What Documents Do I Need When Someone Dies?

In a previous blog we discussed the new probate law changes that were about to happen in Massachusetts. The effective date of those changes has been pushed back to the end of March, 2012. Although the estate administration process itself is designed to be quite simpler going forward under the new Massachusetts Uniform Probate Code, there will still be many details that will need to be tweaked by the courts and attorneys who appear there during initial implementation.

Regardless of the supposed ease of the new system, much work in still needed to be done by the Personal Representative (Executor) prior to the first meeting with the attorney. It can be extremely overwhelming to the surviving family members to figure out what items they need to gather. Below is a list of the kinds of paperwork needed after someone passes away to make this process less burdensome:

Asset Information:
Copies of the following documents will be needed:

• Account Statements – including bank, brokerage, and retirement accounts for at least the three months prior to death
• Life Insurance Policies – you can often obtain these directly from the company or life insurance agent if they can’t be located
• Beneficiary Designation Forms – for life insurance, retirement accounts, and payable on death accounts
• Deeds for Real Estate – copies are fine and can often be obtained electronically through the Registry of Deeds website
• Automobile and Boat Titles – the originals will be needed to transfer legal title
• Stock and Bond Certificates – for stocks or bonds held in certificate form, the original certificate will be needed to transfer legal title

Business Documents:
If the person who passed owned a business, then copies/originals of the following documents will be needed:

• Corporate, LLC or Partnership Documents – this includes copies of the corporate charter or articles of organization and minutes; a copy of the shareholder’s agreement, operating agreement, or partnership agreement; and original stock or LLC certificates to transfer legal title
• Account Statements – including bank, brokerage, and retirement accounts for at least the three months prior to death
• Automobile and Boat Titles – the originals will be needed if legal title will be transferred
• Contracts – including leases, loans, and employment agreements
• Business Licenses – including local and state licenses
• Income Tax Returns – past three years

Contracts:
Copies or originals of the following contracts will be needed:

• Prenuptial Agreements - including any amendments
• Postnuptial Agreements – including any amendments
• Loans - including personal loans, lines of credit, and mortgages, along with the original promissory notes
• Leases – including real estate and automobile leases

Bills:
Copies of the following bills will be needed:

• Utility Bills
• Cell Phone Bills
• Credit Card Bills
• Mortgages and Personal Loans – including lines of credit
• Real Estate Tax Bills
• Storage Unit Bills
• Medical Bills
• Funeral Bill

Estate Planning Documents:
If the person who passed had an estate plan, then copies or originals of the following documents will be needed:

• Revocable Living Trust and Any Amendments – often times a copy of the trust or amendment is all that’s usually needed
• Last Will and Testament and Any Codicils – the originals will be required because if the originals can’t be found it could be presumed the decedent destroyed them, however if all beneficiaries/heirs-at-law agree a copy can be produced in Massachusetts

(NOTE: For clients of Vickstrom Law, copies, as well as the originals, of your estate planning documents are provided to you in your Document Binder.)

Tax Returns:
Copies of at least the last year of the following tax returns will be needed:

• Federal Income Tax Returns
• State Income Tax Returns
• Gift Tax Returns

Death Certificates:
Multiple, original death certificates will be needed to settle the decedent’s affairs. We advise our clients to order at least ten.

Vickstrom Law handles matters in estate planning, elder law, guardianship law, and estate administration exclusively and serves the communities in and around Worcester County.  If you have just had someone pass away, we can assist you in the administration of your loved one’s estate.  Call our offices to schedule your free initial phone consultation with Attorney Kristina Vickstrom today at 508.757.3800.

Photo credit: triosmarteaux /cc by 2.0

Sources: Kavesh, Minor & Otis and Julie Garber, Esq.

Can I Contest My Sister’s Will?

In the coming years we will see a  marked increase in the number of cases challenging the legality of a will on the grounds of mental incapacitation of the person making the will. Though the reason for the increase in will contests is debatable, the growing number of elders with medical issues affecting their cognition; the transfer of wealth between World War II and baby boomer generations; and the change in the traditional nuclear family certainly play a role.

