Your Funeral: Who Gets to Direct the Details

Last week I shared the story of an old client, Smokey Susan.  Susan originally came to see me because the funeral home would not let her direct the disposition of her ex-husband's remains since there was another person claiming that right, and no clear winner to the dispute.

Susan really had no claim to any right to bury Joe:  they weren't married, and the fact that she was the mother of Joe's only child (a minor) was not very persuasive.  If no one else had claimed the right to direct disposition, Susan would have been okay.  The problem was Melanie's claim that under Joe's will, she had the right to make disposition decisions.

How could the dispute over what to do with Joe's remains have been resolved? The best way to avoid a problem at the funeral home is to execute an Appointment of Agent to Dispose of Bodily Remains.  In this document, you can name an agent as well as a successor agent.  You can also be as detailed or as nonspecific as you choose.

For example, I have clients who have very specific wishes with respect to burial versus cremation.  Along those same lines, many clients have very specific wishes with respect to their place of burial, or the treatment of their ashes.

You can also outline the type of service, if any, you want held in addition to other details.  As examples, I will share excerpts out of two of my favorite "directives":

I.     "I am to be buried in the family plot at the farm in Alabama, in the space between my mother and grandfather and I am to be dressed in the blue silk kimono my second husband brought me back from the War."

II.    "I do not want any type of service at the funeral home, or viewing.  Please bury me next to my wife, and have the preacher give a graveside service for family only.  On the following Saturday night, host a night in my honor at American Veterans Lodge # and open a $500 tab for my friends."

Both of these people are gone now, and their agents did as instructed.

I strongly recommend this document for couples when their children are a "Brady Bunch" or if their children fight and argue.  Often, deep resentments surface after the death of a loved one, and for some reason it starts at the funeral home.  I've had many a phone call from a distressed widow or widower who has found out at the funeral home that the stepchildren have very different ideas about where their deceased parent should be buried.  The strangest one was the case where the deceased had divorced the mother of the stepchildren 30 years prior, but the stepchildren wanted him buried next to their deceased mother (his ex-wife of 30 years) her rather than his current wife of 20 years!

Another way to avoid this situation is to purchase a prepaid funeral plan.  This allows you to decide many of the details in advance, and pay for it.

Many people think that an instruction in their will regarding their burial will suffice, and fifty years ago this was true;  however, the will has to be admitted to probate and the personal representative appointed before the personal representative has the legal authority to carry out your wishes.  Consider the time involved in finding an attorney, an appointment, preparation of the pleadings, and waiting on the court to enter an order and issue Letters of Administration. Even in the best of times, you could be facing a delay of 2-4 weeks, and that is only if everyone involved is on the same page.  If there is a dispute about the will, or there is no will and a dispute among the heirs about who should serve as personal representative, the delay could be months in duration. That's a long time to wait.


Julie

Copyright 2013 Julie Ann Sombathy All Rights Reserved

The Story of Arnie and Ophelia

After a year of blogging, it finally dawned on me the other day that some of my old cases would make entertaining blog posts. So, this "story" will be a first in a series. (CAVEAT: Even though a lot of details are public record, the names and relevant identifying details have been altered in order to maintain any potential attorney-client privilege). Also, I will weave a little legal information in the story, but I'll try to keep it painless.

I once had clients early in my practice named Arnie and Ophelia Williams. When Ophelia died, they had just celebrated their 65th wedding anniversary. Sixty-five years! In my late 20's I thought that this was the most incredible thing I had ever encountered. Arnie and Ophelia were in their 80's. This is their story.

I met Arnie and Ophelia because they needed to do some estate planning. While they were old, both were mentally sharp. Arnie had a shock of white hair and brilliant blue eyes. Ophelia had a lot of health problems and Arnie had a gouty foot. Because of Arnie's foot and Ophelia's health, their insurance agent persuaded me to make a house call. They lived in a modest home, on a modest street, in a modest middle class neighborhood. They were worth millions.

Forty years earlier, they had lived in Virginia. Arnie worked at a manufacturing plant. Arnie received stock options as part of his compensation. While he was in his forties, Arnie retired and moved to Panama City. Arnie managed to parlay his stock holdings in the manufacturing company together with the investments he had made during his "working life" into a substantial portfolio by playing the stock market. He was a front runner in the whole "day trader" work from home movement of the early 90's.

