Category: Estate Planning (Page 1 of 4)

“We only got the bank account:” Why Property Titles and Beneficiary Designations Matter.

October 8, 2024 / David Russell / 0 Comments

My father passed away four months ago. Our mom had preceded him in death by several years, and three years ago, Dad married 'Jane' when he was 71 years old. After they married, Dad told me and my siblings that his will left everything to us. At that time, he had about $300,000 in the bank, a company retirement plan worth $800,000 and the house we were raised in. He sold the house after he and Jane married and bought a condo. Now the lawyer tells us that we're only getting what was in the bank accounts. Dad didn't change his will, so how could this have happened?

Jan M.

The loss of a loved one is a challenging and emotional experience, often compounded by the complexities of navigating their estate. This scenario underscores the vital role that legal title and beneficiary designations play in determining who receives property after someone’s passing. Understanding how assets are titled and the impact of federal laws such as the Employee Retirement Income Security Act (ERISA) is essential in estate planning.

Siblings concerned about Step-Mother’s Use of Trust Fund

September 26, 2024 / David Russell

My dad passed away about seven years ago and left a sizeable trust to his wife. The trust is supposed to take care of her for her life before passing to me and my three siblings when she dies. That's all we know about it. We think she is the trustee, but we've never asked because we want to avoid drama. We know she has other assets that she brought into the marriage so we hope she's not draining the trust at our expense. How do we go about finding out the details of this trust, such as how much is in it, what it's being used for, and who is in control of it?

Missy F

This is a tough but very common family situation, caused in part, by a lack of communication about your dad’s plan while he was living. When your dad passed away and left a trust for your stepmother, it undoubtedly added layers to an already emotional situation. Now, faced with uncertainty about the trust’s details and anxious about its potential impact on your inheritance, you’re understandably concerned.

Finding out about the specifics of a family trust, especially when feelings run high, requires a gentle and thoughtful approach. Here’s some ways you can seek the information you need while preserving family harmony.

How to Divide Sentimental Items in an Estate

September 24, 2024 / David Russell

My mom recently passed away and I am the executor of her will. The will is fairly simple with everything divided equally between me and my four siblings. The problem is that there are a lot of heirloom items, including art, jewelry, furnishings, and several sentimental items that I know several of us have an interest in. Some are worth quite a bit, but most of it holds only sentimental value. Since I am responsible for dividing these items equally, how can I fairly and objectively do this without it looking like I'm favoring myself?

Betsy T.

First of all, I’d like to extend my heartfelt condolences for the loss of your mother. Navigating the complexities of grief while handling the responsibilities of being an executor can be an incredibly challenging task. It’s commendable that you’re seeking a fair and objective way to manage your mother’s legacy while honoring her memory and considering your siblings’ feelings.

Mom leaves more to one child than another: what could go wrong?

September 10, 2024 / David Russell

Three years ago, my mother moved in with me and I became her full time caregiver. Last year she changed her will to leave more to me than my sister who hasn't done anything for her care. In fact, she hasn't spoken to mom since she moved in with me. I don't get paid for providing care, but I do use her social security check to help pay for household bills and groceries. Aside from that, mom has a sizeable stock account that she inherited from our dad. I'm worried my sister may cause trouble when mom dies and learns she doesn't get as much as I do. Should I ask her to change her will to be more equal?

Esther B.

I can sense the unease in your voice. As caregiver for your mother, it makes sense that she might favor you in her will, especially if your sister isn’t interested in a relationship with your mom. While your question is more about what happens after your mother dies, my hope is that there will be opportunities to communicate with your sister before that happens, resolve the rift between her and your mother, and avoid the potential conflicts that may arise. Ultimately the decision to accept the provisions of your mother’s will is hers.

That said, let’s discuss some practical issues to address your concerns, minimize legal complications, and discourage potential disputes with your sister when it comes to your mother’s will.

