Why Is a Will So Important?

A 2020 Gallup poll found that less than half of Americans have a will or have made plans regarding how they would like their money and estate handled in the case of their death. The poll also showed that Americans ages 65 and up are the most likely to have one.

Yahoo News’ recent article entitled “How To Write A Will: The Importance Of A Will And Living Will” says that no matter your age, it’s important to have a will to be in control of what happens with your own assets. A will is a legal document that establishes a person’s wishes regarding the distribution of their assets — money, real estate, etc. — and the care of any minor children.

Without this type of legal document, the state law may control who gets your “probate” assets and when. Having one can save an enormous amount of time and money in estate administration and the process of having a guardian appointed for your minor children, if needed.

There’s a big difference between a will and a living will. A living will is a document that lets you state in advance how you want to be treated under certain medical situations, if you’re unable to make those decisions for yourself at a later time.

These differ by state law. However, they generally cover end-of-life decision-making and treatment options. General medical decisions unrelated to end of life care are typically covered in a health care power of attorney. Some states combine these two documents into one directive.

Unlike a living will, which specifically provides instructions for medical care during your lifetime, it lets you to decide in advance who you want to receive your assets upon your death, and who you want to be in charge of handling the administration of your estate. If you have minor children, it also allows you to nominate a guardian for them.

When creating a will, think about the “what,” the “who” and the “how.” To do so, ask yourself the following questions:

  • What assets do you have?
  • To whom do you want to leave them?
  • Who do you want to be in charge of making sure that happens?
  • Who do you want to be responsible for your minor children?
  • How do you want the assets transferred?

Reference: Yahoo News (Aug. 17, 2022) “How To Write A Will: The Importance Of A Will And Living Will”

What’s the Latest with the Queen of Soul’s Estate?

Clearing the Queen of Soul’s tax debts could clear the way for her four sons to finally take over her post-death affairs and fully benefit from revenues flowing into her estate — which could be millions of dollars.

The Detroit Free Press reports in its recent article entitled “Aretha Franklin estate says $7.8 million IRS bill is paid; could spell windfall for sons” reports that Franklin’s tax burden had been an immovable hurdle as her heirs sorted out other estate matters — sometimes combatively — in Oakland County Probate Court following her 2018 death.

The IRS debt prevented the sons from receiving money, even while the late star’s music and movie projects generated big revenue in her name. The remaining tax liability was paid off in June with delivery of a cashier’s check to the IRS.

The IRS said that the singer’s estate had nearly $8 million in unpaid taxes, penalties and interest that had piled up during the previous seven years. The estate at last struck a deal with the IRS in April 2021 with an accelerated payoff schedule that also set up limited but regular payments to Franklin’s sons.

The IRS deal earmarked 45% of incoming Aretha Franklin revenue to pay down the standing tax balance. Another 40% was directed to an escrow account to handle taxes on newly generated income.

With the tax debt now purportedly off its back, the estate contends that most of the incoming cash should get distributed equally among the four sons each month. From that point, income tax obligations would be on each individual. Oakland County (MI) Probate Judge Jennifer Callaghan would have to approve the request.

In the meantime, there’s still the issue of multiple wills that were apparently signed by Franklin. That includes three handwritten documents discovered in her home in 2019.

A fourth will draft suddenly was discovered last year — a typed document prepared by a Troy law firm in 2017 but left unsigned by the star.

The documents contain conflicting instructions about Franklin’s wishes for her estate, including which heirs were to get what, and their emergence exacerbated tensions among sons Clarence, Edward, Teddy and Kecalf.

A trial to clear up the situation was planned for 2020 but was delayed due to the pandemic.

Reference: Detroit Free Press (July 11, 2022) “Aretha Franklin estate says $7.8 million IRS bill is paid; could spell windfall for sons”

Who will Receive Naomi Judd’s Estate?

Country music legend Naomi Judd, who died in April, named her husband Larry Strickland as executor of her estate. She was married to Strickland for 33 years. According to court documents, he’ll have “full authority and discretion” over her estate and won’t need to have the “approval of any court” or permission from any beneficiary.

The Los Angeles Times’ recent article entitled “Naomi Judd reportedly left daughters Wynonna and Ashley out of her final will” says that the 76-year-old Judd prepared the will on Nov. 20, 2017.

The will also provides that Strickland is entitled to receive compensation for his executor duties and that he would be reimbursed for legal fees, disbursements and other “reasonable expenses” in the administration of Judd’s estate. Judd‘s brother-in-law, Reginald Strickland, and Wiatr & Associates President Daniel Kris Wiatr will serve as the estate’s co-executors.

Reports say that Wynonna isn’t happy with her mother’s will and “believes she was a major force behind her mother’s success.”

Naomi died from suicide on April 30a day before she and her daughter Wynonna, known as “The Judds,” were to be inducted into the Country Music Hall of Fame.

