When One Mind is Better than Two By Chris Miller, Esq.

Managing an estate is a lot like running a vacuum cleaner . . . it works better if only one person does the job. Families choosing Executors to take charge of an estate often ask whether all of the children can serve together as Co-Executors. The legal answer is not the practical answer.   Yes, it might be legal to give more than one child the power to act simultaneously for the estate, but that shared gift can lead to bitter fights and resentment.  It is also much more complicated to have two Co-Executors serving together because of the logistics involved.

When two Co-Executors are named to serve together, then both of them have to visit the probate court to sign an Executor’s Oath.  Then, both of them have to meet at a chosen bank to open an account in the name of the estate and coordinate the application for a tax ID number from the IRS.  Some bank branches will even decline to open an estate account with two Co-Executors, for fear of the liability they might have in letting two people spend the estate’s funds independently.

This is only half of the story.  When two Co-Executors have to clean out a home, even the smallest differences of opinion can turn into vicious arguments. Without a pecking order described in the Will, no effective tie-breaker is available to calm things down. Experience teaches us that no matter the age or maturity, children coping with the loss of a parent have high emotions. A good way to prevent arguments is to choose an individual Executor and write that person a letter with clear instructions about who you might want to receive certain items.

Another topic where Co-Executors frequently find themselves at odds with one another is in deciding whether to sell the house that a deceased parent lived in, especially if that house sits on land owned by the family for generations.  With Co-Executors, the decision to sell might be easy, but disagreements arise about the right listing price or which real estate agent to use.  For these reasons, and a few others, one Executor can push an estate faster and more efficiently than two.

Proving a Will in Georgia By Chris Miller, Esq.

 

Before an Executor can take control of a decedent’s assets and begin following a Will’s instructions to distribute dollars among beneficiaries, the Executor has to file the Will at the Probate Court and prove to the Court that the Will was properly signed by the decedent in front of two witnesses.   After the Probate Court is convinced that the Will was properly signed and that all of the closest living relatives have received notice and an opportunity to, then the Court issues a document called “Letters Testamentary” to the Executor.  Many original Wills are accompanied by a notarized “self-proving affidavit,” which is what the Court relies on to determine that a Will meets the requirements of a formal signature with two witnesses.

If, however, the Will is not accompanied by a self-proving affidavit or was signed outside Georgia, then to “prove” the Will, the Executor needs to find one of the witnesses and ask that witness to sign a document called “Interrogatories.” The word “Interrogatories” is just a fancy way of saying “answer these questions, please.”  Instead of relying on the self-proving affidavit, the Court will instead rely on the witness’ statements in the Interrogatories to determine that the Will was properly signed.

Some Wills do not have blanks for the witnesses’ addresses, so tracking the witnesses down can be tricky or completely impossible.   If an Executor makes a good faith effort to find witness and fails, or if the Executor discovers that both of the witnesses are deceased, then the Probate Code gives Executors an alternative method of proving a Will’s validity.   That alternative method starts with showing the Court all of the steps taken to find witnesses and the results of that fruitless search.  The alternative method then lets the Executor submit two sworn statements signed by people who can say they knew the decedent and can vouch for the authenticity of the decedent’s signature.  Examples of people who could vouch for a signature include an accountant or a coworker of the decedent who would have seen or have records of the decedent’s signature and can compare it to the signature on the Will.

All of that effort can be avoided in Georgia if the Will has a self-proving affidavit in the correct format. It can save your Executor lots of time and money.

Tax Reform Tweaks For Your Estate Plan By Chris Miller, Esq.

 

In late December, the Tax Cuts and Jobs Act changed the incentives built into the federal income tax system.  It also bumped the federal estate tax exemption to more than $11 million per person.   That exemption is the door through which someone can pass assets before his or her estate pays estate taxes.  Under the new rules, only individuals who die with more than $11 million in net worth will pay estate taxes. For married couples with assets between $11 million and $22 million, “portability” provides a relatively easy way to “double up” the exemption, and eliminate the estate tax exposure on that second $11 million.

 

The danger of this good news is that people might think that their Wills are fine because there is no expected estate tax. However, the estate tax exemption was not always so high and many documents written in the 1990s and 2000s traded away income tax benefits to save estate taxes.  Those documents still sacrifice income tax savings, but they do not save estate taxes anymore.  Words like “credit shelter trust” or “Bypass Trust” or “A/B Trusts” are flags that your estate plans might create income tax exposure down the road.

For example, if I buy a share of stock for $10 and die owning that stock when it is worth $25, then my estate and heirs will only pay capital gains tax if they sell it for more than $25 per share. In a credit shelter plan, however, that stock is held to the side so that it does not qualify for this basis adjustment. The Trustee then selling my stock at $25 per share after my death would still pay capital gains tax on the $15 difference between my purchase price and the sale price.   To keep up with the changes in the tax rules, and to make sure that your documents do what you want them to do, now is a good time to review your Wills with someone who is informed about the changes and can help decide what is right for you.

Chris Miller has practiced in the North Fulton area for 18 years, guiding clients in estate planning and estate administration.

Gifts with Strings Attached By: Marianna I. Chaet, Esq.

The word “trust” in the context of estate planning is a polarizing one. A trust is a way to hold assets for a designated beneficiary or multiple people with strings attached. A person can put as many or as few strings around the assets held by the trust as they would like. The instructions to the holder of the assets (called “the Trustee”) can be general in nature giving full discretion how to use the assets or can be precise down to a specific amount to be distributed monthly or annually.           Some people find trusts intimidating, while others see them as a form of asset protection or a solution to all of their life’s problems. Many people come in to an estate planning meeting thinking that they want a lifetime trust, when in reality lifetime trusts are simply not useful for many Georgia residents. However, testamentary trusts within wills that spring up after death are much more common.

Testamentary trusts are useful in many different situations, most commonly for the benefit of minor children. They can also be used for the care of an elderly parent or for the benefit of a surviving spouse. When making an outright gift or bequest, you are giving assets to someone and then they are free to do with them what they please. However, when using a trust, you can decide where the remaining assets go after the lifetime of the beneficiary. For example, clients may leave a percentage of their estate to a Support Trust for a parent or a spouse, but can designate any money that does not get used at the death of the beneficiary to someone else. That way the client can make sure that their loved one is taken care of during his or her lifetime, but then the client has a final say on who receives the remaining assets.

Testamentary trusts are versatile tools that are great alternatives to outright gifts.

Marianna is an associate at the Law Offices of J. Christopher Miller, PC. 678-746-2900 NorthFultonWills.com

Tailor Your Estate Plan to the New Tax Style By Chris Miller, Esq.

In late December, the Tax Cuts and Jobs Act greatly changed the incentives built into the federal income tax system.  It also lifted the federal estate tax exemption to more than $11 million per person.   That exemption is the door through which someone can pass assets before his or her estate pays estate taxes.  Under the new rules, only individuals who die with more than $11 million in net worth will pay estate taxes. For married couples with assets between $11 million and $22 million, “portability” provides a relatively easy way to “double up” the exemption, and eliminate the tax exposure on that second $11 million. For the rest of us with less than $11 million in our pockets, the estate tax forecast is zero.

The danger of this good news is that people might think that their Wills are fine because there is no expected tax. However, the estate tax exemption was not always so high and many documents written in the 1990s and 2000s were designed to trade away income tax benefits to save estate taxes.  Those documents still sacrifice income tax savings, but they do not save estate taxes anymore.  Words like “credit shelter trust” or “Bypass Trust” or “A/B Trusts” are flags that complexity in your estate plans might not benefit your children, and may create more income tax exposure down the road.  For example, if I buy a share of stock for $10 and die owning that stock when it is worth $48, then my estate and heirs will only pay capital gains tax if they sell it for more than $48 per share. In a credit shelter plan, however, that stock is held to the side so that it does not qualify for this basis adjustment. The Trustee then selling my stock at $48 per share after my death would still pay capital gains tax on the $38 difference between my purchase price and the sale price.

To keep up with the changes in the tax rules, and to make sure that your documents do what you want them to do, now is a good time to review your Wills with someone who can teach you about the changes.

Sailing Smoothly Through Probate By Chris Miller, Esq.

 

When a loved one passes away, family members coping with grief are often frustrated by the process of transferring ownership of cash and property to the rightful beneficiaries. With a little advance planning and some careful thought, you can minimize the headache of “Probate.”

An easy first gift at your death to your family is leaving behind a signed Will. A Will names an Executor who controls the handling of your estate. It also gives that Executor instructions on distributing assets to your desired beneficiaries.

A second step in making probate easier is signing a self-proving affidavit at the same time that you sign a Will. The self-proving affidavit helps the probate court know that the Will was validly signed and witnessed, and it lets the Executor file the Will for probate without spending time looking for the witnesses to the Will.

The third step is making sure that your Will contains a waiver of certain Executor responsibilities like preparing an inventory and filing annual returns detailing the debts and expenses paid by the Executor. Many software programs may generate a valid Will, but this waiver is often left out from those forms because many states do not permit waivers the way the Georgia Probate Code does.  By including a waiver in your Will, you can save your Executor time and money, and can also keep the contents of your estate private.

After your death, the Executor determines whether your probate is needed or if your assets all transfer to beneficiaries outside of probate.   If the Executor needs to open a probate estate, then the Executor files the original Will at the probate court in the county where you lived.  Together with that Will, the Executor needs to show the Court either a self-proving affidavit or a notarized statement from a witness. The Executor should also obtain a death certificate and solicit consents from the decedent’s spouse and children.  If a person dies without a spouse or living children, then other family members must be given a copy of the Will and the right to object.  Knowing how to contact those people and getting good advice can make the trip through probate court a smooth and painless experience.

 

 

 

Building a Path for an Executor By Chris Miller, Esq.

When an Executor starts winding up the affairs of a person whose life has come to an end, there are dozens (if not hundreds!) of people to call and tasks to complete.  The process can feel somewhat overwhelming, especially for a person who has never been asked to serve before.  The steps of going through probate are more time-consuming and burdensome when a person dies without a Will, but even a good Will does not tell the Executor all the things he or she should know. As much as you might want to leave no messes behind, the job of an Executor is rarely an easy one.

One thing you can do to keep the job of managing your estate from being more stressful than necessary is to write your Executor a letter, and then either deliver it to your Executor or tell your Executor where to find the letter when their services are needed.  The letter doesn’t have to be fancy or written by an attorney — the best letter comes from you. It contains instructions to carry out some of the wishes that didn’t make it into your Will, and is also a bit of a phone directory.  A letter can tell the Executor who might help the Executor pick up the pieces of your life and tie up loose ends.  Ideally, the letter should include the names and phone numbers of the people you deal with regularly.  Those people can guide the Executor on how to most effectively carry out the tasks you have set before them.   Examples of who you might list in a letter to your Executor are your accountant, your financial advisor, your insurance representative, and even your lawn maintenance contact.

Those contacts can then spring into action and help the Executor decide how best to accomplish the tasks before them.  Those contacts are often more than just professionals. They can be people who are important to you, and who can step into roles where it would be great just to have a helping hand, like neighbors or close friends who can help with house sitting, or real estate brokers who can help sell your home.   Think about who will be helping your Executor and give the Executor a tool to delegate those many tasks by writing a letter to guide them about your wishes.

Does My Will Contemplate That?

By: Marianna I. Chaet, Esq.

What happens if you sign your Will and then get married, or have a child, or get divorced and then pass away without having signed a new one? The first question to ask is whether or not you specifically contemplated or predicted the life event in your Will. If the life event was mentioned as a possibility in the Will, then the instructions in the Will are carried out as they are written. However, if the life event was not explicitly contemplated, then Georgia law takes over.

If someone signs a Will that does not mention a future marriage, then a future spouse can claim the same share that he or she would receive had the Decedent died “intestate” or without a Will.

The same concept applies to children. If a Decedent signs a Will that mentions two children, and then a third child is born after the Will was signed, then that third child can also claim an intestate share of the Decedent’s estate if the third child’s birth was not contemplated at the time the Will was signed.

