Probate

Parental Warning: If You Own Your Property This Way, You May Accidentally Disinherit Your Own Children

Owning property as Joint Tenants with Right of Survivorship is easy, common, and often disastrous. Sadly, children – both minor and adult – are often disinherited.

While there are several forms of joint ownership, the one most people use (and the one considered in this discussion) is called “Joint Ownership with Right of Survivorship.” When one owner dies, the jointly owned asset automatically, by operation of law, transfers to the surviving owner.

Joint ownership is a very common way for married people to own their assets.
Joint ownership is also commonly used by aging parents and their adult children.

Joint Ownership Just Postpones Probate

In most cases, joint ownership merely postpones probate; it doesn’t totally avoid it. If the surviving owner does not add a new joint owner (or place the asset in trust) before she dies, the asset will have to go through probate before it can go to the heirs. Or, if the owners die at the same time, probate is required immediately.

Joint Ownership Can Cause You to Unintentionally Disinherit Your Beloved Children

Surprising to most parents, assets titled as “Joint Tenants with Right of Survivorship” are NOT controlled by their Will or Trust. In fact, if you are the first owner to die, you can’t control what happens to that asset.

If you add a spouse who is not the parent of all of your children as a joint owner, you will disinherit your children from a previous relationship.
If you add one child as a joint owner, you will disinherit your other children.

The transfer of ownership takes place immediately upon your death. Even if your Will or Trust directs that you want someone in particular to receive your share of a jointly owned asset, it will still go to the surviving owner. The surviving owner can then do whatever he or she wants with the entire asset.

Here’s an example:

After Robert died, Joan owned their vacation home outright. She remarried a few years later, and she added her new spouse’s name to the title. When Joan died, her children were shocked to learn that the new husband now owned the property, even though their father had always promised it would stay in the family and go to the three of them.

Other Risks of Joint Ownership

While it’s easy to add a co-owner’s name to a title, taking someone’s name off a title can be difficult. If the person does not agree, you could end up in court.
Your assets are exposed to the other owner’s debt and obligations. For example, if you add your adult son on the title of your home and he is successfully sued, you could be forced to sell your home.
There could be serious gift and/or income tax consequences.
If you add a minor as a joint owner, the only way to sell or refinance the asset is through a court guardianship.
If you need to sell or refinance and your co-owner is incapacitated and unable to conduct business, you’ll have to ask the court to appoint someone to sign for your co-owner (even if that co-owner is your spouse). Once the court gets involved, it usually stays involved to protect the incapacitated owner’s interest until the incapacity ends or the person dies.

Actions to Consider

To avoid both inconvenience and tragedy, call our office immediately to set up an appointment and have your asset ownership reviewed.
We will review your asset ownership and explain what will happen to your assets if you become disabled and when you die.
We will show you how to own your assets to best ensure your estate plan works, meaning it does what you think it’s going to do.

Joint ownership with a sibling, life partner, business partner, child, spouse, or anyone else, puts your assets and your children’s inheritance at risk. It may cause significant and unnecessary taxes and cause your estate plan to fail. To avoid both inconvenience and tragedy, you are invited to call our office right now.

Why Not Just Go on Nolo® or LegalZoom or Other Form Provider and Create Your Own Estate Planning Documents Cheaply?

There are many software programs, as well as websites, that sell do-it-yourself estate planning documents. These websites and form tools seem to offer a convenient and cost-effective alternative to consulting with an estate planning attorney. But do they really meet your needs and protect your family? Is online, do-it-yourself estate planning worth the perceived upfront savings?

Penny Wise and Pound Foolish

In all but the simplest scenarios, do-it-yourself estate planning is risky and can become a costly substitute for comprehensive in-person planning with a professional legal advisor. Typically, these online programs and services have significant limitations when it comes to gathering information needed to properly craft an estate plan. This can result in crucial defects that, sadly, won’t become apparent until the situation becomes a legal and financial nightmare for your loved ones.

Creating your own estate plan without professional advice can also have unintended consequences. Bad or thoughtless documents can be invalid and/or useless when they are needed. For example, you can create a plan that has no instructions for when a beneficiary passes away or when a specific asset left to a loved one no longer exists. You may create a trust on your own but fail to fund it, resulting in your assets being tied up in probate courts, potentially for years. Worse yet, what you leave behind may then pass to those you did not intend.

