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EP Planning Pandemic

How Important Is Estate Planning in the Pandemic?

How Important Is Estate Planning in the Pandemic?

Estate Planning during a pandemic. Waiting to create a will leaves nothing but headaches for your heirs and relatives. With nearly 200,000 deaths due to Covid-19 in the U.S. alone, we are reminded of how fast our lives can change.

The Street’s recent article entitled “Life Changes Fast: The Importance of Estate Planning and Health Care Directives” also notes that this reminds us how important it is to make sure we have current estate planning decisions and end-of-life decisions in place.

Here is a basic overview of some important areas of estate and health care planning you should consider:

Your Assets and Belongings

An experienced estate planning attorney can help you determine if a will or a trust would best take care of your objectives and needs. Don’t make this decision on your own because there are major differences between these two types of documents.

Some people use a living trust instead of a will because it avoids the publicity and expense that comes with the probate process. Ask your attorney what is best for your family and situation.

You’ll need to name an executor, who will be in charge of making sure your requests are carried out, including the division of assets. In addition to your will or trust, be sure the beneficiaries on your life insurance and accounts, such as your bank and retirement accounts are current. You should also see how the title is held on any real estate property you own.

Health Care and Your Body

Make certain that it’s super clear and in writing as to what your final wishes are for your medical treatment and final arrangements. Your documents need to address what type of medical treatment you want, if you are not able to make those decisions for yourself. It should also be clear as to any specific life-preserving measures you would want taken.

A power of attorney for healthcare lets you name an agent to make health-related decisions for you, if you’re unable to do so. Some states combine both the power of attorney for health care and a living will into one document, which is called an advance directive. If you want to be an organ donor, make sure this is recorded and your wishes are known (some states have directories or it’s on a person’s driver’s license). Be sure that your hospital and doctor are aware of your wishes and they have copies of any necessary documents.

Guidance and Financial Help. Always consult with an experienced estate planning attorney to be certain that your wishes and objectives are properly spelled out and legally binding.

Reference:  The Street (Aug. 28, 2020) “Life Changes Fast: The Importance of Estate Planning and Health Care Directives”

Read more related articles at:

Pandemic highlights importance of estate planning

Estate Planning Tips Amid The Pandemic

Also, read one of our previous Blogs at: 

What are Some Good Estate Planning Ideas in the Pandemic?

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Guardianship

How Does Guardianship Work?

How Does Guardianship Work?

For the most part, we are free to make our own decisions regarding how we live, where we live, how we spend our money and even with whom we socialize. However, when we are no longer capable of caring for ourselves, most commonly due to advancing age or dementia, or if an accident or illness occurs and we can’t manage our affairs, it may be necessary to seek a guardianship, as explained in the recent article “Legal Corner: A guardian can be a helpful tool in cases of incapacity” from The Westerly Sun. A guardianship is also necessary for the care of a child or adult with special needs.

If no proper estate planning has been done and no one has been given power of attorney or health care power of attorney, a guardianship may be necessary. This is a legal relationship where one person, ideally a responsible, capable and caring person known as a guardian, is given the legal power to manage the needs of a ward, the person who cannot manage their own affairs. This is usually supported through a court process, requires a medical assessment and comes before the probate court for a hearing.

Once the guardian is qualified and appointed by the court, they have the authority to oversee everything about the ward’s life. They have power over the ward’s money and how it is spent, health care decisions, residential issues and even with whom the ward spends time. At its essence, a guardianship is akin to a parent-child relationship.

Guardianships can be tailored by the court to meet the specific needs of the ward in each case, with the guardian’s powers either limited or expanded, as needed and as appropriate.

The guardian must report to the court on a yearly basis about the ward’s health and health care and file an annual accounting of what has been done with the ward’s money and how much money remains. The court supervision is intended to protect the ward from mismanagement of their finances and ensure that the guardianship is still needed and maintained on an annual basis.

