Wills

How Can Siblings Settle Disputes over an Estate?

disputes over an estate
It’s best to avoid future disputes over an estate by giving clear direction in your estate planning documents.

When a parent passes away, their assets are often divided between their children. However, if there’s no will to answer any legal questions and disputes over the estate, siblings can argue over the assets. Some even take the matter to court. It would be great to avoid disputes over the estate because, in many cases, a fight between the siblings can end their good relationship and enrich attorneys, instead of family members.

The Legal Reader’s recent article entitled “Tips to Help Siblings Avoid or Resolve an Estate Battle” says that the following tips can help people avoid disputes over an estate or assist them in preventing the fight entirely.

Use a Family Auction. With a family auction, siblings use agreed upon “tokens” to bid for the estate items they want.

Get an Appraisal. The division of an estate between the siblings can get complicated and end in a fight if the siblings want different pieces of the estate and have to work out the value difference. If, for example, the siblings decide to split the estate unevenly, and one gets a car and another a house, it’s worthwhile to engage the services of an appraiser to calculate the value of these assets. That way, those pieces of smaller value can be deducted from ones of higher value for fairer distribution.

Mediation. If siblings historically don’t get along, they may battle over every trinket left as an inheritance, no matter how immaterial. In that case, you should use a mediator to help divide the estate fairly without a court battle.

Take Turns! Sometimes, if there are several siblings involved in the division of assets, they can take turns in claiming the items within the estate. All siblings naturally have to agree to the idea with no hard feelings involved. Just like Mom would have wanted!

Asset Liquidation. If everything else fails, the easiest way to divide the assets and the estate between the siblings is to go through asset liquidation and split the proceeds.

As you can see, there are a number of ways to deal with the division of the estate and assets and prevent the legal battle between the siblings. To avoid hard feelings, stay calm, be reasonable and ask your siblings to act the same way.

Reference: The Legal Reader (Aug. 24, 2020) “Tips to Help Siblings Avoid or Resolve an Estate Battle”

Is an Ex-Wife Entitled to an Inheritance from Her Former Husband?

Nj.com’s recent article entitled “My brother died of COVID-19. Should his ex-wife get an inheritance?” says that it’s unlikely that an ex-wife is entitled to an inheritance from her former husband’s estate.  However, the answer is highly dependent on state law.

There are three main ways property can transfer at death. They each have different rules.

ex-wife entitled to inheritance from her husband
It is not likely that an ex-wife is entitled to an inheritance from her former husband’s estate.

Joint assets. When property is held as Joint Tenants with Rights of Survivorship (JTWROS), the surviving joint owner automatically becomes the sole owner of the property. Usually, jointly owned property is retitled into individually owned property after the divorce. If this was never done, some states automatically change JTWROS property to a different form of joint ownership, called Tenancy In Common when a divorce is finalized. As a result, with tenants in common property, when one owner dies, his or her 50% ownership interest becomes a probate asset and passes pursuant to his or her will (or the state’s intestacy laws, if they didn’t have a will).

This means that even if the husband in this scenario still owned JTWROS property with his ex-wife when he passed away, she wouldn’t automatically inherit his share. She still has her own 50% share that she owned all along.

Beneficiary designations.  Property can also pass by beneficiary designation, like with life insurance or retirement accounts.

Beneficiary designations are typically updated after a divorce. However, again, ask an experienced estate planning attorney about your state laws. For example, some state’s laws revoke a divorced spouse as beneficiary, even if the beneficiary designation was never updated.

In this situation, even if the husband named his wife as a beneficiary on an insurance policy or retirement accounts and never changed it, she wouldn’t be able to collect.

Probate.  Finally, the third way that property can pass, is through the probate process. This means there’s a will.  If there was no will, it would be pursuant to the state’s intestacy laws.

An ex-spouse is never entitled to inherit property under state intestate statutes.

There’s an important caveats for these rules. They can be superseded by a divorce decree. Therefore, review the divorce decree to see whether it has any relevant language.

