Monday, September 30, 2013

Estate planning for stashes: communication (part 4 of 4)

So far, we've focused on the documents and court procedures for distributing assets. Perhaps even more important than these formal things, more important than anything a lawyer can do for you, is what you can do for  yourself: talk to your heirs.

By "heirs," I mean both the official ones that lawyers call "heirs at law," (the people who would inherit if you died without a will; basically, it's your closest family members, the people who have the right to contest your will) and anyone outside of the heirs at law who will actually either inherit your assets or will be the person distributing your assets.

It's important to let people know your wishes, and prepare them for any choices you make that they might disagree with. It's not possible to prevent all will contests, especially if the person contesting the will is acting maliciously, but you can head off problems that arise when a misguided but well-intentioned family member contests a will because she doesn't believe the will (or memo) expresses your actual wishes. By talking to the heirs ahead of time, you can make it clear that the will (or memo) really is what you want.

Communication is particularly important in situations where there's no need to get the probate court involved, and all of the assets are distributed without any court involvement. Technically, all wills should be probated, but in many cases, it's a pointless exercise, because there are no assets that are subject to the court's authority. While technically all assets need to be inventoried and distributed, in reality, the only assets that will trigger the need to probate an estate are the ones that a) are owned individually by the decedent, and b) have a paper trail, like bank accounts, vehicles and real estate. Once those assets need to be probated, then all of the assets are included in the estate's inventory, regardless of the paper trail, but if there are no assets with a paper trail, and the other assets are of nominal worth, then it's a waste of everyone's time to go through a probate action.

There are two situations where there aren't any assets that will trigger the need to file a probate: when the decedent had no significant assets, and when the decedent had no "probate assets."

The first situation is when the decedent simply didn't have any significant assets with a paper trail; they had no bank accounts, they rented instead of owned their home, and they didn't own a car. They might still own some furniture, of course, and a stash, which technically should be distributed according to any will, but virtually no one actually goes through the probate court to do it, or, at most, simply file a "voluntary" probate, which amounts to an affidavit that the estate was of nominal value, and all assets have been distributed according to the decedent's wishes.

The second, and more common, situation is when the decedent owned everything that has a paper trail jointly with someone else or in a form that has a named beneficiary (like life insurance policies and IRAs), who inherits the assets automatically, without any court involvement. Most married couples own their major assets jointly, so when one of them dies, there's really no point to doing a probate just to distribute the smaller items that might be owned solely by the decedent, like a stash.

So what happens if all your major assets are owned jointly with a spouse or partner, and you die before the joint owner? In that situation, it's not worth the expense of probating your estate, although, in theory, your will could require it. A better solution for most people is, again, to communicate with your heirs, giving them some guidance for handling the stash.

If you have significant assets jointly with another person, you can't predict which of you will die first, so you should have a will (and memorandum, if appropriate). If you don't have any assets that would be probated, regardless of who dies first, I would still recommend executing a will, especially if  you have minor children, so you can nominate a guardian, and also to cover any unexpected situations, like winning the lottery minutes before a fatal accident. Nevertheless, if you choose not to execute a will, but you would like to give your family some guidance with respect to your stash, you could use the basic format of the memorandum discussed previously in part 3. Just keep in mind that it will probably not have any legal enforceability, because there won't be any court overseeing the distribution of your assets. If you really, really, really want to be sure your stash is distributed according to your wishes, a will that mandates being probated is the best way to go, although even then it's not an absolute guarantee. (Lawyers never make guarantees, because it's just asking for trouble.)

Simply preparing a will (and/or memorandum, if appropriate) is only the first step, though. The documentation won't help if your family doesn't know it exists, can't find it or doesn't believe it reflects your actual wishes. I know it's a difficult conversation to have -- "when I die" is not an easy thing for us to think about, let alone say -- but it's a necessary one.

It doesn't have to be a long, dreary, tearful event. Just make sure that the anyone who owns your major assets jointly with you also knows that you care about your stash, and you would like it distributed according to your stated wishes in your will or memorandum or both. These are the basic steps you need to take with respect to communicating your wishes for your stash (which are also good steps to take with any type of estate planning):

1. Make sure your designated personal representative (or executor) knows where the estate planning documents are, and that you did indeed sign them voluntarily. You might even want to run through the terms of the will with the personal representative, if there's a clause that seems unlike you, such as disinheriting someone. For instance, if  you have a relative who loves the same craft that you do, and who would appear to be the most likely beneficiary of your stash, but you don't leave the stash to her, you might want to explain to your personal representative that you made that choice on purpose, and why you chose the other beneficiary.

