What Must Be Done when a Loved One Dies? – Annapolis and Towson Estate Planning

When a member of a family dies, it falls to the people left behind to pick up the pieces. Someone has to find out if the person left a last will, get the bills paid, stop Social Security or other automatic payments and file final tax returns. This is a hard time, but these tasks are among many that need to be done, according to the article “How to manage a loved one’s finances after they die” from Business Insider.

This year, more families than usual are faced with the challenge of taking care of the business of a loved one’s life while grieving a loss. When death comes suddenly, there is not always time to prepare.

The first step is to determine who will be in charge. If there is a will, then it contains the name of the person selected to be the executor. When a married person dies, usually the surviving spouse has been named as the executor. Otherwise, the family will need to work together to pick one person, usually the one who lives closest to the person who died. That person may need to keep an eye on the house and obtain documents, so proximity is a plus. In a perfect world, the person would have an estate plan, so these decisions would have been made in advance.

Do not procrastinate. It is hard, but time is an issue. After the funeral and mourning period, it is time to get to work. Obtain death certificates, and make sure to get enough certified copies—most people get ten or twelve. They will be needed for banks, brokerage houses and utility service providers. You will also need death certificates for taking control of some digital assets, like the person’s Facebook page.

The first agency to notify is Social Security. If there are other recurring payments, like VA benefits or a pension, those organizations also need to be notified. Contact banks, insurance companie, and financial advisors.

Get the person’s credit cards into your possession and call the credit card companies immediately. Fraud on the deceased is common. Scammers look at death notices and then go onto the dark web to find the person’s Social Security number, credit card and other personal identification info. The sooner the cards are shut down, the better.

Physical assets need to be secured. Locks on a house may be changed to prevent relatives or strangers from walking into the house and taking out property. Remove any possessions that are of value, both sentimental or financial. You should also take a complete inventory of what is in the house. Take pictures of everything and be prepared to keep the house well-maintained. If there are tenants or housemates, make arrangements to get them out of the house as soon as possible.

Accounts with beneficiaries are distributed directly to those beneficiaries, like payable-on-death (POD) accounts, 401(k)s, joint bank accounts and real property held in joint tenancy. The executor’s role is to notify the institutions of the death, but not to distribute funds to beneficiaries.

The executor must also file a final tax return. The final federal tax return is due on April 15 of the year after death. Any taxes that were not filed for any prior years, also need to be completed.

This is a big job, which is made harder by grief. Your estate planning attorney may have some suggestions for who might be qualified to help you. An attorney or a fiduciary will take a fee, either based on an hourly rate for services performed or a percentage of the entire value of the estate. If no one in the family is able to manage the tasks, it may be worth the investment.

Reference: Business Insider (May 2, 2020) “How to manage a loved one’s finances after they die”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Is a Life Insurance Policy Beneficiary Required to Pay for a Funeral with Insurance Proceeds? – Annapolis and Towson Estate Planning

It is not that uncommon for a close family member to be named as the executor of a parent’s will. Let us say that rather than your brother, it is your stepsister who is the executor of your father’s estate.

This person has failed to provide any documentation about where Dad’s assets and money have gone.

Add to this the fact that sis has asked all of the siblings to forfeit their life insurance proceeds to her to pay for Dad’s funeral—a funeral that no one can attend because of the coronavirus.

What can the siblings do about the actions of their stepsister as executor of their father’s will?

A recent nj.com article asks “Do we have to pay for a funeral with life insurance proceeds?” According to the article, it is becoming more frequent that estate beneficiaries are hiring their own attorneys to make certain the executor administers the estate properly.

Hiring a private probate attorney is especially common when stepsiblings and multiple marriages are involved.

In most states, the appointed executor is obligated to account in detail to all estate beneficiaries what she has done.

In addition, there is absolutely no requirement that a named beneficiary of a life insurance policy must hand over their pay-out to pay for the decedent’s funeral or estate debts—unless there was some sort of agreement to do this.

Beneficiaries of an estate are entitled to an accounting and should demand one in writing.

The beneficiaries could also ask to review the bank statements of the estate that show all transactions, if they are unable to get an accounting from the executor.

If an executor is not complying with the law and her duties under it, it can be extremely hard for beneficiaries to see results without hiring an elder law attorney or probate attorney who knows how to get this accomplished.

