So my intent was to have a new post every Monday. Best laid plans, right? But, our family has grown in the last two months. We have a son now, and he's done a great job of consuming most of my time outside of work.
What does this have to do with blog posts, outside of being my excuse for a lack of productivity? It's a good opportunity to remind folks that there are big life events that should be triggers for either having estate planning completed, or having an existing estate planning reviewed. In my opinion, those events are:
1) Marriage or divorce;
2) The birth of a child;
3) Retirement;
4) Attainment of age 70 1/2;
5) Occurrence of an unexpected health problem.
Other attorneys may have additional times that they consider good for reexamining estate plans, but these are easy to remember, because most folks will experience most, if not all, of these life events. When one of these happens, take some time to schedule an appointment with an estate planning attorney.
So, from here on, I will endeavor to make more regular blog posts -- but I'm going to stop short of weekly guarantees. Let's just make it something to strive for. The best way to know will be to sign up for our mailing list on the right-hand side of this blog -- don't worry, we won't inundate you with emails.
Friday, February 27, 2015
Wednesday, January 14, 2015
New Year, More Posts!
My blog posts haven't been as consistent as I'd hoped -- and that's being generous. However, from here on, I'll be putting up a new post each Monday about elder law, Medicaid, and estate planning issues. If you read this blog, and you have something related to these areas you'd like to see discussed, send me an email and I will do my best to address it in the next post. Stay tuned!
Friday, July 11, 2014
Raleigh Elder Law | Required Post about Celebrity Estate Planning
Articles detailing the "failings" of celebrity estate plans is one of the more common "click-baitish" news items you'll see related to estate planning. The one I saw today related to Lou Reed, his 34-page will, and the fact that he should have done a revocable trust. The article can be found here.
I bring this up for a few reasons:
I bring this up for a few reasons:
- (shamless plug) I welcome all celebrities that would like me to handle their estate planning. (/shameless plug)
- Revocable trusts are amazing and affordable estate planning tools. Admittedly, any revocable trust drafted for the estate of someone like Lou Reed wouldn't be run of the mill, and would likely have made his 34-page will look like a blog post, but the importance of one can't really be overstated. If you have an estate that you'd like to keep private, or have real property in multiple states, or would like to provide for family members (like Mr. Reed wanted to provide for his elderly mother), a revocable trust can make the administration of your estate much easier. BUT:
- Just because someone does a will instead of a trust doesn't mean their estate plan is bad, or incomplete. It is quite possible that Mr. Reed sat down with his estate planning attorney, and the attorney began discussing trusts, and Mr. Reed threw up his hands and said "I'm not interested in trusts -- I just want to do a will." To which the attorney most likely protested, but at the end of the day, it's the client's decision. And if Lou Reed only wanted a will, that's the end of it. It's much better than doing nothing at all and leaving it to the laws of the State of New York. His wishes were met through the will. Was it the cleanest or best method? Not in my opinion. But just because you don't do a trust doesn't mean your estate planning was awful. The key is having a plan, and that's something we can help with.
Friday, June 20, 2014
Raleigh Elder Law | Does a Will have to be Recorded?
I'm trying to dedicate a decent amount of this blog to common questions that our Clients have when they meet with us, since they are likely questions many folks have. One of those questions relates to "recording the will" and often comes in one of these forms:
"Are you going to record the will?"
"Mom [who is alive] has a will, but it was recorded by the lawyer that did it."
"Do I have to record the will with the Register of Deeds?"
A will does not have to be "recorded" to be valid while a person is living. The only time a will needs to be "recorded" is following the death of the person that created the will, at which point the Will may need to be filed with the Clerk to start the probate process. Until that time, however, provided that the will was properly executed and witnessed, the original will simply needs to be kept in a safe place.
