Letter of Last Instruction

How Can I Avoid Family Fighting in My Estate Planning?

It’s not uncommon for parents to modify their first estate plans, when their children become adults. At that point, many parents’ estate plans are designed to help efficiently transfer assets to the surviving spouse and ultimately to the adult children. However, this process can encounter a number of hiccups and headaches.

Forbes’ recent article entitled “Three Steps To Estate Planning Without The Family Friction” explains that there are a number of reasons for sibling animosity in the inheritance process. Frequently there are issues that stem from a lack of communication between siblings, which causes doubts as to how things are being done. In addition, siblings may not agree if and how property should be sold and maintained. To help avoid these problems, use this three-step process for estate planning.

Work with an experienced estate planning attorney. Hire an estate attorney who has many years of working in this practice area. This will mean that they’ve seen and, more importantly, resolved most types of family conflicts and problems that can arise in the estate planning process. That’s the know-how that you’re really paying for, in addition to his or her legal expertise in wills and trusts.

Create a financial overview. This will help your beneficiaries see what you own. A financial overview can simplify the inheritance process for your executor, and it can help to serve as the foundation for you and your executor to clearly communicate with future beneficiaries to reduce any lingering doubts or questions that they may have, when they’re not in the loop. Your inventory should at least include the following items:

  • A list of all assets, liabilities and insurance policies you have and their beneficiaries
  • Contact information for all financial, insurance and legal professionals with whom you partner;
  • Access information for any websites your beneficiaries may need for your online accounts; and
  • A legacy letter that discusses non-financial items for your children.

Hold a family meeting. This is the most important one.  Conduct a family meeting that includes the parents and the children who will be inheriting assets. Let them hear directly from you exactly what your plans are.  Some topics for this meeting include:

  • The basics of your estate intentions
  • Verify that a trusted person knows the location of your important estate documents
  • State who your executor and other involved people will be and your rationale
  • Make certain that all parties value communication and transparency during this process; and
  • Discuss non-financial legacy items that are important for you to give to your children.

This three-step process can help keep your children’s relationships intact after you are gone. Hiring an experienced estate planning attorney, creating a clear financial overview and communicating what’s important to you are critical steps in helping to keep your family together.

Reference: Forbes (July 2, 2020) “Three Steps To Estate Planning Without The Family Friction”

What Parents of Minor Children Need to Know About Writing a Will?

Who wants to think about their own mortality? No one. However, it’s a fact of life. Failing to plan for your eventual passing by preparing a will — especially for parents of minor children — can result in issues for your loved ones. If you die without a will, it can mean conflict among your survivors, as they attempt to see how best to divide up your assets.

Naming a guardian is the most important thing you can do

Fatherly’s recent article, “How to Write a Will: 8 Tips Every Parent Needs to Know” says that families can battle over big assets like cars to small assets like a collection of supposedly rare books. They can fight over anything and everything. So, remember to prepare and sign a last will and testament to dispose of your property the way you want.

Dying without a will means your estate will be disposed of according to the intestacy laws in your state. That could leave your loved ones in the lurch that you may have wanted to provide for. For instance, in some states, your spouse may only get half your estate, with the remainder going to your children.

Writing a will is essential, and you should not try to do it yourself. Instead, hire an experienced estate planning lawyer. Along with this, keep these items in mind.

Plan for Every Scenario. When doing your estate planning, consider the various scenarios and contingencies that can happen after you’re gone. A well prepared will includes when and where you want your assets to go. Be wise in how to distribute your assets, to whom they will be going and the timing.

Family Dynamics. You must be very specific when drafting up a will, especially if family circumstances are unique, such when there are children from previous marriages who aren’t legally adopted by a spouse. They could be disinherited. Work with an attorney to make sure they receive what you intend with specific details. If you and your partner aren’t legally married, your significant other could find himself or herself disinherited from your assets after you’re dead.