Reference: nj.com (June 16, 2020) “Do we have to pay for a funeral with life insurance proceeds?”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Don’t Neglect a Plan for Your Pet During the Pandemic – Annapolis and Towson Estate Planning

If you have a pet, chances are you have worried about what would happen to your furry companion if something were to happen to you. However, worrying and having an actual plan are two very different things, as discussed at a Council of Aging webinar. That is the subject of the article “COA speakers urge pet owners to plan for their animal’s future” that appeared in The Harvard Press.

It is stressful to worry about something happening, but it is not that difficult to put something in place. After you have got a plan for yourself, your children and your property, add a plan for your pet.

Start by considering who would really commit to caring for your pet, if you had a long-term illness or in the event of your unexpected passing. Have a discussion with them. Do not assume that they will take care of your pet. A casual agreement is not enough. The owner needs to be sure that the potential caretaker understands the degree of commitment and responsibility involved.

If you should need to receive home health care, do not also assume that your health care provider will be willing to take care of your pet. It is best to find a pet sitter or friend who can care for the pet before the need arises. Write down the pet’s information: the name and contact info for the vets, the brand of food, medication and any behavioral quirks.

There are legal documents that can be put into place to protect a pet. Your will can contain general directions about how the pet should be cared for, and a certain amount of money can be set aside in a will, although that method may not be legally enforceable. Owners cannot leave money directly to a pet, but a pet trust can be created to hold money to be used for the benefit of the pet, under the management of the trustee. The trust can also be accessed while the owner is still living. Therefore, if the owner becomes incapacitated, the pet’s care will not be interrupted.

An estate planning attorney will know the laws concerning pet trusts in your state. Not all states permit them, although many do.

A pet trust is also preferable to a mention in a will, because the caretaker will have to wait until the will is probated to receive funds to care for your pet. The cost of veterinary services, food, medication, boarding or pet sitters can add up quickly, as pet owners know.

A durable power of attorney can also be used to make provisions for the care of a pet. The person in that role has the authority to access and use the owner’s financial resources to care for the animal.

The legal documents will not contain information about the pet, so it is a good idea to provide info on the pet’s habits, medications, etc., in a separate document. Choose the caretaker wisely—your pet’s well-being will depend upon it!

Reference: The Harvard Press (May 14, 2020) “COA speakers urge pet owners to plan for their animal’s future”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Should I Have an Advance Directive in the Pandemic? – Annapolis and Towson Estate Planning

Advance directive is a term that includes living wills and health care proxies or powers of attorney. These are legal documents we all should have. A living will allows you to tell your family and doctors the types of medical care you want at the end of your life. Health care proxies or powers of attorney let you name someone to make medical decisions for you, if you cannot communicate.

WTOP’s recent article entitled “Advance medical directives vital during COVID-19 pandemic” says that you need both because not all medical situations will trigger a living will. In fact, a living will is only really applicable, if you have an end stage process, a persistent vegetative state, or a terminal illness. People often run into a situation where they have a health event, but it is not something that is going to end in their death.

An estate planning attorney can draw up advance directives, when they are creating your estate plan.

When selecting the individual to grant the power to make decisions for you, consider who would be most capable of advocating for what you want, rather than what they, other family members or a medical provider might want. You should also name a backup in the event your first choice cannot serve and make sure these advocates understand your wishes. Give copies of the documents to them and go through what you want.

Your attorney will follow your state’s rules about how to make these documents valid, such as having witnesses sign or getting the paperwork notarized.

Next, keep the originals in a safe place at home, along with your will, and tell your family where to locate them. Your physician and attorney should also have copies.

Tell your doctor to add the forms in your electronic health record. That way, other medical providers can access it in an emergency. You should also carry a card in your wallet that has your health care agent’s name and contact information, as well as where you keep the originals and copies.

If your choices could cause stress for your family, consider including a note explaining your thinking. Even if they disagree with your decisions, it is more comforting to hear it directly from you, rather than the person you named to act on your behalf.

Reference: WTOP (June 1, 2020) “Advance medical directives vital during COVID-19 pandemic”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

How Do I Avoid the Three Biggest Estate Planning Mistakes? – Annapolis and Towson Estate Planning

After you die, your last will and testament must be approved by the local probate court. The judge will determine if the document is the last will of the deceased, review the inventory of the estate and confirm who will administer the estate proceeds. It is known as “executing” a will.

Wealth Advisor’s recent article entitled “Avoid these 3 estate-planning mistakes and make probate cheaper and easier for your loved ones” discusses some mistakes that people make and how to avoid them.

  1. You do not have a will, or you have a will that was written in another state. You also should have a current will. Life changes, and you need a will for where you live in now. Residency is defined differently in each state, and an out-of-state will delays the probate process, because it fails to satisfy state requirements. Worse yet, it may even be declared invalid.

