Michigan Estate Planning Blog

What are the Essentials of Estate Planning?

 

Once you’re familiar with the basics, estate planning isn’t quite as daunting as it may seem at first, says a recent article from The Atlanta Journal-Constitution, “Estate planning 101: A guide to management.” Estate planning includes the necessary planning to protect you while living and distributing assets after you have passed.

Your estate plan depends on many factors, including the size of your family, whether you’re married, widowed, or single and the amount of your assets, including your home, investment accounts, real estate, retirement accounts and digital assets.

One important thing to know: estate planning is not just for wealthy people. If you think you don’t have enough assets for an estate plan, you’re wrong: any adult needs an estate plan to protect themselves and their loved ones.

Consider your last will and testament as a gift to your loved ones. A will is a legal document containing instructions for distributing your property to heirs upon death. What constitutes a valid will varies from state to state, so you’ll want to work with a local estate planning attorney to create a will.

If you die without a will, your estate is considered “intestate,” and your property will be distributed according to the laws of your state and the probate court. Your family won’t have any say in whoreceives assets. They could go to a distant relative you’ve never even met. With a will, you get to decide (within the bounds of law, of course) what you want to happen with your assets.

Trusts are used to have further control over assets in an estate. Wills become part of the public record once filed in probate court. However, the contents of a trust remain private. The trust can be used to hold assets while you are living, and certain types of trust only become effective upon your death. Another benefit of a trust is that it can allow a trustee to manage assets in the trust if you become incapacitated.

Special Needs Trusts are created for people with developmental disabilities to provide support in addition to government benefits. Medicaid Asset Protection Trusts take assets out of a person’s estate, often as part of planning for long-term care costs. An estate planning attorney can recommend the type of trust best for your unique situation.

A power of attorney is a document used while you are living to give another person the ability to manage your affairs in case of incapacity. Everyone should have a POA for their financial and legal affairs and a Medical or Health Care Power of Attorney, so a trusted person can help with medical decisions and be involved in decision-making for medical care.

An executor is a person you name in your will who is in charge of your estate and estate management after you have died. You can name one or two people to be executors of your estate. However, be sure that they work well together to avoid any stalemates.

An experienced estate planning attorney can make this a relatively straightforward process, giving you the peace of mind of knowing you have taken the necessary steps to protect yourself and your loved ones.

Reference: The Atlanta Journal-Constitution (Aug. 1, 2024) “Estate planning 101: A guide to management”

How Estate Planning Prepares for Unexpected Medical Events

 

Estate planning is more than the distribution of property after a person dies—in fact, a large part of an estate planning attorney’s practice concerns helping people prepare for unexpected medical issues. A recent article from Merrill Foto News, “Know Your Legal Rights: Advance Care Planning Paves The Way For Future Medical Decisions,” explains what steps should be taken.

Anyone over 18 should have certain advance care plan documents in place, although these documents become even more critical as one reaches their later years. People who have been admitted to the hospital for emergency care, treatment for illness, or surgery all need someone else to speak with medical personnel on their behalf.

Having an Advance Directive, which is also known as Health Care Power of Attorney in some states, is necessary for another person to be able to be involved with your medical care. The healthcare law has become very restrictive, and simply being a person’s spouse or child may not be enough to allow you to make critical decisions on their behalf.

It’s best to name two people as your health care power of attorney—a primary and a backup in case the primary is unable or unwilling to act. If you and your spouse are both in a car accident, for instance, you’ll need someone else to advocate for both of you.

Who to name as your agent depends upon your situation. If your adult children live nearby, one of them may be the best choice if they can be counted on to follow your wishes. If no family is nearby, naming a trusted friend may work, unless you and the friend are both elderly. What would happen if your friend predeceased you or was unable to come to the hospital in the middle of the night? Your estate planning attorney can discuss your situation and help you determine the best candidates.

While many fill-in-the-blank Health Care Power of Attorney documents are available, it’s best to have one prepared by an estate planning attorney to reflect your wishes.

Your feelings about artificial life support also may have changed. Before COVID, people often said they didn’t want to be put on a respirator. However, respirators now save lives. Your wishes to be kept alive in the presence of different kinds of medical evidence may have changed from ten years ago. What if your heart is still working and a brain scan shows evidence of mental activities? Progress in medicine has led to more complex questions and answers about patients’ prognoses; you want a healthcare power of attorney document to reflect your wishes, given advances in medicine today.

Your feelings about healthcare decisions may have changed over time, so healthcare directives and an estate plan should be updated similarly to reflect changes in your life and circumstances.

Reference: Merrill Foto News (July 25, 2024) “Know Your Legal Rights: Advance Care Planning Paves The Way For Future Medical Decisions”

What Happens When Blended Families Ignore Estate Planning?

 

The idea of a “Brady Bunch” family, where two adults with children from prior marriages blend their families, is filled with good intentions. With time and patience, a real family can be created if all parties are willing participants. That is until one of the parents dies and the will is revealed, according to the article “The Brady Bunch Breaks Down: Estate Fights Tear Stepfamilies Apart” from The Wall Street Journal.

The typical estate plan for couples and their families is for the surviving spouse to inherit all the assets when the first parent dies. In a blended family, non-biological children are often disinherited. The spouse has no legal obligation to give anything to the biological children, and, making matters worse, the stepsiblings will inherit the deceased stepparent’s assets.

All of the work to blend the families can be undone. The stories are heartbreaking: children changing locks and kicking out their stepmother before the funeral, adult children learning they’ve inherited nothing, while the stepmother receives a lifetime of assets.

Good planning with an experienced estate planning attorney can prevent these and other ugly scenarios.

