Most people do not like to talk about estate planning. Some do not want to think about the idea of death, others do not want to discuss financial or personal matters, and more simply procrastinate. However, once you do make the decision to set up your estate plan the options and paperwork can seem daunting. Here are ten basic, essential documents that you should discuss with your attorney about including in your estate planning process.
1. Basic will
The will is the document that most people think of when they consider estate planning. A will, in its most basic form, states who gets what when you pass. Family, friends, trusts, charities, and just about anyone else can be named as an heir or beneficiary in a will. You can also name a guardian for minor children in a will, and you should appoint an executor for the will, as well. If you do not have a will the court decides who gets what in your estate and a judge decides where your children will live.
2. Beneficiary forms
Almost every retirement account and insurance policy names a beneficiary in the case that you die while in the possession of the policy or account. Most beneficiary forms are mandatory, but you need to check each account and update the beneficiary if any major life changes like marriage, divorce, or children have occurred. You should also make copies of all beneficiary forms, and make sure that they are included in your estate planning documents.
3. Financial power of attorney
A power of attorney form names a person to make specific types of decisions about your well-being in the case that you are no longer able to do so yourself. A financial power of attorney form designates a person to make all financial and legal decisions on your behalf. A financial power of attorney form can be customized to the level of decision making power and types of decisions that the holder can have.
4. Medical power of attorney (Healthcare proxy)
The medical power of attorney form is similar to the financial power of attorney. The difference is that the person named to the medical power of attorney, otherwise known as a healthcare proxy, makes all of your medical decisions for you if you are unable to do so yourself. An important detail within the medical power of attorney is to include a HIPAA form that gives the person appointed as your healthcare proxy access to your medical records and information so that better decisions can be made about your care.
5. Living will
Also known as an advanced medical directive, a living will details all of your decisions regarding end of life wishes and long-term medical care. You can customize a living will to a particular illness or types of procedures that you do or do not wish to have. If you foresee issues arising within your family about your living will for personal or religious reasons consider explaining within the living will why you chose those directives. Whoever is appointed in your medical power of attorney should follow the decisions set out by you in your living will.
The next post will continue with the last five documents essential to the estate planning process.
Most people do not like to talk about estate planning. Some do not want to think about the idea of death, others do not want to discuss financial or personal matters, and more simply procrastinate. However, once you do make the decision to set up your estate plan the options and paperwork can seem daunting. Here are ten basic, essential documents that you should discuss with your attorney about including in your estate planning process.
The loss of a parent is a heartbreaking experience, and discovering that your parent had a large amount of debt can add even more stress to the situation. Usually, creditors have a certain period of time in which to make claims against your parent's estate. In most cases, you are not responsible for the debts of your deceased parent and if there are not enough assets the debt dies with them; however, in certain circumstances you can be on the hook to pay for what your parent left behind. Responsibility for debts is typically determined by the type of debt, the assets available, and where your parent resided.
Assets can be protected from creditors even if your parent passed on with debt. If you are listed as the beneficiary of a retirement account or life insurance policy that money cannot be touched by creditors. However, other assets in the estate may have to be sold in order to pay off the debts of creditors. This can greatly reduce or eliminate your inheritance from your parent's estate.
Credit Card Debt
In most cases, you are not responsible for the credit card debt of your parent. However, if you are a co-signor for your parent's credit cards then you can be held liable for the debt. Credit card companies are considered low priority creditors. That means that they fall behind other lenders, funeral care costs, and tax agencies. If you are responsible for paying off your parent's credit card debt, typically the credit card companies will agree to negotiate a lower payment because of their low priority.
Medical Care Debt
Deciding who is responsible for unpaid medical bills is separated into two categories: those who were on Medicaid and those who were not. If your parent was on Medicaid then you are not responsible for the debt. Under Medicaid rules, the only major asset that a person can possess and qualify for Medicaid is a home. The state can place a lien on the home to recover payments, but that money will come from the estate.
If your parent was not on Medicaid and had unpaid medical bills, state law determines whether or not you are responsible for the debt. The estate must first try to pay off all outstanding medical bills from estate assets. If the debt remains, "filial responsibility" may mandate that you pay off the remainder. Almost thirty states have filial responsibility statutes that require adult children to pay off the remaining debt if the estate cannot.
