Tag Archives: Estate Planning

If you owe money when you die, who pays the debt?

clipart0275If you’re like most people, you have some kind of debt – a mortgage, a credit card bill, school or a car loan. What happens when you die? Do your heirs have to pay your bills for you?
According to a recent U.S. News and World Report article, the general rule of thumb is that if there’s enough money in your estate, your bills will be paid out of the assets you’ve left. Those assets will be liquidated to generate the necessary funds.
If there’s not enough money in your estate, here’s what will probably happen. I say “probably” because there are no firm rules in this area and each case is different.
Credit card:
As long as you don’t have a co-signer on your credit card, the odds are that the debt will be discharged by the credit card company. If you have a co-signer, that person will be responsible and will have to pay whatever is owed.
Mortgage:
If the house isn’t paid off, the bank may decide to foreclose…unless someone takes over the monthly payments.
Car:
If you are making car payments when you die, your vehicle can be repossessed by the bank. However, if one of your family members is willing to take over the loan, there should be no problem.
There are a few caveats that you should be aware of.
If you owe a lot of money and make deathbed gifts, your creditors may be able to convince the court to return those gifts to the estate so that their bills can be paid.
Your children or spouse should be careful about cosigning financial agreements for you. This personal financial guarantee may obligate them to repay any money owed through these agreements after you die.
If you don’t want your loved ones “haunted by debt collectors” after you’re gone, make sure they’re careful about what they sign.
For more information about how to manage your estate and what happens when you die, go to www.diesmart.com.

5 ideas to consider when doing estate planning

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If you have a spouse and family, you’ll probably leave everything to them.  However, if you don’t have a spouse or kids and you’ve been procrastinating doing your estate planning because you’re not sure what to do about all of your stuff, here are 5 ideas you should think about consider.  We found them in the Rapid City Journal.

  1. Consider leaving something to close friends, caregivers or anyone else who you are close to.
  2. Think about charities that are meaningful to you.  What organizations have goals that match your own?
  3. Think about where a donation could benefit your community.  There are places like libraries, volunteer fire departments, arts organizations that would welcome some extra funds.  What about giving a piece of art to a hospital or buying a park bench?
  4. Build relationships with people who share your interest in collections of antique, tools or other items.  Then you can pass along your collections to people who will appreciate them and remember you.
  5. Don’t wait until you’re gone.  Consider donating collections to museums or giving personal possessions that you value but don’t necessarily use to someone who would appreciate them.

For more information about estate planning, go to www.diesmart.com.

Who has your healthcare power of attorney?

A healthcare power of attorney is the document where you name the person who will make medical decisions on your behalf when you are unable to do so.  Equally as important as having this document is telling your family who it is and why.

A legal battle started a short while ago disputing whether Sumner Redstone,  the 92 year old titular leader of both CBS and Viacom (who earned a combined $24 million in compensation from the companies in fiscal 2014), still has the mental capacity to make informed decisions.

The suit was brought by Manuela Herzer, a former companion to Mr. Redstone.  The two dated between 1999 and 2001 and, according to her, still maintain a close relationship.  She was legally designated as the person to make Mr. Redstone’s medical decisions.  However, in October, new documents were executed that stripped her of this power and named, instead, Phillippe Dauman, Redstone’s longtime lawyer and CEO of Viacom.  In court filings, Ms. Herzer claims that Mr. Redstone does not have adequate mental capacity to replace her and has asked the court to make him undergo a medical evaluation to prove her point.

Most of us don’t earn $24 million dollars in one year and don’t have the kind of net worth of Sumner Redstone.  However, the point is still as valid for you and me as it is for him.  If you make changes in your healthcare power of attorney or other legal documents that relate to who can make decisions on your behalf, it’s a good idea to tell those involved so they will be aware of what you’ve done and why.

For more information about a healthcare power of attorney and other estate planning documents, go to www.diesmart.com.

California passes right-to-die law

131754-gov-jerry-brown_1This past week, Governor Jerry Brown of California signed a bill into law that makes it legal for a dying person to end his or her life.  When Brown signed the bill, he also released a letter to the state assembly explaining why he agreed to sign it.

He said, “The crux of the matter is whether the State of California should continue to make it a crime for a dying person to end his life, no matter how great his pain or suffering.  In the end, I was left to reflect on what I would want in the face of my own death.”

“I do not know what I would do if I were dying in prolonged and excruciating pain,” Brown wrote. “I am certain, however, that it would be a comfort to be able to consider the options afforded by this bill. And I wouldn’t deny that right to others.”

The law requires that patients are able to administer the life-ending drug themselves.  Also, their decision must be submitted in written form, signed by two witnesses and approved by two doctors.

California becomes the fifth state to have a right-to-die law.  New Mexico, Oregon, Vermont and Washington are the others.

For more information about end-of-life decisions, go to www.diesmart.com.

3 tips when making estate planning decisions

I came across this blog that was written by Julie Ann Garber, J.D. last year.  It had such good information that I decided to re-post and share it with you.

Many people struggle with all of the decisions that they have to make when putting together their estate plan: Who should get what? When should they get it? Who shouldn’t get anything? Who should be the executor? Who should be the trustee?

All of these decisions can be overwhelming, even for someone who has what is considered a “normal” family, but they don’t have to be.  In the wise words of Jerry Cantrell of Alice in Chains, it’s your decision.

If you’re stressed out about how to plan your estate, then don’t despair.  Here are three tips for making your estate plan your way:

Tip #1 – Don’t be afraid to disinherit someone.  It’s your money, so you can choose to leave it, or not leave it, to whomever you want. But beware – being bullied into making your estate plan a certain way by a certain individual and not the way you really want it (for instance, leaving everything to one child to the exclusion of others at the insistence of that one child) will result in family discord.  If you really want to disinherit someone, then that’s your prerogative, but if someone bullies you into disinheriting someone else, then in extreme cases this could amount to “undue influence” and lead to an ugly will or trust contest. If you truly want to disinherit someone, then work closely with your estate planning attorney to insure that not only will your final wishes be carried out, but your plan will be bullet proof from challenges.

Tip #2 – Choose your executor and trustee wisely.  Here are the traits you should look for in your executor and trustee:  loyal, fair, practical, trustworthy, organized and tough.  If you choose a person who has most of these traits, then your final wishes will be fulfilled, but if you choose a person who has only one or two of these traits, then your final wishes will take a back seat to their own agenda.  Better yet, choose a corporate trustee, such as a bank or trust company, to put these important jobs in the hands of professionals.  Otherwise it may be way too easy for Uncle Bob to skim some off of the top or for your loved ones to convince Uncle Bob to disregard your wishes.

Tip #3 – Listen to your estate planning attorney.  While a good estate planning attorney will listen intently so that he or she can learn about your greatest concerns and challenges when it comes to planning your estate, you should also listen to your estate planning attorney because he or she can offer some good advice and solutions to ease those concerns and overcome the challenges. And while sometimes what your estate planning attorney says may not be what you want to hear, your attorney’s advice, which comes from years of experience in similar situations, may very well head off a family feud or a will or trust contest.

For more information about estate planning, go to www.diesmart.com.