Who Needs a Will

Approximately 55 percent of all adult Americans die without a will, affecting about $100 million in assets per week in U.S. probate courts. This on average would reduce the amount to heirs by $3 million per week, assuming a three percent (3%) average cost of probate.

The costs of probate, not to mention the lost assets to litigation [especially in blended families, e.g., second spouse, children from the first marriage], and state and federal estate and inheritance taxes, which can still reach 55% if the Federal Estate tax is reinstated at some level.

For those who don't have wills, state law determines who gets the assets. Assets owned jointly between Husband and Wife, or others when held joint tenants with right of survivorship pass to the survivor. Those assets that are subject to a beneficiary designation pass to the beneficiary. However, even these situations may not fulfill the wishes or intent of the decedent.

Almost all other assets — real property, cash, and personal property — are distributed according to state statute. Such estates are said to be "Intestate", or without a Will.

So, who needs a will?

Anyone who owns property with no co-owner or beneficiary or who has children young enough to need a guardian, or anyone with a potentially taxable estate, or heirs that need creditor protection [whether nursing home, "special needs", or other financial creditors] needs a will.

Someone who has a complicated family situation, such as children by a former spouse, or a taxable estate (in Tennessee, any estate over $1 million dollars), especially needs a will.If the estate isn't large or the planning is not complicated, the cost of a will is not prohibitive. Although I rarely encourage people to "shop around" for lawyers, you might check with respected friends and obtain two or more names of lawyers who practice in this area.

You can hand write your own will, which is better than getting the "free" or cheap online Wills that are not tailored to state law, and often cause more problems than they solve. Most lawyers, who specialize in estate planning, trust, probate, and tax do simple wills too, for much less, and the peace of mind is worth something. The benefit to heirs is definitely worth it.

A valid, holographic will must be written entirely in your own handwriting and be signed by you, as the testator. It should deal with all of your property. Put a heading on the will, such as "Last Will of (your name)," and date it.

However, you get a Will, keep it in a safe place, and destroy an document that is not the most recent, it will only cause headaches if found after death.

One additional suggestion, prior to death it is very handy and reduces stress on family to have valid Powers of Attorney who can make decisions and tend to financial matters, if you are incapable of handling these matters.

Estate Tax 2010?

Possible action on the Federal estate tax. Will something happen, if not, will the politicians [we need a dirtier sounding word to more accurately represent these actors] pass something later that is retroactive?

This would cause folks who have died on or since 1/1/10 to not know whether they owe a tax, whether to file a return, file without paying the tax, then wait years to have the Supreme Court what if anything they owe - all the while the infamous IRS interest and penalties accruing faster than the estate grows!

I still think there is a possibility, they will wait until later in the year, pass something permanent at an exemption level higher than the 2011 of one million dollars, and call it a tax cut.

At this point, it is hard to know where we are going, even with some movement, because if passed, the retroactivity feature may or may not be included, and if it is, will it ultimately be upheld?

More later!

Estate Planning - In the Future!

What will Congress do? Will they extend the current limits on estate tax exemption [$3.5 million per person], or allow it to go away for 2011?

Will they add portability [whatever that ends up meaning, presumably short of me becoming a paid matchmaker to put wealthy clients together with those of the opposite sex who have "intact exemption amounts"]?

It seems they may extend the current limit, but we do not know for how long. Regardless, they make it clear, much as the small towns who write an incomprehensibly large number of traffic tickets for their population size, but won't "turn them in" if you appear in court and pay some exorbitant [relatively speaking] court fee - that this is all about money, and not some idea of fairness or promoting the general welfare [I am scared to see what they decide that phrase means in the future - THINK HEALTHCARE].

They seem to care nothing for consistent, reasonable, even-handed regulation and fiscal activity, rather favoring games that push expense out into the future, and accelerate revenue collection [at least as forecast] so they can remain either revenue neutral or revenue positive.

It is a sorry state of affairs when "our elected" govern through the rearview mirror and by pushing issues into some future election cycle, while ignoring the will of the people [at least anecdotally they are doing this, by pushing healthcare reform that the polls show a lack of support for - the same polls, I should add, that they gleefully follow when it suits their purpose.

I think the verdict is in, politicians are crass, selfish and primarily interested in the service of themselves and their vested interests. They do not serve the folks, they do not look out for us, unless we are a big donor, and whatever they end up doing on estate tax "reform" won't be primarily guided by what will help the individuals or small businesses, unless they happen to be represented by some union/big business lobbyist!

I am reminded of the words of the immortal Homer Stokes [paraphrased] - "We need to pick up the broom of reform, and sweep this place clean"! We do not have a friend of the little man within 100 miles of Washington DC, as far as I can tell!

God Bless.

How to make it easier on your loved ones!

We encounter a number of people who are now enamored with electronic statements, and otherwise going "paperless".

