Assets

Three Keys To Protecting Yourself From A Rogue Executor

April 3, 2023 By Gratia P. Schoemakers, Esq. Leave a Comment

Unfortunately, sometimes a death in the family can bring out the worst in people. Indeed, family resentments sometimes simmer during a time of grieving – particularly when money and assets from the deceased’s estate are involved. If you are a beneficiary under a loved one’s estate plan, you may be under the assumption that those assets will be distributed according to his or her wishes. Inheritance theft, however, is an underreported problem that can cost families dearly. Moreover, the theft can be perpetrated by someone who was highly trusted by the decedent – the executor, who is the person typically chosen by the decedent to manage the estate upon his or her death or incapacity. Thankfully, you have the ability to deter a thief from stealing your inheritance and the inheritance of other beneficiaries of the estate.

Safeguard Your Inheritance

There are several ways in which you can ensure that you will not lose your inheritance due to theft perpetrated by a rogue executor. The following are three basic ways to do so:

Knowledge is key: First, be sure to have information about the trust or estate and its assets. You should not get pushback when requesting this. As a beneficiary of the estate, you almost always have a legal right to an inventory and accounting of the estate. This is a summary of all the transactions and assets of an estate or trust and should come with supporting documentation such as receipts or cancelled checks. Even though the executor or trustee is in charge of the assets, he or she is legally required to report on the assets and transactions as well as act in the best interests of the beneficiaries.
Document, document, document: Whether it is a phone call or an in-person meeting, be sure to document everything in writing. Be sure to confirm details such as what you asked for, what you learned, what you received (or did not receive), etc. Courts across the country often place greater weight on written evidence than on verbal testimony.
Get outside help: Understand that emotions run high when a loved one has passed away. This can sometimes cloud our judgment, making legally required or authorized actions performed by the executor seem hurtful. Assistance from a third party can help make sure your rights are protected so that neither you nor the estate are unnecessarily tied down with the expense and stress of court battles.

While the best way to protect your wishes is through a well-drafted estate plan – which includes a detailed will, power of attorney, and trust that appoints multiple individuals as executors – inheritance theft still happens. Theft can occur through undocumented loans, denigration of other heirs, destruction or forgery of documents, or embezzling, to name a few.

Bottom Line

While laws vary from state-to-state regarding how an heir can establish that his or her inheritance has been hijacked or is in danger of being stolen, there are certain basic rights an heir or beneficiary can count on. To learn more, call or contact us today.

How To Avoid Sending Your Loved Ones (and Assets) Through Probate

August 2, 2022 By Gratia P. Schoemakers, Esq. Leave a Comment

Today many people are using a revocable living trust instead of a will or joint ownership as the foundation of their estate plan. When properly prepared, a living trust will avoid the public, costly and time-consuming court processes of conservatorship or guardianship (due to incapacity) or probate (after death). Still, many people make a big mistake that sends their assets and loved ones right into the court system: they fail to fund their trust.

What Does it Mean to Fund Your Trust?

Funding a trust is simply the process of transferring assets from your name into your trust. You should also change most beneficiary designations to your trust.

Funding is accomplished in several different ways:

Changing the title of the asset from your individual name (or joint names if you’re married) to the name of your trust – for example, from John Smith to John Smith, Trustee of the John Smith Living Trust dated December 1, 2015.
Assigning your interest in an asset without a title (such as artwork, jewelry, collectibles or antiques) to your trust.
Changing the primary or contingent beneficiary of the asset to your trust.

What Happens to Assets Left Out of Your Trust?

For many people avoiding conservatorship or guardianship and probate are the main reasons they set up a revocable living trust. Unfortunately, you may believe that once you sign your trust agreement, you’re done. But if you fail to take the next step to change titles and beneficiary designations and then become mentally incompetent or die, your assets and loved ones will end up in probate court.

Which Assets Should, and Should Not, Be Funded Into Your Trust?

