Paul R. Tierney Law

Must I have ‘Prince’-like Riches to Need a Will?

“When the legendary singer, songwriter and performer Prince died suddenly in 2016, he left an estate estimated to be worth between $50 and $300 million dollars – and no will. Without a spouse, living parents or children, his sister and five half siblings have been battling it out since, in one of the most complicated probate court proceedings in Minnesota history, with tens of millions of dollars being spent on fees for lawyers and consultants.”

The Tribune-Democrat asked in a recent article, entitled “You Don’t Need a Prince-ly Fortune to Need a Will,” the following question: “Why would an artist who was so careful and controlling of his image and work not plan ahead to protect it?”

Alas, it is likely Prince was like the rest of us.

He was not very keen on considering a future beyond his own lifetime.

But this isn’t the only reason folks avoid estate planning. In addition to busy lives and plain-old procrastination, another common notion of more than 50% of all Americans who do not have a will is that they don’t need one. Most of us do not have millions of dollars or complex business interests like Prince, so we think estate planning is a bit much for our comparatively simple financial situations.

That is not smart thinking.

If you’re married, have children, or own property, a will drafted by an experienced estate planning attorney lets you decide how your assets will be distributed in the future.

If we’ve learned anything from the uncertainty of the past year, it’s that you can’t predict the future. But you can prepare for it.

Proper estate planning ensures that people and charities you support now will be supported even after you are gone, in the most tax-efficient way, while avoiding family strife.

Planning ahead can also address any number of possibilities that need careful consideration, like custody of your minor children and whether you would like to remain on life support.

If you die without a will or “intestate,” state law and the probate court determine how any of your assets subject to probate will be distributed.

Estate planning may take some effort and some time, but when you’re done, you’re going to feel so good that you’ll want to party like it’s 1999!

Reference: The (Johnstown, PA) Tribune-Democrat (April 17, 2021) “You Don’t Need a Prince-ly Fortune to Need a Will”

How Digital Assets Figure into Estate Planning

“Estate planning isn't just about hard assets anymore. Who will read your email when you die?”

Yahoo Finance’s recent article entitled “Who inherits your selfies when you die?” laments that the internet ruins everything, and a simple death is no exception.

If asked to close out a family member’s estate, it now includes social media accounts, cloud storage and frequent flyer miles.

Digital assets are files created electronically. They exist as data held on a digital storage drive or computer hard drive.

However, items made by hand can become a digital asset, such as a painting or handwritten notes become digital assets, if they’re scanned and uploaded to a computer.

It can also be images, photos, videos, files containing text, spreadsheets, or slide decks.

The first time anyone has to deal with the laws and rules about incapacity and death, is when a loved one becomes ill or has passed away. It’s an emotionally tough time, and they’re likely to be grieving when trying to make important decisions on a project they know nothing about.

Know that we no longer solely have a paper trail to our lives. Think about the number of digital accounts you log into to manage your household and personal finances.

It’s significant, and an executor's role is now dependent on knowing and finding both our physical and digital lives.

Your executor won’t know what you have, unless you tell them in advance.

Your home office is paperless and behind a locked screen. We all have wishes and preferences about those assets, and these wishes and preferences need to be documented and shared.

Today’s home office is a digital home office. We will soon have the same spectrum of choices in estate planning for our digital assets, as we have for our physical ones.

However, right now, there aren’t a lot of pre-planning options.

You should create a list of your digital assets and passwords, so others you trust will know where to find them. Back up data should be stored in the cloud to a local computer or storage device.

Ask an experienced estate planning attorney about how to organize and address your digital assets in your estate plan.

Reference: Yahoo Finance (April 16, 2021) “Who inherits your selfies when you die?”

Prince Philip’s Death and the Importance of End-of-Life Planning

“While memorials and tributes continue to pour in, one thing is clear:  Prince Philip had clearly defined wishes regarding how he wished to pass, as well as his funeral plan.”

Since his recent death, Prince Philip has been remembered around the world as a model of service and a loyal and loving husband.

His more than seven decades in the public eye as a member of the Royal Family has many feeling that a beloved member of their own family has passed.

Forbes’ recent article entitled “What Prince Philip’s Death Shows Us About The Importance Of End-Of-Life Planning” says that in his case, as an important state figure, it was a requirement. In many ways, the ritualistic nature of that plan is letting everyone remember the Prince and all he achieved.

