Understanding Probate Law 

Posted by on May 22, 2020 in Legal News |

Probate law is its own field. There are attorneys who practice solely in this complex, multi-faceted field of law, and they know the ins and outs. These estate planning attorneys are the ones you should contact to set up an estate plan, as opposed to joining online sites like LegalZoom to do it yourself.

In this article, we will walk you through a day in the life of a probated estate. For each “step,” there are many sub-topics and sub-steps, as well as ways to avoid probate. This overview should not replace setting up an appointment with an estate planning attorney. 

What is Probate?

If you make a will, probate is the way you can authenticate it. Probate court is the legal body that supervises the distribution of your estate and payoff of creditors. If you die intestate (without a will), your estate still goes through probate, but the court will determine all of the distribution factors. Here is an example of step-by-step probate process.

Step One: Authentication

Whoever has your will must file it with the state after your death as soon as “reasonably possible.” What is “reasonable” or not will be determined by the court. The person with the will also will file a petition for probate, which is a request to kick off the process.

Authentication means ensuring that the will is properly-made, accurate, and not forged. Each state has its own authentication mechanisms and laws, and the possessor of your will must be sure to follow the court’s rules on authenticating before probate can really get going.

Step Two: Appointments 

After authentication, the court will appoint someone to administrate your will. This person is known as an executor. The executor is in charge of conducting transactions on behalf of your estate (including paying off creditors and distributing assets).

Step Two-and-a-Half: Bond

Sometimes, an executor will have to “post bond” before he or she can distribute the estate. Bond acts as an insurance policy in case the executor leaves or commits grievous errors in administrating the estate. Not all states require bond for executors.

Step Three: Find the Assets

Identifying and listing the estate’s assets is a tedious process. The will may include many of them, but there might be “hidden assets.” The executor can find “hidden assets” through reviewing insurance policies or tax returns. 

Step Four: D.O.D. Values

Date-of-death values are the appraisals of the assets—basically, how much an asset is worth on the day the person died. The court can appoint someone to make the appraisals, but the executor can also do the appraisal appointments him- or herself.

Step Five: Creditors

Next, creditors, which are the people to whom you owe debts, must be identified and notified of your death. In many states, an executor must post an ad in the paper to let creditors who are unidentified know that you have died. Usually, once they know you’re dead, creditors will swoop in to try to collect payment. 

Step Six: Pay Debts

And once all the creditors have lined up, it is time for the executor to take the values accumulated in your estate, add them up, and start using the value to pay off debts. Creditors come first in probate, not your family.

Step Seven: Tax Returns

Next, the executor must file tax returns for your estate for the year up until your death. The IRS is considered a creditor, and sometimes, it is necessary to liquidate assets to pay off unpaid taxes.

Step Eight: Final Distribution 

Your family gets what is left, if there is anything after paying off creditors. The executor will look to your will for guidance on the distribution. 

If this sounds terrible, that’s because it can be. There are ways to legally minimize your tax burden and avoid probate court, and an attorney can help you do that. Probate court is a lengthy, difficult process, but it does not have to be that way.

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Divorce and Legal Separation

Posted by on May 16, 2020 in Legal News |

Well, we knew this article would come eventually. Everyone is stuck in the house right now, whether they want to be or not, as Coronavirus rages through the country. Some people are quarantined by themselves, while others are stuck inside with spouses. Being stuck inside with your spouse leads to boredom, and boredom leads to fights. Arguing is just one way to pass the time.

But what happens when these arguments are stuff that your relationship cannot surmount? Old quarrels can lead to divorce and legal separation. If quarantine has driven you to this point, you should probably read this article. Here is some need-to-know info about divorce and its impact on your estate plan.

Divorce Vs. Legal Separation

Firstly, there is a difference between divorce and legal separation. Divorce ends the marriage contract between you and your (ex-) spouse. Legally, you two are no longer married. Legal separation, on the other hand, does not end the marriage contract. In a legal separation, the couple is still married, but they are living apart. A legal separation is a court order that will mandate the rights/duties of the couple during this time period. If you want to be done done, get a divorce.

And, as divorce is the end of the marriage, this article will discuss divorce’s, not legal separation’s, impact on your estate plan. 

Divorce’s Impact on Your Estate Plan 

Power of Attorney

Do you want someone with whom you have been arguing for two straight months (or longer) to be your power of attorney? The power of attorney is allowed to make major healthcare and/or financial decisions for you in the event of your incapacitation. This position can have a huge impact on your life when you are in your most vulnerable state. Switch out the power of attorney to someone you haven’t divorced. This can include a family member or close friend.