In general, you will probably want to fund the following assets into your trust:

Real estate – homes, rental properties, vacant land and timeshares
Bank and credit union accounts – checking, savings, CDs
Safe deposit boxes
Investment accounts – brokerage, agency, custody
Notes payable to you
Life insurance – if you don’t have an irrevocable life insurance trust
Business interests
Intellectual property
Oil and gas interests
Personal effects – artwork, jewelry, collectibles, antiques

On the other hand, you will probably not want to fund the following assets into your trust:

IRAs and other tax-deferred retirement accounts – only the beneficiary should be changed
Incentive stock options and Section 1244 stock
Interests in professional corporations
Foreign assets – in some countries funding an asset into a U.S.-based trust causes adverse tax consequences, while in other countries trusts aren’t recognized or are ignored due to forced heir-ship laws
UTMA and UGMA accounts – your minor grandchild is the owner, not you as the custodian; instead, name a successor custodian
Cars, trucks boats, motorcycles and scooters –most states allow a small amount of assets, including vehicles, to pass outside of probate, in others a beneficiary can be designated for vehicles, and in others, vehicles don’t have to go through probate at all

It’s important to work closely with your attorney to determine what should go into your trust and what should stay out. Also, before purchasing new assets, consult with your attorney to find out how to title the account or deed or who to designate as the beneficiary.

What Are the Benefits of Funding Your Trust?

Funding your trust makes it possible to obtain the best results from your trust-based estate plan:

Your incapacity trustee instead of a conservatorship or guardianship judge will take control of your trust assets if you become mentally incompetent.
Your settlement trustee instead of a probate judge will take control of your trust assets after your death.
Your trust will be easier to update as your wishes and circumstances change instead of doing things piecemeal through joint ownership, payable on death or transfer on death accounts, or individual beneficiary designations.
Your final wishes will remain a private family matter instead of being publicized in the local probate court records.
Your incapacity or settlement trustee will have direct access to your trust assets without the need for obtaining a court order.
Your incapacity or settlement trustee will be able to manage, invest, sell and reinvest your trust assets without court intervention.

The Bottom Line on Trust Funding

Many people like the cost and time savings, plus the added control over assets a living trust offers. Yet in the end an unfunded trust isn’t worth the paper it’s written on. We are available to answer your questions about funding your trust and look forward to working with you and your advisors on all of your estate planning needs.

Your Vacation Checklist

June 12, 2019 By Gratia P. Schoemakers, Esq.

You’ve packed sunblock and a beach novel. You’ve planned your itinerary and bought plane tickets. But have you ensured that your estate plan is up to date?

Don’t leave home without making sure your financial health and the future of your loved ones is provided for. It’s even more crucial than getting a pet sitter and locking the front door.

Creating an Estate Plan

If you don’t have an estate plan yet, don’t panic. Now is a great time to connect with a qualified estate planning attorney who can sit down with you and get you started with an appropriate plan for your financial future.

Here are some questions to begin the process:

Do you have a will? An attorney can help you create an accurate and intentional will if you do not already have one.
Have you considered using a trust? Trusts have considerable benefits, from keeping assets safe from creditors to dividing an estate equally without worrying about the status of individual assets.
Are your children protected? An attorney can help you designate a guardian to care for your minor child in the event you are unable to. An attorney can also help you name an adult who will manage your minor child’s inherited property if you pass away. These may or may not be the same people.
Have you considered life insurance? If you anticipate leaving behind significant debt or hefty estate taxes, or if you have small children, you may want to consider a life insurance policy. Knowing your dependents are provided for will give you peace of mind.
Is your business protected? If you own a business, have you named a proxy to manage your interest if you cannot? Do you have a business succession plan? If you co-own a business, have you drawn up a buyout agreement? An attorney can help with that as well.

Pour-Over Wills: A Useful Tool

Considering a trust-based estate plan? It’s a great way to ensure that your assets are divided and protected in exactly the way you want. It can also help your beneficiaries avoid the expensive and lengthy process of probate, when an estate must be organized and distributed through a probate court. But as you may know, gathering the needed documents may be time-consuming.

If you need to complete an estate plan before leaving on a vacation and are unable to fully fund your trust, you may want to consider using a pour-over will in the interim.

A pour-over will stipulates that all assets that have not yet been funded into your trust will be put there when you pass away. Your trust becomes the beneficiary of any assets that you may not have had time to transfer there. In a crunch, it can serve as a stop-gap measure while your trust-based plan is being funded.

Trust, but Verify

Have you already created an estate plan? That’s great! It’s still important to verify that all provisions made in the estate plan are exactly as you want them.

Here are some items to confirm before leaving town:

Are your assets accurately inventoried? Have you left out any important assets or neglected to report changes?
Are your beneficiary designations accurate? Are your assets going where you would like them to?
When was the last time you reviewed your selection of fiduciaries? Being named as someone’s Personal Representative, Successor Trustee, Agent under a Power of Attorney, etc. can be a time consuming job. It is important that you review your selections periodically to ensure that those people are still the best choice to act on your behalf.

