Attorney Sandy Ard, of the Ard Law Firm, PLLC, writes about Estate Planning, Medicaid Planning, Veterans Benefits Planning, Wills, Trusts, Living Trusts, Pet Trusts, Special Needs Planning, Asset Protection, Elder Law, Farm Trusts and Non-citizen Spouse Estate Planning, Probate & Estate Administration, Business Succession, and Family Business Planning in Houston, Texas, and the surrounding areas.
"Keeping The Family Together: Planning Ahead To Avoid Family Strife Later On" is a timeless article from the July 18, 2014, edition of Mondaq. It recommends several notions to not just benefit your children and other heirs—but also keep them on speaking terms after you pass.
Don't Hide Your Estate Plan. You do not need to share every detail of your will or the rest of your estate plan, but you should let them know what to expect before you pass away. It gives them a chance to ask questions, avoid surprises, and time to accept your reasoning.
Treat The Kids The Same, Even If You Have A Black Sheep And A Prodigal Son. The Mondaq article warns against disinheriting one child, since they might sue and this can trigger delays, expenses and attorneys' fees. All of that lessens the estate for all of your beneficiaries.
Watch Out for Conflicts of Interest When Selecting Executors and Trustees. The article points out that the estate planning attorney who drafted your will or trust may have a conflict of interest if they also are your executor or trustee. This is particularly important to look at if he or she is also a fiduciary for other family members who are also beneficiaries.
Make Periodic Reviews of Your Estate Plan. Your situation as well as those of family members will change over the years. In addition, federal and state tax laws continue to be modified with every new administration or legislature. Schedule regular meetings with your estate planning attorney to look at your plan to see that it's current and complete.
Anticipate Possible Changes in Family Circumstances. As you set out specific bequests, think about which of your family will be able to hold onto an asset, and whether you should set up a trust to help them do so.
So what is the Golden Rule of Estate Planning? Maybe it is to start now, get the information you need to make smart decisions, and work with an estate planning attorney.
Reference: Mondaq (July 18 2014) "Keeping The Family Together: Planning Ahead To Avoid Family Strife Later On"
The Wall Street Journal article "Creating an Estate Plan Around a Prenup" chronicles how an estate planning attorney worked with a client to ensure the needs of the client were addressed. After thoroughly understanding the estate planning goals of the client, the attorney created a plan that provided for the client’s family after he passed away. This plan preserved the terms of the prenuptial agreement that kept his wife from taking his assets and business in a divorce. The adviser suggested using family limited partnerships. This type of entity gave the client a way to provide for his wife with income from the business—without giving her control of the enterprise.
Under the family limited partnership structure, the client had 99% limited partner ownership in the two companies. When he died, his will would set out some of the limited partner interest to his wife. These shares would be given to a testamentary trust with the wife as trustee and beneficiary. As a result, the wife would receive income from the business through the trust; however, she would not get a controlling stake in the company.
The estate planning attorney created the partnerships and transferred ownership of the business assets into them. The WSJ reported that the client and his wife have been very happy with the results for more than 15 years now, with both a strong business and marriage.
Reference: Wall Street Journal (July 11, 2014) "Creating an Estate Plan Around a Prenup"
What estate planning should newlyweds tackle first? A recent Motley Fool article, titled "Estate Planning for Newlyweds," says to start small and change your account beneficiaries. This should be automatic now that you have a spouse. Talk it through, weigh the options and your preferences, and then update all of your insurance policies, any existing will or trusts, bank and investment accounts, and your 401(k) and other retirement accounts.
The two of you should discuss how you want your assets to be divided in the event that one or both of you passes unexpectantly. When you are comfortable with your decisions, talk to your estate planning attorney and create a will that documents your intentions.
While you are in your estate planning attorney's office, ask him or her to set up a durable power of attorney, so that your spouse will have the ability to handle your individual financial affairs if you are incapacitated. The original article also suggest that you check with your banks and financial institutions to see if they require their own forms—some are hesitant or will not recognize your spouses' authority unless it is their “approved” paperwork.
You should also have an advance medical directive, so that your new wife or husband understands what you would want to occur in specific medical situations. Also, be sure you nominate each other as health care proxies. These two documents will set out your medical care preferences and allow each of you the authority of power of attorney to access medical records and make health care decisions.
The Motley Fool article discusses several other estate planning matters newlyweds should discuss. Once the two of you are one—as far as your estate planning ideas—sit down with an experienced estate planning attorney and draft all of the necessary documents. Planning for the worst, the article cautions, will give your family security, solidity, and protection.
Reference: Motley Fool (July 13, 2014) "Estate Planning for Newlyweds"
A recent MarketWatch article, titled "How a parent’s health-care bills could hurt you," says there is a lot of confusion over entering into an agreement for long-term care for a family member who is cognitively impaired.
According to the article, you should be aware of the issues when signing your name in lieu of your parent’s on a contract without adding any clarifying language. In most cases, you are acting as a guarantor who is personally responsible for the payments.
