Category Archives: Basic Estate Planning

Do we REALLY need two witnesses?

Going through the correct procedures of witnessing and notarizing estate planning documents can seem onerous, but skip it at your peril.  I recently read this in ElderLaw Answers…

 

 

Texas Attorney Disbarred for Attempted Theft Through Improper Will Filing

 

A Texas appeals court affirms an attorney’s disbarment for attempting to steal from an elderly woman’s estate by filing a will that had not been properly witnessed or notarized. Olsen v. Comm. for Lawyer Discipline (Tex. App., 5th Dist., No. 05-09-00945-CV, Aug. 9, 2011).

In 2002, Mary Ellen Logan Bendtsen executed a will that left her entire estate to her daughter and only child, Frances Ann Giron, and named Ms. Giron as executor of Ms. Bendtsen’s estate.  Following a fall in early 2005, Ms. Bendtsen, then 88 years old, was admitted to a hospital where a psychiatrist determined that she suffered from dementia.  While in the hospital, Ms. Bendtsen was visited by attorney Edwin C. Olsen IV and she executed a new two-page will that he had prepared which replaced Ms. Giron as executor and sole beneficiary of her mother’s estate and named a new executor and beneficiaries.

Ms. Bendtsen died on March 2, 2005, and within hours Mr. Olsen filed an application for probate of the new will on behalf of the new executor.  He attached to the application the two pages signed by Ms. Bendtsen and a one-page jurat signed and notarized by a notary.  Ms. Giron filed an application for probate of the 2002 will and a petition contesting the new will’s validity.  Subsequent evidence revealed that Ms. Bendtsen had not signed the will in the presence of both witnesses and that the notary, despite language in the jurat to the contrary, had not witnessed Ms. Bendtsen sign the will and had not signed and notarized the jurat in her presence.  The probate court set aside the 2005 will and admitted the 2002 will to probate.

Ms. Giron then filed a complaint against Mr. Olsen with the state bar.  A trial court granted the Commission for Lawyer Discipline’s motion that Mr. Olsen violated various rules of professional conduct and had committed the criminal offenses of attempted theft and securing execution of documents by deception.  The trial court later entered a final order permanently disbarring Mr. Olsen from practicing law in Texas and ordered him to pay the commission’s attorneys’ fees and costs.

On appeal, Mr. Olsen acknowledged that the jurat falsely stated that Ms. Bendtsen had signed the will in the presence of the notary.  However, he argued that the filing of the three-page will with the notary’s jurat instead of only the two-page will signed by Ms. Bendtsen was not done for dishonest reasons but rather to accommodate the notary, who had refused to go to the hospital to notarize the document.

The Court of Appeals of Texas, Fifth District, affirms Mr. Olsen’s disbarment.  The court concludes that he failed to raise a genuine issue of material fact that would preclude summary judgment on the commission’s claim that by filing the 2005 will and jurat, knowing them to include false information, he violated the rules of professional conduct relating to honesty, deceit and making false representations to the court.

For the full text of this decision, go to: http://www.5thcoa.courts.state.tx.us/cgi-bin/as_web.exe?c05topin.ask+D+769150

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Probate Checklist

If someone close to you has passed away, there are things you will need to gather together to begin the probate process.  Some of these are listed below:

  • Any Bank or Other Account Statements
  • Lists of Stocks, Bonds
  • Location of Safe Deposit Box
  • Last Tax Return
  • Certified Death Certificates If Issued
  • Last Will and Testament
  • Any Trust or other Agreements
  • Copies of Insurance Policies, Annuities, Retirement Plans
  • Copies of Real Estate Documents including Deeds
  • Copies of Divorce Decrees

 

Finding and putting these together will allow your attorney or accountant to help you with the estate efficiently.   Depending on the type of assets and family situation of the person who has passed away, probating an estate can be a long and complex process. 

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Planning for Incompetence

One of the scariest scenarios we face is the prospect of no longer being able to make our own decisions and to think for ourselves.  Often this is a process of gradual decline, and either we, or those close to us, can see the changes and understand what is happening.  If you have not done advanced planning, that’s a good time to get moving.  There are some fairly straightforward documents that you can draft and execute which will allow those you love and trust to make important decisions. 

1.  Health Care Proxy:  this document names the person who can make medical decisions for you in the event that you are unable to make them yourself.  In Massachusetts, only one person can be named at a time, but you can have successor agents in case the first person is not available.  I recommend that everyone have a Health Care Proxy (including young adults so that doctors must listen to their parents, or to the person they have designated).

