Paul O. Dillon, Attorney at Law

Can You Make a Will in a Video?

Jesse Beck had no will at age 45. However, he did make a video in which he stated he wanted his brother Jason to inherit everything if he died. Four days after making the video, Jesse was struck and killed by a car. Not surprisingly, estate litigation ensued after his death. The Montana Supreme Court ruled that video doesn’t count as a will, according to The Wall Street Journal article, “Yes to Text Messages, No to Video: What Counts as a Will.”

Despite the article’s title, you definitely don’t want to create a testamentary document using a text. A lack of understanding about what is acceptable as a will often leaves heirs with legal disputes and huge headaches. Beck’s brother won’t inherit his estate. It will go to his daughter. He would have done far better to have a will and an estate plan.

The gold standard is a paper will prepared by an estate planning attorney who knows the state’s laws and is signed with ink—known as a “wet signature.” While some states recognize holographic wills written and signed by hand on paper, doing so puts your wishes at risk.

Nearly half of all Americans don’t have a will. Some states recognize electronic wills, and legislation is pending in a few other states. However, the electronic will must be text and not audio or video. There are growing concerns about using artificial intelligence and deepfakes to create fraudulent electronic wills or alter electronic wills without the testator or heirs being able to identify the changes.

When someone dies without a will, known as intestacy, their state’s laws determine who inherits their estate. If Jesse wanted his brother to inherit his estate, he should have had a will created with an experienced estate attorney. While his own estate may have been modest, there is a wrongful death case pending against the vehicle involved in Jesse’s fatal accident. Alexia’s inheritance may be in the millions.

Different state courts have ruled differently regarding non-paper wills. An appellate court in Michigan accepted a digital will created with a note in an Evernote app on the decedent’s mobile phone.

Montana doesn’t have an electronic or e-will statute. However, writing may be treated as valid if there is clear and convincing proof the decedent wished it to be a valid will. In a case different from the Beck matter, a Montana court rejected using a text message as a will.

The bottom line: unless you intend to subject your family to a lot of legal wrangling and spend a lot of time in court, it’s best to meet with an experienced estate planning attorney and have a will prepared. You’ll also want to speak with the attorney about related documents, including Power of Attorney, Healthcare Proxy, Living Will and, if applicable, Trusts.

Reference: The Wall Street Journal (Dec. 14, 2024) “Yes to Text Messages, No to Video: What Counts as a Will”

Why an Updated Estate Plan Is Critical, Especially Now

Without a properly prepared and current estate plan, property is distributed following the intestacy law of the decedent’s state of residence. In most cases, the laws are centered around kinship, with spouses and children dividing percentages of the estate.

If you had something else in mind, it wouldn’t matter—the time to create and update an estate plan is while you’re living. We all know this. However, many just keep procrastinating. A recent article, “Make sure your estate plan is updated to reflect law changes,” from Los Altos Town Crier, explains precisely what pitfalls your loved ones will face if you put off creating an estate plan until it’s too late.

Probate can be minimized or avoided with a professionally prepared estate plan. The probate experience varies with the jurisdiction: in some courts, it’s a streamlined process, while in others, it is a series of delays, sometimes stretching out over months or even years. The time and costs of probate also depend upon the complexity of the estate. In some states, probate can cost 4—7% of the estate’s total value.

An estate planning attorney works with clients to create a means of passing assets to their intended beneficiaries without court involvement. This takes many different shapes depending on the family, the value of the assets, the structure of ownership, etc. Trusts, payable on death accounts, joint tenancy ownership and LLCs (Limited Liability Corporations) are just a few means of passing wealth without involving probate.

Estate planning attorneys help clients control how and when assets are passed to heirs. For instance, if someone had a child who is exceptionally mature and responsible, they may wish to provide the child with their inheritance upon their death. A trust can be created to address the concerns of a family with an adult child who, for whatever reason, cannot manage money. The trust can have a trustee who will be charged with distributing assets according to directions provided by the parents—after achieving certain milestones, at specific ages, or when the trustee deems funds should be distributed.

Incapacity is unpleasant to consider but is as much a part of estate planning as planning for asset distribution after death. Without having a plan for incapacity, the family may be forced to go to court and petition for a supervised conservatorship, a costly and stressful process.

