Building Legacies that Last Estate Planning and Elder Law

Creating A Good Estate Plan

Dose-media-424257-unsplashMany people these days wonder about what do I need to do before I die and what is the process. Well, the answer to those questions is: Create an Estate Plan. By creating an estate plan, it helps open up the options about money distribution in a will or trust to the heirs of your inheritance. In fact, there are 12 easy steps to follow in order to make sure that your estate plan can go smoothly without having the risk of going to probate court.

 

  1. Create a Will
  2. Consider creating a trust
  3. Make Health Care Derivatives
  4. Make A Financial Power of Attorney
  5. Protect your children’s property
  6. File Beneficiary Forms
  7. Consider having Life Insurance in place
  8. Understand any estate taxes that will be made
  9. Make sure the funeral expenses are covered
  10. Make the final arrangements
  11. Protect your business
  12. Make sure your documents are stored in a secure place

By following these steps, your estate plan will be carried out smoothly and successfully without any further negotiations. If you don’t create an estate plan, your future heirs would need to go to probate court to negotiate over your inheritance which is not good at all. Avoid going to probate court and create an estate plan today!

Michelle Profit is an estate planning attorney serving Maryland and the District of Columbia. A Harvard Law School graduate, she has worked in the financial services industry for over 20 years. A dedicated advocate for all of her clients, Michelle Q. Profit personally handles each client case from start to finish to meet the client’s needs and objectives. Michelle listens in the consultation sessions and works with any other client accountants or financial planners to create a comprehensive estate plan.

How Michael Jackson’s Estate Plan Was A Success

Michael Jackson

Michael Jackson, the King of Pop culture, not only left behind a legacy; he also left behind a great estate plan. He made the sensible choice unlike Prince, Aretha Franklin, and Whitney Houston. With the help of his chief executor of his estate both his entertainment attorney John Branca and his music executive John McClain, he left an estimated over $500 million value of assets to his heirs. By having this money, his heirs, under Jackson’s will, will be protected.

In order for him to create this smart and sensible estate plan, he had to follow the steps which include: Creating A Living Trust, Naming A Guardian, and Assembling A Good Estate Plan. By Creating A Living Trust, it spared his heirs the ongoing and prolonged legal process of transferring assets through probate court. By Naming A Guardian, he chose who would care for his minor children. By Assembling A Good Estate Plan, he was able to make sure his heirs got what they wanted.

According to a close correspondent to the King of Pop, “He put two people in charge of the will and trust who he felt were sage, mature, and had a great deal of expertise in how to handle what are probably considerable assets. He couldn’t have put his estate in a better position.” With these steps, you will be able to achieve what Michael Jackson did, which is a “Good Estate Plan.” Overall, the bottom line is that Estate Planning is important and you should have one in place, just like Michael Jackson did. It will serve you well in the future and protect your future heirs.

Michelle Profit is an estate planning attorney serving Maryland and the District of Columbia. A Harvard Law School graduate, she has worked in the financial services industry for over 20 years. A dedicated advocate for all of her clients, Michelle Q. Profit personally handles each client case from start to finish to meet the client’s needs and objectives. Michelle listens in the consultation sessions and works with any other client accountants or financial planners to create a comprehensive estate plan.

Does Your Estate Plan Have All the Right Stuff?

Man holding glasses sitting at computer

“Many people think estate planning means deciding what happens to your things when you die. For that reason, many young families do not consider estate planning to be a priority. However, it may be one of the most important things young parents can do!”

A last will and testament is the document which parents need, to legally nominate guardians to rear their children if orphaned. It clearly delineates who should take care of the children and who should manage the money available to care for the children, as noted in The Daily Sentinel’s article titled What is missing from your estate plan?”

While some people name one person to rear the children and handle the money, it’s a good idea to separate the two roles.

Without these instructions in a will, those left behind can have very different ideas about where the children should live and who should care for them. If the two parent’s families have very strong opinions, suddenly both families have hard choices to make about what will happen to the children.

No parent wants to leave a legacy of court battles and family division.  However, that’s what is likely to happen without a will.

