Sunday, July 31, 2016

Testamentary capacity to sign Will detailed IN THE MATTER OF THE ESTATE OF HELEN M. WESTE

Testamentary capacity to sign Will detailed

Argued May 16, 2016 – Decided June 24, 2016

Before Judges Messano and Gooden Brown.

On appeal from the Superior Court of New Jersey, Chancery Division, Probate Part, Middlesex County, Docket No. 228318.


                                                                                    SUPERIOR COURT OF NEW JERSEY
                                                                                    APPELLATE DIVISION
                                                                                    DOCKET NO.  A-0436-14T1 
            Joanne Halkovich, niece of Helen M. Weste (Helen[1]), appeals from the Chancery Division's August 8, 2014 order that: discharged Halkovich as administratrix CTA[2] of Helen's estate; ordered Halkovich to provide a full inventory and accounting of the estate's assets; admitted Helen's 2002 last will and testament (the 2002 will) to probate; and appointed Helen's neighbor, John Brek, as executor under the terms of the 2002 will.  We discern the following facts from the evidence adduced at the trial before Judge Frank M. Ciuffani.
            Helen had no children and was divorced from her husband, John.  On March 28, 1994, she executed a will (the 1994 will) that made three charitable bequests to two religious entities; left her personal property to her niece Louise Ogletree; and bequeathed the remainder of her estate in different percentages to a sister and eight nieces and nephews, including Halkovich.  Helen named John, then a resident of Florida, as executor.  Helen died on March 6, 2010, at the age of eighty-two.  Halkovich became administratrix CTA because John and one of the alternate executrixes pre-deceased Helen, and the other alternate executrix and family members renounced the rights to administration.  The 1994 will was admitted to probate on March 30, 2010.
            In 1995, Helen left the apartment she had shared with John and moved back into her family's home located on Hampden Street in Linden.  Brek rented a portion of the house across the street.  Over the ensuing years, he befriended Helen and would do odd jobs around her home and drive her to do her errands. 
            Helen's health began failing in 2001.  Her nephew testified that he and his wife often visited, but, on one occasion in July of that year, Helen referred to him by his father's name, even though he had been dead for nearly twenty years.  Throughout fall 2001, Halkovich and another niece, Carolyn Amoroso, visited, and Helen did not recognize either of them.  Amoroso testified that she and her mother, Helen's sister, visited on March 17, 2002; Helen recognized her sister, but not Amoroso.  Amoroso observed that Helen's home was not as neat as usual.  However, Amoroso acknowledged at trial that Helen was still coherent and stayed on topic during the conversation.
Concerned about Helen's failing health, family members contacted John, who was attorney-in-fact pursuant to a written power of attorney Helen had executed at the time of the 1994 will.  John flew to New Jersey from Florida, and, on April 5, 2002, after summoning police and emergency medical services, had Helen admitted to Trinitas Hospital (Trinitas).  In his psychiatric evaluation, Dr. Benjamin Chu noted that Helen "appears confused, and disoriented . . . .  Her insight and judgment are poor. She is unable to take care of herself."  Dr. Chu diagnosed Helen with dementia, and assigned her a GAF score of 20, well below normal functioning.  Helen was discharged from Trinitas, but never returned home.  In June 2002, Halkovich coordinated her aunt's admission to an assisted living community in New Jersey. 
Michelle Chihadeh, a certified dementia practitioner and assisted living administrator, testified regarding the care she provided Helen at the facility.  Helen was admitted to the special care community as a result of her memory impairment, risk of wandering and need for twenty-four-hours-a-day supervision.  Following John's death, on July 28, 2006, Halkovich was appointed Helen's guardian.  Helen was transferred to another facility where she remained until her death. 
Victor Padlo, who at the time of trial had been a practicing attorney in New Jersey for thirty-nine years, testified that Helen called his office and scheduled an appointment for February 15, 2002.  Brek testified that he drove Helen to Padlo's office, but he had no prior knowledge of the reason for the meeting and no prior association with Padlo.  During the meeting, Helen gave Padlo a handwritten document that Padlo testified was essentially a "holographic will."  
As was his practice, Padlo contemporaneously prepared a will information worksheet.  Padlo testified that no one else was present in his office when he interviewed Helen, and he had no doubt regarding her testamentary capacity.  Padlo testified that he had never prepared a will for, or allowed it to be executed by, anyone who lacked sufficient mental/testamentary capacity.  He had, on other occasions, declined to prepare the documents.
Padlo prepared the will after the February 15, 2002 meeting and contacted Helen to make arrangements for its execution. Helen returned on March 14, 2002, and executed the will.  The same day, Padlo oversaw execution of Helen's living will, that provided Brek with Helen's medical proxy.  Only Padlo's secretary and another attorney in his office were present during the execution of the documents.
The 2002 will made a bequest to one of the religious institutions referred to in the 1994 will, made a specific bequest to Helen's niece Louise Ogletree, bequeathed her personal property to her niece Linda Ogletree, together with 10% of her residual estate and bequeathed the home on Hampden Street and 90% of her residual estate to Brek.  It also named Brek executor.
Helen gave Brek copies of the testamentary and living wills  when they left Padlo's office in March 2002.  Brek testified that Helen told him that he should not let anyone put her in a nursing home and asked Brek to take care of her.  Nonetheless, Brek stood by silently and actually witnessed Helen's involuntary removal from her home and subsequent admission to Trinitas in April 2002.  He never advised anyone that he possessed a copy of the 2002 will during the ensuing years, and, in February 2010, Brek moved to Pennsylvania.  Brek became aware of Helen's death nine months after the fact, when a neighbor notified him.  For reasons unexplained, Brek never filed his complaint seeking to probate the 2002 will until October 2011.[3]
Each side produced expert witnesses who reached differing opinions regarding Helen's testamentary capacity at the time of the 2002 will.  Dr. Peter Crain, a board certified forensic psychiatrist, testified that Helen lacked two of the three criteria, specifically, that she did not "understand the natural recipients" of her assets, or reasonably appreciate "the extent of [those] assets."  Dr. Eileen A. Kohutis, a psychologist, testified as Brek's expert witness.  She opined that Helen possessed testamentary capacity when she executed the 2002 will.
In a comprehensive written opinion, Judge Ciuffani reviewed the testimony and the case law regarding testamentary capacity.  He concluded
the evidence does not clearly and convincingly establish that Helen Weste, when she met with her attorney on February 13, 2002 [sic], after preparing in her own handwriting a document setting forth her testamentary intent, and on March 14, 2002[1], when she signed a [w]ill which Mr. Padlo prepared based on her written instructions, lacked testamentary capacity. The best evidence is from those who interacted with her during that critical timeframe, Mr. Padlo, Mr. Brek and her two nieces who visited her before and after she signed the [w]ill and left her to care for herself.  If Helen Weste had the capacity to live alone and care for herself, she had the capacity to make a [w]ill.

