Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

A Member of the Law Professor Blogs Network

Friday, July 18, 2014

Why an Estate Plan May Be the Best College Graduation Gift


As your child prepares to leave for college, they may not be thinking about their estate plan.  However, this is a great time to prepare important legal documents such as health care power of attorney, a HIPAA authorization, a financial power of attorney and a will.

In the majority of states, an individual is considered an adult at age 18.  Absent legal documents, parents do not have access to their adult child’s financial information, medical records or basic information about their child’s medical conditions. 

If your child becomes incapacitated, it is likely they would want you (thier parent) to be able to communicate with medical professionals in the case of an emergency.  In terms of financial institution representatives, your child may want you to have the ability to report a lost debit or credit card.

See Child Heading Off to College? Why an Estate Plan is Important, Taft Law, July 14, 2014.

July 18, 2014 in Disability Planning - Health Care, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Thursday, July 17, 2014

Digital Estate Planning

ComputerMany people fail to consider what will come of your online accounts when you die.  While grieving relatives might want access for sentimental reasons or to settle financial issues, you may not want a spouse going through every single e-mail. 

The Uniform Law Commission was on track Wednesday to endorse a plan that would give loved ones access to, but not control over, the deceased’s digital accounts, unless otherwise specified in a will.  If the legislation is adopted by the legislature, a person’s online life could become as much a part of the estate plan as deciding what to do with physical possessions. 

Privacy advocates are skeptical of the proposal.  “The digital world is a different world from offline.  No one would keep 10 years of every communication they ever had with dozens or even hundreds of people under their bed.”

While some tech providers have come up with their own solutions, the Uniform Law Commission’s proposed law would trump access rules outlined by a company’s terms of service agreement, although the representative would still have to abide by other rules including copyright laws. 

See Anne Flaherty, What Happens to Your Online Accounts When You Die? Associated Press, July 16, 2014.

Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.

July 17, 2014 in Estate Administration, Estate Planning - Generally, Technology, Web/Tech, Wills | Permalink | Comments (0) | TrackBack (0)

Estate Planning Essentials

Last will and testament

Many different events occur throughout your life that may trigger the need for a new or updated estate plan.  Marriage, divorce, birth or death are just a few examples of events that create the need to change existing planning documents.  Yet oftentimes, people avoid creating their estate plan because they are unsure of what exactly they need to include.  Below is a list of the most important things to include in your estate plan:

  • Updated Will. If you die without a will, the court will not know how you wanted to distribute your assets and distribute them based on the distribution schedule established in the state probate code.  It is therefore important to have a proper will in place and update it so you are prepared for any unexpected event. 
  • Ancillary Documents. There are several documents that should be included in your estate plan including a durable power of attorney, medical power of attorney, HIPPA power of attorney, and beneficiary designations/guardians.
  • Setting Up a Trust. Depending upon the size of your estate, it may be necessary to include certain trusts.  These may include a bypass trust, a marital deduction trust, a survivor’s trust and a revocable living trust. 

See Caroline Marciano, Estate Planning for Busy Executives: How to Get the Basics in Line, Wealth Management, July 15, 2014.

July 17, 2014 in Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 16, 2014

Avoid These 5 Inheritance Mistakes


Sometimes heirs who are not money savvy can end up blowing it all on a more lavish lifestyle.  In some cases, an unequal inheritance may create rifts between relatives or trigger guilt in someone who had not expected a large windfall.  Below is a list of potential mistakes heirs make and how to avoid them:

  1. Careless Spending. Receiving large sums of money can lead to big purchases, “If a beneficiary hasn’t had access to money before, it’s that Sudden Money Syndrome . . . What may have taken mom an dad a lifetime to build can be quickly frittered away.”  It may be helpful to consult a financial professional they trust before making large purchases with an inheritance.
  2. Letting In Jealous Tension.  When survivors do not get the inheritance they expect, there can be resentment among family members.  When dividing up an asset that  may have more emotional than financial value, it may be best to do a bidding system where people place sealed bids and give up that portion of their financial inheritance to pay for the item in dispute. 
  3. Not Getting An Expert’s Opinion. A professional may advise you to renounce part of the inheritance or help you consider other tax implications. 
  4. Losing Other Income Sources. Receiving an inheritance may disqualify beneficiaries who receive income based or asset based government benefits. 
  5. Giving All the Money to Others. Sharing is not a mistake. Giving away large sums of money out of guilt could lead to problems.  This could jeopardize your financial security as a result. 

