Infusing the Principles of Etiquette into Your Estate Plan

May is National Etiquette Month, and the goal is to encourage all people to act with consideration, respect, and honesty in their interactions with others and in their everyday lives.

Etiquette can also play a role in estate planning. A well-crafted estate plan ensures that your wishes are respected and that your loved ones are taken care of. Estate planning can also address what happens when you become ill and are unable to make decisions for yourself prior to death. Good manners and decorum can help minimize potential conflicts and disputes that may arise among family members during the planning process. As such, it is important to observe proper etiquette when planning and executing your estate plan to ensure a smooth and peaceful transition of your money and property to your loved ones. This involves communicating openly and honestly with family members about your plan and considering their feelings and opinions. Showing respect and sensitivity to family members can prevent future potential legal challenges that could arise from disagreements. 

The following are some ways that you can bolster your estate plan by incorporating the key elements of etiquette. 

Consideration. An estate plan can create a sense of stability and calm in times of loss or uncertainty. No matter what level of wealth you currently enjoy, if you do not leave detailed instructions for the type of medical care you want, you will be putting those you love most in the position of being mind readers. They will have to do their best to figure out what you would have wanted and then deal with the consequences, such as unhappy family members who disagree with them. A well-crafted estate plan shows consideration for your loved ones by preventing confusion about what to do and helping them avoid the pressure to make rushed choices.

Additionally, a carefully prepared estate plan can allow you to customize a plan that provides for your loved ones in a unique way that takes into consideration your loved one’s personal circumstances. They can find solace in the love and consideration you showed them by ensuring that your estate plan was not just a one-size-fits-all document.

Another way you can demonstrate consideration in an estate plan is by carefully considering who you are choosing as your trusted decision makers. Each role in an estate plan is important and is best handled by individuals with the right skills. When you are choosing a decision maker, it is important that you pick the right person for the job and that the person you are choosing can handle the responsibilities. In some instances, the person may not be able—not for a lack of skill, but because their plate is already full. Choosing an already overcommitted loved one could leave them feeling burdened and resentful during a time when they need to be grieving.

Respect. Estate planning makes it easier for your loved ones to respect your wishes because they know exactly what you want. Trust-based estate plans can respect your and your loved ones’ right to privacy by keeping private matters out of the public eye. Without a comprehensive trust-based estate plan, your estate may need to go through court in a proceeding called probate. This means that your choices become visible to the public, as does any information that needs to be filed with the court (like a list of everything you owned).

Honesty. An estate plan can bring a family together. News stories are rife with examples of beneficiaries arguing over a deceased loved one’s money and property or instances of a person’s care and end-of-life wishes being ignored. But an estate plan can avoid those types of emotionally draining situations. You should communicate your wishes for end-of-life care to your loved ones. While creating an advance directive document like a healthcare power of attorney is important, it is equally essential to have open and honest conversations with your loved ones about your wishes. These conversations can be difficult, but they can provide clarity and peace of mind for everyone involved. And these discussions can provide a wonderful opportunity for you to show those same people how much you care for them and appreciate them while strengthening the bonds of family love. Many people also take the opportunity to write something personal to their family members – passing along hopes, dreams, stories, and wisdom.

By crafting an estate plan that is considerate of one's loved ones, respectful of privacy, and honest about wishes for care and end-of-life decisions, you can ensure that your wishes are carried out in the most respectful and dignified manner possible. If you are interested in learning more about our estate planning process, or to update your existing plan, please schedule a meeting with us.

Important Probate Rules You Should Know

READ ON TO LEARN MORE

When a person dies, what happens next depends on whether the deceased person had any foundational estate planning documents such as a last will and testament (otherwise known as a will) or trust, who the living relatives are, and their relationship to the person who died. If the deceased person did not have a trust or will, the state where the deceased person resided has rules for overseeing how the deceased person’s money and property are to be distributed. If the deceased person died owning accounts and property in their sole name and had a will, it will contain instructions for what is to happen to the decedent’s money and property and must be filed with the probate court. Probate is a formal legal process of proving that a will is valid (if the person had a will), appointing someone to carry out the deceased person’s wishes (known as a personal representative or executor), and supervising the distribution of the deceased person’s money and property. 

While probate rules can vary by state, there are some important ones that you should be aware of should you need to wind up a loved one’s affairs.

Deadlines

Deadlines are important rules that must be followed during the probate process. Failing to meet these deadlines could get you in trouble with the court.

