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Planning for Your Special Needs Family Member

If you are caring for a family member that has a disability, you worry about the future.  What happens when you aren’t there anymore to care for him or her?

Have you done the right kind of planning?  Or, have you put it off?

Now is the time to start planning for your disabled family member’s future.  You and your family should consider the following issues:

  • Where will my loved one live when I’m no longer here to care for him or her?
  • What financial needs will he or she have in the future?
  • How can we assure that our loved one will have the same quality of life as he or she does now?
  • Who will administer his or her funds? How do we assure that the funds are managed and used to the best advantage?
  • How do we make sure that Social Security and Medicaid benefits won’t be affected?
  • If we leave an inheritance, what impact will it have on his or her benefits?

The way to make certain that your loved one is well cared for when you are no longer here is to establish a Special Needs Trust.

This trust can provide for the “extras” that are not available when an individual relies totally upon public benefits.  While the funds cannot be used for food or rent, there is so much more that you want your loved one to have.  These funds can bridge the gap between the basic, bare bones existence that is possible on public benefits and maintaining the current standard of living.  It will provide funding for dental and eye care that is not covered by Medicaid.  It can also provide funds for entertainment and travel expenses.

A Special Needs Trust can provide the right future for your loved one, while providing you with peace of mind.  You will be assured that the life of your loved one will be enhanced and enriched, in the way that you would do, but when you are no longer here.


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Do Millennials Really Need to Worry About Estate Planning?

You are in your 20’s or early 30’s.  Why would you need to think about estate planning?  You have more debt than assets.  If you have a house or car, the bank owns more than you do.

Well, you do need to think about estate planning.  Any assets that you do own need to be planned for.  If something untimely happened to you, who would receive these assets?  If you are unmarried and do not have any children and If you were to die without a Will, your parents would in all likelihood receive all of your assets.  If they are not alive, your assets would be divided equally among your siblings.

If you have children but are not legally married, who would handle the money for your children?  If you and your children’s mother were both to die, who would care for your children?  If you want to have any input into this circumstance, you need to execute a will.  You can name your beneficiaries and the persons who would be in charge of your estate.  If you have children, you could name the guardians and conservators for those children.

So, is that all you need?  No.  You need also to plan for a disability.  If you were ill or injured and unable to make decisions for yourself, who would do that for you?  Without anything in place, your family would be forced to go to Probate Court to gain Guardianship and Conservatorship over you.  This is costly and time consuming.

The better plan is to execute a Durable Power of Attorney and Patient Advocate Designation (Durable Power of Attorney for Health Care).  This would enable the individuals who you trust to step in and pay your bills while you were disabled.  They also could make medical decisions to permit you to receive the best medical care.

When should you do this?  Now.  You may not need these documents for years to come – or – you might need them tomorrow.


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Icy blast provides planning opportunity!

There is little good to say about our current icy spell.  The single digit temperatures with below zero wind chills, combined with plenty of snow make getting out difficult and undesirable.

Why not use this time as a planning opportunity?

This is the perfect time to get your finances and documents organized and up to date!  What should you look at?

  • Life Insurance – do you know where the policies are? Do you know who your beneficiaries are?  Check each policy to make certain that these are correct.
  • Retirement Funds (IRAs, 401Ks) – again, have you named the correct beneficiaries? Double-check to make sure that these are up to date and correct.
  • Estate Plan – do you have one? If not, it is time to get started.
  • Will or Trust – if you do have one, take it out and re-read it. Does it accurately reflect your desires and relationships today?  Are the agents you selected in the past the ones that you want today?  Are the beneficiaries correct?  Are the amounts for each still right?
  • Disability – do you have a Durable Power of Attorney? A Patient Advocate Designation (Power of Attorney for Health Care)?  Do these reflect your current thinking?
  • Where is all your paperwork? Is all of this information scattered around in different drawers and locations?  Do you even know where it is?

Once the information is all accumulated – organize it.  Put it all together in one location.  Include life insurance policies, all retirement plans, retirement fund statements (year-end), bank account statements (year-end), investment account statements (year-end), deeds, trusts, wills, durable power of attorneys and health care directives.

If you don’t have an estate plan – start one now.  Determine, with the assistance of an attorney, what will meet your needs.  Then take the steps to get it done.

By the time the balmy breezes of spring arrive, your task will be complete.  You will have real peace of mind knowing that all of your affairs are in good order.


Estate Planning at the Holidays?

