Tag Archives: trust

Checked your state’s unclaimed property database lately?

TaffyWhen Sophie Walter died in Illinois in 2009, she left behind a sizable estate, some of it in a pet trust for Taffy, her beloved cat.

The cat’s money was paid out monthly to Taffy’s caregiver, Karen Norwood (who had also been Sophie’s caregiver at an assisted-living facility during the final years of her life).  The funds were used to cover Taffy’s care and maintenance for the remaining years of her life.  She died last year at age 17.

In addition to the pet trust for Taffy, Walters left her money to several animal welfare charities.

Her story would never have been noticed if it weren’t for $121,479 that had fallen through the cracks following her death.  This money was in a savings account she had at JP Morgan Chase Bank.  After five years with no activity on the account, the bank turned that money over to the state treasurer, as required by law.

Taffy’s trust was only discovered when the state treasurer’s office looked for the money’s rightful owner.  Whether the money actually belonged to Taffy is unclear but it was passed on to the same animal welfare charities that had received the balance of Walter’s estate.

A cat can’t check the treasurer’s unclaimed property database but you can.  It’s a good idea to check it every so often in case you actually have an account you’ve forgotten about or a bequest from a now deceased relative has fallen through the cracks.

For more helpful hints about what to do after someone dies, check out our website http://www.diesmart.com.

 

50% of Prince’s estate value goes to pay estate taxes

PrinceYesterday, Prince’s estate had to file an estate tax payment plan.  Since his estate was valued at about $200 million, the taxes are expected to be about half of that – 40% to the federal government and 16% to the state of Minnesota.  Allowable deductions and exclusions will reduce that amount to 50%.

If Prince had an estate plan with trusts to benefit relatives and charities he chose, the amount of taxes due would have been very low.  Instead, only about 50% will go to his six siblings and the government will take the rest.

Prince’s estate didn’t have to actually have to pay the entire $100 million yesterday; it can make payments over time.  That’s a good thing since Prince’s estate isn’t very liquid.  There are many entertainment assets which are still being valued and it can take a long time since their actual worth will be determined.

It’s not clear whether the IRS and Prince’s estate will agree on the value of his music catalog; it’s difficult to put a dollar value on this kind of asset.  The estate can learn from the experience of Michael Jackson’s estate.  He died in 2009 and yet his estate is still not settled.  The tax case will go on trial in Los Angeles next month where there will be a dispute about more than $700 million in taxes, interest and penalties.

You probably aren’t worth this kind of money but even if your estate is only worth a few hundred thousand dollars, you should still have an estate plan.  It will make it much easier for your heirs and will enable them, rather than the government, to share in the total value of your estate.

For more information about estate planning, go to our website http://www.diesmart.com.

Do you have a will?

cynyjagxuaa5ewcIt’s never too soon to write a will.

Reginald “Jake” Gutierrez, a Washington state police officer, was fatally shot while responding to a domestic violence call in early December.  He had been with the Tacoma police department since 1999 and was highly respected and experienced.

Although he had a career in a dangerous field, he had not taken the steps necessary to protect his family if he was killed.  He lived with his fiancé, Rebecca Humphrey, and had talked about writing a will before they were married… but had not done it before his death.

Gutierrez was the breadwinner in their family, supporting Rebecca as she started a small business.  Now he is gone and Rebecca cannot access any of his money.  His estate will have to go through the probate process before she will possibly have access to any money.

Meanwhile, bills are piling up.  The Tacoma Police Department gave her $2,000 to cover her immediate needs and also set up a fund for the family.  But she will burn thru the $2,000 very quickly and doesn’t know how or when the fund will be distributed.

Rebecca is hopeful that everything will be worked out.  She says that Jake’s family hasn’t been fighting over money.  However, she wants others to hear her story and prepare for the worst.  She says “If you love your kids or fiancé or spouse, please think about that now for them so they don’t have to when they are grieving.”

If Gutierrez had written a will before his death, a lot of anguish and difficulty could have been avoided.

Even though you may not have a career in a dangerous field, you cannot plan when you will die.  You should prepare now and make decisions on how to take care of your family when you’re gone.  See an estate planning attorney or, if you have a simple estate, find a form on the internet.  But, whatever, you do, write your will today.

For more information about wills and estate planning, check out our website http://www.diesmart.com.

You don’t think you’ve been treated fairly by a deceased relative?

judge-cartoonIf someone in your family has died and you don’t think you’ve been treated fairly, what’s the first thought that comes into your head?  Challenge the will.  But you might want to think a second time before doing this.  A will contest is very hard to win.  It’s difficult to prove that someone was incompetent after they’ve died and it’s equally as tough to prove that undue influence was exerted on the deceased.    Finally, some wills have a clause that will cause you to forfeit your inheritance if you challenge that will.  So it might be best to just accept whatever has been left to you and then to get on with your life.

