Talking To Your Parents About Estate Planning

There are many ways to broach "the talk" with your aging parents about estate planning and the sooner you start the better, for all concerned.
A recent article in Huffington Post’s Business Canada suggests that getting a plan together when your parents are still in good health will prevent any stress or confusion that could result should their health falter later in life.

1.            Don't shun the talk. Discussing personal finances is often considered a taboo, but many barriers can be knocked down if you approach the conversation openly, lay out your goals, and check them off.

2.            Don't wait for a health crisis -- or any other crisis -- to talk to your parents about their estate plans. If you feel disingenuous using some ice-breaking strategy then just be upfront about acknowledging how uncomfortable the topic makes you feel. That in itself is an ice breaker.

3.            Don't be a bull in a china shop. Ensure your parents feel loved and in control of the situation. Don't forget the discussion is about them and how they want you to fit in. Listen to their ideas to get a strong understanding of what they want. If you have suggestions then offer them, but don't expect that they'll immediately accept them, if at all. It's about people skills and open communication. If you know that will be a hurdle from the start, then perhaps a visit to a third party such as an estate lawyer or financial planner can help take the edge off.

4.            What to talk about. Assets, wills, and how your parents want to share their legacy; be prepared with specific questions about all those topics. Beyond that, you'll need to talk to your parents about plans about their income, retirement investment plans, and health care. Some professionals suggest commonly cited questions including: should your parents have a living will? Does the Power of Attorney cover off what your parents want addressed? Does your parents' will and estate plan clearly lay out the transfer process to beneficiaries or deal with tax issues?

5.            Discuss where the documents will be kept. After figuring out exactly what your parents want in their estate plan there must be clear guidance on where those plans will be kept. Experts in the industry stress the importance of knowing where to easily find phone numbers and contact names, details, and documents including wills, investments, and personal information such as birth certificates.

"What do you mean I don't get it all? We were married".

Spouses are often shocked when they realize they aren't entitled to the entire estate just because they are married. People mistakenly think that because they are married, they receive the entire estate when a spouse passes away.
Unfortunately, a spouse can find themselves having to share a deceased spouse's estate in unanticipated ways.First, it is important to understand the difference between probate and non-probate assets. Non-probate assets are assets that are jointly owned, have a beneficiary designation or are owned by an entity such as a trust. Bank accounts that are in joint names or that have a payable on death beneficiary listed are examples of non-probate assets.
Probate assets are those that are title solely in the decedent's name and don't have a beneficiary designation. Since these assets don't have an obvious designated post-mortem owner, their ownership needs to be determined.

Read more in NWI Times article by Christopher Yugo

Should you give your kids their inheritance before you die?

LearnVest’s Libby Kane explains that while the word "inheritance" typically conjures up images of a will being read after a loved one's passing, many people don't want to wait that long to give money to their children.

A recent study from U.S. Trust shows that the majority of wealthy individuals feel it's important to leave an inheritance of some kind. In fact, 64 percent of those ages 49 to 67, and 72 percent of those 68 and older say they want to leave the next generation money. And at the same time,  more than half say they have provided or are providing significant financial support to adult children.
Leaving money to family earlier than expected isn't uncommon. But is it for you? 

Why you should give early…

1. There may be tax benefits

2. You get to see the fruits of your labor

… and why you shouldn't

1.       You could come up short later

2.       Early giving can spur family drama
Read the full article
The bottom line: Like most financial choices, giving an early inheritance isn't always the right move. If it's on your mind, contact me to help you decide which option can best help you provide for your loved ones without compromising your own financial health.

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.