See Susan Johnston, 5 Inheritance Mistakes for Heirs to Avoid, U.S. News, July 15, 2014.

July 16, 2014 in Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Estate Planning with Walmart Wills


Not only is Walmart rolling back prices on toilet paper and snack food, but the store is now selling wills for only $99. 

Axess Law has startedw offering legal documents to shoppers at several Walmart locations in Ontario, with plans to expand across Canada. 

Although there are advantages to purchasing an inexpensive will, there are caveats.  Many people are unaware that even the most minor legal language can have implications that consumers may not appreciate at the time.  Furthermore, a will is just one piece of a larger plan that should encompass other documents such as powers of attorney and Do Not Resuscitate orders.  “Estate lawyers frequently see the costly mess that is created when people die with a low cost will and a poorly planned estate that results in a lengthy estate process with thousands of dollars in unnecessary legal fees and higher estate taxes that easily could have been avoided.”  Low-cost products and will kits place too much emphasis on wills being the only focal point of an estate plan.  “By paying a little more for a will and proper estate planning advice upfront, will makers can rest assured their family will not be burdened by unnecessary taxes or be tied up in emotional court battles long after they’re gone.”

See Gail Johnson, Wal-Mart Wills: Should You Trust Estate Planning to a Big Box Store? Yahoo Finance, July 14, 2014.

July 16, 2014 in Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Monday, July 14, 2014

Deathbed Will Case to be Decided Soon

WillJoseph Herb O’Brian died minutes after allegedly dictating a new will to a friend’s attorney and signing with an “X”. The new will left everything except $10,000 to that friend, Kenneth Pawlowski. The validity of the will has been argued in court for the last three years. O’Brian’s stepson, who was left the remaining $10,000, and O’Brian’s brother claim that O’Brian lacked capacity to execute the death bed will and are alleging fraud. A decision in this long disputed case is expected within the next three months.

See Andy Furillo, Final Wishes of a ‘Good Man’ or Deathbed Fraud? Judge to Rule in Probate Case, The Sacramento Bee, July 13, 2014.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

July 14, 2014 in Estate Planning - Generally, New Cases, Wills | Permalink | Comments (0) | TrackBack (0)

Saturday, July 12, 2014

Lou Reed's Surprising Estate Planning Decision

Lou ReedAs I have previously discussed, Lou Reed’s estate is currently worth over $30 million and growing. What is even more surprising is that the successful singer-songwriter only used one estate planning tool. Reed distributed his entire estate through a will signed in 2012. By not using trusts and relying solely on a will, Reed's estate has been made an entirely public affair by going entirely through probate. A revocable living trust would have given his family privacy and saved them the costs and stress of the probate process.

See Danielle & Andy Mayoras, Lou Reed Walked on the Wild Side With Hs Estate Planning, Forbes, July 10, 2014.

July 12, 2014 in Estate Planning - Generally, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Thursday, July 10, 2014

7 Indicators Your Estate Plan Is Outdated


Estate planning is not something we should do once and then completely disregard.  With unpredictable futures and ever changing laws, it is imperative that estate plans are frequently updated.  Below are some indicators that your estate plan may be outdated:

