The Most Common Estate Planning Mistakes

After years of practicing estate planning law, attorneys are all too familiar with some of these mistakes, and can help you avoid them, if you are smart enough to get help from a professional.

After years of practicing estate planning law, attorneys are all too familiar with some of these mistakes, and can help you avoid them, if you are smart enough to get help from a professional.

MP900400332Some people like to think they know everything, and that often applies to estate planning. The problem is, they don’t learn about the mistake—their heirs do! By working with an estate planning attorney, you can avoid making these mistakes and spare your family the stress and expense.

The Hockessin (DE) Community Newsreports in a recent article, “The dumbest estate planning moves,”that the misuse of joint ownershipis extremely frequent.

You probably know that settling an estate without a will,can be very time consuming and expensive. One way that people try to avoid probate, is with property owned jointly with rights of survivorship.

That’s because the joint owner becomes the exclusive owner of that property, when the other owner passes away. This is the case for a bank account or a family home.

Many seniors say their joint owner, usually a son or a daughter, will gladly share the account with their siblings after the parent passes. But will the joint owner then tell their siblings that’s how Mom wanted it?

More often than we’d like to believe, the result is that the other siblings may get a lot less than Mom wanted—or nothing at all. If the surviving owner does follow through with Mom’s instructions and does truly square up with his brothers and sister, there may be other tax consequences.

That’s because the process of squaring up may be considered a gift for tax purposes.

In real estate, there’s a chance the remaining owner will be burdened with a low-cost basis. As a result, she will be hit with capital gains taxes, when later selling the asset. Mom’s effort to simplify things may have actually caused a lifetime of family conflict.

Instead, avoid these troubles with a transfer on death account or the use of a revocable living trust.

A real estate attorney can handle the title change.  However, before you start dealing with the deed, sit down with an estate planning attorney. He or she will be able to explain how this may impact your tax liability and the conflict it may spark within the family.

A better option is to create an estate plan, properly prepared with the help of an experienced estate planning attorney. This will guide the distribution of assets and prevent or at least mitigate the possibility of siblings battling over the estate.

Reference: Hockessin (DE) Community News (April 24, 2018)“The dumbest estate planning moves”

Work Requirements from Medicaid May Harm Some Seniors

States that have opted to require Medicaid recipients to work, will put some seniors at risk of losing healthcare coverage.

States that have opted to require Medicaid recipients to work, will put some seniors at risk of losing healthcare coverage.

Bigstock-Senior-couple-standing-togethe-12052331A recent article from US News & World Report, “How Medicaid Work Requirements Could Hurt Older Americans,”explains how the new requirements for Medicaid recipients to work or meet “community engagement” requirements may create hardships for some seniors. Many lower income Americans depend on Medicaid for healthcare, including adults age 50 to 64, who often suffer from chronic health conditions.

The Centers for Medicare & Medicaid Services announced in January that states can apply for waivers to implement work requirements for people who receive Medicaid benefits. The waivers have been approved in three states and are pending approval in others. Age limits vary for who might have to fulfill work or "community engagement" requirements for up to 80 hours a month. In Kentucky, Medicaid recipients are exempt at 64. In Indiana, it’s 60, and in Arkansas, 50 is the threshold. Some other states are looking to implement work requirements. They include Arizona, Kansas, Maine, Mississippi, New Hampshire, Utah and Wisconsin.

Beth Kuhn, commissioner of the Kentucky Department of Workforce Investment, notes that most people on Medicaid also receive Supplemental Nutrition Assistance Program (SNAP) benefits—also known as food stamps. For those 80% of Medicaid recipients, she says, work requirements don't apply after age 49.

Community engagement is the prime focus of the new requirements, which entails four facets: volunteering, training and education, work, and caregiving of a family or community member in need.

There are many who are excluded from the requirement, and one group is the medically frail. Medical frailty would be determined by an eligibility specialist.  However, it’s not clear now how chronic medical conditions impacting many beneficiaries, like asthma, diabetes, heart disease, high cholesterol, and hypertension, will be considered.

A group of Kentucky residents receiving Medicaid, are now being represented in a federal class action lawsuit by The Southern Poverty Law Center, National Health Law Program, and Kentucky Equal Justice Center. A joint brief was filed by the National Academy of Elder Law Attorneys (NAELA), AARP, AARP Foundation, Justice in Aging and the Disability Rights Education and Defense Fund.

