Estate Planning For Your Furry Family Members

Pets occupy a very special place in the hearts of the people whose lives they share. Today, more and more people think of their pets not just as companions, but as part of their family. If you have a treasured furry (or feathered, scaly, etc.) friend, you may wan to explore your estate planning options that allow you to continue to provide for your pet even after you die.

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One choice available to you is leaving a provision for your pet in your will. It is important to understand that the law still considers pets to be merely property. This means that, once your property (which includes your pet) is distributed to the people named in your will, that is the end of the control you have. If the person you name becomes incapacitated, dies or has to move into a residence that does not allow pets, you will have no say in what happens to the animal. This concern is a very important consideration if your pet has a very long lifespan, such a horse, parrot or turtle.

Another option available for pet people is the pet trust. The vast majority of states recognize pet trusts within their statutes. Even if your state does not have statutes specifically recognizing pet trusts, all is not necessary lost. Kentucky, for example, recognizes trusts “for humane purposes,” and the law in that state has long stated that the care of a specific animal is such a humane purpose.

With a pet trust, you create a trust for the benefit of your pet, you fund it with cash or other assets to be used for the pet’s care and well-being and you name the person who will manage the trust’s assets. That trustee then disburses money from the trust, in accordance with the trust’s instructions, to the person you designated to care for your pet. You can also name alternate trustees who will take over in the event that the person you originally named can no longer serve as trustee.

You have a great deal of flexibility with how you construct your pet trust. The trust can take effect during your lifetime or upon the occasion of your incapacity or death. You can also include detailed care instructions in your pet trust. If your pet has food allergies and must only consume certain types of food, your trust can provide direction about obtaining the correct food. If your pet has a special medical condition and requires extra trips to the vet, those instructions can go in the trust, too.

Summary: Pets are extremely important and treasured members of many families. A pet owner who wants to provide for his/her pet after death should consider including the pet in his/her estate plan. A pet trust potentially offers significant flexibility for guiding the care and maintenance of your beloved friend.

When is the Right Time to Create an Estate Plan? Now!

A common fallacy about estate planning is that creating an estate plan is a form of planning for death.  The reality is, there is no “Right Time” to create an estate plan, because you never know when you might need it and not having one can be risky business.

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One of the most commonly believed fallacies about estate planning is that creating a plan is a form of planning for death and, as long as you are young or healthy, estate planning is not an immediate priority. Nothing could be further from the truth! As one April 20, 2014 article in the Wall Street Journal reminds readers, “There’s no time like the present to make sure all your estate-planning ducks are in a row.”

Why is this so important and so urgent? Because estate planning is much more than establishing what happens after you die; it is also about documenting a clear set of instructions for what happens if you’re still alive and cannot speak for yourself.

That’s why some estate planning needs are universal. If you are in a serious accident and suffer major injuries that prevent you from managing your affairs, or perhaps from communicating at all, you need to have the proper documents already in place that give the person you want the authority to pay your bills, manage your investments, approve needed medical procedures or even authorize the termination of life-prolonging medical care.

With no plan in place, both you and your assets could be in significant risk. With no will, your assets will be distributed at your death according to your state’s intestacy laws. These laws may give part (or all) of your wealth to an estranged relative, and will definitely give your loved ones to whom you’re not related (either by blood or marriage) absolutely nothing. With no powers of attorney in place, your family may be forced to go to court and pursue a legal guardianship or conservatorship, which can be expensive and stressful, just to make decisions on your behalf. Your doctors may be forced to continue providing you with life-extending care, even though you have no hope of recovery and such care is against your wishes, if you don’t have a living will.

So, why is estate planning important? Because it gives you the ability to take control of a great many decisions both during life and after death. And why act now? Because no one knows for certain what the future may hold, and only a proper plan can give you the assurance that, whatever tomorrow brings, you’ll be prepared and your family will be protected.

This article is published by the Legacy Assurance Plan of America and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com

Protecting Your Estate Plan With a Broad No-Contest Clause

In one recent case from Michigan, that state’s Court of Appeals had to address a dispute about a man’s will. The man, Danial Span, had a daughter, Kayla. Span and Kayla’s mother divorced when she was 3 and, sometime later, he surrendered his parental rights and her stepfather adopted her in 2007. Two years prior, though, Span and the girl began forming a relationship. When he created his will in 2013, Span identified Kayla as his daughter, but left her nothing.

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Span’s 2013 will also contained a “no-contest” clause in it that, as with many such clauses, dictated that any person who challenged the will would forfeit their entire inheritance they were scheduled to receive under the terms of the will. In Span’s circumstance, the exact language of his no-contest clause stated that any beneficiary who “contests in any court any of the provisions of” the will would be treated as if she predeceased Span.

