Parents Should Explain Finances to Their Children

Parents are often very reluctant to discuss the parents’ financial situation with their grown children. It is important to do so for things to go smoothly later.

If you are a typical parent then you probably expect that your children will inherit your assets. You probably also expect that when you get older and are unable to handle everything for yourself, your children will assist you.

That is what happens in most families.

However, most families also make a pretty big mistake when it comes to these expectations. They assume the children will be able to step in immediately and take over for the parents having little or no prior knowledge about any details.

This can lead to big problems, which is why parents should talk to the adult children about the finances as TC Palm discusses in “Acquaint grown children with your financial affairs.”

You do not need to tell your adult children every last little detail about your finances.

Nevertheless, they need to know enough so that they can take over with few problems.

They certainly need to know where to look for details regarding your assets. While you are at it, make sure your children are familiar with financial concepts that they might not know.

What do they know about basic “financial planning”?

One great way to make things easier for your children is to get an estate plan. Going through that process can give you an idea of what you need to let your children know.

Reference: TC Palm (Oct. 30, 2017) “Acquaint grown children with your financial affairs.”

Common Marriage and Estate Planning

Courts in many states today are reviving the old concept of common law marriage. However, not every state is which creates the need for estate planning for couples who consider themselves to be common law spouses.

In most states, the idea of common law marriage has been abolished for a long time. Only a small number of states recognized the concept until recently.

Courts in some states are beginning to recognize these marriages again.

Why? Probably because more couples are choosing to live together for long periods of time and acting like married couples, despite never making it “official” through the process of formally getting married.

By recognizing the existence of a common law marriage, the courts are then able to treat the couple as they saw themselves when it comes to divorcing or settling an estate.

Not all states will recognize these marriages though as the Wills, Trusts & Estate Prof Blog points out in “Why Common Law Couples Need an Estate Plan (New York).”

What makes a valid common law marriage varies from state to state.

Normally, if the couple holds itself out to the public as married or tells a government agency that they are married, then a common law marriage exists. For example, if the couple files a joint tax return with the IRS, then the existence of a common law marriage will be recognized in those states that allow them and the couple will be in trouble with the IRS in other states.

Since not all states recognize common law marriages, it is important that you understand that you will still need an estate plan to protect your common law spouse’s interests in some states.

Even if you act like you are married, you are not actually “married” in most states and you need to account for that in your planning.

Reference: Wills, Trusts & Estates Prof Blog (Oct. 25, 2017) “Why Common Law Couples Need an Estate Plan (New York).”

Mediation in Estate Disputes

Family litigation over an estate can be very nasty and often leads to permanent rifts between family members. To help mitigate this possibility, many courts prefer to send litigants to mediation.

When family members start fighting over the estate of a loved one, the battle can turn acrimonious.

There is almost no way for there to be a civil intra-family estate dispute, unless the case goes to trial before a judge.

When family members start testifying against each other it is extremely difficult for the wounds to heal. To avoid this problem, many courts prefer that families to try to solve their disputes through other methods before a case goes to trial.

A common way to do this is for the litigants to be sent to mediation which the Wills, Trusts & Estates Prof Blog discussed in “Court Rejects Effort to Avoid Settlement Agreement.”

In mediation a trained, neutral third party attempts to facilitate an agreement between the parties to the dispute. A mediator will often try to get the parties to see the other person’s side and to compromise.

Even when mediation does not instantly help the parties to reach an agreement, it often helps to clarify the issues. Many feuding family members do decide to reach post-mediation settlements.

Mediation does not always work. Some people feel that they are pressured into settling during mediation.

For that reason, it is important to have an attorney during estate litigation as courts are reluctant to allow people who have second thoughts out of any agreements reached during mediation.

Reference: Wills, Trusts & Estates Prof Blog (Oct. 25, 2017) “Court Rejects Effort to Avoid Settlement Agreement.”

Who Needs A Will? You Do!

Many people do not think that they need a will. They are all almost always wrong. Everyone with any property at all needs a will.

Some of the common perceptions about estate planning are just plain wrong.

In fact, many people do not think they need a will. Why? Because wills are something only rich people get.

They think that if they only have only a little bit of money or property, then everything they have will simply pass wherever their family decides.

However, that is not what happens.

