Posts tagged ‘will’
the hidden costs of a DIY will
I just this moment returned from a court hearing to establish a guardianship. A hearing that occurred for only one reason: my client’s dad used LegalZoom to make a will.
My client’s dad thought he was doing the right thing. I mean, having a will is better than having no will, right?
Wrong. Having a well-drafted will that includes the right language is MUCH better than having no will. (To learn more about why you need a will, go HERE and HERE.)
But having a poorly-drafted will that doesn’t include what it should – or includes the WRONG language – can be much worse than having no will.
In my client’s situation, her dad left some money to her minor son. Which is great! But, because he bought the will from LegalZoom and didn’t get any legal advice, he didn’t structure the bequest in the right way. And because of this, my client had to file a legal action to get the court’s permission to accept this money on her son’s behalf.
So, the cost of using LegalZoom for this family far exceeded the difference in cost between a DIY will and working with an attorney. How much? Many hundreds of dollars, months of time.
FYI – a DIY will has hidden costs. Buyer beware.
‘nest egg’ planning – an important end-of-year goal
The end-of-the-year rush is in full swing. You’re busy shopping for holiday gifts, planning and attending gatherings with family and friends and (hopefully) simply enjoying the magic of the season . . . so why make time in the midst of all this to think about your nest egg?
Because it’s the *ideal* time to focus on the simple steps to take to properly preserve and protect your nest egg. You can chart a course, follow it (at whatever pace YOU choose) and in the process check off some very important items from your to-do list. The bottom line: the greatest gift you can give your family is to put an organized and thoughtful estate plan into place – one that protects your nest egg.
We’ll go through the steps incrementally, starting out with the first seven estate planning items on the checklist. (My next post will cover insurance planning, which ties in directly to a thoughtful estate plan for most people.)
- Make (or update) your will document. If you don’t already have a will document, now is the time to put one in place. This isn’t a complicated or expensive task. I’ve written previously about why everyone should have a will – check out these posts for more information HERE and HERE. And if you already have a will, you should review it on an annual basis to make sure that it continues to carry out your wishes. Obviously, if you’ve had a change in life circumstances in 2010 – marriage, divorce, new child, etc. – then a review of your will is imperative.
- Create (or update) your powers of attorney and living will. Everyone should have two powers of attorney in place, if you reside in Tennessee: a general durable power of attorney and a power of attorney for healthcare. With these two documents, your family will be able to manage your affairs in the event you’re disabled. Without these documents, a conservatorship may be necessary – go here to read my article on this topic. And as with your will documents, the powers of attorney should be reviewed annually – make sure that the people you’ve designated are still appropriate for this position. As well, terms for the documents do change, so check with your estate planning attorney to see if your documents require substantive revision. A living will sets out your end-of-life health care preferences and is important information for health care providers and your family.
- Create a letter of instruction. This letter goes hand-in-hand with your will and powers of attorney documents. In this letter, you provide invaluable information to your heirs: where important documents are located, where your financial accounts are located, special burial wishes, and the like. I’ve written before about compiling this information for your heirs – you can read this article here.
- Calculate (or review) your net worth. The amount of your estate – e.g. the value of all of your assets – determines in large part what kind of estate planning you can/should do to protect your nest egg for your heirs. You should review your net worth annually and consult with your tax and/or estate planning advisors to determine if your plan requires any substantive changes in order to achieve your goals.
- Consider creation of a trust. Your annual review of net worth may lead to a recommendation that you establish a trust – either living (created and funded in the present) or testamentary (created and funded following your death). A trust often can be an effective vehicle for transferring wealth and protecting assets.
- Consider funeral pre-planning. This is a simple step to take, and can save cost and time for your family. It’s as simple as contacting local funeral homes and requesting pre-planning information.
- Arrange for the orderly transfer of business assets. If you are a small business owner, planning for the smooth operation (or sale) of your business in your absence requires more than a simple reference in your will document. Your entity documents (or legal agreements with business partners) should address what happens to the business upon death, and should be reviewed annually to confirm that the plan continues to meet such goals. As well, you should consider the purchase of life insurance as a vehicle for funding the transfer of business assets at death.
