probate

Common Mistakes Women Make in Estate Planning!

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A large amount of women hold a substantial amount of wealth in this country, however, many do not take the correct steps to protect their assets.  It’s a simple fact that Women live longer than men!  By the time a woman is 85+ she will outnumber men by 25% and she is 9 times more likely to live past 100 than a man.  When the husband gets ill, becomes disabled or passes away, it is the WIFE who is left to deal with the couples finances.  Therefore, it is necessary for women to get more involved in the couple’s finances well before any of these life changing events occur.  What should a Woman avoid?

Putting off Estate Planning. Probating an estate without a will takes longer, cost more money, requires more court involvement and the state law determines who gets your possessions. But the biggest reasons you should have a will is to keep the family harmony! There’s no excuse for putting your family through the drama of trying to probate an estate without a will!

Trying to Do It Yourself! There are numerous ways to transfer assets upon death and a will is just one of them!  There are also numerous documents you may need depending upon your own circumstances.

  • Who gets your stuff once you pass?
  • Who gets the responsibility of being your executor and what does that mean?
  • Who makes decisions for you upon disability or incapacitation?
  • Who makes burial decisions once you pass?
  • Do you need a Special Needs Trust now or upon your death so your spouse or child doesn’t lose disability benefits?

These are all good questions to iron out with a professional!  The cost of preparing a will by using a professional should not prevent you from being prepared.  You can spend a little now or a lot later!  However, the main reason you should leave it to the professionals is because doing it your self means there is good chance that you will make a mistake!  I have had small and large estates where the person used a computer form incorrectly and it left us trying to figure out what they wanted to accomplish and cost the beneficiaries additional unnecessary expenses. I have also had clients write their own will giving away each of their assets to a specific person, but they forgot about after acquired items or potential future litigation.

Failing to Understand your financial situation. Many women find themselves lost when their husband passes away or becomes incapacitated because he was the one that handled the finances. While you may not want to be the one to deal with the bills on a daily basis you should always know what assets you have as a couple, how those assets are disposed of upon death, and what your estate plan is as a couple.

Failing to Probating Husband’s Estate.  Women are more likely than men to put off probating their spouses estate.   Many women think that they get it all so there is no need to probate, but this always causes problems down the road.  It is necessary to probate the will to transfer assets such as, bank accounts, investment accounts and real estate.  What happens when you want to sell or refinance your house and it is still in both names?  What happens when you pass away and your children try to probate your estate and there are joint accounts or property?

In Texas, a Will can only be probated within 4 years of death unless there are extenuating circumstances and then it can only be probated as a Muniment of Title.  So waiting to probate a Will seriously limits your options!   Do you really want your children to have to deal with your husband’s estate years down the road?  Do you really want the Court to tell you that you now only own one-half of your house because you failed to probate?

If your husband doesn’t have a Will, then it is important to probate now rather than later!  The main reason is because you or your children may not be able to find witnesses in 10 or 20 years.  So as you can see it is very important to consult an attorney after your spouse dies to discuss the ways you can go about making sure you preserve your rights.

Failing to Consider the Possibility of Incapacity.  Women live longer and are more likely to be the caregiver of their husbands or parents, so it is likely that a woman is going to have to deal with long-term care during her lifetime. For this reason, it is important for women to be informed, involved and understands her financial affairs.  Here are a few questions you need to discuss with your estate planning attorney are:

  • Do I need a Guardianship Designation? It lets you chose now rather than allowing a Court to decide who will have control over your person and finances if you become incapacitated or the POA’s are not enough.
  • Do I need to provide for a Special Needs Trust for disabled or incapacitated spouses or children? If your spouse or child receives financial assistance, you would not want to leave them assets that would affect this assistance.
  • Do you need a Lady Bird Deed? This tool could help preserve your home to be left to your children at your passing being used to pay your creditors.

