Survivorship In the Context of Estate Planning and Probate

Image from www.sxc.hu, #921217

Imagine a car is traveling on the interstate, heading out for a much needed Spring Break.  At the wheel is a newly minted driver, 16 year old Todd.  In the passenger seat is his proud mother Sharon, navigating the GPS instructions taking them to the Sunshine State for some good times.  At home remains Todd's pet dog Tuffy, left in the care of his father, Ted, the ex-husband of Sharon.  In the blink of an eye a tire flies off a passing vehicle.  The inexperienced Todd over-corrects and a violent collision occurs.  When rescue crews arrive Sharon is declared dead on the scene.   Todd is airlifted to the nearest trauma hospital where he dies. What happens to Sharon's estate?

If she did not have a will, state statute controls.  Here in Wisconsin her probate estate would pass to her son as long as he outlived her by 120 hours.  Should Todd die the following day, he would not have survived and Sharon's estate would pass to her next heirs-at-law, her parents if they are living (assuming Todd had no children of his own or other siblings from his mother).  If not, then on to Sharon's siblings.  Should Todd outlive Sharon by 3 weeks he would have survived her, inherit her estate, and then died intestate (no will) with state statues leaving his assets (those that he just inherited from his mom) to his father, Ted.  Yes, whether Todd dies before or after 120 hours determine whether or not Sharon's assets would eventually pass to her ex-husband.  

Survivorship, outliving another from which you will inherit, is not a simple issue.  If a will controls the distribution of property it likely contains a suvivorship clause, meaning in order to inherit, one needs to outlive the decedent by a certain number of days.  The documents we draft in our office generally call for a 90 day survivorship.  Residents of Wisconsin without a will fall under state statue requirements of 120 hours (5 days) in order for another to inherit.  Wisconsin Statutes, Section 854.03(1) states:

854.03  Requirement of survival by 120 hours.(1)  Requirement of survival. Except as provided in sub. (5), if property is transferred to an individual under a statute or under a provision in a governing instrument that requires the individual to survive an event and it is not established that the individual survived the event by at least 120 hours, the individual is considered to have predeceased the event.

Do not assume that just because someone died after another that the statutes, or a governing document, will agree on that person having survived.  As you can see with this hypothecial, survival is conditioned on surviving for a certain amount of time.  That time varies from state to state, and document to document. Consult with an attorney to learn more about your specific situation.

Thanks for reading, and if you are head out on Spring Break, be safe and buckle up when behind the wheel.

What Washington Giveth, Washington Taketh.....Federal Estate Taxes in the news again

In 2012 Congress and the President gave a gift to those attuned to estate planning.  The federal estate tax exemption was increased and earmarked for inflation.  Finally!  Now I could advise my clients beyond the year or two into the future.  We had a federal exemption of $5 million per person.  Until then the threat of the level falling back to the $1 million mark lingered. That made planning a challenge.

Under current law any one person can die and leave $5.3 million at death without triggering the federal estate tax.  Married couples can leave an unlimited about, tax free, to US citizen spouses.  With the exemption tied to inflation, planning done now evolves nicely over time. And then I blinked.

Over the past two years, as I discussed the federal estate taxes in seminars, I routinely joked "what Washington giveth, Wasthington can taketh -- keep an eye on this issue."  Perhaps I told that joke one time too many.  News reports last week of the President's proposed budget include language to reduce the federal estate tax exemption in 2018 to $3.5 million, and to my dismay, remove the indexing to inflation, would tax any amount over the exemption at 45%.

And so our brief honeymoon with stability in the area of the federal estate tax is over.  Clients with a net worth of several million need to consider putting in tax planning language, just in case.  And I'll be watching and reading what comes out of DC, curious to see what, if anything, happens in this area.  Once a city I called home, it is a curious and fickle town.

Author's children, playing in the sand on The Mall.  National Capitol in the background.

Medication -- One of the Many Items a Loved One Leaves Behind at Death

Readers of this blog may have followed that my mother passed away on February 16th of this year.  With her last breathe I was an orphan at age 40, my dad having died back in 2009.  I was also left with the task of emptying and cleaning out their ranch home.  And is often the case, it had quite the supply of medications. Some used, others not, some prescription, others not.  Regardless of the source, I found myself hold two large plastic bags full of pills, creams, inhalers, and more.  What to do with them?

Tossing them down the drain or in the trash puts current and future generations at risk -- a water supply contaminated with discarded meds.  Harmful to fish, wildlife, and possibly us.  Thankfully here in Madison there is a program called MedDrop, offering 12 year round drop off sites.  One was not far from my mother's home.  And it was just as the snow began to melt and Spring moved to town that I safely disposed of the medications from her home.

End of life affairs for a loved one run a huge spectrum.  There are more immediate decisions about funeral and burial.  Ushering and estate through probate or trust administration.  Finding new homes for pets and or plants of the decedent.  Filing a final tax return.  And as shown here, taking a few extra minutes to make sure medications end up in a safe and proper location -- not a landfill.

