There are a number of issues in estate planning that are more important in second and subsequent marriages, as discussed in the article “Estate planning documents for second marriages” from the Cleveland Jewish News. A couple who each have children from a prior marriage are planning to marry again and blend their families. Consequently, the couple needs to address income taxes, a prenuptial agreement, pension and 401(k) benefits, Social Security, college funding, cost-sharing, and estate planning documents.
Here’s an example of how important estate planning is for blended families. A couple who each have children from their prior marriages get married. Twenty years later, the husband dies. He had wanted to provide for his second wife, so his will stated that all his assets went to his wife. They had the understanding that on her death, those assets would go back to his children.
What actually occurred was that his wife lived a long time after he passed, and she simply combined their assets. When she died, the money went to her children, and her husband’s children received nothing. The husband’s children didn’t believe that he meant to do that, but because of the lack of planning, that’s exactly what happened.
What were the alternatives? He could have set up a marital trust that would have held the assets for his second wife on his death, but upon the wife’s passing, would have gone back to his children. The trust document could prohibit the wife from transferring the assets in the marital trust to her children, and instead, guarantee that any assets remaining at her death would go to his children.
It’s wonderful to have a verbal agreement with your spouse, but if you don’t set up a formal legal plan, there’s no way to be sure that assets will be distributed as intended.
Another way to ensure that children from a blended family receive what they are intended is to have an independent person or entity, like a bank or a trust company, oversee a marital trust.
Other important documents include a durable financial power of attorney, durable health care power of attorney and a living will declaration.
Just as important as remarriage, anyone who has been divorced needs to review their estate planning documents to ensure that they reflect their new marital status, especially when they marry again. That is also the time to review beneficiary designations that appear on insurance policies, 401(k)s, pensions, retirement accounts, and investment accounts.
There’s no “set it and forget” plan for estate documents, so before you walk down the aisle a second time, or shortly after you do so, speak with an estate planning attorney to clarify your goals and put them into the appropriate estate planning documents.
Reference: Cleveland Jewish News (May 7, 2019) “Estate planning documents for second marriages”
If you have a family member who needs ongoing assistance because of a disability, severe medical issue, or a chronic illness, you might need to create a schedule within the family for providing care to that loved one. Few of us can afford to hire a private nurse for a family member. Many people who need caregiving need someone available 24 hours a day, even if some of that time is watching over the person rather than providing medical attention.
Public assistance programs provide limited, if any services, so most families have to figure out who can pitch in and help care for the loved one. If you are like most people, you could use some suggestions on tailoring a caregiving plan to your family. Recent legislation could make that task easier.
The Inherent Problems of Caregiving
People who are already working full-time and raising their families often end up taking shifts along with other relatives. The situation can go on like this for years. The caregivers become exhausted, physically, emotionally and financially.
Resentment can build if some of the family caregivers feel they are doing more than their fair share, while others are not doing their part. Years later, the primary caregivers can get accused of undue influence if the person who received help gives a larger portion of the estate to the primary caregivers out of gratitude.
Why Congress is Paying Attention to the Challenges of Family Caregiving
Our population is aging. By 2026, the baby boomer generation will start to turn 80 years old. Many people in their eighties need long-term care, either in the home or a facility. The high numbers of baby boomers and the declining birthrates mean there will be more people needing family caregiving and fewer relatives available to provide those services.
Family caregiving takes a massive chunk out of our economy each year. Experts say 40 million people in the United States provide unpaid caregiving services to their adult loved ones, who have limitations in their daily activities. The experts on aging value these services at around $470 billion a year.
Another 3.7 million Americans take care of a disabled child under the age of 18. Some people have to provide caregiving for both an older adult and a child. People in the field estimate that about 6.5 million people in our country fall into this category.
The caregivers face immediate and long-term financial crises because of the time they devote to the needs of their vulnerable loved ones. In the moment, the caregiver might have to cut back on work hours or leave a paying job to be there for the family member in need. Losing a paycheck and benefits can put a caregiver into economic hardship. Many caregivers live in poverty in later years of their lives because it was impossible to contribute to retirement savings or the Social Security system during the long years of caregiving.
Congress is working on measures to provide more public resources for family caregivers. The “Recognize, Assist, Include, Support, and Engage (RAISE) Family Caregivers Act,” which was passed in January of 2018, requires the Secretary of Health and Human Services to investigate how families are currently handling caregiving, and then to create strategies for state and communities to support caregiving families. Increased assessments and service planning dovetailed with education, support, and respite options can impact financial security and workplace issues of caregivers.
