EZ Legal Services: Shortcut or Risk?

Despite the marketing that’s attempting to penetrate just about everywhere these days, there’s a lesson to be learned from online programs that make estate planning seem so easy. And the lesson isn’t that you can save money and time by putting it together yourself. Up front, you may very well save some money and time. Just don’t be surprised when those “plans” don’t hold up in court. Just ask the family of Ann Aldrich.

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Aldrich used one of these easy programs to put her will together back in 2004. In the will, neither of her two nieces were actually mentioned. Jump to the present and both those nieces were able to capitalize on their aunt’s poor planning. The Florida Supreme Court recently ruled in favor of the nieces because the will was missing the important residuary clause, allowing all money acquired by the aunt after 2004 to be distributed through intestacy (the same laws that govern property distribution for those who pass away without a will at all).

Aldrich’s will included statements leaving everything to her sister and then her brother. Since the sister died first, the brother argued that he was entitled to everything. Since the “oh so easy” legal form only accounted for listed items, nieces were able to argue their rights to assets not specifically outlined in the will. Although Aldrich’s intentions appear rather clear, her documentation was missing something that an estate planning attorney would have picked up at first glance. Unfortunately, this meant that her wishes were not carried out as she planned. This situation was entirely preventable with a little bit of planning. If you’d like to ensure that your estate planning documents carry out your wishes clearly, set up a consultation by calling 732-521-9455 or emailing info@lawesq.net

Showdown: Wills vs Trusts

Depending on who you talk to, your estate planning specialist might recommend wills over trusts or trusts over wills. Let’s walk through some of the differences between these two planning tools to see if one might be a better fit for your needs.

Showdown Wills vs Trusts
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If you are planning to use a will as your primary tool, bear in mind that your assets must first go through the probate process in order to be eventually received by your beneficiaries. Some states have lengthy and cumbersome probate processes, meaning that it could take your beneficiaries a while to actually receive the assets. Probate is also very public, meaning that details about your financial situation will be shared in a less-private forum. If you’re concerned about this, a trust might be a better option.

In comparison, trusts tend to pass by the court system for the majority of the administrative process. Since these are privacy documents, there’s less public scrutiny into your finances or your plans, and some clients prefer this confidential approach. Unlike wills, which become active on your death, a trust can be rendered effective immediately. Additionally, trusts can also be used for incapacity planning, adding another layer to their usefulness.

Both wills and trusts can do tax planning for credit shelter trusts. The bottom line is that it depends on your needs. If you are not concerned about the red tape of the probate process, there are still advantages (especially regarding privacy) for the establishment of a trust. We work with clients to create a customized plan for you since we recognize that each client is unique. To talk more about the kinds of trusts we can help you establish or to begin generation of your will, contact us today at 732-521-9455 or through e-mail at info@lawesq.net

Risky Do-It-Yourself: Wills

Software or online programs to help you plan your estate are popping up everywhere, but that doesn’t mean they are the best choice for your needs. Many of these programs lead you to believe that generating your will is easier than it truly is. Heirs might find out too late that your self-created will doesn’t really match up with your state laws or even your own intent.

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When it comes to estate planning, intent is everything. Too often, the wishes of an individual don’t come across clearly in self-generated wills. Many modern court cases have focused on the determination of the testator’s intent, but judges are hesitant to cross certain lines to clear up confusion. As a result, your heirs may discover that your wishes aren’t carried out as you planned at all. Simply put, doing your will on your own can have big consequences.

Consider the Estate of George Zeevering. Last fall, a Pennsylvania appellate court was evaluating an unclear DIY will. Since the testator had not worked with a lawyer to generate the document, which was incomplete, it was difficult to determine the true intentions of Mr. Zeevering. In one aspect of the case, property had already been titled in the names of a son and a decedent as joint tenants. Mr. Zeevering stated that “the failure of this will to provide any distribution” to his daughters was done on purpose.

The case got sticky when the residuary and residuary estate totaled over $200,000 after debt payments were made. There was no provision within the DIY will for what should happen to those assets. In the end, the court determined that when a will doesn’t provide for the disposal of an entire estate and fails to include a residuary clause, the residuary estate must be divided under intestacy laws.

This case is but one example of where estate planning on your own can go wrong. Although it may not have been Mr. Zeevering’s intention to distribute the remainder of his estate under intestacy laws, that’s what happened. Despite his wishes, the law overrides an incomplete or improper will. While online and computer programs argue that wills and estate planning documents are easily done on your own, that minimizes the true complexity of document generation and estate laws.

Estate planning can be very complicated for an individual but it’s easily done under the guidance of an estate planning attorney. An added benefit of using a legal professional “in the know” is that he or she is clued into state and federal laws about estate planning, which always have the potential to change. An estate planning attorney is an excellent resource for all your questions as well as giving you the peace of mind that your estate will be carried out in the manner you wish. Cutting corners with a do it yourself tool is your choice, but do so at your own risk. If you want the assurance of totality and legality, contact an estate planning professional today.

Planning for Blended Families: Part I – Intake Process

The “blended family” comprises a fast-growing segment of U.S. households. Whether you arean attorney or investment advisor, there is an advantage in taking some time to fine-tune your intake or initial interview process to determine the desirability of representing a blended-family client.Once you assess the accepted client to determine your counseling strategy, you canbegin strategy planning with your newly acquired information.

As noted, attorneys face different client engagement issues than advisors and CPAs.  This content seeks to illuminate the client-discussion topics but not to precisely define the boundaries between the planning perspectives.

*  Blended families have unique and complex planning needs
*  Planning for blended families may be an important growth area for your business
   –  Blended families continue to grow in number
   –  Blended families often require advanced planning strategies
*  Extending an engagement letter to a blended-family couple warrants careful consideration
*  Your intake interview is an important professional relationship tool

How a “Blended Family” Is Different from a “Traditional Family”
A “traditional” family is one in which any child is a child of both spouses. A “blended family” includes at least one child for whom only one of the spouses is the parent. Money-related discussions for any family can be challenging, but the dynamics of a blended family can make these discussions even more difficult and more critical.

Disparity in Age
Age differences between spouses may be more significant in a remarriage. As a result, age differences between children in a blended family may also be more significant.

These wider age differences mean guardianship issues and planning issues will be unique to each child. In some family situations, older stepsiblings may be willing to be named as guardian for their younger stepsiblings.

In addition to contributing to the potential for conflict, age similarity between the spouse and a stepchild must be considered in a planning strategy.

Disparity in Wealth
Any significant disparity in net worth between the spouses can make estate planning more critical early in the remarriage.

Conflict and Animosity
Bringing two families together can lead to animosity between spouse and stepchildren, between stepchildren, and between parent and children—this animosity can damage or destroy the relationship between the spouses. Aside from contributing to unpleasant living situations or family gatherings, the conflict and animosity that can exist in a blended family can prevent communication. However, effective communication is key to identifying potential issues and creating a sound financial and estate plan for the unique needs of a blended family.

Because of the increased potential volatility and the different legal status afforded blended families, advanced planning strategies may be important tools to implement.

What you need to know
Review your intake interview to ensure it’s designed to fully explore these unique aspects of a blended family so you’ve got an excellent starting point to begin strategizing with your client.

Important Information You Need but Don’t Ask Outright.
The intake process will provide you with a lot of information. With this information, you should determine:
* whether you want to represent a client;
* whether you can represent both spouses;
* your counseling strategy; and
* planning strategy.

Your powers of observation are critical both to deciding whether to offer an engagement letter to a blended-family prospect and to planning your counseling strategy for them.

Power Imbalance
Especially if your intake questionnaire indicates a large disparity in age, net worth, education, or health, carefully observe how a couple—and the whole blended family if children are present—interacts during the interview to identify and explore potential power imbalances.
* Is one spouse doing all the talking?
* What does their body language tell you?
* Does one spouse look to the other for consensus?

