Monday, August 6, 2018

Powers of attorney provide parents a say in key decisions for their college-age kids

Woman reviewing bills to afford college for her child

Powers of attorney provide parents a say in key decisions for their college-age kids

by Tom Alberts Aug 6, 2018

Summary: Before heading to begin that freshman year of college, young adults approaching the age of majority – 18 in most states – are encouraged to get three important documents in place. The first is a power of attorney for health care in which a proxy, usually a parent, is appointed to make treatment decisions for a young adult in the event of incapacity. The second is a HIPAA release form that allows access to medical information and the ability to discuss treatment plans with caregivers, regardless of incapacity. The third is a power of attorney for financial and legal matters. When children reach the age of majority, the ability of parents to make health care and financial decisions on their behalf is significantly limited.

When young adults prepare to attend college, they discover many decisions need to be made: where to attend school; where to live; what subjects to study; and what trendy fashions must hang in their closets.

Parents also have numerous considerations. Among them: how to pay for all of this; how to utilize the new empty bedroom; and, more importantly, what happens when Junior turns the age of majority.

For estate planning purposes, the issue of children making the legal transition into adulthood looms large. In most states, 18 is the age of majority (it’s 19 in Alabama and Nebraska and 21 in Mississippi). The age of majority is a milestone that legally divides childhood from adulthood. It’s also a measurement of time that marks the end of authority by parents to exert control over important decisions made on a young adult’s behalf.

As parents relinquish control, they suddenly lack carte blanche in matters they’ve dealt with for the past 18 years or so – making decisions about health care and finances for their children. Once a person is the age of majority, laws require that doctors, hospitals, banks, universities and the like no longer treat them like children. Suddenly, unfettered access to medical records and information about treatment options is no longer the purview of parents because of the federal Health Insurance Portability and Accountability
Act, or HIPAA.

This is a big deal, for example, if your child is away at college and has a medical emergency and becomes incapacitated. Parents want immediate answers about the health of their children. They want to provide input to health care providers and expect candid answers from doctors and nurses.

The same is true when it comes to finances. Many parents who are paying the bills – and tuition – want access to bank accounts in their children’s names to obtain balances, track spending and make sure the checks won’t bounce. In the event of an emergency, parents want the ability to manage their children’s accounts and pay the rent, car loan, taxes and credit cards to ensure their finances are in order. They also may need access to digital assets – such as online banking and social media and email accounts.

If continued control is what parents desire, they’ll need their adult-age children to sign power-of-attorney documents that provide authority over health care and financial and legal matters. The assignment of powers of attorney for health care and finances are common “living will” elements of estate plans for older folks, but they have important implications for young adults and their parents.

Consider what would happen if a young adult away at college has an accident and becomes incapacitated. Without a medical power of attorney, also referred to as a health care proxy or an advance health care directive, a parent might be forced to seek a court-appointed guardianship – which can be time consuming and expensive – to make decisions on a child’s behalf. Medical professionals in a far-away hospital may cite privacy concerns and refuse to discuss treatment options without proper authorization from their patient.

Similarly, parents who attempt to deal with financial and legal matters involving children who have reached adulthood may face roadblocks unless a power of attorney for financial and legal matters is executed. Otherwise, parents may find themselves seeking a court-appointed conservatorship – another costly and time-consuming endeavor.

Once signed and notarized, power-of-attorney designations can be in force immediately and “durable,” meaning they remain in effect after the principal becomes incapacitated. A “springing” power of attorney that takes effect only upon specific circumstances – incapacity, for example – is another option that maintains some independence for the young adult but allows the parents to assume control in case of an emergency. That independence can be important to a student who is concerned about overprotective parents having easy access to their grades and other personal data. The Family Education Rights and Privacy Act (FERPA) limits access to educational records of students age 18 and older unless they provide written consent. This may be an issue, for example, if a parent would need to contact professors regarding their child’s situation. A FERPA waiver can be included as part of a durable power-of-attorney document.

