Tag Archives: Estate Planning

Beneficiary basics

WHY IS PROPERTY TITLE AS IMPORTANT AS YOUR WILL OR LIVING TRUST?

When you die, the way in which your beneficiaries are determined depends on whether the property is titled or not.

Property with a title includes real estate, vehicles, boats, airplanes, bank accounts, savings bonds, stock certificates, life insurance policies and retirement accounts.   If you don’t have a will or a trust, state intestate laws will determine who inherits property with a title.

Property without a title includes jewelry, art, antiques, and your digital assets.  Unlike titled property, there are no default laws that determine who inherits property without a title.

Property with a title

Title is the manner in which both real and personal property is owned.  Title may be proven by certificate, deed, bill of sale, contract, signature cards or other documents.  The title documents may also designate a beneficiary.  The title may state that an individual owns the property or multiple people own the property, i.e., joint tenants with rights of survivorship, or a trust owns the property.

Title can indicate whether the property is owned by an individual, by joint tenants, or a trustee.

It turns out that a title is more than just a piece of paper conveying ownership of a house, a car or a safe deposit box.  Property title determines whether contract law governs the inheritance of the property or whether the wishes written in your will or trust govern the inheritance of the property.

Q. What are asset buckets and why do they matter?

A. When you die, someone will make an inventory of your estate.  Think of your titled assets as going into three buckets: the probate bucket, the trust bucket and the automatic inheritance bucket.  Which bucket the asset belongs in is determined by the way the property is titled.

Probate assets:

  • Property owned by an individual
  • Property owned as joint tenants with rights of survivorship, no living joint tenant
  • Property where “Estate” is the named beneficiary or becomes the default beneficiary because the designated beneficiary died before the owner.
  • The decedent’s share of property owned as tenants in common

Trust assets

  • Property owned by a trustee

Automatic inheritance assets:

  • Joint tenants with right of survivorship, a living joint tenant
  • Community property with right of survivorship, a living joint tenant
  • Property owned by an individual, or more than one person with a designated living beneficiary:  life insurance policies, retirement account, pay on death bank accounts, transfer on death brokerage account, tranfer on death real estate deeds and transfer on death vehicle registration forms.

Q. Why do the buckets matter?

A. Once you know in what bucket the asset belongs, you will know who has the authority to empty the bucket.

Probate assets

Probate assets will be managed by the executor named in your will or by a personal representative appointed by the court if you do not have a will.

  • Instructions in your will generally determine the beneficiary of your probate assets.  If you do not have a will, state intestate secession rules determine the beneficiary.
  • The executor or personal representative must determine what type of probate procedures are required to get authority (Letters of Affidavits) to manage the property.
Trust assets
  • Trust assets will be managed by the successor trustee named in your trust.
  • Instructions in your trust determine who are the beneficiaries of assets owned by your trust.
  • The trust gives the successor trustee the legal authority to manage trust assets.
Automatic inheritance rights

Assets with automatic inheritance rights will be managed by the beneficiaries who automatically inherit the property.

  • The law automatically determines the beneficiaries and overrides any instructions contained in a will or trust.
  • A beneficiary has the authority to immediately claim their property with a certified death certificate and an affidavit or other claim form.

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Untitled property

Even if you die without a will or a living trust, default state and federal laws will determine who inherits your titled property.  Untitled property is different.  There are no default laws determining who inherits your untitled property.

Q. What happens to your untitled personal property?

A. For many families, deciding who will inherit personal property is a big emotional event.  Memories are sometimes more important than money.  Your heirs are more likely to argue about personal property than anything else you own.  There are several ways to deal with personal property and keep the peace at the same time.  First, you should decide who is going to get what.  Just your children? Other close relatives?  Friends?  You can decide.  It’s your property, after all.

If you have a will or trust, specify in your will or trust who gets what.  Your will or trust should also reference a specific Personal Property Attachment which lists who gets what.

Q. What is the best way to document your personal property and how you want it divided when you die?

A. Many products are available to help make a list of your personal property.  The information can be completed by hand or stored in electronic records.  Most products provide a way to inventory your house room to room and list and photograph personal property in each room.

  • You can provide detailed information such as what it is, where you got it, if it’s an heirloom, etc.  You can also include who you would like to receive it when you die.
  • You can also use a digital recorder and make an audio tour of your house, recording items as you walk through each room

The important thing is that you document what you have, where it is and who gets it when you die.  Be aware that simply making a list of your personal property may not be deemed valid and legally enforceable upon your death unless the list is referenced within your will or trust.

Q.  What happens to your e-mail, blog or other business processes stored on hosted site on the Internet??

A.   If you own a small business and your accounting or sales systems are managed on hosted web sites (for instance, Yahoo, Google, Ebay, etc.), it is critical someone knows how to access these accounts.  Digital assets are considered personal property.  There are no default laws determining who has rights to access thee assets or state statutes an Internet Service Provider (ISP) must follow when someone dies.