“They’re all our children.” Estate planning attorney and WealthCounsel member Jeff Sydney identifies this statement as a bright red flag. In his experience, couples in denial about the important and unique needs of a blended family are extremely hard to counsel. A blended-family couple must be willing to acknowledge that their situation is a breeding ground for conflict. The more access you have to the family’s dynamics, the better strategy you can create for its specific needs. Without that access, you can at least plan for the “worst case scenario”, but even that kind of planning requires the couple to acknowledge that effective planning must contemplate conflict. The more complex a family’s situation, the more specific and detailed the planning strategy must be.

Confidential Information
Requested private conversations—one spouse requests a conversation with you without the other spouse present—are another flaming red flag. Sydney indicates that the request typically starts like this:  “I didn’t want to say this in front of my [spouse], but . . . ” and, if you don’t stop it, sometimes concludes with disclosure of a secret child or hidden asset.  For an attorney, this attempted or achieved disclosure of non-shared information raises critical and perhaps insurmountable issues concerning representing the couple as joint clients. For that reason, attorneys must have the “no secrets among us” conversation at the very earliest opportunity and refuse any proffer of secret information from one spouse.

What you need to know
If your intake interview is designed for blended families, the answers it prompts will be a strong indicator of whether you want to or can engage a client. But make sure to read between the lines of how a blended-family couple interacts so that you have the whole picture. Make sure your intake process includes counseling strategy assessments so that you can effectively facilitate open, honest communication essential to effective client meetings.

Your Ethical Obligations as They Relate to Blended Families
Turning away a client may seem counterintuitive to your business plan, but carefully screening potential clients keeps you in the driver’s seat. For an attorney, declining a potential client at the outset is easier than resigning from an existing relationship. After a thorough intake interview, you will be able to determine if you are qualified to handle the client’s needs, if any conflicts exist, and if you want to proceed to the next step. Carefully assess the prospective clients’ direct responses to the interview questions and their observed behaviors. Be sure that the clients are forthright with each other and with you about the information needed to provide an effective and realistic financial plan for their family situation. A professional relationship founded on incomplete information and poor communication will keep you up at night and may lead to ethics issues. A positive professional relationship will be a more positive experience for you and will generate new leads for your business.

For the attorney or advisor:

  • Should you represent both spouses?
  • Should you represent parents or children of existing clients?

Ethics questions for the attorney:

  • Will you represent both of the spouses as a couple, or will you represent only one of the spouses?
  • If you represent the couple, does your engagement agreement contain necessary conflict-of-interest disclosures and waivers of attorney-client privilege as to each spouse?
  • If you represent only one of the spouses and have met with both of them, have you informed the other spouse in writing of his or her need to retain independent counsel?
  • If the other spouse has retained separate counsel, have you informed your client and your staff and instructed them in writing to deal only with the spouse’s counsel in matters related to the planning engagement?
  • If the other spouse has waived the right to independent counsel, did you get that waiver in writing?
  • When should you resign from an existing engagement?
  • When must you resign from an existing engagement?

Attorneys must know state requirements specific to representing blended families. Some state statutes address:

  • Duty to enter into written contract
  • Duty to avoid actual conflict of interest
  • Duty to avoid potential conflict of interest
  • Duty to maintain client’s confidence

What you need to know
Your observations during the intake interview may raise some ethics questions in your mind about representation. Know your state’s laws and ethics rules.

Actions to Consider:
* Market your professional services to blended families.
Blended families represent a growing share of the market, and they often afford the opportunity to implement advanced planning strategies. They can represent an excellent client base for your planning practice.
* Make an informed decision to represent a blended family.
Recalibrate your intake process to screen potential blended-family clients for some of the known landmines.
* Maximize your time together, fostering a productive and efficient professional relationship.
Collect the information you need to formulate your counseling strategy.

Our thanks and acknowledgement to WealthCounsel member Jeff Sydney for his contributions to this article.


Next in the Blended Family series:  Part II – Counseling Strategy

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax adviser based on the taxpayer’s particular circumstances.


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