Posts Tagged ‘Estate Planning’

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When does a Will become effective?

Sunday, October 30th, 2011

I’ve gotten a couple of questions lately about when a Will becomes effective. One of these questions was from a son whose mother had a habit of writing and rewriting her Will on a regular basis to delete one or another of her children as a beneficiary based on who was the last person to visit the mother. Another question was from a man whose brother had died and he wanted to know if a written, but unsigned, copy of a Will was effective.

A Will is a document that tells the world (and most importantly, the court) how you want your ‘stuff’ distributed after you have died. Most people think of this as telling the world about your plan for the inheritance of your estate.

Contrary to popular belief, a Will does not become effective when it is written, or when it is signed, or even when it is executed correctly with all of the proper witnesses and signatures and put in a safe-deposit box.

A properly executed Will becomes effective the moment after the person who is the subject of the Will takes their last breath. That is, only when the person who is the subject of the Will has died.

This is because as long as a person is alive, they can change their minds about what they want to do. Most Wills have some verbiage that says something to the effect that the person revokes any and all existing Wills and that this is now their Last Will and Testament. But if they are still alive, they can always come back next year, or next week, and do the same thing again.

Also, unless the Will was executed with all of the correct processes and procedures, it is just a bunch of words on a paper and basically worthless. If you want your Will to be effective at your death, you need to have the proper execution formalities for your jurisdiction.

The last Will that was properly executed before your death is the one that the courts will find to be effective, even if you had changed your mind and thought you were making the right changes in later documents.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

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What is a ‘Life Estate’?

Sunday, September 11th, 2011

I had a question this week from a potential client who knew that her brother was allowed to live in her deceased mother’s house until he died and then the house was supposed to be divided equally between the remaining sisters and brothers. This arrangement is called a ‘life estate’, and it means that the brother has lawful possession as long as he is alive. The other sisters and brothers are called ‘remaindermen’.

A more common example is when a parent (for our example we will say the mother) dies leaving a spouse and children. The spouse later remarries and wants to make sure that his new wife will not need to move out of the family home if something should happen to him. He grants a life estate to his new wife with the remainder of the ownership going to his children at her death.

This sounds like a simple way to handle things and you may wonder why it isn’t used more often.

One problem is that the life estate ends when the named person dies. This means that if the named person is sick or in a nursing home, the remainder owners do not have the right to do anything with the property until the named person dies.

There is also the problem that a person with a ‘life estate’ can only give or sell what he owns. That means that he can’t sell the house to anyone else, or make arrangements for someone else to live in the house either. This has caused problems like the situation where an uncle had a life estate in the family home and put in his Will that the home should go to his favorite niece. She thought it was hers, except that the uncle didn’t have ownership to give! Once he died, the house belonged to the ‘remaindermen’.

In the case of the person who called our office, the brother had gotten married and the family wanted to know if his wife would inherit the house if the brother died. (the answer is no…because once he died, his life estate ended).

Then, there is the problem of who is supposed to pay the bills for the house. You may think that the person living in the house should be paying the bills. But what if the house needs a new roof that is expected to last 30 years? Should a 90 year old person with a life estate be required to put a new roof on the home, even though it is unlikely that he will be in the home long enough to use it all?

A Life Estate can also be set to terminate on the death of someone else. For example, let’s suppose mother has four children. Son 1 is disabled and cannot live on his own. Daughter 1 is not disabled and has agreed to take care of son 1. Son 2 and Daughter 2 are both married and living in another state with their respective families. Mother wants to make sure that Daughter 1 has a home in which to care for Son 1 so she grants a life estate to Daughter 1 for so long as Son 1 is alive, with the remainder being divided equally between the 3 remaining children when Son 1 dies. What this means is that Daughter 1 will probably need to move out of the home after Son 1 dies because otherwise she would need to be able to purchase the other 2/3 of the house from her remaining siblings.

I’ve even seen a case where a cat lover gave a life estate in her home to her friend for so long as her favorite cat was alive so that the friend could take care of the cat and the cat would not need to move to a strange house.

As you can see, a Life Estate can be a useful tool in your estate planning arsenal, but only if it is planned correctly.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

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Being Prepared Works!

Monday, August 29th, 2011

I hope this finds everyone safe. Hurricane Irene has come and gone and it appears that most of us on the Virginia Peninsula are ok, although some of us are still without power.

I know that in my family, we are fine. We were pretty lucky in that the power in our house never went out. However, we put all of our frozen foods into a cooler with dry ice ‘just in case’. We also brought in everything from the yard that might be picked up in the high winds, tied down those things that couldn’t be moved inside, and got most of the ‘stuff’ off of the floor in the garage (our garage almost always floods in a storm). We moved our vehicles to higher ground so they wouldn’t be flooded.

And then we left town since the area where our house is located was told to evacuate.

It was hard to sit and wait with that feeling of being powerless. However, it helped that we had done everything we could to be prepared for whatever might have happened.

