Wednesday, August 6, 2014

'Tis A Gift To Be Simple.....And When It Is Not.

It never fails.  New clients walk into my office and sit down for our first meeting of the estate planning process.  Once the initial hellos are finished and the legal services agreement reviewed and signed, we get down to business.  Nine times out of ten I hear "oh, this will be simple, we are a solid middle class family." Instantly this Shaker song pops into my mind (one I adore and delight in signing at our UU church).

The song makes me smile, such a happy little ditty.  The client(s) is smiling, thinking this will be simple because they do not have tons of assets, just the normal amount of a normal person or couple here in the heart of the Midwest.

A glance at their questionnaire and the tune fades from my mind, replaced by something for chaotic. Something more ominous.  Something that is anything but simple. Something along these lines:

Why the change in background music?  It's simple really.  Money is not what makes estate planning complex, life circumstances make it simple or complex.

Me: I see it is a second marriage for both of you, and that there are three children from one side and two from the other.  Correct?

Client: Why yes, is that a problem?

Me: Not a problem, but certainly not simple.


Me: You've been together for 18 years, never married, she has a son from a prior marriage.  Correct?

Client: Yes, is that a problem?

Me: Not a problem, but we have some issues to explore.

These are what estate planners call Blended Families, and they are not as easy to plan for as the squares in the Brady Bunch boxes might make it appear.  They are complex situations.  What happens when the first spouse dies?  It passes to the survivor, but then where?  Locking in plan to the kids requires a trust most likely, and with that, simple burst like a balloon on a 98 degree day.

Sadly, single with no children does not guarantee simplicity either.

Me: Your questionnaire indicates that you wish to leave your entire estate to eight nieces and nephews for their college education.  And you want to make sure expenses for your three poodles are paid for after your death.  Correct?

Client: Yes, is that hard to do?

Me: Not necessarily hard, but a simple will cannot accomplish these goals.  You'll need a will with trusts -- plural, one for the college funds and one for the dogs.

Who is simple might you wonder?

Me: I see that you are married with two adult children.  There is a combined net work of $3.7 million.  You want everything to go to the surviving spouse, and upon his/her death, equally to the children.  Correct?

Client: Yes, does the net worth create problems?

Me: No, you are under the federal estate tax and it appears that a simple will might be all you need.

Life -- it is always throwing us for a loop.

Monday, July 7, 2014

What Do You Mean She Did Not Survive? Survivorship in the World of Estate Planning

Without fail, every week or so a client will give me the look.  Akin to Gary Coleman on Different Strokes, what I call "the Wathcha' Talkin' About Willis? face.  You remember, this one:

Behind the look is an air of confusion, annoyance and frustration.  These are the type of conversations that place unfavorable adjectives in front of the title lawyer.  Case in point:

Client: My wife died on Sunday, her sister died Thursday, so my wife outlived her and is the beneficiary of the sister's IRA.

Attorney: Well, your wife died after her sister, but she may not have actually survived her, it depends.

Client: [intent pause, brow wrinkles, and they are clearly holding back the statement -- now I thought you were suppose to be smart, you went to law school, and now your tellin' me that my wife did not survive her sister, come on, pay attention] -- what? is the question they toss my way.

Attorney: In the world of estate planning we have a concept called survivorship, it requires an heir to outlive the decedent by a certain amount of time in order to actually live long enough to inherit.  If they die too soon, they are considered to have predeceased and the asset passes as though they had died before the decedent.

Client: what?

Attorney: the thought is that you want your assets to pass to another person, but control what happens if they die before you.....or too soon after you.

Client: okay, so how long did my wife have to outlive her sister?

Attorney: that depends on the situation.

Client: Are you kidding me! Can't you give me a firm answer?

Attorney: No.  In Wisconsin the statutes require an heir to outlive the decedent by 120 hours (5 days) before inheriting, unless a will sets a different time frame such as 30, 60 or 90 days.  But this is an IRA, which is non-probate property, meaning the contract with the financial services company controls.  We need to know, under the contract, what time frame applies.  Do you have a copy of the contract?

Client: No, why would I, it belonged to her sister.

Attorney: Can you get one from the company -- you are a suspected heir since you survived your wife.

Client: [Head falls into their hands] -- why does this have to be so hard?

Attorney: I'm sorry that it is, but I can try to make this easier for you. There is a reason I keep Frango Mints in the waiting room, everyone needs a treat after talking with a lawyer about illness, death and taxes.

Lessons learned: 1) dying second does not necessarily mean a person stands to inherit under a will or beneficiary form.  Timing will likely play a key role.  Did the 2nd to die live long enough after the 1st to actually inherit.  2) hard copies of financial agreements can save countless hours for loved ones left behind to sort out the path an asset will take after death.

Monday, June 9, 2014

It Was Her Wish

"Are you kidding me, it's in the Bible......follow the dying person's last wish!"  It is not often that my husband invokes the Bible, he is an atheist after all.  But when he does, he is serious, and he is expressing the fact something is ancient.  Not just some new trendy idea -- it dates back to biblical times.

