Michigan Estate Planning Blog

What Happens If You Die Without a Will?

 

No matter where you live, dying without a will is going to lead to a costly, stressful and expensive experience for loved ones. It will also make distributing assets more complicated than necessary. A recent article from the Daily Journal, “Intestate succession: The risks and complications of dying without a will,” makes a strong case for having an estate plan, including a will, prepared by an experienced estate planning attorney.

When there is no will, assets must be submitted to a local court to be probated, including transferring legal title to property from the decedent to heirs. Most probate proceedings take at least 18 months and, in some cases, can extend to several years. There are attorney and administrative fees based on the gross value of the assets plus taxable gains on sales and receipts.

What is a very rough estimate of costs for an estate with a total value of $1 million when there is no will? While it varies by jurisdiction, a total cost of $30,000 is not unusual. Add costs like maintaining a property, paying a mortgage and other expenses; you can see why having a will is better.

Another reason to have a will: the delays of probate can make it difficult for the estate to pay expenses. If the personal representative (executor) needs to pay bills but the estate account is not funded, even more complexities and costs will occur.

Laws vary from state to state over who receives the estate assets when there is no will. California is a community property state, so that the spouse will receive all the community property and a portion of the separate property. How much separate property will be received depends upon the number of children, grandchildren, living parents or siblings and their own children.

In most states, the distribution of assets is governed by kinship. If there is no surviving spouse, the estate may pass equally to children or their children. However, the court may need to search for blood relatives without children or grandchildren. If you have no children but have relatives you haven’t spoken to for years and no will, they may become your heirs.

The simplest way to prevent a nightmare for your loved ones is to consult an experienced estate planning attorney and create an estate plan, including a Will, Power of Attorney and Healthcare Proxy.

A will is used to name a guardian for minor children, an executor to administer the estate and set the terms for the distribution of property. Without a will, the court makes these decisions, including who will raise minor children and where they will live. A court-appointed guardian will not be the same as a beloved family member, altering the course of children’s lives. For parents of young children, this should motivate an appointment with an estate planning attorney.

Estate planning also includes a detailed check on the ownership status of accounts for the option to name a designated beneficiary. Insurance policies, investment accounts, pensions and bank accounts will likely allow a beneficiary to be named. These assets will go directly to designated people, no matter what your will says or if, despite reading this article, you decline to have a will created.

Whatever your situation and wherever you live, you’ll want a will created to leave a legacy of caring for your loved ones.

Reference: Daily Journal (May 5, 2025) “Intestate succession: The risks and complications of dying without a will”

Estate Planning Documents Every Family Needs

 

 

Estate planning is not something only very old or very wealthy people need to do. Anyone who doesn’t want to leave a mess for their loved ones after they’ve died or if they are too sick to be able to make decisions, needs an estate plan. A recent article from Military.com, “Wills and More: These Are the Legal Documents Every Military Household Needs,” isn’t just for military families. Estate planning is for everyone, and one last important point: estate planning documents require upkeep to be effective.

The foundations of an estate plan include a will, beneficiary designation, and powers of attorney.

A will details who you want to receive your property when you’ve died and names an executor in charge of your estate. If there is no will, the laws of your state come into play. You may not like who is chosen to manage and distribute your estate, but it will be too late for you or your family.

Beneficiary designations apply to bank, investment, and retirement accounts, life insurance policies, and any asset permitting a beneficiary to be named. If your will has one instruction but the beneficiary designation says another, the beneficiary designation wins. This is just one example of why updating your estate planning documents is important. You may have opened an account decades ago and named a person who is no longer in your life or living.

Power of Attorney (POA) is a legal document that gives you the authority to make legal and financial decisions if you are incapacitated. A related document, Power of Healthcare Attorney, permits someone else to make healthcare decisions. Think of the two POAs as a mini-succession plan, giving authority over essential parts of your life to someone else if you become incapacitated.

If these documents aren’t in place, family members will need to go to court to obtain guardianship or conservatorship to take over routine matters like paying bills and being able to talk with doctors and make medical decisions. This is an expensive, time-consuming, and stressful process, easily avoided by having these documents prepared by an estate planning attorney.

Here’s an example of why updating documents is so important. Let’s say your mother receives a diagnosis of Alzheimer’s Disease. She’s still functioning, but the disease is progressing. Once someone is incapacitated, they are not allowed to sign legal documents. If you fail to update her POAs and other estate planning documents on a timely basis, the documents can be challenged and may be deemed invalid.

Events requiring estate planning document updates include happy things like marriage, welcoming a child or grandchild into the family, or coming into a large inheritance. Unpleasant events require updates as well: divorce, death, a serious disease, or financial losses.

Remember, estate planning is about protecting your family and your property. You've protected yourself and your loved ones by making a will, keeping beneficiary designations updated, and having POAs and related documents for incapacity. Your family will be spared the stress and cost of cleaning up a mess, which is probably not the legacy you want to leave. Meet with an experienced estate planning attorney and get started on this most critical task.

Reference: Military.com (April 21, 2025) “Wills and More: These Are the Legal Documents Every Military Household Needs”

Is Power of Attorney for Health Care Needed If You’re Healthy?

 

Like most people, a 61-year-old man never thought he would have a health crisis. Neither did his family. However, he was struck with a sudden heart attack, followed by complications leading to a brain injury and he became incapacitated. The family was faced with a terrible situation in addition to their father’s health crisis.

The couple had never done any estate planning, nor did they have a Power of Attorney for Health Care. The spouse assumed she would have the legal right to make medical choices for her husband. However, without a POAHC, she had no standing. A recent article from the Wisconsin Newspaper Association, “Wisconsin Spouses can’t make medical decisions without this document,” should serve as a wake-up call for families across the country, since this is not a one-state issue.

There is no automatic right to make healthcare decisions for an incapacitated partner. Unless both spouses are joint owners, one can’t access bank accounts. Without having the right estate planning documents in place, a spouse won’t be able to make decisions, pay bills, or transfer money between accounts to ensure the household runs smoothly.

Medical decisions for the man fell into legal limbo and got tangled up in red tape. Instead of focusing on his recovery, they embarked on a legal process that could have easily been avoided with one document.

First, the family had to petition the court for legal authority over his medical care, known as guardianship. This was an expensive, time-consuming and emotionally exhausting process, all going on while they were adjusting to this dramatic change in his health.

Making matters worse, he was not a compliant patient in his altered state. He wandered frequently, and one night, he got out of the hospital on a bitterly cold night. To make matters worse, the hospital couldn’t discharge him to a rehabilitation facility until the court awarded the family guardianship. The family was bombarded with questions about the status of his case, which was scheduled weeks away.

At the same time, there were further problems with the hospital without a designated health care agent. First, the hospital administrators insisted that the patient be discharged to a long-term care facility. They then said the insurance company had stopped paying, so he had to go home. When the family sought help from the county, the hospital threatened to tell the courthouse that the family was neglecting him and threatened the guardianship process.

The hospital reneged on its promise to help provide at-home nursing care when the guardianship process was finally completed. The family was left on their own to find appropriate care.

This nightmare could have been avoided if the couple had an estate plan, including naming a healthcare agent with a Power of Attorney for Healthcare. When he became incapacitated, his wife or adult child could have had the legal authority to make health care decisions on his behalf without the delays, added expense and frustration of court proceedings.

Everyone should have a Power of Attorney for Healthcare, sometimes known as a Healthcare Proxy, to name another person to step in and make decisions for them in case of incapacity. We never know what will happen, even to our healthiest family members. Anyone over age 18 needs to have a POAHC. Talk with your estate planning attorney and take care of this before it’s needed.

Reference: Wisconsin Newspaper Association (April 7, 2025) “Wisconsin Spouses can’t make medical decisions without this document”

Three Top Excuses Heard by Estate Planning Attorneys

 

Recognition of your mortality and taking the time to plan for tying up the business of your life are two very different things. Estate planning attorneys hear reasons for delay all the time. However, the explanations aren’t going to help your family when they have to administer an unprepared estate while grieving. A recent article from MarketWatch, “The top 3 excuses people make to put off estate planning--and why they’re all wrong,” offers food for thought.

I don’t own enough to need an estate plan. Even if you die in debt, you need an estate plan to prevent loved ones from having costly problems like probate, taxes and other issues. If you’re in a nursing home and all you own is a bank account with a named beneficiary, you may not need a will. However, you definitely need medical directives, including:

Healthcare Power of Attorney (or Healthcare Proxy), someone you name who can make medical decisions.

HIPAA Release so a person of your choosing can access health insurance information and medical records.

Designated representative for Medicare, Medicaid and Social Security

Living Will to express wishes for end-of-life care. Do you want to be kept on life support if you aren’t expected to regain consciousness? What about artificial feeding? These are tough issues to address. However, without expressing your wishes, your family won’t know what you want.

Procrastination has worked before, so why change now? Many people are waiting to see if changes will come to federal estate tax exemptions, which are set to happen at the end of 2025 unless Congress acts. No one knows what will happen. However, if your estate is hovering near the $7 million mark and you wait until the last minute to make changes, your estate could become taxable. Creating and executing an estate plan takes time, so that procrastinating could cost your heirs 40% of your estate.

I don’t know where to start. This is what experienced estate planning attorneys are for. Just as you wouldn’t be advised to perform surgery on yourself, you need the services of a skilled and trained estate planning attorney to create an estate plan to achieve your goals.

Start by gathering any documents you might already have, including investment and pension accounts, life insurance policies, titles and deeds and anything you think might be relevant. Next, make an appointment with an estate planning attorney who can explain the process, offer strategic tools to minimize taxes, transfer wealth and prepare an estate plan to protect you and those you love.

If you need more of an incentive consider this: putting a loved one through the process of a scavenger hunt to identify documents, spend their own money to retain counsel to go to court to obtain a guardianship if you are incapacitated and need their help, or be powerless as a lifetime of work evaporates in estate taxes, will teach a valuable lesson of what not to do. If you’d prefer to be remembered with love and affection and not resentment, it’s time to stop procrastinating.

Reference: MarketWatch (April 17, 2025) “The top 3 excuses people make to put off estate planning--and why they’re all wrong”

What Should Be Included in Your Estate Plan?

 

Estate planning attorneys often have clients who are more than 100 years old. However, those clients have usually made all their estate planning decisions while they were far younger, like in their 70s or 80s! A recent article, “Guidelines for estate planning, from a Golden Valley attorney,” from Sun Post, explains what your estate plan should include and why.

People should have their estate plans in place long before they turn 100, to provide peace of mind for themselves and for their heirs and executors, who will need to take over their affairs in case of incapacity or when they ultimately die.

Everyone should have a healthcare directive, sometimes called a Power of Attorney for Healthcare or Healthcare Proxy. This allows another person to have access to medical information and acts to express your wishes if you can’t communicate your wishes because of illness or an injury.

One person should be appointed to follow your healthcare and end-of-life instructions. Making your wishes clear in a legally binding document ensures that your loved ones know what you want and will help them make decisions for your care during a healthcare crisis.

You’ll also want a financial power of attorney in place so someone else can manage your financial life. Some people opt to make their bank accounts payable to a trust or retitle the bank as a “Transfer on Death” (TOD) account. This lets someone gain access to your finances. Let’s say you needed to be hospitalized for an extended period—having these documents in place will allow bills to be paid, your home maintained and avoid penalties for late or non-payment.

Many people today have trusts to prevent the estate from going through probate. When a will goes through probate, it becomes part of the public record. Probate takes time and can be costly. While probate in some jurisdictions isn’t as bad as in others, it can delay settling your estate by months or years.

Everyone who is over 18 needs to have a will. A will describes how your assets are to be distributed. If you have family heirlooms, for instance, your will can clarify who you want to receive a necklace or piece of art. The will instructs your executor, so they know exactly what you want to happen.

Your will is also used to nominate a guardian for minor children. Parents should always have a will, so they can name the person they want to raise their children in case both parents die.

Not having an estate plan leads to all kinds of problems for families. For one thing, the distribution of assets, and who should be the guardian for children and executor of your estate, are all decided according to the state’s laws. You may not have wanted your first cousin to raise your children. However, the court will make the decision for you. It’s better to have a will.

If you already have a will but haven’t updated it in more than three years, it’s time to dust it off and have it reviewed by an experienced estate planning attorney. Changes in your life and tax laws could mean that your will isn’t going to work the way it once did.

A final note: ask your estate planning attorney about how to store your estate planning documents. If your documents are stored at a safe deposit box, they will be sealed upon death and won’t be accessed until a court order has been obtained. This can delay settling the estate and create complications for loved ones.

Reference: Sun Post (March 20, 2025) “Guidelines for estate planning, from a Golden Valley attorney”

The Coming ‘Great Wealth Transfer’ and Estate Planning

 

As a huge number of baby boomers turn 65 from now through 2027, most people should be thinking about managing their money amid the so-called “great wealth transfer,” when as much as $72 trillion is expected to move from one generation to the next. A recent article from MarketWatch, “As a $72 trillion ‘great wealth transfer’ is set to begin, here are 4 estate-planning rules to follow,” offers some tips.

Every adult should have a last will and testament and a financial power of attorney, so someone can manage their financial affairs if they become incapacitated. You’ll also need a healthcare proxy to name a person who can make medical decisions on your behalf.

Update beneficiary designations on 401(k)s, investment accounts and any financial accounts naming a beneficiary. Whatever is on those documents supersedes trusts and wills. These should be reviewed every few years or after any major life events like marriage, divorce, the birth of new children or grandchildren, or the death of a beneficiary.

