Guest Article: Three Reasons You Need an Attorney for Your Will

As a service to Life Point Law blog readers, we’re always on the lookout for helpful articles from a variety of sources.  The following column comes from Missouri-based Rudy Beck, Attorney and Founder of Beck and Lenox Estate Planning & Elder Law, LLC.

Nearly half of American adults over the age of 55 do not have a will, according to a 2019 study by Merrill Lynch. These stories make headlines when a public figure such as Aretha Franklin, Prince or Kurt Cobain passes away without a will — but the truth is that failing to prepare an estate plan can have devastating consequences for any family.

Long ago, a person could handwrite their own will without consulting an attorney, and that will was honored. As taxes and financial tools have continued to evolve, Estate Planning is no longer the “D-I-Y project” it once was. The consequences of drafting a will or trust incorrectly can be disastrous and create long-lasting problems for your heirs.

Stick to basic house projects for your D-I-Y talents, and read three real-life scenarios to help you better understand why Estate Planning is a job best left to will and trust attorneys.

The Top Three Reasons to Consult an Estate Planning Attorney for Your Will

Many people assume they do not need more than a simple will if they do not have a rock star’s massive, wealthy estate. They may even try to save time and money on attorney fees by purchasing a template for a will or buying their will online.

We have learned these individuals usually undervalue the size of their estate, or that their wishes are often more complicated than they realize.

Three of the most important reasons to consult with an attorney for your Estate Planning needs are:

  1. Simple solutions are not always the result of a simple plan.
  2. Attorneys offer an unbiased voice to ask personal, potentially difficult questions.
  3. An Estate Planning attorney can help you plan for the cost of long-term care.

The below lessons are based on real-life scenarios involving clients of our law firm.

Scenario #1: Your Simple Estate Planning Solutions Are Often Not Simple.

Doris came to our firm to discuss her will and how to prepare it for her three children. She owns a home worth approximately $180,000 and has investments totaling approximately $450,000. Doris explained that she wants to leave her house — or really, the proceeds from its sale after her death — to her children equally.

When asked about the plan for her investments, Doris said, “Don’t worry, I’ve taken care of it.”

Doris had her investments in three laddered Certificates of Deposit (CDs), each one Payable on Death (POD) to a different child. By Doris’s calculations, each child would receive $150,000 when she passed away. But we posed several scenarios under which that would not happen.

For example, Doris assumed the amount of money she has and where she has it will remain unchanged, which is very unlikely. When a CD matures, she may roll it over to a new one or decide to invest elsewhere. And if Doris passed away suddenly, the funds intended for one of her children could be stuck in her checking account.

Unfortunately, Doris’s child couldn’t receive that money unless their name was also on the checking account — which is not what Doris wants or what her children expect.

Scenario #2: An Estate Planning Attorney Will Ask Tough, Unbiased Questions.

Jennifer and her husband wanted to set up a trust that would provide income to their adult child, solely through investments in that trust. They were concerned their daughter would spend the principal funds quickly and foolishly, and not have any money left to fund her future retirement.

On the surface, this sounded like a good idea — but when our attorney asked more questions about their objectives for this inheritance, the plan this couple envisioned had some significant shortfalls, including:

  • Changing Interest Rates.
    Their daughter’s inheritance was expected to be around $250,000. If the interest income is 4%, or $10,000 per year, it seems to be a reasonable amount. But what if an economic boom (or recession) caused today’s interest rate to change?
  • Unpredictable Life Circumstances.
    In the future, their daughter could lose her job or face a sudden medical crisis. The way the inheritance was structured, she could not access any part of the principal, even if she needed it to pay her mortgage or medical bills.

Our clients were so focused on the prospect of their daughter purchasing a sports car and a boat, they had not considered other realistic life events — and realized their trust needed to reflect some important changes.

Scenario #3: Asset Protection Strategies Can Help Fund Future Long-Term Care.

Georgia came to see us after her husband, Henry, suffered a stroke. He was in the hospital, and doctors had already told Georgia he was not going to be able to return home. Instead, he would need to live in a skilled nursing facility.