The greatest sorrow of their lives was that they were never able to have children. Ophelia had no living relatives. Arnie had a nephew, Jerry, with whom they were close. Jerry lived out of state, but he visited regularly. I believe this part to be totally true because if there is one thing elderly clients will tell you when you are doing their will, it is which relatives come see them and which ones don't visit or call. [Go call your elderly relatives right now. This blog will be here in a half hour.]

So, Arnie and Ophelia executed Pour Over Wills and a Joint Revocable Trust with traditional estate tax planning for the time period.  The trust left everything to Jerry.  The Pour Over Will named Jerry and two friends of Arnie and Ophelia as their co-executors (in Florida we call the executor the Personal Representative).  Likewise, the trust named Jerry and the two friends as successor Co-Trustees. Soon after they executed their documents, but before we could fully fund their trust, Ophelia died. Arnie died less than 30 days later. I've always thought he died of a broken heart because all that was really wrong with him was that gouty foot. He just went to bed and never got better. At the time, I thought his death was the most tragically romantic thing, ever.

Most everything that was not in the trust was in just Arnie's name, so in the end we only had to probate Arnie's Pour Over Will to transfer the rest of the assets into the trust. Unfortunately for me and Jerry, when we opened Arnie's safe deposit box we found original stock certificates for 65 different companies. Each of these stock certificates ultimately required 3 medallion endorsed signatures. So, that was a total of about 200 endorsed signatures from 3 people living in 3 different states. It took months to accomplish and to this day remains one of the most frustrating tasks I've ever encountered in a probate.

Meanwhile, back in Virginia a woman was dying. She was in her 70's and had one child, Rose. Rose was in her early 40's with strikingly orange-red hair and brilliant blue eyes. She was also a child of tragedy, having lived her entire life without her father who had died before she was even born. Just before taking her last breath, Rose's mother motioned her close and whispered in her ear that "I have to tell you something. The man you thought was your father wasn't your father. Your father lives in Florida. There's a shoebox in the top of my closet with your name on it with everything about your father in it."

Eventually, Rose got out that box, hired an investigator and tracked down her father. She tried to call him several times, but lost her nerve and hung up. Her husband finally made the call for her. A man answered the phone and when Rose asked for her father, Arnie Williams, she was told that he had recently died.

Jerry is the man who had to give Rose that bit of news, but he did not know then her relationship to his uncle. Soon after that call, Rose called me. In the face of her incredible story, all I could tell Rose to do was hire an attorney in Florida. I also had to warn Jerry that he might not inherit anything at all.

See, Rose was potentially a Pretermitted Child. In layman's terms, that means a child of which the deceased person was unaware when they signed their Will. A Pretermitted Child is entitled to the share of the deceased's estate to which they would have been entitled under the intestate statute. For an only child, that would have meant 100% of Arnie's estate.

About a week later, a local attorney called me on Rose's behalf. She had been to Florida to meet with him in person (and to also meet Jerry--her long lost cousin). The first thing he asked me was "Did Arnie have crazy orange hair and blue eyes?"  In that shoebox Rose's mother had hidden in the top of the closet were pictures of a orange-red haired man in his 40's with brilliant blue eyes holding a baby which Rose knew to be herself. There were birthday cards for her 1st and 2nd birthday and letters. Jerry confirmed that Arnie had orange-red hair like Rose in his younger days. He also confirmed though family photos that the man holding baby Rose was most likely his uncle. Jerry does not think his Aunt Ophelia ever knew about Rose or the affair.

Because it was obvious that Arnie knew Rose existed, she was not a pretermitted child, and did not inherit anything from his estate. Jerry inherited 100%. When I last spoke to Jerry, he said that he and Rose continued to be in contact. Rose never held the inheritance against Jerry.

Through talks between Rose and Jerry comparing the respective lives of her mother and his uncle, Arnie's secrets were revealed. Rose's mother was married to Arnie's boss at the manufacturing company. She and Arnie had an affair, and Rose was the result. Before Rose was born, her mother's husband died in an accident at the plant. Although we will never know, I've always thought Arnie's somewhat early retirement and move had to of come about when baby Rose was very young since her hair and eyes were such an identifying trait. People back then were way better at keeping secrets, though, and also tended to turn a blind eye to such things. Who knows? The affair could have been a well kept secret or an "open secret." This part of Arnie and Rose's story will never be known.