If there is no will, the deceased is said to have died “intestate,” and his estate must go through probate. However, an administrator will be named by the judge to distribute assets, according to state law. It can be a lengthy and often costly process.

Some people do not want to hire an attorney to create their estate plan or write a will, because they believe it is too expense or they never get around to doing it. However, if you die without a will, the legal costs will be even more and that will be paid by your estate—that decreases what’s left to give to your heirs.

  1. Mixing up estate taxes with probate. Your estate may be too small to be subject to federal tax, if it is less than the $11.58 million exemption. However, you still will be subject to probate and possibly a state estate tax. Therefore, you still need an estate plan.
  2. Disregarding easy things to keep some assets from probate. Most states have a “mini-probate” that is expedited for small estates. With this process, heirs may have fewer fees, less paperwork and shorter waiting.

You can also create a living trust (revocable trust) to avoid probate altogether, if done correctly. This is a legal vehicle to which all of your assets pass upon your death. Ask an estate planning lawyer to help you create a trust, because they can be complicated. Whether you need a trust, a will, or both, an experienced estate planning attorney has worked through a variety of situations and will have sound and creative ideas. Investing time and money with an attorney makes life easier for you now and for your family later.

Reference: Wealth Advisor (Feb. 18, 2020) “Avoid these 3 estate-planning mistakes and make probate cheaper and easier for your loved ones”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What You Need to Know about Drafting Your Will – Annapolis and Towson Estate Planning

A last will and testament is just one of the legal documents that you should have in place to help your loved ones know what your wishes are, if you cannot say so yourself, advises CNBC’s recent article entitled, “Here’s what you need to know about creating a will.” In this pandemic, the coronavirus may have you thinking more about your mortality.

Despite COVID-19, it is important to ponder what would happen to your bank accounts, your home, your belongings or even your minor children, if you are no longer here. You should prepare a will, if you do not already have one. It is also important to update your will, if it is been written.

If you do not have a valid will, your property will pass on to your heirs by law. These individuals may or may not be who you would have provided for in a will. If you pass away with no will —dying intestate — a state court decides who gets your assets and, if you have children, a judge says who will care for them. As a result, if you have an unmarried partner or a favorite charity but have no legal no will, your assets may not go to them.

The courts will typically pass on assets to your closest blood relatives, despite the fact that it would not have been your first choice.

Your will is just one part of a complete estate plan. Putting a plan in place for your assets helps ensure that at your death, your wishes will be carried out and that family fights and hurt feelings do not make for destroyed relationships.

There are some assets that pass outside of the will, such as retirement accounts, 401(k) plans, pensions, IRAs and life insurance policies.

Therefore, the individual designated as beneficiary on those accounts will receive the money, despite any directions to the contrary in your will. If there is no beneficiary listed on those accounts, or the beneficiary has already passed away, the assets automatically go into probate—the process by which all of your debt is paid off and then the remaining assets are distributed to heirs.

If you own a home, be certain that you know the way in which it should be titled. This will help it end up with those you intend, since laws vary from state to state.

Ask an estate planning attorney in your area — to ensure familiarity with state laws—for help with your will and the rest of your estate plan.

Reference: CNBC (June 1, 2020) “Here’s what you need to know about creating a will”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Update Will at These 12 Times in Your Life – Annapolis and Towson Estate Planning

Estate planning lawyers hear it all the time—people meaning to update their will, but somehow never getting around to actually getting it done. The only group larger than the ones who mean to “someday,” are the ones who do not think they ever need to update their documents, says the article “12 Different Times When You Should Update Your Will” from Kiplinger. The problems become abundantly clear when people die, and survivors learn that their will is so out-of-date that it creates a world of problems for a grieving family.

There are some wills that do stand the test of time, but they are far and few between. Families undergo all kinds of changes, and those changes should be reflected in the will. Here are one dozen times in life when wills need to be reviewed:

Welcoming a child to the family. The focus is on naming a guardian and a trustee to oversee their finances. The will should be flexible to accommodate additional children in the future.

Divorce is a possibility. Do not wait until the divorce is underway to make changes. Do it beforehand. If you die before the divorce is finalized, your spouse will have marital rights to your property. Once you file for divorce, in many states you are not permitted to change your will, until the divorce is finalized. Make no moves here, however, without the advice of your attorney.

Your divorce has been finalized. If you did not do it before, update your will now. Do not neglect updating beneficiaries on life insurance and any other accounts that may have named your ex as a beneficiary.

