Click here to read the article I wrote for the UNT Dallas College of Law Accessibility Journal.
After Aretha Franklin died last August, she was believed to have died intestate--that is, without a will. But recent reports suggest that not only did she have one will, but she may have had three.
So, if one will is good, are multiple wills better? Short answer: nope.
What happens when a decedent has more than one will? Well, I can't speak to the laws in Michigan, where Aretha lived, but let's say she'd lived in Texas. Here's how this issue, called will construction, would be handled in the Lone Star State.
It's worth noting that in Aretha Franklin's case, and in many will construction cases, the purported wills at issue are written by lay people, not attorneys. A properly attorney-drafted will should avoid the issues noted below.
Is any of the documents a valid will?
First, we'd need to review the documents to determine which, if any, show "testamentary intent"--that is, purport to dispose of some or all of the person's property after death. A signed note saying "I give my house to Joe when I die" would probably be construed as a testamentary instrument, while "I want to give my house to Joe" might not be, since it expresses a wish rather than actually making a gift, and doesn't state that such gift is to happen at death.
Second, we'd have to determine if the document met the legal requirements for a valid will. A typed will is valid if properly attested by two witnesses, and an attorney-drafted will prepared by a knowledgeable estate planning attorney should satisfy this requirement. A handwritten, or holographic, will can also be valid even if not witnessed if it's written entirely in the testator's handwriting (testator=person making the will).
So, if the Queen of Soul wrote out her wishes for property disposition at death in a spiral notebook, as the article suggests, that writing could satisfy the requirements for a valid holographic will as long as she signed her name somewhere on the document and a witness can confirm that the handwriting is Aretha's. (So yes, if you found yourself on a plane going down and didn't have a will, you could write your will on a cocktail napkin.)
But if instead of handwriting those wishes she typed them up on her computer, printed the document out, and signed it without witnesses, it's not a valid holographic will, it's just her autograph on a piece of paper (I mean, it's still Aretha Franklin's autograph, so it's not nothing, but it's not a will.). What if she splits the difference, typing up her wishes, signing it, then going back and adding handwritten notes? Well, we disregard the typed portion and if what's left can stand as a will, it's a will.
Which documents comprise the testator's will?
Next, once you've figured out which documents, if any, meet these requirements, you'd have to consider their relation to each other. If the most recent document expressly revokes all prior wills (as virtually any attorney-drafted will does, unless, for example, there is another will in a foreign jurisdiction the new will is intended to work alongside), that document alone comprises the testator's last will. Otherwise, to the extent that a later document is inconsistent with an earlier one, the doctrine of "implied revocation" comes into play and the later provisions supersede the earlier ones. But to the extent they aren't contradictory, the documents should be harmonized and given effect.
So for example, if Aretha's first will gives everything to Kid A and a later will gives everything to Kid B, the later will impliedly revokes the first one as they are so inconsistent that they can't coexist. But if the second will just gives the car to Kid B, we'd harmonize the two to say that under the combined will, Kid B gets the car, Kid A gets everything else.
Beyond that, once we've figured which document(s) comprise the testator's will, the next step is to review and determine if any ambiguity exists, such as a property description that leaves the reader unclear which property is being given. In cases of ambiguity, Courts apply a series of presumptions to determine if the ambiguity can be resolved. If not, they can consider extrinsic evidence—evidence beyond the four corners of the will itself—to try to determine the will’s meaning. Without knowing more about Aretha's documents we don't know if this will be an issue, but it wouldn’t surprise me. She was a brilliant musician, after all, but not an attorney. As I like to say, clients think of will provisions in terms of specific items and specific people, while attorneys like to draft in terms of classes of property and classes of people for greater flexibility, where possible.
Stories about celebrity estate planning gone wrong make noteworthy examples, but issues like this are not uncommon with layperson-drafted documents. I once had a probate client come in for our first meeting with an attorney-drafted will that had the i's dotted and t's crossed. So far, so good, looks like a straightforward case. Then the client reaches into a file folder, pulls out a piece of legal paper with writing, and says "and we found this in a legal pad in her living room, does it mean anything?" The paper, dated after the other will, purported to be a will too. Suddenly, not so straightforward.
Was this handwritten document a will that stood on its own, should the two documents be harmonized into a whole will, or did I have an attorney-drafted will and a page of handwritten notes that fell short of a testamentary instrument? Fortunately in that case it was a moot point because all family members agreed on the same course of action, but had the documents resulted in different distributions, we may have been looking at a contest between the party who fared better under the handwritten item and the party who fared better under the attorney-drafted will.
And while Aretha’s estate is big enough that even after legal fees the distributees will get a lot, when issues like this affect everyday people, it can eat into a small estate. Had the testator in my case picked up the phone to schedule a meeting with her attorney to make a new will instead of picking up a legal pad and a pen and attempting to write her own, she'd have saved her family some time, effort, and money—a result she’d likely have preferred.
You've finally done it. You've created an estate plan, including a will. Do you have to take it anywhere now or can you just store it at home?
