Author: admin

How much stuff is too much? Most Americans would probably admit that they own too many things. From clothes to electronics to sports equipment to collectibles, the typical US house is stuffed to the brim with items of questionable utility. 

On occasion, we may commit to decluttering, only to get overwhelmed or distracted. Meanwhile, the stuff keeps piling up. But at some point, it is necessary to deal with everything we have accumulated over our lifetime. 

If you do not declutter your house, somebody else will have to do it when you die. This is part of the thinking behind Swedish death cleaning, a morbid-sounding practice that is actually quite liberating, both for ourselves and our loved ones. 

The Psychology of Materialism

The average American home contains 300,000 items.¹ By any measure, that is a lot of stuff. 

“The things we own end up owning us” is a quote from the movie Fight Club, which touches on how materialism negatively affects us. Research shows that buying more stuff does not make us happy. In fact, the opposite appears to be true. A series of experiments by psychology professor Tim Kasser found that materialism is negatively correlated with well-being.² 

Research also shows that 84 percent of Americans worry that their homes are not organized or clean enough.³ And 55 percent of them say the disorder is a major cause of stress.⁴ 

Acquiring things triggers reward pathways in the brain that make us feel good. Shopping or receiving a gift—or enjoying a sweet, fattening treat—delivers a dopamine hit that reinforces a cognitive pattern to want more. But in the long term, acquisitiveness can make us feel bad just like eating bad foods can. 

To keep the things we own from owning us, we need to use disciplined thinking to help overcome our more base desires. 

Minimalism, Tidying Up, and Death Cleaning

Counterbalancing the American tendency toward materialism is the minimalist lifestyle trend. Minimalism dates back to an avant-garde art movement that began in 1960s New York.⁵ As a way of life, minimalism emphasizes living with less and being happy with what you already have. 

Minimalist living went mainstream with the 2010 publication of Marie Kondo’s New York Times bestselling book, The Life-Changing Magic of Tidying Up. It produced the KonMari method of inventorying all of one’s belongings and then keeping only those things that “spark joy.” 

The successors to the minimalist movement can be seen in Americans—the millennial generation in particular,—who have embraced tiny homes, #VanLife, and spending money on good times, not stuff. Seventy-eight percent of millennials, compared to 59 percent of baby boomers, say they “would rather pay for an experience than material goods.⁶

Millennials recently overtook baby boomers as the country’s largest living generation.⁷ But it is boomers who are the target of the latest chapter in minimalism: Swedish death cleaning. 

A popular concept in Swedish and Scandinavian culture, Swedish death cleaning was introduced to an American audience with the 2017 release of The Gentle Art of Swedish Death Cleaning: How to Free Yourself and Your Family from a Lifetime of Clutter.⁸ 

In the book, author Margareta Magnusson urges those 65 and older to take part in the practice, which comes from the Swedish word döstädning, a combination of dö (death) and standing (cleaning). “Visit storage areas and start pulling out what’s there,” Magnusson writes in the book. “Who do you think will take care of all that when you are no longer here?”⁹

The Benefits of Swedish Death Cleaning

The primary goal of Swedish death cleaning is to spare loved ones the burden of clearing out our stuff when we die. 

“Some people can’t wrap their heads around death,” says Magnusson. “And these people leave a mess after them. Did they think they were immortal?” 

Magnusson recommends categorizing possessions by those you can easily get rid of, such as clothes you no longer wear, unwanted gifts, and excess kitchen items, and those you might want to keep, like old letters, photographs, and your children’s artwork. You might consider starting in the attic or basement, where excess items tend to accumulate, choosing belongings you do not have an emotional attachment to and moving from large items to small items. 

Magnusson, though, does not emphasize a rigorous approach or definitive checklist. She encourages readers to develop their own method and focus on personal goals for Swedish death cleaning. It is a highly personal exercise that is intended to be uplifting rather than daunting. 

Throughout the book, she reiterates the personal benefits of death cleaning, calling it a “permanent form of organization that makes your everyday life run more smoothly.” And she adds that you might even find the process itself enjoyable. 

“It is a delight to go through things and remember their worth,” Magnusson writes. 

Your loved ones, however, may not understand why you would want to undertake something called “death cleaning,” even though it benefits them. Especially if you are still in good health, it might disturb them that you are systematically eliminating stuff from your life in anticipation of dying. 

According to Magnusson, death cleaning is an important reminder about the impermanent nature of all things, ourselves included. 

“We must all talk about death,” she writes. “If it’s too hard to address, then death cleaning can be a way to start the conversation.” 

There might also be items your friends and family would rather inherit than see you get rid of. Inviting them to take part in your decluttering journey could make the process go smoother. Together, you can sort through things and reflect on the memories they spark. If they want something, let them have it. 

Along the way, they may develop an appreciation for minimalism and decluttering. They might even decide to undertake their own death cleaning and receive a wellness boost that becomes part of your legacy. 

Death Cleaning and Estate Planning

Estate planning, like death cleaning, makes life easier for our loved ones after we die. An estate plan leaves nothing to chance. It creates a written record of your final wishes that minimizes court involvement and eliminates questions about what you would have wanted. 

We cannot help you with death cleaning. But we can help you create an estate plan that simplifies asset disposition for your heirs and gives you peace of mind. To get your plans in order, schedule a meeting with our attorneys. 

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Footnotes

1. Mary Macvean, For Many People, Gathering Possessions Is Just the Stuff of Life, L.A. Times (Mar. 21, 2014), https://www.latimes.com/health/la-xpm-2014-mar-21-la-he-keeping-stuff-20140322-story.html.
2. Professor Kasser on Materialism and the Holidays, Knox College, https://www.knox.edu/news/professor-kasser-on-materialism-and-the-holidays (last visited Sept. 29, 2023).
3. Home Organization Is Major Source of Stress for Americans, Survey Finds, Huffpost (May 22, 2013), https://www.huffpost.com/entry/home-organization-stress-survey_n_3308575.
4. Id.
5. Kyle Chayka, The Empty Promises of Marie Kondo and the Craze for Minimalism, Guardian (Jan.3, 2020), https://www.theguardian.com/lifeandstyle/2020/jan/03/empty-promises-marie-kondo-craze-for-minimalism.
6. Sofia Horta e Costa, Millennials Are Starting to Change the Stock Market, Bloomberg (Jan. 31, 2016), https://www.bloomberg.com/news/articles/2016-02-01/millennial-splurge-on-lifegoals-giving-leisure-stocks-a-boost.
7. Richard Fry, Millennials Overtake Baby Boomers as America’s Largest Generation, Pew Rsch. Ctr. (Apr. 28, 2020), https://www.pewresearch.org/short-reads/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/.
8. Margareta Magnusson, The Gentle Art of Swedish Death Cleaning: How to Free Yourself and Your Family from a Lifetime of Clutter (int’l ed. 2018).
9. Sarah DiGiulio, What Is ‘Swedish Death Cleaning’ and Should You Be Doing It?, NBC News (Nov. 2, 2017), https://www.nbcnews.com/better/health/what-swedish-death-cleaning-should-you-be-doing-it-ncna816511.

