Oconee Estate Planning Blog

Why Is Estate Planning So Important?

Big Easy Magazine’s recent article “Estate Planning Is Essential and Here’s Why” says that writing a last will isn’t limited to what happens to your house, car, company, or other assets after you die. It also states who will take care of your minor children, if they are orphaned.

Your instructions for burial and other smaller things can be included.

If you fail to provide specific instructions, the state intestacy laws will apply upon your death. Here is a glimpse of the consequences of not writing your last will:

• Your burial preferences may not be honored.
• Your properties may be managed by an individual you don’t necessarily trust. Without a named executor to your last will, some other family member may be asked to file taxes, make transfers and manage your estate.
• Family members may not get an inheritance. Under intestacy laws, same-sex relationships and common-law marriages may not be recognized. So, your partner may not get a portion of your estate.
• Your favorite charity may be left out. If you are committed to leaving a legacy, your charity, religious organization, or other organization of choice should be mentioned in the last will.
• The government will name the guardians for your minor children.

With a last will, you can designate a guardian for your children and avoid additional taxes. Ask an experienced estate planning attorney about developing a comprehensive estate plan.

Aside from this, estate planning can also save your loved ones considerable angst and money.

A detailed last will with your instructions will avoid complications and provide comfort, while your loved ones recover emotionally from their loss.

Reference: Big Easy Magazine (May 17, 2021) “Estate Planning Is Essential and Here’s Why”

Suggested Key Terms: Estate Planning Lawyer, Wills, Intestacy, Probate Court, Inheritance, Guardianship, Probate Attorney, Charitable Donation, Funeral Arrangements, Burial

Your Will and Estate Planning Checklist

Dying without a last will creates additional costs and eliminates any chance your wishes for loved ones will be followed after your death. Typically, people think about last wills when they marry or have children, and then do not think about last wills or estate plans until they retire. While a last will is important, there are other estate planning documents that are just as important, says the recent article “10 Steps to Writing a Will” from U.S. News & World Report.

Most assets, including retirement accounts and insurance policy proceeds, can be transferred to heirs outside of a will, if they have designated beneficiaries. However, the outcome of an estate may be more impacted by Power of Attorney for financial matters and Medical Power of Attorney documents.

Here are ten specific tasks that need to be completed for your last will to be effective. Remember, if the will does not comply with your state’s estate law, it can be declared invalid.

1. Find an estate planning attorney who is experienced with the laws of your state.
2. Select beneficiaries for your last will.
3. Check beneficiaries on non-probate assets to make sure they are current.
4. Decide who will be the executor of your last will.
5. Name a guardian for minor children, if yours are still young.
6. Make a letter describing possessions and who you want to receive them. Be very specific.

There are also tasks for your own care while you are living, in case of incapacity:

1. Name a person for the Power of Attorney role. They will be your representative for legal and financial matters, but only while you are living.
2. Name a person for the Medical Power of Attorney to make decisions on your behalf, if you cannot.
3. Create an Advance Directive, also known as a Living Will, to explain your wishes for medical care, particularly concerning end-of-life care.
4. Discuss these roles and their responsibilities with the people you have chosen, and make sure they are willing to serve.

Be realistic about the people you are naming to receive your property. If you have a child who is not good with managing money, a trust can be set up to distribute assets according to your wishes: by age or accomplishments, like finishing college, going to rehab, or maintaining a steady work history.

Do not forget to tell family members where they can find your last will and other estate documents. You should also talk with them about your digital assets. If accounts are protected by passwords or facial recognition, find out if the digital platform has a process for your executor to legally obtain access to your digital assets.

Finally, do not neglect updating your last will every three to four years or anytime you have a major life event. An estate plan is like a house: it needs regular maintenance. Old last wills can disinherit family members or lead to the wrong person being in charge of your estate. An experienced estate planning attorney will make the process easier and straightforward for you and your loved ones.