The result:  Each ISP has set their own policies on whether they will provide passwords or user IDS to your spouse, executor or trustee when you die.  Some ISPs may not.

If you work in a small business, your chief executive officer or chief financial officer may not be able to access company files without your passwords.

When you set up accounts on hosted services, ask what their policy is regarding user IDs and passwords when someone dies.  Plan accordingly.  Create and maintain a list of URLs, user IDs and passwords for important data.

Q.  How will your employees, executor or spouse gain access to data files stored on your personal computer.

A.  You own the data on the PC.   You have the right to leave instructions on who inherits any intellectual property stored on the PC.  If you have data you don’t want someone to see after you die, be sure to delete it on a scheduled basis.  Don’t forget to leave any user IDS or passwords someone will need to log onto your computer.

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Can celebrities teach us about estate planning?

be83d9254a85f218c3e112c005779b85We came across this post by John J. Scroggin, AEP, J.D., LL.M. and thought it was worth reposting.  Too many people think that things will take care of themselves…but they won’t.

“It is interesting how the common estate planning mistakes of average clients are so often replicated and exaggerated in celebrity situations. This column will discuss some of the things we can learn from high-profile celebrity estates, recognizing that our typical clients receive much less media attention and, often enough, have a few less zeros on their estate values. It is not that celebrity estates are more confounding than your average client’s estate. It’s that most celebrities have been allotted more than 15 minutes of media time, with much of it collected after they die.

Dying Without a Will

Dying without a will doesn’t damage the deceased, but it sure makes it hard on the survivors. Abraham Lincoln was shot on April 14, 1865. He died the next morning without a will despite being a skilled and successful attorney. He left an estate of $110,296.80 (the equivalent of several million dollars today).1

Prince died without a will on April 21, 2016. His estate has been estimated to be worth $300 million.2 His sister and five half-siblings initially appeared to be his only intestate heirs, until Carlin Q. Williams, a 39-year-old convicted felon being held in a maximum security prison, claimed to be the love child of Prince from a one-night-stand when Prince was a teenager.3If DNA tests had proven his relationship to Prince, Williams could have inherited 100 percent of Prince’s intestate estate.

Unfortunately, a significant number of Americans seem to be following Paul Simon’s perspective from his 1965 song Flowers Never Bend with the Rainfall: “So I’ll continue to continue to pretend that my life will never end.” The 2014 Rocket Lawyer Make-A-Will Month survey showed that 64 percent of Americans do not have a will.

Estate planning sounds as if it is for the wealthy when, in fact, it applies to everyone at every adult age (Georgia is the only state that allows a person as young as age 14 to sign a will).

In many states, each child and the surviving spouse will inherit an equal percentage (with the surviving spouse inheriting some minimum amount). If a trust is not established by a will, a minor child may be entitled to receive inherited assets by age 18, before they may be mature enough to handle the money. Ex-spouses may have control of the inheritance until the children reach adulthood.

In 1994, Kurt Cobain committed suicide at the age of 27. He left behind a detailed suicide note, but had not signed a will. Cobain’s wife and daughter were his only intestate heirs. In 2010, control of Cobain’s Right of Publicity passed to his daughter on the day she turned 18, and the next year the daughter reportedly purchased a $1.8 million home in Hollywood.

Intestacy can create messy dispositions based upon the order of death. For example, in most states, if a married couple with no descendants and no wills were injured in the same accident and one spouse survived the other by a few seconds and then died, the surviving spouse’s relatives could inherit all of the couple’s joint estate with the other spouse’s family receiving no assets.4

Professional wrestler Chris Benoit murdered his wife and son before taking his own life in 2007. In the probate hearings, the order of death became the pivotal issue for the disposition of assets. Under Georgia law, Benoit was considered to have predeceased both his wife and son.5 If the wife died first, then for the short time his son was alive, he would have inherited his mother’s and father’s assets, which would pass by intestacy at his death to Benoit’s two children from a prior marriage (as the closest living relatives of the deceased son). But if the son died first, then the wife’s closest relatives (her mother, in this case) would have inherited all the assets. Apparently the two families reached an out-of-court settlement in 2008.

Without a will, the courts will have to decide on the person(s) to manage assets for any minor children (and potentially during adulthood). Martin Luther King Jr. was assassinated in 1968 and died without a will. Particularly since the passing of his widow, Coretta Scott King, their children have fought over the control and benefits of his legacy and assets.

In the event of an intestate estate or the failure of all named personal representatives, state statutes generally set an order of appointment, with the surviving spouse normally being the first person to be appointed, followed by the closest blood family members. Note that the statutory appointment is by relationship, not competence. Do you really want that brother who has been bankrupt twice running the estate for your minor children?

