As it is usually the single largest asset any person owns, deciding how to structure the transfer of a home to the next generation is an important aspect of a comprehensive estate plan. At first blush it may seem like the most straightforward way to transfer a house is to simply give it away to an adult child and file a gift tax return. But there are often better methods of accomplishing your goals and protecting your interests using a trust or other estate planning tool.
]]> While many people may be motivated to transfer their home during their lives in order to protect it from any future liabilities that they may incur, by transferring the house, it is now subject to the risk of incurring liability from the person to which it was transferred. This can include bankruptcy or even divorce. While neither of these risks may seem imminent, they are sometimes unforeseeable and unavoidable.A trust is often a useful tool in accomplishing many of the goals, such as avoiding probate and protecting assets, individuals seek when considering transferring a house. But please remember that every person's specific circumstances and goals in relation to estate planning. It is important to consult with a knowledgeable and experienced estate planning professional before making any major decisions.
Source: Huffington Post, "Don't Let Bad Estate-Planning Make You Homeless!" Ann Margaret Carrozza, May 9, 2012
]]>But she is not the only person who has a potential claim to the estate. Another woman says that in 2005 Coleman had named her as his beneficiary and executor of his future estate. She had worked for Coleman managing his affairs for a number of years, she was also his ex-girlfriend. The two are now engaged in litigation over control of the estate
]]> So this battle over Coleman's estate pits his ex-girlfriend and former manager against his ex-wife to whom he was only officially married for less than a year. As you may know, Coleman faced personal challenges throughout his life. According to news reports the value of his estate is relatively modest for someone who had achieved so much notoriety. There is apparently a pension and a house worth $325,000, it is likely that both sides in this dispute see more value in the future rights to his name and brand for licensing.Source: Huffington Post, "Gary Coleman Estate: Actor's Ex-Wife Shannon Price And Ex-Girlfriend Anna Gray Battling It Out," May 7, 2012
]]>While most people realize that estate planning is important, many still ignore or delay the process. Sometimes that lapse can have unwelcome consequences for a person who is incapacitated or for heirs caught up in probate or losses from inheritance taxes.
]]> A will gives an estate direction with the help of a personally-selected executor. Living wills and powers of attorney are legal documents that assign trusted individuals to make medical or financial decisions when a living person no longer can. Trusts define estate asset parameters under the guidance of an appointed trustee.When a person loses the ability to make choices while still alive, a living will and powers of attorney step in to designate who can make tough medical choices and manage finances. A person charged with executing a living will makes end-of-life decisions, according to the predetermined desires of the person who created the will. The same is true with finances. Powers of attorney hand over the asset-management reins to a capable, chosen individual so that the person who can no longer manage money remains financially secure.
Wills become effective at death and set in motion the wishes of the deceased, including child guardianship wishes. A will allows one or more executors to divide an estate according to the directions left behind by the decedent. The document helps to avoid the costs of having the estate enter probate, possible family disputes and unnecessary time-consumption.
Documents like trusts provide management through trustees to achieve certain asset goals after a person's death, like a child's future college education and well-being.
Source: Daily News, "Wills, estate planning 'spell out' wishes,"May 6, 2012
]]>Another consideration that the report found was often overlooked was making provisions in estate planning for pets. Only one third of the estate plans reviewed included provisions for pets, including where the pets will go and who will care for the pets.
]]> The third factor that people often do not account for in their estate planning package is technology. Most people have professional, personal and financial information stored online. About 57 percent of the estate planners surveyed for the report said they did not have provisions for digital assets, including safeguarding those assets and determining who would get them when a person becomes incapacitated or dies.Before creating an estate, the estate planner should speak with aging parents, friends, relatives and children about the estate planning process. It will save hardship and heartache in the future, especially if parents outlive children or if the estate planner has online assets.
