October 27, 2017March 7, 2023

There Is Not Time to Do It Later

Most people do not think something bad is going to happen to them any time in the near future.

Healthy people have this belief that they will be able to continue with their lives without any problems.

They do not think they will have an accident. They do not think they will get seriously ill. They know these things could happen, but believing that they are imminent is paranoia.

The problem with this thinking is that it leads people to put off estate planning. People put off their initial estate planning, but they also put off making necessary changes to the estate plans they already have.

The latter can be as big of a problem, as the former the Sunshine Daily Coast reports in “Fix your will before it’s too late.”

What is the problem with putting off making necessary changes to an estate plan? Once you have a plan that is the one a court will follow, until you change it.

If you have stated in your will that someone should inherit your property and you change your mind for whatever reason, the change has no legal effect until you actually create a new will.

If something happens to you before you create that new will, then the person you do not want to inherit the property actually will.

It is never a good idea to procrastinate in any area of estate planning.

Instead of putting things off, see an estate planning attorney as soon as the needs arises.

Reference: Sunshine Coast Daily (Oct. 2, 2017) “Fix your will before it’s too late.”

October 19, 2017March 7, 2023

Wills Need Probate

How wills actually work, is not understood by everyone.

Many people think that if something is written down in a will, then everything is settled. They think all that is required is for the beneficiary to show the will to whoever is holding the property the beneficiary is to inherit.

That is not the way it works at all.

Unfortunately, the misperception is common.

In fact, estate attorneys are used to hearing this from people named in wills, who think it all works that way and are upset when they discover that it does not.

The Times Herald recently discussed this in “Wills won’t work without probate.”

A will is only a bunch of words on paper that have no real legal authority, until the will is filed with a
probate court.

The court must then agree to accept the will as representing the valid wishes of the deceased.

Once that is done, the probate court appoints a personal representative for the estate.

That personal representative is then charged with carrying out the directives in the will, under the
supervision of the court.

This can result in a long and often expensive process.

It depends on the size of the estate, the ability of the personal representative and whether there are any
challenges to the estate.

Of course, this can all usually be avoided by speaking to an estate planning attorney about getting a
trust instead of a will.

Reference: The Times Herald (Sep. 22, 2017) “Wills won’t work without probate.”

October 2, 2017

Electronic Wills are around the Corner

Almost all business can now be conducted electronically. Wills are one of the last holdouts, but that is starting to change.
Traditionally, for a will to be accepted as valid in probate court, it had to follow very strict forms and procedures. It needed to be signed and there needed to be witnesses present who could testify that the will was signed. Normally, two witnesses were needed.

Eventually, some states relaxed the strict formalities and allowed other wills to be probated, if it could be proven that the contents of the will were the intentions of the testator. However, some states kept the very strict rules.

That makes it difficult for wills to be made digitally, like most everything else can be today.
The law is now beginning to adapt in ways that will make them possible, as the New Jersey Law Journal discusses in "Electronic Wills: No Longer in A Galaxy Far, Far Away."

In 2013, an electronic will was accepted into probate in Ohio. In that case, the person had digitally signed the will using a stylus and witnesses were present to the signing.

While Florida recently rejected an electronic wills law, Nevada has passed a law that allows them.
In other states, courts are rewriting the rules to allow more non-conforming wills to be accepted, which will eventually pave the way for electronic wills in those states.

For now, you probably do still need to make sure that your will is written on paper and that all of the formal procedures are followed correctly.
That might not be true in a decade.

Reference: New Jersey Law Journal (Sep. 11, 2017) "Electronic Wills: No Longer in A Galaxy Far, Far Away."

September 1, 2017December 26, 2025

Trusts Are Cheaper Than Wills

If you are looking to save money on your estate plan, then you might think that you should get a will since they are cheaper to get than a trust. However, trusts are actually cheaper overall.

Estate planning can be expensive for some people. Estate planning attorneys do not always come cheap and not everyone thinks they can afford to hire one.

In most cases, a will is less expensive to get than a trust. This is because trusts normally require more of the attorney’s time to draft. This leads many people to get wills to save time and money.

The problem with is that a will is more expensive overall than a trust, as the Times Herald-Record explained in “Trusts will cost you less at settlement time.”

When someone passes away, someone must then administer either the will or the trust to make sure that property is distributed as the deceased directed.

Using a will requires going to probate court and having an executor, who can charge for the service, go through the process of administering the estate.

