‘Till Death Do Us Part, Too: Estate Planning Tips for Commitment Without Marriage

Advice columnist Ann Landers once observed that “love is friendship that has caught fire.” If that’s true, there are thousands of ways for that blaze to unfold. For many Americans, such devotion and passion do not need to be neatly formalized as marriage.

In fact, our cultural norms are shifting, and quickly. Consider the following:

  • Per the U.S. Census Bureau, approximately 112 million people in the U.S. are unmarried;
  • 45 percent of our country’s households are “unmarried households.”
  • In 2013, the CDC found that “cohabitation [without marriage] is now a regular part of family life in the U.S.”

Unfortunately, the law has not kept up with these societal trends. If you and your significant other love each other but don’t want to tie the knot, you need an estate plan that takes into account your specific situation while protecting you both, along with any other family members or loved ones you wish to include.

Estate planning for married couples can seem pretty straightforward because it relies on long-standing, proven legal and tax strategies. Unmarried couples, however, may need to take a more individualized approach in order to achieve their goals. Here are some of the documents and methods you need to consider when creating or updating an estate plan.

  1. Living Trusts

Living trusts allow you to use your assets while you are alive and then bypass the probate process when transferring property to loved ones after you die. A trust can also keep your business out of the public record, and it can empower someone else to handle your finances if you become unable to do so. Even though trusts tend to cost more up-front than related solutions, the benefits they provide cannot be easily or reliably replicated with other planning options. On balance, a trust is the superior tool for virtually everyone; it should be the cornerstone of almost any comprehensive plan, especially for couples who have not formalized their relationships with a legal marriage.

  1. Wills

A pour-over will can be an effective “backup” and compliment to a revocable trust. When you die, your assets get funneled into (or “poured-over” into) your trust and then distributed to your beneficiaries per the terms and instructions of that trust. The pour-over will keeps things simple, making the process less stressful (and prone to error) for your executor and trustee. It also helps wrap up loose ends, in case you didn’t transfer every last asset to your trust before you die.

What happens if you die without a will or other estate plan? Courts refer to this as “dying intestate,” and it means that the rules that will apply to your estate will be those written into your state’s laws. These laws rarely, if ever, account for long-term unmarried partners, so a will is essential to protect the person to whom you are committed. As an unmarried couple, you simply cannot rely on the intestate laws to work for you.

  1. Beneficiary Designations

Most retirement accounts and many other types of accounts allow you to designate a “beneficiary,” or a person who will automatically receive what’s in the account when you die. Make sure you update your beneficiaries on your 401(k), IRA, or other retirement accounts, as well as on life insurance and other documents. Depending on how your trust is designed, your circumstances, and your goals, you may name one or more trusts as the beneficiary rather than an individual person.

  1. Power of Attorney, Designation of Health Care Surrogate, and Similar Documents

These documents allow you to designate your significant other as the person who has the right to make certain types of decisions and sign documents on your behalf if you become incapacitated. If no such power exists, the decision-making task typically passes to a close blood relative and typically also requires a court proceeding called a guardianship or conservatorship, depending on the type of help you need and what state you in live. Your lawyer can help you determine which powers should be covered by documents like these to ensure that enough authority is granted while still providing protection against unauthorized actions.

Whether you’ve been living with a life partner for decades, and you’re now eyeing retirement options; or you’re just beginning a family with a person who has not formally and legally been recognized as your wife or husband, you probably have questions. How should you protect yourself and family financially as you get older? What can you do to enshrine the values you hold dear for the next generation? What if an unwanted event happens, throwing you and your partner off balance — what contingency plans can be put in place?

Our experienced estate planning attorneys can help you identify a strategy to get the peace of mind you need. Please call our office today at 832.408.0505or email us to schedule a private consultation.

Do you really need a trust?

Although many people equate “estate planning” with having a will, there are many advantages to having a trust rather than a will as the centerpiece of your estate plan. While there are other estate planning tools (such as joint tenancy, transfer on death, beneficiary designations, to name a few), only a trust provides comprehensive management of your property in the event you can’t make financial decisions for yourself (commonly called legal incapacity) or after your death.