Understanding the Legal Framework

First, it’s important to ensure that the change your mother made to her will is legally sound. The will must have been updated at a time when your mother was fully competent and free from undue influence. Consulting an estate attorney can ensure all legal protocols were followed, thus making it less vulnerable to future challenges.
Was the change made with the assistance of an attorney? Although it’s not a requirement, using an attorney to execute legal documents like wills can avoid the mistakes people make when doing it themselves. Often, people will write a will in their own handwriting (called a holographic will). While these may be valid, these types of wills are easily disputed and may not have followed the procedures for valid will executions in the state where the person resides.
Assuming your mother did use a lawyer, and at the time did possess the capacity to execute a new will, who was present in the room with your mother’s lawyer when she changed her will? Just your mother? You with your mother? Only you? Ideally, it was only your mother. If you were present, did the lawyer directly address your mother or direct questions to you? The less your involvement in the meeting, the less likely you could be open to accusations of undue influence.

Guarding Against Will Contests

If your sister decides to contest the will, she could potentially claim undue influence or argue that your mother lacked the mental capacity to make such a change. To prepare for such scenarios, work with her attorney to maintain thorough records of the discussions and motivations behind the will’s adjustments. This documentation reinforces that the decision was made independently and with full awareness.
Did your mother include a no-contest clause to her will? Known as an in terrorem clause, this can discourage your sister from contesting the will, as she risks forfeiting her inheritance if she loses the challenge. While this is not enforceable in every jurisdiction, where applicable, it serves as a strong preventive measure.
A letter of intent can also be included, detailing your mother’s reasoning behind her decisions. This document, although not legally binding, provides context that could be useful in defending the will against disputes. Sometimes, these are prepared by the person creating the will, but the attorney may also provide this service.
Keeping detailed records of your caregiving responsibilities and related expenses is crucial. Not only does it validate the more substantial inheritance in compensation for your caregiving role, but it also provides a clear, factual basis for the distribution decision should your sister challenge it.

Proactive Communication and Mediation

Facilitating open communication with your mother and sister could be beneficial. If your mother is comfortable, hosting a family discussion where she shares her reasons for the will’s changes may help your sister understand the context and reduce tension. Transparency often alleviates suspicions and pre-empts conflicts.

If direct communication seems difficult, consider bringing in a professional mediator. A neutral third party can help facilitate productive discussions and address any underlying concerns or grievances. This proactive step can prevent more heated disputes down the line.

Engaging a Professional Team

Engaging the right team is critical. Not only can a team of professionals provide advice and counsel, but their presence and involvement demonstrate that you are not acting alone in managing your mom’s affairs. If her lawyer does not specialize in estate planning or elder law, you can look for one near you by visiting the National Academy of Elder Law Attorneys. Other team members might include a geriatric care manager, financial planner, or family counselor.

By addressing these issues now—through open communication, legal safeguards, thorough documentation, and professional advice—you can reduce the likelihood of disputes and honor your mother’s wishes effectively. While it’s a challenging situation, approaching it with preparation and empathy can help maintain family harmony and respect for everyone involved.

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Why Banks Might Refuse a POA

August 13, 2024 / David Russell

I hold a valid power of attorney for my mother, but when I tried to use it at her bank, the bank refused to recognize it. Why would the bank refuse to honor a valid legal document?

Nancy s.

As a holder of a power of attorney (POA) for a loved one, it can be incredibly frustrating when a bank refuses to recognize this legal document. You may believe that you have the authority to act on your mother’s behalf, but banks sometimes take a cautious approach when it comes to powers of attorney. Let’s explore some common reasons banks might refuse to honor a valid POA and what you can do if you find yourself in this situation.

How a lawyer can respond to diminished capacity.

August 14, 2023 / David Russell

Confidentiality is one of the hallmarks of the attorney-client relationship. Clients expect their attorney to uphold the confidential nature of their discussions, and attorneys must adhere to a strict code of conduct to protect the public they represent. But what happens if the attorney questions the capacity of their client?

Capacity can be a complex legal doctrine, but legal capacity is required by parties of a valid contract. Moreover, standards of capacity can also vary by they type of contract entered into as well as by different states in which the contract is governed. For example, capacity to create a valid Last Will and Testament requires the one creating the will to know the general nature of their possessions and who their legal heirs are. Another standard may be applied to a more complex legal transaction.