There are other issues that estate plans address while you are alive.  It is also necessary to plan for incapacity. A living will, also known as an “advance directive,” is important because it helps pre-answer questions, regarding what treatment and care you would want if unable to speak for yourself. Do you want to be kept alive by artificial means? You do not want your loved ones making this decision during a time of great emotional stress, so this is an important document to have in your estate plan.

Finally, your estate plan should include a medical durable power of attorney to deal with all other medical decisions other than end of life. Without it, if you are not near death but not able to share your opinions about your care, your family and your medical providers are placed in a difficult position. In contrast, those who care enough about their family designate an agent and ensure that their wishes are made legally binding.

The big question everyone must face is “When should I start working on my estate plan?” If the answer is “Later,” then the real answer is “No time soon.” For young parents, that puts your minor children in a bad position, where a court may make the decision about who will rear them and how their lives will go on after you are gone.

Don’t make your family have to go through more than they would have to anyway. Speak with an estate planning attorney to create your estate plan, including these very important documents.

Resource: The Daily Sentinel (Aug. 12, 2018) What is missing from your estate plan?”

 

You Never Know When You’ll Need an Advance Directive

Woman sitting looking out a window

women's image reflected in the window “Advance care planning is making preparations and decisions about the medical care you want to receive, if you become unable to speak for yourself.”

Talking with your family and your physician ahead of time about what you would want if you should become incapacitated, is a difficult but necessary conversation, reports The Herald News in the article “Being Prepared: Advanced Directives.” An Advanced Directive is a key part of your estate plan. If you have reached the age of majority (age 18 in most states), then you need to have this document.

An estate planning attorney can help you ensure that you have an Advanced Directive in place which conveys your wishes to your loved ones. Discuss this ahead of time and let your family members know what you would want to happen in advance.

Select a person you know and trust to be your healthcare agent. Tell them you have selected them to serve in that role. Don’t let this be a surprise to them at the last minute. They will need to fully understand your wishes and be willing to carry them out.

Be as specific as you can about what kind of treatment you would want and which you would not. That includes medical ventilation, a feeding tube, kidney dialysis and other treatments.

Do you want to be resuscitated if you stop breathing, or have CPR performed if your heart stops working? You’ll want to have a DNR—Do Not Resuscitate—if you don’t want extreme measures to be taken to keep you alive.

Once you have made your decisions, meet with an estate planning attorney to complete a written advanced directive.

States have different sets of rules regarding advanced care directives, so an estate planning attorney in your state of residence is necessary.

You should keep your advanced directive and DNR document, where someone can get them if an emergency occurs. Do not give it to a relative who lives two states away—they will not get to you in time. Be sure that everyone involved with your healthcare has a copy. This includes your primary care physician. Ask that your directive be maintained in your official medical file.

If you are wondering how or when to have this conversation about a loved one’s end-of-life preferences, the answer is now. Start by sharing your own wishes and then ask them to share theirs. Ask if they have made the proper preparations for their wishes to be carried out and discuss what must happen to have their wishes followed.

It’s not the happiest conversation you’ll ever have.  However, if an emergency occurs, your loved ones will have peace of mind knowing they did what you wanted. You’ll also have peace of mind.

Resource: The Herald News (Aug. 10, 2018) “Being Prepared: Advanced Directives”

 

Will SAFE Act Really Make Seniors Safe?

Elderly woman looking serious

“In an attempt to take a step toward countering some of the negative impact of elder financial abuse, the government recently passed the Senior Safe Act in May 2018, as part of a bipartisan banking reform set of laws. “

Elder abuse costs millions of Americans an estimated $2.9 billion annually. The expectation is that these numbers are only going to increase, as the scams targeting the elderly become more and more sophisticated. This is according to Forbes in ““After SAFE Act Passage, The Battle Against Elder Financial Abuse Remains Far From Over.”

The aim of the Senior Safe Act is to encourage financial institutions of all kinds to play a larger role in fighting against elder financial abuse. The law, which was modeled after the Senior$afe program created in Maine, requires financial institutions to train employees on detecting activities that may indicate elder abuse is occurring. If the employees are trained, the Senior Safe Act also provides a reporting process and liability protection for those who report the possible abuse.  It is thought that the liability protection would make those individuals reporting the possible abuse more proactive.  However, there are still some problems with this.

