Estate Planning (in Plain English)

Praise for Estate Planning (in Plain English)®

"Estate Planning (in Plain English)® is an invaluable tool to help you collect the information your attorney needs to prepare your estate plan and to help your family put your plan into action. I strongly recommend that you add this book to your library."

—Michael Cragun, Utah State Tax Commissioner

"When the time for transitioning to the Great Beyond approaches, over one-half of all Americans follow in the shadows of actor James Dean, business mogul Howard Hughes, and President Abraham Lincoln and perish without a will, leaving a mess for others to sort. Better for your loved ones if you read DuBoff and Bryan’s Estate Planning (in Plain English)® and organize your estate so that others don’t have to. This treasure of a book, written in language for the lay audience, even explains how to dispose of your digital assets. Buy this book and start happily planning your estate!"

—Sherri Burr, Dickason Chair in Law Emerita, University of New Mexico School of Law, coauthor of Wills and Trusts in a Nutshell

"In my tradition, money is considered neither evil nor good. What matters is how one gets it and how one uses it. As always, we have an obligation to be responsible and thoughtful stewards of the resources with which we are entrusted. Estate Planning (in Plain English)® is an indispensable guide to doing just that. It will prove very useful to those of us who wish to put our affairs in order and thus spare those we love an unnecessary burden."

—Rabbi David Kosak

"Having an up-to-date estate plan is one of the greatest gifts you can give your loved ones. Without one, you leave unintended burdens and potentially divisive pain for those you love and have left behind. Estate Planning (in Plain English)® offers a practical road map for addressing all the issues in developing a solid estate plan, from the simplest estate with few assets to consideration of more complex matters that need to be addressed."

—Dan Schutte, composer-in-residence, University of San Francisco

"Death is certain, and disability is likely. Unfortunately, the majority of individuals plan for neither. In Estate Planning (in Plain English)®, experienced practitioners Leonard D. DuBoff and Amanda Bryan provide expert guidance in layperson-friendly language on the multitude of reasons everyone needs an estate plan so that their wishes and desires are followed. Then, they succinctly explain the basic techniques available to carry out their intent. I am confident readers of this book will be motived to take action to make the inevitable transition more palatable for themselves, their family members, and their friends."

—Gerry Beyer, Governor Preston E. Smith Regents Professor of Law, Texas Tech University School of Law

"There is no doubt that when one is caught up in the never-ending wave of a wide range of emotions upon the news and reality of a loved one’s death, dealing with the practical parts of a loved one’s passing is made more complicated and overwhelming. A sense of loss brings a family and gathering of friends into a strange new land, where there is no ready guide for understanding our next step on the journey of life. That’s why it is incredibly helpful to have one part of the ‘next step’ of life’s pilgrimage figured out before the loss of a loved one. Estate Planning (in Plain English)® does just that: it provides an incredibly helpful, easy-to-read road map for what to do, today, before a loved one’s death."

—Brett Webb-Mitchell, ordained Presbyterian Church (USA) pastor, Portland, Oregon

Disclaimer: This book is designed to provide accurate and authoritative information with respect to the subject matter covered. It is sold with the understanding that the authors and publisher are not engaged in rendering legal or other professional services. At the time of publication, this book is accurate regarding the legal and tax material discussed. However, both national and state laws change. If legal advice or other expert assistance is required, the services of a competent attorney, accountant, or other professional should be sought. While every attempt is made to provide accurate information, the author or publisher cannot be held accountable for errors or omissions.

Copyright © 2020 by The DuBoff Law Group, PC

All rights reserved. Copyright under Berne Copyright Convention, Universal Copyright Convention, and Pan American Copyright Convention. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form, or by any means, electronic, mechanical, photocopying, recording or otherwise, without the express written consent of the publisher, except in the case of brief excerpts in critical reviews or articles. All inquiries should be addressed to Allworth Press, 307 West 36th Street, 11th Floor, New York, NY 10018.

Allworth Press books may be purchased in bulk at special discounts for sales promotion, corporate gifts, fund-raising, or educational purposes. Special editions can also be created to specifications. For details, contact the Special Sales Department, Allworth Press, 307 West 36th Street, 11th Floor, New York, NY 10018 or [email protected].

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Published by Allworth Press, an imprint of Skyhorse Publishing, Inc. 307 West 36th Street, 11th Floor, New York, NY 10018. Allworth Press® is a registered trademark of Skyhorse Publishing, Inc.®, a Delaware corporation.

www.allworth.com

Cover design by Mary Belibasakis

Library of Congress Cataloging-in-Publication Data

Names: DuBoff, Leonard D, author. | Bryan, Amanda, author.

