Basic Estate Planning

Robert D. Schwartz, an estate planning attorney in Florida outlined some essential documents in any estate plan in a recent article for TCPalm.

Last Will and Testament - the most basic estate planning document.  A will is a legal document which allows you to direct exactly where your assets are to be distributed when you die. An issue to consider with a will is that when you die your assets must go through probate before they are passed on to your named beneficiaries. Most people want to avoid probate and the most common way to accomplish this is with a revocable trust, also referred to as a living trust. The trust acts similarly to a will. It allows you to direct or put conditions on who gets your assets and when they get them. The biggest advantage of a trust is that it avoids probate. This means that you avoid expensive court proceedings, you preserve the privacy of your estate, and you minimize the emotional stress on your heirs. The key to a revocable trust is that it must be funded prior to your death. That means your assets must be re-titled into the name of the trust. If they are not re-titled, then they must be probated.

The Durable Power of Attorney is another extremely important estate-planning tool. This legal document allows you to select someone to handle your finances in the event that you cannot. No one can predict the crises that can occur in life. If something happens that leaves you unable to handle the business side of your life, this document can allow someone you trust to step in. That person can pay your bills, keep up your investments, or make key financial decisions in your best interests. If you become incapacitated without naming a Durable Power of Attorney, then the court will have to step in and through an expensive and time consuming proceeding, name a guardian to act on your behalf.

A health care surrogate is a legal document which allows someone to make medical and health-related decisions on your behalf if you are not able to. It is sometimes known as a Medical Power of Attorney, commonly called the “Living Will.” It is a statement of your wishes for what kind of life-prolonging treatment you want, or don’t want, in the event that you become terminally ill and unable to communicate. It applies to all instances in which you are incapacitated.

Having a solid estate plan can set your mind at ease. It is not only for your benefit, but for the benefit of your loved ones. Give me a call to set up a meeting to discuss your estate plan.

Do I need a trust?

Julie Landry Laviolette in the Miami Herald tackles the age old question: “Do I need a trust?

”It’s not only heiresses and socialites who can benefit from a trust. Used in the right circumstances, a trust can be a helpful estate planning tool to pass assets to your children, take care of your affairs if you are incapacitated, or dole out your wealth — whatever its size — in a certain way.

Trusts can be part of a simple estate plan that includes a will, power of attorney and living will.

Deciding whether you need a trust or not can be confusing. What is a trust? It is a legal entity that allows you to put conditions on how your assets are distributed after you die. It can help minimize estate taxes and avoid probate. It can also be used to protect an heir’s assets from creditors.
Read the entire article to learn more about trusts can benefit the following people: 

A COUPLE WITH YOUNG CHILDREN

A SINGLE PERSON

A COUPLE WITH GROWN CHILDREN

FAMILIES WITH SECOND MARRIAGES

Make sure your estate plan is doing things for you (not TO you)

Estate planning is more than just having documents. It needs to be tied to long-term intent and aligned with your goals. What works for one person may not work well for the next, and what worked 10 years ago may not work now.

Geoffrey M. Zimmerman, CFP® practitioner, senior client advisor at Mosaic Financial Partners Inc., says many treat their estate plan like a transaction, even though the moving parts may have changed.

“They may have a document that is doing things to them and to their beneficiaries, and not really working well for them,” he says. “That’s why it’s important to review the plan periodically. It might take a visit to your attorney and the cost of several hours of time to update it. But in terms of relieving the headache on a surviving spouse or beneficiaries, those can be dollars well spent.”
Smart Business spoke with Zimmerman about why your estate plan should be continually adjusted. Read the article…

If I can assist you in any way, please call me or contact me by email.  I’ve spent years developing my expertise in these areas of estate management, and I would enjoy applying my expertise to assisting you.

Learning from the mistakes of others

In the arena of estate planning, there’s a lot to be learned from the mistakes of others. Tim Cestnick, author of several tax and personal finance books, offers some examples.

1. Don’t die intestate.

Dying without a will is called dying intestate.

When Jimi Hendrix died at age 27, he didn’t have a will. Despite being very close to his brother, the laws of the jurisdiction where he lived dictated that his estate was inherited by his father, who left it all to an adopted daughter from another marriage.

Without a will, the intestacy laws of your province will dictate who gets what – which may not jive with your wishes.

If you’re unmarried, for example, but have a partner, he or she may not be entitled to any of your assets upon your death if you don’t have a will.

And keep your will updated. When actor Heath Ledger died in 2008, his will was five years old; he hadn’t updated it when his daughter was born, so she wasn’t mentioned in his will and he left everything to his parents and sisters (he wasn’t married).

2. Watch the impact of specific bequests.

A woman I once met left her cottage to her son and her investment portfolio to her daughter. She thought she was treating them equally. There was a sizeable tax liability owing on the cottage upon her death. The only liquid assets available to pay the taxes were part of the investment portfolio.

In the end, the daughter was short-changed since the tax bill was paid out of her inheritance. The woman’s will could have been worded differently to avoid this problem. When you leave specific bequests to certain beneficiaries (including by way of joint ownership or by naming individuals as beneficiaries under your registered plans, for example) your estate may be short on cash to pay taxes or debts, leaving the taxman or creditors chasing beneficiaries for the money.

3. Avoid the wrong executor.

A reader recently wrote me to share the story of a woman who died at age 86. This woman had named her best friend, who was the same age, as executor in her will. Within two weeks of the woman passing away, her best friend also died, leaving the woman’s estate without an executor. This caused additional costs and delays in distributing her estate. When you choose an executor, choose someone who is very likely to still be around when you die (generally someone much younger) and name an alternative executor in the event your named executor is unable or unwilling to act in that role.

