“In ancient times cats were worshipped as gods; they have not forgotten this.” Terry Pratchett

The Burmese cat owned by Lagerfeld stands to inherit a sizable amount of the designer’s fortune, estimated at some $300 million, according to a report from CBS News titled “Karl Lagerfeld’s cat to inherit a fortune, but may not be richest pet.” The cat, named Choupette, was written into his will in 2015, according to the French newspaper Le Figaro.

Karl Otto Lagerfeld (September 10, 1933 – February 19, 2019) was a German creative director, fashion designer, artist, photographer, and caricaturist who lived in Paris. He was known as the creative director of the French fashion house Chanel, a position held from 1983 until his death, and was also creative director of the Italian fur and leather goods fashion house Fendi, and of his own eponymous fashion label. Wikipedia

Before Lagerfeld died on Feb. 19, the cat already had an income of her own, appearing in ads for cars and beauty products. She has nearly 250,000 followers on Instagram and is an ambassador for Opel, the French car maker. She is also the subject of two books. Choupette has had her own line of makeup for the beauty brand Shu Uemura.

Lagerfeld was a German citizen, but he and Choupette were residents of France, where the law prohibits pets from inheriting their human owner’s wealth. German law does permit a person’s wealth to be transferred to an animal.

There are three approaches that Lagerfeld might have taken to ensure that his beloved cat would be assured of her lifestyle, after his passing. One would have been to create a foundation, whose sole mission is to care for the cat, with a director who would receive funds for Choupette’s care.

A second way would be to donate money to an existing nonprofit and stipulate that funds be used for the cat’s care. A third would be to leave the cat to a trusted individual, with a gift of cash that was earmarked for her care.

It is not uncommon today for people to have pet trusts created to ensure that their furry friends enjoy a comfortable lifestyle, after their humans have passed. Estate laws in the U.S. vary by state, but they always require that a human have oversight over any funds or assets entrusted to a pet. Courts also have a say in this. There are reasonable limits on what a person can leave to a pet. A court may not honor a will that seeks to leave millions for the care of a pet. However, it has happened before.

Real estate tycoon Leona Hemsley left many people stunned, when she left $12 million for her Maltese dog. In 1991, German countess Carlotta Liebenstein left her dog Gunther IV a princely sum of $80 million. To date, Gunther remains number one on the “Top Richest Pets” list.

For pets who are beloved parts of regular families and not millionaires in their own right, an estate planning attorney will be able to help you plan for your pet’s well-being, if it should outlive you. Some states permit the use of a pet trust, and a no-kill shelter may have a plan for lifetime care for your pet. You’ll need to make a plan for a secure place for your pet and provide necessary funds for food, shelter, and medical care.

Karl Lagerfeld, an Iconic Designer Leaves a Fortune for Beloved Cat, Choupette’s well being. In New York, estate planning attorney Frank Bruno can assist you with the continued care for your beloved pet. Caring for a loved one upon our passing especially a beloved pet is for both the young and old.

Reference: CBS News (Feb. 21, 2019) “Karl Lagerfeld’s cat to inherit a fortune, but may not be richest pet”

Why Should I Create a Trust If I’m Not Rich?
Why Should I Create a Trust If I’m Not Rich?

Why Should I Create a Trust If I’m Not Rich?

Why Should I Create a Trust If I’m Not Rich?

“Your true assets are the collections of your quality moments on the earth.”
― Amit Ray, Mindfulness Living in the Moment – Living in the Breath

Carve your name on hearts, not tombstones. A legacy is etched into the minds of others and the stories they share about you. —Shannon Adler

It’s probably not high on your list of fun things to do, considering the way in which your assets will be distributed, when you pass away. However, consider the alternative, which could be family battles, unnecessary taxes and an extended probate process. These issues and others can be avoided by creating a trust.

Barron’s recent article, “Why a Trust Is a Great Estate-Planning Tool — Even if You’re Not Rich,” explains that there are many types of trusts, but the most frequently used for these purposes is a revocable living trust. This trust allows you—the grantor—to specify exactly how your estate will be distributed to your beneficiaries when you die, and at the same time avoiding probate and stress for your loved ones.

When you speak with an estate planning attorney about setting up a trust, also ask about your will, healthcare directives, a living will and powers of attorney.

