Guardianship

Why Do I Need Estate Planning If I’m Not Rich?

Most people spend more time planning a vacation than they do thinking about who will inherit their assets after they pass away. Although estate planning isn’t the most enjoyable activity, without it, you don’t get to direct who gets the things you’ve worked so hard for after you pass away.

Estate Planning isn't only for the rich
An Estate Plan will protect your assets and your loved ones

Investopedia asks you to consider these four reasons why you should have an estate plan to avoid potentially devastating results for your heirs in its article “4 Reasons Estate Planning Is So Important.”

Wealth Won’t Go to Unintended Beneficiaries. Estate planning may have been once considered something only rich people needed, but that’s changed. Everyone now needs to plan for when something happens to a family’s breadwinner(s). The primary part of estate planning is naming heirs for your assets and a guardian for your minor children. Without an estate plan, the courts will decide who will receive your property and raise your kids.

Protection for Families With Young Children. If you are the parent of small children, you need to have a will to ensure that your children are taken care of. You can designate their guardians, if both parents die before the children turn 18. Without a will with a guardianship clause, a judge will decide this important issue, and the results may not be what you would have wanted.

Avoid Taxes. Estate planning is also about protecting your loved ones from the IRS. Estate planning is transferring assets to your family, with an attempt to create the smallest tax burden for them as possible. A little estate planning can reduce much or even all of their federal and state estate taxes or state inheritance taxes. There are also ways to reduce the income tax that beneficiaries might have to pay. However, without an estate plan, the amount your heirs will owe the government could be substantial.

No Family Fighting (or Very Little). One sibling may believe he or she deserves more than another. This type of fighting happens all the time, and it can turn ugly and end up in court, pitting family members against each other. However, an estate plan enables you to choose who controls your finances and assets, if you’re unable to manage your own assets or after you die. It also will go a long way towards settling any family conflict and ensuring that your assets are handled in the way you wanted.

To protect your assets and your loved ones when you no longer can do it, you’ll need an estate plan. Without one, your family could see large tax burdens, and the courts could say how your assets are divided, or even who will care for your children.

Reference: Investopedia (May 25, 2018) “4 Reasons Estate Planning Is So Important”

Should I Use an Online Will Service?

More than 50% of Americans don’t have a will, according to a 2017 survey by Caring.com. Spelling out how your assets should be divided, is an essential start to estate planning that can be easily overlooked.

A U.S. News & World Report’s article asks “Should You Make a Free Will Online?” According to the article, before writing your will or using an online service, you need to know the legal requirements in your area. In many instances, this is best left to a legal professional in your state.

There are plenty of online tools that will help you create a will. However, before clicking on a website’s promise, you need to evaluate the available options. There are three main ways to write a will:

  1. Do it yourself;
  2. Use a do-it-yourself program; or
  3. Get help from a qualified estate planning attorney.

If you draft a will on your own, you’ll need to be absolutely certain you understand all of the applicable probate, tax and property laws in your state.

If you use an online service, you’ll have access to software that walks you through the process. In this case, you’ll need to be sure that the software company has all the applicable laws covered, as required for your state. You also want a program that lets you make updates later, if your situation changes.

However, if you engage the assistance of an experienced estate planning attorney, you’ll have the opportunity to have an expert help you think through the details. The result will be a well-drafted will. Yes, it will cost a bit more, but for many situations—like those with blended families, families with minor children, complex investments, or property in several states—it’s worth it.

Remember that the probate laws can vary widely from state to state. For example, the basic form requirements may allow a handwritten will in some states, but in other states the will must be typewritten. Some states require only two witnesses, and others require that the will be witnessed, notarized and typed.

If you have a larger estate or heirs with medical conditions, it may be wise to work with an attorney who can counsel you on the best solutions for your situation. For example, if you have a child with special needs receiving government benefits, you should have an attorney create a trust so their inheritance doesn’t negatively impact their benefits.

You should also use an attorney if you want to reduce your exposure to probate fees. Some people transfer their assets into a revocable living trust, so they are not subject to probate fees. An online service can’t give you this type of attention or personalized service.

If you have a complex situation, you may end up paying less by using an attorney. An experienced estate planning attorney has helped numerous families. He or she can offer insight into setting up guardians for minor children or appointing an individual to be in charge of the distribution of the estate. There are frequently estate and gift tax considerations about which the average person doesn’t know or monitor.

Reference: U.S. News & World Report (January 9, 2019) “Should You Make a Free Will Online?”

