Because every family is different, every will, trust or other estate planning document must be unique in order to meet the family’s specific needs. The following are several important will and trust clauses that every individual should know before assigning their assets in an estate planning document and entering the probate process.

Exordium Clause

This basic, introductory clause states that the will in question is the most recent will crafted by the individual and that it should serve to revoke all other wills that may have come before it.

Fiduciary Appointment and Powers Clauses

These are the clauses in a will or trust that name the person who be in charge of distributing the finances of the estate, and lays out in detail what powers this individual will have. The fiduciary duty clauses are crucial because they leave no doubt as to who is responsible for making sure that those named in the estate will get their money or property as intended.

No Contest Clause

Some people can see trouble coming from a mile away – and they recognize when their family is going to experience conflict over their estate after they pass away. For these individuals with foresight, there is the no contest clause – which simply states that any individual who is named in a will or trust, and contests their inheritance in any way, will not get their money.

Generation Skipping Clauses

Sometimes, kids can be a handful. And when they get older without developing any financial skills, it can be a trick situation, especially for individuals who want to get money to their grandchildren, but don’t want their own kids to blow it all. Using generation-skipping clauses can not only help get the money in the right hands, but also provides a wealth of tax-saving benefits.

Tax Apportionment Clause

Guess who gets the most money out of your estate? If you said Uncle Sam, you’d be correct. The problem with estate planning related taxes is that the government tends to burden everyone who is getting a distribution equally, regardless of how much money they are receiving. In order to distribute the money more fairly, use a tax apportionment clause. These clauses allow you to determine how everyone mentioned in your will is going to be impacted by the tax code.

Spendthrift Clause

Often, a child stands to inherit a considerable sum of money from his or her parent. But what if this individual is unable to control their spending? In this case, the parent might want to consider a spendthrift clause. Spendthrift clauses give a trustee control over any inheritance money so that the child will not use the funds unwisely. Spendthrift clauses also protect inheritance funds from the creditors of those named in the will or trust.

Common Disaster Clause

The common disaster clause directs the executor of a will or trust on how to manage the estate in the event that husband and wife die simultaneously in an unexpected accident. These are important clauses used specifically in the event of a car accident, plane crash or other unforeseen disasters.

While much is commonly known about how to set up your wills and trusts in order to provide for your children after you have passed away, setting up the proper accounts and trusts to leave money to your grandchildren is a more complex affair. The following information will help you engage in good financial planning and will protect your grandchildren’s inheritance rights – and are especially useful if you are concerned that your own children will spend the money in ways that you did not intend, and that do not benefit the next generation of your family.

Tips for Leaving Money to Your Grandchildren:

1. Create a custodial account. A custodial account holds the money that you earmark for your grandchildren until they reach a certain age. With a custodial account, your grandchildren will have access to their inheritance when they reach the age of 18. These types of distributions are handled under the Uniform Transfers to Minors Act (UTMA) and are easy to create with the help of an estate planning attorney.

2. Create a minor’s trust. A minor’s trust allows the trust to control your money even after the grandchildren are older than 18. With a minor’s trust, you control when the individual receives their inheritance, regardless of age. In addition, an attorney can help draft a trust that distributes certain amounts of the inheritance at certain times (at the age of 20, 30, etc.), and even for certain reasons (such as college, a wedding, etc.)

3. Buy savings Bonds. At any time during your life, you may purchase United States Savings Bonds in the name of your grandchildren. These popular bonds are purchased for approximately half of their face value and no taxes need to be paid on them until the bonds are cashed in. The bonds should be placed in the name of the grandchild so that nobody else can cash them in.

4. Do not make a direct cash gift. While cash gifts or distributions in a will may seem like the simplest solution to giving grandchildren money, the process is rife with potential pitfalls. With a direct cash gift, there is no way to protect the money – and your children could use the money themselves while the grandchildren are still minors. Also, there are more serious tax consequences involved when making a direct gift of cash. The result can be a financial burden on future generations.

5. Create an educational savings plan. There are several tax-friendly accounts that individuals can use to save money for their children and grandchildren’s education. 529 Savings Plans and Educational-focused IRA accounts both provide low-tax or tax-free ways to provide for college. These are outstanding choices when you ONLY want the inheritance money to be used for the grandchild’s higher education.

Taking the time to hire a lawyer and plan for your grandchildren’s future is one of the smartest estate planning moves that an individual can make. Financial futures look much brighter for your grandchildren when you take the time to follow one or more of the helpful tips above.

