This is the season for wishing all our clients and friends in Crossville and Chattanooga moments of pure joy and memories that make you smile. It is also a time for remembering the greatest Christmas gift of all - Emanuel, God is with us!
While it is an honor to be named as an executor of a will or estate, it can also be a sobering and daunting responsibility. Being an executor (sometimes called a personal representative) requires a high level of organization, foresight, and attention to detail to meet responsibilities and ensure that all beneficiaries receive the assets to which they are entitled. If you’ve found yourself in the position of “overwhelmed executor,” here are some tips to lighten the load.
Get professional help from an experienced attorney.
The caveat to being an executor is that once you accept the responsibility, you also accept the liability if something goes wrong. To protect yourself and make sure you’re crossing all the “i’s” and dotting all the “t’s,” hire an experienced estate planning attorney now. Having a legal professional in your corner not only helps you avoid pitfalls and blind spots, but it will also give you greater peace of mind during the process. In fact, in some states it’s a requirement that an executor be represented by competent legal counsel, so it’s always a good idea to discuss your responsibilities with an attorney before you start taking any actions.
One of the biggest reasons for feeling overwhelmed as an executor is when the details are coming at you from all directions. Proper organization helps you conquer this problem and regain control. We will advise you of what to do when, but in general, you’ll need to gather several pieces of important paperwork to get started. It’s a good idea to create a file or binder so you can keep track of the original estate planning documents, death certificates, bills, financial statements, insurance policies, and contact information of beneficiaries. Bringing all of this information to your first meeting will be a solid start.
Establish lines of communication.
As an executor, you are effectively a liaison between multiple parties related to the estate: namely, the courts, the creditors, the IRS, and the heirs. Create and maintain an up-to-date list of everyone’s contact information. Also, retain records such as copies of correspondence or notes about phone calls you make as executor. Open and honest communication helps keeps the process flowing smoothly and reduces the risk of disputes. It’s worth repeating because it’s so important -- keep records of all communications, so you can always recall what was said to whom.
If you have been appointed as an executor and you are feeling overwhelmed, we can provide skilled counsel and advice to help you through the process. We can also help you draft your own estate plan, so your family can avoid the stress of probate. Give our office a call today at (423) 648-9829 for an appointment. We look forward to hearing from you.
With extreme wealth accumulated, one would assume that celebrities would take steps to protect their estates. But think again: Some of the world’s richest and most famous people enter the pearly gates with no estate plan in place, while others have made estate planning mistakes that tied their fortunes and heirs up for years in court. Let’s take a look at three high-profile celebrity probate disasters and discover what lessons we can learn from them.
Tom Carvel, The Ice Cream Man
As the man who invented soft-serve ice cream and established the first franchise business in America, Tom Carvel had a net worth of up to $200 million when he died in 1990.
He did have a will and accompanying trust that provided for his widow, family members and donations for several charities, but he also named seven executors, all of whom had a financial stake in the game.
The executors began a round of infighting that lasted for more than 7 years and cost millions. In the end, Carvel’s widow passed away before the disputes could be settled and before she inherited.
Lesson learned: “Too many cooks spoil the broth.” Your trustee and executor may have to make tough decisions. Consider naming executors and trustees who have no financial interest in your estate to reduce the risk of favoritism. Also, consider having only a single trustee and executor rather than a committee.
Jimi Hendrix, The Guitarist
Passing away tragically at age 27, rock guitarist Jimi Hendrix left no will.
What he did leave behind was a long line of relatives, music industry bigwigs, and business associates who had an interest in what would become of his estate - including intellectual property that would continue to earn.
An attorney managed the estate for the first two decades after Jimi’s death, after which Jimi’s father Al Hendrix successfully sued for control of the estate.
But when Al attempted to leave the entire estate to his adopted daughter upon his passing, Jimi’s brother, Leon Hendrix, sued, launching a messy probate battle that left no clear winners.
Lesson learned: When you don’t leave a comprehensive estate plan, the conflict can last for generations. Even if you’re not a celebrity, we can put your wishes in writing so they are carried out after your death rather than opening a door to costly conflict.
Prince, The Musical Genius
The court battle waging over Prince’s estate is a probate disaster.
When the 80’s pop icon died in early 2016, he left no estate plan (reportedly due to some previous legal battles that left him with a distrust of legal professionals in general).