Until more support is given to caregivers on an official level, families will have to make do with coordinating care on their own. Be sure to have honest and open discussions frequently with everyone involved.
References: AARP. “Building a Family Caregiving Strategy to Align with the Real Needs of Families.” (accessed October 31, 2019) https://blog.aarp.org/thinking-policy/building-a-family-caregiving-strategy-to-align-with-the-real-needs-of-families
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:
|December 2019||January 2020|
|11/28/2019 (Th) through 11/29/2019 (F)||12/24/2019 (Tu) through 12/31/2019 (Tu)|
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!
Thinking about your own mortality can be something frightening that many people would rather not do, which makes something like creating a will a difficult thing to do. But if for no other reason than to avoid fracturing the family, everyone needs a will. Otherwise, the family might end up spending all their time fighting over who gets Aunt Nina’s sideboard or Uncle Bruno’s collection of baseball cards.
But whether we want to think about it or not, having an estate plan in place – and that includes a will – is a gift of peace we can give to our loved ones and ourselves. It’s peace of mind that our family is being told exactly what we want them to do after we pass, and peace of mind to ourselves that we’ve put our plan into place.
A recent article from Fatherly, “How to Write a Will: 8 Tips Every Parent Needs to Know,” starts with the basic premise that a will prevents family squabbles. Families fight when they don’t have a clear direction of what the deceased wanted. That’s just one reason to have a last will and testament. However, there are other reasons.
A will is one way to ensure that your property is eventually distributed as you wish. Without a will, your estate is administered as an “intestate estate,” which means the state’s laws will determine who receives your assets after you pass. In some states, that means your spouse gets half of your estate, with your parents getting the rest (if there are no children). If the parents have died and there are no children, the rest of the estate may go to your siblings.
Most people—some studies say as many as 60% of Americans—don’t have a will. It’s hard to say why they don’t: maybe they don’t want to accept the possibility of their own death, maybe they don’t understand what will happen when they die without a will, or perhaps they want to wreak havoc on their families. However, having a will is essential.
Don’t delay. If you don’t have a will in place, stop putting it off. Creating a will gives you the opportunity to effectuate your wishes, not that of the state. What if you don’t want your long-lost brother showing up just to receive a portion of your estate? If you don’t want someone to receive any of your assets, you need to have a will. Otherwise, there’s no way to know how the distribution will play out.
Not only should you think about who will get your assets, you should also be thoughtful about how you distribute your assets. If you have children and your will gives them your assets when they reach 18, will they be prepared to manage without blowing their inheritance in a month? A qualified estate planning attorney will be able to help you create a plan for distributing your wealth to children or other heirs in a way that will match their financial abilities. You may want to create a trust that will hold the assets, with a trustee who can ensure that assets are distributed in a wise and timely manner.
Every family is different, and today’s families, which often include children from prior marriages, require special planning. If you have remarried and have not legally adopted your spouse’s children from a previous marriage, they are not your legal heirs. If you want to make sure they inherit money or a specific asset, you’ll need to state that clearly in your will. If you are not married to your partner, they will not have any rights to your estate, unless a will is created that directs the assets you want them to inherit.
The will can also provide reassurance and protection in case you need to appoint a guardian for your children. Because of this, parents of young children absolutely need a will. If you do not and both parents pass away at the same time, their future will be determined by the court. They could end up in foster care while awaiting a court decision. Battling grandparents may create a tumultuous situation with long-lasting and detrimental effects on your children and their relationships with their other family members. The court could also name a guardian who you would never have chosen. A will lets you tell the court what you want.
Speak with an estate planning attorney to make sure you have a will that is properly prepared and follows the laws of your state. You also want to have a power of attorney and a health care agent named. Only if you have these plans in advance can you express your wishes in a way that can be legally enforced when you actually need them.
Reference: Fatherly (Feb. 6, 2019) “How to Write a Will: 8 Tips Every Parent Needs to Know”
If you have elderly parents, you might have to step in at some point and provide caregiving services. Whether that concept means hands-on personal assistance with things like bathing, dressing, grooming, and feeding, or handling their finances and making decisions for them, this change in your roles can be challenging for you and your parent. Here are some issues to consider about how to help your elderly parent without ruining your relationship.
It’s Usually Not “Leave It to Beaver”
Acknowledge and accept your family dynamics as they are. Many people grow up seeing fictional families on television and wish their parents and siblings got along better. Very few families measure up to the imaginary ones of fiction. You and your parent probably did not have the kind of relationship in which you would regularly get together for coffee or shopping. Quite a few people have strained interactions with their parents.