If you inherit your parent's home and it comes with a mortgage you may be responsible for the underlying debt. If the mortgage exceeds the value of the home you can consider foreclosing in order to pay off the mortgage on the property. After the foreclosure sale if mortgage debt still remains the bank can go after the estate for the difference. If you wish to keep the inherited home then you are responsible for making all mortgage payments on the home going forward.
You are not responsible for paying off the taxes of your parent. Government agencies are usually top priority creditors and they can take from the estate to pay off outstanding taxes, but they cannot go after you for any remaining balance if the estate is unable to pay it off in its entirety.
In a unanimous decision the Supreme Court has ruled that an IRA is not protected from creditors in bankruptcy proceedings when it is inherited in an estate. In the case of Clark v. Rameker, Heidi Heffron-Clark inherited an IRA from her mother in 2001. The account contained roughly $450,000 and she began to make distributions. In 2010, Mrs. Heffron-Clark and her husband filed for bankruptcy, but they claimed that the remaining $300,000 in the account was shielded from creditors as retirement funds. The creditors and bankruptcy court disagreed, and the case went all of the way up to the Supreme Court.
Key Distinctions of Inherited IRAs
The Court made its decision that inherited IRA accounts are subject to bankruptcy and creditors based on a couple of specific differences between inherited IRAs and owner IRA accounts. Owners of an inherited IRA cannot put additional funds into the account. Additionally, they can take distributions from the account at any time without penalty. In fact, the law states that an heir to an IRA account must either withdraw the entire amount from the account within five years of the original owner's death or at the very least take out a minimum amount starting the December 31st after the original owner died. This applies to regular and Roth IRA accounts.
Inherited IRAs differ from IRA owner accounts because the purpose of an IRA is to ensure that retirement funds will be available in your elder years. If an IRA is inherited, the original owner clearly no longer needs those funds for his retirement, and therefore the need for bankruptcy protection of those assets no longer applies.
Ramifications on Estate Planning
This decision does have some effect on estate planning. First and foremost, it is important to remember that IRAs are typically not covered in a will. When an IRA or other employer-sponsored retirement fund is created the owner of the account must fill out a beneficiary designation form. This form can later be amended, but the account is inherited by the person named on this legal document.
Spouses face the biggest consequences from the decision in Clark. A spouse that inherits an IRA has the option to rollover the inherited account into her own IRA. Distributions from her IRA are postponed until the spouse turns 70½, and penalties apply if the spouse takes the IRA early. If a spouse elects not to rollover the IRA, it is considered an inherited account and is now subject to bankruptcy proceedings.
Besides rolling over the account another option for avoiding an inherited IRA being subject to bankruptcy proceedings is to name a trust, as opposed to a person, as the beneficiary of the IRA. With the advent of the decision in Clark we are likely to see an increasing number of account owners naming trusts as the IRA beneficiary and having their loved ones named as beneficiaries to the trust. However, setting up IRA beneficiaries as a trust is a complicated legal issue, and if you elect this option the best decision is to talk to an experienced estate planning attorney about the matter.
According to some estimates, the Baby Boomer generation will leave over $30 billion to their children in their wills over the next thirty to forty years. When leaving an inheritance for minor or adult children sometimes personal, professional, or financial issues can flare up and complicate the process. If you wish to leave your estate to your children here are five simple steps that will ease any conflicts in the planning.
· Use open communication to manage expectations
Talk to your children about what to expect from the estate. Recent surveys have found that children often undervalue their parents' estates by over $100,000. Letting your children know where you stand financially and what they should reasonably expect resolves a lot of conflicts before they even begin. You should also communicate about how their expectations should change because of economic downturns, long-term medical care, or other unexpected issues.
· Create a level playing field
Creating a level playing field does not necessarily mean that you must distribute all assets equally. This can also apply to the distribution of responsibilities when it comes to settling your affairs. When your children feel included in the process it makes them feel like they are worthy, capable, and trusted by you. Getting everyone involved can minimize fighting over aspects of your estate.
· Distribute assets yourself
One common issue that causes problems between children occurs when assumptions are made about asset distribution. A lot of parents will name one child as the beneficiary of a life insurance policy or other account and simply expect that child to equally distribute the money to the rest of his siblings. To avoid any potential issues, name all children as the beneficiaries to the accounts that you wish them to share.
