Read more about the article What to Do When a Spouse Dies – Annapolis and Towson Estate Planning

What to Do When a Spouse Dies – Annapolis and Towson Estate Planning

The death of a spouse is one of life’s most stressful events and is an overwhelming experience. Having to deal with life’s legal and financial aspects while grieving is a challenge, says a recent article, “What To Do After The Death Of A Spouse,” from Forbes. One thing to note: all tasks don’t have to be done at once.

What does need to be done promptly is making funeral arrangements, notifying family and friends and alerting your estate planning attorney. Other immediate steps include:

  • Obtaining multiple copies of the death certificate
  • Asking a friend or relative to watch the house during the funeral. Burglaries often occur during funerals, when burial plans are public.
  • Arrange for any pets to be cared for.

There are a number of things to avoid as well. Letting grief and fear delay important actions can lead to larger estate problems. Don’t neglect to contact Social Security to report the death and monitor tax and other deadlines. Don’t start giving away assets, whatever persistent family members may say. You’ll need to go through the estate process properly. Assets are not distributed until all other tasks have been completed.

Legal and financial documents must be gathered and reviewed, including bank statements, investment accounts, retirement accounts and beneficiary designations, life insurance policies, estate planning documents and outstanding debts or liabilities.

Bills need to be paid. This can become problematic. For example, were the bills paid from joint accounts, your or your spouse’s account? Do you have a list of all accounts? Is it okay to pay a joint bill from your bank account? Do you need to change regularly made payments formerly made from your deceased spouse’s account to your account?

Hopefully, you and your spouse had the right estate planning documents completed beforehand. Next, contact your estate planning attorney to discuss the will and any trusts. Assets owned by your spouse only will likely go through probate. Assets with beneficiary designations, like retirement accounts or life insurance policy proceeds, will go directly to the beneficiaries.

The surviving spouse needs to file taxes for themselves and the deceased spouse by April 15 of the following year. Discuss with your estate planning attorney whether or not you’ll need to file a federal or state estate tax return, which is due nine months after death. Note that these may need to be filed even if no tax is due.

Questions? Contact us to schedule a complimentary initial call with one of our experienced estate planning attorneys.

Reference: Forbes (April 20, 2023) “What To Do After The Death Of A Spouse”

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Read more about the article How to Pre-pay for a Funeral – Annapolis and Towson Estate Planning

How to Pre-pay for a Funeral – Annapolis and Towson Estate Planning

When getting started with prepaying funeral expenses, a big factor to consider is your age and current health status. Unlike life insurance policies, funeral planning insurance from most major providers is available to anyone over 18 who wants a policy. However, depending on the type of policy, you may have to answer some health screening questions. Your answers will impact the terms and benefit payouts determined by time of death, says Yahoo Life’s recent article, “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?”

Pre-arrangement insurance policies must be paid in full by age 90, so someone near that age and planning for the first time will likely have to pay in full upfront.

Some companies might state that certain diagnoses with imminent death are disqualifiers for policies, and others will insure individuals with a short life prognosis but with altered payout clauses—or they may require full payment upfront.

In those instances, a trust might be a better choice. That fiduciary arrangement lets a third party (the trustee) hold assets on behalf of a beneficiary or beneficiaries.

Remember that companies, policies and regulations vary greatly by state. It will, therefore, be helpful to consult an experienced estate planning attorney on the best options for you.

You should review your plans periodically throughout life because what you want today in your 20s may differ from what you want in your 80s. You should also keep your family up to date on any changes you make.

There’s one main difference between trusts and insurance policies. Insurance will often have a clause allowing for the difference between what you’ve paid and the total cost of your funeral arrangement to be covered, if you haven’t paid your policy out in full at the time of death.

However, a trust will typically let you put in whatever amount you want over time.

The pre-arrangement insurance policies used by funeral homes to cover the cost of funerals differ from what is generally known as “life insurance.” A life insurance policy is meant to cover unexpected death. However, it’s not guaranteed to pay out benefits—because factors like cause of death affect the policy payout.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Yahoo Life (Feb. 17, 2022) “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?”

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Read more about the article How Can I Relieve My Family’s Stress when I Die? Annapolis and Towson Estate Planning

How Can I Relieve My Family’s Stress when I Die? Annapolis and Towson Estate Planning

After losing a family member, people experience pain and grief. The situation gets worse if legal issues are involved, resulting in family conflicts. Such challenges are typically the result of a lack of planning when they could have been much easier if a good plan had been in place, says Scubby’s recent article entitled “7 Ways To Ease Your Loved Ones’ Suffering After You Die.” Let’s look at some ways to avoid problems after you pass away.

  1. Create an Estate Plan. This is the first step you can take in making your family’s life easier. Your heirs will inherit your estate after you die. If you don’t have a written estate plan, it can be more difficult.
  2. Maintain a Binder for Documents. Store all of your important documents and information in a master document binder or some other system. Include important documents and information about your bank accounts, credit cards, investment accounts and information about your digital assets, such as emails, online banking, social media accounts and any other digital assets that you own. You should also give information that your family will need to access these documents and information.
  3. Buy Life Insurance. It’s smart to purchase life insurance as part of your basic estate plan. The loss of a family member can result in confusion, worry and anxiety regarding finances. Those left behind can sometimes wonder how to pay for necessities after a family member dies, so an insurance policy can solve that problem. This will give your family a financial cushion that will provide them with some breathing room.
  4. Write An Instruction Letter. A last letter of instructions for your family is smart, in addition to your estate plan. This gives you the chance to express your love and affection to each of your family members. You can also state where you want to be buried or if you’d like to be cremated, and what kind of memorial service you would like. Your testament doesn’t appear in this document. It only lets you state your final wishes about each of these matters. It has no real legal significance.
  5. Prepare Them Emotionally. It’s hard to comprehend the truth of death for you and your family. They’ll go through the grieving period without you, and to help them emotionally, you can honor the people in your life who matter most; offer an apology to those you have hurt; and/or forgive your loved ones, if they have hurt you.
  6. Pre-plan Your Funeral. To ease the burden on your family at your death, pre-plan your funeral. This means you’ve made your funeral arrangements and chosen what you want as part of your funeral services.
  7. Collect Important Documents and Contact Information. Organize important documents in a folder. This should include info on bank accounts, mortgages, insurance policies, employer contact information, estate planning, safe combinations and Social Security information. Make a list of close friends and family members, including their contact info, for your loved ones to contact in the event of your death.

This list of things you can do to ease the burden on your family isn’t exhaustive. However, it’s certainly helpful.

Contact us to review your estate plan with one of our experienced estate planning attorneys.

Reference: Scubby “7 Ways To Ease Your Loved Ones’ Suffering After You Die”

 

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Does an Elder Orphan Need an Estate Plan? – Annapolis and Towson Estate Planning

Estate planning for the future is even more important for elder orphans than for those with a spouse or family members, according to this recent article “Savvy Senior: How to get help as an elder orphan” from The Virginia Gazette. There is no one single solution, but there are steps to take to protect your estate, health and provide for long-term care.

Start with the essential estate planning documents. These documents will protect you and ensure that your wishes are followed, if you become seriously ill or when you die. These documents include:

A durable Power of Attorney to designate someone to handle financial matters in the event of incapacity.

An Advanced Health Care Directive, including a Living Will, to tell your health care provider what kind of care you want if you become incapacitated.

A Health Care Power of Attorney, naming a person of your choice to make medical decisions on your behalf, if you are unable to do so.

A Will to direct how you want your property and assets to be distributed upon your death and to name an Executor who will be in charge of your estate.

Your best option to prepare these documents is an experienced estate planning attorney. Trying to do it yourself is risky. Each state has its own laws for these documents to be valid. If the documents are not accepted, the court could declare your will invalid and your directions will not be followed.

People with families typically name a responsible adult child as their power of attorney for finances, as executor or for health care decisions. If you do not have adult children, you may ask a trusted friend or colleague. Name a person who is younger than you, organized and responsible and who will likely be available and willing to service.

If the person you name as executor lives in another state, you will need to check with your estate planning attorney to see if there are any special requirements.

If you do not have a friend or even a distant relative you feel comfortable assigning this role to, your estate planning attorney may be able to suggest alternatives, such as an aging life care manager. These professionals are trained in geriatric care and often have backgrounds in social work or nursing.

If you are reluctant to complete the legal documents mentioned above or start having them prepared and then fail to complete them, you may face some unpleasant consequences. A judge may appoint a guardian to make decisions on your behalf. This guardian is likely to be a complete stranger to you. They will be legally empowered to make all decisions for you regarding your health care, end-of-life care and even your burial and funeral services.

Unless you are comfortable with a court-appointed person making health care and other decisions for you, call an estate planning attorney and start making plans for the future.

Reference: The Virginia Gazette (April 1, 2022) “Savvy Senior: How to get help as an elder orphan”

 

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Why Do I Need a Will? – Annapolis and Towson Estate Planning

Some people mistakenly think that not having a will allows their probate assets to bypass the time and expense of probate. No, that is not true.

Probate assets are those assets with no surviving joint owner, designated beneficiary, or are not titled in a revocable living trust.

If you die without a will, your probate property still must go through probate, says Fed Week’s recent article entitled “Expressing Your Will with a Will.”

Therefore, you should have a will. If probate avoidance is a concern, you can ask an experienced estate planning attorney about utilizing various non-probate transfer methods, to include creating a trust. If you have a revocable living trust, you can keep control over the trust assets while you are alive.

The assets placed in revocable living trust during your lifetime can be distributed at your death, under the terms of the trust, without the requirement of probate.

When you draft a will, you cannot simply forget about it. Special life events, such as births, adoptions, deaths, marriages, and divorces, all may require you to revisit your will. After each change, make certain that your current will is both safe and accessible. You can leave a copy of your will with your executor.

If you decide to keep your will somewhere else, your executor and other loved ones should know that location. The estate planning attorney who prepared your will should have a copy, as well as a memo revealing the location of the original.

Regardless of where you put your will, you should create a separate document for your funeral and burial instructions. That is because wills typically are not read until days or weeks after death.

It will not help your survivors make prompt decisions about a funeral or a memorial service.

A separate letter should be used to specify your final wishes and your executor should know where these instructions are located.

These arrangements include seeing if there is a pre-arranged funeral plan, meeting with a funeral director to make arrangements for the funeral services, confirming cemetery arrangements and choosing the necessary casket or urn, grave marker and funeral stationery.

Reference: Fed Week (Feb. 22, 2022) “Expressing Your Will with a Will”

 

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What Happens to Parents’ Debt when They Die? – Annapolis and Towson Estate Planning

There are two common myths about what happens when parents die in debt, says a recent article “How your parents’ debt could outlive them” from the Greenfield Reporter. One is the adult child will be liable for the debt. The second is that the adult child won’t.

If your parents have significant debts and you are concerned about what the future may bring, talk with an estate planning attorney for guidance. Here is some of what you need to know.

Debt does not disappear when someone dies. Creditors file claims against the estate, and in most instances, those debts must be paid before assets are distributed to heirs. Surprisingly to heirs, creditors are allowed to contact relatives about the debts, even if those family members do not have any legal obligation to pay the debts. Collection agencies in many states are required to affirmatively state that the family members are not obligated to pay the debt, but they may not always comply.

Some family members feel they need to dig into their own pockets and pay the debt. Speak with an estate planning lawyer before taking this action, because the estate may not have any obligation to reimburse you.

For the most part, family members do not have to use their own money to pay a loved one’s debts, unless they co-signed a loan, are a joint-account holder or agreed to be held responsible for the debt. Other reasons someone may be obligated include living in a state requiring surviving spouses to pay medical bills or other outstanding debts. If you live in a community property state, a spouse may be liable for a spouse’s debts.

Executors are required to distribute money to creditors first. Therefore, if you distributed all the assets and then planned on “getting around” to paying creditors and ran out of funds, you could be sued for the outstanding debts.

More than half of the states still have “filial responsibility” laws to require adult children to pay parents’ bills. These are old laws left over from when America had debtors’ prisons. They are rarely enforced, but there was a case in 2012 when a nursing home used Pennsylvania’s law and successfully sued a son for his mother’s $93,0000 nursing home bill. An estate planning attorney practicing in the state of your parents’ residence is your best source of the state’s law and enforcement.

If a person dies with more debts than assets, their estate is considered insolvent. The state’s law determines the order of bill payment. Legal and estate administration fees are paid first, followed by funeral and burial expenses. If there are dependent children or spouses, there may be a temporary living allowance left for them. Secured debt, like a home mortgage or car loan, must be repaid or refinanced. Otherwise, the lender may reclaim the property. Federal taxes and any federal debts get top priority for repayment, followed by any debts owed to state taxes.

If the person was receiving Medicaid for nursing home care, the state may file a claim against the estate or file a lien against the home. These laws and procedures all vary from state to state, so you will need to talk with an elder law attorney.

Many creditors will not bother filing a claim against an insolvent estate, but they may go after family members. Debt collection agencies are legally permitted to contact a surviving spouse or executor, or to contact relatives to ask how to reach the spouse or executor.

Planning in advance is the best route. However, if parents are resistant to talking about money, or incapacitated, speak with an estate planning attorney to learn how to protect your parents and yourself.

