Asset Beneficiaries are importantAs we all know (some more traumatically than others), the divorce bug has attacked nearly every family at some point. And when it hits, the parties are often so unsettled that making sure all their bases are covered can be a real challenge. One thing that's often overlooked is a party's will. If it's a New Hampshire will, the parties are covered by a statute that automatically revokes any bequest to the former spouse. If the parties have put all their assets into a joint revocable trust, however - maybe to avoid probate or to provide for young children - there's no automatic revocation, and the parties really need to assign those assets to new separate trusts to avoid the surviving [former] spouse from continuing to benefit.
Even if they're clear-headed enough to think of all that, though, they're not finished. They also need to review their bank and investment accounts, insurance policies, annuities and the like that are jointly-owned or have designated beneficiaries. The proceeds of those assets are unaffected by the divorce decree, and unless the ownership and/or beneficiary arrangements are carefully changed directly with the bank, insurance company or other institution, the former spouse is going to get a windfall upon the first party's death - maybe at the expense of the parties' children or the deceased party's eventual new spouse. While we're talking beneficiaries, permit me to mention one other potential snag that has nothing to do with divorces. Many people who've hand-crafted a trust to protect their young children or grandchildren still have them named as the beneficiaries of the kinds of assets mentioned in the last paragraph. Or maybe it's even the grown kids who are named as the beneficiaries, but then one of them predeceases the account or policyholder (that's you), and your young grandchildren step into their parents' shoes. In either of those scenarios, if the asset ends up passing to young children or grandchildren, they're going to receive the big payoff at age 18 - the legal age of majority (for all purposes but drinking!) - no matter how carefully your trust provides for its assets to be held until the kids are 21 or 25 or whatever age you think is more appropriate. That unfortunate result can be remedied easily, just by making the trust itself the beneficiary, so the assets collect in there and then are parcelled out to your off-shoots as your carefully-constructed trust provides. Finally, let me answer a good question that many people pose while signing their new trusts: "If I'm creating a trust to hold my assets, why do I still need a will?" It's because not everyone follows through to get all their assets re-titled into the name of the trust - or made payable to the trust - so there still needs to be a vehicle for making sure those stray assets end up where they're supposed to be. And that can make a significant difference in the outcome, because if there's no will at all, and if a large asset isn't in trust name or payable to the trust - say, because it's payable to the decedent's "estate" - that asset may end up going to a relative who's entirely different than the trust beneficiaries. We're actually wrestling with that very scenario right now, as a recent NH resident/decedent set up a trust in another state with numerous charitable beneficiaries carefully provided for, but then forgot to back up the trust with a will when she arrived here. Now the considerable non-trust assets are heading off to the family members who inherit when there's no will - and who may be perfectly nice folks, of course, but who weren't the intended recipients. A simple will passing everything to the trust would have avoided that nightmarish outcome. Post 05/22/2015 Estate Planning Modern FamiliesLet's start with the situation that sends a shiver through every parent - what to do if one of the kids is missing (heaven forbid). Well, if you've really determined that's the case - the child's not just at a friend's house without your knowledge, or didn't get off the bus because he/she got sent to detention and missed the usual ride - you should certainly start with the local police department. Then, depending on what you think may have happened, you can also contact the State Police Missing Persons Section of the Major Crimes Unit at 603-223-3856 or [email protected].
And if you take the belt and suspenders approach to things, you can also check out the FBI's Child ID app, where you can store photos and all sorts of information about your children that would be extremely helpful to the authorities in the event of trouble. Here's one of the success stories the app references: "One of the app’s questions prompted the boy’s father to remember an unusual characteristic of his boy’s front teeth. The captured data, along with the child’s digital image, was sent to FBI offices. Armed with detailed info, the FBI was able to issue an extremely detailed press release about the boy. And hours later, the child was abandoned by his captors, recognized in a busy office park by a bystander and reunited with his parents." Let's also talk about when the kids go visit grandma and grandpa because you're off to ride motor bikes in Bermuda for a week! First of all, get your own planning in order, because those things slide all over the road when you get caught in a shower. Then, you should probably consider some arrangements for the grandfolks to be able to get medical care for the kids if one of them has a health hiccup while you're gone. And if it's during the school year, you might combine that with authorization for the folks to act in loco parentis with the administration about all sorts of educational issues - all the way from picking the kids up for those doctor visits, to discussing attendance and disciplinary issues, even giving approval for a school trip or Friday night rollerskating. Needless to say, this all becomes more and more important the longer you plan to be away from the little guys. If it's just a long weekend, you may not want to bother with anything at all, but if you're heading off to spend a year with Habitat for Humanity, it would be critical - but so would your own planning in that event. In order to help with the arrangements, we'll be happy to send you a self-explanatory form you might consider. And one way to test whether it will achieve the desired results would be to provide it to the kids' pediatrician and principal for pre-approval. If they balk, or if they want other specific language included, it would help to know that and try to do something about it before you leave town. Bon voyage! Posted 05/22/2015 - Misc. |
Phil RunyonPhil Runyon has been practicing law in Peterborough, NH, for over 50 years. He has regularly sent out emails to his clients, keeping them updated on changes in the law that effect estate planning, and writing about other relevant concepts or planning techniques. Archives
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