Your attorney will have retitle your probatable assets to the trust. This includes brokerage accounts, real estate, jewelry, artwork, and other valuables. Your attorney can add a pour-over will to include any additional assets in the trust. Retirement accounts and insurance policies aren’t involved with probate, because a beneficiary is named.

While you’re still alive, you have control over the trust and can alter it any way you want. You can even revoke it altogether.

A revocable trust doesn’t require an additional tax return or other processing, except for updating it for a major life event or change in your circumstances. The downside is because the trust is part of your estate, it doesn’t give much in terms of tax benefits or asset protection. If that was your focus, you’d use an irrevocable trust. However, once you set up such a trust it can be difficult to change or cancel. The other benefits of a revocable trust are clarity and control— you get to detail exactly how your assets should be distributed. This can help protect the long-term financial interests of your family and avoid unnecessary conflict.

If you have younger children, a trust can also instruct the trustee on the ages and conditions under which they receive all or part of their inheritance. In second marriages and blended families, a trust removes some of the confusion about which assets should go to a surviving spouse versus the children or grandchildren from a previous marriage.

Trusts can have long-term legal, tax and financial implications, so it’s a good idea to work with an experienced estate planning attorney.

Reference: Barron’s (February 23, 2019) “Why a Trust Is a Great Estate-Planning Tool — Even if You’re Not Rich”

If you ask yourself “should Create a Trust If I’m not Rich?” then these are the answers for you.

Do I Need a Living Trust or a Will? Or Both?
Do I Need a Living Trust or a Will? Or Both?

Do I Need a Living Trust or a Will? Or Both?

Do I Need a Living Trust or a Will? Or Both?

“Tax planning is one element of estate planning, and in many estates is the least important factor. The larger issue is: Who will inherit and what will they inherit?” First National Trust Update April 2015

“A man of 70 need not be always feeling, much less talking, about his approaching death, but a wise man of 70 should always take it into account. …He would be criminally foolish not to make, indeed not to have made long since, his will.” C. S. Lewis (1898-1963)

Do I need a living trust or a will? Or both? This is just one of the reasons people think they want a trust: to ensure that the value of their overall estate will not decrease, because of the cost of probate. The most common way to do that is with a trust, says The Houston Chronicle in the article “Elder Law: Which should I have—A Living trust or a will?”

In some states, probate is not an expensive or overly time-consuming issue. Texas, for example, has what is called an independent administration. Executors handle the tasks involved in settling an estate and distributing assets to beneficiaries. As a result, there’s very little court involvement. However, New York does not have that process and as a result probate has extensive court involvement. An estate planning attorney in your area will be able to explain the details of your state’s procedures and discuss whether a trust is right for your estate. They’ll also explain the difference between different types of trusts.

The trust most frequently used to avoid probate, is known as a revocable trust, living trust or an “inter vivos” trust.

Selecting the best type of trust for each situation is different. Here are some advantages of living trusts:

Avoiding probate. The cost of probate alone is not reason enough to use a trust. However, if your assets are in trusts, you may not need to file an inventory listing your assets with the court. That’s not always required in every jurisdiction, but if it is required where you live, a trust can help keep your asset list private, by ensuring that it is only seen by beneficiaries.

Asset management for incapacity. A living trust goes into effect, while you are alive. If you become incapacitated, an alternate trustee can step in to manage assets, pay bills and ensure that finances are taken care of.

Avoiding probate in another state. If you own out-of-state property, your estate may need to be probated in your home state and in the other state. If you have a living trust, out-of-state parcels of land can be deeded into the trust during your lifetime, thus avoiding the need for probate in another state. After your passing, your trustee can handle the out-of-state property in the living trust.

Administrative ease. There are, unfortunately, instances when Power of Attorney can be challenged by financial institutions. The authority of a trustee is more likely to be recognized, by banks, investment companies, etc.

There are some questions about whether it’s better to have a living trust or a will. The most complex part of having a living trust, is the process of funding the trust. It is imperative for the trust to work, that every asset you own is either transferred into the trust or retitled into the name of the trust. If assets are left out or incorrectly funded, then probate will probably be necessary. This can occur, even if only one single asset is left out.

If an asset is controlled by beneficiary designation, then the trust may not need to be named a beneficiary, should you want it to pass directly to one or more beneficiaries.