At a time of record home unaffordability, more people are teaming up with friends and relatives to realize the homeownership dream. According to the National Association of Realtors (NAR), more than 75 percent of homes on the market now are too expensive for middle-income buyers. Just five years ago, this same income group could afford half of all available homes. From 2010 to 2020, the number of homes bought by people with different last names soared by more than 770 percent. This group includes friends, roommates, and married couples. In 2021, the percentage of single-family homes purchased by nonmarried co-buyers was 25 percent, up from 17.4 percent in 2018. Purchasing a property with other people can help a buyer to lower their individual costs while building equity. However, going in on a house together can also create trouble spots, including survivorship and inheritance issues. 

A home is the largest single investment that most people make. When buying a home with another person, the co-owners must decide how to hold the title so that it aligns with their wealth-building and estate planning goals. 

Co-Ownership and Home Titles

Co-buying a home with a partner, relative, or friend can reduce the costs of the down payment, mortgage payments, utilities, and other household expenses for each buyer, while allowing them to build home equity. Some co-buyers may not even want to live in the home. Their goal may be to rent it out or flip it for a profit. 

Home co-ownership can present problems as well. If one buyer has a bad credit score, it can negatively affect another buyer’s mortgage terms. And if one party cannot meet their financial obligations, the other party could be on the hook for the budget shortfall. 

Typically, co-owners are not only listed together on the mortgage loan, but on the home title. Having more than one person on the title raises estate planning issues that may not immediately arise but should be thought about. 

Property can be titled in different ways. Common ways of joint ownership titling include tenants in common, joint tenants with right of survivorship, and tenants by the entirety. 

• Tenants in common. With this type of title, property shares may or may not be divided equally between owners. Each owner’s share might be equal to their investment in the property or the shares may be divided equally among the owners. However, the co-owners still have equal rights to use all areas of the property. They can also choose who receives their interest when they die; it does not automatically pass to the other owner(s). 
• Joint tenants with right of survivorship. Under this arrangement, each owner has an undivided interest in the property. They own the property in equal shares and have the right to use the property however they wish. The right of survivorship means that, when one of the joint owners dies, their property interest passes to the surviving joint owner(s). 
• Tenancy by the entirety. This title option works the same way as joint tenants with Right of Survivorship but is only available to married couples in certain states. It also provides valuable creditor protection because property owned in this way is not subject to the creditors of just one spouse (although it may be subject to the claims of a creditor of both spouses). 

In states with community property, another type of joint ownership for married couples, co-owned property can be titled with the right of survivorship, but it is not the default and must be designated this way. 

Joint Ownership and Estate Planning

Around 60 percent of Americans do not have a will, but the percentage without an estate plan is highest among Millennials (78 percent) and lower among Baby Boomers (58 percent). About two-thirds of Gen Xers do not have a will, while more than 80 percent of those age 72 or older do have a will. 

One of the top reasons cited for failing to address estate planning is a lack of assets to leave to anyone. While this is often a myth—estate planning is advisable no matter how many assets a person has—buying a house instantly changes this calculus. 

For most people, a home is their greatest investment and the primary driver of household wealth. Even if somebody co-owns a house, their investment in the property is likely to dwarf their other accounts and property. 

Deciding what to do with shares of a jointly-owned property is a major estate planning consideration. And it begins at the time a property is purchased and the title is issued. 

When co-buying a house, each owner should understand how it is being titled and make sure the titling matches their estate planning wishes. For example, joint tenancy might make sense for a married couple but be a poor choice for friends or unmarried partners because they give up the right to leave the property to anyone other than the co-owner. 

In the latter case, tenancy in common is likely a better option. Each tenant in common has the power to dispose of their property interest however they choose—but only if they indicate their wishes in their estate plan. Otherwise, their share of the property passes according to state law when they die. 

For those who already own a house, how the property is titled is no less important to their estate plan. Circumstances change. The original title terms may no longer reflect a person’s current priorities. While changing a joint tenancy may not always be possible or practical, at the very least, a person should know how a home title affects their property rights, the rights of any heirs, and tax obligations. 

Get Your Estate Planning House in Order

Choosing how to title a co-owned home, and how this choice fits into your estate plan, depends on the people and property involved, your estate planning goals, and state laws where the property is located. An estate planning attorney from our office can explain the pros, cons, and consequences of each type of joint ownership to help you decide which one best fits your situation. 

Call or contact us today for help getting your estate planning house in order. 

People often engage in transactions that result in money being owed to them, such as loaning money to a friend or business partner or renting a house to a tenant. But what happens if someone passes away before they receive the money owed to them? Can someone else collect these debts? If your loved one has died and you think they were owed money at the time of their death, keep the following information in mind.

Does the Debt Die with the Person?

The fact that someone dies does not mean that the outstanding debt owed to them disappears or is no longer owed. The debt survives the death of the creditor and is then owed to the deceased creditor’s estate. In fact, a debt that is owed to the estate is considered an asset (i.e., money and property) of the estate. The estate is entitled to collect the debt as part of the probate process that culminates in the distribution of the deceased person’s money and property to the beneficiaries named in their will or to the beneficiaries designated by state law if the deceased person did not have a will. Similarly, if the debt is owed to the deceased person’s trust, the trust’s right and obligation to collect the debt continues after the trustmaker’s death.

Who Can Collect the Debt?

Before anyone can act on behalf of a deceased person’s estate, they must be appointed by the probate court. If the deceased person had a will, they probably named someone they trusted to act as their executor (also known as a personal representative). If the deceased person did not create a will, a person who is given priority in their state’s probate law, generally a family member, can petition the court to name them as the administrator of the estate. Once appointed, the executor or administrator of the estate is authorized—and has a duty—to act on behalf of the estate to collect the debt. Similarly, if a debt was owed to a deceased person’s trust, the successor trustee has the obligation to try to collect the amount owed to the trust.

How Can an Executor or Trustee Discover If the Deceased Person Was Owed Money?

If the executor or trustee is the deceased person’s spouse, they may be very familiar with the assets owned by their deceased spouse, including how much money their spouse was owed and who owed it, but a non-spouse executor or trustee may be less knowledgeable about the assets owned by the deceased person. All executors or trustees should examine the deceased person’s important papers and financial records to determine if there is any evidence that money was owed to the deceased. Optimally, there will be a written loan agreement, mortgage document, or other contract that provides clear evidence of both the existence of debt and the terms of repayment. However, even if there is no formal contract, other written evidence—for example, an email or even a text message demonstrating that someone owed money to the deceased person—can be used to establish the existence and terms of the debt. Alternatively, if the deceased person had records, books, or canceled checks showing the existence of a debt and that someone was making regular payments to them, this documentation can be used as evidence for the executor or trustee to establish the existence of a debt. Although written evidence is considered more reliable, the trustee or executor may also rely on witnesses who heard the deceased person and the debtor discussing a loan or other business transaction to establish the existence and terms of the obligation. Similarly, debtors themselves may make statements to the trustee or executor acknowledging the debt. 

What Happens After the Debt Is Discovered?

The executor or trustee who discovers that a debt was owed to the deceased person should first ascertain if there are any amounts outstanding, that is, amounts that were due at the date of death. For example, consider a situation in which Bob made a loan of $5,000 to his friend Julie, who was obligated under the loan agreement to make monthly repayments of $250 on the fifteenth of each month until the loan was repaid in full in December 2024. If Bob passes away on January 16, 2024, the executor would need to determine if Julie was current on her payments, collect any monthly payments she owed at the date of Bob’s death (including interest), and monitor future payments.

Once the executor or trustee is aware of a debt that is owed to the deceased person’s estate, they should provide a formal written notice to the debtor that the deceased person has passed away and the date of death, that the estate is their new creditor, and that future payments should be made to the estate via the executor or trustee. The notice should also include the executor or trustee’s name, address, and any other information needed to facilitate payment of the debt. The executor or trustee should make efforts to collect any past due amounts and to facilitate the payment of amounts that will be due in the future, for example, rental payments for the remaining term of a lease agreement that extends beyond the date of death.

What If the Debtor Will Not Pay the Amount Due?

Although an executor or trustee will initially attempt to collect a debt by contacting the debtor and requesting payment of the amount due, if those collection efforts are not successful, they may need to seek the help of a lawyer to send a demand letter to the debtor or file a lawsuit on behalf of the estate to collect the amount owed. 

We Can Help

If your loved one has passed away, we can help guide you through the probate process if you are the executor of their will or wish to be appointed as the administrator of their estate. Likewise, if you are the successor trustee, we can help you administer your loved one’s trust. 

One of the important duties of an executor or administrator is to collect, protect, and prepare an inventory of all of the assets in the deceased person’s estate, including the debts owed to them, so they can be distributed to the beneficiaries of the estate. Trustees similarly have a duty to maintain records relevant to and to collect debts owed to the deceased person’s trust. Seeking help from an experienced estate planning attorney can help put your mind at ease by helping ensure that you fulfill all of your duties during what is likely a stressful and emotional time following the death of your loved one. If you would like help, call us today to set up an appointment.

Unfortunately, rifts sometimes arise between family members that are much more serious than just temporary squabbles. The result may be estrangement, defined as “the state of being alienated or separated in feeling or affection; a state of hostility or unfriendliness” or “the state of being separated or removed.”¹ Estrangement does not mean that the relationship has come to an end legally, however.  

A husband may move out of the home he shared with his wife and have limited or no contact with her or their children. A child who has been abused may live with a relative and avoid contact with their parent. A parent may choose not to associate with a child who has committed crimes or abused their trust. These types of situations are unfortunate and occur more often than we would like. You may be surprised to learn that limited contact, or even the absence of any contact, will not have a major impact on the legal right of an estranged spouse or child to inherit from their family member, especially if there is no estate plan expressing an intention to disinherit them.

Estranged Spouse

Intestate succession statutes. If the deceased spouse did not have an estate plan in place, the surviving spouse is legally entitled to inherit from the deceased spouse as set forth in their state’s intestate succession law even if the spouses are estranged—and in many states, even if they are legally separated. Intestate succession laws provide a default estate plan representing the state’s view of the fairest distribution of a deceased person’s money and property. In many states, if the estranged couple did not have any children, the surviving spouse will likely inherit the entire estate of the deceased spouse—even if they despised each other and had not seen each other for many years. If there were children from the union, the surviving spouse and children may each receive a portion of the estate as set forth in the intestate succession statute; in community property states, even if the couple had children, the spouse may inherit all community property, although any separate property may be divided between the surviving spouse and the children. 

Pretermitted spouse statutes. Some states have another type of statute that is intended to protect a spouse who is unintentionally omitted from a will, for example, if the will was created prior to the marriage and was never amended to provide for the spouse. These laws typically provide that unless the will expresses an intention to disinherit the surviving spouse, the spouse will inherit the amount they would have received under the intestacy statute if the spouse had died without a will. Therefore, depending on the circumstances, even if an estranged spouse’s deceased spouse had a will that did not provide for them, the estranged spouse may be entitled to inherit some or all of the deceased spouse’s property if there is no express statement in the will of the deceased spouse’s intention to disinherit them.  

Elective share statutes. Even if the deceased spouse created a will that expressly indicates an intention to completely or partially disinherit their spouse, the state’s elective share statute typically protects the surviving spouse to some degree. This type of statute allows a spouse to elect to inherit a certain percentage—often ranging from thirty to fifty percent—of their deceased spouse’s estate regardless of what the deceased spouse’s will says. In some states, the surviving spouse is only allowed to take their elective share from the probate estate, which excludes money and property that have been transferred to a trust, insurance policies, and retirement or financial accounts that name other beneficiaries. Other states have laws that include both the probate estate and other accounts or property the deceased spouse owned; these laws provide that the surviving spouse’s elective share can be calculated based on a larger pool of assets called the augmented estate.

As a result of the intestacy and elective share laws, an estranged spouse is likely to be protected from complete disinheritance in the absence of other planning.

Estranged Child

As with an estranged spouse, if no estate plan is in place, a child will be able to inherit from their parent under the state intestacy statute, even if they have had no contact with their parent for many years. 

The estranged child may also inherit under some circumstances if their deceased parent created a will that does not provide for them. Similar to the laws designed to protect surviving spouses who were unintentionally omitted from a will, many states have laws providing that if a child is unintentionally omitted from a will—for example, if the child was born after the will was created and the will was not updated to include them—the child should inherit the amount they would have received under the intestacy statute if the parent had died without a will. This protection will not apply if the parent’s will expressly disinherits the child. However, under this type of statute, if the will does not expressly state an intention to disinherit the estranged child, they may be able to inherit in specified circumstances even if their parent’s will does not provide for them.

Ways to Address Estrangement In Your Estate Plan

Those who do not want an estranged family member to inherit from them should create an estate plan that includes a will expressly stating that intention or a trust that does not include the estranged spouse or child as a beneficiary. As mentioned, a spouse can inherit the amount allowed under the elective share statute regardless of the terms of the deceased spouse’s will. To avoid litigation by the estranged spouse, the will could provide for an inheritance in the amount the surviving spouse would be entitled to receive as their elective share or the “statutory minimum.” In states in which the surviving spouse’s elective share is limited to the probate estate, beneficiaries other than the estranged spouse can be named to receive assets such as retirement accounts, money and property held in trusts, and life insurance policies. Other strategies, such as lifetime gifts and prenuptial or other marital agreements may also be used to limit or waive the spouse’s right to inherit an elective share.

When someone wants to disinherit a child, their will should clearly state that intention. To avoid a will contest by a disappointed child, the parent could also consider including a small inheritance for the estranged child and, if no-contest clauses are enforceable under their state law, a no-contest clause providing that the child will lose the inheritance if they unsuccessfully contest the will. If the parent transfers their money and property to a trust, the child can simply not be named as a beneficiary of the trust.

Take Steps to Memorialize the State of the Relationship

For estranged spouses, doing what is required to legally end the relationship is another way to avoid unintended results when one of the spouses dies. After divorce, the surviving former spouse is not entitled to inherit any amount from the deceased former spouse unless there is a property settlement agreement providing otherwise. Depending on state law, even if the surviving former spouse is still a beneficiary in the deceased former spouse’s will, they may not be entitled to inherit pursuant to the will unless there is additional documentation showing that the deceased former spouse intended that result. As mentioned above, the effect of legal separation varies depending on state law: in some states, legal separation has no impact on a spouse’s right to inherit under the intestacy or elective share statute.

We Can Help 

One of the important goals of estate planning is to ensure that your wishes are carried out. If you want to prevent an estranged family member from inheriting from you, your estate plan needs to expressly state that intention. We can help you think through how to best accomplish your estate planning goals while also minimizing any further strife in your family. Give us a call today to set up an appointment.

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Footnote

1. Estrangement, Dictionary.com, https://www.dictionary.com/browse/estrangement (last visited Aug. 29, 2023).

It is normal for married couples to share almost every aspect of their lives with each other. But when it comes to death, even the closest couples might become tight-lipped about certain topics. According to one study, half of all couples fail to discuss their dying wishes.¹ 

Death is final for the departed. For the surviving spouse, death can leave unanswered questions. As uncomfortable as it might be to discuss subjects like burial arrangements and remarriage, they should be broached as part of creating a comprehensive estate plan. Seemingly mundane details, such as the location of important documents and contact information, should also be addressed. 

Location of Important Documents

Older couples tend to commingle their finances. Among baby boomers, having only joint accounts is the norm. Millennial and Gen Z couples, however, are more likely to keep their money separate.² 

When couples do have joint accounts and property, it is not uncommon for one spouse to handle all financial matters. Fewer than one in four couples report that both spouses have an equal role in managing household finances.³ 

When one spouse is the “money person” in the relationship, it can create issues in both life and death. To avoid unnecessary stress, couples need to ensure that they are on the same page. For day-to-day finances, this can mean regular check-ins about charges, expenditures, and budgeting. With regard to estate planning, couples should keep each other informed about the location of important documents such as the following: 

• Estate planning documents
• Life insurance paperwork
• Loan documents 
• Financial account information (e.g., savings, retirement, and investment accounts)
• Usernames, passwords, and other information for accessing digital accounts and assets

This might be more difficult in community property states—where spouses are considered joint owners of most accounts, property, and debts acquired during marriage—barring a marital or property agreement stating the contrary. In states that follow common law, spouses are allowed to own property individually and are not considered jointly responsible for accounts and property except for those listed under both spouses’ names. But even in community property states, accounts and property that predate the marriage and those that are inherited are usually considered separate property. 

Keeping finances secret—and separate—although it may be legal under state law, can still raise estate planning issues between couples that deserve discussion. A spouse with separate accounts and property might have separate accompanying estate planning documents. If so, the other spouse should at least be in the know about them to facilitate estate administration. 

Contact Information 

A spouse will often be the first person to find out about their partner’s passing. After that, there may be an established priority of whom to contact next on a need-to-know basis. 

The surviving spouse is likely to have a good idea of who should be contacted and in more or less what order. It may not be particularly important whether an older sibling is informed before or after a younger sibling or vice versa.

Yet it should not be assumed that a husband or wife has access to these individuals’ phone numbers. Nowadays, most contact information is stored in a personal device, not a Rolodex. To ensure that this information is accessible, it can be listed in a separate document. Alternatively, each spouse can give the other their phone’s login credentials. 

Outside of immediate family and friends, a spouse could be unsure about whom to get in touch with. Extended family, a religious leader, club members, professional contacts, and, if the deceased was still working, their employer may need to be contacted as well. Some people might be named in the will and require inheritance notifications. 

Keeping a spouse apprised of relationship statuses, whom to get in touch with, and how to get in touch with them about end-of-life wishes are small but important estate planning points. 

Burial Arrangements

Arguably the most morbid thought about death is what to do with someone’s remains. At the same time, following a person’s burial preferences is a way to ensure that they receive an appropriate send-off. 

More Americans are choosing to be cremated instead of having a traditional burial.⁴ Whichever someone chooses, options for personal touches abound. 

If cremated, a person may wish to have their ashes scattered in a favorite place. In the case of a burial, they may opt not to have an open casket. There are also natural burials (being buried without a casket) and funeral services without a body present. About 20,000 people donate their bodies to science each year.⁵ 

In some states, the surviving spouse has the primary authority to make these decisions, absent specific instructions by the deceased. As unpleasant as it can be to discuss burial, cremation, or donation, doing so can offer the departed—and the surviving spouse—peace of mind that this most personal of decisions is honored. 

Remarriage 

Wedding vows famously contain the phrase “’til death do us part.” But what about after death? Are couples still obligated to obey their promise of fidelity? 

Whether approaching this question from a religious or a secular perspective, it is generally accepted that a widowed spouse is not doing wrong by remarrying. Depending on their age, history, and beliefs, though, some people may have strong feelings about remarriage. 

Nowadays, when more than half of marriages end in divorce, the idea that a bereaved spouse should not remarry is antiquated. Remarriage rates, however, have declined in recent decades.⁶ They decline with age for both men and women and are significantly lower after bereavement than after divorce.⁷ 

A spouse who predeceases their partner may be okay with remarriage but not want the new spouse to have access to their money. Estate planning can help prevent this outcome. The use of a qualified terminable interest property (QTIP) trust, for example, can provide for a surviving spouse while protecting children’s inheritance from the surviving spouse’s new spouse. 

If there are no children involved, or if one spouse simply trusts the other to do whatever they want with the money even if it benefits the new spouse, special estate plan provisions might not be necessary. 

Regardless, remarriage is a topic worth discussing. Couples may not be on the same page about remarrying. Nor do they have to be. Couples that have separate finances are free to do with their share what they want. One spouse could be okay with remarriage and do nothing, while the other is against remarriage and sets up a trust to protect their accounts and property. 

Show Love with a Thorough Estate Plan

The optimist would argue that there are no worries after death. Once we depart this plane of existence, all our worldly cares die with us. 

Putting aside the metaphysics of death, from a practical perspective, our passing can create complications for those we leave behind. Not having an estate plan takes the control over your accounts and property out of your family’s hands and gives it to the state. But an incomplete plan can cause problems too. 

Small estate planning gaps can raise big questions that leave a person’s legacy in doubt. It is never too late to revisit and update an estate plan while you are alive. But unresolved estate issues taken to the grave could come back to haunt your loved ones. 

Estate planning is a gift to your spouse and the best way to take care of them when you are no longer around. To show them love, contact our office and schedule an appointment. 

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Footnotes

1. Rosemary Bennett, Half of Couples Fail to Discuss Dying Wishes, Times (London) (May 12, 2014), https://www.thetimes.co.uk/article/half-of-couples-fail-to-discuss-dying-wishes-lbnsjrs6b77.
2. Lorie Konish, Joint vs. Separate Accounts: How Couples Choose to Handle Finances Could Impact Their Financial Success, CNBC (Mar. 7, 2022), https://www.cnbc.com/2022/03/07/joint-vs-separate-accounts-how-couples-choose-to-handle-money.html.
3. Happy Couples: How to Avoid Money Arguments, Am. Psych. Ass’n (2015), https://www.apa.org/topics/money/conflict.
4. Jazmin Goodwin, More Americans Are Choosing Cremation over Traditional Burials, Survey Finds, USA Today (Jan. 24, 2020), https://www.usatoday.com/story/money/2020/01/21/more-americans-choose-cremation-over-traditional-burials-survey-finds/4530268002/.
5. Justin Sherman, Inside the Largely Unregulated Market for Bodies Donated to Science: “It’s Harder to Sell Hot Dogs on a Cart,” CBS News (Mar. 23, 2023), https://www.cbsnews.com/news/bodies-donated-to-science-largely-unregulated-cbs-reports/.
6. Leslie Reynolds, Remarriage Rate in the U.S.: Geographic Variation, 2019, Bowling Green State Univ. (2021), https://www.bgsu.edu/ncfmr/resources/data/family-profiles/reynolds-remarriaage-US-geographic-variation-2019-fp-21-18.html.
7. Remarriage After Bereavement, OnlyYouForever, https://www.onlyyouforever.com/remarriage-after-bereavement/ (last visited Aug. 30, 2023).

A benefit of working hard is sharing the fruits of your labor with your loved ones. However, gift or estate tax consequences may impact high net worth clients when they share their wealth. By crafting a comprehensive estate plan, we can address these concerns and protect high net worth clients and their loved ones. The following three types of trusts may assist high net worth clients in sharing their wealth in a tax-advantageous way.

Grantor Retained Annuity Trust

A grantor retained annuity trust (GRAT) is an irrevocable trust you can use to make large financial gifts to your loved ones while also minimizing gift tax liability. These financial gifts remove future appreciation from your estate, reducing the amount that will be subject to estate tax at your death. However, there may be gift tax liability, which would be owed and paid at the trust’s creation. You create a GRAT and then fund it with accounts and property, such as those that are expected to appreciate in value over the GRAT’s term. Then, you receive a fixed annuity payment, based on the trust’s original value, for a specified time period. Once the period has terminated, the remainder of the trust’s accounts and property are transferred to your named beneficiary.

The rate of return that you receive is based on the specific rate determined by the Internal Revenue Service, known as the Internal Revenue Code (I.R.C.) § 7520 rate. The key to saving taxes and having money available to be transferred to the beneficiary is for the trust’s accounts and property to outperform this rate. To limit or eliminate the gift tax that would be due when making a gift to someone, the value you retain (the amount that is ultimately distributed back to you) is subtracted from the value of what was transferred to the trust. This is also known as the subtraction method. Ultimately, the goal is for this number to be zero (known as a zeroed out GRAT) or as close to zero as possible. This means that any appreciation is transferred to your beneficiary at the trust’s termination gift-tax free. 

Let’s look at what a possible outcome could be when using a GRAT. In this situation, let’s say you make a $1 million gift to a GRAT, the current I.R.C. § 7520 rate is 4.2 percent, and the annuity will be paid over five years. If the trust only makes 4.2 percent, then the client will be in roughly the same position as it was when it was created because everything will be returned to the client. If the trust makes 7.5 percent, then there will be approximately $123,562 remaining that will be transferred to the beneficiaries with no gift tax (assuming a zeroed out GRAT). If the trust does even better and makes 10 percent over the course of five years, then the beneficiaries will receive $231,419.¹

Grantor Retained Unitrust

A grantor retained unitrust (GRUT) is an irrevocable trust that is like a GRAT. Accounts and property are transferred to the trust and you retain a right to receive an annuity for a fixed time period. Then, at the trust’s termination, the trust’s remaining accounts and property are given to your named beneficiary. However, with a GRUT, the annuity payment that you receive each year is calculated based upon a fixed percentage of the trust’s value that year. Therefore, since the trust’s value can vary from year to year, the annuity amount can vary even though the same percentage is used each year to calculate the annuity.

Like a GRAT, the gift tax is due at the time the accounts and property are transferred to the trust, and the gift tax liability is based on using the subtraction method. Because the annuity is based on the trust value that year, it is unlikely that the difference between what you give and retain will be zero, which will require that some gift tax be paid. 

Qualified Personal Residence Trust

A qualified personal residence trust (QPRT) is an irrevocable trust that you can use to remove your residence from your overall estate. Ownership of the residence is transferred to the trust, and you retain the right to use and enjoy the property for a specified time period. Then, once that time terminates, the residence is transferred to your named beneficiary. If you would like to continue living in or using the residence, you will have to pay the beneficiary rent. You may need to consider your relationship with the beneficiary when evaluating whether this tool would serve your needs.

Although this transfer reduces the amount subject to estate tax at your death, gift tax will still be owed when the property is transferred to the QPRT. The value of what is transferred to the trust (the amount subject to gift tax) is the residence’s value less the value of what you keep (because you have the right to continue using it). This estate planning tool’s effectiveness depends on the federal interest rate when the trust is created. The higher the interest rate, the lower the gift value and the lower the potential gift tax liability. 

You can establish a QPRT for no more than two residences. It can be funded using a principal residence or a vacation home or secondary residence, or a fractional interest in these types of residences. It is also important to note that if the residence currently has a mortgage, it may be advisable to pay off the mortgage before transferring ownership to the QPRT to avoid complications in administering the trust.

The important thing to note with all three types of trusts is that you must survive the trust term. When trying to determine the length of the trust, it is important to consider your current age and life expectancy. If you die before the trust terminates, the tax benefits will be undone and the full value of the account or property will be counted towards your estate tax liability.

Because each transaction is subject to taxation, it is important that you evaluate the gift tax, estate tax, and nontax considerations before making a decision. We are available to meet with you, discuss your unique situation, and craft a plan that leaves your hard-earned wealth to those you care about as you wish. To learn more, please give us a call.

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Footnote:

1. Grantor Retained Annuity Trust Calculator, Roger Healey, https://rogerhealy.com/GRATCalculator.aspx (last visited July 24, 2023).

About two out of three Americans will die without a will. This is known as dying intestate. 

While the reasons for not having a will vary, the end result is the same for everyone: they do not get to choose who receives their property when they die. Instead, their money and property are distributed according to the laws of their state in a process called intestate succession. 

This is not necessarily a bad thing. In most states, a person’s spouse, children, parents, and siblings are given priority in the line of succession. But even if someone is fine with their next of kin receiving all of their money and property, a beneficiary can still be required to go through a long and costly court process when there is no will. 

State law can only assume how the typical person would dispose of their estate. When a state’s default intestacy laws do not align with the actual preferences of the decedent about who should get what, this can lead to a number of issues. 

Sample State Intestacy Laws

It is understandable why people do not want to talk or think about death. But dying without a will takes power out of the individual’s hands and puts it in the hands of the state and its one-size-fits-all intestacy laws. 

For a general idea of what happens when a person dies intestate, here is how intestacy law works in a few states: 

New York

• If the decedent has a spouse, the spouse inherits everything.
• If the decedent has children but no spouse, the children inherit everything.
• If the decedent has a spouse and children, the spouse inherits the first $50,000 plus half of the balance, and the children inherit the rest. 
• If the decedent has no spouse and no children, the decedent’s parents inherit everything. 
• If the decedent has no spouse, children, or parents, the decedent’s siblings inherit everything. 
• If the decedent has no living family, their property goes to New York State. 

Things can get trickier when children inherit by law from their parents. Adopted children have the same rights as biological children, but foster children and stepchildren do not unless they are legally adopted.¹ 

California

The state of California differentiates between community property and separate property.² The former generally includes all property acquired by either spouse during the marriage, while the latter is property obtained prior to or outside of the marriage. 

When a person dies intestate in California while married and they have one child or grandchild, the spouse inherits all of the community property and half of the separate property; the child or grandchild inherits the rest. If they die married and intestate with two or more children, the spouse gets all of the community property and one-third of the separate property, with the rest split equally among the children. 

California also has a few unique intestacy laws. For example, half-siblings who share a parent are treated as whole siblings for intestacy purposes,³ and children born after the decedent’s death are treated as heirs.⁴ 

Florida

In Florida, intestate succession hinges on whether a person is married and has children with their spouse. 

• If the decedent is married and they have children together, the spouse inherits 100 percent of the estate. 
• If the decedent is married and has children from a previous relationship, the spouse inherits 50 percent of the estate and their children receive the other 50 percent. 

Note that in Florida, if the spouse has children from another relationship, they inherit nothing under intestacy laws. The decedent’s biological children, even those from another marriage, are given preference over a surviving spouse’s children from another relationship.⁵ 

Florida places legally adopted children on the same level as biological children. Grandchildren only receive an intestate share if their parent (i.e., the decedent’s son or daughter) is not alive to receive their share. 

Potential Consequences of Dying Intestate

The above examples should be sufficient to show how state intestacy laws, while largely similar from state to state, vary in the details and can quickly get complicated, especially when a family is blended and does not have a typical nuclear structure. In fact, because more than half of marriages now end in divorce, most families have shifted from having a biologically bonded mom, dad, and kids to a blended family structure.⁶

Nonblood Beneficiaries

Default intestacy laws can leave out not only stepchildren, foster children, and children placed for adoption, but also close family friends, charities, and others not related by blood. 

Who Receives the Money and Property—and How Much

Intestacy laws are rigid about who receives how much. Intestate shares are statutorily determined and do not consider special circumstances, such as an heir who is receiving income-based financial aid and may be disqualified from further benefits due to an estate disbursement. This could be avoided by placing money and property in a trust for that individual’s benefit. 

Parents commonly divide their money and property equally among their children, but no law requires this, and there are good reasons why some parents do not want equal distributions. State intestacy laws preclude unequal distribution as well as intentional disinheritance of a child. 

Other Problems

All of these special circumstances require nuance in an estate plan, but state intestacy laws are not nuanced. Intestacy can also give rise to the following additional issues: 

• Loved ones are unable to make specific funeral arrangements.
• The probate court chooses a personal representative to manage the estate, who may not be somebody the decedent would choose for this role
• The court decides who raises minor children. 
• Small business owners can lose control of what happens to the business when they die.
• Property that the decedent intended to keep in the family could be sold.
• The probate process can be lengthy and delay how soon loved ones receive money and property.
• Probate costs can drain money and property that otherwise would have gone to heirs.
• Arguments can break out between heirs about what the decedent would have wanted.
• Digital assets like social media accounts and fintech accounts could be left in limbo.
• There are no instructions for end-of-life care or incapacity. 

To clarify, not all accounts and property pass through probate when somebody dies without a will. Some accounts and property bypass probate, including those jointly owned with survivorship rights, accounts with beneficiary designations, and transfer-on-death and payable-on-death accounts. Anything owned by the decedent in their name at death without a beneficiary designation, though, passes through the probate court and is subject to intestacy law. 

Do Not Leave Your Legacy Up to the State

There is much about death we cannot control. We do not know when, where, or how we will meet our end. But we can control our legacy and make our final wishes known through an estate plan. 

There are many reasons for not making an estate plan. You may think you are too young, do not have enough money and property, or cannot afford estate planning. But a better question might be, Can you afford not to have a plan? A basic estate plan can fit your budget and allow you to rest easy knowing your money and property will end up where you want them to go. 

Do not leave your legacy up to the state. Create an estate plan while you still can and make your wishes known. 

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Footnotes:

1. When There Is No Will, NYCourts.gov, https://nycourts.gov/courthelp/whensomeonedies/intestacy.shtml (last visited July 26, 2023).
2. Cal. Prob. Code § 6401 (West 2022), https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=6401.
3. Cal. Prob. Code § 6406 (West 2022), https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=6406.
4. Cal. Prob. Code § 6407 (West 2022), https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=PROB&sectionNum=6407.
5. Fla. Stat. § 732.102, http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0732/Sections/0732.102.html.
6. Stepfamily Statistics, The Step Family Foundation, https://www.stepfamily.org/stepfamily-statistics.html (last visited July 26, 2023).

When you create a trust, choosing a trustee is one of the most important decisions you will make. If you create a revocable living trust—that is, a trust that you establish during your lifetime and can revoke or amend—you may opt to act as trustee for your trust, retaining the full control over and benefit of the money and property it holds. However, what happens if you develop a health issue or are injured in a car accident and are unable to manage your own affairs? With today’s longer life expectancies, it is much more likely that you will experience dementia in your later years, making it impossible for you to handle your own finances. And what will happen when you pass away? It is crucial that you name a successor trustee (and an alternate in case the first successor is unable or unwilling to serve) who will step into the role of trustee to manage the trust on your behalf if you become incapacitated or die. 

There are certain characteristics you should look for in any trustee. They should be trustworthy and responsible, capable of making wise financial or investment decisions, and interested in carrying out your wishes as expressed in your trust document. Depending on your particular circumstances, it may be prudent to name different trustees to serve at your incapacity and at your death. On the other hand, some may prefer to have the same trustee serve in the event of both incapacity and death.

Different Trustees at Incapacity and Death

During Incapacity

During your lifetime, you are typically the beneficiary of your revocable living trust, so you may prefer to have a spouse, child, or other close relative serve as your trustee if you become incapacitated. Not only will they have a legal duty to act in your best interest, they are also among the people who know you and your needs best, love you, and understand your wishes. They will have your best interest at heart and will ensure that your affairs are handled in a way that is most beneficial for you. Another possible benefit is that, although a family member who serves as trustee is entitled to charge a reasonable fee for the work they perform in that role, they may forgo compensation. Importantly, because there often are no other trust beneficiaries during your lifetime, there is no risk that a trustee who is also a family member will show or be perceived as showing favoritism or partiality between beneficiaries.

Tip: You should consider naming the same person you have chosen to act as your agent under a financial power of attorney as your trustee. While your trustee will manage the money or property held in your trust, your agent under a financial power of attorney is typically authorized to manage nontrust property, pay bills, enter into contracts, or engage in other financial transactions on your behalf. You may choose to make the financial power of attorney effective immediately, or in some states, only upon a determination that you have become incapacitated. In any case, the person you choose to act as your agent will need to meet the same criteria you should use in naming a successor trustee: your agent should be someone you know is honest, reliable, and capable. 

At Your Death

When you pass away, you are no longer the beneficiary of your trust. Instead, the trust’s beneficiaries are the individuals or organizations you have designated in your trust document to receive distributions from the trust after your death. Other considerations may come into play in choosing who will serve in the role of trustee at that point. For example, if you name your spouse or child as your successor trustee, it may be difficult for them to take on the responsibilities of that role at a time when they are grieving and distraught. 

In addition, if there have been any family rivalries or disharmony, naming one of the children as trustee may create tension, as the other children may suspect that the child who is trustee will not carry out their duties in an unbiased way. These tensions could also occur in blended families. For example, if you have children from both your previous and current marriage and you name your current spouse as trustee, your children from your first marriage may suspect that they will not be treated fairly. This situation could even lead to disharmony for families who have always gotten along well in the past.

To avoid family squabbles, you may want to name someone whom you can count on to act fairly and impartially—perhaps a good friend, a trusted business associate, or a professional trustee—to act as your successor trustee upon your death.