Some advisors report being reluctant to report any client who seems to be suffering from mental deficiencies or elder abuse. The problem, advisors say, is that they are not trained and won’t feel confident in making a judgement about competency. Some court cases have put the onus on the advisor, when selling certain products or strategies but advisors lack both the training and the ability to make a medical diagnosis of senior clients. Without the ability to identify competency, it is very likely that any reporting will only take place well after the elder financial abuse has taken place.

Another issue is that family members or friends are typically the ones who commit elder financial abuse. The victim usually does not want to press charges, fearing that the person will become angry with them and withdraw their emotional support. Being dependent upon the same person who may have perpetrated financial abuse, puts the elderly person in a no-win situation.

Elder abuse prevention, financial and otherwise, should start years in advance, at the first signs of declining physical and mental health. It should begin with a plan for managing financial assets and having the proper legal documents in place, including a will, power of attorney, general durable power of attorney, healthcare directive and other estate planning documents.

By being proactive while the individual is still relatively well and healthy, it may be possible to create protections that will be crucial later in life. Speak with your estate planning attorney now, to make sure that your estate plan is in place, so you and your family are protected.

Reference: Forbes (July 23, 2018) “After SAFE Act Passage, The Battle Against Elder Financial Abuse Remains Far From Over”

 

Cohousing May Be the Answer for Many “Golden Girls” and Guys

Generational Family smiling

“Here’s one answer to the “Where to go next?” question being asked by those inching toward retirement, or those looking to escape the increasing cost of Seattle living and combine resources with a like-minded community.”

For those living in high-cost areas, like Seattle, San Francisco, New York, Los Angeles and other places where the cost of housing is astronomical, the idea of purchasing land and building tiny houses next to each other seems like something out of a movie. But according to an article in Seattle Times titled “Battling rising cost of living? Seeking a community? A look at the cohousing lifestyle,” this could be a very real and enjoyable solution for many retirees.

This past June, Charles Durrett, an architect who has been advocating for the cohousing lifestyle for years, presented a workshop for people who want to establish these types of communities. The idea is that everyone gets their own private home and living quarters, while sharing kitchens and other shared rooms. Neighbors share house items, meals, coordinate activities and make group decisions about how to manage their shared lives.

While he introduced the concept and phrase “cohousing” thirty years ago, he says that he’s now busier than ever before. The workshop was sold out.

The concept could be an ideal solution for seniors who don’t want to give up their privacy but would like to be part of a smaller community. Durrett recommends that each community have a caretaker unit, so someone who is able to take care of the residents, can live as part of the group.

The success of a cohousing community is not in the size or design of the house.  It is due to the enthusiasm of the people coming together, who believe their lives will be better, if they are living as part of a community. That’s the common denominator. The architect has lived in a cohousing community for 12 years with 30 adults—20 of them seniors—and 20 children.

Research has shown that people live longer, when they are socially engaged.  However, social can also turn to drama, especially in small groups. Therefore, people must learn how to get along and cooperate.

Is cohousing for you? You should do your homework before making a big decision about selling your home to live in a shared community. Your estate plan should also reflect your new position and be aligned with your new ownership. An estate planning attorney will be able to help you achieve that goal, while protecting your assets for your heirs.

Reference: Seattle Times (June 1, 2018) “Battling rising cost of living? Seeking a community? A look at the cohousing lifestyle”

 

Think 61 is Your Golden Retirement Number? Think Again

Elderly couple enjoying retirement

“There's nothing wrong with looking forward to retirement and even planning an early exit from the workforce.  However, Americans may be a bit misguided, when it comes to this particular milestone.”

If you work for a living, chances are good you like to daydream about what your life will be like during retirement. We all do it and so do younger workers who have yet to pay their dues.  However, according to a survey from Bankrate, as reported in The Motley Fool’s article titled “Americans’ Ideal Retirement Age–and Why It’s Not Realistic,” adults across the board think that 61 is the ideal age to retire.  Is that realistic?

Unless you can live without Social Security during retirement, 61 is not your magic number. Most American retirees can’t live on Social Security alone and those benefits have a major impact on the ability of most retirees to keep up with their bills.  However, eligibility doesn’t start until age 62. The people in the survey either didn’t know they can’t collect Social Security until they turn 62 or they are assuming they can get by without it.