Will

Some states have a strikeout provision in a will that essentially ignores your ex-spouse in the event of a divorce. The provisions about your ex are “ignored” by a court. However, not all states have this, and you shouldn’t rely on it anyone. If your ex is a beneficiary of your estate, take them out. You want to make sure your will (or a trust) is updated to reflect your current status.

Retirement/Life Insurance

Your 401(k), pension, or IRA are not passed down as part of your will. Instead, they go to a beneficiary in the event that you die and are unable to benefit. The same goes for life insurance. If your ex-spouse is listed as the beneficiary on these types of accounts, you should take them off. It’s likely that you do not want your ex getting a windfall of cash in the event of your death, so calling the financial/insurance institutions in charge of these is a must-do. 

What About the Kids? Alimony?

Custody and alimony are part of family law, and an estate planning attorney who does not practice family law will likely refer you to another attorney. Custody determinations and alimony determinations are tricky, and they are handled separately than the other, above-mentioned aspects of an estate plan. 

According to Bloomberg News, China has already seen a spike in divorce filings. The pandemic is pretty much over there, so China’s spike in divorces serves as a foreboding warning to the rest of the world. ABC News’s interview with Howard Markman (the Center for Marital and Family Studies’ co-director) came to the same conclusion: a surge in divorce is to be expected. Contact an attorney to ensure that there is as little negative impact on your estate plan as possible.

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A Mother’s Love

Posted by on May 8, 2020 in Legal News |

Mother’s Day is coming up, and the holiday reminds us that very few things are stronger than a mother’s love for her children. In the spirit of that sentiment, this article will be geared towards mothers and their kids. We’ll discuss how mothers can protect their kids through smart estate planning. 

Moms and Their Kids 

While this list certainly is not exhaustive, it does contain some of the most important documents an estate plan should include. Consult an attorney for more information on how to structure your estate plan. Like families, no one estate plan is the same. There is no “one size fits all” option.

Guardianship

One of the last things you probably want to think about with Mother’s Day coming up is what it would be like if your kids did not have a mother. So, we’ll keep this short. Guardianship papers are an essential part of any estate plan. These papers detail who will take care of your kids in the event that you (and your spouse, if you have one) pass away.

Picking a guardian for your kids in the event of a “worst case scenario” means selecting someone who will be there for the day to day. Yes, Disney trips and lavish vacations are fun, but select someone who can stick with your kids for the long haul. Only you know what’s best. Make sure to consult with your proposed guardian before you make the selection, just to ensure that he or she is on board with such a big responsibility.

A Trust

“Can’t I just put my kids in my will and call it a day?” Well, you can, but your will still must go through probate, and that can be a long, drawn-out process that tangles up your assets. A trust, which is a three-party fiduciary relationship, transfers ownership of your asset to your kids immediately.

But, don’t worry. They can’t get their hands on your asset until they are older. You pick the date they receive the trust’s benefits. The person who controls the trust’s distribution is a trustee. Discuss this with an estate planning attorney if it sounds like something you want to set up. A trust is a good way to avoid probate and get your kids what they need immediately.

Updating Regularly 

Don’t forget to update your estate plan regularly to encompass changes in the family, whether these include new kids, grandkids, divorces, or other life changes that might cause your will to look different. You don’t want to exclude anyone (or include someone who shouldn’t be), so a regularly-updated estate plan will benefit you and your kids far more than one that is out of date.

Life Insurance 

Life insurance is an excellent choice for someone who wants to provide for their kids. Life insurance is a contract between you (the policy holder) and an insurance company. You pay a premium to the company. In exchange, the insurance company promises a payout to the beneficiary (your kids) in the event of your death. Life insurance plans, like all insurance plans, vary in terms of expensiveness and coverage. 

Business Succession Plan

For moms out there who own their own businesses, this one is important. Make sure that there is a plan in place in the event that you die. Do you want your business to be passed on to your kids? Or, do you want your company liquidated or sold? Without a succession plan, your kids will be faced with hard, confusing decisions. A succession plan will make this much easier for them.

This Mother’s Day, give your kids the gift of a long-term plan for the future. Consult an estate planning attorney to talk about your options. Above all, be happy and stay safe! 

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All About Power of Attorney (POA)

Posted by on Apr 22, 2020 in Legal News |

You’ve probably heard the term “power of attorney” before, but you might not know the ins and outs of what it requires. In this article, we’ll go through ten things to know about a power of attorney. 

1. What is a Power of Attorney? 

A power of attorney is actually a legal document. This legal document allows you to appoint an individual (or more than one) to be in charge of your financial, healthcare, and/or legal affairs in the event that you are unable to make these decisions yourself, due to illness. The POA ensures that you will be taken care of, even if you are unable to communicate your wishes to doctors, the bank, or a lawyer. 

