An authentic document is one that you state considers to be a legal representation of your wishes.
We read an interesting post awhile ago that we thought might help some of you. The author is Jennifer Stuart, Attorney, Senior Law Project Jennifer Stuart is an attorney in Raleigh with Legal Aid of North Carolina’s Senior Law Project (SLP). The post is repeated here in its entirety.
When I draft wills for older clients, they often ask about “adding a name” to their bank account – in other words, setting up a joint account. Joint accounts can make perfect sense for seniors who depend on family members for help paying bills and other day-to-day tasks. Joint accounts can also help avoid the need for probate, an often-complex process that requires court involvement to carry out the will.
Undoubtedly, joint bank accounts can make life easier for the right people: seniors and their trusted family members or caretakers. However, they can also make things easier for the wrong ones: people who want to exploit seniors and get access to their money. I hear this concern from a lot of my clients. Their son is in and out of rehab, or their daughter may be easily manipulated by an abusive spouse. Is it safe to add their name to the account?
My clients are right to be cautious, because opening a joint account gives the joint owners virtually unlimited access. They can withdraw any amount of money, at any time, for any reason, without your permission. And the process is irreversible: Once you give someone access to your account, the only way to remove them is to close the account. (The same warning applies if you make someone a co-owner of your home with a new deed; you cannot change your mind and deed it back to yourself unless they agree to give back their interest.)
Therefore, my advice to clients is always: Pick someone you can truly trust, and understand how joint accounts work so both you and your bank know what you want.
If you want someone to have access to your account while you’re alive and receive full ownership of the account when you die, then you want a “joint account with a right of survivorship.” If you want this type of account, make sure the written agreement you sign with your bank clearly states that the account has a right of survivorship.
If you want to give someone access to your account only after your death, then you want a “payable on death” account that names a beneficiary. You can set up a POD account if you are the sole owner of the account, or if the account already has a joint owner and you want the beneficiary to be a third party. Be aware, though, that this will create problems if your joint owners do not agree on the POD beneficiary.
Finally, be aware that setting up a right of survivorship or POD account will not necessarily prevent a portion of the account from being used to pay your debts after your death if you have no other money or assets.
So, when clients ask me about “adding a name” to an account, I tell them that joint accounts can definitely make life easier, but they are first and foremost a matter of trust.
For more information about topics of interest to seniors, check out our website www.diesmart.com.
We 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.
Alan 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.
We came across an interesting article about life insurance on the Edward Jones web site. It gives you some valuable information and some things to think about. It’s reposted here in its entirety.
“If you already have life insurance, you’ve taken an important step to ensure your family is taken care of in case of an unexpected event. But just having it isn’t always enough. Do you have the right type or amount? Have you reviewed your policy lately?
These are the 5 most common life insurance mistakes people make.
1. Having the wrong amount of coverage
Studies show that 1 in 4 people feel they need more life insurance protection.* So how do you decide how much is enough? Use our life insurance needs calculator, or “L-I-F-E,” to get a quick estimate. It will help you calculate your:
Once you have that number, compare it to your current policy amount and see how close you are.
2. Having the wrong type of policy (term vs. permanent)
Do you need insurance to cover you while you have a mortgage to pay or children at home? Or are you looking to build cash value in a policy that you can later pass on to your heirs? Each insurance type has its own advantages. Here are the basic differences:
Term insurance covers you for a specific time frame, typically less than 20 years. It’s the most basic, and affordable, type of insurance, which makes it a popular choice for young families who are balancing debt and saving for the future.
Permanent Insurance provides lifetime coverage and allows you to build cash value that you can later pass on to your beneficiaries. It’s more expensive than term insurance, but the premiums typically don’t increase with age.
Learn more about the differences between these two insurance types here.
3. Relying solely on employer-provided insurance
Life insurance coverage provided by your employer might be okay if you’re single and without kids, but if you have dependents and large financial obligations, it may not be enough. Employer policies rarely cover more than 3 times an annual salary (the general recommendation is 10 times your annual salary) and sometimes only cover as little as 6 months’ salary. Plus, if you change jobs, you can’t take your policy with you.
4. Neglecting to designate beneficiaries
Naming beneficiaries helps ensure that your insurance money goes directly to the people you intended, helping them avoid probate (the legal process of distributing your estate). This could save your family time and expense. If you have insurance from Edward Jones, your financial advisor can help you set up beneficiaries for your policy.
5. Ignoring your policies
Life insurance is an important part of your overall financial plan and should be reviewed at the very least every 3-5 years. If you’ve recently gotten married, divorced or welcomed a new baby in the home, it’s time to review your policy to ensure your coverage amount and policy type still work for your situation.”
For information about financial and estate planning, check out our website www.diesmart.com.