We found a blog that gave a great example of what might happen if you challenge someone’s will.

Sam and Erica were married. It was Erica’s first marriage and Sam’s second, his first marriage ending in divorce. Sam had one child, Jason, from his first marriage. Erica did not have any children. They each had identical wills, leaving their entire estate to the other, and on the death of the survivor everything goes to Jason.

Their wills also contained a provision, requiring the surviving spouse to live at least six months after the first spouse’s death. If the survivor did not live that long, he or she would be treated as having predeceased the first spouse.

In March of 2015, Sam died. Erica filed a probate proceeding in May and submitted Sam’s will to the court. Because she filed just two months after Sam’s death, Jason objected. He argued that she had no authority to take over Sam’s estate because she had failed to survive him by six months.

Erica apparently became angry, and revoked her own will to make sure that Jason did not receive any share of her estate. Erica signed a new will a few months later (well after she had reached the six-month survivorship requirement). She left her entire estate to her sister and nothing to Jason. She died five months later.

Jason contested her new will, arguing that she had been subjected to undue influence by her sister in preparing her new will. The probate court dismissed his complaint and upheld Erica’s will. Not satisfied, Jason appealed.

The higher court affirmed the probate court finding and stated that it was clear that no one influenced her in her decision to revoke the earlier will or to do her new will. Once she revoked the earlier will, she was intestate — that is, she had no will at all — and since Jason was not her child, he would have no right to any share of her estate if she had died without a will.

Why would that make a difference? Because if she had no will prior to signing the new will, Jason had no standing to even challenge that will. According to the appellate court, there was no question that Erica had revoked her earlier will a few months prior to her executing a new will and thus Jason’s objections were dismissed.

What might Jason have done differently? Hindsight is always 20/20. Perhaps Jason should not have objected to his father’s estate when he did. If Erica had actually died in the four months after he raised his objection, he could probably have still made his legal point. In the meantime, he clearly offended her to the point that she changed her estate plan.”

Moral of the story: Think about what might happen if you challenge someone’s will.  It might be better to accept what’s been left to you than taking a chance that you might end up with nothing.

For more information about estate planning, check out www.diesmart.com
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How do you have that difficult discussion about what’s in your will?

last-willThe information in this article so important that we’re copying it verbatim from a Yahoo news story.

Remember, if you die without a will, the state will determine who inherits.

People make a lot of excuses to put off planning for the inevitable. You may be fearful about your own mortality, or think you don’t have enough assets to need an estate plan — or perhaps you just think that things will change so much before your death that you and your spouse can delay making a plan.

But dying without a will or more extensive plan only brings further grief to your family. “You leave heirs in a lurch and risk changing the family dynamic” — and not for the better, says Anchorage, Alaska, financial planner Michael Branham.

Do I Need a Will?

If you want to plan out where your things go after you die, a will is probably a good idea.

Without a will, decisions about who will administer your estate, who will be the guardian of your minor children and who will inherit your money fall to a local probate court, which is bound by state laws, says Cincinnati estate planning attorney David Bross. Start now by talking to your spouse about your intentions.

PREP WORK

It’s impossible to have a detailed conversation about bequeathing assets before you’ve itemized all the property you possess as a couple. “In many houses, one person takes the reins as the family CFO and the other partner is less informed or engaged with the financial picture,” says Raleigh, N.C., financial planner Mike Palmer. “But both spouses need to have familiarity.” Make a list of each of your investment, retirement and savings accounts, as well as all property and other goods like art or collectibles. (For the latter, you may need to bring in an appraiser to help you understand which pieces have monetary value.)

Next, learn which of those assets fall outside the scope of a will. Typically, this includes anything payable to a named beneficiary — such as a life insurance policy, 401(k) account, or IRA balance — as well as assets held jointly. You need to assign beneficiaries for as many accounts as possible, even before putting together the actual will. It’s worth revisiting beneficiary assignments, too, especially for older accounts — you don’t want your ex-spouse to get your 401(k) just because you forgot to change the designation.

OPENING LINE: “I saw what happened to Jill’s family when she died without a will, and I don’t want our kids to go through the same thing.”

Use a friend’s or even a celebrity’s passing without a will to ease into the conversation while providing some emotional distance. Talking about your own or your spouse’s death is hard, so stay focused on the reason you’re really discussing this: your loved ones.

Decide whom you want to include as an heir. Remember, if you die without a will, the state will determine who inherits — likely your spouse or kids. If you want friends, a pet, more distant relations, or a charity to receive part of your estate, you’ll need to clearly spell that out.

