It’s an unfortunate fact that predators emerge during times of crisis to take advantage of people. That means the COVID-19 pandemic can leave your elderly parents vulnerable in more ways than one. But even when things go back to normal, this chronic problem of financial exploitation will still be a risk.
We see it happen far too often. Maybe your parents live several hours away, or in another state or country, and someone in their community gets close to them. Or maybe they have a close relationship with a financial advisor who isn’t really looking out for their best interests. This person could even be another family member, friend, business partner, hired caregiver, professional advisor, or just a casual acquaintance.
Sometimes, when bad actors become involved with your parents’ lives and assets, it can lead not only to a loss of money, but even a loss of personal freedom. One of the worst cases of this I’ve heard of is the case of Milo, a retired veteran living in Arizona, and his son Greg, who lives in California. It all started when Milo asked Greg to help him protect his small amount of money from a family member who was “borrowing” it freely. All Milo had was a savings of $140,000 and payments of $3,700 per month from social security, a pension, and veteran’s benefits.
To help his father out, Greg applied for guardianship of Milo’s money, and the court granted it. But at the same time, without notifying Greg, the court appointed a professional financial Conservator that neither Milo nor Greg knew. The Conservator quickly set to draining Milo’s small savings, with the court barring Greg from filing any more motions.
The situation escalated even further when the Conservator decided to move Milo from his assisted living facility to a cheap lock-down facility where he wouldn’t even have access to the outdoors. This would, of course, free up more money for the Conservator to access. Before this could happen, though, Greg hurried to pick his father up and bring him back to California with him.
Now, the two are essentially on-the-run from authorities, who are trying to bring Milo back to Arizona and under the control of the Conservator. Milo and Greg are out of funds and are now trying to raise capital to mount a legal battle and free Milo from this terrible situation.
The scariest part is that Milo and Greg had all the proper legal documents in place. Sometimes, though, that is not enough to protect your parents from being taken advantage of—even to this extreme. Especially in a time of stress and confusion like the COVID-19 pandemic we are currently living in, it is vital to be vigilant and get the best possible counsel to avoid something like this happening.
This isn’t meant to make you paranoid or distrustful of the people around you, or of how your parents handle their own lives. Well, maybe it is a little. Mostly, though, it’s a call to encourage you and your family to be aware, educated, and empowered in knowing what risks are possible for your parents, and for your future inheritance.
Look out for the following “red flag” actions from influencers:
Preventing important communication between family members;
Withholding documents from other family members;
Encouraging financial gifts or economic benefits to recently met connections (usually in the same network as your parents’ “new friend”);
Naming recently met connections as attorney-in-fact (under a financial power of attorney), or as a joint owner on financial accounts, real estate, and other assets;
Giving financial advice that may not be in your or your parents’ best interests, but rather in the interests of the advisor.
We recommend you start talking with your elderly parents now about how they want their affairs to be handled. Also, you should immediately investigate any situation where you suspect your loved ones are being taken advantage of. There have been too many cases of financial abuse or inappropriate influence where family members are too late to stop the bad actor.
Ideally, you’ll know the value of your parents’ tangible assets (i.e., home, car, business, stocks) and intangible assets (i.e., generational stories, personal relationships, theological legacies). Additionally, you should be working with an advisor to help you understand how family dynamics and the law will impact you, and everything that matters to you and your parents when they’re gone.
Dedicated to empowering your family, building your wealth and defining your legacy,
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If you or your parents have a retirement account, (or any investment accounts for that matter) now is a perfect time to get connected to how those accounts are invested. While you may have outsourced all of this to a broker, which is fine, I don’t believe you should ever allow your investments to be made without your clear understanding of exactly what you are investing in as well as how and whether your investments align with your plans for the future.
Some brokers and advisors believe this, too. Unfortunately, because it takes more time to ensure you understand your investments, many brokers and advisors would rather keep you in the dark. Now is not the time (or ever, really) for you to be okay with being in the dark about your investments.
Educate Yourself If you or your parents have a retirement account, and you are not intimately connected to how those assets are being invested, it’s time to get more involved.
Log in to your retirement account or pull your last statement and look. Many brokerages select investment funds for their clients’ portfolios based on rates of growth. They’ll offer investment options based on a few tiers of growth and risk, and very often you have no idea what your assets are actually invested in.
Labels like “slow-growth” or “conservative” or “high-growth” or “income” aren’t enough to tell you exactly where your money is invested. So, what you want to do now is look at your statement, which should contain the names of the funds chosen for you, and you can go from there to do your research. Look up each of the funds on sites like Yahoo Finance to see what you are investing in, and whether you understand these companies, believe in their future growth, and want to stay invested there.
