How to Help Create an Estate Plan

We all have assets that need to go to someone when we die. Without an estate plan, the decision as to who gets your assets is left to state law, explains Money Talks News’ recent article entitled “Why Everyone Needs an Estate Plan.”

You don’t have to delay until you’re gray to get an estate plan in place. Estate planning can benefit you at any age. No one can predict the future, and if the unexpected occurs and you pass at a young age, an estate plan can designate who will get guardianship of your minor children or the pets you leave behind.

Hiring an experienced estate planning attorney who can write up the necessary legal documents may be smart when you decide to put together an estate plan. You can also take these steps to put your estate plan in place.

  1. Make an inventory of your assets — list your tangible and intangible assets and their estimated value. Tangible assets include your home or other real estate holdings, vehicles, fine jewelry and collectibles. Intangible assets are things such as your bank account, life insurance policies, retirement accounts, investments (stocks, bonds, and mutual funds) and businesses you own.
  2. Review your beneficiaries — make certain your retirement account and life insurance policies have designated beneficiaries and the information is up to date.
  3. Review the estate tax and inheritance tax laws in your state.
  4. Review your estate plan regularly — things in your life may change, so you should reassess your estate plan when these changes happen. Life events, such as marriage, divorce, having a child, losing a loved one, or getting a new job, are all good times to take another scan of your estate plan.

Failing to have an estate plan can cause a lot of stress for your family. They can be torn apart in disputes over the division of assets after a loved one dies.

Life is full of unknowns, so whether you’re a young parent or a senior, having an estate plan in place to carry out your wishes after you die will lessen the burden on those you love and give them time to grieve.

Reference: Money Talks News (Oct. 21, 2022) “Why Everyone Needs an Estate Plan”

Do I Need to Name a Life Insurance Beneficiary?

When a loved one dies, there are questions to address, such as how to pay for a funeral and other death expenses. A life insurance policy may help. However, the deceased must have made sure the proper beneficiary is named.

If a beneficiary isn’t designated, some issues with the estate could arise, or the policy could go to the decedent’s estate. Likewise, the same is true if the one beneficiary preceded the decedent in death.

Yahoo Finance’s recent article entitled “What Happens If I Don’t Name a Life Insurance Beneficiary?” explains that a life insurance policy is a contract you enter into with a life insurance company.

When you set up your life insurance policy, you have the right to name one or more beneficiaries who’ll get the proceeds of the policy when you die. You pay premiums on the policy until your death, to guarantee your beneficiaries that right.

You might designate just one beneficiary to receive all the proceeds. In addition to the primary beneficiary, you can name contingent beneficiaries who will receive the proceeds of the policy if the primary beneficiary predeceases the policyholder.

It is important to add as much identifying information about your beneficiaries as possible, so they can be easily identified. It’s also important to keep your policy up to date on the information of your beneficiaries.

If there are no beneficiaries living, either the proceeds of the policy will enter the probate process, or the life insurance proceeds will pass to the decedent’s heirs-at-law who are those people who are close to the decedent and would probably inherit, if there was a beneficiary designation or will.

Heirs-at-law are also defined as those people who will inherit your assets, if you die intestate.

Dying without a beneficiary in place or leaving your estate as beneficiary of your policy have different rules in each state.

Ask an experienced estate planning attorney about your state’s rules and the rules of the life insurance company when you’re setting up your life insurance policy and will.

Reference: Yahoo Finance (Dec. 10, 2022) “What Happens If I Don’t Name a Life Insurance Beneficiary?”

Can I Contest Dad’s Will While He’s Still Living?

The Maryland Daily Record’s recent article entitled “Wills cannot be challenged until testator dies, Md. appeals court says” explains the Court of Special Appeals said a will or revocable trust is only a draft document until its drafter, or testator, has died.

As a result, those challenging a living person’s will or trust would be merely “presumptive heirs” who have no legal standing to challenge a legal document that’s not yet final.

“Pre-death challenges to wills may be a waste of time – the testator might replace it with a new one, die without property, or the challenger might die before the testator,” Judge Andrea M. Leahy wrote for the Court of Special Appeals.

The appellate court’s decision was the second defeat for Amy Silverstone, whose legal challenge to her mother Andrea Jacobson’s will was dismissed by a Montgomery County Circuit Court judge for lack of standing.

