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BLENDED FAMILIES NEED ESTATE PLANS

Estate Planning

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If you have a blended family, it’s important that you have an estate planning attorney craft your estate plan rather than using a simple form Will to divide your assets based on percentages. Blended families are those that have children from multiple marriages and they have unique dynamics for which you should account in your estate plan. This will help avoid conflicts after you pass away.

When you leave a simple Will that bestows an inheritance on your natural children based on percentages, you leave open the possibility that the children will fight about who gets what specific assets. That’s bad enough. When you add step-children into the mix, it can get even worse. This could especially be a problem if your natural children and step-children did not grow up together. You may want to provide for your entire blended family and it is your right to do so. However, you should be careful to provide for them in a way that minimizes conflict.

The best way you can provide for your family, whether it’s blended or not, is to speak to an estate planning attorney. Every family is different and needs different things. An estate planning attorney can help you in making sure that you do what is right for your family.

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If you have young children, it is important that you name someone to be the guardian of the children in the event that you pass away. To do this, you need to make a Will. An estate planning attorney can help you make a Will. However, you need to choose an appropriate guardian. Here are a few tips.

The most important thing is to pick someone who is responsible and willing to serve as guardian. You want someone you know who will raise your children appropriately. That might be a family member or it might be someone else. You should also speak to that person ahead of time and make sure that he or she is willing to raise your children if anything should happen to you.

In most cases, the court will appoint the person you designate to be the guardian. However, sometimes the court might have a good reason not to. Because of something you do not know about, the person you chose might not be an appropriate person to raise your children. For this reason, you might want to also consider appointing a backup guardian. That is someone the court can appoint if the first person cannot be the guardian.

An estate planning attorney can create a Will that designates your choice for a guardian of your minor children and your backup choice.

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If you have paid life insurance premiums for years, the last thing you want to happen is for the insurance company to receive a windfall after your death instead of paying out to your beneficiaries. However, if your beneficiaries do not know about the policy, they will not know to make a claim. For this reason, part of your estate plan should include some way of letting your beneficiaries know about your life insurance policy.

New York’s Department of Financial Services strongly encourages insurers to check their unpaid premiums databases against the Social Security Administration’s records in an attempt to find unclaimed life insurance benefits that should be paid out. However, it might take months or even years for the insurance company to notice that you have passed away and that it needs to locate your beneficiaries. In the meantime, your spouse and children will not have the benefit of the life insurance policy you paid for.

You should reference all of your life insurance policies somewhere in your overall estate plan documents so that the people who need to know can tell your beneficiaries where to make a claim. It is also a good idea to store the policy information in the same place that you keep your other estate plan documents. At a minimum, make sure that your will’s executor will know about the life insurance policies as quickly as possible.

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As part of your estate plan, your New York City estate planning attorney will draw up a wide range of documents for you. As part of the process, you will need to designate people to act on your behalf. You might need to appoint an executor, a trustee, a general power of attorney, a healthcare prox and more. You do not need to designate the same person to act in every role.

Speak with your attorney about what the people designated for each role actually do so that you can designate the most appropriate person. For example, the executor of your will has a short-term assignment. Once directives in the will are carried out, the executor’s role is over. However, a trustee may need continue administering the trust for years. Thus, you might want to consider a potential trustee’s ability to continue to act well into the future, which might not be as big of a concern for an executor.

Different considerations go into deciding who to appoint to different roles, such as appointing a power of attorney or a healthcare proxy. An estate planning attorney will go over every role with you and has the experience to know what the most important factors are that you should consider. Make sure you ask your attorney about every role.

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A durable power of attorney allows an attorney-in-fact or an agent to make specific financial decisions on the principal’s behalf. A power of attorney document must be in writing and must comply with specific statutory formalities. Additionally, some banks may require parties to use their specific forms before they honor their power of attorney instruments. In most cases, you will have to sign your power of attorney document in the presence of a notary public and obtain the notary’s signature or seal. You may also need to sign your document in front of witnesses. You can limit your agent’s financial decision-making powers by specifying the types of actions your agent can take on your behalf. You can also further specify what types of financial decisions your agent cannot make.

Every power of attorney ends at the principal’s death. This means that if you die, your power of attorney is no longer effective, regardless of whether or not you revoked it or validly destroyed it. The termination is automatic. However, your power of attorney may also become automatically invalid if you become mentally incompetent. Unless you created a “durable” power of attorney, your power of attorney most likely ends at your mental incapacity. Although state laws may differ, most states require you to include certain words to express your intent in creating a durable power of attorney. You may need to include specific words, such as “to remain effective upon my mental incapacity” or “a durable power of attorney.”

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Many people fear that a spouse from a second marriage will not leave assets to the children of a previous marriage. If you leave all of your assets to your spouse in a simple will, this is a real concern. The second spouse is under no obligation to leave assets to your children from a previous marriage in his or her own will. Even if you and your spouse create joint wills that leave assets to all of your children, nothing prevents your spouse from changing his or her mind after you pass away.

With proper estate planning, however, you can avoid this problem and leave assets to your children from a previous marriage. In New York, an attorney can assess your situation and find the best option for you. For example, if your spouse lives in a home that you individually own and would eventually like to see pass to the children of your first marriage, you might want to give your spouse a life estate in the property and have it automatically pass to your children when your spouse passes away. In other situations, setting up a trust or leaving your children assets in your will might be better options. A qualified estate planning attorney can determine the best options for your family situation.

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In most situations, a stepchild will not inherit property from a step-parent after the step-parent dies. The step-child does stand to inherit from his or her biological parents, but all inheritances are dependent on the laws of the state in which you live. Talk to a your estate planning attorney for more detailed information.

  • Intestacy: When you die without will, your stepchildren are very unlikely to inherit anything at all. In some states, step-children have no intestacy rights, while in others, a step-child is the last person who stands to inherit from a step-parent before the state does. This essentially means that if there is no spouse or biological relatives of the step-parent that survives him or her, the step-child inherits. If there is no step-child, or offspring of that child, the property goes to the state.
  • Wills and Trusts: If you create a Will you can choose to leave as much property to your stepchildren as you like. Similarly, if you create a trust you can choose to name your stepchildren as beneficiaries so they can receive the benefit of the property you transfer to that trust. A person creating a Will can also choose not to leave anything to his or her children, including step-children.
  • Adoption: While a step-child’s rights to inherit from a step-parent are much more limited than the parent’s children, a step-child that a step-parent adopts has the same right to inherit as any other child. State inheritance laws do not differentiate between children and adopted children, even if the adopted children are former step children.

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Few phrases that include the word “fatal” ever promise a positive outcome, and “fatal errors in execution” is no different. When you’re developing an estate plan, a fatal error in execution can throw significant problems in your estate’s way when it comes time to distributing estate property. Let’s take a look at the term in more detail.

  • Execution: The execution of a Will is the formal signing of the document. This signing must comply with state laws and includes various elements in order to be successful. For example, all states require that both the testator and two competent witnesses sign the document. But does the testator sign first? What if the witnesses sign first? Do the witnesses have to sign in each other’s presence or in the presence of the testator? All of these questions can impact the validity of the execution and, if not properly accounted for, can lead to a fatal execution error.
  • Fatal Error: A fatal execution error is an error during the execution process that invalidates the will. This means that even if you’ve created a Will and stated in detail all of your preferences, if a court later finds a fatal execution error it will determine the Will is invalid. It will then disregard your Will and your choices will have no impact on how your estate is distributed.

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As discussed in the previous blog entry, the New York Estates, Powers and Trust Law (EPTL) establishes the statutory procedures that personal representatives, administrators and executors must follow when filing wrongful death lawsuits.

The EPTL provides mandatory statutes of limitations or time limits in which a personal representative can sue someone on a decedent’s behalf for wrongfully causing his death. Section 5-4.1 of the EPTL sets the statute of limitations at two years. Your personal representative or executor of your estate must file a wrongful death lawsuit within two years of death. However, the EPTL contains an exception to the two-year statute of limitations for the Sept. 11, 2001, terrorist stacks. In this case, a lawsuit alleging a wrongful death caused by the Sept. 11, 2001, terrorist attacks are subject to limitations period of two years and six months from the date of the decedent’s death.

If the decedent’s death was caused by a criminal action and not just a wrongful or negligent act or failure to act, the EPTL allows the personal representative or executor of the decedent’s estate to maintain a wrongful death lawsuit within one-year from the date the criminal action terminates or ends. Thus, if the state maintains a criminal action against an individual or company for your death, your personal representative, administrator or executor has another year from the date the criminal action terminates to commence a wrongful death proceeding.

Check out our blog tomorrow to read Part 3 of How Can an Estate Maintain a Wrongful Death Lawsuit on a Decedent’s Behalf?