This is an issue that really gets shoved to the back burner at the holidays. After all, it does not sound very merry to think of the issues that surround estate planning when what we want to do is be happy and joyous. Additionally, holidays bring enough bills, right?
The holidays are a time when we purchase lots of gifts for our family – toys for the kids, things for our parents, siblings and spouses. How many of these items really get used and treasured? How many toys are played with for a few days and then are tossed to the side? How many of the sweaters and ties are pushed to the back of the closet – seldom used.
The bottom line is that many of our holiday purchases are not items with real value.
Consider that if some of your holiday gifting budget were to be spent on something with real, sound value for your family – something that would protect your children and spouse. Then estate planning at this time of the year makes a lot of sense.
Get a jump on your New Year’s Resolutions. Move estate planning to the top of the list. For a real value – for true peace of mind – for protection and security for your loved ones.


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Do Your Parents Have an Estate Plan?

This is a very difficult topic.  Some families discuss financial and medical issues with ease.  Many don’t.  If your parents are the ones that don’t, it is still important to get the ball rolling.

First of all, if there is more than one child, this should be done in a family context.  It is not a good idea for one child to approach his or her parents alone.  It can be perceived by other siblings as lobbying for favors.  It can be seen by parents as one child being greedy.  The best way to do this is by all of the siblings being present during discussions such as these.

It might be good to start with the topic of medical directives, since this does not deal with money.  Ask your parents if they have medical directives or power of attorneys in place.  If they don’t, you might want to encourage them to do so by letting them know that if they were to get sick and unable to speak for themselves, the current regulations would not permit the hospital to speak with the children concerning any medical information.  Since it is a good idea for every member of the family to do this, it could be a good family project for all members to take the time to do medical directives and appoint patient advocates.  In that way, your parents may not feel as if they are the target of an unpleasant conversation.

Next, gently approach them about the issue of Wills and Trusts.  If one of the children has already taken that step, it might be a good idea for him or her to lead off the discussion by pointing out that he/she had already taken care of that.  Talk about what a relief it is to know that all your affairs are in order.  Additionally, you might want to raise the issue of how much difficulty a friend had when his or her parents did not have any planning in place.

Once you get the ball rolling, try to make sure that your parents address all of the following issues and discuss them with all of you.

 

  1. Should they prepare a Will or a Trust? What would best meet their needs?

 

  1. Have they checked their beneficiary designations on all of their life insurance and IRA’s or 401K’s? Are they correct?

 

  1. Who should they chose as agents under their documents? Are some of you less willing than others to assume that responsibility?

 

  1. How should their personal property be distributed? Perhaps it would be appropriate for each of you to list several things that you really would like to have.  That would give them a starting point for a distribution list.

 

  1. How would they like to spend their golden years? What are their goals?  What are their concerns?  Do they worry about having the financial assets available to live out the rest of their lives in comfort?

 

  1. Do they have long term care insurance? If they don’t, what would a plan be if they were to need skilled nursing care?  They may believe that they can take care of one another, yet that may not be a practical plan.  Who will care for the survivor when he or she is not able to care for him or herself?

 

  1. When do they plan on downsizing their living? Would they consider selling their home and moving into something smaller and easier to care for?  Would they object to assisted living when the time comes?

 

  1. How would they feel comfortable deciding when they could no longer handle their own financial affairs? Would it be upon the recommendation of a doctor? Or two doctors?

 

  1. Where are all of the documents kept? Are they all in one place?  This is important not only at the end of life, but in the event of a medical emergency.

 

If this is approached in an open and friendly manner, the discussion can benefit not only your parents, but all of the children as well.  You will learn about your parents’ goals and wishes.  They will be comfortable knowing that you understand these goals and desires.


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Should you name your parents as beneficiaries?

For most people, this idea might seem unusual.  After all, in the general scheme of things, parents will die first.

For individuals with minor children, this should not be a strong consideration as the primary focus of your estate plan is to provide for your children in the event that you are no longer here to care for them.

For people whose children have grown, or for individuals without children, this issue may deserve a stronger consideration depending on family dynamics and economics.

If your parents are individuals without significant assets and are “getting by” on their social security and a small savings, they may run out of assets in the event of a lengthy medical event.  Additionally, while those without assets can apply for Medicaid for Nursing Home costs, that doesn’t hold true if an elderly parent needs assisted living.

