Jane Austen’s Will: It Used to Be So Easy
August 9, 2010
Many clients are shocked when they see the sheer volume of paper in a truly well-done estate plan. A trust by itself can be hundreds of pages, not to mention the other 6 to 16 documents you may or may not have—depending on your family situation. You may find that the “simple” estate plan you thought you were getting has turned into something of a size that would rival War and Peace!
It didn’t always used to be this way. The last will and testament of the great Jane Austen, for example, was only one paragraph long:
I Jane Austen of the Parish of Chawton do by this my last will I testament give and bequeath to my dearest sister Cassandra Elizabeth everything of which I may die possessed, or which may be hereafter due to me, subject to the payment of my Funeral expences, & to a Legacy of £50. to my Brother Henry, & £50 to Mde de Bigeon – which I request may be paid as soon as convenient. And I appoint my said dear sister the executrix of this my last will & testament.
Jane Austen
April 27 1817
Although this simplicity may have worked in 1817 England, it isn’t practical in the here and now. Things just aren’t that simple anymore. First of all, although Austen appoints her sister Cassandra as the executrix of her will, the will itself neglects to specify what powers are included in that appointment, leaving Cassandra effectively unable to carry out Austen’s wishes. Secondly, the will neglects to make alternative provisions—what if Cassandra had unexpectedly died before Jane? Also notably lacking (from our contemporary perspective) are any provisions for estate taxes. And finally, discerning readers may notice that the will does not include the signatures of any witnesses, something which would have been required if her will had been type-written. Likely, it was only because her will was written entirely in her own hand, and her hand-writing was later authenticated by witnesses who authenticated her hand-writing, was the will upheld as valid. In California, a type-written will must always be signed by at least two witnesses; the only exception to this requirement is a “holographic” will, which is a will that is completely handwritten by the testator.
We all may long for simpler times, especially when it comes to something most people think will only benefit their heirs and not themselves; but many of the rules and regulations that are dismissively thought of as “hoops to jump through” are there for your best interest. They exist to protect your heirs and your legacy from fraud, misuse, greed and neglect. Far from being a chore, creating a thoughtful and legally valid will these days is actually an act of love… One might even say it’s a matter of sense and sensibility.
How To Choose Your Executor or Personal Representative
June 14, 2010
Serving as someone’s executor or personal representative under a Last Will and Testament can be a HUGE job, and may not be right for the faint of heart. Although nomination is commonly considered an honor, there is a lot of work involved, and an executor must have a great capacity for organization, attention to detail, the ability to meet deadlines, and more. You may be tempted to name your favorite sibling or eldest child just to keep from hurting any feelings, but your family and heirs will not be well served if you choose your executor based on emotion rather than ability.
Keeping this in mind, here are 4 things to consider when choosing your executor or personal representative:
- Your executor should be trustworthy. Your executor will be privy to all of your financial secrets: reviewing estate assets, determining your liabilities and paying off creditors, settling outstanding debts, and making distributions to heirs. Chances are you don’t want all that information spread throughout the family or community.
- Your executor should be organized. The person you choose will be in charge of a number of detailed tasks, both large and small. He or she will be making lists of assets, working with your attorney to meet court deadlines, making timely distributions for estate taxes, and more. Missing or being late for one of these many steps can draw out the entire process, costing your heirs both time and money.
- Your executor should be financially savvy. One of the responsibilities of executor is to keep the estate viable (making sure the mortgage and fees continue to be paid) during the probate process. If you have investment accounts you’ll want to ensure they won’t languish and lose their value before they can be distributed to your heirs.
- Your executor should have heart. Although probate is a can be a difficult and detailed process, it is at its core about the people you love. Your executor should have the ability to be caring and compassionate during this emotional time.
If you don’t know anybody you would trust with all of these responsibilities don’t lose faith, there are other options. For example, you can choose a bank or financial institution as your executor, or you can ask your estate planning attorney to recommend a professional fiduciary. The goal is to find someone who will serve you well and work with your attorney to ensure a smooth probate for all involved. Another approach is to create and fund a trust, where the duties after your demise would be handled by your Successor Trustee. However, many of the same concerns that apply to your Executor (if you only have a Will) also apply to your Trustee. Talk to your attorney about choices and the difference between administering a probate estate created by a Last Will and Testament, on the one hand, versus a trust estate created by a Trust, on the other. You may find the talk very helpful.
Take Action in the Face of Estate Tax Uncertainty
May 13, 2010
If you’ve been reading our blog regularly then you know that the 2010 estate tax repeal has caused no end of confusion and uncertainty; not only for those who have been dealing with probate and trust administration since the tax was first repealed, but also for those who are trying to think ahead and do the right thing for their spouses and children. Many people have come to the erroneous conclusion that they have no choice but to stand by and wait until the Washington politicians make up their minds about whether or not to restore the estate tax retroactively—but we’re here to tell you that you don’t have to wait to protect your assets and your family.
