Husband has no children; Wife has prior marriage child. Husband/Wife estate 50/50 investments/real estate and exceeds estate exemptions. Husband wants control of estate, all assets available for his lifetime needs, to minimize his taxes, is against any gifting while alive, against irrevocable trusts. Husband wants his estate to go to Wife and then her child but only if he doesn’t need it all (or changes mind). Husband is Wife’s first priority but Wife wants child (and grandchildren) to inherit from Wife’s estate, after Husband and Wife die. In AB trust, after Wife dies, Husband can use testamentary power of appointment to reallocate assets between survivor and AB trusts, thus changing Wife’s bequests to child. Is AB trust right choice to ensure Wife’s child’s inheritance if Wife dies first? What other trust(s) or provisions should Husband and Wife consider to meet both their desires?

One way to answer the question is to invoke a remarriage provision in the trust. A remarriage provision states that the assets stay in the trust. In the event surviving spouse remarries the assets in the trust would be locked up, unless the surviving spouse enters into a pre marital agreement with the new spouse. Depending upon the language you want to use, the surviving spouse must protect the assets for the benefit of the surviving children and/or grandchildren. The assets could not be used to benefit new spouse.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

You’ve heard all the arguments in favor of estate planning, you know it’s the right thing to do, you want to get your planning done… you just aren’t sure how to get started. This is understandable; estate planning can feel like an overwhelming endeavor when you’re presented with everything at once. The trick to getting started with your planning is to take it one step at a time.

Write down your goals. You may have a number of intertwined goals for your estate plan (this is especially true for blended and multigenerational families), or one simple-but-important goal such as “ensure my minor children have a place to go” or “keep the family business intact.” Knowing your goals from the outset will make all subsequent decisions much easier.

Make a list of the people you trust. Throughout your estate plan you’ll be nominating people to take over financial, healthcare, and guardianship responsibilities if something happens to you. Have a rough list of people you would trust in these roles. Begin with your initial goal and go from there. For example, if your initial goal was guardianship of minors, make a list of people you would trust with the care your child, and move from there to financial decision-makers, etc.

Make a list of people you don’t trust. If you’re having trouble coming up with people for the list above, it sometimes helps to consider the people you would NOT want to be responsible for your child, your finances, or your healthcare. Write down those people and work backward from there. If your kids must be kept from crazy Uncle Joe at all costs, would your cousin Emily be an acceptable alternative, even if she does have a different parenting style?

Know your assets. Make a list of all your assets and their approximate values. This will help your estate planner determine what kind of asset protection you need in your plan. Assets include:

• Your Home
• Investment/Vacation Property
• Bank Accounts
• Savings/Investment Accounts
• Retirement Accounts
• Life Insurance
• Family Owned Business
• Etc.

Bring In the Professionals. Estate planning is a very technical process, and the laws may frequently change, so you’ll definitely want professional help with the details of the process. The good news is that now that you’ve completed the beginning steps, the follow-through with your chosen professional advisor will be a snap! If you already have a relationship with a trusted attorney, insurance agent, financial advisor or CPA you’ll want to start there. Let that person know your goals and that you’re ready to begin planning in earnest; he or she will be able to guide you onto the next steps, or give you the name of an estate planning professional who will help you build your ideal plan.

Although it looks overwhelming from the outset, estate planning is really just a series of small steps, each of which leads you to the achievement of your ultimate goal: Preserving your assets and protecting your loved ones. Now that you know it’s so easy… what are you waiting for?

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There are five common myths that frustrate all estate planners—particularly because we know that not only are they patently untrue, but also because their continued circulation can be harmful.

1. Estate Planning is only for rich people. This is probably the single most common estate planning myth there is—and it is a myth. During a normal year the first $1 million dollars of your estate would transfer to your beneficiaries tax-free. (This is also the expected exemption amount for 2011.) By this standard it certain does seem that only “rich people” need estate planning, but when people add up the value of their home, their life insurance, savings, retirement account, etc., etc., etc. they often find that they are much closer to being a “rich person” than they thought. Not only this, but as we’ll get into in more detail below, estate planning is not only about saving on estate taxes, it’s also about controlling your wealth and protecting your own needs when the unexpected occurs.