Another key document – a HIPAA medical release signed by the young adult – is recommended to supplement the powers of the health proxy and give access to medical information to others, regardless of incapacity. The release, which can be signed ahead of an actual emergency, designates who can be privy to medical records and receive information about health care. The release can be worded to protect certain information the young adult may want to keep private – such as medical information about drug use, mental health, sexually transmitted diseases and other sensitive subjects.

The National Law Review lists some important considerations regarding the three critical documents.

The documents should be updated every few years. “This is especially critical for powers of attorney. The institutions where you would be most likely to use these documents – such as hospitals and banks – might refuse to honor them if they perceive them to be outdated,” according to the NLR.
The adult child has the right to revoke or amend the documents at any time. That would include adding any limitations on the authorities granted by the documents.
When attending an out-of-state institution, young adults should execute documents in both their home state as well as the state where the school is located.

Discussions about potential family emergencies aren’t as popular as chats about dorm room decorations, but they are necessary to prepare for life’s unexpected events in which parents still play a pivotal role, experts say.

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life’s contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com (email)
#legacyassuranceplan
@assuranceplan

Friday, August 3, 2018

End around: Some wield wills as a weapon to leave eternal message

Children looking upset at the reading of a will.

End around: Some wield wills as a weapon to leave eternal message

by Tom Alberts Aug 3, 2018

Summary: Wills are usually rooted in kindness and compassion and intended to pass along assets to loved ones and friends. In some cases, the end-of-life documents are utilized as a final twist of the knife resulting from greed, betrayal, family discord and spite.

People utilize a will as their last opportunity to distribute assets and property among loved ones and friends and provide some solace during a time of grief. Most folks of sound mind are motivated by gratitude, kindness and compassion when they make their end-of-life wishes known.

But a will also affords the living one last chance to twist a financial knife, achieve sweet revenge or make a deadly serious point. The motivations behind negative provisions in a will are many – greed, betrayal, resentment, jealousy, spite – and a major divergence from typically altruistic intentions.

Life goes on for stocks and bonds, diamonds and pearls, stamp and record collections, fancy cars and other heirlooms and assets. But their deprivation from survivors, usually because of family squabbles and bitter feelings, can assure that a measure of pain is inflicted far into the future.

Two lawyers with decades of experience have no shortage of stories about wills that are bitter pills to swallow. Barry M. Fish and Les Kotzer have served hundreds of will-writing clients from all walks of life. They’ve shared dozens of anecdotes in their 2014 book “The Will Lawyers: Their Stories of Money, Inheritance, Greed, Family and Betrayal.”

Their experience shows that being a loving family member can serve you well, but selfish progeny with a penchant for parental handouts can be stung badly as beneficiaries. Death-bed vindication can crawl out from under the covers for those slighted by sons, daughters and other ingrates.

"You get nothing!"

“We mortgaged our lives for our ungrateful son. We were heading for the poorhouse,” Nelson, an elderly father, told the authors. Nelson’s son, who lived in a far-away town, for years claimed he had no job, had a child with special needs and required the ongoing financial support of his generous parents.

Upon a surprise visit to the son’s home, Nelson arrived at an opulent apartment and was greeted by a nanny. His son, wife and grandson were vacationing on a tropical island. It was a costly revelation.

“He obviously couldn’t wait for us to die,” Nelson fumed. “He wanted his inheritance now and lied to us to get it. Well, all he is going to get is a letter from us telling him that he milked us enough. He won’t get a nickel from our wills!”

Ouch.

For Maureen, an aging mother who decided to revise her will, second thoughts about three of her four children led to a substantial “heir cut.”

Daughter Chelsea missed her stepdad’s funeral. “I tried to forgive her, but I can’t,” Maureen reasoned. Son Brahm never visited Maureen at the hospital during her serious operation. Same reaction: “I tried to forgive him, but I can’t.” And daughter Crystal “never lifted a finger” to help with the move to a retirement home. “I tried to forgive her, but I can’t.”

Daughter Amy, the youngest, was there for the funeral, the hospital stay and retirement home move. “She deserves to get everything that I own,” Maureen said. “After I die, I don’t care if people look at me as a bad mother. Yes, I do love all my kids. But I just don’t like three of them.”

