Welcome to the Estate Planning Page!
Please select the best option for you below
Please select the best option for you below
I Am Not Sure
WHETHER I NEED AN ESTATE PLAN OR NOT
I Need To Create
AN ESTATE PLAN BUT I DON’T KNOW WHERE TO START
I Have A Plan
FOR MY ESTATE BUT I NEED AN UPDATE
I am not sure whether I need an estate plan or not
The simple answer is that EVERYONE needs an estate plan. Many people believe that only the wealthy or those with complicated finances need an estate plan, but it’s not just what you own that matters, it’s who you own it with and how you want to give it away after you die.
- Blended Families: Too often we see families torn apart because the family dynamic changed and no one updated the estate plan.
- Young Children: How old were you when you felt able to responsibly manage half-a-million dollars? If you think about it, your home, life insurance, and retirement accounts could easily surpass that amount, even if you have more than one kid.
- Incapacity: Beware the tendency to think that it won’t matter how your estate is managed, because you’ll be dead and past caring. Most of us will have a period of incapacity at some point in our lives. Who do you want to manage your assets and make medical decisions for your care?
- Business Interests: Do you have rental properties? A small business? A share in a family business? Operating agreements may not fully cover all the eventualities, particularly in an incapacity situation.
We are going to show you how you can easily take control of your assets and protect your loved ones
no matter what your asset portfolio looks like.
Wouldn’t it be nice to not lay awake at night worrying about whether you have everything in place?
Did you know there is a way you can:
Avoid probate? (More on what probate is and how it works later.)
Pass on property to the people of your choice?
Greatly minimize or avoid estate taxes altogether?
Put restrictions on when and under what circumstances a child or grandchild can receive property? For instance, restrictions like attending college and maintaining a certain grade point average before they can receive an inheritance from you. Or maybe you want to make sure an 18 year old grandchild isn’t driving around in a new Corvette because he or she blew his entire inheritance while driving past the Chevy dealership!
There is a solution. The solution is planning.
Estate planning will ensure that your hard-earned assets and property transfer smoothly and easily to your loved ones. If done right, it can help your loved ones avoid the hassle and expense of probate and potentially avoid or limit estate taxes as well.
It includes things like:
Real property such as houses, condos, and land
Personal property such as cars, home furnishings, and bank accounts
Collectibles such as art, antiques, and jewelry
Life insurance proceeds
Investment accounts such as 401(k)s, IRAs, and brokerage accounts
Business interests such as corporations, partnerships, etc.
… and the list goes on.
It is a document (or several documents) that provides a way to work through “what if” scenarios. Then, when you are gone, or if you have become incapacitated in some way, someone you have named to handle your estate can clearly and easily understand your wishes. That person can then step into action and handle your affairs based on your wishes.
If done properly, this can be done with no interference from the courts or the government. So often, however, people think that a proper estate plan only takes care of what happens to their property when they die? The larger question, and one that most attorneys are unprepared to deal with, is “what happens if I outlive my assets?”
A good estate plan is holistic. It should include incapacity documents and take into account your insurance needs while recognizing commitments you have now, and in the future.
I need to create an estate plan but I don’t know where to start
Putting an estate plan in place is probably something you have been thinking about for some time now. You may have even started to take steps to move this forward. But now I want to ask you a pointed (and perhaps undiplomatic) question: Are you satisfied with what you have done about it?
We get calls every day from unfortunate individuals whose relatives died intestate, or who can’t access a family property due to poorly executed legal documents. The transfer of assets from one generation to another is rife for potential disaster, yet statistics show that nearly 2/3 of Americans don’t have any estate planning in place. The numbers are even higher for millennials: 78% of Americans aged 18-36 have no will. There are some serious roadblocks at play here.
Many things can get in the way of estate planning. Aside from the obvious roadblocks of time and money, many people are reluctant to discuss their deaths, don’t think they need an estate plan, or are waiting for family dynamics to settle before beginning the process. Here are some common roadblocks and tips to overcome them and get going on a plan that will provide peace of mind for you and your loved ones.
LACK OF URGENCY
No one expects to die tomorrow, so unless they’ve received exceptionally bad news from their doctor, most people figure there’ll be plenty of time to set up their estate plans. For many people, this may be true, but is it really a risk you’re willing to take? Too many people fall into the trap of believing that if they are active and healthy, they will live for decades more and can do their estate plan once they retire. While death might not be imminent for most of us, the risk of a car accident, sports accident, or brain injury are just as high, if not higher, for a healthy, active person than they are for a retiree. Plus, if you live on the edge, it’s not you who’ll face the consequences of failing to plan. It’s your family.
