EHDH Estate Planning

Does Marriage have an Impact on a Will?

It is very difficult to challenge a marriage once it has occurred, since the capacity needed to marry is relatively low. Even a person who is under conservatorship because they are severely incapacitated may marry, unless there is a court order stating otherwise, says the article “Estate Planning: On Being Married, estate planning and administration” from Lake Country News. This unfortunate fact allows scammers to woo and wed their victims.

What about individuals who think they are married when they are not? A “putative” spouse is someone who genuinely believed they were married, although the marriage is invalid, void, or voidable because of a legal defect. An example of a legal defect is bigamy, if the person is already married when they marry another person.

Once a couple is married, they owe each other a duty to treat each other fairly. In certain states, they are prohibited from taking unfair advantage of each other. Depending on the state of residence, property is also owned in different ways. In a community property state, such as California, marital earnings and anything acquired while married is presumed to be community property.

In a community property state, debts incurred before or during the marriage are also shared. In a number of states, marriage is sufficient reason for a creditor to come after the assets of a spouse, if they married someone with pre-marital debts.

There are exceptions. If a married person puts their earnings during marriage into a separate bank account their spouse is not able to access, then those deposited earnings are not available for debtor spouse’s debts incurred before the marriage took place.

If a married person dies without a will, also known as “intestate,” the surviving spouse is the next of kin.  In most cases, they will inherit the assets of the decedent. If the decedent had children from a prior marriage, they may end up with nothing.

These are all reasons why couples should have frank discussions about finances, including assets and debts, before marrying. Coming into the marriage with debt may not be a problem for some people, but they should be advised beforehand.

A pre-nuptial agreement can state the terms of the couple’s financial health as individuals and declare their intentions. An experienced estate planning attorney can create a pre-nuptial to align with the couple’s estate plan, so the estate plan and the pre-nuptial work together.

Marriage brings rights and responsibilities which impact life and death for a couple. Starting a marriage based on full disclosure and proper planning clears the way for a focus on togetherness, and not solely the business side of marriage.

Reference: Lake Country News (Feb. 12, 2022) “Estate Planning: On Being Married, estate planning and administration”

What Does It Mean to Be an Adult’s Legal Guardian?

The conservatorship battle over Britney Spears’ life and money is not typical of most guardianship and petitions brought by attorneys for families when a loved one is incapacitated and can’t care for themselves or make informed decisions. In most cases, by the time they reach out to an estate planning attorney for help, things have usually taken a turn for the worse.

According to the recent article, “Why the sensational Britney Spears case is atypical of most conservatorships” from Deseret News, families often wait until there is a crisis to start pursuing conservatorship. Starting the process before an emergency would be better, but it is difficult, as the family must face a harsh reality: their loved one has lost the ability to maintain a normal life.

Family members may have Alzheimer’s disease or another type of dementia but have not been formally diagnosed.

Elder financial abuse is also part of the conservatorship problem. If the family is involved in the person’s finances, they may see large checks being written to strangers or spending that doesn’t follow the person’s behavior.

In some states, a guardian controls the person’s living arrangements and medical care, while the conservator controls the person’s finances. Each state has its own laws, so families need to work with attorneys where their loved one resides.

In the Spears case, the court had to see evidence of incapacity, which seems odd for a person who has spent the last 13 years performing and earning millions. However, it is possible for a person to be incapacitated, while still maintaining some degree of functionality.

If Spears’ counsel can demonstrate that she has capacity to manage her own life, health and finances, and if it finds the reasons she needed conservatorship 13 years ago no longer exist, then it is possible the conservatorship will terminate. She will be able to run her life, manage her career and make financial decisions as she sees fit. Those decisions may not be what her father would wish, and there is certainly room for her to make mistakes, just as any other celebrity multimillionaire does.

The LA Superior Court judge suspended Jamie Spears as conservator, appointing a CPA as a temporary conservator until the next court hearing, scheduled for mid-November.

