The Key Health Document Most Americans Don’t Have but Should

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You may not like the idea of contemplating your own mortality, or that of a loved one. You may procrastinate for many years about putting your final wishes in place. However, there is one document that is important for yourself, your loved ones, and your life. The health care directive. Forbes’ recent article titled “Two-Thirds of All Americans Are Missing This Estate Planning Document” explains why you shouldn’t put it off any longer.

A health care directive is a legal document that an individual can use to give specific directions for caregivers, in case of dementia or illness. It directs end of life decisions. It also gives directions for how the person wishes their body to be cared for after their death.

This document is known by several different names: living wills, durable health care powers of attorney or medical directives. However, the purpose is the same: to give guidance and direction to loved ones when making medical and end-of-life decisions.

This document itself is a relatively new one. The first was created in California in 1976, and by 1992, all fifty states had similar laws. The fact that the law was accepted so fast across the country, indicates how important it is. The document provides the family with stability and certainty for a loved one during the time a person is impaired, and even after their death. That is at the heart of all estate planning.

Yet just as so many Americans don’t have wills, only a third have a health care directive. That’s a surprise since both estate planning attorneys and health care professionals regularly encourage people to have these documents in place.

A key part of a health care directive is selecting an agent. This is the person who will act as the proxy to make decisions for another person, consistent with their wishes. They will also have to advocate for the person with respect to having treatment continue or shifting to pain management and palliative care. The spouse is often the first choice for this role. An adult child or other close and trusted family or friends can also serve.

The agent’s role does not end at death but continues to ensure that post-mortem wishes are carried out. The agent takes control of the person’s body, making sure that any organ donations are made if it was the person’s wish.

Once any donation wishes are carried out, the agent also makes sure that funeral wishes are done according to the person’s wishes. Burial is an ancient tradition, but there are many different choices to be made. The health care directive can have as many details as possible or simply state burial or cremation.

Having a health care directive in place permits an individual to state his or her wishes clearly. Talk with your estate planning attorney about creating a health care directive as part of your comprehensive estate plan.

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

How Does a Conservatorship Work?

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Millennials, now in their 30s, need to begin thinking about caring for their boomer parents, as medical, financial and mental health needs come up. For lucky families, this will mean conversations with travel agents and financial advisors. For those not so fortunate, it will mean conversations with doctors, nursing home staff and, in some cases, with lawyers regarding conservatorships, says KAKE.com in the article “What is a Conservatorship and How Does It Work?”

A conservatorship is a form of legal guardianship of an adult. The conservator has legal authority over certain parts of the person’s life. It may be a “limited conservatorship,” where only specific matters are under the conservator’s control, like health or finances. The “full conservatorship” gives the conservator complete control over the person’s life, in the same way, that a parent has legal control over a child.

Conservatorship is granted when you can show the court that the person no longer has the capacity to make decisions on their own behalf. In almost all cases, this is based on their mental capacity. While it can happen, physical incapacity alone rarely is acceptable for a conservatorship to be awarded.

Some common reasons for conservatorship include if the person is in a coma, suffers from Alzheimer’s, dementia or severe mental illness, or has a permanent or genetic mental disability that prevents them from ever reaching the maturity or independence necessary for them to make all the decisions necessary to care for themselves.

Conservatorship is a legal proceeding, and the appointment of the conservator must be granted by an officer or appointee of the court. It is typically handled by a state probate court or family court. Hearings are usually held by a judge or a magistrate. A conservatorship may be part of estate planning. Most conservatorships require medical paperwork, but in all instances, the potential ward must have the opportunity to be heard by the decision-maker and to present their case, if they wish, as to why a conservatorship should not be granted. An individual also has the right to challenge the conservatorship in open court at any time, if they disagree.

If this sounds like a lot of complexity and trouble, that’s because it is. To avoid this, a Power of Attorney (“POA”) may be used to accomplish some of the things that would otherwise require a conservatorship. A POA gives a person the ability to make legally binding decisions for someone else, and the scope can be narrow or broad, depending on the person executing the POA. The person creating the POA can decide exactly how much power to give to another person, and it is depending on that person’s willingness to allow someone else to have control over their finances.

An estate planning attorney will be able to discuss all of the rights, responsibilities and fiduciary obligations of a conservator. Most have had experience with conservatorship and will be able to help the family and the individual make informed decisions in the best interest of the individual.

Reference: KAKE.com (December 11, 2019) “What is a Conservatorship and How Does It Work?”