What about if you're in possession of the will of someone who has passed away? Do you have to do anything with the will?
A will isn't just another special document. For many important documents a copy is as good as an original but when it comes to probate, the original will is far preferable to a copy. It's possible to probate a copy of a will when the original isn't available but doing so involves several additional steps.
When the original can't be located, you must overcome the presumption that the reason the original can't be found is because the person who wrote the will revoked it by destroying it. Probating a copy of a will requires giving notice to family members who would inherit in the absence of a will, inviting a contest if any heir was excluded from the will. At best, probating a copy of a will is more work than probating an original and at worst, the effort may fail.
In summary, the original will is a special document which should be safeguarded to avoid risk of loss or tampering both during life and after death.
Section 252 of the Texas Estates Code speaks about the safekeeping and custody of wills. There are a few important terms to know:
-- A testator is the signer of a will--the person who's providing for the disposition of his/her property at death. You may also see references to a "testatrix," the feminine version of the word, though "testator" is now commonly used for all genders. If it's your will, you're the testator.
The will of a testator can be either deposited or surrendered. Wills are both deposited and surrendered to the county clerk of the testator's county of residence.
If the testator is still living, her will can be deposited with the county clerk for a fee of $10. A testator is not required to deposit her will and may choose instead to store it in another secure place, such as a bank safe deposit box or a home safe. Many clients choose to deposit, reasoning that $10 is a small price to pay to avoid the risk of losing the will, but others choose to make their own storage arrangements.
It's important to note that depositing a will doesn't automatically trigger the probate process or have any legal significance. The fact that a will was accepted for deposit isn't a finding that it was validly executed or even that it meets the requirements of a will. It's just about ensuring the document's safe storage.
When you deposit your will with the county clerk (or someone else does so on your behalf), the clerk issues a certificate of will deposit. For clients who choose to deposit, I advise storing the certificate of deposit along with a copy of the will marked "copy" with the rest of the client's estate plan to ensure that family members know that the will has been deposited.
During the testator's life, the county clerk can only release the will to the testator or a person authorized by the testator. When depositing the will the testator may provide contact information for people the clerk should notify of the will's location upon learning of the testator's death.
While depositing a will during the testator's lifetime is optional, once the testator dies, the Code states that the person in possession of the original will shall deliver the will to the county clerk. "Shall" is legalese for "must," so surrender is a requirement, not an option. The procedure is similar to that for deposit except that the custodian does not have to pay the $10 fee and the certificate is of "will surrender" rather than "will deposit."
Of note, the surrender requirement is not limited only to wills the family intends to probate, and is not imposed only upon the named executor or beneficiaries. If you're in possession of the original will of a deceased person, you're required to surrender it. If the custodian fails to do so, a court can order him to surrender the will under threat of arrest.
The deposit/surrender distinction is one that can lead to confusion but is easy to summarize. While the testator is living, he can deposit the will for the convenience of storage for a small fee. Once the testator is deceased, the custodian must surrender the will but is not charged to do so.
What happens to a person’s assets and debts when they die? You may know that a person’s assets pass either to the beneficiaries of a will/trust/beneficiary designation or, in the absence of such planning, according to the will the state of Texas wrote for you. But what about debts?
Well, generally, a decedent’s debts become obligations of his estate. Some of the types of debt that comes up in probate estates won’t surprise you: secured debt (mortgage, car note), funeral expenses, estate administration expenses, general unsecured debt (credit cards, medical bills, etc.). And in some cases, if the decedent received Medicaid benefits during his life, the Medicaid Estate Recovery Program may make a claim for the value of care.
But did you know that if the decedent was incarcerated, the state of Texas can bring a claim against his estate for the cost of his confinement? Yes, that’s right: if you’re a guest at the gray bar hotel, in some circumstances, the state may pass the tab along to your estate.
There are a few important limitations on the state’s ability to bring such a claim. First, the state may not enforce a claim if the inmate was survived by a spouse, dependent, or disabled child. Second, and of note for estate planning, only the inmate’s probate estate is subject to such claims.
Just as a person anticipating future Medicaid need may wish to estate plan with the intent to minimize which assets pass subject to probate, similar planning may be appropriate when the client or a member of the client’s family is incarcerated.
If you saw this post title and thought, "what does a probate lawyer know about criminal law?" the answer is "not much!" But guest blogger Mike Howard knows all about it: his law practice focuses exclusively on criminal defense work.
This guest post was written by a friend and colleague of mine, Mike Howard. Mike defends people charged with both state and federal crimes in and around the Dallas/Fort Worth area. For more information about Mike, his practice, and criminal law topics, check out his website MikeHowardLaw.com. He also blogs about interesting criminal legal issues at MikeHowardLaw.com/news.
I've known Mike since we were in law school together at SMU Dedman School of Law in the early 2000s, and having known him well for over 15 years, I can say without hesitation that not only do I refer others in need to him, but if I or a loved one had need for such representation he'd be my first call.