Establishing a joint trust to give children equal shares after the second parent dies sounds like a good idea. However, if the stepparent moves the assets into a new trust and names their own biological children as the beneficiaries, the first parent’s children are disinherited.

Creating separate trusts can work. However, they need to be iron-clad. Other options are distributing assets while the parent is living or leaving a specific amount (either a dollar amount or a percentage) in the will directly to the named children. Some families keep biological children in the estate plan and fund a separate trust for the spouse and stepchildren.

A prenuptial agreement is a good tool for blended families. However, it should be in addition to, not instead of, an estate plan.

In some states, the default rule is for the surviving spouse to keep half the community property and have no right in the deceased’s separate property. Most states also allow a surviving spouse to claim an elective share, typically a third or half of the estate.

Another problem that blended families must address is planning for illness and incapacity. The spouse usually makes medical decisions and funeral arrangements. However, stepchildren may have different ideas than their stepparents. Both parents should have their wishes expressed in documents, including a Power of Attorney, Healthcare Power of Attorney, Living Will and whatever documents are required by state and federal laws.

Consider naming an executor or trustee who is neither a biological child nor a relative. Having someone who is impartial and trustworthy could relieve pressure on the children.

An estate planning attorney can clarify the possible issues arising for stepfamilies regarding asset distribution, asset protection, medical directives and planning for incapacity.

Reference: The Wall Street Journal (June 1, 2024) “The Brady Bunch Breaks Down: Estate Fights Tear Stepfamilies Apart”

How to Protect Your Spouse when Diagnosis Is Dementia

 

Few illnesses are as terrifying as dementia, for which there is no cure. If estate planning is in place, it may need to be adjusted to address new, more imminent issues. Reviewing the family situation from a legal and financial aspect is critical, and there is no time for delay, explains a recent article from Morningstar, “’I don’t want my wife to lose everything’: I’ve been diagnosed with dementia –I suddenly could not spell or write legibly.”

There are a number of steps to be taken to smooth the path ahead. First is to update your will and create a financial power of attorney. Don’t try to do this without the help of an experienced estate planning attorney.

This may also be the time to reassess your investment portfolio based on your new financial plan and risk tolerance.

An Advanced Healthcare Directive will inform doctors what actions you want them to take when you cannot make those decisions for yourself. You may want to list your wife as your healthcare proxy to carry out these decisions, but be mindful of the pressures put on a marriage when serious healthcare issues occur. Your spouse will need emotional support as well, and you’ll want to have a successor to your spouse for both the healthcare and POA documents.

Share your situation with trusted family and friends to create a team–a community of people who can provide support, part of which will be updating beneficiaries. Now would also be the time to record instructions for access to devices, documents, and even daily habits.

Long-term care insurance will help with expenses and should serve as an example for anyone reading this article. Policies should be purchased early in life when they are relatively affordable to help alleviate the financial burden of nursing home costs.

An estate planning attorney and financial advisor will help you take an accounting for assets, expenses, and projected long-term care costs. You’ll want a team approach to provide as much guidance as possible.

When to put your long-term care policies into payout status is a difficult decision. You’ll need to time this with a Medicaid plan, which your elder law estate planning attorney will be able to help with.

Now may also be the time to create a trust and divest assets to make it through the five-year Medicaid look-back, using your long-term care policy in the next five years.

There are exceptions to the five-year look-back rule for Medicaid eligibility. They include paying off debts, buying medical devices, or making home improvements to improve accessibility. However, eligibility depends upon income and other assets.

Some states, including Florida and New York, have rules exempting homes from assets calculated by Medicaid under certain circumstances. California eliminated an asset limit this year, making a person’s home automatically safe from Medicaid while they are living, but this does not mean it’s exempt from the Medicaid Estate Recovery Program.

Working with a team of professionals, including an estate planning attorney, and having the support of family and trusted friends will be important as time goes by and the disease progresses.

Reference: Morningstar (Feb. 25, 2024) “’I don’t want my wife to lose everything’: I’ve been diagnosed with dementia –I suddenly could not spell or write legibly”

What is the Most Important Document in an Estate Plan?

 

The priority of every estate plan, regardless of your age, is the medical care documentation. Even while making decisions on other aspects of your estate plan, says this article from Forbes, “Be Sure You Have The Most Important Document In Every Estate Plan,” you should get these documents done to protect your care and comfort for the rest of your life.

Some of the document’s names may vary from state to state. However, your estate planning attorney will know which ones you need.

HIPAA Authorization. The Health Insurance Portability and Accountability Act of 1996 protects patient privacy but also makes it illegal for people you don’t authorize in writing to gain information about your medical status. You’ll need a document authorizing medical providers to discuss your situation with key people in your life. Once the document is executed, distribute copies to medical care providers and the people named in the document.

Living Wills and Advance Directives. Living wills were once simple statements, stating, “If I have a terminal condition and there’s no hope of recovery, don’t prolong my life by artificial means.” These statements are now considered obsolete. Medical science has advanced to a point where it cannot be said with certainty whether someone may improve. There are also disagreements about whether some types of care, like the use of a ventilator, should be considered artificial life support or essential to helping a patient recover from a serious illness.

To address this, some estate planning attorneys create detailed custom living wills, using questionnaires with different scenarios so their clients can decide in any of the situations. Of course, you can’t anticipate every situation, and there can be differences of opinion about diagnosis and prognosis. There are instances where medical providers aren’t given the documents until after treatment has been administered. However, it’s better to express your wishes proactively.

