A Will Reveals More About You Than Just Assets and Distribution

Current Events, Estate PlanningNo Comments

We tell our readers quite often that a will is one of the most important documents in your estate plan—an essential document, to be quite honest—but sometimes we like to remind our readers that wills are interesting family and historical documents as well.

Genealogists will often use an ancestor’s last will and testament to determine important details about family members: names and birthdates of siblings or children, extent of property, last known address, etc. Additionally, these are the documents in which we make our final wishes known. This is often where our true selves come out; who we liked best and what we valued most.

A last will and testament can be very revealing indeed. In honor of President’s Day we offer these interesting tidbits relating to the wills of the leaders of our nation:

  • George Washington was concerned with the future of our young nation to the very end, and gave some of his estate toward establishing the first American Institutions of higher education, an attempt to prevent young Americans from being “sent to foreign Countries for the purpose of Education, often before their minds were formed, or they had imbibed any adequate ideas of the happiness of their own; contracting, too frequently, not only habits of dissipation and extravagance, but principles unfriendly to Republican Government & to the true and genuine liberties of mankind.”
  • Interestingly, President Abraham Lincoln left no will—and he was a prominent lawyer who should have known better!
  • President Harry S. Truman included careful tax planning in his last will and testament.
  • President Warren G. Harding must have had some kind of premonition when he conveniently decided to write his will 6 weeks before his sudden death.
  • The will of President Calvin Coolidge was just 23 words long: “Not unmindful of my son John, I give all my estate, both real and personal, to my wife, Grace Coolidge, in fee simple.”
  • President John F. Kennedy was a bit poetical in his will, and included this haunting phrase, “being of sound and disposing mind and memory, and mindful of the uncertainty of life…”

Estate Tax Laws Aren’t the Only Things That Change

Estate PlanningNo Comments

We’ve written before about the importance of reviewing and updating your estate plan, but it’s a topic worth mentioning again—especially in light of the many recent changes to estate tax law. The plain truth is that no matter how perfect your estate plan is when you create it, change is inevitable, and when your life (or the tax law) changes, it’s important that your estate plan change with it.

Reviewing your estate plan every 2-5 years is essential to keeping it up to date and working the way you intended it to work. Luckily, reviewing your estate plan can be quick and easy if you know what you’re looking for. Here are 5 key components you’ll want to review:

  1. Fiduciaries-How have the people in your life moved or changed?
  2. Assets-Are your finances different than they were a few years ago?
  3. Distribution and Beneficiaries-Are there any new members of your family?
  4. Health Care-What changes have you experienced in your health recently?
  5. Legal Updates-Have the laws changed?

If we’re lucky, our lives are constantly changing—our families evolve, our finances improve or decline, we meet and form strong relationships with knowledgeable friends and professionals. It only makes sense that your estate plan should change too. What seemed best for your family 4 years ago might not be the ideal situation now. By reviewing and updating these 5 components on a regular basis, and touching base with your attorney, you will insure that your estate plan will continue to protect yourself and your family the way you intended it to when you first created it.

Estate Tax Lessons from 2010 and Things to Watch Out for in 2011

Current Events, Estate PlanningNo Comments

We all know from the many news stories of last  year that estate tax laws are not set in stone, they can fluctuate and change both at the state and the federal level; and as this article in Forbes points out, keeping up with those fluctuations can be of the utmost importance to you and your loved ones.

The many celebrity news stories we saw last year provide all the examples we need of what can happen when you plan well (as was the case with Brittany Murphy’s estate plan) or when you neglect your estate plan—or even worse, when you fail to plan at all. Here are some celebrity examples of common estate planning pitfalls and mistakes:

Failing to update your estate plan. We tell all of our clients how important it is to review and update your estate plan every 2 to 5 years; Gary Coleman provides a prime example of what can happen if you neglect to follow through on those updates and reviews. “[Coleman] created a handwritten codicil to his will in 2007 leaving much of his estate to his wife, Shannon Price. After they divorced, however, Coleman never updated his will or created a new one. That led to a court fight after he died about whether Coleman was still married to Price. Even though they never officially tied the knot for a second time, Price claimed they had a ‘common-law marriage,’ which would mean that the handwritten will would be valid.”