Reference: nj.com (Aug. 4, 2020) “My brother died of COVID-19. Should his ex-wife get an inheritance?”

How Do I Find the Best Estate Planning Attorney?

About 68% of Americans don’t have a will. With the threat of the coronavirus on everyone’s mind, people are in urgent need of an estate plan, but many people are wondering how to go about finding the best estate planning attorney for their specific needs.  Whether those needs are simple or complex, finding the right estate planning attorney for you is critical.

To make sure your plan is proper and legal, consult an experienced estate planning attorney. Work with a lawyer who understands your needs, has years of experience and knows the law in your state.

Best Estate Planning Attorney
Finding the best estate planning attorney isn’t difficult if you follow a few simple guidelines.

EconoTimes’ recent article entitled “Top 3 Estate Planning Tips When Seeing An Attorney” provides several tips for estate planning, when looking for the best estate planning attorney.

Attorney Experience. An experienced estate planning attorney will have the years of experience and specialized knowledge necessary to help you, compared to a general practitioner or an attorney who’s just transitioning into estate planning. Look for an attorney who specializes in estate planning.

Inventory. List everything you have. Once you start the list, you may be surprised with the tangible and intangible assets you possess.

Tangible assets may include:

  • Cars and boats
  • Homes, land, and other real estate
  • Collectibles like art, coins, or antiques; and
  • Other personal possessions.

Your intangible assets may include:

  • Mutual funds, bonds, stocks
  • Savings accounts and certificates of deposit
  • Retirement plans
  • Health saving accounts; and
  • Business ownership.

Create Your Estate Planning Documents. Prior to seeing an experienced estate planning attorney, he or she will have you fill out a questionnaire and to bring a list of documents to the appointment. In every estate plan, the core documents often include a last will and powers of attorney, as well as coordinating your Beneficiary Designations on life insurance and investment accounts. You may also want to ask about a trust and, if you haver minor children, selecting a guardian for their care, in care anything should happen to you. You should also ask about estate taxes with the attorney.

Reference: EconoTimes (July 30, 2020) “Top 3 Estate Planning Tips When Seeing An Attorney”

How Do I Keep My Son-in-Law from Getting the Money I Give my Daughter in My Estate?

Say that you were to name your daughter as the beneficiary on your Roth IRA and 401(k) accounts, as well as your house and other investments. Her husband would not be a beneficiary.

His only source of income is a monthly stipend that he receives from a trust and income he earns from being a rideshare driver.

Can you use a trust to prevent her son-in-law from inheriting or getting her money when she dies?

Nj.com’s recent article entitled “Can I protect my daughter’s inheritance from her husband?” explains that trusts are very effective at accomplishing this goal.

Note first that retirement assets can’t be re-titled to a trust. However, a home can be, and investments can be, if they’re not tax deferred.

For assets that can’t be re-titled to the bloodline trust during your lifetime, you can name the trust as the payable-on-death (POD) beneficiary of those assets.

You also should take care in deciding on who you choose as a trustee.

In the situation above, depending on applicable law for your state, your daughter may not be the sole trustee and the sole beneficiary under this form of trust arrangement. However, in all instances, a bank or attorney can be a co-trustee.

This trust arrangement ensures that assets distributed to your daughter aren’t commingled with the assets of her husband with extravagant tastes and an open checkbook. In addition, those assets would not be subject to equitable distribution in the event of a divorce.

If the daughter is the sole trustee over a trust, then all the planning will be out the window, if the daughter does not agree to this set-up.

For example, if she takes distributions from the trust and deposits them in a joint account with her husband, the money is available for equitable distribution.

This means the daughter arguably has indicated that she does not think of her inheritance as a non-marital asset.

A divorce court would see it the same way and award a portion to the husband in a break-up.

Reference: nj.com (July 21, 2020) “Can I protect my daughter’s inheritance from her husband?”

What Is Involved with Serving as an Executor?

Serving as an executor of a relative’s estate may seem like an honor, but it can also be a lot of work, says The (Fostoria, OH) Review Times’ recent article entitled “An executor’s guide to settling a loved one’s estate.”  