Go through this process with your parents, too. The money they have invested in the stock market is part of your overall family wealth. If it’s not there to support them through their senior years, that financial responsibility will eventually fall to you. Having these conversations with them now can be difficult, but it’s important.
If you have a broker you work with, call them now, and ask to get on a video conference. Then, have them help you review each investment, why it’s been chosen, and whether there may be better or other options for you or your parents.
Here’s the key: make sure you understand it, and don’t hang up the phone until you do. If your broker is using words you don’t understand, keep asking questions until you do understand. If you need a referral to an advisor give us a call.
With everything that is happening in the world—and with the volatility of the stock market and our current reality —knowing your options is vital to preserving the full legacy you and your parents have worked hard to build.
Dedicated to empowering your family, building your wealth and defining your legacy,
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With all the media about “digital wills”
and “online estate planning” it could be tempting to think you can do your
estate planning yourself, online. And, maybe you can. But, if you do, you need
to know the potential pitfalls. Online estate planning could be a big trap for
the unwary and end up leaving your family worse off than if you had done
nothing at all.
First and foremost, before you do any of
your own online estate planning, it’s critical to understand your family
dynamics, the nature of your assets, and what the state of California would say
should happen to your assets if something happens to you. You see, if you don’t
do estate planning, the state does have a plan for your assets if you become
incapacitated or when you die. You need to know what that plan is, so you know whether
you want to change it.
But Don’t I Need a Will and Can’t I Just Do It Online? Here’s the funny thing about estate planning: the one legal document that everyone thinks they need most actually does the least.
Every adult does need SOME estate
planning. A will is always a good idea because it says who gets, and who oversees
distributing, what you have. However, if the default law would have given your
assets to the same people you would choose and authority to the person you
would name anyway, then an online will would probably do nothing valuable for
you at all.
Even a properly drafted will does not
keep your family out of court (a will must always be adjudicated by a judge).
And if drafted improperly, it could require the person you’ve named to handle
things for you to get a bond, which is like an insurance policy. These are
expensive and can be hard to get for an executor who has less than a stellar
credit score. If your named executor cannot get a bond, it would then mean the
court would appoint a court ordered executor, and that can be costly for your
estate. This is just one of the examples of how having a will prepared online,
can create more expense for the people you love. Unfortunately, all the online
will preparation solutions I’ve reviewed don’t even mention this risk.
So, yes, you can do your own will online,
but at what potential cost for the people you love?
The Problem with Online Wills DIY online estate plans (and even many estate plans created by lawyers) usually include three or four basic documents: a will, a financial power of attorney, an advance health care directive, and possibly a trust.
But, honestly, completing these documents
without counsel is simply not enough to guarantee your estate will be executed
as simply, affordably, and effectively as you would wish.
For instance—are you sure there isn’t
some missing consideration that could lead to turmoil as your family tries to
figure it out? Did you know that most family fights don’t even happen over
money, but over lack of clarity? Have you considered all your extended family,
including stepchildren and ex-spouses? What will be done with all the personal,
sentimental items you want to pass on to your children?
And there have been far too many
scenarios where seniors, even those who had some estate planning done, get
caught in the court system or even declared incompetent, and then have
court-appointed guardians named, who then drain their accounts. In many cases,
their assets are gutted before they can go to their kids. You don’t want that
to happen to you or your family and a do-it-yourself will makes that outcome
more likely, not less.
What about making sure your family knows
what you have and where it is? An online will won’t tell them that. There’s nearly
$10 billion being held in the California department of unclaimed property; much
of it because someone died and their family lost track of their assets.
So how can you be sure you’ve got
everything covered, legally?
With online wills and DIY estate planning
docs, you wouldn’t even know what questions to ask to uncover the potential
risks to the people you love, who deserve to receive what you’ve created in
your life, without a big mess.
Think about this: do you know anyone who has lost family relationships because, after a loved one died, the family ended up in an irrevocable fight? Maybe this has even happened in your own family. I see it all the time and the consequences—both, financial and emotional—can be devastating.
And, it’s all unnecessary.
Yes, even if there are attorneys on staff
at these online companies, they don’t get to know you and your family dynamics
enough to spot the real issues that could arise. They are, instead, focused on
a one-size-fits-all solution and easy answers to complex issues.
The Kind of Help Your Family Deserves Many lawyers who specialize in estate planning often base their work on template documents. Even if they are well-intentioned, they’re working with an old, traditional system that places the focus solely on providing documents. But the documents are only as good as the understanding a lawyer has about your family dynamics, the nature of your assets, how the law will apply to your situation, and how the documents can be written as simply as possible to achieve your wishes. You need much more than just a set of four or five filled-out template documents to address all those complexities.
