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We acquire so many assets over the course of our lives now—bank accounts, stocks, real property, life insurance, retirement, and more—it’s almost impossible to know what has to go through probate and what doesn’t.
The answer to the question above is no; life insurance and retirement benefits do not have to go through probate if the account has a named beneficiary. Benefits from life insurance accounts can be paid directly to the named beneficiary, and money from IRAs, Keoghs, and 401(k) accounts transfer automatically to the named beneficiaries of those accounts as well. The persons named as beneficiary, however, will most likely want to consult with a financial advisor to determine what needs to be done with the proceeds from these accounts.
Yet another type of account that is not subject to probate is a pay on death (or POD) account, the money from which can pass directly to the named beneficiary upon the death of the owner.
Probate laws vary from state to state, so contact our office—or your own local attorney who specializes in probate—for more information.
A recent study about how divorce may affect your health has been making the rounds in the news sources lately. This article discusses how the added stress of divorce, family upheaval, and tighter finances can be so detrimental to your health that the effects can last years into the future. Because our firm works frequently to help divorced or remarrying couples update their estate plans to protect their new blended families this article sparked our interest. But what was even more interesting was this recent post by Paula Span about the effects divorce can have 20 or 30 years down the road—not just on the couple but on their grown children now acting as caregivers.
According to Ms. Span, adult children of aging parents often find themselves caring not only for mom and dad but also for stepmom, stepdad and sometimes even another stepparent from yet a third (and current) marriage. Dividing time (and often finances) between so many parents with new and special needs can quickly take its toll, as can the family politics that come with adult siblings, half siblings, and step siblings. “It adds another layer of complexity to an already complex and emotional situation.”
With all of this complexity and intermingling family ties, it is more important than ever to have conversations about estate planning and long-term care with parents and siblings before mom and dad (and stepmom and stepdad) get to an age where they need in-home or around the clock nursing care. A good estate plan can eliminate much potential fighting and confusion by clearly defining who will be making financial decisions and who should be making health care decisions when mom or dad become incapacitated. And a caregiver agreement can provide financial assistance to the one sibling who inevitably ends up shouldering most of the care giving burden.
If you are a part of a blended family don’t wait for time to take its toll; talk to your parents and siblings now about any challenges the future may bring—and how to meet those challenges together.
What is your estate plan all about? Is it about saving your assets from estate tax, or is it about leaving an inheritance for your children? Or is it something even beyond that—providing for your own financial security during your life, thus enabling you to leave a lasting legacy for your family?
Estate planning—or what this article from Investors Insight likes to call legacy planning—can help you achieve all of these goals. The article outlines the four primary goals an estate plan can help you achieve if you and your attorney work together to make your plan more than merely a tax savings tool:
1. Financial Security
2. Estate Care and Management
3. Protecting your Estate
4. Minimizing the Tax Burden
Tax planning is absolutely an important part of your estate planning process, but tax laws have a tendency to change, and with a new estate tax law expected in 2009 or 2010 it is essential to remember your other goals as well when you plan your estate. Our firm can help you achieve those goals and prepare for whatever the future may bring.
For a subject with which everybody is at least peripherally familiar, probate can turn confusing and frightening when you are forced to become intimately acquainted with it. As a beneficiary, probate can be lengthy, expensive and frustrating; but if you have been named as executor, probate can suddenly become an overwhelming maze of deadlines, notifications and potential liabilities. This is why many executors choose to hire a probate lawyer to help them through the process.
If you are the executor of a small estate with a straightforward will and one or two beneficiaries who are not contentious then you can probably do without an attorney. But you will want to think about hiring an attorney if you are serving as an executor under any of the following circumstances:
There are a number of beneficiaries who are not on friendly terms, or a number of beneficiaries receiving varying sizes of inheritance.
The decedent had large estate with many different assets, especially if the assets are not commonly held.
The decedent was a resident in a different state than your own home state.
A large number of creditors are making claims on the estate.
There is a disagreement about the will, or if more than one will was found.
