Nevada Estate Planning

Executors… Beware!

Being asked by friends or family to be executor of an estate is a big honor, but the warm feelings can vanish once the job starts.

Choosing an executor can be a difficult task, and in no small part this is because it means finding someone you trust to do as you would do. Oftentimes it is gesture of trust and respect made to a friend or family member. Neither the estate planner nor the would-be executor ought to forget, however, that serving as executor can be a fairly difficult role to play. The Wall street Journal recently offered some practical insights and advice on the topic, noting that to be named executor is both “an honor… and a pain.”

Simply put, the executor administers a decedent’s Last Will and Testament through probate, navigating the many twists and turns of that court process. Administration involves accounting for assets, paying bills, and distributing assets in accordance with the terms of the Last Will.

The process typically takes time, too. It can mean up to several years for larger estates, and during that time the executor must keep up with the associated laws, tax code changes, and financial investments, or else intelligently delegate such responsibilities to professionals. It means that a “non-professional” can do the job, but perhaps not an amateur; you have to know your abilities and have confidence. To top it off, the compensation for being an executor is often meager, given the heavy workload, and is regulated by state laws.

The biggest problem an executor will face, by and large, is a shifting relationship with the family. Money can make people antsy or even belligerent, even if the terms are clear in the Last Will, and that’s something an executor might have to bear. This is especially true of family members turned executors who may face soured relationships at family functions. Accordingly, that can make for some awkward moments around the Thanksgiving table.
Practically speaking, to serve as an executor you must anticipate the challenges ahead of time, prepare for them, and remain organized. Indeed, organization is essential throughout the probate process, to include separating yourself into the two roles: executor and family member/friend.

While planning your estate and settling on an executor, consider alerting your would-be executor your decision ahead of time. Doing so will allow them to prepare for the role, and perhaps even get directions from you personally. For more advice, my August newsletter reviews some of the responsibilities and liabilities an estate plan administrator will face.  You can access that article here.  However, to get a better idea of the challenges it is best to consult with an estate planning attorney, such as myself, for advice and counsel.  The Initial Consultation page of my website gives you an idea of what to consider in preparing yourself and others for an estate planning consultation.

Reference: The Wall Street Journal (September 19, 2011) “Estate Executors: An Honor… and a Pain”

Joint Ownership - Hidden Pitfalls To Avoid

One of the most common estate planning mistakes that people make is joint ownership.

Estate planning can be daunting. Once you get past the fact that your very mortality (and morbidity) is the triggering event, estate planning means taking stock of all you own and, what is often more important, how you own it. Yes, there are many degrees of ownership and each can make for some difficult wrinkles.

One common phenomenon is joint ownership between generations. Not only is it common, but it can make for some unintended problems. Forbes recently ran a piece on some of these problems and the five reasons to avoid such ownership form. Let’s review some of the high points, but I would commend the full article to your reading file.

Joint ownership oftentimes is an attempt to simplify things, or at least that is why people use it as a means of holding title. Perhaps they want to simplify practical day-to-day financial management. Aging parents needing such help may add an adult child’s name to a bank account or investment, either for direct aid or for just assisting in managing the accounts or assets. Likewise, it could be done as an attempt to avoid probate. Adding the adult child’s name to the account, investment, or real estate as a form of will-substitute (a so-called "poor man’s will"). Of course, these are only simple solutions that may actually work; but only when things go off without a hitch.

One such hitch to remember is joint-ownership is a two-way street. That means that adult child joint owner has equal ownership rights to the assets and so do any of that adult child’s financial predators. The adult child may have their own creditors, may be facing an acrimonious divorce, or may be sued for damages in civil court. In addition, while no parent would anticipate it, the adult child may use the jointly owned bank account for a "quick loan" when they are running a little short of cash. Any of these unintended consequences can not only jeopardize the financial independence of an aging parent, but can cause hard feeling among other adult children who may (or may not) be joint owners with their parent.

Another possible hitch, especially from an estate planning perspective, is that joint ownership as a stop-gap or a will-substitute is not really estate planning and may run afoul of the parent’s actual estate distribution wishes. For example, the adult child who has joint ownership doesn’t have to share such assets upon the parent’s death. As you can imagine, it is very easy for such cases to spill over into family squabbles and even prolonged court-cases.

Sometimes joint ownership seems like a good idea and a quick fix to avoid probate. And, sometimes it is. Before you use joint ownership as a form of titling your assets, however, consider the drawbacks.

