You have a completed estate plan. Many people put it away and never think of it again. They believe that they are all set – for life. That’s really not true.
Life changes and so do our needs. An estate plan completed when you have minor children is not the same one you will need when they are in their 30’s and you are in a retirement mode. So, how often should you review your documents?
First, all reviews do not need to be conducted by an attorney. These are your documents and you know what your needs are. I recommend reviewing the documents every one to two years. Pull out the documents and re-read them. Are all of the facts contained in the documents correct? Are the choices that you made still the ones that you want? Are the individuals that you have named as agents still available?
If the documents are still accurate and what you want, fold them up and put them back. You are all set. If however, things have changed, it is time to make an appointment with your attorney to change the provisions that require updating. This does not mean that you will need all new documents. Often simple amendments are possible to change distribution provisions or agents.
As time goes on, it is wise to schedule a review of your documents at least every five years with your attorney. Laws change which may affect your documents. Additionally, your personal circumstances may have changed in a way that an amendment is required.
Other times, there will be triggering events that will lead to changes.
The death of a spouse
The death of a child
The marriage of a child and/or the birth of a grandchild
The death or disability of one of the agents that you have named
A large change in your finances such as an inheritance
The acquisition of multiple parcels of property
In any of these circumstances, it is wise to make an appointment with your attorney to address these issues and make certain that your documents are up to date. Then you can once again, put the documents away and be certain that you are well prepared.
Not all families have the same estate planning considerations and concerns. This is particularly true for Dual Income No Kids (DINKs) couples.
Couples or singles with children are equally concerned with stretching their money throughout their lifetimes and leaving a legacy to their children. They often assume (or hope) that if they become disabled over time that family members will step in to assist. This could mean hands on care or supervision of their care in a facility.
For DINKs, this is not the case. While they may have close relationships with nieces, nephews and friends, their primary focus is not on leaving these beneficiaries a large inheritance. If there is money or property left upon their demise, they have beneficiaries that they would prefer to leave the wealth to. Since these individuals did not have the expense of raising children, and did not have their careers modified by child raising times, they will often have more assets than the married with children couples.
For these couples, the primary focus is upon their future and the possibility that at some point, one or both of them may require assistance and care. Without children to guide that process, the selection of agents under Durable Power of Attorneys and Advocates under Health Care Power of Attorneys becomes of greater importance.
Selection of these agents is often difficult. Naming siblings seems practical – they are persons that can be trusted. It may also be somewhat unwise because an individual of the same age may predecease them, or be disabled as well. It is less likely that younger family members would provide a “hands on” approach to caring for them during a health care crisis.
For these individuals, planning for long term care takes a higher priority. They must economically provide a means to live either assisted or ultimately in a long term care setting. This might be for the survivor, or for both of them if they survive into their 90’s. The selection of health care advocates is a key.
Durable Power of Attorneys and Revocable Trusts must be carefully drafted to assure that the Agent or Successor Trustee focuses upon continuing the standard of living of this individual without any concern as to the preservation of the financial estate for the beneficiaries and heirs.
One size certainly never fits all – and that is especially true in the case of the Dual Income No Kids Couple. Careful, special planning is needed to assure that their needs are addressed for disability and old age, as well as the disposition of the remaining wealth upon their passing.
Many individuals never get around to doing their estate planning – because they are waiting for the “right time”.
For many, this is a magic age – they think they need to be over 50 or over 60 years old to need an estate plan. Others wait even longer.
So what is the right time?
For those in their 60’s through their 70’s
Now is the right time. You have acquired property and wealth. While you are hoping for longevity, it is possible that you will not live into your 80’s and 90’s. Accidental injury leading to death can take any of us at any time. A serious and severe illness could strike and with the urgency of the medical issues you may not have the time or energy to thoughtfully devote to planning.
It is also more important than ever to have Powers of Attorney in place to assist you if you are disabled and unable to handle your business or financial affairs or your medical affairs.
