1. You have to be old to plan your estate. FALSE –  Age doesn’t matter when planning your estate.  In fact, preparing a Will, and setting up a Trust should be done as soon as possible.  When we are young, we more than likely have children that are under age 18 and will require a Trust so that any and all assets can be appropriately distributed on behalf of the children. Additionally, minor children will need a Guardian appointed to care for them and ensure they are not only emotionally but financially secure.
2. You have to have a lot of money to have a Will or Trust. FALSE –  Everyone, no matter their financial status, has assets.  The obvious assets are a home, condominium or automobile; however, assets consist of your personal items as well such as clothing, jewelry, furniture and the like.
3. Solely owned assets such as collectibles and bank accounts only need to be included in a Will.  FALSE –  While most checking and savings accounts or other financial accounts have a payable on death benefit (POD) which is an arrangement between a bank or credit union and a client that designates beneficiaries to receive all of the client’s assets. The immediate transfer of assets is triggered by the death of the client.  All assets, especially solely owned ones must be included in a Trust.  Having these assets in a trust allows the Trust to dictate to whom they go without the need of court intervention. As for collectibles, a Trust will ensure they are distributed accordingly without the need for Probate.
4. Having a Will or Trust means you can avoid Probate.   A trust is a fiduciary arrangement that specifies how your assets are to be distributed, usually without the involvement of a probate court. However, a trust must be fully funded and all assets in the name of the Trust in order for the Trust to take precedence and rule out the need of going to Probate.  If the Trust is not fully funded and the assets have not been signed over to the Trust, you will still need to go to Probate so that the Court can appropriately assign the assets.. 
5. Estate Planning is expensive. FALSE – The average cost for having a Revocable Trust, Will, and Power of Attorney is between $2,600 – $4,000.  Once these documents are prepared and properly executed, you and your loved ones are covered.  You will be able to rest knowing you have all your assets properly secured.  This initial cost will far offset the costs of Probate which can last an average of 1 year. 

Who should you name as the beneficiary of your retirement fund and  life insurance policy?

A beneficiary is the person or entity you name in a life insurance policy, retirement fund or other financial account to receive the death benefit. You can name one person, two or more people or a Trust you have created. Naming beneficiaries for qualified retirement plans means that probate, attorneys’ fees, and other costs associated with settling estates are avoided.

It is extremely important to make sure all of your financial accounts have a designated beneficiary.  DO NOT assume these accounts will automatically be dispersed to your loved ones.  By not assigning anyone as a beneficiary, these funds go into your estate, and as a result go through probate, which could be a lengthy process for those with rights to your estate and access to your benefits. If you are unsure whether a beneficiary has been designated, contact your financial institution or advisory immediately.

When deciding who to name as a beneficiary there are several factors to consider.  If you are married, Federal law says your spouse is automatically the beneficiary of your 401k or other pension plan, period. You should still fill out the beneficiary form with your spouse’s name, for the record and a contingent beneficiary should be listed in the event your spouse predeceases you or you both die at the same time.  If you want to name a beneficiary who is someone other than your spouse, and your spouse is still alive, your spouse must sign a waiver.

A person can also have more than one benefactor.  You can assign someone else such as a child or other family member but it will require your spouse to sign away rights to be the primary beneficiary. Remember for any 401(k) or pension plan, your spouse must be the primary beneficiary unless spousal consent is given to the naming of another beneficiary. For example, let’s say you are married and have two adult children, under these circumstances you can assign the beneficiaries a certain percentage of the benefits.  You could split  the benefits, say 50% to your spouse and 25% for each child; however your spouse must sign an appropriate waiver acknowledging they will not be the sole beneficiary.

A person can also designate their Trust as a beneficiary. Naming a trust as a beneficiary is a good idea if beneficiaries are minors, have a disability, or can’t be trusted with a large sum of money.  For example, if your spouse has predeceased you and you have minor children, you can designate your Trust as the beneficiary.  This will allow the Trustee to control the finances for their health, education, maintenance and support.  Additionally, the Trust can also be worded in such a way that the minor children will receive the benefits once they reach a certain age. Another example is if you have two adult children, and one is responsible while the other is not, you can list the Trust and responsible child as beneficiaries and decide the percentage to be given to each.  Your Trust should outline how you want the funds handled.  The responsible child would immediately receive the benefits, while the Trust would then be responsible for maintaining and disbursing the funds according to your wishes.

Life Insurance policies work the same way as retirement plans except for two important factors.  First, your spouse is not required to be the beneficiary.  There are almost no rules restricting who you pick. In addition, you can easily change your beneficiary if, for example, you get divorced.  Second, a Life Insurance policy will not pay out death benefits if there is a lapse of a policy because premiums weren’t paid,  suicide,  death while committing a crime,  murder by a beneficiary, material misrepresentations on the life insurance application.

In sum, make sure your financial accounts, retirement accounts and life insurance policies have the beneficiaries listed along with the percentages of desired disbursement.  Prepare now so that your loved one don’t have to encounter difficulties later.

If you die without a Will, who is in charge of your Estate?

When a person dies, he or she does so either “testate” or “intestate.”  If you die “testate,” it means that you executed a Will before your death. If you die “intestate,” it means you did not.  

The difference is critical, because whether or not you died having a Will determines who is in charge of your estate and distributing your assets.(put a hyperlink to the previous blog about asset) 

If you executed a Will before your death, (assuming it is valid and uncontested etc.), the court will distribute your property in accordance with its terms.

If you died without a Will, however, the court will use your state’s laws to decide who will get what.

Connecticut laws govern who are considered your heirs and how their shares are to be distributed. These laws also determine who will be in charge of making the decisions about your property.

When there is no Will to tell the court who you want as your personal representative, the probate judge must choose one for you.  In the alternative a family member may also petition the court to allow them to be the Administrator of your Estate.  The Administrator will be responsible for filing all court documents, attending any necessary hearings, as well managing all assets and debts. 

There is unfortunately no guarantee that the Administrator will distribute your assets according to your wishes.  Whereas when you have a Will, you have pre-appointed a person to be your Personal Representative and Executor of your Will and therefore you can dictate how your assets are disbursed and to whom.

For example, if your estate is valued at $100,000.00 and you have 2 children and 4 grandchildren, you may want to give $25,000 to each of your grown children and split the remaining $50,000 evenly four ways between your grandchildren.  You can specifically outline this in your Will.  Without a Will, your children will need to petition the court as to how they feel the assets should be disbursed, and they may want to split the $100,000.00 50/50 leaving nothing aside for your grandchildren.

Choosing who the Executor of your estate will be when you pass also allows that person to be fully aware of the responsibilities and they won’t feel burdened.

In today’s world, life is filled with uncertainty.  Don’t leave planning for your future and that of your loved ones to chance.

There are 2 types of assets: probate assets and non-probate assets. Probate assets are usually assets that are owned solely in your name and non-probate assets have a beneficiary designation or are payable on death.  While not everyone has non-probate assets, we all have probate assets.  Examples include:

Probate assets include:

• Solely owned checking and savings accounts with no payable on death designations
• Solely owned brokerage and other investment accounts;
• Real property, including primary residence, second home, any residential or commercial investment properties;
• Tangible personal property,.all the “stuff” in your home, like clothing, jewelry, fine china, furniture, artwork, etc.;
• Motor vehicles including cars, motorcycles, and boats;
• 401ks and IRAs with no beneficiary designations or accounts with predeceased spouse as primary beneficiary and no contingent beneficiary designations; 
• Business interest with no succession plan.

Non probate assets include:

• retirement accounts (401ks and IRAs) with primary and contingent beneficiary designations;
• Life insurance policies with primary and contingent beneficiary designations; 
• Any assets and accounts held in a revocable or irrevocable trust;
• Jointly held bank accounts or bank accounts with payable on death (POD) or transfer on death (TOD) designations; 
• Jointly held brokerage and other investment accounts.

To ensure your probate assets are dispersed according to your wishes a Will is required.  A Will spells out how you want your affairs handled and assets distributed after you die. Unlike probated assets, your Will does not control how non-probate assets are distributed. Instead, they pass directly to the named beneficiaries without the involvement of the Probate Court.

By turning probate assets into non-probate ones, you can enjoy greater control over what happens to them after you pass or, in some cases, become incapacitated.  The ability to distribute assets without the involvement of the Probate Court has several advantages, the main one being that the named beneficiaries will have access to their inheritances immediately after you die.

An Estate Planning Attorney can advise you on how to structure your Will, Trusts, and other estate planning tools to ensure that your loved ones receive their inheritances in a timely manner and with as little financial impact as possible.

First, some states do not recognize Holographic Wills and, while other states do permit Holographic Wills, they require the document meet specific requirements to be valid.  A handwritten will that’s signed by the testator alone is not enough to be valid in Connecticut, although it is in other states, such as Texas.  A handwritten or holographic will isn’t valid in Connecticut unless it has at least two credible witnesses, the witnesses understand they are attesting to your Last Will and Testament and all signatures are acknowledged before a notary public.  This is to ensure it was made by the testator.  If the Will is not properly witnessed and notarized, it is not valid.  A caveat is that if you resided in Texas, or another state where a Handwritten Will is valid at the time you wrote your will, then moved to Connecticut and subsequently passed away, the Probate Courts may acknowledge the Will based on your place of residence when the Will was written.  However, this can be a delicate situation and the validity of the Will cannot be guaranteed. 

Second, a Holographic Will may be easier to contest.  In the probate of a Holographic Will, it shall be necessary that at least one witness who knows the handwriting and signature of the testator explicitly declare that the will and the signature are in the handwriting of the testator. If the Will is contested, all witnesses, including the notary public may be required to verify the document is legitimate. 

Third, you want to be sure that your estate assets will pass to the people you choose. Your Will is an extremely important document and you want to watch for issues that could invalidate it in court.  The language in your Will must be clear! If your intentions are not stated with absolute clarity, the Will could be misinterpreted, easily contested and become the cause for serious family strife.  

This is why it is always prudent to have an attorney that is knowledgeable in Estate Planning and probate law assist you with Estate and Asset Planning and preparation of your documents. An attorney is aware of the rules and procedures that govern the Probate Court and will thereby ensure you, your family and assets are protected and distributed based on your wishes..

Probate matters can be complicated when you don’t have a valid Will. It can take much longer to settle an estate and cost more money, especially if litigation becomes necessary. It can create tension among your loved ones, each of whom may have their own ideas about what your intentions were. Let’s say, for example, you have a Holographic Will put away in a safe deposit box.  At the time of your death, you were unmarried but lived with your longtime partner, your parents have both passed away, and you had no children of your own. However, you have three siblings, and you’re estranged from all of them. Having a Holographic Will could be cause for your siblings to contest the validity of the will.  If the Holographic Will is found to be invalid, in some states your estate would pass to the three of your siblings in equal shares, leaving your longtime partner no legal right to your assets. Having a valid will in place would ensure that your partner could inherit the whole of your estate.

POWER OF ATTORNEY

A Power of Attorney determines who has authority to conduct certain financial business transactions on your behalf should you become incapacited or be out of the state or country.  If you are simply out of the state or country, you can provide the appropriate directions and instructions as to how you want certain business and financial matters handled.  However, should a tragic event occur leaving you incapacitated and without the ability to handle your everyday, daily financial tasks, having a Power of Attorney will provide you with the peace of mind that your business affairs will be managed appropriately.  Deciding to whom the Power of Attorney will be assigned is a matter that must be thoughtfully considered.  Do you want a family member in charge or do you want a third party person, such as an attorney, that has no emotional investment.  Whomever you choose, remember that they will be responsible for your financial business matter and should be able and willing to do so while taking into consideration your well being.

HEALTHCARE POWER OF ATTORNEY

A Healthcare Power of Attorney simplifies the process of how certain medical situations are handled.  This document  allows you to empower another person to make decisions about your medical care with legal authority. A Healthcare Power of Attorney merely says, “I want this person to make decisions about my health care if I am unable to do so.”  This document is different from other legal documents related to end-of-life-healthcare decisions. As with a “normal” Power of Attorney, choosing your representative is an extremely important decision.  This person may one day be deciding what health care measures and treatments will be in your best interests or determining exactly how your personal and religious values would impact other treatments.

LIVING WILL

A Living Will dictates what medical treatment you will or will not receive should you be in a life or death situation.  The Living WIll authorizes the use of or lack of life support mechanisms.  Having a Living Will allows you to pre-make the decision on how you will be taken care of in end-of-life-healthcare decisions.  A Living Will only applies if you are terminally ill or permanently unconscious or another similar condition as defined by state law. If you are only temporarily unconscious or otherwise unable to communicate, but are not terminally ill, in a permanent vegetative state, or other end-stage condition, a living will is of no use. You will need a Healthcare Power of Attorney to cover such a situation.

As you can see, these documents are all unique and specific unto themselves.  While you can have one without the other, they work in conjunction with each other.  These two documents are an important part of your Estate Planning and everyone should consider having them.