Mary lived alone on a large estate for fifteen years following her wealthy second husband’s death. Her only living relative was her sister, Louise. The two have been close since childhood, but in recent times the frailty of both women has led to fewer and fewer visits. Mary passed away in January after a three-year battle with endometrial cancer. Although weakened by age and sickness, often delusional and dependent on prescription medication, Mary executed a second version of her will in 2010 (unbeknownst to Louise) with the assistance of her live-in caregiver, Kate. When the terms of Mary’s will are administered, Louise discovers that she is to receive just $1,000 while Kate is the primary benefactor of Mary’s $450,000 estate.

Many times, the relative of one who has recently passed believes that they were unjustly left out of a will. Perhaps due to the mental state of the deceased, the relative might believe that the deceased was delusional in granting a non-relative a financial windfall. In the above example, Louise would like to know whether she has any legal recourse to challenge Kate’s award. She feels that Kate knew about Mary’s delusional capabilities and possibly took advantage of Mary in receiving the majority of Mary’s estate, and finds it hard to believe that her sister would not have left her more. However, it is also reasonable to see that Mary might have felt indebted to Kate and wanted to provide her with a genuine token of appreciation for her services.

In order to create a valid will in Massachusetts a person must possess “testamentary capacity”. In most states, this means that the person creating the will understands the nature of the document, the worth of her assets, and her relationship with whomever she is transferring them to. Testamentary capacity requires freedom from delusion which is the effect of disease or weakness and which might influence the disposition of her property. The person executing the will needs only to be aware of her actions during the period of time she is making the will. The fact that he or she doesn’t remember it the day after does not invalidate a will.

Although wills contests arise frequently, proving that a person is without testamentary capacity is difficult because signing a will does not require a great deal of coherence nor consistency. Louise would have be allowed to contest Mary’s will in the probate court, but it likely would lead to a lot of costly litigation. Most often the disagreeing parties will negotiate a settlement to mitigate the litigation.

If a relative finds themselves in a similar position, they should contact an attorney experienced in Estate Administration to discuss the possibility of a legal claim. If you considering disinheriting an heir who might attempt to challenge a will’s provisions, speak to an experienced Estate Planning attorney about avoiding the probate process altogether through the use revocable or irrevocable trust planning.

Contesting a will is a procedural and difficult process. Yet, if you feel that a loved one lacked the mental capacity to transfer his or her estate, contact our office to discuss your options.

Estate Planning Myths Explained

Occasionally, I run across a great article written by someone else. Today is one of those days and I just had to share it with you. Clients are often confused when they come in for initial consultations and have preconceived notions about planning their estates based on things that they’ve heard from their friends, neighbors, hairdresser, etc. Most of the time the information shared is incorrect, or at least incorrectly applied to their situation. This article does a great job of debunking the most popular “myths” of estate planning.  I only added one little thought in bold below. Thank you to my colleague, Attorney Gina Barry, from Bacon & Wilson in Springfield for putting this article together…. and as far as I know unicorns are still mythical creatures.  

Certain ideas with respect to estate planning are widely accepted, yet unfortunately, inaccurate. This article will reveal and explain the most commonly stated estate planning myths. 

Myth No. 1: ‘If I have a valid will, my estate does not have to go through probate.’

Many people believe that having a will means that their estate will not have to be probated when they pass away. A will is a document that, in part, gives instructions as to the distribution of the assets in the decedent’s probate estate. The assets in the probate estate are those assets that are held in the decedent’s name alone that do not have a designated beneficiary. Thus, whether or not probate is needed is not based upon whether or not the decedent had a will; rather, it is based upon how the assets are owned by the decedent.

If the decedent left probate assets, then in order for their will to ‘speak,’ a probate estate must be opened. If all the assets held in the decedent’s name are jointly owned with a right of survivorship or have named beneficiaries, then there is no need for probate.

Myth No. 2: ‘I can give away $10,000 to as many people as I want each year, but if I give more, then I have to pay gift tax.’

This myth emanates from the gift-tax system. In 2010, the rule with respect to gift tax is that you may give up to $13,000 to as many people as you want without having to file a gift-tax return. Note that the amount that can be gifted is stated incorrectly in the myth because most people remain unaware of the ongoing increases to the allowable gift amount.