Secure your important documents and make sure your executor, trustee and a trusted family member know where they are. The executor should also have contact information for your estate planning attorney, CPA and financial advisor.

Review your overall estate plan every three to five years. If your estate plan was created when your children were minors and now they’re adults, it’s time to revisit your estate plan.

A will alone might work for a simple estate. However, if you have complicated finances or significant wealth, you should talk with your estate planning attorney about a Revocable Living Trust. Putting assets into trusts allows assets to pass to beneficiaries without going through probate, which is often expensive and time-consuming. Once the trust is established, you’ll need to fund it by retitling assets, so they are taken out of your estate and owned by the trust.

Wills, trusts and estate planning documents should be reviewed and updated on three occasions: every three to five years if your life doesn’t change much, every time there is a major event in your life, commonly called a “trigger” event and whenever there is a large change to tax laws.

The estate planning community is now preparing for the possible end of the Tax Cuts and Jobs Act of 2017, which raised the federal estate and gift tax exemptions to historically high levels. Unless the rule is extended, on January 1, 2026, these limits will return to previous amounts, with estates around $7 million subject to federal estate taxes. If your wealth is near the $7 million mark and you haven’t met with your estate planning attorney to prepare for this potential change, now is the time to make an appointment.

Once your estate plan is up to date, it’s a good idea to have conversations with family members, the people you’ve named as executors, power of attorneys and beneficiaries. If you have a plan but haven’t shared it with children or heirs, it could lead to family fights, even leading to litigation.

Your estate planning attorney will help create an estate plan to meet your needs and protect your loved ones. It’s a task to tackle sooner, rather than later.

Reference: MarketWatch (April 3, 2025) “As a $72 trillion ‘great wealth transfer’ is set to begin, here are 4 estate-planning rules to follow”

How to Create an Estate Plan That Works

 

An estate plan tells your loved ones and the courts how you want to divide your property, as well as protecting heirs from the expenses and stress created when there is no estate plan. According to a recent article from AOL, “Estate planning checklist: 7 key steps to making a successful plan,” an estate plan also saves your family from months, even years, of dealing with courts and government bureaucracies in settling your estate.

How to start? Follow these steps.

Make a complete inventory of your assets, both tangible and intangible. This means real estate, cars, financial accounts, digital assets, life insurance, retirement accounts, pension accounts and personal property. Save your heirs from a scavenger hunt and protect assets from being lost.

Decide who you want to care for your family. If you have children who are underage, name a guardian in your will. The guardian often serves as the conservator, managing the children's financial assets. Check on your life insurance policies, which provide funds for your family after you’ve passed.

Ask potential executors if they are willing to do the work. The executor carries out directions in your will. It can be a big responsibility. They’ll need to gather and manage assets, notify heirs, Social Security, Medicare, pay estate taxes, secure and possibly sell your home, and more.

Have an experienced estate planning attorney set up at least three key elements: a will, power of attorney and advance healthcare directive.

The Will names a guardian and an executor and gives directions for distributing assets. The biggest estate planning mistake people make is not having a will. When this happens, the court assigns someone to manage your estate, and your family will have to live with whatever the court-appointed person decides.

A Power of Attorney allows someone to care for your business affairs if incapacitated. A Medical Power of Attorney, or Healthcare Proxy, will enable you to name someone to be involved with your healthcare, speak with your doctors and health insurance company and help make decisions for you. These documents should be customized to convey your wishes as to how much or how little you want these people to be able to do.

An advanced healthcare directive is used to state your wishes if you are incapacitated about what kind of treatment you do or don’t want to receive if you are at the end of your life. For instance, if you don’t want to be resuscitated or if you don’t want CPR to be performed, this information goes into the AHD. This document can be challenging to consider. However, it is a blessing to spare your family from having to guess your wishes during a time of crisis.

Discuss the use of a trust with an estate planning attorney. Trusts are not just for wealthy people. Some trusts take assets from your taxable estate and distribute them directly to beneficiaries outside of probate. Many kinds of trusts serve different purposes, so your estate planning attorney will help you understand which is best for your purposes.

Determine who to leave your assets to and how to structure your estate. If you have young children and you don’t establish the correct trusts, they may inherit everything when they turn 18 or 21. This is rarely a good idea.

Tax planning is a part of estate planning. While you may not face federal taxes, your state may have its estate tax, and some states still have inheritance taxes. Rates and exemptions are different in every state.

The incapacity planning part of an estate plan is for you. However, the rest is for your family, to take care of them and show them how much you care about them and their futures.

Reference: AOL (Feb. 4, 2025) “Estate planning checklist: 7 key steps to making a successful plan”

An Estate Plan To-Do List to Get Planning Done

 

Even if your New Year’s resolutions have fallen by the wayside, don’t let the resolution to create or revise your estate plan pass without tackling it. A recent San Francisco Bay Times article, “Kickstart 2025 With 5 Estate Planning Resolutions to Secure Your Future,” offers a step-by-step list of the tasks to complete your estate plan.

Start by locating your estate planning documents. Review them to be sure they’re up to date. If your will includes people no longer living or beneficiaries you’re no longer feeling generous towards, you’ll need to make those changes.

Review your estate plan with an eye on the people you’ve named for specific roles. Will the executor or trustee be a good fit? What about the person you’ve named as Power of Attorney? Your estate plan should also include a Healthcare Proxy. As you age, you need to be sure the people in these roles can still physically get to the bank or the hospital and navigate online banking or healthcare portals on your behalf.

Digital assets are now part of everyone’s life. However, not everyone addresses their digital assets in estate plans. You’ll need to review and record your digital accounts, from emails to social media to cryptocurrency, and create a list of the accounts, login information and passwords. If you have two or three-factor identification, you’ll need to be sure your digital executor can access your mobile phone or email to confirm their identity. Many people use password managers to gather their information. However, a notebook will do as long as your digital executor knows its location.

If you haven’t reviewed your healthcare directives in a while, you’ll want to do so. Your wish to be kept off any life-support systems while in your thirties may have changed as you have gotten older. After COVID, many people who would have never wanted to be on a respirator learned that it was lifesaving, not life-ending. Speak with your healthcare proxy about your wishes, so they know what you want and your estate planning attorney to ensure that they are documented properly.

An experienced estate planning attorney can help you avoid or minimize the probate process. For instance, placing assets in a trust can take the asset out of your taxable estate if the right trust is used. The assets in the trust won’t go through probate and will remain private. If using Payable on Death accounts makes sense for your estate plan, be sure that the accounts you want to transfer to someone else on your death are titled correctly.

An estate planning attorney will guide you through the process to ensure that you have the right documents, so your loved ones can help you if you become incapacitated and know your wishes when you die. It’s a gift to those you love, easing their burden and building your legacy.

Reference: San Francisco Bay Times (Feb. 5, 2025) “Kickstart 2025 With 5 Estate Planning Resolutions to Secure Your Future”

Why Is Estate Planning Important?

 

Estate planning is part of long-term planning, no matter what the size of a person’s investment portfolio or their total net worth. It protects the individual and their property, which is why everyone needs an estate plan. Estate planning is an umbrella term used to refer to everything from asset allocation after death to planning for incapacity and end-of-life healthcare decisions, according to a recent article in The Daily News, “What to know about estate planning.”

Typical components of an estate plan include a last will and testament, power of attorney, healthcare directives and trusts. Most surveys conducted in the last few years show only a third of all American adults have a will, and more than half think they don’t need an estate plan because they don’t own enough assets.

Here’s all you need for an estate plan to protect yourself and your loved ones:

A will is the document used to distribute assets after your death. Working with an estate planning attorney who knows the laws of your state is the best way to ensure that your wishes are followed. Trying to do this on your own or with an online platform puts your will at risk of being deemed invalid by the court, which would put your entire estate into the hands of your local probate court.

The will is used to name an executor to carry out the directions you’ve expressed in the will. It is also used to name a guardian if you have minor children. Without a will, or if a will is found to be invalid, the court will name someone to take over distributing your assets. If you have young children and both parents are deceased, the court will decide who should raise your children.

Trusts are used to protect assets, minimize taxes and safeguard assets for beneficiaries. There are many different types of trusts, and an experienced estate planning attorney will know which type is best for your family. For instance, if a family member is disabled, you may need a Special Needs Trust. Your estate planning attorney will also discuss whether you need a Revocable or Irrevocable Trust.

Trusts are used to shield assets from creditors and may be part of Medicaid planning. Another benefit is that assets in a trust don’t go through the probate process. If you are concerned about disgruntled family members poring over your will—which becomes a public document after it is entered into probate—you may wish to use a trust to keep your estate and your assets private.

Planning for incapacity is an integral part of an estate plan. Suppose you become incapacitated without any estate planning. In that case, your family will need to go to court to be able to speak with your doctors, talk with the health insurance company and take part in your healthcare decision-making. Court proceedings are costly and take time; they are not something you want to be embroiled in during a health emergency.

Your estate plan should include a Power of Attorney, which names another person to act on your behalf if you are incapacitated. You’ll also want a Healthcare Proxy to permit another person to make medical decisions on your behalf. An Advanced Directive will express your wishes for what kind of care you want if you can’t communicate your wishes.

Having an estate plan expresses your wishes for more than your property distribution. If you don’t have an estate plan, contact an estate planning attorney to discuss your intentions for assets, beneficiaries and your future. Most people are surprised at how relieved they feel once this task is taken care of. The peace of mind knowing you and your family are protected is well worth the effort.

Reference: The Daily News (Jan. 30, 2025) “What to know about estate planning”

Think of Estate Planning as a Gift to Loved Ones

 

When you think of a gift for your family, you might think about matching sweaters or a family vacation. However, the gift of an estate plan will be remembered because it demonstrates your ability to take care of your family and could help build wealth across generations. A recent article from CNBC Money Report, “Here’s why estate planning is a gift to your family,” explains how this works.

Remember, there’s no relationship between creating a will and signing documents and something happening to you immediately afterward. This notion keeps many otherwise responsible adults from taking care of their estate plans. Don’t fall prey to it.

Another point is that families fight over money and possessions, even when relationships are good. Without clear instructions provided in an estate plan, a family undergoing the loss of a parent is vulnerable to fighting and litigation.

You’ll want to have a Last Will and Testament and, depending on your situation, possibly trusts, a Power of Attorney for financial and legal matters if you are incapacitated and a Healthcare Proxy (sometimes called a Healthcare Power of Attorney), so someone can make medical decisions and talk with treating doctors in case you can’t communicate.

What happens when there is no estate plan? The courts will make all of your decisions, regardless of the wishes of your loved ones. Your entire estate will go through probate, and a stranger could be named to take charge of it, with a hefty fee to compensate them for their services.

If you have minor children and no will, the court will name a guardian to raise your children. Will it be someone you would have picked or your distant cousin who lives hundreds of miles away? There’s no way to know.

Assets titled properly or those with a named beneficiary will go directly to those named on the accounts without going through probate. This is one of the attractions of trusts, which never become public.

Part of creating an estate plan includes reviewing your accounts and beneficiary designations to ensure that the people named as your beneficiaries are still correct. If you have any old accounts you haven’t looked at in decades, now is the time to ensure that you’re not leaving your pension to an old college pal—unless that’s your intention.

Estate planning is about empowering the present and planning for the future. Chances are you’ve read many news articles about celebrities with massive estate problems because they failed to plan. Leaving a mess for your family to deal with is probably not the legacy you had in mind.

Give yourself and your loved ones the peace of mind knowing you’ve taken care of your estate plan. Be remembered as someone who cared enough to do the right thing. Consult with an experienced estate planning attorney today.

Reference: CNBC Money Report (Jan. 7, 2025) “Here’s why estate planning is a gift for your family”

What are Best Practices for Estate Planning?

 

You’ll be able to avoid common problems and have a more effective estate plan by being mindful of some simple but important details, according to a recent article, “7 Estate Planning Best Practices,” from Kiplinger.

Name more than one person for essential roles in your estate plan. An executor is the person who will carry out the instructions in your will. What happens if they cannot serve or decide they don’t want to? Always make sure to name an executor and a successor executor. The same is true for your Power of Attorney, Healthcare Agent, and, if you have a Revocable Trust, your successor trustee. If most of the important people in your estate plan are around the same age as you, it’s wise to name younger people as backups.

Talk with your loved ones about where your estate planning documents can be found, including how to access them. They’ll need to be able to find them, for starters, and then learn how to open them if they are in a secure location. Don’t surprise loved ones by adding turmoil to their grief.

Talking about your estate plan includes talking about the intentions behind the estate plan. You may wish to create a letter of intention, explaining your reasoning behind the estate plan. It’s not legally enforceable, but it might preclude ambiguity and possibly prevent family disputes. If you don’t, you add the possibility of family fights, litigation and even the dissolution of family relationships over the generations. People fight about money, whether we like to acknowledge this or not.

Work with an experienced estate planning attorney who knows your state’s laws. Estate planning laws are state-specific, and someone who is a terrific attorney in Colorado won’t necessarily know the law of Texas. If you move to a different state, you’ll also need to update documents to be sure they will work in your new home.

Don’t wait until a medical emergency to give your healthcare providers copies of relevant estate planning documents. Ask your estate planning attorney and your doctor about giving your healthcare team documents like a living will, power of healthcare attorney, living will and other related documents. Most healthcare systems today have patient information portals where they can be stored.

Did you create a trust but haven’t yet funded it? If you don’t retitle your assets so they are inside of the trust, your trust won’t perform as intended. This last step has to happen for the trust to be effective.

Review your estate plan on a regular basis. Most estate planning attorneys recommend reviewing an estate plan every three to five years, and more often if there have been large “trigger” events like marriage, divorce, death, or birth. If you move to a new state, you’ll also need a review to be sure your estate is still valid in the new state.

Your estate is like your car: without regular maintenance, it will not perform well and, over time, will stop running. Call your estate planning attorney to make sure that your documents are in order for the new year.

Reference: Kiplinger (Jan. 6, 2025) “7 Estate Planning Best Practices”

What’s the Difference Between a Living Will and Last Will and Testament?

 

Estate planning serves to make your wishes known, plan for the future and enjoy peace of mind knowing that you have protected yourself and your family. Young adults, unmarried people and parents juggling family and work also need an estate plan, according to a recent article from Success, “What to Consider When Making a Will—and the Difference Between a Will and a Living Will.”

A Last Will and Testament and a Living Will are essential parts of every estate plan. However, their similar names can lead to confusion. They serve two very different purposes.

A Will provides directions to be followed when administering your wishes. The will names an executor who manages the estate and distributes assets in the probate estate. A guardian for minor children is also part of a will. This is why it’s so important for parents with young children to have an estate plan, including a will. If there is no will, a court will decide who will raise the children if both parents die.

Young adults, who generally believe they are immortal, often engage in high-risk activities and travel to exotic places. They should have a will and, equally importantly, a living will. This document is used to express preferences for medical care if one is seriously ill or injured and cannot communicate their wishes.

Similarly, young adults should also have an Advance Directive or a Medical Power of Attorney so someone they choose can make decisions if they are incapacitated, whether by illness or injury.

A Power of Attorney is needed to allow someone else to handle financial and legal matters in case of incapacity. Taken together, the will, living will and advance directive allow someone else to take over for you while you are living or after you have died.

Digital assets need to be addressed for anyone with an online life—which means almost everyone, especially younger people. Access to bank accounts, utility companies, photos stored online, social media accounts and digital property is a part of contemporary life. Settling an estate without this information will be difficult, if not downright impossible.

Estate plans need to be reviewed every three to five years and when significant life events occur, like marriage, divorce, the birth of a child, or a big change in financial circumstances. An experienced estate planning attorney can guide you through this process, making it far easier than expected.

Reference: Success (Dec. 23, 2024) “What to Consider When Making a Will—and the Difference Between a Will and a Living Will”

New Year’s Estate Planning Resolutions for 2025

 

You're in good company if your New Year’s resolutions included estate planning. Many people who put off creating or reviewing their estate plans in 2024 have resolved, once again, to take care of this vital task in 2025. A recent article from Coeur d’Alene/Post Falls Press, “Estate Planning in 2025: A New Year’s Resolution worth keeping,” reviews the basics of estate planning.

Last Will and Testament. It expresses how you want assets to be distributed and who your executor should be—the person in charge of asset distribution. Suppose you’ve had significant changes in life, like moving to a new state, welcoming a new family member through birth, adoption, or marriage, losing a loved one, or changing beneficiaries. In that case, you’ll need to review your estate plan.

Revocable Living Trust. Many kinds of trusts exist. However, a Revocable Trust is most commonly used to help heirs avoid a lengthy and expensive probate process. Trusts allow assets to pass directly to beneficiaries, and their contents remain private, which many prefer.

Power of Attorney Documents. A POA designates who you want to make decisions for you if you become incapacitated. A Durable Power of Attorney is used to name the person you want to be in charge of your financial affairs and should be drafted to meet your unique needs. For instance, you may want someone to be able to pay your bills and maintain your home but not sell your coin collection. A Medical Power of Attorney allows someone of your choosing to be involved in your healthcare decisions and talk with healthcare providers.

Living Will and Advanced Medical Directives. This is the document where you express your wishes if you are terminally ill and not likely to recover to what we consider a “normal” life. It addresses matters like receiving life support like artificial nutrition, respiration, and other means of being kept alive. These documents spare your loved ones the ordeal of guessing what you would want in a medical crisis and are a kindness to have in place.

Designated Beneficiaries. Regularly reviewing accounts with named beneficiaries should occur while you’re working on your estate plan. Most retirement accounts and pension funds allow you to name a beneficiary. These pass outside of the probate estate, so you’ll want to be sure they are up to date. You may also have bank or investment accounts with beneficiary designations, so check those.

Getting your estate plan done is one New Year’s resolution you’ll be glad to have kept!

Reference: Coeur d’Alene/Post Falls Press (Jan. 5, 2025) “Estate Planning in 2025: A New Year’s Resolution worth keeping”

Preparing for Life With an Estate Plan

 

A properly prepared estate plan includes a number of legal documents giving your specific and personal instructions to healthcare providers, financial institutions and the courts in charge of validating your will and overseeing asset distribution after you die.

According to a recent article from Kiplinger, “5 Key Components of an Estate Plan—and 7 Others to Consider,” if you don’t have an estate plan, your state’s government and local courts will make many decisions for you. Worse, your loved ones will need to petition courts to do anything for you, from making healthcare and end-of-life decisions to appointing someone to raise your children or sell your home.

An estate plan is prepared by an estate planning attorney who will know the various legal documents and strategies necessary to protect you and your loved ones. An estate plan includes the following documents:

Living Will. This document expresses your wishes for medical care, with as much detail as you want. For instance, do you want to have artificial nutrition through feeding tubes or blood transfusions if you are unable to give your consent? How do you want doctors to manage end-of-life care, if your body is living but your brain functions have ceased?

Without a living will, doctors will usually take an aggressive stance to keep you alive, even if you have something else in mind. Alternatively, your loved ones might have to make these decisions without knowing what you would have wanted. Having a living will and making sure your loved ones know what you want is a gift to them. Think of the guilt they’ll live with if they don’t know your wishes.

Healthcare Power of Attorney. This POA names someone you trust to make medical decisions when you can’t convey your wishes because of incapacity. They become your healthcare proxy, speaking with your doctors and deciding on treatment for you. Without one, your loved ones won’t be able to be involved in your care without going to court and petitioning to be named healthcare proxy.

You may remember the case of Terry Schiavo, a 26-year-old woman who had a heart attack and was only kept alive through artificial means. Her husband and parents were engaged in a court battle from 1990 to 2005 when a court ruled doctors could remove a feeding tube. Most of these situations don’t make headlines but are no less painful for families.

Financial Power of Attorney. This POA names someone to manage your money, access financial accounts, manage assets and run the day-to-day finances of your life when you are incapacitated. If you don’t have a POA, the court will name someone for you, whether you would have chosen them or not.

There are different kinds of POAs. The Durable POA is in effect the moment it is executed. The Springing POA is only executed when you become incapacitated and may lead to delays. Your estate planning attorney will know which is best for your situation.

Last Will and Testament. A will outlines your instructions for distribution of assets. If you have minor children or other dependents, it names a guardian for them. It also names an executor, the person who will be in charge of managing your estate. Without a will, again, the courts will decide who should receive your assets and raise your children.

An estate plan addresses the use of trusts to distribute your assets without court involvement. If your family includes a disabled individual, your estate plan includes plans for their future. For singles and childless couples, an estate plan spells out who will be able to make financial and healthcare decisions when you cannot.

Consult with an estate planning attorney today to give yourself and your family the peace of mind you all deserve.

Reference: Kiplinger (Jan. 6, 2025) “5 Key Components of an Estate Plan—and 7 Others to Consider”

Why Singles and Child-Free People Need Estate Plans

 

A growing number of Americans are single or have chosen to be child-free. They may feel they don’t need estate planning, since so many articles about this topic concern couples, children, and grandchildren. However, estate planning can be more important for these individuals, according to a recent article from Yahoo! finance, “Don’t let the government inherit your wealth: Estate planning is essential for those who are single or child free.”

Without spouses and children, most state laws about inheriting property when there is no will rely on kinship or bloodlines, and assets will go to the next of kin, whether you like them or not. The other estate planning issue facing singles and child-free people is planning in advance, so someone you trust can manage your financial life and make health decisions on your behalf if you are incapacitated. All of these things are part of an estate plan.

For starters, review your financial accounts. Which ones allow you to name beneficiaries? If you have nieces or nephews, beloved friends who are your family, or charitable organizations you care about, you could name them to receive these assets.

If you don’t already have a durable and medical power of attorney, speak with an estate planning attorney to get these started immediately. Downloading templates from the web is not a good idea for these documents, as you may give someone expanded powers you didn’t intend to, or they may be deemed invalid. An estate planning attorney will create these documents to reflect your wishes. Do you want someone to be able to pay your bills but not to sell your house? Do you want to be kept on life support only if certain indicators are present? These are specific wishes to discuss and document.

Everyone should have a last will and testament. The will is used to name the executor overseeing your estate upon your passing. They will need to notify the Social Security Administration, Medicare and/or Medicaid and your state’s motor vehicle bureau, of your passing. They’ll also create an estate bank account, file for an estate taxpayer identification number, pay taxes and more. They’ll be in charge of distributing assets according to the directions you’ve left in your will. Without a will and a named executor, a court will name someone you don’t know as your estate administrator.

If you are a member of the LGBTQ+ community, having an estate plan is even more important to protect your wishes and, if you have one, a long-term partner. Without being legally married, even someone who has been part of your life for decades will not have any rights to inherit from you. Another reason to work with an experienced estate planning attorney is that every state’s laws regarding same-sex marriages, domestic partnerships and civil unions vary. An estate planning attorney will make sure that your documents align with state laws.

An unpleasant but necessary fact to consider: financial elder abuse can occur more easily when there’s no one closely involved in your life to keep an eye on you and your finances. Decision-making can be less heartfelt. Will a distant relative deciding on your nursing home pick one you would have wanted, or will their eyes be on their inheritance?

Whether you are child-free, single, or unmarried but in a serious relationship, don’t delay sitting down with an estate planning attorney to map out your future.

Reference: yahoo! finance (Dec. 19, 2024) “Don’t let the government inherit your wealth: Estate planning is essential for those who are single or child free”

Common Estate Planning Mistakes and How to Avoid Them

 

Estate planning is something everyone should do to protect themselves while they are living, ensure that assets are distributed according to their wishes after death and prevent families from fighting over estates. A recent article from The Daily Record, “Experts urge early estate planning to avoid costly mistakes,” reminds us we never know when we’ll need our estate plan to go into effect, so having one in place is important.

Remember, estate planning isn’t just about drafting and signing legal documents. It encompasses defining family goals and facilitating conversations to discuss family values and hopes for the future.

Every estate plan needs at least three core documents:

A financial power of attorney, needed to authorize another person to make financial and legal decisions on your behalf in case of incapacity.

An advanced medical directive, which gives you the opportunity to express your preferences for medical care, if you’re not able to communicate.

A last will and testament directing how you want assets to be distributed, naming an executor to administer your estate and naming guardians for minor children.

A common mistake is attempting to use online templates for critical documents like a power of attorney or wills. While it seems convenient and inexpensive, many of these documents fail when reviewed by a court because they don’t follow state law or are contradictory.

An estate plan is a highly personalized document and requires a holistic view of the family’s life and situation. A thorough review of your life, finances and family dynamics is necessary to create an effective estate plan while you are living and after you’ve passed.

Another common error is thinking your family won’t benefit from a trust. However, any family with dependents and assets needs to at least consider a trust. Using a trust can protect your family and your assets from creditors, avoid probate and maintain privacy.

Another mistake is failing to review an estate plan every three or four years. The estate plan might not achieve goals unless it keeps up with changes in tax laws and retirement rules. For example, beneficiaries now have ten years to empty an inherited IRA, when in the past, they had a lifetime to take out withdrawals.

You may want to change your IRA beneficiary if these new rules will create a tax burden for them.

The process doesn’t have to be complicated. However, it does require taking the first step, which is making an appointment to meet with an estate planning attorney. You can anticipate a feeling of relief and peace of mind from knowing you’ve protected loved ones and yourself.

Reference: The Daily Record (Dec. 17, 2024) “Experts urge early estate planning to avoid costly mistakes”

Avoid Common Estate Planning Mistakes

 

Otherwise sound estate plans can be undermined by critical mistakes. A recent article from The National Law Journal, “Estate Planning Mistakes—2025 Annual Refresher—Part 3 [Podcast],” outlines how to avoid a number of common mistakes and protect the estate plan and the family from the effects of these missteps.

Not providing complete and accurate information. Transparency is critical when creating an estate plan. There are times when life’s circumstances may be sensitive and difficult to share with a professional. However, secrets can tear estate plans to bits. If assets are being hidden to avoid paying taxes or if there is an unacknowledged biological child, the integrity of the estate plan could be jeopardized.

This is especially relevant in a blended family. If a prior marriage or a child from a prior marriage is not disclosed, the result could be litigation between heirs. Hidden debts or undisclosed assets may surface after death, leaving executors and heirs with tax liabilities and family strife.

Failure to coordinate estate and financial instruments. Financial investments, life insurance policies and estate plans are rarely all started and completed at the same time. However, these and other accounts need to be coordinated so they work together. If a will says all three children should receive equal shares of an estate, but only one child is named as a beneficiary on a life insurance policy, the three are not going to receive equal shares. Provisions with different instructions in trusts, wills and beneficiary designations will only lead to trouble.

This is a relatively easy problem to solve; it just takes time and attention. Review estate planning documents every few years, including wills, trusts, any account with a beneficiary designation, power of attorney documents and life insurance policies. An estate planning attorney is always willing to speak with a financial advisor and CPA to ensure that the estate plan and financial tools will work together.

Talk with your family about your estate plan. A lack of trust and communication leads to estate plan failure and family fights. If you are uncomfortable talking with family members, consider setting up a family meeting with your estate planning attorney. If the family is spread across the country, an online video meeting can be coordinated.

Even the best of intentions can lead to problems. If one family member is struggling financially while the others enjoy robust earnings, parents may wish to leave more of their estate to the child having money problems. Talking about this openly with all of the siblings while parents are still living is far better than giving the family a major jolt when expectations aren’t met. If the conversation doesn’t happen, a painful legacy may be created.

Relying on Joint Tenancy to transfer assets. It may seem like joint tenancy is an easy way to transfer assets upon death. However, it can undo the intentions of a will or a trust. Assets held in joint tenancy pass directly to the surviving tenant, transferring outside of the estate plan. If a parent puts one child’s name on a joint account but not others, the child on the account is under no legal obligation to share the asset with their siblings, setting the stage for family discord and often, litigation.

Joint tenancy should be reviewed along with all other ownership and estate planning documents to consider how it will impact the estate plan. Revocable trusts may offer the same flexibility, while also ensuring that assets are distributed according to the intent of the overall estate plan.

Relying on informal agreements. A verbal promise between close family members may feel good. However, it won’t be enforced if one party fails to live up to their promise. This situation arises frequently when family heirlooms or personal possessions are promised but end up in another person’s hands. Documenting these promises and discussing decisions with heirs can avoid disputes and damaged relationships.

Effective estate planning requires attention to detail, communication and the guidance of an experienced estate planning attorney. Ensuring that the estate is properly planned has the added bonus of protecting the relationships between family members, which is the most valuable legacy of all.

Reference: The National Law Journal (Dec. 17, 2024) “Estate Planning Mistakes—2025 Annual Refresher—Part 3 [Podcast]”

Why Your Children Need You to Complete Your Estate Planning

 

Parents of minor children need an estate plan to protect their children’s future. The article “Estate Planning Series: For Parents” from Colorado Parent explains what can happen if a family with young children doesn’t have an estate plan.

Estate planning is more than distributing assets or even planning to avoid an estate going through probate. A last will and testament is the legal document used to name a guardian for minor children if both parents should die or become incapacitated.

Without a will, the court appoints someone as the children’s guardian. Most people would instead make this decision themselves, naming a person they trust and know will help their children thrive. If parents name their own parents or anyone in a generation above them, they need to carefully consider whether or not those people can raise the children as they age.

Parents don’t have to name a family member to be their children’s guardian. Parents may get some push-back on this decision. However, they know their children and family best. It may be better for children to be raised by a trusted friend who has agreed to take on this task than the children’s grandparents. Family members who are perfectly capable of dealing with toddlers may be too elderly when children reach their teenage years and need a different kind of parenting.

A Power of Attorney is essential for everyone over 18. When someone becomes incapacitated, another person can take over the business of their lives, maintaining a house and managing day-to-day bill paying. Without a POA, a family member must have a guardianship or conservatorship approved by a judge. The judge might appoint a professional guardian who doesn’t know the person or their family or a family member who has a fraught relationship with the incapacitated person.

An estate planning attorney can create a POA to suit individual needs. A document downloaded from the internet is likely to be riddled with potential disasters, including the possibility of giving someone more decision-making power than you would have wanted.

Estate planning for families with young children also addresses how the children’s living expenses will be paid. If life insurance is purchased, what happens to the proceeds if one of the parents dies? If a child is the life insurance beneficiary, a court-appointed custodian may be appointed to receive and manage the funds. By placing the life insurance into a trust and naming a trustee, the parent can be confident the proceeds will be used solely for the child’s upbringing.

These are just a few issues parents must consider when creating an estate plan with young children in mind. Speak with an experienced estate planning attorney to protect your family and their future. Once it’s done, you can return your attention to all of the ups and downs of parenting.

Reference: Colorado Parent (December 2024) “Estate Planning Series: For Parents”

How Estate Planning Cares for Future Generations

 

Building and owning a business or saving prudently can lead to more than a comfortable life—it can create a legacy to be passed on to family members and charitable groups. Estate planning for a legacy takes many forms, explains an article from Cincinnati Business Courier, “Taking Care of Future Generations: Estate Planning Strategies and Trends.”

The primary purpose of estate planning is to transfer assets smoothly and when possible, without court involvement. High net-worth families use estate planning to use existing tax opportunities to structure their assets, so they may be passed to the next generation in a tax-efficient manner.

Estate planning is also necessary to allow assets to pass without turmoil and stress. Having a detailed estate planning, where wishes are clear and assets are carefully inventoried, prevents heirs from having to undergo legal and logistical contortions to receive an inheritance.

The planning process varies from state to state. However, the general process is the same. An estate planning attorney discusses the family, the business or other assets and the wishes to be achieved. Some states, like Kentucky and Pennsylvania, still have inheritance taxes in addition to state estate taxes. As of this writing, few families are impacted by federal estate taxes, although this may change in the future.

Wills may be the best known part of estate planning. However, the will is only part of an estate plan. If prepared properly, most property passes without a will and, therefore, without probate. Trusts are the most commonly used tool in estate planning. Trusts are created to serve as separate legal entities which distribute assets upon the death of the grantor (the person who created the trust). Assets distributed by a trust don’t go through probate and are distributed according to the language of a trust. This level of control, in addition to taking out any court involvement, are one reason why trusts are so popular in estate planning.

A Power of Attorney is very important in estate planning. The person who has been named the POA steps in to handle general financial matters and helps maintain the normal course of life—paying bills and maintaining a home—if someone becomes incapacitated. A Medical Power of Attorney gives the power to talk with treating physicians and make decisions.

An estate plan also includes naming an executor, the person in charge of administering the estate. You’ll want to select a person who is, above all, trustworthy. They will also need to be organize, financially savvy and able to manage the beneficiaries and the family’s dynamics.

Estate planning often involves lifetime gifts, also known as planned giving. Giving to charities while living allows the donor to see the impact of their generosity, which can be very rewarding. The same can be said about giving to loved ones. The benefit of taking assets out of the taxable estate is a motivating factor for some, but not all, lifetime giving.

Giving is also done through family foundations and donor advised funds (DAFs). The DAF is becoming more popular because the charitable deduction is created when the fund is created, while there is still access to the funds. Foundations are typically created only by extremely high net worth families, as there are extensive costs involved in creating a foundation. However, a family foundation is an excellent way to bring younger generations into the tradition of philanthropy.

An estate planning attorney will walk you through the necessary steps, explore options and help outline your wishes for the legacy you wish to leave to loved ones. It is a gift to the family, providing peace of mind for you and a plan for the future.

Reference: Cincinnati Business Courier (Nov. 15, 2024) “Taking Care of Future Generations: Estate Planning Strategies and Trends”

Make Life Easier for Heirs: Get Your Estate Organized

 

The holiday season is not when most of us think about death and dying. However, we do think about gift-giving. Estate planning is a gift for your family. Wouldn’t you prefer a package wrapped in festive paper and decorated with ribbons than an unwrapped item hastily stuffed into a shopping bag? The article “5 Things to Do Now to Make Your Estate Simpler for Your Heirs” from The Wall Street Journal offers a starting point.

Update all estate planning documents. Failing to update estate planning documents, including finalizing new documents, can wreak havoc on families. One example is a woman who took about two decades to update her will and then died before signing the papers. Her will included giving assets to stepchildren she hadn’t seen in more than twenty years. Her adult children are spending thousands to have the new will enforced by a judge, even though it’s unsigned.

When did you last examine the beneficiary designations for all your financial accounts? Life insurance, retirement accounts, bank and investment accounts, pensions and other financial accounts provide an opportunity to name a person or people to receive the assets directly upon your death. If your old college pal is the person you thought of when you started your 401(k) with your first job, your wife may not appreciate his receiving hundreds of thousands of dollars upon your death.

Named beneficiaries receive assets directly from the financial institution and do not go through probate. No matter what language is in a will or even a living trust, these assets belong to the people you named to receive them. You should have a list of all of these accounts and know who the beneficiaries are.

Digital assets are now part of estate plans. There are very few people today who don’t have digital assets. These include the content in your emails, photos stored on the cloud, websites, content on social media platforms, online businesses and anything you’ve created online. Most people don’t understand the Terms of Service Agreement they make between the service provider and themselves when they click on the link to approve the TOSA. However, this is a legally binding contract delineating what the platform owns and what the user owns. You may not own books, movies, or other digital assets; you might have rented them unknowingly.

Digital assets need to be organized for heirs, since there isn’t a paper trail for them to follow like in previous decades. You can create a spreadsheet, use a password manager or a pad of paper. However, there should be a means for your digital executor to identify and access your digital assets.

Some digital platforms allow you to name a “legacy” contact who can take care of your digital assets after you’ve passed. You’ll need to go through each of your digital assets to find out which platform has this or related features. If it seems annoying, imagine how your heirs will feel trying to untangle your digital assets.

If your estate includes cryptocurrency, this is especially important. Millions of dollars of crypto have been lost because people have failed to secure their pass keys or digital wallets.

Deal with personal property now. Especially if you have multiple heirs, hoping the kids “work things out” could be a recipe for disaster. Make a list of your personal items and who you want to receive what. In some families, this is relatively straightforward. However, your adult children will be grieving after your passing and vulnerable to disputes. Another tactic: give items while you’re living.

Get your estate planning documents organized. Create a three-ring binder with all essential documents. Contact information for your estate planning attorney, CPA and financial advisor should be provided. Include a list of bills paid online, like utility, mortgage, taxes, health insurance, car insurance, etc. Also included are Power of Attorney, Health Care Power of Attorney, Living Will, Trusts and other estate planning documents. Tell your executor and adult children where the folder is.

An organized estate plan helps avoid family conflict. Having documents prepared, property assigned and accounts recorded all takes time. However, by doing so, you’ve minimized the work for loved ones and minimized reasons for quarrels during what will already be a difficult time.

Reference: The Wall Street Journal (Nov. 14, 2024) “5 Things to Do Now to Make Your Estate Simpler for Your Heirs”

Planning to Protect Your Children’s Inheritance: Asset Protection

 

No one likes to think about the possibility of losing a lifetime of earnings through unfortunate events like divorce, spendthrift heirs, or litigation. However, ignoring these risks won’t prevent them. A recent article from Kiplinger, “Want Your Kids to Inherit? You Need an Asset Protection Plan, ” explains several asset protection strategies used to protect wealth from disappearing in nefarious ways.

Prenuptial agreements aren’t the most welcoming topic when your adult child announces their engagement. Still, this should be discussed and encouraged no matter how much you love your prospective new family member. A prenuptial agreement or prenup is a contract between two adults agreeing on how they will distribute assets in case of divorce. This legally binding document addresses assets, debts, spousal support, alimony, gifts and inheritances. It’s also helpful as a supporting document if one of the spouses should die unexpectedly. However, the couple should have a will, power of attorney and other estate planning documents created as soon as they are married.

Depending on the state, there may be laws concerning when the prenup is signed for it to be valid. Signing a prenup under duress could make it invalid, so this needs to be addressed in a timely manner.

Another option is to create a postnuptial agreement (postnup). Spouses may contractually agree to terms outlining the distribution of assets in the event of a divorce after the wedding.

Asset protection includes determining and formalizing how assets will be passed on to heirs. Parents should consider creating trusts as part of their estate plan. Trusts allow grantors (the person creating the trust) a much higher degree of control over who receives the assets in the trust and takes them out of the probate estate.

For example, the trust may call for a beneficiary to receive a portion of their inheritance at ages 30 and 40 and the balance at age 50. An heir with a drug dependency might be required to complete a rehabilitation program or maintain employment over a steady period of time before the trustee can distribute some or all of the assets in the trust.

If assets are left through a will, a number of vulnerabilities are created. First, they are part of the probate estate and subject to federal and state taxes. Second, the will becomes a public document when it goes through probate, so creditors can learn if someone is receiving an inheritance. Creditors may include ex-spouses, credit card companies and financial institutions.

An experienced estate planning attorney is familiar with the tools used to protect assets and ensure that they pass to the next generation according to your wishes. Protecting a lifetime of hard work is a worthy endeavor, creating a legacy and providing security for those you love.

Reference: Kiplinger (Nov. 9, 2024) “Want Your Kids to Inherit? You Need an Asset Protection Plan”

How Does a Special Needs Trust Work?

 

The most straightforward description of a special needs trust is designed to hold assets for a disabled person without putting benefits received from the government at risk. It’s essential for those planning for a loved one’s future to understand how special needs trusts work, how they are funded and what they can and cannot accomplish. A recent article appearing in Success, “What Is a Special Needs Trust?” provides more insight.

Individuals with disabilities who qualify for financial support through Medicaid or Supplemental Security Income (SSI) must have limited assets and income. They become ineligible for benefits and resources if they exceed their state’s limits. A Special Needs Trust (SNT) keeps assets separate.

An estate planning attorney creates the SNT and names a trustee for the funds. The trust's assets are to be used for housing, transportation, education, health and other expenses not covered by government benefits.

In some cases, the SNT shouldn’t be funded until necessary. Once money or other assets are in the trust, its use is restricted. Parents are advised to ensure that well-meaning grandparents or other family members don’t bequeath assets directly to their disabled loved ones. They have the option of creating an SNT of their own or bequeathing assets to the SNT created by the parent.