Reference: Greenfield Reporter (Feb. 3, 2022) “How your parents’ debt could outlive them”

 

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What Assets Should Be Considered when Planning Estate? – Annapolis and Towson Estate Planning

The numbers of Americans who have a formal estate plan is still less than 50%. This number has not changed much over the decade. However, the assets owned have become a lot more complicated, according to a recent article from CNBC titled “What happens to your digital assets and cryptocurrency when you die? Even with a will, they may be overlooked.”

Airline miles and credit card points, social media accounts and cryptocurrencies are different types of assets to be passed on to heirs. For those who do have an estate plan, the focus is probably on traditional assets, like their home, 401(k)s, IRAs and bank accounts. However, we own so much more today.

Start with an inventory. For digital assets, include photos, videos, hardware, software, devices, and websites, to name a few. Make sure someone you trust has the unlock code for your phone, laptop and desktop. Use a secure password manager or a notebook, whatever you are more comfortable with, and share the information with a trusted person.

You will also need to include what you want to happen to the digital asset. Some platforms will let owners name a legacy contact to handle the account when they die and what the owner wants to happen to the data, photos, videos, etc. Some platforms have not yet addressed this issue at all.

If an online business generates income, what do you want to happen to the business? If you want the business to continue, who will own the business, who will run the business and receive the income? All of this has to be made clear and documented properly.

Failing to create a digital asset plan puts those assets at risk. For cryptocurrency and nonfungible tokens (NFTs), this has become a routine problem. Unlike traditional financial accounts, there are no paper statements, and your executor cannot simply contact the institution with a death certificate and a Power of Attorney and move funds.

Another often overlooked part of an estate are pets. Assets cannot be left directly to pets. However, most states allow pet trusts, where owners can fund a trust and designate a trustee and a caretaker. Make sure to fund the account once it has been created, so your beloved companion will be cared for as you want. An informal agreement is not enforceable, and your pet may end up in a shelter or abandoned.

Sentimental possessions also need to be planned for. Your great-grandmother’s soup tureen may be available for $20 on eBay, but it is not the same as the one she actually used and taught her daughter and her granddaughter how to use. The same goes for more valuable items, like jewelry or artwork. Identifying who gets what while you are living, can help prevent family quarrels when you are gone. In some families, there will be quarrels unless the items are in the will. Another option: distribute these items while you are living.

If you can, it is also a good idea and a gift to your loved ones to write down what you want in the way of a funeral or memorial service. Do they want to be buried, or cremated? Do they want a religious service in a house of worship, or a simple graveside service?

If you are among those who have a will, you probably need it to be reviewed. If you do not have a will or a comprehensive estate plan, you should meet with an experienced estate planning attorney to address distribution of assets, planning for incapacity and preparing for the often overlooked aspects of your life. You will have the comfort of expressing your wishes and your loved ones will be grateful.

Reference: CNBC (Jan. 18, 2022) “What happens to your digital assets and cryptocurrency when you die? Even with a will, they may be overlooked”

 

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Write a Letter of Instruction for Loved Ones – Annapolis and Towson Estate Planning

A letter of intent is frequently recommended for parents of disabled children to share information for when the parent dies. However, letters of intent or a letter of instruction can also be a helpful resource for executors, says the article “Planning Head: For detailed instructions consider a letter of instruction” from The Mercury. This is especially valuable, if the executor does not know the decedent or their family members very well.

For disabled children, legal documents address specific issues and are not necessarily the right place to include personal information about the child or the parent’s desires for the child’s future. Estate plans need more information, especially for a minor child.

The goal is to create a document to make clear what the parents want for the child after they pass, whether that occurs early or late in the child’s life.

For a disabled child, the first questions to be addressed in the estate plan concern who will care for the child if the parent dies or becomes incapacitated, where will the child live and what funds will be available for their care. Once those matters are resolved, however, there are more questions about the child’s wants and needs.

The letter of intent can answer questions about the special information only a parent knows and is helpful in future decisions about their care and living situation.

The letter of intent concerning an estate should also include information about wishes for a funeral or burial and contain everything from directions for the music list for a ceremony to the writing on the headstone.

Once the letter of intent is created, the next question is, where should you put it so it is secure and can be accessed when it is needed?

Do not put it in a bank safe deposit box. This is a common error for estate planning documents as well. The executor may only access the contents of the safe deposit box after letters of administration have been issued. This happens after the funeral, and sometimes long after the funeral. By then, it will be too late for any instructions.

Keeping estate planning documents in a safe deposit box presents other problems. If the bank seals the safe deposit box on notification of the owner’s death, the executor will not be able to proceed. This can sometimes be prevented by having additional owners on the safe deposit box, if permitted by the bank . Any additional owners will also need to know where the key is located and be able get access to it.