GGLO Forms Team for American Cancer Society Walk

One of the top five things that motivate clients to pick up the phone to call and make an appointment to begin the process of creating a will is a stage-four cancer diagnosis.  Working with the client, the family, and often involved in the post-death paper work, we here at GGLO are motivate to do what we can to raise funds for research and treatment.  And that is why on Saturday, April 12th we will be lacing up our walking shoes. Join our team and or make a donation -- our goal is to raise $1,000.  Click here for more details.  Checks payable to the American Cancer Society can be sent to our office, 313 Price Place, Suite 204, Madison, WI 53705, by Friday, April 11th.  Together we can make a difference!

Middle Class Philanthropist: How anyone can leave a legacy appears on Wisconsin Public Radio's Larry Meiller

Thank you to guest host Judith Siers-Poisson for having me on Wisconsin Public Radio's Larry Meiller Show yesterday to discuss my book, Middle Class Philanthropist: How anyone can leave a legacy.  For those who were not able to tune-in, the show is now available on-line, click here.

Philanthropy is a term normally associated with individuals who have a seven-figure net worth, making a splash in the end of the year news cycle with hefty donations to worthy causes.  Judith and Wisconsin Public Radio helped shine the spotlight on the every day Americans who have made a difference in the life of a nonprofit without leaving it a fortune.  I know the four stories included in my book are not the only ones out there.  If you have a story to share, please email or call me as I work on my second book on this topic.  My goal is to profile ten or twelve individuals or families who have left a legacy without being mega-wealthy.

When The Dead Want to Connect -- Removing A Colleague on Linked In and Other Social Media

Author's parents

It's an email that lingers in my memory years after I found it in my in-box.  "Carl wants to reach out to you!". The Carl in question had a Yahoo email account, and it was not Carl who had been on the account recently but rather his widow Sharon.  They used the same email but it was registered to him, one she did not change after his death in September of 2009.  Why would an email from so long ago still take up precious memory power today in 2014?  The Carl behind the email was my dad and his widow my mom.  He had only been dead for a few months when one day I find a cryptic email waiting for me.  Thanks Yahoo!

A similar yet less emotional social media ping hit my husband last week.  Going about his work week he was running through the hundreds of emails that tend to pile up.  Sitting there was one from LinkedIn encouraging him to congratulate a colleague on a work anniversary.  Sadly, the colleague had died suddenly a year before.  He was gone from the engineering world, but LinkedIn had no idea.

Curious about what to do, my husband searched around and found a discussion chain.  Sadly there is no one and obvious button to click to resolve this matter.  As pointed out, many of the young techies out there pioneering social media seem unaware that from birth, death will one day follow.  And sometimes the death is sudden, unexpected, and at far too young of an age.  If you are receiving messages on Linked In or other social media to connect with a now deceased colleague or friend, here are a few avenues to consider:

• contact the family and friends to see if they will submit a death certificate to the company to have the account turned off;
• alert the company of the death and underscore the general need to create a user policy that makes reporting deaths far easier than it is now;
• create a folder or sub-circle of contacts who have passed and label it "deceased" -- I doubt this will translate to the main software, but it does allow you to make note of those who are no longer with us and may prevent you from inadvertently contacting them down the road should you have forgotten about their passing.

As I have blogged in the past, most tech companies do not allow the Personal Representative of an estate to turn off a social media page, but rather convert it to a memorial page.  With the sheer number of Baby Boomers on social media, in time, these policies will likely advance and allow loved ones to more easily turn off or make accountants dormant.  But it will take time.  

Earlier this year my mother entered hospice care. Her time was limited, and I used the Power of Attorney to turn off her cell phone.  I never anticipated how hard it would be, or the fact that the 20 something sales support person had no idea what the word "hospice" meant or the term "Baby Boomer".  He was nice, kind, and clearly impacted by the fact my mother was dying, but he was also a bit clueless about this element of life.  Time, it will take time for the young tech companies to grow up and plan for death.  For now, be patient, be creative, and make the most of your day.

An App You Can Use To Distribute TPP

T.P.P. -- in the world of estate planning it means your tangible personal property.  Basically it is your "stuff". From a wedding ring to the family piano, anything you can pick up and carry.  And when you leave your earthly word behind, the question becomes -- where will my TPP go?

During a client meeting last week this topic came up, as it often does.  I gave my standard response, "use the inventory template I provide but be very specific, imagine telling a stranger what item you mean, where it is located, and who should receive it -- you cannot be too specific."  The wife asked "would pictures be wise?"  My response, "yes!".  And then the husband said --"use Encirle, an app on the phone!"  A few minutes later he'd emailed me the link.

Marketed for protecting again loss from theft, it would also be an easy way to go through your home and document what you want to go and to whom.  My cautious legal mind says the app would document the written instructions one has already left, not stand alone.  But check with your attorney for his or her opinion. Remember, a blog is a place for sharing of ideas not the dispensing legal advice.

If you have a creative way to leave specific instructions on what should happen to your TPP when your time comes, take a moment and leave a comment.  And thanks for reading.

Our "stuff" -- it may not have a large dollar value, but emotional value can be priceless.  

Author's fridge with children's artwork -- priceless!