Attorney & Mediator
Attorney & Mediator

Estate Planning: After the documents are signed – additional next steps – LEAVE A ROADMAP

In addition to leaving a spread sheet of information concerning all of your bills, I encourage clients to also print out a copy of the statements from their asset accounts. This is easily done when quarterly reports are received, either by mail, or via electronic format.

There should be a copy of your bank savings and checking account statements, your retirement account statements (401K, IRA, Roth), annuity statements, investment statements. It is less important to update these than it is to have the account information with your estate planning documents. This will give your agent (under your Durable Power of Attorney) or your Personal Representative (under your Last Will and Testament) a road map to your assets with the institution, account number and broker or agent.

Additionally, include a copy of all of your real property. Often times, clients have parcels of property in a different area of the state or in another state that their agents are not aware of. Make certain that this information is readily available.

In this way, your agent or Personal Representative will know exactly what you own, where it is located and the value of the property involved. It is only when an agent has this information that they can effectively do the job that you have requested.

Estate Planning: After the documents are signed – the next steps

So you have signed your Will or Trust, your Durable Power of Attorney and Patient Advocate Designation.  Are you all done?  Not yet.

First, have you made and given copies of the Power of Attorney and Patient Advocate Designation to your agents?  This is an important step.  They must sign the acceptances; further, they will need a copy of the document if they are to act on your behalf.

Next, have you checked beneficiary designations?  These override the provisions in your Will.  This can alter the distribution that you anticipated.  Make certain that these are consistent with your overall plan.  Also, make certain that there are not beneficiaries that were listed long ago that are inappropriate for today.  This includes IRAs, 401Ks, life insurance and bank accounts.

Another very important step concerns the availability of information for your agents.  If you were incapacitated, how would your agent under your Durable Power of Attorney know which bills to pay and when?  Today, with on-line banking, we do not receive statements in the mail.

Make a spread sheet of all of your bills and how they are paid.  List whether they are automatic debits from savings or checking, or automatically charged to one of your credit cards.  Are there monthly bills that are not automatic?  Are there bills that you must do on-line to pay?  If so, the account number, user name and password are critical for your agent to access the account.  These should be listed and left in a secure location.

Tell you agent where this information is kept so that in an emergency, it can be readily accessed.

If this information is on your computer, does your agent have the password to open your computer programs?

While this may seem time consuming, it is important to have all of this information in one location: account numbers, when bills are due, how they are paid, user name, passwords.  In this way, your agent can assist you effectively if you are incapacitated.

Estate Planning: 529 Plans for Children & Grandchildren

Summer is passing by at lightning speed and it’s getting closer to “back to school” time. So, it is probably a good time to think about options available for your children’s or grandchildren’s college education.

The 529 Plan is a college funding plan, sponsored by the state. It permits you to make cash contributions to this investment account and the earnings are not taxed federally so long as the withdrawal is made for qualified higher education expenses. Those would include tuition, books, supplies, computer equipment, and some room and board.

You may make gifts of up to $14,000 per recipient (or $28,000 for married couples) per year without triggering gift taxes without using any of your lifetime exemption. Additionally, 529 Plans permit you to “bunch” five (5) years’ worth of annual gifts into a single year. Therefore, you may gift $70,000 per recipient ($140,000 for married couples) in the first year. Once you do this, you may not make another contribution to the plan until year #6.

There are a few disadvantages. One is that the contribution must be cash. You cannot gift stocks or real estate. Additionally, the money will be counted if the student is seeking financial aid.

If the child or grandchild decides to forego college, the beneficiary can be changed to another child or grandchild.

While a 529 Plan may not be ideal for everyone, it merits a closer look when you are planning for your child or grandchild’s future.

Probate Matters: You are not Responsible for the Deceased’s Debts

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When someone dies, they just as often leave debts as they do assets.  The family is concerned that they will be responsible for the debts of the deceased family member.

They will receive calls from bill collectors who try to shake them down for the money – threatening lawsuits and liens.  After all, that is their job, to get as much money on the outstanding bill as they can.

Generally speaking, a spouse or child is not responsible for the debts of their deceased spouse or parent.

You are only responsible for the debt if you co-signed for the loan or obligation.  This could be true on a mortgage or a credit card that is in both names.  If you have not co-signed, you are not responsible for the debt.

