Sharing Legal Documents and Passwords

While parents are alive and well is the time to prepare for the future, when they begin to decline. An adult child who is a primary agent may have questions about organizing documents and managing storage in a digital format, as well as how to secure their passwords for online websites. The advice from the article “Safe sharing of passwords and legal documents” from my San Antonio is that these two issues are evolving and the best answers today may be different as time passes.

Safe and shareable password storage is a part of today’s online life. However, passwords used to access bank and investment accounts, file storage platforms, emails, online retailers and thousands of other tools used on a desktop require passwords that are increasingly complex and are difficult to remember. In some cases, facial recognition is used instead of a password.

Many rely on their internet browsers, like Chrome, Safari, etc., to remember passwords. However, this leaves accounts vulnerable, as many of these and other browsers have been hacked.

The best password solutions are stand-alone password managers. They offer the option of sharing the passwords with others, so parents can provide their agents and executors with access to their list. However, there are also new laws regarding digital assets, so check with your estate planning attorney. You may need to create directives for your accounts that specify who you want to have access to the accounts and the data that they contain.

Storage of legal documents is a separate concern from password-sharing. Shared legal documents need to be private, reasonably priced and secure.

Some password managers include document storage as part of the account. The documents can be uploaded in an encrypted format that can be accessed by another person, who is assigned by the account owner.

Document vault websites are also available. You will have to be extremely careful about selecting which one to use. Some of the websites resell data, which is not why you are storing documents with them. One company claims to offer a “universal advance digital directive,” which they say can provide digital access worldwide to documents, including an emergency, critical and advance care plan.

The problem? This company is located in a state that does not permit the creation of a legally binding advance directive, unless it is in writing, includes state-specific provisions and is signed in front of either two qualified witnesses or a notary.

Talk with your estate planning attorney about securing estate planning documents and how to protect digital assets. Their knowledge of the laws in your state will provide the family with the proper protection now and in the future.

Reference: my San Antonio (October 14, 2019) “Safe sharing of passwords and legal documents”

Wishing you and yours a joyful day

Season’s Greetings from the Goff Legal Team!

It’s that time of year again – where time seems to move at lightning speed to the end-of-year.

With the holidays right around the corner, this post is to provide you an overview of upcoming office hours and closures in the event you were thinking about contacting the office to schedule an appointment.  The office will remain sensitive to urgent matters and emails or voicemails received, however, please assist our office in accommodating for the hectic holiday season.

Our office will be closed and unavailable for the dates as follows:

November 2019

December 2019January 2020
11/28/2019 (Th) through 11/29/2019 (F)12/24/2019 (Tu) through 12/31/2019 (Tu)

01/01/2020 (W)

If you find yourself having gone through a lot of big changes in your life and want to make updates to certain parts of your estate plan or across all of your documents, my office would be more than happy and able to assist in scheduling an appointment with me or my associate attorney, Maureen Chang. (Yes, our office now has had another attorney to assist with client needs since January 2019 in case you have not yet been updated with our office news!)

As always, thank you for your continued support and interest in our local business; we look forward to continuing to serve our clients and the local region with effective and efficient legal services.

My staff and I wish you a safe and jolly holiday season and Happy New Year!

When Selecting Beneficiaries Gets Overlooked

Here’s one way to mess up your estate plan: naming beneficiaries not by name, but by the generic term “children.” If yours is a blended family, your stepchildren may be out of luck, according to the article “Five mistakes to avoid when naming beneficiaries” from Delco Times. In many states, stepchildren aren’t recognized if the word “children” is used. Use their full names.

Here are more mistakes that people make about beneficiaries:

Failing to name a beneficiary on every account. The great thing about beneficiary designations as that they do not go through probate and beneficiaries receive assets directly from the custodian of the account. However, if you fail to name a beneficiary, the asset, whether they are life insurance proceeds or the entire balance of a 401(k) account, will go to your estate. If it exceeds the statutory limit, then it will need to go through probate.  For retirement accounts, your heirs will also lose the ability to stretch withdrawals over their lifetime.

Failing to name a contingent beneficiary. What if the first person passes away before you do and there’s no contingency beneficiary named? The asset will be treated as if there were no beneficiaries named at all, and it goes through probate.  If both the sole beneficiary and the owner die at the same time, all of the funds must similarly go through probate.

