Can You Estate Plan Like George Washington?

Estate planning for those you love can dramatically change your family for generations. Did you know that in his last will and testament of 1799, George Washington detailed his vision for his legacy? He bequeathed the “use, profit, and benefit” of his whole estate to his “dearly beloved wife Martha Washington.” In addition, he forgave the debts of many of his family members, financed the establishment of a school for orphans, set aside stock for what’s now Washington and Lee University and made arrangements to care for other loved ones.

Kiplinger’s recent article, “Smart Tips for Estate Planning: Write Your Will Like George Washington Did” reports that Washington’s estate plan was more than 5,500 words—the equivalent of nine single-spaced pages.

While your estate planning may not require the same degree of detail, there is an important lesson to be learned from Washington: his writing was personal and captured his exact situation at the time and laid out his future vision. Hopefully, your own estate plan will have the same personalization. However, remember that estate planning isn’t limited to a single legal document.

It is imperative for both spouses to have a good working knowledge of a family’s intentions. Both spouses should participate in drafting the documents to avoid unforeseen complications during stressful times. It is also good for both spouses to be comfortable with the family’s financial adviser, attorney and accountant. In addition, communicating the estate plan to the couple’s children is essential.

Of course, not every spouse will take an eager interest in estate planning, and not every child will want to see the detailed disposition of assets. If this happens to you, put in place a basic protocol, such as “call our estate planning attorney.”

In addition to your last will and testament, you may want to think about a “personal statement of intent” or a “letter of wishes” within your own legacy design. This document works in concert with your will to provide your heirs with a deeper level of personalization and explanation of your rationales. This document is non-binding and typically is accessible only to the people you stipulate, such as your executor, trustee and heirs. A personal statement of intent can help to clarify the rationale behind the provisions of your will.

As you consider your estate plan, think of George and remember the foundational values of communication, clarity and customization.

Reference: Kiplinger (August 9, 2019) “Smart Tips for Estate Planning: Write Your Will Like George Washington Did”

Can a Trust Be Amended?

A son has contacted an elder law estate planning attorney now that mom is in a nursing home and he’s unsure about many of the planning issues, as reported by the Daily Republic. The article, “Amending trust easier if parents can make informed decision,” describes the family’s situation.

There is one point to consider from the start. If the son been involved in the planning from the start, in a family meeting with the attorney and discussions with his parents, he might have less uncertainty about the plan and the details.

As for the details: the parents are in their 90s, with some savings, a few annuities, a CD and a checking account. They also have five acres of land, which has their home and a duplex on it and 12 additional acres, with a rental property on it. Everything they own has been placed in a family trust. The son wants to be able to pay her bills and was told that he needs to have a power of attorney and to be named trustee to their trust.

He reports that his parents are good with this idea, but he has a number of concerns. If they are sued, will he be personally liable? Would the power of attorney give him the ability to handle their finances and the real estate in the trust?

If his parents have a revocable or living trust, there are provisions that allow one or more persons to become the successor trustees, in the event that the parent becomes incapacitated or dies.

What happens when they die, as they each leave each other their share of the assets? The son would become the trustee, when the last parent passes.

Usually the power of attorney is created when the trust is created, so that someone has the ability to take control of finances for the person. See if the trust has any of these provisions—the son may already be legally positioned to act on his parents’ behalf. The trust should also show whether the successor trustee would be empowered to sell the real estate.

Trusts can be drafted in any way the client wants it written, and the successor trustee receives only the powers that are given in the document.

As for the liability, the trustee is not liable to a buyer during the sale of a property. There are exceptions, so he would need to speak with an estate planning attorney to help with the sale.

More specifically, assuming the trust does not name the son as a successor trustee and also does not give the son power of attorney, the bigger question is are the parents mentally competent to make important decisions about these documents?

Given the age of these parents, an attorney will be concerned, rightfully so, about their competency and if they can freely make an informed decision, or if the son might be exercising improper influence on them to turn over their assets to him.

There are a few different steps that can be taken. One is for the son, if he believes that his parents are mentally competent, to make an appointment for them with an estate planning attorney, without the son being present in the meeting, in order to determine their capacity and wishes. If the attorney is not sure about the influence of the son, he or she may want to refer the parents for a second opinion with another attorney.

If the parents are found not competent, then the son may need to become their conservator, which requires a court proceeding.

Planning in advance and discussing these issues are best done with an experienced estate planning attorney, long before the issues become more complicated and expensive to deal with.

Reference: Daily Republic (Aug. 10, 2019) “Amending trust easier if parents can make informed decision”

What Is Your Goal for Heirs?

If you ask most people what their most valuable assets are, they usually say their homes, or their jobs. However, if you ask them to think about it a little more, the answers change and become more focused on people and relationships. As couples and individuals work to generate assets for their retirement and enjoyment, they start to think about the kind of legacy they want to pass to their heirs, says Think Advisor in the article “Annuities and Heirs.”

For many, the ability to leave loved ones with significant financial support is a top priority. This requires good estate planning.

Estate planning can be complex, and the laws do change. Understanding how legacy planning aligns with retirement planning is an important concept.

How do you successfully transfer wealth to the next generation?

The most common approach is to have no strategy at all. This never works well, and usually leads to an expensive estate administrative process, legal battles between heirs, high taxes and the likelihood that the inheritance will evaporate rapidly.

One legacy transfer strategy involves the use of annuities. Because these contracts come in all shapes and sizes, it’s important to understand how these investments work. Annuities purchased for wealth transfer can be set up as income streams to children or grandchildren, especially if they have stretch capabilities. Some annuities allow for greater access to principal than others, and many are designed specifically for wealth legacy planning.

Some of the control levels include:

  • Beneficiaries may choose the method of payout, from a lump sum to various withdrawal strategies.
  • A portion may be paid as a lump sum and the remainder offers a few withdrawal choices.
  • A lifetime stream of distributions is set up for a beneficiary, based solely on the client’s direction.
  • The lifetime distribution is in effect, but if the owner wants to make a change, they can be rescinded. This can only be done with certain annuities. With many annuities, once it is set, there are no changes permitted.

Talk with your estate planning attorney about the kind of legacy you wish to create for your heirs, and what methods and tools they believe will accomplish your goals.

Reference: Think Advisor (Aug. 6, 2019) “Annuities and Heirs”