New Developments Transform the Role Life Insurance Plays in Your Estate and Financial Planning

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Within the past year, a combination of new legislation and the recent change of leadership in the White House and Congress stands to dramatically increase the taxes your loved ones will have to pay on inherited retirement accounts as well as increasing the taxes you owe on your taxable investments. However, purchasing life insurance may offer you the opportunity to minimize the effect of these developments.

To this end, if you hold assets in a retirement account, you need to review your financial plan and estate plan as soon as possible to determine if investing in life insurance or some other strategy may offer tax-saving benefits for you and your family. To help you with this process, here we’ll discuss how these new developments might affect the taxes owed by you and your heirs, and how investing in life insurance may help offset the tax impact of these new changes.

 

The SECURE Act

At the start of 2020, the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) went into effect, and the new law effectively put an end to the so-called “stretch IRA.” Under prior law, beneficiaries of your retirement account could choose to stretch out distributions of an inherited retirement account over their own life expectancy to minimize the income taxes owed on those distributions.

Under the new law, however, most designated beneficiaries of inherited IRAs and similar tax-deferred qualified retirement accounts are now required to withdraw all of the assets from the inherited account—and pay income taxes on those withdrawals—within 10 years of the account owner’s death. Those who fail to withdraw funds within the 10-year window face a 50% tax penalty on the assets remaining in the account.

 

Democrats Take Control

The recent election of Joe Biden as President and subsequent Democratic takeover of the Senate will likely result in the passage of new tax legislation that could have a significant impact on your family’s financial and estate planning considerations.

Specifically, it’s likely that within the next two years Democrats will pass legislation aimed at eliminating many of the tax cuts enacted through the 2017 Tax Cuts and Jobs Act. As part of this legislation, we’re expected to see significantly lower federal estate tax exemptions, the elimination of the step-up in cost basis on inherited assets, as well as an increase in the top personal income and capital-gains tax rates.

One way you may be able to minimize the new taxes on both your tax-deferred retirement accounts and taxable investments is by investing in cash-value life insurance. Let’s break down exactly what this strategy might look like.

 

The New Role of Life Insurance in Your Estate and Financial Planning

Given the new distribution requirements for inherited IRAs, you should consider whether it makes sense to withdraw funds from your retirement account now, pay the tax, and invest the remainder in cash-value life insurance. From there, you can access the accumulated cash-surrender value of the life insurance policy income-tax free during your lifetime via tax-free withdrawals and/or loans. And upon your death, the payout of your life insurance policy would be income-tax free for your heirs.

By annually investing what you would otherwise put into tax-deferred retirement accounts into a cash-value life insurance contract, or by taking taxable withdrawals from your tax-deferred retirement accounts over time and reinvesting them in cash-value life insurance, you can effectively move these funds into a tax-free, rather than tax-deferred, investment vehicle.

This strategy could not only minimize the income taxes you pay over your lifetime, but it could also significantly reduce the tax bill imposed on your designated beneficiaries after your death, since life insurance proceeds are income-tax free.

Additionally, by investing a portion of your investable assets in cash-value life insurance, you can offset the effects of the proposed loss of income tax basis step-up upon your death, which we’re likely to see enacted through Democrat-backed legislation. What’s more, this strategy would also minimize your current income taxes on what otherwise would have been taxable income from your investments, as growth on investments inside a life insurance policy are not subject to income tax, including any capital gains.

Finally, if you stand to be affected by the proposed decrease of the federal estate-tax exemption, which is currently set at $11.7 million, by placing the life insurance policy inside an irrevocable life insurance trust, you can remove the death benefit paid out to your beneficiaries from your taxable estate. In doing so, you would still be able to access the cash value of the insurance policy during your lifetime, either via a so-called “spousal access trust,” if you are married, or via a traditional irrevocable life insurance trust, if you are not married.

 

Rethink Your Planning

Although the SECURE Act and the proposed new legislation stands to have an adverse effect on the tax consequences for your retirement and estate planning, investing in life insurance may offer you a valuable tax-saving opportunity. That said, you can only take advantage of this opportunity if you plan for it.

 

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Moving to A New State? Remember to Review Your Estate Plan

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Moving to a New State? Be Sure to Update Your Estate Plan

Although you likely won’t need to have an entirely new estate plan prepared for you, upon relocating to another state, you should definitely have your existing plan reviewed by an estate planning lawyer who is familiar with your new home state’s laws. Each state has its own laws governing estate planning, and those laws can differ significantly from one location to another.