A week after Span signed his will, he died. Catherine Jock, Span’s personal representative (and the sole beneficiary of his estate) submitted the will for probate. The daughter challenged the will. The basis of her contest centered on Span’s mental capacity and the validity of the signature on the will. The personal representative, acting on behalf of the estate, tried to enforce the no-contest clause against the daughter. The trial court concluded that the personal representative could not enforce the no-contest clause against the daughter because the specific nature of the daughter’s challenge was one challenging the execution of the will and the testator’s capacity, and was not an attack on any provision in the will.

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Because the appeals court upheld the trial court’s ruling that went against the daughter on the substantial portion of her will contest, it did not need to reconsider the trail court’s ruling on the no-contest clause. Nevertheless, the case of Span’s will is a clear reminder of the need to approach no-contest clauses carefully. The language used in Span’s no-contest clause is fairly common. If your desire is only to prevent your potential beneficiaries from launching a challenge against a specific term (or terms) in your will, then such a clause could be beneficial.

However, contests that challenge a provision (or provisions) within a will are only one avenue for upsetting an estate plan. For some disgruntled people, their ends may be accomplished just as effectively by getting your plan invalidated in its entirety. If your goal is to protect yourself from both types of challenges, then, if no-contest clauses are enforceable in your state, you might benefit from using a clause with broader language than what Span had in his 2013 will. A experienced estate planning lawyer can help advise you about the whether no-contest clauses are enforceable in your state and, if they are, what degree of breadth would best match your planning goals.

Summary: For residents of states that allow no-contest clauses in estate plans, such provisions can offer a degree of protection against an unfair or frivolous court contest that would seek to undo your plan. Court cases have clarified whether or not the clauses are enforceable in a given state and, if they are allowed, how far they can go in protecting your plan. Depending on what your goals are, a broadly-worded no-contest clause may be able to give you the best protection against litigation by a disgruntled heir.

 

Understanding How You Can Protect Your Wishes as Recorded in Your Estate Plan

When you make the decision to create an estate plan, you likely put a lot of time and thought into getting that plan into place and making sure that it accomplishes exactly what you want. For this reason, almost anybody who puts in the effort of establishing a plan would also want to be sure that their wishes are protected from being undone after they’re gone. Depending on the laws in your state, a “no-contest” clause may be a viable solution.

“No-contest” clauses, also known as “terror” clauses (or, in some cases, by the Latin “in terrororem”,) are provisions inserted into estate planning documents like will or trusts. They state that, if a beneficiary under that document goes to court to challenge the legal validity of the document, and loses, then that beneficiary, regardless of what the plan document originally said, receives nothing.

These clauses can be very effective in some cases. For example, assume that your estate plan leaves one of your beneficiaries the flat sum of $75,000. Also assume that, if your estate plan were ruled invalid by a court and your assets were divided up according to your state’s intestacy laws, that same beneficiary would receive $250,000. A “no-contest” forces that beneficiary to consider carefully whether or not she can win in court, as a defeat in court means loses a significant sum — that being the $75,000 distribution.

A well-drafted “no-contest” clause will likely differentiate between a beneficiary who files a court challenge seeking to invalidate your estate plan and one who goes to court seeking a clarification of some aspect of your plan that is unclear. Even carefully drafted plan documents can sometimes have provisions that are ambiguous or vague. Most people would not want to punish their beneficiaries for asking a judge to make a ruling that clarifies a confusing provision, assuming that the beneficiary is not asking the judge to throw out the plan entirely.

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It is important to bear in mind that “no-contest” clauses are not legal in all states. Some states have decided that they violate public policy and have declared that they are unenforceable. In some states, the enforceability of a “no-contest” clause depends on whether the clause is placed in a will or a living trust. In Michigan, for example, the legislature passed a law declaring “no-contest” clauses in wills unenforceable. Because the law didn’t mention living trusts, the state Supreme Court there decided a few years ago that “no-contest” clauses in living trusts are allowable. So, if you live in Michigan (or a state whose law mirrors Michigan’s,) and you want to protect your wishes you’ve set up in your plan, you may want to consider utilizing a living trust in order to gain the added benefit of a valid and enforceable “no-contest” clause, in addition to the other potential advantages offered by a living trust.

Summary: “No-contest” clauses can serve important purposes in protecting the wishes you’ve enshrined in your estate plan. These clauses may provide a power financial disincentive that discourages disgruntled beneficiaries from using the courts in order to invalidate your plan and obtain a larger portion of your wealth as a result. “No-contest” clauses are not legal in every circumstance, however. The laws in your state may not allow them. In some states, “no-contest” clauses are allowed in living trusts and not in wills, which may provide an addition reason for residents of those states to consider using living trusts.