If you are going to do that, it requires some extra organization on your part to make winding up your affairs manageable, or even possible after your death. Mostly, if you get paper statements, getting your mail forward to a family member will help them run down most, if not all of your accounts, and business affairs.

If you do online only, they if they can sign on to your computer [password?], they almost always need additional passwords for signing in to accounts and usually a different one to open statements received as attachments to emails sent to their email address.

Where do you keep those and do you keep them "paperless"? Something needs to be written down somewhere, even if it is directions to a safe or lockbox and how to open it to access the various computer files.

Often, life insurance policies do not send electronic statements, yet. If a policy is paid up, unless the heirs can find the policy, waiting until an annual statement is mailed is about all they can do, unless you have contact information and policy information in a file for your agent(s). HOWEVER, I was told recently by a company I can not in good conscience recommend, that they don't mail annual statements on paid-up policies! WHAT? How do you find out about those, how many policies do they have that have never been paid - they are a "roll-up" insurer, having apparently purchase a number of smaller and/or lesser know companies.

This company [I won't name for now], their customer service people were dismissive, and often told us things that were later contradicted, and when a copy of the policy was requested, we received a letter, they failed to process one claim, citing the file as incomplete, but when they checked it was complete, but the claim information had been placed in the file for another policy on the same insured. Later they supplemented the required information with a request for a certified death certificate [after having processed the claim on the same decedent on another policy], so who knows. The moral here is it pays to do business with an agent/representative that stays on top of your affairs, and that you stay on top of your policies, no matter how old, if still in force, and try to avoid those who are in the life insurance business [companies] that are more interested in consuming small companies than issuing policies and standing behind them, if that is possible.

Organize your stuff, and make it at least possible to track down your stuff for your heirs, someone will have to one day.

The Perils of NOT Planning

This past month has seen a number of deaths very close to me. While, I am sad for the losses, for me and their loved ones, not for them, it has painfully brought home a lesson to me that I preach to others, but had not suffered the consequences of myself.

Folks, do your planning. Find a competent estate planning person to help you. From a self serving perspective, I believe the person must be versed in estate and gift as well as income tax planning, to do an effective job, regardless of after-market designations that look good, but no one in the public knows what the substance of them is.

Do your planning, it will be for your family, the most cost-effective money you ever spent. Compile a list of insurance policies, coverages, who the agent/company, and contact information for them is, have your financial advisor and attorney review them, make sure beneficiary designations reflect your wishes and current situation. There is no do-over on beneficiary designations following death, unless you have a very cooperative recipient who understands and will disclaim the interest provided to them via the beneficiary designation. Also, have a Will done that is valid, reflects your situation, and if you are married, takes into account what the spouse may get by "electing against a will" under state law, even if you provide something in the Will or alternatively have a prenuptial agreement that is supposed to handle that. IT DOESN'T, unless you carry it forward properly into the estate plan, and take into consideration this "spousal share" provided under many state's laws, along with other circumstances.

Another item that has caused increased headache - electronic statements! When a person dies, you have to know or know how to workaround their passwords on their computer and email accounts just to get to the statements and then most often there is another password they use to get into the statements. It can cause great consternation and delay in handling affairs if the Executor or Administrator can't get into your computer, your e-statements, and other records.

Lastly, if you have paid up life insurance or other coverage, make a list of company, policy number, contact information, benefit/face amount, so heirs can claim it. Paid up insurance may only send an annual statement, so if you die at the "wrong" point during a year it can be 8 to 10 months before another statement will come along, to even alert a beneficiary or heir that there is a policy, much less anything about the policy.

I know people like to procrastinate, and don't want to pay for this type stuff, but do it yourself and cheap local or online documents are highly likely to cause strife and pain among your loved ones left behind. There is no way to avoid some pain and grief, but you can go a long way toward making the memories better, and heading off conflict with planning that is properly structured and kept up to date.

Inaugural Post

Welcome to my first post to this blog. This blog is designed to post thoughts [and hopefully insights] into the estate planning, and probate issues affecting those in the "Midsouth" - defined by me as those in West Tennessee, and Northern Mississippi, where I practice law.

I am a former trust officer, who worked in planned giving, then advanced marketing for an insurance company; moved on to the trust business where I was trust and compliance officers of a bank "EB" trust department, started my own retirement plan administration and consulting business, then manager of the EB trust department at another bank. I went to law school at Tulane, then Masters in Tax Law at Boston University, before moving to Memphis, TN. Thank you, thank you very much.

Anyway, I hope to share both thoughts about the process of estate planning, asset protection planning [which I take a somewhat expansive view of - not just stopping your financial creditors from getting paid, but preventing/impeding fraud on you, your spouse, kids] the psychology of why it does or doesn't get done, rants about people doing cheap and/or stupid things that cost them or their families long term [no names] and ideas on how to do better.

Why do you suppose that only 30 to 40% of people do estate planning?