The relationship between the ward and the guardian is often a close one and can continue for many years. The guardianship ends upon the death of the ward, the resignation or removal of the guardian, or in cases of temporary illness or incapacity, when the ward recovers and is once again able to handle their own affairs and make health care decisions on their own.

If and when an elderly family member can no longer manage their own lives, guardianship is a way to step in and care for them, if no prior estate planning has been done. It is preferable for an estate plan to be created and for powers of attorney be created, but in its absence, this is an option.

Reference: The Westerly Sun (Sep. 19, 2020) “Legal Corner: A guardian can be a helpful tool in cases of incapacity”

Read more related articles at:

Guardianship

Also read one of our previous Blogs at:

What Should I Know about Guardianship?

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INHERITANCE TAX

Protecting Inheritance from the Taxman

Protecting Inheritance from the Taxman

Wealth Advisor’s recent article entitled “4 Ways to Protect Your Inheritance from Taxes” explains that inheritances aren’t considered income for federal tax purposes—whether it’s cash, investments or property. However, any subsequent earnings on the inherited assets are taxable, unless it comes from a tax-free source. You must report the interest income on your taxes. Any gains when you sell inherited investments or property are also taxable (but you can usually also claim losses on these sales). Remember that state taxes on inheritances vary, so ask an experienced estate planning attorney for details. Let’s look at fours steps you can take to protect your inheritance:

Look at the alternate valuation date. The basis of property in a decedent’s estate is the fair market value (FMV) of the property on the date of death, but the executor might use the alternate valuation date, which is six months after the date of death. This is only available, if it will decrease both the gross amount of the estate and the estate tax liability, typically resulting in a larger inheritance to the beneficiaries. If the estate isn’t subject to estate tax, then the valuation date is the date of death.

Use a trust. If you know you’re getting an inheritance, ask that they create a trust for the assets. A trust lets you to pass assets to beneficiaries after your death without probate.

Minimize retirement account distributions. Inherited retirement assets aren’t taxable, until they’re distributed. There are rules as to when the distributions must happen. If one spouse dies, the surviving spouse usually can take over the IRA as his or her own. Required minimum distributions (RMDs) would begin at age 72, just as they would for the surviving spouse’s own IRA. However, if you inherit a retirement account from someone not your spouse, you can transfer the funds to an inherited IRA in your name. You have to start taking minimum distributions the year of or the year after the inheritance, even if you’re not yet 72.

Make some gifts. It may be wise to give some of your inheritance to others. It will be a benefit to them, but it could also potentially offset the taxable gains on your inheritance with the tax deduction you get for donating to a charitable organization. If want to leave money to people when you die, you can give annual gifts to your beneficiaries while you’re still living up to a certain amount—$15,000 for to each person without being subject to gift taxes. Gifting also reduces the size of your estate, which can be important if you’re close to the taxable amount. Talk with an experienced estate planning attorney to be certain that you’re staying current with the frequent changes to estate tax laws.

Wealth Advisor (Sep. 15, 2020) “4 Ways to Protect Your Inheritance from Taxes”

Read more related articles at:

Best Ways to Protect Your Estate and Inheritances From Taxes

4 Ways to Protect Your Inheritance from Taxes

Also, read one of our previous Blogs at:

What Exactly Is the Estate Tax?

Click here to check out our Master Class!

Probate Process

What’s Involved in the Probate Process?

What’s Involved in the Probate Process?

SWAAY’s recent article entitled “What is the Probate Process in Florida?” says that while every state has its own laws, the probate process can be fairly similar. Here are the basic steps in the probate process:

The family consults with an experienced probate attorney. Those mentioned in the decedent’s will should meet with a probate lawyer. During the meeting, all relevant documentation like the list of debts, life insurance policies, financial statements, real estate title deeds, and the will should be available.