It took 2 years before the court named Prince’s 6 siblings as his heirs.
An estate worth more than $200 million has been greatly reduced by payments to the IRS, the state of Minnesota, the court-appointed executor and lawyers.
Lesson learned: Accurate legal documentation protects your legacy. Don’t let a general distrust or a bad experience propagate through the generations and leave your heirs to fight and potentially lose their inheritance.
These celebrity probate disasters serve as stark reminders that no one’s wealth is exempt from the legal trouble that can occur without proper estate planning. As always, we are here to help you protect your family and legacy. Give us a call today at (423) 648-9829 to discuss protecting your assets and taking care of your family.
When you pass away, your family may need to visit a probate court in order to claim their inheritance. This can happen if you own property (like a house, car, bank account, investment account, or other asset) in only your name. Although having a will is a good basic form of planning, a will does not avoid probate. Instead, a will simply informs the probate court of your wishes - your family still has to go through the probate process to make those wishes legal.
Now that you have an idea of why probate might be necessary, here are 3 key reasons why you want to avoid probate if at all possible.
It’s all public record.
Almost everything that goes through the courts, including probate, becomes a matter of public record. This means when your estate goes through probate, all associated family and financial information becomes accessible to anyone who wants to see it. This doesn’t necessarily mean account numbers and social security numbers, since the courts have at least taken some steps to reduce the risk of identity theft. But, what it does mean is that the value of your assets, creditor claims, the identities of your beneficiaries, and even any family disagreements that affect the distribution of your estate will be available, often only a click away because many courts have moved to online systems. Most people prefer to keep this type of information private, and the best way to ensure discreteness is to keep your estate out of probate.
It can be expensive.
Thanks to court costs, attorney fees, executor fees, and other related expenses, the price tag for probate can easily reach into the thousands of dollars, even for small or “simple” estates. These costs can easily skyrocket into the tens of thousands or more if family disputes or creditor claims arise during the process. This money from your estate should be going to your beneficiaries, but if it goes through probate, a significant portion could go to the courts, creditors, and legal fees, instead.
Of course, setting up an estate plan that avoids probate does have its own costs. Benjamin Franklin wrote, “an ounce of prevention is worth a pound of cure.” Like the “ounce of prevention,” costs you incur now to put a plan in place are more easily controlled than uncertain costs in the future, especially when you consider your family may be making decisions while grieving. With proper planning, you can minimize the risk of costly conflict and also reduce or eliminate some costs, like court costs and executor fees; if there’s no probate case there won’t be any probate costs.
It can take a while.
While the time frame for probating an estate can vary widely from state to state and by the size of the estate itself, probate is not generally a quick process. It’s not unusual for estates, even seemingly simple or small ones, to be held up in probate a year or more, during which time your beneficiaries may not have easy access to funds or assets. This delay can be especially difficult on family members going through a hardship who might benefit from a faster, simpler process, such as the living trust administration process. Bypassing probate can significantly speed the disbursement of assets, so beneficiaries can benefit sooner from their inheritance.
If your assets are located in multiple states, the probate process must be repeated in each state in which you hold property. This repetition can cost your family even more time and money. The good news is that with proper trust-centered estate planning, you can avoid probate for your estate, simplify the transfer of your financial legacy, and provide lifelong asset and tax protection to your family. To learn more, call us for an appointment. We would be happy to strategize with you about taking care of your family now and in the future.
The decision on your assets is better made by you than state law.
The key to estate planning is to plan ahead and have a say in where your assets end up, rather than let the state make the decisions, according to Kiplinger in “Estate Planning: A Family Affair.”
If it helps to get you to move on this, consider that if you don’t have an estate plan, the decisions about what will happen to your property–and if you are a parent of minor children, what will happen to your kids—will be decided by the laws of your state and the courts. That should be enough motive to get you past the fear of confronting your own mortality and on to planning for your death or incapacity.
Don’t have a will yet? You need to do that right away. If you have an estate plan, but haven’t reviewed it in a while, and your life has become more complex, it’s time for a review. By the way, just because you review your plan does not necessitate an overhaul. However, laws and lives do change and the same goals your will and estate plan addressed four years or 14 years ago, may not be the same as they are now.
