Category Archives: Estate Planning

Estate Planning Facts. Last Will and Testaments versus Living Trusts. Estate Taxes. Gift Taxes. Inherited IRAs. Guardians for minor children. Pet Trusts. Funeral Agents. Avoiding Probate. Get Your Affairs In Order.

Do you have a will?

It’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.

What’s a big problem in China? No wills!

It’s only been in the last 30 years that China has allowed people to accumulate wealth. Prior to that, it really didn’t matter. There was no private property to pass along to a descendant so a will was not needed.

Now, some of the first generation to benefit from the ability to accumulate wealth are dying and it’s causing a huge problem with inheritance disputes that are taking up the time of the courts and causing rifts between family members.

We came across a story in USA Today that illustrated the problem and explained what the Chinese government is trying to do to fix it.

“When people die without a will their children scramble for their property, damaging family ties and having a negative effect on society,” the state-run Xinhua News Agency has warned.

“Only 1% of China’s 220 million seniors have drawn up inheritance plans, according to best estimates. The reason is cultural: talking about death is taboo and writing a will is akin to putting a curse on yourself.”

“Consider the publicized case of Yan Jiying, a coal baron from the northern province of Shanxi. He died in 2015 at the age of 71, leaving his estranged wife, long-term mistress and six children to fight over his assets.”

“The government is calling on local authorities around the country to establish free legal centers for those over 60. One charity doing that since 2013 is the China Will Registration Center, founded by Chen Kai, a young lawyer with a passion to protect seniors. “

“ The waiting list for appointments at his first Beijing center now stretches into September, proof that people will write a will if they can find support they trust, Chen said. “We want to teach old people that they are the masters of their fortune, that they have the right to decide what happens to their hard-earned money, ” he said.”

“On a recent morning around a dozen seniors were squeezed around a communal table at the center, diligently transcribing the final copy of their will. They begin by dictating their wishes to a lawyer, who types up a draft. The clients are then evaluated by a visiting psychiatrist to establish clarity of mind, they record video testimony of their wishes in the presence of two independent witnesses, and finally copy the final document by hand.”

“For many, the last step is the hardest. Most are over 70 and have shaky hands or poor eyesight. Transcribing a page of formal Chinese characters mistake-free is no easy task. But Chen is adamant that they do it this way, saying he has seen too many badly written wills challenged. He wants his clients to be sure their wishes will be respected even if some family members do not like them.”

Although the percentage of people in the United States having wills is much higher than 1%, it’s still below 50%. If you don’t have a will, you should consider preparing one so that your family won’t have to deal with issues related to your estate once you’re gone. To find out more about preparing a will and other estate planning steps, check out our website http://www.diesmart.com.

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

If 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
.

How do you have that difficult discussion about what’s in your will?

The 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.

Was she swindled out of joint property?

We came across a column about a women whose husband asked her to give up the rights to their home…and 10 years later they were divorcing. The column is from The Moneyologist; it teaches a good lesson and I think you may find it very interesting. We’re publishing it in its entirety.

Dear Moneyologist,

My husband and I have been married 14 years. We live in California and I am contemplating divorce. I am 62 and he is 65. When we married, he owned a home (with a mortgage) purchased five years prior. A few years into our marriage, when interest rates fell, he refinanced the home. A couple of days before submitting the application, he asked me to sign an inter-spousal transfer of ownership (known as a quitclaim).

The reason: He said I had a student loan which had at one time been in default and we would not be able to receive a good interest rate, or that the loan might be altogether denied. He promised that as soon as the loan was approved, he would follow up by putting me back on title.

A few weeks later, we purchased a second home (cabin). Just a few minutes before going in to finalize the purchase, he asked to sign another quitclaim, citing the same circumstances. The mortgage on the cabin is underwater at this time.

It has been 14 years since this happened, and he refuses to add me to the title. He finally admitted that he indeed had an ulterior motive, as he witnessed a friend who underwent a divorce and lost a house to his former spouse and that he was not going to be “taken advantage of” if we divorced.

What are my options? I feel that I was deceived and that this constitutes fraud. About 90% of his investments were made before we were married, and I am also aware that he has made no provisions for me in his will nor named me as a beneficiary to his life insurance.

Beverly in California

Dear Beverly,

The investments he had prior to your marriage belong to your husband and he is free to name anyone from the next-door neighbor to the window cleaner on his life insurance. Now, the good news:

California — in addition to Arizona, Idaho, Louisiana, Texas, Nevada, New Mexico and Washington — treat all marital assets as community property. That means that assets acquired during the marriage are divided equally between the two spouses. “Notwithstanding an agreement otherwise, upon the death of a married person, one-half of the community property belongs to the surviving spouse and the other half belongs to the decedent,” according to California Probate Code Section 100(a). Why is that important to you? Because the refinancing of this home and the purchase of the cabin were made during your marriage, so it’s irrelevant whether your husband had you sign a quitclaim or not.

Well, not quite. A judge could look unfavorably on your husband’s behavior and your testimony (if you don’t have it in an email) that your husband did this because he wanted to prevent you from even owning the property you both bought during your marriage. There is a precedent for this: In 1996, a California woman won $1.3 million in the lottery and filed for divorce 11 days later without even telling her husband or anyone else about her windfall. A couple of years later her husband discovered her deception and sued. Superior Court Judge Richard Denner ruled that she acted out of fraud or malice and awarded her husband all of her winnings. A judge could, in theory, take a similar view and punish your husband.

Your husband’s shady behavior could end up doing him more harm than good in any divorce settlement. There are a lot of good, honest people out there waiting for you post-divorce.

Check out our website, www.diesmart.com for more information.