One of the primary advantages of having a trust is that it provides the ability to bypass the publicity, time, and expense of probate. Probate is the legal process by which a court decides the rightful heirs and distribution of assets of a deceased through the administration of the estate. This process can easily cost thousands of dollars and take several months to more than a year to resolve. Or course, not all assets are subject to probate. Some exemptions include jointly owned assets with rights of survivorship as well as assets with designated beneficiaries (such as life insurance, annuities, and retirement accounts) and payable upon death or transfer on death accounts. But joint tenancy and designating beneficiaries don’t provide the ability for someone you trust to manage your property if you’re unable to do so, so they are an incomplete solution. And having a will does not avoid probate.

Of note, if your probate estate is small enough – or it is going to a surviving spouse or domestic partner – you may qualify for a simplified probate process in your state, although this is highly dependent on the state where you live and own property. In general, if your assets are worth $100,000 or more, you will likely not qualify for simplified probate and should strongly consider creating a trust. Considering the cost of probate should also be a factor in your estate planning as creating a trust can save you both time and money in the long run. Moreover, if you own property in another state or country, the probate process will be even more complicated because your family may face multiple probate cases after your death, one in each state where you owned property – even if you have a will. Beyond the cost and time of probate, this court proceeding that includes your financial life and last wishes is public record. A trust, on the other hand, creates privacy for your personal matters as your heirs would not be made aware of the distribution of your assets knowledge of which may cause conflicts or even legal challenges.

A common reason to create a trust is to provide ongoing financial support for a child or another loved one who may not ever be able to manage these assets on their own. Through a trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide. Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction, or encouraging irresponsible behavior that you don’t find desirable. A trust can also come with conditions that must be met for the person to receive the benefit of the gift. Furthermore, if you ever become incapacitated your successor trustee – the person you name in the document to take over after you pass away – can step in and manage the trust’s assets, helping you avoid a guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a serious, chronic illness. Unlike a will, a trust can protect against court interference or control while you are alive and after your death.

Trusts are not simply just about avoiding probate. Creating a trust can give you privacy, provide ongoing financial support for loved ones, and protect you and your property if you are unable to manage your own assets. Simply put, the creation of a trust puts you in the driver’s seat when it comes to your assets and your wishes as opposed to leaving this critical life decision to others, like a judge. To learn more about trusts – and estate planning in general, including which type of plan best fits your needs – Contact our office today at 832.408.0505

Baltimore Register of Wills Can’t Find Her Father’s Original Last Will, Will Your Family Be Able to Find Yours?

While it’s not unusual for an original last will and testament to be misplaced, it is when your daughter happens to be the Register of Wills for Baltimore City. 

 What is a Register of Wills?

 In Maryland, the Register of Wills is an elected official in each county and the City of Baltimore who is responsible for overseeing the administration of the estates of deceased persons during the probate process.  As an added benefit, each Maryland Register of Wills provides safekeeping for the last will and testaments of living persons.

 Why is it Important to Locate an Original Last Will?

 Belinda Conaway became the Register of Wills for Baltimore City in December 2014 after her stepmother, Mary W. Conaway, held the office from 1982 through 2012.  After Belinda’s father, Frank M. Conaway, Sr., died in February 2015, court records indicate that the family was unable to locate his original last will and testament but did find a copy of a will he signed in 1999.  The 1999 will left Mr. Conaway’s estate equally to his children, Belinda and Frank M. Conaway, Jr.  In March 2015, Belinda filed a petition requesting that the copy of the will be admitted to probate.  She stated in her petition, “This copy was found among the personal papers and I have not been able to locate the original.” 

 Ironic, isn’t it?  Fortunately in this case, Mr. Conaway’s children agreed that the 1999 will was in fact their father’s last will and the probate judge admitted the copy to probate.  But this may not be the case in your situation.  Sometimes after an original will goes missing and a copy is found, family members will disagree about whether it is in fact the deceased person’s last will.  If this is the case, then the copy may be overlooked in favor of an older original will that has been located or state laws that dictate who inherits when there is no will (known as “intestacy laws”).

