May 4, 2017February 23, 2022

Avoiding Probate

One of the most common questions that people have about estate planning, is how to avoid probate. You probably cannot do so entirely, but you can make it quick and painless.

For most people, the word “probate” conjures up nightmare scenarios of protracted estate battles that cost lots of money and tear families apart. It is an ugly word for most people.

As a result, most people generally want to avoid having their estates go through probate.

In fact, one of the most frequently asked questions of estate planning attorneys is how to avoid probate, as Forbes points out in “Probate, Wills, Executors: Your Estate Planning Questions Answered.”

It is important to understand that probate is merely the type of court that a will or an estate without a will has to go through.

Most of the time, it is a relatively simple process, especially with the assistance of an estate attorney. However, there are times when it can be long and expensive, so the desire to want to avoid it are not unjustified.

The key is to have an estate plan that utilizes instruments that do not have to go through probate. The most typical of these are trusts, but there are other more complex legal instruments that can also be used. Find out more about the basics of trust and wills, click here.

However, even the most airtight probate avoidance estate plan might have to go through the probate process briefly.

All estate plans should have at least a simple pour-over will that directs any unaccounted for assets into a previously created trust.

If there are enough unaccounted for assets, they will need to go through probate. However, the process should be quick and easy.

Reference: Forbes (April 7, 2017) “Probate, Wills, Executors: Your Estate Planning Questions Answered.”

May 3, 2017April 30, 2026

Wills Can Be Changed

Spouses will often agree to get wills. They or their heirs believe that a contract has been entered into that prevents those wills from being changed. It is not true.

It is fairly common in estate planning attorneys’ offices, for a husband and wife to come in and declare that they both want similar wills drawn up. These wills are often referred to as “mirror image wills.”

The most common form they take, is that each spouse gets a will leaving everything he or she owns to the surviving spouse. The second to pass away spouse, then gives everything to the children or other agreed upon heirs.

Despite their seeming simplicity, these wills are an unusually common source of litigation, as the National Law Review discusses in “Contracts to Make Wills or Trusts.”

The problem starts when the surviving spouse has a change of plans and changes his or her will to divide things differently or to give the estate to different heirs.

The heirs of the original mirror image wills routinely argue in court, that the spouses entered into a contract to make the original wills. Unfortunately, that is simply not the case in almost all circumstances.

To be valid, a contract requires that a person receive some sort of compensation, called consideration, for whatever promise it is that they are contracted to perform.

In the case of mirror image wills, spouses rarely receive any form of consideration for promising not to change the will later.

It is important to understand this point, because the issue frequently comes up in estate litigation. It costs estates a lot of money, when the issue is raised.

Reference: National Law Review (April 10, 2017) “Contracts to Make Wills or Trusts.”

May 2, 2017February 23, 2022

Estate Planning Prevents Family Fights

There are many reasons to plan for your estate. The most important is probably that with proper estate planning, you can help to prevent your family from fighting over your estate.

Only the most sadistic people among us, would really want their families to fight over their estates. The goal for almost everyone is for our families to get along with each other, even after we are no longer around.

However, families do often fight over estates.

Some of those fights are unavoidable, since they stem from longstanding family dynamics and family members who do not trust each other or get along with each at all.

Many of those fights are avoidable, as Wealth Management discusses in “How to Prevent Feuds Among Heirs.”

The single most important thing that needs to be done to prevent family fights over an estate, is to get an estate plan. Review the basics of getting an estate plan click here.

Sound estate plans can often cut off any reason for families to fight. Proper planning can ensure that everyone gets their fair share of the estate. The estate plan can set forth reasonable means for resolving any disputes that do come up.

However, just getting an estate plan is not enough.

The next thing that needs to be done, is to communicate with your family about what is in the estate plan. An estate planning lawyer can help you start the process of developing a plan and letting family know about it.

People who know what they are going to get and why that was the choice of the departed, are much less likely to be upset and start fights with other family members over the estate.

If you do not already have an estate plan, get one.

If you do already have one, then make sure that you review and update it regularly to ensure that it will be effective in preventing your family from fighting.

Reference: Wealth Management (April 10, 2017) “How to Prevent Feuds Among Heirs.”

May 1, 2017July 26, 2024

Family Wealth Does Not Always Last

Even great amounts of family wealth, can easily be lost by future generations who do not preserve and add to it as the original wealth generator did.

James Jewett Stillman’s greatest lasting achievement was running the bank that eventually grew into Citigroup. However, he had another legacy.

