You’ve Established an Estate Plan. Do You Know Where the Documents Are? Does Your Family?

For most people, finally establishing an estate plan is a big step that they have undertaken after years of delay. A second step is making decisions regarding the executor, trustees, beneficiaries, funeral costs and debt, and a third step is actually completing the will. There is, however, a fourth step that is often skipped: placing the original will and other critical documents in a place where it can be found when it is needed.

As far as wills are concerned, this step is more important than you might think, for two reasons:

1. If your will can’t be found upon your death then, legally, you will have passed away intestate, i.e. without a will.
2. If your loved ones can only locate a photocopy of your will, chances are the photocopy will be ruled invalid by the courts. This is because the courts assume that, if an original will can’t be located, the willmaker destroyed it with the intention of revoking it.

Options for Storing the Original Copy of Your Will

Because an original will is usually needed by the probate court, it makes sense to store it in a strategic location. Common locations recommended by estate planning attorneys include:

• A fireproof safe or lock box
• Stored at the local probate court, if such service is provided.
• A safety deposit box in a bank

There are advantages to each choice. For many, a fireproof safe is simplest: it’s in the home, doesn’t need to leave the house and can be altered and replaced with maximum convenience. The probate court makes sense because it is the place where the last will and testament may end up when you pass away. A safety deposit box also makes sense, especially if you already have one for which you’re paying.  Just make sure that your executor can access it.

By making sure that your original will is safe and can be found when needed, you don’t just ensure that it can be used when the allocation of your assets and debt occurs. You also ensure that disputes, confusion and disappointment don’t occur years after your death; while uncommon, in some cases, by the time the will has been discovered, the assets of the decedent have long been distributed according to intestacy laws and not the decedent’s will. Intestacy laws are essentially the “default will” that the state establishes for individuals who do not have their own estate plan.

You’ve taken the trouble to protect your assets and loved ones by creating an estate plan. Don’t leave its discovery to chance. Ensure that your executor or trustee can easily and reliably find it when it comes time to put it into effect. 

8 Reasons Young People Should Write a Last Will and Testament

Imagine if writing a last will and testament were a pre-requisite to graduating from high school.  The graduate walks across the stage, hands the completed will to the principal, and gets the diploma in return.   It might sound strange because most 18 year olds have little in terms of assets but it’s a good idea for all adults to draft a last will and testament.

Graduation from college is another good milestone to use as a reminder to create an estate plan.  If you haven’t created a will by the time you marry – or are living with a partner in a committed relationship – then it’s fair to say you are overdue.

Think you don’t need an estate plan because you’re broke?  Not true.  Here are eight excellent reasons for young people to complete a last will and testament.  And they have very little to do with money.

You are entering the military.  Anyone entering the military, at 18 or any other age, should make sure his or her affairs are in order.  Even for an 18-year-old, that means creating a will and other basic estate planning documents like a health care directive and powers of attorney.

You received an inheritance.  You may not think of the inheritance as your asset, especially if it is held in trust for you.  But, without an estate plan, the disposition of that money will be a slow and complicated process for your surviving family members.

You own an animal.  It is common for people to include plans for their pets in their wills.  If the unthinkable were to happen and you died unexpectedly, what would happen to your beloved pet?  Better to plan ahead for your animals in the event of your death.  You can even direct the sale of specific assets, with the proceeds going to your pet’s new guardian for upkeep expenses.

You want to protect your family from red tape.  If you die without a will, your family will have to take your “estate” (whatever money and possessions you have at the time of your death) through a long court process known as probate. If you had life insurance, for example, your family would not be able to access those funds until the probate process was complete.  A couple of basic estate planning documents can keep your estate out of the probate court and get your assets into the hands of your chosen beneficiaries much more quickly.

You have social media accounts.  Many people spend a great deal of time online, conversing with friends, storing important photos and documents and even managing finances. Without instructions from you, will your family know what to do with your Facebook account, your LinkedIn account, and so forth?

You want to give money or possessions to friends or charities.  When someone dies without a will, there are laws that dictate who will receive any assets.  These recipients will include immediate family members like parents, siblings, and a spouse.  If you want to give assets to friends or to a charity, you must protect your wishes with a will.

You care about what happens to you if you are in a coma or persistent vegetative state.  We all see the stories on the news – ugly fights within families over the prostrate bodies of critically ill children or siblings or spouses.  When you write your will, write a health care directive (also called a living will) and a financial power of attorney as well.  This is especially important if you have a life partner to whom you are not married so they can make decisions on your behalf

 

Preparing to Meet With an Estate Planning Attorney

A thorough and complete estate plan must take into account a significant amount of information about your assets, your family, your property, and your wishes during and after your life.  When you make your first appointment with an estate planning attorney, ask the attorney or the paralegal if they can provide a written list of important information and documents that you should bring to the meeting.  