 This is why it is so important for your loved ones to be able to find your most-recent original last will – because without it, the laws of your state may presume that you intended to destroy your will and a copy of it will be viewed as worthless.

 Who Knows Where to Find Your Original Will?

 Do you know where your original will is located?  Do your loved ones know where your original will is located?  While your family members certainly don’t need to know what your will says, they do need to know where your original will is being stored. 

 On the other hand, if you’re uncomfortable letting family members know where to find your original will, then let someone you trust – such as your attorney, accountant, or financial advisor – know where to find your original will.  Otherwise, your family may end up in front of a probate judge and your true final wishes may be overlooked. Contact our office today at 832.408.0505 to see how we can help you!

 

3 Simple Ways to Avoid Probate Costs

The bad news: probated estates are subject to a variety of costs from attorneys, executors, appraisers, accountants, courts, and state law. Depending on the probate’s complexity, fees can run into tens of thousands of dollars.

The good news: probate costs can be reduced by avoiding probate. It’s really that simple.

Here are three simple ways to avoid probate costs by avoiding probate:

 Name a Beneficiary. The probate process determines who gets what when there is no beneficiary designation. So, naming a beneficiary is the easiest way to avoid probate. Common beneficiary designation assets include:

  • Life insurance
  • Annuities
  • Retirement plans
  1. Create and Fund a Revocable Living Trust. A revocable living trust owns your property, yet you remain in charge of all legal decisions until your death. After your death, your named trustee manages your assets – according to your A trust works well if properly created and funded by an experienced estate planning attorney.
  1. Own Property Jointly. Probate can be avoided if the property you own is held jointly with a right of survivorship. There are several ways that you can establish joint ownership of property such as:
  • Joint tenancy with right of survivorship – ownership simply transfers to other tenants upon your death;
  • Tenancy by its entirety – is a form of joint tenancy with right of survivorship, but only for married couples in some states;
  • Community property – property obtained during a marriage in some states;

State laws play an important role here. We can help you determine which form of joint ownership, if any, is a good fit for you.

 We Have the Tools to Help You

Contact our office today at 832.408.0505. We’ll help you decide whether it makes sense to avoid probate in your particular case and, if so, the best way to do so.

How to Buy Life Insurance Like a Pro

Life insurance is a purchase only made once or twice in a lifetime, so it is common to be unaware of the ins and outs of policy protection. The potential pitfalls are significant, however, so review the following tips before purchasing a life insurance policy.

Get the Right Type and Amounts

Life insurance policies are generally sold by highly commissioned sales people or by order takers. In either case, you need to be sure you are in the know, before you buy, lest you get sold a policy or amount you don’t need, or you overlook the types and amounts that are right for you. We can help you make objective decisions about your insurance needs, with no commissions payable to us, so you know you’re getting our 100% on your side analysis.

Don’t Name a Minor as a Beneficiary

If you’ve named a minor child as a beneficiary, or even a secondary beneficiary, after your spouse, you could be creating double trouble. First, your life insurance would have to go through a court process and subject to the control of a financial guardian, and then second, whatever is left would be distributed to your minor child when he or she turns 18.

You can easily avoid this by naming a trust as beneficiary of your life insurance, thereby keeping your life insurance out of court and ensuring your child doesn’t receive control until he or she is ready. Plus, then you get to decide who takes care of the life insurance money you are leaving behind, until it’s distributed to your child. And, you can even build in protection against your child’s future divorce, or any creditor issues.

Term Insurance to Fund Divorce Settlements

If you receive child support and alimony, insist that your spouse have a  term life insurance policy to guarantee you are able to collect on your settlement, even if your ex-spouse dies while still paying out your divorce settlement.