Folks that talk about wills being recorded aren't incorrect, however. The Clerk of Superior Court in each county has a depository for original wills. For a small fee, any person may take their original will to the Clerk, and ask that it be deposited with the Clerk for safekeeping. If this has been done, the Clerk will give the person depositing a will a receipt in exchange for the will. That receipt will outline whose will has been deposited, the date on which it was deposited, and the County where it was deposited. Under the statute, once the will has been deposited, the only people that may access it while the person who created the will (the "Testator") is living are the Testator, their duly-authorized agent, or their attorney. This isn't technically "recording" the Will, but it is deposited somewhere
Some attorneys may do this as a matter of course. Clients are always free to do this as well. I normally advise clients that it is available, but is not required. So, to answer the question, "does a will have to be recorded", the answer is "it depends."
"Are you going to record the will?"
"Mom [who is alive] has a will, but it was recorded by the lawyer that did it."
"Do I have to record the will with the Register of Deeds?"
A will does not have to be "recorded" to be valid while a person is living. The only time a will needs to be "recorded" is following the death of the person that created the will, at which point the Will may need to be filed with the Clerk to start the probate process. Until that time, however, provided that the will was properly executed and witnessed, the original will simply needs to be kept in a safe place.
Folks that talk about wills being recorded aren't incorrect, however. The Clerk of Superior Court in each county has a depository for original wills. For a small fee, any person may take their original will to the Clerk, and ask that it be deposited with the Clerk for safekeeping. If this has been done, the Clerk will give the person depositing a will a receipt in exchange for the will. That receipt will outline whose will has been deposited, the date on which it was deposited, and the County where it was deposited. Under the statute, once the will has been deposited, the only people that may access it while the person who created the will (the "Testator") is living are the Testator, their duly-authorized agent, or their attorney. This isn't technically "recording" the Will, but it is deposited somewhere
Some attorneys may do this as a matter of course. Clients are always free to do this as well. I normally advise clients that it is available, but is not required. So, to answer the question, "does a will have to be recorded", the answer is "it depends."
Thursday, June 19, 2014
Raleigh Elder Law | Year's Allowance
One of the really helpful estate administration forms that folks may not know about is what's called a "Year's Allowance". It can be downloaded from our website here.
The "Year's Allowance" form is something we use a lot when it comes to dealing with the estate of a spouse who has died and left a widow or widower. In situations where the couple had most of their assets set up jointly or had named each other as beneficiary, there often is very little that needs to be transferred from the deceased spouse to the surviving spouse. Most often, it's things like vehicles or small checks made payable to the deceased spouse as reimbursement for insurance premiums.
The Year's Allowance allows for the assignment of up to $30,000.00 in personal property (vehicles, money, etc.) from the deceased spouse to their surviving spouse, without having to go through probate. To the extent that the value of the property in the name of the deceased spouse is $30,000.00 or less, it can be transferred to the surviving spouse by simply completing one form and having it certified by the Clerk of Court in your county.
An example: Joan dies in 2014, leaving her husband, Bill. Joan had an IRA, of which Bill was the named beneficiary. Joan and Bill had a checking and savings account, of which they were joint owners. Joan had a 2010 Honda Accord (worth $12,000.00) that she owned solely. Their home was owned as tenants by the entirety.
When Joan died, Bill was left wondering what would need to be done from a probate standpoint to transfer Joan's assets to him. Fortunately for Bill, out of all the things listed above, he only needs to worry about the 2010 Accord. The IRA has Bill listed as beneficiary, meaning he need only file a death claim with the company managing the IRA. The jointly-owned checking and savings accounts can be closed by Bill and reopened in his name alone without any legal authority. Joan's interest in the home automatically transferred to Bill upon Joan's death because they owned it as tenants by the entirety. The only thing that Bill can't transfer without legal authority is the car.
Bill would simply fill out the Year's Allowance form, sign it and have his signature notarized, and take it, along with Joan's death certificate and her original will (if she had one) to the Clerk of Court. (There is a fee associated with the Year's Allowance -- currently it is $8.00 -- so Bill needs cash as well). Once there, the Clerk will review the documentation, and assuming everything is complete, he or she will sign it, place a raised seal on it, and hand it back to Bill.