We had been discussing the fallout of my mother's memorial service. Yes, such an event can have fallout. And from my vantage point of an estate planning and probate attorney, I can tell you that it happens more often than not.  But here I was, the daughter, not the attorney, in the mini-drama surrounding her final wishes. Thankfully that legal education of mine fortified my backbone, allowing me to stand tall and carry out her wishes, despite the descent of her grieving relatives.

With no uncertain terms, she had clearly expressed her wishes to me from the passenger seat of my Honda Civic.  Sick for many years, we often found ourselves with me driving her home following a hospital discharge. Both aware that her health was declining and that we are all human. Eventually her time would come.

I broached the topic with "I know you don't want to think about these types of things, but if something should happen, would you want a service like the one we did for dad?" First came the sideways glare, and then (I can quote her here) “I don't want nothin' in the god damned church in Brooklyn. I married my first husband (my dad was her second husband) there, and that is where they buried my baby....without me being there. No! I have no happy memories of that place. Do it at the church you go with with the kids, FUS. And I hate my picture, so don't do one of those silly poster boards plastered all over the place. Hmmmh” And that was that, she looked forward and we proceeded home.

Over the years I revisited the topic, wanting to make sure I knew her wishes. And the answer was always the same. Had she been a client, I would have advised her to put her wishes in writing through Wisconsin's Authorization for Final Disposition. But she was mom, and that piece of paperwork was never completed. Her final day on earth was February 16, 2014, a Sunday. The following Monday I contacted the minister at FUS and began setting in motion her plan, her wishes.

It would be a memorial service, not a funeral. It would be held at the First Unitarian Society in Madison, not the Methodist church in Brooklyn where so many other funerals for the family had occurred. It would be several months after her death, not in a few days. It would be her wishes, not the boiler plate funeral of prior generations. We all grieve in our own ways. Communications with her relatives are strained if not severed. She was my mom, and I followed her wish. My question to you dear reader, is what is your wish and who can make sure it happens? The time will come, we just do not know when.

Monday, June 2, 2014

Mary and Baby Jesus Planter Finds a New Home: Tales From the Land of TPP

My phone chimed, indicating a new Facebook alert. Quick downward swipe of my fore finger and there it was, notice that the Mary and Baby Jesus planter had a new home! Relieved, a smile enveloped my face knowing that: one, I managed to keep this item out of a landfill; and, two, a piece of my mom and dad would live on in the home of neighbors who know the meaning of “it takes a village”. The expression “you cannot take it with you” has never had more impact on me than it did at the moment I read that comment. You die, but your stuff remains. And then the question, where will it all go?

Her final breath came on a Sunday, two days after Valentine's Day. One audible exhale akin to sinking into a warm bath, and my mother's earthly days came to an end. It took a few moments for the reality to sink in. She was gone. Both of my parent's were now gone. At age 40 I was an orphan. Sobs finally arrived, having been stoic during her final months, as her body clearly shut down but not her spirit. The polar vortex of 2014 held on firmly that month, and not until its release in late Spring was I able to tackle the TPP.

The what you ask? The TPP. Not only am I her daughter, but I am her estate planning and probate attorney / daughter. TPP is the lingo we use in my line of work to refer to her stuff. Her items, anything from a wedding ring to piano. And after the initial waves of grief washed over me, with the memorial service behind me, and her ashes comfortably settled in the plot next to my dad, was I able to fully face the reality of emptying the ranch house at 1121 Valley Stream Dr. Their abode for 38 years, one that held family heirlooms, garage sale finds that may or may not be antiques worthy of Antiques Roadshow, 8th grade insect collections, bag upon bag of canceled checks from the auto business they owned in the 1970s to 1990s, and mildewed junk that should have been tossed decades earlier. It was a new mountain to face.

The Unitarian Universalist in me advocated for recycling as much stuff as possible. “Empty the jars of applesauce from 1979 and keep those canning jars out of the landfill”, the voice in my head would shout! Another voice, the frugal one, saw value, even minute value in each item. Hey, I could sell this for $2 on Craigs List. And then there was the exhausted lawyer who happens to be a wife of a business owner and mother of a 5 and 3 year old arguing for the most time-efficient manner for emptying the house and getting it market-ready.

It was a mixture of all three who prevailed in emptying the house. Lessons I walked away with were:
  1. Hire someone with time and drive to post items on Craigs List, offering them 50% of the earnings. Requirement, you must trust the person. I am amazed at what a little motivation can do to empty a home – and what others are willing to buy!
  2. Know when to call in the Pros and pay for their expertise. When the basement tiles and adhesive tested positive for asbestos the “country club” ways of my husband kicked in. We hired a firm, bonded and licensed to address the mess. An email requesting me to mail a key said “part of my fee is to make this as easy for you as possible”. To which I simply wrote, “thank you”;
  3. Donate to charity. Yes, I'd be happy to take a tax deduction for 2014 on the TPP I inherited. Pack it, load it and drop it off, or call for a pick-up. Either way, get a receipt for the CPA; and
  4. Give it away. Save your time and the earth, list it for free. I spent very little time hauling items out of the basement, set them outside the garage and listed them (with photos) on social media. People love something for free, and wow did things relocate.
Rehoming the TPP is now complete.  The Mary and Baby Jesus planter now resides in the sunroom of the neighbors who cared so much, and I am ready to move on to the next phase in this life cycle event.  

