A Celebrity Estate Plan Lesson (Part 2)
In my post last week I wrote about the trial in the matter of Aretha Franklin’s estate to determine which of two handwritten wills would be admitted as her last will. The case illustrates the reasons why everyone should have a will executed in accordance with state law and preferably typewritten and prepared by an attorney familiar with trust and estate law and the estate administration process. Having a will prepared by an experienced attorney will greatly reduce the risk of a court battle which can be costly in terms of legal fees but also family harmony. In Aretha Franklin’s case, it pitted 2 of her sons on one side against a third son. That’s because the two handwritten wills that were discovered in her home differed in their terms. For one thing, her Michigan home was left to one son and her grandchildren in her 2014 which was not the case in her 2010 will. For another her 2010 will stipulated that her sons were required to obtain a business degree or certificate before receiving their inheritance whereas the 2014 will had no such requirement. While the court did resolve the issue of which will controls, there are indications that the family may be back in
A Celebrity Estate Plan Lesson (Part 1)
Over the years I have written a number of blog posts about the reasons everyone should have a will and more specifically a formal one. Too many adults don’t and high profile celebrities are no different than the general population. I wrote 10 years ago about the litigation surrounding James Gandolfini’s estate because he didn’t leave a will. Aretha Franklin is another celebrity example. Franklin died in 2018 but only this month a trial settled - at least for the moment - the issue of what document should be considered to be her last wishes with regard to the assets that comprise her estate. That’s because she didn’t leave a formal will prepared an attorney. Instead she left what is known as a holographic will - one that she hand wrote and signed rather than one typewritten and witnessed and notarized in accordance with state law. In fact she left two holographic wills. Both were discovered in her home. A 2010 will was found in a locked cabinet and a 2014 will was found in the couch cushions in her living room. Both were handwritten and signed by Franklin but differed as to their terms. This led to a predicable legal dispute amongst 3 of her sons as to which
The Home and Not Much Else (Part 3)
In this week’s post, I continue to discuss a common fact pattern we see in our office. The case involves someone who needs long term care, doesn’t have enough to pay for it but does have a house. As I explained last week, the available government benefit programs don’t always cover the entire cost of care. In particular, if you want to be cared for at home, there isn’t a program that is guaranteed to cover all of what you need. Tapping into the equity can fill that gap but it must be done carefully. That’s because while the equity in your home is a non countable asset as long as you or your spouse is living it, once you draw out the equity in the form of cash by way of a mortgage and put it in your bank account, it becomes a countable asset. That additional amount may then cause you to lose Medicaid benefits if the balance exceeds the countable asset limit. So how do you navigate through the process so that the mortgage amount supplements the Medicaid benefit but doesn’t cause you to lose it? The type of mortgage is key. Taking a lump sum and depositing it in your bank account won’t work
The Home and Not Much Else (Part 2)
In last week’s post I laid out a common fact pattern we see in our office. In short, it’s a case where long term care is needed and there is not much in the way of liquid assets to pay for it but there is a house which the senior owns - usually with a small or no mortgage. In general, there are 3 ways to pay for care - using your own funds (referred to as private pay), long term care insurance and government benefits - maybe a VA benefit but more often Medicaid. Both these benefits are needs based. Because the home is an exempt asset if the applicant or a spouse is living in it as a primary residence, it is possible to qualify for these programs without selling the home - assuming the other eligibility requirements are met (eg. no transfers were made that would cause a waiting period for benefits). Just because one can qualify, however, doesn’t mean that will completely solve the long term care financing problem. That’s because these programs may not cover the entire cost of care. For example, the VA Aid and Attendance pension will max out at about $2200 per month for a married couple and somewhat
The Home and Not Much Else (Part 1)
In this week’s post, I address a common problem we see often in our office. An elderly client owns a home but very few other liquid assets. Income from Social Security and pensions is enough to meet monthly expenses - but then things change. Long term care becomes necessary. That’s when the status quo no longer works. Expenses will far outstrip income. So what are the options? There are a number of choices. Which ones work best depends on the type and amount of care needed and where it is administered. In making a decision it is important to be as realistic as possible about the situation and to recognize that change may be necessary with very little notice. Navigating the long term care journey can be a roller coaster ride. Care needs will typically increase over time as a person’s health deteriorates. This is typically gradual but it could also be sudden. Consideration should be given whenever possible to implementing a plan that has flexibility to enable a shift in care if and when it is needed. The available options will involve tapping into the home’s equity. That could be done by selling the home or borrowing against that equity. In some cases, the equity may not be needed at all. I’ll get into the details
The Time and Expense of Having No Will
People will sometimes ask me why they need a will if they don’t have any probate assets. This might be because they believe everything is owned jointly with right of survivorship or because they own nothing. It usually turns out, however, that they do own something. It might be a car that is titled in the name of the decedent or refund checks issued after death, such as unearned premiums or tax rebate checks. Having a will makes it a whole lot easier to administer these assets. As I have written about in previous posts, a typical will designates an executor who usually serves without the requirement to post a bond. The bond acts as an insurance policy to insure the creditors and heirs receive what they are entitled to. When there is no will, an administrator must be appointed and a bond posted. That can pose a problem in terms of time and cost. First of all, it must be determined who has a right to serve as administrator. All people with equal or greater right to serve must sign a renunciation agreeing not to serve in favor of the person applying for the appointment. If they will not or cannot sign, then a court proceeding by way of an