Making a Clean Start for 2020? Here’s Help

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Some people like to start their New Year’s off with a clean slate, going through the past year’s files and tossing or shredding anything they don’t absolutely need. However, many don’t, in part because we’re not sure exactly what documents we need to keep, and which we can toss. This article from AARP Magazine provides the missing information so you can get started: “When to Keep, Shred or Scan Important Papers.”

Tax Returns. In general, you only need to keep the tax returns and supporting documents that extend back to the IRS’s window of time to audit taxpayers. The can only audit you for three years after the end of the taxable year, or when you submitted your tax return, whichever is later. This means unless you’re planning on running for office, keeping the tax returns and supporting documentation for the last three tax years is usually enough. However, if the IRS finds that there is a substantial error, which usually means you omitted 25% or more of your income, in any of those three years, then the time period doubles to six years.

Regardless of how you earn your income, start by visiting MySocialSecurity.gov account before shredding to make sure that your income is being accurately recorded. Having your tax records in hand will make it easier to get any figures fixed.

As for documents regarding homeownership, keep records related to the home until you sell the house. You can use home-improvement receipts to possibly reduce taxes at that time.

Banking and Investments. If you or your spouse might be applying for Medicaid/Medi-Cal to pay nursing home costs, you’ll need to have five years of financial records. That includes bank statements, credit card statements, and statements from a brokerage or financial advisors. This is so the government can look for any asset transfers that might delay eligibility.

If that’s not the case, then you only need banking and financial statements for a year, except for those issued for income-related purposes to provide the IRS with a record of tax-related transactions. Your bank or credit card issuer may have online statements going back several years online. However, if not, download statements and save them in a password-protected folder on your home computer.

Stocks and bond purchases should be kept for six years after filing the return reporting the sale of the security. Again, this is for the IRS.

If you have a stack of canceled checks, shred them. Almost every bank and credit union today have an electronic version of your checks.

Medical Records. These are the records you want to keep indefinitely, especially if you have had a serious illness or injury. The information may make a difference in how your physicians treat you in the future, so normal or not, hang on to the following documents: surgical reports, hospital discharge summaries, and treatment plans for major illnesses. Put these in a password-protected folder in your computer or a secure cloud-based account, so they can be shared with future healthcare providers. You should also keep immunization and vaccination records. The goal is to have your own medical records and not to rely on your doctor’s office for these documents, as many doctor’s offices do not have accessible or electronic records. This is especially true if you have had appointments with multiple offices for your care.

Maintain proof of payments to medical providers for six years, with the relevant tax return, in case the IRS questions a health care deduction.

Use the information above as a guideline to help you make a clean start with your paperwork for 2020, and remember to put your documents in one secure place that your successor agents can find.

Reference: AARP Magazine (August 5, 2019) “When to Keep, Shred or Scan Important Papers”

Tips for Choosing a Fiduciary

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One of the important tasks in creating a complete estate plan is selecting people (or financial institutions) to represent you, in case of incapacity or death. Most people think of naming an executor in their will, but there are many more roles, advises the article “What to consider when appointing a fiduciary?” from The Ledger.

Here are the most common roles that an estate planning attorney will ask you to select:

  • Executor or personal representative: a person named in your will and appointed by the court to administer your estate.
  • Agent-in-fact (under a durable power of attorney): a person who manages your financial affairs while you are living, if you are unable to do so.
  • Health care surrogate or agent: a person who makes health care decisions on your behalf while you are living, if you are incapacitated.
  • Trustee of a trust document: administers the trust that you have created.
  • Guardian or conservator: a person who makes health care and financial decisions on your behalf, if the court determines that other roles, like health care surrogate or agent-in-fact, are not sufficient.
  • Guardian for minor children: person(s) who make decisions for your children, if you are not able to because of death or a loss of capacity before the children reach adulthood.

The individuals or financial institutions who take on financial roles are considered fiduciaries; that is, they have a legal duty to put your well-being first. Their responsibilities may include applying for government benefits, managing and invest your assets and income, deciding where you will live, working with your attorneys, financial advisors, and accountants.

Many people name their spouse or eldest child to take on these roles. However, that’s not the only option. A few questions to consider before making this important decision include:

  • Does this person have the experience, skill, and maturity to manage my financial affairs?
  • Does this person have the time to serve as a fiduciary?
  • Would this person make the same health care decisions that I would make?
  • Can this person make a difficult decision for my health care?
  • Does this person live near enough to arrive quickly, if necessary?
  • How old is this person, and will they be living when I may need them?
  • What kind of response will my family have to this person being named?
  • Are my assets substantial enough to require a financial institution or accountant to manage?

These are just a few of the questions to consider when choosing fiduciaries or health care agents in your estate plan. Speak with your estate planning attorney to help determine the best decision for you and your family.

Reference: The Ledger (Oct. 16, 2019) “What to consider when appointing a fiduciary?”

How to Manage the Cost of Long-Term Care

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A single woman has seen her annual premiums for long-term care rise by more than 60% over the last six years. Her cost in 2018 was $2,721, up from $1,626 in 2013. Despite the increase in cost, she’s keeping her policy, reports CNBC in the article “Long-term care insurance costs are way up. How advisors can help clients cope”

For her, the price she is paying is worth the cost. But even when someone believes that it’s worth it to pay the higher amounts for the benefits of insurance, these types of increases can take older individuals off guard, especially if they are living on a fixed income.

Last year, Genworth Financial received 120 approvals by state regulators to increase premiums on their long-term care insurance business. The weighted average rate increase was 45%. General Electric said earlier this year that it expects to raise premiums on its LTC policies by $1.7 billion in the next ten years. Insurers hold between $160 to $180 billion in LTC reserves, covering 6 to 7 million people, according to estimates from Fitch Ratings.

Eldercare services have also become increasingly expensive. The annual national median cost of a private room in a nursing home was $100,375 in 2018, according to Genworth Financial. The annual national median cost of a single home health care aide was $50,336 in 2018.

Insurers entering the business in the 1990s and early 2000s didn’t anticipate that so many policyholders would continue to pay their premiums and eventually file claims. Fewer than 1% of policyholders have let their policies lapse, and this caught many companies off guard.

Low-interest rates have also hurt overall profitability for the insurance companies.

About 40% of the bonds held in insurance companies’ general accounts had a maturity of more than 20 years at purchase, said the American Council of Life Insurers.

There are a few ways to tweak benefits to keep premiums more affordable while continuing to have this essential coverage.

Daily Benefit. Policies sold in 2015 had an average daily benefit of $259. Paring down the daily benefit could keep premiums down.

Benefit Period. Insurance contracts sold in the 1990s and early 2000 could payout for the remainder of a client’s life. Reducing that period to five or ten years could make premiums lower.

Inflation Protection. Inflation riders help stay ahead of the rising cost of care. For older policyholders, this might reduce the inflation protection.

Waiting Period. Most policies have a waiting period before benefits will be received. Adjusting this period of time might reduce benefits.

Policyholders are advised to speak with the insurance company directly, instead of relying on the premium increase notices. This may reveal more options that can be used to reduce the premiums, without sacrificing too much in the way of coverage.

Reference: CNBC (September 8, 2019) “Long-term care insurance costs are way up. How advisors can help clients cope”

What Should I Know About Medicaid?

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Medicaid is the federal program that gives healthcare benefits to those who cannot afford them. Many people who end up requiring long-term care can pay for it out of their own assets, at least initially.

However, because long-term care expenses are so astronomical, many people end up accessing Medicaid benefits, after their own assets have been depleted.

The Medicaid program can help with paying for home care, assisted living, and nursing home care, explains Insurance News Net’s recent article, “Medicaid planning.”

It would be great if people would plan to qualify for Medicaid before they become completely broke, which would preserve their children’s inheritance.

For those who are thinking of transferring all of their assets to their children to qualify for Medicaid, the government has already thought of that. If you gift any assets to your children within the 60 months leading up to the date you apply for Medicaid, the government will calculate a penalty period, depending on the amount of the gift. You will have to wait until the end of the penalty period before you are eligible for Medicaid. However, there are perfectly legal strategies that a senior can use to become eligible for Medicaid, while still preserving considerable assets for their family and children.

That’s why you should talk to an elder law or Medicaid planning attorney. These practitioners specialize in helping people qualify for Medicaid benefits far in advance of their assets becoming depleted.

Assets may be freely transferred between spouses to help gain eligibility for a spouse that needs care.

There are also many assets that are exempt for purposes of gaining eligibility. This includes a primary residence, certain IRAs and most vehicles.

It’s also important to remember that a person can enter into contracts with family members to provide care in exchange for a fee. The payments to family members won’t be considered a gift for the 60-month lookback period.

With the guidance and planning from qualified legal counsel, seniors who require long-term care can get the benefit of government healthcare, while preserving assets for their heirs.

Please contact an experienced Medicaid planning or elder law attorney for additional information.

