An Important Reminder When Setting Up 529 Plans -- Name a Successor Owner

An Important Reminder When Setting Up 529 Plans -- Name a Successor Owner

By Melinda Gustafson Gervasi

May 27, 2024

Writer's need inspiration.  Combing the online "National Day Calendar" website gives me creative insight for blog posts, including todays.  Did you know that May 29th is National 529 Day -- a day to remind us of the ease and importance of saving for a child's post high school education. Funds in a 529 savings plan can be used to pay tuition for 4 and 2-year college programs as well as trade schools and accredited apprenticeship programs. 

Within weeks of their birth, I set up a 529 plan for each of my children.  Personally, our family used Wisconsin's EdVest program, which offers multiple tax savings.  When I set the forms up I did so with the eye of an estate planning and probate attorney.  While I was the account owner and my child was the beneficiary, I made certain to name my spouse as the Successor Owner of the account.  That way, should I die before the funds are used, my spouse would seamlessly take ownership of the funds. 

Whether it is saving for college, retirement, or a rainy day -- when you set up a new account it can be beneficial to ask yourself who you want to own the account at your death.  If you have an answer, work with the financial company where you have the asset to designate a successor owner.  If you do not, then you lose control over where those funds would go upon your death.

Author's children playing on a family trip to Sweden long ago, when she was still taller than her kids; 
image by M. Gustafson Gervasi, 2024

Remember that a blog is not legal advice, but a platform to spark thought and reflection.  Always seek the legal advice from an attorney licensed in your home state.  Thank you for reading, and be well. 

20 Ways to Make Probate More Efficient

20 Ways to Make Probate More Efficient

By Melinda Gustafson Gervasi

May 20, 2024

Weekly I hear from clients coming into my office that they want to make life easy for their loved ones when their time comes.  If you fall into that category, here are 20 action items you can take now that may make the work of probate easier on your loved ones:

1. Write a will.  Only 32 percent of Americans have an estate plan. Without one there is no clear person to handle your final affairs.  Take control now and create a legal plan to say who is in charge.
2. Nominate an institution to be your Personal Representative (called an Executor in other states).  An institution, such as the wealth management office of a bank, does this work day in and day out.  They can likely complete a task in an hour that might take your loved one a week to figure out;
3. If available, file your will with your local courthouse for safekeeping.  This is a service offered here in Dane County, Wisconsin.  For a one-time $10 fee the will is filed at the courthouse, which offers superior fire and water protection than any home. And the document is already where it ultimately needs to be delivered.
4. Declutter!  Do not put off until tomorrow what you can purge today.  Your efforts need not be perfect, but something is better than nothing.  If you need inspiration, reach my prior blog posts about the book The Gentle Art of Swedish Death Cleaning.
5. Set up a 3-ring binder to hold your important documents.
6. Annually review your important documents to see what is out of date and then update accordingly.  For example, did your brother die 6 months ago but he is still listed as the beneficiary of your life insurance.
7. List out all of your assets. 
8. Write up a list of any liabilities, from a mortgage to student loans, to annual bills such as property insurance.
9. Leave instructions for how to dispose of chemicals or equipment you might have in your home.  I am married to an electronics engineer who is a ham radio operator.  Knowing how to properly handle, move or dispose of his equipment and supplies would save me a lot of time and energy.
10. Make a plan for your pets.  Our family is home to 4 cats, yes 4.  We are "that cat family".  My estate plan reflects our devotion to cats, and includes a pet trust to help make the care and re-homing of our felines easier if the bank has to take action (our spouse is the primary Personal Representative, a local bank is the Successor Personal Representative).
11. Print out your holiday card mailing list for easy access.  If you care enough to send an annual card, these folks may want to know of your passing.
12. Add the past 2 or 3 years of federal and state income tax returns in hard copy for easy access by the person you appoint to handle your final affairs.
13. Provide a list of one or two local thrift stores where clothing, furniture, and other items can be donated if not given to loved ones.  For example, our family directs all donations to the Dane County Humane Society thrift store, however, sometimes their warehouse is full.  I should figure out a secondary choice.
14. Keep hard copies of important vital records, property deeds and vehicle titles.
15. Write a few bullet points to be included in an obituary, or if you are really Type A, write your own.
16. Provide a current contact list for your professional world -- employer, employees, professional associations, licensing boards, etc.
17. Keep an up-to-date list of social media accounts and close out ones you no longer use -- do not overlook digital clutter.
18. Designate items with special meaning to specific loved ones, such as how gets Christmas tree decorations, framed photos or pieces of jewelry.  Make the decision now rather than have family members sorted it out while grieving. That takes time and makes for fertile ground for family fights.
19. Shred documents for assets you no longer own, such as expired life insurance policies.  Keeping records that are not current will slow down the work of your Personal Representative. 
20. If you have minor children, name a guardian in your will.  The only legal way to name a guardian is completing a will.  Avoid confusion and potential litigation, make your wishes now and put it into a legally binding document.