Reference: U.S. News & World Report (May 13, 2021) “10 Steps to Writing a Will”

Suggested Key Terms: Will, Power of Attorney, Medical Power of Attorney, Assets, Trust, Digital Assets, Estate Planning Attorney, Advance Directive, Living Will, Disinherit, Beneficiary Designations

Do You Have to Do Probate when Someone Dies?

Probate is a Latin term meaning “to prove.” Legally, a deceased person may not own property, so the moment a person dies, the property they owned while living is in a legal state of limbo. The rightful owners must prove their ownership in court, explains the article “Wills and Probate” from Southlake Style. Probate refers to the legal process that recognizes a person’s death, proves whether or not a valid last will exists and who is entitled to assets the decedent owned while they were living.

The probate court oversees the payment of the decedent’s debts, as well as the distribution of their assets. The court’s role is to facilitate this process and protect the interests of all creditors and beneficiaries of the estate. The process is known as “probate administration.”

Having a last will does not automatically transfer property. The last will must be properly probated first. If there is a last will, the estate is described as “testate.” The last will must contain certain language and have been properly executed by the testator (the decedent) and the witnesses. Every state has its own estate laws. Therefore, to be valid, the last will must follow the rules of the person’s state. A last will that is valid in one state may be invalid in another.

The court must give its approval that the last will is valid and confirm the executor is suited to perform their duties. Texas is one of a few states that allow for independent administration, where the court appoints an administrator who submits an inventory of assets and liabilities. The administration goes on with no need for probate judge’s approval, as long as the last will contains the specific language to qualify.

If there was no last will, the estate is considered to be “intestate” and the laws of the state determine who inherits what assets. The laws rely on the relationship between the decedent and the genetic or bloodline family members. An estranged relative could end up with everything. The estate distribution is more likely to be challenged if there is no last will, causing additional family grief, stress and expenses.

The last will should name an executor or administrator to carry out the terms of the last will. The executor can be a family member or a trusted friend, as long as they are known to be honest and able to manage financial and legal transactions. Administering an estate takes time, depending upon the complexity of the estate and how the person managed the business side of their lives. The executor pays bills, may need to sell a home and also deals with any creditors.

The smart estate plan includes assets that are not transferrable by the last will. These are known as “non-probate” assets and go directly to the heirs, if the beneficiary designation is properly done. They can include life insurance proceeds, pensions, 401(k)s, bank accounts and any asset with a beneficiary designation. If all of the assets in an estate are non-probate assets, assets of the estate are easily and usually quickly distributed. Many people accomplish this through the use of a Living Trust.

Every person’s life is different, and so is their estate plan. Family dynamics, the amount of assets owned and how they are owned will impact how the estate is distributed. Start by meeting with an experienced estate planning attorney to prepare for the future.

Reference: Southlake Style (May 17, 2021) “Wills and Probate”

Suggested Key Terms: Wills, Probate, Estate Planning Attorney, Assets, Executor, Administrator, Court, Intestate, Non-Probate, Beneficiary Designation, Living Trust, Testate, Life Insurance, 401(k)

How to Avoid Basic Estate Planning Miscues

WMUR’s recent article entitled “Common estate planning mistakes” gives us a few of the most common and potentially costly mistakes, along with help on how to avoid them.

Failing to plan. You delay and you delay. Most Americans don’t have a will and no estate plan. If you die without a will, your assets will be divided according to the intestacy laws of your state. There is no guarantee this would be consistent with your wishes. Whether an estate plan involves a basic will or perhaps a trust, having a plan can help reduce estate taxes, save on estate administrative costs, preserve privacy and speed up disbursement to beneficiaries. An estate plan can help direct how your assets are to be distributed. You can also designate a guardian for your minor children in your will.

Failing to maximize your marital estate exemption. Portability is an estate planning provision that can help with potential estates. Each person gets an $11.7 million federal estate tax exemption in 2021. If one spouse dies without using up his or her $11.7 million, the unused portion may be transferred to the other spouse for use at the survivor’s death. However, portability doesn’t address the appreciation of assets from the first spouse’s estate. It also doesn’t offer creditor protection. There are other documents in a comprehensive estate plan that can address these goals. Discuss the issues with an experienced estate planning attorney.