Attorney Mark C. Palmer, Chief Counsel at the Illinois Supreme Court Commission on Professionalism, addresses how attorneys can work with clients that are demonstrating cognitive decline. In his article,
Diminished Capacity of a Client: How Should a Lawyer Respond? | Q&A, Palmer discusses three questions an attorney needs to consider:

How does a lawyer know if the client has diminished capacity?
How might this change how a lawyer represents a client?
What protective measures can the lawyer take while meeting ethical obligations?

If you have concerns about the capacity of your aging loved one to execute a valid legal contract, consult with a qualified legal professional, preferably a Certified Elder Law Attorney (CELA) as well as your loved one’s medical provider. It is these professionals’ responsibility to independently determine whether your loved ones have the required capacity to act in their best interests.

MARK C. PALMER

Mark C. Palmer is Chief Counsel at the Illinois Supreme Court Commission on Professionalism. Mark writes on civility, professionalism and future law for the Commission’s 2Civility blog and delivers statewide professionalism programming, including a lawyer mentoring program, to attorneys and law students across Illinois. Follow him @palmerlaw.

Source: Diminished Capacity of a Client: How Should a Lawyer Respond? | Q&A

Indiana Case Highlights Family Tensions in Selecting Financial Caregivers.

March 27, 2023 / drussellcfp

Most people should be able to choose a loving and honoring adult child or family member as a financial caregiver. An Indiana case highlights the importance of integrity when making the choice.

In the case of Biggs vs Renner, Terri Renner and Sherry Biggs are siblings locked in a court battle over their mother’s care, with Terri claiming that Sherry abused her position as agent under her mother’s Power of Attorney, and used their mother’s funds for her own benefit. Court records would confirm Terri’s fears.

Sherry admitted to converting her mother’s accounts first to a joint account, and then to accounts only in her name. She offered a promissory note to court as evidence that she intended to pay the money back, but the the note was largely unenforceable due to her mother’s incapacity, and no payments had been made so far. In addition, Sherry allowed her daughter and husband to live rent-free in her mother’s home and paid several thousand dollars of improvements from her mother’s accounts that did not directly benefit her mother.

Terri sought a court’s intervention to remove her sister as attorney-in-fact, and to insert a disinterested third party as guardian of their mother’s estate. The court granted Terri’s petition, but Sherry objected on appeal.

A Power of Attorney is a legal arrangement whereby one person grants authority (let’s call that person the grantor) to another person to act in their behalf as attorney-in-fact, or agent while they (the grantor) are alive but unable to act for themselves. Acting as agent under a power of attorney is a fiduciary responsibility that obligates the financial caregiver to exercise the powers granted solely for the benefit of the grantor. A financial caregiver has to keep accurate records and is prohibited from using the property of the grantor for their own purposes. Being a financial caregiver is an honorable position when conducted honorably.

Why name an adult child as financial caregiver?

It is understandable that an older person would want to name an adult child as financial caregiver on their behalf. We want to believe our own children would act honorably on our behalf, or perhaps we have regrets about our own parenting and feel guilty if we do not atone ourselves by putting them in charge. Sometimes a parent will name an estranged child in hope that the trust shown by the parent will mend a broken relationship. Parents will often do whatever it takes to keep a child close to them. However, the selection of a financial caregiver should place emphasis on the dependability and the integrity of the individual over familial connections. This may require difficult decisions and may even alienate family members, but if early and intentional discussions on the subject can be held with the appropriate family members, perhaps these kinds of conflicts can be avoided.

Note: The information above is for general information only and should not be relied upon to make legal or financial decisions Advice as to the preparation and use of Powers of Attorney should only be provided by a qualified attorney licensed in your state.

IRA Funds Protected from the Claims of Guardian

August 24, 2022 / drussellcfp

A Florida Appeals court has ruled that a special appointed guardian does not have a claim for guardianship expenses against a deceased’s IRA accounts. ( Araguel v. Bryan, (Fla. Dist. Ct. App., No. 1D20-2789, August 17, 2022).

