The Classics: Fab Four of Estate Planning Mistakes

  1. “I’m not wealthy so I don’t have an estate: Everyone has an estate.  Estate planning is about what you own, not just what everything is worth.  If you have a car, a house, a bank account, or anything, you have an estate.  Estate planning encompasses how you plan for the distribution of your assets.  Estate planning can be a simple will, or it can be complicated trusts.
  2. Pets. Legally, pets are your personal property.  As with all property, you should plan for what will happen to them if you die.  Obviously this takes on critical importance with pets, since so many pets end up in cages in shelters when their owners become incapacitated or when they die.  Include instructions for the care of your pet in your will, or set up a pet trust.
  3. Designation of agents, naming of executors and trustees. Most clients do not want to “play favorites” with naming their children as agents to powers of attorney, executors in a will, trustees to a trust, so they want to name all three (or however many) children as “co-“ agents.  Under some states’ laws, co-agents can act independently of each other without requiring signatures on everything of, say, all three children.  This can still be a nightmare.  Financial institutions prefer one person for their own liability reasons.  Unless there’s an odd number to break a tie, disagreements can hamper efforts to care for an incapacitated parent or deal with estate matters.  If all three signatures are required, this can be burdensome if all three children live in separate states.  Choose one child—typically the closest geographically and most responsible financially—then list other children as successors.  (Choosing a guardian for your children is crucial also.  See this important post.)
  4. Buried or cremated? Where? Besides arguments over the distribution of belongings, the other main creator of arguments is decisions surrounding burial, cremation, and cemetery location.  Be absolutely clear in your estate plan about what you want.  Do you want buried?  If yes, in what cemetery?  Do you want cremated instead?  If yes, do you want your ashes scattered (and where), or stored in an urn (and with whom)?  Fights occur because of cemetery location first, since extended family want you in your hometown even if you’ve lived away for decades.  Disposition of your body is the second cause of fights, in my experience.  Some people are abhorrent to thinking of a loved one decomposing in a grave, or being reduced to ashes in an oven.  Finally, if you choose cremation and want your ashes scattered, be sure your wishes are legal.  The wish to “throw my ashes up in the air as you’re going down Space Mountain at Disney World” is not legal.

Contact me at julie@juliemillslaw.com to discuss your will or trust, or planning for your pet.

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August is #NationalMakeAWillMonth!

August is #NationalMakeAWillMonth.  What are you doing to celebrate—having a will prepared this month?  Instead of discussing what happens with a will, here’s what happens without one.

When you die and you have not prepared a will, you die intestate.  The laws of “descent and distribution” in your state kick in, and the court uses these laws to decide who gets what.  The court appoints a person to administer your estate.  The court decides who will care for your children.

Without a will:

  • You don’t decide who gets what assets you own
  • You don’t dictate who winds up your affairs
  • You don’t choose who will parent your children
  • You don’t decide where your pets will go
  • You don’t decide whether you’ll be buried or cremated, or where you’ll be buried

Celebrate #NationalMakeAWillMonth by having a will prepared this month.  Take control of what happens to your assets at death!

All I want is a simple will.

Legal resources for handling your own legal matter should be made more readily available for the public since the cost of hiring an attorney can be too expensive for too many.  In some situations, handling your legal matter yourself can be done if you are diligent about researching what you need, what is available, and what is required.  Unfortunately, the trap of “you don’t know what you don’t know” can ruin the best-laid plans, particularly estate plans.

“All we want are simple wills.”  This statement is followed by the direction that the couple (let’s assume they’re married) wants to leave everything to their spouse first, then the kids.  That does sound simple:  Mike and Carol Brady’s will would leave everything to each other then to their kids.  What could go wrong?

A popular do-it-yourself-will website posted an article that shows the reader how easy it is to write your own will.  First, name your executor.  Second, name “guardians for young children.”  Third, describe how assets will be divided and distributed.  Fourth, sign in front of two witnesses, then have them sign.  This is great too—again, what could go wrong?  This does sound easy.  Who needs an attorney!

Let’s examine the Brady’s “mirror wills” (they mirror each other—all to spouse, then to kids equally).  The first red flag is that the Brady’s have children from other relationships, and like most blended families, the kids aren’t adopted.  In most states, stepchildren do not inherit (unless specifically named).  Here, a typical will would state “I leave all my assets to my wife Carol; if she predeceases me, then to my children in equal shares.”  Mike dies, and all of his assets go to Carol.  Carol dies, and her mirror will states “…all of my assets to Mike; if he predeceases me then to my children equally.”  At Carol’s death, she had inherited all of Mike’s assets from when he died.  Since Mike predeceased her, then all of her assets, including from Mike, go to Marcia, Jan and Cindy.  Those are her children.  Greg, Peter and Bobby are her stepchildren.  What do the boys get?  Nothing under this standard, simple will!