In the end, an estate planning attorney, such as myself, can help you determine whether joint ownership is appropriate under your unique circumstances. Remember: Look before you leap. The protection of your assets and family relationships are at stake.

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Reference: Forbes (September 13, 2011) "Top 5 Reasons to Beware of Joint Ownership Between Generations"

Asset Protection Pointer: Start Yesterday

Reference: Forbes (August 25, 2011) “Why Do Creditors Win In Most of the Reported Asset Protection Cases?”

One of the main goals of asset protection is to settle the case before it gets to court.

We tend to think of the law as a rigid structure, unless of course it’s bending to help us. On the other hand, the law also might bend against us… and that can be rather unsettling, especially when you are a debtor attempting to protect your assets.

Unfortunately, it seems creditors win most of the asset protection cases brought to court. In fact, a review of such cases suggests that courts have a bias in favor of creditors over debtors. Jay Atkinson at Forbes recently weighed in on why that is so and offers a glimpse into the politics and psychology of the court. I thought you might find it instructive.

Truth be told, assessing the value of asset protection is not something that can be done by merely scanning a record of court wins and losses for debtors and creditors. Why? Consider this: Creditors, by nature, tend to be the litigants who are after something. That means they can call it quits if they feel their legal position is not particularly strong. As a result, they are more likely to pursue an out of court settlement.

Debtors, however, have to stay on the defensive no matter how much ground they’re forced to surrender. Unfortunately, too, this means that most of the court precedents and legal interpretations are going to be pro-creditor, because the only way the court can affect change is by coming to a decision. If the decisions are always victories for creditors, then it follows that the precedents will also be pro-creditor. As Atkinson concludes: “The cases that are ‘good’ for debtors usually settle; the cases that are ‘good’ for creditors will probably go to a decision and thus ‘make law.’” That is about as well-summarized as I have seen it.

Atkinson has some more to say, particularly on the topic of judicial psychology, but the main lesson here: Court is not a “friendly” place for debtors. Indeed, as Atkinson points out, proper asset protection is really all about avoiding court or the need for a court decision. Simply put, proper asset protection is about proper planning and having it completed far ahead of time.

Helping you avoid the court proceedings of a probate is one of the goals of Sundvick Legacy Center.  I have detailed information on what a probate in Nevada would look like here.  To learn more about various Estate Planning options, please visit the Practice Areas of my website or call our office at (702) 384-3767 for a free consultation.

Warmly,

Lizette Sundvick

Credit Shelter Trust Still A Valuable Estate Planning Strategy

Reference: The Journal of Financial Planning (August 2011 ed.) “Why Portability Isn’t a Cure-All”

Some estate planners have suggested that portability makes it unnecessary to continue to draft estate plans that include credit shelter trusts. This reported demise of the credit trust reminds me of Mark Twain’s famous observation, after his obituary had been mistakenly published by the New York Journal, that “The reports of my death are greatly exaggerated.” Like Mark Twain’s “death,” it seems to me that reports of the demise of the credit trust are greatly exaggerated.

One of the most-heralded simplifications of the new estate tax law is portability of the individual’s federal estate tax exemption between married persons. Some media “experts” have been saying that portability would eliminate the need for most estate planning. Not true. As pointed out recently in the Journal of Financial Planning, credit shelter trusts are still a savvy planning strategy.

Portability means that any unused portion of a deceased spouse’s estate tax exemption doesn’t simply dissipate but can go automatically to the surviving spouse. Each individual gets a $5 million exemption, which means a married couple can effectively protect up to $10 million with their combined exemptions. That amount is sufficient to protect the vast majority of estates, eliminating the need for a credit shelter trust to pass and protect the exemption of the first spouse to die. Or so it would seem.

There are two conditions that limit the effectiveness of portability. The first is obvious: portability will expire at the end of 2012, unless Congress acts to preserve it. The second is that the surviving spouse must file a timely estate tax return in order for the IRS to assess and transfer the exemption, even if the estate value wouldn’t have otherwise triggered an estate tax return. So this simple, automatic portability thing is not as simple, nor as automatic as many would like believe.

Moreover, portability as a technique lacks many estate planning advantages, especially in the cases of blended families, appreciating assets, or where sprinkling taxable income to beneficiaries in lower brackets could result in a net tax savings.

Lastly, remember that portability will sunset for people dying on or after January 1, 2013. Relying on portability will be effective only in those situations in which both spouses die prior to that date. In most situations, a properly planned credit shelter trust will offer significant advantages over reliance on automatic portability.