According to a spokesperson with Justice in Aging, the brief focuses on the elimination of pre-application coverage, elimination of non-emergency medical transportation and the imposition of lockout penalties for various transgressions. With no pre-application coverage, an individual could easily become liable for thousands of dollars of health care costs, if an illness or injury prevented them from filing a Medicaid application.

Reference: US News & World Report (April 20, 2018) “How Medicaid Work Requirements Could Hurt Older Americans”

How to Address the Business Side of a Second Marriage

before your wedding celebration, consider these steps

A second (or third) marriage comes with certain legal and financial issues that are best dealt with before you walk down the aisle.

26201363701_de6af9d0ed_oA new marriage feels like a fresh start and a chance to move forward in life.  However, before your wedding celebration, consider these steps recommended in Nasdaq’srecent article, “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again).”

Create a consolidated net worth statement. One fundamental mistake many couples make is failing to look at their combined net worth, until they start talking about how they will pay for their wedding or another big-ticket item. Those who remarry frequently have more complex financial responsibilities, such as child support, liquid and illiquid investment assets, as well as estate planning and tax-planning strategies. The best course is to be upfront from the start to avoid damaging your relationship in the long run. Take time to review your individual financial situations, including liabilities, before you create a consolidated statement of net worth.

Sign a pre or postnuptial agreement. This can be uncomfortable but can be valuable for both parties, if there’s a divorce. A pre or postnuptial agreement is particularly important,  since it's the only way to legally claim specific assets within a marriage. In addition, a prenuptial agreement may ensure that any children within the marriage are financially protected, in the event one spouse dies. It’s also important to remember, even if you're recently married and don't have a formal prenuptial agreement, state law will often have one for you.

Think about all of your kids. Some spouses who were married previously may bring children into their new relationship. This creates many financial issues. Determine as a couple how you’ll financially address major expenses, like health care, child care, and tuition. When you've decided, discuss your plan of action with an attorney to be sure you're considering all potential options and their long-term implications.

Update your beneficiary designations. This is a common error. Assuming you want to name your new spouse as a beneficiary, you should review all your accounts and update the documents.

Review and update your estate plan. This step often gets forgotten in the rush of planning the ceremony, reception and honeymoon. You’ll both need to meet with an experienced estate planning attorney to review your individual wills from the past and prepare new wills, powers of attorney and health care directives to reflect your new status.

Reference: Nasdaq(April 20, 2018) “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again)”

For Better or Worse, Why You Need to Update Your Estate Plan

These are the top four reasons to update your estate plan:

Major life events are reasons to update your estate plan, whether they are celebrations or sad events.

MP900422990These are the top four reasons to update your estate plan: birth, death, marriage and divorce. However, there are other reasons, including bankruptcy or receiving a surprise windfall.

The FDL Reporter recently published an article, “Best reasons to update estate plans include marriage, divorce, move, birth”that discusses life events that can impact your estate planning.

Marital Status. A change in your marital status definitely requires significant changes to your estate plan. If you've recently married, state law on marital property will now apply to the division and distribution of your estate upon your death.  If you've recently divorced, your estate plan should be updated to see that your ex is removed as a beneficiary and fiduciary, as well as any of his or her relatives.

Financial Status. If you're fortunate enough to have won the lottery or received an inheritance, you need to look at your existing estate plan to see that it still satisfies the needs of your now larger estate. If the opposite has occurred and your estate has declined in value, you also need an estate plan review.

Birth or Death of a Beneficiary or Fiduciary. You need to remove the individual's name.  However, if a spouse has died, your plan may need a complete overhaul. If you or a beneficiary have adopted or had a child, you need to add that child.

A Move to a New State.This is one of the most overlooked reasons to update your estate plan. Every state has different probate, tax, and estate laws.

You Don’t Remember the Last Time You Updated Your Estate Plan. The passage of time brings change to others, even if your life has not changed. Are the people you had named as fiduciaries still able to carry out those duties? Is the person you selected to be your executor, still the best candidate? Review your estate plan with your attorney to make sure that it still reflects your wishes and your life.

Reference: FDL Reporter (April 24, 2018) “Best reasons to update estate plans include marriage, divorce, move, birth”

What If I Don’t Want to Give My Spouse Everything in my Estate?