Stillman also had a large and valuable collection of art and an estate he wanted to be preserved for use by the public. If everything had gone according to plan, the art and the estate would have been preserved for generations.

However, everything did not go according to plan.

His heirs are now trying to auction off the art, because they need the money to save the estate, as Bloomberg reports in “New York Banking Royalty’s Heirs Are Unloading Art to Save the Family Estate.”

The source of the problem, in this case, appears to be that trustees who were charged with running the estate have squandered millions of dollars over the years. The estate’s funds have run so low, that the heirs have no choice but to sell something. Therefore, they have chosen to sell the art.

The immediate lesson to be learned? It is very important to choose trustees carefully and to make sure that trust documents are carefully crafted to make squandering money difficult.

However, there is also a more important lesson that wealth does not last forever, unless it is properly maintained. Had it not been the trustees who squandered the wealth in this case, it might have been the future heirs.

Reference: Bloomberg (April 4, 2017) “New York Banking Royalty’s Heirs Are Unloading Art to Save the Family Estate.”

April 26, 2017February 23, 2022

Absolute Minimal Estate Planning

Even if you do not think that you need an estate plan, there are a couple things that you absolutely must do.

You need to do some estate planning. Even if you think that you do not, you do.

Your possessions will not just magically go to whomever you want after you pass away, if you do not make some sort of estate plan.

While you should visit an estate planning attorney and get the most comprehensive estate plan that you can get, you might wonder what the absolute minimal amount of estate planning you can do to make sure that you have everything done that is absolutely necessary.

Recently, Fidelity discussed that in “Estate planning must dos.”

There are really two things that must be done at a minimum.

First, you need to check beneficiaries on documents such as life insurance policies and retirement accounts. These beneficiaries are legally entitled to the proceeds of the accounts after you pass away.

The second thing you absolutely must do is to title any real property you have appropriately. Of course, what is appropriate titling, depends on your individual family situation and is something you should discuss with an attorney.

Those are the two absolute basic minimal estate planning requirements.

If you do not want to do just the minimum and would prefer to do more, talk to an estate planning attorney about what more you can do. Our site provides information on the basic estate documents you need for fundamental planning.

Reference: Fidelity (March 27, 2017) “Estate planning must dos.”

April 25, 2017

The Trumps and Trusts

Trusts might be more of a topic of political conversation today, thanks to the Trump family, than at any other time since President Theodore Roosevelt waged war against the trusts of the Gilded Age. That could be a good thing.

Trusts are not often a subject of much public discussion. They are important to estate planners, but as a matter of pressing national concern they rarely register.

The last time they were considered to be a matter of nightly discussion on the national news was during the first Roosevelt administration, when President Theodore Roosevelt resolved to bring the trusts to heel.

Today, trusts are back in the news because of the Trump administration and how members of President Trump's family are using trusts to hold their assets.

A lot of digital ink has been spilled over whether the President's family is using trusts in ethically appropriate ways.

One of the more recent examples of that comes from a New York Times article on Ivanka Trump's trust titled "Despite a Trust, Ivanka Trump Still Wields Power Over Her Brand."

While the press reporting has been mostly over the concerns about the ethical considerations of the Trump family trusts, there is another possible story.

What the Trumps are teaching us is that trusts can come in all sorts of shapes and sizes. They can be created for different purposes and give different people various levels of control over the assets in the trusts.

Whether or not you care about the ethical considerations of the Trump trusts, pay attention to the different things they do with their trusts. It might give you some ideas about what you can do with trusts that you can make part of your estate plan.

Reference: New York Times (March 20, 2017) "Despite a Trust, Ivanka Trump Still Wields Power Over Her Brand."

April 24, 2017May 5, 2022

Planning for a First Child

New parents have many possible things to worry about. One of them does not need to be what will happen to their newborn, should anything happen to them.

First-time parents are stereotypically known to be a nervous group. That is understandable. Bringing a new life into the world that you are responsible for, is a daunting task for even the most financially secure and emotionally stable people.

It is not easy being a parent and it is anything but cheap. Parenting a child costs a lot of money in today’s world. It requires careful planning. We have some of the basics about planning for young families on the Profit Law Firm website.

Recently, Wealth Management outlined some financial planning advice for new parents in “Six Financial Planning Steps for Expecting Parents.”

All of the steps listed in the article are important and worthy of consideration for new parents. However, the last one is of particular importance, because it is the one that is most often forgotten.