Filing the petition. The process would be in initiated by the executor or personal representative named in the will. He or she is in charge of distributing the estate’s assets. If there’s no will, you can ask an estate planning attorney to petition a court to appoint an executor. When the court approves the estate representative, the Letters of Administration are issued as evidence of legal authority to act as the executor. The executor will pay state taxes, funeral costs, and creditor claims on behalf of the decedent. He or she will also notice creditors and beneficiaries, coordinate the asset distribution and then close the probate estate.

Noticing beneficiaries and creditors. The executor must notify all beneficiaries of trust estates, the surviving spouse and all parties that have the rights of inheritance. Creditors of the deceased will also want to be paid and will make a claim on the estate.

Obtaining the letters of administration (letters testamentary) obtained from the probate court. After the executor obtains the letter, he or she will open the estate account at a bank. Statements and assets that were in the deceased name will be liquidated and sold, if there’s a need. Proceeds obtained from the sale of property are kept in the estate account and are later distributed.

Settling all expenses, taxes, and estate debts. By law, the decedent’s debts must typically be settled prior to any distributions to the heirs. The executor will also prepare a final income tax return for the estate. Note that life insurance policies and retirement savings are distributed to heirs despite the debts owed, as they transfer by beneficiary designation outside of the will and probate.

Conducting an inventory of the estate. The executor will have conducted a final account of the remaining estate. This accounting will include the fees paid to the executor, probate expenses, cost of assets and the charges incurred when settling debts.

Distributing the assets. After the creditor claims have been settled, the executor will ask the court to transfer all assets to successors in compliance with state law or the provisions of the will. The court will issue an order to move the assets. If there’s no will, the state probate succession laws will decide who is entitled to receive a share of the property.

Finalizing the probate estate. The last step is for the executor to formally close the estate. The includes payment to creditors and distribution of assets, preparing a final distribution document and a closing affidavit that states that the assets were adequately distributed to all heirs.

Reference: SWAAY (Aug. 24, 2020) “What is the Probate Process in Florida?”

Read more related articles at:

The Probate Process

What Is Probate, and How Does It Work?

Also, read one of our previous blogs at:

How Does a Probate Proceeding Work?

Click here to check out our Master Class!

 

Trustee Fees

What are Trustee Fees?

What are Trustee Fees?

A frequent example is when you create a revocable living trust to pass on assets to your children. You must name a trustee to manage those assets. You might name yourself as trustee, although some situations may require that it be another individual or organization. An issue to consider are the trustee fees. Trustees assume responsibilities when managing assets, and the fees can compensate them for their time and efforts.

Yahoo Finance’s recent article entitled “Trustee Fees: What Are They and Who Pays?” explains that these fees are a payment for services rendered. A trustee can be an individual or an organization, like a bank, wealth management company or other financial institution. Trustees will do various duties, depending on the instructions in the trust document. However, their primary job is to make certain that the assets held in a trust are managed according to the trust grantor’s (creator’s) wishes for the trust’s beneficiaries.

The trust creator will usually set out the terms of payment for a trustee in the trust document. Let’s look at some different ways to structure trustee fees. One fee structure is to pay the trustee a set percentage of the assets in the trust each year. This is typically used with larger trusts with significant assets that continually appreciate or generate ongoing income. With a smaller trust, a different fee structure might be used. Instead of a percentage, you might pay the trustee a flat dollar amount, each year. If they don’t have as many duties, they could be paid an hourly rate.

When drafting a trust document with the help of an experienced estate planning attorney, the grantor can set the terms of payment, including capping how much can be paid in trustee fees.

If a trust doesn’t mention trustee fees in the trust document, state law can determine the fee. Typically, fees can either be charged as a percentage of assets or as a percentage of transactions associated with money moving in or out of the trust.

There are no set rules for calculating the amount trustees can charge for their time. However, there are some common guidelines. In many instances, a trustee will charge a minimum of 1% when dealing with larger trusts with significant assets. Smaller trusts frequently use a flat fee model. Trustee fees are paid out of the trust’s assets. Fees are typically paid quarterly.

Trustees are also entitled to reimbursement for any expenses, such as travel expenses, storage fees, taxes, insurance, or other expenses they incur related to the management of the trust. These expenses are reimbursable, regardless of whether the trust document specifies any guidelines for reimbursement.

The trustee fees are tax deductible to the trust, and the fees are considered taxable income for the trustee. If you’re uncertain what to pay (or what to charge if you’re acting as a trustee), speak with an estate planning attorney.

Reference: Yahoo Finance (Aug. 14, 2020) “Trustee Fees: What Are They and Who Pays?”

Read Related articles at:

Definitive Guide on Trustee Fees

Trustee Fees: What Are They and Who Pays?

Also, read one of our previous Blogs at :

What You Need to Know If Asked to Serve as a Trustee

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Estate Panning Uninherited Heirs

How to Protect Your Estate from Unintended Heirs

How to Protect Your Estate from Unintended Heirs

Disinheriting a child as an heir happens for a variety of reasons. There may have been a long-running dispute, estrangement over a lifestyle choice, or not wanting to give assets to a child who squanders money. What happens when a will or trust has left a child without an inheritance is examined in an article from Lake County News, “Estate Planning: Disinherited and omitted children.”

Circumstances matter. Was the child born or adopted after the decedent’s estate planning documents were already created and executed? In certain states, like California, a child who was born or adopted after documents were executed, is by law entitled to a share in the estate. There are exceptions. Was it the decedent’s intent to omit the child, and is there language in the will making that clear? Did the decedent give most or all of the estate to the other parent? Did the decedent otherwise provide for the omitted child and was there language to that effect in the will? For example, if a child was the named beneficiary of a $1 million life insurance policy, it is likely this was the desired outcome.

Another question is whether the decedent knew of the existence of the child, or if they thought the child was deceased. In certain states, the law is more likely to grant the child a share of the estate.

Actor Hugh O’Brien did not provide for his children, who were living when his trust was executed. His children argued that he did not know of their existence, and had he known, he would have provided for them. His will included a general disinheritance provision that read “I am intentionally not providing for … any other person who claims to be a descendant or heir of mine under any circumstances and without regard to the nature of any evidence which may indicate status as a descendant or heir.”

The Appellate Court ruled against the children’s appeal for two reasons. One, the decedent must have been unaware of the child’s birth or mistaken about the child’s death, and two, must have failed to have provided for the unknown child solely because of a lack of awareness. The court found that his reason to omit them from his will was not “solely” because he did not know of their existence, but because he had no intention of giving them a share of his estate.

In this case, the general disinheritance provision defeated the claim by the children, since their claim did not meet the two standards that would have supported their claim.

This is another example of how an experienced estate planning attorney creates documents to withstand challenges from unintended outcomes. A last will and testament is created to defend the estate and the decedent’s wishes.

Reference: Lake County News (Aug. 22, 2020) “Estate Planning: Disinherited and omitted children”

Read more related articles at:

What are Unintended Heirs?

UNINTENDED HEIRS

Also, read one of our previous Blogs at:

How Can You Disinherit Someone and Be Sure it Sticks?

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Tennacy

What Does Tenancy by the Entirety Mean in Estate Planning?

What Does Tenancy by the Entirety Mean in Estate Planning?

Choosing an ownership structure for real estate is is an important decision. As a result, it is crucial to understand the options. Motley Fool’s recent article entitled “What is Tenancy by the Entirety?” explains that the only owners of the property must be both spouses of a legally married couple. The couple must be a married couple, not just two people in a relationship or two otherwise unmarried individuals. The owners also can’t be a married couple that co-owns the property with another.

