Written by Robert T. Nickerson
Have you ever seen an ad for estate planning and thought, “There’s no way I could ever afford something like that”? You’ve probably seen a lot of stories about the wealthy that’ve spent a lot on lawyers in order to have their assets prepared for their family. I’ll tell you immediately that you don’t need to be Jeff Bezos or Elon Musk to plan for your future. Estate planning is not just for the wealthy. What is important is having the right documents prepared so that your family will be ready when your gone. Not to sound downbeat, but at some point, we will die and we do need to make sure our loved ones don’t face problems with the court or government with what you’ve left behind. I’ve helped a lot of families navigate over what to do with properties, financial assets, and even the guardianships of their children. But rather then give you an entire course on the technical aspects of estate planning, I thought I would go through six essential documents every adult should have in order to help their loved ones get an idea with what you would want. While some don’t need to be touched until death, some of these could come in handy for medical emergencies.
Durable power of attorney
Here’s something that can be used for a lot of circumstances when your still alive. Should you become incapacitated for any reason, a durable power of attorney allows you to select someone you trust to make all legal and financial decisions in your name. They can pay bills. They can setup lawsuits. There’s a lot they can do to save a lot of time.
More importantly, they prevent families from arguing over who should be your voice. Without it, this would force families to go to court to have a conservator appointed, which along with being a very expensive and time consuming process, may not have your best interest. That’s not to say their all bad, but they go off from an idea of probably what you would want. These are the kind of decisions that are better suited for trusted love ones.
This is similar to a power of attorney, except this is in the case for potential medical decisions. Let’s say you’ve gotten into a bad accident are in a coma. You have no way to let the medical team of what you want to happen in any scenario. This document ensures that someone you trust will make those choices. It can even say whether or not you wanted your life to continue should something awful really happen.
Without this document, no one in the family may be allowed to step in, and in some states, may even require a guardian which is just as time consuming as acquiring a conservator.
There’s a lot of confusion with a lot of people assuming that a will can do whatever you want. While it’s sort of true, let’s clear some things and explain what it really is. A will actually dictates what is to happen with your owned assets. It doesn’t have anything to do with guardianship or special trusts.
With a will, you’ll need an executor that’ll take charge on how your assets are divided within the people you’ve selected. This person is also responsible for paying any bills, preparing a tax return and even preparing an estate plan return.
So you want to avoid probate court? Then a revocable trust is going to be key to do so. This does the same thing a will does, but with a lot more advantages. First, it remains a private document (while a legal will is publicly available). Second, if you own any out of state property, then a revocable trust would let you avoid the probate process in that state. Third, this would allow for an easier process for guardianship. This gives the subject more power on how their assets would be distributed to their children.
A revocable trust also makes things easier for a successor to step in to manage the trust rather then waiting for a financial institution to do so.
This is something that comes with a will or a revocable trust. A beneficiary designation is how a retirement account and life insurance is distributed. This is also something that needs to be reviewed at least once a year as a lot of circumstances can change this. Death, marriage and divorce are just some of the things that can cause course to change. There have been horror stories of ex-spouses that have sued, claiming an entitlement to ones assets.
Under the SECURE act, a beneficiary designations have changed. It varies, but in most cases, it’s no longer possible to distribute a retirement account asset over a lifetime.
Guidance Letter to Family
Though this isn’t necessarily a legal document, if you wanted to add a personal touch, a guidance letter is a great way to first give an idea of what you would want to happen. You can use the legal documents to fully iron out the details of your wishes, but a letter is a nice way to give out some guidance in your own language, giving your family more comfort in the way they remember.
Written by Jill Roamer J.D.
Undue Influence is when someone pressures another in such a way that the person being influenced is not acting by their own free will; they are being coerced into taking a certain action. The person being influenced does not understand the repercussions of their actions.
Recognizing undue influence is a job for many – lawyers, financial advisors, notaries, bankers, and family members. Due to the nature of undue influence, it is often carried out by loved ones and kept hidden from others. Undue influence often happens in the case of illness, where there is a deterioration in physical and mental abilities. The bad actor will take advantage of the ill person, and unduly influence them into taking actions to benefit the bad actor.
The issue of undue influence was recently litigated in Malousek v. Meyer. Here, we have Molly and Greg who began cohabitating in 2009. In 2015, Molly was diagnosed with cancer and began treatments. By 2017, her health had drastically deteriorated. In mid-October of 2017, the pair added Greg as a joint owner on Molly’s bank accounts, changed beneficiary designations in Greg’s favor, got married, and executed a quitclaim deed in order to have the home transfer to Greg upon Molly’s death. In addition, Molly executed a power of attorney naming Greg’s son, Mark, as agent.