Serving as an executor
Serving as an executor of an estate is an honor, but it could also comes with some challenges.

When serving as an executor of a will, you’re tasked with settling the decedent’s affairs after she dies. This may sound rather easy, but you should be aware that the job could be time consuming and difficult, depending on the size of the decedent’s estate and the complexity of the decedent’s financial and family situation. Here are some of the duties that are expected of anyone serving as an executor:

  • Filing court papers to initiate the probate process
  • Taking inventory of the decedent’s estate
  • Using the decedent’s estate funds to pay bills, taxes, and funeral costs
  • Taking care of canceling her credit cards and informing banks and government offices like Social Security and the post office of her death
  • Readying and filing her final income tax returns; and
  • Distributing assets to the beneficiaries named in the decedent’s will.

Each state has specific laws and deadlines for the responsibilities of anyone serving as an executor. To help you, work with an experienced estate planning attorney and take note of these reminders:

Get organized. Make sure that the decedent has an updated will and locate all her important documents and financial information. Having easy access to deeds, brokerage statements and insurance policies will save you a lot of time and effort, making the job of serving as an executor much easier. With a complex estate, you may want to hire an experienced estate planning attorney to help you through the process. The estate will pay that expense.

Avoid conflicts. Investigate to see if there are any conflicts between the beneficiaries of the decedent’s estate. If there are some potential issues, you can make your job as executor much easier if everyone knows in advance who’s getting what, and the decedent’s rationale for making those decisions. Ask the person you’ll be serving as an executor for to tell her beneficiaries what they can expect, even with her personal items because last wills often leave it up to the executor to distribute heirlooms.

Executor fees. You’re entitled to a fee for the work you do serving as an executor. The fee is paid by the estate. In most states, executors are allowed to take a percentage of the estate’s value, which can be from 1-5%, depending on the size of the estate. However, if you’re also a beneficiary, it may make sense for you to forgo the fee because fees are taxable as income, and it could also cause rancor among the other beneficiaries.

Reference: The (Fostoria, OH) Review Times (Aug. 19, 2020) “An executor’s guide to settling a loved one’s estate”

Intestate Succession: Should I Let The State Write My Will?

It’s a common question to ask an estate planning attorneys: “I’m not wealthy, Do I Really Need A Will?” A recent article in The Sun explains that the answer is “yes.” If you die without a will you are said to die “intestate,” state probate laws will determine who will receive the assets in your estate. This is is known as “Intestate Succession.” Of course, that may not be how you wanted things to go. That’s why you need a will.

Intestate Succession
If you don’t have a will the state will decide who will receive your assets.

When you die, your assets (i.e., your “estate”) are distributed to family members and loved ones in your estate plan, if there is no surviving joint owner or designated beneficiary (e.g., life insurance, annuities, and retirement plans). No matter the complexity, a will is a key component of any basic plan.

A will allows you make decisions about the distribution of your assets, such as your real estate, personal property, family heirlooms, investments and businesses. You can make donations to your favorite charities or a religious organization. Your will is also important, if you have minor children: it’s where you nominate a guardian to care for them if you die.

Of course, you can avoid intestate succession by writing your own will or paying for a program on the Internet, but it’s better to have one prepared by an experienced estate planning attorney. Prior to sitting down with an attorney, make a listing of all your assets (your home, real estate, bank accounts, retirement plans, personal property and life insurance policies). If you have prized possessions or family heirlooms, be sure to also detail these.

Make a list of all debts, such as your mortgage, auto loans and credit cards. You should also collect contact information for all immediate living family members, detailing their addresses and birth dates.

When meeting with an attorney, ask about other components of an estate plan, such as a power of attorney and medical directive.

The originals of these documents should be kept in a safe place, where they can be easily accessed by your estate administrator or executor.

You should also review your estate plan every few years and at significant points in your life, like marriage, divorce, the adoption or birth of a child, death of a beneficiary and divorce.

Do your homework, then visit an experienced estate planning attorney to make sure you avoid intestate succession and receive important planning insights from their experience working with estate plans and families.