Reference: Insurance News Net (September 29, 2019) “Medicaid planning”

What Taxes are Due if I Gift My Home to my Child?

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It’s not unusual for a senior to consider gifting their home to a married child or to a grandchild. However, there are tax consequences to consider before you do this.

nj.com’s recent article on this subject asks “What should I know about taxes before I gift my home?” The article explains that you can gift your home or any other asset to anyone, provided that person is capable of receiving the gift and takes delivery or ownership of it. However, if the grandchild is a minor, the gift would have to be made either in trust with a trustee or through a Uniform Transfers to Minors Act (UTMA) account that has a custodian, until they attain the age of majority.

The federal government has a gift tax, but not everyone will be subject to the tax. That’s because each year, you can give anyone up to a $15,000 gift tax-free. If you’re married, you and your spouse could each make those gifts, totaling $30,000 per year, per recipient without any gift tax.

Gifts to an individual more than $15,000 per year that aren’t under an exclusion or exemption are subject to federal gift tax. As a result, you must file a federal gift tax return on IRS Form 709. However, it’s not likely that you’ll actually have to pay any gift tax, even though you have to file a return. The reason is that under the federal unified estate and gift tax system, each person has a lifetime exclusion from gift and estate taxes of $11.4 million, over and above the annual $15,000 per person gift tax exclusion. That number is doubled for married couples ($22.8 million). So, you can transfer up to $11.4 million, whether as a gift during your lifetime or as a bequest after your death, before any gift or estate taxes are actually due. Keep in mind, though, that if you make gifts that use up your $11.4 million exemption, that your exemption is reduced by that amount when your estate tax is calculated on your death.

In addition, you can make unlimited gifts to qualified charities without any gift tax consequences. The same is true for gifts to spouses, as long as both spouses are U.S. citizens. Payments of tuition or medical expenses for someone else are also gift tax-free if they’re made directly to the school or the medical care provider.

As far as whether and how to gift your home, there are income tax considerations to consider. If you sell your home and have a capital gain, you may qualify to exclude up to $250,000 of that gain from your income. The exclusion is up to $500,000 if you’re married and file a joint return with your spouse. To qualify for the capital gains exclusion on the sale of your home, you are required to have owned the home and also used it as your principal residence for at least two of the previous five years.

For example, say that you purchased a home for $200,000 and made capital improvements in the amount of $50,000. Your basis in the home is now $250,000. If you sell that home for $500,000, then you will have a capital gain of $250,000 ($500,000 sale price minus $250,000 basis). However, as long as you qualify under IRS principal residence rules, you could exclude the entire $250,000 gain when you sell the residence and therefore have no tax bill to pay.

If you gift the house to a child or anyone else, in most instances, your $250,000 basis would carry over to the recipient. Your child and their spouse would then have a $250,000 basis in the house. If they live in it for two years, then they could have a capital gains exclusion of up to $500,000, as long as they file a joint return, if they then sell it.

If you want to stay in your home, one option is to leave it to your child or grandchild in your will, rather than gifting it now. If your child inherits the house, then their basis in the inherited house would then be its fair market value on the date of your death instead of your original $250,000. This increased basis in the home would decrease the amount of any future capital gains if the daughter subsequently sold the home.

Another option would be to sell the house now to a third party, leverage the capital gains tax exclusion and then gift the money, instead of the home itself, to your child.

The best financial outcome would depend on the individual financial circumstances, future plans, and income tax brackets of the parent and child. There are additional factors to consider, such as the age of the house, its location and condition, whether your child would use it as their primary residence or as a rental and whether you anticipate that the house will increase in value over time.

One final note: if you gift the house to a grandchild, the generation-skipping transfer tax (GSTT) would apply in addition to the gift tax. This is a separate tax system that applies when gifts or bequests are made to a person who is two or more generations below the person making the gift or bequest, like a grandchild or great-grandchild. However, many of the same exclusions that apply for gift tax purposes, also apply for GSTT purposes. So, the odds are you won’t have to pay any GSTT for this specific transfer.

Talk to an experienced estate planning attorney to help you find the best strategy for you and your family.

Reference: nj.com (October 28, 2019) “What should I know about taxes before I gift my home?”

What Estate Planning Do I Need with a New Baby?

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Congratulations parent! You have a new baby. There’s a lot to think about, but there is a vital task that should be a priority. That is making an estate plan. People usually don’t worry about estate planning when they’re young, healthy and starting a new family. However, your new baby is depending on you to make decisions that will set them up for a secure future.