In the case of Mary, the bogus will that the widowed mother gave to her daughter was medicine needed to cure years of financial pressure. One day, the daughter wanted to “have a talk” with her 85-year-old mom. Mary’s generosity with cash and sharing her home with the daughter weren’t adequate. The daughter wanted the house to be given to her, mortgage-free, now or after Mary’s passing. Mary balked. She had a son who deserved his share.

To keep peace in the home, Mary executed a will that left the house to the daughter. A while later, the daughter left for a week. That’s when Mary took the law in her own hands and invited a lawyer over to execute a new will, nullifying the one in the daughter’s possession.

“I pacified my bullying daughter for the rest of my life with the fake will which had left my home to her, before I revoked the fake,” Mary said. “My real will is leaving everything I own to my son, which is going to punish my daughter long after I am gone.”

In their book, the authors say that most wills don’t fall into the vindictive category, and the previous examples stand out in their practice. But just like a fingerprint, a last will and testament is unique to the person who created it, and there are few limits on human creativity.

Keep in mind, however, that whatever your intentions, a properly executed and updated will as part of an estate plan is an important way to ensure your wishes are followed – good, bad or otherwise.

This article written and published by:
Legacy Assurance Plan
8039 Cooper Creek Blvd
University Park, Florida 34201
844.306.5272 (Phone)
info@legacyassuranceplan.com (email)
@assuranceplan

Thursday, August 2, 2018

Liability lurks with rental properties; LLCs, trusts can provide a safe haven

Keys handed over from an owner to a renter.

Liability lurks with rental properties;
LLCs, trusts can provide a safe haven

by Tom Alberts Aug 2, 2018

Summary: The ownership of rental properties can expose landlords – and their personal assets – to liabilities from legal judgments and put at risk not only their private bank accounts but also legacies intended for loved ones. Use of a limited liability company (LLC) for rental property is one way to protect personal assets. As part of a comprehensive estate plan, a revocable living trust can be used to protect LLCs from probate administration, enabling your assets to be distributed promptly to your beneficiaries.

Successful landlords know that ownership of rental property can provide reliable income for generations to come when the proper estate planning strategies are utilized.

But many less than lucky landlords can attest that owning rental property carries risks that can lead to asset-consuming lawsuits that decimate an estate intended to benefit one’s heirs. If landlords lack adequate liability insurance, an accident on their property has the potential to jeopardize personal assets that would be needed to satisfy a legal judgment.

In other words, one misplaced banana peel combined with a plaintiff can lead to a slip-up that can cost a fortune, wreck your retirement and negatively impact the legacy you want to leave behind.

Besides insurance, one option for owners of rental property to protect their personal assets from the clutches of damages-seeking litigants is to transfer its ownership to a limited liability company (LLC).

The popular LLC, which first came into existence in Wyoming in 1977 and now thrives nationwide, is a legal entity that can protect its owners, known as members, from personal liability from lawsuits and debt claims. The LLC can protect the personal assets of its members – bank accounts, investments, homes, vehicles – from a lawsuit gone bad.

The LLC can serve as a shield against a tenant or visitor who slips on that wayward banana peel and sues the landlord with visions of being awarded his sports car and vacation cottage. Insurance has liability limits, and when those are exceeded, successful plaintiffs may go after personal assets of the landlord.

WHO SHOULD ‘OWN’ AN LLC?

For estate planning purposes and to avoid exposure to claims, many experts advise that rental properties should not be owned directly by individuals or revocable living trusts. Instead, rental properties should be “owned” by LLCs. A trust, then, can serve as the owner of the LLC. There are two key benefits to the strategy. The LLC maintains protection from liability, and the trust is protected from probate. The trust also can specify how to distribute the rental property to beneficiaries upon the LLC member’s death.

To provide more layers of protection from personal liability, separate LLCs can be created for individual rental properties. LLCs also are utilized for properties with multiple owners. When rental properties are in multiple states, it’s suggested that LLCs be established in the states where they are located. An LLC in a landlord’s home state can even be designated as holding company to own LLCs that have been created for properties in other states.