• When and if to file the last will and testament. If and when a will must be filed with the probate court can vary by state, but it is important that you understand when this task needs to be completed. Some states require that your loved one’s will be filed with the probate court within a certain number of days after your loved one’s death, while others only require that a will be filed if a probate is necessary. This usually occurs when the decedent died owning accounts and property in their sole name that need to be transferred. Once the will is filed, the court will generally begin by reviewing the will to ensure that it was properly made and signed. If the court is satisfied, it will appoint the personal representative. 

• Collecting and securing items. The personal representative must locate and secure the deceased person’s money and property and create an inventory of all items. Deadlines for filing an inventory with the court are calculated from the date you were appointed as personal representative, and they vary greatly among states, from sixty days in Florida to six months in New York. The inventory will include a valuation of the items as of the date of death. During this period, the personal representative may also need to establish a tax identification number for the estate and open an estate checking account for depositing estate funds.

• Notifying creditors. The personal representative must notify known creditors and attempt to find unknown creditors. Generally, at the direction of the probate court and with the assistance of an experienced estate administration attorney, the personal representative is required to publish notice of the deceased person’s death in appropriate newspapers to run for a specified length of time. This notice is typically published in the local newspaper where the person died. The purpose of this notice is to allow creditors, both known and unknown, time to make a claim to the estate for any debt owed. The personal representative must then determine the validity and priority of all creditor claims received and pay those claims as appropriate.

If the personal representative follows the correct steps regarding notice to creditors, any debts not brought to the personal representative’s attention during the applicable time period may be barred, and the estate may not be responsible for paying them. The creditor deadline gives creditors an opportunity to come forward with their claims, but it also provides a cutoff point for the personal representative so they can wind up the deceased’s affairs in as efficient a manner as possible.

Maintaining and providing estate accounting records. The personal representatives must maintain accounting records as proof of monies coming into and going out of the estate. Depending on the circumstances, the accounting records may need to be filed with the court, and interested parties may need to sign releases at certain intervals.

Filing and paying taxes. A personal representative must ensure that the deceased's final tax return is filed by the personal income tax filing deadline of the year following the deceased's death. If the estate earns income after the deceased’s death, the personal representative must file estate income tax returns (sometimes referred to as fiduciary income tax returns). Finally, a personal representative may have to file an estate tax return if required by law or for further tax planning. Each of these returns will have a specific deadline.

Who Has to Know

During the probate process, there are a lot of steps that are involved, and there may be multiple individuals who need to be kept informed about what is happening. If the deceased had a will, this would include those named in the will (beneficiaries). In some states, the deceased’s relatives and the deceased’s creditors can also be interested persons. When dealing with individuals other than those the deceased named in a will, it may be tempting to leave them in the dark, especially if there has been bad blood. However, personal conflicts do not absolve the personal representative of the duty to keep an interested person informed and to provide them with the information they are legally entitled to.

Who Can Be in Charge

Another important probate rule is who can be appointed as a personal representative. The personal representative can be almost anyone. Many states require that the personal representative be an adult or emancipated minor. However, some states may not appoint a personal representative who is a non-US resident, nonstate resident, or a felon. Most often, a personal representative is a surviving spouse, a family member, a close family friend, or an attorney. There is no requirement that the personal representative have any experience or expertise in handling estate matters nor is the person required to have any financial or legal experience or background.

We Are Here to Help

Probate is a process with many rules. We understand that this can be very overwhelming for many people. We are committed to working with named and appointed personal representatives to ensure a smooth estate administration. If you would like to learn more about the probate process and what is involved, please give us a call.

Procrastination and Estate Planning

Many individuals find it difficult to confront the topics of mortality and finances, which are two issues that are at the heart of estate planning. This is especially true if you are healthy and feel like you don't have much money.

It’s Natural to Feel Anxious

Estate planning is often an unfamiliar and uncomfortable subject for most people, and it's natural to feel anxious or inadequate when facing it. Unlike other tasks, there is no set deadline for creating wills, trusts, and powers of attorney, and the deadline may arise suddenly without warning. Moreover, estate planning may not be a fun or enjoyable task, but it's a necessary responsibility of being an adult.

The Cost of Hiring a Lawyer

The cost of hiring a lawyer is a common concern for many people, but it's important to remember that not all lawyers deserve this reputation, and finding a good lawyer can provide peace of mind and save you significant legal fees in the future. The amount of paperwork involved in estate planning can also be intimidating, but seeking clarification and asking questions can help make the process less overwhelming.