The will is challenged or contested.
These are only a few of the reasons why you might want to consider hiring an attorney to help you through the probate process. If you aren’t sure whether you’ll need an attorney, don’t hesitate to call our office for a consultation. We can help walk you through the process and consider any obstacles that might arise. A little bit of foresight, and knowing you have an experienced professional on your side, can make all the difference in the probate process.
Planning for retirement often requires a fine-tuned equation including such variables as where you plan to live, how many years you’ve worked and how much social security you can expect, health care expectations, long-term care, and especially your life expectancy. Well, part of that equation is about to change, because according to U.S. News and World Report the life expectancy in the United States has increased 1.4 years since 1997.
It may seem like a small change, but the article reminds us that when planning for retirement “it’s also important to note that many people live far longer than average and life expectancy increases every year.” And time is the great equalizer, it seems. The expectancy gap between the lifespan of men and women is closing, as is the gap between Caucasians and African Americans.
What this means is that if you planned for your retirement based on an equation from 10 years ago, you may need to revisit your plan with your financial advisor. “Most financial advisers recommend budgeting for at least 20 years of retirement and preferably 30 years in case you do live into your 90s.” Planning this way means you may end up with a surplus, but “it’s better to leave something behind for your children than to use up your entire savings and have no income outside of Social Security.”
And if you do think you may have a surplus to pass on to your children and grandchildren, our firm can help you protect your retirement income right now, AND for future generations.
Parents, grandparents, aunts and uncles often come into our offices to make estate plans, and one of the questions they ask is how they can support the people in their lives who have special needs. Special needs can include anything from Autism or Down Syndrome to Paralysis or blindness, and everything in between. Our clients know enough to know that they can’t leave an inheritance outright without jeopardizing their loved one’s financial assistance, but they don’t know exactly how they can help. We always tell them that the only way to leave money to their loved one with special needs is through a special needs trust.
Special needs trusts are not yet well-known, but they are gaining attention among attorneys, financial advisors, and in the mainstream media. In fact, we recently found this very helpful article about special needs trusts on an online news source. The article explains that a special needs trust can help by paying for things to improve quality of life that the government will not generally pay for; things such as cultural events, travel to stay in touch with family, computer and media equipment and books.
The article mentions parents setting up special needs trusts for their young children, but a special needs trust does not have to be so limited. It is true that it must be established by a parent or grandparent, but a special needs trust is not limited to just minor children. It can be established for an adult of any age, and anybody can contribute to the trust.
A special needs trust can mean the difference between living an enriched life and barely getting by. If you have someone in your life with special needs, inquire about a special needs trust as a way to leave an inheritance, it could make a world of difference.
We’ve all been learning a lot more lately about economics and investment practices than we ever thought we would… but do these lessons from the global economy transfer to the family circle?
Studies have shown that most families have one person who takes care of all the finances: paying the bills, setting aside money for investment and savings, planning the family budget, etc. This may be convenient in the short term, but it can create long term problems. If both partners aren’t aware of the family budget and financial status there can be a tremendous disconnect in spending habits, leading to resentment and often a slow decline into debt. Furthermore, what happens to the family finances if the “accountant spouse” dies or becomes incapacitated? The surviving spouse often has no idea what the family financial status is, or even where accounts or investments are located and how to access that money. The best solution is for couples to talk about their finances often, or take turns being the family CFO.
Even children benefit from a certain amount of involvement in the family financial planning. Having a regular allowance or earning pocket money for chores not only teaches kids about money management, but also helps them understand when they have to wait to get that new video game, or when the family may have to cut back on certain luxuries. Including children in certain financial decisions, such as which charities to support or how to spend surplus cash, teaches them accountability, and that the choices they make can have a lasting impact.
Many of us look upon our finances with dread; but it doesn’t have to be that way. Skill with money matters can bring us just as much pride and joy as skill with a paintbrush, tennis racquet, or any other skill that must be acquired with practice and hard work. With a little education, and the involvement of the entire family, we can all become the masters of our own financial futures.