From there, Bill would take the certified Year's Allowance, along with the title to the Accord, to the DMV, present both, and ask that title be transferred to him.
What this means is that Bill has completed the administration of his Wife's estate with one form. Behold, the magic of the Year's Allowance!
The "Year's Allowance" form is something we use a lot when it comes to dealing with the estate of a spouse who has died and left a widow or widower. In situations where the couple had most of their assets set up jointly or had named each other as beneficiary, there often is very little that needs to be transferred from the deceased spouse to the surviving spouse. Most often, it's things like vehicles or small checks made payable to the deceased spouse as reimbursement for insurance premiums.
The Year's Allowance allows for the assignment of up to $30,000.00 in personal property (vehicles, money, etc.) from the deceased spouse to their surviving spouse, without having to go through probate. To the extent that the value of the property in the name of the deceased spouse is $30,000.00 or less, it can be transferred to the surviving spouse by simply completing one form and having it certified by the Clerk of Court in your county.
An example: Joan dies in 2014, leaving her husband, Bill. Joan had an IRA, of which Bill was the named beneficiary. Joan and Bill had a checking and savings account, of which they were joint owners. Joan had a 2010 Honda Accord (worth $12,000.00) that she owned solely. Their home was owned as tenants by the entirety.
When Joan died, Bill was left wondering what would need to be done from a probate standpoint to transfer Joan's assets to him. Fortunately for Bill, out of all the things listed above, he only needs to worry about the 2010 Accord. The IRA has Bill listed as beneficiary, meaning he need only file a death claim with the company managing the IRA. The jointly-owned checking and savings accounts can be closed by Bill and reopened in his name alone without any legal authority. Joan's interest in the home automatically transferred to Bill upon Joan's death because they owned it as tenants by the entirety. The only thing that Bill can't transfer without legal authority is the car.
Bill would simply fill out the Year's Allowance form, sign it and have his signature notarized, and take it, along with Joan's death certificate and her original will (if she had one) to the Clerk of Court. (There is a fee associated with the Year's Allowance -- currently it is $8.00 -- so Bill needs cash as well). Once there, the Clerk will review the documentation, and assuming everything is complete, he or she will sign it, place a raised seal on it, and hand it back to Bill.
From there, Bill would take the certified Year's Allowance, along with the title to the Accord, to the DMV, present both, and ask that title be transferred to him.
What this means is that Bill has completed the administration of his Wife's estate with one form. Behold, the magic of the Year's Allowance!
Wednesday, June 18, 2014
Raleigh Elder Law | Common Probate Pitfalls
We have a lot of clients that come in and ask the question, "What is probate?" Probate is the process by which a deceased person's will is offered to the court (in North Carolina, this occurs in front of the Clerk of Superior Court) for approval and by which the estate is administered in accordance with the terms of the will. There is plenty of information out there about probate and what it is (here and here, for example), so there's no need to go over it again. What I think would be beneficial is a discussion of the most common mistakes people make in the probate process.
Common Pitfall #1: Failing to transfer all property out of the name of the decedent. When it comes time to close the estate, it's important to make sure that all items in the name of the deceased person have been closed out and/or transferred. Many times we will see executors come into our office because they failed to transfer title to a vehicle or close out a bank account. If it's something that wasn't listed on the estate's 90-day inventory, it can fall through the cracks, at which point the estate will have to be reopened in order to transfer those items.
Common Pitfall #2: Paying expenses related to a home or land owned by the deceased person out of the estate. This is any easy trap to fall into, because it seems like a no brainer that an Executor would pay things like power bills, water bills, and tax bills for a home or land that a deceased person owned. However, this is not the case. Under North Carolina law, legal title to real property is vested in the deceased person's beneficiaries on the day the person dies, and with legal title comes responsibility for all expenses related to the property. From that point on, the beneficiaries are responsible for all the bills. Some counties will allow expenses related to real property to be paid from the estate with the agreement of the beneficiaries of the estate, but it varies, and could result in the funds paid out needing to be paid back to the estate.