Your plan should include an inventory of your
assets and guarantee they are all owned in a way that will keep your family out
of court and conflict while ensuring everyone named in your plan has what they
need and understands your choices. Most importantly, you should understand
your plan and ensure that it passes along more than just your money.
Do it yourself estate planning is risky.
While it may be better than nothing, it may also be worse. And it won’t be
until after you are gone that your loved ones find out that answer.
Dedicated to empowering your family, building your wealth and defining
your legacy,
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Right now, huge numbers of people are
coming face to face with their own mortality, and realizing they need to plan
for the worst. This goes not just for those in the “senior” category, but for
all of us, no matter our age. We are facing the reality of our mortality, and
many of us are doing it courageously by taking this as an opportunity to learn
what we need to do for the people we love.
Recently I heard a tragic story from a
colleague whose client lost her fiancé to COVID-19. Because she wasn’t listed
on her fiancé’s health directive and HIPAA waiver, she could not get anyone to
update her on his condition once he entered the hospital.
Naturally, she didn’t give up trying, and
eventually someone told her that he wasn’t in the ICU anymore. She was enormously
relieved, but when she hadn’t heard anything else by the next day, she called
again for news. Finally, after being transferred several times, she learned
that the reason her fiancé wasn’t in the ICU was because he was in the morgue.
He’d passed away the day before, and no one had told her. Heartbreaking.
Nobody expects something like this to
happen, especially to people who are healthy and making plans for their own
futures. But sometimes the worst does happen, and if it does, you want the
people you love to be able to grieve properly, without leaving them with a mess
of confusion on top of it all.
Now, think about your own situation. What
will happen to your loved ones, and the assets you’ll leave behind, if you
become sick or die?
Without a doubt, you’d want to ensure
certain people in your life are informed if you have to go to the hospital and
kept up to date on your condition while you are there. You’d also probably want
to avoid them having to go through a drawn-out court process to handle your
estate after your death or save them from the fate of not being able to access
your assets if you are hospitalized. This article is all about you having the
tools you need to make sure everything is in place to do the right thing for
the people you love, just in case something happens to you.
Covering the Bases First, you need to have a worst-case scenario conversation with your family. A lot of people try to avoid conversations about death, but the fact is, we will all die. It’s better to face that with those we love so that when the time comes, we will be as ready as we can be, and so will they.
Create an Asset Inventory This is something you can get started on right now, by yourself, without the help of a lawyer. It is a great resource to leave for your loved ones so they know where to find everything that is important to you, and will be important to them, if something happens to you.
First, get out your calendar and schedule
an appointment with yourself. Set aside an hour or so to put all your asset
information in one place (we use a spreadsheet when we do this for clients):
real estate, bank accounts, retirement accounts, life insurance, stocks, bonds,
business interests, etc.
Update Your Health Care Directive This is extremely important if you want your loved ones to avoid the tragic situation my colleague’s client found herself in. Do NOT delay reviewing and updating these documents.
Your Health Care Directive should have
three parts:
A Living Will/ Medical
Directive, which states how you want decisions to be made for you.
A Medical Power of
Attorney, which states who should make these decisions if you can’t make them
yourself.
A HIPAA Release that allows
medical professionals to disclose information to your Medical Power of
Attorney/Agent.
Name Legal Guardians for Your Kids A very important thing for all parents of minor children to do is name legal guardians for your children. Think about what would happen to them right now if something were to happen to you, for both the long term and the immediate future. This is the single most important thing parents of minor children should do because it would have the greatest impact on – or leave the biggest hole for – our minor children if something happens to us.
Going Beyond Just the Basics The goal in setting up an estate plan is, ultimately, to keep your loved ones out of court and out of conflict. To do that, you must make the right decisions during the planning process, retitle assets so they are protected by your plan, and ensure your plan stays up to date for the rest of your life.
Estate planning is all about merging your
family dynamics, assets (both material and non-material), and the law into a
cohesive plan which accomplishes all that you really want to do for the people
you love.
If you are ready to face your mortality
courageously and want to ensure your family is protected and provided for no
matter what, don’t wait. Get the help of a professional (someone who’s
providing virtual planning sessions) and get started now.
Dedicated to empowering your family, building your wealth and defining
your legacy,
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It’s the
beginning of the month, and bills are coming due. If you are stressed out, it’s
important that you know where and how to get access to financial relief. Please
consider this not only for yourself, but for your adult children and elderly
parents, too, even if you do not need it for yourself.