Besides liability protection, LLCs may offer tax advantages when formed as a real estate holding company. LLCs with one owner, known as single-member LLCs, are considered as “disregarded entities” by the IRS. As a result, a separate federal tax return for the LLC is not required. Instead, the profits and losses of an LLC pass directly to the member and can be reported as part of the member’s individual tax return.

Additionally, mortgage interest paid by a member can be deducted on the return. The pass-through tax advantages extend to LLCs owned by more than one person, which are known as multimember LLCs. When LLCs have multiple members, operating agreements often are devised to spell out their individual rights, responsibilities and ownership stakes.

Another advantage of an LLC is its simplicity and flexibility. Unlike a corporation or partnership, an LLC does not require the appointment of corporate officers or the formation of a board of directors.

WHAT ABOUT EXPENSES – AND PAPERWORK?

Experts caution that statutory requirements to form an LLC should be followed carefully to ensure the ongoing validity and propriety of the entity. For example, the status of an LLC can be put at risk when LLC funds are co-mingled with personal funds.

“If you do set up an LLC, be sure never to mingle your LLC money with your personal money,” cautions landlordology.com. “If you head to the mall and use money from your LLC to buy a new outfit, or if you use your personal money to pay for a new garbage disposal for your rental property, a person suing you could claim that your LLC is not a separate entity. That could mean you lose your protection.”

Ideally, an LLC should be created before a rental property is purchased to reduce mortgage hassles, title transfer expenses and consulting fees. When transferring a title to an LLC, the mortgage holder must be notified; tenants must be advised about the ownership change; leases need to be updated; and a title transfer tax, if applicable, must be paid.

Some challenges can arise and expert advice may be needed when transferring a title from private ownership to a corporate entity. That’s because a mortgage holder may adjust the interest rate of a residential loan, seek a higher commercial loan rate or even call the loan when a title is transferred to an LLC. Some taxing jurisdictions may levy higher rates for real estate that is considered “commercial.” Homeowners insurance is another matter. Some companies may charge higher premiums for a property that is owned by a business and thus considered a commercial property.

Initial costs to create an LLC vary widely from state to state. Expect expenses and legal fees to register the entity, publish a public notice of intent, create an operating agreement and for the title transfer tax. Ongoing expenses may include an annual state franchise tax or an annual renewal fee. Remember, an LLC is a legal entity. To maintain its integrity in court, an LLC should include not only an operating agreement, but also a corporate book, minutes of ownership meetings, a bank account and a tax ID number.

While there are many details and expenses to consider, the process can be reduced to three key steps. First, create an LLC with a revocable living trust as the owner (member). Second, title the rental property in the name of the LLC. Third, operate the business with required formality. That way, you can achieve protection from litigants as well as probate proceedings. While the properties owned by LLCs still have exposure to legal judgments, the LLC member’s personal nest egg – from bank accounts to trusts as part of an estate plan – can be shielded.

Legacy Assurance Plan is an estate planning services company. Its goal is to educate people on a variety estate planning issues. It also provides access to a variety of resources to help its members achieve their estate planning objectives. Whether your goal is as simple as protecting your family and loved ones from the costs, delays and hassles of probate or as complex as providing for a disabled child when you no longer can, Legacy Assurance Plan can help you find the information and resources you need to privatize your estate.

Tuesday, July 31, 2018

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Tuesday, July 24, 2018

Small estates, and even big ones, can qualify for probate shortcuts

Showing a small house, small estate, can still have probate shortcuts.

Small estates, and even big ones, can qualify for probate shortcuts

by Tom Alberts July 24, 2018

Summary: In many states, it’s not the size of an estate that matters if you want to avoid probate. It’s the value of the assets that are titled in an individual’s name without a beneficiary that plays a key role in whether you can avoid the costly and time-consuming process of probate. An estate can be worth many millions, but if those hefty assets are passed to beneficiaries through trusts and other estate-planning tools, the bulk of an estate can bypass probate. The assets that remain to be distributed can then fall below a state’s threshold, enabling an estate to qualify for a simplified and expedited form of summary administrative probate.