Incapacity or death are the last things on the minds of new parents. However, when a new child joins the family, updating an estate plan to include naming a guardian becomes critical. If there is no will or the will has never been updated to reflect the addition of children, the court determines who will raise the children. Any interested party may petition the court to be appointed as a guardian. The court ultimately makes the decision. However, the decision by the parents, as expressed in an estate plan, will have more weight than an estranged sibling.

An estate plan protects the family by lessening the chances of family disputes and legal battles, which can lead to lifelong divisions. A meeting with an estate planning attorney will give you insight into the importance of having an estate plan and how it serves as a gift to loved ones.

Reference: Los Altos Town Crier (Oct. 29, 2024) “Make sure your estate plan is updated to reflect law changes”

Top Estate Planning Mistakes to Avoid

Suppose you’ve reached retirement age and have savings, including a 401(k), IRA, investment accounts, home and life insurance policies. Congratulations! While you’ll use these assets during retirement, some of them may end up in your estate. This, according to a recent article from Rocky Mount Telegram, “Avoid these estate planning mistakes,” is why you need an estate plan.

An estate planning attorney will be able to create such a plan. They’ll also know how to avoid common mistakes made by people with less experience. Once you get your information in order, the process isn’t as daunting as you think. Here’s what you need to know to have a successful plan:

Don’t wait until the “right time.” Putting off creating a plan and taking care of the details, like funding a trust or getting documents executed, leaves many people with no plan. Illness and accidents occur without warning. Estate plans address incapacity and distribute assets. If there is no will, your state’s laws of intestacy will determine how to distribute your estate. Contact an estate planning attorney and schedule a meeting sooner, not later.

Neglecting to update an estate plan and related documents. Estate planning isn’t a “set it and forget it” process. Most people’s lives include change—marriage, divorce, moving, etc. Your estate plan needs to change too—to be updated in the event of a large event, like the birth of a second child or grandchild, moving, a change in health or financial status and to take advantage of always-changing tax laws.

Forgetting to update beneficiaries. The number of people leaving generous surprises to people no longer in their lives because they forgot to update their beneficiaries would surprise you. However, it would not surprise an estate planning attorney. People start retirement funds at their first job and forget they assigned someone to receive the assets twenty or thirty years later. Your will only addresses assets in your estate—accounts with beneficiary designations are outside the purview of your will.

Neglecting to fund a trust after it’s been created. This is another common mistake to avoid. The entire estate plan might not achieve your goals if the trust is created and not funded. Assets being moved into the trust need to be retitled, and it takes some attention to detail to ensure that this is all done.

Naming a bad executor. The executor is responsible for carrying out your wishes as expressed in your will, overseeing the distribution of assets, filing estate and final personal taxes and many other tasks. They need to be extremely well organized and financially responsible. Your legacy will be impacted if you choose someone based on family relationships instead of competence.

Most people start this process by consulting with an estate planning attorney. It will take some time and effort on your part. However, imagine your family having to dig through all your records and documents and guess what you wanted to happen. Is that not a pretty picture? A better choice is to start and finish your estate plan with an experienced attorney.

Reference: Rocky Mount Telegram (May 10, 2024) “Avoid these estate planning mistakes”

How Your Estate Plan Addresses More than Money

Having a properly drafted and executed last will can help ensure that your wishes for asset distribution are followed, says an article from CNBC, “Writing your will is ‘not just a question about finances,’ expert says. Here’s why it’s a crucial task.”

People often think they don’t have enough assets to warrant creating a will, which is a big blunder. Without the right estate planning documents, loved ones will have to deal with additional difficulties during times of serious illness or death.

When no will exists, laws of “intestacy” take over. These state-specific laws determine who receives your assets, usually based on bloodlines or kinship.

Without a will, any minor children will be raised by whoever the court decides will be best to raise them. It won’t matter if you’ve always thought your cousin would be the best parent, if you died if the judge believes your uncle and aunt are the best choices. Your wishes won’t be heard.

If you don’t have an estate plan or haven’t revised your will in more than five years, it’s time to make an appointment with an estate planning attorney to prepare a will and other documents to protect your loved ones and your assets.