Failing to fund your estate plan. A revocable living trust is a wonderful tool, but it’s just an empty vessel until you fund it by re-titling your assets in the name of your trust.  Michael Jackson created what is most likely a wonderful living trust, but his failure to fund it properly means that 2010 saw “The estate of Michael Jackson… dragged on with no end in sight.”

Waiting too long to create your plan. If you are a senior citizen, waiting too long to create your plan leaves you open to the exploitation or undue influence of acquaintances or family members who might try to take advantage of you.  Even if nothing of the sort has taken place, just the suspicion of undue influence can land your estate in a lengthy court battle. “Does the Anna Nicole Smith case come to mind? The United States Supreme Court ruled in 2010 that it will hear her case for the second time. Did she wrongly take advantage of her 90-year old husband, or did his son use fraud and other improper means to stop the billionaire from leaving money to Anna Nicole?”

We can all benefit from the very public airings of these celebrity estates.  Our office can help you avoid the mistakes listed here, plus many more.  The new laws of 2011 provide the perfect opportunity to create a plan (or update your existing plan), and ensure that your family will be well protected now, and in the future.

Minnesota Health Care Dispute Raises Fears for Everyone

Current Events, Estate Planning, Health CareNo Comments

As estate planning attorneys we help our clients plan ahead. We help them create the documents and take the legal action they need to protect themselves and those they love. We help them talk through painful possibilities, and support them as they make difficult decisions. We work to ensure that our clients and their families will be prepared for any eventuality—but deep down we hope that they will never really need to make use of some of these documents and plans.

One of the situations that estate planners (or any compassionate advisor) dreads is one that is happening right now in Minnesota. According to the Minneapolis Star Tribune the family and friends of 85 year old Al Barnes are struggling to make a difficult decision about his end-of-life care—a decision made no easier by the fact that not all family members (or Mr. Barnes doctors and health care providers) can agree on the next course of action.

“Numerous doctors have assessed Barnes in the past year, and agree on his prognosis. According to court records, Barnes suffers from a level of dementia so profound that doctors believe it is pointless to treat his kidney failure and respiratory failure.” But this isn’t the whole story. Al Barnes’ wife Lana Barnes believes that “her husband suffers from chronic Lyme disease, and that antibiotic treatment of the tick-borne bacterial infection would reverse his dementia — and necessitate treatment for his other conditions as well.”

Mr. Barnes does have a Health Care Directive which lists his wife Lana as his agent, but it apparently goes no further than that, giving no specific instructions or information about what his wishes for end-of-life care would be. And herein lies the dispute. “A Methodist Hospital doctor wants to take decisionmaking rights from [Mrs. Barnes] because he believes she is demanding hopeless and painful treatments. The 56-year-old wife is accusing the doctor and others of misdiagnosis that has left Barnes substantially — but not irreversibly — incapacitated.”

The Minneapolis Probate Courts temporarily took away Mrs. Barnes’ authority over her husband’s care earlier this month after the disagreements between wife and doctors came to a head. “Lana and doctors from Methodist Hospital [are] due to resume arguments over his medical care Wednesday in Hennepin County Probate Court… After Wednesday’s hearing, a judge will decide whether Lana Barnes remains in charge.”

This is exactly the kind of situation we hope to help our clients avoid by encouraging a little bit of forethought, conversations between family members and loved ones, and by preparing a thorough, decisive, and well-thought-out health care directive.

Planning to Make Your Life Extraordinary

Estate PlanningNo Comments

One of the best parts about doing the work that our firm does is that we get to help people evaluate their priorities and define for themselves what is truly important. Sometimes it’s too easy to get caught up in the day-to-day stresses and activities and to lose sight of what your true focus is. In the concerns of the ordinary it’s easy to forget to pay attention to the extraordinary.

It may not sound appealing, but planning for your death makes you take a look at life from a very different point of view. Take the typical To-Do list, for example. Most people have a To-Do list filled with tasks such as “pay the bills” or “wash the car”, but don’t these lists evoke a feeling of heavy obligation rather than pleasant anticipation? If you were to take your list of Things to Do and add onto the end of it “Before I Die”, how would that change your list?

This is a large part of what estate planning is all about. It’s about separating the wheat from the chaff, about evaluating your life, realizing what is truly important, and planning to accomplish and protect those things of value.

