Attorney & Mediator
Attorney & Mediator

Estate Planning: When was the last time you updated your Estate Plan?

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It was years ago when your children were small.  You went to an attorney’s office and had a Will drawn up.  All is well, right?

No.  You must update your estate plan as your life progresses and changes. If your estate plan is over 10 years old, it is out of date. You can’t lock the documents away forever and never think of them again.

You should personally review them annually to be certain that there are no changes that need to be made.  When there are changes, you should make an appointment with your attorney to update the documents.

First, your children are not minors any more.  They don’t need guardians or conservators.  Maybe you have grandchildren to think about.

Perhaps the individuals that you selected as your personal representatives are no long appropriate (or living).  Your assets are much different today.  There may have been marriages, births, deaths, and disabilities of family members.  You might have received gifts or inheritances that need to be addressed.

The type of estate plan that you set up when your children are young and you have few assets is very different from the one that you set up when your children are young adults or when you are preparing to retire.  Your assets have changed; your circumstances have changed; your life has changed.

Also, the laws have changed.  In 2012 there were changes to financial powers of attorney.   There have continually been changes in the laws relating to your health care power of attorney.  We now are able to appoint a Funeral Representative.

The statutes relating to Revocable Trusts have undergone two major revisions, one in 2000 and one in 2010.  Do your trusts reflect the changes?  If they were drafted in the late 1990’s, they are very out of date.

Summer is over, the weather is cold.  It’s a great time to find those documents, pull them out, dust them off and review them.  It’s probably time to make an appointment with an estate planning attorney to review the changes that need to be made to get your estate plan up-to-date.

ESTATE PLANNING: Why would you do this in the summer?

The weather is finally warm. It’s time to hit the beaches, go out on the boat, play golf…

Why would you consider estate planning now?

First, it is still on your bucket list. You resolved to get it done this year. You shouldn’t keep putting it off.

Importantly, this is the time that families get together. It’s a good opportunity to talk – parents and children about important issues. You may find that your children want you to get this taken care of. They have heard horror stories from their friends about what happens when you don’t take the time to plan.

Shouldn’t your children know:

• Where your important documents are located?
• Who your financial advisor and attorney are?
• Who you would like to handle your estate when the time comes?
• Who you would like to be your Patient Advocate if you were too sick to speak for yourself? And what you would like to have done for you, or not done for you?
• What type of advance funeral planning have you done? And if none, what is it that you would like for yourself?
• What plan should be made for living arrangements when you cannot live independently anymore?

These are important issues and deserve careful thought and discussion.

Shouldn’t parents know:

• Which items of personal property each of the children would like? And more importantly, what they do not want?
• Whether the children actually want the family home, the family farm, or the family cottage?
• Whether the children are in a position to assist if a parent is too ill to live independently?

While feelings can be bruised when we find that our children don’t value our personal property, the farm, or the cottage, this is important to know ahead of time. This is part of a good plan.

A dialogue will solve more issues than create them. It is the surprises down the road that create friction among children and their parents. Your children may not necessarily agree with your plans, but if they know ahead of time they can learn to live with it. Learning to respect points of view when we don’t agree is an important aspect of being part of a family.
So, when everyone is sitting around enjoying a beverage, or sitting around the campfire, try talking about these issues. You may find that your children are eager and receptive to helping you plan for the future.

Divorce for Seniors – Why so much “gray” divorce?

While the national trend for divorce has declined, the incidence of older individuals getting divorced has increased.  There are a number of reasons for this.

First, divorce does not have the same stigma that it did years ago.  It is accepted by society, friends and family.

Next, life transitions are more evident as we get older.  No longer busy with jobs and children, the empty nesters begin considering what they are going to do with the rest of their lives.

Life expectancies and health has increased.  An individual who is 55 today can expect to live another 20 – 30 years.  Often, the parties believe this is too much time to spend with someone you have grown apart from.

The up-side for many older people is that divorce gives them the freedom to explore new avenues and interests.

There are several downsides that should be considered as well.  There may be loneliness in transitioning to a life without another individual at their side.  There may be the loss of friends and social networks due to the split.  Finances will be more difficult with 50% of the assets and 50% of the income.  And finally, there may be a loss of caregivers when the senior faces health challenges.

Divorce for Seniors – A gray divorce can impact women more substantially than men.

Portrait of a senior woman contemplating. Isolated on black background.

The statistics confirm that divorce is actually on the rise for people over the age of 50.  This can have a different financial impact upon the parties and particularly upon women.

First, younger couples who divorce have longer to regain their financial footing.  While they are splitting all assets and retirement plans in half, they have many years to work upon building their assets back up.   Divorce after the age of 60 leaves very little time to recover financially.

Women more often than men, have taken time off during their careers to be stay-at-home moms.  While this was a good emotional decision at the time, it means that their incomes lag behind that of their husbands.  It also means that their retirement savings are lower.

