Anyone who has any assets they want distributed should have an estate plan, regardless of the size of their estate. Having a will and an estate plan created by an experienced attorney is the easiest place to start, says the Observer-Reporter in the article “Set up an estate plan so your assets go where you want.” Without a will, the state will decide what happens to your assets, and it may not be what you wanted.
Morningstar’s article, “2 Estate-Planning Tools That Singles Should Consider” explains that a living will, or advance medical directive, is a legal document that details your wishes for life-sustaining treatment. It’s a document that you sign when you’re of sound mind and says you want to be removed from life supporting measures, if you become terminally ill and incapacitated.
What if the father died first, then the mother? They both wrote identical wills and named the youngest child as executor. The middle child was named as the alternate. The will states that if the first executor can’t or won’t carry out the duties of the will, then the alternate executor takes over. It also states that within six months after the mother’s death, the home should be sold, and the proceeds divided evenly between all three siblings.
Time passes, and now it’s been now a year after her death. The oldest child is occupying the house—but he can’t qualify for a mortgage or buy the other two kids out of their shares.
Is the alternate executor permitted to just assume the executor duties and sell the home?
nj.com weighs in with a recent article, “Family fights over mom’s will when executor won’t sell the house. What’s next?” According to the article, being named in the will doesn’t give you the automatic right to serve as executor.
If an individual is named as successor executor in the will, there must be two steps taken, before he can assume the administration of the estate.
In this situation, the youngest brother, as the current executor, must either resign or be removed.
The easiest, quickest and least costly option is for him to voluntarily step aside. However, he obviously has to agree to it.
The second option is to go to court and ask the Chancery Court judge to remove him.
To be successful in removing the executor, a person must show the Chancery Court judge that the executor is refusing to take the necessary action, as directed by the mother’s will. If the judge is convinced, she can remove the youngest brother by court order.
The middle child would then need to be appointed by the judge as the new executor.
Typically, when a person is named as the alternate, it isn’t a problem. It’s merely an administrative process. The middle child would have to go to the probate court and sign the required paperwork.
Reference: nj.com (December 27, 2018) “Family fights over mom’s will when executor won’t sell the house. What’s next?”
The ways that children of a first marriage can contest a will fall into several scenarios. However, in order to do so, a person must have “standing.” Typically, a person has standing in two situations, explains nj.com in its recent article, “Can children from a first marriage contest a will?”
One way is when the individual is the decedent’s heir at law and would inherit under the laws of intestacy if the will were declared invalid. Another way a person could have standing, is if there were a prior will in which the person is a named beneficiary, and the prior will would be reinstated, if the subsequent will were set aside.
For example, in Mississippi, probate laws take blended families into consideration. If a person dies without a will and has descendants, like children or grandchildren who are not descendants of the surviving spouse, then several things would happen. The surviving spouse would inherit a child’s share of the estate. The descendants from outside the marriage would then inherit the remainder of the estate in equal shares.
Let’s say George and Gracie were married and had baby Benny. After George and Gracie divorce, George marries Phyllis. If George dies intestate—without a will—then Benny would inherit one-half of his estate. If George dies with a will, Benny has standing to challenge the validity of the will.
As a practical matter, Benny should only challenge the will, if he’d stand to inherit more under intestacy than under the will, and he has a valid challenge justifying that the will be set aside.
The four most common challenges to a will are lack of capacity, improper execution, fraud and undue influence/duress.
It’s not uncommon for will contests to be successful. However, it really depends on the facts and circumstances of each specific case. For example, Benny would have a much tougher time proving undue influence, if John and Phyllis were similar in age and married for 30 years prior to George’s death, than if Phyllis was 50 years younger than George, and he had some level of dementia.
Reference: nj.com (December 11, 2018) “Can children from a first marriage contest a will?”
When a family member dies, personal items and heirlooms can be the cause of significant conflict among family members, The Guardian says in its recent article, “When It Comes To Heirlooms, It’s Personal.” Many of these hotly-disputed items may have little to no monetary value. However, that doesn’t make them any less important to those family members who treasure their “priceless” emotional value.
A person can typically leave his estate to whomever he wants, provided that it satisfies the obligations to a spouse and dependents. There are several ways to ensure that an estate is equitably distributed, according to the wishes of the deceased. However, making decisions on personal effects and family heirlooms is often one of the hardest parts of the estate planning process.
Here’s what can you do to make sure the cherished personal property you wish to leave to your heirs doesn’t become the focal point for future disputes:
- Avoid any surprises. Avoid potential conflicts by sharing with your family the contents of your will and your reasons for the way that you’ve decided to distribute your assets, so there are no surprises after you are gone.
- Know what “fairness” means. Fairness doesn’t always mean “equal.” That is especially true when it comes to your personal items and heirlooms. Decide what “fairness” means to each of your family members, and if you agree, distribute your items accordingly.
- Talk about your special assets. Create a list of the items you want to bequeath and ask your family who should get what.
- Get appraisals and consultations. Have your personal property appraised and consult with your heirs to be certain that the items you bequeath are appropriately valued–both monetarily and emotionally.