Designating Your Children’s Guardian. Naming a guardian is the single most important thing that parents of minor children can do.  If you don’t name a guardian for your children (in cases of either single parenthood or where both parents pass away), the state will determine who will raise your children.

Specificity. Your will is a chance to say who gets what. If you want your brother to get the baseball card collection, you should write it down in your will or it’s not enforceable. In some states, including Florida, you can attach a written list of these personal items to your will.

Health Care. Begin planning your will when you’re healthy so that, in the event of disaster, you will have a financial power of attorney and a health care agent in place. If you become too ill to make decisions yourself, you’ll need to appoint someone to make those decisions for you.

Rules for Parents of Minors. Minors can own property, but they’ll have no control over it until they turn 18. If parents leave their home to their minor child, the surviving spouse will have issues if they want to sell it. Likewise, if a child is named the beneficiary of a life insurance policy, IRA, or 401(k), those assets will go into a protected account.

Don’t Do It Yourself. This cannot be over-emphasized. It’s tempting to create a will from a generic form online. But this may be a recipe for disaster. If your will is drafted poorly, your family will suffer the consequences. Generic forms found online are just that—generic. Families are not generic. Work with an experienced estate planning attorney to help you address your unique family needs.

Visit the Mastry Law website for a free copy of our report A Parent’s Guide to Protecting Your Children Through Estate Planning.

Reference: Fatherly (February 6, 2019) “How to Write a Will: 8 Tips Every Parent Needs to Know”

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”

Another Celebrity Death, Another Estate Mess

With less than half of Americans having an estate plan in place, we are in the same boat as celebrities, like Aretha Franklin or Prince. While our estates may not match their assets, the messes left behind are just as painful to family members.

A recent survey from caring.com found that only 42% of adults have estate planning documents, including a will. That means that almost 60% of Americans are going to leave our families a mess after we die. Here’s what’s even scarier: a recent article from the Chicago Tribune, “Don't leave a mess for your heirs,”reports that only a third of Americans with children under age 18 have an end-of-life plan. They have not named guardians for their own children, in the event of their own deaths.

MP900178564Many of those who haven’t done any estate planning, say they just haven't gotten around to it. That’s understandable, but it’s important that you conquer your anxieties associated with this emotional subject and take control.

For Aretha Franklin's estate, Michigan (her state of residence) will decide who will get what. The local probate court will oversee everything from property, retirement accounts and the residuals that flow from her music catalog. It’s possible that her assets will be split among her four children. However, as many parents know, some kids are more prepared to manage financial distributions than others—a big reason why estate planning is so important.

If you have property you want to go to specific individuals, you should create a document with instructions as to who gets what.

Some people think that because they don't have a high net worth, they don’t need to worry about such things. However, estate planning isn’t just about money—anyone with young children should have a will, because a will names the guardians of minor children. You want to be certain that you, and not the courts, designate your children’s guardians.

When you’re ready to start or revisit the planning process, talk to a qualified estate attorney (yes, pay for a lawyer and don’t do it yourself), here are the basic documents to consider:

  • Will: A document that makes certain your assets are passed to designated beneficiaries in accordance with your instructions. The will designates an executor who will oversee the distribution of your assets. If you have minor children, you must name a guardian for them.
  • Letter of Instruction:This may include the appointment of someone who will ensure the proper disposition of your remains. That can be important, if you’re choosing a method that’s contrary to your family's traditions.
  • Power of Attorney: This gives a person you select the authority to act as your agent, in certain circumstances.
  • Health Care Proxy:This gives a person you select, the power to make health care decisions on your behalf, if you lose the ability to do so.
  • Trusts: Revocable (changeable) or irrevocable (not-changeable) trusts may be useful, depending on family and tax situations. You need an experienced trust attorney to help you decide, if this is a sound strategy and to properly prepare the documents.

Even if your funeral plan does not include a gold-plated coffin (like Aretha) or a multi-million estate (like Prince), sit down with an estate planning attorney and prepare these documents to protect your family sooner, not later.