· If distributing unequally, explain why
The largest issues often come from inequality in asset distribution. Children fight when one gets more than others. Oftentimes, parents have good reasons for allocating more of the estate to one or more children. One child may make more money, another may need more for schooling or special needs, or a variety other logical reasons for unequal distribution. The easiest way to resolve this issue is to simply explain why. Because parents often feel uneasy about having these kinds of talks with their children, another option is to leave a note with the will or address it in your estate planning documents.
· Eliminate uncertainty by placing the estate in a trust
A lot of attorneys who specialize in estate planning suggest distributing estate assets to children in chunks, particularly if the children inheriting the estate are at a younger age. The logic of this is that children will make more mature financial decisions as they age. One simple way to control when and how your children receive their inheritance from your estate is by putting your estate in a trust. In addition to placing specifications about when and how distributions should be made, many other types of provisions can be written into a trust. It can ensure that your children will make wise and prudent decisions about the inheritance that you provide.
The usual story regarding issues with prepaid funerals is similar to this - one person purchases a prepaid funeral plan and does not inform her family. Years later, she passes away and the documentation for the prepaid funeral plan is nowhere to be found nor does anyone know that it even exists. The family pays for the funeral, and only afterwards is the paperwork discovered. However, at that point the funeral has already occurred, and the home refuses to refund the family for the costs.
On the outset, prepaid funerals sound like a good idea to include in estate planning. It appears to be a way to reduce the stress and costs of planning a funeral on your family; however, many issues can arise with the incorporation of a prepaid funeral into an estate. Other options are available in estate planning that can solve the same problems without the potential pitfalls of a prepaid funeral.
Common Problems with Prepaid Funerals
One big issue with prepaid funerals is cost. The average price of a funeral is around $8,000 according to the National Funeral Directors Association, but some prepaid plans can end up costing more in payments than the payout in the end. This has a detrimental effect on the rest of your estate that you want to leave to your loved ones.
Another issue with some prepaid funeral plans is a "redemption clause." Because so many prepaid funeral documents are lost or plans were never told to the families some less scrupulous prepaid funeral companies have instituted a redemption clause. It states that a prepaid plan claim must be submitted to the company within a certain time period (usually 30 days) in order to be accepted and a payout to be made.
Alternatives to Prepaid Funerals
Research has found that the majority of Americans do not shop around for funeral planning services or a funeral home. Most people either choose the funeral home closest to them or the home that other members of their family have used. By comparing various funeral homes, prepaid and otherwise, you can see the options and services that are provided by each and choose the one that is right for you.
If you want to provide something for your family that will take some of the stress out of planning and paying for your funeral consider creating a "payable upon death" account. These types of bank accounts earn interest, provide money in case of an emergency, and can provide financial support for your funeral after you have passed away.
Another way to relieve the stress and problems that come with planning for your funeral is to simply talk with your family and loved ones about your wishes. Most people do not want to talk about their funeral because the topic makes them uncomfortable, but by explaining what you want it reduces the guesswork, and most likely some cost, for your family later on.
Finding happiness with someone else at any age is a wonderful thing that we all strive for. However, combining family and finances later in life can be more complicated than getting married in your 20s or 30s. In addition to separate finances a lot of people who marry later in life already have their own estate plan in place. Combining two estate plans into one cohesive set of final wishes can be complicated. Here are a few tips to keep in mind when combining estate plans after a late-in-life marriage.
Talking About Prior Obligations
Older couples can bring prior obligations and debts into the estate planning process. While most financial matters affect the present, some obligations can have a direct effect on the estate planning process. If your new spouse has a reverse mortgage on the home or owes half of his pension to a former spouse it will have a direct impact on what will be inherited from the estate.
Making Decisions about Adult and Minor Children
Late-in-life marriages face further complications when there are minor or adult children involved. In most cases each spouse's individual estate plan provides for their children, but other questions arise when combining estate plans. Will the new spouse inherit money that would have otherwise gone to the kids? Do all of the children benefit equally from the new estate plan, and should it? Are there other resources in place from a prenuptial or divorce agreement that provide for some children but not for others? All of these questions, and others, need to be addressed when adult or minor children are involved.
Changing All Documents Related to the Estate Plan
Combining estate plans is more than just signing a new will. When going through the process it is also important to revisit all other tangential documents that affect the estate plan. Review beneficiaries for life insurance policies, retirement plans, and other important financial accounts. It is vitally important to review those documents because in estate law the legal titles of beneficiaries usually trump the wishes in a will.
