Archive for the ‘Estate Plan’ Category

Do you have a blended family?

Thursday, February 2nd, 2012

My parents were divorced and my dad remarried a woman who had children, so I come from a ‘blended’ family.  I am also divorced from my children’s father and I’m now married to a man who has children from his first marriage.   All to say that I know what it’s like to live in a ‘blended’ family.

I’ve heard that the schools now have projects to trace your family ‘bush’ instead of your family ‘tree’.  It’s a sign of the times.

But, the laws haven’t quite caught up with society.

A step-child, even if they have been in your household and you have acted as their parent for their entire lives, is not considered your child for inheritance purposes.  And problems can arise when a current spouse and children from a previous relationship all want to take ‘their rightful portion’ of an inheritance.

There are ways to take care of the ones you love by talking to an Estate Planning attorney and making sure that your estate is used the way you want.  This is important for everyone.

It is even more important if you have a blended family.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

Is an adopted child considered blood line in a will?

Sunday, November 13th, 2011

I found this question on the internet awhile ago, and thought that others might have the same question themselves.

In this case, there wasn’t a lot of information other than the fact that this man had adopted his wife’s child, but wanted to make sure that all of his inheritances in his Will would pass only to his bloodline.

Legally, as soon as you adopt a child, it is considered YOUR child for all intents and purposes.  By law, there is no distinction between a child by blood and a child by adoption.  Generally, when the adoption is finalized, the child loses the legal connection to the birth parents and gains the legal connection to the adoptive parents.

This is different than the status of a step-child.  A step-child is not considered your child for any legal action, even though you were the parent for the child’s entire life.

There are ways of drafting your Will, Trust or other estate planning documents to create your desired end result.

You can disinherit any of your children by putting the language into the document.  It doesn’t have to be an adopted child.  I have had clients who wanted to make sure that one of their children did not get anything when they died because of things that child did, or perhaps they have already given one child more than his or her share and now wanted to make sure that what was left would go to another child.

Some people also give different amounts to different children by naming them specifically along with a percentage of the estate value

In this man’s case, he could write his Will so that his adopted child did not inherit something that he felt strongly should be kept in the blood line.

I’ve also had clients who wanted to make sure that their step-children were treated the same as their biological children.    I had one client who wanted to make sure that their son’s step-daughter was treated as any of their other grandchildren.

This is relatively easy to accomplish with the right drafting, but you need to make sure it is done correctly or you will not get your desired result.  Even worse, you might end up with a document that causes your family to spend lots of dollars, even the entire value of your estate, in litigation to fight over what you really meant when you wrote that you wanted your things to go to ‘your bloodline’.   This is one good example of why it is important to go to an Estate Planning professional instead of trying a ‘do it yourself’ plan that you find in the store, on software, or on the internet.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

What is a ‘Life Estate’?

Sunday, September 11th, 2011

I had a question this week from a potential client who knew that her brother was allowed to live in her deceased mother’s house until he died and then the house was supposed to be divided equally between the remaining sisters and brothers.  This arrangement is called a ‘life estate’, and it means that the brother has lawful possession as long as he is alive.  The other sisters and brothers are called ‘remaindermen’.

A more common example is when a parent (for our example we will say the mother) dies leaving a spouse and children.  The spouse later remarries and wants to make sure that his new wife will not need to move out of the family home if something should happen to him.  He grants a life estate to his new wife with the remainder of the ownership going to his children at her death.

This sounds like a simple way to handle things and you may wonder why it isn’t used more often.

One problem is that the life estate ends when the named person dies.  This means that if the named person is sick or in a nursing home, the remainder owners do not have the right to do anything with the property until the named person dies.

There is also the problem that a person with a ‘life estate’ can only give or sell what he owns.  That means that he can’t sell the house to anyone else, or make arrangements for someone else to live in the house either.  This has caused problems like the situation where an uncle had a life estate in the family home and put in his Will that the home should go to his favorite niece.  She thought it was hers, except that the uncle didn’t have ownership to give!  Once he died, the house belonged to the ‘remaindermen’.

In the case of the person who called our office, the brother had gotten married and the family wanted to know if his wife would inherit the house if the brother died.  (the answer is no…because once he died, his life estate ended).

Then, there is the problem of who is supposed to pay the bills for the house.  You may think that the person living in the house should be paying the bills.  But what if the house needs a new roof that is expected to last 30 years?  Should a 90 year old person with a life estate be required to put a new roof on the home, even though it is unlikely that he will be in the home long enough to use it all?