Prince’s death without a will created an environment in which the six equal intestate heirs will control his vast music empire and the release of previously unreleased songs. None of the siblings have experience handling either his business interests or his significant estate. Recent reports indicate that conflicts are emerging among the six intestate heirs over the management of the estate.6

Many clients provide some level of support for their parents and other family members. When the client dies intestate, the surviving spouse and/or children of the deceased generally have first-priority rights to the assets. Thus, other family members who may have expected to receive continued support lose it. NFL player Steve McNair purchased a million dollar home for his mother to live in, but retained title to the residence and failed to create a will passing the house to his mother. When he died, his wife demanded that his mother pay $3,000 per month in rent. The mother moved out because she could not afford the rent. After she moved out, the estate billed her $53,363 for appliances and other items she took out of the house.7

Failing to Plan for Incapacity

Every adult of every age should plan for their incapacity.

According to the American Bar Association, only 33 percent of adult Americans have executed a medical directive. In 2000, AARP reported that only 45 percent of Americans over the age of 50 had executed a durable general power of attorney. And a 2009 Lawyers.com study reported that only 29 percent of Americans had either a medical directive or a general power of attorney.

Media mogul Sumner Redstone is one of the wealthiest people in America with an estate estimated to be over $42 billion. In 2015, a series of conflicts began over his competence and control of his estate. As the fights continued, Redstone’s granddaughter said her aunt and other family members had “succeeded in reversing decades of my grandfather’s careful estate planning and are poised to seize control of Viacom and CBS.”8

Clients may revise their dispositional documents when they are of marginal competence, and therefore, inappropriately influenced. A person who lacks the capacity to enter into a valid contract may still have the ability to sign an enforceable will.9

With a low standard for determining competence, it is generally hard to succeed in such a challenge to a testator’s competence, even when their behavior is odd or erratic. For example, the Michigan Supreme Court ruled in 1879 that “[a] man may believe himself to be the supreme ruler of the universe and nevertheless make a perfectly sensible disposition of his property, and the courts will sustain it when it appears that his mania did not dictate its provisions.”10 And the California Court of Appeals ruled: “Appellant produced evidence of forgetfulness, erratic, unstable and emotional behavior, and of suspicion, probably delusional at times, on the part of the testatrix. This is of no avail unless it were shown, as it was not, that it had direct influence on the testamentary act.”11

When a client dies, the first priority may be to change the locks to the house. Conflicts over dispositions of personal property appear to be endemic to all levels of wealth. In February 2015, The New York Times reported that Robin Williams’ widow and his three children from his two prior marriages were in conflict over the issue of how his “cherished belongings that include his clothing, collections, and personal photographs” should be passed.

Disposing of tangible personal property seems to be the most forgotten part of the average client’s estate plan. It is the author’s experience that this is single-greatest source of conflict among surviving family members.”

For more information about estate planning, check out our website www.diesmart.com.

 

Should Alan Thicke’s widow or sons inherit his estate?

imagesAlan Thicke died on December 13, 2016.    His two older sons, who are co-executor’s of their dad’s living trust, have filed a petition in court to get instructions on how his 1988 trust (amended last year) and a 2005 prenup signed by him and his third wife, Tanya Callau should be considered.  Basically, what’s in question is what’s separate property, what’s community property, and how it should be split among the co-executors and their third brother and Callau.

“It’s a question of what Alan wanted, and we’re just attempting to honor his intentions and enforce his trust,” says Alex Weingarten, the litigator representing Thicke’s sons. “It was Alan’s money; it was Alan’s career; it was Alan’s talent; he had the right to decide what would happen to it upon his passing.”

The prenup, attached to the court petition, shows that before the couple built a life together, with Callau helping to raise Thicke’s youngest son, Carter, they came into the marriage with vastly different resources. Thicke listed his net worth as $14 million at the time. By contrast, Callau, a model, listed a $40,000 ring as her sole asset, and $3,700 in debts.

According to the article in Forbes, one big issue in the estate dispute is the division of the $3.5 million Carpenteria, Calif. ranch which Thicke listed as separate property in the prenup but the couple called home. The prenup says Thicke was to name Callau as beneficiary in his will to get 25% of his net estate, including a 5-acre parcel split of the property, but the trust doesn’t give her any part of it, just the right to live there so long as she pays 100% of expenses.

Unfortunately, these disputes between later spouses and kids from earlier marriages are common. There are so many lessons in these battles. One—As circumstances change, know that a prenup can be revoked by both parties, or amended by a postnup. You need good advice—separate advisors for each party– from both a divorce lawyer and an estate lawyer in either case.

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

Who’s the owner of a 1958 Corvette convertible?

032317_16bThis story is taken from one published in the Daily Republic.

“A California judge will apparently decide who owns that yellow Corvette in June.

One thing we do know for sure is that 75-year-old George Bristol owned the Corvette, valued at some $97,000, prior to his death in a traffic accident on Dec. 14, 2016.

After that, though, the picture grows murky.

An administrator of the estate, Jared Bristol, says the Corvette is now in the possession of Laura Hazelett, who he claims in his lawsuit was having a relationship with George Bristol before he died late last year in his 2004 Toyota Tacoma, which left the road, went airborne, and crashed into the side of a large drainage canal.

Jared Bristol filed a lawsuit against Hazelett on Wednesday in Fairfield, Calif., claiming that she forged George Bristol’s signature on forms that she filed in January 2017 with the Department of Motor Vehicles saying that George Bristol had given her the car two days before his death.

The lawsuit asks that the DMV not be allowed to transfer ownership of the Corvette to anyone while the estate is in probate.

The Daily Republic reached out to Hazelett for comment on the allegations of the suit but received no response.”

If George Bristol had included his Corvette in his estate planning, this issue would not have arisen.  He could have named Hazelett or anyone else as the owner of the valuable car.  Whoever was named would have inherited it and there would have been no court fight.

Be sure that you have an estate plan and that it includes any valuable assets you own.  That way, you will save your loved ones time, effort and expense…and your wishes will be carried out.

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

Do you know your spouse’s passwords?

Ann

A recent article in the Huffington Post really emphasized why you need to be sure to learn your spouse’s passwords…while he or she is still alive to tell you what they are.  The article, titled “I’m Still Paying For My Dead Husband’s Cell Phone Because I Don’t Know His Childhood Friend’s Name”, is printed here in its entirety.

The photo is of the author, Ann Brenoff, and her now deceased husband.

“Make a record of your passwords, folks.

Until I became widowed two months ago, I thought death was a finality. After it happened, I would have the time and space to mourn. I’ve since learned that death is actually followed by a long web of subscriptions, billing services and other minutia ? along with a series of arguments with customer service professionals reading from scripts. 

Unraveling my husband’s life has been a complicated problem, primarily for one reason: His passwords were not in his “important papers” file. 

As a result, my access to his personal accounts is limited, and depending on the company with which I’m dealing, the malarky of what passes for customer service is off the charts.

Take for example his cell phone carrier, a global company with 40,000 employees, none of whom apparently work on weekends. They won’t stop billing me for his phone service because I can’t get into his account to cancel it. I don’t know his password.

And I can’t override the password with his account’s security question ? the first name of his first childhood friend. Vic was 81 when he died ? I feel safe suspecting that he probably wouldn’t have remembered this name either.

Recently, a customer service rep offered me this option: Drive to a company store to “authenticate” my husband’s account, bring his driver’s license, Social Security number, death certificate and our marriage license. For real. Oh, and then call him back because I clearly must have plenty of time on my hands. Mind you, they are still billing my credit card while giving me the run-around. 

Death certificates are the key to the universe.

The root of dealing with all post-death matters is having a copy of a certified death certificate. You can do nothing without one. The best advice anyone gave me was to order multiple copies because everyone, including the gas company, wants one.

Getting a death certificate, at least in Los Angeles, is best accomplished by rising before dawn, taking a day off work and going in person with plenty of quarters for the parking meter. And don’t forget to bring your own pen; things are a little tight at our government offices these days.

Once armed with copies of my husband’s death certificate, I set out to move all his accounts into my name and square away the mountain of paperwork that comes with the end of life. And while it’s certainly been a journey of discovery ? we’ve been spending how much on premium cable so he could watch Cubs games from Los Angeles? ? it has pitted me against more than one instance of corporate absurdity.

Customer service is a contradiction of terms.

Take for example the bank that wouldn’t switch our account notifications to my email from his. We have banked with them for decades and all our accounts are jointly held with survivor rights. Even worse, the bank has his cell phone number on file ? yes, the one I hope to get rid of. 

The cable company, usually the boogeyman of the utility companies we deal with, turned out to be not-so-bad. I just had to threaten to not pay them if they didn’t switch the name on the account. Ditto for the propane company. 

Credit cards are generally pretty happy to remove names. The mail-order pharmacy, not so much, especially when automatic refills are involved. Eventually, every automatic refill will outlive its subscriber and medications aren’t returnable. Who wins in this scenario? 

Car insurance, his driver’s license, his Social Security and Medicare, his magazine subscriptions and his airline miles ? flash that death certificate and you are good to go. 

But the ability to cancel his cell phone service? That one remains elusive.

Widowhood is not for the weak. One minute, you’re fine and the next you’re a raving lunatic. You curse your dead spouse when you have a flat tire, when you just don’t have the energy to drive your kid to the school bus stop and no one else is around to help. It can feel like the weight of the world is on your shoulders and you just want one thing ? just one ? to be easy. Like, you know, canceling a cell phone plan.”

For information about end of life planning, check out our website www.diesmart.com.