Rich people are just like you and me, except they use $100 bills as coffee filters and have a tendency to be much, much weirder. Case in point, check out these strange wills and trusts from the upper crust of society. You’ll laugh, you’ll cry, you’ll wonder why you didn’t marry money.

Leona Helmsley

Granted, not too many creatures with two legs liked Leona that much when she was alive, but is that really a good reason for the Queen of Mean to to will $12 million to her dog? Full disclosure: Helmsley gave a large portion of the fortune she inherited from her husband to charity and her children, but still…how many chew toys and pig ears can you go through in your life?

William Randolph Hearst

The newspaper magnate’s will was as a long as a phone book and just as exciting to read, except for one strange provision tucked in at the end. As a final challenge to those who claimed he fathered children out of wedlock during his life, Hearst proclaimed that the estate’s executors would pay one dollar to anyone who could prove that they were his love-child. Nobody ever stepped up to try and claim the money. Perhaps if he had sweetened the pot a little.

Eleanor E. Ritchey

Again with the dogs! Ritchey was heir to the Quaker State Motor Oil fortune, and when she died in 1968, she willed her five million dollar fortune to her 150 dogs. Not willing to stand by and let rover steal their inheritance, Ritchey’s children contested the will and lost – plus, by then the estate was worth 9 million dollars. The estate continued to care for the dogs until the last one died in the 1980’s, at which time the money was donated to the Auburn University research department for animal diseases.

Janis Joplin

When the rock singer died of an accidental drug and alcohol overdose in 1970, she left her considerable estate to her parents- except for $2,500 of the money which was earmarked for an all-night party to be thrown in her honor. Lesson learned.

Harry Houdini

Well, nobody will ever accuse the great illusionist of not being a romantic. When Houdini died, he left his wife with a 10-word secret code and told her that he would use it to contact her from the afterlife. His plan, he explained, was to use the code as verification that it was really him speaking (and not some OTHER magician from beyond the grave trying to make a move on his wife). And for the answer to your next great trivia question, those words were:

“Rosabelle…answer…tell…pray…answer…look…tell…answer…answer…tell…”

Henry Durrell

When this Bermuda-based multi-millionaire died, he had three favorite nephews – each of whom was hoping to inherit their uncle’s sprawling luxury estate. Durrell’s will directed the executor to hold a game of dice after the reading of the will. The winner of the game would be left the estate. Richard Durrell won the game, while the other two nephews presumably never gambled again.

Although the probate process varies from state to state, there is a basic order and process to the proceedings that is, for the most part, universal around the country. The following is a look at the steps one must follow during probate in order to insure that all financial matters of the estate are handled in the correct manner and in a timely fashion.

Steps in the Probate Timeline:

• Step 1: Filing a petition for probate

The first step in the probate process is filing all the required paperwork with the court. Check with an attorney or your state’s probate court to make sure all the documents are handled properly.

• Step 2: Probate hearing

Several weeks after your paperwork has been filed, there will be a probate hearing to help determine the validity of the estate and confirm that the process is adhering to the law from the start.

• Step 3: Issuing the letters of administration and filing the order

During this part of the probate process, the names of those representing the estate will officially be entered into the court record. The order that begins payment to creditors will also be filed at this point.

• Step 4: Notice to creditors

This is one of the primary steps of the probate process. During the notice to creditors period (which can take several months), an inventory is prepared containing all debts and assets of the estate. There will be a search for all creditors to which the estate owes money. Also, the IRS will be contacted so that the federal and state tax status of the estate can be determined as well. Finally, this is also the time in which the sale of assets owned by the estate can begin.

• Step 5: Paying all creditors

When all the creditors of the estate (including the Internal Revenue Service) have been located, and the amount they are owed has been ascertained, it is time to pay them all.

• Step 6: File additional paperwork with the court regarding completion of above steps.

Next, the court must be notified, via filing, that all the creditors have been paid. It is at this point that a formal request (a petition) to distribute funds to those named in the will or trust will be made.

• Step 7: Petition hearing

Approximately four weeks after step six is complete, there will be a hearing to confirm that all the paperwork has been filed properly and that the estate’s debts with its creditors have all been settled to the satisfaction of the court.