Silverstone argued that it should be declared void based on her claim that her aunt unduly influenced her mother. The mother suffers from dementia and memory impairment.

This undue influence led Silverstone’s mother, Andrea Jacobson, to change her will in 2018 to expressly “disinherit” Silverstone and her son, Silverstone alleged.

The mother’s new will stated that Silverstone and her son shall not “in any way be a beneficiary of or receive any portion of the trust or the grantor’s estate.”

The disinheritance came amid a falling out between mother and daughter, according to court documents.

Silverstone’s challenge to the will and related trust is premature while her mother is alive, the court held.

Reference: The Maryland Daily Record (Dec. 12, 2022) “Wills cannot be challenged until testator dies, Md. appeals court says”

Can I Leave Money to My School in My Estate Plan?

Mahlon “Jack” Kohler passed away in September 2021, at the age of 96. In his will, he left $40,000 to Northeast Community College in Norfolk, Nebraska for nursing and optometry scholarships. The gift has been placed in an endowment as a charitable donation and will provide assistance for nursing students in perpetuity.

News Channel Nebraska’s recent article entitled “Norfolk man leaves $40,000 to Northeast Community College for nursing scholarships” reports that, prior to graduating high school, Mr. Kohler was called to duty by the United States Navy in 1943.

After basic training, he was sent to the Pacific Theatre where he was stationed at Guadalcanal, New Guinea, Russell and Amerilites Islands. He then returned to the Brooklyn, New York Naval Base in 1945. He received an honorable discharge on May 6, 1946.

After his discharge from the Navy, Mr. Kohler moved back to Norfolk and worked for American Optical Company for 33 years. He was recognized as a World War II Honorary Sentinel in front of over 86,000 fans at Memorial Stadium in Lincoln during a Cornhusker football game just after celebrating his 95th birthday.

“Jack lived in the Norfolk area for many years and was always fond of education,” said his stepson, Ronald Kotrous. “He decided to choose nursing (for his benevolence) because of the people. In the last few years, they were really good to Jack and to my mom, so they wanted to give back to that community.”

“Endowed scholarships are a great way to create a legacy,” said Dr. Tracy Kruse, vice president of development and external affairs at Northeast and executive director of the Northeast Foundation. “The principal of an endowment is invested, and scholarships are paid from the earnings.”

Kruse encouraged others to consider Northeast Community College in their estate planning.

“Planned giving provides an opportunity to make a large gift while still caring for your loved ones,” she said. “An estate gift is probably the largest charitable donation you will ever make, and the best opportunity to leave a lasting legacy.”

Reference: News Channel Nebraska (Nov. 29, 2022) “Norfolk man leaves $40,000 to Northeast Community College for nursing scholarships”

Can Executor Take the Money and Run?
Living trust and estate planning form on a desk.

Can Executor Take the Money and Run?

What if your executor or trustee decides to run off to the Bahamas with all your assets, leaving heirs with nothing? Ohio Farmer’s recent article entitled “What if trustee runs off with assets?” says that safeguards should be in place to protect the heirs of an estate.

The most common way to protect against this possibility is a fiduciary bond. An executor, trustee, or guardian would get a bond early in a probate case and file it with the court. The bond would remain in place while the fiduciary is serving his or her role. If the fiduciary absconds with estate assets, the bond is there to help the beneficiaries.

This expense would be covered by the fiduciary, who would need to find a bond company willing to issue it. The bond amount is connected to the value of personal property, such as financial accounts, vehicles and personal effects.

Do you need a bond to cover the value of land? No. The primary difference is that land can’t be picked up easily and moved, making a bond unnecessary. It’s also very hard to transfer land without extensive safeguards. In some cases, court permission is required for a transfer. To sell a farm or ranch, a title company might raise suspicion. Real estate-related actions are also often public record. In some cases, a court action can correct issues or order damages.

It’s possible to waive the requirement of a bond. That’s a default setting for bonds with estates, trusts, or guardianships. Most estate planning documents waive the bond requirement, because family members often serve as fiduciaries.

State law may also describe several situations where a bond isn’t required. However, if a party motions the court, and the judge thinks there’s good cause for a bond, one can be required for a fiduciary.

While a bond can provide some important protections for heirs, the likelihood of a fiduciary running off with assets is low. As a result, most administrations view the bond as an unnecessary step and expense.

However, if a family is concerned about the trustworthiness of a fiduciary, the bond requirement should be reinstated.

