This is a guest post by Daniela Baker from CreditDonkey
Approximately half of all Americans die without a will. For those without one, the court steps in to divide up the property according to state laws. Because making a will should be a relatively simple process, this scenario can be avoided. You can create one through an attorney or on your own. Here are six important things to consider before making yours.
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Today is Elder Abuse Day in Canada as Sharon Singleton points out in her article, Seniors should focus on estate planning.
Canada will mark Elder Abuse Day on Tuesday, with concern about retirement and pension planning mounting as the population ages. Nearly half of all Canadians from the baby boomer generation have not saved enough for their needs, according to a poll carried out for the Canadian Institute of Actuaries.
As lawyer Les Kotzer of Fish & Associates suggests that’s a recipe for exploitation of their elders. In his book, Where There’s an Inheritance, he collates about 80 anecdotes on how a lack of estate planning, or mistakes in working out a will, have led to abuses.
Longer lives and reducing financial resources give a double whammy to those who have done insufficient retirement planning. That can affect both the boomers and their parents. The boomers are hoping to inherit from their recession-era parents who are in turn dependant on over-indebted kids.
Kotzer points out that some of the most common problems come from giving up control to the children, without having proper protection in place. He cites a number of examples:
Children who had convinced their mother that she could save them money on taxes when she died by transferring her assets to them. They then paid her an allowance, though when she overspent one month, her daughter yelled at her.
An 80-year old woman was pressured by her son to put the house in his name to avoid probate taxes. What he didn’t tell her was that his business was going bankrupt and his creditors sent her a letter laying claim to the house.
A 75-year-old woman worked two jobs. She had loaned her daughter $100,000 and her son $150,000 and when her husband died asked for the money back. Her daughter didn’t have the cash and her son claimed it was never intended as a loan and she’d have to go to court and sue him for it.
It is important to keep good records and these documents need reviewing on a regular basis to reflect changes in life. Wills should be drawn up and kept up to date as grandchildren are born, or children get divorced. Putting such documents away and forgetting them is a recipe for a family disaster.
A Power of Attorney specifies who will manage your property during your lifetime, in case you are unable to do so yourself. As Daniel O. Tully, Eldercare attorney, points out you should start the conversation soon.
No one wants to face the fact that our loved ones will not be with us forever. Facing our own mortality is frightening as well. Don’t be afraid to start the conversation. Whether you are a parent talking to your children, a husband talking to a wife or an adult child talking to an aging parent, bringing up the topic of death and disability can be difficult, but it is an important conversation to have.
Although none of us wants to contemplate a time when we or a loved one might become disabled or die, it is important to be prepared. There are many steps families can take in advance of death or disability to avoid future conflicts or uncertainties.
You need to be covering:
You should also list information on the location of assets, such as bank accounts, property and stocks and bonds; the identity of important professionals who might have information about your estate; and the location of important records, such as loan, insurance and tax documents. The list can also contain things you want done immediately after you die, such as calling relatives or notifying employers.
It is important that Families must communicate and respect the designated Power of Attorney. A failure to do so can cause major problems. A family member who is unaware of an existing Power of Attorney may grant rights to others that are counter to what has been authorized in the POA.
When relatives are in declining health, a POA should be registered with banks, investment firms, doctors, credit card companies and indeed any other company or institution they may have dealings with. Even their drugstore should have a copy. Only in this way can the individuals rights and wishes be preserved and honored.
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It is often said that death and taxes are inevitable and cannot be avoided. It appears that bank fees can be added to the list. At least that would seem to be the case in the UK where Barclays is accused over ‘obscene’ fees for customers’ wills.
An Independent on Sunday inquiry has revealed some major high street banks, solicitors and will-writing firms advise clients to appoint them as executors on customers’ wills and levy fees of up to 4.5 per cent on the estate on death. On an estate worth £500,000, that equates to £22,500 – about four times as much as the fees that the best-buy probate firms charge.
An executor’s role is to administer the deceased’s assets and ensure they are correctly distributed between beneficiaries and the taxman.
Barclays has been criticised for using aggressive tactics to persuade customers to appoint it as executor. Barclays defended its actions, saying that it acted as executor only in a minority of cases and that its policy is to step down when asked to do so by a beneficiary.
Consumers are warned that some will-writing companies and banks insist on writing themselves in as a joint or sole executor in the first draft in the hope of getting the fees for doing the estate work.
A codicil can be added to an existing will to remove unwanted executors. However, it applies only if the person drawing up the will is still alive. As usual, it is buyer beware and you should read very carefully all the small print before signing that draft will. It may have sharp teeth.
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Perhaps most people realize the importance of having a will so that you Don’t Leave A Mess for your Loved Ones.
Upon your death, your loved ones will be grieving your loss. Don’t make the process more difficult by failing to properly plan for your death. There are some important things to avoid in order to ensure your final wishes are met and to make the process smoother for your loved ones.
The link above describes what is involved.
However the will along may not be sufficient as revealed in the story of How Earl Jones, the Montreal Ponzi schemer, found his clients.
Court records reveal that in the summer of 1986, a cancer-stricken nurse named Dianne Creaser signed a will in a weak, barely legible scratch, appointing businessman Earl Jones as one of the executors of her estate. After her death, although Ms. Creaser had named her ex-husband as another executor of her estate, Mr. Jones went to the Montreal courthouse two months later to get a probate hearing confirming him as the sole person who would handle her assets.
That is why it is so important to understand what probate is and the steps involved in the probate process.
Probate is the legal process of distributing your assets according to your wishes, which includes determining the validity of your will, gathering your assets, paying your debts and taxes and then distributing the remaining assets according to your last will. To get the process started Your Personal Representative, the Executor, will submit your will to probate court to have it validated. The main advantage of probate is that the probate court is supervising the entire proceedings, and the probate laws are being followed.
The Probate Process arranges that any debts you owe, including taxes are paid. Thereafter it ensures that assets are transferred to your beneficiaries, as per your will.
The probate court oversees the following:
The length of probate will depend on the complexity and size of your estate. On average, the probate process can take between 1-2 years if there are no complications. However in some cases it goes on for decades. Given this, it is worth studying exactly what will be involved and arranging that the appropriate steps have been taken to safeguard the best interests of your heirs.
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