Healthcare Power of Attorney. The limits of living wills and advance directives have led some estate planning attorneys to replace or supplement them with a healthcare power of attorney or healthcare proxy. The HPOA gives one or more people—known as your agents—the authority to make medical decisions if you cannot. The agents talk with your healthcare providers to understand your situation and options. They then make decisions in tandem with the wishes stated in your living will.

Agents need to be available, so you’ll want to name people who are nearby. Appointing more than one agent can provide flexibility in an emergency.

Do Not Resuscitate/Hospitalize. It’s common for older, frail patients to decide they don’t want to be resuscitated or hospitalized. For example, CPR is often declined because while it may bring a person back to life momentarily, their eventual passing may become violent rather than peaceful. The thinking behind DNR orders is this: at some point, hospitalization or treatment for every new ailment only briefly extends life without improving its quality and could reduce the person’s quality of life. Make sure a DNR/DNH is easily accessible to first responders, give medical providers a copy and consider having a bracelet or necklace with these letters.

Once all these documents are executed and circulated, it will be time to focus on distributing property and protecting assets.

Reference: Forbes (Jan. 22, 2024) “Be Sure You Have The Most Important Document In Every Estate Plan”

What Questions Should You Ask an Estate Planning Attorney?

 

To protect assets and health during life and facilitate a smooth transition of assets to loved ones after your death, an estate plan needs to address many different issues. This includes the laws of asset distribution in your state of residence, potential transfer taxes and costs and strategies required to expedite and simplify succession issues. A recent article from mondaq, “Four Questions To Ask Your Estate Planning Attorney,” explains key points to cover with your estate planning attorney.

How do assets pass after death? Some assets pass through the will, but not all. It depends upon where you live, where your assets are situated, what kind of assets they are and how they are titled. State law governs how assets are conveyed after death, so consulting with an estate planning attorney in your estate is critical to creating a successful plan.

If you live in a community property state, your property will pass to the surviving spouse, who is deemed to own one-half of the community property. In these states, one cannot leave more than half of their property through a will, as you only own half.

There may be rules in your area restricting asset transfers. Some states have forced heirship rules, which require a certain percentage of assets to be distributed to a spouse or children, while others have “elective share” rights for surviving spouses. This allows the spouse to elect to take a sizable portion of their deceased spouse’s assets.

What legal documents make up an estate plan? There are two categories of estate planning documents: those used during your lifetime and those used after you die. During your lifetime, you’ll need a healthcare proxy to permit another person to make medical decisions for you. A Power of Attorney allows an agent to make financial and legal decisions on your behalf. Without these documents, your family may need to apply to the court for guardianship, which is an arduous process.

Everyone needs a will and/or trust to transfer assets after death. Lacking a legally enforceable document directing the disposition of assets, they will pass according to the laws of your jurisdiction, which may not follow your wishes. Using a trust to distribute assets combined with a “pour over will” is another approach to minimize court involvement. A pour-over will provides direction for any assets not already in a living trust to be placed into the trust when you die, thus removing assets from your probate estate and allowing them to be distributed according to the terms of the will.

What tax planning needs to be done? Federal, state, inheritance and income taxes vary by state and are subject to change. Consult with an estate planning attorney about what the tax rules are for you and how to accomplish goals in a tax-minded manner. For instance, right now (for 2024), the federal exemption for estate and gift taxes is $13.610 million per person, but this will be cut in half on January 1, 2026, so it may be wise for you to make gifts now. Some states have their own estate taxes, and a few have inheritance taxes, which apply to heirs regardless of where they live.

Have there been any recent changes to the law impacting my estate plan? Changes occur frequently on federal and state levels, making regular updates to estate plans critical to their effectiveness. Your estate plan may not reflect recent tax changes if it is over three to five years old. In addition to tax laws, other laws may significantly impact an estate plan. Regular meetings to review your estate plan with an experienced estate planning attorney could also prevent your will from being declared invalid by the court, when your estate will be treated as if there was no will and the state’s laws will determine how your assets are distributed.

Reference: mondaq (Dec. 18, 2023) “Four Questions To Ask Your Estate Planning Attorney”

 

How Does Estate Planning Protect Young Children?

 

Once you have a child, you’ve got a bundle of joy—and a lifelong commitment to caring for the child, sometimes even after they reach adulthood. What would happen if something happened to you and your partner? To be sure your child or children are taken care of, you’ll need to take these estate planning steps, as explained in a recent article from Kiplinger, “To Protect Your Kids, Consider These Estate Planning Steps.”

Appointing a guardian. Planning for the absence of parents from a physical and financial perspective needs to be done. Parents need to establish a guardian and have the person named in their will. It may be a good idea to name a secondary guardian if something happens and the primary guardian is unwilling or unable to serve in this role.

Create a trust. Parents should consider creating a trust for their children to ensure that there is money to provide for their care if both parents die. A child under the age of 18 is a minor and, as such, may not legally hold title to property. A trust is used to hold assets for the child’s benefit. The language of the trust would have instructions to provide for the children’s education, health and support.

There are two basic trusts to consider. A revocable trust is created during a person’s lifetime and can be changed anytime by the trustmaker. A testamentary trust is created as part of a will. Neither trust needs to be funded until the person passes away, at which time the property of the decedent is placed in a trust if the will contains the correct instructions. An estate planning attorney will be able to structure this plan.

Assign a trustee. This person manages the trust assets for the children's benefit. They need to be financially responsible people who can manage the funds for the children. The trustee can be a family member but should not be the same person chosen as the guardian. Keeping these roles separate ensures that the guardian will not misuse funds. Another option is to hire a professional to serve as the trustee. Professional trustees, including banks or financial advisors, usually charge a percentage of assets. In some cases, estate planning attorneys serve as trustees for minor children.

Establish terms of distribution. It’s up to the parents to decide how their children should receive trust assets. They can mandate principal distributions at certain ages, like a certain percentage at age 20, another at 30 and the balance at 40. While the parent dictates the terms of distribution while the children are minors, the trustee will be the one to decide on distributions for food, health, education, or extracurricular activities.

How do you be sure there will be money for your children? Parents should purchase life insurance, since most young parents don’t have a lot of liquidity. Term policies are the least expensive and can be for ten, twenty, or thirty years, during which the policy is guaranteed if the premium is paid. Whole life insurance is another option. However, it is more expensive.

Start a 529 college savings fund. These accounts can be funded through automatic withdrawals from a checking account, or family members can be encouraged to make gifts to these accounts. In some states, there are state income tax benefits for residents. The growth is tax-free if the funds are used for qualifying educational expenses.

When the child becomes a legal adult. Once a child celebrates their 18th birthday, they are legal adults, and parents lose their rights. New adults should have a healthcare proxy so someone can make medical decisions for them in case of incapacity. They should also execute a HIPAA disclosure form so healthcare professionals can discuss their medical care with parents.

If a child has special needs. An estate planning attorney will create a Special Needs Trust to hold assets and name a trustee to manage the funds. This trust allows a child with special needs who may be eligible for government benefits to continue to receive benefits in addition to distributions from the trust.

Reference: Kiplinger (Nov. 19, 2023) “To Protect Your Kids, Consider These Estate Planning Steps”

The Team Behind a Successful Estate Plan

 

 

Most advisors stick with their areas of knowledge. The estate planning attorney drafts the necessary documents, your CPA files tax returns and the investment advisor fine tunes assets. However, coordinating these professional silos is critical to ensuring your estate plan works, says a recent article from Forbes, “Your Estate Plan Must Be Coordinated To Work.”

Communication needs to extend past advisors to key loved ones and people you name in roles, such as agents, trustees and executors. Many people find these discussions awkward. However, preparing heirs and fiduciaries for their roles and setting expectations is a crucial step to avoid issues during transition periods. Some of the most significant estate planning problems arise when the baton is passed, such as if you fall and become incapacitated. You need to be sure your agents know what is expected of them and when they will be called upon to perform their respective tasks.

Coordinating advisor actions will save time and expense in the long run. Your estate planning attorney, CPA, trust officer, wealth advisor and insurance broker should know what each other is doing on your behalf. Many people shy away from doing this because of concerns about cost. However, not doing it can lead to much larger expenses.

You want to foster coordination and collaboration, in a controlled and cost-effective manner. One way to do this is to have advisors prepare a summary of key points, facts and decisions following your meetings, so you can circulate it to other advisors. This way they all know what is being done and can share their knowledge and experience if they think something is wrong or won’t work as planned.

One example of what can happen when advisors are not coordinated is paying bills from incorrect accounts. For instance, if you incur legal fees for the estate plan but pay them from a trust account or business entity, a creditor could argue this is a personal benefit from a trust you are not a beneficiary of, or you’ve violated the business purpose of an entity, which could expose all trust or entity assets.

Your estate planning attorney should know how your assets are titled, which are owned jointly, or other designations used to avoid the terms of your will and/or any trusts. Beneficiary designations, wills and titles must be planned and coordinated to avoid derailing your estate plan.

If you die and an asset is owned in your name only, the asset will go through probate and be distributed according to the terms of your will. If you are incapacitated, your agent, under your financial Power of Attorney, must act concerning the asset to help pay bills.

Many people opt to have assets held in a joint name so that on death, the asset will pass to the named joint owner without going through the will and probate. If the person named as the joint owner is not the same as the POA, you may have created a logistical nightmare. How will the POA pay bills if the joint owner does not cooperate?

Coordinating professional advisers is as important as coordinating family members. There are many different agents and positions to be appointed. People often sign a financial POA with their estate planning attorney, and no one looks closely at any conflicting appointments.

The same kind of issues occur with health care agents. There are several different health care documents, and you’ll want to coordinate them to eliminate the possibility of conflicting appointments. The key to achieving this is diligence, communication and follow-up.

Reference: Forbes (Oct. 31, 2023) “Your Estate Plan Must Be Coordinated To Work”

 

Top Benefits of Estate Planning

Despite the hard lessons learned during the COVID pandemic, surveys repeatedly show most Americans still don’t have an estate plan in place. According to the article “Five benefits of estate planning” from The Aspen Times, a comprehensive estate plan ensures your assets are distributed according to your wishes when you die, minimizes taxes on your estate and protects your loved ones, especially those who depend on you financially. In addition, estate planning protects you while you are living and ensures that your wishes are followed, if you become incapacitated.

Protect Yourself and Your Assets During Your Lifetime. No one likes to consider themselves at risk of incapacity. However, this happens. If you become mentally or physically incapacitated during your lifetime, you might not be able to earn income, or make decisions for yourself. Part of an estate plan includes documents to address these risks to protect yourself, your family and your assets.

Designating a health care proxy and a power of attorney gives people you choose the ability to make decisions on your behalf. Otherwise, the responsibility for your medical, legal and financial decisions may go to someone you don’t even know.

Asset Distribution. Without a last will, your home state’s laws govern the distribution of your assets. Your intentions to care for certain individuals won’t be relevant, as the law itself decides who gets what. A last will is used to state exactly how you want assets to be distributed. Your last will should be updated as your financial situation and/or family dynamics change. You should also review designated beneficiaries on investment accounts and insurance policies regularly and especially after any major life changes.