Motley Fool’s recent article, “If You’re a New Parent, Take These 4 Estate Planning Steps” says there are a few key estate planning steps that every parent should take to make certain they’ve protected their child, no matter what the future holds.

  1. Purchase Life Insurance. If a parent dies, life insurance will make sure there are funds available for the other spouse to keep providing for the children. If both parents die, life insurance can be used for a guardian to raise the child or to fund the cost of college. For most parents, term life insurance is used because the premiums are affordable, and the coverage will be in effect long enough for your child to grow to an adult.
  2. Draft a Will and Name a Guardian for your Children. For parents, the most important reason to make a will is to name a guardian for your children. If you designate a guardian, you can select the person that you think shares your values and who will do a good job raising your children. This way, it’s not left to a judge to make that selection. Do this as soon as your children are born.
  3. Update Beneficiaries. Your will should say what happens to most of your assets, but you probably have some accounts with a designated beneficiary, like a 401(k), IRA, or life insurance. When you have children, you’ll need to update the beneficiaries on these accounts for your children to inherit these assets as secondary beneficiaries, so they will inherit them in the event of your and your spouse’s death. Be careful, however, to designate a custodian to take care of those funds while your children are still minors.
  4. Look at a Trust. If you die prior to your children turning 18, they can’t directly take control of any inheritance you leave for them. This means that a judge may need to appoint someone to manage assets that you leave to your child. Your child could also wind up inheriting a lot of money and property free and clear at age 18. To have more control, like who will manage assets, how your money and property should be used for your children and when your children should directly receive a transfer of wealth, ask your estate planning attorney about creating a trust. With a trust, you can designate an individual who will manage money on behalf of your children and provide instructions for how the trustee can use the money to help care for your children, as they age. You can also create conditions on your children receiving a direct transfer of assets, such as requiring your children to reach age 21 or requiring them to use the money to cover college costs. Trusts are for anyone who wants more control over how their property will help their children after they’ve passed away.

When you have a new baby, working on your estate planning probably isn’t a big priority. However, it’s worth taking the time to talk to an attorney for the security of knowing your bundle of joy can still be provided for, in the event that the worst happens to you.

Reference: Motley Fool (September 28, 2019) “If You’re a New Parent, Take These 4 Estate Planning Steps”

Beginning-of-Year Financial Tasks

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There are some tasks that, if left undone, can have an enormous impact on those you love. The beginning of the year is a good time to set some deadlines for yourself, while you still have New Years resolution momentum. Give yourself a February 15 deadline, and you’ll stay focused says The Daily Journal’s article “5 financial tasks you should tackle by year-end.”

Here’s the list to get you started:

Check Your Beneficiaries on All Accounts. A sad story comes from Washington state, where a man died two months after his divorce was finalized. He had not changed his beneficiaries, so all of his life insurance proceeds and his pension plan went to his ex-wife, and not to his children from a prior marriage. The case went through the court system all the way up to the U.S. Supreme Court, which ruled in 2001 that the beneficiary designations had to be honored.

Start by making a list of your accounts, then check to see who your beneficiaries are. You may need to contact the financial custodian of the accounts, or you might be able to do it online. Ask for confirmation in all cases, so you and your heirs will have it in writing. Keep this in an organized binder so it will be easy to find if something were to happen to you.

Look at Any Pay-On-Death Designations. In some accounts, there is a pay-on-death designation, in place of a beneficiary designation. This also may have been an option that you chose when you first opened the account. Without a designation or Pay-On-Death name, the account must go through probate, the legal procedure to distribute property in your estate.

Depending on the state, you might have had this option on the property or even vehicles. A local estate planning attorney will know if this is an option in your state. To add or change a beneficiary on a vehicle, you’ll need to apply for a certificate of car ownership with the beneficiary form. If you want to change your deed to a Transfer-on-Death deed, you will need to submit a new deed to the appropriate county recorder. Again, an estate planning attorney will be able to help. The lawyer will also help evaluate whether this is a good way to transfer property in your situation.

Update Insurance Policies. The insurance company is not going to send a beneficiary a check without someone filing a claim. The family often does not know what insurance policies exist. A 2013 investigation from Consumer Reports found nearly $1 billion in unclaimed life insurance proceeds. You want to update your contact information with the insurer every now and then, making sure that your beneficiaries are correct and that bills are being sent to the right address. In some cases, the insurance company allows people to notify another person if payment is overdue and they are not able to reach you. You should also keep that contact information updated, in case your back-up person moves. Keep a list of your insurance policies in a place easy to find.