Source: AARP, "The Takeaway: Keeping Your Estate Up to Date," Elizabeth Nolan Brown, April 30, 2012
]]>While acknowledging the general wisdom behind the decision to create a well thought-out estate plan, one might wonder, 'what happens if I don't? Or if I just use an online form?' In that case you may be leaving the future to the discretion of the Arizona and federal governments, or some online operation that may not understand your circumstances and goals.
]]> In Arizona, Chapter 2, of Title 14 in the Arizona Revised Statutes provides that any part of a person's assets not disposed of by a will, are to be distributed according to the process described in the statute. The statue basically moves down the line identify surviving spouses or children who could inherit the estate. Very quickly you begin to see language like that distributes the product of your life's work like this, "to the decedent's paternal grandparents equally if both survive or to the surviving paternal grandparent or the descendants of the decedent's paternal grandparents or either of them..."Even more alarmingly, if the court is unable to identify a suitable heir, your entire estate can simply be acquired by the state.
Source: Arizona Revised Statutes, "Title 14 - Trusts, Estates and Protective Proceedings," May 2, 2012
]]>Often a guardianship or conservatorship action is used when an elderly relative no longer has the capacity to manage their own affairs. There may be some tell tale warning signs when a loved one is in this position. They may be experiencing memory loss or display sign of being confused in situations in which they previously would have seemed to have a firmer grasp on the situation.
]]> It is important to intervene, when appropriate, in these situations as the person may no longer be able to protect their own interests and may become more vulnerable to unscrupulous individuals who would seek to take advantage of their incapacitated state.As is likely the case in this matter involving Britney Spears, conservatorships need not be permanent in duration. Once a court determines that she is once again fit to manage her own affairs the conservatorship may be lifted.
Source: USA Today, "Britney Spears' fiancé to share conservatorship over her," Maria Puente, April 7, 2012
]]>It is a good idea to consider creating a will and trust early to disperse assets. The sooner the will and trusts are created, the more option will likely be available to structure you long term planning in the way that you intend. By starting planning early you will be better prepared to handle any issues that may arise.
]]> Issues that might come up include allowing a second wife to keep the home the children were brought up in. But what if the second wife is much younger than the husband? What happens if they are the same age, but the husband dies at an early age because of illness or an accident? Do the kids have to wait until the second wife dies before getting the house?You can set up different types of disbursement of assets through trusts. You may want to give the kids the house, and you can do that via a trust, while still allowing your second wife to live in the house. The trust could contain stipulations, such as what happens if the wife remarries or give the wife a set number of years to stay in the house, plus a generous amount of money to help her buy another house.
Source: The Huffington Post, "Estate Planning: What You Don't Say Can Hurt You," Ann Brenoff, April 23, 2012
]]>Two attorneys who are co-authors of the book "Who Will Care When You're Not There?" recently answered a few common questions asked about pet estate planning.
]]> One of the questions commonly asked is how much a person should set aside for the pet's care. The answer depends entirely on the type of pet, the pet's age and the pet's health. Older pets often need more than they do in younger days. An older dog, for example, may need more for vet bills. A parrot that lives 80 or more years also needs enough to be provided for its life.A person planning an estate for his or her pet should also consider the people involved in caring for the pet should the owner die or become incapacitated. The pet's estate needs at least two people, but should have three people. The estate should name a guardian -- the person who will take care of the pet. It should also name a person to handle the money for the pet. This person can be the same person as the guardian, but to ensure that the money goes to the pet and that the pet is properly cared for, the planner should choose two different people. The third person is the "watchdog." This person could be the pet's veterinarian. The person makes sure that the other two people are carrying out your wishes.
The guardian you choose should be a person that like your pet and a person your pet likes and gets along with. Additionally, you should also have backup people. If something should happen to the original people you named, the backup can step in.
Source: Observer and Eccentric, "Estate planning for pets," April 15, 2012
]]>A person in a more complicated or blended family, may have different estate planning considerations and goals than a person in a more traditional family. Under these circumstances it may make sense for each spouse to consult separately with an estate planner to ensure that all of their concerns are addressed.