Sometimes a family will find that the assets of an estate are less than the debts that the deceased had.  In such a case, the only ones who will be benefitted by opening a probate estate are the creditors.  They will divide up the assets that are left.  In such a case, you as a family member do not have an obligation to open up a probate estate.  If the creditors want to open an estate to get paid, they may do so.  It is not up to you to do it for them.

The estate of a decedent consists of the property that he or she had in his or her own name alone at the time of death.  Therefore, the jointly owned property such as bank accounts or real estate (unless it has a mortgage) will simply pass to the family members outside of the probate court process.  All that will be left will be the assets in the deceased’s name and lots of debts.

If your parents have died, before you start paying bills, evaluate whether the debts of the estate are greater than the assets available.  If you are uncertain, call a Probate attorney and sit down for an evaluation of the estate and whether you should pay the claims.

Do not be bullied by creditors and bill collectors.  Call an attorney first – you may save thousands of dollars.

Estate Planning – Did You Choose the Right Person for the Job?

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When clients are in the midst of estate planning, it is difficult to choose the individuals who will serve in the capacities as Personal Representative, Trustee, Agent, etc.  There seems to be a temptation to name your spouse and then your children in birth order.  That may be what seems fair, but it isn’t always the right thing to do.

It is more important to make the job duties and the skill set of the individual fit well.  Being the Personal Representative, Trustee or Agent under a Power of Attorney requires the ability to handle finances and property matters.  Don’t appoint an individual who has never balanced a checkbook or who is a spendthrift. If the child you appoint can’t handle his or her own money, then it is unlikely that he can handle yours.

I have observed all too often the situation where the wrong person is appointed.  He doesn’t understand what he is supposed to do and reacts poorly when challenged.  This can result in things either not getting done on time, or not done at all.  This will affect the entire family.

While you are trying to be fair, you might be placing a child into a situation where they are doomed to fail.  That isn’t fair either.  Consider your child’s money management skills, temperament, and honesty.

This can be true as well for a spouse.  I have had clients come in to do an estate plan because one of the parties is very ill, perhaps starting down the road to dementia.  The well spouse appoints the sick one as the agent and Personal Representative.  This is done so that feelings aren’t hurt; however, it is not appropriate under the circumstances.

It is important to appoint back-up agents as well.  One is simply not enough.  He or she could be incapacitated at the time you need the assistance.  Every agent designation requires at least one, if not two, back-up individuals.

When it comes to the health care power of attorney, or Patient Advocate Designation, it again is important to match up the skill set of the individual with the job.  While you want the individual to have compassion, it cannot be the individual who will be overcome with grief if you are ill.  It must be an individual who can discuss your medical situation with the caregivers and give important answers and instructions.  If you are worried that your spouse or a child could not make the tough call you would want made, then he or she is not the right individual for the job.

Choose wisely and carefully.  Do the fair thing – match the skill set to the job.

Estate Planning: Older Parents – Do a Favor for Your Adult Children

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When people consider estate planning, they think about the older individuals in the family getting their affairs in order.  The adult children want mom and dad to decide upon their estate and distribution of their assets.  The children and the parents want an orderly transition – without chaos.  The more prepared you are, the more easily the process will be.

Adult children often sit down with their aging parents to discuss these issues.  What do mom and dad want to do when they are too elderly to live alone? Where will they want to live?  Who will care for them?  Who will look after their financial well-being?

The missing piece of the puzzle here is the fact that the adult children do not take their own advice.  They do not engage in estate planning.  After all, they may be in their 40’s or 50’s and there is no need to do this type of planning, right?  Wrong.

While sitting down for “the talk”, I would encourage older parents to urge their adult children to get their estate plans in order as well.  While it is usual for all of the children to pitch in and help mom or dad if they cannot live on their own, that may not be the case for an adult child who has minor children of their own.  The situation could be more chaotic and difficult for all concerned.

“The talk” is a two-way street.  While it is important to know what mom would want if she were critically ill, it is also important for mom and dad to know what their adult children would want if they were critically ill.  There is usually less said about that – but it is just as important.

Urge your adult children to get their estate plans done at the same time.  While theirs may not be as complex, they are just as important.  It should really be a family affair.  Everyone should be ready for the future – not just mom and dad.

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.

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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.

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