Also under the current rules, even if a gift-tax return must be filed because more than $13,000 is given to one person, the giver of the gift will not pay any gift tax until he or she has gifted more than $1 million during their lifetime. Thus, if a person has $100,000 and gives all of it away in one year to one person, they will need to file a gift tax return, but they will not owe any gift tax because the gift does not exceed the lifetime threshold.

The estate tax system is NOT to be confused with MassHealth/Medicaid planning. If nursing home care is eminent and you intend on having MassHealth/Medicaid pay for your care, gifts of any size are not allowed and can lead to MassHealth/Medicaid disqualification.

Myth No. 3: ‘I can give away assets when I enter a nursing home and still obtain Medicaid benefits.’

When faced with a nursing home bill of approximately $8,000 per month, many people wish to obtain Medicaid benefits to pay for this care. In order to obtain Medicaid benefits, an asset limit must be met; therefore, assets valued above this amount must be reduced to the asset limit before benefits will be granted. In their efforts to reduce the excess assets, many people believe that they can gift the excess assets due to the gift-tax exclusion explained in Myth No. 2. While a person can make a gift of up to $13,000 per person in 2010 without filing a gift tax return, the Medicaid program is not governed by the gift tax rules.

The Medicaid program imposes a penalty when any assets are given away within five years of the application for benefits, except in very specific circumstances. This penalty results in being unable to obtain Medicaid benefits for at least five years after such a gift is made. Thus, a gift of any amount will typically result in a penalty being imposed even if the gift does not have to be reported on a gift-tax return.

Myth No. 4 – ‘If I need nursing home care, Medicare will pay for my care.’

In part, this myth is perpetuated due to the fact that “Medicare” sounds very much like “Medicaid,” which does pay benefits for nursing home care for approved applicants. Medicare Part A will pay for medically necessary inpatient care in a skilled nursing facility, but only following a three-day hospital stay. Medicare will pay for up to 100 days of skilled nursing care or rehabilitation services. The actual length of benefits could be much shorter than 100 days if those services are no longer required.

When Medicare benefits are paid, Medicare pays 100% of the cost for the first 20 days, but only 80% of the cost of the next 80 days. Most Medicare recipients also have Medigap insurance, which will pay the balance not paid by Medicare. When Medicare benefits are exhausted, an alternative payment source is needed to pay for ongoing nursing home care.

Questions? Wondering if something you’ve heard is a ‘myth?’

 This article was originally published in Business West.

Letting Software or Online Service Plan Your Estate: Is It Worth the Risk?

There are several websites that offer customized, do-it-yourself wills and other estate planning documents. These computer-based services appear to offer the consumer a cost-effective and convenient alternative to visiting an Estate
Planning or Elder Law attorney. Or do they? Is online estate planning worth the convenience and initial savings? How do the documents created compare to those that a qualified attorney would produce?

To answer these questions, ElderLawAnswers asked two experienced Estate Planning and Elder Law attorneys to evaluate three leading online will preparation and estate planning programs: Nolo’s Online Will, BuildaWill, and LegalZoom. Their findings and ElderLawAnswers’ conclusions are presented in a five-page whitepaper that is available for free on ElderLawAnswers website.

The conclusion: “We conclude that while online estate planning could possibly work for people who have little or no property, small savings or investments, and a traditional family tree, the significant remainder of the population should not rest easy using one of these programs and should instead consult with a qualified Estate Planning attorney. In other words, in all but the most commonplace Estate Planning situations (and only an attorney can determine what is “commonplace”), do-it-yourself estate planning programs can be a risky, and often quite costly, substitute for in-person planning with an experienced estate planning attorney.”

I encourage you to read the whitepaper and see for yourself. Common issues with these type of estate plans include oversimplification. For example they do not explain the complexities of naming too many decision makers to serve at the same time, nor do they explain why a minor child or an elder parent may not be a good choice to name as an agent. They often overlook tax laws. Its important to remember that each State’s probate laws and tax laws vary. Further, mixed marriage situations are never a good fit for these programs. Additionally, users may miss powerful opportunities to sheild a child’s inheritance or plan for a special needs child. Finally, there is the issue of liability. Who do you hold accountable if a mistake was made?

In my office alone, I have several consultations per month where I assist clients in backing out of poorly drafted, do-it-yourself estate plans, and into something that makes sense for them and their families. Its very important to remember that there are no one-size-fits-all when it comes to planning one’s estate but that the utmost care should be placed in choosing the right person (Estate Planning or Elder Law Attorney) to help you, and not the right computer program.