Judge Ciuffani noted that "[t]he case law clearly states that the threshold for testamentary capacity is very low, one need only possess a very low degree of mental capacity to execute a will, even less than is needed to enter into a contract." 
            The judge noted that Helen was able to contact Padlo on two occasions, and prepared "very specific" handwritten instructions for preparation of the 2002 will.  He rejected the argument that Dr. Kohutis's opinion was a "net opinion," observing that she had reviewed the same documents as Dr. Crain.  Judge Ciuffani also noted that Dr. Crain conceded that a person with "moderate dementia could have testamentary capacity," and that Dr. Crain offered no opinion "on whether Helen Weste, if she wrote the written instructions [on] her own, had testamentary capacity."  The judge implicitly rejected Halkovich's argument that "Brek told Helen what to write." 
            Lastly, Judge Ciuffani rejected any claim that Brek asserted "undue influence" upon Helen.  He found no evidence to support the contention, noting that Brek was not present when Helen met with Padlo, Helen made dispositions to a charity and relatives in the 2002 will and did not bequeath all her assets to Brek, and Brek waited many months after Helen's death to present the will.  The judge rejected the claim that misspellings and errors in the handwritten instructions demonstrated that it was not prepared by Helen.  He entered the order under review, and this appeal followed.
            Before us, Halkovich argues that, for a variety of reasons, the judge erred in concluding that Helen had the requisite testamentary capacity to make the 2002 will.  She also contends that the 2002 will was the product of undue influence.  We have considered these arguments, in light of the record and applicable legal standards.  We affirm.
Our review of the findings made by the judge in a non-jury trial is limited.
Final determinations made by the trial court sitting in a non-jury case are subject to a limited and well-established scope of review: "we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice[.]" 

[Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) (alteration in original) (quoting In re Trust Created by Agreement Dated December 20, 1961, ex rel. Johnson, 194 N.J. 276, 284 (2008)).]

In particular, "[t]he findings of the trial court on the issues of testamentary capacity and undue influence, though not controlling, are entitled to great weight since the trial court had the opportunity of seeing and hearing the witnesses and forming an opinion as to the credibility of their testimony."  In re Will of Liebl, 260 N.J. Super. 519, 523 (App. Div. 1992) (alteration in original) (quoting Gellert v. Livingston, 5 N.J. 65, 78 (1950)), certif. denied, 133 N.J. 432 (1993).
            Challenging Judge Ciuffani's determination that Helen possessed requisite testamentary capacity when she executed the 2002 will, Halkovich argues: 1) the judge should have applied "heightened scrutiny as a result of the suspicious circumstances" surrounding the will; 2) the judge applied the incorrect legal standard to assess Helen's competency; 3) the judge disregarded competent evidence that Helen lacked the requisite capacity; and 4) the judge disregarded Dr. Crain's "credible and competent testimony" in favor of Dr. Kohutis's "net opinion."  We reject these claims.
            "In any attack upon the validity of a will, it is generally presumed that 'the testator was of sound mind and competent when he executed the will.'"  Haynes v. First Nat'l State Bank, 87 N.J. 163, 175-76 (1981) (quoting Gellert, supra, 5 N.J. at 71).  

The gauge of testamentary capacity is whether the testator can comprehend the property he is about to dispose of; the natural objects of his bounty; the meaning of the business in which he is engaged; the relation of each of the factors to the others, and the distribution that is made by the will.  Testamentary capacity is to be tested at the date of the execution of the will. Furthermore, [a]s a general principle, the law requires only a very low degree of mental capacity for one executing a will.  [T]he burden of establishing a lack of testamentary capacity is upon the one who challenges its existence [and] [t]hat burden must be sustained by clear and convincing evidence.  A testator's misconception of the exact nature or value of his assets will not invalidate a will where there is no evidence of incapacity. Even an actual mistake by a testator as to the extent of his property does not show as a matter of law that he was wanting in testamentary capacity.

[Liebl, supra, 260 N.J. Super. at 524-25 (citations omitted) (alterations in original).]

            The "suspicious circumstances" Halkovich alludes to are the conflicting testimony regarding Helen's mental state in March 2002, the lack of any "precipitating event" that would have caused her to change the disposition of her assets from the earlier will, and errors and misspellings contained in the handwritten list she provided to Padlo.  The very old cases cited by Halkovich do not alter the burden of proof or change the legal standards relating to testamentary capacity.  More importantly, Judge Ciuffani evaluated all of the evidence regarding Helen's mental state as of March 14, 2002, and he discounted the importance of any errors or misspellings in the handwritten list.  Contrary to Halkovich's contentions, the 2002 will kept some of the dispositions made by the earlier will and rejected others.  In any event, "[i]t is well settled in this State that every citizen of full age and sound mind has the right to make such disposition of property by will or deed as he or she in the exercise of individual judgment may deem fit." Casternovia v. Casternovia, 82 N.J. Super. 251, 257 (App. Div. 1964). 
            Similarly, the contention that Judge Ciuffani applied the wrong legal standard is unpersuasive.  Halkovich cites the judge's statement that at the time of executing the 2002 will, Helen was able to care for herself and argues "this [is] not the test for testamentary capacity," and the finding was contrary to the weight of the evidence.  However, a fair reading of the judge's entire written opinion makes clear that the judge did not misapprehend the standard for assessing testamentary capacity, nor did he make a factual finding that was not supported by the evidence.  The reality is that Helen made the appointment to see Padlo, she was prepared to make a new will and Padlo, who had extensive experience, did not question her capacity.  Moreover, when her relatives involuntarily removed her from her home, Helen was in fact caring for herself without assistance. 
            Halkovich's final two arguments regarding Helen's testamentary capacity lack sufficient merit to warrant extensive discussion.  R. 2:11-3(e)(1)(E).  Applying our standard of review, we cannot conclude that Judge Ciuffani's factual findings and assessment of the credibility of the expert testimony were "'so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice[.]'"  Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)).  We also agree with Judge Ciuffani that Dr. Kohutis's opinions were not inadmissible net opinions.
            Halkovich also contends that Judge Ciuffani erred in concluding the 2002 will was not the product of undue influence.  We again must disagree.
A will which on its face appears to be validly executed, may be set aside if it is tainted by "undue influence." Haynes, supra, 87 N.J. at 176.  The Court has defined undue influence as
a mental, moral, or physical exertion of a kind and quality that destroys the free will of the testator by preventing that person from following the dictates of his or her own mind as it relates to the disposition of assets, generally by means of a will or inter vivos transfer in lieu thereof.

