Total Counsel Law Group

How Should Couples Begin the Estate Planning Process?

“Let’s face it: mortality is hard to think about and death is impossible to plan for. What is doable, however, is getting affairs and assets in order to prevent loved ones from inheriting a headache and legal fees in the event of an incident.”

About 17% of adults don’t think they need a will, believing that estate planning is only for the very wealthy. However, no matter how few assets it seems someone owns, completing a few documents can make a huge difference in the future.

valuewalk.com’s recent article, “Couples: Here’s How To Start The Estate Planning Process” notes that although estate planning can seem overwhelming, taking inventory of assets is a terrific place to start.

Make a list of all your belongings of $100 or more in value, both inside and outside of the home. After that, think about how these assets should be divided among family, friends, churches or charities.

Drafting a will may be the most critical step in the estate planning process. A will serves as the directions for how assets are to be distributed, which can avoid unpleasant disputes.

A will can simplify the distribution of assets at your death, and it also provides instructions to your family and heirs.

A will can also set out directions for childcare, pet care, or any additional instructions or specifications.

Without a will in place, your assets will be distributed according to state law, rather than according to your wishes. Creating a will keeps the state from making decisions about how your estate is divvied up—decisions you may not have intended.

Once you have your assets and beneficiaries set, see an experienced estate planning attorney and have your will drafted immediately. Hey, life is unpredictable.

Another important part of the process is to have a discussion with everyone involved to prevent any legal or familial disputes regarding the estate.

Failure to start the estate planning process can lead to family fighting, misappropriated assets, court litigation and unneeded expenses. Get going!

Reference: valuewalk.com (July 22, 2019) “Couples: Here’s How To Start The Estate Planning Process”

Why Do I Need a Will?

“A will is the legal document that dictates how your possessions will be distributed—and who will take care of the living creatures you're responsible for—when you're no longer around.”

Yahoo Finance’s recent article on this subject asks “Do You Really Need a Will?” As the article explains, without a will, you'll be "intestate"—which means you'll have no say in what happens once you pass away.

Each state has laws that pertain to the distribution of a person's estate, if they die without a will. These laws most likely won’t mesh with your personal desires. If you don't have a will, ask yourself why you don't. Perhaps you think you don't need one. However, more than likely you do. If you're putting off starting this important estate planning task, here are some things to consider.

Just about everybody needs a will, but you definitely should have one if you're married, you have minor children, you have real estate, or you have investments in the stock market. You should also have a will if you have possessions, such as cars, furniture, jewelry, paintings, and computers … and who doesn't?

As far as your money and possessions, you probably have some thoughts as to who gets what. You may want to chip in on the education of some younger relatives or give specific pieces of jewelry to those who you know will appreciate them. If you have minor children, you probably have very definite ideas about who should be their guardians if you die.

With a will, you have control. Without a will, the state in which you live will distribute your assets according to its laws, regardless of your wishes.

After you pass away, there could be surprise money coming to you, and without a will, you have no control over where these funds go. Your estate could get some cash from returned security deposits, medical reimbursements, or refunds from utility companies. Furthermore, if you die in a car accident and there's an insurance settlement, you have no say who gets those funds, which could be substantial.

You also need to think about your pets, and who would be the best person to care for your animals.

There’s also social media. Each organization, like Facebook, Instagram, and Twitter, has specific guidelines for what happens when a user dies. If you don't state what you want done with these accounts in your will, they may stay open forever.

Reference: Yahoo Finance (July 21, 2019) “Do You Really Need a Will?”

Does Estate Planning Include Your Account Passwords?

“Estate administration in the digital age requires having a strategy to share passwords to your computer, email and online accounts. Without that, things quickly get complicated.”

With most bank customers receiving financial statements electronically instead of on paper, there are some actions you need to take to be sure your accounts are incorporated into your estate planning.

Kiplinger’s recent story, “Your Estate Plan Isn't Complete Without Fixing the Password Problem,” says that having online access to investments is a great convenience for us. We can monitor bank balances, conduct stock trades, transfer funds and many other services that not long ago required the help of another person.