DIFFICULT FAMILY DYNAMICS
This can be a particularly difficult roadblock to overcome. We have seen the entire range of family dynamics, from close-knit extended families who talk every day and vacation together, to estranged families who would not attend the funeral of a deceased relative even if they were paid to go. No matter what your family situation, your estate plan can be customized to ensure your wishes are carried out. For families who have a child with a mental condition or addictive behavior, there are provisions that can protect your assets while providing a way for that child to improve their situation and receive the help they need. Every family is different, and every estate plan should be, too.
A good estate plan requires good communication and careful planning. So it is reasonable to expect that your attorney will spend a significant amount of time getting to know you and your values, family situation, and concerns. Hiring a trained professional to guide you through the process will obviously cost more than an online Do-It-Yourself will, but it’s worth it to make sure it’s done correctly. See Dan’s blog post on buying a “Value Meal” estate plan for a good perspective on this.
ESTATE PLANNING FATIGUE
The changes in tax laws over the last couple of administrations has left some clients reluctant to revisit their plans. We hear our clients ask, “So once this is signed, I’m all done, right?” If you changed your plan after the laws changed, or had some family dynamics change, you may feel that it’s too much hassle to invest the time and money in something that is going to change yet again in the near future. To overcome this roadblock, think to yourself whether you would have that same attitude towards changing safety laws, or advances in medicine. It wouldn’t make any sense to complain that you had to go back to your doctor to adjust your medication; surely you would prefer a medication that more directly treated your symptoms and had fewer side effects? Or imagine complaining that your financial advisor wanted you to stop investing in a declining portfolio and instead invest in one that was growing. Surely you’d want to maximize your potential for growth?
Many people are under the misapprehension that estate planning is a one-and-done activity, but this is only true for people who write an estate plan and die immediately. Those of us who continue living tend to also continue purchasing or selling major assets, having children or grandchildren, moving from one state to another, and in other ways changing our circumstances in ways that enhance our lives. It’s a bad idea to expect your estate plan to cover all future scenarios. Such a document would be unwieldy anyway! And while some foresight is a good idea, none of us can truly predict how Congress plans to adjust tax laws in 15 years or whether one of your children will be widowed and remarried in 5 years.
FEAR OF MAKING THE WRONG DECISION
We get it. These aren’t easy decisions to make, and the more complicated your family or financial situation, the more complex your plan needs to be. Many of us don’t want to think about someone else caring for our children, but we need to contemplate that exact scenario if we are to choose good guardians for them. Others are stymied by the thought of their own death, or the death of their spouse. This is a particularly acute problem for many women, who on average live longer than their spouses and may have experienced a loss of retirement income due to taking time off to raise a family. Others may not have been involved in the finances for many years and are overwhelmed with information and choices. Of course, having a professional to advise you and provide perspective on some of these decisions is an invaluable asset.
Remember that perfectionism can be a roadblock in and of itself. If the fear of making the wrong decision keeps you from creating a plan, think about the dangers and cost of not having a plan at all. Above all, find someone you can trust to advise you properly on these important decisions.
NOT KNOWING WHERE TO TURN
These days it seems there are almost too many options out there. You can search online and find dozens of sites that claim to provide a “customized” will for less than $200. Even if you decide to hire an attorney, prices and processes can vary so widely that it may feel impossible to know who you can trust. One way to get past this roadblock is to seek out some positive stories about people’s experiences with their attorneys. We know that there is a certain, shall we say, “reputation” surrounding our profession! That’s ok. We’re confident that we stand out from the crowd with our dedication to our clients and insistence on accompanying them through every step of the estate planning process. Come talk to our attorneys and see for yourself that we are here for you.
The best way to overcome a roadblock is simply to keep moving forward. Go around, under, over, whatever it takes! Just don’t let fear or wrong ideas keep you from doing something so important. Give us a call today.
We know that these are difficult topics, but we can’t avoid death by ignoring its inevitability. It’s no surprise that many people are motivated to come see us after witnessing a friend or family member struggling through the process of tying up a loved one’s estate. What a great gift you can give your family by clearly laying out your wishes!
Online estate planning documents have their place, but only in limited circumstances. Click here for our “Do I Need An Attorney” quiz.
Any unpleasant task is easier when another person provides solidarity and assistance. Even something as simple as starting a new workout routine will have better effect if a friend joins in. We laugh with our clients constantly, and sometimes we cry with them. No question is too basic or unimportant. We are here to make sure that your plan achieves what you want it to achieve. You have someone in your corner who cares about the outcome just as much as you do.
I have a Plan for my estate but I need an update
Many people are under the misapprehension that estate planning is a one-and-done activity, but this is only true for people who write an estate plan and die immediately. Those of us who continue living tend to also continue purchasing or selling major assets, having children or grandchildren, moving from one state to another, and in other ways changing our circumstances in ways that enhance our lives.
It’s a bad idea to expect your estate plan to cover all future scenarios. Such a document would be unwieldy anyway! And while some foresight is a good idea, none of us can truly predict how Congress plans to adjust tax laws in 15 years or whether one of your children will be widowed and remarried in 5 years.
We recommend our clients review their estate planning documents every year, renew their Powers of Attorney every 3-5 years, and amend or restate their Will or Trust whenever a major life change occurs. Families with small children should renew their Delegation of Parental Authority yearly, and review their choices for Guardians at least every 2 years.
Click on any of the following topics to find out more.
Having a trust is like having your own little private company. Like a company, a trust is a special entity that has its own identity and legal rights, independent of you. Once you have a trust in place, you can take all your stuff – your house, your stock market investments, your insurance benefits, and other property – and hand it all over to your trust.
Now, don’t worry. As long as you’re alive and able, you’re the CEO of the trust. You’re also its only employee and customer, meaning that you maintain complete control over your stuff. You can continue to use it, sell it, borrow against it, loan it out, add to it… whatever you can do with your property now.
So why would you do this? Because regardless of what happens to you, the trust lives on. And rather than having to go to a probate court to get permission to manage and distribute your property after you have passed away, a person you have selected simply steps into your shoes and continues managing your property, or distributes it to your loved ones, charities, or anyone else you want, per your instructions.
A trust provides you with maximum privacy, flexibility, and control.
If you should die intestate, your estate will go through probate and all the world will know what you owned, what you owed, and who got what. Your mortgage company, car loan company, and credit card companies will all seek payment on balances you owed at the time of your death.
After that, state law will decide who gets what and when.
For example, if your only heirs are your children and you have not provided any instructions, state law will mandate divvying up proceeds equally.
Your older children will get their shares immediately if they’re 18 or older.
But, the court will appoint a conservator to manage the money for your minor children until they reach 18 years old (at which point, they get it all, without limitation or strings attached).
Shockingly, that conservator can charge a lot of money and be a total stranger – as can the guardian who raises your child.
Yes, if you die without a valid will, the court, not you, will decide who raises your children.
Keep in mind that since your death has been published to alert valid creditors, it’s not uncommon for predators (fake creditors) to come forth and make demands for payment – even if they’re not owed anything.
The bottom line? Dying intestate allows state law and the court to make all the decisions on your behalf – regardless of what your intent might have been. Publicity is guaranteed.
In estate planning circles, the word “probate” often comes with a starkly negative connotation. Indeed, for many people — especially those with larger estates — financial planners recommend trying to keep property out of probate whenever possible. That being said, the probate system was ultimately established to protect the property of the deceased and his or her heirs, and in a few cases it may even work to an advantage. Let’s look briefly at the pros and cons of probate.
For some estates, especially those in which no will was left, the system works to make sure all assets are distributed according to state law. Here are some potential advantages of probating an estate:
It provides a trustworthy procedure for redistributing the property of the deceased if no will was left.
It validates and enforces the intentions of the deceased if a will exists.
It ensures taxes and claimed debts are paid on the estate, so there’s a finality to the deceased person’s affairs, rather than an uncertain, lingering feeling for the beneficiaries.
If the deceased was in debt, probate gives only a brief window for creditors to file a claim, which can result in more debt forgiveness.
Probate can be advantageous for distributing smaller estates in which estate planning was unaffordable.
While probate is intended to work fairly to facilitate the transfer of property after someone dies, consider bypassing the process for these reasons:
Probate is a matter of public record, which means personal family and financial information become public knowledge.
There may be considerable costs, including court, attorney, and executor fees, all of which get deducted from the value of the estate.
Probate can be time-consuming, holding up distribution of the assets for months, and sometimes, years.
Probate can be complicated and stressful for your executor and your beneficiaries.
Bottom line: While probate is a default mechanism that ultimately works to enforce fair distribution of even small estates, it can create undue cost and delays. For that reason, many people prefer to use strategies to keep their property out of probate when they die.
A skilled estate planning attorney can develop a strategy to help you avoid probate and make life easier for the next generation. For more information about your options, contact us today to schedule a consultation.
While you are alive, your assets are cared for in exactly the way you want, but do you know who will take care of things after you pass away? During the estate planning process, you will be asked to choose a fiduciary agent to serve on your behalf. Trustees, personal representatives, and powers of attorney are all examples of fiduciary agents. When you pick a fiduciary agent in your estate plan, you’re picking someone to make decisions in your and your beneficiaries’ best interests and in accordance with the instructions you leave. Luckily, understanding the basics of what each of these terms means and what to consider when choosing a fiduciary agent can make your estate plan work far better.
A revocable living trust is often the center of a well-designed estate plan because it is simply the best strategy for achieving most individuals’ goals. In a revocable living trust, your successor trustee will be responsible for making sure your wealth is passed on and managed in accordance with your wishes after your death or incapacity. The role is two-fold: 1) the Trustee must manage the funds in the trust, growing the estate while ensuring that investments are balanced and protected, and 2) the Trustee will make decisions regarding distributions of income and/or principal to your beneficiaries. Like each of the following individuals involved in your estate planning, it’s essential to have a trusted person or financial institution carry out this vitally important role. That’s only part of the equation, however, as it’s also important to make the language in your trusts as clear as possible so that your trustee knows exactly how you would want them to handle various situations that can arise in asset distribution. Lastly, your trustee will only control the assets contained within the trust — another reason to be sure that you have properly and completely funded your living trust.
