Elise sat in her kitchen staring at a huge, meaningless pile of bills, bank statements, outstanding invoices and cancelled checks. She had always been close to her dad, but right now she was furious at him for dying and making her the Executor of his estate in his Will. Elise was a musician with an MFA, not an accountant. She was nearly 50 and had never so much as balanced her own checkbook. She was not irresponsible, just not equipped to deal with this kind of challenge.
She finally called her friend Joe, a bookkeeper. Joe arrived, looked at the sea of bills and quickly agreed that her dad’s records were a mess. He’d never recorded checks, and some of the invoices were three years old.
Joe helped Elise create a plan that started with getting methodical and organized
Create a pile of all the bills and invoices.
Look for receipts, cancelled checks or other verification that a bill has been paid, such as bank statements, and create another pile.
Keep a separate pile for anything that’s going to affect a credit balance–checks that might have been received or automatic deposits that were made to an account.
Create a spreadsheet. List all of the bills found; match them with cancelled checks and receipts.
If you can’t find something, first check bank statements. If nothing is there, call the company that sent the invoice and ask if the bill has been paid.
If it has been paid, request a receipt. If it hasn’t, create a separate spreadsheet category for unpaid bills or outstanding debt and note the amount.
Key responsibility of the Executor: Accounting for assets and liabilities
To those who are not used to keeping careful financial records, this may seem like a lot of work, and it is. But until the assets and liabilities have been accounted for, Probate cannot move forward. It is important to document every step taken to verify liabilities and assets. It is also important to document the liquidation of assets to either pay bills or divide the estate among the heirs. This will include the cost of an appraiser who will estimate the value of any property that needs to be sold, then recording the sale.
Invest in financial software. A spreadsheet is fine; Excel will do the math for you.
Focus on the numbers. Check and recheck the numbers—they need to balance.
Match every number to a source document. It is much easier to locate an error if every entry is matched to a source document–a receipt, account statement, correspondence, bills paid or pending, and photocopies of checks and deposit slips. Note the source on the spreadsheet, file the documents and keep on hand.
Document everything. Keep comprehensive notes on all expenses and transactions made on behalf of the estate, including dates, purpose and the exact amount. Keep receipts.
Don’t take questions or challenges personally
If the estate closes and a mistake is later discovered, those who received disbursements may be required to reimburse the court to correct a deficiency. Discovering errors before an estate closes protects the heirs and the estate. Conducting an accounting of an estate during Probate is a technical process that requires attention to detail and accuracy. When done well, Probate proceeds smoothly.
Why don’t more East Bay families have Living Trusts? Good question. But here are some of the excuses:
1. I don’t have an estate–why do I need an estate plan?
This is, of course, the classic excuse. Certainly those with a lot of assets have more to protect and more to lose by not making plans for the distribution of their estates. Yet many people are surprised at the cumulative value of their assets. Here in the Bay Area, with our inflated real estate market, anyone who owns a home has a significant investment. Cars, antiques, artwork, jewelry, brokerage accounts and life insurance policies—collectively, all of these can contribute to a significant total net worth.
2. Won’t my spouse automatically inherit my estate?
Some families assume that if something happens to one spouse, everything will, by default, go to the surviving spouse. In general, this may be true, but what if something happens to both spouses? A tragedy, but it happens. And sooner or later, that remaining spouse will die. So far, no one has figured out a way to beat the odds. Without a Will or Trust, along with their grief, their heirs will be dealing with Probate. Depending on the complexity of the estate, Probate can take several years, and it is entirely preventable by creating a Living Trust.
Or here’s another scenario that will affect spousal inheritance
Let’s say someone refinanced his/her mortgage, and one spouse’s name was taken off the house? Then imagine that spouse dies. That estate will not “automatically” pass to the surviving spouse. In fact, it will potentially make the surviving spouse’s life very difficult indeed.
3. I don’t want to inherit my parents’ credit-card debt
This was a new excuse we heard a few weeks ago. One son had discouraged his parents from creating estate-planning documents because he didn’t want to be responsible for his parents’ credit card debt when they died. In general, children aren’t responsible for a deceased parent’s debts, and in some cases, a spouse may be exempt as well. In general, the estate is responsible for paying debts. Once assets are liquidized and if there isn’t enough money in the estate to cover the amount owed, the debts generally go unpaid. It’s those who are owed money—not the heirs–who are left holding the bag.
