Do Name Changes Need to Be Reflected in Estate Planning Documents?

When names change, executed documents with the person’s prior name can become problematic. For example, what about a daughter who was named as a health care representative by her parents several years ago, who marries and changes her name? Then, to make matters more complicated, add the fact that the couple’s daughter-in-law has the same first name, but a different middle name. That’s the situation presented in the article “Estate Planning: Name changes and the estate plan” from nwi.com.

When a person’s name changes, many documents need to be changed, including items like driver’s licenses, passports, insurance policies, etc. The change of a name isn’t just about the person who created the estate plan but also their executors, heirs, beneficiaries and those who have been named with certain legal powers through power of attorney (POA) and health care power of attorney.

It’s not an unusual situation, so there are some different solutions that can address this situation. It’s pretty common to include additional identifiers in the documents. For example, let’s say the will says, “I leave my house to my daughter Samantha Roberts.” If Samantha gets married and changes her last name, it can be reasonably assumed that she can be identified. In some cases, the document may be able to stay the same.

In other instances, the difference will be incorporated through the use of the acronym AKA—Also Known As. That is used when a person’s name is different for some reason. If the deed to a home says Mary Green, but the person’s real name is Mary G. Jones, the term used will be Mary Green A/K/A Mary G. Jones.

Sometimes when a person’s name has changed completely, another acronym is used: N/K/A, or Now Known As. For example, if Jessica A. Gordon marries or divorces and changes her name to Jessica A. Jones, the phrase Jessica A. Gordon N/K/A Jessica A. Jones would be used.

However, in the situation where the sisters-in-law had such similar names, most attorneys want to have the documents changed to reflect the name change. First, the names are too similar, as are their relationships with the testator. It is possible that someone could claim that the person wished to name the other person. It may not be a strong case, but challenges have been made over smaller matters.

Second, the document being discussed in the case above is a healthcare designation. Usually, when a health care power of attorney form is being used, it’s in an emergency. Would a doctor make a daughter prove that she is who she says she is? It seems unlikely, but the risk of something like that happening is too great. It is much easier to simply have the document updated.

In most matters, when there is a name change, it’s not a big deal. However, in estate planning documents, where there are risks about being able to make decisions in a timely manner or to mitigate the possibility of an estate challenge, a name change to update documents is an ounce of prevention worth a pound of trouble in the future.

Reference: nwi.com (October 20, 2019) “Estate Planning: Name changes and the estate plan”

Spare Family Fights: Make a Will

Thinking about your own mortality can be something frightening that many people would rather not do, which makes something like creating a will a difficult thing to do. But if for no other reason than to avoid fracturing the family, everyone needs a will. Otherwise, the family might end up spending all their time fighting over who gets Aunt Nina’s sideboard or Uncle Bruno’s collection of baseball cards.

But whether we want to think about it or not, having an estate plan in place – and that includes a will – is a gift of peace we can give to our loved ones and ourselves. It’s peace of mind that our family is being told exactly what we want them to do after we pass, and peace of mind to ourselves that we’ve put our plan into place.

A recent article from Fatherly, “How to Write a Will: 8 Tips Every Parent Needs to Know,” starts with the basic premise that a will prevents family squabbles. Families fight when they don’t have a clear direction of what the deceased wanted. That’s just one reason to have a last will and testament. However, there are other reasons.

A will is one way to ensure that your property is eventually distributed as you wish. Without a will, your estate is administered as an “intestate estate,” which means the state’s laws will determine who receives your assets after you pass. In some states, that means your spouse gets half of your estate, with your parents getting the rest (if there are no children). If the parents have died and there are no children, the rest of the estate may go to your siblings.

Most people—some studies say as many as 60% of Americans—don’t have a will. It’s hard to say why they don’t: maybe they don’t want to accept the possibility of their own death, maybe they don’t understand what will happen when they die without a will, or perhaps they want to wreak havoc on their families. However, having a will is essential.

Don’t delay. If you don’t have a will in place, stop putting it off. Creating a will gives you the opportunity to effectuate your wishes, not that of the state. What if you don’t want your long-lost brother showing up just to receive a portion of your estate? If you don’t want someone to receive any of your assets, you need to have a will. Otherwise, there’s no way to know how the distribution will play out.

Not only should you think about who will get your assets, you should also be thoughtful about how you distribute your assets. If you have children and your will gives them your assets when they reach 18, will they be prepared to manage without blowing their inheritance in a month? A qualified estate planning attorney will be able to help you create a plan for distributing your wealth to children or other heirs in a way that will match their financial abilities. You may want to create a trust that will hold the assets, with a trustee who can ensure that assets are distributed in a wise and timely manner.

Every family is different, and today’s families, which often include children from prior marriages, require special planning. If you have remarried and have not legally adopted your spouse’s children from a previous marriage, they are not your legal heirs. If you want to make sure they inherit money or a specific asset, you’ll need to state that clearly in your will. If you are not married to your partner, they will not have any rights to your estate, unless a will is created that directs the assets you want them to inherit.

The will can also provide reassurance and protection in case you need to appoint a guardian for your children. Because of this, parents of young children absolutely need a will. If you do not and both parents pass away at the same time, their future will be determined by the court. They could end up in foster care while awaiting a court decision. Battling grandparents may create a tumultuous situation with long-lasting and detrimental effects on your children and their relationships with their other family members. The court could also name a guardian who you would never have chosen. A will lets you tell the court what you want.

Speak with an estate planning attorney to make sure you have a will that is properly prepared and follows the laws of your state. You also want to have a power of attorney and a health care agent named. Only if you have these plans in advance can you express your wishes in a way that can be legally enforced when you actually need them.

Reference: Fatherly (Feb. 6, 2019) “How to Write a Will: 8 Tips Every Parent Needs to Know”

What Happens When There’s No Will or the Will Is Invalid?

The Queen of Soul’s lack of a properly executed estate plan isn’t the first time a celebrity died without a will, and it surely will not be the last says The Bulletin in the article “Aretha Franklin and other celebrities died without an estate plan. Will you?”

The Rev. Dr. Martin Luther King Jr., Howard Hughes, and Prince all died without a valid will and estate plan. When actor Heath Ledger died, his will left everything to his parents and three sisters. The will had been written before his daughter was born and left nothing to his daughter or her mother (it should be noted that if Ledger lived in California he would have needed a trust to avoid probate). Ledger’s family later gave all the money from the estate to his daughter.

Getting started on a will is not that challenging if you work with an experienced estate planning attorney. They often start clients out with a simple information gathering form, sometimes in an online process or on paper. They’ll ask a lot of questions, like if you have life insurance, a prenup, who you want to be your executor and who should be the guardian of your children.

Don’t overlook your online presence. If you die without a plan for your digital assets, you have a problem known as “cyber intestacy.” Plan for who will be able to access and manage your social media, online properties, etc., in addition to your tangible assets, like investment accounts and real property.

Automatic bill payments and electronic bank withdrawals continue after death, and heirs may struggle to access photographs and email. When including digital estate plans in your will, provide a name for the person who should have access to your online accounts. Check with your estate planning attorney to see if they are familiar with digital assets. Do a complete inventory, including frequent flyer miles, PayPal and other accounts.

Remember that if you don’t make a will or trust, the state where you live has laws that will decide for you. Each state has different statutes determining who gets your assets. They may not be the people you wanted, so that’s another reason why you need to have a will or trust.

Life insurance policies, IRAs, and other accounts that have beneficiaries are handled separately from the will. Beneficiaries receive assets directly and that bypasses anything written in a will, so you should confirm and keep documentation that specifies who your beneficiaries are. This is especially important for unmarried millennials, Gen Xers, divorced people, single individuals, and widows and widowers, who may not have designated someone as a beneficiary.

Don’t forget your pets. Your heirs may not want your furry family members, and they could end up in a shelter and euthanized if there’s no plan for them. You can sign a “pet protection” agreement or set up a pre-funded pet trust. Some states allow them; others do not. Your estate planning attorney will be able to help protect your beloved pets as well as your family.

