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Ask Heidi: What are the first Steps I should take for my Estate Plan?

Estate Plan

 

Answer:

Think about whom you would like as Personal Representative for your estate. You don’t have to limit your ‘pool’ to family members and friends. Many lawyers, banks and other planning professionals have a person or department that can be named to carry out your wishes.

Create a living will. A living will, or “5 Wishes” as local hospitals call it, is a document which states your wishes should you be incapacitated and in a situation where you need to be placed on life support AND there is no expectation of your survival or recovery. Once completed your primary physician’s office may want a copy, so they are aware of the action you want taken in the face of difficult end-of-life decisions. 

Think about whom you would like as name a Health Care Surrogate or Power of Attorney. This person is tasked with making decisions about your health in scenarios not covered by your living will.  For example:  a patient with advanced Alzheimer’s Disease and two treatment options for a severe medical issue –someone with capacity needs to make the decision. As with your Personal Representative, this could be a non-relative, such as a third-party professional or clergy, if they’re willing to accept the responsibility.  Always talk to your potential designees. 

Check your named beneficiaries for your 401(k) plans and life insurance policies. These non-Probate Assets become Probate Assets if you fail to designate beneficiaries. They don’t HAVE to go to people –often people choose to leave some assets to a charity of their choice –if this is you there are several options to take care of these wishes ahead of time such as Donor Advised Funds and Charitable Trusts that may be able to help your taxes now, too.

Find an Estate Planning Attorney. Hire an Estate Planning Attorney to properly draft these documents and help guide you through this process.

These are just the first steps… go, talk to that Attorney. If you have a plan in place, review your options to ensure everything is accurate.

Why Naming Beneficiaries Is Important Regarding Contractual Assets

There are many pitfalls to be avoided when putting together your Estate Plan, especially if you try to do it yourself. For this post, I am going assume an Estate Planning Attorney is drafting your documents, which as you know is what I highly suggest everyone does. That said, naming beneficiaries is all on you and is a critical job when it comes to Estate Planning.

Before you can name who you want the asset to go to after your passing, you have to know what assets you have. If you own contractual assets (Annuities, Life Insurance, Retirement Accounts, to name a few) that include beneficiary designations, it’s important to name your beneficiaries; otherwise, your assets will transfer according to the contract’s default beneficiary provision –which is most likely your Estate. If your assets pass to your Estate, that could result in a timely probate process, additional estate expenses, and exposure to creditor claims to name just a few potential issues.

I discuss at length my client’s financial holdings at our initial meeting, and as their “homework” I have them gather copies of contracts, most recent statements, and current beneficiary designations. This exercise allows me to compile an Asset Inventory and advise my clients appropriately as to how they can “Probate Proof” themselves in conjunction with the documents I prepare for them. A full understanding of how your assets will transfer after your death helps create an Estate Plan that fulfills your wishes and prevents delays for your heirs. Designating beneficiaries incorrectly can have far-reaching negative consequences and is an essential part of your overall Estate Plan. If you are unsure about your Estate Plan or do not have an Estate Plan at all, make an appointment with an Estate Planning Attorney where you live. If you are located in the Daytona Beach area, call my office for a free consultation.

ASK HEIDI: What is the number one mistake most people make regarding their Estate Plan?

Short Answer:  Not naming a beneficiary or keeping their beneficiaries up to date on their contractual “non-probate” assets is the most significant mistake that folks routinely make regarding their Estate Planning.

Why it’s Important:   If you own contractual assets that include a beneficiary designation, it is important to name your beneficiaries and keep them updated; otherwise, you could omit a later-born child, leave assets to someone else’s estate or create a situation where there is no beneficiary because certain life events void beneficiary designations (divorce for example) and then your assets will transfer according to the contract’s default beneficiary provision –most likely the intestate succession laws under your state’s law. Retirement accounts are an example.

When you meet with your Estate Planning Attorney, discuss ALL your assets, not just what you think you should discuss –everything needs to be included in your Estate Planning and your attorney can only give the proper legal advice if they know all the facts. If you have questions regarding this issue or any Estate Planning issue and live in the Daytona Beach area, give me a call to schedule a free consultation.  