Minimize Transfer Taxes. While there’s no way to predict what taxes will take effect in the future, it’s safe to assume there will be taxes on your estate. If you hope to leave wealth of any size to your family, proper estate planning is crucial. There are many different strategies to minimize taxes on inherited wealth, including life insurance, Roth IRA conversions, lifetime giving and trusts. Your estate planning attorney will be able to create a plan suited for your unique situation.

Protect Family Wealth. As people accumulate wealth, they often become the targets of frivolous lawsuits. For this reason, placing assets in certain types of trusts can ensure efficient wealth transfer, as well as protecting assets from predators and creditors.

Create and Continue a Legacy. Legacy planning is part of the estate planning process. Many people donate money or assets on their death to causes they supported during their lifetime. These goals can be achieved by contributing to a donor advised fund, creating a family foundation or setting up a philanthropic trust.

Creating an estate plan is also a useful tool for having candid discussions with the family about the future, avoiding future conflicts and making your estate administration easier for loved ones.

Reference: The Aspen Times (Jan. 24, 2023) “Five benefits of estate planning”

Why Does Everyone Need an Estate Plan?

Twenty and thirty-year olds are busy building their lives, starting or growing careers, exploring personal goals, repaying student loans and maybe starting a family. They’re young and healthy and think nothing can happen to them—but that’s not true. A recent article from Kiplinger titled “You’re Not Too Young for an Estate Plan: 7 Essentials for Your 20s and 30s” explains why even a twenty-year old with student loans needs an estate plan.

Student loans. Federal student loans discharge upon death, so no further payments are needed, including any federal Parent PLUS loans parents may have taken out. However, for private student loans, the decision is up to the lender. If the private loan was taken out by the student, the institution may forgive the loan. However, if a parent or another adult co-signed the loan, they might be responsible for paying the entire loan. The exception: if the loan was made after November 20, 2018, the co-signer may be protected by the Economic Growth, Regulatory Relief and Consumer Protection Act. If you took out loans after getting married, the surviving spouse is likely to be required to pay the loan if they co-signed the loan or if you live in a community property state.

 

Health Care Directive and Health Care Power of Attorney. The Health Care Directive is used to tell your family what you would want if you were near death, whether by injury or illness. Healthcare providers are obligated to follow your directions if they are stated in this document. Without it, you could be kept on life support for many years, regardless of what your family wants.

 

A Health Care Power of Attorney is used to name someone you trust to act as your “agent,” if you become incapacitated. This document is focused on your care and medical treatments. It also lets your agent speak with your health insurance company, obtain access to medical records and discuss your care with healthcare providers.

 

Last Will and Testament. This document isn’t just for people with homes, families, and retirement accounts. Young people have property too—your car, your personal possessions, and whatever financial resources you may have accumulated. If you have a will, you can direct who you want to receive what you own. Without one, the court will decide who gets your possessions and your family won’t have any say about it. With a will, you can determine who receives your property, including your digital assets. You’ll also name an executor in the will—the person who is in charge of distributing your property. An estate planning attorney will create a document to comply with your state’s laws. It doesn’t have to be a complicated document, but it is a good way to ensure your loved ones know your wishes.

 

Retirement Accounts and Beneficiaries. These accounts may not be as robust as they will be later in your life. However, they are still yours. Make sure that you have named beneficiaries who you want to receive them if you die. Singles may name a sibling, parents, partner, or another family member to receive these assets.

 

Digital Assets. A digital life means you need a digital estate plan. Creating an inventory list of all of your digital accounts, usernames and passwords. If an account has two-factor authentication, indicate how another person might gain access to the account. Don’t include any of this information in your will, as it becomes a public document after being submitted to the court for probate. Tell a trusted family member where the inventory is located. If you own cryptocurrency, research how crypto assets are passed if the original owner dies.

 

Guardianship. Your will is used to name a guardian for minor children. Without it, the court will appoint a guardian, and it may not be the family member you wish it would be.

 

Don’t Forget Your Furry Friends. You can add a pet guardianship clause to a will to ensure that your pet stays with a trusted friend or family member who has agreed to care for your pet. You can also set up a pet trust to set aside funds for your pet’s care, including food, veterinary visits, toys, training and treats.

 

Reference: Kiplinger (Aug. 22, 2022) “You’re Not Too Young for an Estate Plan: 7 Essentials for Your 20s and 30s”

Some Key Documents Should Be Considered Before Sending Your Child Off to College

In the United States, as soon as a minor turns 18, they’re typically considered a legal adult.

As a result, parents no longer have any authority to make decisions for their child, including financial and health care decisions.

Yahoo’s recent article entitled “Don’t Let Your Child Leave for College Without Signing Three Critical Documents” asks what if your adult child becomes sick or is in an accident and ends up hospitalized?

Because of privacy laws, known as Health Insurance Portability and Accountability Act (HIPAA), you wouldn’t have any rights to get any information from the hospital regarding your child's condition.

Yes, we know you’re her mother. However, that’s the law!

You also wouldn’t have the ability to access his or her medical records or intercede on your child's behalf regarding medical treatment and care.

If your child’s unable to communicate with doctors, you’d also have to ask a judge to appoint you as your child’s guardian before being able to be told of his or her condition and to make any healthcare decisions for them.

While this is hard when your child is still living at home, it’s a huge headache if your child is attending college away from home.

However, there’s a relatively easy fix to address this issue:

Ask an experienced estate planning attorney about drafting three legal documents for your child to sign:

A Durable Power of Attorney (DPOA) for Health Care. This document designates the parent as your child's patient advocate.