I think of this today as I am also grateful that we have the proper legal documents to assist our family if an emergency were to happen and we were unavailable. We have the Power of Attorney so that someone could pay our bills. We have the medical directive so that our family would know what to do if we were injured and unable to make our own decisions. We have the Will and Trust documents so that our property could pass more easily in the case of our deaths.

Estate plans are just one more way to be prepared.

I could have been really irritated that we went to so much trouble last Friday to get prepared for things that (luckily) we did not need. Instead, it was comforting to know that our preparations were done ‘just in case’.

If you want to discuss how you can be prepared for a personal emergency, call the office for an estate plan consultation!

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

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Back to School Emergency Cards

Sunday, August 14th, 2011

It’s time for a new school year and that means shopping for school clothes, meeting new teachers, and filling out emergency cards.

The emergency cards can be helpful in telling the school who is authorized to pick your kids up from school if you aren’t able to be there. And it can help to make sure that your child is not sent home with a stranger pretending to be a relative, or anyone else that you do not want to be around your children.

What these emergency cards can’t do is authorize someone to temporarily take custody of your children if a serious accident happens to you during the school day (or any other time). if something happens to you, the authorities can only leave your kids with their legal guardian.

So what happens if there isn’t a legal guardian? The authorities will find someone in the foster care system to take care of your kids until ‘things can be worked out’. That means that your kids will be with strangers during this emotional and difficult time. Not with the neighbor who knows them or the parent of their friend from school.

Most parents know they should name a guardian for their kids in their Will, but a Will only becomes meaningful after your death, and even then it may take days or weeks to find the document and get it entered with the court. What about in the meantime? And what if you are injured and in a hospital instead of deceased?

In Virginia, you can draft something called a ‘standby guardianship’ which tells everyone who YOU want to have custody of your children if you are not able to take care of them yourself.

This important document should be drafted by every parent and reviewed on at least an annual basis to make sure that it contains your current wishes. There may have been a change in your life, and there may have also been a change in the life of the neighbor or friend you had named before. You should also make sure that your babysitter knows how to find a copy of this document, and a copy should be given to the school as well as the person named in your document.

We all have busy lives and we forget to do some things. As you are filling out the emergency cards for school this year, take a minute and review your standby guardian designation to make sure it is still valid. And if you don’t have a standby guardian for your minor children, now is the time to get this important document!

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

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Posted in Children, Estate Planning, Family Law, General Information, Guardian | No Comments »

Have You Checked Your Beneficiary Designation Lately?

Sunday, July 10th, 2011

I encourage my clients to review their estate planning documents on a regular basis, and an annual checkup seems like something that can be scheduled and easy to remember.

But what about things that aren’t part of the documents that I help to create? What about your individual IRA? or your life insurance policy? or your company retirement plan? or your investment portfolio?

These types of plans are contractual in nature and the contract is between you and the insurance carrier or the plan administrator, or….whomever.

It is also important to make sure that these beneficiaries are up to date. If the beneficiary is a minor child, do you have the person you want today as the trustee of these funds? Have the children now become adults and you want them to have access to the funds immediately? Have you created a trust and just never got around to changing the beneficiary of your insurance so that the funds will go into the trust to be distributed the way you wanted?

One of the biggest problems is selecting a beneficiary and just forgetting about it. What happens if that person has died before you? What happens if that person is no longer the one that you want to have access to the funds? Maybe they got married to someone you hate. Maybe they ran off to join a commune. Maybe receiving the funds will make them ineligible (for just a little while) for medicaid benefits they are receiving now? Maybe…. (fill in the blank).

I had a very personal example of this. My mother had a life insurance policy that she got when she was working. Her plan was that we could use her life insurance proceeds to pay for the funeral and then there would be a little left over for each of us (I’m the oldest of 7 children). We all knew she had the life insurance and we all knew what she wanted us to do with the proceeds, but what we didn’t know was that she hadn’t really named a beneficiary at all. I know she meant to have the beneficiary set to ‘all of my children equally’, but it never got recorded at the life insurance company. The funeral home would have taken an assignment of the insurance proceeds, but that assignment had to be signed by all of the named beneficiaries and there were no named beneficiaries!

That meant that we needed to get a certified copy of her divorce papers, and all 7 of us had to sign affidavits that we were indeed her children before we could get access to the funds. Of course we needed to have this done on the forms provided by the insurance company, which took time. And somebody had to pay the funeral home right away. So mom’s plan to use the insurance proceeds to pay for the funeral only ‘kinda’ worked. One of us had to pay the funeral home and then each of the other 6 had to reimburse the one that paid when they got their one-seventh of the proceeds.

I have a great family and it worked out fine, but I’ve heard lots of examples of where one child has been ‘stuck’ with the entire funeral bill and the others refused to reimburse the sibling that paid the funeral home itself.

Please, take a few minutes and double check your beneficiary designations on all of those ‘contractual’ assets.

If you have any questions about this or any other legal subject, please feel free to give us a call at 757-234-4650 or visit our website at http://www.BeaversLaw.com.

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