The best thing is for an executor to inform all the heirs of real property in writing that they are responsible for the expenses of the property going forward, and to not pay those expenses from the estate. It will just make things easier when it comes time to close the estate.
Common Pitfall #3: Paying bills along the way instead of waiting. It would seem counter to the Executor's job to wait on paying bills. Your job is to wrap things up, and paying bills is part of that job. However, North Carolina law states that if there are not enough assets in a deceased person's estate to pay all creditors fully, the claims of creditors have to be prorated. We have seen many times where an executor, in an attempt to keep bills paid and avoid ongoing billing, will pay things along the way, and then when it comes time to settle the big bills, there isn't enough money. This is a problem because the estate cannot be closed until the bills of the decedent are satisfied in accordance with the law, and if there isn't enough money in the estate because bills have been paid incorrectly, the Executor may be put in a situation where they have to reimburse the estate for those incorrect payments.
In North Carolina, following a person's appointment as Executor, the Executor is to run what's called a "Notice to Creditors". This notice, run in a newspaper in the county where the person died, lets everyone know that the person has died, and tells them that if the deceased person owed them money, they have 90 days in which to make a claim with the Clerk of Court, or their claim will be forever barred. (Note: There are exceptions to this rule as it relates to "known" creditors, so if there's a debt you, as Executor, know about, and they do not file a claim, you can't say they are barred. If you run into a situation where you aren't sure about a claim's validity, contact an attorney).
You should always wait until this 90-day period has run before you start paying estate bills. This will ensure that you're paying things correctly, and will ensure that if there isn't enough money in the estate, that claims are properly prorated and satisfied as fully as possible.
There are certainly other areas that can cause problems for Executors, but these are the ones we see in our office most often. If you're considering navigating the probate process on your own, keep these points in mind -- they may save you a lot of extra work down the road.
Common Pitfall #1: Failing to transfer all property out of the name of the decedent. When it comes time to close the estate, it's important to make sure that all items in the name of the deceased person have been closed out and/or transferred. Many times we will see executors come into our office because they failed to transfer title to a vehicle or close out a bank account. If it's something that wasn't listed on the estate's 90-day inventory, it can fall through the cracks, at which point the estate will have to be reopened in order to transfer those items.
Common Pitfall #2: Paying expenses related to a home or land owned by the deceased person out of the estate. This is any easy trap to fall into, because it seems like a no brainer that an Executor would pay things like power bills, water bills, and tax bills for a home or land that a deceased person owned. However, this is not the case. Under North Carolina law, legal title to real property is vested in the deceased person's beneficiaries on the day the person dies, and with legal title comes responsibility for all expenses related to the property. From that point on, the beneficiaries are responsible for all the bills. Some counties will allow expenses related to real property to be paid from the estate with the agreement of the beneficiaries of the estate, but it varies, and could result in the funds paid out needing to be paid back to the estate.
The best thing is for an executor to inform all the heirs of real property in writing that they are responsible for the expenses of the property going forward, and to not pay those expenses from the estate. It will just make things easier when it comes time to close the estate.
Common Pitfall #3: Paying bills along the way instead of waiting. It would seem counter to the Executor's job to wait on paying bills. Your job is to wrap things up, and paying bills is part of that job. However, North Carolina law states that if there are not enough assets in a deceased person's estate to pay all creditors fully, the claims of creditors have to be prorated. We have seen many times where an executor, in an attempt to keep bills paid and avoid ongoing billing, will pay things along the way, and then when it comes time to settle the big bills, there isn't enough money. This is a problem because the estate cannot be closed until the bills of the decedent are satisfied in accordance with the law, and if there isn't enough money in the estate because bills have been paid incorrectly, the Executor may be put in a situation where they have to reimburse the estate for those incorrect payments.