Funding the trust becomes complicated, when retirement accounts are involved. Consult with an experienced estate planning attorney, if you want to make the trust a designated beneficiary of a retirement account. This is because very specific and complex rules may limit the ability to “stretch” the distributions from the account.

Using a trust instead of a will-based plan is growing in popularity, but it should never be an automatic decision. An estate planning attorney will be able to explain the pros and cons of each strategy and help you and your family decide which is better for you and what advanced directives are required.

Reference: The Houston Chronicle (Feb. 15, 2019) “Elder Law: Which should I have—A Living trust or a will?”

 

Legal Documents to Raise Your Grandchildren
Legal Documents to Raise Your Grandchildren

Legal Documents to Raise Your Grandchildren

Legal Documents to Raise Your Grandchildren.

“For the sake of our health, our children and grandchildren and even our economic well-being, we must make protecting the planet our top priority.” – David Suzuki

“The joy of grandchildren is measured in the heart.” – Unknown

It is not unusual today to see grandparents rearing their own grandchildren. Legal documents will be needed, according to the article “Grandparents Raising Grandchildren” that appears in the Record Herald. Most importantly, without the correctly prepared legal documents, grandparents will not be able to enroll the children in school or make important medical decisions on their behalf.

There are some options available to give grandparents the legal authority needed to make decisions, as they rear their grandchildren.

Grandparent Power of Attorney. If the parents of the child are living and their whereabouts are known, the parents and grandparent may execute a document known as a grandparent power of attorney. This allows the grandparent to legally manage a number of tasks:

  • Enroll the child in school
  • Obtain educational and behavioral information about the child.
  • Consent to all school-related matters, like trips, after-school activities, etc.
  • Consent to any medical, psychological or dental treatment for the child.

A grandparent power of attorney needs to be signed by the child’s parents, signed by the grandparents and be notarized. It is not required to be filed in the Family Court of the county, where the grandparent lives.

A grandparent Power of Attorney is temporary but will exist until revoked, and it can be revoked at any time by the child’s parents.

Caretaker Authorization Affidavit. If the child is living with the grandparent and the grandparent has tried but failed to locate the parents, the grandparent may execute a caretaker authorization affidavit. This allows the grandparent to:

  • Exercise care, physical custody and control of the child.
  • Enroll the child in school.
  • Discuss the child’s educational progress with school officials.
  • Consent to medical, psychological or dental treatment for the child.

This document must be signed by the grandparent, notarized and filed in the Family Court of the county, where the grandparent resides. The Family Court may refuse to accept the caretaker authorization affidavit, if it believes it is not in the child’s best interest. The caretaker authorization affidavit is also temporary and terminates when the child no longer lives with the grandparent.  The grandparent may have to file a guardianship proceeding in the Family or Surrogate’s Court depending on the needs and circumstances of the family.

Legal Custody Proceeding. There are a few procedural and legal hurdles to overcome before a grandparent may file for custody. For a grandparent to obtain permanent custody of a child, grandparents need to file a petition asking for legal custody to be granted to them.  This is permanent, and also the most difficult option to obtain. An award of legal custody to the grandparents gives them the same rights as the parents while, at the same time, removing the rights of the child’s parents. The person who has legal custody may make all important decisions for the child, including educational and medical decisions.

If you are considering seeking full legal custody of a grandchild or grandchildren, speak with an attorney who will be able to explain the process that takes place and the larger circumstances. Make sure that you have an estate plan, including a will that names a legal guardian for your grandchildren, so a person you know, and trust will be able to take over as their guardian. You may also need to set up a trust or make them your heirs, so there will be money for their support and education.

Reference: Record Herald (Feb. 26, 2019) “Grandparents Raising Grandchildren”

Hopefully you will realize the importance of Legal Documents to Raise Your Grandchildren.

What are the “Must Have” Estate Planning Documents?
three important estate planning documents. A will, living will and power of attorney.

What are the “Must Have” Estate Planning Documents?

What are the “Must Have” Estate Planning Documents?

“Leave nothing for tomorrow which can be done today” Abraham Lincoln

“There is nothing like the death of a moneyed member of the family to show persons as they really are, virtuous or conniving, generous or grasping. Many a family has been torn apart by a botched-up will. Each case is a drama in human relationships — and the lawyer, as counselor, draftsman, or advocate, is an important figure in the dramatis personae. This is one reason the estates practitioner enjoys his work, and why we enjoy ours.” Jesse Dukeminier and Stanley M. Johanson, introduction to 1972 edition of Family Wealth Transactions: Wills, Trust, Future Interests, and Estate Planning.

