We Were Surfing, Then a Shark Ate Her
What Happens if You Die Without a Will While On Vacation? It was going to be the best honeymoon ever. We met a couple of years post-divorce for both of us, and fell madly in love with each other and each other’s children. We were financially secure and each of us had our own wealth and intended to keep our assets separate. The water was beautiful and blue and the waves were amazing. We went out on our boards and out of nowhere appeared a grey fin, an ugly snout, and then menacing black eyes. She freaked out, fell off, that thing opened its snout, showed teeth, and the center half – 1/3 – of my new wife’s body disappeared. Then all hell broke loose. We had quickly prepared powers of attorney prepared before we left and were planning to have an estate plan prepared by an attorney once we returned. My wife was particular about how she wanted her remains disposed – she wanted to be buried in the most sustainable and economical way. At the hospital, researchers appeared and refused to release her body. Unlike our home state, in this state, doctors were the final decision-makers on dispositions of remains. So I had to leave her remains in a strange place. I’m also going to have to pay thousands of dollars to a healthcare system because we didn’t have traveller’s insurance. When I returned home, I learned that some of her accounts had no designated beneficiaries, so instead of everything going to her children, her children will have to split everything with me. When they found out about that, they began blowing up my cell phone asking me what I intended to do. Of course, I intend to give them the 100% of my share but one of them is a spendthrift – money burns holes through their pockets and my wife was adamant about being careful how much to give to this child on a regular basis. That has caused some friction between all my stepchildren. Also, since my wife had no Will or Trust, her estate must go through probate. In this state, because I’m the surviving spouse, I have preference in acting as an administrator for her estate. This issue also created discord between me and my stepchildren. That frickin’ shark! I think what I’m going to do is use part of my half to create a trust for the spendthrift child to shelter at least part of their share of the estate, and they are not going to like that, but I know it’s what my wife would have wanted. She would have been very upset with the fact that this kid, who she actually suspected as being a functional addict, is going to obtain 1/6 of their share completely outright. I really hope the kids don’t blow through their inheritance; they are still young adults, just a few years out of college. Her estate was rather large, so I also must obtain insurance to cover the value of her estate, which cost the kids thousands of dollars. My wife was also working with a tax professional because she also had a significant tax liability that they were disputing with the IRS. That means I can’t distribute her estate to the kids (or anyone else) until that issue is resolved. How am I going to explain that to the kids? Maybe I can provide a partial distribution, but I still need to have some appraisals done – she owned a couple of rental properties and a small online business. I really miss her – she was fun but brilliant. This is a mess… And a fictional story…kinda
Zen and the Art of Sibling Rivalry
(Or more aptly titled, \”Probate War Stories That Will Scare You Into Estate Planning…I hope\”) My sister predeceased me. During our childhood, as the older sibling, I did what most older siblings did – tortured her because my parents tortured me. Okay. Torture is a misnomer, but childhood psychologists say that my actions seeking to control my younger sibling, were natural for the stage of our relationship. And in my evolving yet immature brain, it was only fair: There were only 2 of us, and I was the oldest. But it ended when I stayed small for my age and my younger sister grew large for her age, and she showed me who was really boss. After that, my sister and I rarely had a row. Maybe we had strong differences of opinions three times during the entire 46 years we were together. She was no saint (and neither was I), but there were lines we just didn’t cross. And maybe we were just lucky that way, or maybe I’m just dreaming because of the 4 in our tiny family, my sister was the first one to die. However, I would prefer to think that we were just lucky that way, like our cousins who were also sisters with parents who predeceased them. Because O-M-G… Siblings who will drain an estate dry because of control issues and parents who just knew the kids would get along fine. Death and money changes everything… Sibling POAs who absconded with the bulk of the fortune while a POA, leaving other siblings to wonder if the medical bills were that high. Pending death and money changes everything… Siblings who changed the Last Will and Testament in the hospital room, after the morphine drip increased and other siblings were taking care of the house. Like I said, pending death… Siblings who saw the Last Will and Testament before the other siblings, didn’t like what they saw, decided