Reference: The (Jonesboro, AR) Sun (July 15, 2020) “Do I Really Need A Will?”

What Happens If I Don’t Fund My Trust?

Trust funding is a crucial step in estate planning that many people forget to do.

However, if it’s done properly, funding will avoid probate, provide for you in the event of your incapacity and save on estate taxes.

Forbes’s recent article entitled “Don’t Overlook Your Trust Funding” looks at some of the benefits of trusts.

Avoiding probate and problems with your estate. If you’ve created a revocable trust, you have control over the trust and can modify it during your lifetime. You are also able to fund it, while you are alive. You can fund the trust now or on your death. If you don’t transfer assets to the trust during your lifetime, then your last will must be probated, and an executor of your estate should be appointed. The executor will then have the authority to transfer the assets to your trust. This may take time and will involve court. You can avoid this by transferring assets to your trust now, saving your family time and aggravation after your death.

Protecting you and your family in the event that you become incapacitated. Funding the trust now will let the successor trustee manage the assets for you and your family, if your become incapacitated. If a successor trustee doesn’t have access to the assets to manage on your behalf, a conservator may need to be appointed by the court to oversee your assets, which can be expensive and time consuming.

Taking advantage of estate tax savings. If you’re married, you may have created a trust that contains terms for estate tax savings. This will often delay estate taxes until the death of the second spouse, by providing income to the surviving spouse and access to principal during his or her lifetime while the ultimate beneficiaries are your children. Depending where you live, the trust can also reduce state estate taxes. You must fund your trust to make certain that these estate tax provisions work properly.

Remember that any asset transfer will need to be consistent with your estate plan. Your beneficiary designations on life insurance policies should be examined to determine if the beneficiary can be updated to the trust.

You may also want to move tangible items to the trust, as well as any closely held business interests, such as stock in a family business or an interest in a limited liability company (LLC). Ask an experienced estate planning attorney about the assets to transfer to your trust.

Fund your trust now to maximize your updated estate planning documents.

Reference: Forbes (July 13, 2020) “Don’t Overlook Your Trust Funding”

What Basic Estate Planning Documents Do I Need?

AARP’s recent article entitled “Sign These Papers” suggests that the following documents will give you and your family financial protection, as well as peace of mind.

Advance Directive. This document gives your family, loved ones and medical professionals your instructions for your health care. A living will, which is a kind of advance directive, details the treatment you’d like to have in the event you’re unable to speak for yourself. It covers things like when you would want doctors to stop treatment, pain relief and life support. Providing these instructions helps your family deal with these issues later.

Durable Power of Attorney for Health Care. This document, regularly included in a comprehensive estate plan, lets you name a trusted person (plus a backup or two) to make medical decisions on your behalf, when you’re unable to do so.

Revocable Living Trust. Drawn up correctly by an experienced estate planning attorney, this makes it easy to keep track of your finances, allow a trusted person step in, if necessary, and make certain that there are fewer problems for your heirs when you pass away. A revocable living trust is a powerful document that allows you to stay in control of all your finances as long as you want. You can also make changes to your trust as often as you like.

When you pass away, your family will have a much easiest task of distributing the assets in the trust to your beneficiaries. Without this, they’ll have to go through the probate process.  It can be a long and possibly costly process, if you die with only a will or intestate (i.e., without a will).

Will. Drafting a will with the guidance of an experienced estate planning attorney lets you avoid potential family fighting over what you’ve left behind. Your will can describe in succinct language whom you want to inherit items that might not be in your trust — your home or car, or specific keepsakes, such as your baseball card collection and your Hummel Figurines.

Durable Financial Power of Attorney. If you’re alive but incapacitated, the only way a trusted person, acting on your behalf, can access an IRA, pension or other financial account in your name is with a durable financial power of attorney. Many brokerages and other financial institutions have their own power of attorney forms, so make sure you ask about this.

These five documents (sometimes four, if your advance directive and health care power of attorney are combined) help you enjoy a happier, less stressful life.