Did You Know: Long-term care is a big concern for many of our clients. Statistics from an AARP report show that 52% of people turning 65 will need long-term care services at some point in their lives, whether at home, or in an assisted living or skilled nursing facility. If they have not planned for the expense, these seniors will need to spend a significant amount of their savings to receive essential care.

Georgia was concerned about how they would pay for the high cost of this facility without spending everything they had — including their home and $500,000 in savings and investments. She was quite healthy and had every reason to expect to live another 20 years or more. They needed to make their hard-earned money last.

With our Estate Planning knowledge and expertise, our attorneys recommended putting their funds into Medicaid-compliant annuities, to pay Georgia as the “community spouse.” After their affairs were sorted, we were able to obtain Medicaid to pay for Henry’s care and preserve funds for Georgia’s future needs.

(originally reported at www.beckelderlaw.com)

Will Each of Your Kids Get an Equal Inheritance? How You Handle That Question Can Cause Family Strife – or Prevent It

As you plan ahead for the end of your life, one of the decisions you’ll want to think carefully about is the eventual disposition of your estate. If you plan to leave your assets and possessions to your children – and if you have more than one heir – you’ll have a potentially tough choice to make: do you divide your estate equally, or do you give a different amount to each of your kids?

Equal or Unequal, Your Estate Plan Sends a Message

This recent article from NerdWallet helps us think through that question. “Your estate plan may be your last words to those you leave behind,” writes reporter Liz Weston. “If you’re a parent, you should think carefully about the message you’ll be sending.” The biggest problem is that, unless you make your motives crystal clear, you may be creating a deep divide between your offspring, no matter how noble your intentions.

“Parents who leave their children unequal inheritances risk fueling family feuds,” the article states. “But strictly equal bequests also can cause resentment if the heirs don’t see the distribution as fair.” As wealth planner and author Colleen Carcone told NerdWallet, “Money can cause family discord, and you want to make sure that you are thinking through this and keeping sibling relationships intact.”

“Equal Inheritance” versus “Fair Inheritance” – It Comes Down t0 Perception

Instead of focusing on “equal” or “unequal” division, the NerdWallet article recommends you concentrate on the idea of “fairness.” As Weston writes, “For some people, fair means an equal dollar amount. Others may want to adjust the distribution to deduct financial help they’ve already given, for example, or to leave more to heirs with greater need.” Sometimes an heir who has provided in-home care for a parent receives a larger share. In other families, the offspring who has worked harder in the family business may be entitled to receive more equity than his siblings.

“Each approach has its merits — and problems,” says the NerdWallet article. “With an equal-dollar distribution, heirs may resent their wealthier siblings for getting money they don’t ‘need.’ Similarly, children who received less financial help during the parent’s life may resent those who got more if the estate distribution doesn’t reflect that imbalance.” On the other hand, unequal distributions can also cause hard feelings, as well. “The person getting less than others may view it as a punishment, especially if the amount was docked to reflect past financial help or to account for personal wealth,” writes Weston. “One inheritor I know refers to this as ‘the success tax.’”

The Unique Dynamics of Your Family Should Guide Your Decision

“What matters is how your decision is likely to play out given your family’s dynamics, and that may be differently than you expect,” writes Weston. For example, one family had a son whose wealth far exceed that of his siblings, or even his parents. In spite of this, the parents had planned to divide their estate equally. But when the parents discussed this with their son, according to wealth manager Colleen Carcone, they discovered he didn’t want what they thought. “He said, ‘I would rather have the money go to my siblings, but what I’d really like is that watch collection that Grandpa left you.’”

But in other families, if it’s not an equal distribution, there will be discord. “Leaving one child more than another would ignite those ‘Mom (or Dad) always liked you best’ rivalries that can destroy sibling relationships,” says Weston. As hard as it might be to let your children know your plans ahead of time, it’s an essential step. Otherwise, one planner told NerdWallet, the parents are “just sowing seeds of discord for when they are gone.”

Equal Inheritance or Not, Parents Should Leave Behind a Detailed Letter

Whether or not you have a family meeting while you’re living – and we strongly recommend that you do – NerdWallet also urges you to leave behind “a detailed letter explaining the thinking behind your decisions. Such letters can head off disagreements about what you said and what you meant.” This will make your wishes unambiguous, and it will also help children grasp your reasoning. “Make sure that [your children] understand why you did what you did,” Colleen Carcone told NerdWallet. “Nobody wants to leave a legacy of family disharmony.”