Failing to Consider Burial Plans.  Since you will likely outlive your husband, have you considered that it will be up to you to make the funeral plans after his passing.  Many women are too upset about their loss to handle these arrangements so it is left up to the children or funeral home.  But what if you and your husband could make these plans in advance of either’s passing?  This doesn’t mean you have to purchase burial plots and pay for burial plans!  This just means you have a written plan in place and designate an agent to carry out this plan after you are gone.  It makes sense to have such a plan because it is easier on the remaining spouse who has to deal with the loss or with the spouse’s other family members.

Estate Planning advise from Warren Buffett!

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Blum

Marvin Blum (pictured on the far left) generated quite a bit of media coverage this past weekend when he posed a question to Warren Buffett at the Berkshire Hathaway annual meeting, where an estimated 35,000 shareholders gather each year in Omaha. Marvin’s question and a summary of Warren Buffett’s comments are below.

“I’m an estate planning lawyer, and it’s interesting as we wrap up today to ponder that the baby boomer generation is about to pass along the greatest transfer of wealth in history. I can design plans that eliminate estate tax and pass down great amounts of wealth to the next generation, but many of my clients come to me and say they want a plan like Warren Buffett’s, leaving their kids enough so they can do anything, but not so much that they can do nothing. Now they ask me, and I am asking you, ‘How much is that, and how do you keep from ruining your kids?'”

The following is a brief summary of Mr. Buffett’s insightful response:

• I think that more of our kids are ruined by the behavior of their parents than by the amount of the inheritance.
• I rewrite my will every five or six years.
• When your children are old enough (mid-thirties or thereabouts), you should explain your estate plan to them – It’s crazy for them to read the will for the first time after you’re dead.
• If your child is named as executor, your child should understand how to carry out his or her obligations that are embodied in the will before I sign that will, and we should talk it over.
• Rather than creating a dynasty of sorts, if you’re very wealthy, the money can have far more utility to society than to create a situation where your kids don’t have to do anything in life except call a trust officer once a year and tell him how much money they want.
• If you’re going to leave each of your children different mixes of assets, you want to make sure your definition of equality is understood by the children.

Marvin’s question drew immediate attention in the news media with coverage in The Wall Street Journal, The New York Times, The Washington Post, Bloomberg Business Week, The World-Herald, and commentary from these sources was syndicated and reprinted globally by many other outlets.

Article was provided by the Blum Firm, P.C.

Who makes the funeral decisions?

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In Texas, if the Decedent did not leave any written instructions, then the Texas Health & Safety Code authorizes the following persons, in the priority listed, to control disposition, including cremation. They also bear liability to pay the reasonable cost of burial, from their own funds if the estate does not have adequate funds. They are:

1) The surviving spouse;

2) Any one of the surviving adult children;

3) Either one of the decedent’s surviving parents;

 4) Any one of the decedent’s surviving adult siblings; or

5) Any other adult who would inherit under the intestacy laws.

However, if the Decedent left instructions, they get top priority!  Legally, a person may provide funeral directions in the following:

1)       a Will;

2)       a pre-arranged funeral; or

3)       a written instrument signed and acknowledged by that person.

If the directions are in the Will, then for the limited purpose of handling the funeral there is no need that the Will first be probated. The person authorized to control the disposition must promptly carry out the directions to the extent that they are affordable to the estate or the Agent. If that alleged Will is later denied probate or is declared invalid, the funeral directions remain valid to the extent they were acted on in good faith. Again, probate of the Will is not required – just the appearance of a document that purports to be the Will and is acted on in good faith.

The directions might also be in a legal document called an “Appointment of Agent to Control Disposition of Remains.” It is essentially a power of attorney, but it takes effect at the moment of death, contrary to typical powers of attorney that cease at the moment of death.  That Appointment document may include very explicit and legally binding instructions, including the requirement of cremation or a traditional funeral. It must be signed by the principal (and acknowledged before a notary) and it must be signed by the agent. When the agent signs it, the agent is also agreeing to pay for the funeral if the estate’s funds prove inadequate.