[In re Estate of Stockdale, 196 N.J. 275, 302-03 (2008).]

"It denotes conduct that causes the testator to accept the 'domination and influence of another' rather than follow his or her own wishes." Id. at 303 (quoting In re Neuman, 133 N.J. Eg. 532, 534 (E.& A. 1943)).  "Ordinarily, the burden of proving undue influence falls on the will contestant.  Nevertheless, we have long held that if the will benefits one who stood in a confidential relationship to the testator and if there are additional 'suspicious' circumstances, the burden shifts to the party who stood in that relationship to the testator."  Ibid. (quoting In re Rittenhouse's Will, 19 N.J. 376, 378-79 (1955)).
            Here, the judge rejected Halkovich's wholly-circumstantial suppositions as evidence of Brek's influence over Helen.  We see no basis to disturb those conclusions given the lack of any evidence to the contrary. 

[1] We refer to Helen Weste, and her ex-husband John, by their first names to avoid confusion.  We mean no disrespect by this informality.

[2] The initials stand for "Cum Testamento Annexo," or "with will attached."  See N.J.S.A. 3B:10-15.
[3] Rule 4:85-1 provides:

If a will has been probated by the Surrogate's Court or letters testamentary or of administration, guardianship or trusteeship have been issued, any person aggrieved by that action may, upon the filing of a complaint setting forth the basis for the relief sought, obtain an order requiring the personal representative, guardian or trustee to show cause why the probate should not be set aside or modified or the grant of letters of appointment vacated, provided, however, the complaint is filed within four months after probate or of the grant of letters of appointment, as the case may be, or if the aggrieved person resided outside this State at the time of the grant of probate or grant of letters, within six months thereafter.

The estate never sought to dismiss Brek's complaint as untimely and the issue was not addressed by Judge Ciuffani.

Tuesday, July 26, 2016

Fill Loved Ones in on Your Estate Plans

Fill Loved Ones in on Your Plans

Fill Loved Ones in on Your Plans
A conversation with friends and family about what you want to happen if you become incapacitated or when you pass away is probably not a conversation you're excited about having. But talking to your loved ones about every aspect of your plans now will ensure that everyone is on the same page when the plans become necessary in the future. Having a conversation will also let them know how much these tasks mean to you and will make the process less stressful down the road.

When to talk about it

Think about your family, how they work together and their comfort level with this type of conversation. Ask yourself:
  • Do you need to all be together or will you talk with each person one-on-one?
  • If you want to talk with everyone at once, when is your next opportunity to do so?
  • Will that be over a holiday or other special gathering?
  • Will it help to prepare people in advance that you want to spend time going over these issues?
Even if your family seems hesitant discussing these things, chances are they have many of the same concerns you do. Families vary in their level of comfort with end-of-life issues, but most really do want to have the conversation and are simply waiting for someone else to start it.

Before you begin the conversation

Have your plans thought out and documents prepared with your estate planning professionals. You can also ask them about specific details you'll want to tell your loved ones and if they have any tips about approaching the conversation.
If you're nervous, try practicing the conversation with a friend first. It can help you think it through and prepare for any emotional speed bumps that might get in your way.

How to approach the conversation

Sometimes, it's hard to know how to start a dialogue. Here are some suggestions on what to say.
For parents who want to talk with adult children: "We would like to schedule a family meeting to talk with you about the plans we have made medically, legally and financially for when we die. It is important to us that you are all informed of our wishes. We think it will make things easier to handle if you know what plans we have made, where our papers are and who will be in charge of our estate."
For parents who want to talk with teenage or younger children: ""I know it is not something any of us want to think about, but if something were to happen to Dad/Mom and I, we want you to know that you will be well taken care of. I would never want you to be afraid of where you would live, who would take care of you, I want you to know this information."