2. For disinheritances, if it's done for reasons other than personal animosity, it can be a good idea to explain it to the disinherited heir. As an example, it's a common estate planning practice to disinherit the decedent's parents, not because the will-maker dislikes her parents, but because it doesn't make sense for a sixty-year-old person to leave assets to an eighty-something-year-old person, only to then have all the assets have to be re-probated a few years later.

3. Make sure that the beneficiaries know that the estate planning documents exist, and that they do reflect your wishes. You may even wish to share copies of the documents with your family, so that there aren't any unpleasant surprises later, when you won't be around to say, "Yes, that really is what I want."

4. As the documents are updated significantly (not necessarily every time you add to your stash, but when the terms of distribution are changed), you notify anyone who has copies of, or has read, the older versions.

So now you know: if you want to have a say in what happens to your stash after you're gone, you need to: 1) figure out what should happen to it, 2) express those wishes in a will, 3) expand on those wishes in a memorandum if your state recognizes and enforces them, and 4) make sure your family and representative or executor all know that the estate planning documents exist and accurately express your wishes.

Once you've done all that, go enjoy your stash and make something fabulous to go along with your fabulous estate planning work.

Sunday, September 29, 2013

Fresh start for October 2013

Primary WIP for October:
Second draft of A Stinkin' Plot (cozy mystery set on garlic farm)

Secondary WIP for October:
Non-fiction book: Financial Planning For Authors

Fun WIP (for mini vacations from more structured writing):
Victoria and the Vapors (Homage to Sherlock Holmes)

Status of other WIPs:
Fatal Forfeit (legal thriller, 50+ pages of first draft completed)
A Monkey Wrench in the Works (cozy mystery, outlined)
Plowed Under (cozy mystery, outlined)
One Cat is Never Enough (post-apocalyptic cozy mystery series; 4 books in various stages of completion)
Arresting Amelia (vague idea for cozy mystery set at general aviation airport)
Legal Research for Authors (non-fiction book, outlined)
Contracts for Authors (non-fiction book, outlined)
Estate Planning for Stashes (collections of yarn, fabric, art, books, beads, Tardises, etc.): four-part series posted on blog, with final section to go live tomorrow; debating whether to make it a free digital book on Smashwords for easy downloading.

Monday, September 23, 2013

Estate planning for stashes: Memos (part 3 of 4)

Two weeks ago, we discussed the technical legal information. Last week, we went over the formal language of a will. This week, we'll address a slightly less formal document that may be used in some jurisdictions: a testamentary memorandum.

Note that in most jurisdictions, a memorandum won't have any legal effect without a valid will that mentions the memorandum. In some jurisdictions, a memorandum won't have any legal effect, no matter what. It's important to find out from a qualified professional in your jurisdiction, whether a memorandum is enforceable and if so, what formalities there are.

Once you've confirmed that a memorandum will work in your jurisdiction, and you've agreed with your attorney that you'd rather distribute your stash by way of a memorandum instead of directly in the will, you need to actually prepare a memorandum. Check with the lawyer to see if there are any formalities, other than 1) referring to it in your will, 2) signing it and 3) dating it. If so, make sure to follow those instructions, in addition to the format suggested here.

Assuming your lawyer has approved of the use of a memorandum, here's an example of the sort of language you might use at the beginning of the memorandum:


Pursuant to the provision in my will for a memorandum to distribute my tangible personal assets, I direct my personal representative [or "executor" in jurisdictions that  use that term] to distribute the following items to the named beneficiaries, provided that the named beneficiary survives me by thirty days.

After the introduction, for the description of the items, you can use either the general language that might otherwise have been included in a will (e.g., "all of my yarn" or "all of my wool yarn" to one person and "all of my cotton yarn" to another person), or a more detailed inventory by way of a list or spreadsheet of items that includes the description, location and optional things like the date acquired and the approximate value. If you're already cataloging your stash on Ravelry, GoodReads, some other on-line site for other types of stash, a custom spreadsheet, a notebook, or a legal pad, you can keep right on doing that, and simply refer to it in your memorandum. Generally, it's more important to have a process that works for you than one that might be fancy and all-encompassing, but that you don't actually use.