If you find this post informative, I encourage you to check out his website and review the excellent resources there. Thanks for sharing these helpful tips, Mike!
With the summer upon us and holidays like July 4th coming up you may be planning on going out and having a good time with friends. There's nothing wrong with that, but it's a good time to talk about our top DWI tips.
When my clients come to me for an "estate plan," what they usually mean is a will, occasionally in conjunction with a living trust. Yet as I point out in our meetings, there are a lot of other ways that one disposes of one's estate, and some of them don't happen in a lawyer's office. A good estate plan should zoom out to account for these other means of asset transfer, including beneficiary or payee on death designations, rights of survivorship, etc.
One option that is commonly overlooked is lifetime gifting. Did you know you can give up to a certain amount, called the annual gift tax exclusion amount, every year to as many people as you'd like? For 2018, this exclusion amount is $15,000, so you can give $15,000 to as many people as you'd like this year without owing any federal gift tax. If you're married, your spouse can do the same, so combined, the two of you can give up to $30,000 per person per year.
Lifetime gifting has several benefits. First, while I hate to talk myself out of work ;), lifetime gifting is as simple as writing a check so beyond working out a gifting strategy, you may not require legal assistance to make outright lifetime gifts. Second, lifetime giving allows you as the giver to not only decide exactly who gets what and apply any preconditions you may wish, but also to have the satisfaction of seeing the recipients enjoy your gifts. Also, depending on beneficiary ages, lifetime gifting may enable you to give the gift when it is most needed, for example, to help a grandchild go to college. And, the recipients get to express their appreciation for your generosity directly to you.
On the flip side, lifetime gifting also comes with a few risks. For most people, the biggest risk is that the money you give away today may be money you need for your own support in the future. Second, while you can revise a will or trust to change distribution plans as life circumstances change, lifetime gifting can't be undone in the same way, much as toothpaste can't be readily put back in the tube. For some people, these considerations may limit the practical value of the gift tax exclusion.
Amounts gifted up to the annual gift tax exclusion amount don't count toward your lifetime combined estate/gift tax exemption, which is another benefit. That said, even before the recent tax bill the exemption amounts were high enough not to be a planning consideration for many people, and now at $11.2 million individual/ $22.4 million couple, even fewer people will need to take that into account.
Many people may already be doing lifetime gifting in a small, informal way, such as small checks on birthdays, and for some clients, greater lifetime gifting isn't appropriate at this stage of life. For others, however, planned lifetime giving using the gift tax exclusion can be an easy, efficient, and satisfying way to distribute a significant amount of property.
So you’ve finally done it. After years of thinking “I really need a will” you’ve finally called me and set an appointment to discuss your estate planning needs. What will the process look like? How long will it take?
Here’s what you can expect if you work with me on an estate plan:
Before we meet
Before you come in to meet with me, I ask you to complete my estate planning client worksheet. The worksheet is a web-based form that takes around 15 minutes to complete, no pen and paper necessary (though if you prefer to complete that way, I’m happy to send you a PDF version of the worksheet).
Your answers on the worksheet need not be super-detailed or final, but they serve a few important purposes. First, they give us a helpful starting point for our discussion so that when we sit down to visit I’ve already got at least a general idea of your family situation, nature and size of estate, and wishes and concerns. Second, it’s my experience that when clients have taken the time to fill out the worksheet they come into the meeting better prepared as well and for couples, they may have begun discussions between themselves as to some issues. As a result, I find that the planning meeting is far more productive when clients have completed the worksheet in advance. I know your time is valuable and you want to get the most value for your dollar, and this helps maximize the value of our time together.
Flat fee/hourly fee
For clients who do complete a worksheet in advance I offer a flat fee estate plan option including your will, declaration of guardian for children (if applicable), financial and medical powers of attorney, advance directive to physicians, HIPAA authorization and, if requested, declaration of guardian for self and appointment for disposition of remains. For couples, I offer a discounted rate such that the second plan in the package is half price. Clients who do not complete a worksheet before our meeting pay hourly for my time, as there is generally more follow-up required after the first meeting.
While the flat fee plan documents provide a comprehensive plan for most clients, occasionally a client will require additional documents such as a trust agreement, deeds, etc. Such documents may be available on a flat fee or hourly rate, depending on circumstances.
The heart of the estate planning process is our planning meeting. This meeting typically lasts 60-90 minutes and is when we work to flesh out the wishes you set forth in the worksheet.
At this meeting we’ll go through each document included within the estate plan to discuss what that document does and walk through some what-if scenarios to ensure your plan addresses contingencies that may arise. You may end up changing your answers from the worksheet based on our discussion, and that’s fine. By the end of this meeting you should have a clear understanding of what each estate planning document does and I should have a good understanding of your wishes for each document.
Clients often ask if they need to bring anything with them. If you have any existing estate plan documents you may bring those for review; often, our new documents will be revoking the old ones but in some cases they may coexist and need to work together. Also, if you have any assets such as retirement accounts with beneficiary designations you may bring information on these accounts. Finally, if your ability to dispose of your estate is limited due to a divorce decree or previously executed contractual joint wills, please bring these documents so I may review and advise accordingly.