POWERS OF ATTORNEY
Your powers of attorney are documents in your estate plan that appoint individuals to make decisions on your behalf (if you become unable to do so yourself.) There is quite a wide range of situations covered by various powers of attorney, and we can help you decide which types you’ll need based on your current situation and future goals. Here are the two most common types to cover in your estate plan:
FINANCIAL POWER OF ATTORNEY
The person you grant financial power of attorney will have the ability to take financial actions on your behalf. This can include purchasing life insurance, withdrawing money from your accounts, transferring funds from one account to another, paying your bills, and selling or buying property in your name. In most cases, powers of attorney are granted to family or friends, but in some cases it may be wise to consider appointing an institution, like a trust company, or professional fiduciary as your financial agent. Whoever you appoint will likely have broad powers to act in your stead, so it’s critically important you choose the right person.
MEDICAL POWER OF ATTORNEY
A Medical Power of Attorney allows an individual to make medical decisions on your behalf. Such powers also cover a wide range of specific actions that can be taken regarding an individual’s medical needs, such as approving medical treatments, determining incapacity, and electing to undergo additional tests or scans.
Your personal representative, also known as an executor, is the person who will see your assets through probate if necessary and carry out your wishes based on your last will and testament. Depending on your preferences, this may be the same person or institution as your trustee. Many individuals chose to go with a professional entity for this role. This is someone who doesn’t stand to gain anything from your will, and is often the best choice if your estate is large and will be divided among many beneficiaries. Of course, family or friends can also serve, but it’s important to consider the amount of work involved before placing this burden on your family or friends. Serving as a personal representative can be hard work and may have court-ordered deadlines, so it’s crucial to pick someone you know will be up for the job. They may need to hire a CPA to help sort out your taxes, or a lawyer to assist in the process or to aid in dispute resolution. Therefore, choosing a spouse or someone else intimately involved in your life may not always be the wisest option, as they may not be up to the task at the time of your death.
THINGS TO CONSIDER
Before settling on a fiduciary agent to fill one or more of these roles, ask yourself:
are they trustworthy?
have they demonstrated financial and/or emotional intelligence?
do they manage their own responsibilities in a way that gives me comfort and confidence in their abilities?
would I want them in a long-term financial relationship with my beneficiaries?
would a professional be a better fit for this position?
GET IN TOUCH WITH US TODAY
Let us help you make the process of picking your fiduciary agent as smooth and headache-free as possible. Once you have these choices in place, you’ll be able to rest easy knowing that your estate is in good hands no matter what life brings. Give us a call to make an appointment today.
Studies have shown that 70% of family wealth is lost by the end of the second generation and 90% by the end of the third. Don’t let your loved ones become part of these statistics. You need to understand, and work to overcome, the disconnect that occurs between generations regarding the transfer of wealth. In this issue you will learn:
The main factors that contribute to family wealth loss over the generations.
How you can overcome your reluctance to discuss your wealth with your loved ones.
What you must communicate to your family to effectively transfer your wealth.
How your key advisors can help you bridge the gap among the generations of your family.
If you would like to learn more about multigenerational wealth transfer planning, please call our office now.
WHY IS OVER 90% OF FAMILY WEALTH LOST BY THE THIRD GENERATION?
You could assume that errors in financial and tax planning and investments are the main cause of wealth lost over the generations (in other words, blame it on someone else’s mistakes).
However, studies have shown that these factors account for less than 3% of lost family wealth. Instead, the largest contributing factor to generational loss of wealth (60%) is from lack of communication and trust among family members, followed by unprepared heirs (25%). (Sullivan, Missy, “Lost Inheritance,” The Wall Street Journal (March 8, 2013): http://online.wsj.com.)
WHY IS THERE A LACK OF COMMUNICATION AND TRUST THAT INEVITABLY LEADS TO UNPREPARED HEIRS?
Surveys have shown that fear is the dominant emotion that prevents people from communicating with their heirs about their wealth:
Fear about running out of money
Fear about creating an “entitlement mentality” in heirs
Fear about heirs squandering their inheritance
Fear about outside influences overtaking heirs
Fear about not treating heirs “equally” and creating sibling rivalry
Fear about how disclosure of a wealth transfer plan now might limit choices and changes to it in the future
Parents who fail to communicate their financial and estate planning goals to their children risk two outcomes:
The children misunderstand that conditions placed on an inheritance are designed to maximize and preserve the children’s lifelong financial stability and life comfort; or
The children interpret a “promised” inheritance as a license to be lazy and complacent while waiting to play the “inheritance lottery.”