What to discuss

Here are the topics that you should make sure you cover.
Medical: Tell them about your documents such as living wills and health care directives. Let everyone know who will be making health care decisions and, if you think it will matter to your family, say why you chose that person.
While one person will carry out decisions, make sure everyone knows the decisions they will be carrying out are yours alone. Talk about what you want to happen if you would be unable to live unassisted. Talk about how you feel about nursing home care. If you have arrangements with a specific facility, let everyone about them.
Discuss hospice care and how you want to be cared for at the end of your life. Cover how you feel about pain management.
Funeral plans: If you have your wishes documented, let people know where the document is, who'll be carrying out your plan and why that person was chosen. It can be helpful for everyone to know what your decisions are about burial or cremation. If you have a burial plot or wishes for distributing ashes, let them know. Talk about what you would like your funeral to be like and let them know about any spiritual or religious traditions you would like honored.
Financial: Discuss where your important papers are kept. Let them know who the executor of your will is and who your attorney is. This could be a good time to find out if anyone has more sentimental attachment to certain items than others. It can be helpful for everyone to understand and voice their preferences publicly — before issues of grief and loss cloud judgment.
If all of this seems a little overwhelming, keep in mind that you don't have to discuss everything at once. It can be enough to simply start the conversation — and then keep it going over time. Want to remove some of the stress from planning?

Planning Your Funeral: Less Morbid Than It Sounds

Planning Your Funeral: Less Morbid Than It Sounds

Funeral planning
Although making funeral plans now might seem strange, there are many reasons why it is a smart idea.
One of the biggest reasons to plan your funeral is to keep someone else from having to. The grief of losing someone we love affects everyone differently, and loved ones can't really predict what they will feel once the moment happens. Planning ahead can be a generous gift on your part – a way to decrease stress when the people you care about are already feeling a heavy emotional toll.
Another reason to plan is to ensure the event will reflect your wishes. You may know clearly what you want — and what you don't want. You may want favorite poems, songs or spiritual passages read. Or perhaps you have a very strict "no hymns" rule. If you served in the military, you and your family may want to include final military honors or you may feel that tradition doesn't match the person you became since your service. There are no right or wrong choices; it's about what's right for you.
Some people want a plan because it is their way to say goodbye. It can be your last statement to the world about what mattered to you and who you were. Or you see it as your chance to throw one last party.

The Practical Side of Planning

There are a few practical details you should cover as you work through your plan. The following forms will help you organize your wishes.
As you work through your plans, be prepared for the possibility of learning it mattered more than you thought it might. The process may be a moment to face what you fear about death as well as an opportunity to focus on what you want to celebrate about your life. 

Explore Your Long-Term Care Options

Explore Your Long-Term Care Options

Long Term Care & Funeral Planning: Make Your Wishes Known
The majority of us will use some sort of long-term care services as we get older. You may need assistance with activities ranging from bathing, eating and taking medication to shopping for groceries, managing money and preparing meals.
Because the cost of these services continues to rise — now averaging anywhere from $5,000 to $10,000 per month — you need to start budgeting and planning now so that you are prepared when you need these support services, whether it be at home, in the community, in assisted living facilities or in nursing homes.

Long-term care insurance

As you plan, keep in mind that there are long-term care insurance policies that can provide financial help, but that age and physical condition are factors in the cost. If you are older or less well, then you can expect the policy to have higher premiums and more stringent terms. On the other hand, if you are younger and in good health, you can expect more flexibility in the terms and premiums.
As is true with any insurance product, you'll need to look carefully at each policy offered and its options. Consider such items as:
  • What benefits are offered? For example: daily payments amount (which could be up to a preset daily amount for incurred expense reimbursement or daily pre-set disability payment amounts regardless of actual expenses) benefits for certain period, lifetime benefit amounts, comprehensive or facility care only, home modifications to support physical capacity limitations or risks, care coordinator services, payment for family/friend provision of care.
  • What conditions trigger coverage? For example: a determined impairment in activities of daily living (ADRs) or specified cognitive impairment.
  • When will benefits begin? That is, is there an elimination period — a set period of days after the requisite triggering condition exists before benefits start? How long is the elimination period?
  • Will benefits be fixed or will they adjust with inflation?
  • What exclusions from coverage or from certain policy benefits apply? For example, If you already need or are in long-term care, or if you have certain progressive and severely debilitating conditions.
  • How much will it cost?
To learn more about this option, talk to an insurance agent who specializes in these types of policies.