I’m sometimes asked when I’m doing estate plans for a couple whether both members need to come to this meeting or if only one can speak for both. In my experience, when just one partner comes, the absent partner generally has many questions later necessitating more follow-up. Accordingly, I reserve the discounted flat fee for couples in which both partners attend the meeting. I understand that sometimes it’s not possible for both partners to attend and am willing to follow up with the second partner separately but my fees will reflect the additional time required.
Also, since both partners are my clients, while the first partner may attend the meeting and discuss wishes and concerns, I must confirm those wishes with the second partner to ensure the documents I prepare accurately reflect that partner’s wishes as well.
Within 1-2 days of our meeting, I’ll email you a recap of what we discussed and a bullet-point summary of what I understand your wishes to be, noting any information I need from you in order to prepare the documents. Once you reply back and provide any required details, I’ll prepare your draft documents.
After I’ve prepared drafts of your documents I’ll upload them to Clio, my secure client portal, and send you a link so you can review and let me know of any questions or desired revisions. Once we’ve done any necessary revisions and the documents are in final form, it’s time to schedule our signing meeting.
This meeting will generally run 30-60 minutes. We’ll go through each document and you’ll sign and initial where indicated. As we go through each document I’ll again highlight relevant portions so you can confirm again that they reflect your wishes.
Once you’ve autographed every document, I’ll scan them and return the originals to you to take. I’ll keep a PDF copy for my records and upload PDF copies for you as well. I’ll also give you the “now what” letter suggesting storage places for your docs, language for beneficiary designations, and suggestions of other items to include in your estate plan folder to assist your agents in carrying out your wishes. That’s it. You’ve completed your estate plan!
I recommend that we work to complete the process, from planning meeting to document signing, in a month or less. I find that the shorter timeframe makes it easier for clients to review their documents while our discussion is still top of mind and likewise, I can easily respond to client questions without having to first go through my notes to remember details of your case. In my experience a longer timeframe usually makes for a harder process all around, while clients who have wrapped it up fairly quickly often comment that it all seemed a lot easier than they expected.
To facilitate a quick process, I prepare the meeting recap as soon as possible and almost always within 2 days of our meeting, and upon receiving the client response to the recap I prepare drafts within 2-3 days. Likewise, I respond to any follow-up emails or revision requests as quickly as possible. Whenever the ball is in my court in the process I think of it as a hot potato I want to get back to you as soon as possible. I know a quick process makes it easier for you and will do my part to make that happen.
I don’t expect clients to respond within the same short timeframe (I’m the one who’s getting paid to do this, so I should be the one moving quickly, right?) but do strongly encourage clients to review and respond at their earliest convenience while our planning meeting discussion is still fresh of mind.
As of today, it appears that musical legend Prince died without a will*. When a person dies without a will, or “intestate,” his property passes according to a formula prescribed by state law, not the decedent’s wishes. Prince was known to be a devout Jehovah’s Witness and might have wanted much of his estate to go to his church. But if he never created an estate plan to give that wish effect, it will pass instead to his heirs as defined by law. In effect, the state wrote his will for him.
* Note that it’s possible he has trusts, legal entities, or some other manner of legal planning that provides for the distribution and management of some or all of his assets. As of now, the only detail shared is that a will has not been found. But for sake of example, let's assume he had none of those things.
Celebrity estate plans gone awry often make interesting cautionary tales for the rest of us. Prince lived in Minnesota so his estate will be distributed and administered according to Minnesota law. But by way of example, what if he had been a Texas resident?
Who would get his property under Texas law? When a person dies without a will, we look to see who his closest living relatives are.
In Texas, the first thing we have to consider is whether the decedent was married at death or not. If they were, then we have to consider whether we’re dealing with community property, separate property, or both. In this case, Prince was unmarried at the time of his death, so that issue wouldn’t apply.
Next issue to consider is whether he was survived by any children or other descendants (grandchildren, great-grandchildren, etc.). It appears that Prince had only one child, who tragically died as an infant. So, Prince was not survived by a spouse or descendants. In other words, if you picture a family tree, there’s no spouse to go across to and no descendants to go down to.
The next direction to try is up. If Prince’s parents had both survived him, they would each inherit half of his estate. If only one survived, the survivor would claim half and Prince’s siblings (or descendants of deceased siblings) would collectively split the other half. If he was survived by only his mother but Prince’s father and Prince’s siblings all predeceased him, Mom would get 100%. But Prince’s mother and father both predeceased him.
So to recap, we’ve looked for and not found heirs at any of the following levels: spouse, descendants, parents.
Next up is siblings, and here we finally find some heirs. Reportedly, Prince was survived by one full-blood sister and five half siblings. Here is at least one area where Texas and Minnesota probate law differ: in Texas, half siblings inherit half as much as full-blood siblings, whereas in Minnesota they are apparently treated equally.