What’s In Your Safe Deposit Box? If it’s been a while since you’ve visited your safe deposit box, schedule a time to go and have a look. If you neglect to pay your annual fee, after a number of years the bank is legally permitted to open the box and turn its contents over to the state. Visit once a year to make sure payments and contact details are current. Leave clear instructions with your executor and heirs about where to find the box and its keys. Consider giving another family member official access to the box.

Revise Powers of Attorney. Now is a good time to review your powers of attorney to see if it’s time for an update. If you can’t locate your original POA documents, or if the people you chose many years ago have died or moved away, it’s time for a new set. And if you don’t have power of attorney documents in place, make an appointment with your estate planning lawyer to have them created. Spare your family the stress, lost time, and unnecessary expenses that trying to get access to your accounts might cause by having these updated and name a backup agent (or two).

Yes, technically this article was for the end of the year, but we are a long way from the end of 2020 and I have a feeling that these tasks weren’t on any of your holiday ‘to-dos’ or end of year lists.  Heck, even if you did set yourself a deadline to complete these tasks before the end of the year that would be fantastic.

Reference: The Daily Journal (Nov. 18, 2019) “5 financial tasks you should tackle by year-end”

What Mistake Did Hollywood Director John Singleton Make with his Estate?

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Hollywood director John Singleton didn’t do his family any favors by committing the most common mistake when it came to estate planning: procrastination.

Forbes’ recent article, “The John Singleton Estate Teaches Why No One Should Procrastinate Updating Their Will” explains that after Singleton died in April at age 51 from a stroke, he only had an outdated will from 1993. Although he was unmarried when he died, he left behind at least five children and two other minor daughters, who may be his offspring. The family has already publicly disagreed about important issues like who should serve as his conservator if he was to recover from the stroke. They even fought over the cause of his death, after he was brought to the hospital under mysterious circumstances.

Couple this acrimony with an outdated will, and Singleton’s family can expect many years of headaches, stress and legal battles about his estate. There will also be some hefty legal fees. Singleton died with only a will in place, so his estate will go through the lengthy and expensive probate court process. This has already led to more fighting and will likely mean more legal disputes.

Singleton’s mother, Sheila Ward, filed to open the probate proceeding and asked the court to admit his 1993 will. At the time he signed it, Singleton was a relatively new director and had only one child, daughter Justice. Ward reported that Singleton had assets worth $3.8 million. She listed his heirs, which include five acknowledged children, plus two minor daughters, each of whom she designated as an “Alleged Daughter.”

However, some websites have reported that Singleton’s net worth was around $35M when he died. It is believed that the filing only listed a small fraction of his wealth, because he may have had a trust that contained the remainder of his assets. It’s possible but unlikely, in light of the fact that it would be very unusual for someone to set up a trust and not at the same time create or update his will to a “pour-over” will.

Pourover wills work in concert with trusts so that any assets not transferred into a trust during someone’s lifetime are then passed into the trust through the probate court process after they die. As the name implies, the will “pours” the assets from the probate estate into the trust. Singleton’s 1993 will was already admitted into probate, so the court determined it was his last unrevoked will created during his life, and it wasn’t a pour-over will.

His mother, who was appointed the personal representative of his estate, recently filed a new document asking for the court to approve a settlement worth $515,472 based on Singleton’s claim for a greater share of royalties from Sony Pictures arising from his 2001 movie, Baby Boy. The filing says that Singleton reached a settlement in this amount before he died, but the settlement was never signed or finalized due to his untimely stroke. This money would be added to his estate.

Under his 1993 will, only his daughter Justice will inherit the millions of dollars of her dad’s estate.  However, the other kids aren’t out of luck. Singleton’s will doesn’t control their inheritance, because they were born after he signed his will. California’s probate law permits any after-born children to inherit equally with children living when the will was signed, with exceptions (like if a child was taken care of in other ways, such as a life insurance policy).

There’s still the question of how many of the children are really his. The paternity of the two minor daughters wasn’t established. That may be another probate fight.

The lesson of all of this is to work with a qualified estate planning attorney to be certain that you have an up-to-date will, as well as other important estate planning documents.

Few people expect to pass away at such a young age, like Singleton, but no one is promised tomorrow. Don’t procrastinate creating an estate plan, believing that you can take care of it “someday.”

Reference: Forbes (November 4, 2019) “The John Singleton Estate Teaches Why No One Should Procrastinate Updating Their Will”