On March 27,
President Trump signed a $2.2 trillion stimulus bill into law that will
hopefully provide some relief for many, perhaps including you. The CARES Act
(Coronavirus Aid, Relief, and Economic Security Act) sends money directly to
Americans, expands unemployment coverage, and funds loans and grants for small
businesses. So, let’s look at how you can access these funds.
Who gets direct stimulus money and how much do they get? All eligible adults who have a Social Security Number, filed tax returns in 2018 and/or 2019 will automatically get a $1,200 direct stimulus deposit from the government within a particular income bracket. This is true whether you have been laid off, are currently employed, or are currently self-employed or an independent contractor.
To get the full amount:
A single adult must have an adjusted gross
income of $75,000 or less.
Married couples with no children must earn
$150,000 or less for a combined total stimulus of $2,400.
Every qualifying child 16 or under adds $500
to a family’s direct stimulus.
If you have filed as head of household, have
dependents, and earned $112,500 when you last filed, you will get the full
payment.
This payment
is not considered income—it’s essentially free money from the government.
Therefore, it will not be taxed. It also is not a loan, so if you are eligible,
you will not be charged interest or expected to pay it back. As of right now,
the stimulus is a one-time payment.
Are there exceptions? Payment decreases and eventually stops for single people earning $99,000 or more or married people who have no children and earn $198,000 annually. Additionally, a family with two children will no longer be eligible for payments if their income is over $218,000.
If you are an
adult claimed on your parent’s tax return, you do not get the $1,200.
What do I need to do to get my stimulus money? For most people, no action is necessary. If the IRS has your bank account information already, it will transfer the money to you via direct deposit. If, however, you need to update your bank account information, the IRS has posted on their website that they are in the process of building an online portal where you can do so.
An important
note: if you have not filed a tax return in the past couple of years, or you
don’t usually need to file one, you should file a “simple tax return” showing
whatever income you did have, so you can qualify for these benefits.
You can continue to check for updates on how
to make sure you get your payment by regularly checking for updates on their
Coronavirus Tax Relief page. https://www.irs.gov/coronavirus
When will that money come through? Treasury secretary Steven Mnuchin says that he expects most people will get their payments by Friday, April 17th, though other sources say that it could take up to 4–8 weeks.
Loans (and Grant Money) for Independent Contractors If you have a business, are an independent contractor or are self-employed, you can apply for loans, and get a $10,000 grant from the government via the CARES Act.
These are
Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP)
loans. Please note that there are still elements of these loans that are not
fully understood, and we are giving our best legal interpretation based on
information from the Small Business Administration and the US Chamber of
Commerce.
VERY IMPORTANT: If you apply for EIDL right now, you can claim
a $10,000 advance that does not need to be repaid. It’s essentially a grant
that can be used to keep your business alive. You can apply for it right here: https://covid19relief.sba.gov/ Do it, now. This is applicable if you are an
independent contractor, or a self-employed business owner. Basically, if you
file a separate tax return for your business or a Schedule C on your personal
tax return, you SHOULD qualify. But please see note above that we don’t really
know how all of this will be implemented. What we do believe is that you should
get your application in for the EIDL grant money.
The PPP applications will be made through your bank, so contact your banker, if
you believe you will need the PPP loan, which will be forgiven if used for
payroll specifically in the weeks after receiving the loan funds.
You should
have the following information on hand to fill out either of the two loan
applications:
IRS Form 4506T—Tax Information
Authorization—completed and signed by each principal or owner,
Recent federal income tax returns,
SBA Form 413—Personal Financial Statement,
SBA Form 2202—Schedule of Liabilities listing
all fixed debts,
Any profit and loss statements, recent tax
returns, and balance sheets.
Here’s a bit
more information about both loan programs.
Economic Injury Disaster Loans (Above and Beyond the $10,000 Grant) Every state has been declared a disaster area due to COVID-19, and therefore your business may be eligible for an SBA economic injury disaster loan (EIDL). This is a low-interest loan that has terms that can last as long as 30 years, and can provide you with capital loans of up to $2 million and an advance of up to $10,000.
Economic
Injury Disaster Loans (EIDL) can be used to cover:
Paid sick leave to employees unable to work
due to the direct effects of COVID-19,
Rent or mortgage payments,
Maintaining payroll (to help prevent layoffs
and pay cuts),
Increased costs due to supply chain
disruption,
Payment obligations that could not be met due
to revenue loss.
Whereas the
application used to take hours, it now only takes about 10 minutes to fill out.
A couple of important notes, however:
SBA loan reps have said that they are focusing
on processing applications filed after March 30th, so if you have a
confirmation number starting with 2000, you should probably reapply.