Compare Quotes for Whole and Term

Experts suggest most people only need life insurance to cover their working years and while they raise a family. Term life insurance is typically affordable and covers you when you need it most. Permanent insurance is best when you know you will have estate taxes to cover OR if you want to use insurance as an investment vehicle with guaranteed returns, but often big commissions to make up in the early years of the policy. One of the services we provide to our member clients is to review all insurance policies, both in place and those being considered, to provide objective evaluation before you buy.

Don’t Overlook Living Benefits

A living benefits rider could allow you to access funds if you were diagnosed as terminally ill or with a chronic and debilitating condition.

If you are ready to purchase a life insurance policy that works for you, start by sitting down with an  Estate Attorney. As your Estate Attorney, we can walk you step by step through creating a financial plan that will help you provide for your family no matter what. At GP Schoemakers, PLLC, we offer Family Wealth & Legacy Planning Sessions that help you protect and preserve your wealth for future generations. Before the session, we’ll send you a Family Wealth & Legacy Inventory and Assessment to complete that will get you thinking about what you own, what matters most to you, and what your wishes are when you die.

This article is a service of Gratia P. Schoemakers, Estate and Business Attorney. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth & Legacy Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 832.408.0505 to schedule a Family Wealth Planning Session and find out how to better protect your family.

Tax Lessons to be Learned from Celebrity Estate Plans

A celebrity’s image and likeness can continue to produce considerable income after death. This type of intellectual property is considered part of your estate, and the IRS can tax its value. In the case of pop star Michael Jackson’s estate, that recently meant an IRS bill to the tune of $64.5 million, years after his death, which is about 40% of his likeness’ valuation of $161 million.

Michael Jackson’s estate planning fail could certainly have been avoided by using one of these estate-planning strategies that minimize the taxable value of a person’s image and likeness.

Charitable Bequests

Robin Williams made a charitable bequest of his image and likeness to a foundation. It was set up in his name, allowing his estate to get a charitable deduction against the estate tax.

Time Bans

Williams also established a 25-year time ban to prevent any future exploitation of his image. A time restriction lowers the value of a celebrity’s name and likeness because the value is typically lower at the end of the ban than at the date of death.

State of Residence

Some states don’t recognize inheritable postmortem rights to likeness. This means the estate can’t profit from it. Consider your state’s laws when estate planning so you can benefit from any available tax breaks.

Consult with Multiple Appraisers

Get one appraisal and have another appraiser act as a consultant to point out where there might be room to argue against the valuation.

Celebrity estate planning fails grace the cover of tabloids and news sites as soon as weeks after their deaths. Fortunately, they provide valuable estate planning lessons for the rest of us. While their fails may be more expensive, even a small fail can have a huge impact on your family’s future and well-being. Don’t leave your family holding the bag, especially an empty one.

Your family is worth the time for you to have a Family Wealth Planning Session with us so you can make empowered, informed choices for the people you love. As your Estate Attorney, we can walk you step by step through a process that will minimize your tax liability and keep your family out of court and out of conflict.

Our Family Wealth & Legacy Planning Session guides you to protect and preserve what matters most. Before the session, we’ll send you a Family Wealth & Legacy Inventory and Assessment to complete that will get you thinking about what you own, what’s most important to you, and what you can do to ensure your family is taken care of and you’ll leave the Session with absolute clarity about how to make the best choices for your life and death.

This article is a service of Gratia P. Schoemakers, Estate and Business Attorney. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth & Legacy Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today at 832.408.0505 to schedule a Family Wealth Planning Session and find out how to better protect your family.

Leaving Without a Plan: Prince Didn’t Leave a Will & Here’s Why You Should

Even after death, celebrities are highly publicized for their mistakes, many of which we make ourselves. April 21, 2016, superstar musician Prince suddenly died, leaving no will, and the management of his substantial estate fraught with legal complications and added costs.

It’s easy to assume that the wealthiest among us have all their ducks in a row, but it’s hard to judge someone—even a celebrity—for neglecting something like the creation of a will. Until you stop to seriously think about what will happen when you die, creating a will can seem like an unnecessary and morbid task, certainly not something you casually check off your to-do list. Nevertheless, the importance of having a will simply cannot be stressed enough. Below are just a few of the reasons why everyone should have a will, no matter their wealth, age or health.