A protected person or an interested party has the legal right to petition a court to terminate a guardianship, if they believe the person is capable of managing their own affairs. Some states have laws serving as a “Bill of Rights” for protected persons, which outline the legal rights individuals have, even when they are under the care of a conservator or guardian.

The best source for information on conservatorship or guardianship is not the entertainment headlines, but from a local estate planning attorney who is familiar with the laws of your state and how this process works for regular people who are sincerely trying to help their family members.

Reference: Deseret News (Sep. 30, 2021) “Why the sensational Britney Spears case is atypical of most conservatorships”

Estate Planning Lessons from Celebrity Nightmares

The dispute over Larry King’s estate shines a harsh spotlight on what happens when an elderly person makes major changes late in life to his or her estate plan, especially when the person has become physically weakened and possibly mentally affected, due to aging and illness. A recent article from The National Law Journal, “Larry King Will Contest—Key Takeaways,” examines lessons to be learned from the Larry King will contest.

A handwritten will is most likely to be probated. King’s handwritten will was witnessed by two individuals and may rise to the standards of California’s rules for probate. California was likely King’s residence at the time of his death. However, even if King’s won’t satisfy one section of California estate law referring to probate, it appears to satisfy another addressing requirements for a holographic will.

Holographic will requirements vary from state to state, but it is generally a will that is handwritten by the testator and may or may not need to be witnessed.

The battle over the will is just a starting point. Most of King’s assets were in revocable trusts and will be conveyed through the trusts. He did not seek to revoke or amend the trusts before he died. News reports claim that the probate estate to be conveyed by the will is only $2 million, compared to non-probate assets estimated at $50 million—$144 million, depending upon the source.

Passing assets through trusts has the advantage of keeping the assets out of probate and maintaining privacy for the family. The trust does not become a matter of public record and there is no inventory of assets to be filed with the court.

Any pre- or post-nuptial agreements will have an impact on how King’s assets will be distributed. This is an issue for anyone who marries as often as King did. Apparently, he did not have a prenuptial agreement with his 7^th wife, Shawn Southwick King. They were married for 22 years and separated in 2019. While Larry had filed for divorce, the couple had not reached a financial settlement. California is a community property state, so Southwick will have a legal claim to 50% of the assets the couple acquired during their long marriage, regardless of the will.

It is yet unclear whether there was a post-nuptial agreement. There are reports that the couple separated in 2010 after tabloid reports of a relationship between King and Southwick’s sister, and that there was a post-nuptial agreement declaring all of King’s $144 million assets to be community property. Southwick filed for divorce in 2010, and King sought to have the post-nup nullified. They reconciled for a few years and King was reported to have updated his estate plan in 2015.

The claim of undue influence on the will may not be easy to challenge. Southwick is claiming that Larry King Jr., King’s oldest son, exerted undue influence on his father to change the will. They were not close for most of Larry Jr.’s life, but in the later years of his life, King made a transfer of $250,000 to his son. Southwick wishes to have those transfers set aside on the basis of undue influence. She claims that when King executed his handwritten will, he was highly susceptible to outside influences and had questionable mental capacity.

Expect this will contest to continue for a while, with the possibility that the probate court dispute extends to other litigation between King’s last wife and his oldest son.

Reference: The National Law Review (March 15, 2021) “Larry King Will Contest—Key Takeaways”

Alzheimer’s, Dementia and other Brain Diseases Require Special Estate Planning Steps

There are certain steps that can be taken by individuals, loved ones and family members to make this challenging time safer and smarter, advises an article “Financial And Estate Planning Steps To Take Now: Special Considerations For Those With Brain Disease” from Forbes.

Anyone living with a neurologic condition needs to be sure their planning reflects not only their condition but their personal experience of the condition. The variability of each person’s experience of a brain disease, from symptoms and severity to the progression rate and future prognosis to the possibility of any recovery, affects how they need to plan.

