Legacy Assurance Plan

Friday, August 5, 2016

When to Use (or Not Use) Your Immediate Family as Executor or Trustee in Your Estate Plan

Summary: Estate plans involve many important decisions. One of these critical choices is selecting the person or people who will manage your estate and your trust after you die. While selecting a close loved one to carry out these tasks can work in a lot of circumstances, some situations may dictate that choosing a person who is less close makes more sense. Choosing the right person or people can help ensure that your plan's assets are distributed efficiently and according to your wishes.

For many people, the most important estate planning decisions they will make are deciding who will receive their assets after they die, and who will manage those affairs when that time comes. Deciding on the person or people you want to serve as the executor of your estate and the successor trustee of your trust can be vary based upon the specific circumstances of your wealth and your family. Regardless of your situation, these are very important decision that you should approach with considerable care.

For some people, selecting an executor and a successor trustee can be fairly simple, as they prefer that their closest relatives handle these roles. Choosing an immediate family member, even if that relative is a beneficiary in your estate plan, can be a wise selection in many cases. Often times, your relative is entirely capable of handle these tasks, and can be fully counted on to perform the duties of an executor or trustee in the way that you want. In these circumstances, using a family member or other loved one can offer financial advantages over selecting an outside professional.

In other cases, though, using a loved one to serve as your executor or your successor trustee can be a risky choice. If your estate plan is highly complex, you might not want to select a loved one who would not be able to manage the complicated nature of your plan. Even if your plan is not especially complicated, you might want to avoid selecting a loved one who is poor when it comes to managing or distributing wealth.

Additionally, if your estate plan calls for one or more beneficiaries to receive their distributions stretched out over a long period of time, you might want to avoid choosing a loved one (or, if you do, make sure you have several alternate successor trustees or executors to reduce to risk of your plan's distribution scheme outliving your trustee.)

You may also want to contemplate your "family politics" in making your best choice. If the distrbutions you've created in your plan are likely to cause conflict between family members, you may want to take care to ensure that your trustee or executor is an impartial party. For example, if your plan calls for your daughter to receive a large distribution and for your son to receive very little or nothing, selecting your daughter as a trustee or executor could heighten the strife between siblings and perhaps even increase the risk of a legal challenge to your plan.

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.

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Wednesday, August 3, 2016

Protecting Your Estate Planning Goals In the Event of Your Spouse's Remarriage After Your Death

Summary: A QTIP trust can be a vital element of some estate plans. Whether you are worried about your spouse's children from another marriage, your spouse's potential for remarrying after you die or your spouse's inability to manage the wealth you stand to leave behind, a QTIP trust may be able to help. Your estate planning attorney can show you how this type of planning can allow you to provide for the care and well-being of your spouse during his/her remaining years while also ensuring that, after your spouse dies, all of your remaining wealth goes to the people you want to receive it.

In 1980, not long before his untimely death, famed singer John Lennon wrote a song entitled "Grow Old With Me." The song, with its message of a couple sharing two long lives together, is a popular one at weddings. Unfortunately, in many instances, one spouse will outlive his/her partner by many years, even many decades. Proper estate planning can help you ensure that, should your spouse outlive you, you can have peace of mind knowing that both he/she and your children are taken of, even if your spouse re-marries.

Some people have, among their estate planning goals, the desire to ensure that their spouses and children and grandchildren are well taken of and will enjoy the fruits of their wealth, but also, as another goal, want to be sure that only their loved ones benefit from the estate. Without a proper estate plan, these twin goals could be at risk. If you and your spouse have "sweetheart wills," which are mirror-image wills in which each one of you leaves everything to the other, serious problems could arise if you die first, especially if your spouse remarries after you die. If your spouse and his/her new spouse created their own set of "sweetheart wills," and your spouse dies before the person he/she married after you, all of your wealth that still remained after your spouse's death would go to this subsequent spouse. If your spouse were to remarry and later die with no will at all, the intestate laws would also create a scenario where your spouse's subsequent spouse would receive a portion of your wealth.

Simply creating a joint revocable living trust may not always protect you, either. Depending on how the trust is structured, the spouse who survives longer may have total control to amend the trust any way he/she sees fit, which could include altering distributions to benefit a subsequent spouse or relatives of that spouse.