Reference: The Bulletin (Sep. 14, 2019) “Aretha Franklin and other celebrities died without an estate plan. Will you?”

Leaving a Legacy Is Not Just about Money

A legacy is not necessarily about money, says a survey that was conducted by Bank of America/Merrill Lynch Ave Wave. The study surveyed more than 3,000 adults, with 2600 of them being 50 or older. The study also incorporated focus groups where participants were asked about end-of-life planning and leaving a legacy. The article, “How to leave a legacy no matter how much money you have” from The Voice, shared a number of the participant’s responses.

A total of 94% of those surveyed said that a life well-lived is about “having friends and family that love me.” 75% said that a life well-lived is about having a positive impact on society. A mere 10% said that a life well-lived is about accumulating a lot of wealth.

The study highlights that people want to be remembered for how they lived, not what they did at work or how much money they saved. Nearly 70% said they most wanted to be remembered for the memories they shared with loved ones. And only 9% said career success was something they wanted to be remembered for.

While everyone needs to have their affairs in order, especially people over age 55, only 55% of those surveyed reported having a will. Only 18% have what are considered the three key essentials for legacy planning: a will, a health care directive and a durable power of attorney.

The will addresses how property is to be distributed, names an executor of the estate and, if there are minor children, names who should be their guardian. The health care directive gives specific directions as to end-of-life preferences and designates someone to make health care decisions for you if you can’t. A power of attorney designates someone to make financial decisions on your behalf when you can’t do so because of illness or incapacity.

An estate plan is often only considered when a triggering event occurs, like a loved one dying without an estate plan. This is often a wake-up call for the family once they see how difficult it is when there is no estate plan.

Parents aged 55 and older had interesting views on leaving inheritances and who should receive their estate. Only about a third of boomers surveyed and 44% of Gen Xers said that it’s a parent’s duty to leave some kind of inheritance to their children. A higher percentage of millennials surveyed—55%—said that this was a duty of parents to their children.

The biggest surprise of the survey: 65% of people 55 and older reported that they would prefer to give away some of their money while they are still alive. A mere 8% wanted to give away all their assets, before they died. Only 27% wanted to give away all their money after they died.

Reference: The Voice (June 16, 2019) “How to leave a legacy no matter how much money you have”

Second Marriage? Make Sure Your Estate Plan Is Ready

It’s always a good idea to review your estate plan, especially when a major life event, like a second marriage, is taking place. The use of pre-nuptial agreements gives prospective spouses the opportunity to discuss one another’s rights of inheritance and clarify a great many issues, says nwi.com in the article “Estate Planning: Planning for second marriages.”

There’s a second opportunity to sign an agreement detailing inheritance rights after the wedding takes place, called a “post-nuptial agreement.” The problem is that once the wedding has occurred and you are both legally married, you might get stuck with some surprises and, well, you’re married. For most people, it’s better to set things out before the wedding, rather than after.

Having the discussion prior to marriage can also help with financially planning your life together. There may have been dissolution decrees in one or both of the couple’s prior divorces that have requirements which must be satisfied, such as maintaining a life insurance policy with the ex-spouse as a beneficiary. This can have an impact on the couple’s estate plan. Because of arrangements like this, it is recommended that you have everything discussed upfront in the pre-nup.

There are also additional steps that should be followed for any estate review upon a marriage. First, make sure that the last will and testament reflects your new spouse. For second marriages in particular, you want to make sure any mention of the prior spouse lists them as just that, a prior spouse only.

Next, verify and confirm how all of the assets are owned. Will they continue to be owned by just one spouse, or converted to jointly owned? Does your estate plan have a trust, and if so, are assets owned by the trust? Does there need to be a change made to your trustees?

Many people don’t remember how their bank accounts are titled. Fewer still can tell you who their beneficiaries are on their retirement accounts, life insurance policies and bank accounts. Remember: the beneficiary designations are going to determine who receives these assets, regardless of any language in your last will and testament. Once you die, there is no way to contest that distribution. Review your accounts and make sure that the beneficiaries are up to date, especially if you want to remove your prior spouse from your designations.