If an administration is pending, the family can petition the court to require a bond. Consult with an experienced estate planning attorney to determine the role of bonds for your estate plan.

Reference: Ohio Farmer (Nov. 22, 2022) “What if trustee runs off with assets?”

Giving to My Favorite Charity in Estate Plan

If you’d like to leave some or all of your money to a charity, Go Banking Rates’ recent article entitled “How To Leave Your Inheritance to an Organization” provides what you need to know about a charitable donation as part of your estate plan.

  1. Make Sure the Organization Accepts Donations. Unless you have a formal agreement with the charity stating they’ll accept the inheritance, the confirmation isn’t a binding commitment. As a result, you should ask the organization if there’s any form language that they may want you to add to your will or trust as part of a specific bequest. If the charity isn’t currently able to accept this kind of donation, look at what they will accept or if other charities with a similar mission will accept it.
  2. Set the Amount You Want the Charity To Receive. Some people want to leave the estate tax exemption — the maximum amount that can pass without tax — to individuals and leave the rest to charity. Because the estate tax exemption is subject to change and the value of your assets will change, the amount the charity will get will probably change from when the planning is completed.
  3. Have a Plan B in the Event that the Charity Doesn’t Exist After Your Death. Meet with your estate planning attorney and decide what happens to the bequest if the organization you’re donating to no longer exists. You may plan ahead to pass along the inheritance to another organization and make sure it receives the funds. You could also have the inheritance go back into the general distributions in your will.
  4. State How You Want Your Gift to Be Used. If there is a certain way that you’d like the charity to use the inheritance, you can certainly inquire with the organization and learn more. Find out if the charity accepts this type of restriction, how long it may last and what happens if the charity no longer uses it for this purpose.

As you draft charitable planning provisions, make sure you do so alongside an experienced estate planning attorney.

The provisions in your will should be specific about your desires and provide enough flexibility to your personal representative, executor, or trustee to be modified based on the conditions at the time of your death.

Reference: Go Banking Rates (August 26, 2022) “How To Leave Your Inheritance to an Organization”

The Basics of Estate Planning

No matter how BIG or small your net worth is, estate planning is a process that ensures your assets are handed down the way you want after you die.

Forbes’ recent article entitled “Estate Planning Basics” explains that everybody has an estate.

An estate is nothing more or less than the sum total of your assets and possessions of value. This includes:

  • Your car
  • Your home
  • Financial accounts
  • Investments; and
  • Personal property.

Estate planning is the process of deciding which people or organizations are to get your possessions or assets after you’ve died.

It’s also how you leave directions for managing your care and assets if you are incapacitated and unable to make financial or medical decisions. That is done with powers of attorney, a healthcare directive and a living will.

Your estate plan details who gets your assets. It also designates who can make critical healthcare and financial decisions on your behalf should you become incapacitated. If you have minor children, it also lets you designate their legal guardians, in case you die before they reach 18. It also allows you to name adults to safeguard their financial interests.

Your estate plan directs assets to specific entities or people in a legally binding manner. If you want your daughter to have your coin collection or your favorite animal rescue organization to get $500, it’s all mapped out in your plan.

You can also create a trust to safeguard a minor child’s assets until they reach a certain age. You can also keep assets out of probate. That way, your beneficiaries can easily access things like your home or bank accounts.

All estate plans should include documents that cover three main areas: asset transfer, medical needs and financial decisions. Ask an experienced estate planning attorney to help you create your  plan.

Reference: Forbes (Nov. 16, 2022) “Estate Planning Basics”

Planning for Crypto and NFT Assets in Estate Plan

People generally don’t like to deal with their own mortality. However, assets need the protection of an estate plan. If they are digital assets, planning is even more important. According to a recent article from nft.now titled “What Happens to Your Crypto and NFTs When You Die?”, Bitcoin’s total circulation is unlikely to reach its stated limit of 21 million due to early adopters who either died without an estate plan or lost their private keys and access to their bitcoin permanently.

The challenge of digital asset distributions is built into the decentralized nature of the blockchain. The core of the Web3 security is not to give away private keys, even to friends or loved ones, since there’s no centralized authority to address any wrongdoing. Striking a balance between security and accessibility about crypto asset management and inheritance is still an evolving process.