Failing to consider state estate taxes. You may live in one of the states that has state estate taxes. Twelve states and DC impose estate taxes. These include Hawaii, Washington, Massachusetts, Oregon, New York, Minnesota, Illinois, Vermont, Maine, Rhode Island, Connecticut and Maryland. Keep this in mind when reviewing your strategy and make certain to discuss how portability is elected with your estate planning attorney.

Taking advice from family or friends. Make sure the person you discuss your estate plans with is knowledgeable about the process. Look for an experienced estate planning attorney who knows estate tax law, trust and probate issues. You may also ask this attorney, if they practice in elder law.

You should have your estate documents in place to give you peace of mind that things are going to happen as you wished upon your death.

Reference: WMUR (May 6, 2021) “Common estate planning mistakes”

Suggested Key Terms: Estate Planning Attorney, Probate Attorney, Inheritance

Will a QTIP Trust Work for a Blended Family?

Many people have so-called “blended” families, where one or both spouses have children from a previous marriage.

Estate planning can be hard for a spouse in a blended family who wants to provide for a surviving spouse and for children from an ex-spouse.

Fed Week’s recent article entitled “‘Blended’ Families Raise Special Estate Planning Considerations” suggests that one option may be a qualified terminable interest property or “QTIP” trust.

This kind of irrevocable trust is frequently used by those with children from another marriage.

A QTIP trust allows the grantor or maker of the trust to provide for a surviving spouse and maintain control of how the trust’s assets are distributed, once the surviving spouse dies.

Income (and sometimes the principal) generated from the trust is given to the surviving spouse to ensure that the spouse is cared for during the rest of his or her life. Therefore, with a QTIP:

• At the death of the first spouse, the assets pass to a trust for the survivor. No one else can receive distributions from the trust; then
• At the death of the second spouse, any assets left in the QTIP trust are passed to beneficiaries named by the first spouse to die. This is usually the children of the first spouse to die.

With a QTIP, estate tax is not imposed when the first spouse’s dies. Rather, estate tax is determined after the second spouse has died.

Moreover, the property within the QTIP providing funds to a surviving spouse qualifies for marital deductions. As such, the value of the trust isn’t taxable after the first spouse’s death.

While this arrangement may appear to address the needs of both sides, in many remarriages the surviving spouse is much younger than the one who died.

In many cases, the surviving spouse may be close to the age of the children of the spouse who died. As a consequence, those children may have to wait a number of years for their inheritance.

To avoid this, a better approach would be to provide for biological children as well as for a surviving spouse at the first death. Assets can be divided at that time.

If an asset division is impractical, the proceeds of a life insurance policy may help to provide some inheritance for all parties.

Reference: Fed Week (May 7, 2021) “‘Blended’ Families Raise Special Estate Planning Considerations”

Suggested Key Terms: Estate Planning Lawyer, Qualified Terminable Interest Property (QTIP) Trust, Life Insurance, Blended Family

How Do I Address Digital Assets in Estate Planning?

Many states consider the digital accounts you have and access online to be no different from the tangible personal property you own, like cars, real estate and jewelry.

Los Altos (CA) Online’s recent article entitled “Creating an estate plan for your digital assets” says that you can control what happens to these digital assets after you die. However, you need to take specific actions to ensure that your wishes are followed. Let’s look at how to do it:

1. Create an inventory. With everything you have online these days, you should categorize your digital assets. They might include online data storage accounts; emails, texts and contacts; social media accounts; and shopping accounts. You should identify all your financial accounts – bank, brokerage and retirement and bank credit card. However, those should be addressed through your estate planning documents in the traditional manner.
2. Determine who you want to receive your digital assets after you are gone. Think through who gets what, just like your tangible property.
3. Designate a fiduciary. This is a trusted agent named in your will or trust with the authority to access your digital assets. It can be the same individual for all of them but need not be. You should also include in an addendum your wishes for the disposition of each asset. Work with an experienced estate attorney to make certain that your estate documents accurately reflect your intentions.
4. Determine the fiduciary’s ability to access your digital assets. Social media terms of service agreements (TOSAs) usually state that all posted content becomes the property of the custodian (the service provider), and nearly all TOSAs prohibit third-party access to digital assets after the user dies. However, if your will or trust explicitly grants a fiduciary access, the TOSA will no longer prevail. The custodian will be required to allow access to the digital assets by the fiduciary. The custodian has the right, however, to require evidence of the fiduciary’s authority, and could make the process difficult.

