INHERITANCE AND DIVORCE: WHAT’S YOURS IS OURS – UNLESS YOU PLAN AHEAD!

By Helen F. Rice, Esq.

On January 9, the Supreme Court of Georgia issued a ruling in a divorce case (Shaw v. Shaw, No. S11F1586) that should not come as any great surprise – the husband and wife were ordered to divide assets held in a jointly titled investment account equally between the two of them. The twist in this case, however, was that the funds in the account were inherited by the husband from his mother. Georgia courts have consistently held that property inherited by one spouse during a marriage remains the separate property of the spouse who receives it. Why, then, would it be fair for the Court to order the parties to divide up an inheritance in their divorce?

In the Shaw case, the husband had established an investment account and deposited his inheritance into it. None of his other assets were added to or commingled with the inheritance, and the wife never made any deposits of her own funds into the account. However, from the outset, the husband set up the investment account in the name of both himself and his wife, to be held as joint tenants with right of survivorship. The Supreme Court found that the simple act of setting the account up as a joint account was sufficient evidence of the husband’s intent to transform his separate property into marital property, and therefore, to share it with his wife.

Similarly, when the husband inherited a piece of Florida real estate from his mother, he directed that it be deeded to both himself and his wife jointly. The Court again found that this action transformed the property into a marital asset, and as a result, the property was ordered to be divided between husband and wife equally in their divorce.

The lesson here is simple: if you don’t want to be potentially forced to divide your assets with your spouse someday, keep them separate and in your own name. Savvy couples who identify potential issues like this before they marry can execute a pre-nuptial agreement that will clarify their intent to keep separate property separate during the marriage and prevent a result like the Shaw ruling. If you don’t have a pre-nup, keeping your separate property in your own individual name is your best protection. There are estate planning tools you can use to ensure that your spouse receives the property at your death, if your marriage remains intact and that is your wish; or you can direct that your separate property is to be distributed to your children or other heirs at your death, allowing only marital property to pass to your spouse. When in doubt, consult an attorney. Asking questions in advance is always the best way to avoid problems and substantial legal expenses later – just ask Mr. Shaw!

Estate Planning for a Second Marriage

By: Debra A. Robinson

If a married couple has children from prior marriages, failing to do proper estate planning can cause hardship for the survivor when one of the spouses dies, or it can leave nothing for the deceased’s spouse’s children.

Under Georgia law, if a married person dies intestate (without a Will), and is survived by a spouse and children, the spouse and children share equally in the deceased’s estate, with the spouse receiving a minimum one-third share.

For example, if a husband with two children from a prior marriage died intestate, his estate (the assets he owns just in his name) would be distributed one-third to his wife, and one-third to each of his two children.

What if the husband owned a home before the marriage, and the couple lived there together after the marriage?  What if the husband never got around to changing title to the home to add his wife as a joint owner?  The widow would find herself living in a home that was owned two-thirds by her stepchildren.  The stepchildren could make it so unpleasant for the widow that she would be forced to sell the house and move out so that her stepchildren could receive cash for their shares.

What if the husband did sign a new Will after the marriage, leaving all his assets to his wife, with the understanding that at her death, she would leave whatever remained to his children?  If his largest asset was an IRA, and he never got around to changing the beneficiary after the marriage, his two children would still be the designated beneficiaries.  The children would receive his IRA, because the beneficiary designation controls.  The wife would have no claim to the IRA funds.

What if both spouses had children from prior marriages?  How could the husband be sure that if he left everything to his wife, she wouldn’t change her Will after his death to name her children as beneficiaries and exclude his children entirely?

Couples in second marriages often ignore estate planning, fearing it might lead to a fight.  But failing to have the discussion won’t make the problems resolve themselves.

One option that can work well for second marriages is a Revocable Living Trust.  Each spouse could create one, or they could create one jointly.  The assets are retitled into the Trust, and designate the Trust as beneficiary.   After the first death, the Trust continues for the benefit of the surviving spouse.  At the second death, the Trust directs the distribution of the remaining assets.  If each has children from prior marriage, the distribution is often 50% to each set of children.  If one spouse brought more substantial assets to the marriage, they might agree to give that spouse’s children a larger percentage.  If one spouse has children from a prior marriage, and the couple also have a child together, the distribution could be 50% to their child together, and 50% to the children from the prior marriage.  Through the use of a Trust, the couple can provide for each other during their lifetimes, and agree on a fair distribution of the remaining assets at the second death.

The attorneys at Robinson & Miller have the experience to provide guidance on these issues to couples in second marriages.

Why holidays might be the perfect time to talk estate planning

Why holidays might be the perfect time to talk estate planning.

Happy Holidays From Robinson & Miller!

Robinson & Miller Holiday Party 2011

Elderlaw Considerations in Real Estate Transactions

By Helen F. Rice

During the 20^th century, the number of Georgians over age 60 increased ninefold, compared to a fourfold growth in the overall population of our state. Georgia has the 9^th fastest growing population over age 60 in the United States. Even in a down real estate market, retirement and active adult communities continue to be popular among homebuyers. Everyone moving to a new home is leaving a known past behind and starting a new phase in life; but for an elderly person, selling their home can be an especially emotional event, and the transition of moving can be overwhelming and depressing. They may be leaving a home and community they’ve known for years, and giving up friends and belongings that have mattered to them for a long time. The move may be necessitated by health challenges that cause them to be fearful about their future or force them to accept new limitations in their lifestyle. However, there are some simple things that can be done to minimize the bumps they encounter on the road to their new environment.

Many times, communication with an elderly seller of property is limited because a child or family member has stepped in to help. While this can be a great thing by removing a more emotional or easily confused party from the transaction, it is critical that everyone understand from the outset whether the seller intends to handle any part of the negotiation decisions, sign the contract and other necessary documents, or attend the closing in person. If the seller cannot or will not handle these things, the person acting on their behalf must be given the authority to do so by virtue of a properly executed durable power of attorney. A financial power of attorney is often prepared by an estate planning attorney as a companion document to a will and an advance directive for health care. It is typically designed to be very broad so that the agent has authority to handle bank and investment accounts, social security and retirement matters, tax returns and accounting issues, and all other financial transactions that may be necessary, including real estate transactions. Some financial powers of attorney may require a certification from a physician that the individual granting the power has become incapacitated before the agent’s authority to act on that individual’s behalf becomes effective. In Georgia, there are specific legal requirements in order for a power of attorney document to be used in the sale of real estate, so it is important to see a copy of the document and have an attorney review it to make sure it will be adequate for the closing.

If a property owner has lost the ability to make or communicate significant responsible decisions concerning his or her health and safety and the management of his or her property and assets, an interested party (usually a family member) can petition the Probate Court to be appointed as guardian of that person and conservator of the assets. An attorney will be appointed by the Court to represent the incapacitated person, and a hearing will be held to ensure that the appointment of a guardian and conservator is in the best interests of that person. If the judge approves the petition, the conservator can then ask for the power to sell the property. The Court will need to know all of the details of the sale and be kept informed of any changes in the agreement with the buyer throughout the process. If the seller’s mental capacity is in doubt, and no power of attorney is in place, this is the route that must be taken in order to sell the property. However, if a guardian and conservator is needed for the transaction, it is best to begin early – absent an emergency situation, it can take anywhere from 30 to 90 days or more to finalize an appointment and get court approval of a real estate sale.

After the owner of an interest in real property has died, the process changes entirely. In Georgia, if the deceased owned the property with someone else as a joint tenant with right of survivorship, then the real property interest passes automatically to the surviving co-owner, who can complete the sale by simply providing the closing attorney with a copy of the death certificate. However, if the deed does not specifically contain the words “joint tenants with rights of survivorship,” or if the deceased was the sole owner, the ownership interest will have to be resolved through the probate process and an executor or administrator will be given authority by the Probate Court to finalize the sale. Until this authority is issued, no sale transaction can take place. It is highly advisable to contact an attorney to assist with the probate process in order to ensure minimal delays.