In North Carolina, following a person's appointment as Executor, the Executor is to run what's called a "Notice to Creditors". This notice, run in a newspaper in the county where the person died, lets everyone know that the person has died, and tells them that if the deceased person owed them money, they have 90 days in which to make a claim with the Clerk of Court, or their claim will be forever barred. (Note: There are exceptions to this rule as it relates to "known" creditors, so if there's a debt you, as Executor, know about, and they do not file a claim, you can't say they are barred. If you run into a situation where you aren't sure about a claim's validity, contact an attorney).
You should always wait until this 90-day period has run before you start paying estate bills. This will ensure that you're paying things correctly, and will ensure that if there isn't enough money in the estate, that claims are properly prorated and satisfied as fully as possible.
There are certainly other areas that can cause problems for Executors, but these are the ones we see in our office most often. If you're considering navigating the probate process on your own, keep these points in mind -- they may save you a lot of extra work down the road.
Friday, June 13, 2014
Raleigh Elder Law | Medicaid Estate Recovery Claim Filed -- Now What?
In a previous post, I indicated that I would be following up on the process when a Medicaid Estate Recovery claim can't be or isn't waived. Time to follow up! Once it is determined the claim can't be waived, the estate of the deceased Medicaid recipient has a claim against it that the State of North Carolina would like to have satisfied.
However, just because they have a valid claim doesn't necessarily mean that it's going to get paid. The same could be said of any claim made against an estate. In order for claims to be paid, there must be assets in the estate with which to satisfy said claims. No assets in the deceased recipient's estate? Then most likely, Medicaid (and any other creditor) won't get paid back.
Let's look at the process, but let me start by making an important point: estate recovery liability does not, in North Carolina, extend beyond the Medicaid recipient. If your husband, mother, father, brother, or best friend was receiving Medicaid, and you are named as executor of their estate or get appointed as administrator, and you get an estate recovery notice, do not panic. Medicaid will not be coming after you personally. They are only coming after the estate. Your job is to just make sure things get done correctly.
So what happens? The deceased person's estate is opened (more on that in a later post), and the executor or administrator takes stock of what the person owned. If they were receiving Medicaid, chances are they didn't own much (for an overview of what a Medicaid recipient can have, click here), and if they owned anything of significant value, it was most likely real property. Real property that passes to heirs by virtue of either a will or intestacy is considered part of a person's estate, and can be claimed by creditors for payment of debts. However, because of the way the law treats real property upon death, it must be "reclaimed" (for lack of a better term) by the estate to be sold to satisfy those claims.
The executor or administrator would therefore be responsible for filing the proper petitions and paperwork for reclaiming the real property so that it can be sold. Once this process is complete, the real property is sold, the proceeds from the sale are added to the estate, and debts can be satisfied.
Quick example: Bob received Long Term Care Medicaid Assistance for three years prior to his death. He is a widower, and his will names his two children, Lauren and William, as beneficiaries. Lauren is the Executrix. Bob passes away, and Lauren opens her father's estate. Her father's estate consists solely of his home, valued at $125,000.00. Not long after opening the estate, Lauren receives an Estate Recovery Claim in the amount of $70,000.00. Her father also has a credit card bill totaling $12,000.00.
Lauren realizes she has $82,000.00 in debts that must be paid, and the only asset with which to pay those debts is the home. Lauren hires an attorney, who files the necessary paperwork and follows the necessary process to reclaim her father's home for the estate. This means that the home, which was supposed to go to Lauren and William, no longer belongs to them, but rather belongs to the estate.
At this point, Lauren hires a realtor who lists the home for sale. After a month or so, Lauren receives a couple of offers, the highest of which is for $80,000.00. Lauren, on the advice of the realtor, accepts the offer. The offer is approved by the court, and the sale takes place, meaning that Bob's estate now has $80,000.00 in cash with which to pay debts. As you can see, this isn't enough money to pay both debts. So what must Lauren do?
North Carolina's General Statutes outline how debts are to be satisfied in situations where there isn't enough money to pay them all in full (that statute can be found here). I will try and cover priority in a later post, but under the law, the Estate Recovery Claim has priority over the unsecured claim of the credit card company. When a claim has priority, it gets satisfied in full (if there are enough funds to fully satisfy it) before the claims over which it has priority get satisfied.
