Tuesday, July 29, 2008
Pay-on-Death (POD) or Transfer-on-Death (TOD) cards are types of a beneficiary forms, that when complete, make an asset non-probate. A POD is usually associated with banking accounts (savings, checking, money market), and a TOD generally accompanies a brokerage account. Upon the account holder’s death the asset will pass immediately to the person(s) listed on the card, avoiding probate. Advantages of PODs and TODs include an immediate transfer, whereas probate may take 12 to 18 months or longer. Also, by avoiding a probate transfer, the recipient is not responsible for the probate fee.
Two points of caution. First, a POD or TOD card may not provide ample room for contingent beneficiaries. And second, it is wise to have some assets remain under probate because money will be needed to pay final bills, taxes, and administrative fees. Funds left in your probate estate will be accessible by your personal representative to close out final expenses; otherwise your estate may be insolvent.
As always, it is wise to consult with an attorney or other trusted advisor prior to making estate planning decisions – including PODs and TODs.
Monday, July 28, 2008
Probate is one of those words that tends to strike a cord of fear in people, however, that does not have to be the case. Through some basic knowledge, the mystery and fear surround the probate process can fall aside, leaving people feeling knowledgeable and empowered.
Blacks Law Dictionary defines probate as the legal process by which the estate of a decedent is administered; generally it involves collecting assets, paying liabilities and taxes, and distributing the remaining property to the heirs. Key points to keep in mind when facing probate are:
- A will facilitates probate by telling the court how you want your assets and affairs handled upon your death – a will does not avoid probate;
- Probate applies only to your “probate property” – which is anything you own that does not have a clear designation on it about who should receive it upon your death. Common examples may include your savings account, home, and or car.
- Probate does not apply to your “non-probate” property – which is anything you own that does have a clear designation on it about who should receive it upon your death – called the beneficiary form or pay on death form or transfer on death form. Common examples include your life insurance and retirement accounts. These assets are passed according to the form, not your will.
- A fee is assessed by the probate court. In Wisconsin the fee is 0.02 percent of the value of your probate property. Other states fees vary greatly.
- The person in charge of ushering a decedent’s property through probate is called the Personal Representative.
While probate may take time, and requires a lot of attention to detail and paperwork, it is not unmanageable. And, if you feel it is beyond your comfort level or requires too much of your time, as a persoanl representative you can always hire an attorney to assist you in the process. Generally those fees would be paid with the decedent’s assets, not your own.
Monday, July 21, 2008
Recently I wrote a review of the book for the Wisconsin Lawyer Magazine. Aimed at the collector instead of the estate planning attorney, the book discusses many issues, including heirs removing items before probate is finished, benefits of donating pieces to a museum, and the importance of appraisal.
As a collector, you obviously have a passion for a certain genre. Through a little planning and effort, you can make sure that passion lives on beyond you.
Thursday, July 17, 2008
Wednesday, July 16, 2008
One, purchase a three-ring binder and subject dividers. Mark the dividers “will”, “powers of attorney”, “instructions”, “beneficiary forms”, “important people to contact”, etc. Behind each tab place the appropriate documentation.
Two, if you put your will in a safe deposit box make sure you have a copy in your personal papers (that three-ring binder) that is clearly marked “COPY”, and indicates where the original is kept.
Three, make a list of all the bills you pay on-line. Should something happen to you, your personal representative likely will not have access to your email account, making it harder to track down those accounts, close them, and pay them off.
Four, make a list of your financial holdings. Include institution name, type of account, and a contact number. As your assets change over time make sure you update this list. Again, keep this in the binder listed above or in another obvious spot.
Five, tell people where they can find your documents. They do not need to know what they say, just where they can find them if something unexpected happens.
These simple steps can dramatically assist your friends and loved ones during what would be a very difficult time.
Monday, July 14, 2008
Saturday, July 20, 2008, Madison, Wisconsin will recognize Gay Pride Day. The agenda includes an address from Congresswomen Tammy Baldwin, followed by a picnic at Brittingham Park. Whether you yourself are in a same-sex relationship, or have a loved one who is, I encourage you learn more about how estate planning can enhance the relationship.
Since same-sex couple commitments are not legally recognized in the State of Wisconsin, partners live without basic rights and responsibilities. However, by taking action, you can bestow those rights and responsibilities on your partner. For example, you can name him or her as:
- Your power of attorney for health care (include a HIPPA waiver);
- Your power of attorney for finance;
- Your personal representative or trustee;
- Recipient of probate assets; and
- As beneficiary on your non-probate assets (life insurance, retirement, etc.).