The daughters teamed up in their grief to tearfully accept the Hall of Fame honor for their late mother.

Wynonna later decided to tour despite her mother’s death. She enlisted some major stars to join her on the road.

In May, Ashley revealed that her mother had used a firearm and said she found her mother’s body when she was visiting her mom’s Tennessee home.

“Our mother couldn’t hang on to be recognized by her peers. That is the level of catastrophe of what was going on inside of her,” she told ABC’s Diane Sawyer. “Because the barrier between the regard in which they held her couldn’t penetrate into her heart and the lie the disease told her was so convincing.”

The Judds were known for songs including “Why Not Me,” “Love Can Build a Bridge” and “Mama He’s Crazy.”

Reference: Los Angeles Times (Aug. 1, 2022) “Naomi Judd reportedly left daughters Wynonna and Ashley out of her final will”

Do Young Adults Need a Will?

Everyone, age 18 and older, needs at least some basic estate planning documents. That’s true even if you own very little. You still need an advance health care directive and a power of attorney. These estate planning documents designate agents to make decisions for you, in the event you become incapacitated.

The Los Angeles Daily News’ recent article entitled “Estate planning, often overwhelming, starts with the basics” reminds us that incapacity doesn’t just happen to the elderly. It can happen from an accident, a health crisis, or an injury. To have these documents in place, you just need to state the person you want to make decisions for you and generally what those decisions should be.

An experienced estate planning attorney will help you draft your will by using a questionnaire you complete before your initial meeting. This helps you to organize and list the information required. It also helps the attorney spot issues, such as taxes, blended families and special needs. You will list your assets — real property, business entities, bank accounts, investment accounts, retirement accounts, stocks, bonds, cars, life insurance and anything else you may own. The estimated or actual value of each item should also be included. If you have life insurance or retirement plans, attach a copy of the beneficiary designation form.

An experienced estate planning attorney will discuss your financial and family situation and offer options for a plan that will fit your needs.

The attorney may have many different solutions for the issues that concern you and those you may not have considered. These might include a child with poor money habits, a blended family where you need to balance the needs of a surviving spouse with the expectations of the children from a prior marriage, a pet needing ongoing care, or your thoughts about who to choose as your trustee or power of attorney.

There are many possible solutions, and you aren’t required to know them before you move ahead with your estate planning.

If you are an adult, you know generally what you own, your name and address and the names of your spouse and children or any other beneficiaries you’d like to include in your plan. So, you’re ready to move ahead with your estate planning documents.

The key is to do this now and not procrastinate.

Reference: Los Angeles Daily News (July 24, 2022) “Estate planning, often overwhelming, starts with the basics”

Did COVID Spark More Estate Planning?

Those who have had a serious bout with the coronavirus (COVID-19) are 66% more likely to have created a will than those who did not get as sick, according to Caring.com’s 2022 Wills and Estate Planning Study.

COVID has accounted for more than one million deaths in the United States thus far.

MSN’s recent article entitled “More Young Adults Are Making This Surprising and Smart Money Move” says that it may be even more surprising that the number of adults in the 18-to-34 age range who now have estate planning documents has jumped 50% in the pandemic era.

Nonetheless, many people of all ages continue to put off the process of creating this key estate planning document.

Two-thirds of Americans still don’t have a will.

Caring.com found that among those who don’t have a will, a third say they think they don’t have enough wealth to warrant one.

However, even if you don’t have an expensive home, a large IRA and other valuable assets to pass on, you can still benefit from creating a will.

There’s no minimum level of wealth needed to have an estate plan, and every adult should have a basic plan in place to care for their own needs and the needs of their family.

The Caring.com survey of more than 2,600 adults found that—you guessed it—good old-fashioned procrastination is the primary reason people don’t create a will. About 40% admit to this factor.

Not surprisingly, the survey also found that those with higher incomes are more likely to put off getting a will due to procrastination.

Those people with lower incomes don’t prioritize a will because they don’t feel they have the assets to justify this important legal document.

Reference: MSN (July 24, 2022) “More Young Adults Are Making This Surprising and Smart Money Move”

Why Is Valerie Bertinelli’s Ex Challenging Their Pre-Nup?

On Wednesday, Food Network host Valerie Bertinelli filed a 13-page petition to bifurcate her marital status from financial issues in her divorce from Tom Vitale, according to court records obtained by PEOPLE. The court documents note that Bertinelli is looking for “an early and separate trial on the issue of validity of Premarital Agreement,” says MSN’s recent article entitled “Valerie Bertinelli Requests Separate Trial to Validate Prenup in Divorce from Tom Vitale.”

If the petition is granted by the judge, it would mean the former couple can’t move forward with divorce proceedings until the court determines the validity of the premarital agreement. Bertinelli’s request argues that granting this bifurcation could “assist the parties to achieve settlement of remaining issues.”