Since women statistically live longer, it means that they are retired longer.  In other words, their retirements cost more.  Yet, they have typically saved less for retirement than their husbands.  Post-divorce income for a woman may be lower than her ex-husband.  It may be more difficult to save the amounts that are necessary to have the retirement that she was looking forward to.

A gray divorce may require the woman to watch her spending more carefully and to live more frugally than her ex-spouse.  She must have a budget that realistically plans for living within her means and increasing her savings.

Women who divorce later in life may have to adjust expectations of what a retirement will look like.  While married, she may have looked forward to travel, rest and relaxation.  On a single income, much of this may be curtailed.

DIVORCE FOR SENIORS – What is different about “gray” divorce?

Portrait of a senior woman contemplating. Isolated on black background.

When younger couples divorce, it is likely that there can be child custody and support issues.  There often is less in the way of assets to divide.  Often, it is the division of debt.

For the grey divorce, it comes after years of working and accumulating, together.  There are special considerations.

Division of Assets.  While each of you will be entitled to fifty percent of the total of your marital estate, not all assets are created equal.  If you are not dividing each individual asset, but are instead dividing the value of the overall marital estate, it is important to keep tax considerations in mind.

A portfolio of stocks can have long term capital gain issues.  Were the stocks purchased at a substantially lower price?  The individual who takes this stock will take the purchase price basis.  When he or she sells, the capital gains will be due.

Retirement funds.  First, there are specialized orders that must be entered by the court in addition to the Final Order of Divorce.  These are called QDRO’s and EDRO’s.  This specialized order can divide an IRA, 401K, 403B, or SEP.  All monies in these plans are pre-tax dollars.  As they are withdrawn, income tax will have to be paid  Therefore, $50,000 in a savings account and $50,000 in an IRA do not have exactly the same value.  This must be considered when dividing the assets.

Social Security Issues.  It is not possible to have the Social Security Administration issue checks as part of a divorce.  It is, however, important to know the rules by which Social Security is paid.  For a long term marriage, it is possible after a divorce, that a spouse may actually have more income by taking 50% of his/her spouse’s monthly benefit as opposed to 100% of his/her own.

It is important to keep these unique issues in mind when going through a gray divorce.

Gray Divorce – Division of Assets

Division of Assets. 

Generally, for a long term marriage, the marital assets will be divided 50/50.  Premarital property acquired prior to the marriage as well as inheritances will not be divided if they were not comingled.

Debt will in all likelihood be divided equally as well.

This can change if there was a prenuptial agreement that was signed prior to the marriage.

Since older established couples may have accumulated more wealth than their younger counterparts, it is important to accurately value the assets and to know the tax consequences that are lurking behind every asset.  Not all assets can be treated the same.  Some have built in capital gains.  Others do not.  This impacts the value to you.

Division of Real Estate

As with other financial assets, real estate has hidden tax consequences that can impact the value to you.  The family home is usually the first place that you will start.  While you may want to keep the family home as it represents security to you, it is important to realistically evaluate whether you can afford to keep it.  Can you afford the taxes, maintenance, and utilities?  What will you have to give up in order to keep this asset.

Does the home have a mortgage?  If it does, will you qualify on the basis of your assets and income to handle the mortgage outright?

Are there other properties that you jointly own?  Are they mortgaged or owned outright?  Should these be sold to generate cash, or are you going to split them up?  Again, as with the marital home, there are costs associated with maintaining real estate that should be realistically viewed.

For vacation properties, there will be built in capital gains to take into consideration.

Inheritances and Gifts

Generally speaking, inheritances and gifts received by one party can remain his or her own property outside of the division.  This is true only if the property was not comingled with other assets.  Did you keep these assets in your own name alone?  If it is gifted property, is it clear that it was a gift only to you and not to you and your spouse as a couple?

Personal Property

There will be many items of personal property to divide.  Some may be valuable or sentimental, others are not.  It is an emotional time, and it is difficult to have perspective on the division of these items.  While it may be worth fighting about an heirloom or work of art, you should carefully consider whether it is worth the costs and attorney fees to fight over the dishes.

Estate Planning: Cross-Training for Spouses

cross-training-couple

In every household, different responsibilities are routinely handled by one spouse or the other.  This division of labor makes it easier to accomplish all the tasks that are required.  Also, we usually try to take over the jobs that we enjoy (or dislike less).

One spouse will always take out the trash or cut the grass.  The other will prepare most of the meals or do the gardening.  One spouse drops off the kids to daycare, while the other picks the kids up.

The same is true with financial matters.  One or the other spouse is usually responsible for all of the bill payments and investing matters.  Some people don’t like handling financial matters, while some may have a knack for it.  This works well until there is a crisis.

That’s why I recommend cross-training.  I’m not suggesting that the jobs be switched, but it is important that both spouses know what is going on financially in the family.

At a minimum each spouse should know who holds the mortgage to the house, approximately how much the mortgage payment is, what the property taxes are and what the monthly utilities are.  Additionally, both should know how much is in savings and checking as well as in all of the retirement accounts.  Both should know who the accountant is that prepares the annual income tax returns and both should know who the financial advisor is.