While few people may aspire to a life of modest means, having a small estate is one ticket to avoid the purgatory of a full-blown probate process.

Better yet, if a key objective is to avoid probate, it doesn’t mean you have to liquidate your estate and give away your possessions, real estate and money before you die.

For those who’ve achieved financial success, accumulated substantial assets and are rightly wary of probate, don’t fret. There are strategies that can make a large estate look like a small one in the eyes of probate laws and glide through a streamlined probate process. An abbreviated and simplified probate process means you can avoid anxiety-filled trips to the courthouse, steep legal fees and dealing with unpredictable decisions that precede the slam of a judge’s gavel. Depending on the state, it may be possible to avoid a formal probate hearing and expedite the estate resolution process by filing the appropriate paperwork and affidavits with the court.

More than 20 states have established thresholds of an estate’s total value to determine whether formal probate administration proceedings can be avoided. If the value of an estate’s assets are below the threshold, a simplified form of probate, often referred to as summary administrative probate for small estates, may be utilized.

That’s a big deal, because formal probate can take several months, even years, to complete for large estates. In the meantime, your heirs are denied access to their inheritance, and your legacy remains in limbo. Summary probate can be completed in much less time. In some states, if a decedent has been dead for a certain length of time, the estate – regardless of size – may qualify for summary probate.

HOW DO YOU STAY BELOW THE THRESHOLD?

To determine the dollar limit of an estate, add up the value of assets titled in an individual’s name without a designated beneficiary. If the total falls below the threshold, then the estate may qualify for summary probate.

Depending on the state, summary probate thresholds and other restrictions vary widely. In Georgia, for example, the threshold to be considered eligible for summary probate as a small estate is $10,000. In Arkansas, it’s $100,000. For California, the limit is $150,000 in combined real and personal property with a 40-day waiting period to qualify for summary probate via affidavit. In Minnesota, the threshold is $50,000 – as long as that’s personal property only and not real estate. Oklahoma’s threshold is $20,000 in personal property only. The amounts and restrictions run the gamut depending on individual state laws.

The trick is to keep the value of untitled assets below the state’s small-estate limit. The magic to stay below the threshold can be found in several estate planning tools.

Assets that are held in living trusts, payment-on-death accounts, transfer-on-death deeds, joint tenancy as well as life insurance proceeds and accounts with designated living beneficiaries like IRAs and annuities can skirt probate completely and don’t count toward the threshold total.

A grantor who establishes a living trust takes advantage of a primary asset transfer tool to bypass probate and distribute assets directly from the estate to the beneficiaries. Assets left to heirs directly through a living trust – and outside of probate – in many cases are distributed within weeks of the grantor’s death.

Keep in mind that trusts must be properly established and funded during the life of the grantor to be valid and enforceable. But once they are, trusts skip probate entirely – unless the grantor outlives all the beneficiaries.

There may be assets that have not been placed in a trust at the time of a person’s death. In those cases, a pour-over will may be an option. A pour-over will directs that any assets not transferred into a trust at the time of the grantor’s death be “poured over” into the living trust. In essence, the trust is the benefactor of the will. The key is to make sure the value of untitled assets in the pour-over will – sometimes called the “probate estate” – does not exceed the threshold for small-estate summary probate. Otherwise it could require that the will pass through a prolonged probate process. If a pour-over will is above the threshold and doesn’t qualify for summary probate, it can delay distribution of the trust for months until it clears regular probate. Therefore, it’s important to limit a pour-over will to minor assets to ensure staying below the threshold.

Summary probate won’t work if the will is contested or if heirs can’t be located. Estates with multiple creditors or that are insolvent and can’t pay creditors also won’t qualify for a shortcut.

Some states impose other restrictions on the use of summary probate. Those conditions may require the surviving spouse to be the lone heir or that all heirs must agree on the division of property.

The Uniform Probate Code has been enacted in 18 states, and parts of the code have been adopted in several others. The UPC establishes a small-estate procedure that allows the executor of an estate to immediately disburse funds and distribute the estate without giving notice to creditors.