Once you have your paperwork in order, relax and enjoy the sunshine!

Image by M. Gustafson Gervasi, 2024

Thank you for reading.  Remember that a blog is not legal advice.  It is meant to spark thought and reflection.  Please seek legal counsel from an attorney licensed in your state of residence.  Be well!

Word of the Month: Power of Attorney

Word of the Month: Power of Attorney

By Melinda Gustafson Gervasi

May 13, 2024

Power of Attorney is a legal phrase commonly known among everyday Americans. However, just because a term is familiar to you, it does not mean you actually understand the term. Case in point, recently I was reading the book Grown Woman Talk: Your Guide to Getting and Staying Healthy by Dr. Sharon Malone. I thoroughly enjoyed the book until I got to the last chapter.  Despite admonishing medical doctors who gave advice outside their area of focus (think genecology vs. allergy), she proceeds to give legal advice in the last chapter going as far as recommending someone make their Power of Attorney a joint owner on bank accounts.  Dr. Malone's goal is to prevent a financial crisis from happening during a medical event.  While her intentions are good, her advice is not sound.  Adding someone to your bank account creates ownership interest, something most people do not intend to do.  A properly written Power of Attorney for Finance allows the person you name to handle bill paying, funds allocation, and a host of other financial powers.  The POA is all that is needed in my humble opinion. 

As you educate yourself about the documents that make up an estate plan, keep in mind that a "power of attorney" is a legal document that grants power to a person you nominate to make decisions or you in either a financial capacity or health care situation.  The document means the person can make your decisions if you cannot.

When deciding who to name as your Power of Attorney, you may want to ask yourself:

• Who do I trust to make the decisions I would make if I were able;
• Who has the time and space to make decisions for me;
• Who has the skill set to dive into my healthcare situation or take control of my financial ship; and
• Who will be able to stay calm and collected when needing to act.

In the scenario described in the doctor's book, where a person adds someone to their bank account, ownership is established.  If a women adds her daughter to her bank account and then dies, generally the bank account passes directly to the daughter and becomes her sole property.  This transfer of wealth happens no matter what the will might say.  In some situations that may be fine, and in others it may be problematic.  For example, if in this situation the women had a son as well, the son would be cut out of the bank account funds.  It all went to his sister.  And even if his sister wants to share equally with him, doing so may trigger the gift tax.  In 2024 a person can gift up to $18,000 to another person before owing the gift tax. Let me illustrate my point with actual numbers. A women has $100,000 in her checking account.  She adds her daughter as an owner to "pay the bills".  Two weeks later she dies due to complications from surgery.  The daughter is now the sole owner of the $100,000 account.  If she wanted to share equally with her brother she'll need to talk with a CPA to find out how to give him his $50,000 without paying a gift tax that becomes a concern if the gift is greater than $18,000 ($50,000 is clearly greater than the $18,000 limit).  

As you can see, estate planning and probate matters become complicated quickly.  It is always in your best interest to seek the advice and counsel of an attorney licensed in your state of residence.  Do not rely on the suggestions of your best friend, a neighbor, or a well spoke doctor who wrote a book.  Also, a blog is not legal advice, but a mechanism to spark thought and reflection.  Thanks for reading and be well.

Image by M. Gustafson Gervasi -- Complicated road signs in St. Louis, Missouri

Privacy and Estate Planning: Review Outdated Documents

Privacy and Estate Planning: Review Outdated Documents

By Melinda Gustafson Gervasi

May 6, 2024

Deep in the list of an online calendar for "National" Days and Weeks of an exhaustive list of topics is a note that the first full week in May is National Choose Privacy Week.  Upon closer inspection, the week is aimed at privacy within context of public library users.  However, I'll use it as a springboard into the topic of privacy and your estate planning documents.

This time of year many people are out in their yards, pulling away dead limbs and stalks from last years garden growth.  It's a time to pull out the dated and make room for the new growth.  If you have a rainy day and are not in your yard or garden, I encourage you to apply the same spring cleaning energy to reviewing your outdated documents.  Specifically, review Power of Attorney for Finances and or a will to see if they list your Social Security Number.  It is not uncommon for documents created 15 years ago to include this sensitive information.  What was standard no longer is due to identify theft.  If found, creating new documents without sensitive information may be wise.  And be certain to shred the old documents and not simply toss them in the recycle bin.

Enjoy the warm up and explosion of color happening outside your window!  Keep in mind that a blog is not a substitute for a lawyer, but meant to spark thought and reflection.  I encourage you to seek legal advice from an attorney licensed in your home state.  Thank you for reading, and be well.