Monday, August 26, 2019

Beneficiary Forms Gone Horribly Wrong

Beneficiary Forms Gone Horribly Wrong.
By Melinda Gustafson Gervasi



Within the legal community there is a decent amount of discussion about whether or not our professional lives will be usurped by on-line and digital platforms.  Days like today reassure me that my professional life has a few good years, decades even, before a software engineer codes me out of business.

Take life insurance and children for instance.  New client call comes in.  Brief biographical information is provided related to: marital status, children, and financial instruments.  In short, caller is single with a minor child and his best friend from college is named as beneficiary of the life insurance because friend is a responsible adult who will do the right thing.  An actual attorney will likely hear this and say, "wait, tell me that again please" as her eyebrows rise higher on her forehead.  In contrast, your standard online will-writer will prompt "check here if you have named a beneficiary on your life insurance.". 

In my humble opinion, when you name a beneficiary who is not the person benefiting from the money you are making a big mistake.  Big.  Huge!  Why?  That money goes to that person, no strings attached.  And sure, most of the time that person is trusted and will do the "right thing".  However, if they give too much money to person the money was really meant for, they make get slapped with the federal gift tax.  Moreover, what if trusted friend goes through a divorce, dies, or gets sued?  That life insurance money, meant for someone else, will be caught up in the friend's mess.

This is the perfect example of why a lawyer still provides greater benefit than an online system.   When something does sound right, we'll raise our ears up and dig into the details making sure a huge mistake has not or will not occur. We can work around that pit of a mess and provide far more uniquely crafted documents.

Thanks for reading, and always, remember a blog is meant to spark discussion and should not be taken as legal advice.  Moreover, we have 50 different states, each with its own set of estate planning and probate laws.  Always seek the advice of a licensed attorney in your home state, not a blog.

Monday, August 12, 2019

Busting Myths & Misconceptions: Reflections on The Grand Budapest Hotel, a Wes Cravin Film.

Busting Myths & Misconceptions: Reflections on The Grand Budapest Hotel, a Wes Cravin Film.
By Melinda Gustafson Gervasi


From Hollywood to Netflix to TV dramas, legal thrillers remain a popular film genre.  Recently I enjoyed watching The Grand Budapest Hotel, a Wes Craven film.  Set in a fictional remote mountain village somewhere near the borders of Germany, Switzerland, and France, it is a quirky film revolving around the owner succession of a grand hotel. There is the requisite scene for a legal drama: " the reading of the will".  From the deceased's children to her cousins thrice-removed, all assemble in a dark cavernous room, dressed in black, with an attorney at the center of attention.  Here the legal misconceptions leap off the screen:

Except in limited circumstances, the attorney who drafts a will is not the Executor (or what Wisconsin law calls the Personal Representative) of the will;
The will in the movie is a massive heap of papers, of which the lawyer verbally summarizes in a sentence.  Here in Wisconsin a copy of the will is delivered to the Interested Parties (those named in the will, the deceased's next of kin even if not named in the will, and any named nonprofits).  Gathering a cast of characters in a large room where the will is read to them is dramatic but not realistic.
A third scene shows the person who inherited a valuable painting under the will dictating to his assistant a will, under which the assistant will be the sole heir.  In my opinion a will written by the assistant, who is inheriting, is not a wise move.
The movie did contain some accurate points.  First, an amendment to a will is called a codicil.  Second, the attorney for the estate represents the estate. The the attorney does not represent the interests of any interested parties.  That would be a conflict of interest.

This was a fun movie. Just do not take screen plays to be legal advice or education.  If you have any legal thriller books or films with estate planning or probate issues you would like me to comment on in future newsletters, please send me a message!

Monday, August 5, 2019

50 States, 50 Different Sets of Estate Planning & Probate Laws

As Summer 2019 begins its slide towards September our family strives to complete our annual License Plate Game.   It's a great way to reinforce the fact the United States is made up of 50 different states (for our elementary aged kids), all with different plates.....and sets of laws about estate planning & probate.