The UPC requires the executor to certify that the estate value falls below the threshold and distributions have been made to heirs. The executor also must send a copy of the closing statement to all heirs, creditors and other claimants. If no court action involving the estate is initiated, the appointment of the executor terminates a year after the closing statement is filed, according to the UPC.

Regardless of your state of residence, careful estate planning is essential to avoid the pitfalls of a long, drawn-out probate process. Developing an estate plan that establishes trusts, payment-on-death accounts and transfer-on-death designations can keep assets out of the “probate estate.” That’s important because many states allow small estates below a maximum value to qualify for expedited summary probate.

Saturday, July 21, 2018

Some new faces in the family? Time to rethink your estate plan

Some new faces in the family?
Time to rethink your estate plan

by Tom Alberts July 21, 2018

Summary: Adoptions create special considerations for families when it comes to estate planning. Intestate succession laws require that the adoption process be finalized before children can establish inheritance rights with their non-biological families. Other situations, such as same-sex marriage and advances in reproductive technology, require modern-day families to make sure their children are considered rightful heirs.

Sometimes, families expand in nontraditional ways through adoption or when stepchildren become part of a blended household.

While the addition of an adopted child or the welcoming of a stepchild into a newly formed family can be a reason to celebrate, those events also require re-evaluating your estate plan.

Intestate succession laws in the United States determine who inherits property when someone dies without a last will and testament. Those laws, many of which were initially written a century ago, take a traditional approach to defining the family unit.

Traditional legal definitions for words like “child,”“issue” and “heir” don’t always fit in a society that has made unimagined advances in reproductive technology and whose relationships have diversified widely from the nuclear families familiar to our top-hat wearing forefathers. But many estate plans continue to use those terms to determine inheritance.

As a result, it’s important that wills and trusts are created with modern families in mind. It’s also critical that those legal documents employ the proper terminology to protect your legacy and your heirs – whether they are children adopted by same-sex couples or offspring conceived in test tubes or by a surrogate mother.

State laws of descent and distribution generally refer to “child” as first generation only. “Issues” are defined as lineal descendants of the same bloodline. An “heir” is someone who either was conceived by or birthed by the individual who has died or is the child of such an heir.

In the law books, a relationship by “blood” is the common thread that ties together the rights of inheritance, but there are important exceptions. Modern families, however, are very often not limited to such “blood” relationships.

Intestate succession laws generally treat adopted and biological children equally as long as the adoption process – which can take months to years to complete – is finalized. A child with an adoption that is still in progress has not secured inheritance rights and must be named in a will or trust of an adoptive parent or parents to be protected as a beneficiary.

Also keep in mind that stepchildren don’t have rights of inheritance under a new stepparent unless the new stepparent legally adopts them.

Adoption by a new stepparent, however, can impact the child’s ability to inherit from their biological parents and biological relatives. Basically, it’s one or the other – the child is either the rightful heir of the biological parent or the adoptive parent. The children’s inheritance rights are linked to the adoptive parents and severed from the birth parents once an adoption is official.

ARE YOU IN A ‘MODERN FAMILY?’

A different scenario arises in second-parent or co-parent adoptions, which often take place when an unmarried person adopts a partner’s children without termination of the other partner’s parental rights. In some states, according to the National Center for Lesbian Rights, the second-parent adoption procedure can be utilized by same-sex parents. Other states limit or prohibit adoption by unmarried LGBT individuals and couples.

Married same-sex couples, however, have the same adoption rights as traditional couples, the organization says, but caution is urged.

“It is legally advisable for non-biological parents to get an adoption or parentage judgment to ensure that their parental rights are fully protected no matter where they move or travel to, even if they are married, in a civil union, or a registered domestic partnership,” the NCLR advises.

Advances in reproductive technology and the legal acceptance of same-sex marriage have made second-parent adoptions an important part of estate planning.

Consider the situation involving Lyndsey D’Arcangelo of New York, who wrote a commentary for NBC News about her experience with second-parent adoption as a same-sex parent. In D’Arcangelo’s case, her wife gave birth to a child via artificial insemination.

Despite their legal same-sex marriage, D’Arcangelo was left off the birth certificate as the baby’s legal parent.