What do Aretha Franklin, Kurt Cobain, and Prince have in common? Aside from being famous and talented, each of these stars passed away without a will. All three had the money and attorneys to draft a proper estate plan, but for whatever reason, they didn’t draft one. It’s a good lesson to not neglect your estate plan.

Motley Fool reports in the article, “3 Must-Have Estate Planning Documents To Get Done This Year,” that dying without a will creates numerous problems for your family. If there are no legal instructions in place, probate law dictates the distribution of your assets and selection of guardians for your minor children, which can cause problems. Regardless of your personal situation, you should think about creating these three important estate planning documents.

Will. A will is used to distribute your estate, according to your instructions. A will can say how much and what type of asset each heir will receive, to minimize family fighting after your death. If you have young children, you can designate guardians in your will to be in charge of their care. If you die without a will, the probate judge will order who becomes their guardian.

You also need a will to make charitable bequests, to expedite the probate court process and to reduce or eliminate estate taxes. When you draft your will, you’ll appoint trusted people to serve as the executor and the trustee.

Living will. A living will can take effect while you are still alive. This is a legal document that sets out your instructions for medical treatment, if you become unable to communicate, such as whether or not you want to be placed on life support. A living will can relieve the emotional burden from your family of having to make difficult decisions.

Power of attorney. This legal document helps in the event you’re incapacitated or in the hospital in an unresponsive state. A power of attorney gives the individual you designate the authority to transact financial and legal matters on your behalf. Set up a power of attorney, before you need it. If you don’t and you’re unable to make decisions, your family may have to petition the court to get those powers, which costs time and money.

Estate planning is a huge favor that you’re doing for your family. Get these three legal documents in place.

Reference: Motley Fool (February 18, 2019) “3 Must-Have Estate Planning Documents To Get Done This Year”

This post answered the question What are the “Must Have” Estate Planning Documents?

A Love Letter to Your Family
estate plan is a love letter to family

A Love Letter to Your Family

A Love Letter to Your Family.

“A real love letter is made of insight, understanding, and compassion. Otherwise it’s not a love letter. A true love letter can produce a transformation in the other person, and therefore in the world. But before it produces a transformation in the other person, it has to produce a transformation within us. Some letters may take the whole of our lifetime to write.”
― Thich Nhat Hanh, Your True Home: The Everyday Wisdom of Thich Nhat Hanh: 365 days of practical, powerful teachings from the beloved Zen teacher

“Wish not so much to live long as to live well.” – Poor Richard’s Almanack, 1738

Now, to the 70% of Americans who do not have an estate plan, the article “Senior Spotlight: Composing the ‘family love letter’” from the Lockport Journal should help you understand why this is so important. One reason why people don’t take care of this simple task, is because they don’t fully understand why estate planning is needed. They think it’s only for the wealthy, or that it’s only for old people, or even that it’s only about death and taxes.

Consider this idea: an estate plan is about protecting yourself while you are alive, protecting your family when you have passed and leaving a legacy for the living.

Some of the main elements of an estate plan are to create and execute documents that provide for incapacity and death, as well as provide information about your assets, liabilities and wishes.

You’ve spent a lifetime accumulating assets. It is now time to sit down with family members and have a heart-to-heart talk about the details of the estate and what your intentions are with respect to its distribution. The subject of death can be challenging for all. However, discussing your estate plan is vital, if you want to protect your family from what might come after you are gone. Each family has its own goals, so it’s a good idea to talk about it frankly, while you still can.

Without discussions and an estate, the chances of a family split, assets not going where you had intended and unnecessarily higher costs in taxes and legal fees, are a very real possibility.

If speaking about these topics is too hard, you may want to write your family a love letter. It would contain all the information that your family would need at the time of your death or if you become incapacitated because of illness or injury.

Your estate plan should also include the documents needed, so your family can make decisions on your behalf, if you are incapacitated. That includes a power of attorney, a health care directive and may include others specific to your situation.

Ideally, all this information will be located in one convenient place. Don’t put it on a computer where you use a password. If the family cannot access your computer, all your hard work will be useless to them. Put it in a folder or a notebook, that is clearly labeled and tell family members where it is.