A HIPAA Authorization gives you access to your child’s medical records and lets you to discuss his or her health condition with doctors.

A DPOA for Financial Matters, designates the parent as your child's agent, so that you can manage your child's financial affairs, including things like banking and bill paying, in case your child becomes sick or injured, or is unable to act for any reason.

Reference: Yahoo (Aug. 2, 2022) “Don’t Let Your Child Leave for College Without Signing Three Critical Documents”

Should I Discuss Estate Planning with My Children?

US News & World Report’s recent article entitled “Discuss Your Estate Plan With Your Children” says that staying up-to-date with your estate plan and sharing your plans with your children could make a big impact on your legacy and what you’ll pay in estate taxes. Let’s look at why you should consider talking to your children about estate planning.
People frequently create an estate plan and name their child as the trustee or executor. However, they fail to discuss the role and what’s involved with them. Ask your kids if they’re comfortable acting as the executor, trustee, or power of attorney. Review what each of the roles involves and explain the responsibilities. The estate documents state some critical responsibilities but don’t provide all the details. Having your children involved in the process and getting their buy-in will be a big benefit in the future.
Share information about valuables stored in a fireproof safe or add their name to the safety deposit box. Tell them about your accounts at financial institutions and the titling of the various accounts, so that these accounts aren’t forgotten, and bills get paid when you’re not around.
Parents can get children involved with a meeting with their estate planning attorney to review the estate plan and pertinent duties of each child. If they have questions, an experienced estate planning attorney can answer them in the context of the overall estate plan.
If children are minors, invite the successor trustee to also be part of the meeting.
Explain what you own, what type of accounts you have and how they’re treated from a tax perspective.
Discussing your estate plan with your children provides a valuable opportunity to connect with your loved ones, even after you are gone. An individual’s attitudes about money says much about his or her values.
Sharing with your children what your money means to you, and why you are speaking with them about it, will help guide them in honoring your memory.
There are many personal reasons to discuss your estate plans with your children. While it’s a simple step, it’s not easy to have this conversation. However, the pandemic emphasized the need to not procrastinate when it comes to estate planning. It’s also provided an opportunity to discuss these estate plans with your children.
Reference: US News & World Report (Feb. 17, 2021) “Discuss Your Estate Plan With Your Children”

What Estate Planning Documents Should I Have when I Retire?

Research shows that most retirees (53%) have a last will and testament. However, they don’t have six other crucial legal documents.

Money Talks News’ recent article entitled “6 Legal Documents Retirees Need — but Don’t Have” says in fact, in this pandemic, 30% of retirees have none of these crucial documents — not even a will — according to the 20th annual Transamerica Retirement Survey of Retirees.

In addition, the Transamerica survey found the following among retirees:

• 32% have a power of attorney or medical proxy, which allows a designated agent to make medical decisions on their behalf
• 30% have an advance directive or living will, which states their end-of-life medical preferences to health care providers
• 28% have designated a power of attorney to make financial decisions in their stead
• 19% have written funeral and burial arrangements
• 18% have filled out a Health Insurance Portability and Accountability Act (HIPAA) waiver, which allows designated people to talk to their health care and insurance providers on their behalf; and
• 11% have created a trust.

The study shows there is a big gap that retirees need to fill, if they want to be properly prepared for the end of their lives.

The coronavirus pandemic has created an even more challenging situation. Retirees can and should be taking more actions to protect their health and financial well-being. However, they may find it hard while sheltering in place.

Now more than ever, seniors may need extra motivation and support from their families and friends.

The Transamerica results shouldn’t shock anyone. That is because we have a long history of disregarding death, and very important estate planning questions. No one really wants to ponder their ultimate demise, when they can be out enjoying themselves.

However, planning your estate now will give you peace of mind. More importantly, this planning can save your heirs and loved ones a lot of headaches and stress, when you pass away.

Talk to an experienced estate planning attorney today to get your plan going.

Reference: Money Talks News (Dec. 16, 2020) “6 Legal Documents Retirees Need — but Don’t Have”

A Plea To Put It Down On Paper

It can be hard to appreciate the kind of frustration a family can go through when someone’s affairs are not in order and the time comes. On the other hand, if you have been there and done that, or have seen it second hand, then you know what I mean. There are simply a lot of plans that need to be made, because there are a lot of things that can go wrong. For an impassioned voice on the matter and some advice you should heed, be sure to read a recent commentary published in The Washington Post titled “Put your estate plan on paper before it’s too late.” The author recounts her own experience with her mother, who wasn’t even suffering from old age. Her mother was moved to critical condition after an accident. Unfortunately, the author was left on the other side of a legal wall caused by the lack of a financial durable power of attorney and healthcare directive that might have allowed her to come to aid. Worse still, the mother had actively put-off or refused committing her wishes to paper, and that’s why there was no legal recourse. If you or a loved one have not committed your financial durable power of attorney and healthcare directive wishes to paper, then here’s one more story to remind you why they are so important. We plan because there is a reason for certain privacy, healthcare and even probate. It is our own personal responsibility. If nothing else, we plan because when the time comes there are more important things to think about, like the comfort of an ailing loved one or the memory of a recently passed one. The original article spells out the basics and brings the need to complete your own plan clearly into focus.