“In same-sex couples, where only one member of the couple can donate biological material at a time by default, the legal status of the non-biological parent is in question,” D’Arcangelo writes. “In New York State, the non-biological parent in every same-sex couple that conceives via in vitro must go through a second-parent adoption if both parents want legal rights to that child.”

In other cases, second-parent adoptions can enable a child to be adopted by a stepparent or another adult while preserving ties to existing birth parents. Often, the intention is to create a new parental relationship while preserving ones that previously existed. Such an adoption would require consent of the birth parents.

Estate planning also is critical for unmarried couples who want the nonparent to have custody should the parent die or become incapacitated or if nonparents want children to inherit from them. A parent in an unmarried relationship can grant power-of-attorney authority in a will that allows the nonparent to act in the child’s behalf if the parent is incapacitated.

In those situations, experts suggest both partners should change their wills. The parent’s will would name the partner as guardian; the nonparent’s will would list property to be left to the child as a beneficiary. It’s also recommended that you name a guardian familiar with your family’s needs and circumstances and clearly state your intentions in your will and in a living trust. Also, the creation of a trust may be a good option to protect an adopted child’s interests and ensure assets benefit the child, experts say.

Adopted children also present other considerations for parents. For example, parents may want to include special provisions in wills and trusts when a foreign-born child is adopted. Parents can provide for an adopted child to visit his or her native country and be exposed to native culture.

WHO WILL TAKE CARE OF YOUR CHILD?

Keep in mind that adopted children are no different from biological children when it comes to considering a supplemental-needs trust for youngsters with disabilities. Parents also should ponder the multitude of life’s scenarios that can arise. For example: What if both parents die at the same time in a car accident?

The nomination of a guardian in one’s will can deal with such a tragedy and other unforeseen situations.

“It’s better to nominate an individual as a personal guardian; if you name a couple and they split up, what happens to the child? Be sure to consult with the person you name to be sure he or she wants the job, and name an alternative guardian in case your first choice should have a change of heart or die before the child is grown,” according to the American Bar Association.

A property guardian is another appointment to consider making in a will, the ABA says. Generally, the property guardian is the same person as the personal guardian.

“You can appoint two different people to manage the child’s money and personal affairs, but be aware that conflicts can arise if you split authority this way,” the ABA advises. One exception may be if the property guardian lacks financial expertise, a separate guardian for personal and financial affairs could be considered.

There are several other factors and real-life situations to consider concerning adoptions and estate planning. Fortunately, membership in Legacy Assurance Plan, which educates its members on a variety of estate planning options and provides access to numerous resources to achieve planning objectives, can assist families in making important decisions that improve lives for the next generation and beyond.

Wednesday, July 18, 2018

Scrivener’s error: Handwritten wills can translate into probate problems

Alfred Nobel’s handwritten last will and testament is dated Nov. 27, 1895. Photo courtesy of Prolineserver via commons.wikimedia.org.

Scrivener’s error: Handwritten wills can translate into probate problems

by Tom Alberts July 18, 2018

Summary: Laws vary in the United States concerning the validity of handwritten, or holographic, wills. In some states, one’s last wishes can be scrawled on a piece of paper and accepted as valid in probate court. In other jurisdictions, holographic wills will be rejected, and a state’s intestacy laws will determine the distribution of one’s assets. Experts agree the best advice is to utilize an attorney to assist in the process of creating a well-planned and valid will.

Seventy years ago, Canadian farmer Cecil George Harris was trapped under his tractor and used a pocket knife to etch his final wishes into one of the implement’s fenders.

Harris’ immortal words – “In case I die in this mess, I leave all to the wife. Cecil Geo Harris” – have been carved into legal textbooks ever since his accidental death in 1948. The famous fender was accepted as a valid last will and testament by the probate court and survives in a display at the University of Saskatchewan College of Law.

Before the advent of the typewriter and computer age, the standard practice to record one’s legacy was to dip a quill into an inkwell and compose your final wishes on parchment. Back then, a handwritten, or “holographic,” will was the norm.