If you do not have a Health Care Proxy and there is a disagreement about your care, it is possible that a Guardian will have to be appointed by the probate court.  This is a process that can be time consuming, complex, and expensive.  In the end, the court decides who will make decisions about your care, not you.

2.  Durable Power of Attorney:  this document names a person who can sign documents on your behalf, and who can make financial and administrative decisions on your behalf.  This can be effective now, or it can come into effect upon your incapacity. 

Like a Health Care Proxy, if you do not have a Durable Power of Attorney, and become incompetent, a family member or caregiver will have to go to court to be named to represent you.  This person is called a Conservator, and this process, like naming a Guardian, requires court involvement and much expense.  It also means that the court makes the final decision about the person best suited to manage  your affairs.  Judges are wise and thoughtful, but they don’t know you or your family members the way that you do – don’t you think you’ll make a better decision?

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Digital Property

What happens to  your Facebook account, Paypal transactions, or Ebay account if you pass away or become incapacitated?  Who has access to that “bill pay” function?  You have beautiful photo albums that you keep and update on-line, will your children still be able to see them?  You do your business back ups to the cloud, can your business partners get to your documents?

There are practical answers and legal answers here.  The legal pieces are probably still a murky tangle.  Presumably title transfers as a type of intangible property in some cases, in others, the cash will flow through probate like other types of financial accounts.

However, some practical steps are necessary before you even get to that point.

  • Make a list of digital accounts and passwords
  • Store them somewhere non-digital (like your desk drawer)
  • Update them when you change your passwords or add accounts

 

In some ways this goes against the grain of keeping our information secure, but I think that it is far more likely that an account will be hacked than that someone will rifle through your desk drawer for the list of digital account information.  (Of course, if you have middle school children and you control the XBox Live account, this may not apply…)

Some financial and legal professionals offer services that store this type of information along with copies of your important documents. It’s a little like a digital safety deposit box, and you create a password and pin that would allow another to see the information in the event of a crisis. 

However you decide to keep track, this type of information gains in importance every day, make sure someone can get to it if they need to.

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Grandma’s Yellow Pie Plate

There’s a great book called “Who Gets Grandma’s Yellow Pie Plate” which is put out by the University of Minnesota Extension Service.  It’s a kind of how to guide for dividing personal property when someone passes away.  Often it is things with sentimental value that tear families apart after a death.  Did your family have a special tradition, your mother a favorite Christmas tree ornament, your father a pipe or carving that brings back fond memories?  How items like this are divided upon a person’s death can cement a family in fond memories, or re-ignite old scars and power struggles. 

There are different ways to approach dividing personal property – ask the people who are important to you what things they value.  You might be surprised by what they say.  You can give things away while you’re alive, or make a list of items and recipients.  Often such a list is mentioned in a will; it should be signed and dated.  After a person has died, the family may gather to divide things up; do this with a plan and some thought.  Who should be there, where should the conversations take place, when should this happen? 

And of course, don’t forget to have this conversation about your pets.  We joke in my family that the turtle will be going to the nursing home with me because it’s likely to live longer than I do…I hope it’s only a joke!

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But Doesn’t Everyone Need a Trust?

I recently had a client explain that they wanted a trust because Suze Orman said that everyone needed a trust.  Now, in general, trusts meet many needs, and are often a good idea.  Especially if there are minor children, adult children who might do better with structured payments, or long term care planning concerns, trusts can fill a valuable need.  However, just as not everyone NEEDS a prenuptial agreement, not everyone needs a trust. 

Trusts help  you avoid much of the probate process, but there are other ways to do this, too.  If your assets are jointly held with your spouse, and one of you dies, the assets will go “by operation of law” to your spouse without going through probate.  In a similar way, anything with a beneficiary designation (life insurance, annuities, most retirement accounts) will go to that beneficiary directly.  The probate court will oversee any assets that pass through your will, and sometimes this can be a good thing.  It does take time to probate an estate, but if the assets are fairly limited, the cost of setting up a trust may not be appropriate.

Regardless of whether you do or do not need a trust, please call an advisor you trust before you make important estate planning decisions, I know that you aren’t cookie cutter clients, why should you have a cookie cutter estate plan?