Why Did the Hawaii Attorney General Oppose a Change to the Trust of a Hawaiian Princess?

Attorney General Russell Suzuki claimed in a court filing that 92-year-old Native Hawaiian princess Abigail Kawananakoa’s amendment to her trust is too complex and invalid based on a prior court ruling, according to The Honolulu Star-Advertiser.

The Clay Center Dispatch reports in the recent article, “Attorney general opposes Hawaiian princess’ trust amendment,” that Judge Robert Browning ruled last fall that Kawananakoa doesn’t have the mental capacity to manage her $215 million trust, after she suffered a stroke in 2017. The judge appointed First Hawaiian Bank to serve as trustee and removed Jim Wright, her longtime attorney who stepped in as trustee following her stroke.

Kawananakoa has indicated that she is feeling okay. She fired attorney Wright and then married Veronica Gail Worth—her girlfriend of 20 years.

Kawananakoa is considered a princess, because she is a descendant of the family that ruled the islands before the overthrow of the Hawaiian Kingdom in 1893.

The princess inherited her wealth as the great-granddaughter of James Campbell, an Irish businessman who made his fortune as a sugar plantation owner and one of the state’s largest landowners.

The Hawaiian princess says she also wants to create a foundation to benefit Hawaiians and exclude board members appointed by Wright. She previously created a foundation to benefit Native Hawaiian causes.

“I will not contribute any further assets to that foundation because I do not want those individuals having anything to do with my trust, my estate and any charitable gifts I make during my lifetime or at my passing,” she said in the amended trust.

Her current foundation has requested a judge to appoint a guardian for Kawananakoa.

In his filing, Attorney General Suzuki wrote that the proposed changes will substantially alter the estate plan Kawananakoa executed before her mental capacity came into question.

In this case, the state represents the public interest in the protection of the trust’s charitable assets, Suzuki said.

A court hearing on the trust amendment is scheduled for next month.

Reference: The Clay Center Dispatch (January 3, 2019) “Attorney general opposes Hawaiian princess’ trust amendment”

A Will is an Essential Component of Estate Planning

Drafting a will is a fundamental and essential component of estate planning.

Drafting a will with an experienced estate planning attorney helps avoid unnecessary work and perhaps some stress, when a family member passes away. A will permits the heirs to act with the decedent’s wishes in mind and can make certain that assets and possessions are passed to the correct individuals or organizations.

The Delaware County Daily Times’ recent article, “Senior Life: Things people should know about creating wills,” says that estate planning can be complicated. That’s the reason why many people use an experienced attorney to get the job done right. Attorneys who specialize in estate planning will typically discuss the following topics with their clients.

  • Assets: Create a list of known assets and determine which of those are covered by the will and which have to be passed on according to other estate laws, such as through joint tenancy or a beneficiary designation, like life insurance policies or retirement plan proceeds. A will also can dispose of other assets, such as photographs, mementos and jewelry.
  • Guardianship: Parents with minor children should include a clause regarding whom they want to become the guardians for their underage children or dependents. (For more about this, download Mastry Law’s FREE report A Parent’s Guide to Protecting Your Children Through Estate Planning.
  • Pets: Some people use their will to instruct the guardianship of pets and to leave assets for their care. However, remember that pets don’t have the legal capacity to own property, so don’t give money directly to pets in a will.
  • Funeral instructions: Finalizing probate won’t occur until after the funeral, so wishes may go unheeded.
  • Executor: This individual is a trusted person who will carry out the terms of the will. She should be willing to serve and be capable of executing the will.

Those who die without a valid will become intestate. This results in the estate being settled based upon the laws where that person lived. A court-appointed administrator will serve in the capacity to transfer property. This administrator will be bound by the laws of the state and may make decisions that go against the decedent’s wishes.

To avoid this, a will and other estate planning documents are critical. Talk to an estate planning attorney or download a FREE copy of our estate planning book, Failing to Plan is Planning to Fail.

Reference: The Delaware County Daily Times (January 7, 2019) “Senior Life: Things people should know about creating wills”

Here’s Why You Need an Estate Plan

It’s always the right time to do your estate planning, but it’s most critical when you have beneficiaries who are minors or have special needs, says the Capital Press in the recent article, “Ag Finance: Why you need to do estate planning.”

While it’s likely that most adult children can work things out, even if it’s costly and time-consuming in probate, minor young children must have protections in place. Wills are frequently written, so the estate goes to the child when he reaches age 18. However, few teens can manage big property at that age. A trust can help, by directing that the property will be held for him by a trustee or executor until a set age, like 25 or 30.

