One of the Problems we see at the law office. Old Sam's Deed

Old Sam’s Deed

You have known Old Sam as an honest man for many years.  Everyone likes him, even his wife, and he seems to have grown to like you as his young neighbor.  Old Sam says you should buy his tree-filled creek bottom next to your land so your kids have more room to play.  You borrow some money on a ten year note at the bank.  You write him a check for a very agreeable price and he signs a deed to the five acres.  You pay the filing fee and get the deed recorded.

A couple of years later Old Sam dies and his wife says she does not want the kids riding motorcycles on her land any more, not even among the trees on the five acres you bought from Old Sam.  She threatens to put up a fence to keep the kids out.  You scream, “Trespass!!” and she suggests you talk to your lawyer.

How could the widow possibly have any right to tell you what to do on your own real estate?  What does she know that you do not?  Maybe she knows about Homestead law and of Augmented Estate law in Nebraska.

One rule in Nebraska, designed to protect the family from an improvident sale of the family home by only one of two spouses, makes Old Sam’s deed to you void and unenforceable, without the signature of his wife too.  A second rule protects a surviving spouse from being deprived of a fair share of the decedent spouse’s estate by protecting against gifts of land by the decedent spouse to outsiders.

Your attorney tells you that the widow can make you give, not sell but give, the five acres back to her.   Your attorney suggests that you talk to her very nicely, and maybe, with a promise of no more motorcycles and a nice fence and a nice check, she will sign a second deed for you.  “But,” your attorney says, “Call me next time before you write the check.”

Witte Law Office

6125 Havelock Ave
Lincoln, NE 8507
402-467-5080
glen@wittelawoffice.com

 #law #Attorney #Wills #Trusts #Estateplanning #Probate

One of the Problems We See at the Law Office: Estate Planning for Young Children

Testamentary Trusts and POAs

Your husband is working late so you get your daughter from the baby sitter and stop at the store for groceries.  You see a cute baby riding in another grocery cart holding a doll.  She looks up and asks her mother, “Should I have a Will for my baby like you have for me?”

After supper and when things get quiet you mention the Will thing to your husband.  But his droopy glazed eyes are locked on the TV screen and he seems to sleep through your attempt at conversation.  The next day at work, you hear the term Testamentary Trust for Minors.  You think of yourself as a good parent, but is there something others know that you do not?  Is there something Mom did not know or mention?  Maybe so.  So you email your local attorney and set an appointment.

You tell the attorney that you are not rich, that you and your husband have good potential as your jobs and careers progress, but all you have now are debts and life insurance.  And a baby.  You do not expect to die any time soon.

The attorney agrees that death is not very likely, and even disability is fairly low on the probability scale.  But if anything happens, then a Will can be very useful.  And so can a Durable Power of Attorney.  He reports that many families do execute Wills which include provisions to protect children.  One clause can be used to give a responsible adult authority to care for your babies if you suddenly die.  A second set of clauses can give a responsible adult power to collect and use your life insurance proceeds for the care of your babies.  The clauses are often called a Testamentary Trust; “Testamentary” because they are part of a will, and “trust” because they give someone control of your property for the benefit of a third person, your child.  A Durable Power of Attorney can give your spouse or another responsible person the authority to act on your behalf to help make decisions with your financial affairs in case you are incapacitated in an accident or by some other disabling event.

The attorney smiled and said, “I sometimes tell my clients that if we help you sign these forms, then you will be guaranteed to never need them.  If we do not, then you will need them the next day.”  So you decide to proceed and avoid the risk of needing them when it is too late.

Witte Law Office

6125 Havelock Ave
Lincoln, NE 8507
402-467-5080
glen@wittelawoffice.com

 

One of the Problems We see at the Law Office

How to make your kids hate their new step parent

You have loved your spouse for many years, but now you are alone in the world.  Or you were until you found another whose life experiences are similar and who now adds immeasurably to your happiness and who brings a beautiful new dimension to your life.  Your children say they only want you to be happy.  But they seem to not like your new love.  How can they possibly see things so differently?

Maybe your children know something you do not.  Maybe they know the law of Descent and Distribution in Nebraska.

As the sole surviving parent, your children will inherit everything you own when you die, or if you have a will, then everything your will gives them, and every account or investment on which you have named them as beneficiaries.   But if you marry, then your new spouse will be entitled at your death to the first $52,500 of your assets plus at least half of everything else you have left after paying your debts and funeral costs.

Prenuptial agreements are useful and in many cases do accomplish their purpose.  But it is difficult to talk so frankly and so objectively with the one you hope will share your most intimate details for the rest of your life.  So what alternatives are there?

You should spend some time with your friendly local attorney.  There are certain things that can be done that will protect your children and which will not require the approval of your prospective spouse.  The changes do not have to be expensive.  Your attorney should talk about life estates, irrevocable trusts, life insurance policies, and incorporation.

So, to help your children feel comfortable with your new spouse, talk to your attorney before the wedding.