Of course, nobody can live every minute in this state of heightened awareness. The bills do need to be paid and the car does need to be washed. But as you make that list of ordinary To-Do’s each morning try to include one thing that brings you closer to your extraordinary goal. Keeping the big picture in mind can give you perspective, and keep you focused on what’s really important. Make your own “To Do” list one that will bring you a sense of pleasant anticipation at the dawn of each day, and of happy contentment when you turn the final page.

It’s Never Too Early to Make Your First Will

Estate PlanningNo Comments

We’d like to share with our readers a recent article in Forbes entitled How To Write Your First Estate Plan. This article supports something we’ve been saying in our blog all along: That everyone needs a will—whether you’re a young couple just starting out, an established family with valuable assets to protect, or an entrepreneurial business owner with succession on your mind. The article reminds us that a will “is the cornerstone of an [estate] plan,” and at whatever stage of life you may be is not too early to make your first will.

“There’s a lot more to an estate plan than just a will, even for folks who don’t need a more complicated estate-tax oriented version. You might have pieces of it already–a living will signed when you had elective surgery or a beneficiary form filled out for a 401(k) when you got your first job. You need to make sure the pieces fit together.”

Many couples or individuals are first motivated to create a will when they have young children, and the primary purpose of their will is to ensure that their minor children will be cared for and provided for should anything happen to the parents. This is certainly one of the best reasons to create your will or estate plan, but it is not the only reason, not by a long shot. If you drafted your will when your children were young and haven’t looked at it since—or if you never created a will because you don’t have kids and therefore didn’t think you needed one—it’s time to revisit the subject.

An estate plan not only ensures that minor children will be provided for, but also that:

  • Older children have the means to continue their education if something happens to you
  • Your spouse or children are the recipients of your life insurance or retirement proceeds, and not the tax man or (even worse) an ex-spouse or ex-boyfriend or girlfriend.
  • You have someone trustworthy distributing your assets as you wish after you pass away.
  • Your business will transfer smoothly if you aren’t able to run it anymore.
  • And much more.

“Whatever motivates you, fine. The point is–whether you’re in estate tax territory or not, if you don’t have an estate plan, you need one. (And if you have a really old one, you probably need a whole new one.)” Any opportunity is the perfect opportunity to start planning to protect your loved ones. Call our office (or your own trusted attorney) to learn what steps you can take toward protecting your loved ones right now.

Knowledge and Communication is Key to Avoiding Family Fights

Elder Law, Estate PlanningNo Comments

Do your adult children know which of them will be your power of attorney if something happens to you? Most people don’t want to think about Alzheimer’s, dementia, or getting old; and those who have thought about it often choose to keep their wishes secret, their documents held under lock and key until the time comes when they are needed. But according to a recent article in Reuters, one of the most critical steps a parent can take toward preventing sibling fights is to state early and openly which adult child is their choice for power of attorney.

“In order to avoid conflict, parents [should] sit down with their children and spell out who has been appointed and why… It’s something that really has to be thought out in advance, hopefully before a crisis has arisen and while the parent is still able to express their goals.”

Open communication can go a long way toward smoothing relationships between family members, but if that by itself isn’t enough to keep the fights to a minimum, the advice of a trusted advisor can often dispel suspicions that may be brewing just beneath the surface. But don’t wait until arguments have already exploded, the best course of action is to consult with your advisor before intervention is necessary. Asking your advisor to sit down with yourself and your family members gives each child a chance to ask questions and voice their concerns; it also gives them a chance to hear from your own lips what you’re planning and why you’re planning it.

5 Essential Tips for Executors or Trustees

Estate Planning, Probate, Trust AdministrationNo Comments

Serving as executor or trustee of a will or a trust is an honor… but it’s also a job—a BIG job—and not one to be taken lightly. The role of executor or trustee can be one of great financial power, but it carries with it a heavy fiduciary obligation. Fiduciary obligation means that an executor or trustee must act in the best interests of the beneficiaries; it means that although the executor or trustee may be doing all the work, he or she may see very little return on that work, which is all for the benefit of the named beneficiaries.

If you have been nominated (or are currently serving) as an executor or trustee there are a few things you’ll want to remember as you go about your duties:

1. The will or trust is your guide, the mission statement by which you should operate; read and understand the document completely, and have an attorney help you, if necessary.

2. You need to be pro-active—to an extent. If you are managing a large amount of money or assets over a period of time it is probably not in the best interests of the beneficiary to let those funds sit in a savings account. Create (with an advisor, if necessary) a financial plan for the trust assets.