So, we’ve concluded that Prince’s heirs are his full-blood sister and 5 half-siblings. What percentages would they all get under Texas law? Brace yourselves, we’re gonna math.
Think back to when you learned fractions. The top number is the numerator, the bottom is the denominator. To come up with our denominator, we add up the total number of shares at play: one for each half-sibling, two for each full. That gives us 5+2=7. Now, for the numerator, each half-sibling gets 1, each full gets 2. So our full sister gets 2/7 of the estate while each of the five half-siblings gets 1/7. Add them all up and you get 7/7=100% accounted for.
Now, to take it a step further, let’s suppose one of Prince’s half-siblings predeceased him but was herself survived by children. That half-sibling’s children collectively share her 1/7. So if she had three children, they each get 1/3 of 1/7. Add those pieces together, and collectively, that branch of the tree gets 1/7.
So now that we know who the heirs are, they just show up and get their money, right? Not quite. Again, I’m using Texas law here, so the process that actually plays out in Prince’s estate may well look different, but there is as yet no legal finding of who Prince’s heirs are.
The process of obtaining that legal declaration of heirs is called a judicial determination of heirship. One or more of the heirs files an application asking the Court to declare heirship. The Court appoints an attorney to serve as attorney ad litem for unknown heirs-in essence, to fact-check the application. Often this is a fairly straightforward undertaking involving speaking with the applicant and other people who don’t stand to inherit but knew the decedent’s family history and reviewing relevant records. In a situation like this, though, it could get a lot more interesting.
Once the Court has heard sufficient evidence to determine the heirs, the Judge signs an Order declaring heirship, and that Order is analogous to a will that divides the person’s property among the declared heirs.
So what if, perhaps unbeknownst to any of his family members, or even Prince himself, Prince fathered a child? (Let’s just say the life of a famous celebrity might present more opportunities for casual “relationships” than the average person’s.) If paternity could be established, now that child skips to the head of the line in front of the siblings and inherits the full estate. Is there any child out there? Who knows, but it wouldn’t surprise me at all to see allegations of it, given Prince’s celebrity and large estate.
But let’s assume that there are no surprise children out there, and the siblings are in fact the only heirs. Well, now you have 6 people who may not get along, who may be in very different financial circumstances, who may have different opinions, all co-owning some very valuable property. Doesn’t sound like a recipe for trouble at all, right?
Texas law allows for independent administration-that is, for the administrator to act largely free of court supervision, when provided for in a will or, in the absence of a will, when all heirs consent. If all 6 of these people were willing to consent (and there are no minor heirs who are legally incapable of giving consent), that might be an option. But would they all agree to that? And even if they did, would anyone want to serve as an independent administrator in these circumstances?
Most likely, it would end up being a dependent administration. That is, the administrator would essentially be playing “Mother May I?” asking the Court’s express permission for nearly every action taken, from resolving creditor claims to selling property to managing ongoing business to distributing assets. If you’re thinking that sounds like an expensive, complicated process, you’re right.
Okay, so most of us don’t have $300 million estates, including valuable intellectual property and other complex assets. But take away the money and fame and the story looks not so different from those of some of my own clients. Fortunately, sometimes the family members all get along and the estate can be administered fairly easily and inexpensively. But take an already strained family dynamic and throw in an intestate death and things can get messy quickly.
None of us know what Prince was thinking or why he didn’t have an estate plan. It’s safe to say, though, that whatever his wishes for his estate, there was a better way to achieve them than dying intestate. The same is true for us non-celebrities too.
Not to be a Debbie Downer, but…
There’s really no way around it: making an estate plan necessarily involves confronting the possibility of our own death and incapacity. For those of us with young children, this also means confronting the idea of our children growing up without us, being raised by someone else.
Those are some hard scenarios to imagine-hard enough, in fact, that many people choose not to do so, burying their heads in the sand and hoping the issue never arises.
Alas, as the saying goes, hope is not a strategy. And the question is not whether someone else will raise your children when you cannot, but who will take on this important task and, more to the point, whether that person will be someone chosen by you or by a judge who doesn’t know you.
As I’ve discussed before, if you haven’t created an estate plan, the State of Texas already wrote one for you, and that plan includes an order of priority on who should be guardian of your children. That plan might not match your wishes, but even if it happens to, there’s advantage to spelling your wishes out.
For parents of young children, our motivation to do an estate plan isn’t really about our stuff. It’s about our kids.
So, how do you go about choosing who should be guardian of your children? First, let’s back up a bit and understand what we’re talking about with guardianship.
When does need arise for guardianship of a minor?
Let’s start with the idea that parents are what the law calls “the natural guardians” of their children- that is, we don’t have to go to Court to get the right to make decisions for our own children. Until they are 18, just being their parent is sufficient for us to have the ability to make decisions for them.