Part of having a complete estate plan includes ensuring that the people you’ve named as beneficiaries on bank and retirement accounts and life insurance policies are still the people you want to receive these assets. These accounts pass outside of your probate estate, so whatever your will says doesn’t matter for these accounts.

If you own a home or multiple properties, talk with your estate planning attorney about how to best structure ownership. It might be possible to place your home in a trust to remove it from your probate estate, or you may do better leaving it as is. The estate planning attorney will review your entire estate to determine your best option from an estate planning and tax perspective.

If there’s no will, a significant asset like a house is usually divided among heirs, depending on the state’s laws. This can get very complicated very fast.

Meet with an estate planning attorney to get the process started. It’s not as burdensome as you might think and will save your loved ones from additional stress and worry during times when their focus should be on celebrating your life and grieving your loss.

Reference: CNBC (May 8, 2024) “Writing your will is ‘not just a question about finances,’ expert says. Here’s why it’s a crucial task”

Is It Important to have a Will?

The biggest mistake people make in estate planning is not having a will. Many think that if they don’t have a will, their children or spouses will automatically inherit everything, and their families will know what to do. This simply isn’t true.

A recent article, “5 reasons why having a will is important for you and your loved ones” from Microsoft Start, says depending upon where you live, if you die without a will, your estate will be distributed according to the laws of your state. It won’t matter what you might have wanted to happen or what your spouse or family thinks should happen. And there won’t be any recourse for your spouse or your children.

Part of your assets to be included in your will are known as “digital assets.” The digital content now being included routinely in estate plans includes blog posts, social media, and email accounts, followed by passwords. Other digital assets include cryptocurrencies, NFTs (nonfungible tokens) and online businesses.

The laws of every state are different, and there are jurisdictions within every state. The laws of intestacy are different in each one. Your entire estate might not go to your spouse but be divided between your spouse and your children. If you’ve remarried and your state’s laws give everything to the spouse, your biological children might be disinherited.

If you have relationships outside of marriage or kinship (also known as “bloodlines”), your state’s laws probably don’t recognize those relationships, no matter how lasting they may be. A close friend, family caregiver, or live-in partner may find themselves left out of your inheritance, even if you’ve told them you’ll take care of them.

There are many instances of live-in partners being evicted from homes when family members inherit real estate property and the partners are not co-owners. This is a dramatic example, but it is all too common.

Parents need a will to designate a legal guardian for minor children. The will is used to name who you want to raise your children and look after them financially. Part of your estate planning should include financial planning in the event of something happening where your children will need to be raised by others. You can set up a trust with trustees in charge of funds for the children’s upbringing. I

If the family includes a special needs individual, the estate plan should include a Special Needs Trust to protect their loved one. An SNT allows monies to be set aside for their benefit without placing their government benefits at risk.

An estate planning attorney can help you clarify your wishes and document them in your will. They’ll also help prepare documents like Power of Attorney, Living Will, Healthcare Directives, and others needed to protect you while you are living.

Reference: Microsoft Start (May 2024) “5 reasons why having a will is important for you and your loved ones”

Why Unmarried Couples Need Protection of an Estate Plan

Couples decline to marry for a variety of reasons. Some are pragmatic, such as protecting health insurance eligibility. Taxes are another reason, as is qualifying for government benefits, like Medicaid or needs-based student financial aid. However, a recent article from the Journal of Accountancy, “Forgoing marriage? Estate planning for unmarried couples,” explains why unmarried couples must protect themselves from life's unexpected but inevitable events.

There is an old saying that marriage is the cheapest estate plan available, and in part, this is true. Here’s what unmarried couples can do to protect themselves.

How are assets titled? Having the home titled as a joint tenancy/ownership with the right of survivorship protects both partners. If one partner dies, full ownership automatically switches to the other partner, with no need for court documents or other paperwork.

Beneficiary designations. Each partner should review the beneficiary designations on all applicable financial accounts and products. This includes life insurance, pensions, retirement accounts, and, if possible, bank accounts. If the couple doesn’t want to make each other joint owners of the bank accounts, see if they can be added as beneficiaries.

Cohabitation agreement. This document clarifies everything from financial responsibilities during and after the relationship, from who will care for a shared pet to the distribution of jointly owned property if there is a breakup. Think of it as a prenup for unmarried people.

Power of Attorney. This allows the partners to step in and manage each other's affairs if one should become incapacitated. It’s also effective if one person travels and needs the other partner to manage daily financial matters.

Advance Care Directive. This document states a person’s wishes about medical care if they cannot communicate on their own. It should include a Health Care Power of Attorney, allowing the partners to make medical decisions for each other. Without it, adult children, siblings, or parents will be the only ones who can make these decisions. This will also permit the partners to access personal health information for each other during an illness or an emergency.

Last Will and Testament. Distribution of property or assets not owned jointly takes place through the will. The will is also used to name an executor in charge of the estate and carrying out the instructions in the will, as well as a guardian for minor children. If there is no will, an unmarried surviving partner will have no control over any property or assets. Without a will, the laws of intestacy take control, and usually surviving children, parents, siblings and even distant cousins who are related by blood come before the unmarried partner.

Trusts. If the couple wishes to keep their possessions and distribute them privately, a trust can be created to own assets, with the trustee being one partner and the successor trustee being the other. Couples with minor children, shared real estate investments, or assets in more than one state may find using trusts more efficient than passing assets through a will. Assets in a trust are not subject to any instructions in a will, do not become public and do not go through probate.

A consultation with an estate planning attorney can provide unmarried couples with a clear path to protect each other for the rest of their lives. This is the peace of mind provided by an estate plan.

Reference: Journal of Accountancy (April 30, 2024) “Forgoing marriage? Estate planning for unmarried couples”

Why Estate Planning Is Essential for Small Business Owners

Estate planning should be a top priority for anyone who has built and grown a successful small business, especially if they intend to build generational wealth and create a legacy. The title of a recent article from Business Insider says it all: “You might not want to think about estate planning, but as a financial planner, I know it’s essential for small-business owners.”

There are more complex issues for business owners than employees for estate planning. Therefore, be sure to work with an experienced estate planning attorney who will create a plan to protect you, your family and your business. As you go through the process, keep these basics in mind:

Last Will and Testament. This document is the foundation of an estate plan, providing directions to the state probate court regarding your wishes for distributing assets. It also names a guardian responsible for minor children upon your passing. If you don’t have a will, assets are distributed according to your state’s intestacy laws, typically based on kinship. You can update and change your will throughout your lifetime, and it should be reviewed every three to five years.

Revocable Living Trust. Having a revocable living trust gives you more control over assets, which could be necessary to distribute business assets. A revocable living trust can be altered while you are living, so changes in your business can be reflected in the directions in the trust.

Financial Power of Attorney. This document is critical if you are the business owner who performs most of the financial tasks of your business. When a business owner becomes incapacitated, having someone named Power of Attorney gives the POA the ability to pay bills, make bank deposits and withdrawals, file business and personal taxes and make any other financial decisions you wish. POA can be limited if you only want someone to pay bills, or they can be broad, allowing the agent to do anything you would do to keep the business running while you are incapacitated. Your estate planning attorney can craft a POA to suit your needs.

Business Succession Plan. A business succession plan should be in place as soon as your business gains traction and becomes successful. Distributing shares of the business after you pass is fine. However, what if your heirs don’t have a clue how the business works? Do you want them to sell it after you pass or maintain it for the next generation? A succession plan requires the help of an estate planning attorney, CPA and financial professionals to create a management team, define roles, set performance guidelines, etc.

Digital Estate Plan. We spend so much time online. However, few have plans for our digital assets. If your business is online, has a website, and uses social media, online finances, and cell phones, you need a digital estate plan to identify assets and provide instructions on what you want to be done with those assets after you have passed.

Review Beneficiary Designations. Any account that can name a beneficiary, such as retirement plans, investment accounts, or life insurance policies, must be reviewed every few years or whenever a trigger event, including birth, death, divorce, or remarriage. Upon your passing, these assets will be passed directly to the beneficiary. Be sure the person you named twenty years ago on your life insurance policy is still the right person to receive proceeds upon your passing.

An experienced estate planning attorney can review your current estate plan to ensure that it covers all bases for you and your business.

Reference: Business Insider (March 22, 2024) “You might not want to think about estate planning, but as a financial planner, I know it’s essential for small-business owners”

Do I Need a Pour-Over Will?