Contact Us Today

Estate planning with a trusted attorney is an important part of ensuring your financial health and preserving the legacy you’d like to leave to your loved ones. As you’re preparing for summer travel, don’t neglect your estate plan. We can help you put a plan in place that will reassure you and your family. Contact us today to plan for your tomorrow.

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How to Leave Your Life Insurance and Retirement Plan to Your Minor Children

August 23, 2018 By Gratia P. Schoemakers, Esq.

Your children are your pride and joy. It is no surprise that at some point or another, every parent likely becomes concerned about who will care for a minor child or children if one or both parents die or are incapacitated. From a financial perspective, many parents turn to life insurance in an effort to take care of their family in the event of death. While it is true that life insurance is a particularly helpful financial tool to protect your loved ones, it is just as important to consider how to leave the proceeds to your minor children. Beyond this, you should also take into account how to incorporate your retirement money (IRAs and 401(k)s), another common, significant asset into your overall estate plan.

mother and child

Once you decide to purchase life insurance you will name a beneficiary of the death benefits. You also name a beneficiary on your retirement accounts. But, if you fail to have a system in place and your children are minors at the time they inherit these assets, the court will appoint a property guardian or a conservator (the title depends on state law, but the role of this person is to “watch over” a minor person’s money). This process will require attorneys’ fees, court proceedings, supervision from the court, and will generally limit investment options — all costs and delays that will not help your children, but rather cost them a significant percentage of their inheritance. Another downside? Whatever’s left when the child becomes an adult (usually at age 18, but may be older, 19 or 21, in some states) will be handed over, without any guidance or boundaries. This can impact college financial aid opportunities as well as open up a ready opportunity for irresponsible spending that most parents would never intend.

How To Leave Assets?

There are several ways in which you can structure your life insurance policies, retirement accounts, and overall estate plan to benefit your minor children in the most streamlined way possible.

First, instead of naming minor children as beneficiaries, use a children’s trust to manage and use the money for the benefit of your children. This lets you designate someone you think will manage the money well, rather than leaving it to the whims of the court.

Second, select and name a guardian to handle the day-to-day care for your children. This person can be different than the person managing in the money, which can sometimes work well depending on the amounts involved and the different skill sets needed to manage money versus raise children.

Third, if you have a living trust, make sure you have properly funded the trust and aligned your retirement assets with the plan. If you do not yet have a trust, consider the benefits of one over will-based planning. Both types of plans will allow you to designate how much and when your children will receive the money, but a trust-based plan will allow you to do so without court involvement.

Benefits of a Trust

Generally, parents list a minor child as the secondary or contingent beneficiary on life insurance and retirement accounts after first naming the surviving spouse as a primary beneficiary. This may work, as long as everyone dies in the “right” order and at the “right” time. But, it’s a gamble, and providing structure through a trust for these inheritances is a vastly better option. Unlike guardianship or custodian accounts, where the proceeds must be handed over once the minor(s) turns a certain age, you can specify at which age your child receives the proceeds. This allows you to specifically designate how the money is to be used, so it will be available for the important life events, while protecting your children from reckless spending. Ultimately you have more control with a trust, and your customized plan will provide the best protection for your family.

If you have any questions about how to leave assets to your minor children — whether it is a life insurance policy, a retirement account, or any other asset — contact us today. A legal professional can explain the options available to your family, determine what tax implications will result, and advise you on the best structure that will protect your family’s needs. Call or contact our office today to schedule a time for us to sit down and talk.

What to Do with Your Beloved Collection

August 23, 2018 By Gratia P. Schoemakers, Esq.

babushka collection

Whether your beloved collection consists of artwork, books, cars, music, or other significant items, you should not forget about this valuable asset when estate planning. You have likely spent quite some time — whether years or your entire life — building your collection; you should not leave its fate to the whims of the court. Estate planning is a great way to share the value and meaning of these much-loved items with those you leave behind. Through your estate plan, you can explain to your loved ones why you collected these items in the first place as well as the meaning or value they have for you.

Who Should Get My Prized Collection?

There are several options for you when it comes to your collection. You may already know of a family member or friend who shares your interest and will genuinely enjoy the collection. Knowing precisely who is going to be receiving your collection may be part of the peace of mind you are looking to achieve with the preparation of your estate planning.