The average Social Security benefit check is just more than $1,400, which adds up to about $17,000 a year. If you are among those who have little or no money set aside for retirement, that’s a lifeline.

A large number of working Americans are way behind in their retirement savings. It’s estimated that around 42% have fewer than $10,000 set aside for the future. How will they retire at all, much less retire at age 61?

Even if you can manage to keep working until age 62, filing at that age has its own issues. Today’s workers need to wait until their Full Retirement Age, or FRA, in Social Security’s terms, to receive their full monthly benefit. The difference is large enough to make it worth the wait.

Assume that your full retirement age is 67, but you retire at age 62. Instead of $1,400, your monthly benefit would be $980.

However, what if you are among those who really want to retire at 61? You’ll need to have started with saving and investing for retirement at a relatively young age and have been willing to take a very aggressive position in your investments. If you started at age 26, with a goal of retiring at age 61, and you are employed by a company with an employee sponsored 401(k), you’d have had to contribute $1,500 a month for thirty-five years to amass enough money—if your investments were earning a steady 7%.

If retirement is around the corner, one thing you can do is make sure your estate plan is in place. Therefore, whatever assets you have, will be distributed according to your wishes. Make sure you have also taken care of having a power of attorney and healthcare directive in place. Speak with an estate planning attorney to make sure these documents are prepared correctly.

Reference: The Motley Fool (July 18, 2018) Americans’ Ideal Retirement Age–and Why It’s Not Realistic”

 

Women Living Longer but Saving Less

Woman sitting looking out a window

“All working Americans need retirement savings, regardless of gender.  However, the need is particularly strong for women, since they have a tendency to live longer than their male counterparts. Therefore, they're also more likely to require paid care at some point—since a spouse may not be around to provide care.”

Women have a statistically longer lifespan than men. It’s unsettling to learn that women save about half as much as men for retirement. This disparity could put women in a very bad position, when they are most vulnerable late in their lives, says The Motley Fool in its article “Why Are Women Only Saving Half as Much as Men for Retirement?”

When queried about why they think it is so difficult for women to save for retirement, most woman honestly said they are living from one paycheck to the next, with little to spare for savings. They are also paying back student loans. Men say much the same thing, so why is the average female saver saving so much less for her future?

In a recent Student Loan Hero study, women admit that they don’t know a lot about investment and retirement planning. Women are also more likely to take breaks in their careers to be caregivers, raising children and taking care of aging parents. This reduces their earnings. While some wage equity has been achieved and even made into law, most women do not earn the same as their male counterparts. Therefore, women face special challenges to their retirement savings.

What can be done to address the gap?

  • Start by examining your budget and cutting unnecessary expenses.
  • Make sure to maximize your employer’s 401(k) match.
  • Fight for raises throughout your career. To gain more info on what your position is worth, use websites like Glassdoor’s “Know Your Worth” tool to compare salary data.
  • Consider changing your investment approach. If you have steered clear of stocks over conservative vehicles like bonds, they may be a good way to catch up.

Finally, don’t forget that retirement includes estate planning. Sit down with an experienced estate planning attorney, who can help you prepare the necessary documents to protect you and your family. Make planning for retirement a priority. Your future self will appreciate it!

Reference: The Motley Fool (June 3, 2018) “Why Are Women Only Saving Half as Much as Men for Retirement?”

 

Now Is a Good Time to Revisit Your Estate Plan

Bigstock-Vintage-brass-telescope-on-ant-44347372“There still are many sound nontax reasons to revisit estate planning and possibly update your prior documents.”

Even with the doubling of the individual estate gift and GST tax exemptions to about $11.2 million per person (and double the amount for married couples), you still need a will, says Forbes in a useful article titled “7 Reasons to Revisit Your Estate Plan, Trump Tax Law Aside.”

A will serves as the primary vehicle to convey your intentions for your assets and explain your legacy. The provisions of the will can be used to designate how assets will be transferred, whether outright to beneficiaries, to existing trusts or into a new trust that is created under the provisions of the will. If you use the will to create a testamentary trust, the will is where you specify the age for distributions to the beneficiaries and other important details. The will is also how you convey your wishes to make a gift to specific institutions and who should receive family heirlooms.