2. Who Needs a Power of Attorney? 

You may think that just the elderly need a POA. However, that is a misconception. Anyone can need a POA, even someone who is in the best shape of their life in their twenties. Not to sound gloomy, but illness (especially now, as COVID-19 is spreading more and more rapidly every day) can affect anyone. Don’t think that because you’re young and healthy now that you won’t need a power of attorney one day.

3. General Power of Attorney

The next four items on this list are definitional. A general power of attorney is also called an “attorney in fact” or an “agent.” This person gets a broad scope of power over your affairs. They handle financial decisions, business transactions, settling claims, employing professional help, making gifts, and even the purchase of life insurance. 

4. Special Power of Attorney

A general power of attorney is different than a special power of attorney, as the latter has less of a broad scope. A special power of attorney is a document that grants someone scope over a limited transaction or small part of your life. You might sign a special power of attorney giving someone the ability to manage your property, collect debts on your behalf, or handle business transaction. The scope is far more limited with this document. 

5. Durable Power of Attorney 

A durable power of attorney is not its own separate POA. “Durable” refers to its validity even if you become mentally incompetent. A special power of attorney or general power of attorney can be a durable power of attorney. This means that it will be valid even while you are mentally incompetent or mentally ill. It’s essentially a protective measure, granting your POA durability—lasting validity. 

6. POA for Healthcare

A POA for healthcare is a power of attorney that strictly revolves around your healthcare decisions. Say you are in the hospital for an illness and you are unconscious; your POA for healthcare will make medical decisions on your behalf, keeping in mind what you would want. The POA for healthcare will mirror your healthcare wishes. 

7. Who Should You Choose?

Only you can decide who to choose. However, the main factor is trust. Do you trust this person to make sound decisions on your behalf? Your life will quite possibly be in their hands. Level-headedness and trustworthiness are two of the most important characteristics of a POA, with a special emphasis on the latter. 

Should you suspect your POA of wrongdoing, you are not left in the lurch. There are state resources, such as an ombudsman or other legal advocates, who can look into transactions and ensure that your POA is not abusing his or her powers. If you feel you are in danger, contact law enforcement.  

8. Appointing Multiple People

You can appoint more than one power of attorney, but you need to specify whether they must make decisions together or if they are permitted to make them separately on your behalf. Note that a possible downside of this is that your POAs might not agree, slowing down decision-making and causing conflict. 

9. Can Your Choice Be Questioned? 

Your choice is valid if you are mentally competent when you sign it. Each state has its own specific laws on competency when signing such a document, and you should contact an estate planning attorney to safeguard your choice from people who may naysay.

10. Now What? 

To create a power of attorney, you should contact an estate planner. This attorney will walk you through the document and ensure it is done properly. 

With the uncertainty surrounding the coronavirus, now is the time to make sure your affairs are in order if the worst-case scenario comes to pass. Contact an estate planning attorney and set up a POA as soon as possible.

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Prioritizing Assets in an Estate Plan

Posted by on Apr 15, 2020 in Legal News |

This article is tricky, as every person’s estate is different. “Prioritizing assets” is usually a term used in an emergency situation, when someone does not have an estate plan and the clock is ticking. So, currently, with COVID-19 being the huge threat that it is, estate planning has taken on an emergency function for many people.

Which asset should you protect first? This article will give suggestions as to what you should prioritize. The list runs from “most important” to “less important,” but it is all relative. At the end of the day, it is up to you to decide. Contact an estate planning attorney to determine how your particular estate plan should look.

Most Important: Living Assistance, Healthcare Decisions, POA

Living Assistance

Most people will need long-term living assistance once they get older. You may not know this, but Medicare does not pay for living assistance, such as a nursing home or assisted living. Medicaid does pay for this assistance, but many people are rightfully concerned about the quality of care they will receive if they use Medicaid. 

Setting aside a sufficient fund (even if you have to liquidate property to do so) for your living assistance is a top priority. You deserve to have a good retirement, and that includes the portion of your life where you require assisted living. 

Healthcare Decisions 

A healthcare directive allows you to delineate medical decisions before they happen. This document contains your wishes for your medical care, and doctors and nurses will abide by it. A healthcare directive is a useful document to have if you are unable to communicate these wishes (such as a Do Not Resuscitate order) yourself. 

POA

POA stands for “Power of Attorney.” A power of attorney is a document that grants someone the authority to make financial, medical, business, and/or legal decisions on your behalf. The person who you designate as POA in the legal document should be someone you trust to be level-headed and make decisions that would mirror what you would want.

Moderately Important: Business Succession, Trusts

Business Succession

This is definitely in the “most important” section for people who own a business, but for people who don’t own a business, it is not relevant, so business succession planning evens out somewhere in the middle.