For an Alzheimer’s patient, in early stages there may be no problems in signing legal documents and putting legal safeguards in place to protect finances. Most people are not aware that the degree of competency to sign legal documents varies, depending upon the complexity of the documents to be signed and the circumstances. A relatively low level of competency is required to sign a will. This is known as “testamentary capacity.” A higher level of competency is required to sign something like a revocable trust, investment policy statement, etc. Therefore, a person who may be legally able to sign a will may not have the legal capacity to sign other documents. Alzheimer’s patients need to get their entire estate plan in order, as soon as a diagnosis is received. Safeguards are extremely important, including having an independent person, like a CPA or trusted family member, receive copies of all monthly bank and brokerage statements, in case abilities decline faster than anticipated.

Patients living with peripheral neuropathy may experience issues with balance, burning sensations, dizziness, hypersensitive skin and pain that make wearing socks or shoes impossible. If the condition becomes so severe that the person becomes homebound, they need to make changes: set up accounts, so bills can be paid online, have income streams set to automatic deposit and simplify and consolidate accounts. It is important to have a Power of Attorney (POA) that is effective immediately or a revocable living trust with a co-trustee. In this way, you do not have to leave home to conduct your business.

Parkinson’s disease may not be well understood by professional advisors. You’ll need to explain that your facial expression—Parkinsonian masked face—does not mean that you are not responding to a conversation. They need to know that your handwriting may change, becoming small and cramped. This can result in a bank or other financial institution refusing to accept your signature on documents. Your attorney can prepare a document that confirms you are living with Parkinson’s disease and that micrographia is one of your symptoms. The document should include three or four different signatures to reflect the variations. Have each signature witnessed and notarized.

People living with MS (multiple sclerosis) face the possibility of an exacerbation that could leave them incapacitated at any time. A revocable trust to coordinate financial management, with trusted individuals as co-trustees should be in place.

For people with these and other brain illnesses, an emergency financial and legal road map needs to be prepared. It should include monthly recurring bills, non-recurring bills like life insurance, property taxes, etc. Contact information for key advisors, your estate planning attorney, CPA, financial advisor, banker, insurance agent, etc., needs to be shared. Your estate plan should be updated, if you haven’t reviewed it in three or four years. If you don’t have an estate plan in place, now is the time to have one created.

Reference: Forbes (May 17, 2020) “Financial And Estate Planning Steps To Take Now: Special Considerations For Those With Brain Disease”

Do Unmarried Couples Need Estate Planning?

A couple that has no intention of ever getting married should know that they won’t get the automatic rights and protections that legally wed spouses get, particularly when it comes to death. Therefore, unmarried couples must make a concerted effort to cover all the bases, says CNBC’s recent article entitled “Here’s what happens to your partner if you’re not married and you die.”

The number of unmarried couples who live together reached 18 million in 2016, a 29% increase from 14 million in 2007, according to the Pew Research Center. Among adults age 50 and older, the increase was 75% with roughly 4 million cohabiting in 2016, compared to 2.3 million in 2007.

These couples still face some key differences from their married counterparts. For example, there’s no filing federal taxes as a couple, and if an employer allows health insurance for a partner, the amount the company contributes is taxable to the employee, rather than being tax-free for a spouse.

End-of-life considerations also need attention. Unmarried couples can sign some legal documents that will dictate what happens, if one of them either becomes incapacitated or passes away, which is a type of estate plan.

If you die without a will or intestate, the state probate court will decide how your assets are distributed. A will by itself also won’t address everything. If you want to make sure your tax-advantaged retirement accounts — like your Roth IRA and 401(k) plans — go to your partner, make sure that individual is the designated beneficiary on those accounts. Even if your will says otherwise, whoever’s listed as the beneficiaries on those accounts will get the money. It’s the same for insurance policies and annuities.

