Things You Should Not Keep in Your Safe Deposit Box

A safe deposit box may not be the best place to keep some items.
A safe deposit box may not be the best place to keep some items.

A safe deposit box isn’t a smart choice for everything. Kiplinger’s recent article entitled “9 Things You’ll Regret Keeping in a Safe Deposit Box” advises that there are some items you might not want to lock away in your bank, which isn’t open nights, holidays, or weekends. During this pandemic, hours of operation for many businesses are reduced. Some financial institutions have temporarily closed some locations. There are other banks that require an appointment for in-branch services, like accessing your safe deposit box. This could create a headache if you’re trying to retrieve important documents or items when you need them.

Here are some items you should store elsewhere, because may need to access them more often or on short notice.

Cash. Keeping a large amount of cash in a safe deposit box isn’t a good idea. If you need it at a time when the bank is closed, you’re out of luck. In addition, the cash may lose its buying power over time because of inflation. You may also find that some banks don’t allow cash in a safe deposit box. Finally, cash in a safe deposit box isn’t protected by the FDIC. To have FDIC insurance (covering up to $250,000 per depositor per insured bank), your cash needs to be deposited in a qualifying deposit account, such as a checking account, savings account, or CD.

Your Passport.  If you need to take an emergency trip, you would not be able to pick up your passport during non-banking hours. If your travel requires a passport, there’s not much you can do about those calls in the middle of the night requiring you to travel immediately.

The Original of Your Will. It may not be a good idea to keep your original will in a safe deposit box because after your death, the bank may require the executor named in your will to obtain a court order to access the safe deposit box. That could mean a long and expensive delay before your will is probated and your estate is settled.

Funeral and Burial Instructions. Many people execute a legal document regarding the disposition of their remains or write a letter of instruction with funeral arrangements to accompany their will. The problem is that, if these instructions are hidden away in your safe deposit box, they may not be read in time to have any effect.

Uninsured Jewelry and Collectibles. Heirloom jewelry and your valuable stamp collection and rare coins are good candidates for a safe deposit box, but they must be properly insured. The FDIC doesn’t insure safe deposit box contents, and neither does the bank, unless it’s stated in your agreement.

Any Illegal or Dangerous Items. Your bank should provide you with a list of items that are not permissible to keep in a safe deposit box. This will include things like firearms, illegal drugs and hazardous materials.

You may also be interested in https://galligan-law.com/does-your-estate-planning-include-your-online-account-passwords/.

Reference: Kiplinger (June 1, 2020) “9 Things You’ll Regret Keeping in a Safe Deposit Box”

 

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Will Contests – Does a “No-Contest” Clause Really Work?

A no-contest clause in your will may discourage a will contest.
A no-contest clause in your will may discourage a will contest.

We live in a litigious society. Unfortunately, even family members sometimes file lawsuits because they are dissatisfied with what their parents or loved ones leave them in a will or trust. Some are so disgruntled that they decide to contest or challenge the validity of a will or trust, which can delay its administration for years and result in thousands of dollars in legal fees. If you are concerned that any of your beneficiaries may seek to challenge your will or trust, a no-contest clause might be one method you can use to discourage them from pursuing this course of action.

What Is a No-Contest Clause?

A typical no-contest clause provides that a beneficiary who disputes the validity of a will forfeits any inheritance or benefit they otherwise would have received according to its terms. It will not prevent someone who is not a beneficiary named in your will or trust from contesting it though.

Are They Enforceable?

In Texas, no-contest clauses are enforceable unless the will contestant shows that he or she had “just cause” for contesting the will and that the will contest is in good faith. The goal is to discourage will contests that are not brought in good faith (for example, a person might threaten a will contest in the hopes that the rightful beneficiaries would be willing to settle for an amount less than the cost of defending the will contest),  but to allow contests for legitimate reasons, such as a forgery, or when a purported will is executed by an incapacitated person or a person who has been unduly influenced by another.

What Are the Pros and Cons?