The better solution is to keep all important documents including wills, financial power of attorney, health care powers, living wills, or health care directives, insurance forms, cemetery deeds, information for the family’s estate planning attorney, financial advisor, and CPA, etc., in one location known to the trusted person who will need access to the documents. That person will need a set of keys to the house. If they are kept in a fire and waterproof safe in the house; they will also need the keys to the safe.

If the parents move or move the documents, they will need to remember to tell the trusted person where these documents have moved. Otherwise, a lot of work will have been for naught.

Reference: The Mercury (Jan. 19, 2022) “Planning Head: For detailed instructions consider a letter of instruction”

 

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Why Is Estate Planning So Important? – Annapolis and Towson Estate Planning Attorneys

Big Easy Magazine’s recent article “Estate Planning Is Essential and Here’s Why” says that writing a Last Will and Testament is not limited to what happens to your house, car, company, or other assets after you die. It also states who will take care of your minor children, if they are orphaned.

Your instructions for burial and other smaller things can be included.

If you fail to provide specific instructions, the state intestacy laws will apply upon your death. Here is a glimpse of the consequences of not writing your last will:

  • Your burial preferences may not be honored.
  • Your properties may be managed by an individual you do not necessarily trust. Without a named executor to your Will, some other family member may be asked to file taxes, make transfers and manage your estate.
  • Family members may not get an inheritance. Under intestacy laws, same-sex relationships and common-law marriages may not be recognized. So, your partner may not get a portion of your estate.
  • Your favorite charity may be left out. If you are committed to leaving a legacy, your charity, religious organization, or other organization of choice should be mentioned in the Will.
  • The government will name the guardians for your minor children.

With a Will, you can designate a guardian for your children and avoid additional taxes. Ask an experienced estate planning attorney about developing a comprehensive estate plan.

Aside from this, estate planning can also save your loved ones considerable angst and money.

A detailed Will with your instructions will avoid complications and provide comfort, while your loved ones recover emotionally from their loss.

Reference: Big Easy Magazine (May 17, 2021) “Estate Planning Is Essential and Here’s Why”

 

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What is not Covered by a Will? – Annapolis and Towson Estate Planning

A Last Will and Testament is one part of a holistic estate plan used to direct the distribution of property after a person has died.  A recent article titled “What you can’t do with a will” from Ponte Vedra Recorder explains how Wills work, and the types of property not distributed through a Will.

Wills are used to inform the probate court regarding your choice of Guardians for any minor children and the Executor of your estate. Without a Will, both of those decisions will be made by the court.  It is better to make those decisions yourself and to make them legally binding with a will.

Lacking a Will, an estate will be distributed according to the laws of the state, which creates extra expenses and sometimes, leads to life-long fights between family members.

Property distributed through a Will necessarily must be processed through a probate, a formal process involving a court.  However, some assets do not pass through probate.  Here is how non-probate assets are distributed:

Jointly Held Property. When one of the “joint tenants” dies, their interest in the property ends and the other joint tenant owns the entire property.

Property in Trust. Assets owned by a trust pass to the beneficiaries under the terms of the trust, with the guidance of the Trustee.

Life Insurance. Proceeds from life insurance policies are distributed directly to the named beneficiaries.  Whatever a Will says about life insurance proceeds does not matter—the beneficiary designation is what controls this distribution, unless there is no beneficiary designated.

Retirement Accounts. IRAs, 401(k) and similar assets pass to named beneficiaries.  In most cases, under federal law, the surviving spouse is the automatic beneficiary of a 401(k), although there are always exceptions.  The owner of an IRA may name a preferred beneficiary.

Transfer on Death (TOD) Accounts. Some investment accounts have the ability to name a designated beneficiary who receives the assets upon the death of the original owner.  They transfer outside of probate.

Here are some things that should NOT be included in your Will:

Funeral instructions might not be read until days or even weeks after death. Create a separate letter of instructions and make sure family members know where it is.

Provisions for a special needs family member need to be made separately from a Will.  A special needs trust is used to ensure that the family member can inherit assets but does not become ineligible for government benefits.  Talk to an elder law estate planning attorney about how this is best handled.

Conditions on gifts should not be addressed in a will. Certain conditions are not permitted by law.  If you want to control how and when assets are distributed, you want to create a trust. The trust can set conditions, like reaching a certain age or being fully employed, etc., for a Trustee to release funds.

Reference: Ponte Vedra Recorder (April 15, 2021) “What you can’t do with a will”

 

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