to keep the Will in a safe place, and upon death, when asked, “What will? There is no will.” Secret knowledge of disproportionate gifting changes everything… I recently listened to a panel of estate planning attorneys discuss the importance of transparency in gifting. I agree and disagree. Parents generally love their children and, before the parents die or become incapacitated, they rarely see the sibling ghoul that lurks within. So, being transparent about estate planning is an exercise in futility. However, disproportionate gifting, making only one a POA over financial matters, and the rationale behind these actions should be discussed with everyone in the room and…probably a Zen Master. Now, not all siblings are evil-doers. In my practice, I’ve witnessed wonderfully loving acts of generosity between siblings. But, the wars… Namu Myōhō Renge Kyō
Give Me Your Family and Your Money
Estate planning attorneys help clients manage the 2 most important aspects of our clients’ lives: their families and their money. This means we must know as much as possible about our clients, more than almost anyone. A friend recently chuckled when I told them that if they want to be my estate planning client, then they need to talk to me as they would their doctor and then tell me what their doctor reported; talk to me like they would their tax accountant and then give me copies of their tax returns; talk to me like they would their financial planner and then give me copies of all of their financial records; talk to be about their children, siblings, partners, and parents and then tell me what they don’t want them to know; and, finally, give me the complete contact information for each one of the persons we just discussed so that I can verify, within the bounds of attorney-client privilege, HIPAA, and other fiduciary rules, the information provided with each person. And THAT is why to consider preparing a Last Will and Testament or a Trust as a DIY task is NOT funny … Unless you’re a doctor who can diagnose their own maladies, an estate planning attorney who is also a tax accountant, and a Certified Financial Planner with licenses to buy all the financial products available to amass wealth, AND you have no loved ones or potential beneficiaries. And THAT is why having a credible, experienced estate planning attorney is important for 99.9% of adults… One of our instruments is called a Trust for a reason. No joke.
So Like, What Is It with Using Children? AKA Snakes Pt. 2
Continuing our examination of challenges to marriage equality, let’s consider the D.C. case, Marouf v. Azar, where the issue is whether the federal government, on the basis of religious freedom, violated the Constitution by using taxpayer dollars to fund services that discriminated against lawfully married persons. Two lesbian, married couples, and federal taxpayers have challenged the federal government because part of their tax payments (actually part of all U.S. taxpayers\’ dollars) is used to fund programs that discriminate against them with respect to adoption and foster parenting. Most readers probably know by now, because of recent events, that the federal government provides care to refugee children who reach the U.S. without a parent or legal guardian; the care is provided via the Unaccompanied Refugee Minor Program. The government further provides assistance to children who arrive without a parent or legal guardian and have no legal status through the Unaccompanied Children program. Homeland Security initially seizes children in both programs and transfers them to the Office of Refugee Resettlement program (ORR), which is governed by the U.S. Health and Human Services Department (HHS). ORR then places the children in foster homes or with adoptive parents and provides other care through religious organizations such as the organization at issue in this case, the United States Conference of Catholic Bishops (USCCB). The USCCB openly denounces LGBTQ persons and families because of the organization’s religious doctrine and clearly provides this denunciation in its application for funding from the federal government. Yet, ORR provides grants comprised of taxpayer dollars to the USCCB despite the organization\’s discriminatory policy and, in so doing, violates its parent agency’s – HHS’s – grantmaking rules because HHS follows the law settled by Windsor and Obergefell. One couple, Fatma Marouf and Bryn Esplin, and filed a lawsuit based on these facts after they tried to apply for adoption through USCCB and, during a telephone interview, were denied the opportunity to continue the application process. Fatma and Bryn were told that they were unsuitable because their family did not “mirror the holy family” and thus, were unqualified to foster parent or adopt. In response to this clear discrimination by an organization funded by the federal government, as of February 2018, Fatma and Bryn are seeking redress alleged violations of their rights under the Establishment Clause, the Equal Protection Clause of the Fifth Amendment, and the Substantive Due Process Clause under the Fifth Amendment. Really…what is it with keeping children from being loved by lawfully, married couples?