Today, using pen and paper makes better sense for a grocery list or a note for the baby sitter. Not all states accept holographic wills, and there are other potential pitfalls in using a handwritten document.

DO YOU KNOW YOUR STATE’S LAWS?

The recognition of a holographic will depends on where you live. Some states no longer recognize holographic wills under any circumstances. In other jurisdictions, you can bequeath your fortune based on decrees scrawled on a cocktail napkin, matchbook cover – or tractor fender if necessary.

In about half of the U.S. states, like Oklahoma, holographic wills are perfectly OK. In some, like Florida, they are forbidden. In others, there are specific exceptions and requirements for holographic wills to be recognized by probate courts.

But holographic wills have special requirements that – when not followed – can cause potential problems in probate proceedings. Legal Aid Services of Oklahoma Inc. offers instructions but warns, in all capital letters, that you must follow the 10 detailed rules or a judge may not follow your requests. Among the rules: Every word must be in the testator’s own handwriting; sign your name at the very end with the date above the signature; do not have any witnesses sign the document; and do not notarize it. “Papers with even one typewritten or computer-printed word are not holographic wills,” the information sheet warns.

Nevada loosely regulates holographic wills and has only three requirements: It must be in the testator’s own handwriting, dated and signed. Las Vegas-based probate attorney Jonathan Barlow, discussing the topic in a YouTube video, recounted a case in which a man wrote his will – which was admitted in court as valid – on hotel stationery.

“In that he says, ‘Dear Susie: I want to make sure that you get everything that I have and that my children and my other relatives get nothing.’ Basically: ‘I intend to create a will at some point in the future. Love, Bill,’” Barlow explains. “The kicker is the estate was worth over $2 million. The children were cut out of $2 million due to a hotel stationery letter.”

ARE YOU AVOIDING A RECIPE FOR TROUBLE?

States that validate holographic wills require that they be entirely handwritten, and the “material provisions” – which specify the testator’s wishes – must be in the author’s handwriting.

A will that mixes handwriting and typed copy is a recipe for trouble. In one Arizona case, a partially typed and handwritten document was invalidated. A grandmother’s wishes were tossed aside, and her granddaughter did not share in her legacy. The case is a warning to do-it-yourselfers, says Phoenix-based attorney Kent Burke.

The grandmother had prepared her will on a computer and named the granddaughter as an heir. Some handwritten changes were made, and the will was only signed by the grandmother and a notary. The grandmother’s sister challenged the will and prevailed.

Arguments that the document was a valid holographic will were rejected because the material provisions were not handwritten by the testator. Burke says the case was a “perfect example of someone wanting to save money by preparing her own will. By doing so, it created confusion and substantial costly litigation.”

There are other potential pitfalls with holographic wills. For one, probate courts need to prove the validity of wills and may require the use of handwriting experts. Legibility and sloppiness are another concern that could lead to legacy-altering misunderstandings, and handwritten wills can leave out important details that an estate planning attorney would include. Also, the will is at risk of rejection if there’s evidence the testator was under duress or incompetent when it was written.

When the question about the propriety of creating a holographic will was posed to popular financial writer and TV host Dave Ramsey, his advice was clear. “I would never advise someone to write his own will, unless, of course, he’s an attorney in that state,” Ramsey writes. “Laws can vary from state to state, and some states may not look upon a document like that as being official under law. ... If you’re trying to save money by doing it this way, I would strongly urge you to look at involving a lawyer as an investment.”

Sometimes, there’s little time to spare in creating a last will and testament – like in the case of the Canadian farmer dying in a field – and a holographic will is necessary. But because a thoughtfully crafted will is the foundation of an estate plan, experts suggest utilizing a lawyer when preparing the document. After all, your legacy is at stake.

There are numerous issues to keep in mind when creating your last will and testament as part of a comprehensive estate plan. One helpful option to consider is a Legacy Assurance Plan membership. Members are educated on a variety of estate planning matters and receive access to numerous resources they can use to achieve legacy-protecting objectives. Membership with Legacy Assurance Plan can help families in making important choices that will improve lives for the next generation and beyond.

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