Take the above steps, one-at-a-time and at your own pace. But just do it. In my next post, I’ll add a few more to-do items to the list. And in the meantime, feel free to call (615.595.7776) or email (cnm@csquaredlaw.com) if you have question about your year-end planning.
As I write this post, my satellite weather station reports the temperature at 19 degrees, with a ‘feels like’ temperature of six degrees. I hope you’re staying warm and enjoying this holiday season!
With *warm* regards,
Caitlin Moon
Even more reasons to have a last will + testament . . .
In my last post, I reviewed the law in Tennessee on intestate succession – e.g., what happens to your estate (your stuff) when you die without a will. This ‘default’ plan for distributing your estate likely is reason enough to create a last will and testament.
But there are more reasons, just in case you were wondering . . .
In discussing with clients why they want to create a well-thought-out will document, I universally get agreement with the proposition that a properly-drafted will should both save the time and effort of the person/people who are dealing with the estate’s probate process AND it should eliminate as much probate-related expense as possible. Both of these are worthy goals, and are easy to achieve. But planning is necessary!
In Tennesssee, there are a lot of ‘hoops’ one must jump through when administering an estate that didn’t plan properly for probate – whether an intestate estate (no will at all) or an estate of someone who simply had a poorly-drafted will document.
One of the hoops – that can require significant time on the part of the executor, or significant expense on the part of the estate if professionals must be hired to complete this requirement: an accounting of the estate’s contents. The personal representative has to file a statement of all receipts, disbursements and distributions of principal and income for the accounting period and the remaining assets held in the estate – both initially, when the estate is opened, and annually until the estate is closed. See Tennessee Code 30-2-601 et seq.
The accounting can be effectively waived in a properly-drafted will, thus saving your executor a great deal of time and your estate the expense.
Another hoop is the estate inventory. Unless properly waived in a will, then the personal representative has to make a “complete and accurate inventory of the probate estate of the deceased.” This is then filed with the probate court clerk. See Tennessee Code 30-2-301 et seq.
Again, this hoop requires a significant expenditure of time on the part of the personal representative – and/or expense if professionals must be paid to complete this work.
I once worked on behalf of a family whose matriarch had died rather unexpectedly. Her will was drafted decades earlier, and didn’t waive inventory. It turned out that she had thousands of antique items – she’d been an avid collector for years. The family was ready to simply divvy everything up and sell what no one wanted, and had even reached agreement on these points. But a full inventory was still required, which took a LONG time to document. The cost was real in terms of time, but also in terms of emotional involvement. The family members weren’t well-served by dealing with this administrative task while in the midst of mourning their loss.
Creating an effective will document, whether your circumstances are simple or complicated, can be a fast and easy process. Just do it.
Exactly WHY do I need a will?
I offer no-cost consultations with anyone interested in planning his/her estate – and while I’ve been talking with folks about their wills and related documents for more than 12 years now, it still amazes me how many people have no idea what happens to their ‘stuff’ when they die without a will.
I practice in Tennessee, so what I’m about to say only applies in this state. Each state has its own laws, but they all do have ‘rules’ about where stuff goes at death if a person doesn’t make other plans through a will.
So where does my stuff go if I die in Tennessee without a will? This is a multi-level question, and depends upon a lot of factors. The formal term for this is ‘intestate succession’ and details are set out in TCA § 31-2-101 through 110.