Reference: Chicago Tribune (August 30, 2018) “Don't leave a mess for your heirs”

Do I Need an Ethical Will?

An inheritance is often more than just assets.

If you want to be remembered as the person who made sure your heirs had all the information they needed about what you wanted, for funeral arrangements as well as what to do with Great Aunt Joan’s diamond bracelet, you might want to consider writing an ethical will.

25240245194_9cde86a5e5_oAn inheritance is often more than just assets. Family heirlooms, art, treasures from global adventures and stories, are also things that families share. When you prepare an ethical will, sometimes known as a “living letter” or a “legacy letter,” you give your children the ability to know what you want them to do with your belongings, and why.

Investment News’recent article, “Advisers use ethical wills to look beyond client assets,”says that a legacy letter helps the writer explain to younger generations his or her reasons for setting up the will in a certain way and what they hope to accomplish through the estate plan. In writing the letter, the donor is also adding to the probability that his or her wishes will be followed.

Some don’t like the term ethical will and prefer to call it a legacy letter.  However, the purpose is the same. Regardless of what it's called, the ethical will is simply a letter.

It’s not a binding legal document.  It is often written to accompany a formal will.

An ethical will can help uncover character assets and the values that a person holds dear. It can explain that what they have to pass on to loved ones, can be much more valuable than finances.

Even if the letters are directions about assets, they will by their very nature be personal, and your way to send a final message to those you love. You want to share your goals for your estate, and likely, your hopes and dreams for your family when you are gone.

Reference: Investment News (June 19, 2018) “Advisers use ethical wills to look beyond client assets”

A Partial Checklist for Your Will

Having a will prepared is a gift of kindness to your loved ones. They will appreciate the effort to care for them, after you’ve passed on.

Having a will prepared is a gift of kindness to your loved ones. They will appreciate the effort to care for them, after you’ve passed on.

Th (2)If you need another reason to have a will prepared, consider the potential for conflict among loved ones who will have to guess about what your wishes were during a very difficult time. You can spare them that distress, by preparing your will and estate plan in advance.

US News & World Report’s article, “10 Steps to Writing a Will,”says that if you've been procrastinating on completing the task, here's your opportunity to cross it off your list. You can get going with these simple steps.

  1. Do-it-yourself? You can use online software to help you write your will.However, there are many horror stories of people who wrote their own wills with devastating consequences. Consider the late Supreme Court Justice Warren Burger. Wouldn’t you think he, of all people, could write a will? Nope. His will was just 450 words and had a ton of errors. His family spent a fortune in legal fees and had to pay more than $450,000 in taxes to collect their assets. Work with an experienced estate planning attorney. He or she will know how to help you efficiently and effectively.
  2. Beneficiaries.When you pass away, your beneficiaries will receive your assets. Be sure that this list is up-to-date.
  3. Executor. In Florida the Executor is referred to as the Personal Representative.This individual will make sure the wishes in your will are carried out. The key here is making sure you select a person who’s responsible. (They’ll be working with a probate attorney, so they don’t need any special knowledge of the law).
  4. Guardian.If you have minor children, you need to designate a friend or family member as a guardian. Check out Mastry Law’s free Parent’s Guide for lots more information on this topic.
  5. Be specific.Don’t be vague in your will and think everyone will know what you want. If you leave your will open to interpretation, it may end up in court.
  6. Be realistic.Even if you want to distribute your assets fairly, it still isn't easy. It’s best to talk to your heirs about your assets. Tell them that if they have their eye on anything other than house and cars, to let you know so you can write that down and make sure they get it when you die. This gives them some input.
  7. Witnesses.Be sure you have the witnesses required to sign your will. They can't be people who stand to inherit anything in the will. Witnesses also need to be at least 18 years old, and ideally, they'll be people who are likely to be around after you’re gone. That’s because if something’s amiss, and your will is contested in court, the judge may want to call a witness to testify.
  8. Keep your will safe.Be sure that someone you trust knows the location of your will, as well as any other important papers and passwords to financial institutions. Keep the original copy somewhere secure.
  9. Keep your will up to date.Major events, like the birth of a child, death, divorce, remarriage, moving to a new state, are all reasons to update your will. This year’s new tax laws may present opportunities that you don’t want to miss out on.