Reference: The Washington Post (March 20, 2014) “Put your estate plan on paper before it’s too late”

For more information, see www.jerryreiflawyer.com

A Plea To Put It Down On Paper

It can be hard to appreciate the kind of frustration a family can go through when someone’s affairs are not in order and the time comes. On the other hand, if you have been there and done that, or have seen it second hand, then you know what I mean. There are simply a lot of plans that need to be made, because there are a lot of things that can go wrong. For an impassioned voice on the matter and some advice you should heed, be sure to read a recent commentary published in The Washington Post titled “Put your estate plan on paper before it’s too late.” The author recounts her own experience with her mother, who wasn’t even suffering from old age. Her mother was moved to critical condition after an accident. Unfortunately, the author was left on the other side of a legal wall caused by the lack of a financial durable power of attorney and healthcare directive that might have allowed her to come to aid. Worse still, the mother had actively put-off or refused committing her wishes to paper, and that’s why there was no legal recourse. If you or a loved one have not committed your financial durable power of attorney and healthcare directive wishes to paper, then here’s one more story to remind you why they are so important. We plan because there is a reason for certain privacy, healthcare and even probate. It is our own personal responsibility. If nothing else, we plan because when the time comes there are more important things to think about, like the comfort of an ailing loved one or the memory of a recently passed one. The original article spells out the basics and brings the need to complete your own plan clearly into focus.

Reference: The Washington Post (March 20, 2014) “Put your estate plan on paper before it’s too late”

For more information, see www.jerryreiflawyer.com

ESTATE PLANNING / POWER OF ATTORNEY

Some people who thought they had covered all their bases and acted responsibly to care for loved ones in the event of a debilitating illness or incapacity are finding their plans un-done by strict banking policies. Bank of America recently updated their online security procedures, and no longer accepts a power of attorney for online banking. As Bernard Krooks wrote last week for Forbes, this strict policy came to light when Chicago resident Eva Kripke was blocked from accessing her husband’s Bank of America account. According to Krooks, Mrs. Kripke had been handling her husband Sidney’s bank accounts as agent under a power of attorney ever since he was diagnosed with Lew body dementia four years ago. Suddenly now, however, she is denied access under the bank’s updated security procedures. The bank suggested she to go to her local branch and get a printout of her husband’s account information. Unfortunately, Mrs. Kripke felt this was unacceptable because her husband’s health status requires close financial oversight. Perhaps more unfortunate, her options are limited because her husband’s illness has rendered him incompetent. Rules such as these are becoming increasingly prevalent and significant as more people are called upon to care for an aging population and their attendant disabilities. An experienced elder law attorney can provide guidance in situations where powers of attorney are limited. You can learn more about powers of attorney in the Fundamental Estate Planning Practice Center on our website. Reference: Forbes – Bernard A. Krooks (July 7, 2011) “Power of Attorney Does Not Grant Access to Online Banking, Says Bank of America”

ELDER LAW / ELDER CARE

If you, your parent, or an elderly loved one is reaching the point where living alone is no longer an option – for medical reasons or otherwise – it may be time to consider some time of assisted living, whether nursing home or retirement community Increasingly, many families are looking at the “Continuing Care Retirement Community” or CCRC option. Even though the CCRC may be the pricier option, a little-known tax strategy recently explained in Smart Money could make it more financially attractive.. What is a CCRC? As SmartMoney explains: As opposed to a traditional nursing home where you simply pay a monthly fee, residents enter into a long-term contract with a CCRC. In exchange for a one-time entry fee and ongoing monthly charges, the CCRC provides housing and a range of on-site services. When a resident's health and personal care needs become more acute, the level of service can be increased to include assisted living, long-term care and skilled nursing care. The big advantage is that the resident doesn't have to move as his or her needs change. Interestingly, there is another advantage: a potential tax savings. Because part of the upfront and ongoing fees is to provide medical services – whether the resident uses them or not – a medical tax deduction may be available. This strategy was upheld in the 2004 Tax Court case, Delbert L. Baker v. Commissioner (122 TC 143, 2004). Of course, medical expenses must exceed 7.5% of adjusted gross income in order to claim the deduction. However, if you are considering a CCRC, it’s quite possible that your applicable expenses will exceed this threshold, since their fees, including the upfront buy-in, are usually quite high. Remember, too, that the percentage of costs that qualify as medical is determined by the aggregated spending of the facility itself, rather than the individual and their level of received care. The CCRC management should be able to give you estimates of the percentages, though you may have to ask for them. Also of note, remember that if you will pay some or all of your parent’s CCRC fees, you can claim the applicable percentage of the charges as a medical expense on your return – if you provide more than half of your parent’s support. Also, the IRS says these tax breaks apply only if the person enters into a CCRC-like contractual lifetime care arrangement, not just any retirement facility or nursing home. You can learn more about long-term care planning on our website. Also, be sure to sign up for our free monthly e-newsletter for regular updates

Reference: SmartMoney (June 15, 2011) “A Tax Break for Retirement Community Costs”

ESTATE PLANNING / HEALTH CARE DOCUMENTS

National Health Care Decisions Day is set for April 16. According to their website, this initiative is a collaborative effort of national, state and community organizations committed to ensuring that all adults with decision-making capacity in the United States have the information and opportunity to communicate and document their healthcare decisions.