Next to each item in the list or spreadsheet, indicate both a first and second choice of beneficiary, in case the first one is unable or unwilling to accept the item. This is just a personal recommendation, but if you know a charity that could benefit from your stash, and you aren't entirely sure your named beneficiaries will actually want the stash, I'd recommend listing that charity as an alternative beneficiary. That way, if the original beneficiary gives up knitting or quilting or whatever else the stash is for, and doesn't have a real use for the items and is only taking them to honor your wishes, the beneficiary can decline the bequest, guilt-free, and the items will go to the charity of  your choice.

One way to express a charitable preference is something like this:

In the event any of the named beneficiaries is unable or unwilling to accept their items, I instruct my personal representative [or "executor" if your state still uses that term] to distribute any declined cotton or acrylic yarn to Head Huggers, or a comparable charitable organization that provides hand-made hats to chemo patients; any declined baby yarn to Project Linus or a comparable charitable organization that provides hand-made blankets for children in need; and any declined wool yarn to the knitters at my local ABC church, who make blankets for the homeless.

Finally, make sure to sign the memorandum, and if there's more than one page, initial any page that's not signed. If there are any strike-outs or hand-written changes, they should be initialed too.

I strongly recommend putting a date on the memorandum, in case there are multiple versions, so the person administering your estate will know which one is most recent. If you update the memorandum, you can leave the original date, and simply add "updated on _____."

DISCLAIMER: The rules relating to wills and probate vary from state to state, and country to country. The information here is not intended as individual legal advice, but is simply offered as information you can discuss when you consult a qualified professional in your jurisdiction, who can advise you with respect to your local laws and their applicability to your specific circumstances.

Monday, September 16, 2013

Estate planning for stashes: wills (part 2 of 4)

Last week, I gave you all the technical information about how a will or memorandum might be used to ensure that your stash is treated in accordance with your wishes after you're gone.

I strongly recommend that you have a lawyer prepare your will, rather than trying to do it yourself. The problem with DIY legal documents is that you don't know what you don't know, and that's particularly risky with wills, because if you make a mistake, by the time anyone realizes the documents are defective, you're dead and can't fix them. Some lawyers (the ones who give the rest of us a bad reputation) secretly love all the proponents of DIY wills, because a defective will tends to generate far more legal fees than a properly drawn one.

That said, you can make the lawyer's job easier, reduce the expense to you, and improve the chances of having a will that accurately expresses your wishes, if you do some planning before you see the lawyer. That's true of all the elements of the will (e.g., choice of beneficiaries, personal representative, trustees/guardians for minors, and age for distribution to children who are no longer minors), but the lawyer is more likely to ask about those basic issues than to ask about your yarn (or fabric or book or scrapbook) stashes.

Accordingly, before you consult with your lawyer, you should think about how you can describe your stash, and how you want it distributed. If you're a Ravelry member (or belong to a comparable group for other types of stash), and you catalog your stash there, keeping it up-to-date, it's extremely simply to simply refer to your Ravelry (or comparable site) account. If you're not that organized, think about how else you could describe the stash, and how to differentiate between portions of it, if it's to go to different people.

Then, you should discuss with the attorney the pros and cons of mentioning the stash in your will versus including it indirectly by way of a memorandum (assuming your state recognizes and enforces testamentary memoranda). If the attorney isn't receptive to your concerns (and you're not prepared to go looking for a different adviser), it might help to mention approximately how much money you've spent on the stash over the years, since the attorney may not be aware of just how much we indulge ourselves with pretty fibers and books and the like. If you have any concrete information on the stash's current value, or know of a resource that would help establish a future value, that would also be useful in the future, for placing a value on the stash in the probate inventory.

If you write the stash directly into your will, you'll need to be somewhat vague and all-encompassing in your description of it, to allow for future acquisitions and dispositions. In other words, the paragraph in the will would read something like this (subject to the standard wording in your jurisdiction):

"I give, devise and bequeath all of my yarn to my son, Joe Shmoe, provided he survives me by thirty days. In the event he predeceases me or fails to survive me by thirty days, I give, devise and bequeath all of my yarn to the nearest chapter of Head Huggers, or comparable charitable entity which supports the donation of handmade hats to patients who have lost their hair during treatment."

If you need to divide the stash among various heirs, it would read something like this (subject to the standard wording in your jurisdiction):

"I give, devise and bequeath all of my yarn, in equal shares, to my son, Joe Shmoe, and my daughter Josefina Shmoe, provided they survive me by thirty days, or to the survivor thereof. If Joe Shmoe and Josefina Shmoe cannot decide on a fair and equal distribution of the yarn, then I give my personal representative absolute discretion to make the division of the yarn, and the personal representative's decision shall be final."


"I give, devise and bequeath all of my wool yarn and the circular needles to my son, Joe Shmoe, and the rest, residue and remainder of my yarn and knitting tools and supplies to my daughter Josefina Shmoe, provided they survive me by thirty days, or to the survivor thereof. [etc.]"

Depending on how detailed you are with your stash cataloging, if you participate in a site like Ravelry (or GoodReads for books), you could add a beneficiary's name or code to your stash catalog. Ravelry and GoodReads both have a field for user-defined tags, so you could either use a beneficiary's name or something more generally descriptive in that tag, and then the will language would look something like:

"I give, devise and bequeath all of the yarn tagged at my Ravelry account with "Joe" [or: tagged with "luxury" or even "Group A"] to my son, Joe Shmoe, and all of the yarn tagged at my Ravelry account with "Josefina" [or: tagged with "daily use" or "Group B"] to my daughter Josefina Shmoe, provided they survive me by thirty days, or to the survivor thereof."

Another option, if you're better at photographing your stash than I am (and then organizing the pictures) would be to photograph your existing stash, and make sure to photograph new acquisitions as they're added, and then organize the pictures into folders on your hard drive (with a back-up to an external hard drive or a flash drive), with some sort of descriptive name, much the same way you would use a tag on Ravelry or Goodreads. Then, just substitute the hard drive location for the Ravelry reference in the paragraph above.

The picture above is what remains of my yarn stash, after switching most of my crafting to quilting. The navy bag is yarn for mittens, the white bag is yarn for chemo caps, and the teal bag is a Go Bag for my current project. If you divide your stash in similar ways, based on its intended use (e.g., clothes, afghans, charity projects, babies), and the intended recipients match up with the various uses,  you could refer to how or where the relevant portion of the stash is stored. It's not quite as reliable as a complete inventory, because you have to trust that no one will go in and mess up your sorting before the items are distributed, but it's better than giving your heirs no guidance at all, and it doesn't require you to do anything you're not already doing (except to write down who gets what).

Bottom line: think about what  you want to happen to your stash before you consult your lawyer. Have an idea of how to describe it, who should get it, and approximately what it's worth currently.

Next week, I'll share some suggestions for how to use a memorandum instead of a will, and then in the final week, I'll address the importance of communication with your heirs.

DISCLAIMER: The rules relating to wills and probate vary from state to state, and country to country. The information here is not intended as individual legal advice, but is simply offered as information you can discuss when you consult a qualified professional in your jurisdiction, who can advise you with respect to your local laws and their applicability to your specific circumstances.

Monday, September 9, 2013

Estate planning for stashes: overview (part 1 of 4)

Over at Reinventing Fabulous, there was a discussion recently about the various types of stashes we like to accumulate, and it got me to thinking about what happens to our stashes after we're gone. (It's not being morbid, it's thinking like a lawyer.) At one point, I had some collectible books that wouldn't seem valuable to a casual glance, but were in fact worth ten or twenty times the prices printed on them. My casual solution back then was simply to attach a note to them, advising anyone who cared to look, that they should not be tossed in the recycling bin.

The picture above is my stash of chemo caps, which aren't really a stash, but it just dawned on me that I ought to include instructions for where they should be donated if I'm unable to do it.

My main stash nowadays is fabric, mostly quilting weight. No single piece is terribly expensive, but the sheer quantity of the collection makes it reasonably valuable, at least to another quilter. Fortunately, the person named to handle my estate is aware of the value, and I don't have heirs who would have any sentimental attachment to it, so I don't worry too much about how it will be distributed.

But what can you do if the person in charge of your estate is less knowledgeable about your stash of fabric, yarn, books or whatever other tangible property you love? How can you make sure that the items go to someone  you know will cherish them, or will be sold for something approaching their market value?

One option, of course, is to list everything in your stash in your will. There are several drawbacks to doing that, starting with the fact that you'd have to update your will every time you added to, or subtracted from, the stash, and our collections are expensive enough without adding legal fees to every shopping expedition.

In any event, I've always been reluctant to include itemized lists in wills. For one thing, it tends to raise questions in the minds of people like the taxing authorities, the beneficiaries who distrusted the person administering the estate, and sometimes even the probate court employees. That means that if something was listed in the will, it almost always had to be formally appraised, even when the value of the item was less than the cost of the appraisal. It also tends to cause problems among rival heirs, when an item listed in the will had been given away or lost or sold before the testator (the person whose will is being probated) died, and inevitably, someone would become convinced that someone else had stolen it.