Be sure to check the box toward the end of the
application if you want to be considered for an advance up to $10,000 (as I
mentioned at the top of the article, this amount does not need to be repaid and
so is essentially a grant!).
Coronavirus Emergency Paycheck Protection Loan The CARES Act’s $350 billion allocation to small businesses is specifically called the Paycheck Protection Program (PPP). It specifically incentivizes borrowers who maintain their payrolls, i.e., don’t lay off their employees. This program will fully forgive loans where at least 75% of the forgiven amount is used to pay employees for the eight weeks following the loan. If you lay off employees or cut salaries and wages, your loan forgiveness will also be reduced.
PPP loans can
be used to cover:
Payroll costs,
Group health care benefits during periods of
paid, sick, medical, or family leave, and insurance premiums;
Interest on a mortgage obligation,
Rent, under lease agreements in force before
February 15, 2020,
Utilities, for which service began before
February 15, 2020,
Interest on any debt incurred before February
15, 2020.
Small
businesses with less than 500 employees (including sole proprietorships,
independent contractors, and those who are self employed) are eligible. You can
apply through SBA 7(a) lenders, federally insured credit unions, or
participating Farm Credit Systems (ie your bank). Other lenders might be on the
scene soon as well, but a lot of them are currently being reviewed for approval
to the program.
What if I am not eligible or need more money? If you don’t qualify for stimulus money, all is not lost. There are several other ways that the CARES Act has made it easier for you to get a short term financial boost.
Unemployment The CARES Act has also legally expanded unemployment benefits, expanding them for 13 more weeks and adding an additional $600 per week. Some self-employed, freelance, and independent contractors may be eligible, too. These benefits vary from state to state, and you can find how to apply at the Unemployment Benefits Finder site: https://www.careeronestop.org/LocalHelp/UnemploymentBenefits/find-unemployment-benefits.aspx?newsearch=true. Be sure to have your Social Security number, the Social Security numbers for dependents you are claiming, and your driver’s license or state ID handy while you apply.
Private Loans If you’re in good standing with your bank, you may be able to get a “bridge loan” extended to you in order to cover your bills. Several major banks have set aside money specifically for the purpose of supplying these loans to customers that they deem eligible for them.
Retirement Account If you don’t have another rainy-day savings account, the CARES Act waives the 10% penalty tax that you would normally get for withdrawing money early. The criteria is pretty open-ended, and applies to people who experience financial hardship because of COVID-19 in some way.
If you are experiencing fear about
affording to pay your bills, remember that you do have options for accessing
savings, loans, and stimulus money. Stay up to date on the above resources, and
if you need any help navigating your way through this uncertain period, we are
here to help.
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Do your parents have an estate plan? Is it up to date? No matter how rich or poor you or your parents are, especially in the wake of the COVID-19 pandemic, you need to be asking these and several other questions. When your parents become incapacitated or die, their affairs will become your responsibility, and it will be impossible to ask them to clarify anything. So, if you do not know whether they have estate planning in place to help you best support them, read on.
The Best-Case Scenario
In a best-case scenario, your parents have an updated estate plan, and they’ve walked you through it. They have provided an inventory of their assets that’s easy for you to find listing out everything they own and how it’s titled. Ideally, the plan also includes directions on how to handle their non-monetary assets, and a video, audio recording or written stories that pass on their values, insights and experience. On top of all that, it’s best if they’ve introduced you to the lawyer who set it all up, so you know who to turn to when the time comes.
Less-Than-Ideal Scenarios
If that’s not the case, you could have some holes to fill. If they’ve not done any planning at all, now is the time to encourage them to get it done and support them in any way you can. If they already have a completed plan, it’s likely that it has been sitting on their shelf or in a drawer for years, not updated, with no inventory of their assets and no way to capture and pass on their intangible assets. Even worse, their lawyer could have been using outdated systems that are no longer recognized, which can lead to trouble down the road.
It’s also possible that if they’ve never updated their estate plan, it no longer tracks with their current assets, and may even require complex actions that are no longer necessary upon their death. Worst of all, you may have no idea what your parents own or how to find their assets, and at their incapacity or death you’ll be left with a mess, even though your parents had good intentions and thought their planning was handled.
The Worst-Case Scenario
In a worst-case scenario (which we see more frequently than we’d like), your parents may have worked with someone who exerted undue influence over their decisions. This person may have led them to write something into their plan that they either didn’t really want to or wouldn’t otherwise have chosen if they understood all their options.
Either way, it’s critical for you to know who your parents have worked with to create their estate plan, and how and why they made the choices they did. If you aren’t in the know, now is the time to find out.