If both partner’s names are on checking, savings or investment accounts, the account will pass directly to the surviving partner. However, for an account with only one partner’s name on it, ask the bank about the appropriate form to be completed, so the money is left directly to the surviving partner. This is what’s called a transfer-on-death or payable-on-death designation. Without this designation, the assets will end up in probate and distributed either in accordance with the will or intestacy state laws.

Regardless of how the mortgage is paid or whose name is on the loan, the person named on the deed is the owner. If the house in one partner’s name, it won’t automatically pass to the partner, as it would with a married couple (via joint tenancy with rights of survivorship). It would become part of the probate estate. To remedy this, you can retitle the home, so that both partners are listed as joint owners on the deed, “with rights of survivorship.” Each partner then equally owns the house and is entitled to assume full ownership upon the death of the other. Note that there could be other factors to consider before adding a partner’s name to an existing deed, such as expenses, tax implications and protection from potential creditors. Ask your estate planning or probate attorney before you make a change. A partner owning the house, could leave it to the surviving partner in the will. Remember, though, any asset passing via the will is subject to probate, which may lead to unforeseen issues.

In addition, a partner has no legal say in his or her partner’s medical treatment, if he or she is in a situation where they can’t make decisions for themselves. To give the partner that right, partners can grant each other a durable power of attorney over health care. This allows the partner to make important health-care decisions, if the one in the hospital is unable to do so. This is different from a living will, which states a person’s wishes if they are on life support or suffer from a terminal condition. This document helps guide the agent’s decision-making. If no one is named, medical personnel must follow the instructions in that document.

Likewise, partners may want to give each other durable power of attorney for finances. This would let them handle one another’s money, including accessing accounts as necessary, if the incapacitated partner could not do so.  If the partners have dependents, name a guardian for them in the will. Otherwise, that decision will be left to the courts.

Reference: CNBC (Dec. 16, 2019) “Here’s what happens to your partner if you’re not married and you die”

Why Everyone Needs a Health Care Directive

A health care directive is a document that directs what a person wants to happen, in the event of serious illness or dementia, explains Forbes’ recent article, “Two-Thirds Of All Americans Are Missing This Estate Planning Document.” This is also the document used to direct what you want regarding end-of-life decisions and what you want to happen to your body after you pass away.

Health care directives are also called living wills, durable health care powers of attorney, or medical directives, but they all serve the same function, which is to provide guidance and direction on how a person’s medical and death decisions should be made.

Despite the importance of a health care directive, a 2017 study found that only 33% of all Americans have one.

A critical decision in a health care directive is selecting an agent. This is a proxy who acts on your behalf to make decisions that are consistent with your wishes. It’s important to pick an individual whose values are aligned with yours. This is your advocate on decisions, like if you want to have treatment continued or just be kept comfortable in palliative care.

Once you choose an agent, review your directive with her. This will give her guidance if and when the need for her to step in arises.

The agent’s role in the health care directive doesn’t end at death but continues to ensure that your post-mortem wishes are carried out. When the person dies, the agent takes control of the body. Prior to funeral plans, the agent must make certain that any organ donation wishes are carried out. This decision is usually shown on a person’s driver’s license, but it’s also re-stated in the health care directive.

After the donation wishes are carried out, the agent helps to make sure funeral wishes are handled properly. These instructions can be detailed in the health care directive.

Consider how your family and loved ones would feel, if they had to make these decisions without having any idea of what your wishes were. Would they know what to do, or would they do what you want? Having a Healthcare Directive is a kindness to your family.

Reference: Forbes (December 13, 2019) “Two-Thirds Of All Americans Are Missing This Estate Planning Document”

Estate Planning Essentials

Having an estate plan means that you and your family are prepared not just for death, but also for illness and incapacity. Distribution of your property according to your wishes, is just one part of an estate plan. Minimizing state and federal estate taxes is another. A complete estate plan addresses many legal, financial and health issues.