Revisiting We ALL Do…
June is PRIDE month and to celebrate…all month long, we\’re revisiting the one of the most important decisions for our friends, family, and clients in the LGBTQ community: Obergefell v. Hodges, which gave the community marriage equality. To start things off, let\’s consider the 4 \”principles and traditions\” the Supreme Court of the United States used to justify its Opinion and, thus, marriage equality: \”Individual autonomy\” encompasses the right to decide who one will marry. See Loving v. Virginia. And in case you\’re wondering, \”individual autonomy\” is legalese that underpins the Declaration of Independence, the instrument that declares individuals free to pursue happiness. The union of marriage is a fundamental right because the intimacy of the marital union is unique and depriving same-sex couples from the recognition and protection of that intimacy is wrong. Marriage equality helps protect the emotional stability of children borne or adopted into same-sex marriages, by equalizing their families with heteronormative families. Marriage is one of the bases of America\’s social and legal order. Depriving same-sex couples from enjoying the benefits of marriage, which includes social stability, would be \”demeaning. Individuals must be free to pursue happiness. That happiness can be found in the remarkable closeness of the marital union. Generally, children are the fruit of marriages and children must be protected because they represent the future. Thus, marriage is a societal bedrock in which most adult individuals must be able to participate. Sounds simple, but it took us almost 50 years to get here.
Protecting Families Globally…A Remarkable Colleague
Your Resolution: Keep Fake Children Out of It
Recently a post went out from our office across a few social media outlets that pretty much sums it up when it comes to reasons why most folks, especially parents and smallbiz owners need a will. The post went something like: “Got kids? Get a will. Got more than one heir? Get a will. Got a high risk job? Get a will. Got the picture? If it\’s a Renoir, get a will.” The Issue: Children While we’ve written here repeatedly about how important it is for parents to have a will because of the guardianship provision, it bears repeating. Only by having a valid will can you nominate a potential guardian or potential guardians for your children. If you’re a single parent, having a valid will is all the more important. You don’t want an irresponsible parent having control over your child’s estate, which he or she will have, if you’ve followed this series and bought life insurance, or daily care if the other biological parent believes that chips and fruit punch make for a good breakfast. An alternative issue about children can be found in the converse: If you’re single and have been responsible intimately, you want to ensure that “fake children” cannot inherit from you. The issue: Multiple heirs. Wills or the potential for inheritance often results in less than happy-go-lucky family dynamics, especially if someone dies without a will and with a couple of children or a few nieces and nephews. So a will allows one to head the family feud off at the pass. You can state who will get what and when and the best part is you don’t have to say why. Frankly, that should be communicated long before the ink on the will is dry. If you’re unsure about the allocation, you can leave it to the discretion of the executor and have a “no-contest clause” inserted and then talk about it at Thanksgiving. That might provide the impetus needed for having that “conversation.” The Issue: High Risk Profession. Do you work as a carrier of jet fuel? Are you a criminal defense attorney or a divorce lawyer with walk-in offices? High-wire artist? Human rights attorney working in the hotspots, such as Afghanistan? The Issue: Art and other collectibles. People tend to put a value on everything from brown crock-pots to President Jefferson’s cravat. If you own anything that is similar to Jefferson’s cravat, the pen Clinton used when he signed DOMA, Reagan’s cowboy boots, Liberace’s cape, you need to get that or those items first appraised by a qualified appraiser. Next, you should have a will prepared that will determine how that valuable piece or collection is going to be managed, i.e., sold, handed down, donated. More than 70% of Americans don’t have a will and that percentage surely includes people who have children or who don’t plan to have children, folks with more than a few heirs who might argue over a collection of antique doohickeys. Children should be taught how to plan; one should plan appropriately for not having children; and doohickeys should also be in the plan – the estate plan that includes a will.