Generally, need for a guardian arises when both parents of the child die or become legally incapacitated and thus, unable to care for their child. At that point, the child needs a legal guardian. (Note: guardianship, which comes into play when the parents are deceased or incapacitated, is a different concept than conservatorship.)
How long does a guardianship of a minor last?
Until the child turns 18 and is no longer a minor. Once a person turns 18, he is no longer under the legal disability of minority and is presumed to have capacity to make his own decisions.
A person with special needs may still lack legal capacity upon reaching 18 and at that point, a guardianship of adult comes into play, in which a judge must find the person to be incapacitated.
What types of guardians are there?
The law actually provides for 2 types of guardian for your children: guardians of their person and guardians of their estate.
Guardian of the person: The guardian of the person (GOP) role is what we typically think of when children are involved. This person’s job is to provide for the child’s physical care, consent to medical treatment on his behalf, determine where he should live and attend school, and consent to matters such as field trips. In short, the GOP handles decisions relating to everything but managing the child’s assets.
Guardian of the estate: The guardian of the estate (GOE) handles assets owned by the child and may speak for the child in legal proceedings and contracts.
Does a minor need both a GOP and GOE?
Not necessarily. Most minors don’t have an estate that needs managing as most minors do not own significant property. A child who has just inherited property from deceased parents might have an estate, but if the parents set up their estate plan for their assets to pass in trust to their children, the trustee appointed in the parent’s will may be able to manage all assets such that there is no need for a GOE.
When we talk about guardians for minors we’re generally talking about a GOP. While the parents can, with a well-drafted estate plan, often avoid the need for a GOE of their children, they cannot avoid the need for a GOP. Rather, they may tell the Court who they wish that GOP to be.
Do I have to nominate the same person to be both GOP and GOE?
No. These roles may be filled by different people. However, in that they would necessarily have to work together to meet the children’s needs, it’s important to nominate people who get along and could work closely.
Who should I nominate?
Let’s start by ruling out people who the Court cannot legally appoint as guardian. If you nominate one of these people, the Court cannot honor your wishes and appoint them because their appointment is prohibited by law. Note that the disqualifications are slightly different for GOP and GOE, but for simplicity I’m going to combine them:
In short, the Court must make an appointment that is in the minor’s best interest, and naming someone who lacks capacity, has an interest adverse to the child’s, or who has shown himself untrustworthy in the past is not in the child’s best interest.
Other than those disqualifying factors, what other limitations are there on my appointment?
You can appoint go-guardians, if they are married. Otherwise, only one guardian may serve at a time.
For married couples, I recommend nominating the same guardians in the same order, so that a Court isn’t put in the position of trying to sort through conflicting requests.
For single parents, it’s important to know that you cannot cut off the other parent’s parental rights by naming someone else as guardian. Your nomination for GOP will only come into play if both legal parents are deceased or incapacitated. Guardianship isn’t a tool for terminating or limiting parental rights-those are family court issues.
However, you can write your estate plan to ensure that any assets the child inherits from you are managed by someone you appoint, whether a trustee or, if needed, a GOE. Parents are not automatically their children’s natural GOE.
Translated out of lawyer-ese: You can’t write a plan that keeps your child from going into the physical care of the other legal parent, but you can write a plan that ensures any assets that would go to your child as a result of your death are managed by someone you choose on the child’s behalf.
Okay, so given all of that, there are a lot of people I could nominate. How should I choose?
When you’re choosing a GOP for your child, you’re choosing the person who will decide where your child lives, where she goes to school, and will consent to medical care, field trips, etc. In short, you’re deciding who will parent your child until she becomes an adult.
Among the factors you may want to consider in determining whether someone would be a good guardian for your child are:
The hard truth is that no one will raise our children just like we would, and picking the best person involves deciding which factors are most important to you and choosing the person who comes the closest to meeting your wishes.
Should I talk to my chosen person before nominating them?
Yes. Being a guardian is a big and important responsibility, and the person may be honored by the consideration but ask you to nominate someone else instead. If your chosen person isn’t interested or able, better to know that now while you can make another choice.
But if the person is willing, now you have a good opportunity to discuss it and tell them why you believe they are the best choice and ensure they understand your wishes. Remember, you can’t expect someone else to raise your child exactly as you would, but you can make sure you’re on the same page with regard to important matters.
So once I’ve nominated guardians, can I cross it off the to-do list forever? What are reasons why I may need to change my nomination?
It’s hard to predict the future. The grandparents who are the picture of health today could experience health issues of their own down the line. The aunt and uncle who are happy to step up today might have several children of their own and then not be in a position to care for yours, or the bachelor you didn’t consider initially might now have a spouse and a more grounded family life. The close friend who lives nearby could move across the country.
And your children get older. Perhaps you chose one person when your children were young but now that they’re older and their needs different, someone else now seems like a better choice.
You are always free to change your nomination. I recommend that my clients briefly review their estate plans once a year to ensure they still accurately reflect wishes and circumstances.
If I nominate someone in an appropriate document and then I and the child’s other parent both die, does the person we nominated automatically become my child’s guardian?