Until recently, however, in my state the only way to be as sure as humanly possible that an item would go to the right beneficiary was to specifically mention it in the will. That way, if the item went to the wrong person, the right person could go to court to demand either the item or compensation for it.  It wasn't an absolute guarantee, but it was a strong incentive for the person administering the estate to distribute the property to the right person.

My state's law also allowed for a "memorandum" for distributing items of relatively small value, separate from the formal will, but the terms of the memorandum were considered to be informal guidance for the person administering the estate, rather than creating a legal right that the beneficiary named in the memorandum could enforce in court.

In 2012, however, my state adopted what's known as the Uniform Probate Code (UPC) (although "uniform" is a bit of a misnomer, since my state, like others who have adopted the code, tinkered with it a little, so the version here is slightly different from the version in some other states).

A very nice provision of the UPC is Section 2-513, which, as adopted in my state, reads:

"A will may refer to a written statement or list to dispose of items of tangible personal property not otherwise specifically disposed of by the will, other than money. To be admissible under this section as evidence of the intended disposition, the writing must be signed by the testator and must describe the items and the devisees with reasonable certainty. The writing may be referred to as one to be in existence at the time of the testator's death; it may be prepared before or after the execution of the will; it may be altered by the testator after its preparation ...."

Stripping out the legalese, what that means is that, if your state has adopted the UPC or comparable laws, you can create an enforceable document, not included as part of your official will, that lists all of your stash (and other items like furniture and items of sentimental value) and who gets what. You can create the document at any time, before or after you sign the will, and you can change it at any time without having to go back to the lawyer's office for a new will. The memorandum doesn't need to be fancy, as long as it's signed, and the information is reasonably clear. There's no need for witnesses or a notary. Your representative doesn't need to file this memorandum with the court as a public document (unless there's a disagreement about it), which is a nice bonus if your stash is something that's at odds with your public persona.

One caveat: This memorandum won't be legally binding without a will that mentions it. The sample language from the creators of the UPC, to include in your will is this:

"I might leave a written statement or list  disposing of items of tangible personal property. If I do and if my written statement or list is found and is identified as such by my Personal Representative no later than 30 days after the probate of this will, then my written statement or list is to be given effect to the extent authorized by law and is to take precedence over any contrary devise or devises of the same item or items of property in this will."

In summary: if you want to be absolutely, positively sure your stash goes to the right place, and it can be described in its entirety or in some easily defined grouping (e.g., "all of my fabric/yarn/books" or "all of the wool yarn, but not the cotton yarn"), then it might be best to list it in your will, but be prepared for some additional administration expense for appraisals. If you want to be reasonably sure your stash will go to the right place, but you want to have more flexibility to divide the items or to change your mind, then, if it's allowed in your jurisdiction, consider a memorandum, that is referenced in your will.

Next week, I'll have some suggestions for the stash-describing language that your attorney could include, as appropriate in your jurisdiction, in your will, and the following week I'll have suggestions for using a memorandum in conjunction with a will. The final entry for the series will focus on the importance of communication when it comes to estate planning.

DISCLAIMER: As noted above, the UPC has not been adopted in all states, and even where it has been adopted, some provisions have been altered by individual states. The information here is not intended as individual legal advice, but is simply offered as information you can discuss when you consult a qualified professional in your jurisdiction, who can advise you with respect to your local laws and their applicability to your specific circumstances.

Sunday, September 1, 2013

Fresh start for September 2013

Primary WIP for September:
Brainstorm and write first 100 pages of a legal thriller about civil-asset forfeiture

Secondary WIP for September:
Non-fiction book: Financial Planning For Authors

Fun WIP (for mini vacations from more structured writing):
Victoria and the Vapors (Homage to Sherlock Holmes)

Status of other WIPs:
A Stinkin' Plot (cozy mystery, first draft completed)
A Monkey Wrench in the Works (cozy mystery, outlined)
Plowed Under (cozy mystery, outlined)
One Cat is Never Enough (post-apocalyptic cozy mystery series; 4 books in various stages of completion)
Arresting Amelia (vague idea for cozy mystery set at general aviation airport)
Legal Research for Authors (non-fiction book, outlined)
Contracts for Authors (non-fiction book, outlined)

ETA: I'm also working on a series of blog entries on estate planning for our stashes (collections of yarn, fabric, art, books, beads, Tardises, etc.)