Q & A for Estate Planning, Probate, and Taxes

Q.  Can I change my Last Will and Testament?

A.  You can amend your Will by executing a document called a codicil.  The codicil states the change(s) made and it must be witnessed in the same manner as your Will; most states require the person making the Will to sign before two witnesses and sign before each other.  If there is to be a minor change, such as a change in an alternate guardian, then a codicil suffices.  However, if there are major changes, such as a different beneficiary, a new Will would be a better choice, since the former beneficiary is unlikely to know what he or she missed and thus not contest the Will.

Q.  Who can contest a Will and for what reason?

A.  An heir can contest the Will in probate court.  If the contest is successful and the Will declared invalid, the heirs would inherit according to state law.  That prospect may be incentive enough to look for a reason to challenge the Will.

Most states recognize several grounds for contesting the Will.  Ineffective execution of the Will or incompetence of the personal making the Will or undue influence by a beneficiary are typical issues in a Will contests. If there are not the required witnesses or the witness sign at different times, the Will could be declared void.  The persons who makes the Will must be competent, usually this means that he or she knows it is a Will, knows the extent of property he or she owns and knows who would benefit from the Will.  Greed can play a part in convincing a vulnerable person to make a relative or friend the beneficiary of a Will to the exclusion of other family or friends.

Q.  What rights does a surviving spouse have in a deceased spouse’s estate?

A.  All states provide certain rights for a surviving spouse.  Usually, the spouse has absolute right to a certain dollar amount from the deceased’s estate.  Indiana, for example, gives the spouse $25,000 from the estate.  State law usually permits a surviving spouse to elect against the deceased’s Will for an equivalent of his or her heirship share if the spouse died without a Will (often one-half of the probate estate).

Of course, if the couple co-owned property with rights of survivorship, the survivor receives that property as surviving co-owner.  Likewise, a surviving spouse would receive life insurance proceeds if he or she was named as beneficiary or as named beneficiary in the deceased’s retirement plans.

Of course, the surviving spouse may have waived his or her rights in a prenuptial agreement.

Q.  Does a same-sex marriage spouse have lesser rights than in the traditional marriage.

A.  The U. S. Supreme Court held that the same-sex marriage was a marriage for federal and state law.  The spousal rights are the same for both forms of marriage.

Q.  How can children from a first and a second marriage be treated the same?

A.  For many families, children have different financial needs, so treating children the same when dividing up your estate may not be in everyone’s best interests.  With multiple families or blended families this fairness division becomes even more difficult.  The short answer is that there is no one correct way.  If feasible, talk with all family members about their possible inheritances.  If this is not possible, prepare a letter to accompany your Last Will and Testament explaining your decision help ease the possible disappointment of heirs who receive less than they expect.

If you have a second family who will receive the bulk of your estate, you might consider providing life insurance for them as named beneficiaries; term life insurance will provide the most benefit at the least expense.

Q.  What is the best way of providing for a special needs child or a spendthrift child?

A.  Special needs children may need financial resources for their entire life.  This financial challenge is complicated by Social Security and Medicaid laws.  There are attorneys who specialized in this area, so consult them.  Usually, the attorney will prepare a special needs trust for the child.

Spendthrift children or addicted children should also have a trust and a trustee who is directed in the trust to provide for their needs but not their wants.  Any benefits from the trust may be tied to the child earning income as an incentive to change their errant ways.

Q.  What is the purpose of probate and can it be avoided?

A.  Probate is a court process for the administration of the deceased’s property, so that creditors will be paid and the net assets distributed according to the Last Will and Testament or, if none, according to state inheritance law.

The probate property includes any property solely owned by the decedent or property owned tenants in common (usually property co-owned with family or friends), and deceased share of community property (when not subject to a community property agreement conveying it to the surviving spouse).

Probate can be avoided or minimized by creating joint with survivorship property or designating a successor as transferred on death.  A trust could be created for the property; at death the property would be transferred to the beneficiaries of the trust.

Many states provide for limited or unsupervised probate which expedites the process and saves the estate legal fees.

Q.  Can an estate beneficiary refuse his or her share of the estate?

A.  A beneficiary of a probate estate or a surviving joint owner can refuse or disclaim his or her interest.  State law usually requires the disclaimer to be executed before the heir or co-owner receives the property and requires written notice of the disclaimer, usually to the personal representative of the estate. If the disclaimer is timely and properly made, then it is as if the person disclaiming died before the deceased.  For example, if there are four children named in a Will and the Will requires them to survive their father, then when one child disclaims his interest the result is the other three children become his only beneficiaries.

Q.  Can I avoid federal and state estate taxes?

A.  The exemption amount for the federal estate tax is $5,450,000 in 2016, and is adjusted annually for inflation.  If you have an estate that is more that this amount, consult an attorney.  States vary on their estate and inheritance taxes.  You can visit your state department of revenue web site to obtain the tax information.

Q. How do you develop an Estate Plan

A. Developing an Estate plan starts by meeting with an attorney that specializes in Family Law.

Before you meet with an Attorney, you may want to creat a list of all your assets. This should include the following:

  • Real estate (home, land, vacation property)
  • Personal property (car, boat, appliances, furniture, jewelry, collectibles, heirlooms)
  • Business assets (full or partial ownership interests)
  • Life insurance
  • Money market accounts
  • Pension or retirement accounts.
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