In Estate Planning, Fair and Equal are Different

What may work fine when you are raising children does not always work in estate planning, as reported in The Press Enterprise’s article “Why ‘fair’ and ‘equal’ aren’t always the same.” Thinking that treating children in the exact same way will avoid children arguing about who got more, who deserved more, etc., doesn’t apply here. Trying to treat kids the same, often ends up with parents feeling guilty and questioning their parenting skills. Sibling rivalry doesn’t always end, when kids grow up.

Adult children can have an emotionally charged and surprisingly juvenile response, when their parent’s estate planning comes to light, before or after a death. Beneficiaries often equate the terms of the will with how much they were loved—or treated unfairly.

When the older sibling who “was always Mom’s favorite” is put in charge of the estate, other siblings may hear “Mom didn’t love me as much” instead of recognizing that their older sibling has always been better at being organized and working through problems.

One of the hardest decisions in estate planning is often who should be in charge of managing the estate. In fact, this often leads to the entire estate plan grinding to a halt. Some parents elect to name several adult children as co-executors. Sometimes this works, and other times it turns into a complete disaster.

If you don’t want your children doing battle with each other in court and want them to continue functioning as a family, it’s best to have conversations in advance about your wishes. If you want them to work together, be realistic.

It may be necessary to choose a family member or friend to manage the estate, so as to avoid choosing one child over another. If the trusted person is a legal professional with trust administration experience, that may avoid years of family strife. However, if that family friend or relative also has their favorites or if there is any animosity between the children and this person, it may become even more complicated.

If a parent’s sibling is selected, will that person be able to perform the duties of their role, or might they be too infirm?

Another option is to name a professional executor, such as an attorney or trusted accountant. Some people consider using an institutional trustee, like a bank or a trust company, but they may only represent large estates.

Your estate plan needs to have clear instructions. Talk with your estate planning attorney about your family dynamics. They may have recommendations that you have not considered. Talk with your children, so they understand your thinking. A little information in advance could go a long way towards preserving family unity.

Reference: The Press Enterprise (Sep. 14, 2019) “Why ‘fair’ and ‘equal’ aren’t always the same”

Still Waiting to Update Your Estate Plan?

If you are wondering if Franklin’s handwritten wills are valid, join the club. With an estate valued at least $80 million, it’s good news that some kind of will was found to divide up her assets. However, says Daily Reckoning in the article “Urgent: Your Will May Need Updates,” there’s no guarantee that those wills are going to hold up in court.

The problem with Aretha’s family? It proves how important it is to have a properly executed will and one that is also up to date. It’s different for every family and every person, but if you’ve done any of the following, you need to update your will.

Moved to a different state. The laws that govern estate law are set by each state, so if you move to a different state, your entire will or parts of it may not work. If your estate is deemed invalid, then your wishes won’t necessarily be followed. Your family will suffer the consequences. For example, if your old state required only one witness for a will to be valid and you move to a state that requires two witnesses, then your executor is going to have an uphill battle. Some states also allow self-written wills but have very specific rules about what is and is not permitted.

Bought new property. People make this mistake all the time. They assume that because their will says they are gifting their home to their children, updating the new address doesn’t matter. However, it does. Your will must specify exactly what home and what address you are gifting. If you have a second property or a new property, update the information on your will.

Downsized your stuff. Sometimes people get excited about getting rid of their possessions and accidentally discard or donate something they had promised to someone in their will. If your will doesn’t reflect your new, more minimal lifestyle, your heirs won’t get what you promised to them. Instead, they may get nothing. Therefore, review your will and distribute the possessions you do have.

Gifting something early and forgetting what was in your will. If your will specifies that your oldest son gets your mother’s mahogany desk, but you gave it to your niece two months ago, you may create some awkward moments for your family. Whenever gifting something with great sentimental or financial value, be sure to review your will.

Having a boom or a bust. If your finances take a dramatic turn, for better or worse, you may create problems for heirs, if your will is not revised to reflect the changes. Let’s say one account has grown with the market, but another has taken a nosedive. Did you give your two children a 50/50 split, or does one child now stand to inherit a jumbo-sized pension, while the other is going to get little or nothing?

Had a change of heart. Has your charity of choice changed? Or did a charity you dedicated years to change its mission or close? Again, review your will.