Many of the clients who come through our offices are parents of small children whose primary goal in creating an estate plan is to protect those children. This includes providing for their immediate financial needs, ensuring they will have the means to receive an education, and so forth, but often the very first question these parents ask is about guardianship. Most often they want guidance in choosing the best person to care for their children when they are gone, but sometimes a client asks if there is a way to keep their children out of the hands of abusive or irresponsible relatives. The answer is a resounding yes.
Of course, the first thing you should do to keep your children safe from an unsuitable guardian is to execute a Nomination of Guardians in which you name the people who would be good and loving parents. But beyond that, you can execute an Exclusion of Guardians (also known as an Anti-Nomination of Guardians). In this document you name the person or couple who should under no circumstances receive guardianship of your children. You may, in the document, state the reasons why your child should be kept out of the care of this person, but it is not always necessary.
For many parents, the excluded guardian is often a member of their extended family, and they fear that executing so strong a document might break the peace. For this reason, you can request that the Exclusion of Guardians be kept completely confidential. Unless and until the excluded guardian tries to gain guardianship over your children there is really no need for anyone except you and your attorney to be aware of its existence.
There are many valid reasons to execute an Exclusion of Guardians; alcoholism, history of abuse, mental illness, extreme financial irresponsibility, and more. How is a judge or court to know of these reasons unless you tell them? And that is exactly what an Exclusion of Guardians does. If you have any fears along these lines talk to your attorney. You hope the document will never need to be used—never even be seen by any eyes other than your own—but the peace of mind it can bring is invaluable.
Tolstoy said that “happy families are all alike; every unhappy family is unhappy in its own way,” but sometimes even the most stable and happy of families can turn angry and litigious when death and property is involved. It never ceases to be surprising how many seemingly strong family relationships devolve into backbiting and grudge-holding when a loved one dies and the last will and testament does not live up to expectations.
When a will is contested by an angry beneficiary (or someone who thought they should have been a beneficiary), the core motivation is often more about emotion than finances. Unfortunately, however, a will contest (if the contest is deemed valid)—and the ensuing litigation process—will delay probate considerably and make it significantly more expensive.
For this reason, if you are named as the executor of a will, it is important to know what legitimate grounds for will contests are, and to have a trusted attorney to whom you can turn if and when surprises occur. Serving as executor of a will can be stressful enough when everything goes as planned; dealing with the unexpected—especially when those surprises come from hurt or angry relatives—can take over every part of your life and have a lasting effect on family dynamics.
We hope you will never have to deal with a will contest in your family; but if you do, we hope you will let our firm help you make the process as fair and as painless as possible.
There seems to be a lot of fear around President Obama’s proposed healthcare reforms, most of that fear centering on the end-of-life planning included in the proposal. As a firm that deals with elder law issues, it is important to us that our clients be informed about their health care and choices. As a firm that counsels people (elderly or not) about the wisdom of including end-of-life planning in their health care directive, we feel it’s in your (and our) best interest to clear up a few details about exactly what that planning entails.
One of the fears currently sweeping the nation is that the current administration’s healthcare reforms are about euthanasia; or denying someone lifesaving medical treatment simply because they are elderly. Republican Senator Johnny Isakson explains in this article in the Washington Post that this is simply not true. Rather, Senator Isakson explains, thinking about your end-of-life healthcare options, talking about them with your doctor and family, and including them in your health care directive is responsible. It is about controlling your own destiny in your final days; whether that means you choose to forgo invasive procedures, or want every heroic measure taken—the decision is yours. But there is no way for your family or your doctor to know what your wishes are unless you’ve had the conversation and specified those wishes in your health care directive.
Our firm has no political leanings or agenda. We know that there is certainly much debate to be had about the pros and cons of the proposed health care reforms, but as regards end-of-life decisions and health care directives, we hope we have been able to clear up some confusion and ease your mind. If you still have questions about what it means to have a health care directive please don’t hesitate to call our office.