A living trust, also known as a revocable trust, is used in estate planning to transfer ownership of assets in trusts and accomplishes several things. It takes assets out of your probate estate, while permitting you to continue to control the assets. You can be the trustee while living and of sound mind, as explained in the article “What Is A Pour Over Will?” from Forbes. The trust names a backup or successor trustee who manages the trust assets if you become incapacitated or die. The living trust includes the names of your beneficiaries, which may be individuals or charitable organizations.

When you die, assets held in the living trust are transferred using the trust administration process. Assets held (owned) outside the trust must be addressed differently. This usually means going through probate.

If you have no will, your state's intestacy laws will apply. These laws would distribute your assets to family members based on their relationship to you—kinship. This may not be what you wanted, especially if a family member is estranged from you. However, it won’t matter, and other family members will have to live with the court’s decision.

However, you can use a pour-over will to “pour over” any assets not in the trust at the time of your death into the trust after your passing. This ensures that the assets will be transferred through the trust administration as well.

When the living trust is established, assets must be retitled so the trust becomes the legal owner. But you might not do this with everything you own, or you may acquire assets after the trust is created and die before you can transfer them. You might simply forget some assets.

As you create a trust for the specific reason to facilitate effective management and transfer of property through the trust administration process, it makes sense to have all your property moved into that trust upon your passing.

An experienced estate planning attorney can help create the living trust and coordinate it with your will and instructions for all assets not otherwise accounted for to pass into the trust upon your death. You’ll need to work with an estate planning attorney to be sure the trust, will and other estate planning documents comply with your state’s laws.

An estate planning attorney can help you understand other options for transferring assets and provision for loved ones. The pour-over will is one of many estate planning tools available to protect your loved ones.

Reference: Forbes (Jan. 29, 2024) “What Is A Pour Over Will?”

Estate Planning Myths Debunked

Estate planning is intimidating to people who think it’s only for the wealthy or don’t want to consider their own mortality. However, not addressing estate planning can cause families to suffer everything from the expense of estate battles to fractured families. A recent article from Forbes, “10 Estate Planning Myths You Shouldn’t Believe,” addresses the most common myths.

Estate planning is for the wealthy. Many articles focus on strategies to avoid paying the federal estate tax, which is only an issue if your estate is worth more than $12.92 million. However, estate planning is also about three things: planning for your finances to be taken care of if you’re incapacitated, making sure your health care decisions are carried out the way you want even if you aren’t able to communicate your wishes and making sure that your children and other heirs are cared for when you die. Estate planning is for anyone who may become seriously ill or die, which means everyone.

You’re too young for estate planning. The news is filled with stories of celebrities who die unexpectedly before creating a will. We never know when we may need estate planning.

If you die without a will, the state will get your assets. If you die without a will, each state applies intestacy laws to determine who inherits your property. You or your family may not like how the law distributes property. However, there won’t be anything they can do about it. Even if you don’t care about your property, if you have minor children, you need a will to determine who would be the guardian of your children if both parents die. Otherwise, the court will decide for you.

You don’t have to worry about probate if you have a will. This is wishful thinking, as probate can be long and expensive, especially if more than one court decides about your assets. While a will gives the court guidance on your wishes, it doesn’t avoid probate entirely. A will becomes public information that can be easily contested in court. If you own property in more than one state, each property may have to go through probate in its respective state.

You can draft these documents without an attorney. Yes, there are many forms online, and your hospital may have forms available for Health Care Proxy. However, you may be creating more problems than you solve by doing so. There are nuances in health care decisions not addressed by standard forms. Wills and trusts need the guidance of an experienced estate planning attorney to ensure that the documents align with state laws and accurately reflect your wishes.

No one needs an estate planning lawyer. There may be complicating issues in your life you are unaware of. An experienced estate planning attorney needs to review any estate planning documents to prevent problems for you and your family. Estate planning practitioners are accustomed to families coming for help after a do-it-yourself estate plan has gone wrong.

To avoid probate, you need a trust. Jointly owned property generally passes to the other owner without going through probate, as do assets with beneficiary designations, including life insurance, annuities and retirement plans, like 401(k)s and IRAs. Each state has its own rules for titling property to facilitate the transfer when a joint owner dies.