For those in their 50’s
Now is the right time. Your children may be over 18 but are not wise enough to handle the inheritance of your assets. You are now accumulating wealth and property – hoping to add to that wealth. While it is less likely that you will pass away, as with any age, there is no magic ball to tell us what our future brings. Longevity? or illness and disability? or accidental death?
For those in their 30’ and 40’s
Now is the right time. Your children are minors. It is important to make the difficult decision concerning their care if you are not there to raise them. Who would they live with? Who would raise them according to your values? Who would manage the money that you leave behind for their benefit?
How your children would be cared for is a far more important issue than who gets the family piano. This is not an inevitability, and somewhat unlikely. However, it is not unheard of for minor children to lose both parents. Take the time to plan for their future.
For those in their 20’s
Now is the right time. You think that you own nothing but debt. You may not have any children. So why do any planning?
It is at a minimum important for you to have Durable Power of Attorneys for financial and legal matters as well as for medical matters. If you are single, who would care for these matters if you were unable to do so? While your parents may want to assist, they could not legally do so without these important documents in place.
So, when is the right time to do estate planning? Now is the right time, young or old. Get this item off of your bucket list and achieve a peace of mind knowing that you have tied up the loose ends and planned for your family.
For many with pets – dog and cats – consideration of who gets our beloved furry friends has become an important estate planning issue. Who will care when you’re not there?
It is important to plan for a home and care for these pets. Selecting a kind and caring individual that you trust is critical to the continued well-being of your dog or cat. Yet, this is less complex than larger animals – after all, the animal can be taken into a home and cared for becoming part of a new family. The amount to set aside for food, care and veterinarian fees is fairly modest.
This becomes more complex for horse owners. While you may love your horse as much as the dog or cat owner loves their animals, it isn’t as easy as taking the animal into another home. Horses require property and a constant, daily care that is more complex and time consuming than feeding a cat.
Have you planned for a disability? If you are temporarily disabled and in the hospital, do you have someone who will step in immediately to care for your equine friends? A well-meaning friend that is not familiar with the care of horses may not understand what is required. After all, this involves more than putting out a bowl of kibble once a day.
Are there funds available to pay for supplies, food, and vet bills that can immediately be accessed? Have you appointed an individual to immediately step in and take over this financial component?
Upon your death, how will your horse be cared for? Have you discussed this issue with the individual(s) that you would select to care for the horse? Are they willing and able to assume this responsibility? A large dog may only live for 10 years while a horse may live to 20 or 25 years.
How will the financial responsibility be taken care of? If you leave a stipend in your Will to the individual, the money may be distributed; however, there will be no continued oversight after your estate is closed. There will be no legal assurance that the caregiver will actually continue to care for your horse.
You may want to consider having a trust in which the trustee is able to pay for the ongoing costs associated with the upkeep and care of your horse so long as it is cared for. If the ownership is transferred to yet another individual, the trustee can then continue to make funds available to that new owner.
Who will care when you’re not there? Responsible loving owners of horses as well as dogs and cats must plan for the care of their beloved friends if they are not available due to disability or death.
There is an increasing amount of litigation at worst and family disharmony at best when it comes to carrying out the estate planning directions of parents.
There are fights over the division of personal property
There are fights over the division of the money
Family cottages become a matter of conflict instead of joy
Family businesses disintegrate becoming worthless
There is bickering over running the family farm
Why is there so much discord? It really boils down to one central issue – the parents do not have “the conversation” with their family concerning the division of their estate and their outlook on the future use of their assets.
This is a difficult subject because there are many who were raised in an era when these were not issues that were discussed with the family. They may not believe that their estate plan is any of their children’s business. While the right of parents’ privacy is important – this approach leads to the problems outlined above.
Personal Property. If you do not ask your children what they want, you may be unaware that several desire the same items. Therefore, when you state in your Will or Trust that the personal property is to be divided equally among the children, it is a recipe for disaster.