 Link: http://www.nhdd.org/

 From National Health Care Decisions Day (April 16, 2011)

ELDER LAW / PRIVATE HEALTH CARE ADVOCATE

When a medical issue strikes you or your family, the world starts spinning a bit faster and begins to bear down hard. Even the best of us can’t always keep our heads above the rising tide of bureaucracy, legal snares, and other issues that can arise in the event of a medical-billings problem or an insurance coverage denial. A private health care advocate might be an option worth exploring, according to a recent article in the Wall Street Journal’s MarketWatch. An advocate cannot offer medical advice or address legal issues (like malpractice lawsuits) but they can help resolve medical billing problems, fight insurance-coverage denials, aid in complex medical decision-making and find the right specialist or hospital for a particular condition. Some even accompany patients to doctors’ offices and other care settings. Many are or were nurses or social workers – and can help push through a problem when you really need assistance or guidance. Most hospitals employ similar representatives that can help during your stay, but private advocates are often small businesses that can be called upon in far more circumstances. Advocates typically charge $50 to $200 an hour, says Joanna Smith, president of the National Association of Healthcare Advocacy Consultants (NAHAC), a professional group in Berkeley, CA. If you are looking to hire a health-care advocate, you should expect a written estimate of costs and services, and feel comfortable with the advocate’s style, experience and expertise before signing on. The NAHAC has designed a code of ethics, which you can find on their website. Be sure to ask about those when interviewing an advocate

Link: http://www.marketwatch.com/story/private-health-care-advocates-offer-other-options-2011-04-18

 From MarketWatch (April 17, 2011) “Private Health-Care Advocates Offer Other Options”

ELDER LAW / NON-FAMILY CAREGIVERS

As it turns out, Sophia, Blanche, Dorothy and Rose were ahead of their time! Yes, those Golden Girls of the 1980s were on to something that has become a growing trend of aging baby boomers. When the four savvy women decided to move in together and build a sort of ad-hoc “family,” they were simply doing (more than three decades ago) what an increasing number of seniors are doing, or considering doing, today.

Sociologists and popular social critics alike have been discussing the erosion of the nuclear family for years but here is a new twist: what is to become of those seniors who aging outside the nuclear family? Bernard Krooks of Forbes  recently offered some valuable insight, and food for thought.

The baby-boomers are just starting to enter retirement and they are far more likely than previous generations to have remained childless throughout life. Many never actually married, and others have already lost their spouses. What will happen to these people if they become disabled, incapacitated, or develop a chronic illness?

Most in-home care for the elderly is performed by family members. Hospital stays are getting shorter, driven by cost-saving initiatives, making it even more likely that these seniors will need outside help at some point in their lives.

Without family, seniors can only turn to friends, paid caregivers, or government-sponsored social services. Of course, paid caregivers are difficult for many seniors to afford, and government-programs present their own challenges, especially in light of recent budget cuts.

Unfortunately, friends are not currently accorded the same status as family members by a legal system that has always made the assumption of a nuclear family. There is an emerging movement, though, that seeks to change that. Some legal scholars are espousing the establishment of “friendship law,” which would confer certain rights upon “designated friends” who play a significant caregiver role – including hospital visitation, tax breaks and claims to an estate if no will has been established.

One thing we never saw the Golden Girls do was consult an attorney about their various “rights” to caring for one another. There was one episode, though, when Rose suffered a heart attack and the girls were not allowed to visit her in the hospital because they were not actual family members. A good elder law attorney might have helped the girls sort through some of those legal issues in advance.

By the way, you can watch portions of Rose’s “Heart Attack” episode on YouTube: http://youtu.be/xx3CMHpBLu8.

Link: http://blogs.forbes.com/bernardkrooks/2011/04/11/aging-outside-the-nuclear-family/

 From Forbes.com (April 11, 2011) “Aging Outside the Nuclear Family”

SMALL BUSINESS / HEALTH REPORT

If you’re a small business owner, you probably already know that things are not exactly hunky-dory in the business world, but that they are starting to get better. You know this from your own experience, and perhaps a few discussions with your accountant or tax advisor. However, it may be comforting to know that your instincts are probably right, and verified by a couple of recently released key research reports. The National Small Business Association (NSBA) released their 2010 Year-End Economic Report this month and – as you probably already guessed – the news is mixed. Small business owners seem a little more optimistic than they were six months ago. Almost two-thirds of them expect economic growth to be flat this year, and only 13 percent say they anticipate a double-dip recession. Two-thirds express confidence in their own firms and 15 percent say they are growing now. A whopping 40 percent are reporting increased revenues, and for the first time since 2008, a majority of small business owners (54 percent) expect their revenues to improve this year. The Small Business Association (SBA) also this month released their report on Small Business Lending in the U.S. Small business lending fell 6.2 percent last year, while large firm lending declined by 8.9 percent. I bet these numbers aren’t surprising to most small business owners. Overall, the numbers report a mixed economic bag for small business owners across the board. Again, probably not earth-shattering news for business owners, but rather confirmation of what you likely are experiencing on a day-to-day basis. And, since it’s Friday, perhaps a good enough reason to celebrate!

Link: http://www.businessinsider.com/latest-small-business-research-the-news-is-not-too-bad-2011-3

 From Business Insider (March 10, 2011) “Latest Small Business Research: The News is Not Too Bad”

ESTATE PLANNING / HEALTH CARE DOCUMENTS

National Health Care Decisions Day is set for April 16. According to their website, this initiative is a collaborative effort of national, state and community organizations committed to ensuring that all adults with decision-making capacity in the United States have the information and opportunity to communicate and document their healthcare decisions. You also can learn more on their Facebook Page. You can learn more about Health Care Documents – also known as advance directives or health care proxies – on our website.

Link: http://www.nhdd.org/

 From National Health Care Decisions Day (April 16, 2011)

ESTATE PLANNING / HEALTH CARE DOCUMENTS

From National Health Care Decisions Day (April 16, 2011) National Health Care Decisions Day is set for April 16. According to their website, this initiative is a collaborative effort of national, state and community organizations committed to ensuring that all adults with decision-making capacity in the United States have the information and opportunity to communicate and document their healthcare decisions. You also can learn more on their Facebook Page. You can learn more about Health Care Documents – also known as advance directives or health care proxies – on our website.

 Link: http://www.nhdd.org/

 

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