The bad thing about these advancements, is that they can make for a very difficult situation for a surviving spouse or executor attempting to determine where the assets of a deceased person are held.

This was in the news recently, when the founder and CEO of a cryptocurrency exchange died unexpectedly. Gerry Cotten didn’t share the password to the exchange’s cold storage locker—leaving $190 million in cryptocurrency belonging to his clients totally inaccessible. Investors may never see their funds again.

You can see how important it is to provide a way for someone to access your data, if you become incapacitated or die.

The easiest, but least secure answer is to just give your passwords to a trusted family member. They’ll need passwords to access your accounts. They’ll also need a password to access your email, where electronic financial statements are sent. Another simple option is to write down and place all passwords in a safe deposit box.

Your executor or guardian/attorney-in-fact through a power of attorney (in the case of incapacitation) can access the box and your passwords to access your computer, email and financial platforms.

This is a bit safer than simply writing down and providing passwords to a trusted friend or spouse. However, it requires diligence to keep the password list updated.

Finally, the most secure way to safely and securely store passwords is with a digital wallet. A digital wallet keeps track of all your passwords across all your devices and does so in an encrypted file in the cloud.

There’s only one obstacle for an executor or surviving spouse to overcome—the password for your digital wallet.

Reference: Kiplinger (April 19, 2019) “Your Estate Plan Isn't Complete Without Fixing the Password Problem”

What Are the Six Most Frequent Estate Planning Mistakes?

“Let’s talk about death. Specifically–have you planned what will happen after yours?”

it is a grim topic, but it is an important one. Without a legal will in place, your loved ones may spend years stuck in court proceedings and spend a lot in legal fees to settle your estate.

The San Diego Tribune writes in its recent article, “6 estate-planning mistakes to avoid,” that without a plan, everything is more stressful and expensive. Let’s look at the top six estate-planning mistakes that people need to avoid:

No Plan. Regardless of your age or financial status, it’s critical to have a basic estate plan. This includes crafting powers of attorney for both healthcare and finances and a living will.

No Discussion. Once you create your plan, tell your family. Those you’ve named to take care of you, need to know what you’ve decided and where to find your plan.

Focusing Only on Taxes. Estate planning can be much more than just about tax avoidance. There are many other reasons to create an estate plan that have nothing to do with taxes, like charitable giving, special needs planning for a family member, succession planning in the event of incapacity and planning for children of a prior marriage, to name just a few.

Leaving Assets Directly to Children. If you leave assets directly to your children or grandchildren under age 18, it can cause unintended custodian or guardianship issues. Minors can’t own legal property, so a guardian will be appointed by the court to manage the property for them, until they reach age 18. If you don’t name a guardian, the court will appoint one for you and that person may have very different ideas about how the account should be managed and invested.

Making Mistakes with Ownership and Property Titles. With many blended families, you may want to preserve assets from an inheritance as your own separate property or from a prior marriage for your children. There are many tax consequences and control issues in blended families about which you may not be aware.

Messing Up Your Trust. Many people don’t properly fund or update their trusts. An unfunded trust doesn’t do anyone any good. Assets that aren’t titled in the name of the trust don’t avoid probate.

Finally, be sure to review your estate plan regularly, as your circumstances change.

Reference: San Diego Tribune (April 18, 2019) “6 estate-planning mistakes to avoid”

When Do I Need a Revocable Trust?

“The Last Will and Testament plays an essential role in estate planning and without question everybody should have one.”

A will is a legal document that states how your property should be distributed when you die.  It also names guardians for any minor children. Whatever the size of your estate, without a will, there’s no guarantee that your assets will be distributed, according to your wishes. For those with substantial assets, more complicated situations, or concerns of diminished capacity in later years, a revocable trust might also be considered, in addition to a will.

Forbes’ recent article, “Revocable Trusts And Why Should You Consider One,” explains that a revocable trust, also called a “living trust” or an inter vivos trust, is created during your lifetime. On the other hand, a “testamentary trust” is created at death through a will. A revocable trust, like a will, details dispositive provisions upon death, successor and co-trustees, and other instructions. Upon the grantor’s passing, the revocable trust functions in a similar manner to a will.

A revocable trust is a flexible vehicle with few restrictions during your lifetime.  you usually designate yourself as the trustee and maintain control over the trust’s assets. You can move assets into or out of the trust, by retitling them. This movement has no income or estate tax consequences, nor is it a problem to distribute income or assets from the trust to fund your current lifestyle.

A living trust has some advantages over having your entire estate flow through probate. The primary advantages of having the majority of your assets avoid probate, is the ease of asset transfer and the lower costs. Another advantage of a trust is privacy, because a probated will is a public document that anyone can view.

Even with a revocable trust, you still need a will. A “pour over will” controls the decedent’s assets that haven’t been titled to the revocable trust, intentionally or by oversight. These assets may include personal property. This pour-over will generally names the revocable trust—which at death becomes irrevocable—as the beneficiary.

Another reason for creating a revocable trust is the possibility of future diminished legal capacity, when it may be better for another person, like a spouse or child, to help with your financial affairs. A co-trustee can pay bills and otherwise control the trust’s assets. This can also give you financial protection, by obviating the need for a court-ordered guardianship.

Talk to an experienced estate planning attorney about the best options for your situation to protect your estate and provide the peace of mind that your family will receive what you intended for them to inherit, with the least possible costs and stress.

Reference: Forbes (March 11, 2019) “Revocable Trusts And Why Should You Consider One”

What Do I Do to Obtain a Guardianship?

“Here's what to expect, when applying for guardianship.”

Independence is important for seniors. No one wants to give that up, until it’s absolutely a necessity.

However, could a situation arise where a person has been appointed to be your guardian and no one told you about it?

What if that happened in another state? Perhaps a niece wants to “help,” but she’s halfway across the country.

nj.com’s recent article, “Worried someone may want to be your guardian? Here's what you need to know,” first explains how guardianships work.

Guardians are appointed by a judge, for both minors and incapacitated individuals. An application is required to be made to the court in the state and county, where the minor or alleged incapacitated person lives or where his or her property is located. In either situation, once the minor becomes 18, she receives the property. If the incapacitated person returns to full or partial competency, the court (upon application) may restore that person’s rights, which would dismiss or limit the guardianship.

A guardianship can be of the person. This type is limited to making medical or similar decisions on the incapacitated person’s behalf, or concerning the person's property, or both. A guardianship can also be limited. This means that the guardian is appointed to only make certain decisions, like financial ones. A guardianship can also be plenary, which means the guardian can be appointed to address all issues.

When a guardian of an individual's property is appointed, the property is usually re-titled into the name of the guardian for the benefit of the incapacitated individual. This gives third parties notice of the guardianship.

In New Jersey, prior to an individual being appointed as the guardian of an alleged incapacitated person, that person has to be given notice of the proceedings. That person is also appointed an attorney by the court to advocate for them or to report to the court on their situation. Therefore, in the questions raised above, a senior would be given notice and legal representation. The niece in another state couldn’t petition for a guardianship behind her aunt’s back.

The records of these types of proceedings aren’t open to the public, because of the confidential information in them, like certifications from physicians on the physical and mental condition of the alleged incapacitated person.

However, information on the name of the guardian for the incapacitated person should be available, so creditors and other third parties can know who to rely on, when providing services to the incapacitated person.

Reference: nj.com (August 24, 2018) “Worried someone may want to be your guardian? Here's what you need to know”

Planning is Critical for Families with Children with Special Needs

“A college education is expensive, but for families with children with special needs, the costs could easily double.”

The American College of Financial Services in Bryn Mawr, PA found that the average cost of rearing a child from birth to age 18 is about $250,000. However, rearing a child with special needs can easily be more than double that amount. If you have a child with special needs, then you should have a plan in place to help you address the unique financial and other challenges that go with providing care for your special needs child.

WTNH’s recent article, “Financial planning for families with children with special needs,” advises that working with a team of different professionals can help parents manage both the financial and non-financial aspects of providing care. Here are some of the key roles:

Caregiver. Working with a caregiver can help manage the challenges of providing care and addressing everyday responsibilities. The cost will be commensurate with the level of care required, so determining the need will be important to creating a budget.

Estate Planning Attorney. A lawyer who specializes in estate planning can help create a special needs trust to shield assets for a beneficiary with special needs, while preserving her ability to qualify for government programs. An updated will and living will with the names of a guardian and trustee will also be crucial to be sure that care is provided for in accordance with your wishes. A letter of intent can also be a helpful document for caregivers. It’s not a legally binding document, but it can provide important information like medical history, family history, information about your child’s preferences, and your wishes for the type of care they should receive.

Accountant. As a provider of care to a child or dependent with special needs, you may qualify for tax deductions for medical expenses, tax credits and tax-advantaged accounts. For individuals disabled before the age of 26, a 529A account can provide tax-free growth and use of the money to improve health and quality of life.

Financial Advisor. A financial advisor, who specializes in working with families that have special needs children or dependents, can provide specific recommendations on how to fund and protect accounts for disabled dependents.

In addition, look at any available government benefits, like Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). Don’t overlook employee benefits, like insurance to replace income, in the event of a parent’s premature death or disability, flextime or child care reimbursements.

Reference: WTNH (August 7, 2018) “Financial planning for families with children with special needs”

What To Do When Your Special Needs Child Turns 18

“If you have a child with special needs, once they turn 17, you need to start thinking about what's going to happen when they turn 18 and you are no longer legally in control of their life.”    

A recent article in the Effingham (IL) Daily News, “Teaching parents about guardianship of disabled children,” explains that in this transition period, parents need to decide whether their child needs a guardian, or if they need a power of attorney.

Once a child is age 18, the parent is no longer the child's legal guardian.

You should identify the support required for your child and ask what other support they need, while they’re transitioning. Work with a special needs attorney and ask about guardianship. Guardianship is a way to protect an individual who can’t take care of herself, make informed decisions or handle financial assets. An experienced attorney will explain guardianship and alternatives that may be chosen, if the child is capable of making some, but not all, decisions on her own. There are different kinds of guardianships and different kinds of powers of attorney (POA) for estate and health care requirements.

A person can be disabled in some ways, but still be competent to execute the powers of attorney. If the person understands who their family is, who she is, if she’s oriented to time, and she knows who they trust to handle their business or health care decisions, then she can probably sign powers of attorney.

A POA is written authorization to represent a person and make specific decisions on her behalf. The child may have a POA over her health care or estate management. A guardianship of the child’s health care or estate management is appointed by a judge, after reviewing physician statements about the disabled person's needs.

Remember that having power of attorney over their child's financial matters, doesn't give parents power over everything. Things not covered in the POA document are things over which the agent doesn't have the authority. A POA can be revoked, when the person assigning it is competent. However, in a guardianship appointed by the court, you have a duty to act, until the court determines otherwise.

A guardianship requires a physician's report which states that the alleged disabled person needs a guardian. The physician should state specific reasons for the court. Guardianship should be as narrowly designed as possible.

Reference: Effingham (IL) Daily News (April 15, 2018) “Teaching parents about guardianship of disabled children”

New Mexico Forms Commission to Study the State’s Guardianship System

“The New Mexico Supreme Court issued an order Thursday, forming a 16-member commission to study the state’s guardianship system and to recommend improvements.”

The members of this new commission include representatives from the three branches of government, Elder Law and estate planning attorneys with experience in guardianship law, along with advocates for the interests of the elderly, disabled and others involved in guardianship proceedings.

KRWG’s recent article, “In Depth: New Mexico Supreme Court Forms Commission To Recommend Guardianship System Changes,” explains that court-appointed guardians make personal and health care decisions for those who are incapacitated.

Conservators are appointed by a court to manage the financial and perhaps the property affairs of an incapacitated person. Those may be individuals suffering from dementia, traumatic brain injuries, a developmental disability or a mental illness.

The New Mexico Supreme Court ordered the commission to hold hearings to gather public input and then to make recommendations about any necessary changes in court rules, state statutes, program funding, administrative practices or other ideas to improve the guardianship system.

The New Mexico Supreme Court ordered the commission is to make an initial status report by October 1 and to continue its work until completing a final report and recommendations.

Wendy York, an Albuquerque attorney, has been appointed the chair of the new commission. York was a Second Judicial District judge from 1997 to 2005. She has worked in a private law firm for the past 12 years as a mediator in cases, including disputes involving family members and protected persons, as well as guardianship organizations.

Members of the commission include several judges, legislators, and Elder Law attorneys, like Tim Gardner, legal director of Disability Rights New Mexico, a non-profit group that promotes and protects the rights of people with disabilities and Jorja Armijo-Brasher, director of the Department of Senior Affairs for the City of Albuquerque since 2009. She is in charge of six senior centers, two multi-generational centers, as well as services and programs for the elderly, like home-delivered meals and transportation assistance.

For more information, please visit our website at www.totalcounselor.com

Reference: KRWG.org (April 7, 2017) “In Depth: New Mexico Supreme Court Forms Commission To Recommend Guardianship System Changes”

Myths of the Midlife Marriage

“Marriage after age 50 is a wonderful thing, but it also has some financial challenges.”

There are numerous money myths that you’ll hear when you consider getting married at midlife, particularly if your spouse-to-be has children from a first marriage. Here are six common myths from Forbes’ recent article entitled “6 Money Myths About Marrying After 50”:

1: Prenups Are Just for The Rich and Famous. This is not true. If you’ve been married before and have children from a previous relationship, a prenuptial agreement is important to ensure that your assets will pass to your children from the prior marriage. What about a first-time marriage? There still might be a need for a prenup, especially if you own significant assets. Don’t think of a prenup as preparing for divorce, but rather more like writing your will. If you don’t have your affairs in order, the state will decide for you—just like dying without a will. After age 50, the focus of a prenup should be on protecting your children and grandchildren. For instance, some states allow a surviving spouse to claim his or her “elective share”, instead what’s in the decedent's will. A prenup allows your spouse to waive the elective share. That means the odds are that your estate plan won’t be challenged by your surviving spouse.

2: Don’t Talk Estate Planning with Your Stepfamily. Estate planning is critical when you have children from an earlier marriage.  Otherwise, your entire estate could pass to your new spouse and not to your own children. Have a candid discussion about your estate planning and prenup with your adult children and your new spouse. This will alleviate some of the concerns adult kids may have about how it will affect their inheritance, when their parent gets remarried.

3: Holding Assets Jointly Is Always Preferable. Long before getting married, couples should decide on whether they want to have separate or joint accounts and if one will sell his or her current home. If one of you sells their home, will the deed to the house you live in be changed to reflect join ownership? It is best to have these discussions before the wedding ceremony.

4: Your New Spouse’s Debt Won’t Impact You. This is a big one. Marrying a person with a large amount of debt, whether it’s college loans or credit card debt, can be a major issue in second marriages. Therefore, spouses should be upfront and candid about their debts before marrying. That way they can plan how to address the debt.

5: It Always Makes Financial Sense to Get Married. This is not always true. It depends on your personal and financial circumstances. Tying the knot may reduce your Social Security benefits, especially if you didn’t work while you were married the first time and can claim spousal benefits that are much higher than your own Social Security benefits. If you have an ill or disabled partner on Medicaid, then you might want to stay unmarried so he or she can to continue to qualify for benefits. The combined marital income might make your partner ineligible for Medicaid.

6: Your Spouse Automatically Has a Right to Make Your Medical Decisions.  This statement is not true. If there’s no advance health directive in place that details your wishes regarding end-of-life care, it’s not a certainty that your new spouse will be able to make medical decisions for you or tell your doctor what treatment you’d want. You should be clear in writing what your wishes are, so your new spouse and your adult kids will not fight over your care. Talk with your new spouse and your adult children, so they know your wishes and set up an advance health care directive. This should be part of your estate plan, which should also be revised to reflect the new marriage.

For more information, please visit our website at www.totalcounselor.com

Reference: Forbes (February 13, 2017) “6 Money Myths About Marrying After 50”