Title: Estate planning (in plain English) / Leonard D DuBoff and Amanda Bryan, attorneys-at- law.

Description: New York : Allworth Press, 2020. | Series: In plain english | Includes index.

Identifiers: LCCN 2019059403 (print) | LCCN 2019059404 (ebook) | ISBN 9781621537267 (trade paperback) | ISBN 9781621537274 (epub)

Subjects: LCSH: Estate planning--United States--Popular works.

Classification: LCC KF750.Z9 D83 2020 (print) | LCC KF750.Z9 (ebook) | DDC 332.024/016--dc23

LC record available at https://lccn.loc.gov/2019059403

LC ebook record available at https://lccn.loc.gov/2019059404

Print ISBN: 978-1-62153-726-7

eBook ISBN: 978-1-62153-727-4

Printed in the United States of America

Dedication

To my mother, Millicent, and my father, Rubin, who provided me with the gift of life and the desire to use that gift effectively. To my mother-in-law, Cumi Elena Crawford, for her faith, trust, and inspiration, and to my wife, Mary Ann, for her enduring love and continuing support.

—Leonard D. DuBoff

To my children, Random, Grey, and Scout. You are as delightful, quirky, and compassionate as I could have wished for. Your love is my greatest treasure. And to my husband, Josh, for being my safe place and my other half.

—Amanda Bryan

Table of Contents

Acknowledgments

Introduction

PART I—BUILDING YOUR ESTATE PLAN

Chapter 1: The Importance of Making an Estate Plan

Chapter 2: The Estate Plan

Assets

Wills and Trusts

Advance Directives and Medical Powers of Attorney

Gifting

Dividing Property

Protecting the Inheritance

Beneficiaries

Your Legacy

Chapter 3: Wills

General Overview

Common Mistakes

Capacity

Revocation and Revival

Partial Invalidity of a Will

Simultaneous Death

Will Provisions

Executor’s Duties

Creative and Professional Executors

Chapter 4: Testamentary Trusts

General Overview

Trust Agreements

Abusive Trust Arrangements

Successor Trustees

Trustee’s Duties

Estate Planning Trusts

Chapter 5: Living (Inter Vivos) Trusts

General Overview

Advantages and Disadvantages

Spendthrift Trusts and Marital Living Trusts

Professional Asset Management

Funding a Living Trust

Chapter 6: Special Needs Trusts

Identifying a Caretaker

Guardianship

Government Assistance and Income Limitations

Additional Considerations for the Trustee

Additional Instructions to Include

Irrevocable Inter Vivos Trusts

Insurance

Chapter 7: Guardians, Powers of Attorney, Advance Directives,

and Other Essential Documents

Guardians

Power of Attorney

Advance Directives

Other Essential Documents

Chapter 8: Life insurance

Alternatives to Life Insurance

Common Types of Life Insurance Policies

Life Insurance Annuities

Insurance Trusts

Buy-Sell Agreements

Tax Implications

Chapter 9: Digital Assets

The Importance of Planning for Your Digital Assets

Designating a Digital Agent

Identifying Your Digital Assets

Digital Asset Inventory

Roadblocks to Access

Wills

Durable Powers of Attorney

Trusts

Make Your Intentions Known

Online Afterlife Management Companies

Chapter 10: Tax Considerations

Principal Points to Consider

Primary Residences

Individual Retirement Accounts

Gifts and Gift Taxes

Decedent Tax Forms

Income and Deductions in Respect of a Decedent

Generation-Skipping Tax

Chapter 11: Your Legacy

Helpful Tips

Parting thoughts

Last Posts, Tweets, Etc.

Stories and Videos

In Memoriam

Worksheet 1

PART II—AVOIDING PROBATE

Chapter 12: What Is Probate?