Now let’s examine the do-it-yourself article.  Name your executor—not too hard, although the article did not mention naming successor executors, but most people would know that.  However, “Name guardians for young children.”  I name my brother John Doe and his wife Jane as guardians because they know and love my kids.  What if they divorce—now my kids might be in the middle of a custody fight because both were named guardians.  What if my brother John is killed in a car accident—does my sister-in-law keep my kids?  She would if both are named.  Or at brother John’s death would I then want my kids to go live with my sister so my kids remain with a family member?

The best (insert a little sarcasm) advice is “describe how assets will be divided and distributed.”  That appears easy to do—divided evenly among my 3 kids.  I see that phrase often in wills, “to my children equally.”  Dad dies, Kid 1, Kid 2, and Kid 3 each get an equal share of his estate.  But what if Kid 3 died before Dad?  An attorney would counsel you, and prepare accordingly, whether you want your estate divided between Kid 1 and Kid 2, or if you want one share to Kid 1, one share to Kid 2, and one share to go down to the children of Kid 3 (Dad’s grandchildren).

Most people who do their own wills and estate plans think the documents are good, but they don’t know what they don’t know, and they definitely won’t know because they’ll be dead when any problems are discovered (“oops, Dad disinherited his grandkids”).  Simple wills are not that simple in many instances.

Authorized user on a dead person’s credit card—“but Dad said I could…”

Dad dies.  His adult daughter is an authorized user on his credit card, and Dad gave her permission to use the card for whatever she wanted.  Dad happily paid the monthly bill.  Dad dies and Daughter keeps using the card, thinking that she has always used it and thought she still could.  Or, in many cases, she is the executor of his will and uses it to pay for bills or other expenses related to Dad’s final expenses.  Permissible?  Obviously (at least to me) not, but it happens frequently.

An authorized user’s use of a credit card after the primary account holder dies is illegal.  Under state law, it is considered fraud, and is no different than finding a stranger’s credit card and using it.  The authorized user could face jail and, or fines.

The terms of use for credit cards state, generally, that an authorized user’s privilege to use the card ends automatically upon the death of the primary cardholder.   If an authorized user continues to use the card after this privilege ends (cardholder dies), such use constitutes the authorized user’s agreement to pay the bill which might include the entire balance, not just what the authorized user bought.

For instances where an executor who is an authorized user with good intentions uses the deceased’s credit card to pay bills, the end result—liability on the authorized user—might not change.  Daughter/Executor cannot use Dad’s credit card after his death to pay any of his outstanding medical bills, credit card bills, utility bills, etc.  Executors must pay expenses and other estate bills from assets of the estate.  If there are no assets of the estate, then the estate is considered insolvent.  Racking up the balance on a credit card of a deceased person, whatever the reason, will result in liability for those charges, and perhaps the entire card balance, on the authorized user, including (in this example) the executor.

If you are an authorized user on a credit card, notify the credit card company immediately upon the death of the primary cardholder.  Using the primary cardholder’s credit card after death when you have no right to do so will likely have no good outcome.

Contact me at julie@juliemillslaw.com or message me through http://www.juliemillslaw.com with any questions.

Choosing a guardian for your children: the Value Majority Test

Who finds it pleasant to think about their children being raised by someone else?  No one.  However, if you don’t tell the court who to appoint as guardian, then a judge you do not know, and who does not know your family, will decide for you.  Would your child prefer to have a stranger make that decision?  No.  This choice is yours to make.  Get paper, a pen, and try this approach.

  1. List everyone who is a possibility as guardian, even a remote possibility. This might include friends.  Single people.  People with no kids.  People with grown kids.  People who live far away.
  2. Next, take the Value Majority test. List five values that are most important to you, and choose candidates from your list who share at least three of these values with you.  This is my partial values list as an example to get you started:  parenting style;  attitude about education, work, money; faith, religion practices, beliefs; social values; attitude about closeness with family, friends.