Planning Tip: While it may not be easy to open up to your children about your money beliefs and fears, it is essential to overcoming the 90% odds that most of your wealth will be lost by the time your grandchildren die.
Here are some questions you should ask yourself in order to enable you to share openly your “money story” with your loved ones:
What does money mean to me?
What are the attitudes about money that I want to teach to my heirs?
What can I do to help my heirs develop financial competency?
There are only three choices for who will receive my wealth after I’m gone: (1) Family and Friends, (2) Charity, or (3) the IRS; what are my priorities for the control and transfer of my wealth among these three choices?
What is the best way for me to convey these priorities to my heirs?
The answers to these questions will help you express your fears, attitudes, and goals about your wealth and how you want to ultimately pass it down (or not pass it down) to your children, grandchildren, and beyond. In addition, discussing your “money story” with your heirs will allow them to know what to expect after you’re gone instead of being left in the dark.
WHAT MUST YOU COMMUNICATE TO FUTURE GENERATIONS TO FACILITATE WEALTH TRANSFER?
You must communicate the following information to your family to ensure that they will have the information they need during a difficult time:
Net worth statement, or at the very minimum a broad overview of your wealth
Final wishes – burial or cremation, memorial services
Estate planning documents that have been created and what purpose they serve:
Durable Power of Attorney, Health Care Directive, Living Will – property management; avoiding guardianship; clarifying wishes regarding life-sustaining procedures
Revocable Living Trust – avoiding guardianship; keeping final wishes private; avoiding probate; minimizing delays, costs and bureaucracy
Last Will and Testament – a catch-all for assets not transferred into your Revocable Living Trust prior to death, or the primary means to transfer your wealth if you are not using a Revocable Living Trust
Irrevocable Life Insurance Trust – removing life insurance from your taxable estate; providing immediate access to cash
Advanced Estate Planning – protecting assets from creditors, predators, outside influences, and ex-spouses; charitable giving; minimizing taxes; creating dynasty trusts
Who will be in charge if you become incapacitated or die – agent named in your Durable Power of Attorney and Health Care Directive; successor trustee of your Revocable Living Trust and other trusts you’ve created; personal representative named in your will
Benefits of lifetime discretionary trusts created for your heirs:
Fosters educational opportunities
Provides asset, divorce, and remarriage protection
Protects special needs beneficiaries (if properly drafted)
Allows for professional asset management
Minimizes estate taxes at each generation
Creates a lasting legacy for future generations
Overall goals and intentions for inheritance – what the money is, and is not, to be used for (in other words, education vs. charitable work vs. vacations vs. Ferraris vs. business opportunities vs. retirement), and who will be trustee of lifetime discretionary trusts created for your heirs and why you’ve selected them
Where important documents are located – this should include how to access your “digital” assets
Who your key advisors are and how to contact them
Planning Tip: Work with one of your key advisors to create and maintain a location list (where are your important documents being stored and who has copies?) and a contact list for your professional advisors (financial advisor, accountant, attorney, banker, insurance agent).
HOW CAN YOUR PROFESSIONAL ADVISORS HELP YOU CREATE AND MAINTAIN A SUCCESSFUL, MULTIGENERATIONAL WEALTH TRANSFER PLAN?
Your professional advisors are well-positioned to help you discover your wealth priorities, goals, and objectives and then communicate this information to your heirs. This, in turn, will prepare your heirs to receive your wealth instead of being left to figure it out on their own.
Planning Tip: Work with your key advisors to organize and hold annual family retreats that are designed to educate and update your heirs about your wealth transfer goals and plans that have been put in place to achieve these goals.
FINAL THOUGHTS ABOUT SUCCESSFUL, MULTIGENERATIONAL WEALTH TRANSFER PLANNING
Opening up and discussing your fears and beliefs about money will help you to create a “road map” for transferring your wealth. Your road map needs to be personalized through integration of your family values, family history, and ultimate goals for future generations. Your loved ones need to be educated about your road map so that they can be prepared for the opportunities and challenges they will face after you’re gone.
We are available to assist you with figuring out your “money story” and creating and maintaining a successful, multigenerational wealth transfer plan.
Are you considering leaving someone out of your will? Perhaps one of your children needs more than others. Or maybe you will that some family members are not deserving of inheritance. There are, however, restrictions on who you can leave out of your will. Here are 7 things you need to know before removing an inheritance.
1. THE SPOUSAL ELECTIVE SHARE
Perhaps you want to disinherit your spouse, perhaps because your spouse has his or her own money, or perhaps you are separated but have never completed a divorce. But will the law permit it? You can leave your spouse out of your will, but Colorado law allows your spouse to waive your will and inherit a certain minimum amount.
The amount to which your spouse is entitled depends on the amount of time the two of you have been married. In Colorado, a disinherited spouse can elect to receive 5% of your augmented estate for each year you were married. For instance, if the marriage was more than one year but less than two, the spouse can elect to receive 5%. Your augmented estate includes whatever is left after funeral and administrative expenses, creditor claims, exempt property allowances, and other expenses are paid. The amount an excluded spouse can choose to receive is capped at 50%.
This restriction can be circumvented with a prenuptial agreement in which your spouse agreed to receive some limited amount of assets upon divorce or your death. Be aware, however, that your spouse could also challenge the prenuptial agreement if it failed to comply with certain requirements, such as a failure to fully disclose all assets, or if your spouse can prove you coerced him or her into signing it.
2. DISINHERITING CHILDREN
There are also limitations on disinheriting children. You can disinherit adult children, something that people often do for one of two reasons. One is because the disinherited child may be more financially secure than others. Another is because the parent and child are estranged or otherwise at odds. Whatever your reason, we strongly recommend that you disinherit children reluctantly. This will be your last interaction with your children and the last thing they remember about you. And because you will no longer be around for them to take their frustration out on, they may direct their ire towards their siblings with litigation. All your children may end up with bitter feelings about your decision.
You cannot, however, disinherit children younger than 18. Disinherited minor children can elect to receive whatever they would have received under state law if you didn’t have a will. Children left out of a will that was written after they were born can make the same election if the will didn’t have any provision for “after-born” children.
3. CHALLENGES TO A WILL
There are a number of well-known instances of disinherited adult children challenging a will’s validity. Some were given token shares while others were totally disinherited, with the bulk of the estate awarded to someone who only entered the testator’s life shortly before death, or who didn’t seem to have the type of relationship with the testator that would typically lead to a large inheritance.
One sensational will contest involved the principal share owner of the Johnson & Johnson corporation, widely thought to be the most expensive will challenge in American history. Six children of Seward Johnson challenged the validity of his will based on lack of mental capacity, among other allegations. Johnson had left more than $400 million to his last wife, Basia Piasecka Johnson, a Polish immigrant originally hired as a cook by Johnson’s second wife. The story was a fascinating tale of incompetent legal maneuvering, conflicting medical accounts, and allegations of undue influence, all combined with public revelations of an extremely weird and dysfunctional family. After three years of litigation, Basia settled with the family paying them about $43 million but keeping $340 million for herself.
Adult children frequently challenge wills from which they have been excluded based on the following causes of action:
Lack of testamentary capacity
Invalidity based on improper execution
Don’t assume that your estate is too small for anyone to bother fighting over. You may not have hundreds of millions of dollars like the Johnsons, but the sting of being left out of even a much smaller estate can lead to feelings of resentment.
4. UNDUE INFLUENCE
Undue influence occurs when a testator’s intent is subjugated to that of another person. Undue influence gets alleged when there appears to have been some kind of pressure exerted on the testator to leave assets to someone other than the natural heirs. Undue influence often is accomplished by threats to reveal some indiscretion by the testator or to impose physical harm.
You need not prove that the testator lacked mental capacity or was otherwise mentally impaired. The challenger only has to show that the testator would have made a different disposition of property than what was done, and that the pressure or influence inflicted directly led the testator to sign the will or trust. Medical or psychological records supported by testimony from witnesses is essential to prove undue influence as well as expert medical testimony regarding the testator’s state of mind.
5. LACK OF TESTAMENTARY CAPACITY
Lack of testamentary capacity at the time the will was drafted and signed is another common basis for challenging a will’s validity. This is not an easy thing to prove. Courts presume a testator was of sound mind when the will was signed, and it takes substantial evidence to overcome this presumption. It’s a high bar to clear, especially if the will was signed years ago, and typically requires medical records from the time the will was signed. Occasional instances of unreasonable or illogical behavior or testimony regarding peculiar idiosyncrasies are rarely sufficient, especially if the testator had moments of lucidity. If the will was signed in an attorney’s office, it may be more difficult to prove lack of capacity since attorneys are usually careful to note evidence of the testator’s state of mind.
6. IMPROPER EXECUTION
People who draft their own will frequently fail to follow all the requirements for proper execution. In Colorado, the testator must be at least 18 years of age and be of sound mind. He or she must sign the will in the presence of two disinterested witnesses (i.e., two people who have no financial interest in the will). If the person is physically incapable of signing, the testator may designate another person to sign for him or her, so long as that person is not one of the two required witnesses to the will’s signing. Each witness must sign in each other’s presence and observe the testator’s signing or be told by the testator that the signature is that of the testator.
7. YOU SHOULD NOT LEAVE SOMEONE OUT OF YOUR WILL WITHOUT PROFESSIONAL ASSISTANCE
If you have questions regarding disinheritance, contact Dan McKenzie, a Denver wills, trusts, and estates lawyer. Mr. McKenzie has been advising, drafting and litigating issues regarding the validity of wills and trusts for years. Call our office today if you were disinherited from a will or if you need advice on disinheriting someone from your estate.
