Non-Traditional Estate Planning
Wednesday, February 20, 2013
Estate Planning Lessons, Part 2: Marriage Is Not Enough - You Must Get a Financial Power of Attorney Now
This continues my series on lessons I learned in handling the estates of my parents who both passed away last year. This post will discuss reasons why you should plan things now - do not wait!
I am an estate planning attorney with the knowledge and experience to handle complex issues but found myself running around at the last minute to take care of things for my own father. It turns out that my father had never signed a financial power of attorney. What does that mean? It means that his wife was unable to handle simple financial transactions on his behalf while he was in the hospital and unable to do things like go to the bank. But they're married you say. For many financial matters, even a spouse does not have the right to act on your behalf. For instance, a spouse may not deal with anything listed solely in your name. This generally includes such things as your retirmenet plan, stocks or bank accounts.
So, on a Thursday afternoon I was in my office (instead of the hospital) drafting a power of attorney for him to sign so that his wife could take care of some financial matters he thought were crucial in his last few days of life. Then I ran it to the hospital and got it signed and notarized.
You could look at this and note that we were lucky as he was awake, competent and alert enough to know what he wanted done and still capable of signing the Power of Attorney - even one day later and that would not have been the case. Many people simply put it off unti it's too late and the family has to fight to get a conservatorship to be allowed to make decisions they know the loved one would have wanted.
Please plan now so no one is running around trying to get these things done during such a difficult time.
Friday, December 28, 2012
Unique Estate Law: 2012 Wrap Up for a Nontraditional Law Firm
An Estate Planning Attorney Provides a Personal Review of 2012
The state of the firm
For Unique Estate Law 2012 was a fantastic year. The firm beat projections and I was able to assist more clients than ever before. I had referrals from a wide range of sources and a constant stream of clients coming through my website. I’ve done well enough to start advertising on a local radio station and in a local magazine. I have met many wonderful people and have given them guidance and peace of mind when facing an uncertain future.
Two major losses
But, for Chris Tymchuck, it was the worst year of my life.
Why was it such a bad year personally? In November both my Dad and Mom died within a week of each other. They were 66 and 64 respectively so it hadn’t occurred to the family that they might be gone so soon. While my father had battled cancer for 11 years he was in no worse shape in the end than in prior battles. And my Mom had never been sick a day in her life.
Why am I writing about this?
Why do I share such personal information on a law firm website? Because, it is a cautionary tale of what happens in a blended family when little or no preparation is done.
I was recently sharing my story with two clients and they said, “I can’t believe this is happening to you who spend your time making sure that people like us are ok and covered. You have to share your story with people so they understand that this can, and does, happen.” And they’re right.
I write this blog to assist clients and colleagues with things to consider when drafting estate plans for all types of families – both traditional and non-traditional – and the blog has paid off for me. I feel that, in keeping with the spirit in which I write I must use the lessons of 2012 to further education clients and colleagues through this medium. In short, to give back as the blog has given me so much.
Is it relevant to Unique Estate Law?
Why is my story relevant to this site? Because part of the reason that I specialize in non-traditional families is because I grew up in one – or several – and know the complications that come with being raised with in a complex web of interrelated (and sometimes not) people.
My parents divorced and each remarried and had kids with a subsequent spouse. In addition, my Mom remarried a third time and became a stepparent herself. So, that means I have a stepdad, stepmom, 3 half-brothers, a half-sister, a step brother and a step sister. That, of course, doesn’t include the “traditional” family members such as aunts, uncles and still-living grandparents. There are a lot of people to factor into planning, mourning and administering for someone.
I’ve spent the last couple of months grieving and assisting my family with working through the health care decisions, then memorials, estates and other issues associated with facing the illness and then death of parent. I plan to spend the next few posts discussing some of the lessons I’ve learned by being on the other side – education to practice so to speak – as my hope is to assist others to avoid some of the pitfalls we now face.
I can’t say that anything good has really come out of the losses I suffered this year but I will say that it confirmed my choice of profession. First, because I found relief in returning to work and assisting my clients and second because I feel that I use my law degree in the best possible way – to assist others to prepare for, and perhaps face, the worst times in their lives. For that I am grateful.