Investopedia’s recent article, “6 Estate Planning Must-Haves,” provides us with a list of items every estate plan should include:

• A will and/or a trust;
• Powers of attorney;
• Beneficiary designations;
• A letter of intent; and
• Guardianship designations.

In addition to these documents and designations, a thorough estate plan also should consider the purchase of insurance, like long-term care insurance, a lifetime annuity to generate some level of income until death, and life insurance to pass money to beneficiaries without probate.

Let's look at each item on this checklist to make sure you haven't left any decisions to chance.

Wills and Trusts. A will or trust should be one of the primary parts of your estate plan, even if you don't have a lot of assets. Wills make certain that your assets are distributed according to your instructions. Some trusts also help limit estate taxes or legal challenges. Talk to an experienced estate planning attorney about wills and trusts.

Power Of Attorney. A durable power of attorney (POA) allows an agent or a person you assign to act on your behalf, if you’re unable to do so yourself. A healthcare power of attorney (HCPA) designates another person to make critical healthcare decisions on your behalf in the event of incapacity.

Beneficiary Designations. Some of your assets will pass to your heirs without being mentioned in your will, such as 401(k) plan assets. Therefore, maintain a beneficiary and a contingent beneficiary on these types of accounts. Likewise, insurance plans should have a beneficiary and a contingent beneficiary, because they also pass outside of a will. Your beneficiaries should be over 21 and mentally competent.

Letter of Intent. This is simply a document for your executor or a beneficiary to define what you want done with a particular asset after your death or incapacitation. Some letters of intent also contain funeral details and other special requests. A letter of intent isn’t legally binding. It helps inform a probate judge of your intentions and may help in the distribution of your assets, if the will is declared invalid for some reason.

Guardians. If you have minor children or are considering having kids, naming a guardian is very important. Be sure the person(s) shares your views, is financially sound and willing to raise your children. You should also name a backup or contingent guardian.

Most people don’t understand that if you don’t name a guardian in your will, the decision is made by the court. It is possible that the court choses someone you would never have wanted to raise your children.

Meet with an estate planning attorney and prepare a complete estate plan to protect your loved ones.

Reference: Investopedia (July 16, 2019) “6 Estate Planning Must-Haves”

Estate Planning When the Family Includes a Disabled Child

The future can seem daunting when parents consider what will happen to a disabled child, when the parents become elderly and eventually pass away. There are steps that need to be taken, as reported by Yahoo News’ recent article, “4 Tips for Estate Planning When Your Child Has a Disability” to prepare.

1. Draft a letter of intent. This is a letter of instruction that includes instructions that your family and friends will need, if you die or for any reason become incapacitated. This letter should list the passwords to your online financial accounts and personal information someone would need to efficiently step into your life, your home and care for child with a disability. It can include medications, daily routine, strategies you use for calming, therapists’ contact info and other daily living items someone not living in your home may not know about your life.
2. See an estate planning lawyer. Ask an attorney to help you build a vision for what you want your child’s future to look like. Have the attorney create a will and a special needs trust. A special needs trust lets you to distribute funds and property in a way that doesn’t interfere with government program benefits.
3. Create a power of attorney or guardianship. A power of attorney for financial and medical issues may be a viable solution. Supported decision-making is an alternative that empowers those with intellectual disabilities to make choices with support and while preserving their rights. If guardianship is your objective, talk to an attorney before your child reaches age 17.
4. Create an ABLE account. This account can hold funds to ensure your child’s regular account never has more than $2000, which would jeopardize government program benefits, like Medicaid.

An experienced elder law estate planning attorney will have gone through this process before with other families and can help put all of these pieces into place. Take one step at a time, and keep going—this can be overwhelming, but the end result will be well worth it. You will feel better knowing that you did what was necessary to protect your child, and in the end, isn’t that what matters most?