They’ll need this information:

  • A list of your important contacts — your estate planning attorney, financial advisor, CPA, insurance broker and medical professionals.
  • Credit card information, frequent flier miles.
  • Insurance and benefits including all health, life, disability, long-term care, Medicare, property deeds, employment and any military benefits.
  • Documents including your will, power of attorney, birth certificates, military papers, divorce decrees and citizenship papers.

Think of these materials and discussions as your opportunity to make a statement for the future generation. If you don’t have an estate plan in place already or if you have not reviewed your estate plan in more than a few years, it’s time to make an appointment for a review. Your life may have not changed, but tax laws have, and you’ll want to be sure your estate is not entangled in old strategies that no longer benefit your family.

Reference: Lockport Journal (Feb. 16, 2019) “Senior Spotlight: Composing the ‘family love letter’

Using Trusts to Maintain Control of Inheritances

Using Trusts to Maintain Control of Inheritances.

“The spendthrift robs his heirs the miser robs himself.” Jean De La Bruyere

“If the Nation is living within its income, its credit is good. If, in some crises, it lives beyond its income for a year or two, it can usually borrow temporarily at reasonable rates. But if, like a spendthrift, it throws discretion to the winds, and is willing to make no sacrifice at all in spending; if it extends its taxing to the limit of the peoples power to pay and continues to pile up deficits, then it is on the road to bankruptcy.” Franklin D. Roosevelt

Trusts, like estate plans, are not just for the wealthy. They are used to provide control, in how assets of any size are passed to another person. Leaving an inheritance to a beneficiary in a trust, according to the article from Times Herald-Record titled “Leaving inheritances to trusts puts you in control,” can protect the inheritance and the asset from being mishandled. Protection can be the main intention for creating a trust.

For many parents, the inheritance equation is simple. They leave their estate to their children “per stirpes,” which in Latin translates to “by roots.” In other words, the assets are left to children according to the roots of the family tree. The assets go to the children, but if they predecease you, the assets go to their children. The assets remain in the family. If the child dies after the parent, they leave the inheritance to their spouse.

An alternative is to create inheritance trusts for children. They may spend the money as they wish, but any remaining assets goes to their children (your grandchildren) and not to the surviving spouse of your child. The grandchildren won’t gain access to the money, until you so provide. However, someone older, a trustee, may spend the money on them for their health, education and general welfare. The inheritance trust also protects the assets from any divorces, lawsuits or creditors.

This is also a good way for parents, who are concerned about the impact of their wealth on their children, to maintain some degree of control. One strategy is a graduated payment plan. A certain amount of money is given to the child at certain ages, often 20% when they reach 35, half of the remainder at age 40 and the balance at age 45. Until distributions are made to the heirs, a trustee may use the money for the person’s benefit at the trustee’s discretion.

The main concern is that money not be wasted by spendthrift heirs. In that situation, a spendthrift trust restricts payments to or for the beneficiary and may only be used at the trustee’s discretion. A lavish lifestyle won’t be funded by the trust.

If money is being left to a disabled individual who receives government benefits, like Medicaid or Supplemental Security Income (SSI), you may need a Special Needs Trust. The trustee can pay for services or items for the beneficiary directly, without affecting government benefits. The beneficiary may not receive any money directly.

If an older person is a beneficiary, you also have the option to leave them an “income only trust.” They have no right to receive any of the trust’s principal. If the beneficiary requires nursing home care and must apply for Medicaid, the principal is protected from nursing home costs.

An estate planning attorney will be able to review your family’s situation and determine which type of trust would be best for your family because using trusts to maintain control of inheritances works best.

Reference: Times Herald-Record (Feb. 16, 2019) “Leaving inheritances to trusts puts you in control”

Using Trusts to Maintain Control of Inheritances.

Kids Grown Up? Protect Them with These Three Documents
Kids Grown Up? Protect Them with These Three Documents

Kids Grown Up? Protect Them with These Three Documents

Kids Grown Up? Protect Them with These Three Documents

“Right is right even if no one is doing it; wrong is wrong even if everyone is doing it.”  Saint Augustine of Hippo

“Everybody knows how to raise children except for the people that have them.” P.J. O’Rourke

Without the right documents in place, you do not have the legal right to protect your own children, once they turn 18, says The National Law Review in an unsettling but must-read article titled “Three Critical Legal Documents Every Parent Should Get in Place Now to Safeguard Their Adult Children.”