If your parents are already discussing these matters but have not yet included you, you can ask them to schedule a family meeting with their existing attorney. On your parents’ request, that attorney should look forward to walking you through your parents’ planning, the choices they made, and how you will be impacted in the event of their incapacity or death.
You want to develop a relationship with their estate planning attorney now. This advisor can be one of the most important supporters of you and your parents during your time of need. It’s a relationship you will want to establish before you need it, so you won’t be scrambling during a time of crisis.
Dedicated to empowering your family, building your wealth and defining your legacy,
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If you have pets, I’m sure you love them,
but you may not have not provided any written or, better yet, legally
documented instructions about what should happen to them if you become
incapacitated or when you die. If you have, read this article with an eye to
ensuring you’ve checked all the right boxes. If you haven’t, read on because
it’s time to act, and this knowledge will make it easier for you to do things
right.
Let’s start by looking at what happens if
you become incapacitated or when you die if you’ve done nothing to ensure the
well-being and care of your pets. It may be that if you do nothing, one or more
of your friends and family will step forward to take care of your pets. But,
will the person who steps forward be the person you would choose? And, will
they take care of your pets the way you want?
If you do care, you need to take action
rather than just leaving the well-being and care of your pets to chance. If you
don’t designate at least one person, and ideally one person plus backups to
care for your pets, and provide instructions to the people you’ve named, and
perhaps also money to support the care of your pets, your pets could become a
burden to your friends and family, or even end up at the humane society.
Steps to Plan for Your Pet’s Care in Your Estate Plan So, step one in all circumstances is to legally name the people you would want to care for your pets in the event you cannot.
Step two is to give the people you’ve
named specific instructions about how you want your pets to be cared for if you
cannot do it including type and amounts of food, any medications needed,
exercise plan, and any other special things you know about your pets that any
caretaker should know.
Finally, step three is to consider whether you need to provide financial resources to care for your pets.
If your pet has any special needs, or if
you want to provide funding for training, regular exercise, or a certain kind
of food or care, it’s up to you to provide the financial resources to the
people you’ve named to take care of your pets. All of this can be included as
part of your comprehensive estate plan.
Dedicated to empowering your
family, building your wealth and defining your legacy,
https://www.calilaw.com/wp-content/uploads/2019/08/family-dog-91024.jpg640960CaliLawhttps://www.calilaw.com/wp-content/uploads/2023/04/Cali-Law-Logo-A5-1-300x99.jpgCaliLaw2020-02-26 23:31:592020-02-26 23:32:02What Happens to Your Pets When You Die?
If your
child requires or is likely to require governmental assistance to meet their
basic needs, do not leave money directly to your child. Instead, establish a
Special Needs Trust.
A trust that
is not designed with your child’s special needs in mind will probably render
your child ineligible for essential benefits. A Special Needs Trust is designed
to manage resources while maintaining the individual’s eligibility for
government benefits. Planning is important because many beneficiaries as adults
will rely on government benefits for support. If the disabled person has assets
in their own name, they might lose eligibility.
Medicaid,
and other public benefits programs, will not pay for everything your child
might need. A Special Needs Trust can pay for medical and dental expenses,
annual independent check-ups, necessary or desirable equipment (such as a
specially equipped van), training and education, insurance, transportation, and
special foods.
Unfortunately,
some Special Needs Trusts are unnecessarily restrictive and generic. Many
trusts are not customized to the particular child’s needs. Thus, the child
fails to receive the support and benefits that the parent provided when they
were alive. For example, children who are high functioning and active in their
communities can benefit from a Special Needs Trust that is carefully tailored
to provide adequate resources to support their social lives.
Does your
child have significant medical concerns? Should the trust allow for birthday
gifts for other family members? What about travel expenses to visit loved ones?
Do you have a preferred living arrangement for your child? Your child’s special
needs trust should address all these issues and more.
Another
mistake attorneys with special knowledge in this area often see is a “pay-back”
provision in the trust rather than allowing the remainder of the trust to go to
others upon the death of the child with special needs. If a “pay-back”
provision is included unnecessarily, Medicaid will receive the remainder (up to
the amount of benefits provided) in the trust upon the death of the
beneficiary. These “pay-back” provisions, however, are necessary in certain
types of special needs trusts. An attorney who knows the difference can save
your family a small fortune.
A Special
Needs Trust will help you avoid one of the most common mistakes parents make.
Although many people with disabilities rely on SSI, Medicaid, or other needs-based
government benefits, you may have been advised to disinherit your child with
disabilities—the child who needs your help the most—to protect that child’s
public benefits. These benefits, however, rarely provide more than subsistence,
and this “solution” does not allow you to help your child after you are
incapacitated or gone.
