Unfortunately, sometimes a death in the family can bring out the worst in people. Indeed, family resentments sometimes simmer during a time of grieving - particularly when money and assets from the deceased’s estate are involved. If you are a beneficiary under a loved one’s estate plan, you may be under the assumption that those assets will be distributed according to his or her wishes. Inheritance theft, however, is an under-reported problem that can cost families dearly. Moreover, the theft can be perpetrated by someone who was highly trusted by the decedent - the executor, who is the person typically chosen by the decedent to manage the estate upon his or her death or incapacity. Thankfully, you have the ability to deter a thief from stealing your inheritance and the inheritance of other beneficiaries of the estate.
Safeguard Your Inheritance
There are several ways in which you can ensure that you will not lose your inheritance due to theft perpetrated by a rogue executor. The following are three basic ways to do so:
- Knowledge is key: First, be sure to have information about the trust or estate and its assets. You should not get push-back when requesting this. As a beneficiary of the estate, you almost always have a legal right to an inventory and accounting of the estate. This is a summary of all the transactions and assets of an estate or trust and should come with supporting documentation such as receipts or cancelled checks. Even though the executor or trustee is in charge of the assets, he or she is legally required to report on the assets and transactions as well as act in the best interests of the beneficiaries.
- Document, document, document: Whether it is a phone call or an in-person meeting, be sure to document everything in writing. Be sure to confirm details such as what you asked for, what you learned, what you received (or did not receive), etc. Courts across the country often place greater weight on written evidence than on verbal testimony.
- Get outside help: Understand that emotions run high when a loved one has passed away. This can sometimes cloud our judgment, making legally required or authorized actions performed by the executor seem hurtful. Assistance from a third party can help make sure your rights are protected so that neither you nor the estate are unnecessarily tied down with the expense and stress of court battles.
While the best way to protect your wishes is through a well-drafted estate plan - which includes a detailed will, power of attorney, and trust that appoints multiple individuals as executors - inheritance theft still happens. Theft can occur through undocumented loans, denigration of other heirs, destruction or forgery of documents, or embezzling, to name a few.
While laws vary from state-to-state regarding how an heir can establish that his or her inheritance has been hijacked or is in danger of being stolen, there are certain basic rights an heir or beneficiary can count on. To learn more, contact us today.
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Whether you own a little or a lot, the last thing you want to do to your loved ones is leave a bureaucratic mess after you pass away or become incapacitated. Aside from mourning your passing or a significant deterioration in your health, this will cause the family additional stress. Heirs may forfeit life insurance payouts, tax deduction advantages, or miss accounts they did not know existed. This is why it is key to have your estate plan in place before life circumstances get the best of you.
In order to avoid problems, below is a list of a dozen documents you should start preparing right away to ensure you have a solid estate plan in place and your heirs are protected.
- A will: This is a legal document that states your final wishes in the event of death or incapacity. In this document, you name an executor to carry out your final wishes, heirs to receive assets from your estate, and a guardian for any minor children you may have.
- A trust: This is a legal agreement between you (settlor, grantor, or trust maker), the manager of your assets (trustee) and those who benefit from the trust (beneficiaries). Your assets are put into the trust and managed by the trustee on behalf of the beneficiaries, according to the terms you put in the trust document. All livingtrusts are revocable (can be easily changed) or irrevocable (cannot be easily changed) and are created and go into effect during your lifetime.
- Intent letters: These are used to add meaning and context by explaining the reasons why you want your assets distributed or invested in a particular manner. These are particularly useful when the assets are going to be divided unevenly among children or other beneficiaries/heirs.
- Personal inventory: Because most wills distribute property in terms that are general, it is important to create an inventory of your personal items to ensure nothing is overlooked and to let family members know if some items are stored in another location. You should include collections, any valuable property, as well as stories regarding family heirlooms.
- Power of attorney: This document is essential if you become incapacitated as a result of an accident or illness, because it allows a named person to make key decisions on your behalf regarding your finances and/or health care.
- Final wishes: This is particularly important and should include information regarding any pre-arrangements you have made for a funeral or cremation, organ donation, pet care, and who should be notified when you pass away.