Part of your pre-nup and estate plan review should include a discussion of inheritance rights for any children in the blended family. Do you want to leave assets only for your children, or do you want to leave assets for all the children? It’s not an easy conversation to have, especially at the start of the blending process.

Remember also that blended family dynamics can change over the years. When you review your estate plan next—in three to four years—you’ll have the opportunity to make changes that hopefully will reflect deepening bonds between all of the family members. Your estate planning attorney will help create and revise estate plans as your life circumstances evolve.

Reference: nwi.com (May 5, 2019) “Estate Planning: Planning for second marriages”

A Love Letter to Your Family

For the 70% of Americans who do not have an estate plan, the article “Senior Spotlight: Composing the ‘family love letter’” from the Lockport Journal should help you understand why it is so important to set one up. One reason why people don’t take care of this seemingly simple task is because they don’t fully understand why estate planning is needed. They think it’s only for the wealthy, or that it’s only for old people, or that it’s only about death and taxes.

Consider this idea: an estate plan is actually about protecting yourself while you are alive, protecting your family when you have passed, and leaving a legacy for those you have left behind.

The main elements of an estate plan are: 1) create and execute documents that provide for incapacity and death, and 2) provide information about and guidance to help navigate your assets, liabilities and wishes.

You’ve spent a lifetime accumulating assets. It is now time to sit down with family members and have a heart-to-heart talk about the details of the estate and what your intentions are with respect to its distribution. The subject of death can be challenging for all. However, discussing your estate plan is vital if you want to protect your family from what might come after you are gone. Each family has its own goals, so it’s a good idea to talk about it frankly while you still can.

Even though these topics may be hard to bring up, not having those discussions significantly increases the chances of your family having conflict and choosing sides, assets not going where you had intended, and unnecessarily higher costs in taxes and legal fees.

If speaking about this is too hard, you may want to write your family a love letter. It would contain all the information that your family would need at the time of your death or your incapacity due to illness or injury. That includes a power of attorney, a health care directive, and maybe other documents depending on your situation.

Ideally, all this information will be located in one convenient place. Don’t put it on a computer where you use a password. If the family cannot access your computer, all your hard work will be useless to them. Put it in a folder or a notebook, that is clearly labeled and tell family members where it is.

They’ll need this information:

  • A list of your important contacts — your estate planning attorney, financial advisor, CPA, insurance broker and medical professionals.
  • Credit card information, frequent flier miles.
  • Insurance and benefits including all health, life, disability, long-term care, Medicare, property deeds, employment and any military benefits.
  • Documents including your trust, will, power of attorney, birth certificates, military papers, divorce decrees, and citizenship papers.

Think of these materials and discussions as your opportunity to make a statement for the future generation. If you don’t have an estate plan in place already or if you have not reviewed your estate plan in more than a few years, it’s time to make an appointment for a review. Your life may have not changed, but tax laws have, and you’ll want to be sure your estate is not entangled in old strategies that no longer benefit your family.

Reference: Lockport Journal (Feb. 16, 2019) “Senior Spotlight: Composing the ‘family love letter’”

Business Owners Need Estate Plan and a Succession Plan

Business owners get so caught up in working in their business, that they don’t take the time to consider their future—and that of the business—when sometime in the future they’ll want to retire. Many business owners insist they’ll never retire, but that time does eventually come. The question The Gardner News article asks of business owners is this: “Do you have a business succession strategy?”

It takes a very long time to create a succession plan that works. Therefore, planning for such a plan should begin long before retirement is on the horizon. That’s because there are as many different ways to map out a succession plan, as there are types of business. A business owner could sell the business to a family member, an outsider, a key employee or to all the employees. The plan could be implemented while the business owner is still alive and well and working, or it could be set up to take effect, only after the owner passes.

The decision of how to handle a succession plan needs to be made with a number of issues in mind: family dynamics and interest in the business (or lack of interest), the nature of the business, the success of the business and the owner’s overall financial situation.

Here are a few of the more popular strategies:

Selling the business outright. There are business owners who don’t need the money and feel that no one else will care as much as they do about their business. Therefore, they sell it. There needs to be a lot of planning to minimize tax liability, when this is the choice.

Using a buy-sell arrangement to transfer the business. This can be structured in whatever way works best for both parties. It allows a slower transition to new ownership. Some families use the proceeds of a life insurance policy to fund the buy-sell agreement, so family owners could use the death benefit to buy the owner’s stake.

Buying a private annuity. This permits the owner to transfer the business to family members, or someone else, who then makes payments to the owner for the rest of their life, or maybe their life and another person, like a surviving spouse. It has the potential to provide a lifetime stream of income and removes assets from the owner’s estate, without triggering gift or estate taxes.

The plan for succession needs to align with the business owner’s estate plan. This is something that many estate planning attorneys who work with business owners have experience with. They can help facilitate the succession planning process. Talk with your estate planning attorney when you have your regular meeting to review your estate plan about what the future holds for your business.

Reference: The Gardener News (June 4, 2019) “Do you have a business succession strategy?”

Johnny Hallyday’s Estate Battle Pivots on Instagram Posts

The French rocker started using Instagram in 2012 and shared a mix of his personal and professional life with fans. Johhny’s Instagram posts have now helped two of his children defeat his widow in the first stage of an estate battle for an estate that the French news media values at tens of millions of dollars, reports The New York Times in the article “French Rock Star’s Instagram Defeats His Widow in Inheritance Battle.”

When Mr. Hallyday died in 2017, two testaments were found in a safe deposit box. One, which was written in Los Angeles, appointed his wife Laeticia as sole heir and manager of his estate. The will completely exclude his grown children from two prior relationships, David Hallyday and Laura Smet. This is not permitted under French laws of inheritance.

The two children have been fighting to prove that their father lived most of his life in France, and not in the United States.

Laeticia, who was the singer’s fourth wife, told a court outside of Paris that Johnny had settled in Los Angeles in 2007, their daughters Jade and Joy went to school in Los Angeles and he had received a green card in 2014. Court documents also reflect her telling about his fascination for Elvis Presley and American culture.

However, his son David offered something that was a bit more concrete: a chart of where the couple spent their time from 2012 to 2017, based on Johnny’s Instagram posts.

The chart revealed that Johnny spent at least 151 days in France in 2015 and 168 days the year after. He then spent eight straight months in France, mostly because of his illness, before his death in 2017.

The court accepted the children’s argument, ruling that it, and not an American court, had the competence to make decisions on Johnny’s estate.

The battle over the inheritance includes the performer’s rights on more than 1,000 songs, as well as properties in France, California and on St. Bart’s in the Caribbean. The French public has been fascinated by his life and now, by the estate battle. An estimated 15 million people watched a tribute to him in Paris after his death, when he received a hero’s tribute.

This case is an example of how social media and the law intersect. As we live more and more of our lives online, social media posts (including Instagram posts) are increasingly being used as evidence. The newness of the material is similar to what happened in the early 20th century, when the telephone was still relatively new and the admissibility of conversations on the telephone as evidence, was still being debated.

Reference: The New York Times (May 29, 2019) “French Rock Star’s Instagram Defeats His Widow in Inheritance Battle.”

Power of Attorney: Why You’re Never Too Young

When that time comes, having a power of attorney is a critical document to have. The power of attorney is among a handful of estate planning documents that help with decision making, when a person is too ill, injured or lacks the mental capacity to make their own decisions. The article, “Why you’re never too young for a power of attorney” from Lancaster Online, explains what these documents are, and what purpose they serve.

There are three basic power of attorney documents: financial, limited, and health care.

You’re never too young or too old to have a power of attorney. If you don’t, a conservator must be appointed in a court proceeding, and they will make decisions for you. If the conservator who is appointed does not know you or your family, they may make decisions that you would not have wanted. Anyone over the age of 18 should have a power of attorney.