Depending on the type of collection, a charity — such as a library, museum, or other non-profit organization — might be a better option for your collection. The expense and time involved in selling, as well as the opportunity cost of wealth transfer, may make charitable giving the best and most efficient tax solution.

Because some collections are best experienced as a whole, while others may be just as enjoyable and valuable if divided up, you should consider what works best before gifting your items. Sometimes valuable collections can be lent out to organizations temporarily which results in cash flow that does not have the same tax costs of a full-blown sale or the tax benefits of a donation.

Document Your Collection

Finally, it is essential to legally document your collection in order to conduct proper estate planning. Make sure to provide your family, as well as your executor, personal representative, or trustee, with a clear direction not only on what your estate includes but what should be done with these assets upon your death. And while you are taking an inventory of your beloved collection, make sure to let your estate planning attorney and financial advisors know the extent and value of your collection.

We Can Help

We can help you integrate your beloved collection into your overall estate plan. This can be done in a number of different ways including a specific or charitable gift, or even a personal property memorandum. Do not let the time and effort you have spent building your collection go to waste. Call or contact us today to learn about the options available to you so the next generation can share in the joy of your collection.

Call or contact us today. We’re here to help.

Which Life Events Require an Immediate Estate Plan Update?

May 31, 2018 By Gratia P. Schoemakers, Esq.

Estate planning is the process of developing a strategy for the care and management of your estate if you become incapacitated or upon your death. One commonly known purpose of estate planning is to minimize taxes and costs, including taxes imposed on gifts, estates, generation skipping transfer and probate court costs. However, your plan must also name someone who will make medical and financial decisions for you if you cannot make decisions for yourself. You also need to consider how to leave your property and assets while considering your family’s circumstances and needs.

Since your family’s needs and circumstances are constantly changing, so too must your estate plan. Your plan must be updated when certain life changes occur. These include, but are not limited to: marriage, the birth or adoption of a new family member, divorce, the death of a loved one, a significant change in assets, and a move to a new state or country.

Marriage: it is not uncommon for estate planning to be the last item on the list when a couple is about to be married – whether for the first time or not. On the contrary, marriage is an essential time to update an estate plan. You probably have already thought about updating emergency contacts and adding your spouse to existing health and insurance policies. There is another important reason to update an estate plan upon marriage. In the event of death, your money and assets may not automatically go to your spouse, especially if you have children of a prior marriage, a prenuptial agreement, or if your assets are jointly owned with someone else (like a sibling, parent, or other family member). A comprehensive estate review can ensure you and your new spouse can rest easy.

Birth or adoption of children or grandchildren: when a new baby arrives it seems like everything changes – and so should your estate plan. For example, your trust may not “automatically” include your new child, depending on how it is written. So, it is always a good idea to check and add the new child as a beneficiary. As the children (or grandchildren) grow in age, your estate plan should adjust to ensure assets are distributed in a way that you deem proper. What seems like a good idea when your son or granddaughter is a four-year-old may no longer look like a good idea once their personality has developed and you know them as a 25-year-old college graduate, for example.

Divorce: some state and federal laws may remove a former spouse from an inheritance after the couple splits, however, this is not always the case, and it certainly should not be relied on as the foundation of your plan. After a divorce, you should immediately update beneficiary designations for all insurance policies and retirement accounts, any powers of attorney, and any existing health care proxy and HIPAA authorizations. It is also a good time to revamp your will and trust to make sure it does what you want (and likely leaves out your former spouse).

The death of a loved one: sometimes those who are named in your estate plan pass away. If an appointed guardian of your children dies, it is imperative to designate a new person. Likewise, if your chosen executor, health care proxy or designated power of attorney dies, new ones should be named right away.

Significant change in assets: whether it is a sudden salary increase, inheritance, or the purchase of a large asset these scenarios should prompt an adjustment an existing estate plan. The bigger the estate, the more likely there will be issues over the disposition of the assets after you are gone. For this reason, it is best to see what changes, if any, are needed after a significant increase (or decrease) in your assets.

A move to a new state or country: for most individuals, it is a good idea to obtain a new set of estate planning documents that clearly meet the new state’s legal requirements. Estate planning for Americans living abroad or those who have assets located in numerous countries is even more complicated and requires professional assistance. It is always a good idea to learn what you need to do to completely protect yourself and your family when you move to a new state or country. We are here to help you get fully settled in and build a plan to protect you and your family.