Disinheriting
your child with special needs might be a temporary solution if your other
children are financially secure and have money to spare. But permanently disinheriting
your child with special needs could be a huge mistake! It is not a solution
that will protect your child after you and your spouse are gone. The money can
be lost in a lawsuit, divorce, liability claim, or adverse judgment against
your other children. For example, what if your child with the money divorces?
His or her spouse may be entitled to half of it and will likely not care for
your child with special needs. What if your child with the money dies or
becomes incapacitated while your child with special needs is still living?
These are
just some of the concerns parents of special needs children need to navigate.
The bottom line is to get a special needs trust in place with the help of an
advisor who understands the unique issues inherent with special needs
situations.
Dedicated to empowering your
family, building your wealth and defining your legacy,
https://www.calilaw.com/wp-content/uploads/2020/01/special-needs-child-91024.jpg520780Marc Garletthttps://www.calilaw.com/wp-content/uploads/2023/04/Cali-Law-Logo-A5-1-300x99.jpgMarc Garlett2020-01-31 20:31:362020-01-31 20:32:46How to Protect an Inheritance for Your Special Needs Child
Both wills and trusts are estate planning documents that can be used to pass your wealth and property to your loved ones upon your death. However, trusts come with some distinct advantages over wills that you should consider when creating your plan.
That said, when comparing the two planning tools, you won’t necessarily be choosing between one or the other—most plans include both. Indeed, a will is a foundational part of every person’s estate plan, but you may want to combine your will with a living trust to avoid the blind spots inherent in plans that rely solely on a will.
Here are four reasons you might want to consider adding a trust to your estate plan: 1. Avoidance of probate One of the primary advantages a living trust has over a will is that a living trust does not have to go through probate. Probate is the court process through which assets left in your will are distributed to your heirs upon your death.
During probate, the court oversees your will’s administration, ensuring your property is distributed according to your wishes, with automatic supervision to handle any disputes. Probate proceedings can drag out for months or even years, and your family will likely have to hire an attorney to represent them, which can result in costly legal fees that can drain your estate.
Bottom line: If your estate plan consists of a will alone, you are guaranteeing your family will have to go to court if you become incapacitated or when you die.
However, if your assets are titled properly in the name of your living trust, your family could avoid court altogether. In fact, assets held in a trust pass directly to your loved ones upon your death, without the need for any court intervention whatsoever. This can save your loved ones major time, money, and stress while dealing with the aftermath of your death.
2. Privacy Probate is not only costly and time consuming, it’s also public. Once in probate, your will becomes part of the public record. This means anyone who’s interested can see the contents of your estate, who your beneficiaries are, as well as what and how much your loved ones inherit, making them tempting targets for frauds and scammers.
Using a living trust, the distribution of your assets can happen in the privacy of our office, so the contents and terms of your trust will remain completely private. The only instance in which your trust would become open to the public is if someone challenges the document in court.
3.A plan for incapacity A will only governs the distribution of your assets upon your death. It offers zero protection if you become incapacitated and are unable to make decisions about your own medical, financial, and legal needs. If you become incapacitated with only a will in place, your family will have to petition the court to appoint a guardian to handle your affairs.
Like probate, guardianship proceedings can be extremely costly, time consuming, and emotional for your loved ones. And there’s always the possibility that the court could appoint a family member you’d never want making such critical decisions on your behalf. Or the court might even select a professional guardian, putting a total stranger in control of just about every aspect of your life.
With a living
trust, however, you can include provisions that appoint someone of your
choosing—not the court’s—to handle your assets if you’re unable to do so.
Combined with a well-drafted medical power of attorney and living will, a trust
can keep your family out of court and conflict in the event of your incapacity.
4. Enhanced control over asset distribution Another advantage a trust has over just having a will is the level of control they offer you when it comes to distributing assets to your heirs. By using a trust, you can specify when and how your heirs will receive your assets after your death.
For example, you could stipulate in the trust’s terms that the assets can only be distributed upon certain life events, such as the completion of college or purchase of a home. Or you might spread out distribution of assets over your beneficiary’s lifetime, releasing a percentage of the assets at different ages or life stages.
In this way, you can help prevent your beneficiaries from blowing through their inheritance all at once and offer incentives for them to demonstrate responsible behavior. Plus, if the assets are held in trust, they’re protected from the beneficiaries’ creditors, lawsuits, and divorce, which is something else wills don’t provide.