Relationships carry the baggage of the past. It is not helpful for people to tell you to forget about the past. Your parent is the same person with whom you have had conflict, which means they will continue to do things that upset you. If your parent was extremely authoritarian or independent, it will be difficult for them to accept someone telling them what to do – especially one of their children.
Patience versus Doormat
You should try to be understanding of what your parent is going through, such as losing independence and feeling less valuable or powerful. They might get confused and forget you already did things they now accuse you of not doing. They might also be dealing with chronic pain and other health issues.
You should, however, set boundaries. Getting old does not give your parent a right to be physically, verbally, or emotionally abusive. Be firm with your parent if any of these things happen. Being a dutiful and caring son or daughter does not include being a doormat. Calmly inform your parent of the behavior that is not acceptable. You might need to have someone in social services arrange for counseling to help your parent adjust to the reality of aging and the need for assistance.
The Silver Lining
For some people, this stage of life is a time to deal with unfinished business. For those that have had challenging relationships with your parents, now could be the opportunity where you can talk out problems or questions. You might be able to resolve conflicts that could have caused you regrets down the road. The best approach for this goal to tread lightly. Just because your parent is frail, you do not have the right to beat them up verbally with a long list of criticisms and complaints.
Address only one piece of a small issue in a visit, and do not dredge up unpleasant topics in every visit. You do not want your parent to dread seeing you. Be the kind of person you might wish your parent had been when you were a child – kind, compassionate and nurturing.
Those of you who have enjoyed a happy, healthy relationship with your parents can deepen your mutual affection and interaction. Since your parent is no longer rushing around to work and raise a family, you can have uninterrupted conversations and create memories to treasure. Even people who have had strained relationships might get to reach the point where they have pleasant times with their elderly parents.
References: A Place for Mom. “Parenting the Parent: Caring for Elderly Parents.” (accessed August 21, 2019 ) https://www.aplaceformom.com/planning-and-advice/articles/caring-for-elderly-parents
In addition to all the logistics involved with a new baby, new parents should also take care of financial and legal matters in the months leading up to the big day.
U.S. News & World Report’s recent article, “Financial Steps to Take When You’re Pregnant” reminds us that pregnancy is a terrific time to review your financial life. It’s a great time to assess your budget, emergency savings, estate planning documents, and insurance needs to see if anything needs to be refreshed.
Here are a few things to do to prepare for a new baby:
Employee Benefits. Take a look at your employee benefits or have a conversation with HR to determine how much time you can take off and whether you’ll be paid your salary while on parental leave. This is important because many families are faced with higher living costs by the presence of a new baby, which is often combined with taking parental leave that may cut their take-home pay. New parents may have to use the Family and Medical Leave Act (FMLA), which offers eligible employees 12 weeks of unpaid leave, or tap into short-term disability insurance, which typically only replaces a portion of your salary. The amount you receive in short-term disability will also be impacted by whether you pay premiums with pre-tax or post-tax dollars. If you pay with pretax, your benefit will be subject to taxes, which will decrease the overall amount received.
While reviewing these policies, look at your health insurance and see what kind of prenatal visits and pediatric care are covered. You should also look at the terms of your health insurance policy since you could be liable for health insurance premiums during periods where you are taking leave from work. Also, remember that you’ll need to add your baby to your medical insurance within 30 days of the birth.
Budget. Create a new budget that takes into account changes in your income from taking leave and new expenses from having a new baby. You may have to survive several weeks without your normal level of income, so be sure that you have enough saved up to get through that period. After that, create another budget that considers more long-term expenses associated with the new one, such as the cost of childcare, diapers, and formula, all of which can add up.
Life Insurance. Determine if your current life insurance will meet your needs. If you need more, look at term life insurance. It’s usually affordable and expires after a set term, typically anywhere from 10 to 30 years. This policy payout would help a surviving parent or guardian care for your child.
Estate Planning. Consider who would care for your child if both parents were to die before they turn 18. Talk to family or close friends about who you’d like as the guardian of the child. Talk to an estate planning attorney to update (or create) a will and guardianship choices. In addition, ask about formulating a plan for how inheritance, insurance, and other assets will be handled and disbursed if you die while the child is a minor. A revocable living trust can be one way to direct a future inheritance. You can designate your child as the beneficiary and a relative or close friend as the trustee. The trustee will help decide how the money is spent. This trust is usually included in the will and activates after the death of the person who created it.
Beneficiary Designations. Update any beneficiary designations on your retirement and insurance accounts to include your child, but make sure and ask about meeting requirements for how minors can own property.
529 College Savings Account. You should also look into funding a 529 college savings account but don’t feel pressure to contribute a lot. Making certain that your budget, estate, and insurance needs are tailored to meet your new family dynamic are more pressing concerns.