With a tenancy by the entirety, both spouses have an equal ownership interest in the entire property.  It doesn’t matter what portion of the purchase price came from each joint owner. Both spouses also have equal rights, when it comes to actions involving the property, like whether to sell the property. If one of the spouses or owners dies while the property is owned under a tenancy by the entirety, the surviving spouse automatically becomes the sole owner of the home, even if the will of the decedent spouse distributes the property to somebody else.

If there’s a divorce, a tenancy by the entirety can be cancelled. If the divorced spouses continue to own the property, the arrangement will revert to tenants in common. This lets each owner sell or transfer their interest in the property to whomever they want. The property’s ownership structure could also be changed from tenancy by the entirety to another type, if both spouses agree to it.

Tenancy by the entirety has two main advantages for married couples: asset protection and estate planning. Tenancy by the entirety helps protect the property from the debts of one spouse. Creditors can’t attach a lien on a house owned as tenancy by the entirety, unless the debt is in the names of both spouses. TBE makes the owner of the house a separate legal entity from either spouse. It also avoids a costly and lengthy probate process because title to the home transfers automatically to the surviving spouse upon one spouse’s death.

However, TBE isn’t available in all states. Some owners also don’t like the fact that each spouse owns a 50% share, even if one spouse paid the entire cost of acquiring the home. Tenancy by the entirety is only used in certain states. They include AK, AR, DE, DC, FL, HI, IL (for some types of homestead property), IN, KY, MD, MA, MI, MS, MO, NJ, NY, NC, OK, OR, PA, RI, TN, VT, VA, and WY. Some of these states allow tenancy by the entirety for a number of types of property, while others allow TBE arrangements for just real estate.

There are a few other ways to own property. Here are some of the most commonly used methods for properties purchased for more than one adult tenant to live in:

Tenants in Common. It is an ownership structure similar to tenancy by the entirety, but it applies to non-married couples. Like tenancy by the entirety, tenants in common share an equal ownership interest in the property, but at the death of one owner, their share of the property passes to their heirs, not to the surviving owner. Tenants in common is the default ownership structure, unless another form of ownership is specifically chosen with an asset owned equally by two or more people.

Joint Tenants with Rights of Survivorship (JTWROS).  This is similar to tenancy by the entirety. Like tenancy by the entirety, JTWROS-held properties also pass to the survivor in the event of one spouse’s death. However, JTWROS isn’t limited to married couples, and there can be two or more owners. Each one has an equal interest in the property, but unlike TBE property, each owner has the right to sell or transfer their ownership interest to another. Another difference is that JTWROS owners aren’t considered to be a separate and single legal entity—each owner’s creditors can go after the property, even for debts that are owned by a single debtor spouse.

Sole Ownership. With sole ownership, just one person holds title to a property. It is often used when a single individual purchases a home. However, it can also be used if a married couple buys a home, but only one spouse will legally own it. A big advantage of sole ownership is its simplicity—the owner is able to make any decisions about the property on their own. However, transfer of ownership when a sole owner dies can be more complicated than any of the other ownership structures above.

Joint Tenancy. This is typically what happens when two people are listed on a deed, and there’s no other ownership structure designated. Here, both owners have equal ownership rights to a property, and in the event of a deceased spouse or owner, the property passes to the surviving joint tenant. However, joint tenancy doesn’t protect the property from creditors of one of the owners.

Tenancy by the entirety has several key benefits for married couples, in states where it’s permitted. Review these with an experienced estate planning attorney before deciding.

Reference: Motley Fool (Aug. 23, 2020) “What is Tenancy by the Entirety?”

Read related articles at :

Tenancy by the Entirety States

ESTATE PLANNING WITH TENANCY BY THE ENTIRETIES PROPERTY

Also, read one of our previous Blogs at:

What Should I Know About Joint Tenancy?