You can name the person you want to manage your estate in your will. You will get to choose someone you trust and make sure they have all the knowledge they need to ensure your wishes for your estate are carried out.

You can decide who your beneficiaries will be. You can also disinherit those who would normally stand to inherit from your estate if you choose. Your wealth and possessions are yours; a will provides a legally enforceable way to ensure they go to the right people.

You can ensure your minor children will be raised by the people you want, for the long-term. If you have minor children, you should name a legal guardian and include provisions for their care in your will. But, don’t rely on a will alone because it won’t address the immediate care of your children if something happens to you, it won’t provide for your children’s care in the event of incapacity and it won’t ensure someone you would never want to raise your kids could not.

You can leave gifts and donations to your favorite charities or people you love beyond your legal family. Without a will, your estate would pass to the people designated to receive it under the law, and that may not be who you would want to receive everything you own. Creating a will ensures you get to choose who gets what.

Important as they are, a will can only do so much. For example, a will does not keep your family out of court.

And, a will does not ensure your kids will never be taken out of your home, if something happens to you.

And, a will does not keep your family out of conflict.

A will is only one part of a comprehensive estate plan that will protect and enforce your wishes when you die.

If you are ready to take the right steps toward making informed, empowered and educated decisions for the legal and financial future of the people you love, start by sitting down with a Personal Family Lawyer®.

As your Personal Family Lawyer®, we will walk you step-by-step through the creation of an estate plan that will protect what you value most. Our Family Wealth Planning Session™ helps you protect and preserve your wealth for future generations. Before the session, we’ll send you a Family Wealth Inventory and Assessment to complete that will get you thinking about what you own, what matters most to you and what you want to leave behind.

This article is a service of Gratia P. Schoemakers, esq. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth Planning Session™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Begin by calling our office today to schedule a Family Wealth Planning Session.

 

Avoid these 10 Common Estate Planning Mistakes

As a Personal Family Lawyer®, I see many of the same estate planning mistakes made time and again by people who either fail to plan properly or who use “do-it-yourself” estate planning websites or forms in an effort to save money.

Without professional guidance, this can cause more problems for your heirs and end up depleting estate assets by far more than what you could potentially “save” by doing it yourself online.

A qualified estate planning attorney or Personal Family Lawyer® can help you avoid these 10 common estate planning mistakes:

  1. Failure to leave any written documentation of your assets, including a list of your online accounts and passwords
  1. Failure to let family members know where to find important estate planning documents
  1. Failure to name a guardian for minor children or choosing a guardian who lives far away without planning for temporary, local guardianship (solved with a comprehensive Kids Protection Plan®)
  1. Failure to name recipients for your personal possessions
  1. Failure to designate beneficiaries for retirement and other financial accounts
  1. Failure to name secondary beneficiaries
  1. Failure to name alternative trustees or executors
  1. Failure to properly fund or title assets to any trusts you have established
  1. Failure to update your estate plan as life circumstances change
  1. Failure to create an estate plan of any kind and instead leaving it to the court system to decide how your assets will be distributed

If you’d like to learn more about how to avoid common estate planning mistakes that could cost your heirs dearly, call our office today to schedule a time for us to sit down and talk.

Spring Cleaning For Your Legal and Financial Affairs

Spring has officially sprung and that means it’s spring cleaning time. Shake out the rugs, clean out the cupboards, and get your legal and financial affairs in order.

For plenty of folks, it’s easy to know what to do when it comes to home organization, but the idea of legal and financial ordering can be complex and confusing.

This article will give you a few places to start:

  1. Review Your Beneficiary Designations

Request updated beneficiary designation forms from your life insurance account and retirement account custodians. Look at the form and identify whether you have a minor designated as either a primary or contingent beneficiary. If you do, those assets will be tied up in Court, unnecessarily, and may not be available to the people you’ve named to care for your children.