  1. You have had a birthday. Any time you have had a birthday that makes you reflect on your future and your family, you should consider revisiting your estate plan to ensure your current preferences are adequately represented. 
  2. Buying major assets. If you have bought real estate or another asset that has changed your financial status, it might be a good time to check in with your estate-planning attorney. 
  3. Death of a child or fiduciary.  Update your estate plan to remove the deceased person’s name.  If you do not, years from now your personal representative or successor trustee will have to get original death certificate for the deceased person. 
  4. Marriage or divorce. Any changes in marital status will require significant changes to your estate plan. 
  5. Started, purchased, or sold a business. Meet with your estate-planning attorney to ensure that your estate plan is structured properly to deal with the business if you become disabled and put together a business exit plan.  If you’ve sold a business, make sure sale proceeds are titled in your name. 
  6. Moved to a new state. State laws dictate what estate planning documents you need to include and how they need to be signed.  Different states impose different estate taxes so you want to be up to date on the taxable status of your estate.
  7. A beneficiary or fiduciary has gotten married or divorced. It is important to keep in touch with your fiduciaries so you know about changes in their lives as that may change your preferences about what your estate plan dictates for the future of your family and loved ones. 

See Bonnie Bowles, 7 Reasons Your Estate Plan May Be Outdated, Examiner, July 8, 2014. 

July 10, 2014 in Estate Planning - Generally, Estate Tax, Income Tax, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Kennedy Family Wealth Leaves Lasting Legacy

Kennedy family 2Members of the Kennedy family have occupied almost every political position in America, including the roles of congressmen, senator, state representative, and President.  The sustaining force behind the Kennedys reign can be attributed to Joseph P. Kennedy, who made vast amounts of money from insider trading only to later chair the SEC.  It is estimated that the family’s fortune is around $1 billion. 

The majority of the family’s wealth is held in trusts, which range in value from thousands to as much as $25 million.  The task of investing the family trusts is handled by outside organizations, and day-to-day oversight is managed by an advisory board of six experts.

Joseph P. Kennedy’s decision to place his fortune in trusts is one of reasons why the family wealth is still in existence.  The trusts protect the family assets from government taxes.  By holding assets in “dynasty trusts” the Kennedy family is insulated from the estate tax.  If handled correctly, a dynasty trust could potentially maintain an un-taxable fortune indefinitely. 

Other tax-advantaged strategies enable the Kennedy family to sustain their wealth.  Christopher Kennedy acknowledged, “We are a very public family with a very private investment philosophy.”

See Carl O’Donnell, How The $1 Billion Kennedy Family Fortune Defies Death And Taxes, Forbes, July 8, 2014. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

July 10, 2014 in Estate Planning - Generally, Estate Tax, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Estate Planning Documents Every College Graduate Should Have

GraduationAfter graduating from college and entering the coveted “real world,” drafting an estate plan is not necessarily on the top of everyone’s to-do-list.  However, after starting your first job, preparing an estate plan is vital.  Below are five documents that should be part of your estate plan:

  1. Durable Financial Power of Attorney. This is where you name an agent to act on your behalf concerning your personal financial affairs.  Generally, your agent would step into this role if you were unable to handle your own affairs.  This can be a family member, a close friend, or a private fiduciary. 
  2. Health Care Power of Attorney. This is similar to the Financial Power of Attorney, except it is used for decisions concerning your health care.  You must name an agent who can assist with placement, if you must be moved to a rehabilitation facility, and is often given the authority to follow your wishes regarding life-sustaining treatment. 
  3. Last Will and Testament. A will allows you to provide to whom and in what manner your assets will be distributed upon your death. 
  4. Beneficiary Designation. Make sure there is a beneficiary designation on your 401(k)s and IRAs.  A beneficiary designation states that upon your death, the assets held in that account pass immediately to the named individual.  If you do not have a beneficiary designation, the funds will be distributed as part of your estate. 
  5. Beneficiary Deed. This allows you to name an individual who will receive your interest in real property at your death.  If you are married, a beneficiary deed would only be used at the death of the second spouse.  There are times when use of a beneficiary deed may not be in your best interest (i.e., if you want the property to be distributed to minor children.)

See Amber Curto, Five Estate Planning Documents Every Young Professional Should Have, Nat Law Review, July 7,  2014.   

July 10, 2014 in Estate Planning - Generally, Guardianship, Non-Probate Assets, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)