Your family situation and assets are unique. Plus, each state has its own laws governing what happens when someone becomes incapacitated or dies. These nuances may not be adequately addressed in an off-the-shelf document. In addition, non-traditional families, or those with a complicated family arrangement, require more thorough estate planning. The options available in a do-it-yourself system may not provide the solutions that are necessary. A computer program or website cannot replicate the intricate knowledge a qualified local estate planning attorney will have and use to apply to your particular circumstances.

If you’re a person of significant wealth, then concerns about income and estate taxes enter the picture too. In addition to the federal estate tax, some states have a separate estate tax systems with significantly different tax thresholds. An online estate planning website or program that prepares basic wills without taking into account the size of the estate can result in hundreds of thousands of dollars in increased (and usually completely avoidable) tax liability. A qualified estate planning attorney will know how to structure your legal affairs to properly manage – or, in many cases, even avoid – the burden of the death tax as well as minimize the impact of ongoing income taxes.

One important aspect of estate planning is protecting adult children from the negative financial consequences of divorce, bankruptcy, lawsuits, or illness. An online planning tool will not take these additional steps into account when putting together what is usually a basic estate plan. Similarly, parents who have children or adult loved ones with special needs must take extra caution when planning. There are complicated rules regarding government benefits that these loved ones may receive that must be considered, so that valuable benefits are not lost due to an inheritance.

Consult an Estate Planning Attorney

No matter how good a do-it-yourself estate planning document may seem, it is no substitute for personalized advice. Estate planning is more than just document production. In many cases, the right legal solution to your situation may not be addressed by these do-it-yourself products – affecting not just you, but generations to come. To make sure you are fully protecting your family, contact us today. We offer Online Lawyer Drafted Estate Planning Services in addition to our office hours. We understand that you are busy, and that sometimes you need to get things done from the comfort of your home. We’re here to help. Give us a call or contact us today.

3 Reasons You Want to Avoid Probate

3 Reasons You Want to Avoid Probate

When you pass away, your family may need to visit a probate court in order to claim their inheritance. This can happen if you own property (like a house, car, bank account, investment account, or other asset) in only your name. Although having a will is a good basic form of planning, a will does not avoid probate. Instead, a will simply lets you inform the probate court of your wishes – your family still has to go through the probate process to make those wishes legal.

Now that you have an idea of why probate might be necessary, here are 3 key reasons why you want to avoid probate if at all possible.

1. It’s all public record.

Almost everything that goes through the courts, including probate, becomes a matter of public record. This means when your estate goes through probate, all associated family and financial information becomes accessible to anyone who wants to see it. This doesn’t necessarily mean account numbers and social security numbers, since the courts have at least taken some steps to reduce the risk of identity theft. But, what it does mean is that the value of your assets, creditor claims, the identities of your beneficiaries, and even any family disagreements that affect the distribution of your estate will be available, often only a click away because many courts have moved to online systems. Most people prefer to keep this type of information private, and the best way to ensure discreteness is to keep your estate out of probate.

2. It can be expensive.

Thanks to court costs, attorney fees, executor fees, and other related expenses, the price tag for probate can easily reach into the thousands of dollars, even for small or “simple” estates. These costs can easily skyrocket into the tens of thousands or more if family disputes or creditor claims arise during the process. This money from your estate should be going to your beneficiaries, but if it goes through probate, a significant portion could go to the courts, creditors, and legal fees, instead.

Of course, setting up an estate plan that avoids probate does have its own costs. Benjamin Franklin wrote, “an ounce of prevention is worth a pound of cure.” Like the “ounce of prevention,” costs you incur now to put a plan in place are more easily controlled than uncertain costs in the future, especially when you consider your family may be making decisions while grieving. With proper planning, you can minimize the risk of costly conflict and also reduce or eliminate some costs, like court costs and executor fees; if there’s no probate case there won’t be any probate costs.

3. It can take awhile.

While the time frame for probating an estate can vary widely from state to state and by the size of the estate itself, probate is not generally a quick process. It’s not unusual for estates, even seemingly simple or small ones, to be held up in probate for 6 months to a year or more, during which time your beneficiaries may not have easy access to funds or assets. This delay can be especially difficult on family members going through a hardship who might benefit from a faster, simpler process, such as the living trust administration process. Bypassing probate can significantly speed the disbursement of assets, so beneficiaries can benefit sooner from their inheritance.