Estate Planning Pitfalls

Estate Planning Pitfalls Part 2

 

Last month I started what I consider one of my most important posts –a series regarding the

Estate Planning Pitfalls

There are numerous pitfalls of which you need to be aware regarding your Estate Plan.

most common pitfalls I see in Estate Planning.

Part two of my multi-part blog series discusses the pitfall of failing to keep a current/updated Will. This is probably one of the easiest pitfalls to avoid and the most common blunder I see by other people’s clients.  I tell my clients to come see me to review everything EVERY three years whether they think they need it or not —to encourage this practice I personally do not charge for these “check-ins” but even if your attorney charges you, go –it’s money well spent.   

Case Study:  Estate Planning Pitfall #2– Failing to Maintain an Updated Will

I was hired by a young man whose father had recently passed after a lengthy battle with illness, he had two half-siblings

There are numerous pitfalls of which you need to be aware regarding your Estate Plan.

out of state, the decedent had some property here, some property out of state, an ex-girlfriend living in his home.  All a recipe for a convoluted case at best case.  This will be compounded because although Father had resided in Florida for quite some time his antiquated Will was drafted in another state nearly a decade before his death.

To add insult to injury, because the Will was self-prepared on a form purchased at an office supply store it provided for very specific bequests to each of his 3 children and a close friend.  It did not provide for his residuary Estate —what could be called the “everything else” clause.  And a decade later all but one of the properties left to his beneficiaries was long gone and his “everything else” is everything and now left to chance.  The Will also provided for a Personal Representative who lived 2000 miles away and who likely will not want to be in charge of the circus that is about to commence with a bunch of heirs who don’t have a relationship and no clear instructions.

This case hasn’t ended yet but it’s going to be a long haul and could have been very easily avoided if he had just updated his Will prior to passing.

And so, even with a seemingly simple estate—say, you “just” own a bank account and a house—it’s crucial to keep an updated will or a living trust or otherwise Probate Proof yourself.   These scenarios can be avoided with the advice of an Estate Planning Attorney –so have your Estate Planning reviewed every three years or when life changes happen [beneficiaries pass away, children are born, divorce occurs, assets are sold, to name a few] and failing to do so can have unintended consequences.

Ask Heidi: Where Should I keep my Estate Planning documents for safekeeping?

Answer: After you’ve created a Will, the next decision is where to store the Will so that your Personal Representative can easily find it when needed. A physical copy of a

Keep your Estate Documents in a safe place

Will should be stored in a safe and accessible place and the Personal Representative should know exactly where it is kept. I suggest to my clients they can keep their original Estate Planning documents in a safe deposit box or a fireproof safe in their home. As a final safeguard, I provide all my clients with electronic copies of their Estate Planning and suggest they share them with the Personal Representative. As original documents become less important accessibility remains a paramount concern, and so, no matter where you keep your documents, the most important thing is you tell your Personal Representative where they are located.

ASK HEIDI: Do I need to change my will and beneficiary designations after I divorce if I want my ex-spouse to still inherit as if we were married?

 Short Answer:  Yes, divorce does void beneficiary designations as well as will provisions.

Divorce Changes Your Will

Ask Heidi

Why it’s Important:  If you want your ex-spouse to still to inherit in your estate as it was written when you were married, this needs to be addressed again after your divorce.  If you do not update the Estate documents, your estate will be deemed intestate even though you have a will.  The state will distribute your assets and family that you may not have a relationship with will end up with assets you fully intended to go to a former spouse. 

 

Four Questions to Ask Yourself Regarding Your Estate Plan

Estate Plan

Questions to ask yourself to prepare for your meeting with your attorney

You do not have to have a ton of assets to need an Estate Plan. You do need an attorney specializing in this area of law to properly put together any type of plan. An Estate Plan is more than big assets. It is the plan that comes into play when you can no longer convey your wishes on various issues. After you pick an attorney to help put together your documents, ask yourself these four questions. Bring the answers to the meeting so the attorney can get an idea of the type of Estate Plan needed to fit your needs.