Estate Planning

If you have minor children, your estate planning conversation should also include a discussion of who’ll care for them. Then think about whom you trust to carry out your wishes. A will requires that you name an executor, someone who will be in charge of collecting the estate’s assets, inventorying the property, paying claims against the estate (including taxes), and distributing assets to beneficiaries. The job should go to a financially responsible relative or close friend, or a financial institution.

TALKING POINTS: “Kara is old enough to support herself, but what about Jason? Who would look after him if something happens to us in the next five years?”

For couples with young children, the biggest challenge is often assigning custody of the kids, says Bross. “You have two families coming together and two spouses who may have very different ideas about who would be best,” he says. Factor in not only the personal bond between the child and potential guardian, but this person’s location, other dependents (their own children, or an aging parent), age, and other financial obligations. Even if you disagree, there’s strong incentive to come to a decision: If you don’t make a selection, the court will make its own choice.

One couple took four months to decide between their siblings, Bross recalls, ultimately deciding that the sibling who had no children would be in a better position to care for their kids. Don’t make a choice before talking with any potential guardians about their willingness and any concerns you have.

“I don’t feel comfortable letting the children get their inheritance all at once. They are still so young — if they get a bunch of money at 18, who knows what they’ll spend it on?”

Particularly if your kids are still young, think about how you want them to receive their inheritance. Unless you set up a trust to outline who will receive how much property (and under what circumstances), minor children will get a share of the assets for care through the probate court, even with a will, and at 18 receive the remainder, says Bross. Heirs over the age of 18 simply get their inheritance all at once.

If you want to influence either the timing of the inheritance or the way it gets spent, you’ll need to use a trust. Two common kinds are incentive trusts — which might say, for instance, that an heir must earn a degree or pass a drug test before inheriting — or staggered trusts, which let your estate be paid out over a certain time span. Such arrangements can ease concern about young or reckless heirs.

“I know we always talked about splitting the money evenly between the kids, but what if one of them is earning a lot more than the other?”

Deciding how much money should go to each of your heirs can be one of the biggest issues for families, says Seattle financial planner Stacy Gallagher Ployhar. “You need to consider, if the distribution of assets is not equal among the children, how is that compensated for?” she says.

Among the issues to discuss: Did you make a generous gift to one child — say, for a home purchase or advanced degree — that the others didn’t receive? If you have a blended family with “yours, mine, and ours” kids, will biological and stepchildren get treated differently? Families that have a low-earning child and a high-earning one sometimes want to divide assets differently because they believe one needs the support more than the other. “Everyone’s default when planning is to treat heirs equally — but fair isn’t always equal,” says Palmer.

Ultimately, you don’t want heirs to feel hurt or confused by the size of their inheritance. If you are having difficulty agreeing on a plan for the division, consider speaking with your heirs directly about what fair would look like to them. You don’t have to abide by their wishes, of course, but their input could help you and your spouse find common ground.

NEXT STEPS

Once the two of you have agreed to a plan, hire a lawyer to execute it. A will drafted by an attorney averages about $375, according to LegalZoom. Need help finding an attorney? Many bar associations offer lawyer referral services, in which participating lawyers agree to provide half-hour consultations for less than $50.

This is also a good time to put two other estate planning documents in place: a health care proxy, a living will, and a durable power of attorney for finances.

Call a family meeting and tell your children about your general estate plan. You don’t need to spell out how much they’ll inherit or read them a copy, but you should talk about big decisions you’ve made — for instance, if you’re not splitting assets equally among your children, or giving a large portion to charity. “Having this conversation will give you confidence, says Cincinnati financial planner David Nienaber. “People are afraid to tell heirs for fear they will piss someone off, but people are more upset when you die and they’re left to figure out with their siblings why you did what you did.”

ONE FAMILY’S SOLUTION

“I had a client tell me once (without his wife present) that he didn’t want “six-pack abs man” spending his money,” says Palmer. The client was worried that if the estate went outright to the wife, then she could leave it all to someone besides their daughter — and that if his wife remarried, her new spouse would get all the money. “Eventually I was able to get him to share that concern openly with his wife and we addressed that in his estate plan by placing the assets in a trust for their daughter,” Palmer continues. “The wife was unhappy at first that her spouse didn’t seem to trust her, but after listening to his concerns and the benefits of a trust, she decided to go along with the plan because ultimately the two wanted the same thing: their daughter to be the heir.”

This story was originally seen on money.com: Half of Americans Don’t Have a Will. Here’s How to Fix That for Your Family

For more information about estate planning and writing a will, go to www.diesmart.com.