2. “I have plenty of time.” AKA: Only old people need estate plans. First of all, just because you’re young doesn’t mean bad things can’t happen to you. But you know this, and anyway, this post is not about fear. Unexpected tragedies aside, an estate plan is useful even when you’re young because an estate plan is not just about death. A good estate plan will include not only a will, but also a healthcare directive and HIPAA Authorization (both of which are useful if you find yourself facing a surprise stay in the hospital), Power of Attorney documents (which you may need if you ever travel outside the country or are otherwise unable to sign for yourself on financial or legal documents), and legal documents relating to minor children (such as medical authorizations—an essential document if you leave your minor child with a babysitter for any extended period of time.)

3. Married people don’t need estate plans. While it is true that a married person with straightforward wishes for the distribution of their property has less need of estate planning, it does not necessarily follow that they can skip estate planning altogether. Under normal circumstances, any jointly held property will pass to the surviving spouse upon the death of the first spouse… But what happens if the surviving spouse gets re-married? What about the property you would specifically like to go to your children, or to your parents or siblings? And what if both you and your spouse die together? These are the reasons why even married people should consider drawing up a simple plan.

4. All I need is a quick will and I’m done. A quick will is certainly better than no will. And if you want to be technical, you don’t even need a quick will; after all, your state of residence has a plan already in place for you. The problem is that it may not be the plan you want. There is a saying that “anything worth doing is worth doing well.” This goes for wills (or any other legal document) as well. If you want the basics you can have the basics. But if you want the best, you’re going to need to spend a little more time on it.

5. Estate Planning is only about money. Although money is often one of the main motivating factors behind creating an estate plan, money is absolutely not what estate planning is all about. Estate planning is about people. It’s about your family and doing what’s right for them. Estate planning is not just about saving your family from estate taxes, or making sure Junior gets the house; it’s about leaving them peace of mind. A well thought-out will or trust saves them from a lengthy probate process, but also reassures siblings that they are doing what mom or dad really would have wanted. And a memorandum of intent gives you the opportunity to express the things that sometimes cannot be expressed during life. An estate plan is full of documents designed not just to save you or your heirs money, but to allow you to express your wishes and values even after your death. Estate Planning is about more than just money—it’s about family, legacy, and love.

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When it comes to family matters, women are often the head (and sometimes the sole member) of the planning committee. Vacations, dinner parties, school activities and celebrations… many of these wouldn’t happen at all if the women of the family didn’t take the lead. Estate Planning tends to be no different: Many first phone calls, appointments, and attendance at estate planning or elder law seminars are initiated by women. However, studies suggest that this tendency in women to plan ahead may not apply to financial planning.

A recent article from CBS news suggests that although women are actively involved in family and household finances, they are less likely to be involved in long-term financial decisions. According to the article, although many women “know how to spend and get by on a short term basis… they have a time getting a grip on their long term saving and planning.” Of course this is a generalization, and won’t apply to everyone; but considering the importance of the topic, it is definitely a worthwhile subject for discussion.

Here are a few statistics to consider that impact women and their long-term financial decisions:

• Older women (65+) outnumber older men by 22.4 million to 16.5 million. (Administration on Aging)
• Poverty rates are higher among older women than older men by 20.4 to 13.1. (U.S. Census Bureau)
• The median weekly earnings of full-time wage-earning women is $657, or 80 percent of men’s $819. (U.S. Dept. of Labor)
• Not to mention that on average, it is the woman of the family who will end up putting her career on hold for caregiving duties at various times in her life (either to care for young children or aging parents.)

Put all of this together and it means that women need to take control of their finances, not the other way around! Luckily, this may not be as difficult as you think. The CBS news article mentioned above has some suggestions on how to take charge of your finances; but beyond that, planning your estate can be a huge step toward planning for your financial future as well, because any estate planning includes taking stock of of your financial assets—including savings accounts, retirement assets, individually owned assets as well as those owned jointly by a married couple.

We encourage women (and their families) to let their estate planning contribute to their financial future—it’s not just about how your assets will be distributed after your death, but also what steps you’d like to take to preserve those assets during your lifetime.

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They insurance settlement in question was supposed to go towards the burial of my mom, but my adopted sister is unwilling to sign the papers releasing her interest on the insurance policy, of which I am the executor.

I am sorry for your loss.

I have to give you a lawyer’s answer. It depends. You can always sue…the question is whether or not you will prevail.

I am not trying to be cute. Unfortunately many estate plans are incomplete or not done properly. Even though your mother wanted the proceeds of the insurance policy to go toward her funeral, it doesn’t mean that is what is going to happen.

If you mother had a life insurance contract with a funeral home, the proceeds would have to go towards her funeral and burial. However, if she had an insurance policy payable to your adopted sister, your adopted sister can do whatever she wants with her share of the money. She may have a moral obligation to pay the bill, but not a legal obligation. Her share belongs to her.

As executor you have the right to control all of the assets that are in probate. You do not control the proceeds of life insurance unless the beneficiary of the policy is the probate estate.

Check with your probate attorney to be certain.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

We write often on our blog about specific pieces of the estate planning whole: elder law, retirement planning, estate administration, etc… But sometimes it’s important to pull back and look at the big picture—to remind ourselves why we’re doing all this in the first place. And the plain truth is that there is one main reason we do this: Love.

Now, “love” may sound sappy and sentimental, but when it comes down to it love truly is the only reason we would spend time and money thinking about the unpleasant subject of death, and planning for a time that we won’t be around to enjoy.

Estate Planning Ensures Your Minor Children Have a Home

Part of creating your estate plan includes nominating guardians for your minor children. Without this nomination your children are at the mercy of the court should anything happen to you. Estate planning also allows you to ensure that your minor children and their guardians have the financial security they need to make a smooth transition during a difficult time.

Estate Planning Preserves Sibling Relationships

There are fewer things more stressful to a family than the death of a beloved parent. And it is at this time more than any other that fights are liable to break out between normally loving siblings: Fights over what to do for mom’s funeral, over who gets treasured heirlooms, over who dad would have wanted to distribute the estate. All of these fights can be easily avoided by creating an estate plan that spells out your wishes in clear and loving terms.

Estate Planning Allows You to Provide for Your Children and Grandchildren

You spend a lifetime raising and caring for your children knowing that someday, when you’re gone, they’ll have to fend for themselves. Creating an estate plan allows you to leave a little bit behind, a cushion your children can hold in reserve in case of emergency. An estate plan allows you to continue providing for your children even after you’ve gone.

Estate Planning Leaves an Enduring Legacy

Estate planning is not just about finances and paperwork, it’s about relationships. Creating your estate plan allows you to brush away life’s minor details and minutia and focus on what’s really important, allowing you to connect with your loved ones in a more meaningful and lasting way than ever before. Your estate plan expresses your enduring values, leaving a legacy for your family that will live on for generations to come.

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How much does “marriage” matter when it comes to estate planning? The recent California court ruling on gay marriage has thrown marriage and its meaning once again into the limelight, and has many people thinking about what marriage means on a legal level.

Anyone who pays taxes knows that your marital status matters to the state and federal government. Your marital status also impacts your rights when it comes to insurance, privacy, pensions, and even probate. For example, the property of a married person who dies without a will automatically passes to their spouse (and children)*—this is not necessarily the case for unmarried couples. Similarly, in an emergency medical situation a spouse will have access to information about his or her injured spouse, but unmarried couples do not always have this same privilege. Although there is good reason behind these privacy laws, it can be particularly distressing when couples who have lived together for years may suddenly have trouble getting medical staff to recognize their partner when a medical decision needs to be made.

Luckily, your estate planning attorney can help circumvent some of the potential problems unmarried couples may face in case of incapacity or upon death. Executing an Advanced Health Care Directive or Health Care Power of Attorney will ensure that medical personnel recognize the authority of a trusted partner to make medical decisions for you. Similarly, by creating a Will or Trust you can nominate the person you want to act as executor of your estate upon your death, and who the beneficiaries of your property will be, regardless of whether you have a marriage license or not.