- Create a list. Attach to your will a letter that lists your personal property items and the heirs you want to receive them. The letter won’t be enforceable as part of your will, unless you incorporate it into the terms of the will.
- Make choice now. While you’re still alive, list your personal items and have your heirs take turns choosing what they want.
- Choose later. If you don’t want your heirs to select your personal items in advance but still prefer they are the ones who chose, leave a direction in your will that your heirs are to take turns, until all of the items have been chosen.
Reference: The Guardian (December 23, 2018) “When It Comes To Heirlooms, It’s Personal”
Research shows that about 60% of U.S. adults don’t have a will.
However, not all of your possessions pass through a will. 401(k)s, life insurance proceeds, pensions, and annuities pass by beneficiary designation.
The (Washington, PA) Observer-Reporter’s recent article, “Improper estate planning can lead to familial conflict” explains that some of your possessions will pass through probate. If you own property in several states, the process could become more difficult for your loved ones. A way to simplify the process for them, is by having an updated will.
For instance, even if your will states that all of your possessions are to be split equally between your two children, this may not be what actually occurs. If your life insurance lists only Bob as the beneficiary, he’ll walk off with 100% of the death benefit. Your younger son Doug will receive only half of the assets that don’t have a beneficiary designation. Assets that pass by designation are not controlled by the will. That is why Bob gets all the money from the insurance. As you can see, it’s vital that you review your accounts’ beneficiary designations regularly, to make certain they’re up to date. Check on them every few years or when there’s a family divorce, birth, or death. Once you’re gone, they can’t be changed.
In addition, your estate plan should include two powers of attorney (POA). The first POA is to make health decisions. The second POA is to make financial decisions, if you don’t have the capacity to do so. Your POA agent has your authority to make decisions, only when you do not have capacity and she can only exercise it for your own benefit. POAs end at the drafter’s death.
It’s common today for families to have blended elements. Many people were married before and may have had children. Here’s an example of a famous father who made his third wife executor of his estate, giving her control of his business. In this case, his equally famous son was the principal player in the father’s business. The son didn’t understand the implications of his father’s estate plan. When the father died, there was a long and expensive legal battle between the son and the third wife.
Who was it? It was Dale Earnhardt Jr.
Work with an experienced attorney and don’t let this happen to your family.
Reference: The (Washington, PA) Observer-Reporter (December 7, 2018) “Improper estate planning can lead to familial conflict”
Investopedia’s article from this fall, “How to Get Your Estate Plan on Track,” tells us what an estate plan accomplishes. A good estate plan accomplishes three objectives:
- End-of-life health care decisions are documented in a legally binding document;
- Assets will be distributed according to your instructions, rather than state law; and
- Loved ones avoid the time, expense and stress of the probate process.
A basic estate plan should include advanced directives, such as a health care proxy and power of attorney, will (perhaps a “pour-over” will and a revocable living trust). If you want to ensure that you have a valid will that follows the laws of your state, avoid pitfalls and best protect your family, hire an experienced estate planning attorney to make certain you have professional legal knowledge, when considering the nuances of trusts and estate law.
A health care proxy, also called a health care power of attorney, accomplishes two goals. First, it authorizes a designated individual to make health care decisions on your behalf, if you are ill or otherwise can’t make these decisions on your own. Without this, a judge would decide who has this authority in those circumstances. A health care proxy also allows you to document specific decisions for your health care, such as end-of-life decisions.
Your estate plan should also include a power of attorney, which allows you to authorize a person to make financial decisions in your stead. It’s used, if you’re not in a position to handle such affairs on your own (like a health care proxy).
Probate is the legal process where the court approves the distribution of your assets and gives creditors an opportunity to collect your debts. Going through probate can be stressful for your heirs. There are costs incurred and procedures that must be followed before assets are distributed. The probate process can take months and can be dragged out for more than a year in some situations.
Probate can be avoided with the right planning. For example, you can title certain assets like bank accounts, brokerage accounts, and property, so they pass directly by operation of law to your heirs, and bypass probate. Retirement assets are required to have beneficiaries and likewise will bypass probate. Make sure to have contingent beneficiaries, so these assets continue to bypass probate, if your beneficiaries predecease you.
For people with minor children, designating their potential guardian is one of the most critical elements of an estate plan. It is part of your will in most states. Remember, if you don’t name guardians in your will, and both you and your spouse pass away, the court will appoint a guardian, which may not be ideal for your children.
There are other unique situations that may warrant creating additional documentation and planning. These include having a business, adult children from a previous marriage, a potential liability against your estate or a special needs child. In any of these situations, you’ll definitely need to review your circumstances with an attorney.
Those assets held jointly (your home perhaps) and assets that have a beneficiary (life insurance) aren’t included in the will. Each state has its own rules about where the property goes, when a person dies without a will.
Estate planning is an ongoing process. Review your plan every few years or if you’ve had any major life changes, like a birth or adoption of a child, a divorce or a death of a family member.
Having your affairs in order can help prevent making things worse after you pass away.
Reference: Investopedia (October 17, 2018) “How to Get Your Estate Plan on Track”