Deciding How Much To Combine
Because late-in-life marriages often come with complicated financial and family matters some couples choose not to combine everything in their new estate plan. If one spouse is already taken care of because of a prior marriage then it may make more sense to leave her out of the will so that the children will inherit more. Similarly, if some children are provided for from a previous marriage, have money in a trust, or are adults that are independently wealthy it may make sense to leave them less in an estate plan in favor of more dependent or minor children.
The most important thing when combining estate plans after a late-in-life marriage is to make sure that everyone in your combined family is taken care of and your final wishes are fulfilled. If you or your new spouse is uncomfortable discussing issues of finances or estate planning, speaking with an experienced estate planning attorney can also help to facilitate this process.
An attorney is developing an online game aimed at teaching its players about estate planning. Stephanie Kimbro has created a demo for the game, "Estate Quest," where the player is a detective who is given various cases about people who did not plan their estates correctly. The player is taken back in time and given clues about what the person should have done in his estate or written in his will. Examples include naming a guardian, specifying bequests to certain people, or naming an executor.
Using Crowdsourcing for Legal Products
Ms. Kimbro has been utilizing online crowdsourcing such as Rockethub as a means to develop her game. Crowdsourcing websites allow developers to explain their idea to everyone on the internet, and if people want to invest in the idea they donate money to the venture. Crowdsourcing is also a good tool for gauging interest in potential products. Ms. Kimbro is interested to learn about how crowdsourcing can be used to advance legal services projects, and she is using Estate Quest as a test product.
Teaching Estate Planning through Gaming
The goal of law-related online games such as Estate Quest is to teach people of all ages about certain topics in the law. Ms. Kimbro is also working with Illinois Legal Aid Online to develop a game that teaches its players about landlord/tenant law. She stated that the goals of these legal games are to:
· Empower players to prevent legal problems before they happen
· Award players with points that can be used as discounts for access to legal assistance online
· Increase access to justice through engagement and power of gaming to teach basic legal rights
· Build a fun game that may be played online in a social capacity with friends and family
A game like Estate Quest appeals to a younger, more tech-savvy generation, and it can teach players about important legal topics at a younger age. It also encourages younger players to play the game with older members of their family who may have a more pressing need for legal information about estate planning.
The animated game play also serves as a way to discuss sensitive subjects in a more approachable manner. One of the main reasons why so many people do not have an estate plan in place is because the subject matter is uncomfortable to talk about. Others attempt estate planning on their own without an experienced attorney because they do not wish to discuss final wishes or financial matters with others. Games such as Estate Quest can help to facilitate the conversation about estate planning as well as highlight the potential issues that can come with attempting estate planning on your own.
When a family member faces a serious medical emergency or is nearing the end of his life his loved ones will often review the estate plan in order to make the necessary preparations for the present and the future. Reviewing a plan can give clarity to last wishes and a better understanding of what will happen in certain circumstances. However sometimes big surprises can emerge, which is the case with the Samsung fortune.
Recent Case Example
Lee Kun-hee is the current patriarch and leader of the Samsung conglomerate, known mostly for its production of cell phones and other electronic equipment, and his personal assets are valued at around $12.7 billion dollars. Samsung's revenues for 2012 accounted for over one-quarter of South Korea's overall gross domestic product. Earlier this month Mr. Lee, 72, suffered a serious heart attack and was hospitalized. According to the inheritance laws of South Korea, when Mr. Lee passes his heirs will be forced to pay up to $6 billion in estate taxes.
In the United States, gift and estate taxes are exempt up to $5.34 million and the top possible rate of taxation for the remainder is 40%. However, in South Korea the rules of estate tax are different. South Korea's top tax rate for its most wealthy estates is 50%, and the same types of exemptions do not apply. To put this potential $6 billion tax on Mr. Lee's estate into perspective, the United States only collected $16 billion in gift and estate taxes overall last year, and this single estate's tax bill would triple what the entire country of South Korea collected in estate taxes last year.
A major issue faced by the Lee heirs is public scrutiny if they attempt to restructure the estate. The Lee family has already been the subject of public outcry when the elder Mr. Lee went to trial and was found guilty of breach of trust and tax evasion. He had sold shares of Samsung SDS stock to his children far below market value, but he was later given a Presidential pardon. Any attempt at restructuring the estate now, when all of the information is public knowledge, would most likely lead to a huge backlash from citizens of South Korea and other stakeholders within Samsung.