The issue of marriage is one that is obviously very close to the heart, but estate planners see it on a practical level as well. In the legal world of estate planning our goal is to ensure that your wishes for end of life health care and final distribution of wealth are honored—regardless of your marital status.

*Please note: Probate laws will vary from state to state—be sure to talk to your estate planning attorney about the laws specific to your state of residence.

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My husband and I are considering adding our son (he is married) as joint owner to our banking accounts in the event we should become ill or die. Would him being on our accounts be considered his and his wife’s personal property? If they would divorce would she be entitled to half of our accounts? We do not wish to set up a living trust since we do not own real property.

I think you should reconsider doing a trust. A trust is a very effective way to accomplish your objective of having your son pay the bills, without giving anything to his wife right now. You don’t say if you have any other children. If you have other children and you put his name only on the account, you may be disinheriting your other children.

If you don’t want to prepare a trust, there are other choices. The issue is not what happens if you die. You can do a payable on death option with your bank. The bank would give the account to your son at the death of the second of you to die. The problem is what happens if you become ill. You will need him to help you pay your bills.

If the account is in his name, he becomes one of the owners of the account. He has the right to take all of the cash. If you make him power of attorney instead, he can use the account to pay your bills, but the money is not his. You could make these changes the next time you go down to your branch. You, your husband and your son must be at the branch at the same time.

Think carefully about your choices.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

Many clients are shocked when they see the sheer volume of paper in a truly well-done estate plan. A trust by itself can be hundreds of pages, not to mention the other 6 to 16 documents you may or may not have—depending on your family situation. You may find that the “simple” estate plan you thought you were getting has turned into something of a size that would rival War and Peace!

It didn’t always used to be this way. The last will and testament of the great Jane Austen, for example, was only one paragraph long:

I Jane Austen of the Parish of Chawton do by this my last will I testament give and bequeath to my dearest sister Cassandra Elizabeth everything of which I may die possessed, or which may be hereafter due to me, subject to the payment of my Funeral expences, & to a Legacy of £50. to my Brother Henry, & £50 to Mde de Bigeon – which I request may be paid as soon as convenient. And I appoint my said dear sister the executrix of this my last will & testament.

Jane Austen

April 27 1817

Although this simplicity may have worked in 1817 England, it isn’t practical in the here and now. Things just aren’t that simple anymore. First of all, although Austen appoints her sister Cassandra as the executrix of her will, the will itself neglects to specify what powers are included in that appointment, leaving Cassandra effectively unable to carry out Austen’s wishes. Secondly, the will neglects to make alternative provisions—what if Cassandra had unexpectedly died before Jane? Also notably lacking (from our contemporary perspective) are any provisions for estate taxes. And finally, discerning readers may notice that the will does not include the signatures of any witnesses, something which is absolutely necessary in order to execute a valid will today (with the exception of holographic wills, which are often created in emergency situations, are entirely hand written, and do not require the signatures of witnesses.)

We all may long for simpler times, especially when it comes to something most people think will only benefit their heirs and not themselves; but many of the rules and regulations that are dismissively thought of as “hoops to jump through” are there for your best interest. They exist to protect your heirs and your legacy from fraud, misuse, greed and neglect. Far from being a chore, creating a thoughtful and legally valid will these days is actually an act of love… One might even say it’s a matter of sense and sensibility.

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All we have is a house and a few cars, part ownership in another house.

I would go one step further. The foundation of estate planning is control. Life happens. When one spouse dies it is natural for the survivor to remarry. In remarriage loyalties change. It is not good or bad. It just is.

I would recommend an Irrevocable Life Insurance Trust (ILIT) with your children from a prior marriage as the sole beneficiaries. This type of trust is designed to hold a life insurance policy. In addition, this type of rust is not changeable once it is established, so there is no risk of the assets going to anyone except your children. I would also recommend that you name one or other of your children from a prior marriage as Trustee of the Trust. They would be responsible for managing the trust and keeping the policy alive. Finally at your death, the policy proceeds are payable to your children.

This planning enables you to protect your current spouse and your children at the same time.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.