Your Children Want You to Have an Estate Plan

Clients often forget that a solid estate plan makes things much easier for their kids. Even the kids want you to have an estate plan!

Many clients delay creating an estate plan.  People don’t want to think about scenarios where they are deceased or incapacitated, and some people delay because they are afraid of costs.  Clients often think of the impact of estate planning on themselves, forgetting that their children want them to have an estate plan too.

After all, 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 can’t 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 a financial power of attorney, a medical power of attorney and a living will, as well as other estate planning documents to facilitate their use.  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.  This is an expensive and invasive process.

Avoid court proceedings after you die. If you die and you own assets in your own name that do not pass by contract, you will likely go through the probate process, a court proceeding that can be time consuming and costly. Not having any assets in trusts leaves your kids open to out of pocket costs, time, work and difficulty in gathering assets.

Wills in probate court are public documents. Trusts are private documents. Utilizing trusts can keep the details of your estate out of the public eye.

An elder law estate plan also plans for the possibility of long term care and costs. Nursing home care costs can be extreme, and many clients don’t plan for such a creditor during their life time. If you don’t have long term care insurance, you should consider an estate plan that facilitates long term care government benefits, such as a revocable trust plan.

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.  This is one of the main roadblocks to Medicaid planning later in life.  Client’s don’t update their powers of attorney and limited their gifting options.

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 don’t 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 don’t 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.

And kids, see here for speaking with your parents about estate planning.  https://galligan-law.com/probate-lawyers-say-talk-to-your-parents-about-estate-planning/

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

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Handling Savings Bonds In Your Estate Plan

How you own your savings bonds can affect how they are transferred to your beneficiaries.
How you own your savings bonds can affect how they are transferred to your beneficiaries.

There are several estate planning issues you should keep in mind if you have savings bonds or plan to invest in them.

There are currently two types of savings bonds: Series EE U.S. Savings Bonds are currently sold at face value and worth their full value upon redemption with interest. Series I U.S. Savings Bonds are inflation-indexed, i.e., they offer a fixed rate of interest that is adjusted for inflation and are often used as a long-term investment.

Will Savings Bonds Avoid Probate?

Probate is the court process for ensuring that a deceased person’s assets are transferred to the correct beneficiaries. People often seek to avoid probate, as it can be a time consuming and expensive. Whether a savings bond will have to go through the probate process depends on how the savings bond is titled; in other words – how it is owned.

Single owner. It is very common for an individual to purchase a savings bond titled in his or her own name. However, if you choose to do this, your estate will go through the probate process, even if you have a will specifying who you would like to inherit it. If you do not have a will, the savings bond will be passed on to your heirs as determined by a court under Texas law.

Name a co-owner. Two or more people can hold title to a savings bond as co-owners. Each of the co-owners is allowed to cash the bond, even without the knowledge or permission of the other owners. Savings bonds titled in this way pass directly to the surviving co-owner(s) without probate. However, when the last owner dies, the savings bonds are part of the last surviving person’s estate, which must be probated in the absence of additional estate planning designed to avoid it.

Name a beneficiary. Another option is to name a beneficiary with the U.S. Treasury Department using the TreasuryDirect website. If you do this, the savings bond will not need to go through probate, because the beneficiary you have named will automatically become the owner upon your death. The beneficiary must also set up a TreasuryDirect account, but once it is established, will only need to deal with a straightforward process to transfer ownership of the bond when you pass away. This beneficiary designation will take precedence over a contrary provision in your will.

Create a trust. If you want to continue to benefit from the savings bond individually, without naming a beneficiary with the Treasury Department, but also want to avoid probate, you can create a trust and transfer title of the savings bond to the trust. Beneficiaries you name in the trust can receive the benefit of the savings bond, and you can name someone you trust as the trustee to manage the savings bonds. When savings bonds are held by a trust, you can protect beneficiaries who tend to be financially irresponsible from themselves by preventing them from cashing and spending the bonds until the terms of the trust allow them to be distributed to the beneficiaries. In addition, certain types of trusts can protect the savings bonds from being reached by your beneficiaries’ creditors.

If you own savings bonds or are considering investing in them as part of your financial plan, an experienced estate planning attorney can help you consider the pros and cons, as well as the best ways to title them in order to achieve your estate planning goals.

The one mistake you want to avoid is not coordinating your savings bonds with your overall estate plan.

You may also be interested in https://galligan-law.com/common-mistakes-made-on-beneficiary-designations/.

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Will Contests – Does a “No-Contest” Clause Really Work?

A no-contest clause in your will may discourage a will contest.
A no-contest clause in your will may discourage a will contest.

We live in a litigious society. Unfortunately, even family members sometimes file lawsuits because they are dissatisfied with what their parents or loved ones leave them in a will or trust. Some are so disgruntled that they decide to contest or challenge the validity of a will or trust, which can delay its administration for years and result in thousands of dollars in legal fees. If you are concerned that any of your beneficiaries may seek to challenge your will or trust, a no-contest clause might be one method you can use to discourage them from pursuing this course of action.

What Is a No-Contest Clause?

A typical no-contest clause provides that a beneficiary who disputes the validity of a will forfeits any inheritance or benefit they otherwise would have received according to its terms. It will not prevent someone who is not a beneficiary named in your will or trust from contesting it though.

Are They Enforceable?

In Texas, no-contest clauses are enforceable unless the will contestant shows that he or she had “just cause” for contesting the will and that the will contest is in good faith. The goal is to discourage will contests that are not brought in good faith (for example, a person might threaten a will contest in the hopes that the rightful beneficiaries would be willing to settle for an amount less than the cost of defending the will contest),  but to allow contests for legitimate reasons, such as a forgery, or when a purported will is executed by an incapacitated person or a person who has been unduly influenced by another.

What Are the Pros and Cons?

These types of clauses have some advantages as well as some disadvantages, as listed below:

Pros of a no-contest clause

  • Honors your right to give your property to the parties you have chosen in the way you want, as expressed in your will or trust
  • Discourages baseless challenges to a will or trust by a disgruntled beneficiary
  • Discourages meritless lawsuits aimed at forcing a settlement by a dissatisfied beneficiary
  • Avoids lengthy and expensive litigation that will deplete your estate and delay administration

Cons of no-contest clause

  • Causes a beneficiary to suffer a forfeiture of his or her inheritance for enforcing his or her right to challenge the will’s validity
  • Impedes the court’s ability to determine if the will or trust is valid and ensure that it was not executed as a result of unlawful means, for example, where an unscrupulous child convinces an elderly parent with dementia to sign a new will beneficial to that child shortly before the parent’s death

Create an Estate Plan That Keeps the Peace

If you see trouble brewing and are concerned that family members could contest your will or trust, a no-contest clause is one tool that could discourage dissatisfied beneficiaries from seeking to have it declared invalid. Another possibility that could forestall a will or trust contest is to conduct a family meeting during which you can explain your reasons for distributing your money and property in the way you have. An experienced estate planning attorney can help you create an estate plan for your unique circumstances and to employ all available tools, including a no-contest clause, to decrease possible conflict within the family

You may also be interested in https://galligan-law.com/does-your-executor-know-what-to-do/.

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