A careful and detailed estate plan can offer protection, though. The law allows you to create a Qualified Terminal Interest Property trust (or QTIP trust, for short.) A QTIP trust is structured in a way such that, if you die first, your spouse does not receive the contents of the trust outright. Instead, your spouse's care and well-being in locked in by virtue of his/her receipt of regular income from the trust for the rest of his/her lifetime. Then, once he/she dies, the contents of the trust will go to whomever you want to receive to receive them, such as your children and grandchildren.

QTIP trusts can also be beneficial in another situation, which is if your spouse is particularly inexperienced, unsophisticated or bad when it comes to handling or managing wealth.

In other words, QTIP trusts are just one more example of the wide array of tools at the disposal of your estate planning attorney to help you make sure all of your goals and objectives are realized.

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

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Friday, July 29, 2016

The Risks of DIY Estate Planning: Sometimes the Smallest Errors Can Have the Biggest Impacts

Summary: When you set out to plan your estate, it is important not to fall victim to the pitfalls that can come with undertaking this task by yourself. An skilled estate planning team can be your biggest asset, with experienced professionals who can explain your options, recommend a strategy and help you put that plan into motion. With this team on your side, you can avoid the potentially dangerous legal consequences that can come from things as small as a single misused word, and the stress, expense and delay that often occur as a result of those negative consequences.

In a great many endeavors, success is predicated on having a group of people who work together seamlessly as one. Whether you're talking about a special forces military unit or a sports team, winning involves a collection of people each with unique skills working together toward a shared goal. Estate planning can be like that. A fully integrated collection of professionals, working as one team, can help you to achieve the full success of your plan. Going it alone, on the other hand, can be extremely risky. An California woman's estate plan, and the problems surrounding it that eventually led to a recent court challenge, highlight this fact.

In the early 1990s, Ethel Hinz was a mother of two children and two grandchildren in her early 80s with no estate plan. In November 1991, Hinz's daughter died at the young age of 54. Motivated by this, Hinz decided to create an estate plan. Three weeks after the daughter's death, Hinz sat down and drafted a will by hand. In her will, Hinz named her son as her executor. She also named the son as the "sole heir" of her estate. The woman's will made no mention of her two granddaughters (who were both children of her deceased daughter.)

Less than six months after she hand-wrote and signed this will, Hinz died. The son went to court and was appointed executor. Fast forward to 2009, and Hinz's probate estate was still not closed. In April of that year, the son died. During the 17-year period that the estate was open, the son had married. After his death, the son's wife asked the court to distribute all of Hinz's assets to her. The wife had a problem, though, which was Hinz's use of that word "heir." If Hinz had declared her son to be her "sole beneficiary" or "sole devisee," the son's wife would have had no problems.

But that isn't what Hinz wrote and, in the law of estate planning, the word "heir" has a specific and special meaning. What's more, the son wasn't Hinz's sole heir. By the law's definition, Hinz had three heirs: the son plus both of the granddaughters. As Hinz's estate was worth around $10 million, this lack of clarity led to litigation. The son's wife tried to persuade the courts that, when Hinz had written "sole heir," she was, in reality, intending to name the son as the sole beneficiary of her estate. The granddaughters, meanwhile, argued that Hinz was merely identifying the son as her sole surviving child and that the law entitled them to split one-half of their grandmother's estate.

The trial court that heard the granddaughters' will contest agreed with them that the will was ambiguous and, after hearing evidence about Hinz's true intent, ruled in favor of them. The son's wife took the case to the California Court of Appeal. That court decided that the will was not ambiguous and that Hinz's clear intent was to leave everything to her son.

It seems plausible that the decision reached by the appeals court matched Hinz's true intent; namely, to leave everything to her son. In this case, though, if we assume that Hinz really did mean for the granddaughters to take nothing, either outcome could be looked at as a "losing" one. One outcome would have involved the granddaughters getting 50% of the estate, contrary to Hinz's wishes. The other outcome, which is the one that did take place, involved Hinz's estate planning goals coming to fruition, but only after the stress, expense and delay of a trial and an appeal. Both of these "losing" outcomes could have been avoided with a more precisely worded will that avoided the misuse of the word "heir." Such a more carefully-worded document was something Hinz likely could have obtained from most any attorney familiar with estate planning law.

