16709615_sconfused senior womanFor many seniors, taking care of their affairs, particularly paying bills, banking, and other financial matters, becomes more and more difficult as the years go by.  When this happens, many people opt to have a close relative or other highly trusted person assist them with these matters.  The following discussion explores two very common options.

1. Adding a co-owner to your bank account.
John Smith decided to add a co-owner to his bank account.  He picked his son Robert.  As co-owner, Robert was able to make deposits, withdraw funds, and pay all his father’s bills, writing the checks directly from his father’s account.  Seems simple enough – however, there are some serious problems with this approach.

a.  Misusing funds:  Designating a co-owner to your account enables that person to write checks for anything, including his/her personal expenses.  While you trust that the co-owner will only utilize your funds for your benefit, this may not always be the case.

b.  Creditors: If your co-owner gets into financial trouble, his or her creditors may try to seize funds from your account.

c.  Family conflicts:  Issues may arise after your gone regarding who owns the residual assets in the account.  Almost all joint accounts include a “right of survivorship” clause designating the surviving co-owner as the lawful owner of remaining funds.  In John Smith’s case, he intended the remaining money to be equally divided among his three children.  However, as co-owner, the funds belonged to Robert, who was under no legal obligation to share the money with his siblings. Robert chose to keep the money and his siblings took him to court – not something John Smith ever intended.

2. The Durable Power of Attorney

A Durable Power of Attorney may be a much better approach if you need help managing your financial affairs.  John Smith would have been wise to go this route.  Under the terms of a Durable Power of Attorney, John would have designated his son, Robert, “attorney in fact.”  Robert would then use his father’s account for making deposits, withdrawals, and writing checks, but with two very important restrictions:

a.  The funds could only be used for his father’s benefit.

b.  Upon his father’s death, any money remaining in the account would become part of his father’s estate.  The funds would not belong to Robert (unlike the “co-owner” situation noted above).

Finally, it should be noted that the Durable Power of Attorney is a much more powerful instrument than the co-owner option.  You can designate your “attorney in fact” to act on your behalf regarding all manner of legal matters.  It’s up to you regarding how much or how little responsibility you assign to your agent.  For many, this flexibility makes it a very useful tool.

Getting Legal Help:

When you need help managing your financial affairs, it’s critical that you understand your options.  Experienced Estate Planning Attorney, Elga A Goodman, can work with you to explore the various alternatives, and can help you select the most suitable solution for your unique needs.  Contact us today at 973-841-5111.

 

 

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family siluettePreparing your Last Will and Testament (the Will) is critical for helping insure that your wishes are respected after you’re gone.  Married couples with children may have special concerns regarding how money bequeathed to the surviving partner is handled after the survivor passes away.  The following example demonstrates how this type of issue may be addressed.

Robert Smith is married with two children.  In his Will, Robert bequeathed all his assets to his wife, Susan.  However, in his Will, Robert also requested that, upon her death, Susan divide any of Robert’s remaining assets equally between their children.  The problem is that after Robert’s gone, Susan is free to do whatever she wants with those assets.  She’s not obligated to respect Robert’s wishes regarding passing along remaining assets to the kids.

Robert’s attorney came up with a solution to address this issue.  It’s called a testamentary trust.  This trust, created through Robert’s Will, includes specific language tailored to Robert’s wishes, and goes into effect upon his death.   The trust can be drafted to ensure that once Susan’s gone, those assets will pass to Robert’s children.

Testamentary trusts may be useful for many different marital scenarios including second marriages.  However, as with any trust, the language must be very carefully crafted to reflect your wishes.  Under the circumstances, consulting with an attorney is highly advisable.  Properly worded, a testamentary trust can help you exercise control over the situation long after you’re gone!

Getting Legal Help:

Experienced Estate Planning Attorney, Elga A. Goodman, can help you explore trust options and determine what best meets your needs.  Contact us today at 973-841-5111.

 

 

 

 

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4000462_s-3A family feud between Robin Williams’s widow and his children from prior marriages has received a lot of press.  A major issue in this feud involves Mr. Williams’s tangible personal  property, personal items he collected over the years.  Mrs. Williams and her stepchildren differ on which items were bequeathed to them.

This story is a vivid reminder that a person’s personal possessions, whether or not they have significant monetary value, may assume extraordinary importance to the heirs once that person passes away.  And the dynamics between a step-parent and the deceased’s children can assume a ferocity never imagined.

But, when planning your estate, there are some things that can help allay the feuding between your children and their step-parent.

1.  It goes without saying that you should specify as clearly as possible in your Will (or in a written statement attached to your Will) who gets what.  It’s not enough to state that your daughter gets the family heirlooms and your wife gets the furniture you brought to the marriage.  What about that antique chair in the living room that you inherited from your grandmother?   A far better approach is to make a list of all the specific items you wish to bequeath; next to each item, name the designated beneficiary.  The clearer your intentions, the less likely that arguments will ensue.  Of course, you can modify your list, changing who gets what, whenever you wish.  The point is to be as clear as possible about your intentions.

2.  Also, telling your heirs in person how you are dividing up your tangible personal property eliminates the future element of surprise.  It allows your heirs to voice their feelings, enables you to explain your rationale, and gives people time to get used to the idea.  While you may prefer one-on-one talks, you should also consider a group discussion to help insure that everyone hears the same thing.  However, if you change your mind at some later time regarding who gets what, be sure to inform all the affected beneficiaries about those changes.  Neglecting to do so may lead to major feuds once your gone – exactly what you were hoping to avoid.