The former “One Day at a Time” actress is requesting a separate trial from any other outstanding issues regarding the divorce — a move she’s made after Vitale asked to be awarded $50,000 per month in spousal support and $200,000 in legal fees in early July, according to the records.

Bertinelli’s request claims that their 2010 premarital agreement contains a “waiver of temporary and permanent spousal support.”

Valerie’s husband of more than 10 years tried to block her from requesting spousal support and also challenged the validity of their prenuptial agreement itself.

Six months after legally separating in November, Bertinelli filed for divorce from Vitale in May.

She cited “irreconcilable differences” as the reason for the dissolution of their marriage.

In June, the actress appeared on the Today show with Hoda Kotb and got emotional when asked if she ever wanted to look for love again. She said, “Oh, God no.”

“Because of the challenges that I’m going through right now, because divorce sucks. I can’t imagine ever trusting anyone again to let into my life. So, I have some trust issues that I’m sure I’m going to have to get past,” Bertinelli added.

The Hot in Cleveland star has also posted TikTok videos in which she mentions divorce. In May, she posted a video with the caption, “Divorce sucks.” In another May video, she shared a video of herself giving what appeared to be relationship advice to fans.

“When someone shows you who they are, believe them the very first time. Don’t try to fix anything. Don’t try to change them. It’s not your job,” she said.

Reference: MSN (July 18, 2022) “Valerie Bertinelli Requests Separate Trial to Validate Prenup in Divorce from Tom Vitale”

When Should I Hire an Estate Planning Attorney?

Kiplinger’s recent article entitled “Should I Hire an Estate Planning Attorney Now That I Am a Widow?” describes some situations where an experienced estate planning attorney is really required:

Estates with many types of complicated assets. Hiring an experienced estate planning attorney is a must for more complicated estates. These are estates with multiple investments, numerous assets, cryptocurrency, hedge funds, private equity, or a business. Some estates also include significant real estate, including vacation homes, commercial properties and timeshares. Managing, appraising and selling a business, real estate and complex investments are all jobs that require some expertise and experience. In addition, valuing private equity investments and certain hedge funds is also not straightforward and can require the services of an expert.

The estate might owe federal or state estate tax. In some estates, there are time-sensitive decisions that require somewhat immediate attention. Even if all assets were held jointly and court involvement is unnecessary, hiring a knowledgeable trust and estate lawyer may have real tax benefits. There are many planning strategies from which testators and their heirs can benefit. For example, the will or an estate tax return may need to be filed to transfer the deceased spouse’s unused Federal Estate Unified Tax Credit to the surviving spouse. The decision whether to transfer to an unused unified tax credit to the surviving spouse is not obvious and requires guidance from an experienced estate planning attorney.

Many states also impose their own estate taxes, and many of these states impose taxes on an estate valued at $1 million or more. Therefore, when you add the value of a home, investments and life insurance proceeds, many Americans will find themselves on the wrong side of the state exemption and owe estate taxes.

The family is fighting. Family disputes often emerge after the death of a parent. It’s stressful, and emotions run high. No one is really operating at their best. If unhappy family members want to contest the will or are threatening a lawsuit, you’ll also need guidance from an experienced estate planning attorney. These fights can result in time-intensive and costly lawsuits. The sooner you get legal advice from a probate attorney, the better chance you have of avoiding this.

Complicated beneficiary plans. Some wills have tricky beneficiary designations that leave assets to one child but nothing to another. Others could include charitable bequests or leave assets to many beneficiaries.

Talk to an experienced attorney, whose primary focus is estate and trust law.

Reference: Kiplinger (July 5, 2022) “Should I Hire an Estate Planning Attorney Now That I Am a Widow?”

What are Big Mistakes to Avoid in Estate Planning?

Whether it’s a change in domicile, the death of a family member, new grandchildren, or a significant change in assets, it is important to make sure you adjust your estate plan accordingly, says Kiplinger’s recent article entitled “Updating Your Estate Plan? Don’t Make These Top Mistakes.”

  1. Updating a will or trust but forgetting to update ancillary documents. When updating an estate plan, people tend to home in on updating their wills and trusts without also having their powers of attorney, health care directives, or guardians reviewed. This prevents them from completing a full update to their estate planning. While these ancillary documents are good forever, that doesn’t mean they shouldn’t be reviewed and updated.
  2. Using flawed reasoning when selecting agents to act on your behalf. Some people choose their executors, trustees and other agents by trying to appoint all their children together or appointing agents by age or profession, instead of who is best suited to serve. The best person should live nearby and have the time to address issues you may need.
  3. Forgetting to update an estate plan when moving to another state. Estate planning documents drafted out-of-state, provided they were drafted with the legal requirements of that state, will be effective in all states. However, practically speaking, having out-of-state documents can complicate trust or estate administration, or the ability to exercise powers of attorney or health care directives. You should always update your plan when they move to another state to make certain that the plan functions correctly.
  4. Forgetting to create an asset cheat sheet or failing to keep that list updated. Most of us accumulate different assets and investments as we get older. It’s not uncommon for a person to have stocks, life insurance, annuities, securities, or other investments at many different institutions. When you update your estate plan, create a list of your accounts and assets and update that list as things change. Be sure to include the name and location of the account and the last four digits of the account number.

