Trusted Estates

March 2011

Only Wealthy People Die. Didn’t you Hear?

The most current research indicates that only about 52% of adult Caucasian Americans, 33% of adult African Americans, and 26% of Hispanic Americans have the very basic requirement of an Estate Plan, which is a Will.
Therefore, what the remaining 48% of whites, 67% of blacks, and 74% of Latinos are saying is that they trust their state to dispose of their assets and pay their creditors. Really?
Somewhere in the American consciousness, it became erroneous fact that only the rich needed a Estate Plan. What’s an Estate Plan? A Will and/or Trust(s), Health Care Directives, and Powers of Attorney. This must be, because only the rich have assets of value (homes, cars, stocks, bonds, businesses, a mother’s ring, a father’s reconditioned classic car, a special instrument, or a family boat for example). Only the rich care about how their spouse or partner will live and what they’ll live on after they’re gone, because only the rich have spouses and partners. Only the rich have children. Therefore, only the rich want to make sure their children get their assets, but also, if their children are minors, have someone loving to take care of them of their choosing. Only the rich have creditors. Therefore, only the rich are interested in shielding as much as they can from those creditors. Only the rich get terminal illnesses, Alzheimer's, or have strokes and potentially become incapacitated. Therefore, only the rich will need people to make economic and health decisions for them. Only the rich care about giving. They are the only ones who go to churches, have and love pets, and have been personally affected in some way by, say, cancer. Therefore, only the rich want to make sure churches, animal rescues or the American Cancer Society are able to continue their good work. Only the rich have to pay state and federal estate tax, gift tax and income tax upon death (but I don’t believe the state and federal IRS knows this yet). Only the rich care about how they are cared for after death. They are the only ones who care whether they should be buried or cremated and where ashes and caskets should go. Only the rich care about figuring out how all of this is going to be paid for so their grieving spouse, partner, children or parents can do what they’re inclined to do, which is grieve. You see only the rich know they can (unfortunately) be here one day and not the next. This must be because, essentially...ONLY THE RICH DIE.

Have Kids? Get a Will.

People believe (see above) that if they don’t have a lot of money, then they don’t need a Will. Let’s look at one easy example (of many) as to why this is not true.
Minor Children: While it’s safe to assume that you or your spouse (or ex) will live to see your minor children to majority, the bad news is it’s not guaranteed. However, a Will allows you to put two very basic care functions in place for your children.
Firstly, a Will allows you to name the Guardian who will take on the daily parental role of your children in your absence. Secondly, a Will also allows you to name the person who will be taking care of any property that you leave to your children. This person can be the actual Guardian or someone else.
While it’s easy to think you need a Will only when you have lots of assets, a Will is actually more encompassing than that.

The Protected Estate:
Change your 401(k) or insurance policy beneficiaries especially if newly married or divorce as these documents trump your Will.
If you have a large estate make sure your Executor is not only responsible and trust worthy, but also has the financial and legal knowledge to handle it properly.
People interested in maintaining their wealth & decreasing their death taxes know the basics (i.e. the current Estate Tax & Gift Tax Exemption is $5 million for individuals; $10 million for married couples, the annual Gift Tax Exclusion is $13,000)
Trusts are no longer only for the rich. They’re a useful way to protect assets in life from creditors & lawsuits.

Law Office of Danielle Shelton Walczak

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One day you will die. So while you’re alive, plan for it. –New York Times

real Estate stories: the Millionaire in Subsidized Senior housing

William Bruinsma an extremely frugal & private man sought out an estate attorney, Russell F. Peck to draft a Will. When Mr. Peck asked about his estate, Mr. Bruinsma was reluctant to disclose the details and did not. However, he did disclose that he lived in subsidized senior housing and wished to get a Will drafted as cheaply as possible. Assuming Mr. Bruinsma had little in the way of assets that would be subject to Estate Taxes, Mr. Peck drafted a simple two page Will for his client.
Mr. Bruinsma’s 1993 Will provided that one-half of the income including capital gains distributions from his securities and bank accounts be distributed equally to his sister Lucy Bruinsma and his friend Ruth Hobden for their lifetimes, with the residue of his estate to be shared jointly by the American Cancer Society and the American Heart Association.
Mr. Bruinsma died in 1998, unmarried, & childless, with an estate totaling $1.7 million.
The original executrix of Mr. Bruinsma’s Will, Ms. Hobden, knew enough to bring a complaint against the beneficiaries of the Will (of which she was one) for among other things a modification of the Will. She sought to have the Will modified to create a Charitable Remainder Annuity Trust to shield the estate from $466,733 in State and Federal taxes.
In May of 2010, the Massachusetts Supreme Court decided that it would not reform Mr. Bruinsma’s Will and create a trust minimizing the estate’s taxes. The court found Mr. Bruinsma cared little about the tax implications of his estate, or that he would have wanted the beneficiaries of his Will to receive not less than 5% annually of the initial market value of the trust assets, (a substantial increase to them), as the Will modification would require. The court also determined that Mr. Peck, the attorney, made no mistake as to the drafting of the Will, as Mr. Peck did exactly what was asked of him. Mr. Bruinsma wanted to keep his estate plan simple & inexpensive so he could keep his legal fees to a minimum. Equally, the Court believed Mr. Bruinsma may have wanted to keep the information regarding the amount of his assets quite so he could still qualify for subsidized housing.