The Swier Law Firm Estate Planning and Probate Law FAQs

The Swier Law Firm Estate Planning and Probate Law FAQs

 

Have questions? We have answers! Our South Dakota attorneys answer the questions they hear most often from clients just like you.

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  • Is Adding Someone To My Bank Account A Good Idea?

     

    People often come in to do estate planning who have already taken steps to simplify their life as daily tasks become more challenging. A common step is to add a child or trusted individual to a checking or bank account to get help with paying bills, buying groceries, or other financial tasks. It seems logical and often accomplishes what is desired, but this simple action can have unintended results. When a person is added to an account, they become a joint owner of those assets. When one joint owner dies, the person still living automatically becomes the owner without passing through a Will or probate.

    Thus, if a Will says to divide assets among three kids, but one child has been added to bank accounts for convenience, that child has been given everything in those bank accounts automatically when the parent dies. What a Will says makes no difference. Clearly, this is probably not the intention. To avoid this happening, it is best to have a power of attorney drafted. A power of attorney will allow this child to assist with various aspects of everyday life - financial and beyond - yet the person needing assistance still owns all their property and can pass it as they desire through a Will.

  • Is A Safe Deposit Box A Good Place For My Original Will?

     

    Safe deposit boxes have been the go-to for generations for the safekeeping of important documents and property. Safe deposit boxes truly are a great place to keep many important and valuable things. But when it comes to choosing a place to keep your original Will, your safe deposit box is the worst choice.

    When a person dies, the bank will freeze that safe deposit box until a person has been appointed as personal representative of the estate. If you have a Will, that original Will must be produced and filed with the state for someone to be appointed as personal representative. This could potentially turn into a time-consuming, confusing and expensive Catch-22 situation. The original Will is needed for a personal representative to be appointed, but a personal representative must be appointed to get the original Will from the safe deposit box.

    If you choose to take your original Will after signing, pick a safe location to keep it, other than your safe deposit box, and make sure others know where it is and how to access it when you are gone. A better alternative is to let your attorney keep your original Will. Most attorneys who draft Wills will offer this service. Our office will safeguard your Will free of charge - just let your family know we have it.

  • Can I Be Forced To Serve As An Executor or Trustee?

    Often people consider it an honor to be named as an executor, personal representative or trustee. But along with being named in one of these positions comes a lot of responsibility, liability, attention to detail, deadlines, phone calls, paperwork, and potential family drama. Just because the person who named you thought you would be the best person for the job does not mean you are forced to accept the position.

    If you have reservations about serving in these positions then don’t. If you are named in a will or trust and you don’t want to serve simply tell the court that you do not want to serve by filing a renunciation. The court will move on to whoever else may have been named next or if no one else was named, to whoever would have the right to serve in that position under state law. Filing a renunciation does not change anything about the actual estate. Everything in the will or trust will be administered and distributed exactly as written, including to you if you are to inherit. It just means that you have chosen to not be named to take on the responsibility and potential liabilities that go along with these roles.

  • Do I Have To Accept An Inheritance?

    You cannot be forced to accept an inheritance. As strange as that may seem, there are a number of reasons why a person may not want to accept property. This is most often used when all of the inheritance would go straight to creditors or if accepting the inheritance would significantly affect income tax status. A disclaimer can be used to not accept any type of inheritance, whether passing to you by will, state law, through a trust, from life insurance, financial accounts or real estate that pass by how they are titled.

    Disclaiming property means that the person using the disclaimer will be treated as though they died before the right to inherit happened. A few rules to follow: there is generally a time limit to disclaim (often 9 months), the disclaimer must be in writing and be done before there is any benefit from the inheritance, the disclaimer must cover the entire inheritance from one place (you can disclaim from the will but take life insurance) and you don’t get to say what happens to it. Be careful though, some jurisdictions do not allow disclaimers if you already have no money or are receiving public benefits based on low income.

  • What are South Dakota Powers of Attorney and Living Wills?

    Of course, your will does not take effect until your death. However, other estate planning documents (known as “advanced directives”) may be useful during your lifetime.

    A Durable Power of Attorney for Health Care is a document that you, as the “principal,” create by appointing another person, the health care “agent” or “attorney in fact,” to make health care decisions for you should you become incapable of making them yourself. This type of power of attorney is “durable” because it is effective even if you become incapacitated. It is important to note that your “agent” or “attorney in fact” does not need to be a licensed lawyer.  In fact, you can name anyone to serve in this role.   

    A Living Will is a document that instructs your physician and other health care providers as to the circumstances under which you want life-sustaining treatment to be provided, withheld, or withdrawn.

    Similar to a Durable Power of Attorney for Health Care, a Durable Power of Attorney (Financial) is a document that you, as the “principal,” create by appointing another person, the financial “agent” or “attorney in fact,” to make financial decisions for you should you become incapable of making them yourself. Once again, it is important to note that your “agent” or “attorney in fact” does not need to be a licensed lawyer. You can name anyone to serve in this role.   

    You should resist the temptation to use “simple forms” that you may find in a book or on the Internet. South Dakota has particular requirements for advanced directive documents. You should work with your attorney to draft these documents so that they are valid in South Dakota.

  • What does the term "basis" mean in estate planning?

    The term "basis" is what a person has paid for an asset and sometimes money invested in an asset after purchase (Example: what you paid for your house plus what you paid to update the kitchen). This determines gain/loss for income tax purposes.

    There are generally two types of "basis":

    • Stepped-up Basis - Assets get a new basis when they are passed by inheritance (through will or trust). These assets will be re-valued as of the date of death of the owner. If the value of the asset has gone up in value since purchase the new owner will take that asset with a new basis equal to the updated value without paying tax on that increase. This has the potential to save a significant amount of capital gains upon sale in the future.

     

    • Stepped-down Basis - Same as the stepped-up basis except the asset has gone down in value since it was purchased. The new owner would then take that assets with a new reduced (stepped-down) basis. This depends on the value as of the date of death of the owner compared to the price the owner originally purchased the asset.

  • What are considered "assets" under the South Dakota probate code?

    The term "assets" includes essentially everything you own in any form whether or not they have value. This includes, but is not limited to: bank accounts, stocks, jewelry, cars, clothes, real estate and even includes digital assets (e-mail, blog, photos, etc.). 

  • South Dakota Estate Planning - What Is A Codicil?

    A "codicil" is simply a written change to a Will.

  • What is an Ancillary Administration in South Dakota?

     

    An "ancillary administration" is when a probate needs to be opened in another state, generally because a decedent owned real estate there.

  • Will the state of South Dakota take all my money if I don’t have a Will?

    No. The state of South Dakota actually tries hard to replicate what they think you would have wanted to happen with your assets, even if you didn’t say what you wanted. If you die without a Will (known as dying “intestate”) your assets will pass in accordance with South Dakota law. The law starts by looking for people in your life that were closest to you. If you had a spouse your money will start there. In South Dakota, if you had no descendants or if all your descendants were also descendants of your spouse, then your assets will pass to your  spouse.  If you had descendants that were not from your spouse then your assets will start to be divided among different people in percentages.

     

    Despite the state trying to replicate what you would want, it still is much easier to distribute your assets if you have a valid Will at the time of your death. Even if you end up distributing things exactly how they would otherwise be distributed under state law, dying with a Will helps expedite the entire process of probating your estate – it leaves no doubt as to where you want your assets to go to and also helps in naming the personal representative or executor put in charge of sorting it all out.   

     

    Do You Need To Speak With A Lawyer About Estate Planning?

    If you need to speak with an experienced estate planning lawyer please contact us online or call our office directly at 888.864.9981. We will be happy to discuss your legal options!