Trust Creation: Little Mistakes that Can Cost Big

July 3, 2014,

If you have accrued some wealth in your lifetime, have a significant life insurance policy, or simply want to look out for the best interests of your children the idea of incorporating a trust into your estate plan may have been suggested. A trust fund places assets into trust, run by an appointed trustee who makes decisions about the investment and distribution of trust assets to its beneficiaries. However, smaller mistakes can be made in the creation of a trust for your children that can cause major problems after you are gone.

Carefully Consider the Trustee

Naming a trustee for a trust fund for your children is different than naming a custodian for their physical care. Consider appointing someone who has financial knowledge and can make wise decisions regarding the trust assets. Also consider naming co-trustees to the fund, thereby creating a set of checks and balances that can preemptively avoid any type of trust abuse.

Be Clear about the Goals of the Trust

When thinking about the smaller details of a trust it is important to be very clear in your wishes. How often do you want trust assets distributed? Yearly, every five years, or at the trustee's discretion? Do you want your children to reach a certain age first or reach some other type of goal? Do you want the distributions to be tied to future earnings so that the children that need more of the funds get more? By covering each issue clearly in your estate plan you can avoid issues arising later down the road.

Check Your Beneficiaries

This means more than checking to see that all of your children are named as beneficiaries to the trust. Most parents assume that their life insurance and retirement accounts are automatically going to their children, but very few parents double check to make sure that their children are listed as the beneficiaries on those accounts. Also, consider listing every single beneficiary of the trust as beneficiaries for the other accounts to ensure that everyone is legally entitled to the proceeds. This can eliminate any issues or ambiguity if only one child is listed as a beneficiary of those accounts but was just expected to make distributions to remaining children. You can also consider naming the trust as the beneficiary to your other accounts, thereby ensuring that the money will be distributed properly through the trust channels.

Keep Up to Date on All Other Estate Planning Documents

In order to ensure that everyone is accounted for in the trust fund and other estate plans, occasionally check all of your estate planning documents. This is especially important after any major life events such as a marriage, divorce, or the inclusion of other children. By keeping all documents up to date you can take care of any problems in the estate plan before they happen. Make plans to regularly update the will, check beneficiaries, and ensure that everyone listed in your estate plan is still alive and able to take part in the trust that you have created.

Key Estate Planning Questions to Help Avoid Mistakes

July 1, 2014,

Many people are uncomfortable with the process of estate planning. As a result, people are not always completely forthcoming with their estate planning attorney or do not think through all aspects of their plan. If you are just starting to draft your estate plan or are thinking of revising your current documents, here are some questions to consider that can make the process easier.

· What are your personal goals? Professional goals?
Establishing personal and professional goals can give an idea of how much you will need to live comfortably in your lifetime and how much will be left for your heirs. If you plan on retiring early or need more money for personal, financial, or health reasons an attorney can help you structure your estate plan accordingly. Establishing goals is also a good way to indicate to your heirs what they should expect to receive from your estate.

· What would you like to achieve with your wealth?
Knowing what you want to do with your money can also help with estate planning. Are you planning on investing in a post-retirement business, do you want to spend most of your wealth before you die, or do you want to set aside a significant amount for your heirs?

· What keeps you up at night about your money?
Knowing your concerns about your current estate can also help your attorney plan accordingly. If you are unsure about how to use money in retirement and have some left for your heirs they can help you structure a plan, and if you don't know the best way to leave money for your heirs an attorney can tell you what your options are.

· What do you want for your children? Parents? Other family members?
Everyone wants their loved ones to be happy, healthy, and taken care of. However, you need to think carefully about how exactly you want your estate to help. Do you want your loved ones receiving lump sums of money after you are gone, or would setting up a trust be more prudent? In the case of you passing before your parents do you want part of your estate to be put towards their senior care?

· Who have you considered for the role of executor of your estate? Why?
What you should be asking yourself when appointing an executor is who knows best about my estate wishes and has the ability to see them through? It could be a spouse, child, or family friend. You can also appoint someone outside of your close circle like an attorney in order to avoid any personal or familial conflicts that could arise.

· Who have you considered for the role of trustee of your various trusts? Why?
The trustee(s) to any accounts set up for your estate should be knowledgeable about your financial matters as well as your wishes for those assets. You can appoint someone who is close to your family and knows the intimate needs of the beneficiaries, or if you can appoint a neutral third party who will make decisions based on what is best for the trust.

· Who have you considered for the role of custodian for your children?
This person will be in charge of raising your children, and it should be someone who can effectively communicate with the executor and any trustees for your estate to ensure that your children are properly cared for in the estate plan.

· Do your family members get along? If not, why?
If your family does not get along, you need to discuss with your attorney how this may affect your estate plan. Beneficiary, executor, trustee, and other designations can be greatly affected if there is discord in your family. This may mean that you include a letter in your estate plan explaining your decisions, or it may mean restructuring your plan entirely to avoid any further strife.

Back to Basics - 10 Essential Estate Planning Documents Pt. 2

June 27, 2014,

In the last post we discussed the first five of ten essential documents that should be considered when estate planning. Those included a basic will, beneficiary forms, a financial power of attorney, medical power of attorney, and a living will. Here are the last five documents that should be included in your estate planning process.

6. Inventory of assets
Every financial planner has a different way of structuring and explaining your assets. Some planners give you a small book detailing every complex facet of your current financial status. Others will hand you a page with a simple chart or graph that sums up your entire account, and a lot of other financial planners fall somewhere in between. You should talk with your financial planner about getting documents that explain your assets in a way that your executor and heirs will be able to understand, and include it with your other estate planning documents.

7. List of contacts
Providing a list of contacts can greatly help your executor, attorney, and heirs. The list should include the contact information for any personal advisors such as bankers, lawyers, doctors, and tax advisors. You should also list all of your utility providers and any other service that is done for you or your home. This can include dog walking, lawn care, pest control, and others. Finally, provide the contact information for anyone that will be involved in the estate plan so that they can all be notified.

8. Guide to digital assets
As discussed in previous posts, estate planning now includes digital assets. Online bank accounts, social media pages, and the like are all digital assets. Provide a list of accounts, user names, and passwords so that your executor will have access to your digital assets. The list can be a hard copy, or you can opt for an online password storage service and give your executor access to that account.

9. Funeral arrangements
Making all of your funeral arrangements beforehand can greatly relieve the stress on your family from your passing. Decisions about cremation, burial, funeral home, memorial services, pallbearers, and the like can all be predetermined by you in your funeral arrangements. If you expect any donations to be made in your honor you can also decide which charities should get them, as well as how much they should each receive.

10. Trusts
A trust is an estate planning tool that allows assets from your estate to bypass probate proceedings and provide for your loved ones. Trusts are a great tool to provide financial stability for minor children, spouses, and anyone in your family with special needs. You must also name a person as trustee who will make decisions regarding the trust money such as investment and distributions.

Not everyone will need every document in this list for their estate planning needs. However, you should go over all of them with your estate planning attorney. These ten essential documents should cover almost every aspect of your estate plan and ensure that your wishes will be fulfilled as you want them in addition to making sure that your loved ones will be taken care of after you are gone.

Back to Basics - 10 Essential Estate Planning Documents Pt. 1

June 25, 2014,

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.

Inheriting Parental Debt

June 23, 2014,

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.

Mortgage Debt
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.

Taxes
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.

Supreme Court Ruling - Inherited IRAs Not Protected in Bankruptcy

June 20, 2014,

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.

Tips on How to Leave an Inheritance to Your Children

June 19, 2014,

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 Risks of a Prepaid Funeral

June 17, 2014,

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.

Late-in-Life Marriages and Combining Estate Plans

June 12, 2014,

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.

Lawyer Developing Online Estate Planning Game

June 11, 2014,

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.

Samsung Heirs Facing $6 Billion in Estate Taxes

June 9, 2014,

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.

Reminder: The Importance of Updating Estate Planning Documents

June 6, 2014,

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.

Back to the Basics: Estate Planning for Adults & Children with Special Needs

June 6, 2014,

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.

Trusts
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--

-clothing
-transportation
-personal care items
-education
-rehabilitation and therapy
-case management
-health insurance premium
-dental care
-phone and phone service
-television
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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.

Estate Planning & Technology - Including a Digital Estate Plan

June 4, 2014,

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:

· Lastpass
· Dashlane
· PasswordBox
· Keeper
· Password Genie
· Passpack
· 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.

The New Generation of Estate Planning - Young, Wealth, and Childless

June 2, 2014,

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.