Estate planning attorneys know doing nothing is the worst thing to do. While state laws account for intestacy (what happens when there’s no will), and state law will be applied by the court to distribute assets if there’s no will, one option is to put digital assets into a will. However, there are potential pitfalls.

A will becomes a public document during probate. If the purpose of owning crypto is to keep the existence of the crypto wealth private, a will is not the best option. Wills are useful for many assets, but in the eyes of many, trusts are the preferred means of transferring crypto assets.

Managing digital inheritances with trusts offers many benefits, since the trusts bypass the courts and do not become public documents. Trusts are managed by a trustee, during life and after death.  Therefore, the trustee can act quickly if managing NFTs or crypto. The volatile nature of cryptocurrencies makes speed and easy access a necessity to protect digital fortunes.

When setting up a trust to manage cryptocurrency or NTFs, be sure that the trustee is well-versed in digital assets. If they don’t know how to manage your wallet, the assets could be lost. One means of overcoming this is to add a provision in the trust to allow the trustee to hire someone who has expertise with cryptocurrency and NFTs, so they will be properly managed.

Trusts do have some vulnerabilities. Estate planning for crypto requires some sharing of private keys or transferring digital assets. However, the typical crypto investor is usually loathe to hand over this information. It may be more acceptable for them to leave behind instructions on where the trustee can find the information. However, this creates another layer of vulnerability.

Solutions to the issue of digital asset dispersal in the event of incapacity or death are still evolving. There are a number of commercial solutions, some of which are as technical to the layperson as cryptocurrency is to the non-user.

An experienced estate planning attorney will be able to guide you in planning for digital and traditional assets, so they are not lost in the real world or in cyberspace. Prior planning is needed to protect wealth, whatever form it takes.

Reference: ntf.now (Oct. 27,2022) “What Happens to Your Crypto and NFTs When You Die?”

Could Your Estate Plan Be a Disaster?

You may think your estate plan is all set. However, it might not be. If you met with your attorney when your children were small, and your children are now grown and have children of their own, your estate could be a disaster waiting to happen, says a recent article “Today’s Business: Your estate plan—what could go wrong?” from the New Haven Register.

Most estate planning attorneys encourage their clients to revisit their estate plan every three to five years, with good reason. The size of your estate may have changed, you may have experienced a health issue, or you may have a new child or a grandchild. There may be tax law changes, statutes may have been updated and the plan you had three to five years ago may not accomplish what you want it to.

Many people say they “have nothing” and their estate is “simple.” They might also think “my spouse will get everything anyway.” This is wrong 99% of the time. There are unintended consequences of not having a will—accounts long forgotten, an untimely death of a joint owner, or a 40-year-old car with a higher value than anyone ever expected.

Your last will and testament designates who receives your assets and provides for any minors. A will can also help protect your wishes from a challenge by unwanted heirs after your passing.

The federal estate tax exemption today is $12.6 million, but if your will was created to minimize estate taxes when the exemption was $675,000, there may be unnecessary provisions in your plan. Heirs may be forced to set up inherited trusts or even sub-trusts. With today’s current exemption level, your plan may include trusts that no longer serve any purpose.

When was the last time you reviewed your will to see whether you still want the same people listed to serve as guardians for minor children, executors, or trustees? If those people are no longer in your family, or if the named person is now your ex, or if they’ve died, you have an ineffective estate plan.

Many adults believe they are too young to need an estate plan, or they’ve set up all of their assets to be owned jointly and, therefore, don’t need an estate plan. If one of the joint owners suffers a disability and is receiving government benefits, an inheritance could put all of their benefits at risk. Minor children might inherit your estate. However, the law does not permit minors to inherit assets, so someone needs to be named to serve as their conservator. If you don’t name someone, the court will, and it may not be the person you would choose.

What about using a template from an online website? Estate planning attorneys are called in to set things right from online wills with increasing frequency. The terms of a will are governed by state law and often these websites don’t explain how the document must be aligned with the statutes of the state where it is signed. Estate plans are not one-size-fits-all documents and a will deemed invalid by the court is the same as if there were no will at all.

If you don’t have an estate plan, if your estate plan is outdated, or if your estate plan was created using an online solution, your heirs may inherit a legal quagmire, in addition to your coin collection. Give yourself and them the peace of mind of knowing you’ve done the right thing and have your will updated or created with an experienced estate planning attorney.

Reference: New Haven Register (Oct. 29, 2022) “Today’s Business: Your estate plan—what could go wrong?”