Consider designating your life insurance and retirement accounts to be distributed to a trust for the benefit of your heirs, providing Court and creditor protection, and ensuring your children do not inherit money before they are properly prepared.

  1. Update Your Family Wealth Inventory

Your Family Wealth Inventory is where we document the assets that you own, so that in the event you become incapacitated or when you die, your family will know how to find what you own.

Without an updated Family Wealth Inventory, your assets could be lost to the state department of unclaimed property. There’s currently FOUR (4) billions of dollars of assets in our state department of unclaimed property because most people do not leave a clear record of their assets at the time of their incapacity or death.

  1. Consider If You Need to Name New Guardians (Long or Short-Term)

Review your guardian nomination designations. Have you named guardians for both the short-term (local) and the long-term (people you would trust to raise your kids fully)? If so, do they need to change? Is there anyone you would wish to exclude? Does the ID card for your wallet need to be updated? This is the time to check.

  1. Check Out the Title to Your House

Get a copy of the deed to your house and make sure that your trust is listed as the owner on the deed, if you want your house to stay out of court in the event of your incapacity or death. If you see your personal name on the deed, and there is not a trust listed, you can be sure that would result in your house having to go through the court process of probate in the event of your death. If you don’t want that, now is the perfect time to spruce up your planning.

  1. Come In and Meet With Us For a Family Wealth Planning Session

Last, but far from least, this is the perfect time of  year to come in and meet with us for a Family Wealth Planning Session, whether you’ve done planning in the past or not.  We will have a 2-hour working meeting that will get you more financially organized than you’ve likely ever been before (unless you’ve already done planning with us) and give you the confidence of knowing you’ve made the most empowered, informed and educated legal and financial decisions for the people you love.

This article is a service of Gratia P. Schoemakers, Personal Family Lawyer®. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth Planning Session™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love.

Call our office to schedule a time for a private conversation about your family wealth via a Family Wealth Planning Session, where we can identify the best ways for you to ensure your legacy of love and financial security for your family.

Are You Leaving Your Retirement Account at Risk Due to Poor Planning?

You’ve spent your entire life building up your retirement account. It may even be the biggest asset you’ll leave behind for the people you love.

If that’s the case, you may want to consider creating a special trust designed specifically to receive your retirement account assets in the event of your death.

If you leave your retirement account to the people you love outright, simply by naming them as beneficiaries on your retirement account rather than through a special trust, here are the risks:

  1. Some studies indicate 80% of retirement account beneficiaries immediately liquidate the account and frivolously spend the assets (and on top of using the assets in ways you may not agree with, they also lose significant tax benefits for these assets you worked so hard to create);
  2. If your beneficiary is married and does not properly handle the retirement assets you leave behind, and then gets divorced, your hard-earned assets could end up in the hands of the future ex-spouse of your beneficiary;
  3. If you are in a second marriage situation with children from a prior marriage, you may be setting your spouse and children up for conflict after you are gone, due to the way you have planned (or not planned) for the passage of your retirement account.
  4. If your beneficiary is ever in a situation where he or she has creditors or may have to file bankruptcy, and you’ve left your retirement account to him or her without a special trust, your retirement account would go to satisfy those creditors first.

Here’s the good news, it’s not hard to protect your retirement account for your beneficiaries with the right planning. We use a variety of special trusts to ensure the retirement assets you’ve worked so hard to build up throughout your life are passed on to the people you love so they are totally protected from a future divorce, creditors, bankruptcy and so that they do not create conflict for your loved ones.

If you have a significant retirement account whose designated beneficiary  is your spouse or children, or even your regular revocable living trust, call us to have your planning reviewed immediately.

This article is a service of Gratia P. Schoemakers, Personal Family Lawyer,®  who develops trusting relationships with families for life.  If you’re ready to begin planning what you’d like to happen in case of unfortunate emergency, or even your death, schedule a Family Wealth Planning Session™ today. We can help you make plans for how you want to provide for your loved ones when you can’t be there. Contact us today to schedule an appointment to discuss your future and we’ll identify together how to best prepare for you and your family.