4 \”Must Ask\” Questions for Smallbiz Owners and Single Parents
This is the third of 4 articles in our 2013 Estate Planning Fundamentals Review series. We\’ve already covered, life insurance and healthcare powers of attorney. So moving on…to property powers of attorney. Property powers of attorney are important components of an estate plan because the documents help people plan for today as well as tomorrow. The instruments are even more important for single parents and small business owners because often the single parent or smallbiz owner is the sole keeper of the keys to the family’s or business’s financial kingdom. So if the key keeper becomes seriously ill or suffers a devastating injury, the financial kingdom could turn to ruin if a trustworthy substitute keeper isn’t ready to step in. A property power of attorney allows for designation of a substitute keeper. Consider the following: Karyn and Jonah are divorced. Karyn has sole custody of Little Caroline because Jonah was abusive; Karyn’s restraining order proved so. Karyn was an only child whose parents died a while back. She and Jonah moved to Illinois immediately following the birth of Little Caroline, who is 5 years old. By the time Little Caroline was 2, Jonah and Karyn’s relationship was over. After the divorce, Karyn bought a flower and wine boutique, which is thriving. She owns a modest home and lives well within her means. However, Karyn has recently learned that she must be undergo major surgery and will be in recovery for at least 6 weeks, 3 of which will include her being heavily medicated. Because she put so much time into her business, though she has a part-time employee, and spends all of her spare time caring for Little Caroline, she hasn’t had a lot of time to really nurture other friendships. Furthermore, Jonah not only has a violent temper but he also has an erratic employment history. So there is no way Karyn would let him near Little Caroline or her financial affairs. So some but not all of the questions Karyn should consider are: Who will care for Little Caroline while you’re in the hospital and during the first few weeks of your recovery? Do you have 6 months of emergency daily living expenses saved? If you pay your mortgage early, will you be penalized? While you are in the hospital and a bill becomes due, have you arranged for its payment and how? If a complication arises, requiring a longer hospital stay and, thus, a longer recovery period, who will tend to your personal and business affairs? If you conduct your affairs online, who will have access to your online accounts and how have you cleared this with the relevant institutions? Can your part-timer handle opening and closing the shop during your absence? How has this authority been provided and is there a back-up plan? Can the shop survive during your absence? If you have arranged for someone to manage your financial affairs, have you limited their authority and how? All parents and business owners owe a duty to their families and business stakeholders to plan. For single parents and small business owners, failing to plan creates dangerously and unnecessary high risks to family and stakeholders.
The Silver Tsunami Silver Lining, Pt 1: Minimizing the Wave
Recently, I shared a lovely dinner with a few friends and clients over a discussion about the “Silver Tsunami,” a phrase I’m sure you’ve heard bandied about over the last year of so. Still, just what is this “Silver Tsunami”? The “Silver” is related to the number of Baby Boomers, those of us born in 1946 through 1964, reaching retirement age daily. There’s a whopping 10,000 of us looking at 65 every day and that number isn’t decreasing for at least 10 years. The Silver Tsunami is the combined effect of factors caused by retiring Baby Boomers, the largest concentration of individuals reaching retirement age in U.S. history. The effects involve what happens when millions of people suddenly stop earning what they used to, are staring at potentially a longer lifespan than anyone anticipated, and because of the Great Recession or other factors may have or become non-spousal or partner dependents. But there is a silver lining to the Silver Tsunami and, given the current state of affairs of our government, this information is even more critical for Boomers and their children and parents. Most of us have dependents – minor children, grandchildren, very close nieces, nephews, or even very close minor children of dear friends. If we don’t, we probably have adult dependents. If we don’t have either, we just need to give it about 10 years or so. The point is the dependent wave is the precursor to the tsunami but this wave requires relatively simple preparation to ensure that it doesn’t morph into a tsunami. Chris and Charles’ story helps make the point: Chris and Charles decide to take a vacation without the children, Taylor and Michelle. Chris’s sister, Sarah, usually watches the kids but is working on a major project for her boss during their vacation, so Charles’s brother, James is watching them. The kids love James and he loves them, too, often lavishing them with Cheetohs, fruit punch, and snickers…for breakfast. Chris and Charles are driving along and POW! Pileup! Both sustain injuries that will require 6 months or more of surgeries and then therapy. So who’s going to care for the kids? Who will pay the mortgage? No one knows because Chris and Charles are both incapacitated and they failed to plan adequately. What could they have done to ensure the kids were cared