These types of clauses have some advantages as well as some disadvantages, as listed below:

Pros of a no-contest clause

  • Honors your right to give your property to the parties you have chosen in the way you want, as expressed in your will or trust
  • Discourages baseless challenges to a will or trust by a disgruntled beneficiary
  • Discourages meritless lawsuits aimed at forcing a settlement by a dissatisfied beneficiary
  • Avoids lengthy and expensive litigation that will deplete your estate and delay administration

Cons of no-contest clause

  • Causes a beneficiary to suffer a forfeiture of his or her inheritance for enforcing his or her right to challenge the will’s validity
  • Impedes the court’s ability to determine if the will or trust is valid and ensure that it was not executed as a result of unlawful means, for example, where an unscrupulous child convinces an elderly parent with dementia to sign a new will beneficial to that child shortly before the parent’s death

Create an Estate Plan That Keeps the Peace

If you see trouble brewing and are concerned that family members could contest your will or trust, a no-contest clause is one tool that could discourage dissatisfied beneficiaries from seeking to have it declared invalid. Another possibility that could forestall a will or trust contest is to conduct a family meeting during which you can explain your reasons for distributing your money and property in the way you have. An experienced estate planning attorney can help you create an estate plan for your unique circumstances and to employ all available tools, including a no-contest clause, to decrease possible conflict within the family

You may also be interested in https://galligan-law.com/does-your-executor-know-what-to-do/.

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How a Letter to Your Executor or Trustee Conveys Your Wishes

A letter to your executor or trustee can help clarify your wishes and promote your goals for your beneficiaries.
A letter to your executor or trustee can help clarify your wishes and promote your goals for your beneficiaries.

A detailed, informative letter can be invaluable to those you have designated to carry out your wishes after you’re gone, says the article “Why You Should Write a Letter to Your Executor—and What to Say in It” from The Wall Street Journal. Your last will and testament or living trust does have many directions. However, there may be things you want your executor or trustee to know that may not be included in your will or living trust. This is especially important if death is sudden. The letter, which you should sign and date, can help prevent potential disputes by minimizing any confusion around your intentions, priorities and goals.

One thing to keep in mind when writing out instructions is that, if you have a will-based estate plan, the executor is charged with the responsibility of paying your debts and final expenses and then distributing the remaining assets to the beneficiaries. So the executorship is really a relatively short-term position. If you have a trust-based estate plan, it is your successor trustee who has these duties.

Because the executor has no control over your assets after they are distributed to your beneficiaries, a letter of instruction will be most helpful if you have created trusts for your beneficiares in your will or living trust. Think of the trustee of these trusts as being involved long-term. That said, there may be situations when a letter to the executor would be very helpful. For example, a letter could explain why you have decided to treat beneficiaries differently in your estate plan.

Here are some things to consider when drafting a letter to your executor or trustee.

Your thoughts about wealth. Share your story about how you came to the assets that you are leaving in your will. How was your wealth created, what do you value and what are your long-term goals for your wealth? Do you want family members to invest the assets, so they grow over generations, or do you want them used for college education costs for grandchildren?

Describe key players in the family. It is best if your executor or trustee knows the members of your family.  However, they may not know the family dynamics or history. Giving them your insights, may help them anticipate issues. Does one child tend to take over and speak for everyone, without being asked? Are there substance abuse issues in the family that need to be considered? Share your concerns, so your executor or trustee can be mindful of how the family works (or doesn’t) as a unit.

What matters to you? This is especially important, if you don’t want your beneficiaries to be dependent upon their inheritance, instead of becoming self-reliant. Share your values to encourage their earned success. Make it clear if you want to protect the family wealth, so it can be used to empower future generations and for family members to be responsible for their own financial well-being. Evidence of your intent will help a trustee if a beneficiary challenges the way a trustee is managing and making distributions from the trust.

Give your  trustee the power to make decisions, even when that means saying no. Considering the size of your wealth and the family members who are your beneficiaries, you probably have a good idea of who would do what with their inheritance. If you don’t want your wealth to be used for a start-up by a son whose financial management capabilities are questionable, say so in the letter to your trustee. If you are hopeful that a daughter will use her inheritance for a down payment on a home for her family, you should also express that.

A good estate plan is not just about who gets what and when. A good estate plan is one which tries to minimize conflict and promotes the values you hold dear. That’s why it’s important to consult with an experienced estate planning attorney who has worked with many families and who understands the challenges and pitfalls that are presented any time wealth is transferred from one generation to the next.

You may also be interest in https://galligan-law.com/does-your-executor-know-what-to-do/.

Reference: The Wall Street Journal (April 8, 2020) “Why You Should Write a Letter to Your Executor—and What to Say in It”

 

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