On the other hand, using a trust means that a trustee, who can also charge for the service, is required to distribute everything.

The trustee normally does not have to go to court, which makes it a much faster process. The speed means that the trustee may charge much less overall.

In the end, the trustee may be a lot cheaper than any money that might have been saved by getting a will instead of a trust.

When getting an estate plan created, it is important to use the instruments that work best for your situation. Do not be afraid to get a trust because of the initial expense.

It just may be cheaper in the long run.

Reference: Times Herald-Record (August 2, 2017) “Trusts will cost you less at settlement time.”

August 18, 2017

Online Wills Are Dangerous

You can create a will by purchasing a form online and filing it out. However, it makes no sense to do so.

One of the biggest questions people have about estate planning today, is whether they should use one of the several online legal document services.

These services allow people to purchase forms they can download and fill out for themselves that purport to be legal documents. Many people have made their own wills this way.

The problem is that there is no actual advantage to creating a will this way, as MoneySense pointed out in "Danger of DIY Wills."

The one advantage people think these online wills have is that they are cheaper than going to an estate planning attorney. However, that is not really the case.

It is true that you might be able to save a few hundred dollars now by doing things yourself. If there are any problems with the documents you purchased after you pass away, then your estate is going to pay thousands of dollars, a lot more money, to attorneys to sort out the problems. This will dwarf any "savings" you might have had from drafting the document yourself.

There are almost always problems with form wills.

The source of the problems is always the same.

You are not an expert.

You might think you know what the best legal options are for your estate, but you are almost certainly wrong.

Do not be offended by that.

Unless you happen to be a surgeon, you do not know how to take out your own appendix either. Estate planning requires expertise every bit as much as surgery.

Reference: MoneySense (July 14, 2017) "Danger of DIY Wills."

July 21, 2017

Do You Need a Trust?

One of the biggest questions in estate planning today, is whether a trust is the best option for your family.

If you were to conduct a representative poll of middle class Americans about the best way to plan for your estate, it is almost certain that the majority of respondents would suggest getting a living trust.

It is the first piece of advice you will find almost anywhere you look for estate planning information. The reason for that is complex.

One reason is that many internet companies who sell trust creation documents have been very active in pushing the benefits of trusts to get more customers. Trusts are also often the best estate planning option for people.

Nevertheless, the key is to determine what the best estate planning option is for you personally, not for society generally, as Madison.com points out in "Is a Living Trust Right for You and Your Family?."

Trusts do have many benefits over wills.

Trusts do not have to go through probate and, therefore, are not subject to the commonly cited costs and delays associated with probate.

Trust provisions do not have to be made public, as most wills do. Trusts are also a great way to control what your heirs might do with their inheritances, but “testamentary trusts” under wills do so as well.

If you really want to know whether you should get a trust, the best thing to do is to ask an estate planning attorney. Tell the attorney what your needs are and let the attorney suggest the best ways to meet those needs.

Reference: Madison.com (June 27, 2017) "Is a Living Trust Right for You and Your Family?."

July 3, 2017

Tax Court Rules against Minnesota

The tax court has ruled against the state of Minnesota and declared its income tax statute unconstitutional, as it applies to some trusts created in that state.

Minnesota has an unusual way of taxing trusts. The state's income tax statute makes 100% of a trust's assets taxable in that state, if the trust became irrevocable when the settlor was a resident of Minnesota.

This rule applies regardless where the trust beneficiaries reside or where any trustees reside.

Fortunately, the tax court has decided this method of trust taxation is unconstitutional, according to the Wills, Trusts & Estates Prof Blog in "Tax Refunds for Trusts With Minnesota Grantors? Minnesota Income Tax Statute Ruled Unconstitutional."

The court looked at trusts that had an out-of-state trustee, beneficiaries who lived in Minnesota and beneficiaries who lived in other states.

It determined that these trusts could not be considered resident trusts of Minnesota and, therefore, the state could not tax intangible assets. Presumably, the same logic could be applied to some other trust situations.

This ruling could lead to refunds for some trusts.

However, those refunds may not come in the near future, since it is expected that the state will appeal this ruling to the Supreme Court, which could render a different decision.

Reference: Wills, Trusts & Estates Prof Blog (June 7, 2017) "Tax Refunds for Trusts With Minnesota Grantors? Minnesota Income Tax Statute Ruled Unconstitutional

June 16, 2017

Leaving A Large Inheritance? Pros & Cons

Many wealthy people are torn between wanting to leave a large inheritance for their children and fears that their children will not be able to handle the wealth.