Probate is the default process to administer an estate after someone’s death, when a will or other documents are presented in court and an executor is appointed to manage it. It also gives creditors a chance to present claims for money owed to them. Distribution of assets will occur only after all proper notices have been issued, and all outstanding bills have been paid.

Probate can be expensive. However, wise estate planning can help most families avoid this and ensure the transition of wealth and property in a smooth manner. Talk to an experienced estate planning attorney about establishing a trust. Individuals can name themselves as the beneficiaries during their lifetime, and instruct to whom it will pass after their death. A living trust can be amended or revoked at any time, if circumstances change.

With a trust, it makes it easier to avoid probate because nothing’s in an individual’s name, and the property can transition to the beneficiaries without having to go to court. Living trusts also help in the event of incapacity or a disease, like Alzheimer’s, to avoid conservatorship (guardianship of an adult who loses capacity). It can also help to decrease capital gains taxes, since the property transfers before their death.

If you have minor children, an attorney can help you with how to pass on your assets and protect your kids.

For more information about how to best protect your minor children, download a copy of Mastry Law’s FREE report, A Parent’s Guide to Protecting Your Children Through Estate Planning.

Reference: Capital Press (December 20, 2018) “Ag Finance: Why you need to do estate planning”

Why Do I Need an Estate Plan?

Investopedia’s recent article, “4 Reasons Estate Planning Is So Important,” says you should think about the following four reasons you should have an estate plan. According to the article, doing so can help avoid potentially devastating consequences for your family.

  1. An Estate Plan Keeps Your Assets from Going to Unintended Beneficiaries. A primary part of estate planning is choosing heirs for your assets. Without an estate plan, a judge will decide who gets your assets. This process can take years and can get heated. There’s no guarantee the judge will automatically rule that the surviving spouse gets everything.
  2. An Estate Plan Protects Your Young Children. If you are the parent of minor children, you need to name their guardians, in the event that both parents die before the children turn 18. Without including this in your will, the courts will make this decision.
  3. An Estate Plan Eliminates a Large Tax Burden for Your Heirs. Estate planning means protecting your loved ones—that also entails providing them with protection from the IRS. Your estate plan should transfer assets to your heirs and create the smallest tax burden as possible for them. Without a plan, the amount your heirs may owe the government could be substantial.
  4. An Estate Plan Reduces Family Headaches After You’ve Passed. There are plenty of horror stories about how the family starts fighting after the death of a loved one. You can avoid this. One way is to carefully choose who controls your finances and assets, if you become mentally incapacitated or after you die. This goes a long way towards eliminating family strife and making certain that your assets are handled in the way you want.

If you want to protect your assets and your loved ones after you’re gone, you need an estate plan. Without one, your heirs could face large tax burdens and the courts could decide how your assets are divided or even who will care for your children.

Reference: Investopedia (May 25, 2018) “4 Reasons Estate Planning Is So Important”

One Dozen Must-Have Documents

To make sure that your wishes are carried out, you’ll have to do your homework. Make sure that you cover these most important documents.

The last thing you want to do, is leave a bureaucratic mess for your loved ones when you die. Not only will it cause the family stress during a difficult time, it could change how your family thinks of you. That should be more than enough reason to get this done in advance!

MP900398819US News & World Report’s recent article, “12 Documents to Prepare Now for Your Heirs,” says that when people don't have their paperwork ready, it can be a huge headache for the family. A family can be left with all kinds of paperwork to sort out while dealing with grief. Even worse, heirs may forfeit life insurance proceeds and tax deductions or overlook accounts they don't know exist. That's why it's critical to have important documents ready for loved ones. Here are the documents you should start preparing right away:

A will. This is a legal document in which you name an executor to carry out your wishes, heirs to receive your assets and a guardian if you have minor children.

A letter of explanation. Your will stipulates how assets are to be divided. However, a letter of explanation can provide the reasons for these decisions. This can be helpful, if the estate is to be divided unevenly between children.

List of financial accounts and beneficiaries. Keep a list of all your finances, such as bank and retirement accounts and brokerage funds. Each may have a designated beneficiary or transfer on death provision, known as a TOD. A person who’s named as a beneficiary or TOD designee automatically will receive ownership of the asset after you die. Make sure you keep these beneficiary designations up-to-date.