This can come up when dealing with a family member's hospital and doctor bills which are not covered by insurance. Typically, the patient or patient’s representative signs a form stating that they will be responsible for such expenses before the treatment begins.
Without noting your signature, you could be responsible for some hefty bills—monthly fees at a retirement facility or nursing home can be $10,000 or more.
That might not be what you signed up for!
Estate planning and elder law attorneys will counsel you to set up a “durable” power of attorney. A durable power of attorney lets a trusted individual (in legal terms "the agent") retain power of attorney even when the family member who signed the document (the “principal”) is now incapacitated.
For example, as the named agent for your family member on a financial power of attorney document, you have access to his or her banking to pay the retirement or nursing home on their behalf. Again, you need to remember one thing when signing a contract and agreement; otherwise, you will be personally guaranteeing the payments.
The MarketWatch article recommends you separate your responsibility as power of attorney from the financial responsibility of your family member by signing their name as the responsible party on the contract, and after that write, “by [your name] as power of attorney,” followed by the date.
So it would look something like this:
by Alvin Hancock as power of attorney, July 22, 2014
Do not get into trouble and put the care of your family member in jeopardy. Talk to an estate planning attorney to set up a durable power of attorney to help you take care of your family member and protect your money.
“An estate plan is not a time capsule to be opened and dissected at some distant point in the future," according recent Forbes article. The article, titled "Why You Should Update Your Estate Plan," explains that many ultra-wealthy individuals have a valid estate plan in place, but have not reviewed and updated their plans after they first signed them. In some instances, an outdated or insufficient estate plan have caused disputes between heirs. Unfortunately, many of these situations are even more tragic because they are usually avoidable, especially when professionals can facilitate difficult conversations.
The original article notes that family members will often shy away from the estate planning process because it typically means some tough discussions. However, the article reminds us that this can be a wonderful opportunity for your estate planning attorney to educate family members on the benefits and risks of planning while helping to bridge family divides. In fact, the "key is to evaluate the impact on the estate or wealth transfer plan of all major decisions and life events as elements of a broader generational family wealth strategy." As a result, this can simplify an ongoing process and reduce the possibility of damaging legal disputes on the disposition of family assets in the future.
The easiest way to decide when to review your estate plan is: (i) when there is a meaningful change in your life; or (ii) every few years just to make sure you are up-to-date with the changing tax laws. Contact your estate planning attorney to make sure your estate plan is current and your wishes will be carried out when the time comes.
Reference: Forbes (July 3, 2014) "Why You Should Update Your Estate Plan"
Kim Woolen Campbell, Glenn Campbell's wife, recently told The Associated Press via email that the country and pop music legend was suffering from his Alzheimer's disease to such an extent that he needed access to medical care 24 hours a day. The 78-year-old singer's doctors encouraged her earlier this year to discontinue care at the family's home and move him to a care facility. He has been suffering from the degenerative neurological condition for about three years.
This move was publicly criticized by Mr. Campbell’s eldest daughter, Debby.
As reported by The Associated Press, in an article titled "Glen Campbell's wife defends decision on long-term facility care," Kim Campbell wrote in the email that it was "crushingly sad" to see her husband's health deteriorate "but indulging those feelings does not help him."
His daughter Debby Campbell told Country Weekly in June that she was opposed to the decision, and that she did not feel Campbell's family was spending enough time with him in Nashville.
No doubt with a star of this magnitude, the details will come out about how he planned for his long-term care. You should take some time to talk to your own estate planning and elder law attorney to cover just such circumstances.
Reference: Associated Press (June 19, 2014) "Glen Campbell's wife defends decision on long-term facility care"
A recent article in The Star-Ledger, titled "Your Money: The truth about 'power of attorney' documents," provides helpful information about the essential subject of powers of attorney and their uses.
A "Special Power of Attorney" grants an individual the authority to perform a specific act or acts. Just like the name implies, this authority is limited to the special powers listed.
A "Durable Power of Attorney" expressly provides that it is not terminated by the grantor's incapacity. In contrast, a "Non-Durable Powers of Attorney" is terminated if the principal becomes incapacitated. The document can be as broad or as specific as the grantor wants, but generally it gives a person expansive powers and is used when the grantor becomes incapable of managing his or her affairs.
Similarly, a "Springing Power of Attorney" can also be very particular or expansive, but it only "springs" into effect if the principal becomes incapacitated. Caution: this type of document can create issues, as financial institutions will not recognize this POA until they receive official notification of the incapacity of the grantor.
Last, some states have a "Statutory Power of Attorney" in which case the POA need only be presented to the financial institution. The institution must honor a validly executed POA unless it believes in good faith that it does not look genuine, that the principal is deceased, that the document has been revoked, or that the principal was under a disability when he or she signed it.
Some financial institutions may not be helpful. In fact, some will insist that their particular form needs to be completed. Also, if incapacity has already occurred and an institution is unwilling to honor the POA, The Star-Ledger suggests that you bring in your estate planning attorney to help resolve the issue. Finally, the article reminds us that a POA commonly only covers financial matters, and that a separate health care POA is needed for health issues.