Most people name a family member, such as a sibling or adult child, to be the personal administrator of their estate or the successor trustee of their trust. Unfortunately, not all siblings get along and horror stories abound of personal representatives taking advantage of their status in looting assets or charging for services not performed. The lesson here is to be cognizant of family dynamics and if there is ill will, consider naming an independent person or entity as personal representative or trustee. A professional will charge for its services, but if this helps avoid litigation, it will be money saved in the end. A lot of money.
Critically important to any good estate plan are power of attorney documents. There are three such documents. One is a Durable Power of Attorney (LINK TO DOCUMENT NEEDED) for financial decision making. Another is the Medical Power of Attorney, for medical decisions and access to records. And then finally, there is an Advance Directive, often referred to as a “living will,” for end of life decisions. In each of these documents, you name an agent to act on your behalf to make decisions should you become incapacitated. For example, if you were to develop Alzheimer’s disease, and were no longer able to make decisions for yourself, these documents would allow someone you have named to act on your behalf as your agent to make decisions for you.
These documents are particularly important, because without them, a court would have to name a guardian or conservator to act for you. As discussed above, getting a guardian or conservator appointed to act on your behalf is a very long, drawn out process, with substantial court intervention and frequent reporting required. It can be very expensive.
ESTATE PLANNING FOR BLENDED FAMILIES
If you are married and have children from a previous marriage, or if your spouse brought children from a previous relationship to your marriage, you have special estate planning concerns. Most people want to provide for their spouse first, if they pass away, and then their kids. This is easy if all your kids are your spouse’s kids too, and vice versa. Most people in that scenario simply leave all money to the surviving spouse, with the expectation will be taken care of in a manner, regardless of who passes away first. It gets confusing quickly, however, if you have kids from different relationships. In that scenario, leaving all your money to your spouse with the expectation that he or she will keep your kids in their estate plan can backfire spectacularly. There’s nothing to prevent your spouse from changing everything, and cutting your kids out entirely, after you pas away.
To guard against this scenario, there are some things you can do so that your original intentions are carried out and that other unforeseen events do not pop up to frustrate the people to whom you wish to leave your hard-earned wealth.
REVIEW YOUR PRESENT ESTATE PLAN
An estate plan is more than just your will or the powers of attorney that you may have executed. These include any joint accounts you have set up, life insurance policies or POD (payable on death) accounts. When some people remarry, they forget that a life insurance policy exists that names the former spouse as beneficiary or that an IRA, 401k or stocks also name the ex-spouse as beneficiary. It is vital that you review what accounts and stocks you have to ensure they are changed to reflect your present intentions and that you make the necessary changes immediately.
Also, check on your durable powers of attorney to see if you wish to change the person named, especially if it is a former spouse.
SET UP A TRUST
A trust is an excellent way to protect against the possibility that the surviving spouse will change your plans and cut your kids out of the picture. You and your spouse can each set up trusts that will provide for each other during your lifetimes, and then for kids after you have both passed away. You can appoint different family members to handle different responsibilities, or a third party can oversee everything.
You can always split your assets between your spouse and children. Many people, however, want to be sure that their spouse has as much he or she needs before the giving anything to the kids. That is why many people leave all assets to their surviving spouse, with the expectation that the spouse will then include all kids and step-kids in his or her estate plan. As discussed above, however, your surviving spouse will have no legal obligation to honor that wish once the money becomes theirs.
One way to deal with this is a contract to make a will. This arrangement requires each party to include certain provisions in their wills and to not change those provisions after one of the spouses passes away. This can provide assurance to you that your wishes will be enforced. Talk to Denver estate planning lawyer Dan McKenzie about whether you can draft such a contract and what is needed to ensure its enforceability.
If you want to limit your spouse’s right to claim a part of your estate after you pass, you can include waivers in a prenuptial agreement. Under current Colorado law (please check with an attorney to verify whether this is still accurate), a spouse has a right to the following:
Right to make a claim in the decedent’s estate for family and exempt property allowance
Unless someone else is named in the will, the right to act as personal representative
Right to claim part of the intestate estate
Right to claim a homestead exemption in the estate
Right to claim an elective share of the deceased spouse’s estate
These agreements may be included in cases where your spouse has sufficient assets and you wish to leave your entire estate to your children. The prenup can also dictate which assets belong to you and which to your spouse.
Life Estate for Home
One way to ensure that your children gain title to your home is to establish a life estate for you and your spouse so that you both may reside in the home and have control over it as the life tenants. After you both die, the house automatically passes to your children.
There are drawbacks to this strategy. The IRS may consider your transfer of title to your children a gift, and require a gift tax return. It may also result in your children inheriting your house with your capital gain basis, something they could have avoided if they had inherited the property via probate. IAlso, if your children have tax or legal problems, the IRS or judgment creditor can put a lien on the home. Should a child on the title declare bankruptcy, the state could take money from the value of the life estate.