Personal inventory. Most wills distribute personal property in vague terms, like designating jewelry to one person and household goods to another. To be certain that nothing significant is overlooked, create an inventory of personal items. This inventory can also list items that may be stored in another location, unbeknownst to your family.

Power of attorney. This form is an important document for your family, if you become incapacitated because of an illness or accident. A power of attorney allows a designated person to make decisions on your behalf. One form is for financial decisions, and another is for health care.

Life insurance policies. Your family can miss significant life insurance benefits, if they don't know you have a policy, or it’s been lost or misplaced. Keep records of your life insurance plans and place it with your financial records.

Real estate records. Add deeds, assessments, mortgage statements and property tax information to the documents you've prepared for your heirs. Collecting the records for them in advance will make their lives easier.

Tax returns. List the name of your CPA or tax preparer, if you have your taxes professionally done. He or she can help your family with filing final tax returns for your estate. If you file your own returns, print a copy for your files and record any login information for online tax preparation services.

Logins for accounts. Create a list of your usernames and passwords for financial accounts, email, and social media and keep it where heirs can access the information.

A digital estate plan. Some states recognize digital estate plans as legally binding. However, even if it isn’t, it can be a great resource for your family. A digital estate plan states what will happen to your digital assets, like your social media accounts, websites, digital photos, intellectual property and other files and documents. Within your plan, you can name a digital executor and list those you've named as legacy contacts on specific platforms, such as Facebook and Twitter.

An ethical will. This letter describes what you'd like remembered as your legacy, such as passing down values. An ethical will can be used to share memories or to impart wisdom.

Your final wishes. If you've made prearrangements for your funeral or cremation, place that information with your will and other end-of-life documents. Your final wishes should also include information about organ donation, pet care and who should be notified of your passing.

Distilling a lifetime into a dozen documents is not an easy task, but it is necessary. Your loved ones will appreciate your doing the heavy lifting, and it will give them the room they need to grieve their loss.

Reference: US News & World Report (October 4, 2018) “12 Documents to Prepare Now for Your Heirs”

Are You or Will You Become a “Solo Ager”?

“Solo agers face unique challenges, as their needs begin to change.”

Did you know that a study from the Pew Research Center says about 20% of the 75 million baby boomers don’t have children—a figure that’s double what it was in the 1970s and one that’s expected to keep rising.

MP900427632We mention this because these people need someone to count on to always be there, if they need help making decisions and managing their affairs as they get older.

NH Magazine’s recent article entitled “The Difficulties That Come With Solo Aging” says that, for those without children or parents who’re estranged from them, it’s frequently a tough question to answer.

Our country’s 15 million “solo agers” or “elder orphans” now comprise a demographic that’s unprecedented in American history. This relatively new segment of society has a unique set of challenges.

As your physical, intellectual, and emotional capacities diminish, a person on his own must determine how he will be able to make sound decisions on financial and legal issues, relationships, housing and healthcare. There are also more cases being reported of elder fraud, and new scams are designed to take money from seniors. An elderly person could also wind up lonely and penniless.

However, there is help. Professional guardians can assist the elderly in reviewing their financial statements, creating budgets, paying bills, keeping keep them organized and sorting mail and email to see what’s a legitimate bill or a solicitation or potential scam.

A guardianship, which is also known as a conservatorship, is a legal process that’s used when a senior can no longer make or communicate safe or sound decisions about himself person and/or his property, he’s become susceptible to fraud or undue influence. The fact that establishing a guardianship can remove substantial rights from a person means that it should only be considered after other alternatives have proven ineffective or are unavailable.

In addition to a court-ordered guardianship, there are other options. There are also certified geriatric care managers, certified daily money managers, as well as attorneys who specialize in elder law.

Solo agers should arrange a future legal guardianship for themselves, a person who will assume control in a fiduciary capacity, if they’re unable to make decisions for themselves. This may be a relative or a friend, as well as a professional fiduciary or private guardian.

In addition, everyone should have a healthcare directive and an estate plan. However, solo agers have a more urgent need to have these important documents in place, while they’re still somewhat young and healthy—because they don’t have an adult child who will fly in from the other side of the country to provide that assistance and guidance.

Talk to several potential guardians or fiduciaries and go with the one whose skills most closely fit your needs and with whom you feel the most comfortable. Check their references and credentials thoroughly. You can also select different people for different tasks, which gives you a critical system of checks and balances. Be certain that you understand exactly what services each will provide and their fees and get it all in writing.

Reference: NH Magazine(October 2018) “The Difficulties That Come With Solo Aging”

Can Someone Become My Guardian Without My Knowing It?