While this is an overview of the most common elder law concerns that may arise in real estate transactions, there is certainly no way to anticipate every possible scenario. Asking the right questions early in the process, and contacting an attorney for assistance as needed, is always the best way to resolve potential issues before closing and minimize the bumps in the road. When questions arise, please contact us first!

Estate Planning in the Digital Age

By: Helen F. Rice

Estate planning can be overwhelming even if you’re just starting out in adult life and considering your first will. On top of that, there are options for long term care insurance, planning for incapacity, or designating beneficiaries on retirement accounts. We’d like to offer a few helpful tips for getting started in planning your estate responsibly and thoroughly, and also for keeping it current as your circumstances in life change.

First and foremost, the best advice is to consider your wishes and communicate them effectively with your family members and close friends. An Advance Directive for Health Care is a critical document that no one over the age of 18 should be without. It permits you to designate a spouse, family member, or close friend as your agent. It gives them authority to communicate your wishes about your care to your physician if you are not able to do so, and explains what those wishes are in detail. Without an Advance Directive for Healthcare, HIPAA laws may prevent your physician from having any discussions about your ongoing treatment with your family.

A financial power of attorney will permit your designated agent to manage your bank accounts, retirement accounts, and other assets for your benefit if you are unable to handle those affairs due to physical or mental incapacity. And of course, a simple will expresses your wishes for distribution of your assets at your death and can save your family a great deal of stress and difficulty. If you don’t take the time to decide about distributing your assets, the state will do it for you, and not necessarily in the way you would want.

In addition to obtaining the important documents, it’s a good idea to designate a place where your family members could find them quickly in an emergency. Many experts recommend the creation of an emergency binder that contains copies of your estate planning documents, a list of your bank and retirement accounts, information about any life insurance policies you may have, and various proofs of ownership such as deeds, certificates and titles. If your family doesn’t know about your assets, they could end up in the hands of the state. According to the National Association of Unclaimed Property Administrators, state treasurers have approximately $32.9 billion in unclaimed bank accounts and other assets. Creating a comprehensive list of accounts and making sure your family knows where to find it can prevent unnecessary waste of your assets, in addition to helping you make sure your wishes are carried out. Reviewing this information once a year is also critical to ensuring that it remains complete and accurate.

Another critical but often overlooked component of estate planning is providing key information about your online activities to the people close to you. Many people have online bank accounts that are only accessible with a password, and other online activities such as profiles on Facebook, Twitter, or LinkedIn will remain active and unresolved after your death if your family members don’t know about them or can’t access them. Leaving a detailed list of login names and passwords for your online activities, as well as any instructions for their disposition after your death, can make things much easier for your family.

As Benjamin Franklin once said, an ounce of prevention is worth a pound of cure, and this is certainly true in estate planning – just ask anyone who ever tried to administer the estate of someone who died without a will. Although you may not realize it, creating a comprehensive action plan for your loved ones does them a great service, helping them navigate through an emotional time in their lives with minimal stress. Communicating with family and friends about all of the aspects of your estate, including those not covered by a will, is a critical matter in today’s world of technology. For more information, please contact us – we can help.

Who is Robinson & Miller?

Whether a client needs a simple contract reviewed or a complex estate plan with specialized trusts, Robinson & Miller is ready to help.

The firm’s estate planning practice extends beyond Wills, Health Care Directives, and other common estate planning documents.  Robinson & Miller’s attorneys  are highly experienced in Elder Law matters and Special Needs issues, such as protecting assets from the high costs of nursing homes or other specialized care.  Not only does the firm draft estate plans and complex trusts, but the attorneys at Robinson & Miller also assist executors and trustees in settling estates and administering trusts after a loved one has passed.   

The attorneys and staff at Robinson & Miller understand that estate planning and estate administration are very personal matters.  Our attorneys and staff are dedicated to developing a personal relationship with each and every client.    We have developed this Blog to keep our clients and friends informed of new developments in our area of practice and within our firm.

If you have any questions, please feel free to call us at 770-817-4999 or for more information view our website at http://www.robinsonmiller.com