Not Realizing the Benefits

One of the most significant challenges with estate planning is that the benefits of the plan will not be realized until after you have passed away, and it can be challenging to prioritize this task until you fully understand your family's priorities. Additionally, making decisions that may not align with the wishes of your loved ones can be difficult, but ultimately, your desires should take precedence.

It’s a Daunting Feeling

The scope of the task can also be daunting, but it's important to remember that estate planning doesn't have to be a large or time-consuming task. However, procrastination and a desire for perfection can lead to unnecessary delays and complications. Guilt and fear of procrastination can also create a cycle of delay that may require professional assistance to overcome.

Weigh the Risks

It's important to recognize that these challenges are understandable, but delaying estate planning can have significant negative consequences. Avoiding this responsibility may result in your worst fears becoming a reality. Therefore, it's essential to weigh the risks of procrastination against your fears and take action. Seeking professional assistance can help you overcome your obstacles and provide peace of mind for yourself and your family.

If you need help getting started with your estate plan, Varela Law can provide an extensive estate planning strategy to help you begin the process. Contact us for a consultation.

Right of Occupancy Checklist

Right of Occupancy Trust: A Trust to Protect Your Home and Your Loved Ones

Estate planning is about protecting you and your loved ones. Sometimes this can be a difficult endeavor when there is a loved one who may require additional support at your death. While you may want to give as much as possible to this individual, you may not want to do so at the expense of others you care about. A right of occupancy trust can help you plan for this situation as it relates to property use and ownership.

What is a right of occupancy trust?

A right of occupancy trust allows you to designate a beneficiary to live at your residence or use another piece of real estate for a designated time period or until the beneficiary dies or moves away. To implement this strategy, you include a provision in either your last will and testament or trust agreement that places the real property into a separate subtrust overseen by the trustee you have selected. The terms of this provision may allocate money to the subtrust to cover the property’s maintenance expenses. Instructions are also included that outline the beneficiary’s rights and responsibilities, as well any responsibilities that the trustee will need to undertake on the trust’s behalf. Finally, the trust instrument directs what happens to the property once the beneficiary passes away. You could choose to keep the property in the trust to be used by another beneficiary or give it outright to a beneficiary. Alternatively, the trustee may sell the property (unless doing so would adversely impact homestead or other rights) and hold the money in trust for someone’s benefit or distribute it outright to a chosen beneficiary. (Selling the property can have adverse impacts on homestead status, and the trustee should get legal advice before selling.)

What can be addressed with a right of occupancy trust?

When implementing this strategy, it is important to think through these questions to ensure that you provide clear guidance as to your wishes:

• Is the tangible personal property (e.g., furniture, appliances, knickknacks, etc.) included with the property?

• Do you want to set aside money for administrative costs, state and local taxes or assessments, utilities, property insurance, and mortgage payments, or will these be the beneficiary’s responsibility?

• If the property includes a residence, does the beneficiary have to live there full-time?

• Can the beneficiary allow a subsequent spouse, friend, or companion to live at the residence?

• Does the beneficiary have the right to stay at the residence for their lifetime, or does some other occurrence (e.g., remarriage, being admitted to a long-term care facility, etc.) terminate the beneficiary’s use?

Why should you consider a right of occupancy trust?

If you have a residence in your sole name but want to provide your surviving spouse a place to live without potentially disinheriting your children from a previous relationship, this strategy will enable you to protect all parties. 

If you have property that has been in your family for generations that you want your surviving spouse to be able to use for their lifetime, but you have a compelling desire to ensure that the ultimate ownership is passed to your children in order to keep the family property in the bloodline, a right of occupancy trust can assist you with this goal.

If you have a loved one who is dependent on you and you want to ensure that they have a place to live after your passing, a right of occupancy trust can provide that security for your loved one while also protecting the home for the benefit of other loved ones in the future.

You Deserve a Team to Support You

To ensure that your wishes are carried out, it is important that we get your team involved to anticipate, plan, and execute all aspects of this strategy.

A financial advisor can sit down with you to evaluate your current financial holdings and discuss the steps you need to take to ensure that money is available to maintain the property if you intend for most of the expenses to be covered by the trust.

You should consult an insurance agent to ensure that your residence is properly insured through all of the different ownerships (i.e., yours, the right of occupancy trust’s, and the ultimate recipient’s, whether a remainder beneficiary or another trust). Your insurance agent can also advise you about life insurance options if you do not have the financial resources or cash assets to provide the funds needed to maintain the residence. 

A tax advisor should be consulted to discuss important tax implications of a right of occupancy trust and to answer these important questions:

• Will your beneficiary be allowed to take any income tax deductions with respect to the property?