If your assets are located in multiple states, the probate process must be repeated in each state in which you hold property. This repetition can cost your family even more time and money. The good news is that with proper trust-centered estate planning, you can avoid probate for your estate, simplify the transfer of your financial legacy, and provide lifelong asset and tax protection to your family. To learn more, call or contact us for an appointment. One of our experienced attorneys will be happy to strategize with you.

Declare Your Independence from Court Interference!

While the rest of the nation celebrates its independence on July 4th, you can rest assured that you too can declare independence for your family — from court interference. Life can be unpredictable. Whether it is a financial issue, the birth or adoption of a child, sickness or incapacity, it is important to be prepared with proper estate planning. In fact, failure to put together a comprehensive estate plan can leave you and your loved ones at the mercy of the court when it comes to distributing assets or caring for a minor or sick family member.

Estate Planning Basics

Simply put, estate planning addresses how to manage your property in the event of your death or incapacity. Some estate planning tools you have likely heard of before include last will and testaments, living wills, trusts, powers of attorney, and healthcare directive. Estate planning is a great method not only to plan your family’s financial security, but to use tools to keep your family’s personal business outside of the courtroom.

Avoiding Probate

When someone passes away without a will it is referred to as being intestate. A person who dies intestate will have his or her assets distributed according to local intestacy rules. Probate is the legal mechanism by which your assets are distributed upon your death. The process of probate takes time, costs money, and can be a hassle and burden for the family you left behind. One important estate planning tool that will help avoid a drawn out legal process includes a fully funded trust with up-to-date beneficiary designations. By having a fully funded trust and/or up-to-date beneficiary designations when you die, there are no assets in your estate, and therefore no need for probate.

Death is not the only time a court may become involved in your and your family’s personal lives. The court may also intervene in the event you become incapacitated. The court may appoint a guardian or conservator to handle your personal and financial matters, essentially pushing out your loved ones and stripping their ability to help and make important decisions on your behalf. There are several estate planning tools that can help you determine who you want to be in charge should you become incapacitated. These include using a power of attorney, a fully funded trust, as well as a healthcare directive to appoint and give instructions to those you trust to make these difficult decisions for you when you need it most.

Protecting Your Loved Ones

Another important benefit of a solid estate plan is protecting those who are most precious to you — your minor children. It is important to understand that simply naming guardians in your will for any minor children you may have is not enough in and of itself. While a will does ensure your children will be properly cared for in the long-term, often there are significant lapses of time from when the need arises to care for your children and when your wishes are actually carried out. Making sure your estate plan accounts for this gap is vital in preventing the state from taking over and allowing someone you do not want to raise your children from having a chance to take control of their lives and inheritance.

Declare Your Family’s Independence

There are many moving parts to a concise estate plan that must be considered in order to properly protect yourself and your loved ones. An estate planning attorney can explain your options under applicable law and craft a plan that best suits your family’s needs. There is no need to wait and leave your family’s future to chance. Contact us today so we can get you on the road to independence.

Wills vs. Trusts: A Quick & Simple Reference Guide

Confused about the differences between wills and trusts? If so, you’re not alone. While it’s always wise to contact experts like us, it’s also important to understand the basics. Here’s a quick and simple reference guide:

What Revocable Living Trusts Can Do – That Wills Can’t

Avoid a conservatorship and guardianship. A revocable living trust allows you to authorize your spouse, partner, child, or other trusted person to manage your assets should you become incapacitated and unable to manage your own affairs. Wills only become effective when you die, so they are useless in avoiding conservatorship and guardianship proceedings during your life.
Bypass probate. Property in a revocable living trust does not pass through probate. Property that passes using a will guarantees the probate process, designed to wrap up a person’s affairs after satisfying outstanding debts, is public and can be costly and time consuming – sometimes taking years to resolve.
Maintain privacy after death. Wills are public documents; trusts are not. Anyone, including nosey neighbors, predators, and unscrupulous “charities” can discover the details of your estate if you have a will. Trusts allow you to maintain your family’s privacy after death.
Protect you from court challenges. Although court challenges to wills and trusts occur, attacking a trust is generally much harder than attacking a will because trust provisions are not made public.