With these documents you know that you’ve taken the steps to make navigating the future as smooth as possible. By making your intentions clear and easing the inheritance process as much as you possibly can, you’re taking care of your family. They will be grateful that you did.

Reference: AARP (August/September 2018) “Sign These Papers”

Is It Easy to Change My Home’s Title from Tenants in Common to Joint Tenants?

Many couples may have purchased a home years ago with the original deed titled as “William Smith and Wilhelmina Smith”. In most states this defaults to tenants in common. With Wilhelmina being William’s wife for decades, they thought it was time to think about changing the title to William Smith and Wilhelmina Smith, joint tenants with right of survivorship. Joint Tenants

The Washington Post’s recent article entitled “Changing a home title from ‘tenants in common’ to ‘joint tenants’” looks at whether this would result in any adverse consequences, such as issues with the title insurance or taxes issues.

When you own a home in joint tenancy, should either of the owners die, that owner’s interest automatically goes to the surviving joint tenant. However, when people own a home as tenants in common, each person owns a specific share of that home. Therefore, our hypothetical couple William and Wilhelmina Smith each owns a 50% interest in the home. If either of them were to die, his or her 50% interest in the home would be distributed, as provided in his or her will or as provided by state probate statute.

If people purchase a home but don’t specify how they want to own the property, in most situations, the state law will say how the parties take title to the property when the deed is silent.

You can typically record a new document that puts both William Smith and Wilhelmina Smith on the title to the home, as joint tenants with rights of survivorship. When it’s a simple change in the title from tenants in common to joint tenants, most state tax authorities will ignore that change.

To be sure you should ask an experienced estate planning attorney or the office that collects or assesses values in your location for more information. However, it’s a pretty safe bet that the change won’t affect a home’s value.

As far as the title insurance policy, after so many years, it would be doubtful there would be any problems. That’s because the original title insurance policy named William Smith and Wilhelmina Smith as the insured. If they change the ownership from tenants in common to joint tenants, the Smiths are still the owners of the home and still named on that policy.

Reference: Washington Post (July 6, 2020) “Changing a home title from ‘tenants in common’ to ‘joint tenants’”

What are the Estate Planning Basics?

Estate planning is an all-encompassing term that refers to the process of organizing, inventorying and making plans for the proper handling of your affairs during incapacity and after you die. This typically involves writing a will, setting up a power of attorney and healthcare directives with the help of an experienced estate planning attorney.

CNET’s article entitled “Estate planning 101: Your guide to wills, trusts and all your end-of-life documents” provides us with some of the key steps in getting started with estate planning.

Create an Inventory. Your estate includes all of the things you own, such as your car and other valuable possessions, plus “intangible assets” like investments and savings. If you own a company, that’s also part of your estate. Everything you own should be given a valuation. Have your home and other valuables appraised.

Evaluate your family’s needs. A big reason for estate planning is to make certain that your family is cared for, in the case of your death or incapacitation. If you’re a breadwinner for your family, the loss of your income could be devastating financially. Consider a life insurance policy to help provide a financial cushion that can be used to cover living expenses, college tuition cost, and mortgage payments. You may also need to designate a guardian, if you have children under the age of 18.

Make job assignments. Dividing up a person’s property can be a tough and emotional task. Make it easier by ensuring that all of your assets have been assigned a beneficiary. You’ll also name a few people to coordinate the process of dividing up your belongings. List your beneficiaries, so they know who gets what.

Create a Will. You should have a legally binding document setting everything out in as much detail as possible. A will is a legal document that directs the way in which you want your assets and affairs handled after you die. This includes naming an executor, who is someone to manage how your will is executed and take care of the distribution of your assets.

Help your family if you’re incapacitated. A living will (also known as a medical care or health care directive) states your healthcare preferences, in case you’re unable to communicate or make those decisions on your own. If you need life support, a living will states your preferences.

Start estate planning sooner rather than later. Talk to an experienced estate planning attorney today.

Reference: CNET (June 8, 2020) “Estate planning 101: Your guide to wills, trusts and all your end-of-life documents”

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