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

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Tuesday, July 26, 2016

Trust Planning for Married Couples and Dealing with the Death of a First Spouse

Summary: Living trusts can serve essential roles in their creators' estate plans. They can provide many significant benefits and they can be customized in a great many ways to achieve estate planning goals. Some of these customization choices are specific to married couples' trusts. A married couple's trust can, in the aftermath of a first spouse's death, give the surviving spouse either very broad or extremely narrow degrees of control over the assets that have been funded into the trust. It is vital to communicate to your estate planning attorney exactly what you want from your trust, so that you can ensure that the trust you create matches your goals.

Revocable living trusts are extremely useful estate planning tools. They can provide their creators with many benefits, including potential protection in the event of mental incapacitation, as well as the peace of mind that comes from knowing they have saved their loved ones the possible delays, expenses and logistical challenges of probate administration. Living trusts also have the advantage of being highly customizable. With that ability to customize, though, comes the responsibility of ensuring that the way in which you construct your trust matches what you really want. Failing to do so can leave to financial difficulty or litigation.

A Michigan married couple's trust recently demonstrated this. The couple, Otto and Margaret Meyer, established their living trust in 1993. The trust stated that, upon the death of either spouse, the trust became irrevocable and that the beneficiary provisions in the trust could no longer be changed after that event. The husband died in 2005. At that time, the trust called for each of the couple's four children to receive 25% of the trust assets. Six years later, the wife signed an amendment that would have given the couple's property in Lawrence Township, Michigan to one son, James, and 1/3 of the remaining trust assets to each of the other three siblings. After the wife died in 2013, James, who was also the trust's successor trustee, attempted to distribute the trust assets, including transferring 100% ownership of the Lawrence Township property to himself.

The other three siblings went to court to challenge this action. The trial court agree with them, ruling that the 2011 amendment, executed after the husband's death was invalid. James appealed, but he lost. The appeals court ruled that the trust agreement was clear and unambiguous in its statement that the trust could only be amended if the amendment was approved by both spouses and that the trust became irrevocable, with no changes to the beneficiary provisions allowed, upon the death of either spouse. Under those clear terms, the wife had no power to make the changes she tried to make in 2011 after her husband had died.

In this case, we cannot know whether the Meyers really wanted to prohibit the surviving one of them from making the kind of changes that the wife tried to enact after her husband died. Perhaps the trust functioned exactly as the couple had planned for it to work when they established it in 1993. Possibly, though, the trust was more restrictive than they really intended. Either way, the Meyer family's case showcases how important it is to inform your estate planning attorney in a clear way what you want from your estate plan and how you want your living trust to work. There are lots of options and techniques available to your attorney, as long as you've communicated your goals clearly and completely to him or her.

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

#legacyassuranceplan

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Friday, July 22, 2016

Communication is Key When Creating an Unequal Distribution in Your Estate Plan

Summary: For some families, setting up the distribution percentages in your estate plan, whether contained in a revocable living trust or a will, are very simple. In those straightforward cases, the plan will likely call for your entire estate to go to your spouse upon you death and, upon his/her death (or if he/she predeceases you,) then in equal proportions to each of your children. In other families, the distribution instructions are not so simple. Regardless of the reason, if you have unequal or other unusual distributions you desire to make to your loved ones in your estate plan, it is important to create a plan carefully and thoughtfully, and to communicate with your family about your estate planning goals to avoid the potential problems that can come with a surprise that only comes to light after you're gone.

While it is almost always a good idea to avoid leaving the fate of your estate in the hands of a decades-old law drafted by the legislature of the state in which you live, intestacy laws can be instructive in a certain way. For instance, consider the distribution rules for intestate estates. They call for a deceased person's intestate estate to go to some combination of the surviving spouse and/or the surviving children. If the children inherit a part (or all) of the estate, they each take an equal share. These laws exist because, historically, that's the way that many people, when they decided to create a will or other estate plan, would divide up their wealth.