Neglecting to review beneficiary selections on a regular basis. Beneficiary designations override a will, so it’s very important to keep them current. Every few years, review the accounts that you own and see what your beneficiary designation choices are. This is especially necessary if you have been divorced, widowed or remarried. If you fail to take your ex-spouse off an insurance policy, for instance, there’s little that can be done when you die—even if you put your wishes that a new spouse or children receive the proceeds in your will. This will likely cause the issue to go to court, which will soak up precious time, resources, and anxiety.

Not communicating with your partner and family members. Talking with family members and loved ones about your wishes for your legacy and asset distribution is an important way to let them know what to expect when you die. It’s not an easy conversation, but it will be helpful to all. Knowing you have a plan will alleviate them from the worry of the unknown, and it prevents unexpected surprises. There’s no need to talk specific dollar amounts unless you want to. Instead, give them a high-level overview of what your intentions are.

Some families find these conversations easier in the presence of an objective third party, like your estate planning attorney. If your estate plan includes trusts or any complex planning strategies, a family meeting provides a means of explaining the plan and the processes involved.

Reference: Delco Times (October 6, 2019) “Five mistakes to avoid when naming beneficiaries”

Senior Women and Financial Insecurity

Many older Americans worry about whether they will have enough money to live on when they retire. A variety of factors can impact how much money a person will have to pay for housing, food, utilities, medical expenses and other costs of living in retirement. Gender is one of those factors. Here are some of the reasons why women have more financial insecurity than men as they age.

Women have the deck stacked against them in three ways:

  • Thanks to several factors, like the gender pay gap and women shouldering many of the duties that come with raising families, women often earn less than men throughout their employment years. As a result, women tend to go into retirement with fewer assets, less home equity, lower retirement account balances and a higher debt load than men.
  • Because many women earn less than men, their Social Security retirement check will be smaller than the typical man’s, causing women to have less monthly income than men after they retire.
  • Women tend to live longer than men, so they have to make their limited income and assets last longer than men usually do.

A Study in Numbers

The issue of gender pay inequality and financial insecurity in retirement comes with some interesting statistics. Here are a few:

  • More than half of American women age 60 or more worry about running out of money in retirement.
  • The median annual household income for men age 60 or older is $55,000. In contrast, the median household income for women age 60 or older is $39,600 per year.
  • Older women of color have even more extreme financial insecurity.
  • About 20 percent of women age 60 or older with black, African American, indigenous American, or native Alaskan heritage live below the poverty level, with a household income of $12,490 a year.

Thankfully, there are public benefits programs that can help aging Americans make ends meet.

Public Benefits Programs for Low-Income Older Americans

The National Council on Aging (NCOA) can guide seniors on how to get the food, housing, medical assistance, and other forms of help they need from public benefits programs. Many older Americans miss out on valuable benefits that could ease their financial struggles because they do not know about the programs or how to access the resources. The NCOA has offices in every state, with many local offices.

Some of the public benefits for which many lower-income Americans could be eligible include:

  • Getting food through Medicaid’s Supplemental Nutrition Assistance Program (SNAP)
  • Help with paying Medicare premiums from the Medicare Savings Programs
  • Assistance with getting prescription drugs at lower or no cost through the Medicare Part D Extra Help/Low Income Subsidy
  • Help with paying heating and cooling bills from the Low-Income Home Energy Assistance Program.

Around 3 million older American women connected with benefits programs after completing a screening through the NCOA. You might also qualify for assistance if you or a spouse served in the military or worked for the federal government or a railroad.

Most of the older adults who participated in the NCOA survey said they are satisfied with their lives, so there are positive aspects to growing old in America.

Your state might have different regulations than the general law of this article. You might want to talk with an elder law attorney in your area.

References: National Council on Aging. “The Pay Gap is an Aging Issue.” (accessed October 17, 2019) https://www.ncoa.org/blog/the-pay-gap-is-an-aging-issue/

Your Spouse Just Died … Now What?

There are several steps to take while both spouses are alive and well, to help reduce the chance of the surviving spouse finding themselves in a “financial deadlock” situation, or worse. The preparations require the non-financially dominant partner to be involved as much as possible, says Barron’s in the article “How to Avoid Financial Deadlock—or Worse—After One Spouse Dies”

Step one is to prepare the financial equivalent of a “go-bag,” like the ones people are supposed to have when they must leave their home in a crisis. That means a list of all financial contacts, advisors, estate planning attorney, accountants, insurance professionals and copies of all beneficiary designations. There should also be a list or a spreadsheet of all the couple’s assets and liabilities, including digital assets and passwords to these accounts. The spouse should also note the location of financial records and critical legal documents, including insurance policies, wills, and trusts.