There are different kinds of SNTs. A Third-Party Special Needs Trust is created by a parent or other involved person to benefit a disabled child. If any assets are in the trust when the beneficiary of the trust dies, the person who created the trust decides who receives them. They may choose to donate the assets to a charity or a family member.

If an adult becomes disabled later in life, a different type of trust is used: a First Party Special Needs Trust. These trusts are created to own the assets of the disabled individual. For instance, if someone becomes disabled due to a car accident and receives a legal settlement, the money would go into the trust. This allows the disabled person to continue to receive government benefits. When the person dies, the funds spent on their care are paid back to the government through the Medicaid Repayment Program.

Parents or loved ones need several other legal documents to protect themselves and their disabled family members. An estate planning attorney will draft a will to ensure that the parent’s assets pass into the Special Needs Trust. Everyone should have a Power of Attorney and Medical Power of Attorney to protect themselves in case of incapacity.

Checking beneficiary designations is especially important if a family member receives funding from a Special Needs Trust. The person named on the beneficiary designations receives assets upon the owner’s death, which could put their government benefits at risk. All assets must go into the Special Needs Trust to protect their Medicaid eligibility.

Planning for the future is essential for parents of disabled children and adults. It can’t fix everything, but it can relieve some of the worry, knowing that their loved one’s future is protected.

Reference: Success (Oct. 20, 2024) “What Is a Special Needs Trust?”

Wealth Protection Through Estate Planning

 

Without a well-prepared estate plan, wealth can be lost to taxes, administrative costs, or disputes among heirs, both in and out of court. With an up-to-date estate plan, changes to tax laws are proactively addressed and wealth can be protected and passed across generations. A recent article appearing in Medical Economics, “Estate planning is your first line of defense against wealth loss—Here’s what you should know,” explains how an estate plan creates a framework to minimize taxes, avoid the costs and complications of probate and ensures that your wishes for your estate are followed.

Documenting assets is one task that is done when creating an estate plan. When records are not clear, transferring assets can become complicated. A comprehensive record-keeping system can store documents like deeds, life insurance policies, asset inventories, family videos and photographs online.

Many financial records are already online through client portals by major financial companies. The key to incorporating these records into an estate plan is remembering where all the information is stored and being willing to share access information with a trusted family member or friend. The person you name as an executor of your will or a trustee for a trust is the most likely candidate to be provided with this information.

There are many steps to having a solid estate plan. However, there are also many missteps. Here are some of the most common pitfalls to avoid:

Failing to update an estate plan. All the documents in your estate plan, including a Will, Power of Attorney, Healthcare Proxy, HIPAA Release Form, Trusts, Advanced Directives and more, must be updated to comply with changing laws and changes in your life.

Making a careless decision about the executor or trustee can be disastrous. The eldest child does not have to be the one to be in charge of your estate. Neither does the person you love if their life is a trainwreck. The person to be named executor and/or trustee needs to be someone you know to be extremely responsible, reliable, good with money management and a solid moral compass.

Digital assets are often ignored when it comes to estate planning. However, this new asset class needs to be included. If you have email, you have a digital asset. You have digital assets if you have email, cryptocurrency, websites, social media content, online subscriptions and photos stored in the cloud. Suppose no plan is made to create an inventory of accounts and name a digital executor. In that case, your estate becomes vulnerable to identity theft, valuable cryptocurrency could be lost forever and there may be nothing your loved ones can do.

Most family fights have to do with unequal asset distribution after the death of a parent. A clear estate plan is one way to preclude confusion about what you want to happen after death. Talking about your estate plan while you’re still able to have these uncomfortable discussions is one way to help establish your wishes. You may want to create a Letter of Intent or make a video to express your reasons for making certain decisions. This may not be legally enforceable. However, it will serve to document your wishes.

Estate planning is not just about distributing assets after death. By establishing an estate plan, the family is better prepared to deal with the loss of a loved one and can focus on healing together instead of battling over their inheritance.

Reference: Medical Economics (Oct. 17, 2024) “Estate planning is your first line of defense against wealth loss—Here’s what you should know”

What Is Needed for End-of-Life Planning?

 

Becoming incapacitated or dying without planning isn’t uncommon. Nevertheless, it is harmful to loved ones who are left to address the legal and financial aspects at the same time they are experiencing the grief of loss. What needs to happen is addressed in an article from Twin Cities Pioneer Press, “Your Money: A balanced approach to end-of-life planning.”

End-of-life care is expensive. Costs rise as the person moves through the different stages of illness or age. Medicare doesn’t cover long-term nursing care in a facility or at home, so resources without planned protection will rapidly be exhausted. An estate planning attorney can help the family prepare for these costs, but only when planning takes place in advance.

Once incapacitated, people cannot legally sign and execute legal documents. If the family hasn’t arranged for a Power of Attorney or Medical Proxy to be created while the person is still legally able, the family may be faced with the additional expense of going to court to petition for guardianship and/or conservatorship.

There are five basic estate planning documents to be prepared. While every adult should have these documents, they become more critical when someone is closer to passing.

Last Will and Testament. A will directs how you want your assets to be distributed upon your passing. It may include personal property, real estate, jewelry, family heirlooms and any other material goods. Note the will becomes a public document when the estate goes through probate, so don’t include any account numbers or information you don’t want to read by others.

Healthcare Directives. Privacy laws are strict, and healthcare providers are limited in what they can discuss with spouses and children if the right documents are not in place. A Medical Power of Attorney or Healthcare Proxy is needed for family members to be involved in medical decisions. A HIPAA Release Form should be created to access health care and health insurance records.

Many accounts, including bank and investment accounts, IRAs, SEPs and life insurance policies, have beneficiary designations, where a person or persons are named to receive the asset upon the original owner's death. Make sure these are up to date to reflect the owner’s wishes.

Trusts take assets out of an estate for tax and wealth transfer purposes. The person creating the trust dictates how and when the beneficiaries should receive assets. Distributions can occur over an extended period or when certain conditions are met.

Meet with an experienced estate planning attorney if you or a loved one is ill and may be approaching the end of life. Putting an estate plan in place ensures that wishes are fulfilled and spares the family from having to guess what a loved one would have wanted in their final days.

Reference: Twin Cities Pioneer Press (Oct. 12, 2024) “Your Money: A balanced approach to end-of-life planning”

How to Create an Estate Plan with a Blended Family?

 

Blended families are not as unusual as they used to be. However, the financial and legal challenges of combining two families haven’t changed. If your future includes a combined family with stepchildren and stepparenting, the recent article from Kiplinger, “How to Navigate Finances as a Blended Family,” has useful information to consider.

Prenuptial Agreement. A prenup is used to clarify expectations regarding assets and debts. How assets are to be divided between children from past marriages or any future grandchildren can be addressed in a prenup and your will. If you come to the marriage already owning a home or a business, a prenup should be used to clarify your future spouse’s ownership interest. If your spouse-to-be has debts, a prenup covers how premarital debt will be handled.

Shared Expenses. Hoping financial matters will work out themselves is not a plan for a blended family. Will you set up joint checking accounts? Who will be responsible for biological or adopted children’s expenses from prior marriages? What expenses will be split? Single parents of college-age children need to know that if they marry, both spouses' incomes are used on applications for financial aid.

Estate Planning Updates. Everything related to estate planning, from your will, trusts, insurance policies and health care directives, must be updated when you marry again.

Your will must be updated to reflect your wishes for assets to go to children from a prior marriage and your spouse. It’s easy for children to be disinherited in a blended family, requiring special attention. If there is no will, the state’s laws will be applied. This may not be what you wanted.

Beneficiary designations need to be updated. The person named as a beneficiary on accounts like IRAs, SEPs, pensions and life insurance policies receives assets directly, regardless of what the will may state.

You may want to establish a Revocable Trust to take assets from your “probate estate” and provide for children. Your new spouse may be the trustee, or you may choose an adult sibling to administer the trust. You may want to update the trustee or beneficiaries if you have trusts.

Medical directives must be updated so your new spouse can be involved in your healthcare. Privacy laws are strict, and a new spouse might be shut out from making healthcare decisions without new documents. These include a Health Care Proxy, also known as a Medical Power of Attorney, HIPAA Release Forms and Living Will. Your estate planning attorney will know what documents are used in your state.

Estate planning is not as romantic as planning a wedding. It is still a sure signal to your intended and your family to prepare for a future based on responsibility and caring.

Reference: Kiplinger (Oct. 18, 2024) “How to Navigate Finances as a Blended Family”

What Is Legacy and Estate Planning?

 

Creating a last will and testament is part of planning for the future. Leaving a legacy is another. Both are part of an estate plan, which addresses planning for incapacity during your lifetime and the disposition of your property after you’ve passed. A comprehensive estate plan is a worthy endeavor, says a recent article from North Shore News, “How to secure your legacy with estate planning.”

The core components of an estate plan include a last will, power of attorney and advance directives for health care decisions, sometimes called health care power of attorney or health care proxy. Your family will face additional stress and expenses if you don’t have a last will. Your wishes for the disposition of property won’t be honored, unless you proactively have an estate plan created.

Will charitable giving be part of your legacy? This also requires advance planning. When you make donations to individual charities or use Donor Advised Funds, you create a legacy of giving and may also create tax benefits. An experienced estate planning attorney will help create a plan to maximize the tax advantages of charitable gifting.

Estate planning is especially important for women, who statistically live longer than men and tend to have lower earning power. Women need to consider who will be their caregivers if their partners predecease them or if they are solo agers.

Discussing family dynamics with an estate planning attorney can help ensure that the estate plan is created to address individual needs. Estate planning is never a one-size-fits-all plan.

Estate planning also requires regular reviews. One estate planning attorney advises her clients to revisit their estate plans every time there’s a presidential election. It’s an easy way to remember the passing of four years, which is a good time to review an estate plan.

A carefully crafted and regularly updated estate plan addresses changes to your life and the laws governing wills, trusts and retirement accounts. The SECURE Act made major changes to how assets in retirement accounts are distributed to heirs, for instance. The addition of Roth IRA and SEP accounts created huge changes in the passing of assets to the next generation.

Your estate planning attorney will give you and your family the peace of mind of knowing you’re prepared for the future, including the unexpected events, happy and sad, that life brings.

Reference: North Shore News (October, 2024) “How to secure your legacy with estate planning”

Do I Need a Will?

 

 

Even after living through the global COVID pandemic, many people still don’t understand why they need a will and estate planning documents. One survey revealed as many as 40% thought they didn’t need an estate plan because they don’t have enough assets, says a recent article from Pittsburgh Post-Gazette, “Elder Law Guys: Having a will can bring peace, for you and your loved ones.” Even more worrisome, many of these people have minor children, who will be left unprotected if there is no will naming a guardian for them if their parents should die.

We’ve all read the stories of estate battles following the death of rich and famous people. Regardless of their age, marital status, or notoriety, their personal lives and finances became public headlines without a will and estate planning.

Regular people don’t want their loved ones to go through the mess of an estate battle, even if their personal news won’t become hot news on the internet. Here’s what to do to protect yourself and your family.

Make an inventory of your property. Include everything: your home, bank and investment accounts, personal possessions, retirement funds, life insurance, cars, boats and shares in a family business. Listing out who gets what in your will can avoid some (but not all) fights among relatives and siblings.
Even if you rent a home, if you’re employed and have a 401(k) and a bank account, you’ll want to be sure the people you care about inherit your property.

If yours is a blended family, or if you and your partner aren’t married, estate planning is even more critical. Estate planning is how you ensure that your biological children inherit your assets. If you’re not married, you need to take extra care, so you and your partner protect each other in case of a health emergency as well as for property distribution after death.

For parents of young children, a will is essential. Your will is the document used to name who you want to raise your children—a guardian. Without it, the court will decide, and it may not be the person you would have wanted. Your estate plan is also how you determine how children’s living costs will be paid. Your life insurance policy might belong in a trust, with a trustee named to oversee how funds are distributed to the guardians.

Your will is also used to name an executor, the person who will administer your estate, distribute assets, pay final taxes and estate taxes and ensure that your wishes are followed. An executor needs to be organized, responsible and trustworthy.

An estate plan should include documents to protect you while you are living. These include a Power of Attorney for financial and legal decisions in case of incapacity. A Healthcare Proxy or Medical Power of Attorney is needed so another person can be involved in your medical care, if you’re unable to speak for yourself. An experienced estate planning attorney will also discuss the need for a Living Will and other documents you might want to have.

The peace of mind resulting from having an estate plan in place can’t be measured. Knowing that you’ve protected your loved ones and yourself in life and after you’ve passed is a worthwhile investment.

Reference: Pittsburgh Post-Gazette (Sept. 22, 2024) “Elder Law Guys: Having a will can bring peace, for you and your loved ones”

Estate Planning When You’re Single

 

For one woman, the wake-up call arrived when listening to a friend explain all the tasks she needed to perform for her 91-year-old mother, whose needs were increasing rapidly. Solo agers, people who are growing older without spouses, adult children, or other family members, are now a significant part of the older population, says the article “Going Solo: How to Plan for Retirement When You’re on Your Own” from The New York Times.

Seniors who are married or have adult children have many of the same retirement planning issues as their solo ager counterparts. However, figuring out the answers requires different solutions. Managing future healthcare issues, where to live and how to ensure that retirement savings lasts needs a different approach.

Options must be addressed sooner rather than later. Estate planning is a core part of the plan. While you can’t plan everything, you can anticipate and prepare for certain events.

Determining who you can count on in a healthcare crisis and to handle your financial and legal issues is key. This is challenging when no obvious answers exist. However, it should not be avoided. You’ll need an estate plan with advance directives to convey your wishes for medical treatment and end-of-life care.

An estate planning attorney will help draw up a Power of Attorney, so someone of your choice can step in to make legal and financial issues if you become incapacitated. You’ll also want a Healthcare Proxy to name a person who can make medical decisions on your behalf if you can’t communicate your wishes. While it’s comfortable to name a trusted friend, what would happen if they aren’t able to serve? A younger person you know and trust is a better choice for this role.

A Last Will and Testament is needed to establish your wishes for distributing property. Your will is also used to name an executor who administers the will. Think about people you trust who are a generation or two younger than you, like a niece or nephew or the adult child of someone you know well. You’ll need to talk with them about taking on this role; don’t spring it on them after you’ve passed. Just because someone is named an executor doesn’t mean they have to accept the role.

Where you age matters. From safety and socialization standpoints, aging alone in a single-family home may not be the best option. Having a strong network of friends is important for the solo ager. Moving to a planned community with various support systems may be better than aging in place. Explore other housing options while you are still able to live on your own, so you can make an informed choice if and when the time comes for community living.

A combination of professional help will make the solo aging journey better. An experienced estate planning attorney, financial advisor and health insurance source can help you navigate the legal and business side of your life. Check with your town’s senior center for available social services and activities resources.

Reference: The New York Times (Sept. 21, 2024) “Going Solo: How to Plan for Retirement When You’re on Your Own”

When Should I Start Doing Estate and Tax Planning?

 

Estate planning creates a legal framework to manage assets in the event of incapacity or upon death and should include tax planning to protect income and inheritances. A recent article from The Street, “Don’t Be a Grasshopper: The Importance of Proactive Tax and Estate Planning,” references Aesop’s fable of the Ant and the Grasshopper. The ants are always hard at work, preparing for winter, while the grasshoppers play all summer and starve when winter comes.

Fundamentals for estate plans include having an experienced attorney create a last will and testament to convey your wishes for asset distribution. This is also done through the creation (and funding) of trusts, which take assets out of your personal ownership and place them in a separate legal entity. One of the many benefits of trusts is that assets are distributed directly to beneficiaries, without needing to go through probate.

Other estate planning documents include a Power of Attorney, which designates another person of your choice to handle financial and legal decisions on your behalf if you are incapacitated. The Power of Attorney ends upon your death, so it is only used while you are living. Similarly, a Medical Power of Attorney, sometimes known as a Healthcare Proxy, is used to give another person, also of your choosing, the power to be involved with your medical care, speak with your health insurance provider and be part of your health care decision making.

Which estate and tax planning strategies you need will depend in large part upon the size of your estate. If you own a home, a car and investment accounts, a will is needed to distribute your assets and different types of trusts may be needed. If the family includes a disabled family member, you should speak with an estate planning attorney about Special Needs Trusts. If long term care is a concern, a Medicaid Asset Protection Trust may be helpful to protect the well spouse and family.

Proactive planning can be a little more complex for those with significant wealth. Strategies like a Dynasty Trust or Irrevocable Trust may be needed for those whose estates reach estate tax exemption thresholds, which are likely to shrink considerably in the future.

When possible, communicate your wishes with the family so there are no surprises after your passing. Decide how transparent you can be with your children and grandchildren. In some families, this is accomplished with a series of family meetings. For others, holding a meeting in the estate planning attorney’s office with the attorney present to answer questions can be more productive.

Regardless of your estate size and family dynamic, taking the time to create or update an estate plan is a kindness to your loved ones. They’ll know you made an effort to prepare so they can celebrate your life and hold their memories close without the distraction of family fights or protracted court proceedings.

Reference: The Street (September 3, 2024) “Don’t Be a Grasshopper: The Importance of Proactive Tax and Estate Planning”

Do You Need a Will and an Estate Plan?

 

Dying without a will can cause your family to go through at least a year, maybe longer, of probate, fights over property distribution, and, in many cases, litigation against each other. This is probably not the legacy you have in mind, which is why this aptly-titled article, “You need a will and here’s why,” from Lincoln County Leader, is a good read.

Dying intestate, the legal term for dying without a will, means the local jurisdiction will be in charge of how your estate is handled. Each state has its own laws for distribution. In most states, distribution is based on kinship or bloodlines, so if you have relatives, they may be first in line for your inheritance.

In some states, when there is no will, the surviving spouse receives 50% of all assets, and the remaining assets are divided equally among the children. In other states, the spouse gets 30%, with the children receiving the balance. You must have a will if you want your spouse to receive 100% of your assets. If you have children but no spouse, they will usually inherit everything in equal shares.

If you have no children and no spouse, property distribution can become more complicated unless you have a will. The court may give your parents your estate if they are living. If your parents have passed, your siblings are the next likely heirs. The court will seek to identify your closest relatives by kinship, and they may inherit all of your worldly goods.

If there are family heirlooms, you want to give to a particular child, or if you want to have a portion of your estate go to a charity, it won’t happen without a will.

Today’s family often is a bit more complicated than in the past. Blended families need to have estate planning so biological children aren’t disinherited. Estranged relatives could end up with your precious heirlooms unless a will is in place.

What if your children are minors? A will is used to name a guardian for children, so they are brought up by the people you trust. The court will decide who will raise your children if you don’t name a guardian in your will. Also, minor children cannot inherit property, so if you die, your spouse will get their share as per your state’s laws, and the children’s inheritance will be overseen either by the court or by a person named by the court.

Having a last will and testament allows you to direct who is to inherit your assets, from personal items to financial assets. But you need to do more to protect yourself and your family, and this is part of the estate planning process.

When you sit down with an estate planning attorney, they will also review matters, including beneficiary designations (i.e., the people named to receive assets upon your death on life insurance, retirement accounts, and certain financial accounts). They’ll also advise you on documents like a Power of Attorney and Medical Power of Attorney, which allow you to name someone to take care of your financial and healthcare matters if you become incapacitated.

Taken all together, an estate plan provides security for your family, protects you while you’re living, and creates a legacy of caring about the ones you love.

Reference: Lincoln County Leader (Aug. 4, 2024) “You need a will and here’s why”

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 are Risks of a DIY Estate Plan?

 

The number of online tools purporting to create estate plans easily and cheaply makes it tempting to forgo working with an estate planning attorney, but the long-term consequences of a DIY estate plan could be disastrous. A recent article from mondaq, “Risks of DIY Estate Planning” takes a close look at what can go wrong.

Estate and tax laws are both complicated and nuanced. Without an experienced estate planning attorney overseeing the creation of an estate plan, a homegrown plan isn’t likely to achieve the desired results. In addition, chances are good it won’t follow state law. If a last will and testament is found to be invalid during probate, it’s as if there was no will at all.

Estate planning needs to be created for each person’s unique situation. Do family members get along, or should the estate plan be designed to be litigation-proof? Are there large assets held in trust or corporations with complex tax consequences? If there are family members with special needs, have the proper trusts been established to protect them over their lifetimes?

Tax planning is often a significant part of an estate plan. Depending on your state and where you own property or businesses, your estate must consider many different types of taxes. Transfer tax, capital gains taxes, income taxes, and estate taxes are just a few of the taxes to be addressed. If the estate plan doesn’t dovetail with tax liabilities, beneficiaries could find themselves with a far smaller inheritance than anticipated.

Today’s modern family is not as straightforward as in the past. Families come in many different variations, all of which have their own special challenges. Blended families are fairly common, and a traditional “I love you” will, where one spouse leaves the other everything and vice versa, may result in some children being disinherited. Same-sex married couples with children need to be sure their children, biological and adopted, are protected with an estate plan designed to protect all members of the family.

Comprehensive estate plans should address asset distribution issues, guardianship for minor children, and name an executor and heirs. A Power of Attorney is needed so spouses may be involved in each other’s healthcare. Living Wills are required to clarify wishes for end-of-life care, as are Advanced Medical Directives. There are a host of documents to be created and decisions to be made, all of which require the knowledge and experience of an established estate planning attorney.

Reference: mondaq (July 1, 2024) “Risks of DIY Estate Planning”

Do Single Childless People Need an Estate Plan?

A single person without children can focus on their personal goals, including philanthropy. However, it takes planning to ensure that their assets are distributed according to their wishes. A recent article, “I’m an Estate Planner: 8 Ways Single and Childfree People Can Manage Their Assets” from AOL, provides tips for singles with no children and notes that they need an estate plan.

One of the challenges facing singles is the need to have an estate plan in place earlier in their lives than marrieds or parents. If the state is unable to identify a next of kin, the state will take the assets as unclaimed. This is probably not what anyone has in mind for their property.

Consider the people and organizations that have meaning for you. Have an estate plan prepared by an experienced estate planning attorney, who will help you clarify who might be a suitable heir. It may be a close friend, charitable organization, niece, or nephew. Remember to update your will as life changes occur.

For some singles, the preferred option is to “die with zero.” The concept is not to leave any generational wealth behind but to live their lives to the fullest, including philanthropy and gifting while they are living. This lets them see the good work done by charities and the benefits to those they choose to give assets to.

A challenge for some singles is identifying a person to serve as their executor, who will administer their estate, including distributing assets, after their death. If no executor is named in a will or there is no will, a court will name an administrator, and assets will be distributed according to the state's laws.

Do single people need to establish trusts? Trusts are extremely useful in the event of incapacity, which no one wants to think about but needs to be addressed. If you become incapacitated, the trustee can use the funds in a trust to keep your bills paid and your household running. There are also trusts used in charitable giving to meet your philanthropic goals or trusts to protect assets if you need long-term care.

Designating people to serve as your Power of Attorney and Healthcare Proxy is especially important for singles with no children. This way, people of your choosing can oversee your day-to-day financial and legal matters and be involved in your medical decisions.

Finally, don’t leave any of this to chance. Have conversations with people you’ve chosen to fulfill various roles, including executor, power of attorney, healthcare proxy and trustee. Make sure that they understand what you are asking them to do, and be sure they are willing to take on the tasks.

A consultation with an estate planning attorney is the first step to implementing a plan.

Reference: AOL (June 7, 2024) “I’m an Estate Planner: 8 Ways Single and Childfree People Can Manage Their Assets”

Top Estate Planning Mistakes Can Easily Be Avoided

The music icon Prince was far from the only celebrity failing to have a will, the most significant estate planning mistake of all. Tobacco heiress Dorothy Duke named her butler the executor of a $1.3 billion estate, and her family spent millions on legal costs before the estate was settled. You don’t have to be wealthy to make an expensive estate blunder, says a recent article from Microsoft Start Money, “Seven Estate Planning Mistakes You Can’t Afford To Make.” Regular people also make costly mistakes. However, they can easily be avoided by following these steps.

Procrastinating until the “right” time. Making decisions when you’re under a time constraint because of an unexpected event is a bad time to do estate planning. Leaving a mess for your children to figure out will almost always end badly. Fighting among family members, assets lost to cost battles and unnecessary stress are just a few of the headaches. It’s not how you want to be remembered.

Not updating your estate plan. Wills are like pets—they require ongoing care. If a new child is born and your will isn’t updated, you’ve effectively disinherited the child. If you remarry and don’t update your estate plan or beneficiary designations, your new spouse will have little recourse to what you might have left them. The same goes for major changes in your financial life, up or down.

Putting your head in the sand about taxes. In the last 15 years, there have been many tax changes. Failing to address tax changes with estate planning in mind can lead to financial disasters. Remember, you may not be near the federal estate tax threshold. However, if your state levies estate taxes, you’ll need to plan for them.

If the lifetime estate and gift tax exemption reverts to pre-2017 tax law levels, “average” wealthy people with estates worth around $6.46 million will pay federal estate taxes. If this is your situation, start talking with your estate planning attorney now to address this change.

Ignoring incapacity. We’re not sure which is harder to consider, incapacity or death. Neither is pleasant to consider; one is likely, and another is certain. Having the right plan in place means having the power of attorney, health care directives, HIPAA release forms, do not resuscitate, living wills and other documents specific to your state are all part of estate planning.

Forgetting to plan for non-cash assets. If you own a home, what do you want to have happen to the home upon your death? If you become incapacitated, who will take care of your home, your pets and any property requiring upkeep? Classic cars, antiques and art collections must be disposed of in a planned manner.

Neglecting digital assets. More and more of our lives are now conducted online. Bank accounts, social media, photos, online businesses and cryptocurrencies are not included in household assets by your will. You’ll need to provide a tech-savvy person with information on your accounts, create an inventory and direct the person to serve as your digital executor.

Trying to do it yourself. Creating an estate plan without the help of an experienced estate planning attorney is asking for trouble. Here’s just one example: a family thought it was a good idea to retitle the house to Joint Tenancy with Right of Survivorship for the parent and an adult child. They didn’t know about the child’s serious debt situation. The child now had an asset, and creditors moved swiftly to put a lien on the house. The family eventually lost the house to the creditors.

Reference: Microsoft Start Money (June 23, 2024) “Seven Estate Planning Mistakes You Can’t Afford To Make”

Your College Student Needs a Power of Attorney for Finance and Healthcare

 

Once a child reaches the age of legal majority, they are considered an adult with privacy rights. This means that parents lose access to private information. This can have dire consequences if the student is involved in an accident or gets seriously ill, explains the article “Navigating The Transition To Adulthood: A Legal Guide For Parents” from mondaq. With proactive steps, parents can address these situations before they occur.