But in real life, especially today, things can be more complicated. Perhaps, as you are contemplating creating a plan, you have a combination of children and stepchildren. Maybe you have a mixture of children with whom you are very close and children with whom you have virtually no relationship. Alternately, maybe you have some children who have always been very financially independent while others have required a greater degree of monetary help from you. Any of these situations might motivate you to decide to create an estate plan with uneven distributions.

One circumstance where you may want to give very careful thought to creating an unequal distribution is if one of your children has special needs. If your family is in such a situation, you will likely want to consider creating a special needs trust for that child. You may have certain assets that may make sense to fund into that trust (such as your house if the child with special needs still lives at home.) This goal of taking proper care of that child with special needs may mean giving him/her a larger share of your wealth, especially if his/her other siblings are financially well-off.

Another situation facing some families that can be potentially thorny is the total disinheritance of a child. If you make such a decision, it is important to ensure that you word your estate planning documents carefully. The law allows a child who is left nothing and not mentioned in a parent's plan documents to argue to a judge that the parent merely omitted, or forgot, to include a distribution to him/her. In that case, the child may receive the percentage called for by your state's intestacy laws, which could be quite large, depending on your family situation. Whether you decide to leave this child $0, $1 or some other nominal amount, it is important to acknowledge the child's existence in your plan. Your estate planning attorney can guide you in mentioning this child in the proper way.

Once you've made a decision to create an uneven distribution, it is important communicate with your family whenever possible. Conveying your reasons now may avoid problems down the road. Your reasons are valid and your distribution choices are yours to make, but a child or other relative whom you've scheduled to receive a reduced portion may not be expecting this result and, sometimes, loved ones met with such an unexpected, unexplained and surprising result may respond by launching a lawsuit in court to challenge the legal validity of your plan. Communicating now may lessen the shock and reduce or eliminate the chance of court involvement.

While communicating directly with your loved ones during your lifetime about the reasons for your distribution decisions is, if feasible, often a good idea, you should be very careful about conveying the reasons for your choices in your estate planning documents. When creating your plan documents, it is wise to discuss the inclusion or exclusion of such explanations with your estate planning attorney. An experienced estate planning attorney can describe for you the advantages and drawbacks of putting in, or taking out, such explanations. In some cases, the inclusion of too much explanatory language can potentially be harmful, as it may give a disgruntled loved one greater ammunition in a court challenge.

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

#legacyassuranceplan

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Tuesday, July 19, 2016

Dealing With an Estate that Spans Beyond the Borders of the US

Summary: In today's world, with the availability and affordability of travel across the continent or the globe, it is now more than ever a truly global society. The impacts of this evolution span to many areas, including estate planning. If you have assets in multiple states or countries, it is important to understand how the differences in the laws of each place may impact you. When you cross borders, you should take the necessary steps, including a thorough estate plan review, to ensure that your true and current estate planning goals and objectives will be carried out when you die.

At each of the Walt Disney Theme Parks and Resorts, there exists an amusement ride that reminds us all that "It's a Small World After All." Today, this is truer than it's ever been. If you have an estate that spans multiple US states or even multiple countries, you should be very certain to create an estate plan that is properly constructed to ensure that your wishes are carried out.

An example where things did not go smoothly was brought to light in a Florida court case from late 2015. An Argentine woman, Elena Isleno, died in Miami-Dade County with assets in both Argentina and the United States. She had two wills: a first one created in New York in 2007 and second one, created four months later, in Argentina. The woman's New York will distributed all of her US possessions to a collection of relatives and friends living in the US and Argentina. The will from Argentina purported to distribute all of the woman's assets (in both countries) and named a completely different set of relatives and friends as recipients of the woman's wealth. The will from Argentina also said that it revoked any previous wills that Isleno had signed, which would have included her New York will.

After Isleno died in 2012, the beneficiaries named in the New York will sought to admit that document to probate in Florida. Unsurprisingly, the beneficiaries under the Argentina will challenged this and sought to admit the South American document. The laws of Florida say that, in most cases, a foreign will may be admitted to probate in that state if the will complies with the laws of the country where it was created. Florida law has two exceptions: holographic (handwritten) wills and nuncupative (oral) wills. In Florida, foreign wills of these types are never allowed. However, as long as Isleno's will was neither handwritten nor oral, and complied with Argentine law, it would have controlled the distribution of all of the woman's assets.