Trusts avoid estate taxes. If you’re worried about having a taxable estate, talk with an experienced estate planning attorney. Certain trusts can be part of a strategy to reduce and sometimes eliminate estate taxes.

You don’t have to worry about the estate tax. You may not need to worry about the federal estate tax, but some states have their own estate tax with far lower thresholds. Add in the value of your home, life insurance proceeds and retirement accounts. Then, talk with an estate planning attorney.

You’ll have to pay a gift tax if you give someone more than $17,000 annually. If you give an individual more than $17,000 in a single year, you reduce your federal lifetime gift and estate tax exclusion amount. You must start paying a gift tax only after you use up the entire exclusion. You still have to file a gift tax return and keep track of how much you’ve reduced your lifetime exclusion amount, so to avoid the hassle, you may want to stay within the $17,000 annual amount.

There are many misconceptions about estate planning, all of which can be cleared up with an appointment with an experienced estate planning attorney. This is one part of your life where a skilled professional can make a big difference for you and your family.

Reference: Forbes (Oct. 2, 2023) “10 Estate Planning Myths You Shouldn’t Believe”

When Is a Child Not A Descendant?

Not using specific names and terms open to definition could significantly impact who might inherit from your estate or trust. There are situations where some people may choose to deliberately restrict or expand the definition of the group, which might be included in these definitions, explains the article “Who Is Your Descendant: Intentional Limitations Or Broadening Of Definitions In Your Will Or Trust” from Forbes. For some people, creating a new role of a special trust protector who holds a limited or special power of appointment to determine who should be included or removed from the definition of “issue” or descendant is worth considering.

What might arise if the wish only considers children descendants if they belong to a particular faith? Is this type of legal restriction permitted? Clauses limiting heirs to members of a particular faith or a sect within the faith may raise questions about the constitutionality of the clause. Potential heirs excluded under such provisions have argued that a religious restriction on marriage violates constitutional safeguards under the Fourteenth Amendment protecting the right to marry.

Courts have held clauses determining if potential beneficiaries qualify for distributions based on religious criteria enforceable, if the potential beneficiaries have no vested interest in the assets. Another court upheld the provisions of a will conditioning bequests to their sons as long as they married women of a particular faith.

These decisions are narrowly tailored to the specific fact patterns of the cases, since individuals are generally allowed to disinherit an heir with the exception of a spousal elective share or a community property interest. The courts have reasoned that the restriction is not on the heir to marry but on the right of the testator to bequeath property as they wish.

An alternative approach is to create a single trust for all heirs mandating the funds in the trust be used for the cost of religious education, attending religious summer camps, taking relevant religious studies, religious institutional membership, etc. The trust could use the assets to encourage religious observance. However, it may only partially address the question. What about the remainder of the assets—should it be used for all heirs regardless of religious affiliations?

An estate plan compliant with Islamic law may involve a different determination of who is a descendant. The Sharia laws of inheritance are similar to the intestacy statute. One-third of the estate may be distributed as the decedent wishes. However, the remainder must be distributed as mandated under Islamic law. The residuary inheritance shares after the first third are restricted to Muslim heirs. Additional laws prescribe specified shares of the estate to be distributed to certain heirs, depending upon which heirs are living at the moment of the decedent’s death.

Suppose you or a family member is lesbian, gay, bisexual, transgender, or queer (LGBTQ). The law may not address the unique considerations regarding who may be considered a descendent. Special steps may be needed to carry out your wishes as to who your descendants are. What if you view a particular child as your own, but share no genetic material with a child? Children may be adopted or born through surrogacy, so neither parent nor only one parent is biologically related to the child. While some states may recognize an equitable parent doctrine, this may be limited and not suffice to protect the testator.

There are many new complexities for determining who is a descendant, and these issues are complicated and evolving. Changing family structures and religious beliefs based on different values all impact estate planning. A special trust protector may make decisions when uncertainty arises from provisions in a will designed to carry out the wishes. This is a relatively new role and not permitted in some states, so speak with your estate planning attorney to protect your wishes and heirs.

Reference: Forbes (Aug. 4, 2023) “Who Is Your Descendant: Intentional Limitations Or Broadening Of Definitions In Your Will Or Trust”