So where to begin? Pick the description of your situation:
Married with no children: your entire estate goes to your spouse
Married with children: your spouse receives 1/3rd or a child’s share, whichever is greater (e.g. if you are married and have one child, then your spouse receives half and your child receives half; if you are married with three children, your spouse receives 1/3rd and your children each receive 1/3rd of the remaining 2/3rds, which equals 2/9ths; in any of these instances, if a child is deceased, then his/her share goes to his/her living children if any (your grandchildren) or if none, then your remaining children share equally)
Unmarried with children: your children each receive an equal share
Unmarried with no children: to your parent(s), if living; if only one living parent, then he/she takes all
If parents aren’t living: to your brothers and sisters equally (or to a sibling’s children if a sibling is deceased but has children – the children then share equally in the deceased parent’s share)
If no siblings, nieces or nephews: one-half to paternal grandparents (if living) and one-half to maternal grandparents (if living) – the children/grandchildren (whomever is the closest in kinship still living) take the share of a deceased grandparent; example: if your paternal grandmother is living but your paternal grandfather is deceased, then your paternal grand-mother receives ½ of your estate and the rest is shared between your maternal grandparents if both are still living – but if both maternal grandparents are deceased, then their ½ is shared equally by all of their living children (your cousins) or if they have no living children but do have living grandchildren, then the grandchildren receive the grandparents’ share
*However – if there are no living relatives on one side, then the other side receives your full estate; for example, if your paternal grandparents are deceased and have no living children,grandchildren, etc., then your entire estate passes to your maternal grandparents or their closest living relatives if they are deceased
There are yet more twists and turns if you die without any living relatives whatsoever. But that is a subject for another day.
Suffice it to say, most folks would make plans other than the path Tennessee provides when you die without a will. If you are married and have two very young children, do you intend for your children to inherit as much as one-half of your estate? Most often, the answer to this question is no. You likely want your spouse to inherit everything, and have full legal authority to use your entire estate in a manner that is best for your family.
There are many, many scenarios that can be painted, all of questionable desirability, when following the intestate succession flow chart through to many possible conclusions. Controlling the ultimate destiny of your estate is not a complicated process. It involves education and thoughtful consideration. Rely on a knowledgeable estate planning attorney to obtain the education. You will then be prepared for the thoughtful consideration!
Generally the estate planning process takes about two weeks with my clients, from start to finish, and depending on the client’s schedule. Next week’s blog entry will discuss the steps involved in the estate planning process – knowing what to expect can help you make the most of the process and work through it as thoughtfully and efficiently as possible.
In the meantime, feel free to contact me with any questions about this or any other estate planning topic – 615.656.4044 or cnm@csquaredlaw.com.
Do you know where your will is? Crucial documents + information everyone should update annually.
I always urge my estate planning clients to compile the following information – and update it annually. Doing this as you gather information for your tax return is ideal – just add to your ‘to-do’ list for the first quarter of each year.
Having this information in a location accessible by your appointed power(s) of attorney and executor(s) will save incredible amounts of time, and possibly expense, should access be required. Note that this information should be kept in a secure location – if this is an institutional lock box, then make sure that someone in addition to you (and your spouse, if married) also have access.
DO NOT disseminate this information along with copies of powers of attorney and will documents, as it contains sensitive data that should be kept securely and updated at least annually.
(1) A list of key references
(a) Contact information for accountant, attorney, insurance agent
(b) Location of birth certificates, marriage license, financial records
(c) List of user names/passwords for all accounts
(2) Investments
(a) Detailed tabulation by security, to include the following:
(i) owner’s name
(ii) current value
(iii) cost basis
(iv) beneficiaries (if any)
(v) tax status (e.g. taxable, tax-exempt, tax-deferred)
(vi) account number(s) and contact person
(b) Record of each bond or certificate of deposit (CD)
(i) divide each record and organize by category (e.g. EE, I, Muni)
(ii) call or maturity date
(iii) current yield
(3) Social Security: directions on how to notify SSD upon the death of a spouse, and a record of what benefits are expected.
(4) Pension: whom to contact at the company and what the revised pension amount will be.
(5) Estimated income tax: provide a rough estimate to ensure that withholding is appropriate.
(6) Insurance: summary of each policy, to include the following:
(a) Policy number
(b) Death benefits
(c) Contact at company
(d) Any details re: medical insurance policies that will continue for the surviving spouse
(7) Estate documents:
(a) Will:
(i) With the will, keep a current list of the various people who may be needed to assist: attorney for probate, trustee for testamentary trust, accountant to prepare estate return
(ii) Keep the original documents in a location that may be accessed by someone in addition to the spouses; give copies to all people who are named as primary or alternate executors and trustees
(b) Powers of attorney (general and health care) and living will: keep copies in a location that may be accessed by someone in addition to the spouses; give copies to all primary and alternate powers of attorney and discuss with them any particular wishes you may have in regard to your health care and advance directives.