However, there are options for reducing the estate tax bill or paying it off without relinquishing control of the conglomerate. The company that the children were sold stock, Samsung SDS, recently announced plans for an IPO that will most likely net the Lee heirs billions of dollars, and this money could be used to pay off the estate taxes of the elder Mr. Lee. Another option is to create charities or transfer large amounts of his estate into various foundations in order to reduce the amount of taxes owed. But because the options for avoiding the estate tax could potentially weaken the position of the Lee heirs within the Samsung conglomerate or cause public backlash it looks like for now as though the Samsung heirs will be forced to pay the $6 billion bill when it comes due.
The importance of having a thorough and complete estate plan cannot be overstated. Not only does it protect your wishes, it also ensures that your loved ones are provided for after you are gone. However, the estate planning process is not a one-and-done deal. It is also important to update your estate planning documents to reflect any personal, familial, or financial changes that have occurred in your life. The estates of some famous actors illustrate why it is important to have an updated plan.
The actor Paul Walker, known mostly for his role in the high speed franchise, "The Fast and the Furious," died tragically at the age of 40 in an automobile accident. At the time of his death, he was survived by his parents, his 15 year old daughter, and a girlfriend of seven years. Mr. Walker did have an estate plan in place with a pour-over will and trust set up for his daughter. Unfortunately, Mr. Walker set up his estate plan twelve years prior - the same year that his first hit franchise movie came out. Since then, his wealth had increased dramatically and he entered into a long-term relationship. Because his plans were never updated his daughter will be inheriting millions more than anticipated, his long-term girlfriend will get nothing, and the family does not have the direction to know what his true last wishes would have been.
Philip Seymour Hoffman provides another good example of why it is important to update your estate planning documents. Mr. Hoffman died at age 46 from a drug overdose earlier this year. At the time of his death he was survived by his companion of fourteen years and mother of his children as well as his three kids ages 10, 7, and 5. At the time of his death, Mr. Hoffman had an estate plan that was created in 2004. It provided for the eldest child who was the only one born at the time, and did not have any language that provided for the case of future children. His two pretermitted children, those born after the creation of the will, are now left in a precarious legal situation. In addition, since the creation of his estate plan Mr. Hoffman had gained significant wealth and acclaim from winning an Oscar and his successful movie career. He never updated his will to manage this new wealth, and as a result of the language of his will all of the assets that go to his longtime companion will be taxed once under his estate and again under her estate when she dies before it goes to their children.
By periodically updating an estate plan issues like the ones faced by the families of Mr. Walker and Mr. Hoffman can be avoided. When family events or financial circumstances change consider speaking with your estate planning attorney about updating your plan in order to accommodate these changes. It will ensure that your loved ones will receive all of the benefits intended and face no surprising legal problems with your estate.
According to 2010 U.S. Census data, 56.7 million Americans, or almost 20 percent of U.S. residents, have a disability. Within this demographic, over 5 million adults need assistance with self-care and independent living activities, including difficulty getting around inside the home, getting into/out of bed, bathing, dressing, eating, toileting, managing money, preparing meals, doing housework, taking prescription medications, and using the phone.
More than half of those with severe disabilities who are age 15 to 64 receive some form of public assistance. Approximately 33 percent receive Social Security benefits and approximately 20 percent receive Supplemental Security Income (SSI) benefits. Some also receive other forms of cash assistance such as Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP) (formerly called food stamps), and public or subsidized housing.
Given the above statistics, many people who are making estate plans will be leaving money or property to someone with a disability who has a special needs situation. However, if the inheritance is not structured properly, the receipt of money or property can negatively impact a person with disabilities' eligibility for some public assistance programs.
A trust is a legal document that directs the management and distribution of assets. The person or entity creating or funding the trust is called the grantor. The person who receives the benefit of the trust is called the beneficiary. The grantor appoints a trustee to manage the trust and distribute the trust's assets or funds for the benefit of the beneficiary. (The trustee can be a person or an entity such as a bank.)
Trusts are particularly useful in the situation where a beneficiary has special needs because a trust can provide financial resources without compromising eligibility for public benefits. On particular type of trust is called a supplemental needs trust (or sometimes a special needs trust). The special needs trust protects and perseveres financial assets that the individual with special needs inherits. It also separates the assets so that they are not counted for purposes of determining eligibility for public benefits such as SSI, Medicaid, and subsidized housing.
In addition to protecting public benefits, a supplemental needs trust can allow for vastly superior care options and opportunities for the person with special needs. These supplemental items can greatly enhance the person's dignity, productivity, and comfort. For example, trust funds can be used to purchase the following--
-personal care items
-rehabilitation and therapy
-health insurance premium
-phone and phone service
Establishing A Supplemental Needs Trust
Supplemental needs trusts must comply with complex federal and state laws in order to be effective. They also require information regarding the specific situation and needs of the person with special needs.
However, in New York, the following general requirements apply to the formation of a supplemental needs trust:
1. The supplemental needs trust must be for the benefit of an individual under the age of 65 who qualifies as begin "disabled."
2. The trust is established by a parent, grandparent, legal guardian, or the court
3. The beneficiary with special needs with have no direct control over or access to trust funds
4. The trust must provide that, upon the death of the beneficiary of the supplemental needs trust, the state will receive the remainder of any trust funds up to the amount spent by the state for medical assistance to the beneficiary.
Proper estate can help you plan for the future security of a loved one with special needs. It is important to contact an experienced NY estate planing attorney.
In the Information Age our digital presence and assets are just as important as our physical estate. Digital assets consist of all of our property that exists online. This can include brokerage accounts, bank accounts, PayPal, and online currency such as bitcoin. However, our digital presence extends far beyond that into other areas such as social media accounts, email addresses, online subscriptions, documents, photographs, and digital music libraries. Over 75% of all Americans have some kind of social media account or have an account on a social networking website. When creating an estate plan you need to consider what your wishes are for your digital assets as well as how you would like them to be handled.
The first step in creating a comprehensive digital estate plan is to identify and organize all of your digital assets. A simple way to track these assets is to create an Excel spreadsheet. You can break your digital property into categories in addition to having all pertinent user names, passwords, and other information necessary for access. Excel sheets can be password protected, so for those who are worried about other people gaining access to their online accounts a level of security can be added. Other people keep track of accounts and information in a small notebook or other non-digital means.
The next step is deciding who should be the "trustee" of these accounts. This is the person who would manage all of your wishes for your digital property. This person would distribute assets, delete or erase accounts, or continue to manage any digital accounts that you have. Typically, a family member or friend is named as trustee, but the digital assets could be broken into separate groups with a different trustee for each. The best person, or people, to choose are those who will handle the assets according to your wishes.
Providing access to the list of digital assets is also a consideration that must be made. If you choose to organize your assets on a password-protected Excel sheet or lock away a hard copy your trustee needs to know how to access the information or where it is located. For estate planners that are a little more tech savvy, a variety of online companies provide services for storing passwords and other online information. Some of these password manager companies include:
· Password Genie
· Deathswitch, and others.
The final aspect of creating a digital estate plan is providing instructions in the overall estate planning process. Using language in an estate plan that gives permission to the trustee or explains how to gain access to the digital list is a reliable way of ensuring that they will gain access to your accounts. You can also include as a part of your overall estate plan instructions for inheritance or bequeathing of specific digital assets. An experienced estate planning attorney will be able to seamlessly integrate your digital estate plan with your plan for the rest of your physical estate.
For those who are single or childless, estate planning options are vast and often complicated. It is estimated that over 17 million people who are retirement age are unmarried or childless facing this very dilemma. However, a new wave of estate planners are now facing the same issues of those retirees - the young, wealthy, and childless.
Since the tech boom in the 1990s, a considerable number of young entrepreneurs are becoming millionaires and billionaires. Due to their financial circumstances, these people are considering financial and estate planning at a much younger age. The vast majority of this younger generation is childless, some are unmarried, and all are considering what will happen to their wealth when they are gone. Because of this shift in wealth, estate planning attorneys are now stressing income, instead of age, as a more reliable metric for when you should be drafting a plan for your estate.
The most important thing to this new generation of estate planners is flexibility. When planning for the future at this age, there is a higher chance of changing circumstances both personally and financially. The probability of starting a family or having swings in finances is much greater in a person's 20s and 30s than at the typical retirement age. Estate planning attorneys are now coming up with new and flexible options for this generation of young, wealthy, and childless clients.
Besides providing for extended family and loved ones, the most popular option is charitable donation. Many want to participate and donate to charitable options like the Giving Pledge without locking into a long-term commitment. One way to do this is through a donor-advised financial fund which allows the donor to make periodic contributions at their discretion without a mandated dollar amount or period of time. Another benefit of such funds is that the donor receives tax breaks immediately and does not have to go through the messy paperwork typical of such major gifts. Another option is to plan the estate with language that provides for a potential family legacy while leaving a portion or the remainder of the estate to another organization.
With the trend of young, rich, and unattached people planning their estates at a new age combined with the fairly recent addition to estate planning of digital assets, attorneys are reevaluating the typical methods of estate planning and are coming up with innovative ways for people to plan for the future. However, these new options are not just for the young, wealthy, and childless wishing to plan their estate. Everyone can benefit from these new possibilities in estate planning, and by speaking to an experienced estate planning attorney you can incorporate these ideas into your plan.
Estate planning is meant to provide direction and security for loved ones when we pass away, but complications can arise in the estate planning process when structuring a plan as a married couple. Each person in the marriage has individual estate planning goals, tax-related objectives, and ideas for the future. However, upon probing deeper through the individual wants and needs of the spouses common goals run through the estate planning process of almost all married couples:
· Providing for family and loved ones
This is typically the top priority for all married couples. They want to know that their surviving spouse, children, grandchildren, extended family and friends are all provided for after they are gone. Even pets can be provided for if an estate plan is structured correctly.
· Minimizing taxes
Couples also want the taxes on their assets to be as minimal as possible so that their beneficiaries can fully inherit after they are gone. This includes federal estate and income taxes as well as state estate and income taxes.
· Protecting property/assets going to family and loved ones
Similar to providing for loved ones, married couples also want to know that specific property and assets will be protected from creditors or from future family issues such as a future spouse.
· Cost effective planning
The cost of estate planning is one of the main reasons why couples put off the process for so long. They want to have a plan in place that meets the individual and couple's goals, but at the same time want a plan that isn't too costly to create. In most cases a compromise must be made. In order to achieve all of the estate planning goals a basic level of complexity must go into the planning process. At the same time, structuring an incredibly intricate plan can be costly. Therefore, finding an attorney that can cover all of the basic goals while also keeping the plan under a certain budget is vital.
· Privacy in estate planning matters
Keeping the decisions of estate planning private from others is also a common goal of most married couples. Not only does it keep their business out of public knowledge, it can help protect the surviving spouse or other beneficiaries from being the victims of fraudulent schemes after the estate plan goes into effect.
· Control over assets
One of the biggest concerns that married couples have when estate planning is ensuring that the surviving spouse has control of the assets of their marriage after one passes away. The same is true in most cases when it comes to ensuring that the children will also have control over the assets of the marriage when both spouses pass.
· Planning for incapacity
Although it is tough to think about, most couples also want provisions in an estate plan that provide for the incapacitation of themselves or their spouse. An estate plan can provide for more than just death, and in the case of incapacitation a plan can dictate power of attorney as well as medical wishes.
· Asset management
Typically, one spouse in a marriage is more adept at asset management, and an estate plan can structure a new management system for the surviving spouse if the other is incapacitated or passes away. This ensures that someone capable is always managing the family's assets.
Discussing these common goals before meeting with an estate planning attorney can help a married couple facilitate the process of creating an estate plan. Not only does the process become much easier, it also provides peace of mind that both individual and common goals are being met when planning for the future.
As discussed in a prior post, the estate planning process is not a do-it-yourself project. An experienced estate planning attorney is necessary to ensure that all of your wishes are met and that your loved ones are provided for after you pass away. However, after the estate plan has been created, what do you do with it? And what about all of the other, smaller details that come with incapacitation or passing?
New companies are springing up that deal with these specific issues. Instead of sticking the will in a manila envelope in a security deposit box or in the back of a filing cabinet, these companies store all of your estate planning documents online. Some companies allow you to do more than store your estate planning documents online. It helps you make all of the smaller decisions or even send out invitations to your memorial after you pass. These websites also provide for an executor or deputy to also have access to your plans so that they can be carried out once you have passed. These companies are also planning for their own demise - for example, Everplans has already enacted a plan that will allow users to access their estate planning materials up to fifty years after the company has been sold or dissolved.
For those who have already made all of the decisions about memorials, funerals, and smaller details there are still options for storing your estate documents securely online. Dropbox and SecureSafe are cloud storage options where you can upload your documents, and your executor or beneficiaries can access it from anywhere if they know the password. These options give you the benefits of online storage without needing to decide all of the extraneous options.
The most important thing to consider if you decide to store your estate planning documents with an online source is security. Some companies claim that they have "bank-level security" and others will tell you about the high level of encryption that will protect your documents online. For those not so tech-savvy the best option is to simply research the companies, read reviews, or ask your estate planning attorney for advice. Some estate planning attorneys are now setting up their own private online storage sites for estate planning documents that also allow their clients to detail arrangements for their passing, and other attorneys are working specifically in conjunction with already established companies
Whatever method you choose to store your estate plan, make sure that someone you trust knows where it is and how to access it. With the advent of end-of-life online companies it is now becoming easier to plan every detail of your estate plan from the largest legal aspects of inheritance and bequeathing to the smallest detail such as recommending a restaurant after the services. While it is still vital to have an estate planning attorney draft all of the legal documents of your plan, it is nice knowing that you can provide even more ease and direction to your loved ones after your passing.
It has been said that life is a journey, not a destination. So it makes sense that in our last days, on our final journey, we should strive to have a good one--a bon voyage.
While talking about end of life issues--particularly our own--can sometimes be uncomfortable, the best way to make sure that your end of life wishes are honored is to lay them out in writing and make sure that your loved ones are aware of them. Don't miss the opportunity to have a bon voyage--take the opportunity to set out your end of life wishes and take control of your journey.
Unfinished Life Matters
Sometimes so much focus is placed on the medical and legal aspect of dying that the personal aspects get brushed aside. However, the reality is that it is much easier to have a bon voyage if you are happy or at least satisfied when you depart. This involves taking care of loose ends and putting things right where necessary. Personal matters to consider include--
**Saying things you need to say to loved ones, friends, and others, such as "I'm sorry." "I forgive you." "Thank you." "I love you." "Goodbye."
**Determining whether you may need psychological, emotional, spiritual care, counseling, or other support.
**Writing a personal legacy or story, telling any life lessons or outlining your hopes and dream, as well as leaving any helpful advice, for loved ones.
**Creating a "bucket list," outlining any things you would still like to accomplish or setting out any goals of for your remaining medical care.
Funeral arrangements are very personal and options vary widely--from in-ground burial, mausoleum burial, cremation, as well as other possibilities. Some planning and logistical questions include--
**Do I want to donate my organs for transplant or donate my body to science?
**Which funeral home/mortuary do I want used?
**What are my feelings regarding embalming, burial, cremation, casket, burial location?
**Who should be notified of my passing?
**Who will write my obituary and what should it say if you are not writing it yourself?
**What do you envision for a funeral--a church service, a party or dinner, a memorial service?
**Will you pre-pay your funeral expenses or where will funds be held?
**Do you want to specify a charity or other cause "in lieu of flowers"?
Medical And Legal End Of Life Paperwork
A complete estate plan typically involves the documents identified above as well as a pour-over will, a revocable living trust (RLT) or an irrevocable Medicaid asset protection trust (MAPT), power of attorney for finance, and deeds and memoranda regarding personal property. In particular, questions related to medical and/or legal arrangements include--
**Do you have a will and possibly a trust? When is the last time you looked at these documents and thought about their provisions? Do the provisions reflect your current wishes and desires for distribution of your personal and real property, as well as your other assets?
**Do you have a Living Will? Does it state your wishes regarding the type and extent of medical treatment you want in the event that you can no longer speak for yourself?
**Have you made your feelings known about matters such as "Do Not Resuscitate (DNR)" orders or your feelings on CPR? What are your feelings on palliative care and natural death? What are your feelings regarding breathing tubes (intubation) and feeding tubes? A Living Will allows you to record your wishes regarding organ donation, pain relief, funeral, and other advance planning matters. It is an important source of guidance for your health care agent.
**Have you executed a Durable Power of Attorney For Healthcare? Have you also selected a Health Care Proxy? Have you specified an alternative proxy in case your first choice is unable or later unwilling to act as proxy? A health care proxy is a designated decision-maker who will make medical decisions for you if you become incapacitated and cannot make decisions for yourself. Your health care proxy should be someone with a strong personality; someone who will fight for you and your wishes.
Thinking of end of life matters can be uncomfortable and challenging, but most things are easier when we have some control over them. Expressing your wishes and making affirmative decisions regarding end of life matters will hopefully allow you to have a peaceful departure and a bon voyage.