]]> There are a number of factors to consider when thinking about whether the spouses should consult separately with estate planning professionals. When there are children from a previous relationship a tension can arise regarding how that parent's future estate will be distributed. Will it all go to the widow or widower, or will the child from the previous marriage receive their inheritance directly when the parent passes away? Also if one spouse came to the marriage with considerably more assets than the other it may make sense to consult separately. Other unique situations may compel one or both spouses to decide that it would make sense to consult with a professionally independent of the other spouse.While the examples above highlight scenarios in which there is a potential benefit from individual consultation, for each couple the question really comes down to the level of comfort and communication each spouse has in making estate planning decisions together. It may be that a couple that has all of these factors in place are still completely on the same page and are able to engage in a single consultation without either feeling that their concerns are not being addressed. Conversely, even if a couple has a very traditional and straight forward seeming marriage. Each spouse may simply be more comfortable talking individually about their estate plan. The important thing to remember is that the estate planning process exists to serve your interests and ensure that your wishes are carried out, fortunately it is flexible enough to ensure that it fits your personal estate planning goals.
Source: Forbes, "Estate Planning For Couples: Should It Be A Solo Or A Duet?" Deborah, Jacobs, April 10, 2012
]]>In this matter a man bought an antique stock certificate at a garage sale for what was described as a "nominal amount." The man decided to trace the stock certificate to see if it had any actual value. As it turned out, through a series of mergers and acquisitions, the stock could be worth 1.8 million shares of Coca Cola stock which would be worth approximately $1309 million. When the man died in 2010 his family inherited the stock certificate and is now seeking to redeem it. Coca Cola is disputing the family's claim and the bequest is now the focus of a lawsuit.
]]> In this case the dispute about the estate is to determine the true value of the inheritance. In a situation in which a seemingly nominal bequest is later found out to be worth considerably more than the testator had thought, it is likely that estate litigation between the heirs could arise.As part of creating a comprehensive estate plan, it is important to have an accurate understanding of the value of your assets.
Source: Reuters News, "Garage sale find: $130 million in Coke stock?" Tom Hals, April 5, 2012
]]>One Phoenix couple faced this challenge approximately three years ago after learning that the wife was suffering from Alzheimer's of an early-onset variety. The couple worked at getting their wills properly executed, as well as getting power of attorney documents in order so that someone was designated to make needed medical or financial decisions on their behalf in the future when they are no longer capable of deciding things for themselves.
]]> It is also necessary to explore the availability of transportation assistance and day care facilities for care of a family member when their spouse must be absent from the home for work or other required activities.Other issues confronting such couples are whether to have a living trust to place property in for estate planning purposes, and whether a living will is needed because a family member wishes to express their desire not to have heroic and expensive life saving measures carried out when their chances of a full recovery are slim or their quality of life will be poor.
Families confronting the reality of the onset of dementia should also take steps to make sure that others can find their important documents, including wills, trusts, life insurance policies, and powers of attorney. Beneficiary designations on life insurance policies and retirement funds should be reviewed and updated as required.
Looking towards the future, a family confronting dementia should also explore what full care options are available should the need arise, including group homes, assisted living, or skilled nursing facilities.
Source: Arizona Republic, "Diagnosis of dementia calls for financial plan," Russ Wiles, April 6, 2012
]]>Probate can run very smoothly in some situations, and may be an effective way to ensure that debts are satisfied, appropriate taxes are paid, and that the person's last wishes are strictly observed. However, some estate planning attorneys have said that Houston's estate is an example of one that might have been better served through different planning methods, such as a trust.
]]> One major downside to choosing a simple will and utilizing the probate system is that estate plans are made public through court records. As a result, Ms. Houston's estate plan has been made available and has generated significant media attention for her daughter.Interestingly, Whitney Houston's will was originally drafted in 1993 and amended only once since. There is some speculation about whether or not there was a second will somewhere. Questions and concerns by family members about the accuracy of a will or whether or not there are additional relevant documents in existence can be a problem associated with executing a will. Family members that are unhappy with amendments may try to discredit the validity of the changes, leading to extended legal debate over the true intent of the party.