Wealthy parents whose children do not get independently wealthy on their own, often fear that leaving those children a large inheritance would be a mistake. The children might not be able to handle the money and it might cause them to give up their own careers.

In some cases, the children might also waste all of the money and leave nothing for their own children. Despite this common fear, the wealthy parents do want to leave their children large inheritances.

This tension creates problems for many people as they plan their estates, as the Wills, Trusts & Estates Prof Blog points out in "New Focus for Estate Planning."

The key to resolving this tension is to understand that estate planning can be about more than just transferring a lot of assets to heirs. With a traditional Will, heirs get all of the assets at once, which leaves open the possibility that assets will be misused.

There are many kinds of available estate planning tools that can be used to make sure that heirs do not waste everything.

Many types of trusts will help preserve the assets.

Of course, this can only be done, if an estate planning attorney knows that the client fears his children will waste an inheritance. The attorney needs the client to express these fears, so the attorney can devise the best plans.

Reference: Wills, Trusts & Estates Prof Blog (May 17, 2017) "New Focus for Estate Planning."

June 7, 2017October 25, 2023

Why Trusts Are Better Than Wills

Most estate planning attorneys believe that trusts are generally a better way to distribute an estate than wills. It is important to know the reasons why that is.

If you spend any time at all talking to estate planning attorneys or researching estate planning online, it will not be long before you hear that trusts are usually better than wills for estates. This has become such a truism, that even many non-attorneys instinctively suggest a trust when a friend asks them about estate plans.

While it should be noted that trusts are not always better, it is true that they almost always are. Particularly, in Maryland and the District of Columbia, which have Maryland estate taxes and DC estate taxes, which are lower than federal estate taxes, trusts are especially helpful.

Recently, Wicked Local Norwood listed some reasons why that is the case in “Five Ways in which a trust is better than a will,” including:

With a trust you can avoid probate, which can be expensive and time-consuming. Most wills have to go through probate court.
A trust can be drafted that protects your beneficiaries from creditors. If you give heirs money outright in a will, then any creditors they have can go after that money. Trusts avoid this problem.
Special needs trusts can be used to give assets to people with disabilities without making them ineligible for government benefits.
Trusts can be used to reduce estate taxes in ways that are impossible to do with wills.
With a trust, you can leave assets for minor children that are managed by a third-party without the unnecessary intervention of probate courts.

All that noted, wills have the benefit of a neutral judge overseeing the process and “testamentary trusts” can be created under wills that accomplish the same ends as those available through a revocable living trust that avoids probate.

Regardless, consult with a qualified estate planning attorney to evaluate the best approach for your unique circumstances.

Reference: Wicked Local Norwood (May 14, 2017) “Five Ways in which a trust is better than a will.”

May 29, 2017

Treating Your Children Fairly

One of the biggest problems in estate planning is figuring out how to treat children fairly in circumstances when fairly does not necessarily mean equally.

The default estate planning option for people with more than one child is to divide their estates equally between their children. That is the most common thing that is now done in estate planning.

It is easy and simple.

Most of the time it is a fair way to divide a parent's estate and one that the children accept. That does not always work, however, because as every parent eventually learns, treating children fairly does not always mean treating them equally. That holds true in estate planning.

Adult children can wind up in very different life circumstances for a variety of reasons. For example, if one child became wealthy after receiving a large gift from his parents to start a business, it might not be fair to treat that child the same in an estate plan as another child who went into public interest work.

Figuring out how to divide an estate unequally but fairly between children can be difficult, as the Wills, Trusts & Estates Prof Blog discussed in "Dividing Your Wealth Among Your Children."

The biggest problem is figuring out how to make the unequal division without causing any of the children to dispute the estate. Trusts are extraordinarily helpful in these situations, since they are much more difficult to challenge.

Parents can create a trust with an independent trustee and give the trustee the power to make distributions to the children based on their circumstances and needs. It is also important that parents who are leaving unequal inheritances for their children talk to the children and let them know the reasons for doing so.

If you want to leave your children unequal inheritances, you need to seek the advice of an experienced estate planning attorney to make sure you do so in a way that your children will think is fair and not seek to challenge.

Reference: Wills, Trusts & Estates Prof Blog (May 5, 2017) "Dividing Your Wealth Among Your Children."

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Tag: Wills