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Pre Election

Pre-Election Estate Planning Includes a Vast Variety of Trusts

You might remember a flurry of activity in advance of the 2016 presidential election, when concerns about changes to the estate tax propelled many people to review their estate plans. In 2020, COVID-19 concerns have added to pre-presidential election worries. A recent article from Kiplinger, “Pre-Election Estate Planning Moves for High Net-Worth Families,” describes an extensive selection of trusts that can are used to protect wealth, and despite the title, not all of these trusts are just for the wealthy.

The time to make these changes is now, since there have been many instances where tax changes are made retroactively—something to keep in mind. The biggest opportunity is the ability to gift up to $11.58 million to another person free of transfer tax. However, there are many more.

Spousal Lifetime Access Trust (SLAT) The SLAT is an irrevocable trust created to benefit a spouse funded by a gift of assets, while the grantor-spouse is still living. The goal is to move assets out of the grantor spouse’s name into a trust to provide financial assistance to the spouse, while sheltering property from the spouse’s future creditors and taxable estate.

Beneficiary Defective Inheritor’s Trust (BDIT) The BDIT is an irrevocable trust structured so the beneficiary can manage and use assets but the assets are not included in their taxable estate.

Grantor Retained Annuity Trust (GRAT) The GRAT is also an irrevocable trust. The GRAT lets the grantor freeze the value of appreciating assets and transfer the growth at a discount for federal gift tax purposes. The grantor contributes assets in the trust and retains the right to receive an annuity from the trust, while earning a rate of return as specified by the IRS. GRATs are best in a low interest-rate environment because the appreciation of assets over the rate goes to the beneficiaries and at the end of the term of the trust, any leftover assets pass to the designated beneficiaries with little or no tax impact.

Gift or Sale of Interest in Family Partnerships. Family Limited Partnerships are used to transfer assets through partnership interests from one generation to the next. Retaining control of the property is part of the appeal. The partnerships may also be transferred at a discount to net asset value, which can reduce gift and estate tax liability.

Charitable Lead Trust (CLT). The CLT lets a grantor make a gift to a charitable organization while they are alive, while creating tax benefits for the grantor or their heirs. An annuity is paid to a charity for a set term, and when the term expires, the balance of the trust is available for the trust beneficiary.

Charitable Remainder Trust (CRT) The CRT is kind of like a reverse CLT. In a CRT, the grantor receives an income stream from the trust for a certain number of years. At the end of the trust term, the charitable organization receives the remaining assets. The grantor gets an immediate income tax charitable deduction when the CRT is funded, based on the present value of the estimated assets remaining after the end of the term.

These are a sampling of the types of trusts used to protect family’s assets. Your estate planning attorney will be able to determine if a trust is right for you and your family, and which one will be most advantageous for your situation.

Reference: Kiplinger (Aug. 16, 2020) “Pre-Election Estate Planning Moves for High Net-Worth Families”

Read more related articles at:

Pre-Election Estate Planning Moves for High-Net-Worth Families

Estate Planning in the 2020 Election Year

Also, read one of our previous blogs at:

Different Trusts for Different Estate Planning Purposes

Click here to check out our Master Class!

Protecting Assets from nursing home costs

How Do I Keep My Assets from the Nursing Home?

How Do I Keep My Assets from the Nursing Home?

If you don’t have a plan for your assets when it comes time for nursing home care, they can be at risk. Begin planning now for the expenses of senior living. The first step is to consider the role of Medicaid in paying for nursing home services.

WRCB’s recent article entitled “How to Protect Your Assets from Nursing Homes” describes the way in which Medicaid helps pay for nursing homes and what you can do to shield your assets.

One issue is confusing nursing homes and skilled nursing facilities. Medicare does cover a stay in a skilled nursing facility for convalescence. However, it doesn’t pay for full-time residence in a nursing home. For people who can’t afford to pay and don’t have long-term care insurance, they can apply for Medicaid. That’s a government program that can pay nursing home costs for those with a low income. People who don’t have the savings to pay for nursing home care and then require that level of care, may be able to use Medicaid.