- Identifying paperwork: These critical documents should be in kept in a safe place, and it would be a good idea to have a copy of each one. These include birth certificates, passports, marriage certificates, immigration papers, and other identifying documentation.
- Financial account list: Put together a list of all of your financial accounts. These should include any of the following: checking, savings, money markets, certificates of deposit (CDs), investments, annuity, retirement, pension, etc.
- Digital asset list: While software can be useful in keeping track of your digital assets, change of service terms can make this difficult. Instead, keep really important images or messages backed up and saved in a place where your family can access them (and know where to find them);
- House paperwork: You should retain all documents related to every real estate property that you own -closing documents, deeds, homeowners’ insurance, tax payment history, etc.
- Business ownership documents: If you own, owned, or are buying a business, you should keep all associated paperwork in a safe place. Documents should include, but may not be limited to, buy-sell agreements, stock certificates, LLC shares, operating agreements, corporate minutes, etc.
- Past tax returns: At a minimum, you should keep the last three years of tax returns and supporting documentation; if you want to be really careful, keep the seven most recent years.
If you have any questions about these important documents, or planning for your family’s financial security once you are gone, contact a knowledgeable estate planning attorney today.
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As the old adage goes “anything that can go wrong, will go wrong.” Referred to as Murphy’s law, this well-known saying has no mercy. Sadly, estate planning is no exception to its wrath. There is hope! Below are five-estate planning mistakes and how to fix them:
- Incorrect guardian for your children: A will is a way for you to control what happens to your estate and your minor or disabled children from the grave. If you fail to put together a will, the state will decide who cares for them at a court hearing.If you do have a will, be sure to review it regularly and confirm your original guardian is still a great choice for your children. If he or she is not, then amend your will and choose another guardian. Because all family law judges are required to make decisions in the “best interest of the child”, it’s a good idea to write a letter of explanation to help the judge understand the decision you’ve made.
- Wrong beneficiary for your 401(k), IRA, or other accounts: This is a common mistake that can be easily fixed. For example, a single parent may list his or her grandparents as beneficiaries, intending for the grandparent to use the funds for the minor children but fail to change it when the child reaches the age of majority. Or, couples who divorce forget to change the beneficiary information on their plans even after the case is settled. Beneficiary accounts like 401(k)s and IRAs, among others, bypass probate –the official proving of a will through court supervision. While this is typically an advantage, if the beneficiaries listed are wrong it may not be able to be fixed –or can be fixed but will require expensive litigation. This is why it is crucial that you periodically review your designations and confirm you have the right beneficiaries in place.
- Your property is titled as joint tenancy: It is important to understand that joint tenancy is not necessarily the best way to title your real estate or bank accounts. Joint tenancy can unintentionally disinherit heirs because the right of survivorship causes the property to pass outside of the deceased’s estate. It can also cause income tax problems when real estate is sold if the real estate has greatly appreciated since it was originally purchased. Joint tenancy can also cause creditor issues. Even if you’re not at fault, a judgment against one of the joint owners could cause a sale of real estate or a creditor cleaning out a bank account.
- You do not have enough life insurance: When an untimely death happens, the first question is whether or not the deceased had life insurance. Studies show that more than half of widows and widowers who collected life insurance proceeds received less than one year’s income. In short, check your life insurance coverage and make sure that the amount is appropriate for your family’s needs.
- A Durable Power of Attorney is unusable: You become incapacitated, your family and loved ones are unable to advocate on your behalf unless you have a valid, durable power of attorney (POA) in place. If you have a POA but it is invalid or expired, no one can access funds to pay for your care or be able to communicate with creditors to pay your debts. In short, there is no way to keep your medical, legal, and financial life in order unless you have a valid, durable POA. The absence of a POA means your family will now have to petition the court to appoint someone to handle your affairs and this can be a very costly, time consuming and public process.
Remember, after you are deceased or incapacitated, it’s too late to fix many estate planning problems. Poor estate planning can not only have results that go against your wishes but can also have dire consequences for your heirs. Consult with us as your knowledgeable estate planning attorney. We’ll help your family break Murphy’s Law by developing a plan that fully protects your family.
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