Monday, May 26, 2014

Memorial Day & In Flanders Field

It's May 26, 2014, Memorial Day here in the United States.  Symbolized by vibrant poppies, it is a day to pause and remember those who have their life in battle for the values American's hold dear.  Today I will be with my family, enjoying the start of summer customs but also taking a moment to reflect.  With children just shy of age 6 and 4, I plan to share with them this poem, from with the symbol of poppy grew, I leave you with a reading of In Flanders Fields.

Monday, May 19, 2014

Have Children But No Will With Guardianship Nomination? Watch Cinderella And Find Motivation To Get It Done

As the parent of preschoolers it was bound to happen, the request to watch Cinderella.  Never a huge fan of Disney movies due to the fact they always manage to kill off the mom, I had kept these films from our kids. But now, on the cusp of turning 6 and 4 they had heard enough from classmates to request a viewing.  A free DVD was up in our closet, a long ago gift from family.  So, this past Mother's Day weekend, as the heavens unleashed a Spring storm over Madison, I curled up with my kids and husband to watch this classic film.

Almost immediately my husband turns to be, and with an amused but shocked expression on his face, mouths "it's an estate planning problem!"  And so it was, on my day off from work here I was watching a film with the type of situation I walk clients through on a daily basis.  If you die, and then your spouse dies, who will take care of your children and the funds you leave behind?

Guardianship, it's a key sticking point for many parents of young children.  Indecision or an inability to face their own mortality keep this question from being answered.  Thanks to Cinderella I can safely say, planning is not nearly as bad as not having a plan should the unthinkable happen.  If you need a starting point, here are a few questions I would offer -- as a mom myself -- for your consideration:

  1. Who shares your values?
  2. Who is close to your child(ren)?
  3. Who has the ability to welcome your child(ren) into their life and home?
  4. Is the same person as equipped to handle funds you leave behind (i.e. life insurance, retirement, home equity, etc.)?  Remember, someone who might be great with children may not be skilled at financial matters.
  5. Who shares your views on religion, education, lifestyle, and finances?
  6. Consider those in your circle of family and friends -- you are not required to name a blood relative.  More often than not family shares your life but not your DNA.
  7. Have a backup plan, who is your second choice.
  8. If you are considering a couple, ask yourself which one would you choose if that couple divorced? Given the divorce rate it is an important factor to consider -- is the one person sufficient, or was it the couple that made the deal in your mind?
And I could go on and on, but that is for you to consider and speak with your attorney.  Remember, a blog is not legal advice.  Rather it is a forum for discussion.  The same week I watched Cinderella I also read a news story about a women who had created a plan for her houseplant -- one that will likely long outlive her.  This woman had planned for a plant!  Yet how many parents have not asked, what happens if were not here.  Need more motivation?  Watch Disney's Cinderella and you'll likely be prodded in the right direction -- make a decision, and make it legally binding.  Thanks for reading, and have a great week.

Monday, May 12, 2014

But My Banker Said It Was Okay.....Unauthorized Practice of Law

Weekly, if not daily, I find myself in a verbal or email conversation with a client in which I am having to explain why want they have done, or think they can do, is not a wise option.  Frustration on their part is evident.  Why am I telling him or her no when his or her banker, financial planner, sister, or fellow bus rider said they could.  Because I'm their lawyer, that is why.  They accept it, and I feel for them.  Why does it have to be so hard?  Because things get complicated quickly.

Add another person to your bank account?  You may have just stepped on the gift tax.  The IRS will not care if the banker suggested this move and thought it was okay.

Manage to add your daughter's name to the deed of your condo?  What happens when she dies, gets sued, files for divorce or bankruptcy?  Your financial planner probably never brought those scenarios up before encouraging you to get a quit claim deed to make the change yourself.

Relatives descend like a turkey vulture on grandma's house within 36 hours of her passing, there to "claim" what she said would be theirs.  The County Sheriff or DA will likely not care what Great Aunt Mary said when suggesting you all go in and clear out the house.  Theft from an estate is theft.

Most people, especially your financial team, aim to help, but inadvertently give poor legal advice.  As I say in my seminars, it is less expensive to get advice from a lawyer before you act rather than  hire one to clean up a mess.   Unlike your banker, lawyers are authorized to practice law.  Those who are not engage in the unauthorized practice of law:
Every jurisdiction in the United States recognizes the inherent right of individuals to represent themselves in legal matters. In contrast, the privilege of representing others in our system is regulated by law for the protection of the public, to ensure that those who provide legal services to others are qualified to do so by education, training, and experience and that they are held accountable for errors, misrepresentations, and unethical practices. 
Thanks for reading.....and note that a blog is not legal advice.  Please consult your attorney for advice specific to your situation.