1. What are your Assets? Make a list of everything you own. Your home or apartment contents, car, and various other items can be addressed in an Estate Plan. Cars. Jewelry. Furniture. Family photos. Not all assets have a monetary value. Sentimental assets have been known cause just as many problems [if not MORE] as large sums of cash. This list will help your attorney put together a plan to fit your needs.

2. Who Gets What? Now that you have your list – who to do you want to have these assets? Name a person you want to carry out your wishes when it comes to distributing these assets. These are the big decisions that no one can make for you.

3. What are you Healthcare Wishes? Accidents happen and they do not give warnings. That’s why they are called accidents. This is especially important in the case of an illness that robs you of your ability to make decisions. Choose a trusted friend or family member to assign as the healthcare power of attorney. Then talk to this individual to make sure they are willing to accept this responsibility and will follow your wishes.

4. What Type of Funeral? This is a morbid thought and no one likes to think about a day when someone will be planning their funeral. Write what you would like, if you want a funeral and make it part of your Estate Plan. Listing out your wishes will make this easier for love ones during a difficult time.

These questions are just a start. Your attorney will probably have more questions to make sure all the potential issues are addressed in your plan. Follow up on your attorney’s advice. Sign the documents, change the asset titles if necessary and let your family know where your documents can be located. Your family will appreciate having these documents and it will help them deal with their grief.

ASK HEIDI:  How do you help someone with Alzheimer’s Disease or dementia get their affairs in order?

estate planningShort Answer: A complication of diseases such as Alzheimer’s Disease is that the person may lack or gradually lose the ability to think clearly. This change affects his or her ability to participate meaningfully in decision making and makes early planning even more important. In my practice, I advise putting together advanced directive documents in place as soon as possible if you find yourself in this type of situation.

Why it’s Important:  Advanced directive documents such as a Living Will and Healthcare Power of Attorney are written instructions letting others know the type of care you want if you are seriously ill or dying. A Living Will records your end-of-life care wishes in case you are no longer able to speak or make decisions for yourself. You might want to talk with your doctor or other healthcare provider before preparing a Living Will. This will help you have a better understanding of what types of decisions might need to be made. Make sure your doctor and family have seen your Living Will and understand your instructions. Because a Living Will cannot give guidance for every possible situation, you probably want to name someone to make care decisions for you if you are unable to do so for yourself. You might choose a family member, friend, lawyer, or someone in your religious community. Of course, you should make sure the person you have named (and alternates) understand your views about end-of-life care and are willing to make those decisions on your behalf. You can do this either in the advance directives or through a Durable Power of Attorney for health care that names a healthcare proxy, who is also called a representative, surrogate, agent, or attorney-in-fact. As always, I recommend a lawyer in the state in which you reside prepare these papers so there are no legal issues when the time comes for them to be implemented. If you live in the Daytona Beach, Florida area, call my office for a free consultation.

Interview Loved Ones and Not Just for Estate Planning

In my practice, I preach about talking to your loved ones about their end of life paperwork and Estate PLanning PeopleEstate Planning. What I didn’t consider, until I ran across a Facebook post by Brendon Burchard, is what WE lose when a person that has shaped our lives passes away. You may regret not knowing certain things about them as an individual when they are no longer here to ask. Everyone’s life is full of interesting antidotes, experiences, and lessons. If conversations are not held while they are alive, we lose the chance to gather this priceless information. Brendon Burchard held this interview with his father, recorded it and shared it on Facebook. I think this is a fantastic idea for everyone to do with a love one, parent or parent figure. Hold this interview, record it and see this person as a teenager, young child and learn what was important to them. This information will bring you comfort when they are gone and you are grieving their passing.

INTERVIEW SOMEONE YOU LOVE ABOUT LIFE

Questions from Brendon Burchard

1. What comes to mind when you think about growing up in [hometown]?
2. What did you love to do as a kid, before high school?
3. What did you love to do in high school?
4. What do remember most about your teenage years?
5. What do you remember most about your mom?
6. What was most important to her?
7. What do you remember most about your dad?
8. What was most important to him?
9. If grandma and grandpa had a message to you and their grandchildren, what do you think it is?
10. How did you meet [spouse] and know (s)he was the one?
11. How did you choose your career and what was your favorite part about it?
12. What made you successful at work?
13. What did you believe about yourself that helped you become successful and deal with hard times?
14. What times in your life truly “tested your mettle,” and what did you learn about yourself by dealing (or not dealing) with them?
15. What three events most shaped your life?
16. What do you remember about when each of us was born?
17. Were you ever scared to be a parent?
18. What three words would you say represented your approach to parenting and why?
19. When you think about [sibling] how would you describe him?
20. What message do you have for [sibling] that you want him to always keep in mind?
[Do the last two questions above for each sibling in your family]
21. When you think about [spouse], how would you describe her/him?
22. What message do you have for [spouse] that you want her/him to always keep in mind?
23. What three words would you say best describe who you tried to be in life and how you want to be remembered?
24. When they think about their careers, what do you want your children to focus on?
25. What have you learned about other people in life? (trustworthy, kind or not and mean)?
26. What do you think the world needs more of right now?
27. What do you believe people want the most in life?
28. What were the three best decisions you’ve ever made?
29. What are you most proud of in life?
30. What were five of the most positive moments of your life?
31. What message would you like to share with your family?
32. What are you most thankful for?

A Love One Has Passed – Now What?

A love one has passed and now the probate process starts. But where to begin?  First let’s keyboard_legal_malletdefine what “Probate” is per the Florida Bar website: 

“Probate is a court-supervised process for identifying and gathering the assets of a deceased person (decedent), paying the decedent’s debts and distributing the decedent’s assets to his or her beneficiaries. In general, the decedent’s assets are used first to pay the cost of the probate proceeding, then are used to pay the decedent’s outstanding debts, and the remainder is distributed to the decedent’s beneficiaries. The Florida Probate Code is found in Chapters 731 through 735 of the Florida Statutes, and the rules governing Florida probate proceedings are found in the Florida Probate Rules, Part I and Part II (Rules 5.010-5.530).”

For the purposes of this blog post, we are going to assume a Will is in place and you live in the state of Florida.  It is important to note that EVERY State probate process is different.

Hiring of an Attorney.  Florida law requires you hire an attorney to file a Probate action, it makes sense to consult early on because your case may not require a formal Probate action.  In any event, an attorney can help calm your nerves and outline what steps you should take.    

Opening a Case.  If a Probate is appropriate, your Attorney will draft and file a Petition to open the case.  A Circuit Court judge presides over probate proceedings. The judge will rule on the validity of the decedent’s will, if there is one.  If the decedent had a Will that nominated a Personal Representative, the judge will also decide whether the person or institution nominated is qualified to serve in that position. If the nominated personal representative meets the statutory qualifications, the judge will issue “Letters of Administration,” also referred to simply as “letters.” These “letters” are important evidence of the personal representative’s authority to administer the decedent’s probate estate.

 The Personal Representative has a legal duty to administer the probate estate pursuant to Florida law. Initially, the personal representative must:

  • Identify, gather, value and safeguard the decedent’s probate assets.
  • Publish a “Notice to Creditors” in a local newspaper in order to give notice to potential claimants to file claims in the manner required by law.
  • Serve a “Notice of Administration” to provide information about the probate estate administration and notice of the procedures required to be followed by those having any objection to the administration of the decedent’s probate estate.
  • Conduct a diligent search to locate “known or reasonably ascertainable” creditors, and notify these creditors of the time by which their claims must be filed.
  • Employ professionals to assist in the administration of the probate estate; for example, attorneys, certified public accountants, appraisers, and investment advisers.

If the personal representative mismanages the decedent’s probate estate, the personal representative may be liable to the beneficiaries for any harm they may suffer. This is another reason an attorney should be hired to help navigate the waters of Florida probate laws.

This list is a general break down of the INITIAL steps in Probate and every situation is unique.  If you live locally and have probate questions, call, and schedule an appointment so I can answer the questions particular to your estate situation.