No. A nomination is just that-a nomination. It’s you expressing your wishes on who you’d like a Court to appoint. Only a Court can actually appoint a person as guardian.
How does that happen?
If you pass away, the person you nominated can file an application to be appointed guardian of your children, along with a copy of the declaration of appointment in which you named that person guardian. Assuming the person passes a background check and the Court finds that his appointment is in your child’s best interest, the Court signs an Order appointing your nominee as guardian, and upon taking his oath, posting any required bond (which you may waive in your nomination), and obtaining Letters of Guardianship, your nominee is now your child’s official legal guardian.
This all sounds pretty heavy. But once I’ve done it, I’ll know that even if something should happen to me, my children will be well-loved and cared for by someone I chose, who is willing and up to the job.
Couldn't have said it better myself ;)
Should I buy long-term care insurance?
This is a question I get from time to time from estate planning clients, and an item I suggest that every client at least take time to consider. It’s not for everyone, or every stage of life, but it can be a valuable tool in the estate and financial planning toolkit.
What is long-term care?
The term long-term care (“LTC”) describes the range of services provided to help a person with daily living activities, including bathing, dressing, eating, toileting and related needs, and transferring. Most LTC services aren’t medical but LTC may include help with administering and keeping track of daily medication requirements. LTC is appropriate for people who are unable to care for themselves either indefinitely, as for a senior with dementia, or for a long period, such as a person recovering from major surgery or injury.
Where is long-term care provided?
Long-term care may be provided in the person’s home or in a facility such as a nursing home or assisted living center.
I don’t need LTC and may not for years. Why should I be concerned about this?
Statistics show that around 70% of adults aged 65 and older do need some manner of LTC for some time period. The longer we live, the more likely we are to develop dementia or some other condition which limits our ability to care for ourselves and leads to the need for LTC. As the average life expectancy continues to rise, that percentage will continue to go up as well. In short, if you’re not yet to a stage in life when you need LTC, if you live long enough, you’ll probably get there.
Is LTC expensive?
Generally, yes, though of course costs vary by location, nature, and duration of need. While cost varies according to level of care, median national annual costs of care at assisted living centers and nursing homes average over $40,000 and $85,000/year, respectively. Home-based care, which is what many people prefer, if possible, can be even more expensive.
How is LTC paid for?
In the absence of an LTC insurance policy, in one of two ways:
Doesn’t Medicare cover all my costs once I get older?
This is a common misperception. While Medicare covers many costs for seniors, it does not cover long-term care (see the official Medicare handbook). Medicare may pay for up to 100 days of skilled nursing care, but does not cover LTC needs beyond that point. Remember, most LTC isn’t specifically medical in nature, but rather assists with activities of daily living.
Ok, so going back to Medicaid. Are there any limitations on the care that Medicaid will pay for?
Yes. While a full discussion of Medicaid LTC is beyond the scope of this post, because Medicaid reimburses providers at a lower rate, many facilities have only a limited number of “Medicaid beds” (and may have a waiting list for them), and the most luxurious and well-appointed assisted living facilities may not accept Medicaid at all. Medicaid coverage only applies with providers that accept it, so your options are limited to those facilities.
So those are the options if you don’t have LTC insurance. What is LTC insurance?
A long-term care insurance policy is a policy you purchase ahead of need that will pay for your LTC needs in the future as you age. Coverage varies by daily benefit, total benefit, and timeframe. In general, the older the policy holder and the longer and more extensive the coverage, the more expensive the premiums.
What features do LTC insurance policies have?
Policies may include inflation protection guarantees which limit the amount by which your premium can increase from one year to the next. Some policies are tax-qualified, which means that you may be able to deduct part of the premium from your taxes as a medical expense.
A particularly valuable option for some clients is a Texas Long-Term Care Partnership-qualified policy. Such policies provide dollar-for-dollar asset protection in the event you use up your full benefit and later need to spend down for Medicaid. For example, if you purchase a $500,000 policy and use the full $500,000 in coverage but still have LTC needs, $500,000 of your assets are exempted from being subject to Medicaid spend-down, which means those assets are available to pass on to loved ones or use for other purposes.
Is LTC insurance expensive?
The cost depends on the type and amount of coverage you want and your age and health, and varies by provider. And of course, policies with inflation protection, tax-qualifying, or asset protection features will cost more than policies without such features.
What happens if I buy a policy and die before I use up my benefits?
Generally, the same thing that happens if you buy homeowners insurance and don’t need to make a claim during the year: you don’t get your money back. What you do get during the time the policy is in effect is the peace of mind of knowing that if something happens, you’re covered. Which, depending on your circumstances and wishes, may or may not be of value to you.
Okay, so given all of that, who is long-term care insurance a good fit for?
In a nutshell, it’s good for people who are likely to live long enough to need LTC, who have family history of dementia or similar conditions which suggest high likelihood of needing LTC, and who want to ensure they’ll have the highest quality of LTC without depleting their assets to afford it.
Let’s unpack that a bit. First, by looking at the opposite.
Who isn’t LTC insurance a good fit for?
No expected LTC needs: First, LTC insurance doesn’t make sense for a person who doesn’t expect to have long term care needs of significance. For a person in poor health, expected LTC needs may be minimal. And for someone already on the far end of the life expectancy chart, regardless of health, it becomes increasingly unlikely that you’d need care long enough to make it worth a policy (and of course, buying at such an advanced age would come with an exorbitant premium). The key here is the lack of a long term planning horizon.
Minimal assets: Second, LTC insurance isn’t appropriate for someone with minimal assets. Not only will this person likely spend their way down to Medicaid eligibility fairly quickly once need arises, but when they weigh the cost of premiums against the value of the assets they’re trying to protect, it may be a wash. For someone with minimal assets, spending down and then relying on Medicaid is the most appropriate option.
Substantial assets: Third, if someone has significant assets and is willing to spend them in order to pay for their care, they don’t need LTC insurance. Put another way, they have sufficient assets to pay for the level of care they want, and are willing to do so.
So looking at the list of who might want LTC insurance again…
Let’s say that you have the assets to pay most or all of your own expected care needs but want to preserve those assets to pass along to children, grandchildren, or a favorite charity. The thought of all of your life savings going to a nursing home instead of to family frustrates you, and of course, if you deplete those assets, you then have to rely on Medicaid which may not meet your desired standard of comfort. You see a LTC policy as allowing you to pay your LTC expenses ahead of time, maybe even while you’re still working, in order to avoid having to deplete your assets later.
Now, let’s say you’re also someone in pretty good health and longevity runs in your family. You have a reasonable expectation of living into your 70s and beyond. And because the likelihood of needing LTC increases the older you get, you realize that that also means your likelihood of needing LTC is fairly high. Add in a family history of dementia or similar condition, and the scales tilt further still.
In short, you expect to live long enough to need LTC and you like the idea of being able to have home-based care and then, if you have to go to assisted living, be able to go to the nicest and most luxurious facility available. And you want to do that while passing on as much of your savings as possible.
If that sounds like you, then you may be a good candidate for LTC insurance.
Okay, that sounds like me. So should I apply right away?
Personally, I’m an excellent candidate for LTC insurance, but I haven’t signed up yet and won’t any time soon.
Why? I’m still young for it. It’ll be something to look into again around the late 40s-early 50s timeframe. My need is still remote and far enough off that there’s no need to buy now, and even in 10 years I’ll still be young and, presumably, healthy enough to qualify for reasonably favorable premiums.
How late is too late? My grandmother bought a policy around age 80 and still managed to end up in the black on it living to age 92, but I wouldn't recommend that approach to anyone now. She managed to have the fortune of buying an undervalued policy and then living well beyond expectancy to use a high amount of benefit.
Insurance companies have realized in recent years that their previous actuarial assumptions and assumptions about interest rates were off and, after losing money, have reformulated their policies accordingly. The bad news is that costs are now higher for relatively less generous benefits. The good news is that a policy purchased now is less likely to see large premium increases down the line than one purchased when they were operating under overly rosy forecasts. (Some offer premium increase protection guarantees, though of course at a cost.)
So…when should I look into this?
I’d suggest that it should merit consideration around age 50. Maybe not for immediate purchase, but at least discussion with a financial planner about if and when it might make sense. It should at least be on the radar at that point.
What are the risks of waiting too long?
The biggest risk is that you develop a disqualifying condition such that you aren’t able to get a policy. For example, once you’ve been diagnosed with Parkinson’s disease or Alzheimer’s, you probably won’t be able to find an insurer who will cover you. Yet if you had purchased coverage before diagnosis, you’d get to keep the policy and they couldn’t drop you, so long as you continued to pay your premiums. I have a relative in that situation and unfortunately, while an LTC insurance plan might have been a good fit for her, the window of opportunity to purchase has closed.
That risk aside, the consideration for most people is that the longer you wait and the older you are, the higher your premiums will be. Remember, insurance is about actuarial odds, and the older you get, the higher the odds of your needing LTC.
Are there other ways to protect assets from LTC costs?
For example, some manner of irrevocable trust-based planning might also achieve that end. That’s another discussion for another day, but it’s worth noting that there are some limitations, most notably Medicaid’s 5 year lookback provision. And, some clients may be uncomfortable with the idea of relinquishing ownership and control of assets to a trustee, even if they remain the beneficiary.
For those seeking specifically to qualify for Medicaid there are specific strategies to place funds into non-countable assets to protect them.
How do I decide what’s best for me?
As with all matters of estate planning, planning for long-term care needs is not a one size fits all process. Your best bet is through discussion with professionals who can advise you of your options based on your specific circumstances and wishes. Your estate planner can help you evaluate how LTC insurance might fit into your planning goals.
Also, take advantage of resources like ownyourfuturetexas.org, which can provide further information about LTC insurance and direct toward insurers and other resources.