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.
What To Do When Your Kids Don’t Like Your Will
October 4, 2009
In an ideal world elderly parents and their adult children always get along, and when those parents pass away their children quietly and respectfully follow their wishes regarding the distribution of their estate. Unfortunately, we don’t always live in an ideal world, and inheritance and estate planning can often cause tension between parents and children before the parents have even reached retirement age!
What are your options when you know your kids won’t like what you’ve put in your will or trust? Many people choose to simply keep their wishes secreted away in a safety deposit box until they’ve passed away and then let everyone fight it out on their own; but this only puts off the bad feelings and can often cause lasting rifts among siblings. This strategy of secrecy also doesn’t address what happens if you become incapacitated and need one of your trustees or agents (in all likelihood one of your children) to take over your affairs.
A better option than secrecy may be to invite your children to your final meeting with your estate planning attorney. If the attorney is willing, and if you have good relationships with your children, this may be a good move. It could give you an opportunity to share your plans in the presence of a knowledgeable professional who is on your side; it also gives your children the opportunity to ask questions and get clear and immediate answers. More often than not tension about mom and dad’s estate plan stems from a lack of understanding, or a worry that mom or dad have been taken advantage of.
Such a meeting might be especially valuable where you have remarried and plan to provide for your new partner in your plan, before providing for children, either yours or your new spouse’s. A meeting might help explain your wishes. Ask your attorney for his or her view on this when you discuss your plan. While a family meeting is not for every familiy, still for many it can be reassuring, educational, and put everyone one the same page while moving into the future.
Do Life Insurance or Retirement Benefits Have to Go Through Probate?
October 3, 2009
We may acquire many assets over the course of our lives now—bank accounts, stocks, real property, life insurance, retirement, and more—it’s almost impossible to know what has to go through probate and what doesn’t.
The answer to the question in the title, above, is “no”; life insurance and retirement benefits do not have to go through probate if the account has a named beneficiary. Benefits from life insurance accounts can be paid directly to the named beneficiary, and money from IRAs, Keoghs, and 401(k) accounts transfer automatically to the named beneficiaries of those accounts as well. The persons named as beneficiary, however, will most likely want to consult with a financial advisor before drawing these benefits, as there may be tax ways of handling these accounts which minimize tax to the beneficiary.
Yet another type of account that is not subject to probate is a “pay on death” (or POD) account, the money from which can pass directly to the named beneficiary upon the death of the owner.
Probate laws vary from state to state, so contact our office—or your own local attorney who specializes in probate—for more information.
When Should I Update My Estate Plan?
May 23, 2009
You’re one of the smart ones: You already have an estate plan that you and your spouse created it back in 1996; it’s sitting snugly in a safety deposit box, gathering dust until the (hopefully) far-off day when it will be needed. You’re done, right?
Wrong.
Kudos to you if you’ve already created your estate plan, you are one step ahead of the rest of the pack; but people and families grow and change, and your estate plan should change as your life does. Your estate plan should be reviewed regularly (we recommend the tax season as a good time to review your plan), but listed here are some life changes that will definitely require you to update your estate plan:
The birth or death of a beneficiary or fiduciary. This includes the addition of new children or grandchildren, or the loss of a parent or sibling.
Your own marriage or divorce, or the marriage or divorce of one of your beneficiaries. If you named your daughter’s husband in your plan five years ago when they were happily married, you’ll want to be sure to remove him after they go through that messy divorce.
Moving to a new state. Tax, health care, and estate planning laws vary from state to state, and your estate plan will have to change accordingly. This is especially true if you are moving from a non-community property state to a community property state.
A significant change in your financial status, or the status of your business, (if you have one). For the most part, your estate plan is designed based on the size of your assets. Different strategies are more effective for large estates than are for small; and if your financial status changes significantly, so should your estate planning strategy.
The simple passage of time. This may sound like the least important reason to update your estate plan, but it is actually the most common. Naming your parents as trustees when your children are minors is fine, but after fifteen years you may want to give your parents (who are now entering their 80s) a break and name your 37 year old son as trustee instead. In addition, there are some documents that should be re-executed from time to time to avoid them being construed as ‘stale”, e.g. your Advance Health Care Directive, your Nomination of Conservator, and your Nomination of Guardain for Minor Children?
Changes in the Tax Law: changes in the tax law can really require another look at your existing plans. For example, couples who prepared “Living Trusts” back in the 1990′s often used “A–B” trust splits on the first death in order to minimize estate tax. With the increasing exemptions, those trust splits may now no longer be necessary for most couples’ estates, and may actually be a hindrance. See our Article “Review Your Living Trust: Older Ones May Need Revision”.
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