Considerations in Naming a Non-Citizen as Your Child's Guardian

Naming a guardian can be one of the most important parts of your estate plan. With increasing movement between countries, the person you trust most to raise your child in your absence might be a non-citizen. What, if any, additional concerns does that raise?

1. Will a court agree?
Naming a guardian in a will lets a probate or family court know what your wishes are as to who should care for your child. In any case, a Minnesota court is going to look at the best interests of the child. Your choice will be a weighty consideration for a judge. They will balance any other issues the citizenship status of your named guardian raises.

2. Will and should your child be as mobile as their guardian?
The lack of US citizenship ultimately means that either your guardian does not live in the United States or there is a chance that they may not be able to renew their residency. Should that occur, will it be possible for your child reside in the guardian's home country? Is that desirable? These questions should be considered before deciding on a guardian. You should also factor the cost of your child's possible immigration into your life insurance.

3. Should your guardian be the trustee of your child's trust?
Most estate plans for parents with minor children include a trust. Most of those parents name the guardian as the trustee for that trust. That normally makes sense. If you trust someone enough to raise your child, you trust them enough to control your child's finances. However, current IRS rules place a heavy burden on trusts that benefit US citizens, but are controlled by non-citizens. Will your named guardian be savvy enough to deal with burdensome IRS reporting regulations or do you need to make other plans? Additionally, if your guardian resides abroad, being a trustee may create tax implications in their own country.

If the person you most trust to raise your child is not a US citizen, there are many additional issues to consider. While ultimately you may still want to name them as your child's guardian, you want to address any issues their citizenship status creates.

Brouhaha Over Paterno Transfer

Among all of the legal brouhaha the Penn State scandal has raised, there was one going around estate planning circles this month. In July, Joe Paterno transferred the home to his wife for $1. Journalists speculated whether this was to shield assets, therefore an indication that perhaps the coach knew that a scandal might be on the horizon.

Many Pennsylvania attorneys who practice in civil litigation quickly ended this theory, pointing out that Pennsylvania law already exempts the home from judgments. There was really no need to protect the home from creditors. So what's going on?

A simple transfer to a spouse doesn't have great estate planning consequences, unless one is having health issues and such a transfer could prevent control issues from arising or if the transfer is made to a spouse as trustee of a trust. Both appear to the the case. The New York Times had a great discussion of how a transfer to a spouse as trustee of a trust can have great tax benefits. In the end, there really isn't much to have a brouhaha about.

How to get an EIN.

So, you've been named a personal representative of an estate. You've found the will, met with an attorney, had them file the paperwork with the court and received your letters testamentary. You've gone to the bank to set up an account for the estate and the bank asks for an EIN number. What the heck? First of all, an EIN number, or "employer identification number" is the equivalent of social security numbers for entities, like businesses or estates. Obtaining an EIN number is free, easy and fast. The Internal Revenue Service issues EINs online at http://www.irs.gov/businesses/small/article/0,,id=102767,00.html . Upon entering the requested information, including the social security number of the decedent and your own social security number, you'll immediately be issued an EIN. Once you receive the EIN, let your probate attorney know and give them the number for their records. Unlike a lot of things with probate, this is an issue that can be resolved immediately and at no cost.

Repost: What is an International Will?

It's almost the end of the month and I'm spending it in Germany on vacation. Rough, huh? In honor of vacation and generally taking things easy, I reposting a blog entry from 2010, with some additional information.

What is an international will?

Just like different US states have different rules about what it takes to make a writing a valid will, different countries have different rules regarding what it takes to make a writing a will. For individuals who reside in a country other than their country of citizenship or own property in another country, these differences can create major headaches when it comes time to probate a will.

In order to prevent just those type of headaches, the 1973 Convention providing a Uniform Law on the Form of an International Will provides for unified requirements to cause a writing to be valid in any signatory country. Following these requirements allows for a one-document fits all affected jurisdictions approach to drafting a will, assuming all the jurisdictions are signatory countries. The convention is a great help for those living in an increasingly globalized society and can be found at http://www.unidroit.org/english/conventions/1973wills/1973wills-e.htm

However, because probate law is ruled by the states and not the federal government, the
benefits of this treaty only clearly apply to residents of those states which have adopted the provisions of the treaty into their probate code. Luckily for Minnesota residents, Minnesota has adopted the provisions in Minnesota Statutes 524.2-1001 et al.

Some of the major additions to a normal will that are requirement for international wills, is for each page to be numbered, for each page to be signed by the testator, and for the will to be witnessed by an "authorized person" in addition to the standard witnesses required under state law. An "authorized person" in Minnesota is anyone licensed to practice law in the state of Minnesota.

If you reside in a country and have citizenship in another or have property in other countries, speak with an attorney licensed in your jurisdiction of residence who has experience with international wills.

Additional information: If the country you are dealing with is not a signatory to the convention, don't be discouraged. Not all, but many jurisdictions recognize the validity of a out-of-state or out-of-country wills as long as it meets the requirements of where it was executed.

The Fertile Octogenarian May Exist

Yahoo news is reporting that 94 year old Zsa Zsa Gabor may be trying to be the fertile octogenarian.

http://news.yahoo.com/94-old-zsa-zsa-gabor-going-mother-153309072.html

The "fertile octogenarian" is a legal notion that causes good estate planners to plan for additional children born after the will is signed, no matter the age of the testator (person signing the will) or the likelihood that they may have biological children. Who knows, the testator could always adopt... or be Zsa Zsa.

Planning Can Keep a Tragedy from Turning into a Circus

Anytime someone in their twenties passes away, it's a tragedy. That's the same for Amy Winehouse, regardless of her addiction history. However, from early reports, it appears that proper planning may prevent the tragedy from turning into a legal circus.

http://money.usnews.com/money/blogs/alpha-consumer/2011/07/27/amy-winehouses-financial-legacy

Something this article points out is that her estate plan will likely prevent portions of her estate to be awarded to her ex, Blake Fielder-Civil. This is an important point. Most jurisdictions, whether in the US or in another country, have rules about how an estate will be split out when you don't have a will, what we call dying intestate. These rules use assumptions about how most people would want their estate to be dispersed. However, those assumptions may do something that you don't want to do; for example, apparently in the United Kingdom, filter assets to exes. If you know anyone in your life that you want to make sure doesn't receive your estate, meet with a licensed attorney to review the likelihood that person could receive a portion and what you can do now to prevent a circus later.

Who's in Their Right Mind Anyway.

A probate court in Pennsylvania is determining whether the heir to the DuPont fortune had the capacity to execute a valid will. http://www.philly.com/philly/news/pennsylvania/123980894.html

In Minnesota, testamentary capacity means that the person executing the will knows the "nature, situation, and extent" of their property, the claims of others on their estate, and be "able to hold theses things in their mind" long enough to make a rational decision in distributing their assets. Check out the case of In re Estate of Torgersen, 711 N.W.2d 545, for more explanation. You don't have to be a financial genius to have capacity, just need to meet those three minimum requirements.

If you are setting up your estate plan and are thinking about disinheriting someone, a good idea is to request that your attorney ask you questions to demonstrate your capacity and record that conversation. That way, if anyone questions whether you had capacity when you made the will, there will be evidence showing that you did. If you're setting up a plan that disinherits someone, speak with a licensed attorney in your area about preventing questions of capacity.