Had a death in the family. If a spouse dies before you, your will may list alternative recipients. However, you probably want to review your will. You may want to make changes regarding how certain assets are titled. If a family member who was a beneficiary or executor dies, then you’ll need to update your will.

Your estate planning attorney will review your will and talk about the various changes in your life. Life changes over the course of time, and your will needs to reflect those changes.

Reference: Daily Reckoning (Sep. 12, 2019) “Urgent: Your Will May Need Updates”

Will a No-Contest Clause Protect Your Estate from Squabbling Kids?

We may enjoy watching courtroom drama in movies, TV and on stage, but when it comes to our own lives, most people will do just about anything to avoid an estate battle. A “No Contest” provision is an attempt to preclude this and to give anyone who might be thinking about an estate battle a clear message, according to the article “Why courts enforce a ‘No Contest’ clause from The Daily Sentinel.

The simple answer to the question of “why would a court enforce a No Contest clause” is pretty straightforward. If that’s what you put in the will, that’s what the court wants to have happen.

An estate planning attorney will know the correct wording for your state, but the fundamental message in a No Contest clause is that anyone who attempts to contest or oppose the document will give up their share, lose any right or interest to the estate and will be treated as if they have died before the person who is signing the will.

You can have a will created without a No Contest clause, but if you want to make it very clear how you feel about anyone challenging your will, this is a good way to do it.

As you might imagine, it’s not always so cut and dried. There are limitations that courts need to consider, when they are being asked to enforce this type of clause. The red flag is whether there is “probable cause” to challenge provisions of the will or trust. Simply put, if there is language that either is against the law or against public policy, meaning it encourages behavior that is not legal or desired by our general society, then the court may accept a challenge to the will.

For instance, a provision of a will or trust that would result in discrimination or encourage deceitfulness could be challenged. If the language in the No Contest clause differs markedly from the language in the rest of the document, it could be open to challenge.

For the most part, courts are required to let people decide how they want their assets distributed. For someone who is considering making a statement with their will that may be a bit unconventional or that may not be received well by family members, a No Contest clause will enforce their wishes. It is highly recommended that if this is what someone has in mind, they consult with an estate planning attorney to be sure that their wish will be deemed valid by the court.

As with every part of your estate plan, it’s far better to have an estate plan in place with all your wishes carefully outlined, than to hope that your personal executive has the ability to handle your requests. If your will creates a mutiny, then the executor will bear the brunt of the plan. They’ll need to be fully supported by the law, if controversial wishes are going to stand firm.

Reference: The Daily Sentinel (August 24, 2019) “Why courts enforce a ‘No Contest’ clause

Where Should I Keep My Estate Plan?

Many people ask their attorney to hold the original documents of their estate plan. This prevents the plan from being misplaced at home and keeps it away from prying family members.

Forbes’ recent article, “Keeping Your Estate Planning Documents Safe,” explains that because of the expense of storage and the move to paperless offices, some estate planning attorneys are now having their clients hold the original documents.

This saves money for the attorney, but it leaves the client with the problem of where to put the originals.

If you need a safe and secure place for them, here are some options.

No safe deposit boxes. Avoid placing the original documents in a safe deposit box, because the authority to get into the box is inside the box! If you pass away or are incapacitated—and nobody has access to the safe deposit box—they’ll need a court order to get access. For them to get the court order, they need the documents inside the box. It’s like the chicken and the egg.

Get a fireproof safe. A fireproof safe is a great place to keep these important documents.

Make copies. Get a set of hard copies in another location that is easily accessible. You can now use the safe deposit box to hold a set of copies of your documents. Your attorney should also have a set of hard copies.

E-records. Your estate planning attorney should also have an electronic copy of your estate plan and should send you an electronic version of the documents to keep with your e-records.

Don’t lose it, if the originals are misplaced or destroyed. If the original documents somehow vanish, your family may still be able to use a set of copies. For instance, a photocopy of a will can be probated, once the executor has attested that she has made a diligent search to find the original which hasn’t turned up.

Remember that this isn’t a “one and done” task. You should review your documents every few years to make certain the people you’ve named in them are still alive and your intentions haven’t changed.

Reference: Forbes (August 16, 2019) “Keeping Your Estate Planning Documents Safe”

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