Getting Your Affairs in Order
By Geri Tomich, Esq.
Most of us may mutter the phrase, “I need to get my affairs in order,” but do we really know what it means, what it entails, and how to go about it?
With all the resources available to us, most people will have a general idea. We have read up about wills, trusts, and powers of attorney. Some of us who go on the Internet for education may be convinced that “getting your affairs in order” is merely filling out various forms. Filling out forms and documents is easy – name, social security number, date of birth, property description. But do we really stop and think if this will work as intended?
Short story: When Charlie decided to get his affairs in order, he went online and read various articles about estate planning — wills, trusts, and so on. Since he has one son and a modest estate of about $75,000 (comprised of an IRA, money market account, CDs, car), he prepared his own will by downloading a form. He named his trusted friend, Jack, as his executor with instructions to liquidate everything and send the money to Ricky who was attending graduate school in New York.
Charlie also learned about using beneficiary designation forms to simplify the process. So he completed one for each of his accounts and even his car, naming Jack as beneficiary. Shortly thereafter, Charlie passed. Unbeknownst to everyone, Jack had a judgment lien against him. After many twists and turns, Jack’s creditor seized Ricky’s inheritance. Jack’s creditor successfully argued that since the beneficiary designations superseded the will, Jack was given ownership rights to the accounts, which then allowed his creditor to take the money.
How could that be? We need to understand that a will serves as a set of instructions on how to bridge gaps in transferring assets upon death. Here, Charlie intended for Jack to collect his accounts and give them to Ricky. However, by naming Jack as the beneficiary of the accounts, there is not a gap to even trigger the use of Charlie’s will. The beneficiary forms gave Jack the legal right to take ownership of the money. So, with or without the creditor, could Jack have taken the money anyway? Legally, yes.
Planning your estate has a lot of considerations. It goes beyond filling out forms. First consideration: will vs. trust. Generally, a trust is recommended if: the net estate is more than $100,000, you have a substantial amount of assets in real estate, you have real estate in more than one state, you have spendthrift heirs, or you have very specific instructions on how and when you want your estate to be distributed among your heirs after you die.
If none of these apply to you and you would prefer a very simple process while you are alive, the main consideration is to ensure your heirs avoid probate.
First, it is important to know how the probate process works. After your death, the person you named in your will as executor (or, if you die without a will, your next of kin will serve per state law) files papers in the local probate court. The executor proves the validity of your will and presents the court with a list of your property and their value, your debts, and who is to inherit.
Then, relatives and creditors are officially notified of your death. Your executor is tasked with finding and securing your assets during the probate process. Your executor will also face management decisions regarding these assets to settle with the attorney, the accountant, and any creditors who are entitled to be paid out of your estate; therefore, your executor may be forced to liquidate your assets prior to final distribution to your heirs.
Court permission is needed with every step that your executor takes to ensure protection of those having an interest in your estate. Eventually, once all matters are settled, your executor may then distribute what is left to your heirs. This entire process can take up to a minimum of six months.
Second, you need to bridge gaps to ensure probate avoidance. As Charlie’s story illustrates, no probate was necessary for Jack to collect the funds in Charlie’s account. But, as the same story demonstrated, it is important to consult with an experienced estate planning professional to ensure protection against unintended consequences.
Attorney Spotlight - Geraldine Tomich
Geri concentrates her practice in the areas of asset protection, estate planning, probate, guardianships, estate and gift taxation, and business entity formation.
Geri has given a number of educational seminars to the Las Vegas community regarding estate planning, probate avoidance, and business succession planning. She also contributes articles to local publications and has been a guest speaker on KLAV Radio’s Financial Fridays program. Geri is a founding director of the Gift Planning Advisors, a Las Vegas group of professionals who provide educational opportunities for planned giving professionals and heighten awareness of donor opportunities. She also sits on the Board of Trustees of Baby’s Bounty, a non-profit foundation whose mission is to provide a safe and healthy environment for infants.
Geri obtained her masters of law (LL.M.) degree from Thomas Jefferson School of Law, where she graduated magna cum laude. She obtained her juris doctor from Gonzaga University School of Law and her B.S. degree from the University of Nevada, Las Vegas. She is a member of the State Bar of Nevada and the Washington State Bar Association.
A native of Manila, Philippines, Geri moved to Las Vegas with her family in 1990. She loves to travel and spend time with her husband and son, and also enjoys practicing Bikram yoga.
MAC Blood Drive
Marquis Aurbach Coffing
10001 Park Run Dr.
Las Vegas, NV 89145
Friday, September 19 from 8:00 am – 2:00 pm
“Open to Family and Friends”
All donors will receive a voucher for TWO (2) Admissions to see “Recycled Percussion”
at the Quad Hotel & Resort, courtesy of David Saxe Productions!
Schedule your appointment to GIVE BLOOD at
www.unitedbloodservices.org and enter sponsor code: MACLAW
or contact Peter Floyd at 702-942-2138 for assistance.
Please bring photo ID and donor card. Free Cholesterol Testing with every donation!