Same Trustee at Incapacity and Death

If you think there is little risk of family disunity, you may opt to have the same person serve as successor trustee during your incapacity and at your death. There are some definite benefits to this approach. First, if only one person will serve as your successor trustee, less preparation is necessary for the occurrence of either circumstance: instead of bringing two individuals up to speed on your affairs, you only need to involve one person who knows they are next in line to serve as trustee. Having one individual serve as successor trustee will avoid the need to transition from one trustee to the next if you become incapacitated before your death, making management of the trust more seamless. Because the trustee will already be in that role, there will be no sudden need for them to assume a new, potentially stressful role when you die.

We Can Help

Determining who will serve as your successor trustee is a crucial decision when you create your estate plan. Whether you need to decide between having the same trustee or different trustees at your incapacity or death, to name more than one trustee, or to appoint a professional trustee, we can guide you to make the best choice for your particular situation. Our aim is to help you achieve your goals and avoid conflict in your family after you pass away. Call us today to set up an appointment so we can advise you as you make this and other important decisions about your estate plan.

Adding a payable-on-death (POD) or transfer-on-death (TOD) designation to an account allows the assets (money and property) in that account to be passed to a named beneficiary when the original account holder dies. 

Like trusts, POD and TOD accounts bypass probate. They are also fast, easy, and usually free to set up. However, they do not provide the full range of benefits that a traditional trust does and can have some unintended consequences. 

Before deciding whether to set up a POD or TOD account, it is important to know the difference between them, understand their pros and cons, and talk to an attorney about how they fit into your estate planning goals. 

POD versus TOD (versus a Trust)

Payable on death and transfer on death sound ominous; and while the topic of death is always somewhat gloomy, POD and TOD are estate planning terms that financial account holders should be familiar with. 

A goal of most estate plans is to avoid probate—the legal process by which an estate is settled. Probate can be time-consuming and costly, but there are ways to avoid it, such as placing assets in trusts that pass outside of probate. 

Another way to avoid probate is to use POD and TOD accounts for asset transfers. The major difference between POD and TOD accounts is the type of assets held in the account. 

• POD is a designation added to a bank account, such as a checking account, savings account, certificate of deposit (CD), and money market account. 
• TOD applies to an investment account, such as an individual retirement account, 401(k), brokerage account, and other accounts holding securities. 

An additional difference between POD and TOD accounts is that, with a POD designation, the account assets are transferred to a beneficiary (or beneficiaries), while with a TOD designation, account ownership transfers to a beneficiary. 

Financial institutions may refer to a POD account as a Totten trust, a type of revocable trust (aka a living trust) that is set up as a POD account. PODs and TODs are, like Totten trusts, able to be revoked during the owner’s lifetime; that is, the POD or TOD designation can be removed up until the owner passes away. And with all three, while the owner is alive, they retain account ownership and can manage the account as they see fit. It is only when the owner dies that the beneficiaries have a claim to a TOD, POD, or revocable trust.

However, unlike a Totten trust or a revocable trust, there is no trustee who manages a POD or TOD account. The POD or TOD account or assets transfer directly to the beneficiary. Assets transferred in this way have no protection from a beneficiary’s creditors or their poor spending habits. 

Pros and Cons of PODs and TODs

It is important to note that, in the case of jointly held accounts, a POD or TOD account designation does not kick in until both account holders have passed away. For example, if spouses jointly own a bank account that is set up as a POD account, the surviving spouse becomes the sole owner of the account when the first spouse dies, and it only passes to named beneficiaries after the surviving spouse dies.

Others benefits may include the following: 

• Setup is straightforward and there is generally no cost. 
• Designated beneficiaries receive the funds without having to wait for probate to conclude, which can take months. A POD or TOD account allows loved ones to get money almost immediately. Typically, all they need to provide is the death certificate and identification to the account-holding institution. 
• A bank account has Federal Deposit Insurance Corporation (FDIC) insurance up to the standard $250,000, but banks allow account owners to specify multiple unique beneficiaries for an informal revocable trust (i.e., a POD account), which provides additional FDIC coverage.¹ 
• The account owner has the flexibility to change, add, or revoke a beneficiary designation. 
• For added flexibility, a durable power of attorney can be added to a POD or TOD account, allowing somebody other than the beneficiary to handle the account. 
• Trusts can also be named POD beneficiaries.² 

The probate avoidance offered by a POD or TOD account is its main appeal, but this and other benefits should be weighed against the following potential pitfalls:

• A POD or TOD account is not effective if the owner becomes incapacitated. 
• Backup beneficiaries cannot be named, so if a beneficiary predeceases the account owner, their share of the account could be automatically reallocated to the remaining surviving beneficiaries or subject to probate. 
• POD and TOD accounts are established through a financial institution and outside the rest of the estate plan. If a will is updated but POD or TOD beneficiaries are not, there could be inconsistencies in the overall estate plan. 
• Because POD bank accounts avoid probate and pass outside of the estate, the funds in them are not available to settle claims or debts of the estate, such as estate taxes. This can make things harder on the executor, who may need to ask for voluntary contributions from a POD beneficiary. 
• If there are insufficient probate assets to pay the debts of the estate, creditors may be able to claim certain nonprobate assets, including POD and TOD accounts. 

Is a POD or TOD Account Right for My Estate Plan? 

An estate plan is a highly individual matter that reflects your personal wishes and family dynamics. As such, there is no “one size fits all” advice for an estate plan. The pros and cons of any estate planning vehicle—be it a POD, TOD, revocable trust, will, or power of attorney—must be weighed against your values and goals. 

Transferring a bank account to a POD account, or an investment account to a TOD account, may be as easy as signing a document with your financial institution. But the ease of a POD or TOD designation must be considered alongside fiscal considerations such as taxes and personal considerations such as whether heirs would be better served by placing the accounts in a trust. 

During a meeting with our estate planning attorneys, we can discuss POD and TOD accounts and how they may align with your overarching estate planning objectives. Call or contact us to start planning today.

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Footnotes:

1. Your Insured Deposits, FDIC (Oct. 27, 2015), https://www.fdic.gov/regulations/resources/brochures/your_insured_deposits-english.html.
2. Beneficiary FAQs, Bank of America, https://www.bankofamerica.com/deposits/beneficiaries-faqs/ (last visited July 21, 2023).