Witte Law Office

6125 Havelock Ave

Lincoln, NE 8507

402-467-5080

glen@wittelawoffice.com

#law #attorney #wills #trusts #estateplanning #Probate

Blended Family Trust

Blended Family Trust

Your husband died leaving you with two grown children but who still could use more advice than they ask for, especially in financial matters.  You have saved the life insurance proceeds from your deceased husband and wish to preserve it for your children.

You have recently grown to love another man who has three children.  You both have good jobs and share many interests.  You and he share the same goals for saving for the future and in reducing debts on cars and the house.

You contemplated a prenuptial agreement, but your impression of the “standard form” that you found on-line does not provide the flexibility you hope to keep.  You want to be able to change the deal if circumstances change as you think they could.  Yet there are parts that you want to keep as firm and inviolate as possible.  You certainly want to be protected in the event he dies and you want him to have the benefit of what you and he accumulated together in case you die.  But you do want your children to get what you preserved of their father’s estate.  Things like Augmented Estate and Elective Share may be a great benefit for some surviving spouses but those rules seem too arbitrary for your taste.

Knowing that your wishes were partly selfish and partly very generous, you sought the advice of a local estate planning attorney whose website indicated an awareness of the problems.

At the appointment your attorney spent a little time asking questions, a lot of time just listening, and only occasionally making a remark or two to help verify that he understood your meaning.  When you and he were both confident he understood your wishes and desires, he offered suggestions.

The attorney suggested that a trust would provide the best tool to accomplish your goals.  He reported that trusts come in many shapes and sizes, that the agreement will be enforced by the probate courts and sometimes by divorce courts, that it is important to state clearly what you want, and to be cognizant that choosing one option forecloses other options.  Each option has its costs, he reported, but there is no “right” choice.  Every person has a different set of priorities, so every trust should be written a little differently.

After the attorney’s review with you of the options that your choices seemed to give up, you felt better and assured him that you felt reaffirmed in your choices.  He thanked you for your clearheaded decision.

The next week, the attorney reviewed with you his clearly written trust agreement and you found that you understood what the instructions would mean in varying circumstances.

That evening your fiancé thanked you for making his life so much simpler and for making it easier for the step-children to like their new step-parents.

Witte Law Office

6125 Havelock Ave

Lincoln, NE 8507

402-467-5080

glen@wittelawoffice.com

A Simple Trust

A trust is simple.  A trust can have many pages, or a half a paragraph.  You write it, you get to make the rules.  Good thing.  And bad, too.  Sometimes it is like Captain Picard on Star Trek saying, “Make it so.”  But sometimes it is like explaining to a precocious 6 year old how the moon sometimes orbits the sun faster than the earth does and sometimes slower.

So why make a trust complicated and long?  Why make any deal complicated and long?  How about the deal we make every time we log onto a website and download something?  Even when it is free?  Yeah.  Long and complicated.  And a trust agreement probably should be too.

But why?  What law says it has to be long?

Well, you see, there is no law.  The law is that a trust agreement is exactly what you say it is. There are no rules that fill in the blanks we do not cover in the writing.

Most contracts are different.  There are millions of rules for contracts.  We all make contracts almost every day, and many times a day.  As a matter of fact you can make a binding contract without saying a word.  Two people, standing silently and perhaps even with no eye contact, can make a deal.   One party silently makes an offer to pay $.45 for a can of beans, by placing a can of beans on a table or counter.  The other silently agrees to accept the offer and to deliver the can of beans to the buyer by sliding the can of beans past a scanner.  The buyer then hands over the funds in satisfaction of the buyer’s agreed obligations and the seller fulfills the contract for delivery of goods to the buyer by placing the can of beans in the paper sack, or perhaps by placing the can onto the second part of the grocery store checkout counter.  Thousands of such deals are made every day, all across our nation.

Such a contract is binding and legally enforceable.  The buyer who takes the can of beans but fails to pay can be sued in court and can also be prosecuted for theft.  The seller who fails to hand over the can of beans after the buyer has paid the agreed purchase price can also be sued for breach of contract and can be charged with theft.

But how can that be?  The answer is that there are a multitude of statutes, enacted by our legislature, that fill in all the blanks in the contract agreement.  The Uniform Commercial Code verbalizes many of the rules.  Court decisions in various circumstances help guide us in the rest of the blanks.  The UCC tells us that if a buyer offers a particular price for a tangible moveable thing, and if the seller agrees by a clear indication that he or she accepts the offer, and if the buyer hands over the money or promises to hand over the money, then the parties have made an enforceable contract.  For things that are not moveable, like land, other rules step in.  They are generally found in court decisions, but some of the rules are written in statutes, especially if they relate to real estate.

But there are very few such rules to fill in the blanks for trust agreements.  A trust agreement is like a “three-legged stool.”  One person, usually someone who owns something, (who we will call the Grantor) hands that thing over to a second party (who we will call the Trustee) but does not really give away the thing to the trustee.  Instead the Grantor tells the Trustee to do something with the thing for the benefit of some third party (who we will call the Beneficiary).  The instruction the Grantor gives the Trustee is the trust agreement.  The agreement could simply tell the trustee to keep a can of beans from freezing and to give the can of beans to the Beneficiary at supper time, or in two weeks, or two years.