When your child(ren) marry. You may be able to mitigate the lack of a prenuptial agreement, by creating trusts in your will, so anything you leave your child will not be considered a marital asset, if his or her marriage goes south.

Your beneficiary has problems with drugs or money. Money left directly to a beneficiary is at risk of being attached by creditors or dissolving into a drug habit. Updating your will to includes trusts that allow a trustee to only distribute funds under optimal circumstances protects your beneficiary and their inheritance.

Named executor or beneficiary dies. Your old will may have a contingency plan for what should happen if a beneficiary or executor dies, but you should probably revisit the plan. If a named executor dies and you do not update the will, then what happens if the second executor dies?

A young family member grows up. Most people name a parent as their executor, then a spouse or trusted sibling. Two or three decades go by. An adult child may now be ready to take on the task of handling your estate.

New laws go into effect. In recent months, there have been many big changes to the law that impact estate planning, from the SECURE Act to the CARES act. Ask your estate planning attorney every few years, if there have been new laws that are relevant to your estate plan.

An inheritance or a windfall. If you come into a significant amount of money, your tax liability changes. You will want to update your will, so you can do efficient tax planning as part of your estate plan.

Can’t find your will? If you cannot find the original will, then you need a new will. Your estate planning attorney will make sure that your new will has language that states revokes all prior wills.

Buying property in another country or moving to another country. Some countries have reciprocity with America. However, transferring property to an heir in one country may be delayed, if the will needs to be probated in another country. Ask your estate planning attorney, if you need wills for each country in which you own property.

Family and friends are enemies. Friends have no rights when it comes to your estate plan. Therefore, if families and friends are fighting, the family member will win. If you suspect that your family may push back to any bequests to friends, consider adding a “No Contest” clause to disinherit family members who try to elbow your friends out of the estate.

Reference: Kiplinger (May 26, 2020) “12 Different Times When You Should Update Your Will”

 

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What You Need to Do after a Loved One Dies – Annapolis and Towson Estate Planning

The Dallas Morning News’ recent article entitled “Three things to do on the death of a loved one” explains the steps you should take, if you are responsible for a family member’s assets after they die.

Be sure the property is secured. A deceased person’s property becomes a risk in some instances. Friends and family will help themselves to what they think they should get, including the deceased’s personal property. Once it is gone, it is hard to get it back and into the hands of the individual who is legally entitled to receive it.

Criminals also look at the obituaries, and while everyone is at the funeral or otherwise unoccupied, burglars can break into the house and steal property. Assign security or ask someone to stay at the house to protect the property. You can also change the locks. Credit cards, debit cards, and checks need to be protected. The deceased’s mail must be collected, and cars should be locked up.

Make funeral plans. If you are lucky, the deceased left a written Appointment of Burial Agent with detailed instructions, which can make your job much easier.

For example, Texas law lets a person appoint an agent to be in charge of funeral arrangements and to describe the arrangements. An estate planning attorney can draft this document as part of an estate plan. You should see if this document was included. If you are listed as the agent, present the paper to the funeral home and follow the instructions. If there are no written instructions, the law will say who has the authority to make arrangements for the disposition of the body and to plan the funeral.

Talk to an experienced attorney. When a person dies, there is often a lapse in authority. The decedent’s power of attorney is no longer in effect, and the executor designated in the will does not have any authority to act, until the will is admitted to probate and the executor is appointed by the probate judge and qualifies by taking the oath of office and filing a bond, if required. Direction is needed earlier rather than later, on what you are permitted to do. The probate of a will takes time.

It is best to get started promptly, so that there is an executor in place with power to handle the affairs of the decedent.

Reference: Dallas Morning News (April 10, 2020) “Three things to do on the death of a loved one”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Your Children Wish You Had an Estate Plan – Annapolis and Towson Estate Planning

It is the adult children who are in charge of aging parents when they need long-term care. They are also the ones who settle estates when parents die. Even if they cannot always come out and tell you, the recent article, “Why your children wish you had an Elder Law Estate Plan” from the Times Herald-Record spells out exactly why an elder law estate plan is so important for your loved ones.

Avoid court proceedings while living. In a perfect world, everyone over age 18 will have an advance directive, including a power of attorney, a health care proxy, and a living will. These documents appoint others to make financial, legal, and medical decisions, in case of incapacity. Without them, the children will have to get involved with time-consuming, expensive guardianship proceedings, where a judge appoints a legal guardian to make these decisions. Your life is turned over to a court-appointed guardian, instead of your children or another person of your choosing.