Unlike federal law, such as immigration, which is the same from Maine to California, estate planning and probate laws are written at the State level.  Leaving us with 50 different sets of laws about who is in charge and where things go upon your death, as well as next of kin's ability (or lack of) to make medical and financial decisions if you are alive, but too ill to act.

Keep this in mind when you are reading materials for a national audience.  For example, mass produced materials about estate planning claim the fee for a court to oversee the transfer of probate assets (those assets that do not have a designation or label on them about where it goes when you die) is 6, 8 even 10%.  While that may be true in some states, it is not true in all states.  Wisconsin has a fee of 0.2%, no where near the fees in other states in the country.

It is also helpful to keep the concept of 50 different states in mind when talking with family and friends who live outside of your home state.  Terms and powers can very, especially in the are of powers of attorney.  You'll find "executor" in one state, and "personal representative" in another.  Both perform the same basic job function.

Please remember that a blog stimulates thoughts and ideas, but is not legal advice.  Please seek counsel from an attorney licensed in your home state.  And may you all experience the trill of finding a Hawaiian plate outside a Wal-Mart in Dodgeville, Wisconsin when you stopped to pick up a fishing license before enjoying Gov. Dodge State Park's summer activities. Thank you for reading.


Monday, July 29, 2019

You Pay For What You Get: Beware Free Legal Advice

Be Alert! Image by M. Gustafson Gervasi 2019
Once upon a time an elderly women, Agnes, went into her bank to review her accounts.  Behind the desk sat an eager and chipper 23 year old "banker".  With good intentions of providing the best banking services possible, the young banker encouraged the older women to add her daughter to her bank accounts in order to "make things easier."  Relying on her long relationship and established trust with the bank, Agnes took the advice.  When the door closed upon Agnes' exit, her daughter, Anne, had been made a joint owner of the bank account.

Time passed and Agnes' health took a turn, with her earthly life ending six months after the bank visit.  Grieving, yet still functioning, Anne set about taking care of Agnes' affairs.  One day she went into the bank to settle her mother's accounts, death certificate in hand.  To her surprise, the 23 year old banker informed Anne about the joint ownership of the accounts, indicating they would all pass into Anne's name, a nice sum of $200,000.

Anne's next stop was her attorney's office, where the pleasant surprise of the ease of money transferring from Agnes to Anne came to a screeching halt.  As the attorney talked a sense of dread built up in Anne's stomach.  You see, Anne has a sister, Amanda.  As the meeting progressed, Anne learned that the joint ownership allowed the balance in the bank account to become Anne's, but Anne's alone.  She certainly could share with Amanda, but it was not required.  Being a loving sister, Anne had planned to simply write her sister a check, and then heard the term "gift tax". 

Under current law, set by the IRS, any one person can give another person up to $15,000 per year (exceptions to apply this being the IRS tax code).  Anne could give her sister up to that amount, but the balance in excess of the $15,000 threshold would be subject to the gift tax.  Anne owned the money and was gifting $100,000 to her sister.  Long story short, CPA and attorney billable hours were used to develop a transfer plan to Amanda that was legally acceptable, and a pinch of wishful thinking was added so that none of the family would die before the transfer was complete.  It all worked out in the end, however, the complexity and associated cost was the direct result of the free legal advice handed out by a young banker.  A banker, not an attorney.  A banker, not a CPA.  Remember, you get what you pay for, and in this case the free legal advice turned into some hefty bills and stress. 

Thank you for reading, and please remember that a blog is not legal advice.  A blog encourages thought and reflection.  Always seek legal counsel from a licensed attorney in your home state before taking any action on this subject matter.


Monday, July 22, 2019

When the Dead Outnumber the Living on Facebook

Pop quiz:  What year (estimated) will the dead outnumber the living on Facebook?
A)   2070
B)   2056
C)   2031
D)   2103

Click on this link to find the answer.  If the link is broken, the answer will be at the bottom of this post. 

The year itself is not the point, but rather the concept of all the digital data / refuse that will linger in cyber space long after our earthly years have come to an end.  Many Americans already feel smothered by piles of paper, cheap plastic toys kids bring home from birthday parties, and closets full of clothing from bygone eras.  Pile on top of that our digital clutter, and add the weight of the amount of energy required to keep the servers running that store it all, and you may be inclined to throw your arms up in the air in despair.

Clutter and chaos engulf M. Gustafson Gervasi's home. 2019

To purge or not to purge, that is the question.  What kind of digital footprint to you wish to leave behind in perpetuity? Who should be in control of what you do leave behind.  Don't assume the loved ones you leave behind will clear it all up -- in some cases those user agreements we click without reading deny Personal Representatives (a.k.a. Executors) the power to delete social media accounts. 

IMHO an annual review of your estate plan is a wise policy.  What addresses have changed, who has died or been divorced.  What accounts are now defunct.  And....what social media or digital accounts should be deleted.

Thank you for reading.  As a reminder, a blog is not a substitute for legal advice.  It is meant to inspire thought and stimulate conversations.  Always consult with an attorney in your home state for legal advice.

If the link above did not provide the answer, it is A) 2070.


Friday, May 31, 2019

Peonies -- Planning for the Little Things

Image by M.  Gustafson Gervasi, 2019
Peonies unfolding in the warm sun.  June is nearly here.  With it a memory dances in my mind.  June 1991 and my mother fussed about the peony plants that circled our back deck.  Delicate, vibrant, gone too quickly -- her wish was for those flowers to be there for my high school graduation party.  Mother nature granted mom her wish.  Peonies in full bloom were the backdrop for many photos that day.

All of these years later (has it really been 28 years!) those very plants still bloom in June, just in a new location.  My mother left her earthly life in February of 2014.  Despite her passing in the depths of a Wisconsin winter, I was able to transplant the peonies from the backyard of her ranch home to the flower bed in front of my ranch house.  All it took was a simple request from the new owners for me to return when the soil had thawed.

With the plethora of how-to books on estate planning, probate, trusts, and in general getting your "stuff in order" a huge hole exists.  Planning for the items with no monetary value, but a wealth of love and comfort:

  • the Swedish Meatball recipe from your grandmother;
  • record collections now gathering dust, but once filled a childhood home with music;
  • inexpensive jewelry that made dress up in the 1970s oh so much fun;
  • your late father's teddy bear from 1941; and
  • peonies -- as well as other perennials.
Drawing from my own life, and that of clients I have counseled, don't overlook planning for the little things that make up your one grand and special life.

Monday, February 25, 2019

What I've Been Reading: The Death of Mrs. Westaway by Ruth Ware



My workdays are spent at the office, talking with clients about illness, death and taxes.  My evenings and weekends usually allow some downtime for me to indulge my inner bookworm.  Recently I took a break from the Nordic Noir series I've been reading and picked up a book recommended by a dear friend, The Death of Mrs. Westaway by Ruth Ware.

The book opens with an introduction to Hal, a young women in her early 20s scraping out a living reading tarot cards on a pier in Brighton, England.  We learn that her mother, and only family, was killed in a hit and run accident when Hal was barely 18.  She is alone, broke, and avoiding a loan shark she now knows was a mistake.  And then a letter arrives along with her growing bills.  An attorney from Penzance, England wrote, informing her that she is an heir to her late grandmother's estate.  An heir?  Hal's maternal grandparents were dead, and she had no clue who her father was.  And so the mystery begins as Hal hops a train to figure out if this is a valid bequest and the answer to her money troubles.  The book is just the right mixture of mystery, suspense, and an ending with a twist. 

Even on weekends and evenings I am reading about probate matters!  This book set up the stage with just enough knowledge to know a drama would unfold based on the will, but was not weighted down with the ins and outs of estate planning or probate.  When I tweeted to Ruth Ware about finishing the book she was pleased that I did not detect an egregious errors.  After all, I'm licensed in Wisconsin....not England!

As Spring slowly makes it way into our weather forecast, and you begin packing suitcases for Spring Break vacations, this may be the prefect suspense novel for your beach side or ski chalet reading.

Be well, and thank you for reading.