So that is the story of Arnie and Ophelia, or rather, of Arnie and Rose.

The take aways from the story for me were:

1. Secrets rarely stay secret forever.

2. Attorneys should always ask their clients about children outside of marriage, and tell them an abbreviated version of this story in case there is a secret love child to be addressed.

3. No matter how well intentioned, the decisions you make as a parent do not always work out well.

4. If you create a secret like Arnie and Rose's mother did, maybe you should take it to your grave.

5. Call or visit your Elderly Relatives, they miss you and they're lonely. Ten minutes out of your day will totally make their week.

6. For the love of all, please put your stock holdings in an account. Do not hold original certificates. I cannot stress this one enough. It took years for $0.01 checks to quit arriving.

7. Naming more than two Co-Trustees or Co-Personal Representatives can result in unnecessary expense and hassle.

8. Address the potential of an unknown child in your will or trust to avoid what could have happened if Rose had either been dishonest or truly unknown to Arnie.

9. If you don't tell your estate planning attorney everything, including the embarrassing bits like a secret love child, your attorney cannot do an effective job.

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Copyright 2013 All Rights Reserved Julie Ann Sombathy

How do I find a probate attorney in Florida?

Someone you know has died and their estate must be probated. Or, you are unsure if there is anything you must do now that your spouse has died, so you begin the process of finding an attorney to advise you. How do you find an attorney who is best suited to assist you?

Probate is an area of practice that requires experience and knowledge in a combination of several areas of law such as real property, inheritance, intestate and testate succession laws, and elder law. In addition, a working knowledge and understanding of federal estate tax laws is a must for any decent probate practitioner. If your case will involve a dispute between beneficiaries or heirs, or a will contest, your chosen attorney should also be well versed in civil litigation.

The phone book is the last place you should look to find a probate attorney.   Ask your friends, your boss, or any other person whose opinion you value.  Call the clerk of the probate court at the county courthouse where you intend to file the probate. The clerk will usually give you a list of names of the attorneys the clerk sees day in, day out. Or, if your county’s court files are online, search the probate cases and look for frequently recurring names as the Petitioner’s attorney. Check the prospective attorney’s discipline record by performing a Member Search on the Florida Bar's website.

Next, schedule a consult appointment with your top choice. Usually, there is a minimal charge for a consult, and sometimes this is waived if you hire the attorney to do the probate.  Ask up front if you need to use a credit card to pay the consult fee because some offices only accept cash or checks.  Make sure to note your appointment time and date, and if you have a problem and need to reschedule, don't wait until the last second to do so, that is just rude and inconsiderate.

Abraham Lincoln practiced
law for over 25 years

Don't expect to speak to the attorney until your appointment time.  As Abe Lincoln said "A lawyer's time and advice are his stock in trade."  Expecting legal advice over the phone is unrealistic and unfair.  Look at it this way:  it is like going through the drive through and ordering a burger and fries, getting the food, and making an appointment to come back in a week to pay for it.  Who does that?  No one.

Honest Abe Rocking
the Doctor Who

And the lawyer does not owe you anything just because they are a lawyer.  Law school was not exactly fun, and most of us are still paying for it.  If you are calling an attorney that makes so much money he should be happy to give you free advice, what are you doing?  There are plenty of good attorneys in every town who charge reasonable fees for their services.  Why are you calling the most expensive one in town anyway?  If you are, then you can probably afford to pay!  Ah, the never ending paradox.

Once you make an appointment, try to make the most of it by coming prepared with as much information as possible.  Your attorney needs this information to determine the type of probate to file and when to file it, as well as a myriad of other decisions that influence the direction you and your attorney ultimately decide to take.


I think what most people want when they come to see me for a probate, more than anything else, is a sense of resolution, of purpose and direction.  A goal, if you will. The death of someone you know well enough to need to probate their estate is never pleasant, and the practical aftermath can be a confusing morass of legal jargon and paperwork.  Unfamiliar paperwork is never fun to deal with, even in the best of times. So arm yourself with information. This is my Checklist.