Forbes.com recently published an article entitled How to Protect Your Family From Estate Tax Uncertainty. This article suggests that there are a number of steps you can take right now to protect your heirs and your assets, even if you don’t know what changes lawmakers may enact tomorrow or 2 months from now. Their suggestions include everything from working with your estate planning attorney on contingency plans to account for anomalies such as no estate tax or minimum exemptions, to common sense action items such as taking the time now to track your cost basis for assets (to help your executor and heirs determine the change in value for tax purposes.) The Forbes article also suggests that some people may want to plan to save by giving—taking advantage of the gift tax exemption amounts. For more on a special technique involving the use of “Disclaimers” in the current estate tax climate, see Attorney Osofsky’s recently published article.
There are always steps you can take to ensure that your estate plan is up to date, our firm can be your compass and your guide; we can help your family prepare for whatever the future may have in store.
Defining Probate
April 23, 2010
Probate: [from the Middle-English probat, from Latin probatum…] a : the action or process of proving before a competent judicial authority that a document offered for official recognition and registration as the last will and testament of a deceased person is genuine. b : the judicial determination of the validity of a will.
This Merriam-Webster definition of probate doesn’t make it sound so bad. Quite simply, it is the process by which the court determines the legal property of a person who has died, and decides to whom those assets will be distributed. It sounds like it should be simple… but somehow probate is hardly ever simple. Even in the best of circumstances there are procedures that must be followed to the letter, and the actual process (depending on the size of the estate and the laws of the state in which the property is being probated) can take anywhere from 6 months to a few years!
A good will can go a long way toward keeping the probate process on the short and easy end of the spectrum; but even with a will, much of your probate experience will depend on elements outside your realm of control. There are certain steps that must be followed to complete the probate process, including:
- the appointment of an executor or personal representative
- verification of the will
- taking an inventory of assets belonging to the deceased (which can be very difficult if good records have not been kept)
- giving notice to creditors
- paying valid claims against the estate
- preparing and paying taxes
- notifying beneficiaries (not all of whom will be easy to find)
- and eventually distributing the assets to the beneficiaries or heirs
If just reading the above takes your breath away, imagine having to actually go through all of those steps—and possibly more! The good news is that you don’t have to go through it alone, our office can help you navigate the tangled probate maze from beginning to end—from filing the first court documents to protecting your eventual inheritance—ensuring that your probate experience goes as quickly and smoothly as possible.
The Receiving End of Estate Planning
March 29, 2010
We publish a lot on this blog about preparing your estate plan: writing a will, setting up a trust, choosing beneficiaries and nominating guardians; but there is another side to estate planning, a fun side… the receiving end.
You may assume that the receiving end of estate planning is the fun and easy part, but that is not always the case. Coming into an inheritance presents its own questions and challenges; financial, logistical, and personal.
Financial
Receiving an inheritance always means you have to think about taxes. Estate taxes, income taxes, property taxes… The estate tax this year is not as clear as it has been in the past, and you will probably want to have an attorney or accountant help you with it. Whether or not you have help, you will absolutely want to keep paperwork on everything. This includes paperwork from any transfers of inherited property received by you, as well as any and all of the original paperwork you can find for the acquisition of the inherited assets.
Logistical
There is a lot more to an inheritance than simply getting money and spending it. Are you the nominated guardian of young children, holding those assets in trust for their benefit? Or perhaps you are the beneficiary of a trust, and your receipt of the assets is subject to the terms of that trust. Do you have to use the money for school? Do you need the approval of a trustee before you can spend it? Hopefully you are working with a trustee you know and trust, but if you and the trustee disagree you may need mediation or even your own attorney to assist with resolution of any dispute.
Personal
Inherited assets are often very personal and fraught with emotion. Should you really sell the house grandma lived in for decades and use the money to take a cruise? (If so, wait until after taxes, if any, are determined before you buy the tickets.) Would your parents have wanted you to use the money to pay for a wedding, or save it for your own retirement? Do you want to take the summer home that’s been in your family for generations and own it jointly with your new spouse, or keep the property on your side of the family?
Whatever you choose to do with your inheritance, it’s likely you’ll need some guidance from a knowledgeable and trustworthy professional. Your estate planning or elder law attorney can help. His or her knowledge of the probate system, estate taxes, and how to protect your newly inherited assets can be very valuable to you at the receiving end of your loved one’s estate plan.
Do You Need A Will Or A Trust?
March 14, 2010
When it comes to estate planning there are two major vehicles for the distribution of property: A will and a trust. Both are very useful tools and can accomplish specific goals—but how do you know which one is best for your family? Which document you will need depends on a number of factors, some of which may seem completely irrelevant at first: the size of your estate, your goals for that estate, the age of your children, your marital status, your retirement account, and many, many more. But the first step to understanding which tool may be right for you is to understand what each document does.