Each partner must have access to checking and cash independently of the other, and the spouses need to review together how assets and accounts are titled.

It is especially important for both spouses to be on the deed to their home with right of survivorship, so that the surviving spouse can easily prove that they are the sole owner of the home after the spouse dies. Otherwise, they may not be able to communicate with the mortgage company. If a surviving spouse must go to court and file probate in order to deal with the home, it can become costly and more stressful.

It’s not emotionally easy to go through all this information but it is critical for the surviving spouse’s financial security.

Any information that will be needed by the surviving spouse should be documented in a way that is easily accessible and understandable for the spouse. Even if someone is very organized and has a well-developed description of their assets and estate plan, it may not be as easily understood for someone whose mind works differently. This is especially true if the couple has had years where the non-financial spouse was not involved with the family’s assets and is suddenly digesting a lot of new information.

It is wise for the non-financial spouse to be in meetings with key advisors and take on some of the tasks like bill paying, reviewing insurance policies and reconciling accounts well before either spouse experiences any kind of cognitive decline. Ideally, the financially dominant partner takes the time to train the other spouse and then also have them handle the finances independently to the extent possible until they are both comfortable managing all the details.

Each spouse needs to understand how the death of the other will impact the household income. If one spouse has a pension without survivor benefits and that spouse is the first to die, the surviving spouse may find themselves struggling to replace that income. They also need to consider daily aspects of their lives, like if one spouse is highly dependent upon the other for caregiving.

Spouses are advised not to make any big financial or life decisions within a year or so of a spouse’s death. The surviving spouse is often not in a good emotional state to make smart decisions, and that is the time they are most at risk for senior financial abuse.

Both spouses should sit down with their estate planning attorney and discuss what will happen if either of them is widowed. It is a difficult topic but planning ahead will make the transition less traumatic from a financial and legal perspective.

Reference: Barron’s (Sep. 15, 2019) “How to Avoid Financial Deadlock—or Worse—After One Spouse Dies”

Find Money in Forgotten Accounts

Many people who retire find it hard to live on a reduced income, so any windfall is a delight. Bank accounts, life insurance, utility company security deposits, and retirement accounts are all places you might have anywhere from a few bucks to hundreds or thousands of dollars sitting around gathering dust. The trick is to know where to look, since you might not remember all the possible companies that still have some of your money. Here are some tips for seniors on how to find money in forgotten accounts.

Where to Look for Old Bank or Investment Accounts

If you had money in a bank or brokerage account you did not use for several years, the bank probably sent the funds to the state of your last known address. Your last known address usually means the last address the bank had for you, when you actively banked with them.

Let’s say you went to college out of state. You opened a checking account at a local bank for convenience while in school. After graduation, you forgot about the account. Eventually, the bank will send the remaining balance to that state or the state from the permanent address you gave when you opened the account.

You can try to track down obsolete accounts online. Go to unclaimed.org and check every state where you have lived. If you do find something, you will have to fill out and send in a form, either online or by mail, to request the funds. The website contains funds that other types of companies, like utilities, have also surrendered to the state.

This type of search can be time-consuming, but the rewards can make your efforts worthwhile. If you have ever gone by another name, be sure to check under all the names you have used. If you use a nickname, check under all possible combinations of last names, legal first name and nickname.

If your name is a common name, you might have to sift through many possible accounts to find yours. You might also be surprised at how many other people have the same name as you.

Pensions and Retirement Accounts

You have several options to try to dig up an old employer-sponsored retirement account, including pensions. You need to find the current administrator of that employer’s plan. You might be able to find the contact information for the plan administrator on freeERISA.com or by calling the personnel office of that employer.

Sometimes a 401(k) plan gets terminated. In that situation, you can look for contact information on the Employee Benefits Security Administration’s website. Additional options include the Pension Benefit Guaranty Corporation, or the nonprofit Pension Rights Center.