Reference: US News & World Report (June 19, 2018) “10 Steps to Writing a Will”

Estate Plan Basics You and Your Heirs Cannot Do Without

To really serve its purpose, an estate plan must have the legal documents that will protect you and your heirs.

To really serve its purpose, an estate plan must have the legal documents that will protect you and your heirs, if you should become incapacitated. It’s not a pleasant thought, but it does happen.

MP900400665It’s true that an estate plan starts with a properly prepared will, and often includes a trust, but that is just the starting point for a complete estate plan. Even transferring assets upon your death, is only one part of an estate plan. Surprised? Many people are, but better to be surprised now then to have your heirs surprised later!

Investopedia’srecent article, “6 Estate Planning Must-Haves,”provides a list of items that every estate plan should have. This includes a will (and perhaps a trust), a durable power of attorney, up-to-date beneficiary designations, a letter of intent, a healthcare power of attorney, and guardianship designations.

Let's take a look at each item on the list to see if you’ve left any decisions to chance.

Wills and Trusts. This should be one of the main elements of every estate plan—even if you don't have substantial assets. Wills are documents that make certain property is distributed according to your wishes (if drafted pursuant to state laws). Some trusts also help limit estate taxes or legal issues. But this isn’t enough. The wording of these documents is extremely critical: a will or trust should be written in a way that’s consistent with the way you've bequeathed the assets that pass outside of the will.

Durable Power Of Attorney. A durable POA authorizes an agent of your own choosing to act on your behalf when you’re unable to do so for yourself. Without a power of attorney, a judge may have to decide what happens to your assets, if you’re found to be mentally incompetent. That ruling may not be what you wanted. A POA can give your agent the power to transact real estate, enter into financial transactions and make other legal decisions in your stead (as if he or she were you). This POA is revocable by the principal at a time of his or her choosing, typically at a time when the principal is deemed to be physically able, mentally competent or upon death.

Beneficiary Designations. Some assets can pass directly to your heirs without being dictated in the will (like a 401(k) plan).  Therefore, it’s important to have an up-to-date beneficiary, as well as a contingent beneficiary, on these types of accounts. If you fail to designate a beneficiary, or if the beneficiary has passed away or is unable to serve, a judge may decide what to do with your funds. This again may not be what you wanted.

Letter of Intent. This is a document left to your executor or a beneficiary, that defines what you want done with a particular asset, after your death or incapacitation. It can also provide funeral details or other special requests. It’s not a legal document, but it helps inform a probate judge of your intentions and may help in the distribution of your assets, if the will is deemed invalid.

Healthcare Power of Attorney. This appoints another individual (usually a spouse or family member) to make important healthcare decisions on your behalf, in the event of incapacity. If you’re thinking about creating such a document, you should select someone you trust, who shares your views, and who would likely recommend a course of action with which you’d agree. A backup agent should also be named, if your initial pick is unavailable or unable to act at the time needed.

Guardianship Designations. If you have minor children or are considering having kids, choosing a guardian is very important and many times is overlooked. Be sure the individual or couple you choose shares your views, is financially sound and is willing to rear your children. You should also add a contingent guardian as well. Without these designations, a judge could rule that your kids should live with a family member you wouldn't have wanted, and in some cases, the court could require that your children become wards of the state.

It takes all of these documents to make up an estate plan, that protects you and your loved ones in the event of many different situations.

Reference: Investopedia (April 18, 2018)“6 Estate Planning Must-Haves”