For example, if a person has a car when he or she passes away, then someone has to decide who gets that car. A related person cannot just show up at the appropriate government office and have the title changed into his or her name.

It does not work that way.

A court must decide who will get that car.

For that reason, everyone who has any property at all needs a will, as CNBC explains in “Think you’re not rich enough to need a will? Think Again.”

In the absence of a will, a deceased person’s property will be distributed according to the state’s laws of intestate succession. Those laws determine which relations have priority to receive the estate and the court distributes everything accordingly.

Bottom line: the deceased has absolutely no say in who gets his or her property.

Instead of relying on a court to divide your property, get a will.

It does not have to be complicated.

An estate planning attorney can create a simple will for you, even if you do not have many assets.

Reference: CNBC (Oct. 24, 2017) “Think you’re not rich enough to need a will? Think Again.”

After-Born Children

When a person has children after creating a will, the status of that will varies from state to state.

Estate planning attorneys always remind clients that if there are significant changes in their lives they need to revisit their estate plans and make any necessary changes.

Having more children definitely counts as a significant change in a person’s life. Despite the advice of the attorneys, many people do not change their wills after they have more children.

That means courts have to decide what to do about the children and the will.

In Georgia the will gets revoked, as the Wills, Trusts & Estates Prof Blog discusses in “State Law on After-born Children Leads to Revocation of a Will.”

In a recent court case, a Georgia man created a will in 1989. He later had three children out-of-wedlock, but he never updated his will to include the children.

The Georgia court decided that the will was, therefore, invalid and revoked it.

The man’s estate would thus be distributed according to the state’s laws of intestacy, as if the will never existed at all.

Every state treats these after-born children (who are not mentioned in wills) differently.

Talk to an estate planning attorney about the laws in your state.

Better yet, ask the estate planning attorney to help you, if you have had more children since you created your will.

Reference: Wills, Trusts & Estates Prof Blog (Oct. 17, 2017) “State Law on After-born Children Leads to Revocation of a Will.”

How the Elderly Can Prepare for Tax Reform

While it is not yet certain what might be contained in the anticipated federal tax reform legislation or even if anything at all will pass, there are a few things that retirees can do to prepare for changes.

Whenever Congress is talking about reforming taxes, the best advice is usually one word long: wait.

Tax reform is promised so often without anything of much importance passing, that it is usually not a good idea to make big estate planning changes until legislation actually passes.

Now, however, with Republicans controlling both chambers of Congress and the White House, many people are eager to prepare for the promised tax reforms currently being discussed.

For people in retirement, there are some things that could be done to prepare as USA Today reports in “Retirees: 4 ways you can start planning for possible tax law changes now.”

These things include:

• One of the changes being talked about is eliminating the deduction for state and local taxes. Therefore, people who live in high tax states, might want to start considering moving to a more tax-friendly state.

• Congress has discussed increasing the standard deduction. That might make it a good time to create a donor-advised fund to take advantage of current tax law and then donate to the fund later, as necessary.

• While there is talk of eliminating the estate and gift taxes, do not plan for it. Even if they are eliminated, they can always come back later.

Reference: USA Today (Oct. 13, 2017) “Retirees: 4 ways you can start planning for possible tax law changes now.”

DIY Will Goes Bad

The case of a religious woman in Australia illustrates the dangers of do-it-yourself wills.

Australian woman Sandra Marie Hatton was a very religious woman. She wanted to give most of her assets to charities that carry on religious work.

Perhaps to save some money so that there would be more to go to charity, Hatton did not see an estate planning attorney to help draft her will.

Instead, she used a do-it-yourself will form.

Hatton filled it out and then proceeded to make many handwritten changes to it, as she changed her mind about which charities to benefit.

That could end up costing her estate a lot of money, as reports in “Unholy row as court decides on religious woman’s will.”

The will itself has been accepted into probate as valid.

Now, the court also has to decide which of the handwritten changes to accept as valid.

The charities who could benefit from the decisions are all eager to stake their claim and lawyers will have to be hired by Hatton’s estate to help in the case.

Do-it-yourself wills, whether purchased in a kit or online, offer people a way to save some money by cutting out estate planning attorneys.

Unfortunately, as is the case with Hatton’s will, things often go wrong with these DIY wills because the people who create them do not know what they are doing.

In the end, that DIY approach costs the estate a lot more money in the long run.

Reference: (Oct. 15, 2017) “Unholy row as court decides on religious woman’s will.”

The Stored Communications Act

One of the more difficult things for families to do after someone passes away is to gain access to the deceased’s digital accounts. A federal law is part of the reason for that.

When someone passes away, one of the many things families often want to do is gain access to the digital accounts the deceased had. These include emails, financial accounts and social media accounts.

Sometimes access is wanted so important financial and business transactions can be completed, if necessary. Other times the families would just like to have access for their own information and to close the accounts.

The terms of services of most digital providers make it difficult to gain access.

A federal law, the Stored Communications Act, also makes it difficult as the Wills, Trusts & Estates Prof Blog discusses in “Court Holds Personal Representative May Provide Lawful Consent Under Stored Communications Act.”

The Stored Communications Act is essentially a privacy law.

It prevents providers from giving access to some user personal data without the consent of the user.

In a recent Massachusetts court case, Yahoo cited the act as the reason it could not give access to emails sought by the personal representative of a deceased account holder’s estate.

The court declared that, under the act, the personal representative could give the necessary consent to gain access to the data. However, the court did not make this mandatory. The court instead decided that it was still up to the company whether to comply with the request.

Many states are attempting to make it easier to access digital information after someone passes away.

Nevertheless, it appears the law still has a long way to go.

Reference: Wills, Trusts & Estates Prof Blog (Oct. 20, 2017) “Court Holds Personal Representative May Provide Lawful Consent Under Stored Communications Act.”

The Dangers of Guardianships

If courts are not adequate watchdogs of the guardians of the elderly, it can result in the elderly losing everything with little legal remedy.

Rudy and Rennie North were a normal Nevada couple in their 50s. Rennie needed some assistance with day to day living, which she was able to get from a nurse at home.

Then, a woman named April Parks came into their lives.

Parks owned a business and was considered a professional guardian. Without consulting the Norths or anyone in their family, Parks was able to get a letter from a physician’s assistant declaring that the Norths needed a guardian.

Parks took this letter to court and was appointed their guardian.

The Norths again were never consulted.

No tests were conducted on them, to see if they were lacking in cognitive functioning and unable to care for themselves.

Eventually their life savings were used up and they now live in a converted office with their daughter.

The New Yorker reported this story in “How the Elderly Lose Their Rights.”

Although things like this should never happen, they occur all too frequently.

If the legal system is not diligent in protecting the elderly from so-called guardians who just want to take what the elderly have, there is little the elderly can do about it. In this case, the court system was complicit in Parks’ scam.

If you suspect that someone has used the guardianship system to take advantage of you or someone you love, it is vital that you speak to an elder law attorney immediately.

The attorney can help you to stop the guardian before it is too late.

Reference: The New Yorker (Oct. 9, 2017) “How the Elderly Lose Their Rights.”

A New Sign of Possible Dementia

Researchers have discovered that a poor sense of smell might be a sign of upcoming dementia.

The earlier dementia is diagnosed in a person, the better.

Early diagnosis allows professionals to develop treatment plans that will slow dementia’s progress. It also lets people who have the disease to make end of life plans, such as advanced medical directives and estate plans, before they become unable to do so.

However, diagnosing dementia at the early stages is not always easy. This is because many of the signs of dementia are common in everyone as they get old. For example, people often start forgetting things as they age, but that does not necessarily mean they will all get dementia.

Researchers have now discovered a new sign of possible upcoming dementia, as The New York Times reports in “Poor Sense of Smell May Signal Dementia.”

In a study of women, subjects were asked to identify five distinct smells, including leather, fish and roses. How they performed at identifying the smells was found to correlate with whether they later got dementia.

That does not mean that everyone with a poor sense of smell will get dementia.

What it means is that smell is a cognitive function. Therefore, when a person begins to lose their sense of smell, it indicates declining cognitive functions and the possibility of very early dementia.

How this research can be applied in the field is not certain.

It is another useful piece of data for scientists, as they attempt to better understand dementia and how to detect it early.

Reference: New York Times (Oct. 3, 2017) “Poor Sense of Smell May Signal Dementia.”