 Now you should have a list of people who rank as good candidates.  You should choose at least three.  What if you have several people who meet the test and make good candidates, but you wish to shorten your list?  Here are some of my observations.  First, it can be disruptive to uproot children from everything that is familiar to them, so if Joe lives in your area but Jane lives across the country, choose Joe.  Second, a court might not approve a person you designate who has a history involving alcohol or drug addiction, or a criminal record, even if they do share three out of five of your values. Third, please do not name married couples.  Divorce happens to the seemingly best couples, and you do not want your child caught up in a custody battle.  If Mike and Carol Brady both share your values and made your list, choose one as guardian, the other as successor guardian.  Fourth, choose candidates who are likely to keep your children in touch with your family.

Trying this approach should result in at least a few guardian possibilities.  This issue is difficult to think about, but thinking about it is exactly what needs done.

Contact me at julie@juliemillslaw.com if you want to get started on a will to name your guardians.

7 reasons to review your estate plan now

  1. You have no estate plan!  I cannot think of a reason why any adult should not have at least a Last Will and Testament, durable power of attorney, and advance directives (healthcare documents: living will [do you want artificial life support?] and healthcare power of attorney).  If you die or become incapacitated without having any of these documents, state law controls what will happen, not you (through your documents) or loved ones.  This could cause unnecessary and unexpected costs, delays, and loss of privacy.
  2. If any of these have occurred to you or, if married, to your spouse: marriage, death, birth, divorce, second marriage. These occurrences call for a review of your estate plan.  Not reviewing your will and/or trust after any of these events could lead to unintended beneficiaries or fiduciaries.
  3. Speaking of fiduciaries…review the people you designate as fiduciaries in your documents, such as executor of your will, trustee of your trust, guardian of your children, agent in your powers of attorney, to name a few. Are they still alive?  Are they still capable of serving?  Do you still want them to serve?
  4. Review your beneficiaries. Review who you listed to inherit from you.  Are they still alive?  Do you still want to bequeath to them, or add additional beneficiaries?  You should definitely review life insurance and retirement plans and other assets that have beneficiary designations, since the person you name on such a designation will inherit regardless of what your estate plan states.
  5. Your current plan is more than a decade old. There have been many tax and other changes that could affect older plans, but a major change with my practice is that my clients now plan for their “digital assets.”  What happens to your pictures on Shutterfly, or your Facebook and LinkedIn accounts?  What happens to money in your etsy or ebay store’s PayPal account?  Do you want your spouse to have access to your Facebook account at your death?  Or your emails?  These “assets” should be reviewed, and you should consider what you want to happen to them at your death.
  6. Trust funding. There have been so many people who have created a trust plan but did not fund the trust, which meant at death the trust was useless.  You must fund a trust, which means you put assets into the trust—typically by re-titling or deeding assets from you personally, to you as trustee of your trust.  You can fund while living, or set it up so that this funding occurs at your death.
  7. Beneficiary becomes disabled. If a beneficiary has become disabled, or you wish to provide for a beneficiary who is disabled, then it is paramount that you discuss special needs planning, such as a special needs trust, with your attorney.  Leaving assets directly to a disabled beneficiary could jeopardize certain benefits they might receive, such as Medicaid.

If you would like to discuss your estate plan, contact me at julie@juliemillslaw.com.

Letters of Intent–More Information

I received several inquiries after my recent post on Letters of Intent, or instructions for guardians or caretakers of your children or pets.  I have specific forms I have developed for children, pets, and children with special needs.  If you would like pricing for those, email me at julie@juliemillslaw.com, or message me through my law office’s Facebook page.

Letters of Intent can be created by you (versus an attorney), and many parents have done just that.  These can be in-depth, broad, more limited–it’s up to you.  To guide you, here are links to three examples, all from moms who were dying of cancer:

  1. A simple, specific, instructional Letter of Intent, “Mummy Manual”:  http://www.dailymail.co.uk/news/article-346306/The-mummy-manual.html
  2. An in-depth, broad, far-reaching Letter of Intent with guidance:  http://www.telegraph.co.uk/news/health/news/10084492/Dying-mother-leaves-20-point-plan-for-happiness-for-her-family.html
  3. Letters written to child to be given at certain life moments, a series of Letters of Intent:  http://metro.co.uk/2015/07/23/mum-terminally-ill-with-cancer-writes-letters-to-her-four-year-old-to-last-a-lifetime-5308613/

What will be most helpful to your guardian?  What information will help your child the most?  The links to the different letters could be used to guide you in adapting such letters to specific situations, such as pets.

Send any questions to julie@juliemillslaw.com

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