What Wills Can Do – That Revocable Living Trusts Can’t

Name guardians for children. Only a will – not a living trust or any other type of document – can be used to name guardians to care for minor children.
Specify an executor or personal representative. Wills allow you to name an executor or personal representative – someone who will take responsibility to wrap up your estate after you die. This typically involves working with the probate court, protecting assets, paying your debts, and distributing what remains to beneficiaries. But, if there are no assets in your probate estate (because you have a fully funded revocable trust), this feature is not necessarily useful.

What Both Wills & Trusts Can Do:

Allow revisions to your document. Both wills and trusts can be revised whenever your intentions or circumstances change so long as you have the legal capacity to execute them.
WARNING: There is such as a thing as irrevocable trusts, which cannot be changed without legal action.
Name beneficiaries. Both wills and trusts are vehicles which allow you to name beneficiaries for your assets.
Wills simply describe assets and proclaim who gets what. Only assets in your individual name will be controlled by a will.
While trusts act similarly, you must go one step further and “transfer” the property into the trust – commonly referred to as “funding.” Only assets in the name of your trust will be controlled by your trust.
Provide asset protection. Trusts, and less commonly, wills, are crafted to include protective sub-trusts which allow your beneficiaries access but keep the assets from being seized by their creditors such as divorcing spouses, car accident litigants, bankruptcy trustee, and business failure.

While some of the differences between wills and trusts are subtle; others are not. Together, we’ll take a look at your goals as well as your financial and family situation and design an estate plan tailored to your needs. Call or contact us today and let’s get started.

Isn’t There Already a Law That Leaves Everything to My Spouse and Kids?

Many people think that if they die while they are married, everything they own automatically goes to their spouse or children. They’re actually thinking of state rules that apply if someone dies without leaving a will. In legal jargon, this is referred to as “intestate.” In that case, the specifics will vary depending on each state’s law, so where you live when you die can significantly change the outcome for your family. However, the general rule is that your spouse will receive a share, and the rest will be divided among your children. Exactly how much a spouse will inherit depends on the state, though.

Now, it may seem like, “So far, so good.” Your spouse is getting an inheritance, so are the kids. But here are some examples of how the laws can fail many common family situations.

First off, if both parents of minor-aged children die intestate, then the children are left without a legal guardian. Kids don’t automatically go to a godparent, even if that’s what everyone knew the parents had intended. Instead, a court will appoint someone to be the children’s guardian. In such situations, the judge seeks to act in the children’s best interests and gathers information on the parents, the children, and the family circumstances. But the decision is up to the court, and the judge may not make the decision that you, as a parent, would have made.

When it comes to asset division, in most cases, state intestacy law presumes that a family consists of a husband, wife, and their natural-born children. But, that’s not necessarily the way many families are structured, and things can become legally complicated quickly.

According to Wealth Management, one analysis has 50 different types of family structures in American households. Almost 18% of Americans have been remarried, and–through adoption and step-families–millions of children are living in blended families. The laws just haven’t kept up, and absurd results can occur if you rely on intestacy as your estate plan. Stepchildren that you helped raise (but didn’t legally adopt) may end up with no inheritance, while a soon-to-be-ex-spouse may inherit from you.

Say, for instance, a father has a will that allocates assets to his spouse and two children, then they adopt a third child. Then, the father dies in a car accident before he’s able to revise his will. In some states, because the adopted child is not mentioned in the will, she may not be entitled to any inheritance.

If that isn’t worrisome enough, consider that, in some states, the law provides that an adopted child still has rights to the biological parents’ assets–and the biological parents are entitled to inherit a child’s wealth. (Imagine if the adopted-as-an-infant Steve Jobs had died intestate, and his biological parents demanded a share of his estate!)

Of course, with a will or trust, you can control your estate and essentially eliminate the risk of these crazy results.

What if You and Your Spouse Are Separated?

State law decides what happens to your estate if you are separated from your spouse when you die. Much of the time, the court ignores your separation and just considers you still legally married.