What if an ex-spouse is named as a beneficiary or an Executor of a Decedent’s Will? If the Will was signed after the divorce, then the Decedent’s wishes would be carried out as directed by the Will. However, if the Will was signed before the divorce and a future divorce was not contemplated in the Will, then Georgia law treats the ex-spouse as having predeceased the Decedent. In other words, the Will is still valid and can be admitted to probate, but the ex-spouse does not get to serve as Executor nor would he or she receive a share of the Decedent’s estate. This means that if the backup Executor named is a relative of an ex-spouse, the ex-spouse is excluded, but his or her relative has the first right of refusal to administer your estate.

To be safe, it is important to include language in your Will contemplating certain life events. Otherwise state law dictates what happens.

 

Marianna is an associate at the Law Offices of J. Christopher Miller, PC. 678-746-2900 NorthFultonWills.com

Tuning Up Your Estate Plan

By Chris Miller, Esq.

As an attorney who deals every day with estate planning and probate questions, I often get asked when a Will should be updated. I usually answer with another set of questions:

Have you been divorced or remarried?  Changes in marital status affect how assets subject to probate are distributed. However, those changes do not modify your beneficiary designations for life insurance or retirement plans.  A former spouse might still be entitled to funds at your death if you let old beneficiary designations stay in place.

Has your family grown?  Adding a new member to your family is an exciting time, and it could also mean that you need to update your Wills and beneficiary designations. A Will only controls a portion of your assets, so remember to check other assets like retirement plans and life insurance to ensure that those proceeds flow to the right people.

Have you invested in real estate outside the state of Georgia? A Will probated in Georgia can transfer land inside Georgia, but a secondary probate in another state might be needed if you also own property there. You can reduce the costs of transferring those assets in the future by creating a Trust and funding it with the property outside Georgia

Did you sell your business or receive an inheritance? Nobody can predict what Congress and the new Administration will change the estate and gift tax laws, so keep your ears and eyes open to changes signed into law.   The current federal estate tax exemption is $5.49 million. You should ask questions of your financial or legal advisor if the value of your assets might be higher than the exemption.

Is your Executor, Trustee, Guardian, or Agent no longer a good choice? The most common reason we see for people changing their Wills is that the Executor they first named is not the best choice anymore. As children grow older, they might grow into those roles, and likewise, other relatives will age or pass on so they cannot manage your affairs in your absence.

We just don’t know when and how our estate plans will be used. Give your plan a few minutes of thought and talk it over with your family because a little bit of preparation can save lots of hassle and money.

 

The Importance of Beneficiary Designations By: Marianna I. Chaet, Esq.

Suppose you’ve been responsible and had a Will drafted. Now all of your estate planning is taken care of and you don’t need to worry about anything else, right? Well, not quite. Your Will does not control all of your assets.

Any asset which has a beneficiary designation such as a 401 (k), life insurance, or IRA plan passes outside of the Will. The beneficiary designation controls the distribution of that asset. If an ex-spouse is named as beneficiary in a Will, then Georgia law nullifies that bequest. This is not the case for non-probate assets. If you get divorced and forget to change your beneficiary designation on your life insurance, your ex-spouse could stand to inherit assets which you did not intend for them.

It is not only important that beneficiary forms are filled out, but that they are filled out correctly and turned in to the company responsible for the plan or policy. Most people look at filling out beneficiary forms as a chore, but these are some of the most important forms that you will fill out during your lifetime. Most forms allow for primary and secondary beneficiaries, so be sure to fill in both as that could be the difference between going through probate and not going through probate. I steer clear of naming minors as outright beneficiaries as they cannot legally hold money for themselves until they are 18. Instead, I recommend creating a testamentary trust for any minor beneficiaries through Wills to create a basket for those assets.

Beneficiary designations work together with your Will to make sure that your assets get distributed in the exact way that you would want them to be distributed, so don’t let them become an afterthought.

Marianna is an associate at the Law Offices of J. Christopher Miller, PC. 678-746-2900 NorthFultonWills.com