Reference: U.S. News & World Report (August 29, 2019) “Financial Steps to Take When You’re Pregnant”
Multi-generational living is not exactly new, and as people are living longer, it may start becoming more common. Shared households bring many benefits, including convenience. Why should a nurse’s daughter travel 20 miles a day to take her mom’s blood pressure when living together works better, asks The Mercury’s article “Do shared living arrangements make sense?”
There’s also the benefit of increased financial security. Two households merged into one can share expenses, including mortgages, property taxes, utilities and more.
Whether this works in each case depends upon the situation and the relationships of the individuals involved. If there is flexibility and the relationships are good, it can be a blessing. Imagine grandparents and grandchildren who are part of each other’s lives on a daily basis, rather than a twice-a-year visit. That’s a gift.
The arrangement needs to start with a lot of discussions and understanding the wants and needs of each participant. It needs to be based on reasonable expectations. A happy joint living arrangement can swiftly be derailed, for instance, if parents assume that grandparents are willing to be 24/7 babysitters, or if grandparents consider household chores something only for their children and grandchildren to do.
Joining living arrangements must also address financial considerations, estate planning and everyone’s personal experiences and convictions. What works for one family may not work at all for another. Each family must work through their own details.
Here are some examples where a joint living arrangement works.
Parents and children buy a house together. When parents and children live too far away, and the parent’s house would require too much modification for them to continue to live there, both sell their homes and buy a much bigger home that can be made handicapped accessible. The parents make most of the down payment. The house is titled in joint names. Titling is critical. One half is owned by the father and mother, the other half is owned by the adult child and their spouse. Each half would be tenants by entireties (in states where that form of ownership between spouses is available) as between the spouses, but joint tenants with rights of survivorship as to the whole.
Parent moves in with adult child. A widow or widower comes to live with a son or daughter and their family. The parent makes contributions to the monthly expenses. There is a written agreement, which is very important for Medicaid rules regarding gifting. If modifications need to be made to the house—a mother-in-law suite—a written agreement details who contributed what, so that it is not considered a “gift” by Medicaid.
Adult child moves in with parent. This is a “buy-in,” where an adult child obtains a home equity line of credit to purchase an interest as a joint tenant with right of survivorship. The house can be inherited by paying one-half of the value.
None of these strategies should be done without the help of an elder law attorney who is knowledgeable about Medicaid, estate planning and real estate ownership. When it works, this arrangement can benefit everyone in the family.
Reference: The Mercury (AuG. 28, 2019) “Do shared living arrangements make sense?”
We all know someone who can’t bear to throw anything out, no matter how small or valueless the item is. When they pass, the family has the dreadful task of cleaning away the mess while grieving. It’s not easy, says Next Avenue in the article “6 Tips for Dealing with the Aftermath of a Family Hoarder.”
For one woman, whose grandmother lived in a one-bedroom apartment only ten miles away from her, the idea of cleaning out her grandmother’s apartment wasn’t bad.
It was terrible.
The grandmother’s spending and hoarding had led to a foreclosure on the home six years after her husband had passed away. Her possessions overflowed from every closet, drawer, and surface. She had 30 large bins filled with craft supplies in the small living room. There were notes and pictures shoved into boxes, with fast-food napkins and outdated receipts.
The apartment was rented, so everything had to be cleared out in thirty days unless the family wanted to pay another month’s rent.
Three weeks and three garage sales later, the apartment was cleaned out. Five large bags of clothing were donated to a local charity. A junk removal service was paid $250 to remove a mattress, couch, and TV. Most of it went to the trash.
Here are six tips for anyone confronted with this difficult task:
- If you can help it, don’t do it by yourself. Ask friends or family members to help. If you can afford it, consider a clean-out service.
- Find out if there are any instructions in the will. If there are specific directions about possessions, follow them. If not, let close family members make requests before the cleanout starts.
- Limit what you keep. You don’t need a full dining room set or a box of costume jewelry to remember a loved one.
- Look for easy items to discard first. As soon as possible, get rid of any trash, old food in the pantry, junk mail, etc.
- Don’t pinch pennies in a garage sale. Yes, some stuff may be worth top dollar, but your goal is to sell as much stuff as possible. Accept any reasonable offers.
- Make “let it go” your personal anthem. Remember that just because you are getting rid of stuff, does not mean you are getting rid of the person or your memories. Handle items fast, get the task done, and move on. It’s like yanking off a bandage–the faster you do it, the better.
Reference: Next Avenue (August 12, 2019) “6 Tips for Dealing with the Aftermath of a Family Hoarder”