Another option is to leave the fiduciary a list of login IDs and passwords for the sites and/or the data – assuming, of course, that you strongly trust the person you’ve appointed as fiduciary. You can make a list on paper or use password-generator application which requires a master password. You should also be certain to include instructions for any two-factor authentication you may have set up.

Don’t list any user IDs and passwords in your will because they would become visible as a public record after death.

Reference: Los Altos (CA) Online (May 5, 2021) “Creating an estate plan for your digital assets”

Suggested Key Terms: Estate Planning Attorney, Inheritance, Digital Assets, Probate Attorney

What Does the Executor Do?

The executor of an estate is the person who manages all the decedent’s financial affairs. If the person wants to have more than one person manage their affairs, like naming two children instead of one, then the term “co-executors” is used, as explained in a recent article “Executor of Estate: What Do They Do?” from Forbes

The most important characteristic that the executor should have, is integrity and good judgment. They are legally required to act in the estate’s best interest, which is called acting as a fiduciary. This is important, especially if an heir serves as an executor.

They also need to be wise enough to know when they need help from a skilled professional.

The executor follows the directions that are included in the person’s will, including distributing assets to beneficiaries. They also manage the many tasks associated with wrapping up the decedent’s life, including paying creditors, issuing notices of death, filing tax returns and overseeing the sale of homes and automobiles.

In some states, the executor is called a “personal representative.” The word “executrix” is an old, out-of-date term used when a woman serves as the executor, not commonly used today.

When a proper estate plan is in place, the executor of the estate is named in the decedent’s last will and testament. In cases where the decedent (sometimes referred to as the testator) did not have a will, or the will has been deemed invalid, the probate court judge names someone to serve as executor. This is not always someone who the executor would have named, but when there is no will, the court makes this decision.

If you have been named the executor of an estate and don’t wish to serve, you may decline. If the decedent anticipated that and named an alternative or contingent executor, then the secondary person will serve, or the probate court judge will name someone to serve in this role. The judge can also override the decedent’s choice of an executor, if the person they named has a criminal history, is not of legal age, has a mental disability or a substance abuse problem. The court is not allowed to change the executor simply because the heirs don’t want a person to serve.

The executor has a long list of tasks to accomplish, from obtaining death certificates and securing the home to filing the will with the probate court in the decedent’s county of residence and petitioning the court for probate. Many executors bring in an estate attorney to assist with the legal portion of administering the estate, as an estate and trusts attorney will be familiar with the processes and the deadlines.

The executor must notify the Social Security administration and Medicare, if the person was enrolled in either of these federal programs. The Department of Motor Vehicles, Veterans Affairs and insurance companies must also be notified. The executor is also responsible for filing the person’s final income tax returns and if necessary, filing the state and federal estate tax returns. This is just a partial listing of the many different tasks that must be accomplished. The estate planning attorney may have a checklist to help the executor on track.

Reference: Forbes (May 3, 2021) “Executor of Estate: What Do They Do?”

Suggested Key Terms: Executor, Estate Planning Attorney, Will, Decedent, Deceased, Social Security, Medicare, Fiduciary, Veterans Affairs, Probate Judge, Personal Representative, Executrix, Co-Executors

Should I Create a Trust?

Most people know that a will instructs your executor regarding where to transfer your assets when you die. You may also want to consider a trust.