4. Protect your kids from a first marriage.

A gentleman I knew was in a second marriage, but his children were from a first marriage. Upon his death, he left all of his assets to his second wife who, upon her death, left everything to her own children from her first marriage. The gentleman’s children received nothing. There are different ways to ensure your children do receive what you intend for them, including leaving assets to them outright upon your death, or placing assets in a spousal trust where your second spouse can access the income of that trust, but not the capital, leaving that capital to pass to your children upon your second spouse’s death. Pre-nuptial agreements can also play a role here.

5. Remember that promises aren’t binding.

Before his death, Marlon Brando promised his caregiver, Angela Borlaza, his house, but did not write it into his will. Ms. Borlaza went to court and had to settle with his estate. Even a letter of wishes, which details who you’d like to receive your personal effects, is not binding. The late Diana, Princess of Wales, prepared a letter of wishes that left certain assets to her children and godchildren. It wasn’t followed, and the godchildren received only trinkets. A letter of wishes is still a good idea, but if you feel very strongly about specific assets, you may want to distribute those assets by way of your will.

Estate Planning Made Easy: Establishing Trust Bank Accounts

Huffington Post’s guest blogger, Diane Morais of Ally Bank addresses the question “How can I ensure the financial security of my family after I'm gone?"

It's an important question that we all wrestle with -- and one that has fueled an expansive network for estate planning products and services to address this important concern. If you're like most people, chances are you've been working a lifetime to build a nest egg that you can pass along to your children and loved ones. An important element of the estate planning strategy is maybe the simplest component of them all -- how to handle common bank accounts.

With many Americans now able to save for the first time in years, many are evaluating bank accounts that are ideally suited for trusts -- often on the advice of their financial planner -- to firm up their own savings while simultaneously easing the burden on their beneficiaries. There are numerous benefits:

•   Assets secured in accounts for trusts can be transferred almost immediately and without extra costs to beneficiaries when necessary

•   Accounts for trusts can be established in any amount, and those established at Member FDIC banks are insured for at least up to $250,000 per depositor

•   Some banks that offer deposit products for trusts -- such as Ally Bank -- allow them to be established by converting an already-existing savings, money market, or CD account

•    Any individual -- or organization -- can be named as a trustee

Establishing a trust

Establishing accounts for trusts does require a few steps; however, the process is hardly painful. The first step is to set up a living trust agreement, which transfers some or all of your assets to someone who will manage the trust (typically, people name themselves as the trustee; this allows them to retain control of the trust's assets). As part of the trust agreement, you also name beneficiaries who will inherit the trust upon your death. Establishing a living trust requires some paperwork and it's recommended to involve a lawyer in drafting the agreement.

The second step is even easier -- contact a bank that offers deposit accounts for trusts and provide them with the documentation. The process will differ based on the bank you use, but many, including Ally Bank, will provide step-by-step instructions for establishing these accounts.

The short process more than makes up for itself when one considers that the primary benefit of an account for trust is the ability to bypass the probate process upon the grantor's death -- which may save quite a bit of money and time for trustees as well as protecting your privacy by avoiding the often public probate process.

Call for an appointment to learn how an account for trust might fit into your estate planning strategy.

Six step checklist of your estate plan

Steve Shaw an estate planning attorney practicing in South Carolina and Florida offers this Six-step checklist of your estate plan.

1. Define your goals

2. Gather and organize your data

3. Analyze your situation

4. Develop your strategies

5. Implement your plan

Read the full article for details on each step. Shaw on the Law: Six-step checklist of your estate plan

Elder Abuse: How to stop it

The following is an excerpt from a recent article in The Mercury by Kathy Martin regarding elder abuse.

Our aging population is increasingly vulnerable to abuse, with financial exploitation having risen to the third most common form of elder abuse (following self-neglect and caregiver neglect). The message is that we need to step up and report abuse, or suspected abuse, when we see it.
Elder victimization is most concentrated in the very old, most victims are Caucasian and female, and a large proportion of older adult victims have cognitive difficulties. These statistics on victims are not surprising since cognitive issues increase in frequency in direct proportion to age, and the more help someone needs in their home, the greater chance of exploitation. Perpetrators spend time with their victims, and this time and attention results in gaining the trust of the victims. Many older adults are socially isolated, and the family member or other person who spends time with the older person becomes their new best friend and lifeline.
Victims fail to report exploitation even if they realize it is happening. They might fear the perpetrator, or fear being taken to a nursing home, or even fear losing the attention and time that the perpetrator is giving them. People have the right to make their own decisions, even if that decision seems like a poor choice. However, sometimes those choices are made out of fear or undue influence, and it becomes an invisible but very real problem.
As people age, everyone has changes in cognitive ability, especially in processing new information. This change in ability to understand new information, or even a great deal of information at once affects financial decision making ability. Add any cognitive deficits such as from depression or early dementia, and the senior’s ability to make good independent financial decisions can be compromised. It is easy for bad intentioned family members, or scammers, or new “friends” to step in.
What can we do to help our older family members or friends? One step is to make sure that older persons have good Power of Attorney documents in place before signs of dementia start occurring. If there are early signs of dementia, such as new aggressive behavior, anxiety, depression and/or confusion, assist the senior in seeking help and early intervention. Power of Attorney documents can be abused, but it is more protection than allowing a thief to gain control of the senior’s assets by gaining their trust when incapacity is already evident.