Make a list of questions. Go through all of the questions on your list with the attorney until you understand the answer to all of them. Most attorneys will “interview” you about the deceased's assets and liabilities, and testamentary documents (like a will or a trust) as a way to assess the type of probate required. This is why it is important to come to the consultation prepared; the more information you have with you, the better informed your attorney will be and an informed decision is rarely a bad thing.

Ask for a basic explanation of the process and what to expect along the way. Make sure you completely understand the attorney's fee structure, when and how the fee will be paid, and what expenses to expect and when/how those will be paid.

Pay attention to the office, the staff, and the general atmosphere if your appointment is in person. If you are doing business over the phone, the staff should already have prepared you for how the consult will be conducted. Either way, if the office is a mess, the staff is surly, or you just don't feel comfortable with the lawyer, pay the consult fee and keep looking.

Julie
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Copyright 2012 Julie Ann Sombathy All Rights Reserved

Estate and Gift Tax 2012....Reunited, and It Feels So Good

The impact of the 2010 Tax Relief Act passed on December 17, 2010 with respect to estate taxes is significant. In 2010, there was no estate tax. What this meant, quite literally, is that any estate of any size could pass without any estate tax. The downside to this absence of tax is the corresponding absence of an increase of basis. What this means is that inheritances received from decedents’ estates in 2010 (with limited exceptions) received carryover basis instead of stepped up basis.

Basis is another term for “starting point” in tax lingo. What it means for the taxpayer is what a thing was worth when that thing was acquired by the taxpayer. For example, if you paid $10 for a widget in 2010, your basis is $10 (obviously, this is a simplified example). A carryover basis is a basis that “carries over” from the prior owner (in this discussion, the decedent). The new owner (beneficiary or heir) just gets the decedent’s basis. Basis goes up when taxes are “paid.” So, when no taxes are paid as in 2010 estates, the basis “carries over” with no change.

In estates where taxes are “paid” either by literal payment or by use of the exemption equivalent, basis goes up because taxes have been paid. This is called a “stepped up” basis. For example, an estate in 2011 with $4.0 million in assets will distribute to the beneficiaries tax free (the exemption equivalent is $5.0 million). The beneficiaries will receive a stepped up basis of $4.0 million.

The effect of receiving a carryover basis as opposed to a stepped up basis is felt by the recipient when the recipient liquidates the asset and has to pay income tax based on the presumably lower carry over basis (resulting in a much higher gain and therefore, much bigger tax). While in 2010 there was a $1 million dollar basis allocation allowed, otherwise your basis remained the same and while there was no estate tax, there was certainly anticipated future income tax on a much larger portion of the appreciation in the asset.

For 2011 and 2012, the exemption equivalent is 5 million dollars per person. The exemption equivalent is portable between spouses as long as the surviving spouse does not remarry. Thus, for couples having estates worth a combined net of $10 million or less, so long as the surviving spouse does not remarry, there is no estate tax at the death of either spouse. In addition, the recipient of the assets receives a stepped up basis in value which thereafter results in lower income taxes on a subsequent sale of the assets.

The “portability” aspect of the exemption equivalent between spouses is a major improvement in the estate tax code. In addition, gift and estate tax is unified again which means that an individual may either leave an estate of $5 million or during their lifetime give away up to 5 million dollars in assets, without incurring any tax. This is in addition to any gifts which qualify for the annual exclusion. The annual exclusion for 2011 and 2012 is $13,000, thereafter, the annual exclusion is tied to inflation and set to increase annually.

Lastly, for estates of individuals dying in 2010, a provision was included which allows the estate to elect to be treated under the 2011 tax code. This is beneficial for estates between $1 million dollars and $5 million dollars since the 2011 tax code will provide a stepped-up basis for all of the assets (whereas the 2010 tax code would provide a stepped-up basis for only the first $1 million in assets). The law is in effect until December 31, 2012. Thereafter the law reverts to year 2000 law with an exemption equivalent of $1,000,000.

This is a good example of why it is important to review your estate plan every two to three years: the laws change very frequently and not always to your advantage.

Julie

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Copyright 2012 All Rights Reserved Julie Ann Sombathy