Chapter 13: Gifts

Gift Taxes

Federal Lifetime Exemption or Unified Credit

Inter Vivos Gifts

Health and Education Exemption

Gifts to Minors

Gifts to a Spouse

Charitable Gifts

Gifts Made on Your Behalf

Gifts by a Nonresident Noncitizen

Refusing a Gift

Bargain Sales

Considerations in Making Gifts

Net Gift Technique

Deathbed Gifts

State Gift Taxes

Chapter 14: Co-Ownership

Joint Tenancy

Tenancy in Common

Joint Tenancy and Community Property Laws

Transfer on Death Deeds

New Value of Property When a Joint Tenant Dies

Simultaneous Death

Joint Tenancy and Taxable Gifts

Chapter 15: Bank Accounts and Insurance Policies

Bank Accounts

Pay-on-Death Accounts

Bank and Credit Union Accounts

Safety Deposit Boxes

Life Insurance

Chapter 16: Business Structures

Choosing a Business Structure

Buy-Sell Agreements

Transferring Ownership During Life

Worksheet 2

PART III—THE PROBATE PROCESS

Chapter 17: Testate

What Is Dying Testate?

Opening the Estate

Appointing the Personal Representative

Notifying Creditors

Preserving the Assets of the Estate

Executing the Will

Final Income Taxes

Annual Accountings

Interim Payments

Liquidating or Distributing Assets

Closing the Estate

Chapter 18: Intestate

What Is Intestate?

Opening a File with the Court

Appointing an Administrator

Complying with State Law

Notifying Creditors

Preserving Assets

Paying Claims, Attorneys, and Administrator

Small Estates

Benefits of Having a Will

PART IV: GUIDANCE FOR SURVIVORS

Chapter 19: In the Event of Death

What to Do in Case of an Accidental or Unexpected Death

My Personal Information

Upon My Death

At the Time of My Death

My Current Medications

Chapter 20: General Information about Handling the Death of a Loved One

Family and Friends to Notify

Notify My Primary Care Doctor

Organ Donations

Funeral Arrangements

My Obituary

My Photos

My Professional Advisors

Other People to Notify

Chapter 21: Miscellaneous Instructions

Family Information

Pets and Animals

Chapter 22: Important Documents and Where to Find Them

Where to Find Vital Documents

Estate Planning Documents

Beneficiary Designations

Location of Safety Deposit Box

Personal and Confidential Information Instructions

Insurance Policies

Deeds and Documents

Investments

Tax Records

Loans and Credit Cards

Chapter 23: Digital Assets, Accounts, and Passwords

Chapter 24: Immediate Care of Property and Obligations

Legal Jargon Alert

Report the Death

Secure and Inventory Property

Contact Family and Friends

Locate Estate Planning Documents

Identify the Fiduciaries

Fiduciary Responsibilities

Funeral Arrangements and Memorial Services

Chapter 25: Identifying and Caring for Estate Property

Real Property

Pets

Bank Accounts

Stocks and Bonds

Automobiles and Other Vehicles

Income and Payments to the Estate

Obligations of the Estate

Miscellaneous

Chapter 26: The Decedent’s Businesses

Employers

What Should Be Done with the Business

Controlling the Assets

Time Is of the Essence

Chapter 27: Insolvent Estates

Chapter 28: Finding a Lawyer and an Accountant

Finding a Lawyer

Evaluating a Lawyer

Using a Lawyer

Finding an Accountant

Appendix A: Common Estate Acronyms

Appendix B: Information Sources

Appendix C: State Estate and Inheritance Tax Schedules

Appendix D: State Probate and Intestate Laws

Appendix E: State Digital Estate Planning Laws

Glossary

About the Authors

Index

Acknowledgments

In order to assemble the vast quantity of statutes, cases, articles, and books that have become available on this topic, it was necessary to enlist the aid of numerous friends and colleagues. Their help is greatly appreciated, and some deserve special recognition.

Amanda and I would like to thank Greg Rogers of the accounting firm Rogers Financial Services and Tony H. Davidson of Tony H. Davidson CPA, PC for their time and expertise in reviewing the tax material in this book.

We are indebted to Gerry Beyer, Governor Preston E. Smith Regents Professor of Law at Texas Tech University School of Law, for allowing us to use portions of his material on cyber estate planning and administration in this book. We also appreciate the fact that he was kind enough to write a blurb.

We are honored to have a blurb written by Professor Sherri L. Burr, Dickason Chair in Law Emerita, at the University of New Mexico School of Law and coauthor of Wills and Trusts in a Nutshell.

We are also indebted to Dan Schutte, one of the St. Louis Jesuits and the composer of Here I Am, Lord, one of the most popular pieces of Christian music available today and the creator of several works which help individuals with death and dying, for his review of the manuscript and useful recommendations. He was also kind enough to write a blurb for this book.

We are sincerely grateful to Michael Cragun, Tax Commissioner of the State of Utah, for the flattering blurb that he wrote and his helpful recommendations; and Rabbi Kosak, Senior Rabbi of one of the largest and most prestigious synagogues in the West, for the complimentary blurb he wrote.

We are also indebted to Tad Crawford, our editor Chamois Holschuh, and the entire Skyhorse Publishing staff for their help in publishing this volume. Not only were they instrumental in the publication of this work, they were also willing to review numerous copies of the manuscript and provide many valuable recommendations and suggestions.

Thanks also to our paralegals Francesca Hurd and Susana Fuentes for all of their assistance and recommendations.

We are indebted to Lynn Della, a long-standing friend, for her help in reviewing this manuscript, cleaning up numerous parts, and providing priceless recommendations.

Sherrey Meyer was kind enough to review this manuscript and recommend a number of helpful changes.

Tiffany Davidson, attorney at law, and Lauren Barnes, attorney at law, were gracious enough to review a draft of this manuscript and suggest numerous clarifications.

My brother, Michael H. DuBoff, attorney at law, was extremely helpful in reviewing several drafts of this manuscript and providing a number of useful recommendations.

I would also like to thank Colin Mackenzie, an attorney who worked for my law firm for a short time, for his assistance in reviewing the manuscript and providing recommendations. I would also like to thank Christopher Perea for his help in completing the final edit of this manuscript.

Amanda would like to thank her children, Random Gomm, Grey Gomm, and Scout Gomm, and her husband Josh Congdon for their patience and support during the writing process, giving up weekends and evenings with her and being okay with unfolded laundry and macaroni and cheese dinners during the initial writing of this book.

Leonard would like to thank his college English professor, Anne Lotham, for teaching him to write in plain English. He is also grateful for the support of his children and grandchildren. His son Robert and his daughter-in-law Bri Hunter have been very helpful with technology issues, and his daughter Colleen has been extremely creative with her graphic design skills. Her husband, Rudy, a lawyer who has recently joined our law firm, has been very helpful with research. Leonard is also grateful to his grandson Brian and Brian’s fiancée Megan Randall for their personal assistance, and to the newest member of his family, his granddaughter Athena, for her cheerfulness. Leonard’s late sister, Candise DuBoff Jones, JD, Northwestern School of Law, Lewis & Clark College, 1977; his late father, Rubin R. DuBoff; and his late mother, Millicent Barbara DuBoff, all provided him with the inspiration to create works such as this. Leonard valued his mother-in-law Cumi Elena Crawford’s faith, trust, and inspiration, which helped him create this project.

Finally, Leonard would like to express his sincere gratitude and acknowledge the contribution to this project by his partner in law and in life, Mary Ann Crawford DuBoff. Without her, Estate Planning (in Plain English)® would never have become a reality.

Introduction

When I first began writing the Law (in Plain English)® series more than four decades ago, my goal was to educate nonlawyers on the legal aspects of their businesses and professions. At the time, I was a full-time law professor and, as an educator, I felt that one of my missions was to provide educational tools. Later, as a full-time lawyer, I realized the importance of this series in educating my clients so that they could more effectively communicate with me. It became clear that the more knowledgeable my clients were about the myriad legal issues that they faced in their businesses and professions, the more effectively they could aid me in helping them. It is for this reason that I continue this series, and today there are In Plain English® books for writers, high-tech entrepreneurs, health-care professionals, craftspeople, gallery operators, photographers, small businesses, employers and employees, publishers, collectors, restaurants, nonprofit organizations, and now this universal volume for estate planning.

It is important to understand the genesis of this book. When Amanda Bryan was working for my law firm, assisting clients with estate planning problems, we realized how ill-prepared people were to discuss estate planning issues. We searched for a book to assist with this problem and were unable to find one that we believed would be useful for our clients. While there are many estate planning books available in the market, none provide the reader with clear, understandable explanations of the numerous complex issues that should be considered in estate planning. While there are numerous technical estate planning books, they are geared toward lawyers and not in plain English. The books available for nonlawyers are too limited. Further, none of the books we found are workbooks that allow the reader to collect all the necessary material to assist an estate planning lawyer when preparing an estate plan. In addition, none of the books contained material for the individuals who must deal with the estate after the person whose estate plan is involved has died. For these reasons, I began writing this book with Amanda’s assistance. We spent numerous hours researching, revising, clarifying, and converting the manuscript into a clear and, hopefully, understandable book.