for and the mortgage was paid while they were both unable to work? They could have had solid property powers of attorney, which would allow the right person – probably Sarah – to step into their shoes and help ensure their financial stability. In this case as in many, a property power of attorney isn\’t about helping someone out until death; it\’s about protecting what they\’ve got until they can get back on their very much alive feet. What about the money, though? Neither one will be working for at least 3 months. Any financial advisor worth his or her salt will tell you that’s why you must save at least 6 months of emergency living expenses while you’re also socking away your retirement. But let’s just say the money is there. What we don’t want is someone running away with the money, which is why choosing a trustworthy power of attorney agent is critical. What if there were no siblings but only Chris’ parents left to care for the kids? Then the waves may come crashing down on the children and definitely on the parents’ retirement goals. A recent study indicates that approximately 2/3 of Baby Boomers are unsure about their retirement resources. If Chris and Charles were only survived by the girls and Chris’ parents – Rob and Jen, then Rob and Jen were, of course, going to care for Taylor and Michelle. However, that loving obligation could surely cause waves to crash against the retirement shores. Since estate planners love killing folks off to get our points across, for purposes of our story, let’s just say that Rob didn’t last long after Chris and Charles, so only Jen – age 52, Taylor age 6, and Michelle age 8 survive. Rob left Jen comfortable, but Chris and Charles, as mentioned earlier, had not planned adequately. They did what most young couples do, bought reciprocal life insurance policies with a death benefit of $50,000.00 each, naming Taylor and Michelle as contingent beneficiaries. At the time of their deaths, the projected cost of a college education for one child at Taylor’s age was $180,000.00 and the cost to raise one child to 18 years of age, $215,000.00. Accordingly Grandma Jen would need an additional $500,000.00 to see the girls through college. That\’s a tsunami headache. What can she do? The Silver Tsunami Silver Lining, Pt 1 | The Silver Tsunami Silver Lining, Pt 2
Charitable Trustees Beware
Cycling to the office this morning, I passed a woman jogging while pushing a 3-wheeler stroller jogger with twins in it. My mind meandered as to how challenging it must be to care for twins and let’s not even talk about triplets! But I couldn’t help it… Hope and Bill had triplets: Gray, Jay, and Faye. Bill couldn’t handle the stress of 3 terrible twosies, 3 tumbling toddlers, 3 precocious pre-teeners, and 3 hormonally tangled teenagers, so he divorced Hope when the triplets were 15 and went on a permanent excursion to chant in the Himalayas. Hope, not one to be deterred, called on her siblings, Charity and Joy. All was going well until Hope suddenly became ill and, at the young age of 44, passed away, leaving 3 teenagers with no parent. Bill had never been heard from since he left with snowshoes in hand. However, Hope left a will and a trust, naming Charity as trustee and Joy as guardian. When Hope passed on, though she didn’t have a taxable estate at $4 million, she left a considerable amount to her children and her sisters: $1 million to each child and $500,000 to each sister. After the trauma of losing their sole parent had waned to a manageable, moving forward, level, May, Faye, and Jay continued planning for college. Faye was especially excited because she had been accepted at her first choice for engineering. Well, 3 years into her engineering program, Faye and a few other classmates decided to start a small technology company. Each classmate pledged $100,000.00 as seed money and each had the means to fulfill the pledge. So Faye phoned Charity, who was vacationing in the Cayman’s, told Charity about the new venture and asked for her pledge money. She knew that her mom had left enough for her in the trust at this stage – Hope had staggered mentoring provisions in each child’s trust – to more than meet the pledge and that Charity was to invest for the purpose of conservation and then growth. What Faye didn’t know, however, was that Charity was very charitable to herself, using not only Faye’s trust, but May’s and Jay’s as a source of charitable giving. Charity told Faye that it would be a little difficult to come up with the $100,000.00 straight from Faye’s trust, but that she would borrow from May and Jay and help Faye meet the pledge. Faye, the oldest by 10 seconds, didn’t like what she heard and a heated argument ensued. It ended with Aunt Charity telling Faye to calm down or else she wouldn’t get anything because she had discretion over the distribution and there was nothing Faye could do. In fact, Charity decided to make the Cayman’s her home and wasn’t sure when she’d be returning to the states to give Faye the distribution. But Charity was wrong; Faye had the law on her side and Charity was eventually extradited to the U.S., where she faced counts of fraud and breach of fiduciary duty. Faye and her classmates’ business boomed; she eventually coupled with a partner and had a child aptly named, Prudence. The Prudent Investor Rule: A trustee administering a trust has a duty to invest and manage the trust as a prudent investor would considering the purposes, terms, distribution requirements, and other circumstances of the trust.