Nbcnew25.com’s recent article entitled “Elder law and estate planning: What you need to know” explains that a trust can give you peace of mind that your wishes will be carried out when you pass away. Your property won’t need to go through the probate process, if it’s in a trust. Your family can focus on the grieving process without having any problems with wrapping up your estate.

In addition, financial and health care powers of attorney should also be part of your estate plan. Ask an experienced estate planning or elder law attorney to help you draft these documents to save your loved ones the worry, if you must be moved into a nursing home and are unable to make decisions for yourself.

Having the correct documents in place before you or a loved one goes into a nursing home is extremely important. With a financial power of attorney, an elder law attorney could design a Medicaid plan for someone entering a nursing home to help protect their assets.

If the correct documents aren’t in place when a loved one enters a nursing home, it could create issues—one of which is the inability to protect their assets. In that case, you may also be required to appear in front of a judge to get permission for an elder law attorney to assist in protecting assets. That request could even be denied by the judge.

For a married couple, 100% of cash assets, plus the home, can be protected, and Medicaid would cover most of the nursing home cost. This is big because the cost of nursing homes can exceed be tens of thousands of dollars every month.

For married couples, in many instances, the income of the spouse who is entering the nursing home may be able to be transferred to the spouse who still lives at home. That’s important because the spouse at home may depend on the other spouse’s income to help make ends meet.

For singles, at least 60% to 70% of cash assets, plus the home, can be protected, so that Medicaid would cover most of the nursing home cost.

Moving a loved one into a nursing home can be stressful enough, without having to worry about the cost. Help yourself and your family, by preparing the proper documents ahead of time to eliminate some of the stress.

Working with an elder law attorney who specializes in Medicaid planning is a wise move. Don’t wait until it is too late.

Have things in order, so you or a loved one can avoid any unnecessary stress and keep the assets that you’ve acquired during your lifetime.

Reference: nbcnew25.com (April 30, 2021) “Elder law and estate planning: What you need to know”

Suggested Key Terms: Elder Law Attorney, Estate Planning, Wills, Power of Attorney, Trust, Medicaid

Do You Know about the Grandparents Scam?

The Miami-Dade State Attorney’s Office explains that the Grandparents Scam involves someone posing as a grandchild or relative of the victim and claiming to be out of town and in need of help, usually involving an arrest.

Local10.com’s recent article entitled “Man, 22, arrested in connection with ‘Grandparents Scam’” notes that, in some cases, the scammer says he or she is a relative’s lawyer or bail bondsman.

County prosecutors explain that the fake relative claims to require cash for bail, hospital bills, or other bogus expenses. The caller provides the victim with directions on how to deposit money into their bank account.

The victims are asked to not tell anyone and are sometimes called again, so the fake relative can ask for additional funds due to “negative developments” in their case, prosecutors said.

“When a 22-year-old like Alvaro Esteban Jaramillo Fajardo revels in helping to allegedly steal the savings of caring grandparents and the elderly, there is something truly wrong. Sadly, some people seem to believe that it’s always easier and more sophisticated to take someone else’s money rather than work for it oneself,” State Attorney Katherine Fernandez Rundle said in a statement.

“The grandparent scammers and those ensuring that the scam works all deserve to hear the sound of a jail door closing behind them.”

Jaramillo Fajardo is facing charges in connection with eight victims, ranging in age from 71 to 88.

In all, these Grandparents Scam victims suffered financial losses of more than $480,000.

According to a news release from the state attorney’s office, Jaramillo Fajardo acted as the facilitator of the cash withdrawals from his associates’ bank accounts, “which effectively laundered the stolen money.”

Prosecutors explained that Fajardo paid the account holders about $2,000 for each incident in which they were involved.

Authorities say the Defendant frequently sought out his associates on social media and also offered a finder’s fee, if they obtained new, usable bank accounts to receive the illicit funds.

Fajardo also boasted that none of the account holders had previously gotten into any trouble, prosecutors said.

Reference: local10.com (April 15, 2021) “Man, 22, arrested in connection with ‘Grandparents Scam’”

Suggested Key Terms: Elder Abuse, Financial Abuse