If, for some
reason, you do not want a living trust, you can use a testamentary trust to
establish trusts in your will. A testamentary trust will not keep your family
out of court, but it can allow you to control how and when your heirs receive
your assets after your death.
An informed decision The best way for you to determine whether your estate plan should include a living trust, a testamentary trust, or no trust at all is to meet with a trusted estate planning attorney. Sitting down with your Personal Family Attorney to discuss your family’s planning needs will empower you to feel 100% confident that you have the right combination of planning solutions in place for your family’s unique circumstances.
Dedicated to empowering your family,
building your wealth and defining your legacy,
https://www.calilaw.com/wp-content/uploads/2020/01/wills-vs-trust-signs-91024.jpg375500CaliLawhttps://www.calilaw.com/wp-content/uploads/2023/04/Cali-Law-Logo-A5-1-300x99.jpgCaliLaw2020-01-24 18:03:252020-01-24 18:03:274 Things Trusts Can Do That Wills Can’t
As we head
into the thick of the holiday season, you’re likely spending more time than
usual surrounded by family and friends.
The holidays offer an opportunity to visit with
loved ones you rarely see and get caught up on what’s been happening in
everyone’s life. And though it might not seem like it, the holidays can also be
a good time to discuss estate planning. In fact, with everyone you love—from
the youngest to the oldest—gathered under one roof, the holidays provide the ideal opportunity to talk about
planning.
That said, asking your uncle about his end-of-life wishes while he’s watching
the football game probably isn’t the best way to get the conversation started.
In order to make the discussion as productive as possible, consider the
following tips.
1. Set aside a time and place to talk Trying to discuss estate planning in an impromptu fashion over the dinner
table or while opening Christmas gifts will most likely not be very productive.
Your best bet is to schedule a time separate from the festivities, when you can
all focus and talk without distractions or interruptions.
It’s also a good idea to be upfront with your family about the meeting’s
purpose, so no one is taken by surprise, and are more prepared for the talk.
Choose a setting that’s comfortable, quiet, and private. The more relaxed
people are, the more likely they’ll be comfortable sharing about sensitive
topics.
2. Create an agenda, and set a start and stop time
To ensure you can cover every subject you want to
address, create a list of the most important points you want to cover—and do
your best to stick to them. You should encourage open conversation but having a
basic agenda of the items you want to address can help ensure you don’t forget
anything.
Along those same lines, set a start and stop time for
the conversation. This will help you keep the discussion on track and avoid
having the conversation veer too far away from the main points you want to
discuss. If anything significant comes up that you hadn’t planned on, you can
always continue the discussion later.
Keep in mind that the goal is to simply get the planning conversation started,
not work out all the specific details or dollar amounts.
3.Explain why planning is important From the start, assure everyone that the conversation isn’t about prying into anyone’s finances, health, or personal relationships. Instead, it’s about providing for the family’s future security and wellbeing no matter what happens. It’s about ensuring that everyone’s wishes are clearly understood and honored, not about finding out how much money someone stands to inherit.
While some relatives might be reluctant to open up, being surrounded by the loved ones who will ultimately benefit from planning can make people more willing to discuss these sensitive subjects.
Talking about these issues is also a crucial way to avoid unnecessary conflict and expense down the road. When family members don’t clearly understand the rationale behind one another’s planning choices, I’ve seen it breed conflict, resentment, and costly legal battles.
4. Discuss your experience with planning If you’ve already set up your plan, one way to get the discussion going is to explain the planning vehicles you have in place and why you chose them. Mention any specific questions or concerns you initially had about planning and how you addressed them. If you have loved ones who’ve yet to do any planning and have doubts about its usefulness, discuss any concerns they have in a sympathetic and supportive manner.
For the love of your family Though death and incapacity can be awkward topics to discuss, talking about how to properly plan for such events can actually bring your family closer together this holiday season. In fact, our clients consistently share that after going through our estate planning process they feel more connected to the people they love the most. And they also feel clearer about the lives they want to live during the short time we have here on earth.
When done right, planning can put your life and relationships into a much clearer focus and offer peace of mind knowing that the people you love most will be protected and provided for no matter what.
Most importantly this holiday season, enjoy being in the moment and strengthening your bonds with the important people in your life.
Dedicated to empowering your family, building your wealth and defining your legacy,
https://www.calilaw.com/wp-content/uploads/2019/12/family-dinner-91024.jpg477600Marc Garletthttps://www.calilaw.com/wp-content/uploads/2023/04/Cali-Law-Logo-A5-1-300x99.jpgMarc Garlett2019-12-05 19:56:372019-12-05 19:56:404 Tips for Discussing Estate Planning With Your Family This Holiday Season