The flip side of this coin is that items you treasure may not be wanted by your children, grandchildren or other family members. Leaving them items they don’t desire will only make them feel guilty or resentful.
Money. If you are not dividing your monetary assets equally, let your family know in advance. If your children are not saving for their retirement because they believe that they will inherit substantial sums, but you are not leaving them substantial sums, they should be put on notice now.
If you have made loans to one of your children, commit this to writing and address it in your estate plan. Will the loan be forgiven at your death if it remains unpaid? Or will it become an advance upon that child’s share?
Family Cottages. Your memories of all the happy times you spent at the cottage with your children may not be shared by them. You want them to keep the cottage so that it will provide wonderful summer memories for them and their children. Have “the conversation” – ask them if they want to keep it.
It may be that some do not want the cost and responsibility of a vacation property far from their home. They may not be able to afford their fair share of the cost. They might not want to take their annual family vacation at the same place every year, yet if their share of the cost and upkeep consumes their vacation budget, they may not have any choice.
Family Businesses. Have you made a plan for your retirement from the business? Who will continue to operate your business? You may assume that since your children have worked there in the past that they would be happy to come home and run the business. This may not be a part of their plan.
If one of them is working in the business, have you put together a plan for them taking over the management and operation? Have you taught them all they need to know by giving them more and more responsibility? If you haven’t, they may be ill prepared to operate the business. It is possible that they are happy to work there but don’t want the responsibility of owning and managing the company. Again, you don’t know if you don’t ask – have “the conversation”.
If you have more than one child, how will passing on the business work? Are they all to be equal owners? If some work the business and other do not, this will be another recipe for disaster. Alternatively, if one child is given the business to own, are there sufficient assets for the others?
Family Farm. Many of the same observations concerning the family business apply to the family farm. Additionally, remember that the children living in proximity to the family farm may assist you on weekends and at critical times each year, not because they love the farm, but because they love you. They know that it has become more difficult to get all of the work done as you have gotten older so they frequently give you assistance.
It important to have “the conversation” with them. Do they really want the farm? Is it a part of their plan to operate it?
Finally, when having “the conversation” try to be open to your children’s opinions and feelings. Allow them a guilt-free environment to really tell you how they feel about these issues. Try to be non-judgmental if they do not want certain assets or businesses. By knowing where your family stands on these issues, you can craft an estate plan that will peaceably and smoothly transfer your wealth and property to your family when you pass away.
Avoid the litigation, the family squabbles and the possible splintering of your future generations over your estate – have “the conversation”.
By now, you have heard your friends and neighbors talk about Lady Bird Deeds. You are wondering if this is something you need to investigate.
First, many individuals think it is a simple easy way to do estate planning by executing a Quit Claim Deed putting other family members on their property. It may be quick and easy, but it isn’t a good idea.
If you make others joint owners of your property, you are giving them valuable property rights. They become a co-owner with you. So, what is the downside?
As a co-owner, their creditors could pursue your property. For instance, if your co-owner (usually a family member) got into an automobile accident which exceeded his or her insurance, the injured parties could come after your property.
Next, once an individual is a co-owner, you need their permission to sell your property. This can become a genuine problem for parents who desire to sell vacation property. The kids who are co-owners decide that they do not want to sell the family cottage. This stops the sale.
The better approach is a Lady Bird Deed. This transfers real property from the owners to themselves and others as joint tenants; however, they retain a life estate and the right to sell. This fills the gaps outlined above. The owners still have control over the property and the right to sell it until their deaths. Since they have the right to sell, a co-owner’s creditor is unable to force a sale of the property.
The execution of this document also eliminates the need for the property to go through Probate Court. When the original owners of the property pass away, the property is owned by the other joint tenants by operation of law, immediately upon the owners’ deaths.
This may be an important tool that you need in your estate plan
Estate Planning is on your “to do” list – you know that the cold days of winter are the right time to get this done. But, its zero outside with a wind chill that is below zero and the roads are icy – you don’t think it’s wise to make that appointment because the driving is too dangerous.