In this case, Medicaid's Estate Recovery Claim would be satisfied in full, and the credit card company would receive the remaining $10,000.00. The credit card company must take this amount in satisfaction of its claim in full -- it has no other recourse.
There are ways to avoid the inclusion of real property in a decedent's estate, even after a person has qualified for Medicaid. Additionally, there are details related to the probate process that I either glossed over or skipped in the interest of making the post as brief as possible. As always, consult with an attorney (like me!) if you are facing any of these situations.
However, just because they have a valid claim doesn't necessarily mean that it's going to get paid. The same could be said of any claim made against an estate. In order for claims to be paid, there must be assets in the estate with which to satisfy said claims. No assets in the deceased recipient's estate? Then most likely, Medicaid (and any other creditor) won't get paid back.
Let's look at the process, but let me start by making an important point: estate recovery liability does not, in North Carolina, extend beyond the Medicaid recipient. If your husband, mother, father, brother, or best friend was receiving Medicaid, and you are named as executor of their estate or get appointed as administrator, and you get an estate recovery notice, do not panic. Medicaid will not be coming after you personally. They are only coming after the estate. Your job is to just make sure things get done correctly.
So what happens? The deceased person's estate is opened (more on that in a later post), and the executor or administrator takes stock of what the person owned. If they were receiving Medicaid, chances are they didn't own much (for an overview of what a Medicaid recipient can have, click here), and if they owned anything of significant value, it was most likely real property. Real property that passes to heirs by virtue of either a will or intestacy is considered part of a person's estate, and can be claimed by creditors for payment of debts. However, because of the way the law treats real property upon death, it must be "reclaimed" (for lack of a better term) by the estate to be sold to satisfy those claims.
The executor or administrator would therefore be responsible for filing the proper petitions and paperwork for reclaiming the real property so that it can be sold. Once this process is complete, the real property is sold, the proceeds from the sale are added to the estate, and debts can be satisfied.
Quick example: Bob received Long Term Care Medicaid Assistance for three years prior to his death. He is a widower, and his will names his two children, Lauren and William, as beneficiaries. Lauren is the Executrix. Bob passes away, and Lauren opens her father's estate. Her father's estate consists solely of his home, valued at $125,000.00. Not long after opening the estate, Lauren receives an Estate Recovery Claim in the amount of $70,000.00. Her father also has a credit card bill totaling $12,000.00.
Lauren realizes she has $82,000.00 in debts that must be paid, and the only asset with which to pay those debts is the home. Lauren hires an attorney, who files the necessary paperwork and follows the necessary process to reclaim her father's home for the estate. This means that the home, which was supposed to go to Lauren and William, no longer belongs to them, but rather belongs to the estate.
At this point, Lauren hires a realtor who lists the home for sale. After a month or so, Lauren receives a couple of offers, the highest of which is for $80,000.00. Lauren, on the advice of the realtor, accepts the offer. The offer is approved by the court, and the sale takes place, meaning that Bob's estate now has $80,000.00 in cash with which to pay debts. As you can see, this isn't enough money to pay both debts. So what must Lauren do?
North Carolina's General Statutes outline how debts are to be satisfied in situations where there isn't enough money to pay them all in full (that statute can be found here). I will try and cover priority in a later post, but under the law, the Estate Recovery Claim has priority over the unsecured claim of the credit card company. When a claim has priority, it gets satisfied in full (if there are enough funds to fully satisfy it) before the claims over which it has priority get satisfied.
In this case, Medicaid's Estate Recovery Claim would be satisfied in full, and the credit card company would receive the remaining $10,000.00. The credit card company must take this amount in satisfaction of its claim in full -- it has no other recourse.
There are ways to avoid the inclusion of real property in a decedent's estate, even after a person has qualified for Medicaid. Additionally, there are details related to the probate process that I either glossed over or skipped in the interest of making the post as brief as possible. As always, consult with an attorney (like me!) if you are facing any of these situations.
Subscribe to:
Posts (Atom)