Every five or six years or whenever there is a major change in your life, such as a divorce, inheritance, financial loss, birth or a change in estate laws, it’s time for a review. Reviews should take place more often, when you are in your 50s or 60s. At that time, your assets may have grown, your children may have children of their own and your goals may have changed. Your focus may have switched from protecting your children in the event of a premature death of a parent, to transferring wealth from one generation to the next. Also, the large changes to the tax law may mean that you no longer need some of the tax planning strategies you put into place prior to 2017.
One couple looked at their estate plans from almost 20 years ago, before two of their children were even born. They realized that the plan was out of date, their estate had become much larger, more complicated, and they wanted to build in significant charitable giving.
The first task: updating their wills, health care proxies and advance directives for end-of-life care. They created a trust that will donate 11% of their estate to a charity that matters to them. Trusts were set up that will pay out a certain percentage to their children at ages 30, 35 and 40, rather than giving their kids lump sums. They set up a plan whereby a trustee has the discretionary ability to make payments for education, health care, emergencies and even a down payment on a house, which will be subtracted from the child’s future distribution. An additional benefit: Because of their use of trusts, their distribution of assets will be private. Trusts are considered the “work horses” of estate planning because they can be used to accomplish so many different tasks within an estate. However, it is important to note that there is no one-size-fits-all trust.
Don’t forget to have the talk. Sit down with your family members and tell them, to the extent you are comfortable, what you have decided. You don’t have to discuss numbers. However, your family will appreciate being part of the conversation, so they understand the reasoning behind your decisions. If you are a member of our Safe Haven Family Care Plan, we will facilitate this family meeting for you and even include your financial advisor.
If you need to review your current plan or if you need to start your planning, contact us at the Estate Planning Center, (423) 648-9829 or www.epctn.com.
Not only are men who have recently remarried more likely to have a spouse who is younger, said one researcher, in many cases they are marrying women who are much younger. Twenty percent of newly married men wed women who are at least 10 years younger than themselves and another 18% marry women who are six to nine years younger.
By comparison, just 5% of men in their first marriage marry women who are 10 years younger.
For women, the likelihood of having a far younger spouse is very low.
That big age gap can be a big factor in decisions about when you retire, when spouses take Social Security and in planning how much money the couple needs to save and how to invest their savings. Since women tend to outlive men, it’s especially important for retirement savings to last longer when the wife is much younger than her husband.
When to retire is one of the big questions. Long-term care considerations, health insurance and other health costs become more significant when there’s a younger spouse.
Couples with big age gaps need to have a plan that accommodates the partner with the longest life expectancy. Therefore, a 70-year-old husband and a 56-year-old wife need to plan for their portfolio to last over the wife’s longer life span. That could be 30 years, especially if she has good health and a family history of longevity.
If the older partner had a higher income level over his working career, delaying Social Security filing past full retirement age to age 70 could be extremely important. It will enlarge the higher-earning spouse’s benefit and it will also enhance the lifetime benefits for the surviving spouse.
If there is a big age gap between you and your partner, you’ll need to have a lot of discussions about the issues that retirement and retirement planning brings.
An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances.
The article highlights that a larger number of older adults will need specialized care, and one of the problems is a shortage of skilled workers. Care expenses will rise with wage demands. Your best bet: start planning now for how you’d like to receive—and pay for—your care.
Overall, the rising cost of care has outpaced inflation. The CPI (Consumer Price Index) for all urban consumers was 2.1% for the first half of 2018. The annual median cost of a room at an assisted living facility grew faster, and even the cost of a shared room in a nursing care facility increased by 4.11%.
Here’s a look at the most expensive places to seek care:
Aging in Alaska is the most expensive state, if you need to be in a nursing home. The annual median cost for a private room: $330,873, according to the Genworth study. An alternative might be assisted living facilities. However, they offer less medical care or assistance. There’s also the option of having a home health care aide come to visit.
Home health care services cost the most in Hawaii, where patients pay an annual cost of $68,640 for just 44 hours a week of care at home. The growing demand for support services is likely to push the cost of care even higher.
People planning to retire in five years or so can prepare by working with a knowledgeable advisor. The first question is where do you want to receive care? Then plan for the worst-case situation, where you or a spouse need the care that only a skilled facility can provide.
The solution, if you can get coverage, may be a long-term care insurance policy, or a life insurance policy with a long-term care feature. The cost may be high but the costs you might incur without that coverage will be way higher.
Part of your planning should also include selecting trusted people - family or friends - who can be named to take over your financial matters (power of attorney) or medical care (health care power of attorney), should you become incapacitated by illness or injury.
If you are concerned about how to handle long-term care planning, contact our office for a complimentary consultation.
Here are a few of your digital assets to consider: bank accounts, email accounts, Facebook page, Linked In profile, online photo albums, blogs and websites. They’re likely to be around long after you are gone.
This is still a relatively new area of estate planning. What often happens is that heirs think they can simply find and use the decedent’s user name and passwords to access their accounts. However, what they learn is that they are legally not permitted to do so.
A new law was passed in 2017 in California that attempted to bring order to this chaos. The Revised Fiduciary Access to Digital Assets Act allows executors and trustees to obtain disclosure of a person’s digital assets after the original owner dies, but only under certain conditions.
In the recent past, federal and state laws have made it hard for executors and trustees to gain access to these assets without a court order.
Just being the executor or trustee does not automatically give you the right to access assets. There must be evidence that the decedent consented to disclosure.
The new law mainly gave social media platforms and privacy advocates what they wanted: a requirement of prior consent before disclosure. However, the end result is that it is easier to gain access to digital assets if executors and trustees can show that the decedent did consent to disclosure.
However, it’s still not that simple. Here are a few steps to help your loved ones deal with your digital assets:
Inventory every digital asset that you have. Create a list of log-in and password information, plus any “secret questions/answers.”
Tell your trusted family member or friend where that list is. Store it with your other estate planning documents, possibly in your attorney’s vault.
Do not include your digital asset inventory, as part of your will. If your estate goes through probate, all of your account information will become part of the public record.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and will most likely include digital assets. If you already have an estate plan, revisit the package with your estate planning attorney and take your digital assets into consideration.
Advancing technology has brought us digital assets, and they most likely are here to stay. Therefore, cryptocurrency investors need to know how to pass on those assets through the use of estate planning, according to ThinkAdvisor, in “4 Key Steps for Estate Planning with Cryptocurrencies.”
Here are a few facts about cryptocurrency assets:
Record Private-Key Custody and All Access Details. Digital currency is not the same as bank or investment accounts. The information can be lost permanently, if the investor fails to share the access information. Here’s what needs to be shared for most cryptocurrencies:
Private Key – A public-private key system is used to ensure transactional validity. The public key becomes public every time the cryptocurrency is bought and sold but only the owner knows the private key. This is used to verify ownership and access accounts. A physical record of the key must be created and maintained. Keeping it in a bank safety deposit box or home safe insulates the private key from hacking.
Passwords – Investors who do not secure their digital assets in “hardware wallets” often have their cryptocurrency stored on default digital wallets provided by an exchange. The owner must share their user name, password and security question information with the exchange so that digital assets can be retrieved.
Two-Factor Authentication – Many exchanges require investors to use two-factor authentication, usually via a mobile app that provides a unique time to gain access. User name, password and security system must be recorded for anyone else to access.
Use a Hardware Wallet. Once digital currency is purchased on an exchange, it is automatically stored on the exchange’s default wallet so the investor can access them. However, these default wallets are susceptible to hackers. Investors should immediately transfer their currency to a hardware wallet. Purchased online, they are generally encrypted flash drives that require a password or PIN code to gain access. If you lose that flash drive, or password or PIN code, you may have lost all the assets. However, some hardware wallets support 24-word recovery phrases to help investors restore their accounts. Investors are advised to buy a secondary hardware wallet and make an exact duplicate to have another means of access.
Uniform Fiduciary Access. Roughly 24 states have passed some version of the Uniform Fiduciary Access to Digital Access Act. These laws empower fiduciaries to manage digital assets. However, they may not yet provide that same level of power for cryptocurrencies.
Determine Tax Liability. The IRS treats digital assets as property rather than currency for tax purposes; so any capital gains or losses in digital asset transactions must be reported. Many online digital asset exchanges provide data that tracks sales and purchases. However, they don’t always provide enough information to determine the tax basis. Record and save information on every transaction to be able to do the calculations on your tax liability.