While this type of planning might only seem appropriate for royalty, it is actually something that all of us can do with our estate planning. Specifically, our health care directives can help us with end-of-life planning and funeral planning.

Even with the importance of these documents, The Palliative and Advanced Illness Research Center at Penn Medicine found in a 2017 study that only 33% of all Americans have such a document for end-of-life care.

Directive for Final Wishes. A health care directive is a legal document that lets you designate a person to make medical decisions for you, if you’re incapacitated. At death, it also gives the agent the ability to manage the decisions regarding the body.

Most of us think of health care directives in terms of pain relief and interventions. However, Prince Philip’s passing serves as an example of additional features that can be added to a health care directive. Prince Philip was able to die at home in Windsor Castle. In the last two months of his life, he spent a lot of time in the hospital. After his death, it was revealed that his final wish was to die at home, and that wish was fulfilled. You can do the same thing with your health care directive.

Creation of A Funeral Plan. A health care directive can help design a funeral plan, and these directions can include a variety of instructions, like the type of religious service, hymns and speakers at the funeral. No matter what the wishes, having these detailed plans can help the family grieve and honor the deceased’s last wishes. They can also alleviate potential family tensions about what the plans should be.

Creating a health care directive is a straightforward process. Every state has some a form for residents to fill out to state their wishes for end-of-life planning.

Reference: Forbes (April 13, 2021) “What Prince Philip’s Death Shows Us About The Importance Of End-Of-Life Planning”

How to Avoid Probate

“How can we avoid probate and reduce the estate tax for our beneficiaries, who are our two adult children?”

Avoiding probate and minimizing estate taxes are sound estate planning goals, but they shouldn’t be the only focus of an estate plan.

Nj.com’s recent article entitled “How can we avoid probate and avoid taxes for our children?” says that proper estate planning is a much broader discussion you should have with a qualified estate attorney. However, the article offers some topics to discuss with an attorney, who can review all the specifics of your situation.

Probate is the legal process for settling the debts, taxes and last expenses of a deceased person and distributing the remaining assets to his or her heirs. The costs and time needed to settle an estate can be burdensome in some states. However, steps can be taken to significantly limit probate.

Without any special planning, there are a few types of assets that can be transferred outside of probate. Items owned jointly with rights of survivorship (JTWROS) automatically become the sole property of the survivor at the first joint owner’s death. This property doesn’t go through probate.

Accounts with beneficiary designations, like retirement accounts, annuities, and life insurance policies also pass outside probate. There is a payable on death (POD) feature that provides for a beneficiary designation on non-retirement accounts (like a bank account), so POD accounts can also be transferred outside of probate.

You can also create a living trust and transfer assets into the trust during your lifetime to avoid probate. Since the trust document dictates the way in which assets are distributed upon the death of the grantor rather than the will, probate is not needed here either.

In addition, ancillary probate is a second, simultaneous process that is needed when real estate is owned in a state outside the decedent’s state of residence.

Placing out-of-state real estate in a living trust is a useful way to avoid ancillary probate. You can also place the out-of-state real estate in a Limited Liability Company (LLC), so the estate owns an interest in an LLC rather than real property. That way, the entire probate process can be handled in the decedent’s state of residence. However, talk to an experienced estate planning attorney to review which of these options — or perhaps another option — would be best for your unique situation and goals.

Other types of trusts, whether created during your lifetime or at your death, can provide creditor protection and ensure that an inheritance stays in the family, as well as help minimize estate taxes.

Under current law, federal estate tax is only due if your estate is worth more than $11.7 million (double that if you are married). A few states also have an estate tax. Other states also have an inheritance tax, but in many instances it does not apply to amounts left to the decedent’s closest relatives, including their children.

Reference: nj.com (March 24, 2021) “How can we avoid probate and avoid taxes for our children?”

I am Concerned That My Son-in-Law will get My Estate

“You may love your son-in-law or daughter-in-law now, but that could change down the road. So, if you don’t want your money going to your child’s future ex, here’s what you should do.”

A frequently question people have when updating their wills with an experienced estate planning attorney, is whether they still need a trust for an adult child. The child has graduated college, is on her second well-paying job, is married and has children of her own. The child is a responsible young adult. However, an issue may arise with the adult child’s spouse and the potential for divorce.

Kiplinger’s recent article entitled “Worried about Your Child’s Inheritance If They Divorce? A Trust Can Be Your Answer” says that people do not want money they have worked hard for to be directed to their son’s or daughter’s ex-spouse, if a divorce occurs.

The current federal estate tax exemption in 2021 is $11.7 million per person or $23.4 million for married couples, so creating a trust to save taxes upon death isn’t as big a factor as it used to be. The larger question is how well we think our children will handle receiving a large sum of money. Some parents want a trust because they worry about their adult child losing thousands of dollars of their inheritance as a result of a failed marriage. By creating a trust as part of their estate plan, these parents can help protect their child’s assets in a divorce settlement.

In many situations, if a child receives an inheritance and combines it with assets they own jointly with their spouse, like a bank account, car or house, depending on where they live, the inheritance may become subject to marital property division, if the adult child and spouse later divorce. However, if the child’s inheritance is in a trust account, or they use trust funds to pay for assets only in their name, the inherited wealth can further be protected from a divorce.

Trusts can be complicated and require more administrative work and costs, which may cost more than just leaving assets outright to your children. This is worth it for those who want to protect their child’s wealth. If your child is under 18, you’re not thinking about divorce, but because of their youth, leaving assets in trust for them is often a good idea. A trustee will oversee the child’s assets and will be able to guide them to make sound decisions with any inherited funds. If your child is newly married, rather than creating a trust right after your child’s marriage, see how the marriage goes over the next five to 10 years. Then ask yourself how comfortable you are with your child’s relationship and how you feel about your son-in-law or daughter-in-law.

Consider your estate plan as a five-year plan. Review your will, trust and other estate planning documents every five years. This can help you carefully evaluate relationships, finances and the emotional dynamics of your family. An experienced estate planning attorney can also adjust or cancel the trust during your life, as your family situation changes.

Reference: Kiplinger (April 16, 2021) “Worried about Your Child’s Inheritance If They Divorce? A Trust Can Be Your Answer”

What Is ‘Whole Farm Planning?’

“We have all heard the saying ‘plan your work and work your plan.’ Planning is one of the most important aspects of managing any business. This is especially true for farms and agribusinesses, due to their complexity and the inherent uncertainties associated with agriculture.”

Farm families should adopt a whole farm planning approach, when they develop strategies for the future success of their business. The whole farm approach lets families look at the internal structure of their business and then develop business, retirement, transition, estate and investment plans that work in harmony.

Ohio’s Country Journal’s recent article entitled “Whole farm planning” says that in the middle of most farms and agricultural businesses is the family unit, and valuable lessons can be learned by all the generations involved, by examining past successes and disappointments. The underlying values and goals of the family have a significant impact on the way in which family members treat each other and employees and make business decisions.

The analysis of the current state of a farm should also be done to determine the physical, fiscal and personnel status of the business. The operation’s efficiency should be examined and  any available resources that aren’t currently being utilized should be identified. The farm’s profitability, business structure, operating procedures and employee management should also be reviewed. It’s also helpful for the management team to pinpoint external influences that could affect the business in the future, such as governmental, political, economic, environmental, social or technological elements.

Once a family has finished its internal analysis, they can continue the planning process by developing business, retirement, transition, estate and investment plans. These plans all will need to work in concert to ensure the long-term viability of the business.

Business Plan. A comprehensive business plan helps the family develop a plan of action for production and operation practices, and also helps develop plans for the financial, marketing, personnel and risk-management sectors of the business.

Retirement plan. A strategy to help each business member meet his or her expected retirement needs should be created. The two main retirement issues to look at are the amount of money each family member needs for retirement and the farm’s obligation to the retirees.

Transition plan. This plan ensures that the business has the resources to continue for future generations. This helps the family examine its current and future situations, then develop a plan to transfer the business to the next generation.

Estate Plan. This entails determining how the farm assets and debts will be distributed upon the death of the principal operators. This plan, along with the transition plan, helps to address the way in which the off-farm heirs can be treated fairly, without jeopardizing the future of the farming heir.

Investment plan. The primary investments made by farm families are typically made in land, machinery. and livestock. Investments let farm families to save for future education or retirement needs and permit investment diversification.

Reference: Ohio’s Country Journal (Feb. 11, 2021) “Whole farm planning”

How Do I Know Fees Subtracted from My Brothers Estate are Legit?

“I’m a beneficiary to my brother’s estate in New Jersey. My younger brother, the executor, is also a real estate broker. When he sold two properties from the estate, he paid himself real estate commissions totaling about $75,000. He never accounted for the rents on the real estate for the two years he managed the properties. Can he do this, and do I have any recourse?”

Nj.com’s recent article entitled “My brother died. Are these fees taken from his estate legal?” says it’s stressful and tense, when family members ask about how an estate is being handled by another relative.

Let’s say you are a beneficiary to your brother’s estate in New Jersey, and your younger brother is the executor. He’s also a real estate broker. When he sold two properties from the estate, the younger brother paid himself real estate commissions of $75,000. However, he didn’t account for the rents on the real estate for the two years he managed the properties. Is that legal?

In every state, the beneficiaries of a decedent’s estate are entitled to an accounting of the income, expenses, assets, liabilities and distributions of the estate.

Before getting a distribution, a beneficiary is usually asked to sign a “Refunding Bond and Release,” or similarly titled document agreeing to make a refund to the estate, if more taxes or debts are owed and releasing the executor from any liability for actions taken during administration of the estate.

If a beneficiary isn’t satisfied with the administration of the estate and/or wants more information, they shouldn’t sign the Refunding Bond and Release or a like document, until they get the information needed.

When a beneficiary requests a formal or an informal accounting, and if the executor retains a professional to prepare the accounting, those fees will be charged to the estate. That will decrease the distribution to the beneficiaries. The accounting will show the rents received and if it doesn’t, and the executor fails to address the issue, legal action may be necessary.

Executors are entitled to a commission on both income and principal that comes into the hands of the executor, including a commission on the sale of property held by the estate. These fees are usually set by state statute. An executor can ask for additional fees, by showing the court that he or she provided unusual or extraordinary services for which they should receive extra compensation. The court may decrease a commission where an executor’s actual pain, trouble and risk were less for a comparable estate.

Depending on the specifics, the executor may have breached his fiduciary duties, was involved in self-dealing, or other conflicts of interest in acting as both the realtor and executor and taking both an executor’s commission and realtor’s commission. Here, if the younger brother took both a real estate commission and an executor’s commission, the beneficiary could ask the court to reduce the executor’s commission because his real estate firm did the work and reduced his burden.

Reference: nj.com (Feb. 2, 2021) “My brother died. Are these fees taken from his estate legal?”

Why Would I Need a Living Trust?

“Have you made any plans to distribute your assets and take care of your family, when you die or become incapacitated?”

EIN Presswire’s recent article “Advantages of a Living Trust” explains that, if you have not prepared a will, your state of residence dictates the distribution of your estate by default.

A living trust is a legal document that is created during a person's lifetime where a named person (the trustee) is given responsibility for managing the trustmaker's assets for the benefit of the beneficiary. A living trust is designed to provide an easy transfer of the trustmaker’s assets, while bypassing the probate process.

If you fail to plan for your estate, it can result in the government—not your heirs—inheriting the majority of your assets. That is because the top estate tax rate is an 40%.

Moreover, probate costs can take from 5% to 25% of the gross value of your estate, and the probate process can take a year or longer. It can be a very difficult and frustrating experience for your surviving family.

You can’t just think you’re doing effective estate planning by putting everything you own into joint title or having a will leaving everything to your spouse. You need to review your circumstances with an experienced estate planning attorney. Let’s see what you can do with a living trust:

1. Avoid probate delays and expenses.
2. Reduce the emotional stress on your family.
3. Eliminate or reduce taxes.
4. Enjoy total flexibility, since a living trust can be changed or canceled at any time.
5. Keep control of your assets, even in the event of your incompetency and after your death.
6. Avoid a conservatorship at physical or mental incapacity.
7. Keep your privacy, as a trust is completely confidential.
8. Allow for a fast distribution of assets to beneficiaries; and
9. Save time, money, and future headaches for your family.

Ask an experienced estate planning attorney, if a living trust fits into your comprehensive estate plan.

Reference: EIN Presswire (March 12, 2021) “Advantages of a Living Trust”

Remind Me Why I Need a Will

“A will is a legal document that allows you to decide what happens with your estate after you passed away. Unfortunately, not all people consider creating one because they think that it’s complicated and just an extra expense.”

There are a number of reasons to draft a will as soon as possible. If you die without a will (intestate), you leave decisions up to your state of residence according to its probate and intestacy laws. Without a will, you have no say as to who receives your assets or properties. Not having a will could also make it difficult for your family.

Legal Reader’s recent article entitled “Top 7 Reasons to Fill Out a Will” reminds us that, before it is too late, consider these reasons why a will is essential.

Avoid Family Disputes. This process occasionally will lead to disagreements among family members, if there’s no will or your wishes aren’t clear. A contested will can be damaging to relationships within your family and can be costly.

Avoid Costly and Lengthy Probate. A will expedites the probate process and tells the court the way in which you want your estate to be divided. Without a will, the court will decide how your estate will be divided, which can lead to unnecessary delays.

Deciding What Happens to Your Assets. A will is the only way you can state exactly to whom you want your assets to be given. Without a will, the court will decide.

Designating a Guardian for Your Children. Without a will, the court will determine who will take care of your minor children.

Eliminate Stress for Your Family. Most estates must go to probate court to start the process. However, if you have no will, the process can be complicated. The court must name personal representatives to administer your estate.

Protect Your Business. A will allows you to pass your business to your co-owners or heirs.

Provide A Home For Your Pets. If you have a will, you can make certain that someone will care for your pets if you die. The law considers pets as properties, so you are prohibited from leaving assets to your pets in your will. However, you can name beneficiaries for your pets, leaving them to a trusted person, and you can name people to serve as guardians of your pets and leave them funds to meet their needs.

Drafting a will with the help of an experienced estate planning attorney can give you and your family peace of mind and convenience in the future.

Reference: Legal Reader (Jan. 28, 2021) “Top 7 Reasons to Fill Out a Will”

Which Health Issues to Watch for after 50

“As we age, our bodies wear down. Here is how to cut costs associated with some common ailments.”

Money Talks News’ recent article entitled “7 Costly Health Problems That Strike After Age 50” says that, as we get older, health issues often arise that threaten an enjoyable retirement. Treating some of these diseases and conditions can be costly.

However, there are ways to cut these costs. Let’s take a look:

Arthritis. Arthritis strikes roughly 54.4 million Americans, and the Centers for Disease Control and Prevention says that in 2013, adults with arthritis on average paid an extra $2,117 in medical costs. Check out the Arthritis Foundation webpage for ways to cut costs for arthritis care.

Osteoporosis. Approximately 54 million Americans have low bone density or osteoporosis, and among women over 50, one in two will break a bone due to the disease. Among men that age, it’s one in four. Try some weight-bearing exercise, like lifting weights, walking or running, and activities, such as tennis. These can build bone density with little expense. You can also add vitamin D supplements to help your body use calcium and strengthen bones. Check with your doctor.

Diabetes. There are more than 34 million Americans with diabetes, and the risk for the disease increases as you age. In fact, over 25% of adults ages 65 or older have diabetes. Insulin is expensive, and a way to cut costs is to get tested early. Read up on this in the ADA’s Diabetes Forecast magazine for tips on persuading your insurer to help pay for diabetes devices and supplies.

Obesity. At least a third of adults 65+ are obese, studies show. An obese person spends 42% more for health care than people of normal weight. If you lose the weight, it will significantly reduce your risk of being diagnosed with many costly health problems, including diabetes, heart disease, cancer and osteoarthritis. Again, a healthy diet and exercise will help.

Smoking. A no-brainer. Quitting smoking is one of the best ways to improve your health and save money.

Poor oral health. About a quarter of Americans ages 65 and older have eight or fewer teeth, says the CDC. Oral health declines as we age, and conditions, such as severe periodontal disease and oral and pharyngeal cancer primarily affect older adults. Treating these conditions can be expensive, so stay regular with visits to the dentist. Dental visits can be costly if you don’t have dental insurance, so look at the ADA website for help finding more affordable care.

Shingles. Shingles is not as dangerous as some of the other maladies on the list, but experts say it deserves attention because it is so common in people over 50. There are also complications related to shingles, such as blisters, and an ongoing type of pain called post-herpetic neuralgia, or PHN. The easy and affordable fix for shingles is a vaccination, which is more than 90% effective in preventing shingles in those age 50 and older.

Reference: Money Talks News (Jan. 30, 2021) “7 Costly Health Problems That Strike After Age 50”