Unless you have a prenuptial or postnuptial agreement, it is extremely difficult to disinherit your spouse. Again, even if a spouse is omitted from a will, state laws might choose to give a surviving husband or wife a share of the assets.

If you are separated from your spouse, and your divorce is pending, you should definitely talk with your divorce lawyer and an estate planning attorney about your options.

Creditors Win

Intestacy provides no asset protection or preservation benefits. Without any protections in place, an estate’s assets are still vulnerable to creditors, lawsuits, and others who may claim entitlement to the property. These claims would take precedence over the statutory requirements for inheritance. In other words, the family may not receive the lion’s share of the estate. They’d get the leftovers.

The best way to safeguard and pass along what you’ve worked so hard to build is to talk to a qualified estate planning attorney. Protect yourself, your family and your assets by contacting us today.

Help! This Probate Is Taking Forever!!!

After a loved one dies, her estate must be settled. While most people want the settlement process to be done ASAP, probate can take between 18 and 24 months. Yes, you heard that right. The time delays create unnecessary stress.

5 Reasons Probate Takes So Long

There are many reasons why probating a will takes so long. Here are five of the most common:

Managing probate required paperwork can be a monumental undertaking with structured timelines and court-imposed deadlines.

Estates with numerous or complicated assets simply take longer to probate as there are more items to be accounted for and valued.

Probate court caseload. Most probate courts are dealing with high caseloads and limited staff.

Challenges to the will. Heirs, beneficiaries, and those, who thought they’d be beneficiaries, can object to and challenge the will’s terms and legality. While state law dictates how long they have to object, will challenges can add years to the process. Common challenges include that the testator was:

Lacking testamentary capacity
Delusional
Subject to undue influence
A victim of fraud

Creditor Notification. A will’s executor must notify the decedent’s creditors so they have time to submit claims for debts. This time period varies from state to state as well, but it is generally six to nine months.

The bottom line is that, while most state probate laws are designed to keep the process moving along in a timely manner, that’s more of a plan than a reality.

Simply Put, Avoiding Probate with a Trust Is Better

Simply put, having assets in a trust is better. Administration generally only takes six to eight months total – meaning that the process is not tied up in court, beneficiaries get assets faster, costs are reduced, and stress levels are kept to a minimum.

Take Action Now

First, if you need help settling a probate estate, we can help you move the process along and remove some of the burden so you can move on with your life. Second, we can help you make sure you never burden your loved ones the way you’ve been burden. How? We’ll show you how to avoid probate with a trust.

The Pros and Cons of Probate

In estate planning circles, the word “probate” often comes with a starkly negative connotation. Indeed, for many people — especially those with larger estates — financial planners recommend trying to keep property out of probate whenever possible. That being said, the probate system was ultimately established to protect the property of the deceased and his/her heirs, and in a few cases it may even work to an advantage. Let’s look briefly at the pros and cons of going through probate.

The Pros

For some estates, especially those in which no will was left, the system works to make sure all assets are distributed according to state law. Here are some potential advantages of probating an estate:

It provides a trustworthy procedure for redistributing the property of the deceased if no will was left.
It validates and enforces the intentions of the deceased if a will exists.
It ensures taxes and claimed debts are paid on the estate, so there’s a finality to the deceased person’s affairs, rather than an uncertain, lingering feeling for the beneficiaries.
If the deceased was in debt, probate gives only a brief window for creditors to file a claim, which can result in more debt forgiveness.
Probate can be advantageous for distributing smaller estates in which estate planning was unaffordable.

The Cons

While probate is intended to work fairly to facilitate the transfer of property after someone dies, consider bypassing the process for these reasons:

Probate is a matter of public record, which means personal family and financial information become public knowledge.
There may be considerable costs, including court, attorney, and executor fees, all of which get deducted from the value of the estate.
Probate can be time-consuming, holding up distribution of the assets for months, and sometimes, years.
Probate can be complicated and stressful for your executor and your beneficiaries.

Bottom line: While probate is a default mechanism that ultimately works to enforce fair distribution of even small estates, it can create undue cost and delays. For that reason, many people prefer to use strategies to keep their property out of probate when they die.

A skilled estate planning attorney can develop a strategy to help you avoid probate and make life easier for the next generation. For more information about your options, call or contact us today to schedule a consultation.