There is no legal requirement that spouses must leave all of their assets to each other when they die

This is question often goes unasked, but the harsh truth is, not everyone wants to leave their spouse with all of their worldly goods.

Irish-handsThere is no legal requirement that spouses must leave all of their assets to each other when they die, as discussed in a recent article from, “Do I have to leave any money to my spouse? Or can I give it all away?” However, there are laws in some states, including Florida, about what the surviving spouse is entitled to.

Depending on state law, the surviving spouse may be entitled to an "elective share" of the deceased spouse's estate, even if the surviving spouse is disinherited under the deceased spouse's will.  In Florida, the elective share is 50%.

The surviving spouse usually can’t claim an elective share, if the spouses were living separate and apart in different residences, or had stopped living together as a married couple, or had a valid prenuptial or post-nuptial agreement that waived the elective share. In Florida, the elective share is equal to one-half of the "augmented estate.”

The augmented estate is the deceased spouse's estate, less funeral and estate administration expenses and enforceable claims. Certain transfers of property for less than fair market value made by the deceased spouse are added back to this amount. The surviving spouse's assets are then deducted from the elective share.

A notice of elective share must be filed within six months of the appointment of an executor in the county where the appointment was made. That’s a pretty short time.

Because of the relatively short time in which to file the elective share notice, an experienced estate planning attorney should be engaged immediately after the deceased spouse's death, to see if the surviving spouse is entitled to an elective share.

In this situation, the responsibility is on the surviving spouse to file an elective share notice. In some states, like Florida, if the surviving spouse fails to file an elective share action within six months from the time of probate, they lose the right to that share.

Reference: 25, 2018)“Do I have to leave any money to my spouse? Or can I give it all away?”

Rhinestone Cowboy’s Estate Surprisingly Small

When Glen Campbell passed away in August 2017, rumors about his will, debts and assets began to circulate.

When Glen Campbell passed away in August 2017, rumors about his will, debts and assets began to circulate. It may be a long while before the dust settles.

Glen CampbellSome of the stories circulating about famed country legend Glen Campbell, say that his widow Kimberly is suing the estate for more than $500,000 in medical bills. Others say that only five of his eight children were listed in the will. There’s also a big gap between what his assets were thought to be in the past—$50 million—and what they are considered to be now—less than half a million dollars.

Campbell, who suffered from Alzheimer's, died in Nashville at the age of 81.

Wide Open Countryrecently published an article, “Glen Campbell’s Estate Might Not Be Worth as Much as You’d Think,”that gives details about what Glen left behind for his family.

An Arkansas native, Glen started his professional career as a studio musician in Los Angeles, spending several years playing with a group of world class musicians known as "the Wrecking Crew." Campbell played guitar on hundreds of hit records, many without credit. When he went solo, he placed a total of 80 different songs on either the Billboard Country Chart, Billboard Hot 100, or Adult Contemporary Chart—29 made the top 10 and nine reached number one on at least one of those charts.

There were some reports that Campbell’s assets came to roughly $50 million. However, more recent estimates say it’s worth around $410K.

The Tennesseanreported that Campbell’s accountant and manager Stanley B. Schneider (who was appointed administrator ad litemby a judge earlier in 2018) filed paperwork that says Campbell’s combined assets reached a lower amount than many anticipated.

The claim says the stake in AZPB Limited Partnership holds the most value at $296,164, interest in AZ Baseball Broadcast Holdings totals $3,464, and the combined total of two bank accounts is just $959.

Funds from Glen Campbell Music, Inc. and Glen Campbell Enterprises total $109,634.

In addition, Schneider listed debts for state and federal taxes and legal fees totaling $118,200. He also reported that $43,448 of royalties were paid to the estate in the eight months after Campbell’s death. More than $76,000 is owed.

Campbell was one of the biggest stars in show business at one point, with a weekly television show, 45 million records sold and many hits on the pop and country charts.

Reference: Wide Open Country (April 26, 2018) “Glen Campbell’s Estate Might Not Be Worth as Much as You’d Think”

Finding the Right Assisted Living Facility for Now and the Future

People moving into an assisted living facility should do a lot of research to make sure they get the quality care and the services they need.

People moving into an assisted living facility should do a lot of research to make sure they get the quality care and the services they need. Their lives may depend on it.

