My recent columns on wills and beneficiaries led to a few questions from readers. (By the way, as regular readers of this column know, I encourage a dialogue with my readers. You can write to me at readers@juliejason.com.)
F.P. has a will and a living trust. He asked whether the living trust supersedes the will. That's a good question, the type you really need to address with your attorney for one very good reason: Your particular situation will be the determining factor. That is, how your assets are titled and how the documents are written need to be assessed in tandem to know who gets what when you pass away -- and that's really the question F.P. is asking.
To give you some context, living trusts are used to act as "will substitutes." The assets held by the trust bypass the will because they are owned by the trust. Examples of other assets that bypass the will are transfer-on-death accounts; IRAs and 401(k)s that transfer to beneficiaries named in beneficiary designation forms; and joint accounts that transfer to the joint owner.
The will captures assets owned by an individual in his own name. Whether the asset passes by will or a non-probate transfer, the asset is counted as part of the estate for federal and state estate tax purposes.
For more background on this topic, see the American Bar Association's Estate Planning FAQs on wills and trusts at tinyurl.com/5n98j9ah.
Another reader had a different question. After believing that she and her husband had the proper estate documents, P.P. consulted with an attorney at a financial institution, who pointed out drafting problems that needed to be corrected to fit her situation.
P.P. went back to the law firm that created the documents, only to find that the attorney who drew them up was no longer there. According to P.P., a managing partner at the firm said he could not help her and suggested that she seek another attorney.
Reader P.P. had two questions: Where could she go for a reputable list of estate attorneys in her area, and where could she send a complaint about her experience with the initial law firm?
A state bar association is the place to begin. For example, in my home state of Connecticut, the Connecticut Bar Association has a section where you can search the members of the association, and the search portal includes a postal code and area(s) of practice (tinyurl.com/4juxx6jd).
The State of Connecticut Judicial Branch also allows a person to check an attorney's license, which would list any disciplinary history, at tinyurl.com/2p8cm7sh. This section contains "File a Complaint against an Attorney" as well.
In another example, the South Carolina Bar has a website section titled "For the Public," where you can find a lawyer and also file a grievance (tinyurl.com/2p8npz9n).
A third reader said he was set to meet with his attorney to sign his estate planning documents. L.T. wanted to know what questions he should be prepared to ask before signing.
Questions need to come well ahead of the meeting to execute documents. Well in advance, L.T. needs to review the documents by reading them carefully. I suggest actually reading the will (and trust if there is one) out loud and s-l-o-w-l-y.
L.T. needs to look for typos (yes, they happen in drafting and need to be caught before the documents are finalized, especially names of beneficiaries).
L.T. needs to make sure the documents accurately state his legacy wishes. Absolute clarity is the goal. The review should include executors and trustees. By the way, I'm not a fan of an attorney volunteering to act in either capacity, but many attorneys will disagree. (Executor and trustee fees can far exceed fees earned drafting estate planning documents.)
If anyone wants more information on this topic, let me know. A helpful reference on attorney disclosure is Estate Planning Lawyer Serving as a Fiduciary (Chapter 4 of ACTEC's Engagement Letters), which you can find online.
On a separate note, if you want to support financial literacy, send savvy 401(k) participants to 401kchampion.com to compete for the 2022 401(k) Champion® Award, which I fund every year. The goal is to shine a light on 401(k) participants who can inspire others to save for retirement.
DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION