You Can Complete Your Estate Plan During the Coronavirus Quarantine

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The coronavirus lockdown is happening in many states, following the lead of California, Illinois, Florida and New York. Kiplinger’s recent article entitled “How to Get Your Estate Plan Done While Under Coronavirus Quarantine” says that these isolation orders create unique issues with your ability to effectively establish or modify your estate plan.

The core documents for an estate plan are intended to oversee the management and distribution of your assets after you pass or in the event, you are incapacitated. Each document has requirements that must be met to be legally effective. Let’s look at some of these documents. Note that there is proposed federal legislation that would permit remote online notarization, and Illinois and New York have passed orders to allow notarization utilizing audiovisual technology.

Will. Every state has its own legal requirements for a will to be valid, and most require disinterested witnesses. Some states, like California, permit a will, otherwise requiring the signature of witnesses, to be valid with clear and convincing evidence of your intent for the will to be valid. An affidavit indicating that the will was signed as a result of the emergency conditions caused by the COVID-19 virus should satisfy this requirement.

Power of Attorney. This document designates an individual to make financial decisions regarding your assets and financial responsibilities if you’re unable to do so. This can include issues regarding retirement benefits, life, and medical insurance and the ability to continue payments to persons financially dependent on you. The durable general power of attorney is notarized in California.

Advance Health Care Directive. This document states whether you want your life extended by life support systems and if you want extraordinary measures to be taken. It may state that you wish to have a DNR (Do Not Resuscitate) in place.

HIPAA Authorization. Some states have their own medical privacy laws with separate requirements, and most powers of attorney provide that the designated persons can act if you’re unable to do so. Financial institutions typically require confirming letters from your doctor that you’re unable to act on your own behalf. To be certain that this agent can act on your behalf if needed, they should be given written access to see your medical information.

During quarantine, these requirements can be fluid and may change quickly. Be sure to work with an experienced estate planning attorney.

Reference: Kiplinger (March 30, 2020) “How to Get Your Estate Plan Done While Under Coronavirus Quarantine”

What Estate Planning Documents Does My Child Need Now That She’s an Adult?

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Your child may graduate from high school and head off to college or start a full-time job or vocational training program.

Although they’re still your children, the law sees them as are adults. As a result, parents’ “rights” to protect their adult children or make decisions for them immediately becomes quite limited. This remains the same, even if they have moved back home with you during California’s Stay at Home orders.

The Tewksbury Town Crier’s recent article, “Is your child turning 18? Here’s what you need to know,” explains that people often have an estate planning attorney draft the appropriate documents, so they will be legal and binding. Let’s look at a list of documents to consider and discuss with your young adult:

  • HIPAA Authorization: if your 18-year-old has a job in another state or will be attending college and needs medical records or assistance making appointments, ask them to go to the doctor’s and dentist’s office and sign forms that designate agents to act on their behalf. Due to HIPAA laws, information can’t be released without the adult child’s permission.
  • Healthcare Proxy: Have your 18-year old complete this document, make a copy, put a copy on each parent or guardian’s phone and put a copy on your child’s phone. This is for an emergency, like when the child can’t speak for themself. However, don’t wait for an emergency. If your child is at college, the school will only contact you as the emergency contact, but the proxy is between you and the hospital and includes mental health issues. A healthcare proxy lets you to participate in life and death decisions, should your child not be able to advocate for herself.
  • Durable Power of Attorney: A general durable power of attorney or financial power of attorney must also be signed by the 18-year old, designating their parents, guardians, or others as agents authorized to act on their behalf. This allows the agent access to financial information so that they can participate in the financial issues with a university or business in the event that the child cannot.
  • FERPA: This is an educational records release, which allows the educational institution to share grades, transcripts and other related materials with parents or designated agents. Without it, the school will not provide you with access to any information.

Finally, encourage your young adult family member to register to vote.

Reference: Tewksbury Town Crier (December 8, 2019) “Is your child turning 18? Here’s what you need to know”

If I’m 35, Do I Need a Will?

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Estate planning is a crucial process for everyone, no matter what assets you have now. If you want your family to be able to deal with your affairs, debts included, drafting an estate plan is critical, says Wealth Advisor’s recent article entitled “Estate planning for those 40 and under.”

If you have young children or other dependents, planning is vitally important. The less you have, the more important your plan is, so it can provide as long as possible and in the best way for those most important to you. You can’t afford to make a mistake.

Talk to your family about various “what if” situations. It is important that you’ve discussed your wishes with your family and that you’ve considered the many contingencies that can happen, like a serious illness or injury, incapacity, or death. This also gives you the chance to explain your rationale for making a larger gift to someone, rather than another or an equal division. This can be especially significant if there’s a second marriage with children from different relationships and a wide range of ages. An open conversation can help to avoid hard feelings later.

You should have the basic estate plan components, which include a will, a living will, advance directive, powers of attorney, and a designation of an agent to control the disposition of remains. These are all important components of an estate plan that should be created at the beginning of the planning process. A guardian (or guardians) should also be named for any minor children.

In addition, a life insurance policy can give your family the needed funds in the event of an untimely death and loss of income—especially for young parents. The loss of one or both spouses’ income can have a drastic impact.

Remember that your estate plan shouldn’t be a “one and done thing.” You need to review your estate plan every few years. This gives you the opportunity to make changes based on significant life events, tax law changes, the addition of more children, or their changing needs. You should also monitor your insurance policies and investments because they dovetail into your estate plan and can fluctuate based on the economic environment.

When you draft these documents, you should work with a qualified estate planning attorney.

Reference: Wealth Advisor (Jan. 21, 2020) “Estate planning for those 40 and under”

What Critical Estate Planning Document are Californians Missing?

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Too many people think they’re finished with their estate plan after creating just a will or trust. However, that leaves some critical gaps. A comprehensive, well-crafted estate plan isn’t just what happens to your property at death. It should also contemplate what happens if you’re incapacitated and unable to make decisions on your own. That is where documents like the advance health care directive can come in.

The California Probate Code sets out the requirements and process for executing an Advance Health Care Directive, also known as a health care power of attorney. This document enables a person (the principal) to appoint an agent (a trusted friend or relative) to make health care decisions on their behalf. If the principal becomes incapacitated, the agent will decide their medical procedures, treatment and other care.

Insurance News Net’s recent article entitled “Finance Experts Warn: 66% of Californians Don’t Have a Key Estate Planning Document” explains that the law enables the principal to do the following:

  • Detail specific instructions on certain medical issues, such as end-of-life care and pain relief;
  • State her wishes concerning the donation of organs; and,
  • Name a physician who has primary responsibility for medical care.

Here’s a tough situation that individuals could experience without a health care power of attorney, especially for family. If you don’t have a health care directive, your medical care might be on hold. Despite that the fact you express your wishes to someone, that doesn’t mean it’s legally binding. As a result, without a power of attorney, the only way your spouse, children, or other family members can obtain the authority to make health care decisions, is to go to court and file a petition to act as your guardian or conservator. This can take some time, especially if they’re not all in agreement.

By preparing an advance health care directive, you give your agent decision-making authority via the document instead of through the courts.

There are certain state-specific requirements involved with this process, like having people observe and sign as witnesses, or even having it notarized. Ask a qualified estate planning attorney to help you draft and execute it correctly.

Reference: Insurance News Net (Jan. 16, 2020) “Finance Experts Warn: 66% of Californians Don’t Have a Key Estate Planning Document”

Estate Planning Is for Everyone, at Every Age

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As we go through the many milestones of life, it’s important to plan for what we know is coming. Equally important is planning for the unexpected. An estate planning attorney works with individuals, families, and businesses to plan for what lies ahead, says the Cincinnati Business Courier in the article “Estate planning considerations for every stage of life.” For younger families, having an estate plan is like having life insurance: it is hoped that the insurance is never needed, but having it in place is comforting.

For others, in different stages of life, an estate plan is needed to ensure a smooth transition for a business owner heading to retirement, protecting a spouse or children from creditors or minimizing tax liability for a family.

Here are some milestones in life when an estate plan is needed:

Becoming an adult. It is true that for most 18-year-olds, estate planning is the last thing on their minds. However, most states consider these people to be legal adults, and their parents no longer automatically control many things in their lives. If parents want or need to be involved with medical or financial matters, certain estate planning documents are needed. All new adults need a general power of attorney and health care directives to allow someone else to step in if something occurs.

That can be as minimal as a parent talking with a doctor during an office appointment or making medical decisions during a crisis. A HIPAA release should also be prepared. A simple will should be considered, especially if assets are to pass directly to siblings or a significant person in their life, to whom they are not married.

Getting married. Marriage unites individuals and their assets. For newly married couples, estate planning documents should be updated for each spouse. Marriage often means two individuals will merge their estate plans, so documents need to reflect this. A review of their accounts and assets is also good to make sure the new spouse becomes a joint owner, primary beneficiary, and initial fiduciary. In addition to the legal documents of wills, powers of attorney, healthcare directives, something else that needs to be updated to the name of the new spouse or trust are beneficiary designations. This is also a time to start keeping a list of assets, now that someone else may need to access accounts.

When children join the family. Whether born or adopted, the entrance of children into the family makes an estate plan especially important. Choosing guardians who will raise the children in the absence of their parents is the hardest thing to think about, but it is critical for the children’s well-being. A nomination of guardian can make the transition smoother and prevent unnecessary delays in the court system during an already difficult time. A revocable trust may be a means of allowing the seamless transfer and ongoing administration of the family’s assets to benefit the children and other family members.

Part of business planning. Estate planning should be part of every business owner’s plan. If the unexpected occurs, the business will benefit from advance planning by having a set of procedures in place. The owner’s family will also be better off, regardless of whether they are involved in the business. At the very least, business interests should be directed to transfer out of probate, allowing for an efficient transition of the business to the right people without the burden of probate estate administration.

If a divorce occurs. Divorce is a sad reality for more than half of today’s married couples. The post-divorce period is the time to review the estate plan to remove the ex-spouse, change any beneficiary designations, and plan for new fiduciaries. It’s important to review all accounts to ensure that any controlling-on-death accounts are updated. A careful review by an estate planning attorney is worth the time to make sure no assets are overlooked.

Upon retirement. Just before or after retirement is an important time to review an estate plan. Children may be grown and take on roles of fiduciaries or be in a position to help with medical or financial affairs. This is the time to plan for wealth transfer, minimizing estate taxes, and planning for incapacity.

Reference: Cincinnati Business Courier (Sep. 4, 2019) “Estate planning considerations for every stage of life.”

How Do I Discuss My Parents’ Long-Term Financial Goals With Them?

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A recent study by Ameriprise Financial found that more than one-third of adult children say they haven’t had a conversation about their parents’ long-term financial goals. Even though discussing this delicate topic may seem uncomfortable, addressing it now can help avoid challenges and uncertainty in the future. To that end, the Ameriprise Family Wealth Checkup study found that individuals who talk about money matters feel more confident about their financial future.

The Enterprise’s recent article, “Four financial questions to ask your parents,” provides some questions that can help you start the dialogue.

“What do you want to achieve in the next five or 10 years?” Understand your parents’ aspirations for the next few years. This includes their personal and financial goals and when they plan to retire (if they haven’t already). Do they want to move closer to their grandchildren or to warmer weather? Getting an idea of how they want to spend their time will help you know what to expect in the years ahead.

“Where is your financial information located in case of an emergency?” An incident can happen at any time, so it’s essential that you know how to access key personal, financial and estate planning documents. You should have the contact info for their financial adviser, tax professional, and estate planning attorney, and be sure your parents have the right permissions set, so you can step in when the need arises. You should also ask your parents to share the passwords for their primary accounts or let you know where you can find a password list.

“How do you see your legacy?” Talk to your parents about how they want to be remembered and their plans for making that happen. These components can be essential to the discussion:

  • Ask them if they have an updated will or trust, and if there’s anything they’d like to disclose about how the assets will be distributed.
  • Health care choices and expenses are often a big source of stress for retirees. Talk to your parents about their current health priorities and the future and have them formalize their wishes in a health-care directive, which lets them name a loved one to make medical decisions, if they’re unable to do so.

“How can I help?” Proactively offering to help may get rid of some of the frustrations or relieve stress for even the most independent and well-prepared parents. The assistance may be non-financial, like doing house projects or giving them more time with their grandchildren. You should also look into including an attorney in the discussion, in case your parents have estate planning questions.

Retirement and legacy planning can be complex. However, taking the time to have frequent conversations with your parents can help you all prepare for the future.

Reference: The Enterprise (August 19, 2019) “Four financial questions to ask your parents”

How Do I Have the Financial Talk with My Parents?

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GOBankingRates recently released a survey that found that 73% of Americans haven’t had conversations with aging parents about their finances. Moreover, 22% of the survey’s respondents said they never plan to have this talk with their parents, because they believe their finances are none of their business.

That’s a really big mistake.

Forbes’ recent article, “What You Don’t Know About Your Parents’ Finances Could Ruin Yours” says that if you don’t take the time to chat to your parents about their finances, your own finances could be affected. This is because there’s a good chance you’ll have to get involved with your parents’ financial lives, as they age. This can impact your own financial well-being, if you aren’t ready for that task.

As Americans are living longer, there’s an increased risk of health issues, which can lead to significant financial consequences. About 80% of older adults have at least one chronic condition like heart disease, diabetes, dementia or Alzheimer’s disease. Alzheimer’s disease is becoming increasingly prevalent as people live longer. The number of Americans living with Alzheimer’s disease is expected to more than double to 14 million by 2050, according to the Alzheimer’s Association.

However, just 5% of adults ages 55 to 60 have long-term care insurance, and only 11% of adults 65 and older have it. Long-term care insurance helps cover the cost of care in an assisted-living facility, nursing home or even at home. Medicare doesn’t pay for this sort of care–which easily runs well over $8,000 a month.

If you and your parents don’t talk about how to pay for any care they might need, you could become your parents’ long-term care plan. That could mean you pay these expenses or stop working to help care for a parent.

Those who haven’t had detailed discussions with their parents about their finances can anticipate facing a larger burden than those who have been able to help their parents start managing their money better, by having discussions with them.

If you have siblings, it is important for all the children to be on the same page regarding the parents’ finances and long term care plans. This will help everyone involved be better prepared.

Another important reason to talk to your parents about their finances sooner rather than later, is to see if they have a will, power of attorney and living will or advance health care directive. If they don’t, consult with an experienced estate planning attorney. The sooner you address these issues, the better.

Reference: Forbes (July 17, 2019) “What You Don’t Know About Your Parents’ Finances Could Ruin Yours”

Why Is a Revocable Trust So Valuable in Estate Planning?

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A revocable trust is sometimes an investment that people are hesitant to make, but they are worth the time and money. There’s quite a bit that a trust can do to solve big estate planning and tax problems for many families.

As Forbes explains in its recent article, “Revocable Trusts: The Swiss Army Knife Of Financial Planning,” trusts are a critical component of a proper estate plan. There are three parties to a trust: the owner of some property (settlor or grantor), who turns it over to a trusted person or organization (trustee) under a trust arrangement to hold and manage for the benefit of someone (the beneficiary). A written trust document will spell out the terms of the arrangement.

One of the most useful trusts is a revocable trust (also known as an inter vivos trust) where the grantor creates a trust, funds it, manages it by themselves, and has unrestricted rights to the trust assets (corpus). The grantor has the right at any point to revoke the trust, by simply tearing up the document and reclaiming the assets, or perhaps modifying the trust to accomplish other estate planning goals.

After discussing trusts with your attorney, they will draft the trust document and re-title property to the trust. The assets transferred to a revocable trust can be reclaimed at any time. The grantor has unrestricted rights to the property. During the life of the grantor, the trust provides protection and management, if and when it’s needed.

Let’s examine the potential lifetime and estate planning benefits that can be incorporated into the trust:

  • Lifetime Benefits. If the grantor is unable or uninterested in managing the trust, the grantor can hire an investment advisor to manage the account in one of the major discount brokerages, or they can appoint a trust company to act for them.
  • Incapacity. A trusted spouse, child, or friend can be named as trustee to care for and represent the needs of the grantor/beneficiary. The trustee will manage the assets during incapacity, without having to declare the grantor incompetent and petitioning for a guardianship or conservatorship. This can be a stressful legal proceeding that makes the grantor a ward of the state. This proceeding can be expensive, public, humiliating, restrictive and burdensome. However, a well-drafted trust (along with powers of attorney) avoids this. If and when the grantor has recovered, they can resume the duties as trustee.
  • Estate Planning. A revocable trust is a great tool for estate planning because it bypasses probate, which can mean considerably less expense, stress and time. When creating your estate plan, make sure to think of more than just the trust. Ask your attorney about how the trust fits in with the rest of your estate plan: a will, powers of attorney, medical directives and other considerations.

Even though a trust is something that most people should consider, not anyone can create one. Your trust should be created by a very competent trust attorney, after a discussion about what you want to accomplish.

Reference: Forbes (February 20, 2019) “Revocable Trusts: The Swiss Army Knife Of Financial Planning”

What are the “Must Have” Estate Planning Documents?

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What do Aretha Franklin, Kurt Cobain, and Prince have in common? Aside from being famous and talented, each of these stars passed away without an estate plan. All three had the money and attorneys to draft a proper estate plan, but for whatever reason, they didn’t draft one. It’s a good lesson to not neglect your estate plan.

Motley Fool reports in the article, “3 Must-Have Estate Planning Documents To Get Done This Year,” that dying without an estate plan creates numerous problems for your family. If there are no legal instructions in place, probate law automatically dictates the distribution of your assets and selection of guardians for your minor children, which can cause problems or be contrary to your wishes. Regardless of your personal situation, you should think about creating these three important estate planning documents:

Trust. A trust is used to distribute your estate according to your instructions with more privacy, fewer costs, and less time than using just a will. A trust can say how much and what type of asset each heir will receive, to minimize family fighting after your death. If you have young children, you can designate guardians in your trust who will be in charge of their care and take care of any assets left to them. If you die without a trust, the probate judge will order who becomes their guardian and takes care of their money.

You also need a trust to make charitable bequests, to expedite the probate court process and to reduce or eliminate estate taxes. When you draft your trust, you’ll appoint trusted people to serve as the executor and the trustee.

Advance Health Care Directive. An advance health care directive (sometimes called a living will) can take effect while you are still alive. This is a legal document that sets out your instructions for medical treatment if you become unable to communicate, such as whether or not you want to be placed on life support. An advance health care directive can relieve the emotional burden from your family of having to make difficult decisions because you’ve already communicated your wishes through this document.

Power of Attorney. This legal document helps in the event you’re incapacitated or in the hospital in an unresponsive state. A power of attorney gives the individual you designate, also known as an agent, the authority to transact financial and legal matters on your behalf. Set up a power of attorney, before you need it. If you don’t and you’re unable to make decisions, your family may have to petition the court to get those powers, which costs time and money.

Estate planning is a huge favor that you’re doing for your family. Get these three legal documents in place.

Reference: Motley Fool (February 18, 2019) “3 Must-Have Estate Planning Documents To Get Done This Year”

Why Do Singles Need These Two Estate Planning Tools?

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Morningstar’s article, “2 Estate-Planning Tools That Singles Should Consider” explains that a living will, or advance medical directive, is a legal document that details your wishes for life-sustaining treatment. It’s a document that you sign when you’re of sound mind and says you want to be removed from life supporting measures, if you become terminally ill and incapacitated.

If you’re on life support with no chance of getting better, you’d choose to have your family avoid the expense and stress of keeping you alive artificially.

Like a living will, a durable power of attorney for healthcare is a legal document that names an agent to make healthcare decisions for you, if you are unable to make them yourself.

A durable power of attorney for healthcare can provide your instructions in circumstances in which you’re not necessarily terminally ill, but you are incapacitated.

When selecting an agent, find a person you trust enough to act on your behalf when you’re unable. Let this person know exactly how you feel about blood transfusions, organ transplants, disclosure of your medical information and other sensitive topics that may arise, if you’re incapacitated.

A power of attorney eliminates any confusion, especially if this person is someone other than your spouse. Your doctors will know exactly who the decision-maker is among your relatives and friends.

These two documents aren’t all that comprise a fully comprehensive estate plan. Singles should regularly make certain that the beneficiary designations on their checking and retirement accounts are up to date.

You should also consider your life insurance needs, especially if you have children and/or a mortgage.

It is also important to understand that a living will doesn’t address the issues of a will. A will ensures that your property is distributed after your death, in accordance with your wishes. Ask for help from an experienced estate planning attorney.

These two documents—a living will and a durable power of attorney—can help ensure that in a healthcare emergency, any medical and financial decisions made on your behalf are in accordance with what you really want. Speak with to an estate-planning attorney in your state to get definitive answers to your questions.

If you are in California, these two documents are often combined and are called an Advance Health Care Directive. 

Reference: Morningstar (April 23, 2019) “2 Estate-Planning Tools That Singles Should Consider”