There are only three documents and they are fairly straightforward. There is no reason not to have them in place. If your adult child was incapacitated by an accident or an illness, you would want to speak with the medical staff to find out how they are and what decisions need to be made. Whether you were making a phone call or arriving at the hospital, a nurse or doctor would not be permitted to speak with you about your own adult child’s condition or be involved with making any medical decisions.

It sounds unreasonable, and perhaps it is, but that is the law. There are steps you can take to ensure that you are not in this situation.

HIPAA Authorization Form gives you the authority to speak with healthcare providers. This is a federal law (Health Insurance Portability and Accountability Act of 1996) that safeguards who can access an adult’s private health data. HIPAA prevents healthcare providers from revealing any information to you or anyone else about a patient’s status. The practitioners could face severe penalties for violating HIPAA.

This is why you want to have a HIPAA authorization signed by your adult child and naming you as an authorized recipient.  This will give you the ability to ask for and receive information about your child’s health status, progress and treatment. This is especially important, if your child is unconscious or in an unresponsive state. The alternative? Going to court. That’s not what you want to be doing during a health emergency.

A Healthcare Power of Attorney or health care proxy needs to be in place, so you can be named his or her “medical agent” and have the ability to view their medical records and make informed decisions on their behalf. Without this (or a court-appointed guardianship), healthcare decisions will be in the hands of healthcare providers only. That’s not a bad thing, if you implicitly trust your child’s doctor. However, if your child is incapacitated in an out-of-town hospital with healthcare providers you don’t know, you will want to be able to make decisions on his or her behalf.

Note that physicians prefer a single medical agent, not a handful. The concern is that if time is a critical factor and a group of family members do not agree on care, it may compromise the healthcare services that can be provided. You can name multiple agents in priority order. A mother might be listed as the medical agent, and if she is unable or unwilling to serve, the second person would be the father.

The third document is a General Power of Attorney. This would give you the right to make financial decisions on your child’s behalf, if they were to become incapacitated. You would have the legal right to manage bank accounts, pay bills, sign tax returns, apply for government benefits, break or apply a lease and conduct activities on behalf of your child. Without this document, you won’t be able to help your child without a court-appointed guardianship.

Keep in mind that these documents need to be updated every few years. If you try to use an older document, the bank or hospital may not accept them. Your adult child also has the ability to revoke these documents at any time, just by saying they revoke them or by putting it in writing. If you have an adult child living out of state, you want to have these documents prepared for your home state and their state of residence.

Finally, this is not a time to download forms and hope for the best. An estate planning attorney will know more specifically what forms are used in your state and help you make sure that they are prepared correctly.

Reference: The National Law Review (Feb. 11, 2019) “Three Critical Legal Documents Every Parent Should Get in Place Now to Safeguard Their Adult Children”

Have your kids Grown Up? Protect Them with These Three Documents: HIPPA authorization, health care proxy, General Power of Attorney.

Spare Your Family From a Feud: Make Sure You Have a Will
Without a Will there could be a Family Feud

Spare Your Family From a Feud: Make Sure You Have a Will

Spare Your Family From a Feud: Make Sure You Have a Will

“The problem with revenge is that it never gets what it wants; it never evens the score. Fairness never comes. The chain reaction set off by every act of vengeance always takes its unhindered course. It ties both the injured and the injurer to an escalator of pain…Why do family feuds go on and on?…the reason is simple: no two people, no two families, ever weigh pain on the same scale.” Lewis B. Smedes

“The family feuds or the village feuds often had to do with an idea of honor. Perhaps it was a peasant idea; perhaps this idea of honor is especially important to a society without recourse to law or without confidence in law.” V. S. Naipaul

If for no other reason than to avoid fracturing the family, as they squabble over who gets Aunt Rosie’s sideboard or Uncle Joe’s collection of baseball cards, everyone needs a will. It is true that having an estate plan created does require us to consider what we want to happen after we have died, which most of us would rather not think about.

However, whether we want to think about it or not, having an estate plan in place, and that includes a will, is a gift of peace we give to our loved ones and ourselves. It’s peace of mind that our family is being told exactly what we want them to do after we pass, and peace of mind to ourselves that we’ve put our plan into place.