Houston's amendment changed who would be the executor of her will, updating it to reflect that her sister-in-law would serve in that role rather than her mother. The executor is someone who works with the court to carrying out the terms of the will.
Source: The Washington Post, "Whitney Houston's will leaves estate to daughter Bobbi Kristina," Sarah Anne Hughes, March 8, 2012
]]>However, for people that have not planned for this event or who were unprepared for a change in health, it is still possible for children or spouses to gain conservatorship. A recent high-profile case involves the actress Zsa Zsa Gabor. The actress is now 95-years-old and suffers from a variety of health issues, including loss of mental capacity as the result of two strokes. She lives with and is taken care of by her ninth husband, who she has been married to since 1986. Her daughter recently filed for conservatorship, citing concerns about her stepfather's ability to care for her mother and his judgment on financial issues.
]]> Ms. Gabor's daughter told a judge recently that she is also concerned because she believes that Gabor's husband has been inappropriately keeping the elderly woman sedated and isolated from her family and friends. She has requested that she have control over her mother's medical care and finances and told the court that she is open to having a third party involved, so long as Gabor's husband is no longer in charge.The case brings up many interesting questions for people who are being taken care of by a spouse. Disagreements between spouses and children are not uncommon and many families have varying opinions on the best course of action in this difficult situation. Planning for a conservatorship is one way to try to avoid legal struggles like the one Ms. Gabor's family is going through.
Source: The Washington Post, "Zsa Zsa Gabor's daughter seeks conservatorship for ailing actress," Sarah Anne Hughes, March 21, 2012
]]>Much financial elder abuse occurs among those who have not been deemed legally incompetent. In those cases, an adviser generally oversees individual financial decisions, which provides some legal protection. Instead, many older folks that are otherwise considered lucid are conned into distributing their money to sneaky family members. Often, children will limit their parents' access to bank account or trust information, and the older generations fail to keep track of payments they have made to their children.
]]> This type of abuse is compounded by loan professionals and predatory lenders who target the elderly with reverse mortgages and other complicated financial schemes. Seniors should be aware that if a loan borrows equity that has been built in a home over years, it deserves to be questioned.Family members can help their older relatives by asking questions to make sure that the person understands the loan. Elderly victims are often targeted for these loan schemes because they are lonely, confused and isolated from their family members. Relatives can also delve deeper into the loan process by identifying the beneficiary of a reverse mortgage. Often, children will name themselves as the beneficiary, scamming their parents out of thousands of dollars. Adult children have been accused of using the money from reverse mortgages to gamble, pay off credit cards and make big-ticket purchases.
Although most children are not interested in making off with their parents' fortunes through reverse-mortgage scams, elderly borrowers should remain cautious when pursuing such loans. Consulting a variety of family members, as well as financial advisers and legal professionals, will help protect holdings.
Source: Market Watch, "Scammed by your own family," Lew Sichelman, March 23, 2012
]]>It would seem that the priority would be to reach out to these victims and make sure that their abuse stops. But a proposal in the Arizona legislature would make it more difficult for victims of elder abuse to seek justice.
]]> The bill would limit the court's ability to craft awards in civil cases involving vulnerable adults. Currently the court has the power to include attorney's fees as part of the award. This bill would prohibit judges from doing this in cases of elder abuse, so that the victim of the abuse and not the perpetrator would have to pay the attorney's fees. An opponent of the bill quoted in a local news story asks the poignant question, "Why should the victim who has been abused and neglected be responsible for the expense?"Imagine a vulnerable adult who may have an unscrupulous person swindling them out of their life savings and even their home. Now rather than trying to find way to reach out to that person and protect them, this proposal is instead creating barriers for them to access the civil justice system.
Source: Channel 15 News, "Bill would limit awards in elder abuse suits," Angie Holdsworth, March 23, 2012
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