This is very important to avoid a catastrophic effect when one person is disabled or dies.  I have observed many circumstances where the widow or widower is totally unprepared to handle their own finances alone.  He or she has no idea at all as to what the bills are and how they are paid.  It is difficult to learn this new task when you are in the middle of a crisis or in shock from a sudden death.

While an estate planning attorney can assist you with the preparation of Durable Power of Attorneys for financial and legal matters, that power will not be effective nor helpful if you have no idea what needs to be paid or where it needs to be paid to.

When you are looking at estate planning and planning for your future needs, remember to do some cross-training.  It will make you both ready for whatever the future holds.

Estate Planning: End of Life Choices – not the same for everyone

When we complete an estate plan – one of the components is a Power of Attorney for Health Care.  While we may need an advocate to assist us in getting better from a severe illness or accident, it may also involve the end of life.

Not everyone makes the same choice.  Some would like to live as long as possible and use every medical available.  Others do not choose that road.

 

The following is an article about Norma – a 90 year old woman who decided to forego cancer treatment in order to go on the trip of a lifetime around the United States.

 

The end of her life will come more quickly – but it will be lived with gusto.

 

http://abcnews.go.com/US/90-year-woman-chooses-trip-lifetime-cancer-treatment/story?id=37262967

 

 

Estate Planning: So Why Haven’t You Done Your Estate Plan?

bucket-list

The number one problem I see with regard to estate planning is that people don’t do it.  Why is that?

Many feel that they do not own enough “stuff” to warrant an estate plan.  Others cannot make the hard decisions and so they put it off.  Some are simply unable to come to terms with their own mortality – they just cannot confront the fact that one day they will not be here anymore.  There are those that were raised not to talk about these kind of things.

All of these are normal thoughts that many others just like you have.  These are not the reason to put this important planning issue on the back burner any longer.  Don’t let these excuses be the reason to put this off any longer.

If you are young with small children, you need at a minimum a Will, Durable Power of Attorney and Patient Advocate Designation.  While you may not have very many assets, your Will is the only place that you can nominate the individual that would be the guardian and conservator of your children if you died.  While it is not the ordinary course for young parents to both die, it does happen.  Don’t leave your children without the protection of a qualified individual to care for them.  You are the one that knows best about this.  Don’t leave it for a Probate Judge to try to figure out.

While young, you could also become disabled.  Without a Durable Power of Attorney and Patient Advocate Designation, your family would have to go to Probate Court to have a Guardian and Conservator appointed for you.  In the meantime, your medical care would be guided by doctors and nurses who do not know what your thoughts are about medical treatment.  The process is costly – both economically and time-wise.  Be prepared.  Have these documents completed.

Some couples have difficulty when it comes to dividing up their estate or appointing their agents.  This is understandable.  If you cannot agree, you can each put down what you want.  While this is not ideal, it is better than having no documents at all.  If you do not have a Will, your property will be distributed according to the laws of the state you are living in.  You may agree with that, or not.

Remember also that these documents can be amended and changed over time.  You are not stuck forever with today’s choices.  As your opinions change, you can change your documents to reflect your new thinking.

All of us need estate plans.  We need to plan for the future – for the good and for the bad.  When you have finished this task, you will feel a weight lifted from your shoulders as you know that you have taken care of your family for a future in which you are not there.

When do we need to do estate plans?  Today.  Get it done.  Get it off of your bucket list.

Funeral Planning – How did all this start?

Lincoln

As I researched the issues concerning funerals and burials in Michigan, I found an interesting history.

Until the time of the Civil War, burials in America were all “green” funerals.  When an individual died, his or her family washed and dressed the body.  It was usually laid out upon a table or in a homemade wooden casket in the home parlor which was kept cool.

After receiving visitation from family, friends, and neighbors, there was a simple funeral.   The body was often buried upon the individual’s own land if he or she lived in the country.  If the individual was a city dweller, it was done in a city cemetery.  There were no metal caskets, no vaults and no embalming.

During times of war, those who were killed in battle were buried by their fellow soldiers near where they were killed.  The family simply received a notification that their loved one had died in battle.

Then came the Civil War.  Many of the soldiers, from the North and the South, were from affluent families.  They wanted their sons to come home for burial.  The transportation of the bodies was slow and the bodies deteriorated before they could arrive home.

In order to diminish the body’s deterioration, the bodies were embalmed.  This preserved the bodies sufficiently to permit them to be shipped home for interment.

The custom of embalming took hold in America when President Abraham Lincoln was assassinated.  His widow, Mary Todd Lincoln, wanted him embalmed to preserve his looks.  His body was taken around the country prior to burial.  America was impressed with the lifelike appearance of the body after embalming.

In the United States and Canada, embalming has been the standard for over one hundred years.  It should be noted that this practice is not common in Europe, England, or the rest of the world.

© Copyright 2015
Linda E Wasielewski, P.L.C. by awasielewski