For those who don’t qualify for Medicaid when they need nursing home care, they may become eligible when their savings are depleted. With less money in the bank and minimal income, Medicaid can pay for nursing home care. It is also important to remember that when a Medicaid recipient dies, the government may recoup the benefits provided for nursing home care from the estate. Family members may discover that this will impact their inheritance. To avoid this, look at these ways to protect assets from nursing home expenses.

Give Away Assets. Giving loved ones your assets as gifts can help keep them from being taken by the government when you die. However, there may be tax consequences and could render you Medicaid ineligible.

Create an Irrevocable Trust. When assets are placed in an irrevocable trust, they can no longer belong to you because you name an independent trustee. The only exception is that Medicaid can take assets that were yours five years before you died. Therefore, you need to do this as soon as you know you’re going into a nursing home.

Contact an experienced estate planning, elder law, or Medicaid planning attorney to help you protect your assets. The more you delay, the less likely you’ll be able to protect them.

Reference: WRCB (Dayton) (Sep. 4, 2020) “How to Protect Your Assets from Nursing Homes”

Read more related articles at:

Medicaid Trust: Qualify for Government Aid for Nursing Home Cost

6 Steps To Protecting Your Assets From Nursing Home Care Costs

Also read one of our Previous Blogs at:

New Medicare Rule Makes It Harder to Receive Home Care

Click here to check out our Master Class!

divorced couple

Does an Ex-Wife Get Her Former Husband’s Inheritance Because He Died of COVID-19?

Does an Ex-Wife Get Her Former Husband’s Inheritance Because He Died of COVID-19?

Nj.com’s recent article entitled “My brother died of COVID-19. Should his ex-wife get an inheritance?” says that it’s unlikely that an ex-wife is entitled to any of her former husband’s assets.

There are three main ways property can transfer at death. They each have different rules.

Joint assets. When property is held as Joint Tenants with Rights of Survivorship (JTWROS), the surviving joint owner (if there are two owners) automatically becomes the sole owner of the property. Usually, jointly owned property is retitled into individually owned property after the divorce. If this was never done, some states (such as New Jersey) automatically change JTWROS property to a different form of joint ownership, called tenancy in common when a divorce is finalized. As a result, with tenants in common property, when one owner dies, his or her 50% ownership interest becomes a probate asset and passes pursuant to his or her will (or the state’s intestacy laws, if they didn’t have a will).

This means that even if the husband in this scenario still owned JTWROS property with his ex-wife when he passed away, she wouldn’t automatically inherit his share. She still has her own 50% share that she owned all along.

Property can also pass by beneficiary designation, like with life insurance or retirement accounts.

Beneficiary designations are typically updated after a divorce. However, again, ask an experienced estate planning attorney about your state laws. For example, New Jersey law revokes a divorced spouse as beneficiary, even if the beneficiary designation was never updated.

In this situation, even the husband named his wife as a beneficiary on an insurance policy or retirement accounts and never changed it, she wouldn’t be able to collect.

Finally, the third way that property can pass, is through the probate process. This means there’s a will.  If there was no will, it would be pursuant to the state’s intestacy laws.

An ex-spouse is never entitled to inherit property under state intestate statutes.

There are two important caveats for these rules. One is that they can be superseded by a divorce decree. Therefore, review the divorce decree to see whether it has any relevant language. The rules also apply to ownership, beneficiary designations or wills that arose during the marriage. Anything that happened after the marriage would not be affected by the divorce.

Reference: nj.com (Aug. 4, 2020) “My brother died of COVID-19. Should his ex-wife get an inheritance?”

Read more related articles at:

Am I entitled to my dead husband’s inheritance?

Families of dead Covid-19 victims may have to give back stimulus checks

Also, read one of our previous Blogs at:

Why Is Estate Planning more Complicated with a ‘Gray Divorce’?

Click here to check out our Master Class!

 

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