Monday, November 26, 2012
Estate Planning: Leaving Assets to a ‘Troubled’ Heir
A Minnesota Estate Planning Attorney Discusses Complex Estate Planning Techniques
If you have a child who is addicted to drugs or alcohol, or who is financially irresponsible, you already know the heartbreak associated with trying to help that child make healthy decisions. Perhaps your other adult children are living independent lives, but this child still turns to you to bail him out – either figuratively or literally – of trouble.
If these are your circumstances, you are probably already worrying about how to continue to help your child once you are gone. You predict that your child will misuse any lump sum of money left to him or her via your will. You don’t want to completely cut this child out of your estate plan, but at the same time, you don’t want to enable destructive behavior or throw good money after bad.
Trusts are an estate planning tool you can use to provide an inheritance to a worrisome heir while maintaining control over how, when, where, and why the heir accesses the funds. This type of trust is sometimes called a spendthrift trust.
As with all trusts, you designate a trustee who controls the funds that will be left to the heir. This trustee can be an independent third party (there are companies that specialize in this type of work) or a member of the family. It is often wise to opt for a third party as a trustee, to prevent accusations among family members about favoritism.
The trust can specify the exact circumstances under which money will be disbursed to the heir. Or, more simply, the trust can specify that the trustee has complete and sole discretion to disburse funds when the heir applies for money. Most parents in these circumstances discover that they wish to impose their own incentives and restrictions, rather than rely on the judgment of an unknown third party.
The types of conditions or incentives that can be used with a trust include:
Drug or alcohol testing before funds are released
Payments directly to landlords, colleges, etc., rather than payment to the heir
Disbursement of a specified lump sum if the heir graduates from university or keeps the same job for a certain time period
Payment only to a drug or alcohol rehab center if the child is in an active period of addiction
Disbursement of a lump sum if the child remains drug free
Payments that match the child’s earned income
If you are considering writing this type of complex trust, it is advisable to seek assistance from a qualified and experienced estate planning attorney who can help you devise a plan that best accomplishes your wishes with respect to your child.
Monday, November 26, 2012
The ‘Sandwich Generation’ – Taking Care of Your Kids While Taking Care of Your Parents
The ‘Sandwich Generation’ – Taking Care of Your Kids While Taking Care of Your Parents
“The sandwich generation” is the term given to adults who are raising children and simultaneously caring for elderly or infirm parents. Your children are one piece of “bread,” your parents are the other piece of “bread,” and you are “sandwiched” into the middle.
Caring for parents at the same time as you care for your children, your spouse and your job is exhausting and will stretch every resource you have. And what about caring for yourself? Not surprisingly, most sandwich generation caregivers let self-care fall to the bottom of the priorities list which may impair your ability to care for others.
Following are several tips for sandwich generation caregivers.
Hold an all-family meeting regarding your parents. Involve your parents, your parents’ siblings, and your own siblings in a detailed conversation about the present and future. If you can, make joint decisions about issues like who can physically care for your parents, who can contribute financially and how much, and who should have legal authority over your parents’ finances and health care decisions if they become unable to make decisions for themselves. Your parents need to share all their financial and health care information with you in order for the family to make informed decisions. Once you have that information, you can make a long-term financial plan.
Hold another all-family meeting with your children and your parents. If you are physically or financially taking care of your parents, talk about this honestly with your children. Involve your parents in the conversation as well. Talk – in an age-appropriate way – about the changes that your children will experience, both positive and challenging.
Prioritize privacy. With multiple family members living under one roof, privacy – for children, parents, and grandparents – is a must. If it is not be feasible for every family member to have his or her own room, then find other ways to give everyone some guaranteed privacy. “The living room is just for Grandma and Grandpa after dinner.” “Our teenage daughter gets the downstairs bathroom for as long as she needs in the mornings.”
Make family plans. There are joys associated with having three generations under one roof. Make the effort to get everyone together for outings and meals. Perhaps each generation can choose an outing once a month.
Make a financial plan, and don’t forget yourself. Are your children headed to college? Are you hoping to move your parents into an assisted living facility? How does your retirement fund look? If you are caring for your parents, your financial plan will almost certainly have to be revised. Don’t leave yourself and your spouse out of the equation. Make sure to set aside some funds for your own retirement while saving for college and elder health care.
Revise your estate plan documents as necessary. If you had named your parents guardians of your children in case of your death, you may need to find other guardians. You may need to set up trusts for your parents as well as for your children. If your parent was your power of attorney, you may have to designate a different person to act on your behalf.
Seek out and accept help. Help for the elderly is well organized in the United States. Here are a few governmental and nonprofit resources:
www.benefitscheckup.org – Hosted by the National Council on Aging, this website is a one-stop shop for determining which federal, state and local benefits your parents may qualify for
www.eldercare.gov – Sponsored by the U.S. Administration on Aging
www.caremanager.org -- National Association of Professional Geriatric Care Managers
www.nadsa.org – National Adult Day Services Association
Monday, November 05, 2012
Minnesota Transfer on Death Deed, Part 4:Can You Cancel a Transfer on Death Deed After It's Filed?
In this series of posts, we've been discussing transferring a home via a transfer on death deed. You own property in your name alone and want to be sure that it goes to the beneficiary of your choice without the expense and delay of probate. So, after reading these informative blog posts, you decide to use a Transfer on Death Deed (“TODD”) to achieve this purpose.
But what happens if you change your mind after you have executed and filed the deed with the county? Can you cancel or change the TODD?
Yes. The Deed does not do anything to your rights over the property during your lifetime. It only takes affect upon your death. Therefore, nothing is set in stone until after death. You may, at any time, change the beneficiary or cancel the deed altogether. But, you MUST file the transfer on death deed revocation prior to your death.
Monday, October 29, 2012
Minnesota Transfer on Death Deed, Part 3: How Do You Get One?
Twin Cities Estate Planning Attorney Explains the Steps Necessary to Use a Minnesota Transfer on Death Deed
If you are a property owner and wish to use a transfer on death deed (“TODD”) to transfer that property without the hassle of probate, you must
Choose a beneficiary or beneficiaries
Execute a valid deed that expressly states that it is effective only upon your death
Record the deed in the county in which the property is located prior to your death.
Pay the filing fee.
A few things to note. If the property is jointly owned then all owners must sign the deed. And as #3 above states, it is not enough to execute the deed - you must also record it with the proper county before your death.
Monday, October 22, 2012
Minnesota Transfer on Death Deed, Part 2: Why Should I Get One?
A Minneapolis Attorney Explains How to Get a Valid Transfer on Death Deed
In my series on the use of the Minnesota Transfer on Death Deed, I've been explaining the benefits of using the TODD. It is a simple - and relatively inexpensive - process to draft and record a transfer on death deed. If you are still asking "Why should I get one?" let me provide you with a couple of real world examples of the use of a Transfer on Death Deed.
I have a gay couple, Jeff and Nathan, as clients who have been together for 5 years and came to see me about protecting each other in case of tragedy. Jeff owns their home alone as he bought it before he got together with Nathan. Jeff is, of course, concerned that Nathan get the home if anything happens to him.
Can't Jeff Just Add Nathan to the Title of the Home?
Yes. This is a common answer given to people like Jeff, especially by nonlawyer advisors. BUT JEFF MUST EXERCISE CAUTION: If Jeff puts Nathan on the deed to the home, he has given him a gift, which can have current tax implications. Also, Nathan loses the beneficial tax treatment - called a "step up" - received upon inheriting an asset. The tax imlications of this method are covered in other posts but suffice it to say that gifting the home could cause Nathan and Jeff money and hassle.
Another issue no client ever wants to consider? What if Jeff and Nathan break up? Now they still jointly own the home so must deal with it in their dissolution. Does one buy the other out or are they forced to sell the home and split the proceeds?
What about a will?
But, if Jeff merely states in his will that Nathan will get the home, Nathan will be forced to incur the expense, and suffer the delay, of going through the probate process.
What is the solution?
You guessed it. By properly executing and filing a Minnesota Transfer on Death Deed, Jeff can state that, upon his death, the home is to go outright to Nathan. Because the transfer does not happen until after Jeff's death, there is no gift during his life so no worries about gift tax issues. And, Nathan inherits the home so receives the full benefit of the step up in basis for the value of the home - allowing him to avoid increase captial gains taxes. Last, Nathan will not need to open the probate to get the deed to their home in his own name. Again, the Transfer on Death Deed will save Jeff and Nathan hassle and money both during life and after death.
Susan and Emily have been together for together for 15 years and own their home jointly. Susan has a 22-year-old daughter, Stephanie, from a prior relationship and whom Emily has not adopted. They are first concerned with caring for each other if someone happens to one of them. Because the home is jointly owned, if one dies, the other will become the full owner. But, what happens at the death of both of them? Who will get the home?
Because they've been together so long, Emily feels that Stephanie is like a daughter to her as well. She never adopted her because there is still another parent in the picture. But, it is important to her that their home eventually go to Stephanie. Of course, Susan agrees with that so how do we get the home to Stephanie at the death of both clients?
Use a Will?
This solution creates the same issues as in hypothetical #1. But, it also has another one. Susan can't use the will to state what will happen to the home at her death as she owns it jointly with Emily. And her will can't really control what happens to her property after it's been inherited by another, in this case Emily.
Does a Transfer on Death Deed Help?
Somewhat. It will avoid an issue if, upon Susan's death, Emily neglects to draft a will and her estate is transferred through the laws of intestacy (no will). Because Stephanie is not legally related to Emily, she will not inherit through intestacy. It will also help if Emily's will leaves everything to her sister as a Transfer on Death Deed takes priority over the will so Emily will still get the house.
But, it does not help if Susan dies and Emily decides to revoke the Transfer on Death Deed. The TODD's are fully revokable by the suriving grantor even for property owned jointly where both owners executed and filed a valid deed prior to the death of the first owner.
So, the Transfer on Death Deed doesn not provide a guarantee that the home will go to Stephanie should Susan die first.
If that is a concern, perhaps the clients should discuss getting a trust.
These are just a couple of examples where a Transfer on Death Deed may provide a fast and inexpensive solution to two different issues related to a personal residence. The next post will provide the short list of requirements to comply with the law on getting a Minnesota Transfer on Death Deed.
Wednesday, October 17, 2012
Minnesota Transfer on Death Deed, Part 4: Can You Change Your Mind?
We've been discussing the benefits of using a Minnesota Transfer on Death Deed to transfer your home to another person at your death. You own property in your name alone and want to be sure that it goes to the beneficiary of your choice without the expense and delay of probate. So, you decide to use a Transfer on Death Deed (“TODD”) to achieve this purpose.
Can you cancel a Minnesota Transfer on Death Deed?
Yes. The Deed does not do anything to your rights over the property during your lifetime. It only takes affect upon your death. Therefore, nothing is set in stone until after death. You may, at any time, change the beneficiary or cancel the deed altogether.
Monday, October 15, 2012
Minnesota Transfer on Death Deed: Should I Use it To Transfer My House?
Minnesota Estate Planning Attorney Discusses the Benefits of Using a Transfer on Death Deed to Transfer a Home
Minnesota has a unique tool to for use in avoiding probate known as a Transfer on Death Deed (“TODD”). In 2008 Minnesota’s legislature passed a law that allows the owner of real estate to execute a deed naming a beneficiary who, upon the current owner’s death, will succeed to ownership of that property.
There are several benefits to using a Transfer on Death Deed to transfer real property to someone.
You Retain Your Ownership Interests. The property is not transferred until the your death. So, you retain full ownership of the property during your life. So, you may choose to remain living in the home, sell it, borrow against it or give it away without restriction.
Your Home Is Still Protected. The finanacial obligations of the beneficiary will not affect your rights to the property. This is because the beneificary does NOT have any "present interest" in the property so if he/she has any legal actions such as bankruptcy, lawsuits, or divorce that are brought against the beneficiary won’t affect the property. This offers you a lot of protection in leaving the property to someone who may not be the best at managing money as a creditor may NOT file a lien against property subject to a transfer on death deed.
Your Heirs Will Avoid Probate For That Home. Again, this is probably the main reason why people choose a Transfer on Death Deed. The real estate won’t be subject to the costs and time of court probate proceedings- the beneficiary simply submits an affidavit and death certificate with the county recorder. This allows the home to transfer to the beneficiary quickly and inexpensively. It allows avoids the "ease of contest" often found in probate procedures.
You Can Revoke It. This means that you can change or delete the beneficiaries named in the document, even without their consent. Names can be deleted or added as the you sees fit. Or, you can revoke the entire document and dispose of the property in another manner (e.g. sell it or put it into a trust).
You Have Not Given a Gift. Because you are not giving the beneficiary a present interest in the home, there is no gift. This avoids issues with having to file a gift tax return or potential problems if you end up needing medicaid (medical assistance) in the future.
As these come up quite often in my practice, whether between partners or parents and children, I will address the different aspects of Transfer on Death Deeds in a series of future posts.
Monday, August 13, 2012
Estate Planning for Unmarried Couples
A Minneapolis Estate Planning Attorney Examines the Importance of Estate Planning for Unmarried Couples
Estate planning is important for everyone. We simply don’t know when something tragic could happen such as sudden death or an accident that could leave us incapacitated. With proper planning, families who are dealing with the unexpected experience fewer headaches and less expense associated with managing affairs after incapacity or administering an estate after death.
If a person fails to do any planning and becomes involved in a debilitating accident or passes away, each state has laws that govern who will inherit assets, become guardians of minor children, make medical decisions for an incapacitated person, dispose of a person’s remains, visit the person in the hospital, and more. In some states, the spouse and any children are given top priority for inheritance rights. In the case of incapacity, spouses are normally granted guardianship over incapacitated spouse, though this requires a lengthy and expensive guardianship proceeding.
In today’s world, increasing numbers of couples are choosing to spend their lives together but aren’t getting married, either because they aren’t allowed to under the laws of their state, such as in the case of gay and lesbian couples, or simply because they choose not to. However, most states don’t recognize unmarried partners as spouses. In order to be given legal rights that married couples receive automatically, unmarried couples need to do special planning in order to protect each other.
In general, unmarried individuals need three basic documents to ensure their rights are protected:
A Will – A will tells who should inherit your property when you pass away, who you want your executor to be, and who will become guardians of any minor children. These issues are all especially important for unmarried individuals. In most states, an unmarried partner does not have inheritance rights, so any property owned by his or her deceased partner would go to other family members. Also, in the case of many gay and lesbian couples, the living partner is not necessarily the biological or adoptive parent of any minor children, which could lead to custody disputes in an already very difficult time. Therefore, it’s critical to nominate guardians for minor children.
A power of attorney – A power of attorney (for financial matters) dictates who is authorized to manage your financial affairs in the event you become incapacitated. Otherwise, it can be very difficult or impossible for the non-disabled partner to manage the disabled partner’s affairs without going through a lengthy guardianship or conservatorship proceeding.
Advance healthcare directives – A power of attorney for healthcare, informs caregivers as to who is responsible for making healthcare decisions for someone in the event that a person cannot make them for himself, such as in the event of a serious accident or a condition like dementia. Another related document is a HIPAA waiver, which allows the persons named to discuss your care with a doctor BUT not to make decisions.
A fourth document to consider is the use of a revocable living trust. A trust document is nothing more than a set of instructions you leave to instruct your trustee on how, when and to whom to distribute your assets. There are numerous advantages to a trust that are especially appliable to unmarried couples:
It's private unlike a will at probate
You can determine where any remaining assets may go at your partner's death
Avoids court intervention if you're incapacitated
Beyond these documents, it is also critical that you check your beneficiary designations to ensure that the proceeds of your life insurance, retirement accounds, CDs, moneymarket or bank accounts go to your loved one. While your partner may still be able to inherit even without those designations, it will take time and effort to prove to a court that he/she is entitled to the benefits.
Estate planning is undoubtedly more important for unmarried couples than those who are married, since there aren’t built-in protections in the law to protect them and their loved ones. It’s imperative that unmarried couples establish proper planning to avoid undue hardship, expense and aggravation.
Monday, August 06, 2012
Gay Marriage and Inheritance Rights, Part 4: Discussion of Probate Court Ruling That Gay Spouse May Inherit
This series of posts examines the unique case brought before the Hennepin County Probate Court in which a same sex spouse sought inheritance rights over $250,000 worth of assets from his deceased spouse's estate. Recall that Mr. Morrison and Mr. Proehl were legally married during the brief window in California and later returned to Minnesota - a state that has a statue prohibiting the recognition of same-sex marriage - where Mr. Proehl died suddenly of a heart attack. In question were approximately $250,000 worth of life insurance proceeds and in a solo bank account in which Mr. Morrison was not named a beneficiary.
After unsuccessfully fighting to have the insurance company and bank issue the money to him, Mr. Morrison filed suit in Hennepin County Probate Court arguing that he was entitled to Mr. Proehl's estate because they were legally married in California. In a unique - and surprising - decision, the court agreed and ordered the $250,000 paid to Mr. Morrison.
As noted in my prior post, I am thrilled with this outcome for Mr. Morrison but caution that it may also cause some unintended consequences. A few issues that come to mind.
What if you break up?
I know many couples who traveled to a state (Iowa, Massachusetts or New York) or country (Canada) to get married in a jurisdiction in which same-sex marriage is legal and some of those couples are no longer together. But, because the marriage is not valid in Minnesota and due to the residency requirements (of 6 months or more) in most states, the couples never divorced. What happens if one member of that “broken relationship” dies? Will the “ex”, but still-legal-spouse-in-another-state, be able to inherit from the deceased?
Do you have to be "same-sex married" in a jurisdiction where it's legal?
Another question: Would this only work for couples who got legally married in another state? My partner and I have been together for almost 7 years and we have a 5-year-old daughter together. and are registered domestic partners in Minneapolis. If my partner dies without a will, am I currently entitled to the same inheritance rights as Mr. Morrison or do we need to travel to Iowa (actually, I would choose New York) to get married so it’s legal somewhere? And what if we go to Illinois and get a civil union? Does that count?
Will gay couples rely on this decision?
As an estate planning attorney in Minnesota - a state increasingly restrictive of the right of gay couples to marry - I worry that potential clients will hear about this and interpret it to mean that they don't need to properly plan for an emergency. I want to be sure to point out that the judge in this case clearly stated that this was "unlike any that has come before Minnesota's probate court." When I hear that language, I think that it's a "one-off" decisions and may not be repeated. Further, this is not a binding case as it's only at the district court level. Another thing to note is that Mr. Morrison did still have to spend time and money in court fighting for what should have - easily - been his. If Mr. Proehl had named Mr. Morrison as a beneficiary OR in a valid will, those $250,000 worth of assets would have been in Mr. Morrison's hands within a couple of months without legal intervention. Please don't rely on a court to save you, but call my firm and get a plan in place now! If you mention this blog post, I will waive my initial consultation fee because it's that important to me to help this community (and so I know someone reads this).
What if other heirs dispute the partner/spouse's inheritance rights?
What if other family members object to the surviving partner/spouse's inheritance? It doesn't appear there will be any opposition to the Proehl decision as it was clear that Mr. Proehl's surviving family members all believed that Mr. Morrision was his husband and therefore entitled to the proceeds. But, will the outcome be the same if someone is there to dispute it?
While the decision does raise further questions (as complex legal questions often do), let me be clear that I am thrilled for the LGBT community and applaud Referee Borer and Judge Quam for what is clearly the right choice in this situation.
From within Hennepin County Unique Estate Law represents estate planning and elder law clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park. The Minnesota law firm of Unique Estate Law focuses on all aspects of estate planning, including specialized wills, trusts, powers of attorney and medical directives for married couples, young families, blended families, single parents, gay families and those going through a divorce. Unique Estate Law also handles probate administration, asset protection, Medical Assistance planning, elder law, business succession planning, adoptions and cabin planning.