However, Isleno created her will in Argentina by reciting her wishes to an Argentine notary, who wrote down what the woman said, read it back to her and then, after Isleno approved it, the notary executed the document. Isleno never signed it. That, as it turned out, was what decided the case. This way of creating a will qualified as an oral will, the Florida Court of Appeal in Miami decided. As a result, that meant that the Argentine will was not valid in Florida and the beneficiaries under the New York will were free to go forward with probating the New York will and receiving the woman's US assets in accordance with the terms set out in the New York will. (The beneficiaries under the Argentine will were free to go forward with probating that will in Argentina and receiving the woman's Argentine assets in accordance with that document, but could do nothing about Isleno's US assets.)

Isleno's estate points out the importance of regularly updating and maintaining your estate plan. Certain events should almost always trigger a review of your plan. Making changes and crossing state or national borders are two such instances. A careful review of Isleno's plan, especially the changes she made while she was in Argentina, could have revealed the fact that her Argentine will was not valid in Florida. This discovery could have led to the creation of necessary documents, such as, for example, a Florida will that mirrored the Argentine will. This potentially would have avoided the need for drawn-out and expensive litigation and the potential frustration of the woman's true estate planning goals.

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)

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Friday, July 15, 2016

Court Case Highlights Possible Risks of Pay-on-Death Accounts in Estate Planning

Summary: Estate plans can employ many different tools to accomplish the desired goals. In some plans, a pay-on-death account can help achieve those ends. As with any estate planning technique, it is important to understand the potential risks associated with using pay-on-death accounts in your plan and make sure that your plan uses the tools that make the most sense for meeting your needs.

A recent North Carolina case recited what happened when an 11th-hour pay-on-death (POD) account did not meet the state's statutory requirements for such accounts. Although the money eventually was distributed to the desired person, the case still highlights the possible pitfalls of using POD accounts in estate planning.

The case centered on the estate plan of James Nelson of Boone, NC. Nelson's plan included a revocable living trust, which he had funded. In early October 2008, Nelson wanted to change his estate plan. He called his credit union to move $85,000 from an account held by his trust into a new account. The new account had Nelson as the owner and had, as its POD beneficiary, Nelson's daughter, Martha, who also lived in Boone.

The credit union employee, recognizing Nelson's voice, created the necessary paperwork and sent it to Nelson, who signed the paperwork. The following Christmas Eve, Nelson died. The credit union informed the daughter that the account had transferred to her, and she withdrew the $85,000.

Nelson's other two children sued. The trial court in the case agreed with the disgruntled children that the POD account Nelson attempted to create at the credit union did not comply with all of the statutory requirements that North Carolina law imposes. The trial court went on to decide, however, that what Nelson had done was to create a type of common-law trust called a "Totten" trust, or a tentative trust. The trust had, as its beneficiary, Nelson's daughter, Martha, and its contents consisted of the $85,000.

The disgruntled children appealed, but they lost. The North Carolina Court of Appeals agreed with the lower court that the transaction Nelson attempted to complete with a POD account was enough to recognize the creation of a separate tentative trust for the benefit of the one daughter.

In Nelson's case, he may not have had the opportunity to communicate his wishes with his other two children (as he died less than three months after he originally began trying to move the $85,000.) But his case nevertheless points out the importance of communicating with one's beneficiaries, especially when those beneficiaries are your children and you are leaving them unequal amounts of your wealth. Sometimes, communicating the reasons for your decisions can help stave off a court challenge after you're dead.

Additionally, setting up the sort of POD account arrangement Nelson attempted can create certain other risks. If his daughter Martha had predeceased him, and if he placed no alternate beneficiaries on the account, then that $85,000 would flow not back into his trust but rather into his probate estate, possibly requiring the completion a probate administration in order to distribute it. An amendment to Nelson's living trust potentially could have accomplished the same end without exposing the funds to probate.

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

#legacyassuranceplan

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