Consult Estate Planning Attorney Dan McKenzie
Estate planning for blended families can be complex and full of unintended surprises. Consult Denver estate planning lawyer Dan McKenzie, who has handled these and other complex estate planning matters for numerous satisfied clients. A three-time Super Lawyers Magazine “Rising Star,”Mr. McKenzie has been drafting and advising clients on their estate plans and other matters since 2003.
Most people don’t plan to get divorced. Unfortunately, it’s a process that many find themselves having to go through, sometimes more than once. By the time you are done with your divorce, you may be sick of the legal system and sick of lawyers. There are, however, several critical estate planning tasks you should address as soon as possible after your divorce is complete.
For many people, a divorce filing is the first significant legal event of their lives. So follow along and let us try to help you traverse the many pitfalls of estate planning after divorce by either bringing to attention your unforeseen issues or reinforcing known concerns, and the priority status you should attach to finalizing their details.
DO YOUR DESIGNATED BENEFICIARY INSTRUCTIONS NEED TO BE UPDATED?
First, and maybe most important, you need to review your designated beneficiary instructions on your retirement accounts and life insurance policies. While there can be state laws and federal requirements that limit or prohibit your ability to change beneficiaries until your divorce is complete, it is important to know where and when you can make these changes. Most states have some form of prohibition specifically against making changes during the divorce process, and then changes can be made after the divorce have been finalized.
Your designated beneficiary instructions are contracts with the companies to which you have provided them, the purpose of which is to get this money out to those you have listed almost immediately. They do not care about your divorce or how much animosity you may now have for your ex. Although many states, Colorado among them, have statutes that authorize an insurance company or stock brokerage to treat a spouse from whom you got divorced as though they pre-deceased you even if you never removed them from your instructions, many companies ignore those statutes and follow the instructions as written, even if they clearly should have been updated.
DO YOUR POWER OF ATTORNEY DOCUMENTS NEED TO BE UPDATED?
Second, after any divorce, you must review and revise your power of attorney documents. Your financial power of attorney likely gives your now ex-partner access to accounts, safe deposit boxes, retirement funds, and even your mail. You need to find those documents and ensure that they list the people to whom you mean to give these powers. Limiting your exposure to emotional people in emotional times who might have access to all of your liquidated assets or to choices concerning your end of life decisions, is always important and should be first on your list of concerns.
Similarly, if you were in an emergency medical situation, would you want the hospital to be waiting for guidance from your ex-spouse, or taking guidance from that ex-spouse over other family members, because your medical power of attorney says that is what you want?
DOES YOUR WILL NEED TO BE UPDATED?
Third, do you have a will that predates your marriage? If so, then you should consider revisiting the document to assess what assets you have linked, and who is in charge of your financial affairs in the case you become incapacitated or pass away during the divorce process. The process of divorce should be viewed exactly the same as after the divorce has become final. All documentation linking the two of you needs to be severed exactly the same way that it would be had you never been married in the first place.
WOULD YOUR KIDS NEED A TRUST TO HOLD THEIR MONEY FOR THEM?
Third, you need to review the terms of any trust agreement that you put into place for your kids. If you have trust, it likely says your ex will manage your kids’ funds for them as their trustee. Although a court will likely assign all day-to-day parenting duties to your ex if you pass away, it does not mean that your ex has to be put in charge of the money that you left your kids. Giving those purse strings to someone for whom you may have more trust can be one of the most effective ways to ensure your kids are raised with your values, even if you are not available to personally ensure that happens.
DO YOU HAVE ANY INSTRUCTIONS REGARDING YOUR MEMORIAL SERVICE?
Finally, you should account for who will be in charge of your memorial services. Would you want a funeral home waiting on confirmation from your ex-spouse that the plan to which your family has agreed is acceptable?
ESTATE PLANNING AFTER DIVORCE: LET US HELP YOU
The McKenzie Law Firm stands ready to help you with any questions, concerns, and organizing of your estate plan for your life now and the lives of your loved ones going forward. Contact us today to see how we can improve productivity and minimize your risks of your estate plan. After finishing all the necessary legal changes to your estate plan, you will then be able to provide, through the best of your ability to, any children, any business relationship, any charity, any pets caught in the crosshairs of your divorce, and for yourself, in your post marriage life.
(Thank you to our 2019 summer law clerk, Douglas Gasca, for his substantial contributions to this post.)
If you think it might be time to think through your estate plan, you can:
- Give us a call at 303-578-2745 to schedule a “Discovery Session” at which we can determine whether our firm would be a good fit for your needs. Or fill out our contact form to have us call you.
- Get a copy of our estate planning checklist to see where you currently stand.
- Learn more by attending one of our free webinars, reading our blog, or watching our videos.