A Life Estate can also be set to terminate on the death of someone else.  For example, let’s suppose mother has four children.  Son 1 is disabled and cannot live on his own.  Daughter 1 is not disabled and has agreed to take care of son 1.  Son 2 and Daughter 2 are both married and living in another state with their respective families.  Mother wants to make sure that Daughter 1 has a home in which to care for Son 1 so she grants a life estate to Daughter 1 for so long as Son 1 is alive, with the remainder being divided equally between the 3 remaining children when Son 1 dies.    What this means is that Daughter 1 will probably need to move out of the home after Son 1 dies because otherwise she would need to be able to purchase the other 2/3 of the house from her remaining siblings.

I’ve even seen a case where a cat lover gave a life estate in her home to her friend for so long as her favorite cat was alive so that the friend could take care of the cat and the cat would not need to move to a strange house.

As you can see, a Life Estate can be a useful tool in your estate planning arsenal, but only if it is planned correctly.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

Have You Checked Your Beneficiary Designation Lately?

Sunday, July 10th, 2011

I encourage my clients to review their estate planning documents on a regular basis, and an annual checkup seems like something that can be scheduled and easy to remember.

But what about things that aren’t part of the documents that I help to create?  What about your individual IRA?  or your life insurance policy?  or your company retirement plan? or your investment portfolio?

These types of plans are contractual in nature and the contract is between you and the insurance carrier or the plan administrator, or….whomever.

It is also important to make sure that these beneficiaries are up to date.  If the beneficiary is a minor child, do you have the person you want today as the trustee of these funds?  Have the children now become adults and you want them to have access to the funds immediately?  Have you created a trust and just never got around to changing the beneficiary of your insurance so that the funds will go into the trust to be distributed the way you wanted?

One of the biggest problems is selecting a beneficiary and just forgetting about it.  What happens if that person has died before you?  What happens if that person is no longer the one that you want to have access to the funds?  Maybe they got married to someone you hate.  Maybe they ran off to join a commune.  Maybe receiving the funds will make them ineligible (for just a little while) for medicaid benefits they are receiving now?  Maybe…. (fill in the blank).

I had a very personal example of this.  My mother had a life insurance policy that she got when she was working.  Her plan was that we could use her life insurance proceeds to pay for the funeral and then there would be a little left over for each of us (I’m the oldest of 7 children).  We all knew she had the life insurance and we all knew what she wanted us to do with the proceeds, but what we didn’t know was that she hadn’t really named a beneficiary at all.  I know she meant to have the beneficiary set to ‘all of my children equally’, but it never got recorded at the life insurance company.  The funeral home would have taken an assignment of the insurance proceeds, but that assignment had to be signed by all of the named beneficiaries and there were no named beneficiaries!

That meant that we needed to get a certified copy of her divorce papers, and all 7 of us had to sign affidavits that we were indeed her children before we could get access to the funds.  Of course we needed to have this done on the forms provided by the insurance company, which took time.  And somebody had to pay the funeral home right away.  So mom’s plan to use the insurance proceeds to pay for the funeral only ‘kinda’ worked.  One of us had to pay the funeral home and then each of the other 6 had to reimburse the one that paid when they got their one-seventh of the proceeds.

I have a great family and it worked out fine, but I’ve heard lots of examples of where one child has been ‘stuck’ with the entire funeral bill and the others refused to reimburse the sibling that paid the funeral home itself.

Please, take a few minutes and double check your beneficiary designations on all of those ‘contractual’ assets.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

What is a probate estate?

Thursday, January 13th, 2011

Your Will tells the world how you want to distribute your probate estate.  So, the question becomes ‘What is a probate estate?’

In general, your probate estate consists of anything you own the instant after your death.

Your probate estate does not include life insurance proceeds where the beneficiary of the policy is a person or anything other than ‘the estate of the insured’ because an insurance policy is a contract with the insurance company to pay the proceeds to your beneficiary after your death.  So, the instant after your death, the proceeds now belong to the beneficiary.

Your probate estate does not include property you own with someone else that is titled ‘jointly with right of survivorship’ because ownership of your interest in that property is automatically transferred to the other owner at the instant of your death.

At first glance, it would seem that the best option would be to re-title your assets (e.g., home, bank accounts) to be held jointly with right of survivorship.  However, there are big potential problems with that option that should be considered before you make your final decision.

You should contact an estate planning attorney for more information.