Reference: The Star-Ledger (NJ) (July 1, 2014) "Your Money: The truth about 'power of attorney' documents"
What do you know about the subject of wills? You likely have heard of them, but may not have created your own. Regardless, there are some facts about wills everyone should know.
A recent Daily Finance article, titled "4 Things You Didn't Know About Wills - But Should," provides a few of those facts to bear in mind whether you have a will already or may create one someday.
Even in the Electronic Age, You Must Still Follow the Formalities. The laws covering wills are some of the oldest we have in this country. The ownership and postmortem transfer of property has been going on long before the United States was around. One frequent complaint is that the laws and the courts are not keeping up with technology. Even with our Smartphone and eSignatures, creating a will that is going to be found valid still requires that you follow the often-antiquated laws precisely. In most states, it is critical that you sign the will in the presence of witnesses, who will have the duty of testifying in probate court after your death to say that the will was validly signed (e.g., some states require the witnesses' signatures to be notarized in order to have a “self-proving will,” thereby eliminating the need for the witnesses to later testify as to the will’s validity).
A Will is a Good Idea Even if You're Poor. Many young people, and those who believe they are of modest means, do not think they need to create a will. They think that with little or no assets, they do not have anything to leave. However, if you are a parent of any minor children, many states provide that your will is the place where you appoint the person you would like to take care of your children in the event you pass away. If you do not choose a guardian, then a judge will decide.
If You Don't Update Your Will, the Law Might Do It for You. When major life events occur, like marriage, divorce, the birth of a child, or the death of a close family member, people many times fail to update their wills and other estate planning documents. This can result in undesirable results in some circumstances. In light of this, the laws in some states may “rewrite” your will for you … even if you deliberately choose to do nothing.
Your will is an essential and vital legal device to ensure that your property passes to the individuals you intend to inherit it after your death. By heeding these simple reminders and others from an experienced estate planning attorney, you can use your will to more effectively avoid mistakes that can cause huge problems down the road.
Reference: Daily Finance (June 28, 2014) "4 Things You Didn't Know About Wills - But Should"
Almost all of us can agree that we receive a lot of free advice, to include in the financial and estate planning area. It can get complicated quickly, and some people do not know what to do. As a result, many do nothing, or they accumulate cash - which does not earn them anything. Others will start to think about planning when they are in their late 50s and early 60s, realizing that their work life is short. Panic can set in. However, a good financial planner can help clarify and prioritize your goals, and help you make the most of your money.
A recent USA TODAY article, titled “How to find the right financial adviser,” states that no matter where you stand financially, you can benefit from the advice and guidance of a qualified financial planner. The article advises that even for those with modest savings can see a significant change in their lives with a one- or two-hour session with a planner.
Many financial planners are members of professional organizations that certify them, such as the Certified Financial Planner Board, which is an independent professional regulatory organization. To earn this certification, a financial planner must meet all the requirements, including extensive study and a comprehensive test on the financial planning process, investment planning, income tax planning, retirement planning and employee benefits and estate planning. There are several other prominent financial planning designations, and you should work with your estate planning attorney, who either will have this type of certification or know of a qualified financial planner to help you design a plan to meet your objectives.
Reference: USA TODAY “How to find the right financial adviser” (July 9, 2014)
According to a recent explorenews.com article, titled "Six reasons to take a fresh look at your estate plan," you should review your estate plan every few years to see if it needs updating. Things change over time, such as new tax laws and your grandchildren total. Whether you have a simple will or a revocable living trust, the article points out several reasons to re-evaluate your estate plan regularly.
New family members and friends. There might be a new person in your family or a friend whom you would like to add as a beneficiary, trustee, or inheritor. There may be some new grandchildren and in-laws, or charitable organizations in which you have become active.
Former family members and friends. Perhaps you want to exclude someone currently in your will or trust, like an ex-spouse or ex-in-laws.
Your choice of executor or co-trustee. The article suggest that you consider the current age, geographic location, abilities and skills of the executor and/or co-trustee you originally chose, and whether those individuals are still the best candidates. For example, you may want to change your named executor or trustee if he or she is in their mid-80s.
Assets. Do your will and/or trust still apply to the assets you currently have? If your assets have increased or become more complex, you might want to look at adding a trust, drawing up a more detailed will, or consulting with an estate planning attorney to better evaluate your circumstances.
Values. There is more to estate planning than just finances. Evaluate the decisions you have documented regarding your health care and Advance Directives, such as any Do Not Resuscitate (DNR) order. Think about whether you would like to make any changes.
Tax law. A change in the federal tax laws may require updates to trusts. Estate planning attorneys generally recommend that you should have a health care power of attorney and a financial power of attorney.
Once you update your estate plan, tell your family what documents you have drawn up and where they can find them (such as at your attorney’s office). You need not tell them what is in your will or trust, but someone needs to know it exists. Keep your living will somewhere easy to find, and give copies to appropriate family members, along with copies of your health care and financial powers of attorney. These extra steps will ensure that your wishes are put into action when needed.
Reference: explorenews.com (June 25, 2014) "Six reasons to take a fresh look at your estate plan"