But sometimes the can of beans is really a million dollars or a house or half of the Grantor’s Estate when the Grantor dies.  Perhaps the deal is that the trustee will be allowed to spend the money on college education for the beneficiary but only if there is enough cash left to pay the real estate tax on the house and only if the beneficiary is getting A’s and B’s in college and only if the beneficiary is at least 17 years old, etc.  So you can see how the deal for a pile of beans can get more complicated.  But there just is no standard rule to fill in the blanks about A’s versus B’s and no magic rule about age 17 versus age 16.  So the trustee needs more instructions.

So you can see that a trust agreement has to be long enough to make the plan clear.  A good lawyer works hard to make the instructions in the trust agreement easy to understand and to deal with all the questions that may not be obvious now but which may become critically important in the future.  Some rules, such as tax rules and real estate rules and surviving spousal protection rules, must necessarily affect the instructions in the trust agreement.  So the lawyer must at least be aware of the choices the grantor has and perhaps should decide now.  Alternatively, the trust agreement should give the trustee power to decide the question when the question arises.

Of course, there are some trust agreements that just cannot be enforced.  For instance, if the grantor tells the trustee to use the money to hire a hitman to kill the grantor’s evil son-in-law, no court can force the trustee to perform that trust agreement.  We just cannot legally make deals to kill people.  Perhaps a more legal but equally unenforceable trust would instruct the trustee to give all of the Grantor’s money to Grantor’s grandchildren but there are never born any grandchildren.  So the lawyer must assist the Grantor in deciding what should be said and what to add to the instructions in case the plan does not work out as planned.

Finally, the trust agreement must give the trustee power to control at least some property, some asset, perhaps at least one dollar.  If the trustee has nothing to control for the grantor, then there is nothing the trustee can do, so there is no trust deal.

One of the purposes of many trusts is to help avoid the need to use a probate process to transfer the grantor’s assets to the grantor’s heirs at grantor’s death.  In that case, it is important to make sure that the grantor gives the trustee ownership rights in all of grantor’s assets, including real estate, moveable tangible personal property like a car or a couch and all of grantor’s intangible property like bank accounts.  Occasionally, a significant asset is overlooked, or the grantor acquires a significant asset but fails to transfer it to the trustee before death.  In that case the grantor’s estate might have to be probated.  So the Grantor’s will must state what should happen to such an asset.  Often, the grantor’s will merely directs that the asset be transferred to the trustee and be included in the assets controlled by the trust.  We call that kind of a will a “pour-over will.”  So. Sometimes we need documents in addition to the trust to accomplish the desires of the grantor.

So, trusts are simple.  All you need to do is to say what you want.

Witte Law Office

Dad’s Secret Estate

Dad’s Secret Estate

Mom died a few years ago and now Dad has died too, a little surprisingly and without any notice.  Your siblings say it is your duty to probate his estate because you are the oldest.  You know he owns a house and has been using the same bank for decades and has invested money with a stock brokerage company and has a good retirement fund.  But he never talked about death and never talked about his assets or estate.

You sign a listing agreement with a real estate agent to sell the house but the agent calls back to say the supervising broker has some questions.  You talk to the bank customer service representative but feel a little miffed because he won’t give you direct answers to your questions about dad’s accounts even though you show him the death certificate.  The stock broker is even less forthcoming.  Your siblings question your ability to properly protect their interests and jokingly (or maybe not so jokingly) threaten to hire an attorney.  To beat them to the punch, you call your local attorney and set an appointment.

You complain to the attorney about the sudden secrecy of your father’s bank and assert that you are very willing to treat all of the kids absolutely equally, even though one of your siblings has married very well and the other had suffered a debilitating medical problem and so has not been able to work for several years.  You report that Dad may have had a Will but you can only hope that it is stored in the bank lock box and the bank isn’t talking to you.

The attorney reports that if there is no will then Nebraska law gives Dad’s estate to the children in equal shares no matter that one child needs more and the other may need less.  But if your father was as thoughtful as his investment acumen indicates, he likely did sign a will.  In any event, no one has power to deal with his substantial estate until the Probate Court issues Letters of Personal Representative.

Without a will then all three children have priority to be appointed Personal Representative (or “PR”).  Dad in his will could nominate one and thereby give that one priority to be appointed PR.  The children can agree that one of them will do the job.

Dad, in his will, could favor one child with a greater share of the estate and could even include testamentary trust clauses providing benefits to the disabled child in such a way that other governmental benefits would not be reduced by the benefits of the estate.

You are confident your father was the kind of person who would have done what he could to protect his children and so you are hopeful that a will can be found at the bank.  The attorney reports that he likely can get a judge to appoint you as Special Administrator and give you enough authority that the bank could help you search for the will and help you identify assets available for probate.  Thereafter, armed with more complete information, you and the attorney could decide which steps would be appropriate and efficient to administer the estate for the benefit of all the children.

You called your siblings that evening and received their well-deserved accolades for dealing with a professional in this once-in-a-lifetime process.

Witte Law Office

6125 Havelock Ave
Lincoln, NE 8507
402-467-5080
glen@wittelawoffice.com