Category Archives: Wills

Picking Guardians: It’s hard

Dear Liza: My husband and I just can’t seem to get around to writing a Will because we can’t decide who to name as a guardian for our two young children. I don’t like his sister’s husband; he isn’t comfortable with the city where my sister lives. My mother is perfect for right now, but we are worried that she will be too old ten years from now, when she’s 75 and our daughter is 15. We know we should do something, but we don’t know what to do. Any ideas? So, here’s the deal: you are right, you SHOULD do something. And, actually, it sounds like you do know what to do. If right now your mother is the perfect person to be the guardian, get that Will done, and name your mother. You can revisit this in 3 -5 years, and, trust me, you most likely will anyway.  It’s a much better idea to have a Will in place, even if it isn’t going to be perfect forever, than to have nothing written down at all.

Transfer on death accounts and debts

Dear Liza, I am a single male in my sixties. I do not own any real estate property and almost all of my financial accounts are TOD accounts.  I intend to leave my estate to my three adult children.  I have a small stock portfolio and some personal property that I will list in my will. Would  any estate taxes and outstanding debts be paid from the TOD financial accounts I have before the accounts are released to my beneficiaries or would only the stocks and personal property be liquidated to pay the amounts owed? What would happen if there is not enough in my residual estate to cover any outstanding debts? First off, a Transfer on Death (TOD) account is a bank or brokerage account that has a designated beneficiary, who receives the account upon the death of the account owner, without the need for a probate. It’s a great vehicle for passing assets to adult children, especially when, as in your case, you own no real property. (In most states, there’s no way to make real property pass this way, with a transfer on death deed, which is why living trusts are used to avoid probate.) As for debts, if they are unsecured debts (like credit card debts), your heirs are not responsible for paying them. However, the creditors can go after the assets that your heirs inherited from you to pay these debts–it’s just that it usually isn’t worth it to them to do so.  Estate taxes are different–those accounts are part of your taxable estate (you owned them at death) and the heirs would be responsible for paying tax due on these. However, at the moment, you can pass up to $5 million dollars, free of the estate tax, and it doesn’t sound like you (like most people) don’t have that kind of an estate. Here’s a good resource to learn more about this.

Writing a Simple Will

Dear Liza: My best friend of 26 years would like to write up a will. She has a 5 year old daughter, whom does not have a god mother. Both of my best friends parents are dead and the daughters father is not in her life, nor has he been since her birth. My best friend asked my husband and I if we would be her daughters “guardian” if anything should happen to her. We were honored and happily accepted! The problem is, how do we word the will so it is legal?

The good news is that it’s pretty easy to write a valid Will. There are not a lot of hidden ‘gotcha’s’ in doing a Will (unlike a living trust, as you can see from the blog post immediately before this one). Your friend should go to www.nolo.com and use their simple online Will, or purchase WillMaker software, or purchase or go to the library and get a Nolo book like, Nolo’s SImple Will Book, and use their suggested language. Your friend needs to say that she wants you and your husband to serve as the guardians of her minor child and that her child’s biological father is not part of her daughter’s life, and that placement with him would not be in the child’s best interest.

Both of you need to know that she is only nominating you two to serve in her Will — if your friend were to die, a judge would ultimately have to make the guardianship appointment in the best interest of the daughter. A judge will certainly try and honor a parent’s nomination via a
Will, but when there’s a living parent out there, unless they’ve legally abandoned that child (which this father may in fact have done), a judge has to take their parental rights into account as well. If that parent doesn’t want to take custody of the child, the court can certainly also appoint a guardian without severing that parent’s parental rights.

The bottom line is GET THAT WILL DONE. Writing down her wishes for her daughter is the best way your daughter can try and make sure that the right people take care of her daughter if she can’t.

She should sign the Will in front of two witnesses who don’t benefit from the Will in any way. And all of these self-help resources can walk you through the process.

 

Madame Clark-Reclusive Heiress to Huge Fortune Dies at 104

Estate planning in the news. This week, Huguette Marcelle Clark, heiress to her father’s copper fortune, thought to be close to one-half abillion dollars, died at 104, after living for decades in New York hospitals. Reportedly, her accountant and lawyer were the only people in close contact with her. Her passion was for fine French dolls. No news yet on the fate of her fortune. Stay tuned. There will almost certainly be more on this story in the coming weeks. It has it all: a recluse; a fortune; close advisors; an estranged family; a vulnerable old person.

 

When does it make sense to do a Living Trust?

Dear Liza: We are a young family with significant debt  and very little in tangible assets (we completely own just one car — we rent our house).  However, my wife and I have plans of significantly decreasing debt and increasing assets/wealth in the future.  Is it worth the time/costs to create a Living Trust now?  Or should we wait until we actually have assets?  Does it matter?

Because you have a young child, what you really need right now is a Will, naming guardians for your kids and putting a plan in place to manage assets for those kids until they grow up. If you don’t own a house right now, or more than 100K in the bank, I’d say, wait on the trust. The purpose of a trust is to transfer what you’ve got to your kids efficiently and inexpensively. But if you’ve really got nothing to transfer, the trust doesn’t buy you much at the moment. You could certainly create a living trust now, in anticipation of your future wealth, but if there’s nothing to fund that trust with at the moment, I’d say hold off. But do get that Will done. :)