Government assistance

The government provides assistance for some services to those eligible for Medicare, such as nursing home rehabilitation and post-hospitalization home health care. But it doesn't address long-term chronic needs or custodial care.
The Administration for Community Living, maintained by the federal Department of Health and Human Service's Administration on Aging, prepared a chart that addresses the major categories of long-term care options and the financing alternatives available for persons needing care:
Long-Term Care ServiceMedicareMedigap InsurancePrivate Health Insurance
OverviewLimited coverage for nursing home care following a hospital stay and home health if you require a nurse or other skilled provider.Insurance purchased to cover Medicare cost sharing following a hospital stay and home health if you require a nurse or other skilled provider.Varies, but generally only covers services for a short time following a hospital stay, surgery or while recovering from an injury.
Nursing home care
Pays in full for days 1-20 if you are in a Skilled Nursing Facility following a recent 3-day hospital stay.
If your need for skilled care continues, may pay for the difference between the total daily cost and your copayment of $137.50 per day for days 21-100. After day 100 does not pay.
May cover the $137.50 per day copayment if your nursing home stay meets all other Medicare requirements.Varies, but limited.
Assisted living facility (and similar facility options)Does not pay.Does not pay.
Does not pay.
Continuing Care retirement communityDoes not pay.Does not pay.
Does not pay.
Adult day servicesNot covered.Not covered.Not covered.
Home health and personal care
Limited to reasonable, necessary part-time or intermittent skilled nursing care and home health aide services, some therapies if a doctor orders them, and a Medicare-certified home health agency provides them.
Does not pay for on-going personal care or only help with Activities of Daily Living (also called "custodial care").
Not covered under current policies.
Some policies sold prior to 2009 offered an at-home recovery benefit that pays up to $1,600 per year for short-term at-home assistance with activities of daily living (bathing, dressing, personal hygiene, etc.) for those recovering from an illness, injury, or surgery.
Varies, but limited.
To learn more, you may want to talk to an elder law attorney who works exclusively with elder law issues such as how to qualify for Medicaid and other government benefits and what actions you may need to take to legally qualify.

Making a decision

The decision to prepare for long-term care arrangements is very personal. You'll need to:
  • Consider the resources you'll have available for future long-term care costs and the extent of assistance you'll need to make up the difference.
  • Consider if you'll have family members to assist as caregivers should you require it, or if you'll have to turn to outside sources.
  • Think about what is most important to you in terms of the site and extent of care you'll want.
Start with a preliminary analysis and plan to meet your expectations for your own situation.
Even though thinking about how your care needs may change as you get older isn't the most fun topic, it is a necessary one. Another necessary topic you may not have considered yet?

What Happens to Your Debt when You Die?

What Happens to Your Debt when You Die?

What happens to debt?
If you owe money to creditors, you may be worried about how your debt will affect your loved ones when you die. During the probate period (the period during which the legal system determines how your assets should be distributed), creditors have approximately four months to file claims against your estate.
Generally, your estate is responsible for any debt you leave behind, and your debts will be paid during the probate period using the following guidelines:
  • If your estate has adequate cash, it will be used to pay off your debt.
  • If your estate doesn't have the cash but has enough assets to cover the debts, your assets will be sold during the probate period to pay your debts.
  • If your estate doesn't have adequate assets to cover the debt, your estate will pay off the debt in the order determined by state law. Then creditors must generally write off the remaining unpaid debts.

Non-probate assets

Assets such as retirement accounts and life insurance policies go directly to the named beneficiaries instead of through probate. Therefore, these assets aren't considered part of the estate and generally won't be used to pay off debts. Consult an attorney to clarify the rules in your state.

Your mortgage

Federal law allows your surviving spouse to take over the mortgage on your home (if he or she qualifies for it financially) without having to immediately pay the balance.