When making changes, if you avoid the above mistakes, it will ensure that your plan is properly updated and will not cause any unnecessary future complications.

Reference: Kiplinger (June 30, 2022) “Updating Your Estate Plan? Don’t Make These Top Mistakes”

What Is a Marital Trust?

Marital trusts have multiple benefits for beneficiaries, including asset allocation and tax benefits.  They are worth looking at in your estate plan.

Forbes’ recent article entitled “Guide To Marital Trusts” says that a marital trust is an irrevocable trust that allows you to transfer a deceased spouse’s assets to the surviving spouse without paying any taxes. The trust also protects assets from creditors and future spouses that the surviving spouse may encounter.

When the surviving spouse dies, the assets in the trust aren’t included as part of their estate. That will keep the taxes on their estate lower.

There are three parties involved in setting up, maintaining and ultimately passing along the trust, including a grantor, who is the person who establishes the trust; the trustee, who’s the person or organization that manages the trust and its assets; and the beneficiary. That’s the person who will eventually receive the assets in the trust, once the grantor dies.

A marital trust also involves the principal, which are assets initially put into the trust.

A marital trust doubles the couple’s estate tax exemption limit, especially when almost all assets are owned by one spouse. Estate tax refers to the federal tax that must be paid on someone’s estate after they die. The estate tax limit is how much of an estate will be tax-free. In 2022, the estate tax limit is $12.06 million, which means utilizing a marital trust would essentially double that amount to $24.12 million. Therefore, about $24 million of a couple’s net worth would be shielded from estate taxes by taking advantage of a marital trust.

A marital trust is also beneficial because it can provide income to the surviving spouse, tax-free.

Only a surviving spouse can be a beneficiary of a marital trust. When the surviving spouse dies, the trust will then be passed on to whomever the first spouse’s will or trust governs.

If keeping wealth within your family after you die is important, then a marital trust is an estate planning tool that will make certain that individuals outside of your family don’t have access to the wealth. You can put a variety of assets into a marital trust, including property, retirement accounts and investment accounts.

A marital trust is one legal tool to consider using when planning for a blended family.

Reference: Forbes (June 30, 2022) “Guide To Marital Trusts”

Does ‘Gray Divorce’ Fit into Estate Planning?

According to the Pew Research Center, the divorce rate has more than doubled for people over 50 since the 1990s. The Pandemic is also adding to the uptick, says AARP’s recent article entitled “Getting Divorced? It’s Time to Update Your Caregiving Plan.”

A divorce can be financially draining. Moreover, later-in-life divorces frequently impact women’s finances more than men’s. That is because in addition to depressed earnings from time spent out of the workforce raising children, women find themselves more financially vulnerable post-divorce and more likely to serve as caregivers again in the future. Even so, for partners of all genders, it is important to consider the longer-term financial outlook, not just the financial situation you’re in when you are actually dissolving the marriage.

You and your spouse will be dividing assets and liabilities and the responsibilities regarding spousal support. How one of you will live if the other gets sick or passes away should also be part of this conversation.

Consider where you’ll need to make changes. One may be removing your spouse from beneficiary designations on all your accounts. (In some states, this is automatic.) Your divorce agreement may also include buying life insurance or maintaining a trust or beneficiary designations for one another.

Create or update your estate plan immediately. You should also ask your estate planning attorney to review your marital agreement. They will have suggestions about how to align your estate plan with your divorce obligations. If you and your ex are co-parenting children, your estate plan should address who their guardians will be, if both biological parents pass away. It is also important to address who will manage any inheritance, if you don’t want your ex-spouse handling assets you may leave to your children.

Create your life care plan, which means naming health care proxies or surrogates (who will take care of your medical affairs, if you’re in need of caregiving), designating a financial power of attorney (who will take care of your finances and legal affairs), and naming a guardian for yourself if you’re incapacitated.

Consider the way in which your divorce will impact your children and extended family if you need caregiving. At a minimum, agree between yourselves what level of contact you can manage and, if you share children and loved ones, know that your lives will cross along the way.

While your marriage may not last, the connections will, so make a wise plan.

Reference: AARP (Jan. 25, 2022) “Getting Divorced? It’s Time to Update Your Caregiving Plan”