Whether or not your insurance covers your child’s healthcare doesn’t matter. Without a Healthcare POA, parents cannot make medical decisions, speak with healthcare providers, or talk with the health insurance company. Parents are strongly urged to have their college-bound student complete a Healthcare Power of Attorney.

If there is no POA and the child is incapacitated, parents will have to go to court to be able to make medical decisions for their child. Hospitals and healthcare providers are extremely strict about following these rules to avoid litigation and fines. No matter how bad the situation is, don’t expect any rules to be bent.

Your adult child should also have a Living Will. This is a document controlling decisions about end-of-life. It only becomes effective when a person is in a state of permanent unconsciousness, like a coma, or if they are terminally ill. The student uses this document to express their wishes concerning care: do they want to be artificially fed, hydrated, or kept alive by extraordinary means? Do they want to become an organ donor? This document conveys their wishes and can save the family an unimaginable amount of added stress during a trying time.

A Durable Power of Attorney is used to name a person, known as an “agent” or “attorney in fact,” to act on their behalf. The agent can take care of legal and financial matters. This is needed in case of incapacity so the parent or trusted person may deal with financial institutions, colleges, courts and any other company or organization on behalf of the student. Without it, parents cannot access account information or act on the student’s behalf.

Does your student need a will? The estate planning attorney who helps create the documents listed above can help you answer this question. Depending on their situation, if the student owns a car, has a bank account, an inheritance, or sizable cryptocurrency accounts, they may need a will.

The documents mentioned above should also be in place for parents. If parents don’t have a will, Power of Attorney, Healthcare Power of Attorney, Living Will and trusts, if appropriate, their newly minted adult will have a lot to deal with if they should both die unexpectedly. A visit to the estate planning attorney for all generations is a good idea.

Reference: mondaq (June 24, 2024) “Navigating The Transition To Adulthood: A Legal Guide For Parents”

Top Myths of Estate Planning

 

There are far more than five myths about estate planning. However, the article “5 common myths about estate planning, debunked” from Utah Business examines the most common ones. Estate planning is crucial to safeguarding your financial future and asset disposition and ensuring that the right people are involved in caring for you in case of incapacity. Estate planning is for your life and your legacy.

Biggest myth of all: You only need a Will for estate planning. Your estate plan begins with a Last Will and Testament. However, a comprehensive estate plan addresses more than the distribution of assets. Trusts are used to ensure that assets are transferred to the right beneficiaries in a timelier manner than they would be if passed through your will. Your estate plan should include a Power of Attorney, Health Care Directive and a Living Will.

Myth 2: Only seniors need estate plans. Anyone of legal age who has a family and owns property needs a will. Young families need an estate plan to protect their children and ensure that the parent’s assets and any life insurance proceeds are managed and distributed to their children according to the parent’s wishes. Parent’s wills need to include naming a guardian to raise children in the unlikely event of both parents dying while the children are still minors. Without naming a guardian, a court decision will determine who raises your children.

Myth 3: Only rich people need wills. An argument could be made that estate planning is more critical for people who aren’t rich, protecting and growing more modest estates. A well-crafted estate plan will protect the estate from creditors, deter litigation between family members and minimize tax liabilities so wealth can be passed to the next generation.

Myth 4: Estate planning is only about what happens after death. Estate planning addresses what should happen in case of incapacity because of illness or an accident. If you can’t communicate your wishes, these documents allow others to act on your behalf. A Power of Attorney appoints someone to handle your financial and legal matters. Standard POAs aren’t the best option, since they may allow someone too much or insufficient control. You’ll also want a Health Care Power of Attorney so someone you name can take over your medical care and talk with your doctors and health insurance company. Another reason for placing assets into a trust is that the successor trustee may manage assets in the trust if you are incapacitated.

Myth 5: Once your estate plan is created, you’re all set. Your car and home require ongoing maintenance—and so does your estate plan. Life and laws change, and your estate plan won’t work if it’s outdated. Triggering events like marriage, divorce, birth, relocating, or big changes to your financial situation require a review of your estate plan.

Consult an experienced estate planning attorney to create or review your estate plan. You’ll breathe easier knowing you’ve taken steps to protect yourself and your loved ones.

Reference: Utah Business (June 12, 2024) “5 common myths about estate planning, debunked”

 

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”

Caregiving and Estate Planning Provides Peace of Mind for All Generations

 

If your goal is to keep the farm, ranch, or small business in the family, planning, including estate planning and caregiving, is the number one strategy to making it happen. Families may dissolve the farm or business without advance planning to pay for long-term care expenses. A recent article from AgWeek, “Caregiving plans can provide peace of mind for farming and ranching families,” explains what needs to be done.

Part of the issue is that most ranchers and business owners won’t qualify for Medicaid because they own a significant asset. Having to sell off something they’ve worked their entire lives to build is often a result of no planning.

If you have a long-term care insurance policy, it needs to be carefully reviewed to determine what conditions need to be met for benefits to be paid. For example, most policies have a “waiting period,” so you’ll need to plan how to pay for caregiving during the months before the policy kicks in.

There’s also confusion about the difference between Medicare and Medicaid. Medicare is health insurance for medical expenses, while Medicaid is usually used for long-term care and caregiving needs. However, Medicaid is a needs-based program. An estate planning attorney can help the family determine what needs to happen in advance, whether the goal is to protect the farm, ranch, or small business while helping the aging parent become eligible for Medicaid.

Estate planning includes planning for incapacity, which can occur at any time but is more likely as we age. Suppose the individual hasn’t completed a power of attorney, healthcare power of attorney, and other medical directives. In that case, the family will need to go to court to obtain conservatorship or guardianship to take over the person’s financial matters and make healthcare decisions on their behalf. An estate planning attorney can help the family prepare the documents and create a plan.

Having an estate plan in place is also another means of protecting the family’s assets from elder abuse. Everything needs to be documented, and records need to be well-organized so every family member knows where documents are, where assets are and the plan for the inevitable events of aging.

Meeting with an estate planning attorney to create the last will and testament, power of attorney and all other planning documents can minimize the stress and costs involved. Without planning, everything becomes far more complicated, costly and stressful for all concerned.

Reference: AgWeek (May 14, 2024) “Caregiving plans can provide peace of mind for farming and ranching families”

What Information Should Be in a Will?

 

While it’s clearly more fun to plan for a baby shower than to contemplate your own mortality, making arrangements for the eventualities of life as we age—including incapacity and, yes, our own passing—does bring peace of mind. It’s necessary for everyone 18 and older, says a recent article from BestLife,

“The 10 Most Important Things to Include in Your Will, Experts Say.”
The reason is simple: if you are incapacitated and cannot speak for yourself regarding healthcare decisions or your financial life, you need someone to do so for you. This is as much a part of your estate plan as asset distribution.

Planning for incapacity includes having a Power of Attorney (POA) and possibly a lifetime or revocable trust. The POA assigns someone else to manage everyday financial matters. The Healthcare POA is used to designate someone else to make medical decisions on your behalf if you can’t do so. You’ll need to discuss these roles with the person or people being named to ensure that they are comfortable with the responsibilities. Be sure that your Healthcare POA knows your wishes regarding medical directives and will carry them out, even if they feel differently about your wishes.

Your Last Will and Testament is part of a group of documents, including the POAs mentioned above. A will is used to name an executor who administers your estate. The executor has a large task, including gathering information for all assets, filing final taxes and estate taxes, paying off debts, notifying family members and distributing assets. Your executor should be someone you trust and who has the financial acumen to take on all these tasks, as well as managing heirs who don’t always appreciate the executor’s responsibilities.

You’ll need backups for all the people in all roles. Let’s say you chose a respected friend of many years to be your executor. If they become ill or die themselves, who will oversee your estate? You need a second, or even a third, backup executor to be named in your will. The same goes for trusts. A successor trustee is necessary to be sure that your trust and its assets are in good hands.

Minor children or dependents are protected through a will that is used to name a guardian (and a backup guardian) for minor children. If no one is named, the court will decide who will raise your child(ren). Similar issues need to be addressed, such as when you would want your children to receive an inheritance—all at once or when they reach legal age. Could it be specific percentages based on age? Picking the right person and creating a plan will ensure that the children have a good life, even in your absence.

Keeping wills up to date is critical to ensuring that your wishes are followed at every stage of life. Everyone involved should know where the original copy of the will is located. Some estate planning attorneys will safeguard your will, while others recommend keeping it at home in a fire and water-proof safe. Whichever route you take, tell your executor and family members where it can be found.

Discuss the use of trusts with your estate planning attorney. Using trusts can minimize the amount of your estate needing to go through probate, which can be time-consuming and costly.

Don’t neglect your furry or feathered friends. If your lifestyle includes companion animals who are dear to you, consider who would take care of them if you became incapacitated or died. You can use a pet trust to provide assets for their care and name a caretaker, so they don’t end up in a shelter.

Avoid family battles by including your wishes for personal possessions with special meaning in your will. Family heirlooms, artwork and jewelry are among the items families fight over. Spare your family this stress by naming them in your will or gifting them while you are still living.

Digital assets have become a part of our modern lives. Suppose you leave a list of accounts, usernames, passwords and specific directions for your wishes. In that case, your executor will need to be able to manage your digital assets, including financial accounts, photos, subscriptions, airline miles, email and social media accounts.

If you wish to leave assets to a charity, you can do so in your will or make gifts before you die. Speak with your estate planning attorney about how to bequeath assets to a charity, which should be done in alignment with your overall estate plan.

Reference: BestLife (May 3, 2024) “The 10 Most Important Things to Include in Your Will, Experts Say”

Who Is the Best Choice for Executor?

 

Creating an estate plan includes assigning a person (or persons) to three different roles: one to oversee financial affairs if you are incapacitated—Power of Attorney—the second to be the successor trustee of a trust and the third to be the executor of your will. According to a recent article from Kiplinger, these people are critical to caring for you while you are living and after you have passed. The title says it all: “How to Choose Your Trustee or Executor of Your Will.”

The person managing your estate and the Power of Attorney may have broad discretionary powers, so you’ll want to be sure they are prepared to follow your wishes, even if they aren’t the same as their own. All three are considered fiduciaries and have a legal duty to put your interests above theirs.

Trustee duties depend upon the directions in the trust. If a trust owns a family business, farm, or a portfolio of investments, you’ll want a trustee who understands your family’s business, farm, or investments. The trustee should know they can hire advisors and others who help them if they are unfamiliar with the assets in the trust and recognize a need for professional help.

Trustees need to read the trust and its provisions and understand its requirements. An estate planning attorney can help the trustee become more comfortable with their role. A letter outlining the grantor’s intent, the reason for the trust and desired goals will also be helpful.

Many people choose their child or the guardian of a minor child to be their successor trustee. Taking on this role should be discussed with the individual before the trust is finalized. If the trustee is asked to oversee assets for a minor child until they turn 30, it’s a long-term commitment. If the trustee is also the guardian of a child, the trust language should clarify if the assets are to be used for the child’s maintenance.

A non-family member is sometimes better if the family can pay the fees. An estate planning attorney or a professional trustee can take on this role. The professional trustee typically charges a percentage based on the value of the trust assets. Fees based on the value of the entire taxable estate may not make sense if the trust is simple and doesn’t require a lot of management.

A consultation with a skilled estate planning attorney should include discussions of who is available to serve as a successor trustee. There are very few situations that estate planning attorneys haven’t seen. They can help determine even the most complicated family dynamics to name a trustee.

Y Reference: Kiplinger (April 25, 2024) “How to Choose Your Trustee or Executor of Your Will”

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 are the Important Steps in the Estate Planning Process?

 

Estate planning is about taking charge of your legacy and your life. Despite all good intentions, only one in three Americans has an estate plan, according to a recent article from Kiplinger, “10 Things You Should Know About Estate Planning.”

An estate plan does not prevent death or illness. However, it does protect the family from stress and grief. By creating an estate plan, you provide your loved ones with clarity about what you want to happen to your property upon your death.

Equally importantly, the estate plan explains your wishes if you have a serious medical condition and can’t make decisions or communicate yourself. A financial Power of attorney (POA) names someone to oversee your finances and do tasks like paying bills if you are alive but incapacitated. A healthcare POA names someone to make healthcare decisions on your behalf. A healthcare directive explains your wishes for medical treatment in different situations.

What happens if you don’t have an estate plan? Each state has its own laws for what to do when someone dies or if they become incapacitated. Having an estate plan means you are making those decisions yourself. The court may assign someone to make healthcare and/or financial decisions for you. However, they may not be the person you would have selected or make the decisions you would have chosen.

Beneficiary designations supersede your will. Any account with beneficiary designations will go to the person named on the document, regardless of what your will may say.

Trust funds provide control of assets during life and after death. A trust is a legal entity holding property for someone else’s benefit. The trust can be set up to control exactly how you want your money and property distributed after death.

When you die, the court reviews your will to ensure that it’s been properly prepared and gives your executor the power to perform their tasks. This is called probate and can take time. A good estate plan can take much or all your assets out of your probate estate, speeding up the process of distributing assets faster.

Estate planning includes tax planning. In 2024, the federal exemption is $13.61 million, but 17 states and the District of Columbia levy a state estate tax. Some states also have inheritance taxes. Your estate planning attorney will help you incorporate tax planning into your estate plan.