Your home equity loan

If a home equity loan is in your name alone, the executor will try to pay it off during probate, which could mean selling the house.
If you and your spouse have a joint home equity loan, your surviving spouse will likely need to refinance and prove he or she can handle the payments. If your spouse isn't able to make the payments and doesn't have cash to pay off the loan, he or she may need to sell the house or go through foreclosure. Consult an attorney to clarify the rules in your state.

Credit cards and other loans

If you have credit card debt or other loans such as auto loans when you die:
  • If the debt is in your name only, the remaining balances will be paid during the probate process.
  • If your spouse or anyone else cosigned any of the debt, he or she will be responsible for it.
  • Authorized users (who didn't cosign on the debt) aren't responsible for paying the debt.

Community property laws

The exception to many of these situations occurs if you live in one of the ten or so states with community property laws. In that case, any assets and debts acquired by one spouse during the marriage automatically belong to both spouses.

Special Considerations When You Have Young Children in estate planning

Special Considerations When You Have Young Children

Special considerations when you have young children
If you have young children, you'll want to take special care in your estate planning. Diligent planning now will ensure that your children are cared for personally and financially no matter what the future holds.
As you create your estate plans, make sure you consider the following:

Naming someone to care for your children

Your will should name a guardian to care for your minor children. And because children can't own property until they turn 18, your will may also name a conservator or trustee to manage the children's assets. One person can serve as both the personal guardian and the financial conservator, or those roles can be served by different people.
You should also name a backup guardian and conservator in your will in case your first choices are unable to carry out the obligation. Consider reviewing these choices annually, especially if personal and financial situations change for your family or your designated guardian or conservator.

How to distribute assets

If you've named someone as your beneficiary for your life insurance policy, retirement savings, bank accounts and other assets. You should then name your children as secondary beneficiaries in case you and your spouse pass away at the same time.
Your attorney can help you set up a trust to manage your children's assets until they're adults. A trust establishes a fund from which the children's financial conservator or trustee can draw money to cover their expenses. Children often gain control of the money in their trusts when they turn 18, but you can control the trust money however you wish.
For instance, you can give your child control of the money when he or she graduates from college, earns an advanced degree or reaches some other criteria or age. This is commonly known as an "incentive trust." If your child has a substance abuse issue, you can give him or her control of the money only if they meet certain sobriety criteria. This is commonly known as a "sobriety trust."

Children with special needs

A special needs trust can help you provide for a child with a disability throughout his or her lifetime. A special needs trust will help avoid compromising your child's Medicaid, Social Security and other governmental assistance. Be sure to consult a professional who has expertise with the complexities of special needs trusts.

Children from a previous marriage

If you have children from a previous marriage, you may wish for these children to inherit specific assets or percentages of assets — even if you're outlived by your current spouse. If you don't trust your former spouse to direct your children's inheritance appropriately, you may wish for their inheritance to be directed to a trust, even if your former spouse is still living. These specific desires should be outlined in your will with help from an experienced estate attorney.

4 Ways to Pass on Your Inheritance

4 Ways to Pass on Your Inheritance

When it comes to passing assets on to your heirs, there's no one-size-fits-all solution. Should you establish a trust? Should you give away assets now instead of waiting until your death?
The answers to these questions depend on a variety of factors. These could include whether you're married or have minor children, the value of your estate and whether you want to control how your heirs use their inheritance.
Here are a few inheritance methods to consider, as well as what to keep in mind as you choose the right options for you and your loved ones. Your decisions can have significant tax and financial implications; in particular, estate taxes can apply to your beneficiaries if your estate is worth more than $5.43 million in 2015 (this number increases each year for inflation). Always consult with your estate attorney, your financial advisor, or your tax advisor for guidance on your particular situation.
When to consider this method
What to keep in mind
Financial gifts while you're living
If your estate is worth at least $2 million and you're on track with your financial goals, you might want to consider financial gifts to your heirs now. You can see them enjoy your gift and help manage tax implications of larger gifts.
If you have less than $2 million, you will likely want to focus current assets on your own retirement instead of giving money away now.
In 2015, you can give as many individuals as you wish up to $14,000 annually (or $28,000 as a couple) without tax implications for either party. This is known by the IRS as the "annual exclusion."
Payments made directly to educational or medical providers are tax-free and do not count against the annual exclusion.
A trust establishes a fund to be managed by a trustee for the benefit of a particular beneficiary.
The most common trust is established for children whose parents die before the children turn 18. In many instances, the trustee will use the trust to pay for the children's expenses until they turn 18, at which point they gain control of the trust.
Children often gain control of trusts when they turn 18. However, you can also choose to give them the money when they graduate from college or reach some other criteria or age.
In addition to a traditional trust established to manage the assets of your minor children, there are many other types of trusts.
Trusts can be especially beneficial if you have a large estate and want to manage tax implications. Talk to your estate attorney, financial advisor or tax consultant about other types of trusts that might be right for your situation. These could include charitable trusts, family trusts, insurance trusts and living trusts.
Special needs trust
A special needs trust can help you provide for a loved one with a disability to avoid compromising his or her Medicaid, Social Security and other governmental assistance.
A special needs trust needs to keep in mind many complex rules that could have significant financial consequences including disqualification from governmental programs. Be sure to consult a professional who has expertise with special needs trusts.
Non-probate assets
Non-probate assets are transferred directly to your beneficiaries without going through the probate period. These can include:
  • Life insurance, retirement plans or similar assets for which there is a named beneficiary.
  • Assets owned as a joint tenant with right of survivorship.
  • Community property that passes certain assets directly to your spouse. In some states you may need to designate assets as community property with right of survivorship. In other states, assets acquired during marriage are automatically owned equally by both spouses.
Your estate attorney, financial advisor or tax consultant can help you coordinate your non-probate assets with other assets that will go through the probate process. This coordination can help manage taxes and other implications of your total gift to a particular beneficiary.

How to Talk to Loved Ones About Their Roles in Your Plans

How to Talk to Loved Ones About Their Roles in Your Plans

Perhaps one of the biggest reasons you're working on an estate plan is to minimize the stress and possible family drama after you pass. While your actual plan will go a long way toward doing that, one way to be more successful is to talk about your plans with those who will play a part in them. Let them know exactly what their roles mean and what they will be expected to do.
Here's a conversation guide to help you think through what you want to say. Keep in mind that these are just examples and that you should make this as personal as possible and include additional examples if necessary to make the role clear.
I've asked you to be my…
What this means is that you will be the person who will …
I'd like you to do this because…
Circumstances when you'd be needed are…
Additional information you might need to know includes…
Health care power of attorney.

Step in to make health care decisions for me if I cannot make such decisions for myself.
I know you will carry out my wishes. You are logical in high-stress situations. You have experience making health care decisions.
If I were unconscious or incompetent to make health care decisions, you'd act on my behalf.
Decisions could range from ongoing care or basic medical decisions to emergency decisions in a life or death situation.
Why I've made the health care decisions I have and where any supporting documents are located.
Durable power of attorney.

Step in to make financial decisions for me if I cannot make them for myself.
I trust you to manage my finances. I know that you will be available and willing to devote the time it takes to make these decisions.
If I were unconscious or incompetent to make financial decisions, you'd act on my behalf.
You might pay bills, make deposits to or withdrawals from my investments.
Why I've made the financial decisions I have and where any supporting documents are located.
Work with my attorney and other financial advisors to settle my affairs after my death.
I trust you and know that you are detail-oriented. You have experience working with professionals.
Settling my affairs after I die. This can include filing taxes, paying bills and making sure all of my property goes where I've decided it should go.
The process I have created with my attorney and when you should contact the attorney.
Optional: How and when people are receiving items.
Take charge of the assets placed in my trust.
I trust you to make sound financial decisions and deal fairly with beneficiaries.
If I have a trust, you'll manage those funds for the person who receives the funds.
The plans I've made and decisions I'd want made in different situations.
Children's Guardian.
Raise my children who are younger than 18.
My children know you and love you, and I trust you. If I can't raise them, I feel good about you doing it in my place. I know we share the same beliefs and values.
Raising my children, deciding where they go to school and all other matters regarding everyday living.
Details about how I want my children to be raised.
Receive benefits or assets I am leaving behind.
I know you value what I’m giving you and will use what I leave you in a positive way.
Note: Depending on your family situation, you may or may not want to notify people you will be naming beneficiaries.