Generally speaking, you should gather the following information before your first appointment with your estate planning lawyer.

Family Information
List the names, birth dates, death dates, and ages of all immediate family members, specifically current and former spouses, all children and stepchildren, and all grandchildren.

If you have any young or adult children with special needs, gather all information you have about their lifetime financial needs.

Property Information
For all real property you own or can reasonably expect to acquire, gather the property description, your ownership interest information, the address, market value, any outstanding mortgage balance, and the most recent tax assessment.

For any personal property of value (such as vehicles, jewelry, coins, antiques, stamps, and art), compile a list that includes a description, the physical location of each item, your ownership interest information, the market value, and any liens against the property.

Business Information
If you have an ownership interest in a business, make sure you have documents showing your ownership interest in the business, the business location, the names and contact information of other owners, and 2-3 years of past profit and loss statements.

Financial Information
Compile a list of all your financial accounts, including: checking accounts, savings accounts, investment accounts, stocks and bonds, and U.S. Treasury notes.  If any of these accounts currently have designated beneficiaries, bring that information as well.

Gather all retirement savings information, including 401(k) plans, 403(b) plans, IRAs, life insurance policies, Social Security statements, and pension information.  Make sure you have the account names, account numbers, current balances, outstanding loan balances, and currently named beneficiaries.

If any family members owe you debts, compile that information.

Questions to Think About
The following are some of the first questions your estate planning attorney will ask.  You are not required to have answers ready for all these questions, but because some of them are complex, it is a good idea to think through these issues before your appointment.

• Who will be beneficiaries of your property?
• Do you want to bequeath any specific items of property to specific individuals?
• Is there anyone you do not want to be a beneficiary of any of your property?
• Do you plan to make any bequests to any nonprofit organizations – university, church, charity, or other organization?
• Do you know who you want to act as executor of your will?
• Do you know who you want to act as trustee of any trusts you establish?
• If you have minor children, who do you want to appoint as guardian?
• Do you want to make arrangements for your health and financial well-being in the event you become unable to make decisions for yourself?
• Do you have specific wishes for your funeral?
• Are you a registered organ donor?

During your initial consultation, your estate planning attorney will review your family and financial situation, discuss your wishes, answer your questions and suggest strategies to protect your family, wealth and legacy.
 

Making your home senior-proof

Let’s face it – it’s tough getting old. The aches, pains, and pills often associated with aging are things that many members of the baby-boomer generation know all too well by now. Though you might not be able to turn back time, you can help an aging loved one enjoy their golden years by giving them a safe, affordable place to call home. If an aging parent is moving in with you and your family, there are many quick fixes for the home that will create a safe environment for seniors.

Start by taking a good look at your floor plan. Are all the bedrooms upstairs? You may want to think about turning a living area on the main floor into a bedroom. Stairs grow difficult with age, especially for seniors with canes or walkers. Try to have everything they need accessible on one floor, including a bed, full bathroom, and kitchen. If the one-floor plan isn’t possible, make sure you have railings installed on both sides of staircases for support. A chair lift is another option for seniors who require walkers or wheelchairs.

Be sure to remove all hazards in hallways and on floors. Get rid of throw rugs – they can pose a serious tripping hazard. Make sure all child or pet toys are kept off the floor. Add nightlights to dark hallways for easy movement during the night when necessary. Also install handrails for support near doorframes and most importantly, in bathrooms.

Handlebars next to toilets and in showers are essential for senior safety. Use traction strips in the shower, which should also be equipped with a seat and removable showerhead. To avoid accidental scalding, set your hot water heater so that temperatures can’t reach boiling. You may also want to consider a raised seat with armrests to place over your toilet, to make sitting and standing easier.

This applies to all other chairs in the house as well. Big, puffy chairs and couches can make it very difficult for seniors to sit and stand. Have living and dining room chairs with stable armrests, and consider an electronic recliner for easy relaxation.

To keep everyone comfortable and help avoid accidents, store all frequently used items in easily accessible places. Keep heavy kitchen items between waist and chest height.

Even with appropriate precautions, not all accidents can be avoided. Purchasing a personal alarm system like Life Alert can be the most important preparation you make for a senior family member. If they are ever left alone, Life Alert provides instant medical attention with the push of a button that they wear at all times.

Amidst all the safety preparations, remember that it’s important to keep the brain healthy, too. Have puzzles, cards, large-print books and magazines, computer games, and simple exercises available to keep seniors of healthy body and mind.

These simple preparations can not only help extend the life of your loved one, but help to make sure their remaining years are happy and healthy.

Do Heirs Have to Pay Off Their Loved One’s Debts?

The recent economic recession, and staggering increases in health care costs have left millions of Americans facing incredible losses and mounting debt in their final years. Are you concerned that, rather than inheriting wealth from your parents, you will instead inherit bills? The good news is, you probably won’t have to pay them.