3.  Finally, it’s worth considering distributing some of your personal things in advance.  Special occasions like holidays, birthdays, and graduations are great opportunities to gift personal items to loved ones.  And these are excellent opportunities, when the whole family is together, for all to see what has been gifted.

Bequeathing your personal possessions to loved ones is intended to bring them joy.  But it can be particularly tricky in the case of stepchildren and step-parents.  Taking some proactive steps may save your loved ones considerable problems after you’re gone.

Getting Legal Help

Experienced Estate Planning Attorney, Elga A. Goodman, can work with you on all your estate planning needs.  Contact us today at 973-841-5111.

 

 

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Susan went through a very hard time when her husband, Steven, died.  Not only was she grieving the loss of her husband, but she had to deal with so many other things – making funeral arrangements, contacting Steven’s employer, the life insurance company, their lawyer, the bank.  And on and on it went.  And then, in the middle of all this, Susan started getting calls from a debt collection agency.  Her husband had a credit card under his own name.  But the collection agency was pressuring Susan, insisting that she must pay off Steven’s credit card debt.  The agency was relentless, calling repeatedly, demanding payment.  Susan just didn’t know what to do.

Fortunately for her, Susan had an attorney shepherding her through the whole estate probate process.

The attorney informed Susan that she was not personally responsible for paying off her husband’s debt.

1. When a deceased person dies, his personal assets become his “estate.”  Generally speaking, debts are paid out of the estate.  If there isn’t enough money in the estate, creditors (and their debt collectors) are out of luck.

2. Susan’s husband designated her as the beneficiary of his $100,000 life insurance policy.  Since life insurance left to a designated beneficiary is not included in the probate estate, the insurance money Susan inherited was not subject to creditors’ claims.

3. Susan’s husband also designated Susan as the beneficiary to his 401K.  Retirement accounts left to a designated beneficiary, such as 401Ks and IRAs, are usually protected from the decedent’s creditors.  This was the case for Susan, and it meant that the 401K money she inherited was also not subject to creditors’ claims.

4. Susan and Steven resided in New Jersey, which is not a “Community Property State.”  Consequently, Susan’s home, which she owned jointly with her husband, was also outside the reach of Steven’s creditors.

5. Finally, Susan had not jointly applied with her husband for the credit card; she had not co-signed the application.  Since the card was only in Steven’s name, Susan was under no legal obligation to pay his credit card bill.

Given the circumstances, Susan did not pay the collection agency.  However, this is a cautionary tale.  When faced with a deceased loved one’s debt, there are so many different circumstances and corresponding legal considerations.  It’s best to consult with an expert.  Don’t be intimidated by debt collection agencies.  Gathering information and speaking with reputable experts is the way to go before you do anything else!

Getting Legal Help:

Experienced Estate Planning Attorney, Elga A. Goodman, can advise you regarding your deceased loved one’s debts and your obligations.  Contact us today at 973-841-5111.

The information contained herein is for informational purposes only and should not be construed as legal or tax advice.  The persons and situation discussed are fictional.  Any resemblance to real persons or to real life examples is purely coincidental.


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Congress Passes Tax-Favored Savings Accounts for Special Needs Individuals!

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Alex, a 30-year old man with Down syndrome, has cause to celebrate today.  As a Special Needs individual, Alex receives Medicaid and Supplemental Security Income (SSI).  However, these federally funded benefits have been attached to some very restrictive rules.  Specifically, up until now, Alex has been prohibited from having more than $2,000 in savings.  If […]

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When his 75-year-old father died, forty-year-old John inherited his father’s $1 million traditional Individual Retirement Account (IRA).  John wasn’t sure what to do with all that money.  So, he contacted the financial institution managing his father’s IRA and asked them to send him a check for the full amount.  He figured that once he got the […]

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Your Father Died Without A Will. What Happens Next?

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In our last post, we discussed problems that may arise if a person dies intestate (without leaving a Will).  In this post, we discuss the process for administering and distributing the assets of someone who dies intestate: What you should know: 1. The Surrogate’s Court (in the county where the deceased resided) has judicial oversight […]

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A critical part of estate planning involves preparing your Will.  Doing so helps ensure that your estate will be distributed to your heirs according to your wishes. Unfortunately, many people neglect to prepare a Will.  The reasons are many.  But the bottom line is that once you’re gone, and there’s no Will, things get more […]

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Estate Planning – Questions About Tangible Personal Property

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Preparing a Will enables you to direct how and to whom your estate will be distributed once you’re gone.  Your estate is comprised of your  intangible personal property (including cash, IRA’s, 401Ks, bank accounts, insurance policies, etc.), real estate, and  “tangible personal property.”  Many times people wish to be very specific regarding how their tangible personal […]

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Estate Planning: Telling your Children What You’re Planning and Why

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A critical part of estate planning involves identifying your beneficiaries, and specifying what they will inherit.  Parents (particularly those who are widowed or divorced) often designate their children as beneficiaries.  However, problems may arise among the kids depending on how those assets are divided.  Examples abound, but here are just a few: You have three […]

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