Reference: Yahoo News (August 26, 2019) “4 Tips for Estate Planning When Your Child Has a Disability”

Will Jeffrey Epstein’s Estate Escape Punishment?

Epstein’s will, which is a public document, claimed assets of more than $577 million. The trust, which is a “pour-over will” that seeks to transfer all of his assets into a trust, was filed in the U.S. Virgin Islands. There are a number of legal issues that remain unresolved.

None of his assets can be moved into the trust, until a probate court decides what to do with the numerous claims made against the convicted sex offender and his estate.

CBS News’ recent article, “What we know about Jeffrey Epstein's will, and what happens next with his estate,” provides a list of questions that can help explain what happens next with Epstein's estate. His estate will be overseen by the two executors named in the will, attorneys Darren K. Indyke and Richard D. Kahn.

The terms of the trust are not public, because they’re not part of the will itself. Epstein's creation of the trust is commonly done by those who desire privacy. Of course, there is some surprise because the will and the trust were created just two days before he died. One of the most intriguing parts of Epstein's will is that it lists his domicile (his permanent residence) as the U.S. Virgin Islands. Domicile is important in determining which jurisdiction controls the estate. Domicile must be proven in a probate court, and is usually accomplished with tax returns, a driver’s license, or documented time spent in the jurisdiction.

Another question about Epstein's will, is whether it will even be declared valid. His will, and thus his entire trust, can be held invalid, if the will wasn’t properly executed and if it wasn't properly witnessed or signed. There can’t be any fraud, undue influence, or duress. Since the will was made right before his suicide, there’s no certainty of his mental capacity.

His testamentary capacity, which means his mental ability make a valid will or estate, will probably be decided by a probate judge. If his estate planning documents are voided, the assets would transfer to the beneficiary of the estate, which is his brother Mark Epstein. However, Mark would still be liable for creditors' claims and any alleged victims' lawsuits.

Before the assets pass from his estate into the private trust, all creditors’ claims must be satisfied in probate court.

With many different factions competing for the assets and a number of legal issues, this case could take as long as ten years to be resolved.

Reference: CBS News (August 21, 2019) “What we know about Jeffrey Epstein's will, and what happens next with his estate”

No Power of Attorney? Be Prepared for Complexity and Costs

To be able to engage in financial decisions on behalf of an incapacitated person, it is much better if there is a power of attorney in place.

A power of attorney is a legal document signed by the “Principal,” granting the authority to another individual to make decisions on the Principal’s behalf. This document is only in effect during the lifetime of the Principal.

nj.com’s recent article on this topic asks “Who can sign for an incapacitated person if there’s no power of attorney?” The article noted that to have the authority to conduct financial transactions concerning the assets solely owned by the incapacitated person who failed to execute a power of attorney, a guardian will have to be appointed by the court.

A guardianship is a legal relationship established by the court, in which an individual is given legal authority over another when that person is unable to make safe and sound decisions regarding his or her person, or property.

For example, in New Jersey, an application will have to be filed in the probate part of the Superior Court, in the county where the incapacitated person resides.

If it’s not an emergency, a guardian also will need to be appointed to make medical decisions for an incapacitated person who hasn’t signed a health care proxy. This is a legal document that gives an agent the authority to make health care decisions for an incapacitated person. It will take effect, if the person is incapacitated or unable to communicate. The agent will make decisions that reflect the wishes of the incapacitated individual.

It’s typically not necessary to be appointed as an agent under a power of attorney or health care proxy or legal guardian for another person to sign an assisted living or nursing home admissions contract or a Medicaid application.

Before signing an admissions contract for someone else at an assisted living or nursing home, make sure to read the contract very carefully, including the fine print. Don’t be pressured into signing it first and then reading it later. There may be language concerning responsibility for finances. Read it and ask questions, if anything is not clear.

Reference: nj.com (July 22, 2019) “Who can sign for an incapacitated person if there’s no power of attorney?”