According to the court transcript, In October of 2019, Jane Kaigler Araguel became unable to care for herself. As a result, both of her children, Patrick J. Araguel, III, and Leslie Ladon Bryan, petitioned the trial court to become her emergency temporary guardian and the guardian of her person and property. Instead of appointing either of the children, the trial court appointed a professional emergency temporary guardian. In June of 2020, Ms. Araguel died.

After Mrs. A died, the trial court approved the Guardian’s motion to use her assets — including her IRAs — to pay for the guardian’s expenses, his attorney’s fees, and other costs associated with the guardianship.

IRA Creditor Protection

IRA’s are considered contract property, meaning that the owner of the IRA contracts with an IRA Custodian, to hold and invest the IRA funds, and to pay the funds directly to the contract’s named beneficiary(ies) upon the death of the IRA owner. As such, IRA assets do not pass through the owner’s Last Will and Testament, unless the owner’s estate is listed as the IRA beneficiary.

Protection of IRAs from the claims of creditors depends on the state of residence of the IRA owner. Most states have adopted some kind of creditor protection for IRA assets similar to the protection available for qualified retirement plans (ie. 401k, Profit Sharing, Pension Plans, etc.) that are governed by a Federal Law under the acronym ERISA. Simply stated, these assets are excluded from creditor claims such as bankruptcy and litigant claims, except for fraudulent transfers or a divorcing spouse. For a more detailed discussion about IRA creditor protection, click here.

Back to the Case

Mrs. A’s son appealed the trial court’s ruling, arguing that the IRA contracts were not subject to possession and management by the guardian upon Mrs. A’s death and that the death proceeds should have been immediately delivered over to the IRA beneficiaries. Furthermore, he argued that the IRA’s were protected from creditor claims under Florida law, and should therefore not be available to the Guardian for expenses incurred by the Guardian.

After a discussion of the specific meaning of words contained in the various Florida statutes, the court applied a “plain meaning of the terms ‘claim’ and ‘creditor,’ to rule in favor of the Plaintiff, Mrs. A’s son, and reversed the lower court’s decision. To read the full court transcript, click here.

Key Takeaways

A properly executed Durable Power of Attorney granted to one or both of Mrs. A’s sons could have avoided a court-appointed guardianship and allowed either or both of them to manage her assets upon her incapacity.
A revocable living trust that owned Mrs. A’s assets could have been used along with a Durable Power of Attorney to ensure continuity of the management of her financial affairs upon her incapacity.
IRA’s often represent a significant percentage of an individual’s estate, yet what happens to them upon the owner’s death is controlled by a single piece of paper on file with the IRA Custodian, not the owner’s Last Will and Testament. Beneficiary forms should be regularly reviewed.
Seek the advice of a qualified estate attorney when drafting any of these legal arrangements.

Most Have No Plan for Long Term Care

August 15, 2022 / drussellcfp

HGC, an Aging-In-Place research and product development company based in Connecticut partnered with non-profit Arctos Foundation to survey Americans’ preparedness for long term care.

Key findings:

70% of respondents have no advance directive in place, and just one in ten have l ong-term care insurance.

Most respondents have not spoken with a family member or loved one about wishes for Long Term Care.

Those with a spouse or partner are more likely to expect a need for long-term care services and supports, but are no more likely to have long-term care insurance in place.

Source: Independent Research | HCG Secure

To help families understand and discuss the issues surrounding planning for long term care, we have two excellent flipbooks on the topic of Essential Estate Planning, and Understanding Long Term Care.

Suspension imposed after appeals judge is accused of making himself a beneficiary of ex-client’s will

January 15, 2021 / drussellcfp

The Georgia Supreme Court has suspended a state appeals judge with pay during an ethics investigation.

The court suspended the judge, Christian Coomer, on Wednesday, Law360 reports.Coomer is accused of making himself a beneficiary and his wife the executor when drafting wills for a then-client, according to Law.com, Law360 and the Daily Tribune News.

Coomer is also accused of drafting an irrevocable living trust for the client that designated Coomer as the trustee and beneficiary, with the power to transfer funds to himself while the client was still alive, according to the Dec. 28 charges by the Georgia Judicial Qualifications Commission.

Source: Suspension imposed after appeals judge is accused of making himself a beneficiary of ex-client’s will