Astor Matter Reminds Us that Trustworthiness is Essential When Nominating Substitute Decision Makers

Lately, the matter of Brooke Astor’s estate has been covered in the media. Like many people she had an estate plan in place which included a Durable Power of Attorney and Health Care Proxy, which nominated subsituted decision makers in the event she would lose the capacity to make important financial and/or medical decisions at some point during her elder years. She did not want to burden her family with obtaining a Guardianship and/or Conservatorship through the courts. She did end up suffering from Alzheimer’s disease and her son took over her financial powers. He just didn’t do a very good job…

The following is an exerpt from this week’s AZCentral.

Anyone who has signed a financial document has to be squirming a bit over Brooke Astor’s estate case.

Her son, Anthony Marshall, recently was convicted of stealing millions of dollars from Astor while she suffered from Alzheimer’s disease before her death. Although the case largely centered on a contested will purportedly signed by Astor, other estate-planning issues also came into play.

One was a financial power of attorney signed by Astor that gave Marshall authority to direct her affairs if she became incapacitated – and the means to steal from her.

The episode provides a wake-up call for people who use financial powers of attorney. These legal documents can be highly effective in ensuring that someone else will be around to handle financial matters for you if you’re alive but unable to do so – as in the case of mental incapacity.

A power of attorney can be as short as a page or much longer, depending on the detail desired. They’re often included with a trust, will, health power of attorney (addressing medical issues) and other estate-planning documents.

For all the benefits of using a power of attorney to avoid a potential court-supervised conservator situation, there are pitfalls, too.

In particular, you need to trust the person whom you designate to act on your behalf. And you should make sure he or she is responsible, diligent and reasonably astute.

“They really are documents that people should pay attention to,” said Denise McClain, a financial principal and attorney at wealth-management firm Lowry Hill in Scottsdale. “You’re potentially passing along a lot of power.”

Michael Jackson’s Estate Plan Manages to Keep Some Private Matters Private

The media has been covering Michael Jackson’s death quite extensively and many regularly scheduled programs will not air tomorrow as his memorial service is broadcast live around the world. News outlets are digging, trying to answer many questions surrounding his untimely passing, including estate and guardianship issues involving his children. However distasteful, it isn’t surprising that Michael Jackson’s Will was made available for anyone to see online within hours of it being filed with a Los Angeles Probate Court.

Ever wonder what a pop icon’s Will looks like?

Shocked that such an intimate document is available for public reading? Don’t be. Wills become public documents when they are filed at the local Probate Court.

So what did we learn from his Will?

• His ex-wife, Deborah Rowe received nothing,
• He named his mother, Katherine Jackson, to act as guardian for his children and their estates  if he died while they were minors.
• The successor guardian, if Katherine can’t serve in that role, is none other than Diana Ross!! (Huh?!)

So what do you do if you don’t want all your estate planning wishes to be read and scrutinized by anyone, including the media? How do you maintain your privacy? You create a Revocable Living Trust in conjunction with your Will. Michael Jackson did and you don’t need to be a superstar to have one drafted to protect your family.

Jackson created the Michael Jackson Family Trust, which is referenced in his Will. Both were signed in 2002. These are the most recent estate planning documents Jackson executed that have been presented to the court, to date. There is a chance that more recent documents will surface in the near future. In Massachusetts, anyone holding a Will of a deceased person has 30 days to file it with the appropriate Probate Court.

So how much money did Michael Jackson have? Who gets his real estate and assets under the Will? His entire estate was  transferred to the Michael Jackson Family Trust, a private document that is not scrutinized by anyone other than his named trustees.  Arguably, not even the Probate Court in Massachusetts would be involved had he been a resident. Logically, his three children are would-be beneficiaries, but no one knows for sure because the Trust is a private document.

So, despite all the media kerfuffle that has occured since Michael Jackson’s passing, the King of Pop has managed to keep some private matters private through proper estate planning, something even the average American should consider.

So when is a Will not enough? Want to know if a Revocable Living Trust is right for you and your family? Set up a consultation with Vickstrom Law to review your family’s specific needs.