If the time comes that your parents can no longer live independently at home, but are not eligible or appropriate for a skilled nursing home care, they may require assisted living.  The problem is that this is a pay as you go system.  What if they do not have the resources to afford assisted living?

If all of their children are alive and doing well, the children may decide to assist their parents financially by each contributing a monthly amount, thereby permitting the parents to live in assisted living.  What happens, however, if you are contributing to your parents’ assisted living costs and your predecease them?  Or perhaps, they are not yet at the point of needing assisted living, but could very well require it in the future.  If you die first, they will not have the support they may need when the time comes.

This could be a good reason to include your parents as beneficiaries in your trust.  The money could be structured so that it would include assisted living expenses during their lifetimes; however, the money if not used during their lifetimes would then flow to other beneficiaries.

This is a concept which should be discussed at a family meeting of all the siblings.  The key is that with proper planning, your parents’ needs will be met while you are also addressing the needs of your own family.


What to do when someone dies

Most people are in a state of confusion when a death occurs.  What should they do?  First, second, and so on.

 

Things for the family to do:

  1. Evaluate the emotional effect of the death on the surviving spouse, children or close relatives.
  2. If necessary, decide on procedures to care for dependent children and surviving spouse, if incapacitated.
  3. Evaluate the need for security at decedent’s residence and personal property.
    • Cancel home deliveries
    • Notify post office to hold mail.
  4. Decide on funeral arrangements
    • Contact clergy
    • Discuss donation of bodily organs to an organ bank.
    • Arrange for mortuary and burial or cremation.
    • Prepare obituary for publication.
  5. Consult the family lawyer or the lawyer the family wants to retain as either a legal counselor or as probate lawyer to handle the estate’s legal and tax matters.
  6. Evaluate the survivor’s cash needs for the next three (3) months.
  7. Evaluate the existence of and need to care for or sell perishable property.
  8. Keep records of all payments for funeral and other expenses
  9. Locate original Will and/ or Trust.
  10. Locate safe-deposit box.
  11. Locate life insurance policies.
  12. Meet with the lawyer you have selected
  13. Go to the safe-deposit box with the key. At least two bank officers will be at the box opening.
    • Open the box
    • List all contents in detail on letter size paper or on a form provided by the bank.
    • Have all personals sign at the bottom of the list and date.
    • Put contracts back, except for will, life insurance policies and Trust.
    • If there is any danger of a Will contest or a conflict of interest between personal representative, family members or beneficiaries, do not go to the safe-deposit box without an attorney.
  14. Investigate:
    • Social security benefits
    • Life insurance collection
    • Union death benefits
    • Veterans burial allowance
    • Veterans benefits
    • Employee payroll benefits including:
      • Accrued vacation pay
      • Employee death benefit
      • Final wages
      • Ira Accounts
      • Retirement plan death benefits
      • Deferred compensation
    • Medical reimbursements to help pay for hospital and doctor bills.
    • Refunds on insurance or canceled subscriptions or any refunds.
  15. Check for Keogh plan/ IRA accounts
  16. Meet with C.P.A. as to tax and financial planning issues
  17. Get death certificates, usually from funeral director. Depending on the situation, may need as many as 10 – 12.
  18. Meet with life insurance agent to collect proceeds or consider payment options.
  19. Notify liability insurance agent about fire, theft and public liability insurance on decedent’s assets.
  20. Do not pay any of decedent’s debts until the lawyer you have selected discusses them with family members or with the duly appointed personal representative.

 


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  Cottage Trust – Is this the answer for your family?  Part 4

We’ve examined all of the concerns and problems associated with a Family Cottage Trust in Parts One, Two and Three.  What are the steps necessary to decide whether this is right for your family?

 

First:  Family Meeting

While you may think this is a great idea, the best practice is to gather the family for a meeting and discuss the concept.  Find out how many children are interested in keeping the cottage.

If there is interest, then begin to examine all of the “problem” areas.  Have the children discuss how they would administer the use of the cottage.  Are they willing to commit their time to its upkeep?  Their money for its care?

 

Next: Draft the Use Agreement

Can they draft up a set of rules upon which they can agree for the use of the cottage.  If they cannot agree on the rule, it is a sure bet that they will not be able to use the cottage without it becoming a source of anger and discontentment instead of a joy.

If they are able to work through the issues previously set forth, then it is time to set the agreement in writing – have them all sign it.