• Step 8: Distribution

Sometime during the weeks that follow the petition hearing, the court will issue its ruling on the case. If everything goes according to plan, the distributions to those named in the will or trust can now be made. Also, at this time, attorney’s fees for the probate process will be paid to the lawyers representing the estate.

Probate can be a complicated process. That is why it is crucial that the executors or other individuals in charge of the estate hire experienced probate attorneys to handle all of the steps listed above. Probate attorneys can bring about a speedy resolution to all debts owed by the estate, and see to it that those who are scheduled to receive payment as a result of being named in the will receive their money (or property) in a timely fashion.

The probate process is really quite simple. When a will is probated, it is submitted to the Court for validation. Once the will is determined to be valid, the Court appoints someone to administer the estate. This person, commonly referred to as the Personal Representative, is charged with gathering the decedent’s assets, paying all creditor claims and taxes, then finally distributing the remainder to the heirs according to your wishes.

Even if you die without a will, the same basic procedure is followed. The only difference is that without the instructions provided by a will, the Court distributes the estate’s assets according to the Laws of Intestacy, which vary from state to state. Contrary to a popular misconception, the State will not seize your estate’s assets unless you die without a single living blood relative of any kind, no matter how remote.

Why then has Probate gotten such a bad reputation? While the probate process can be lengthy [six to 24 months in some cases] and somewhat formal, this formality may also serve several important functions.

Probate offers a forum where disputes over the will and claims against the estate can be adjudicated with legal finality. Creditors have a defined period within which to file claims. If they do not file a claim on time, their claim is rejected, for good.

Probate also allows heirs to challenge the will. For example, imagine that your 89 year old, millionaire, oil-tycoon father fell in “love” with, and married, a former exotic dancer/ Playboy bunny/ celebrity of alleged ill-repute. You might wish to challenge her claim that your father told her, on his death-bed, that she could have everything, despite having a will that left his millions to you! Probate court is where you would file such an objection.

The most important function of probate is that it puts the Court and your Personal Representative (a person you trusted) in charge of making sure that your final wishes are followed to the letter of the law. There are many ways to avoid the probate process all together. Revocable and Irrevocable Trusts have their benefits. However, the bottom line is that after evaluating your circumstances, it is always advisable to consult with a qualified attorney who specializes in estate planning before your implement any such strategy.

Most wills contain a clause which nominates one of the heirs (or a trusted non-heir) to administer the estate. Even if no will was left, the court must appoint someone to handle the affairs of the decedent after death. That person might be referred to by many different terms: Executor, Executrix, Administrator or Administratix. However, to simplify things, the more modern term Personal Representative [PR] is commonly used.

If you have been named in a will to serve as the PR, you should realize that serving as the PR can require a significant time commitment and can be very complex, depending on the assets in the estate. You should also know that you are in no way legally obliged to accept this appointment! You can always say “no” and the court will appoint someone else! However, if you choose to accept the court’s appointment, here are some hints that might help you through this complex process.

Given that the largest asset in most probate estates these days is real property, the PR’s biggest duty is to make sure that the property is sold at an acceptable price. The current state of the real estate market is sure to complicate this process even more. While you may be tempted to put a “For Sale: Estate Property” sign in the front yard and handle the sale yourself, there are several reasons why this may not be your best course of action.

The first reason is that the biggest decision you’ll face is the Listing Price. As the PR, you will certainly know what the court’s appraiser thought the property was worth. However, this value might be so dated that it no longer represents the “market value” of the property. Depending on the location of the property, the court’s appraisal might be off by as much as 10% by the time you are granted the authority to sell the property! To avoid listing the property at an unrealistic price, you need to engage the services of a real estate professional.

As with the sale of any piece of real property, knowledge of the market and how that given market is trending is an integral part of listing the property at a salable price. The last thing you want is to appear before the court to explain to the Judge why you haven’t had any offers in the previous six months! A real estate professional will have access to all sorts of information needed to arrive at a viable listing price, such as:

• The number of foreclosures in the neighborhood
• The number of properties that are currently in “default”
• The recent sales prices of comparable properties
• Other variables which might enhance or detract from the market value

The second reason for hiring a real estate professional is that the sale of probate property is not exactly the same as selling any other piece of real property. Depending on the degree of authority that you were granted by the court, you may be required to present each offer you receive to the court for approval. If this step is required, the listing agent will need to draft sales contracts that contemplate this contingency.

In sum, the court’s mandate in the probate process is to move the process along. As the PR, it is wise to understand this or the other heirs may petition the court to have you removed. Sitting on real property is by far the most common grounds for removal. You can avoid most, if not all, of these problems by hiring a real estate professional the day that you are granted the authority to sell the real property. At the very least, you’ll have someone else to blame if the sale takes longer than expected! And given the current state of the market, that might be worth its weight in gold!

Every year, hundreds of millions of dollars go unclaimed by their rightful owners. In fact, by most estimates, Governmental agencies across the United States currently hold over $30 Billion in unclaimed funds! Most of these unclaimed funds are the result of:

• Unclaimed Inheritances
• Lost Bank Accounts
• Uncollected Life Insurance Proceeds
• Unclaimed Stocks & Bonds
• Unclaimed Social Security Benefits
• Unclaimed Class Action Settlements
• Unclaimed Insured Bank Deposits
• Undeliverable IRS Tax Refunds
• Unclaimed Savings Bonds

It really isn’t that hard to imagine what causes these funds to go unclaimed. Americans move around a lot and sometimes forwarding addresses are incorrect or not available. You might even have had a distant relative who died intestate [without a will]. If the State cannot identify valid heirs to distribute these assets to, the State holds onto the money.

In fact, very few beneficiaries of Life Insurance know that it is up to them to not only locate all valid policies, but also to notify the issuer of the death of the policy holder before they can be paid!

The good news is that every state has a website where you can search for these funds. You will want to search every possible permutation of your name, including your maiden name, middle name and even nick-names. Here is a list of sites where you can search for your lost riches! Happy hunting!

After having dealt with the loss of a close friend or loved one, and the travails of the probate process, it might be tempting to head to the local mall or car dealership to go on a spending spree with your inheritance money. Before you do, it might be wise for you to look at your current financial situation before you do something regrettable!

First of all, you need to determine exactly how much you stand to inherit. In some estates (especially larger estates) you might receive several distributions before your receive your “final” distribution. Some assets might actually pass to you outside of the probate process, such as Individual Retirement Accounts [IRA’s]. There may be serious tax ramifications depending on how you decided to withdraw the money from these accounts. However these assets are finally distributed to you, you need to arrive at a firm number so that you can create a plan that will satisfy both your short-term and long-term goals.

Once you have a plan that addresses both short and long-term goals, write the short-term goals next to the long-term goals. While it may seem like a great idea to upgrade your home, buy a new car or send your kids to a great private school, you owe it to yourself to weigh these goals against your longer-term needs. Given today’s economy, your retirement needs and the higher education needs of your children may very difficult to meet. This inheritance might be your only opportunity to achieve them!

Next, you need to establish an “emergency” fund. If you do not already have one, you need to set aside an amount equal to six months of your regular expenses. Your emergency fund should be put in a short-term, fixed income investment vehicle such as a money-market account.

Only after you have your “plan” in place should you set aside a fixed amount for the splurge that you so richly deserve. This fixed amount should be placed in a money market fund, certificate of deposit or interest bearing checking/savings account. It is very important that you exercise some restraint here. Once that fund is gone, you simply cannot allow yourself to dip into your “plan” money!

Now it is time to invest your “plan” money. If you are savvy, you might be able to come up with your own plan or you may want to consult with a professional. However you chose to proceed, the key to your success is diversification. Your plan should include stocks, bonds, and a rich array of Exchange Traded Funds [ETF’s] that spread your risk among many sectors. While you want to see your fund grow, it is more important to protect the principal against the volatility of any one sector.

A year from now you will wish you had started today.

If you have been left an inheritance by a friend or family member, you should be aware that the downturn in the real estate market will probably affect the amount that you stand to inherit and the amount of time it will take for you to receive your inheritance.

The vast majority of American probate estates contain one or more pieces of real property. Real property is developed or undeveloped land commonly known as “real estate.” All of the real and personal property in an estate must be sold before the estate can make a final distribution to the heirs. While the possibility of a preliminary distribution does exist, more and more prudent Personal Representatives are waiting until all of the real property is sold in order to avoid personal liability should a property sell for less than the appraised amount.

That brings us to the first potential delay. When a probate estate is opened, the Court will order an Inventory & Appraisal of all of the estate’s assets. As these appraisals age, they are less and less likely to portray a realistic sale price. In California, if the proposed sale price is less than 90% of the Court’s original appraised value, the attorney handling the estate will have to petition the court for a reappraisal of the property before the sale can be approved. This can add weeks or months to the already slow probate process.

This first delay would probably be welcomed by most heirs because it assumes that there has been an offer made to purchase the property! With the current glut of properties on the market and the increasing rates of foreclosure (even if good neighborhoods), offers to purchase are fewer and farther between! Real estate professionals across the nation will tell you that the current wave of foreclosures has added to the already high levels of market inventory. Increased inventory, coupled with a tightening of lending standards has lead to longer sales cycles.

When property values were rising, a typical probate estate would take between 9 to 12 months to close. These days, depending upon the market where the property is located, estates are taking 12 to 24 months to close and that is often only after reducing the listing price on the property several times in order to find a buyer.

If you are the person charged with administering the estate, it might be wise to remember the old maxim: a bird in hand is worth two in the bush. While it may not always be intelligent to “race to the bottom,” it still might be prudent to “lock in a number” and get the estate closed, even if it is for less than the heirs were hoping for. You don’t want to be forced to use phrases that contain the words “should’ve” or “could’ve” when explaining your decision to the heirs.

By Aaron Larson

Law Offices of Aaron Larson

July, 2004

Contents

• How Does This Email Fraud Work
• How Did They Find Me?
• What Harm Is There In Contacting Them, “Just In Case”?
• Sample Spam Emails
• Who Are The People Named In The Emails?
• What Can I Do About Spam Email?

The fantasy has come true - a long-lost relative you have never heard of has died, and you just received an email from a barrister or lawyer indicating that you are the only heir. Well, not quite. Somebody with your last name died without any heirs, and the promise is that if you can prove that you actually have the same last name the barrister will send you his millions. All you have to do is pay some legal fees, and fax over your identification….

How Does This Email Fraud Work?

Inheritance frauds are run by criminals who obtain email lists which include recipients’ names - although lazier criminals don’t even bother trying to match names between the decedents and the recipients of their spam. They then create mass mailings based upon those lists, describing how a fictional individual with the same last name died without heirs, usually in a remote part of the world. If a recipient replies to the email, the criminal will engage in what is called an “advance fee” fraud, and attempt to convince that person to send money to pay for legal fees, bribes, or other expenses. (The term “advance fee” refers to the money they get from you - and despite their promises of riches, you never get a cent in return.) The criminal may also attempt to get copies of the person’s identification cards, bank account information, and other information which can be used to forge bank drafts or commit identity theft.

Sometimes, the fees and bribes these people describe will seem small, particularly in comparison to the riches they offer. But there is no upside - even if you are only “risking” $30 or $40, you’ll lose that money forever. And if you send your bank account information or personal identification, it is possible that the criminals will be able to empty your bank account or obtain credit in your name.

This fraud is closely related to the so-called Nigerian Email Fraud (419 scam), as well as lottery fraud. The same groups of criminals may engage in multiple types of fraud.

How Did They Find Me?

Most people who have an email address for any significant amount of time receive so-called “spam email” (more politely known as “unsolicited commercial email.”) Spammers create lists of email addresses by collecting them from websites, buying them from other businesses, and even by guessing possible names on popular email hosts such as Yahoo! mail and Hotmail. It is possible to buy large email lists for relatively small amounts of money. Most people who are running these scams get spam mailing lists in this manner, or buy them from spammers.

What Harm Is There In Contacting Them, “Just In Case”?

There is no point in contacting them “just in case” - no one has ever received the promised money. You won’t, either.

Also, the scammer is likely to try to obtain from you information that can be used to fake your identity and commit credit card fraud or bank fraud. Even if they only get your name and bank account number they may be able to forge a bank draft, obtain a fraudulent money transfer from your account, or get credit using your name. If you give them any information, they will try to use it to cheat you.

Sample Spam Emails

The following are sample spam emails from this particular scam:

Who Are The People Named In The Emails?

In order to make these spam emails seem more real, the scammers use a wide assortment of fake names, and at times also use the names of real people.

What Can I Do About Spam Email?

The best approach to avoiding spam is ordinarily to be very careful about the distribution of your email address. Once you start to receive spam at a particular email address, you will usually end up receiving increasing amounts of spam at that address no matter what you do. There is filtering technology which some find helpful, which helps to screen out spam email from legitimate email. Please review this associated article about the problem of spam email, and possible steps to avoid it.

You may also visit our Consumer Law Forums, and post information about the spam email.

Article used by permission from ExpertLaw.