• Will the property qualify for any applicable property tax exemptions that may currently be lowering the property tax bill?

• Will the property tax be uncapped at any point during the funding or trust administration?

We are available to counsel you on the options you have with respect to how your property is handled and how you want to provide for your loved ones. Once you have decided how to proceed, we can ensure that your wishes are documented in a legally enforceable way, giving you peace of mind that your plan will proceed smoothly at your passing and that your loved ones will be taken care of.

If you are interested in learning more about a right of occupancy trust or other ways we can customize an estate plan to protect you and your loved ones, schedule an appointment to meet with us.

Ladies, You Need a Plan

In 1987, Congress passed a law recognizing March as Women’s History Month—a time to honor the contributions and achievements of women throughout American history in a variety of fields. Women have played a vital role in building the United States into a strong and prosperous nation. Likewise, women are often the backbones of their own families, frequently focusing on meeting the needs of others rather than their own. However, it is important for women to take care of themselves through financial and estate planning designed to provide for their own future needs, which may differ from those of their male family members, as well as family members who may be dependent on them.

Planning Considerations for Women

Longer life expectancies. According to Social Security Administration data, in 2021, women had an average life expectancy of 79.5 years compared to 74.2 years for men.[1] As a result, it is important for women to create an estate plan that accounts for additional years of living expenses during retirement, healthcare costs, and possibly long-term care costs. As women age, there may be a greater possibility that they could become incapacitated and need someone to act on their behalf to make financial and healthcare decisions. 

Documents such as financial and healthcare powers of attorney and living wills authorize a person they trust to make decisions or take action for them if they are not able to act for themselves. Some women may not only own their own assets but also inherit wealth from both their parents and a spouse who dies before them, and if so, they need a financial and estate plan to optimally preserve and transfer this wealth. Because women may outlive their spouses, they also may be responsible for administering their spouse’s estate or become the sole surviving trustee of a joint trust. These duties may be difficult for a woman who is experiencing health issues that often occur at an advanced age, and this possibility should be addressed in their estate planning. For example, a woman concerned that she will be unable to handle administering her trust at an advanced age can name a co-trustee or successor trustee to administer it if she is no longer able to do so.

Lower earnings. According to U.S. Census Bureau data, women continue to earn less than men, and the pay gap widens as they age.[2] In addition, because some women have shorter employment histories due to time off to raise children or care for aging parents, they may have less saved for retirement. As a result, it is important for them to take steps to protect their money and property from lawsuits or creditors’ claims. For example, a woman could transfer her money and property to an irrevocable trust. Because she is no longer the legal owner of the property, a creditor cannot reach it to satisfy claims against her so long as the trust is properly drafted to include appropriate distribution standards and administrative and other provisions. 

The woman may be a discretionary beneficiary of the trust, and the trustee may distribute the funds she needs for living expenses. Additionally, because they have less money and property during their retirement, women need to have a solid plan in place to make sure that they are able to financially provide for their loved ones upon their death and that unnecessary costs and expenses are minimized to the extent possible.

Care for loved ones. Many women are caregivers for minor children, adult children with special needs, or aging parents. As a result, they are often concerned about who will care for their loved ones if they are no longer able to do so. If a spouse or sibling is not available to provide care, they need to make sure that another family member or trusted individual can be the caregiver (sometimes called a guardian of the person) for their loved one. The same individual—or someone else—can serve as the guardian of the loved one’s estate (sometimes called a conservator or guardian of the estate) to manage the inheritance for their benefit. In the case of a child with special needs, if no family member is able to take on the responsibility of their care, a group home or assisted living facility may be the best choice. A special needs trust may need to be established to ensure that funds are available for the child’s care but do not decrease the amount of government benefits they are eligible to receive.

We Can Help You Plan Ahead

You have accomplished a lot in your life! Celebrate your accomplishments and contributions during Women’s History Month by contacting us to set up an appointment to create an estate plan that provides for your own future needs and those of the people you love. You deserve the peace of mind that comes with knowing your future is secure.

[1] Period Life Expectancy - 2022 OASDI Trustees Report, Soc. Sec. Admin. https://www.ssa.gov/oact/TR/2022/lr5a4.html (last visited Mar. 1, 2023).

[2] Earlene K. P. Dowell, Women Consistently Earn Less Than Men, U.S. Census Bureau (Jan. 27, 2022), https://www.census.gov/library/stories/2022/01/gender-pay-gap-widens-as-women-age.html.