Should you just leave this matter to the spring when the travel is easier?
No. We live in an age of really great technology and there is always the U.S. Mail and the telephone. Make an appointment for a telephone interview or skype if you like – we can discuss all of the issues that are important to you and make some important decisions. You can fill out a questionnaire and return it, or discuss the information over the telephone. You might email or fax documents to me.
You can receive your draft documents via email or U.S. mail. After your review, we can discuss them via telephone.
Finally we will meet face to face for signing the documents – selecting a good day to come in. One trip – not three.
There are ways around this freezing weather. Don’t put off your important decisions to another day. Use these days to get your estate planning done. When spring comes, you can use it for other important matters – like enjoying the warmer weather.
This is a difficult family topic. When there is a family business or farm and one or more of the children are going to participate and take over – there are difficulties which are usually due to miscommunication.
The children would like to do more – really get involved in operating and managing the operation. They know they need more skills and need to learn more about the customers, the vendors and marketing. The problem from the kids’ perspective is that dad and mom don’t seem to want to teach them and bring them in on the big decisions. The kids feel awkward. They don’t want to appear to be too pushy – if their parents thought that it was the right time, they would be including them in the decision making. The kids don’t want to offend their parents – they don’t want it to appear as if they are trying to push their parents out of the way.
The parents wish that the children would do more. They don’t seem as if they are really stepping up and learning all they need to know in order to run the business. Maybe they really aren’t that interested or committed? The children are adults so the parents don’t want to harp or tell them what to do.
The big problem here is not that the children are not committed. It also isn’t that the parents are reluctant to let go of some of the responsibility. The real issue is communication. Everyone is being too careful not to offend.
What is needed is a guided discussion to get a plan together on the transition of the family farm or business.
Find out what everyone’s goals are. When and how are the parents planning on retirement? When do they want to let go of the reins? When were the children planning on taking over?
Find out what is needed. What skills do the children believe that they need prior to assuming leadership? What do the parents think the children need to learn?
Put together a plan to implement the goals. When will new skills be taught or acquired? How will this be done? What is the time table?
The Transition. When and how will the parents start to let go of the management and decision making? What will their role be then? If the children want to make changes in the business, will that be done with or without the acquiescence of the parents?
These steps are necessary prior to changing your financial and estate plan. Once these steps have been taken with the goals and plans in place, the estate and financially planning steps will be much easier.
Do you know who your beneficiaries are? How your assets are titled?
Most people assume that their accounts are titled properly and that their beneficiary designations are correct. Not necessarily so. You may have opened accounts or purchased insurance years ago. The designations and titling of these assets is vitally important.
Lots of former spouses are still named as a beneficiary on accounts. This could lead to a really unfortunate distribution upon your death.
If your spouse has passed away, it is important to change the beneficiary designations on your retirement assets, bank accounts and life insurance policies. It matters. If you have not named secondary or contingent beneficiaries, your heirs could have to open an estate for your deceased spouse in order to receive the distribution of retirement benefits or life insurance proceeds.
Next, it is important to understand that beneficiary designations and transfer on death provisions trump what you have stated in your Will or Trust. This could lead to unwanted results. You may want your estate to go equally to all of your children. If you have listed one child as the beneficiary on your life insurance or IRA, or if you have made them joint on your checking and savings account, the money will not be divided equally. He or she will receive the distribution from the IRA and/or life insurance and then will divide the rest of the estate equally with his or her other siblings.
You may believe that the one child will “do the right thing” because they “know what you want.” Maybe. But maybe not. All it takes is a serious disagreement among your children to change this.
Make certain that your beneficiary designations are up to date and correct. Don’t leave it to chance – check it out.
Make certain that your division of assets is not altered by your beneficiary designations – make certain that your Will or Trust distribution match your beneficiary designations and visa versa.
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.