Don’t neglect your pets. You can express your wishes in an estate plan. However, a pet trust is better. It is enforceable and provides specific information about how you want the pet to be cared for and who you want to care for it.

Digital assets need to be addressed to protect assets and prevent theft. Create an inventory of your accounts, usernames, passwords and name a person who will be your digital executor.

Review your plan every three to five years with an experienced estate planning attorney.

Reference: Kiplinger (Feb. 1, 2024) “10 Things You Should Know About Estate Planning”

Prevent Difficulties in Probate with Advance Planning

If you think gathering your papers, passwords, logins, account information and estate planning documents is a challenging task, consider your heirs trying to do it after you’ve passed and while they are grieving your loss. By preparing all the information they’ll need, you’ll make their inheritance process as easy as possible, says a recent article from Next Avenue, “6 Ways To Save Your Heirs from a Painful Probate.”

A List of Passwords for Hardware, Online Accounts and More Our cellphones, tablets, computers, online accounts and other technology all hold important information. If your executor tries to access information and accounts, they’ll need more than your passwords. If you have accounts with two-factor authentication, for instance, they’ll need to be able to access your email and/or cellphone to access other digital assets. The list should include things like social media usernames and passwords. The information must be kept somewhere safe where a spouse or executor can find it. Some tech platforms allow you to name a legacy contact with the right to access accounts after you pass. A password manager system might be helpful. However, this may add another layer of frustration for non-technical people.

List All Assets and Accounts with Contact Information. Whether you use a spreadsheet or a notebook, this is crucial information. Make sure to include investment accounts, checking and savings accounts, 401(k)s, IRAs, pension accounts, brokerage accounts, etc. Provide contact information for your estate planning attorney, accountant and financial advisor.

The information must be well organized because it will be a lot of data. Your executor will also need the accounts for running your household, paying utilities, mortgage, cable, etc. The same goes for health insurance, Medicare or Medicaid information, life insurance policies, car insurance and deeds to your home and car.

Tell the Executor and/or Heirs Where Your Information is Located. One estate planning attorney reports receiving a few monthly calls from grieving heirs who have no idea where the estate planning documents are, who takes care of the financial accounts, or how to access these accounts. Sometimes, the calls come from people who aren’t even clients but are hoping there might be some special resource known to estate planning attorneys to provide this information. There is no such thing.

Plan for the Unexpected A significant part of estate planning is planning for financial and healthcare decisions while you are still living. A living will details whether or not you want to be kept alive by heroic or artificial means, and a power of attorney authorizes someone to make decisions on your behalf. Without a POA, the person may recover from their medical emergency to find a financial mess of late bills, missed insurance premiums, or a host of issues that could have been dealt with on their behalf. Without healthcare surrogate documents and discussions of your wishes in difficult health situations, the family will need to make difficult healthcare decisions in highly stressful situations.

If the proper documents are not in place, the family must go to court to have someone named a guardian, who can then make health care decisions for you. The same process will be needed to have someone manage your financial affairs, called conservatorship. These are expensive and invasive court processes that can easily be avoided.

Talk with your estate planning attorney and family members to plan for the future. You’ll all feel better knowing that you’ll all be prepared when difficulties arise.

Reference: Next Avenue (Jan. 9, 2024) “6 Ways To Save Your Heirs from a Painful Probate”

How Can Older Adults Not Get Scammed?

 

Everyone becomes more vulnerable to scams and financial abuse as we age into our later years, reports a recent article from Kiplinger, “Seven Ways to Protect Older Adults from Financial Abuse.” Older people are swindled out of more than $3 billion every year, and more than 3.5 million people are victims of financial exploitation every year. Protecting financial well-being requires prevention, which also applies to younger adults.

Maintain a heightened awareness level. Talk with family members about the potential risks from thieves, online and in real life. Know that exploitation by family members is just as likely, sometimes more so, than by strangers.

Maintain open communication. Just like meeting with an estate planning attorney regularly to ensure legal affairs are in order, check in with trusted loved ones about their financial status regularly. Talking about money among families can be challenging, depending on the family’s history and dynamics. Nevertheless, an open and ongoing dialogue will help with early detection and prevention of financial abuse.

Arrange for a Durable Power of Attorney. The person selected as a Power of Attorney (POA) should be trustworthy and capable of managing finances in case of incapacity. Talk with your estate planning attorney about whether you need to apply certain limitations for your POA or if it should be a broad document. If you are a “solo ager,” you may want to ask your estate planning attorney to act as your POA.

Make sure your estate planning is in order. Estate planning is an essential area of protection for people of any age, especially older adults. If your will, trust, or estate planning documents have not been updated in more than four years, it’s time to make an appointment with your attorney. There are many legal options for safeguarding assets and ensuring that your wishes are followed.

Monitor accounts regularly. Reviewing monthly statements from investments, banks and other accounts is essential for protecting assets. A few simple steps can avert fraud, including freezing credit, setting stricter controls on social media and setting phones to send unknown callers to voicemail.

Signing up for financial account and credit monitoring helps detect irregularities or unauthorized transactions. Allowing a trusted loved one to monitor accounts may make sense, depending on support needs and comfort level.

Safeguard personal information. If you’re using your birthday or your pet’s name as a password, it’s time for new passwords. The digital world has increased risks, and endless scammers with highly technical skills exist. Consider using two-factor authentication where possible—you can’t get into your account until you confirm with a code sent to your phone, text, or email. It is an added step and effective in protecting accounts.

Stay Up to Date on Scams. Financial scams come and go in waves, like fashion. Some people still receive emails about having been chosen by an overseas family who needs to bring huge wealth to America. Others have been targeted by romantic scammers on dating websites. There are Medicare scams, charity scams, IRS impersonation scams, sweepstakes scams and grandparent scams. In other words, thieves try to access accounts and funds in many ways. Be vigilant!

Reference: Kiplinger (Jan. 8, 2024) “Seven Ways to Protect Older Adults from Financial Abuse”

How Do You Plan a Business Succession?

 

When business owners die without estate or succession plans, chaos ensues as family members clash over leadership decisions and determining the direction of the business. Even the closest families can quickly descend into a battlefield of hurt feelings, endless arguments and faction-building, according to the article “How to Make Your Business Outlive You” from next avenue.

Family disagreements often escalate into legal disputes. Lacking leadership, businesses spiral downward and often must be liquidated, leaving behind broken families with severely depleted assets.

This scenario occurs in small businesses on a regular basis. Owners with the vision and tenacity to take their ideas and create a successful enterprise are often so passionate that they can’t imagine the business without them.

A well-defined succession plan matters to more than just the family and their customers. According to the Small Business Association, businesses with less than 500 employees account for 99.9% of all firms in the U.S., 43.5% of the country’s total economic output, and just under 66% of new jobs created. A well-designed succession plan contributes to the national economy,

Having a succession plan in place protects the business and the family from unforeseen circumstances and creates a roadmap for the future. What is the best time to start? When all is well, leaders are healthy and there’s no internal drama.

Start by contemplating your legacy. How do you want your family and employees to benefit from the value created by the business? Clarifying this will drive much of what follows.

Seek professional guidance. An estate planning attorney should be one of several professionals to ensure that the plan complies with laws and regulations in your jurisdiction. You also want to be sure your business succession plan aligns with your estate plan. Otherwise, the resulting confusion could lead to prolonged difficulties and even litigation.

You’ll need a power of attorney for someone to be able to make decisions if the business owner becomes incapacitated. A buy-sell agreement establishes a fair market value for the company. Life and disability insurance policies provide financial security for the owner and key personnel.

Put it in legally enforceable documents. Discussions only go so far. Executing a formal series of documents ensures that the plan will be enforceable by a court if needed. Language should be clear, with no ambiguity, to transfer ownership and business shares.

Potential successors need to be identified. Will everyone step up to the next level if the business owner becomes incapacitated or dies? This isn’t always the best solution. Sometimes, skills override structure.

Reviewing and updating the business plan should be done as often as you update an estate plan. Whenever there is a major event in the business, review the plan to see if it is still relevant.

A succession plan is all about legacy, continuity, safeguarding a business, letting employees know they are valued and reducing volatility in the family’s future. It allows the business owner to communicate their values and vision, even if they are not present to be part of the future.

Reference: next avenue (Dec. 12, 2023) “How to Make Your Business Outlive You”

What Is the Biggest Mistake People Make on Their Wills?

 

Making mistakes in your estate planning can torpedo every effort made to protect your family after you die, warns a recent article from Kiplinger, “Common Estate Planning Mistakes.” Everyone benefits from a professionally-made comprehensive estate plan, a process for preparing your legal and financial affairs so assets and possessions are passed on after your death to the people or charities you want.

Not having an estate plan can create a world of trouble for those you love. The biggest estate planning mistake of all is not having an estate plan. After that, there are several others.

Procrastination. Suppose you unexpectedly become incapacitated and don’t have an estate plan. In that case, your family will be left guessing what you would want your medical care to be, in addition to needing to go to court to apply for guardianship so they can pay your bills and keep your household running. Everyone should have documents like Health Care Power of Attorney, Power of Attorney, HIPAA Release Form and Living Will in place.

Trying to make an estate plan on your own. Unless you’re an experienced estate planning attorney, there’s a lot you could leave out if you attempt a DIY estate plan. If there are errors, a court could declare your will invalid and it’s as if you never had a will in the first place. The laws of your state will be used to distribute your assets. It may not be what you had in mind.

Keeping estate planning documents in a safe or safe deposit box. Documents need to be where someone can get them in an emergency or after your passing. Safety deposit boxes are often sealed on the death of the owner. Give copies of your estate plan to your appointed executor or trustee, a trusted family member and your estate planning attorney.

Missing key documents. If your estate plan lacks key documents, your heirs might find themselves battling over the estate. Make sure your estate plan includes these documents:

Last will and testament—This document outlines all final wishes and instructions for distributing your assets and how you want your affairs managed after you die. It also is used to name a guardian for minor children and an executor to oversee the instructions in the will.

Beneficiary designations—Any account allowing for beneficiaries, including IRAs, pension plans, investment accounts and insurance policies, will pass directly to named beneficiaries. Be sure that these are up to date.

Durable power of attorney for medical care—Allows another person to make medical decisions for you if you become incapacitated. Depending on your jurisdiction, it may include an advanced healthcare directive, which gives your instructions on whether or not to use life support.

Funeral instructions—Do you want a traditional burial? Cremation? Tell your family your wishes for a funeral or memorial service.

Proof of identity—Your Social Security card, birth certificate, marriage and/or divorce certificate and any prenuptial agreements will be needed for administering the estate.

Deeds or loan documents for large assets—Collect paperwork for homes, boats and other big assets.

Digital assets. These include websites, cloud storage, social media accounts and cryptocurrency, to name a few. By assigning a digital fiduciary and sharing key information, you help heirs avoid identity theft and lost assets.

Failing to update your plan. Your estate plan needs to reflect the changes in your life. If your estate plan is outdated, you may unintentionally disinherit beneficiaries.

Appointing the wrong person as executor or trustee. If your eldest child is a disaster with money management, don’t name them your executor. Consider a trusted person who is unbiased and able to manage money and family dynamics and talk with them about taking on this role before appointing them to this critical role.

Reference: Kiplinger (Dec. 30, 2023) “Common Estate Planning Mistakes”

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”

 

Estate Planning for Unmarried Senior Couples

An increasing number of couples at various stages of life are choosing to live together without marrying, making estate planning a bit more challenging. This is true whether the couple is relatively young and has children or if they are seniors, according to a recent article from Kiplinger, “Estate Planning and the Legal Quirks of Retiree Cohabitation.”

From one perspective, living together without being legally married provides an advantage: you have your own estate plan. You may distribute assets after death with no obligation to leave anything to a partner or their biological children. In many jurisdictions, the law requires spouses to leave a significant portion to their surviving spouse. This doesn’t apply if you’re cohabitating.

However, there are downsides. For example, a surviving unmarried partner doesn’t benefit from inheriting assets without estate taxes. A non-spouse transferring assets may find themselves generating sizable estate or income taxes. To avoid this, your estate planning attorney will discuss tax liability strategies.

Owning real property together can get complicated. Consider an unmarried couple buying a property solely in one person’s name, excluding the partner to sidestep any possible gift taxes. If the sole owner dies, the partner has no claim to the property. The solution could be planning for property rights in the estate plan, possibly leaving the property outright to the partner or in trust for the partner’s use throughout their lifetime. It still has to be planned for in advance of incapacity or, of course, death.

Regarding healthcare communication and directives, special care must be taken to ensure that the couple can be involved in each other’s care and decision-making. By law, decision-making might default to the married spouse or kin. Without a designated healthcare proxy, a cohabitating partner has no legal authority to obtain medical information, make medical decisions, or, in some cases, won’t even have the ability to have access to a hospitalized partner. A healthcare power of attorney is essential for unmarried couples.

For senior couples living together, blending families can be challenging. However, blending finances can be even more complex. Living together later in life can create many concerns if there are former spouses or children from a prior relationship. If a senior decides to marry, they are advised to have a prenuptial agreement so children from previous unions are not disinherited. If a potential spouse has big issues signing such a document, it should raise a red flag to their motivation to marry.

While living together without the legal protection of marriage is an individual decision and may be seen as a means of avoiding legalities, it needs to be examined from the perspective of estate planning to protect both parties and their families. Couples must prepare for the future, for better or worse, in sickness and health.

Reference: Kiplinger (Dec. 6, 2023) “Estate Planning and the Legal Quirks of Retiree Cohabitation”

 

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”