A recent article from Fatherly, “How to Write a Will: 8 Tips Every Parent Needs to Know,” starts with the basic premise that a will prevents family squabbles. Families fight, when they don’t have clear direction of what the deceased wanted. That’s just one reason to have a last will and testament. However, there are other reasons.

A will is one way to ensure that your property is eventually distributed as you wish. Without a will, your estate is administered as an “intestate estate,” which means the state’s laws will determine who receives your assets after you pass. In some states, that means your spouse gets half of your estate, with your parents getting the rest (if there are no children). If the parents have died and there are no children, the rest of the estate may go to your siblings.

Most people—some studies say as many as 60% of Americans—don’t have a will. It’s hard to say why they don’t: maybe they don’t want to accept their own mortality, maybe they don’t understand what will happen when they die without a will, or perhaps they want to wreak havoc on their families. However, having a will is essential.

Don’t delay. If you don’t have a will in place, stop putting it off. Creating a will gives you the opportunity to effectuate your wishes, not that of the state. What if you don’t want your long-lost brother showing up just to receive a portion of your estate? How about if your ex-wife remains the beneficiary of your IRA?  If you don’t want someone to receive any of your assets, you need to have a will. Otherwise, there’s no way to know how the distribution will play out.

Be thoughtful about how you distribute your assets. If you have children and your will gives them your assets when they reach 18, will they be prepared to manage without blowing their inheritance in a month? A qualified estate planning attorney will be able to help you create a plan for distributing your wealth to children or other heirs in a sequence that will match their financial abilities. You may want to create a trust that will hold the assets, with a trustee who can ensure that assets are distributed in a wise and timely manner.

Every family is different, and today’s families, which often include children from prior marriages, require special planning. If you have remarried and have not legally adopted your spouse’s children from a previous marriage, they are not your legal heirs. If you want to make sure they inherit money or a specific asset, you’ll need to state that clearly in your will. If you are not married to your partner, they will not have any rights to your estate, unless a will is created that directs the assets you want them to inherit.

Parents of young children absolutely need a will. If you do not, and both parents pass away at the same time, their future will be determined by the court. They could end up in foster care, while awaiting a court decision. Battling grandparents may create a tumultuous situation. The court could also name a guardian who you would never have chosen. A will or trust lets you decide.

Speak with an estate planning attorney to make sure you have a will that is properly prepared and follows the laws of your state. You also want to have a power of attorney and a health care agent named. Having these plans made before you need them, gives you the ability to express your wishes in a way that can be legally enforced.

Reference: Fatherly (Feb. 6, 2019) “How to Write a Will: 8 Tips Every Parent Needs to Know”

Here’s Why You Need an Estate Plan

It’s always the right time to do your estate planning, but it’s most critical when you have beneficiaries who are minors or with special needs, says the Capital Press in the recent article, “Ag Finance: Why you need to do estate planning.”

 

While it’s likely that most adult children can work things out, even if it’s costly and time-consuming in probate, minor young children must have protections in place. Wills are frequently written, so the estate goes to the child when he reaches age 18. However, few teens can manage big property at that age. A trust can help, by directing that the property will be held for him by a trustee or executor until a set age, like 25 or 30.

 

Probate is the default process to administer an estate after someone’s death, when a will or other documents are presented in court and an executor is appointed to manage it. It also gives creditors a chance to present claims for money owed to them. Distribution of assets will occur only after all proper notices have been issued, and all outstanding bills have been paid.

 

Probate can be expensive. However, wise estate planning can help most families avoid this and ensure the transition of wealth and property in a smooth manner. Talk to an experienced estate planning attorney about establishing a trust. Farmers can name themselves as the beneficiaries during their lifetime, and instruct to whom it will pass after their death. A living trust can be amended or revoked at any time, if circumstances change.

 

The title of the farm is transferred to the trust with the farm’s former owner as trustee. With a trust, it makes it easier to avoid probate because nothing’s in his name, and the property can transition to the beneficiaries without having to go to court. Living trusts also help in the event of incapacity or a disease, like Alzheimer’s, to avoid conservatorship (guardianship of an adult who loses capacity). It can also help to decrease capital gains taxes, since the property transfers before their death.

 

If you have several children, but only two work with you on the farm, an attorney can help you with how to divide an estate that is land rich and cash poor.

 

Reference: Capital Press (December 20, 2018) “Ag Finance: Why you need to do estate planning”