Avoid court proceedings after you die. If you die and assets are in your name alone, then your estate will go through probate, a court proceeding that can be time consuming and costly. Not having any assets in trusts leaves your kids open to the possibility of wills being challenged, disputes among family members and litigation that can drag on for years.

Wills in probate court are public documents. Trusts are private documents. Do you really want a stranger to access your will and learn about your assets?

An elder law estate plan also plans for the possibility of long-term care and costs. Nursing home care costs can run between $12,000—$18,000 per month. If you do not have long-term care insurance, you can create a Medicaid Asset Protection Trust (MAPT) that protects assets in the trust from nursing home costs, once the assets are in the trust for five years. The MAPT also protects assets from homecare provided by Medicaid, called “community” Medicaid, once the assets are in the trust for 30 months under a new rule that starts on October 1, 2020.

The “elder law power of attorney” has unlimited gifting powers that could save about half of a single person’s assets from the cost of nursing homes. This can be done on the eve of needing nursing home care, but it is always better to do this planning in advance.

Having a plan in place decreases stress and anxiety for adult children. They are likely busy with their own lives, working, caring for their children and coping in a challenging world. When a plan is in place, they do not have to start learning about Medicaid law, navigating their way through the court system, or wondering why their parents did not take advantage of the time they had to plan properly.

You probably do not want your children remembering you as the parents who left a financial and legal mess behind for the them to clean up. Speak with an elder law estate planning attorney to create a plan for your future. Your children will appreciate it.

Reference: Times Herald-Record (May 23, 2020) “Why your children wish you had an Elder Law Estate Plan”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What Exactly Does an Executor Do? – Annapolis and Towson Estate Planning

The job of the executor is an important one. The executor has a fiduciary responsibility to manage the assets and debts of the decedent and carry out instructions documented in his last will and testament. The executor is also responsible for distributing assets, explains the article “A Step-by-Step Guide to Being an Executor” from Kiplinger. If there are any claims against the estate, the executor might be facing personal responsibility, if funds are not handled properly.

The learning curve could be steep, especially if the executor does not know a lot about the person’s finances and possessions, or is new to the tasks of managing money, corralling heirs or the legal processes that occur after someone dies. If the decedent didn’t tell the executor where his records and important papers are kept, things can get even more challenging.

Here is what an executor needs to know, preferably before her services are needed:

Get informed and up to speed. Read the will and see if the decedent’s intentions are clear. That is not always the case. When one man became executor of his mother’s will, he and his sister had two different interpretations about what their mother wanted to happen to the family home. While they wrangled out the issue, there were property taxes to be paid and maintenance costs. A letter of direction explaining things clearly would have prevented many problems.

Sit down and talk about it. It is a kindness to heirs to share information and intentions, while you are still alive. Discuss the will with the immediate family to avoid any surprises or misunderstandings. Consider having an annual conference with children to ensure that they understand the estate, the will and what to expect. If you have an argumentative family, doing this in advance will not guarantee smooth sailing, but it may lessen the fighting.

Make an inventory. Managing an estate can be a long process, with many curves along the way. You will make it easier, if you create a list of all assets, accounts, debts and liabilities. Make a note of where tax records and insurance policies can be found. Include a list of all online accounts and digital assets, plus the names of your professional advisors, including the estate planning lawyer and CPA. Ideally, review the list with your executor.

Should the executor change the locks? In a word, yes. Two kinds of theft happen while people are attending funeral and memorial services. Some family members will outright take items and thieves may break into empty homes. Remove anything of value and have a reputable locksmith install good locks. If the executor is technically inclined, an inexpensive videocam system would be a good idea.

Get copies of the death certificate. Request multiple copies. Some institutions will require originals with a raised seal, while others will work with a copy or a scanned document. Better to have a few more than you need, so you do not have to keep buying new ones.

Speak with an estate planning attorney. There are legal forms and tax forms that will need to be prepared. In some states, probate is straightforward. In other states, it is a complex and time consuming process. You do not need to go it alone.

Open an estate account. The estate is a legal entity and requires a separate tax ID. The executor needs to apply for a separate tax ID, and then can use that to open a bank account. The estate funds the bank account, which is used to pay bills and deposit proceeds from assets.

Distribute assets. The executor is responsible for keeping heirs updated. Heirs receive assets, as designated in the will. If there are collections or a home, they will need to be professionally assessed, before they can be sold.

Reference: Kiplinger (May 12, 2020) “A Step-by-Step Guide to Being an Executor”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys