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BY SUZANNE HAUGH
Staff Writer
ATLANTA--More than 70 percent of those who die each year have not made
wills, leaving surviving family members and friends to pick up the financial
pieces and settle personal affairs as they also cope with the loss of a loved
one.
Kristen Lewis Grice, counsel with Smith, Gambrell & Russell, has
specialized in estate planning for 13 years. She attributes the high statistic
to the notion that “people don’t want to deal with death.”
Another common excuse Grice hears is that people think they don’t have
enough assets to warrant making a will. Financial considerations are not the
only reason for making a will. Grice stressed that anyone with minor children
needs to have a will “no questions asked.” A will is important
because it nominates a guardian and sets up a trust to support children upon
the death of one or both parents.
Others who should seriously consider making a will include those with
dependents who have special needs, such as elderly parents who can no longer
manage money or care for themselves. Grice also recommended those with a
taxable estate, that is, assets with a combined value of more than $650,000,
plan a will to save on estate taxes through bypass trusts and other
money-saving strategies.
“The IRS loves when people die without a will,” Grice said,
because it gets a larger piece of the estate.
And even if you are single with no dependents and have an estate valued at
less than $650,000, making a will communicates what you would like to have
happen upon your death. Paying the cost of making a well-planned will saves
what could be many thousands of dollars later.
When someone dies without a will, Georgia’s intestacy laws kick into
action.
A common misperception is that the surviving spouse, usually the wife,
automatically assumes all of her husband’s assets when no will is in
place. Not so in Georgia.
“This comes as a major surprise,” Grice said.
When someone dies without a will, a wife, for example, assumes only
one-third of her husband’s assets with the remainder going to any
children.
And while the court will grant her custody of minor children, unless other
legal action is taken, the spouse does not control the children’s
inheritance.
“The spouse can apply to be the guardian of a person, but does not have
the (automatic) right to oversee the money,” Grice said.
Instead, the surviving spouse must apply for a guardianship bond which is
like paying for insurance that the spouse will not squander money left to the
children.
Jumping through all these legal hoops “takes money right out of the
children’s pockets,” Grice said, because one must pay legal fees.
Also under the intestacy laws, an estate can pass only to blood relatives,
leaving nothing for family friends or favorite charities. There’s also no
way to implement strategies to save on estate taxes. The court takes control of
the estate and all administrative tasks require court approval.
With the help of a lawyer specializing in estate planning, the burden of
putting one’s personal and financial affairs in order after death will be
lessened. Grice strongly advised against relying on ready-made kits for making
wills, such as computer programs.
“You really risk it with a pre-printed bookstore form that you do
yourself,” she said, adding that each state has its own laws that can
change fairly frequently. If the language of the will is not specific to
one’s state of residence, then the task of settling a will can become much
more complicated and costly.
To find a lawyer, one can look in a number of places. The yellow pages has
an extensive listing of lawyers who practice estate planning, but be careful.
Even if the lawyer has taken a few classes in taxes and wills,
“there’s no substitute to actually doing it,” Grice said.
“You don’t want a trial lawyer to do your estate planning.”
Ask your bank for a referral and visit the State Bar of Georgia’s
website for information on finding a lawyer. If a person is elderly or
terminally ill, lawyers with Georgia Legal Services can also help.
Grice cautioned against hiring a lawyer who charges a flat fee of $500, for
example, saying that you would not get the attention to the details of your
life needed in making a well-planned will. “Your will can say anything you
want it to say. There are a lot of options. It’s not one size fits
all,” she said.
Most lawyers will charge an hourly rate, ranging from $100 to $300 an hour,
based on each lawyer’s experience and whether she or he belongs to a large
or small firm. One will pay more for lawyers from large firms because of the
extensive resources available to them. The total bill should fall somewhere
between $1,500 to $2,000, depending on the size and complexity of one’s
estate. Grice mentioned that many firms allow clients to pay in installments.
“We offer it to those who need it,” Grice said. “Any
legitimate law firm should give them the option.”
One can decrease the cost by doing some homework before meeting with a
lawyer. Grice recommended completing an inventory of one’s assets using
general categories and specifying the approximate value of each item, a house
or car, for example. The next task is to list how the assets are titled. For a
husband and wife, for instance, items may be in one person’s name or owned
jointly. There are two types of joint ownership. The first, right of
survivorship, means an item will pass automatically outside the will to the
surviving spouse. The second type of ownership, tenancy in common, requires
that one’s will specify that the surviving spouse is to become sole owner.
A lawyer experienced in tax law and estate planning will know how to organize
ownership of assets to minimize what surviving family members will have to pay
in estate taxes.
Finding out this title information, as well as listing the beneficiaries for
life insurance policies, IRAs, and other assets, will make the lawyer’s
job easier and speed up the process.
Grice asks her clients to mail her a copy of the completed inventory. She
reviews the inventory and makes concrete suggestions when meeting with clients
during the first office visit. Also part of preliminary paperwork in her
firm’s and other law firms’ approach to estate planning is having
clients sign a final engagement letter. This letter states that clients
understand and agree to billing procedures and, when representing both a
husband and wife, maintains that there will be no secrets between both, thus
avoiding conflicts of interest.
Another issue spouses will want to discuss before sitting down with a lawyer
is guardianship of any minor children or other dependent persons, such as
elderly parents or adult children with special needs. This can be a sticking
point for a couple who can’t agree on a guardian and can be used as an
excuse for not making a will.
“Sometimes there’s not a good candidate...You can ask the estate
planner for help (in deciding),” Grice said.
A very important component of one’s will is appointing an executor to
become one’s legal representative following death. The executor will
collect all assets, pay creditors and deal with the IRS. An executor can expect
to spend about 18 months to two years settling an estate. Grice recommended
naming substitutes in case the executor dies before you do.
Another decision to consider is the appointment of a trustee if one decides
to create a trust for surviving children, other dependent persons or a charity.
Once the executor settles the will, a trustee takes over the management of
funds awarded to the beneficiaries of one’s trust. A trustee also helps
when a surviving family member has special needs. A lawyer can be a good source
for deciding on a trustee. Banks or trust companies also employ people who can
manage a trust.
“It’s one stop shopping (when deciding on using a bank or trust
company),” Grice said. “They can do it all but for the convenience,
you pay significantly.”
One advantage banks and trust companies have is that they will always be
around. An executor or trustee and their substitutes may die before you do. If
there is no living executor or trustee, the will goes to court where a county
administrator is assigned to settle the estate. Besides having to pay court
costs, the county administrator has no personal investment in one’s life
and may make decisions contrary to what you would want.
Many times the executor and/or trustee is the surviving spouse. In any case,
the appointed persons need not be legal experts, Grice said. A good will lets
the executor or trustee hire an accountant, a lawyer or an investor to help
resolve conflicts, handle taxes or advise on investments, she said.
When clients complete their paperwork and tackle issues like guardianship,
Grice schedules an office visit where she presents her suggestions and answers
any questions the clients may have. Following a meeting with her clients, Grice
drafts a will, lets her clients review it, makes any changes and then finalizes
it and obtains the appropriate signatures.
Once a will is in place, you should review it after any major life change,
such as when your executor dies, you move to a new state or your estate
significantly increases or decreases. A good will takes into account additional
children. If there are no major life changes, Grice recommended reviewing your
will every three to five years since “Congress always tinkers with estate
tax laws...and you’ll want to take advantage of new tax laws.”
At the core of creating a will is communicating to the court system and to
relatives and friends what your wishes are regarding your estate. The process
may be costly and also awkward at times, but Grice believes it’s the right
thing to do.
“When clients leave (our meeting) I can see the relief they have
knowing that they’ve done the responsible thing.”
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