This book is not intended to be a substitute for the advice of estate planning professionals. Rather, it is designed to sensitize you to the issues that may require the aid of a qualified estate planning attorney or other expert. It is my sincere hope that this book will, like its predecessors in the series, be practical, useful, and readable. One of our goals in preparing this book is to enable the reader to identify potential problem areas and seek the aid of a skilled professional when necessary—or preferably before it becomes necessary—because it is quite common for individuals to postpone their estate plan for as long as possible (and far too often, too long).

Estate law is quite complex and rapidly evolving. The Internet has become a vehicle for communication and commerce, and the law has been scrambling to keep pace with technology. In writing this book, it was our intention to chronicle the law and restate it in a clear and understandable text that will aid the reader in understanding the current state of estate planning law. It is hoped that, by doing so, our readers will be able to more effectively communicate with their experts when developing and refining their estate plan, and provide a valuable resource for their survivors

—Leonard D. DuBoff

Portland, Oregon, July 2019

PART I

Building Your Estate Plan

CHAPTER 1

The Importance of Making an Estate Plan

When Aretha Franklin died in 2018, her family believed that she had died without a will. Without a will, her heirs were confused and conflicted, not knowing what the Queen of Soul’s wishes were for her assets, her songs, or her memory. Over the course of the succeeding months, her family found two handwritten wills locked in a cabinet in her home. These wills were both dated from 2010. A short time later, a third will, also handwritten, but dated 2014, was found in the cushions of her couch. The wills were contradictory and difficult to decipher. Rather than resolving disputes between Franklin’s friends and family, the documents raised new questions about who should represent the estate, as well as the validity and priority of the wills.

While most individuals will not die with a situation as complex as Aretha Franklin’s, the lesson is clear—a comprehensive estate plan is important to reduce tension among your heirs, ease their grief at an already difficult time, and fulfill your wishes.

Like many people, you may be reluctant to think about planning for the disposition of your estate. The process brings up uncomfortable inevitabilities like death and, yes, as the saying goes—taxes. Thinking about what you will leave behind may bring up feelings of others’ greed or your own inadequacy. Thinking about who you will leave behind may bring up feelings of fear and loss. You may have memories of deaths close to you and unresolved relationships. This book is designed to help you think through this process at your own pace. By the time you complete all of the reading and worksheets, you will be better able to meet with an estate planning attorney, explain your estate and your wishes in a clear and complete manner, and turn over the technical details to that attorney.

The unfortunate situation involving Terri Schiavo, who became a pawn in the battle between her family members, is a grim reminder of the importance of having an advance directive, also referred to as a living will or medical power of attorney. Schiavo was only twenty-six years old when she had a heart attack that ultimately left her in a persistent vegetative state. Her husband, Michael, who was her legal guardian, believed that his wife would not want her life to be prolonged artificially. Her parents disagreed and challenged the diagnosis and Michael’s decision. A legal battle ensued. During that time, Schiavo’s feeding was removed for a few days, only to be replaced, all pursuant to conflicting court orders. In the end, Michael ultimately prevailed and the feeding tube was removed. Schiavo died in 2005 at the age of forty-one.

An advance directive is a document that appoints an individual to make medical decisions on your behalf and states your wishes with respect to sustaining your life through artificial means. If Terri Schiavo had prepared such a document, her family would have been spared fifteen years of struggle. Federal law requires health-care facilities, such as hospitals receiving Medicare funds, to ask patients at the time they are admitted whether they have an advance directive; if they do, the facility must keep it on file.

While it is impossible to determine what specific situations might trigger an advance directive, it is vital for the representative identified in that document to determine whether you would wish to have your life sustained by artificial means, such as life-support systems or artificial feeding. The decision can be made by that individual by consulting with family, clergy, or an experienced attorney. Regardless, the person you identify to represent you in a medical emergency, usually a relative or very close friend, should already know your wishes.

Medical providers may also suggest to patients suffering from life-­threatening conditions or who become seriously ill or frail and are toward the end of life that they complete a POLST form. A POLST form gives medical orders to emergency personnel based on your current medical situation. POLST forms and advance directives are both advance care plans but they are not the same. For more information, see https://polst.org. Be sure to check the POLST forms for your state since they vary depending upon location.

Your advance directive should be accessible so that it is available whenever it may be needed. You should make sure that your primary care physician, your named representative, and your attorney all have copies, and that a copy is kept with your other important papers. Bring a copy with you to the hospital if you ever undergo surgery and let your loved ones know where to find a