At Life Point Law, we want to offer our services in facilitating a family conference where some of these vital issues can be aired under the guidance of an experienced attorney. These conferences can take place in person, with appropriate social distancing precautions in place, or electronically. Please contact our offices for information.

Creating an Ethical Will: How a “Legacy Letter” Can Help Communicate Love, Lessons, and Values to Those You Leave Behind

As we age, many of us begin to think about the concept of “leaving a legacy.” Too frequently, however, the focus turns to money, as if the only legacy that truly matters when we die is a pile of cash, a portfolio of real estate, or a healthy business. But as this recent Kiplinger article point out, when we consider the things of value that we bequeath to our heirs, it’s important to consider the elements of our legacy that are intangible. This kind of inheritance, often spelled out in a document called an Ethical Will, can impact your family far more than money.

Ethical Will: An Ancient Practice with a Modern Application

The definition of an ethical will – sometimes referred to as a legacy letter – is simple, according to Abby Schneiderman who co-founded a company called Everplans.  It’s a document that you have prepared to “communicate values, experiences and life lessons to your family.”  Wikipedia traces the concept to Old Testament times, and calls an ethical will “a document that passes ethical values from one generation to the next.” The practice, says Wikipedia, has become more widespread in recent years, used as an aid to estate planning, as a way of ensuring appropriate end-of-life care, and as a means toward a spiritual healing tool.

The Kiplinger article spotlights Minneapolis hospice director Barry Baines who says he first came upon the concept of an ethical will in the 1990s. “He and his colleagues were working on a project about existential pain at the end of life. A dying young man told them his nonphysical pain was a 10 out of 10. Even though this patient was a husband and father, ‘he told us, “I feel like I’m going to die and there won’t be any trace that I was ever on the Earth.”’” After Baines suggested that the man work with a chaplain to create an ethical will, the man said “his spiritual suffering had dropped to zero.”

Ethical Wills: Do-It-Yourself or Professional Assistance

Baines since has written a book called Ethical Wills: Putting Your Values on Paper, and has co-founded a company that, according to Kiplinger, “offers both guidance for creating ethical wills and trains facilitators — such as financial planners, hospice workers and those who work in faith communities — about how to help people fashion their own legacy letters.” Baines acknowledges that people can write a legacy letter or ethical will by themselves, but sometimes professional help can provide necessary support and encouragement.

“While the task may seem daunting,” says Kiplinger, “most people’s ethical wills aren’t long, perhaps only a page or two.” Professionals suggest that a good starting place can include “personal history, favorite things, academic and professional life, religious and political views, and hopes for the future.” Some people get creative and include a PowerPoint slide show depicting things they love. You can attach favorite recipes, photos, or keepsakes. It’s up to you what you choose to include.

Ethical Wills Can Be Intentional – or Accidental

“Legacy letters can even be accidental,” Kiplinger states. One woman “discovered a two-page typewritten letter from her uncle that was saved by his brother —her father — while clearing out her parents’ house in the early 2000s. Her uncle had written the letter in 1963 on the back of a church bulletin shortly after his only child had died in an airplane crash. Although the family sent hundreds of letters back and forth between Iowa and Michigan, this was the only one saved.”

This cherished letter, which contains simple advice about doing things that matter – taking walks, staying mentally healthy, keeping an open mind, and practicing tolerance – was never intended as a “legacy letter.” But that’s precisely what it turned out to be.

No Life is “Too Ordinary” for an Ethical Will

If you think you have little of value to leave as an ethical or moral legacy for your family, says the Kiplinger article, think again. “For many, leaving an ethical will seems like a grandiose idea, that their lives are too ordinary or unsuccessful for them to have valuable insights to share. But the struggles are where life lessons come from.” One idea is to write your letter when you reach a milestone in life, such as becoming an empty-nester, retiring, or reaching a significant birthday. These life events can prompt times of personal introspection.

Finally, your ethical will can provide benefits for you as well as for your loved ones. “The document can also be one of self-reflection for how you want to live the rest of your life,” the article concludes. The process of putting down on paper can trigger some healthy questions, including “What do I stand for?” and “What matters most?”