If you own one of the 30.2 million small businesses in America, it is vitally important that you have a succession plan in place if you pass away. Who will get your business? Do you want your business liquidated or sold? Perhaps you want it to merge with another company, based on a pre-arranged agreement. It is never too early to plan for a business succession. 

Trusts

A trust is a legal document that sets up an immediate asset transfer. You, the donor, transfer title to an asset to a trustee. The trustee acts as a third-party representative until such a time as he or she transfers his or her legal title to a beneficiary. The beneficiary is the person you want to end up with the property after you die.

This type of document avoids probate court. It goes into effect immediately, so, in an emergency, a trust is not a bad tool to look into.

Relatively Less Important: Gifts, Last Will and Testament, Miscellaneous Transfers 

Gifts

When you’re thinking of the less-important transfers, gifts would likely qualify. Once you have everything else settled, deciding who gets what gift from your estate can become your main priority.

Last Will and Testament

Many of the courts are closed for another month until COVID-19 passes, so a last will and testament will not be probated for a long time. This document, which specifies where you want your property to go after you die, is not ideal in an emergency.

Misc. Transfers 

Small transfers (such as a favorite painting or other, non-essential item) likely can occupy the back-burner for now until more pressing matters are taken care of.

If you’re reading this article and questioning the order of the list, that is perfectly valid. Only you understand your estate situation, and everyone’s property is different. What is important to one person may be unimportant to another. Consult with a lawyer to create an estate plan that is right for you and your loved ones.

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Emergency Drafting of an Estate Plan

Posted by on Apr 9, 2020 in Legal News |

There’s no missing what’s going on out there today. Coronavirus (COVID-19) has swept across the globe and is an international pandemic. Coronavirus is, according to the CDC, more likely to be fatal to the elderly and people who have autoimmune deficiencies or preexisting illnesses. 

It’s no surprise that many people are asking how to draft an estate plan in an emergency. As you may or may not know, an estate plan is a way to legally decide where your assets will go after you pass on. People who have no estate plan, or who have an old, outdated estate plan, should take this time to make sure that they have one. And, if a global pandemic doesn’t count as an emergency, nothing does. 

First Things First: Talk to an Estate Planning Attorney 

This blog is not meant to be legal advice, and your situation is different from your neighbor’s. You will want to talk to an estate planning attorney about drafting an emergency estate plan. The important thing is not to wait, particularly if you have no estate plan or an estate plan that needs updating. 

Drafting an estate plan in an emergency is not the ideal way to do things, but that’s where we are today. Here are some suggestions as to which components of the estate plan to draft first.

Components to Draft First 

The suggested drafts include, if applicable, a healthcare directive, power of attorney, trust, last will and testament, and business succession plans. We’ll look at each one individually. 

1. Healthcare Directive

If illness causes you to become incapacitated, you still want the doctors and nurses who are taking care of you to know what your wishes are. For example, you might not want to be resuscitated (a DNR order). A healthcare directive lays out these wishes in advance, and the hospital will have them on file to refer to in the event that you cannot communicate. 

2. Power(s) of Attorney 

Finance and healthcare are two sectors of your life where you may need a power of attorney. This trusted individual, who you select, will have decision-making capacity regarding your financial and healthcare decisions in the event that you are unable to make these decisions yourself, such as in the case of severe illness or unconsciousness. An estate planning attorney can help you set up a power of attorney. Make sure you speak with your proposed individual beforehand to ensure they are on board.

3. Trust

A trust is a three-party relationship between you (the donor), a trustee, and the beneficiary. You sign over title to certain assets to the trustee for the eventual benefit of the beneficiary. The title switch goes into effect immediately. The trustee now holds title to the asset, and, when you pass on (or at another time you designate), your beneficiary will get the asset. 

A trust is beneficial in an emergency because it goes into effect right away, and it does not require the document to pass through probate court. 

4. Last Will and Testament (with a Word of Caution) 

If you don’t want a trust and have your heart set on a will, a last will and testament is an option. It describes your wishes for your property after you die, including to whom you want it transferred and how. The word of caution with this document is that a last will and testament must go through probate court. As the courts are closed now because of the pandemic, the wait time on probate court may be even longer than usual—and it was a pretty time-consuming process before all this happened.

5. Business Succession 

If you own a business, a business succession plan is a must-have. If you die, you want your business to fall into the right hands. Or, you might want it liquidated or sold. Either way, having a set plan will prevent your hard-earned business from falling into chaos.

This list is by no means exhaustive, and that is why it is so important to contact an estate planning attorney first. The attorney will listen to your particular situation, and he or she will advise you on the most important documents to draft. This session can be done over the phone or via email, but make sure to check with your attorney’s office as to the precautions they are taking during the pandemic. 

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