A Will: A will is a formal declaration of your wishes. It is a document you create to declare the extent of your privately held property (it does not cover jointly owned property) and what your wishes are for the distribution of that property. You name an executor to carry out your wishes, and you can even include a nomination of guardian for young children in your will. A will does not go into effect until after you die; before then it is simply a piece of paper containing your private wishes. However, once you have passed away your will no longer remains private, it now becomes a matter of public record, available to anybody who would like to view it, and overseen by the court in a sometimes lengthy and expensive process called probate.
A Trust: A trust is a far more extensive tool than a will. In fact, there are many different kinds of trusts, each of which may be used for specific situations. Most trusts created for estate planning purposes are revocable living trusts (or RLTs.) An RLT is a document created not simply to distribute your property, but to own your property on your behalf, to be invested and spent for your benefit or the benefit of your named beneficiaries. As such, a trust takes effect as soon as you sign it and your property is protected by and subjected to the trust parameters as soon as you place them in the name of your trust. There is a lot of flexibility available with a trust, and yours can be created to fit your unique situation. Most RLTs name the trust creators as the initial trustees, nominating individuals or banks to take over as trustee when the creator becomes incapacitated or passes away. The benefit of a trust is that when the creator passes away, property is not merely distributed and that’s the end of it; the creator can instruct the trustee to distribute the money slowly and in any number of ways, even to the extent of creating new trusts for each beneficiary. Trusts can last for generations, as evidenced by the enduring Kennedy trusts.
Wills and trusts are necessary tools in estate planning, each one working in unique situations. Your attorney will be able to tell you which one is best for your family.
The Shortest Will: It May Hold the Record, But It Won’t Hold Water
December 12, 2009
Have you ever wondered just how little you could get away with in your last will and testament? Aletta Stager of Brooklyn, NY holds the distinction of having executed one of the shortest wills on record—a mere 2 lines long!
“Nov. 29, 1895. I give to my cousin, Nettie M. Cowan, all money that I have in the Bowery Savings Bank.
Aletta Stager, 131 Berkeley Place, Brooklyn, N.Y.”
Of course, things have changed in the probate and estate planning world in the one hundred plus years since Ms. Stager executed her will. A glaring omission from the two lines above is the nomination of an executor. If you don’t nominate an executor in your will the court may choose one for you. Also, even if you have only one person in mind as your beneficiary, you’ll want to include secondary beneficiaries, who can include charities and non-profits if you don’t have any family or friends to whom you’d like to leave your estate.
Even back in 1895 Aletta Stager’s property ended up going to the state of New York when no heirs—including the named beneficiary—could be found. Perhaps if Ms. Stager had included a couple more lines in her will her estate could have gone to benefit her favorite charity instead of being swallowed up by the state.
Test Your Knowledge: An Estate Planning Quiz
December 2, 2009
How much do you know about estate plans? And how do you know when you need one?
Many people have a vague feeling that they should execute some kind of estate plan eventually, but think (hope) that they really don’t need one right now. On our blog we spend a lot of time telling people that they do need an estate plan, and they probably need one right now—or yesterday!—and we hope we do a good job of explaining why you need one. But maybe it’s time for you to decide when the time is right. This quiz will help you determine just when (and if) you need to do some estate planning.
1. Do you own a house?
Owning your own home means you have at least one significant asset, which affects your need for planning in a number of ways: First, a piece of property cannot be split between people, it will have to be sold (which can take months or longer) and the proceeds divided among your heirs—often at a loss, especially if the house was undervalued to sell quickly. Second, many people who feel they have “small estates and won’t have to worry about Probate or the estate tax” are surprised when they find that the value of their home does indeed push their estate over the line. Third, if you are married, you may need to make provisions for your spouse if you would like them to be able to continue to live in your home, especially if it is partly your own separate property acquired before marriage.
2. Do you have minor children?
If you have minor children and have not made provisions for them in case of your death or incapacity the court will make decisions about their futures. If there are no suitable family members who are willing to step forward and would be suitable guardians, your children might be placed in the care of foster parents or become wards of the state. That is not a chance you want to take.
3. Do you want your heirs to have to wait months (or years) before receiving an inheritance, diminished by the cost of probate?
Probate is sometimes a long and expensive process. Without a plan in place your assets may have to be probated before they can be distributed. Not only does this often take a long time, but the probate fees (which can be considerable) are taken out of your estate—leaving less for your heirs.
4. Do you know how you want to spend your final moments?
Most people don’t die quickly and quietly at the ripe old age of 98. Most people fall victim to accidents, illness or dementia—unable to make their own health care decisions. Without a healthcare directive or living will that specifically outlines your wishes and instructions for your health care and nominates an agent to carry out those wishes, you could end up in a Terri Schiavo situation—costing your loved ones both financially and emotionally.
(NOTE: There is much that goes into your estate plan decision-making; this is only a partial quiz, and not a planning tool. We suggest meeting with your attorney for an in depth interview to determine what kind of planning will be best for you and your family.)
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