How to Search for Life Insurance Policies

You can look for an old life insurance policy you owned, or that of a deceased relative, by using the Life Insurance Policy Locator. Some life insurance policies show up on unclaimed.org, but for others, you might have to find the name of the insurance company at naic.org and then contact the insurer.

Scammer Alert

Be aware before you hire someone to help with finding hidden money. Some companies defrauded people by charging exorbitant fees to conduct searches for them, but do not deliver the promised service. If a company charges a fee upfront before they find your lost funds, that is a red flag the firm is fraudulent. If you want someone else to do the search for you, only agree to pay a percentage of the money that is actually recovered. The search firm’s cut should not exceed 10 to 20 percent of the recovered funds.

References:

AARP. “How to Find “Forgotten” Cash.” (accessed October 2, 2019) https://www.aarp.org/money/budgeting-saving/info-2019/find-unclaimed-cash.html

Are You Prepared to Age in Place?

If aging in place is your goal, then long-term planning needs to be considered. Some things to think about include how the house will function as you age, whether there will be accommodations for the people who will care for you, and how to pay for the care that you might need, says the Record Online in the article “Start planning now so you can ‘age in place.’”

Many homes will need to be remodeled for aging in place, and those changes could be big or small. Some changes that almost everyone has to consider include installing ramps and adding a bathroom and bedroom on the first floor. Smaller changes include installing properly anchored grab bars in the shower, improving lighting, and changing or updating the floor covering to avoid problems with walkers, wheelchairs or unsteady seniors.

Choosing a caregiver and paying for care is sometimes difficult to think about, oftentimes because they are intertwined issues. Many adult children become caregivers for aging parents, and for the most part, they are unpaid. Family caregivers suffer enormous losses, including lost work, career advancement, income, and savings. Stress and neglect of their own health and family is a common byproduct.

You’ll want to speak with an estate planning eldercare attorney about how or if the parent may compensate the child for their caregiving. If the parent is applying for Medicaid and the payment is deemed to be a gift, it will cause a penalty period, when Medicaid won’t pay for care. A caregiver agreement drafted by an elder law estate planning attorney will allow the parents to pay the children that provide them care without having it be considered a gift or triggering a penalty period. Keep in mind, though, that the child will need to report this income on their tax returns.

The best way to plan ahead for aging in place is to purchase a long-term care insurance policy. If you qualify for a policy and can afford to pay for it, it is a good way to protect assets and income from going towards caregiver costs. You can also relieve the family caregiver from duties or pay them for caregiving out of the insurance proceeds.

Without long-term care insurance, the next option is to apply for community and in-home care through Medicaid to pay for care in the home, if available in your state. To qualify, a single applicant can keep $15,450 in assets plus the house, up to an equity limit of $878,000 and only $878 per month of income. For a married couple, when one spouse applies for community Medicaid, the couple may keep $22,800 in assets plus the house and $1,287 per month of income. If the applicant or spouse is on a managed care plan, the couple may keep even more assets and income.

Another option is spousal refusal, which may allow the couple to keep more assets and income. When an applicant has too much income, a pooled income trust may be used to shelter income from going towards the cost of care. This is a complicated process that requires working with an estate planning attorney to ensure that it is set up correctly.

Self-paying for home care is another option, but it is expensive. The average cost of home health care in some areas is $25 per hour or $600 per day for around-the-clock care. When you get to these costs, they are the same as an expensive nursing home.

Planning in advance with careful analysis of the different choices will give the individual and the family the best picture of what may come with aging in place. A better decision can be made, once all the information is clearly assessed.

Reference: Record Online (Aug. 31, 2019) “Start planning now so you can ‘age in place’”

Protect Your Pets After You’re Gone

Currently, 67% of American households own at least one pet, and many people now consider long-term planning for them to be just as important as for two-legged family members, says The Atlanta Journal Constitution in the article “When you’re gone, what happens to your pets?” Pets are viewed as valued members of the family in many homes. They provide companionship, and there have been studies showing that their presence helps to reduce stress. They often sleep in the same bed as their owners and go on vacations with their human family.

If you think about it, our animal companions are completely vulnerable if we die. They can’t take care of themselves. If something happens to their owners, it is possible that they could be taken to a shelter and euthanized. If you don’t want to be kept up at night worrying about this, a pet trust should be part of your conversation with an estate planning attorney.