 

Last:  Amend your Estate Plan

Now it is time to incorporate the cottage plan into your estate plan.  Have your trust direct the trustee to distribute the cottage to an LLC at the time of your death and to have the signed agreement for its use be a part of the Organizational Agreement.

This will not be a quick process.  It will take the children time to decide what they can live with and what they cannot.  There will be (hopefully) minor disagreements which cannot be avoided.  Remember that you are still here to help mediate these disputes and bring them together for the common good.


Cottage Trust – Is this the answer for your family?  Part 3

We have examined a number of issues concerning the financing and use of the property.  It is now time to address the legal L.L.C. issues that will be put into the Operating Agreement.

If the ownership interests are distributed equally among the grantor’s children, what happens when those children pass away?  Can the membership interests only pass to blood relatives – children?  Can a person leave the interest to his or her spouse?

If one of the children no longer wants to be part of the L.L.C., what is the mechanism to handle that?  Are the other children forced to purchase his/her shares?  Could the shares be sold to individuals other than family?

If a child dies, are his/her shares passed on to his/her children?  Can the spouse have any interest in the shares?

If there are mandatory buy-out provisions, how would these be funded?

Should provision be made for ownership by grandchildren of the grantor?  Is that too far in the future to worry about?

At first, it sounds like such a romantic idea for the family cottage to be passed on for many years to many generations; however, there are practical difficulties.  It may be difficult enough for adult siblings to get along and cooperate with a family Cottage.  It will be far more difficult with the next generation.  Also, there will be more of them.  If each child has two children, that is twice as many individuals to accommodate.  There may not be enough weeks in a summer to go around.

There is often the situation where one of the grantor’s children does not have any children.  If the shares are to be passed on only to grandchildren (blood relatives), it means that those without children lose a piece of their inheritance as they cannot pass it on.

 

Disagreements

There will be disagreements – that’s a guarantee.  Each individual will see the cottage as something different.

Some will see it as a place where they can kick back and relax – do some fishing and swimming – no concerns.  Others will treasure it as a holder of their memories – a place to be preserved and cared for.

How should these disagreements be handled?  What will the process be?

 

Ultimate sale.

All good things come to an end.  At some point in the future, the family members will no longer want to own the cottage.  There must be a practical and fair manner to come to that decision.

When can the property be sold?  Will it require a unanimous agreement? Or a majority or super-majority agreement?


Cottage Trust- Is this the answer for your family? Part 2

We previously addressed the issues of Management generally and of Budgeting for the family cottage.  We will now address some other issues that must be considered.

 

Scheduling Use of the Cottage:

While money squabbles are disruptive, scheduling the use of the cottage may well be the real hot button topic.

In northern Michigan, there are only 12 – 14 good summer vacation weeks available.  Clearly, not everyone can have the week of July 4th.   Depending on the number of children that you have, it may be impossible to accommodate everyone’s desires and schedules.

What is the mechanism for deciding on the use of the cottage?  Should preferences be rotated?  Should family members share the prime weeks (presuming that the property is large enough)?

Once the weeks have been assigned, another question is whether people may bring friends with them to the cottage.  If so, how many at one time?

 

Getting it Ready and Keeping it Clean

How will the cottage get opened for the season and how will it be closed?  Is that the job of the first and last to use it?  Or is this a job that should be assigned annually?  Much of this may depend on where your children live.  It isn’t practical to expect someone who lives in California to come to Northern Michigan for a weekend simply to shut the cottage down.  On the other hand, it is not fair to make this the responsibility of the kids that live nearby every year.

What will the rule be concerning clean-up after use?  Everyone likes a clean and tidy place when they arrive.  There must be a mechanism to assure that this is the case for each of the children when it comes time for his or her use.

Will the cleaning be done by contracting with a third party for cleaning and lawn services?  Is that type of expenditure in the budget?  If it is not affordable, will the children want to use part of their vacation week cutting the grass, washing the windows and cleaning the cottage when they are getting ready to leave?

 

Renting out the Cottage

If one or more the children cannot use the cottage on his/her week(s) in a year, should it be rented out?

If the answer is yes, should it only be rented to individuals that are known to the family?  Or to anyone?

Should the rental income be put into the general fund to pay for taxes, expenses, etc., or should the individual who is not using the property be given a portion of the rental?


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Address

Linda E Wasielewski
attorney & mediator
3199 Logan Valley Road
Traverse City, MI 49684
Phone: (231) 933-0829
Email: linda@lindalawtc.com

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