New parents need to get estate plans.

It is through estate planning that parents can prepare for the worst case scenario if something happens to them, the parents, before their children reach adulthood.

It is in estate planning that guardians are nominated for minor children.

It is also through estate planning that financial arrangements are made to make sure that minor children have the resources needed for their care, if something happens to the parents.

If you are expecting a child, make sure you do not neglect to see an estate planning attorney so you do not have to worry about what will happen to your child, if something happens to you.

Reference: Wealth Management (March 31, 2017) “Six Financial Planning Steps for Expecting Parents.”

April 19, 2017February 23, 2022

Dying With Debt

Most Americans pass away still owing some debt. The debt does not merely die with them. It is more complicated than that.

There is a common belief that any debt a person has, dies with him or her. In a sense that is true, but it is also false depending on the type and the amount of debt.

It is important to understand the dynamics of debt and dying, because 73% percent of Americans pass away with debt. The average amount of debt at death is approximately $62,000 according to FOX Business in “Americans Are Dying with an Average of $62K of Debt.”

The only type of debt that completely disappears when the debtor passes away is federal student loans. However, even then the proper paperwork must be filed. The same situation is not necessarily true with other types of student loans.

Other types of debt must be paid by the estate, before any assets are distributed to heirs.

Thus, if a person passes away owing $100,000 and having assets of $150,000, then the estate must pay the debt and only the remaining $50,000 can be inherited by heirs.

If the estate does not have enough assets to cover the full amount of the debt, then heirs are not responsible to pay it. However, there are exceptions. For example, if the estate contains a home, then the value of that home might be used to pay the debt even if other people are living in it. As a result, the heirs might need to pay the debt to stay in the home.

The issue of debt and death can get very complex. If you have any questions, it is a good idea to talk to an estate planning attorney who can help you manage what will happen to any debt you have when you pass away.

Reference: FOX Business (March 21, 2017) “Americans Are Dying with an Average of $62K of Debt.”

April 12, 2017October 25, 2023

The Core of Estate Planning

If you feel overwhelmed about planning your estate, it might be helpful to remember what is at the core of estate planning. It is a way to transfer assets.

Estate planning can be and do many different things. It can provide for the care of minor children. It can be a way to let people know that you love them. It can create a charitable legacy.

In fact, there are so many things estate planning can be and do that may people get overwhelmed thinking about all of them. As a result, they do not create estate plans.

At its core, however, estate planning is not that complicated. Estate planning can be as simple as transferring your assets after death.

As the Times Herald-Record explains in “Transferring assets upon death,” there are four main ways to do that, including:

Wills – In a will you state who should get your assets and appoint someone to be in charge of making sure that your wishes are carried out. Wills have to be approved by a probate court.
Joint Ownership – If you have assets in joint ownership with another person, then by law when you pass away the joint owner becomes the sole owner of the asset.
Beneficiary Designations – For life insurance policies, retirement accounts and savings accounts, you name a specific beneficiary to receive the assets after you pass away. A court does not need to approve the designation.
Trusts – With a trust, you state how your assets should be handled, appoint someone to handle them and name the people for whose benefit the assets will be handled.

How do you know which approach or approaches are best for your circumstances? Contact an experienced estate planning attorney.

Reference: Times Herald-Record (March 15, 2017) “Transferring assets upon death.”

April 11, 2017

A Good Time to Get an Estate Plan

While you are busy doing your taxes this year, it is also a good time to think about getting an estate plan.

Every year at about this time, Americans breathe a big sigh of relief when they seal their tax returns and send them off to the IRS or hit "send" to file electronically. The sigh is even bigger, if the envelope did not include a check written to the government and the tax filer can expect to receive a refund in the next couple of months.

No one likes doing their own taxes.

When they are finally done, the last thing that most people want to do is to deal with more financial issues. However, it is a good idea to do one more thing, as CTV News points out in "The mistakes of not having a will."

When you finish doing your taxes, you should get an estate plan or update your plan, if you already have one.

To do your taxes, you had to get out many of your financial documents. You have also been thinking about how much money you have and where it is all located. Doing those things is one of the first steps to getting an estate plan.

You could put all of your financial documents away and think about other things. However, if you later decided to do estate planning, you will have to start all over again.

Why not just go ahead and get an estate plan now, while things are still on your mind?

Reference: CTV News (March 21, 2017) "The mistakes of not having a will."

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Tag: Estate Planning