A Resolution for the New Year

This blog post is from a January 2018 post on my previous website.

A client called the office today and asked about putting together an estate plan for her family.  It was a New Year's resolution, she told me.  It's something she had been meaning to do for a long time.

She isn't alone.  Many people have "get a will" somewhere deep on their to-do list.  According to a Gallup poll conducted in 2016, only about 44% of American adults have an estate plan in place.  An ABCNews poll found that even fewer American adults have a healthcare directive or similar document.  Perhaps it's time to turn this resolution into a reality, because these documents can go a long way to protect your family.

For a single adult without much in the way of assets, basic planning for 2018 can be as simple as preparing an advance directive for healthcare and a limited power of attorney.  These basic documents will allow a friend or loved one to act as your agent for medical decisions and legal matters if you were to be hurt in an accident or became unable to make or communicate decisions for yourself.

For parents with minor children, your 2018 goal may be planning what would happen if you were unable to care for your child.  In addition to the advance directive for healthcare and power of attorney, important documents for parents can include a simple will with a guardianship nomination and testamentary trust.  For parents of children with special needs, specialized trust structures should be established to maximize eligibility for certain benefits.

For someone with an estate plan already in place, your 2018 estate planning goal may be reviewing changes that have occurred in 2017 and ensuring that your plan continues to match your priorities and wishes.  Did you experience a big change in your assets by inheritance, buying or selling a business, or purchasing a property?  Did your family structure change because of births, deaths, adoptions, or divorces?  Do the agents you previously identified in advance directive and power of attorney documents continue to be the right people to make decisions for you if needed?  Updating your documents with new and relevant information is an important step in making sure your estate plan still does its job.

Make 2018 the year you cross estate planning off your to-do list.

-Steve

Ms. Bloom's Secret Plan

This blog post was originally published on May 10, 2018 on my previous website.

A recent article in the New York Times (linked here) tells the story of Ms. Sylvia Bloom, an unassuming 96 year old who had quietly amassed a fortune of nearly $10 million dollars and then gave it away.  During her career as a secretary at a prominent Manhattan law firm, Ms. Bloom make small investments into the same funds that her bosses were buying.  Over decades these small investments grew and grew, until they became millions of dollars.  When Ms. Bloom passed away in 2016, her family and colleagues were shocked to learn that she had grown this fortune.

This story has a few lessons for us all.  There are lessons about investing: even small investments like Ms. Bloom's made regularly over time can eventually become large sums; there is no thing as a too small investment.  There are lessons about frugality and savings: Ms. Bloom lived modestly, taking the city bus and remaining in a rent-controlled apartment, even though she had the resources to take private cars or buy a fancy home.

Another lesson is the importance of creating a plan that reflects your wishes.  For reasons that remain with Ms. Bloom, she didn't tell people about her savings and investments.  Her money was split between three brokerage houses and eleven banks.  Most of the accounts were in her own name, not in accounts that were shared with her late husband - Ms. Bloom's niece wonders if her uncle even knew about the money.  But at the end, Ms. Bloom had an estate plan that directed her savings to good uses.  "Ms. Bloom’s will allowed for some money to be left to relatives and friends, but directed that the bulk of the fortune go toward scholarships of [her niece's] choice for needy students."  Ms. Bloom herself had been a student of modest means, attending public schools as a youth and then attending Hunter College at night while she worked during the day.  One can imagine the satisfaction that Ms. Bloom secretly felt when she added more money to the accounts or saw their balances grown, knowing that this money would eventually go to scholarships for children and students.

Regardless of what your goal is - having a plan will bring two benefits.  First, it will help you actually achieve the goal.  And second, having a plan and sticking to it will make you feel more satisfied every day.

Who Gets It? The Challenge of Holographic Wills

This blog post was originally published on May 16, 2018, on my previous website.

The New York Post had a recent article (linked here) about the fight for the assets of Mr. Stephen Evans, a Manhattan millionaire who passed away in 2017, apparently leaving behind only a handwritten note as instructions as to how to distribute more than $3 million in assets.  The handwritten document, labeled "Last Will," left Mr. Evans's apartment to a doorman at his building and his stocks and bank accounts to be split between building workers.  Despite the clarity of Mr. Evans's intentions, Mr. Evans's only living relative, a nephew, is contesting the document.

Handwritten wills that were not executed according to the prescribed execution formalities (e.g., in the presence of witnesses) are referred to as "holographic wills," and they are subject to special rules that vary from state to state.  Some states will accept handwritten wills that did not have witnesses so long as the handwriting of the testator can be confirmed. 

Other states refuse altogether to accept wills without the prescribed execution formalities, regardless of how the will was written down.  Georgia is one of these states.

Yet other states will generally refuse holographic wills, but have special exceptions.  In New York, a handwritten will that was not signed in front of a witness is valid if it is written by a member of the armed forces (or a by a person who accompanies armed forces, perhaps such as a reporter) during a war or other armed conflict, but only until one year following discharge from the armed services (or, in the case of the person accompanying the armed forces, for one year after leaving the presence of the armed forces).  A holographic will is also valid if written by a mariner, while at sea, but only for three years.  See NY EPT Sect. 3-2.2.

Since the elderly Mr. Evans did not fit into these special circumstances, his holographic will was not acceptable and was refused by the court.  Presently, a search of Mr. Evans's possessions is ongoing to see if there is another, valid will.  If one cannot be found, it is likely that the New York court will ignore this handwritten letter and distribute the wealth of Mr. Evans to the person next in line under the state's intestacy rules: the nephew.  For want of witnesses when Mr. Evans wrote his will, his friends at his building will lose out on his generosity. 

Making sure that a will is properly executed is an essential part of making an estate plan.  If you have questions, be sure to call an attorney.