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Getting organized…

I want to re-finance my house, consolidate all those little IRAs and 401k’s from old jobs, get a new passport, make a will…What’s the common denominator?  When you start on any of these tasks, you need to be able to put your hands on paperwork, sometimes LOTS of paperwork.  Do you know where your birth certificate, bank statements, investment statements for the last three months are?  And I mean you can hand them to someone easily, not that you’re sure that they are in the big pile over there.

Or, could you tell someone else where to find your life insurance policy, homeowner’s policy, or auto insurance policy if you were away on vacation and you needed to file a claim? 

Join us for a complimentary seminar on May 26th, 2011 at 5 pm at the Cape Ann Savings Bank in Gloucester.  Gail Ramos, Senior Trust Officer at the 
Cape Ann Savings Bank and I will talk about getting a grip on organizing some of that paperwork…Networking from 5 to 5:30 and the program will go from 5:30 – 6:30.

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Retirement medical costs…

Fidelity Investments recently released a report heralding an 8% drop in medical expenses that a couple retiring in 2011 would expect to pay.  See Full Report.  That’s good news, the bad news is that this is still expected to top $230,000 and that’s a number that’s likely to grow.   A visit to your retirement planner is in order if you aren’t factoring this into your savings.  If you need names of reputable financial advisors who specialize in retirement planning, I’m happy to share the names of those I work with here on the North Shore.  Call or e-mail if you need a referral.  bridget@bmurraylaw.com

And all my contact info can be found at www.bmurraylaw.com

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Capacity–Can she really make that decision?

Capacity Requirements

Proper execution of a legal instrument requires that the person signing have sufficient mental "capacity" to understand the implications of the document. While most people speak of legal "capacity" or "competence" as a rigid black line–either the person has it or doesn’t–in fact it can be quite variable depending on the person’s abilities and the function for which capacity is required.

One side of the capacity equation involves the client’s abilities, which may change from day to day (or even during the day), depending on the course of the illness, fatigue and the effects of medication. On the other side, greater understanding is required for some legal activities than for others. For instance, you need to have a higher and clearer amount of “capacity” to enter a contract than to write a will. 

Capacity to make a will was summed up by the Massachusetts Supreme Judicial Court:

Testamentary capacity requires ability on the part of the testator to understand and carry in mind, in a general way, the nature and situation of his property and his relations to those persons who would naturally have some claim to his remembrance. It requires freedom from delusion which is the effect of disease or weakness and which might influence the disposition of his property. And it requires ability at the time of execution of the alleged will to understand the nature of the act of making a will.

This is a relatively "low threshold," meaning that signing a will does not require a great deal of capacity. The fact that the next day the testator does not remember the will signing and is not sufficiently "with it" to execute a will then does not invalidate the will if he understood it when he signed it.

The standards for entering into a contract are different because the individual must know not only the nature of her property and the person with whom she is dealing, but also the broader context of the market in which she is agreeing to buy or sell services or property.  This is a more long range kind of understanding, and requires a more complex ability.

While the standards may seem clear, applying them to particular clients may be difficult. The fact that a client does not know the year or the name of the President may mean she does not have capacity to enter into a contract, but not necessarily that she can’t execute a will or durable power of attorney. The determination mixes medical, psychological and legal judgments. It must be made by the attorney (or a judge, in the case of guardianship and conservatorship determinations) based on information gleaned by the attorney in interactions with the client, from other sources such as family members and social workers, and, if necessary, from medical personnel. Doctors and psychiatrists cannot themselves make a determination as to whether an individual has capacity to undertake a legal commitment. But they can provide a professional evaluation of the person that will help an attorney make this decision.

Because you need a third party to assess capacity and because you need to be certain that the formal legal requirements are followed, it can be risky to prepare and execute legal documents on your own without representation by an attorney.

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Tell me again why I should do my estate plan?

Everyone has a different reason for beginning, updating, or implementing an estate plan.  Usually one very specific reason.  For some, it’s the birth of a child and the need to secure their future.  For another it might be a divorce and the need to separate in life and in death.  For a third, it’s the death or illness of a loved one that makes a client realize that planning can make a death either easier, or much harder for their family members.

For others it’s a chance encounter or event.  I have some friends who were first time homebuyers, excited about a great home, and in a hurry to move in with their young family.  Sadly, the elderly owner of the home passed away two weeks before the closing.  This could have completely derailed this family’s plans, but the home was held in a trust.  The home did not need to go through probate since it was legally owned by the trustees.  Because of this, the closing could continue, and the heirs and the family were able to finish the transaction quickly and efficiently.  You can be sure that the young family was much more enthusiastic about good estate planning once they had seen it in action.

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