With so many changes and uncertainty these days, considering a review of your current plan if you have one is a wise move.  If you do not have a current estate plan, now is the time to set one up.   We offer a free consultation.  Our office is available to take your call at (702) 384-3767.

Warmly,

Lizette Sundvick

Website:  www.SundvickLegacyCenter.com  or Office:  (702) 384-3767

Estate Planning/Beneficiary Designations

Reference:  The Wall Street Journal (July 6, 2011) “Beware the Beneficiary Form”

Think your estate planning is done once you've gone to the trouble of making a will? Think again. All your hard work can be undone with a stroke of a pen when you open a bank, brokerage or retirement account.

What is the quickest way to un-do an otherwise carefully planned estate?

Open a bank account, brokerage or retirement account.

Why? Because the beneficiary designations on these accounts override your will. Yes, it’s true – the beneficiary designation is the estate planning trump card. And many an estate plan has come undone because of carelessly named beneficiaries.

The Wall Street Journal last week issued a warning in an article entitled Beware the Beneficiary Form.

“People don’t realize the importance of this,” says Martin Shenkman, an estate planning lawyer in Paramus, NJ. A carelessly named beneficiary on a financial account can cause a loved one to be disinherited, a disabled child to lose government benefits, and heirs to be slapped with a big tax bill.

The Journal also offers a few tips to protect you from this type of estate plan destruction, to include:

Know what kinds of accounts have beneficiary designations. Did you know that U.S. Savings bonds have a beneficiary form? Other accounts for which you may have named a beneficiary include retirement accounts, life insurance policies, bank accounts, certificates of deposit, stocks, bonds and mutual funds.

Review your beneficiary designations regularly and certainly after any life-changing event such as a marriage, divorce, birth or death of a loved one. Also, job-changers and retirees take note: Beneficiary designations on retirement plans don’t carry over when you roll a 401(k) to a new employer’s plan or to an IRA, or when you convert a regular IRA to a Roth IRA.

If you would like to know more about an estate plan that fully considers your end of life desires, we can schedule a free consultation.  Our office is available to take your call at (702) 384-3767.

Warmly,

Lizette Sundvick

Website:  www.SundvickLegacyCenter.com  or Office:  (702) 384-3767

Estate Planning/Power of Attorney

Reference: Forbes – Bernard A. Krooks (July 7, 2011) “Power of Attorney Does Not Grant Access to Online Banking, Says Bank of America”

Rules such as Bank of America’s power of attorney policy are increasingly significant as the financial world increases its Web presence…

Some people who thought they had covered all their bases and acted responsibly to care for loved ones in the event of a debilitating illness or incapacity are finding their plans un-done by strict banking policies. Bank of America recently updated their online security procedures, and no longer accepts a power of attorney for online banking.

As Bernard Krooks wrote last week for Forbes, this strict policy came to light when Chicago resident Eva Kripke was blocked from accessing her husband’s Bank of America account. According to Krooks, Mrs. Kripke had been handling her husband Sidney’s bank accounts as agent under a power of attorney ever since he was diagnosed with Lew body dementia four years ago. Suddenly now, however, she is denied access under the bank’s updated security procedures.

The bank suggested she to go to her local branch and get a printout of her husband’s account information. Unfortunately, Mrs. Kripke felt this was unacceptable because her husband’s health status requires close financial oversight. Perhaps more unfortunate, her options are limited because her husband’s illness has rendered him incompetent.

Rules such as these are becoming increasingly prevalent and significant as more people are called upon to care for an aging population and their attendant disabilities. An experienced elder law attorney can provide guidance in situations where powers of attorney are limited.

You can learn more about powers of attorney in the Fundamental Estate Planning Practice Center on our website.

If you would like to discuss guardianship and power of attorney issues, we can schedule a free consultation.  Our office is available to take your call at (702) 384-3767.

Warmly,

Lizette Sundvick

Website:  www.SundvickLegacyCenter.com  or Office:  (702) 384-3767

ESTATE PLANNING / CELEBRITY ESTATES

Reference: US News & World Report’s MONEY (July 27, 2011) “Amy Winehouse’s Financial Legacy”

Amid the sad story of Amy Winehouse’s death came one positive note of inspiration for her heartbroken fans: The troubled singer left her affairs in remarkable order.