4. I have a Will, so my estate won’t be subject to Probate
In fact, all Wills are subject to Probate. It’s the process in which a court determines whether the document is valid and ensures that relatives and creditors are notified. This process can take several months and drain thousands of dollars from the value of the estate. A Living Trust is the legal document that holds your property; when you die or become incapacitated, the property in your Living Trust is smoothly transferred to your beneficiaries.
Something else to think about:
If you own property in more than one state—even if it’s a timeshare–you DO want a Living Trust. Going through Probate in multiple states is an experience that you will never forget.
If you value privacy, you want a Living Trust. A Will is a public document, and anyone can come to a Probate
Keep your Trust updated with life events.What’s a life event? Think about anything that will affect the inheritance of your heirs—births, deaths, divorce, important investments.
June marks the two-year anniversary of California’s End of Life Options Act (EOLA). Between June 9 and December 31, 2016, 111 patients were reported to have died following ingestion of aid-in-dying drugs prescribed under EOLA.
While controversial, the law has stringent controls
The law has been extremely controversial, opposed by many groups who argue that it creates too many opportunities for abuse. Yet the law, as it is structured, has stringent controls. Those with fatal, debilitating diseases who wish to take their own lives must get their doctor’s order and an opinion from a second doctor about the severity of their conditions. The act must be carried out within a certain time frame. The fact that there have been relatively few assisted suicides in California since the law was passed indicates to many that the law is fair and is working.
AHD: The legal document that allows people to detail how they want to die
At California Document Preparers, our Living Trust package includes an Advance Healthcare Directive (AHD). It is this document in which people can detail their final wishes about how they will die—if they want nursing care or prefer to die at home. If they want to be surrounded by their families or if they prefer to enlist the care of hospice and refuse artificial efforts to be kept alive. AHDs are the legal documents that record the ability to halt interventions, treat the patient’s pain and allow them to die as peacefully as possible. An AHD includes patients diagnosed with progressive dementia who can make end-of-life decisions before the disease robs them of their ability to sign legal documents. This practice has not included provisions to refuse food and fluids offered by hand—until now.
Washington state has new end-of-life guidelines for dementia patients
A Washington state agency, End of Life Washington (EOLWA), advocates for medical aid in dying and has created guidelines for dementia patients who don’t want to be spoon-fed at the end of life. The group helps people using the state’s 2009 Death with Dignity Act, recently posted new Instructions for Oral Feeding and Drinkingon its website.
The guidelines are directed at those with Alzheimer’s diseaseand other progressive forms of dementia. It instructs caregivers not to provide oral food or fluids under certain circumstances. “These instructions are groundbreaking for patients who fear losing control not only of their faculties but of their free will to live and die on their terms”, said Sally McLaughlin, executive director of EOLWA. “We get calls from people with concerns about their loved ones with dementia feeling like they’re being force-fed. Those with dementia understand that as they stop eating, they would like no one else to feed them.”
The new guidelines have both their critics and proponents
As with the death with dying law before it, these new guidelines have their share of critics who have concerns about potential mistreatment of vulnerable patients. They fear that these guidelines could be used essentially to starve the elderly or incapacitated. Proponents welcome the new guidelines, believing that they help define the uncertainties surrounding assisted feeding at the end of life.
Guidelines target those who show signs of not wanting food
The guidelines do not apply to people with dementia who still get hungry and thirsty and want to eat and drink, the authors note. “If I accept food and drink when they’re offered to me, I want them,” the document states. But if the person appears indifferent to eating, or shows other signs of not wanting food, turning away, spitting food out, coughing or choking, according to the guidelines, this is when attempts to feed should be stopped, and it’s at this point that caregivers should respect those actions.
“No matter what my condition appears to be, I do not want to be cajoled, harassed or forced to eat or drink,” the document states.
The new guidelines are not legally or ethically binding. It’s important to keep in mind that these are guidelines; they are neither legally nor ethically binding. They do, however, bring increased visibility to an issue that we likely will hear more about as the baby boomer population ages. Nearlytwo dozen states have laws that address assisted feeding, including many that prohibit withdrawing oral food and fluids from dying people.
An Advance Healthcare Directive is part of our Living Trust package