Let’s start by understanding what guardianship is, and how it works.

What would happen if someone who you don’t know—or someone you do—decides you are not competent and tries to become your legal guardian? Could it happen?

MP900289434The concept of guardianship for a senior is a difficult thing to consider. Maintaining your independence and remaining in charge of your own life would be at risk, if someone wanted to become your legal guardian, says nj.com ,“Worried someone may want to be your guardian? Here's what you need to know.”

Let’s start by understanding what guardianship is, and how it works.

Guardians are appointed by a judge, for both minors and incapacitated individuals. An application is required to be made to the court in the state and county where the minor or alleged incapacitated person lives or where his or her property is located. In either situation, once the minor becomes 18, she receives the property. If the incapacitated person returns to full or partial competency, the court (upon application) may restore that person’s rights, which would dismiss or limit the guardianship.

A guardianship can be of the person. This is limited to making medical or similar decisions on an incapacitated person’s behalf, or concerning the person's property, or both. A guardianship can also be limited. This means that the guardian is appointed to only make certain decisions, like financial ones. A guardianship can also be plenary, which means the guardian can be appointed to address all issues.

When a guardian of an individual's property is appointed, the property is usually re-titled into the name of the guardian for the benefit of the incapacitated individual. This gives third parties notice of the guardianship.

In New Jersey, prior to an individual being appointed as the guardian of an alleged incapacitated person, that person has to be given notice of the proceedings. That person is also appointed an attorney by the court to advocate for them or to report to the court on their situation. Therefore, a senior would be given notice and legal representation.

The records of these types of proceedings aren’t open to the public, because of the confidential information in them, like certifications from physicians on the physical and mental condition of the alleged incapacitated person.

But, information on the name of the guardian who has been appointed to represent the incapacitated person should be available, so that third parties, including creditors, can know who to contact if they are providing good or services to that person.

Speak with an estate planning or elder law attorney, if you are concerned that someone may be considering applying for guardianship for you. They’ll know how to find out if this is true, and how you can protect yourself.

Reference: nj.com (August 24, 2018) “Worried someone may want to be your guardian? Here's what you need to know”

Is a Surviving Spouse Liable for a Deceased Spouses’ Loan?

Whether a deceased spouse’s debt becomes the responsibility of the surviving spouse, depends on several factors.

There are a few factors that go determine whether or not a surviving spouse has to pay back a debt. Don’t do anything, until you understand the entire picture.

MP900411753First, let’s make this clear: you don’t want your family to remember you as the person who left your surviving spouse burdened with a debt that she didn’t know about until after you died. Unfortunately, this does happen. However, the surviving spouse does not always share the debt.

nj.com’s recent article, “My husband died. Must I pay his loan?” explains that whether a deceased spouse's debt becomes the responsibility of the surviving spouse, depends on several factors.

Let’s say that you’re 67, and your husband passes away suddenly. What if he decided last year that he wanted to explore the open road and took out a $50,000 loan, in his name only, to buy a Class A recreational vehicle (RV) with beechwood cabinets and custom sea glass interiors that sleeps five. You didn’t want it and you can’t afford it. What do you do?

There’s usually spousal liability for debts incurred by the non-debtor spouse only for necessary goods and services, like medical expenses. Therefore, a Class A RV with beechwood cabinets and custom sea glass interiors that sleeps five easily qualifies. However, the surviving spouse’s options depend on the contracts executed by the late husband and the discussions that his widow is now having with the bank.

Any assets in the name of decedent—like the Class A RV with beechwood cabinets, etc.—or paid into the deceased spouse's estate, would have to be liquidated and used to pay creditors in the order of priority, as determined by state statute.

In Florida, the law says the costs and expenses of administration must be paid first, followed in order of priority by the other costs of administering the estate, like the personal representatives compensation and attorney fees, the funeral expenses, taxes, medical expenses, and then all other claims.

Any life insurance or retirement funds that are paid directly to a beneficiary, and not paid to the estate of the decedent, do not have to be used to pay the decedent's debts and expenses, unless the beneficiary is required to pay the debt, as a result of being a spouse obligated to pay for necessaries, a co-signer or obligor or for similar reasons.

If, however, the estate has no assets and cannot pay all outstanding claims, claims within the same priority level must be paid pro rata.

Each situation is different, so the surviving spouse should speak with an experienced estate planning attorney, who is familiar with the laws of the state.

Reference: nj.com (August 20, 2018) “My husband died. Must I pay his loan?”

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