We are used to hearing dramatic stories about the estate woes of celebrities like Anna Nicole Smith and Gary Coleman. From all appearances, however, in the tragedy of singer Amy Winehouse’s recent death there is one positive note: she left her affairs in remarkable order.

According to US News & World Report, Winehouse’s assets, estimated at around $16.4 million were at risk of going to her ex-husband, who is currently in prison, since the English legal system tends to favor ex-spouses. But Winehouse avoided that problem by writing a new will directing her estate to her parents and brother instead.

Whether you have $16.4 million (or more) … or substantially less … there are fundamental estate planning moves that every adult should undertake. These include making a will, appointing powers of attorney, and completing health care documents. Trusts also are versatile estate planning tools that may help you achieve your goals in a variety of situations.

You can learn more about these basic strategies in the Fundamental Estate Planning Practice Center on our website. 

Amid the sad story of Amy Winehouse’s death came one positive note of inspiration for her heartbroken fans: The troubled singer left her affairs in remarkable order.

We are used to hearing dramatic stories about the estate woes of celebrities like Anna Nicole Smith and Gary Coleman. From all appearances, however, in the tragedy of singer Amy Winehouse’s recent death there is one positive note: she left her affairs in remarkable order.

According to US News & World Report, Winehouse’s assets, estimated at around $16.4 million were at risk of going to her ex-husband, who is currently in prison, since the English legal system tends to favor ex-spouses. But Winehouse avoided that problem by writing a new will directing her estate to her parents and brother instead.

Whether you have $16.4 million (or more) … or substantially less … there are fundamental estate planning moves that every adult should undertake. These include making a will, appointing powers of attorney, and completing health care documents. Trusts also are versatile estate planning tools that may help you achieve your goals in a variety of situations.

You can learn more about these basic strategies in the Fundamental Estate Planning Practice Center on our website.

If you would like to create an estate plan to keep your assets protected, we can schedule a free consultation.  Our office is available to take your call at (702) 384-3767.

Warmly,

Lizette Sundvick

Website:  www.SundvickLegacyCenter.com  or Office:  (702) 384-3767

ESTATE PLANNING / ESTATE ORGANIZATION

Most experts recommend creating a comprehensive folder of documents that family members can access in case of an emergency, so they aren't left scrambling to find and organize a hodgepodge of disparate bank accounts, insurance policies and brokerage accounts.

The financial consequences of failing to keep your legal and financial documents in order can be significant. As pointed out in a recent Wall Street Journal article, state treasurers currently hold $32.9 billion in unclaimed bank accounts and other assets. Additionally, some of the country’s largest life insurers are under investigation for failing to pay out unclaimed life policies to beneficiaries. Insurers say they are behaving lawfully and under their policy contracts are required to pay a claim only when beneficiaries come forward.

Will your family members reap the full benefit of your estate planning efforts, or will they miss out simply because they cannot locate all of your important legal and financial documents in a timely manner? Of course, you don’t have to keep every single scrap of paper, but the WSJ offers a pretty comprehensive list of the 25 most important legal and financial documents you should compile, and make sure your heirs can quickly access, to include:

1. Will
2. Letter of instruction
3. Trust documents
4. Housing, land, and cemetery deeds
5. Escrow mortgage accounts
6. Proof of loans made and debts owed
7. Vehicle titles
8. Stock certificates, savings bonds, and brokerage accounts
9. Partnership and corporate operating agreements
10. Tax returns
11. List of bank accounts
12. List of all user names and passwords
13. List of safe-deposit boxes
14. Durable health-care power of attorney
15. Authorization to release health care information
16. Living will
17. Do-not-resuscitate order
18. Personal and family medical history
19. Life insurance policies
20. Individual retirement accounts
21. 401(k) accounts
22. Pension documents
23. Annuity contracts
24. Marriage license
25. Divorce papers

The original article goes into much more detail with each, and whether you have or need each of these documents will depend on your individual situation and the various legal facets of your life, but it is a list that commands a certain attention. By putting this all together you help your loved ones to more quickly and easily pick up the pieces and put your plan into operation.

Reference:  The Wall Street Journal - Saabira Chaudhuri (July 2, 2011) “The 25 Documents You Need Before You Die”

 

If you would like to create an estate plan to keep your assets protected, we can schedule a free consultation.  Our office is available to take your call at (702) 384-3767.

Warmly,

Lizette Sundvick

Website:  www.SundvickLegacyCenter.com  or Office:  (702) 384-3767