Hans Kasper, MS-CPA, PS

Wills, Payable on Death, Joint Tenancy, Living Wills,
Healthcare Power Of Attorney, and Durable Power of Attorney
 

If you don’t think you need a will, then die and watch from wherever you end up, what happens to your family. 

• How much will the lawyers take in the probate process?

• How much will you kids get by state law?

• How much will your wife get by state law?

• Who will be arguing over what?

• Who will steal what isn’t theirs?

• If you and your wife die, who will predecease the other?

• Who will be the guardian of the kids and of the assets for the kids until they reach adulthood?

• How many kids have ended up in foster homes this way?

Do you want your wife and kids to live through the result of your not having a will?  If you have your head screwed on straight, you don’t; therefore, go out and get a will right now. 

However, before you do, go to your local book store and library and get some books on estates, wills and trusts.  Read them and learn all you can about what you want a will to do for you.  Then you will be ready to make an intelligent decision. 

Furthermore, get THREE PRICE QUOTES!  Call three or more attorneys or legal offices and ask them what the cost would be for the type of will you want.  Then choose one and have it prepared to your satisfaction.  Also remember to review it every several years and keep it up-to-date. 

There is nothing better than knowing that if you should die, your family will have no debts, sufficient savings money, adequate insurance money, and a will.

 Reasons that you need a will.

• To determine what happens to your children, you need to pre-appoint who the primary and secondary guardian will be.  Secondary in case the primary can no longer be guardians.  You might even say word like: to the exclusion of all blood relatives, to the exclusion of our elderly parents, or to the exclusion of my dysfunctional sister.  You will not want the guardian of your children to also be the guardian of the trust for the money of the children as they will most likely spend it on themselves.

• To determine who gets what specific items among your personal possessions.  For example: my wedding ring is to go to my eldest daughter Joan, my baseball card collection is to go to my friend Jim Smith, or our land on Camano Island is to go to our son John.

• To determine that a large specific bequest is to be granted.  For example: $1,000,000 is to give to the Union Gospel Mission, $1,000,000 is to be set aside in a trust for the lifetime care of our mentally ill son John, or everything over a total estate value of $1,000,000 is to be given to my church.

• To determine that you want to specifically exclude someone from your will.  Since wills are easy to contest if you simply leave someone out, you would say: To my brother Jim I leave $1.

• To determine before your death who the trustee(s) or executor(s) will be and if and how much they will be paid.

• To prepare a living will that will allow you to give legal direction about your health care when you are unable to do so.  To pull the plug or not to pull the plug--that is the question.

• To prepare a health care power of attorney to determine who will make your medical decisions while you are alive but unable to make those decisions for yourself.

• Note: If you have a choice, make the health care person (a feeling person) different from the durable person (a thinking person) since you may not want that person pulling the plug on you to get to your money.

• To prepare a durable (financial) power of attorney to determine who will make all of the non-medical decisions while you are alive but unable to make those decisions for yourself.  Some people who do not or should not trust their children select a trust company for this purpose.

• Also, make sure that the named beneficiaries are up-to-date on your:

  • bank accounts,

  • brokerage and investment accounts, and

  • retirement accounts.

Medicaid Trusts: While most asset transfers for Medicaid purposes must be made at least 36 months prior to applying for Medicaid, for trusts the transfers must occur at least 60 months prior to applying for Medicaid.  This means that transferring assets into a trust can protect them only if it is done five years before applying for Medicaid.  The area of Medicaid planning is highly technical and certainly not a do-it-yourself project.  It is best to use an elder-law attorney in drafting a Medicaid trust.

Please do not give your adult or minor children signature authority over your financial accounts or as joint owners of your real estate while you are alive!  Here is why:

• The adult child can get into IRS problems with past due taxes and since their SS# is on your account, the IRS can take all of the money out of it to pay those taxes and there isn't a thing you can do about it.  Also, the IRS can lien your real estate to pay for those taxes.

• In the event that your child files for bankruptcy, the account and your real estate can become free game for their creditors.

• In the case that you child is involved in an auto accident, the injured party can file a claim against any accounts and real estate that has the child's name on it.

• During your child's divorce proceeding, the soon to be ex-spouse could have a claim against those accounts and your real estate causing you to liquidate those assets.

• My daughter, Lara, who is in law school at the University of Buffalo in New York state, who is working on a specialty in public interest law that includes elder care law tells me, "Dad, you should see the number of older people that I see who are in need of care, but do not have the money because their own children--the children that they trusted and placed the child's name on their bank account--have stolen the money that was meant for their parent's care."  The parent did not believe that this would happen, but it did.

• Here is a better way:

  • Leave the real estate to your children in your will or trust by naming them as the beneficiary of that property.

  • Leave the accounts to your children by titling the accounts as "Payable on Death".  This will notify the financial institution who they are required to pay the money upon your death, but will not transfer ownership during your lifetime and make it available for creditors.

The husband and wife should have separate wills in the event of a divorce that may nullify a joint will.  

Most married people own their assets in joint tenancy with right of survivorship.  By doing so, the assets pass outside of probate.  However, you may want a living trust to avoid probate or you may want and "A" and a "B" testamentary trust trust provisions within your will or trust to avoid estate taxes as well.  It is vitally important for estate tax purposes that your will allow your surviving spouse or any of your beneficiaries to disclaim some or all of your estate.  In the right set of facts and circumstances, this clause will save you big bucks in estate taxes.

See your attorney or call my office for a referral.