3. Although you may be handling the estate assets, you should not have any personal financial dealings with the trust. You should under no circumstances borrow from or lend money to the trust. Keep your finances separate!

4. Communication and transparency is key! Keep detailed records of all of your actions and transactions regarding the will or trust, and send regular reports to the beneficiaries. Regular communication prevents unhappy surprises or angry lawsuits in the future.

5. You don’t have to do it alone. If you were picked as a trustee because of your financial knowledge and experience—great! But if you were picked because you are the oldest, or the most responsible, or the favorite you may feel overwhelmed by the job ahead of you. Don’t try to muddle through alone, get the help and support of an experienced attorney or advisor.

Non-Traditional Couples Face Estate Planning Challenges

Current Events, Estate PlanningNo Comments

The new estate tax laws (with their friendly bent toward the taxpayer) have been cause for celebration for many wealthy and affluent Americans, but there is at least one group which has not had cause to celebrate—gay and unmarried couples. Under current federal law, a married person could transfer an unlimited amount of their estate to their spouse upon death, free of taxes; but this generous marital deduction does not apply to same-sex couples—even if they live in one of the five U.S. states which recognize gay marriage.

A recent article in Reuters explains that “there is no [recognition of same-sex marriage] on a federal level, which means same-sex couples do not get the marital deductions on U.S. taxes. They also cannot make large gifts or pass on assets to each other without paying taxes.”

The new laws may help some same-sex or unmarried couples; for the next two years unmarried individuals may transfer up to $5 million upon their death tax-free. But this isn’t permanent (the law will likely change again at the end of 2012) and anyone with an estate over $5 million will end up leaving their heirs with a hefty estate tax bill.

Luckily, some of these estate tax challenges can be overcome with some good estate planning and by thinking ahead. “If one partner has more assets, he can transfer some assets to his partner each year… Each year, individuals can make gifts up to $13,000 to any number of people. That can even up the two partners’ estates and hopefully avoid a big estate tax bill when the richer partner dies.” If it’s clear that estate taxes simply cannot be avoided, the wealthier partner may want to consider setting up an Irrevocable Life Insurance Trust to cover the cost of estate taxes.

Beyond the issue of estate taxes, the article brings up the good point that “same-sex couples are more likely to face challenges to their wills, usually from family members who do not approve of their lifestyle.” This provides more incentive than ever to have a well-thought-out estate plan, which can be drafted with just such a possibility in mind.

Regardless of state of residence, same-sex or unmarried couples simply do not have the same benefits as traditionally married couples, which means that same-sex or unmarried couples have to plan carefully to achieve their estate planning goals. It may require more forethought and effort, but the good news is that with the right kind of planning it is possible for non-traditional couples to protect and provide for the people they love.

Excuses, Excuses… Why You Don’t Have a Healthcare Directive

Estate Planning, Health CareNo Comments

What is keeping you from signing a healthcare directive?

A recent article in Reuters mentions that only 2 out of 5 U.S. citizens have some kind of healthcare directive, and that our own U.S. laws might be the cause. A study done by Rebecca Sudore of the University of California, San Francisco found that “Most states had practical restrictions that could make it difficult for many people to complete an advanced directive… In addition, many of the documents used in end-of-life planning were written in complicated legal language that the average person would have trouble understanding.”

Some portions of an advance directive might be written in complicated legal language out of necessity, but we don’t think that’s any excuse not to have one, especially not if you have a knowledgeable and trusted attorney who is willing to go through the legal language with you to ensure you are comfortable with it. As for the other obstacles, the fact that “many states do not allow oral advance directives, and usually require that written documents have witnesses’ signatures, be notarized, or both…” and that currently “40 states do not automatically allow domestic partners and same-sex partners to become the default healthcare proxy;” well, these seem to us to be all the more reason to make sure you DO contact your attorney and get your healthcare directive in place.

A healthcare directive, along with a will and a durable power of attorney, are the three foundational documents of any estate plan. Whether you choose to move on to more advanced planning techniques or not, every person should have these three documents at the very least. These simple documents can end up saving you and your family a world of heartache and expense.

Of course, according to Reuters there is one other possibility about why you might be putting off your healthcare directive, “The biggest issue is that people do not want to do advance directives… There is a fear of planning for how we die.” Don’t let superstition keep you from protecting yourself or your loved ones.

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