As you are dealing with the emotional loss, while also wrapping up your loved one’s affairs and closing the estate, the last thing you need to worry about is whether you will be on the hook for the debts your parents leave behind. Generally, heirs are not responsible for their parents’ outstanding bills. Creditors can go after the assets within the estate in an effort to satisfy the debt, but they cannot come after you personally. Nevertheless, assets within the estate may have to be sold to cover the decedent’s debts, or to provide for the living expenses of a surviving spouse or other dependents.

Heirs are not responsible for a decedent’s unsecured debts, such as credit cards, medical bills or personal loans, and many of these go unpaid or are settled for pennies on the dollar. However, there are some circumstances in which you may share liability for an unsecured debt, and therefore are fully responsible for future payments. For example, if you were a co-signer on a loan with the decedent, or if you were a joint account holder, you will bear ultimate financial responsibility for the debt.

Unsecured debts which were solely held by the deceased parent do not require you to reach into your own pocket to satisfy the outstanding obligation. Regardless, many aggressive collection agencies continue to pursue collection even after death, often implying that you are ultimately responsible to repay your loved one’s debts, or that you are morally obligated to do so. Both of these assertions are entirely untrue.

Secured debts, on the other hand, must be repaid or the lender can repossess the underlying asset. Common secured debts include home mortgages and vehicle loans. If your parents had any equity in their house or car, you should consider doing whatever is necessary to keep the payments current, so the equity is preserved until the property can be sold or transferred. But this must be weighed within the context of the overall estate.

Executors and estate administrators have a duty to locate and inventory all of the decedent’s assets and debts, and must notify creditors and financial institutions of the death. Avoid making the mistake of automatically paying off all of your loved one’s bills right away. If you rush to pay off debts, without a clear picture of your parents’ overall financial situation, you run the risk of coming up short on cash, within the estate, to cover higher priority bills, such as medical expenses, funeral costs or legal fees required to settle the estate.

Beware of “Simple” Estate Plans

“I just need a simple will.”  It’s a phrase estate planning attorneys hear practically every other day.   From the client’s perspective, there’s no reason to do anything complicated, especially if it might lead to higher legal fees.  Unfortunately, what may appear to be a “simple” estate is all too often rife with complications that, if not addressed during the planning process, can create a nightmare for you and your heirs at some point in the future.   Such complications may include:

Probate - Probate is the court process whereby property is transferred after death to individuals named in a will or specified by law if there is no will. Probate can be expensive, public and time consuming.  A revocable living trust is a great alternative that allows your estate to be managed more efficiently, at a lower cost and with more privacy than probating a will.  A living trust can be more expensive to establish, but will avoid a complex probate proceeding. Even in states where probate is relatively simple, you may wish to set up a living trust to hold out of state property or for other reasons.

Minor Children - If you have minor children, you not only need to nominate a guardian, but you also need to set up a trust to hold property for those children. If both parents pass away, and the child does not have a trust, the child’s inheritance could be held by the court until he or she turns 18, at which time the entire inheritance may be given to the child. By setting up a trust, which doesn’t have to come into existence until you pass away, you are ensuring that any money left to your child can be used for educational and living expenses and can be administered by someone you trust.  You can also protect the inheritance you leave your beneficiaries from a future divorce as well as creditors.

Second Marriages - Couples in which one or both of the spouses have children from a prior relationship should carefully consider whether a “simple” will is adequate. All too often, spouses execute simple wills in which they leave everything to each other, and then divide the property among their children. After the first spouse passes away, the second spouse inherits everything. That spouse may later get remarried and leave everything he or she received to the new spouse or to his or her own children, thereby depriving the former spouse’s children of any inheritance.  Couples in such situations should establish a special marital trust to ensure children of both spouses will be provided for.

Taxes - Although in 2011 and 2012, federal estate taxes only apply to estates over $5 million for individuals and $10 million for couples, that doesn’t mean that anyone with an estate under that amount should forget about tax planning. Many states still impose a state estate tax that should be planned around. Also, in 2013 the estate tax laws are slated to change, possibly with a much lower exemption amount.

Incapacity Planning – Estate planning is not only about death planning.  What happens if you become disabled?  You need to have proper documents to enable someone you trust to manage your affairs if you become incapacitated.  There are a myriad of options that you need to be aware of when authorizing someone to make decisions on your behalf, whether for your medical care or your financial affairs.  If you don’t establish these important documents while you have capacity, your loved ones may have to go through an expensive and time-consuming guardianship or conservatorship proceeding to petition a judge to allow him or her to make decisions on your behalf.  

By failing to properly address potential obstacles, over the long term, a “simple” will can turn out to be incredibly costly.   An experienced estate planning attorney can provide valuable insight and offer effective mechanisms to ensure your wishes are carried out in the most efficient manner possible while providing protection and comfort for you and your loved ones for years to come.