The executor or personal representative of the estate is the person or institution in charge of managing your affairs, after you have passed. The executor gathers all the information about your estate, including assets and debts, filing taxes and administrative tasks. That person is named in the will.

If you have minor children, or a child with a disability, you want to choose a guardian and a successor guardian. If you do not, the court will appoint someone to rear your child(ren), and that may not be the person you would have wanted. Your spouse is always the obvious choice, but there are instances where both parents die unexpectedly, with no plans in place for their children.

There are many different types of trusts used to accomplish different things. They can be used to control assets and their distribution, which is particularly important when minor children are in the family. Trusts should be used when there is an individual in the family with a disability, an addiction or other issues who cannot manage their finances on their own.

Tax planning is a major part of any will. For a long time, estate planning attorneys focused on how assets were titled, so that the first of a married couple to pass would be able to fully use their estate tax credit.  However, the relatively new concept of “portability,” which allows any unused credit from the first spouse to pass to be used for the benefit of the second spouse, eliminates the need for any unused estate tax credit to go into a bypass trust.

Not only do you need a will, but this year you should consider reviewing your will, if you have not done so. The new tax law may have eliminated or reduced some estate tax liability, but it has not eliminated the need for mindful and proactive estate planning.

Reference: Forbes (March 15, 2018) “7 Reasons to Revisit Your Estate Plan, Trump Tax Law Aside”

 

Want to Give Away All of Your Money?

Giving-to-charity2“Even if you’re not a millionaire, you may have reached a stage where you think, It’s enough. It could even be a bit too much. A second car may sit mostly in your garage. A beloved vacation home may have transformed from a place to relax to a place to maintain.”

You don’t have to be a millionaire to feel like you’ve got enough. How many cars, vacations or houses does anyone really need? If you’ve reached that point, congratulations. Now, what do you do about it? How do you share your resources in a way that is carefully thought out and doesn’t create a battle among family members? An article from AARP, “How to Give Your Money Away,” provides some good points.

A grandchild needs a college education. Use a 529 college tuition plan to help your grandchild, by contributing to a plan created by the child’s parent. Financial aid formulas look at contributions from a grandparent’s plan but not a parent’s plan as student income. To allow your grandchild to be eligible for student aid or grants, make sure that the funds you contribute go to his or her parent’s 529. Many states permit you to switch ownership to the parent,  if the beneficiary remains the same.

You want to be philanthropic, even if you’re not Warren Buffet. You can use what’s called a DAF—donor advised fund. They are like charitable savings accounts. The tax deduction for any cash or investments placed in the fund is immediate, so you can front-load two or three years’ worth of giving into one year. You can also claim a charitable deduction for a year, when you intend to itemize instead of taking the new standard deduction. You can direct grants from the fund to any non-profit organization you choose and whatever timeframe you like.

One child is a smashing success, the other is a starving artist. Sometimes the disparity of incomes between children, can be a result of choice or abilities. Nevertheless, you may not wish to leave the exact same amount to both kids. One of your children might have a disability and needs special planning. It’s your call and it’s also your call whether to share all the details with your kids. Logic prevails in some families and there’s no drama over these kinds of decisions. Less information about their inheritance is better for others. You could insert a no-contest clause in the will to forestall any litigation.

You have visions of generations enjoying your summer cottage. Sometime this works out.  However, sometimes the kids have no interest in the property and just want to sell it. Have that conversation first. If no one wants it, sell it when the timing works for you. If one kid loves the house and the others don’t care, work out the numbers so the house stays in the family, but the child receives a smaller percentage of assets. If the family wants to keep the house, work with an estate planning attorney to create an LLC (Limited Liability Company) and give shares to the kids. You’ll need an operating agreement, including how the cost of maintaining the property will be handled and what happens, if someone wants to sell their share. Define the universe of eligible owners as lineal descendants and not spouses, to forestall an ownership battle in the case of a divorce.

Talk with an experienced estate planning attorney about how to give away your assets in a way that will make sense for your family and gain useful tax benefits for your estate.

Reference: AARP (May 1, 2018) “How to Give Your Money Away”