A 2018 Realtor.com survey found that 79% of millennials who purchased a home said that they would pass on a home and find another one, no matter how perfect, if it did not meet the needs of their pets. This all highlights how important it is for many people to ensure their pet’s needs are met.

So the question is: How can you protect your pets?

Understand that pets are considered property and have no legal rights. It’s entirely up to their owners to plan for their care. With a pet trust, an owner can be sure that some of those needs are met and addressed. In setting up a trust, there are some questions to consider:

  • What’s the difference between a pet trust and a will?
  • What are the pet trust laws in my state?
  • How much money do I need to put into the pet trust?
  • What happens to any funds left over, when the pet dies?
  • Can you tap 401(k) or other retirement funds to care for a pet?

After you have decided to create a pet trust, the first thing to consider is how much money it would need. To calculate that, look at the life expectancy of each pet and factor the average vet bill, food bill and any additional money in case of an emergency. The ASPCA says that the annual cost to care for a dog is between $737 to $1,404. Caring for a cat averages about $800. Of course, the specific cost depends on the age, breed, weight and other features of your pet, such as whether the animal has any medical needs. You should then calculate how many years your pet will likely need care. Some pets can live a very long time, like horses and birds.

Next, identify caregivers who will commit to caring for your pets. You should then talk with your estate planning attorney about the features you want in your pet trust. A pet trust allows you to leave money to a loved one or friend to care for the pet in a trust that is legally binding. That means the money must be used for the pet’s care. It can be very specific, including how often the pet should go to the vet and what its standard of living should be. The executor or lawyer could go to court to enforce the contract, which protects your pets.

Typically, the trustee holds property “in trust” for the benefit of the pet. Payments to a designated caregiver are made on a regular basis. The trust, depending upon the state in which it is established, continues for the life of the pet or 21 years, whichever comes first. Some states allow pet trusts to continue beyond 21 years.

Speak with your estate planning attorney about protecting your pet. If you rely on an informal plan, your pet may be out of luck, if something happens to the caregivers, or if they have a change of heart. You’ll feel better knowing that you’ve put a plan into place for your beloved furry friends.

Reference: The Atlanta Journal Constitution (September 24, 2019) “When you’re gone, what happens to your pets?”

What is a Durable Power of Attorney?

Those who have heard of a power of attorney generally understand that it gives another person the power to manage your money, but how does it work exactly? A durable power of attorney document must follow the statutory requirements, must delegate proper authority, must consider the timing of when the agent may act and a host of other issues that must be addressed, warns My San Antonio in the article “Guide to managing someone else’s money.” A durable power of attorney document can be so far-reaching that a form downloaded from the Internet is asking for major trouble.

Start by speaking with an experienced estate planning attorney to provide proper advice and draft a legally valid document that is appropriate for your situation.

Once a proper durable power of attorney has been drafted, talk with the agent you have selected and with the successor agents, you want to name, about their roles and responsibilities. For instance:

When will the agent’s power commence? Depending on the document, it may start immediately, or it may not become active until the person becomes incapacitated.

If the power is postponed, how will the agent prove that the person has become incapacitated? Will he or she need to go to court?

What is the extent of the agent’s authority? This is very important. Do you want the agent to be able to talk with the IRS about your taxes? With your investment advisor? Will the agent have the power to make gifts on your behalf, and to what extent? May the agent set up a trust for your benefit? Can the agent change beneficiary designations? What about caring for your pets? Can they talk with your lawyer or accountant?

When does the agent’s authority end? Unless the document sets an earlier date, it ends either when you revoke it, when you die, when a court appoints a guardian for you, or, if your agent is your spouse, when you divorce.

What does the agent need to report to you? What are your expectations for the agent’s role? Do you want immediate assistance from the agent, or will you continue to sign documents for yourself?

Does the agent know how to avoid personal exposure? If the agent signs a contract for you by signing his or her own name, the agent is now liable for the contract. Legally, that means that the cost of the services provided could be taken out of the agent’s wallet. Does the agent understand how to sign a contract to avoid personal liability?

All of these questions need to be addressed long before any power of attorney papers are signed. Both you and the agent need to understand the role of a power of attorney. An experienced estate planning attorney will be able to explore all the issues inherent in a durable power of attorney and make sure that it is the correct document.

Reference: My San Antonio Life (Aug. 26, 2019) “Guide to managing someone else’s money”