MP900407501Life in an assisted living facility is a welcome alternative to aging seniors who are no longer able to remain in their own homes, but don’t want or need to live in a nursing home, which often feels like living in a hospital. They can receive the services they need, while enjoying a full roster of activities and the companionship of their peers. It sounds like a good plan, and in many cases, it is.

However,Consumer Reports’recent article, “5 Steps for Choosing the Right Assisted Living Community”says that finding the right residence can be a huge challenge.

Right off the bat, the cost is high. In 2017, the median fee for a private one-bedroom was $45,000 a year, according to Genworth, a long-term care insurer. Most residents pay out of pocket, although some qualify for Medicaid. Medicare generally does not cover long-term care services.

In addition, shortfalls in caregiving can be a problem for assisted living residents. A 2017 survey of state long-term-care ombudsmen conducted for Consumer Reports, which monitors senior living facilities nationwide, found the most common complaints dealt with understaffing and delays in response to calls for assistance. Ombudsman data show that complaints about assisted living have gone up 10% in recent years.

For families looking at into assisted living facilities for a family member, there are ways to find a facility that delivers quality care in a comfortable setting. The key is to conduct thorough research. You should egin by asking these five key questions:

  1. What Kind of Care is Required?Remember that different facilities offer varying levels of care. Is there a registered nurse on staff? Without this basic level of care, your loved one might end up going to the ER more often.
  2. What is the Quality of Care?Look at the residence’s licensing and inspection records, to see if there are any issues. To get a feel for the way things work, make several visits to the facility. Go for meals and during the weekends, when fewer staff are on duty. You should also talk to residents and their families about their experiences.
  3. Uncover the Real Costs of the Care. Get a written list of fees and charges from the residence and be sure that they’re included in the contract. It is recommended that you hire an elder law attorney, who’s familiar with local facilities, to review the terms of the contract.
  4. Can Your Parent or Family Member Age in Place? Find out what scenarios might trigger a discharge, and whether you could hire private aides, if more care is required. You should also ask what assistance the facility would be able to provide, if a move is needed.
  5. Is an Advocate Available? If family and friends are not able to visit on a frequent basis, the potential for problems increases. Care issues, from cleanliness to patient treatment, may not be readily apparent to an elderly resident, especially if they are suffering from dementia. Consider hiring an aging life-care expert or social worker to make frequent visits, if you are unable to. If the facility’s management knows someone is keeping a watchful eye, the quality of care will be better.

Reference: Consumer Reports (April 16, 2018) “5 Steps for Choosing the Right Assisted Living Community”

Selecting an Executor: Not Always Easy

If there are no family members or friends with the necessary skills, your best option may be…

Don’t delay finalizing your estate plan, because determining who to name as you executor is difficult. Here’s some help to figure out how to make this important decision.

Th (2)If there are no family members or friends with the necessary skills, your best option may be to name your attorney as the third-party executor of your will. A useful article from, “Who should be executor of your will?”explains how this works.

An executor is a person you name in your will or who is appointed by the court and is given the legal responsibility to address a deceased person's remaining financial obligations. An executor is responsible for paying debts and creditors, filing tax returns, paying taxes, and distributing the estate's assets, pursuant to the deceased person's wishes as stated in the will.

The individual named as an executor in a will can refuse to accept this task. A person who originally accepted the role as executor may resign at any point in time. Therefore, it’s a good idea to name alternative executors. If you don’t, a judge will appoint a replacement executor, if your original selection says no for any reason.

Most executors typically perform their duties without payment, but they are entitled to some renumeration. The reason that most executors don't ask for compensation, is because most executors are close family members and perform their duties out of respect for their deceased loved one. The amount an executor gets paid, is usually set by state law and what a probate court decides is reasonable under the circumstances.

For larger estates, it may be wise to select a professional, such as an attorney, who is familiar with the duties and obligations of serving as an executor. This can be extremely useful, when the deceased was the owner of a business and the estate may be complicated.

Executors will frequently engage attorneys to assist them. For example, in New Jersey, an attorney may serve and get paid as an executor and may be paid an additional fee for legal work performed by that attorney.

New Jersey law says that executors can receive 5% on the first $200,000 of the trust principal, 3.5% on the excess over $200,000 up to $1 million, and 2% on the excess over $1 million.

The executor is also entitled to receive six percent on all income received by the executor. While family members often waive their rights to take statutory commissions, they are within their rights to do so.

Reference: 16, 2018) “Who should be executor of your will?”

When Special Needs Children Become Legal Adults

The saying “little children, little problems, big children, big problems,” is particularly appropriate

The saying “little children, little problems, big children, big problems,” is particularly appropriate for parents of special needs children. Preparing for the next phase takes time, so it’s best to begin the process, once they celebrate their 17thbirthday.

MP900302913One of the many decisions that parents need to make before a special needs child becomes a legal adult, is whether or not the child needs a guardian, or if the parents need a power of attorney, as detailed in a helpful article from Effingham (IL) Daily News,“Teaching parents about guardianship of disabled children.”

Once a child is age 18, the parent is no longer the child's legal guardian.

You should identify the support required for your child and ask what other support they need, while they’re transitioning. Work with a special needs attorney and ask about guardianship. Guardianship is a way to protect an individual who can’t take care of herself, make informed decisions or handle financial assets. An experienced attorney will explain guardianship and alternatives that may be chosen, if the child is capable of making some, but not all, decisions on her own. There are different kinds of guardianships and different kinds of powers of attorney (POA) for estate and health care requirements.

A person can be disabled in some ways, but still be competent to execute the powers of attorney. If the person understands who their family is, who she is, if she’s oriented to time, and she knows who they trust to handle their business or health care decisions, then she can probably sign powers of attorney.

A POA is written authorization to represent a person and make specific decisions on her behalf. The child may have a POA over her health care or estate management. A guardianship of the child’s health care or estate management is appointed by a judge, after reviewing physician statements about the disabled person's needs.

Remember that having power of attorney over their child's financial matters, doesn't give parents power over everything. Things not covered in the POA document are things over which the agent doesn't have the authority. A POA can be revoked, when the person assigning it is competent. However, in a guardianship appointed by the court, you have a duty to act, until the court determines otherwise.

You’ll need a physician’s report that clearly states that the allegedly disabled person needs to have a guardian, and the report should include very specific reasons. Guardianship needs to be a narrow as possible. A special needs attorney can guide you through this process to protect your loved one.

Reference: Effingham (IL) Daily News(April 15, 2018) “Teaching parents about guardianship of disabled children”

What Will Happen To My Children If Something Happens To me And My Spouse?

There’s good news, though… Court involvement in the lives of your kids can be completely avoided.

The answer to this question depends upon which estate planning documents you and your spouse have. 

MP900407458If you don’t have a Will or a Trust in place that names a Guardian and Trustee for your children, then the important question of who will raise your kids will be left up to the courts.  Whether you like it or not, the court will likely choose your nearest relative to step into the role of guardian and caregiver for your kids. For some, this is a good thing, but for others, the person chosen by the court might be the last person that you would want raising your kids.  That’s why we recommend that, at the very least, you should have a Will that disposes of your assets and names a Guardian for your kids.

If you and your spouse have Wills that name a Guardian for your kids when you pass away, then the important decision of who will be appointed to raise them will not be left to the courts.  In this instance the court will appoint the person that you have named as Guardian for your children in your Will (unless that person refuses or is unable to act as Guardian).  While this situation is much better than leaving the decision of who will raise your children entirely in the hands of the courts, a Guardian appointed under a Will is typically left with little to no direction regarding howyou want your kids raised.  Furthermore, until your kids turn 18 years old the courts will require a Guardian appointed under a Will to regularly explain how they are spending your assets on your kids.  So, having a Will that names a Guardian for your children is immeasurably better than leaving that decision to the courts, but if you only have a Will appointing a Guardian, the courts will remain involved in your kid’s lives until they become adults. 

There’s good news, though… Court involvement in the lives of your kids can be completely avoided.  If you have a Will naming a Guardian for your kids anda Trust giving the Guardian control over your assets and direction regarding how to use those assets to raise your kids, then the courts won’t be involved in their lives at all.  The reason for this is because the law considers all assets left in Trust to another person (including your kids) to be passed on outside of the probate court process.  Another benefit of a Trust is that it allows you to give specific instructions to a Trustee (usually this is the same person as the Guardian) about how you want your children to be raised and how trust funds should be used.  All of this is done completely free of court intervention and oversight.

Scroll to Top