Keep in mind that the funeral home can legally refuse to accept the Decedent’s remains or to conduct the funeral or cremation until it receives a court order or other suitable confirmation that the dispute has been resolved. So don’t put your family through the fuss of deciding what your burial plan will be, prepare ahead of time!

The Independent Executor’s Job Duties in Texas

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An administration of an estate can take up to nine months or more depending upon the assets contained in the estate. Therefore, there is no reason to feel rushed or the necessity to make a distribution immediately upon being appointed. The appropriate procedures should be followed to protect you from possible litigation. If you are named the independent executor, consult an attorney to be appointed by the Court. Once you are appointed, these are your job duties:

  • Notify the following that apply to the decedent: Social Security office, IRS, banks, retirement companies, investment companies, employers, etc.
  • File Inventory, Appraisement and List of Claims within 90 days of qualification date. Your attorney will provide you with this form to complete and then the attorney will file the Inventory.
  • Publish a notice with the local newspaper to any unknown creditors of the estate, within one month of your appointment. The attorney will usually do this for you.
  • Give written notice to all beneficiaries named in the will within one month of being appointed. You will then need to file a statement of compliance with the Court. The attorney will usually prepare these forms for you.
  • Give written notice by registered mail to holders of real estate liens against Estate property within two months of appointment.
  • Give written notice to all known unsecured creditor’s explaining they have four months to file a claim. If a notice of claim is filed with the court within four months, you can either do nothing and the claim is deemed denied within 30 days or you can send letter denying claim. Once claim is denied, creditor has 90 days to file a litigation case or his case is forever barred. You should not pay any claims to any creditors until this step is completed and you have consulted with your attorney.
  • Give the State of Texas notice of death, but only if the deceased received Medicare financial assistance from the State for such benefits as nursing home or residential care facilities.
  • Liquidate all assets of the estate, sell real property, etc. unless other arrangements have been made between the heirs.
  • Place all Estate funds in insured accounts in the name of the Estate. Retain in a checking account only such funds as are reasonably necessary to pay the debts of the Decedent and the expenses of administering the Estate. Place all additional funds in interest bearing accounts at the highest interest rate available. The bank will require you to have a Tax Identification Number for the decedent’s estate to change the bank account ownership into your name as Executor, so you can go to IRS.gov to obtain an Estate Tax Identification Number or my office can assist you with obtaining this TIN.
  • Preserve, protect and insure, if insurable, all non‑cash assets of the Estate.
  • Maintain an accurate record of all expenditures and receipts of the Estate, regardless of how long the estate remains open. Keeping good records will help you in the long run if a creditor or beneficiary questions your actions as Executor/Administrator. It will also protect you in the long run in explaining your actions to the beneficiaries or heirs.
  • Make arrangements to dispose of or sell all personal property, utilizing estate sale or distributing items to beneficiaries. Hold an estate sale if necessary and sell off any vehicles, or other titled property as necessary.
  • Make arrangements with realtor to sell real property, if necessary. The attorney should review all contracts for you.
  • Pay funeral expenses and expenses of last sickness, before paying anyone.  Reimburse any party who has already paid these expenses.
  • Pay court costs, attorney fees and expenses incurred.
  • Pay only creditors who have made a proper claim against the estate.
  • Pay all delinquent child support and child support arrears, if any.
  • Pay all income taxes, penalties and interest, if any.
  • Pay all claims for the cost of confinement by a correctional facility, if any.
  • Pay all claims for repayment to Medicare, etc. by state agencies, if necessary.
  • Once you are ready to distribute to the beneficiaries or heirs, contact the attorney they can prepare Receipts and Waivers for all parties to sign upon receipt of their checks. Distribute the estate funds to the heirs and have each heir sign a statement of receipt.
  • Submit a Final Account Affidavit to close the estate. This starts the statute of limitations running for four years.

Congratulations!  Now you are done!