By October 23, Molly passed away. Her adult children, A.J. and Courtney, filed a declaratory judgment action seeking to have all the property interest changes reversed and the marriage annulled. Their reasoning was that Molly lacked capacity to make these decisions, she had previously indicated that she did not want to get married and did not want Greg or Mark as beneficiaries, and thus was the victim of undue influence. The district court found in favor of A.J. and Courtney, declaring that the marriage was annulled and ordered that the property be conveyed to Molly’s estate. Greg and Mark appealed.
The instant case is out of the Nebraska Supreme Court. The court reviewed the evidence in the case. Plaintiffs’ arguments and evidence were as follows:
The Defendants’ arguments and evidence were as follows:
The court quoted Miller v Westwood and gave the elements of proving a claim of undue influence: “(1) that the person who executed the instrument was subject to undue influence, (2) that there was opportunity to exercise undue influence, (3) that there was a disposition to exercise undue influence for an improper purpose, and (4) that the result was clearly the effect of such undue influence.” The court further went on to state that undue influence is sometimes difficult to prove with direct evidence and other factors may need to be inferred.
In the end, the Supreme Court ruled for Molly’s children. The court stated that as Molly’s health deteriorated, there was a sequence of events carried out to transfer her property to Greg, it was done in secret, contact with Molly’s friend and family was controlled, and the effect of the transactions was contrary to her prior stated wishes. Importantly, the Supreme Court noted that witness credibility is an issue for the trier of fact, giving the district court deference since that court had the opportunity to observe and question the witnesses. The district court obviously found the Plaintiffs’ witnesses to be more credible than those called by the Defendants.
There are a few lessons from this case. The first is to plan early, while still healthy. This way, the likelihood of an argument for undue influence can be decreased. The second lesson is that practitioners need to be aware of undue influence and have a procedure to analyze each case for its presence. Talk to clients and their families about undue influence and the warning signs. Finally, it might be best to encourage clients to talk on their friends and family about their estate plan, so everyone is aware and on the same page before the client’s death.
Nickerson Law will spot out any cases of undue influence within one's estate plan and help you determine what needs to be done to fox that. Click on the button before to contact us for more information with no obligation.
Written by Robert T. Nickerson
Whenever a family completes or updates their estate plan, the immediately feel a sense of accomplishment. Happiness and security are other thoughts and emotions that probably come with it too. The whole point of an estate plan is to give families ease of mind by having their assets, property and potential trust funds all set up legally on paper so that complications don’t arise later on. Does that mean once you sign that last signature, your out of the woods? That depends on how another question is answer; does your estate plan pass the multigenerational test?
You’d be shocked to learn that many estate plans wouldn’t pass that test. That’s because of one thing; a lack of communication. I’ve seen this happen a lot because no matter how big or small a family is, each generation tends to have their own plans created. Your parents may have had one created years ago or maybe you have an offspring that talks about having a plan created without talking to you first. On top of that, it only takes a few years for many estate plans to become dated. One thing that can never be fully planned is life. Things happen. New Children are born. Potential successors may not be as reliable as before. A divorce might have happened. This is why communication between your family is very important. You need to stay on top of what going on in everyone’s lives. Parents, grandparents, children, grandchildren and even great-grandchildren all have things could alter an estate plan.
Let’s look into one thing that could call for big changes to an estate plan; new children or grandchildren born.
When families expand and bring new children in the mix, there’s a lot of joy and excitement. The parents have probably received tons of gifts for the new baby, but what about gifts in the form of money? Because parents are concerned about their child’s future college education, they know they want to accept money, but their also aware of the tax and even legal consequences. So what are more suitable options then just handing a check over?
A UTMA or a UGMA savings account is a very simple to open up and many banks offer this option. The downside is that these account types aren’t the most optimal if family wealth continues to expand.
But what if the child gets a scholarship or even decides not to attend college? These are possible scenarios that can also raise questions about a larger family estate.
Another good solution is a gift trust. As long as the writing is solid, the grantor can create a gift trust and pay the taxes on their behalf.
A good multigenerational estate plan can help answer those questions and set it in stone. Of course the real answer in how to have a better understanding in a large family is communication. There’s plenty of excuses that people will come up with including feeling like they’ll offend if they ask a parent how much money they make. One thing that people don’t have on their side is time. It only takes ten years for generations to change and the amount of wealth were passing on is only increasing.
Nickerson Law has built years of experience in helping various families and creating estate plans that are transparent and easy to understand. We also note specific time frames when they need to be reexamined. We even look at old plans to see if their still valid. Contact us below to learn more about what can be done for your families future with no obligation.
Jeffrey C. Nickerson - Estate Planning Attorney - My Passion is Special Needs Planning!