It’s never too early, but it could be too late. If you become incapacitated, you cannot sign a POA. Then your family is faced with needing to pursue a conservatorship and will not have the ability to make decisions on your behalf until that’s in place.

You’ll want to name someone you trust implicitly and who is also going to be available to make decisions when time is an issue.

For a medical or healthcare power of attorney, it is a great help if the person lives nearby and knows you well. For a financial power of attorney, the person may not need to live nearby, but they must be trustworthy and financially competent.

Always have back-up agents, so if your primary agent is unavailable or declines to serve, you have someone who can step in on your behalf.

You should also work with an estate planning attorney to create the power of attorney you need. You may want to assign select powers to a power of attorney, like managing certain bank accounts but not the sale of your home, for instance. An estate planning attorney will be able to tailor the POA to your exact needs. They will also make sure to create a document that gives proper powers to the people you select. You want to ensure that you don’t create a POA that gives someone the ability to exploit you.

Any of the power of attorney documents you have created should be updated on a fairly regular basis. Over time, laws change, or your personal situation may change. Review the documents at least annually to be sure that the people you have selected are still the people you want taking care of matters for you.

Most important of all, don’t wait to have a POA created. It’s an essential part of your estate plan, along with your last will and testament.

Reference: Lancaster Online (May 15, 2019) “Why you’re never too young for a power of attorney”

Surviving Spouse Needs An Estate Plan

When one spouse dies after meticulously titling assets to pass through joint tenancy to the surviving spouse, estate planning attorneys flinch. There are occasions when everything works smoothly, but they are the exception. As this article from the Santa Cruz Sentinel warns “After husband’s death, wife needs to create revocable trust.” Actually, she needs more than a revocable trust: she needs an estate plan.

Most of the assets in the plan created by her husband, in this case, did pass to the wife outside of probate. However, there are a number of details that remain. She needs to obtain date-of-death values for any non-IRA securities the couple owned, and she should also have their home’s value determined, so that a new cost basis for the house will be established. She also needs an appointment with an estate planning attorney to create a will and an estate plan.

If the surviving spouse dies without a will, her children will inherit the estate in equal shares by intestate succession. However, if any of her children pass before she does, the estate could be distributed to her grandchildren. If they are of legal age, there is no control over how the assets will be managed.  Making matters worse, if a child or grandchild is disabled and receiving government benefits, an inheritance could make them ineligible for Social Security and Medicaid benefits, unless the inheritance is held within a Special Needs Trust.

Another reason for an estate plan: a will details exactly how assets are distributed, from the set of pearls that great aunt Sarah has kept in the family for decades to the family home. A durable power of attorney is also part of an estate plan, which lets a named family member or trusted friend make financial decisions on your behalf, if you become incapacitated. An estate plan also includes an advance health care directive, so a loved one can make medical decisions on your behalf if you are not able.

These are the basics of an estate plan. They protect loved ones from having to go to court to obtain the power to make decisions on your behalf, as well as protect your family from outsiders making claims on your estate.

A revocable trust is one way to avoid probate. An estate planning attorney will be able to evaluate your own unique situation and determine what the best type of trust would be for your situation, or if you even need a trust.

You may be thinking of putting your home, most families’ biggest asset, into joint tenancy with your children. What if one or more of your children have a divorce, lawsuit or bankruptcy? This will jeopardize your control of your home. A revocable trust will allow your assets to remain in your control.

The last piece in this estate is the IRA. If you are the surviving spouse, you’ll want to roll over your spouse’s IRA into your own. Make sure to update the beneficiary designation. If you neglect this step and the IRA pays into your estate when you pass, then the IRA has to be cashed in within five years of your death. Your children will lose the opportunity to stretch IRA distributions over their lifetimes.

An estate planning attorney can help guide you through this entire process, working through all the details. If your goal is to avoid probate, they can make that happen, while protecting you and your loved ones at the same time.

Reference: Santa Cruz Sentinel (March 24, 2019) “After husband’s death, wife needs to create revocable trust”