Given this, you’ll want to make sure your planning documents all comply with the new state’s laws, and the terms of those documents still work as intended. Here, we’ll discuss how differing state laws can affect common planning documents and the steps you might want to take to ensure your documents are properly updated.

 

Last Will and Testament
The good news is, states will generally accept a will that was executed properly under another state’s laws. However, there could be differences in the new state’s laws that make certain provisions in your will invalid. Here are a few of the things you should pay the most attention to in your will when moving:

 

Your executor: Consider whether or not the executor or administrator you’ve chosen will be able to serve in that role in your new location. Every state will allow an out-of-state executor to serve, but some states have special requirements that those executors must meet, such as requiring them to post a bond before serving. Other states require non-resident executors to appoint an agent who lives within the state to accept legal documents on behalf of the estate.

 

Marital property: If you are married, give special consideration to how your new state treats marital property. While a common-law state might treat the property you own in your name alone as yours, community-property states treat all of your property as owned jointly with your spouse. If your new state treats marital property differently, you might need to draft a new will to ensure your wishes are honored.

 

Interested witnesses: Another important role under your will to consider when moving to a new state is an interested witness. An interested witness is someone who was a witness to your will who also receives a gift from your will. Some states allow interested witnesses to receive the gift, while other states do not allow such gifts. And still other states allow such gifts provided the witness is a family member.

 

Revocable Living Trust

A valid revocable living trust from one state should continue to be valid in your new state. However, you need to make certain that you transfer any new assets or property you acquire, such as your new home, to your trust, so that those assets can avoid the need to go through probate before being distributed to your heirs upon your death.

 

Power of Attorney
A valid power of attorney document, such as a durable power of attorney, medical power of attorney, or financial power of attorney, created in one state is likely to be valid in your new state. However, in some cases, banks, financial institutions, and healthcare facilities in your new state may not accept a power of attorney document if it’s unfamiliar to them. Also, simply as a practical matter, it may be a good idea to have your power of attorney agent live in the same state you do, so keep that in mind as well.

 

Beneficiary Designations
If you have accounts with beneficiary designations, such as 401(k)s, life insurance policies, and payable-on-death bank accounts, these should be valid no matter which state you live in. That said, you should still review these documents when you move to ensure that your address and other personal information is updated.

 

Keep Your Plan Current
As with other major life events, such as births, deaths, marriage and divorce, moving to a new state is the ideal time to have your plan reviewed by a professional.

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5 Questions to Ask Before Hiring An Estate Planning Lawyer – Part 1

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7 QUESTIONS TO ASK BEFORE HIRING A LAWYER – Metro Law and Mediation

Since you’ll be discussing topics like death, incapacity, and other frightening life events, hiring an estate planning lawyer may feel intimidating or even morbid. But it doesn’t have to be that way.
Instead, it can be the most empowering decision you ever make for yourself and your loved ones. The key to transforming the experience of hiring a lawyer from one that you dread into one that empowers you is to educate yourself first. This is the person who is going to be there for your family when you can’t be, so you want to really understand who the lawyer is as a human, not just an attorney. Of course, you’ll also want to find out the kind of services your potential lawyer offers and how they run their business.
To this end, here are five questions to ask to ensure you don’t end up paying for legal services that you don’t need, expect, or want. Once you know exactly what you should be looking for when choosing a planning professional, you’ll be much better positioned to hire an attorney who will provide the kind of love, attention, care, and trust your family deserves.

   1. How do you bill for your services?

There’s no reason you should be afraid to ask a lawyer how he or she bills for the work they do on your behalf. In fact, questions about billing and payment should be thoroughly discussed before you engage any lawyer to represent you. No one wants surprises, especially when it comes to legal fees.

Find an estate planning lawyer who bills for their services on a flat-fee, no surprises, basis—and not on an hourly basis—unless it’s required for limited purposes. And ideally, you want a lawyer who will guide you through a process of discovery in which they learn about your family dynamics, your assets, and they educate you about what would happen for your family and to your assets if and when something happens to you, and then support you in choosing the right plan for you that meets your budget and your desired outcomes.

  1. How will you respond to my needs on an ongoing basis?

One of the biggest complaints people have about working with lawyers is that they are notoriously unresponsive. Indeed, I’ve heard of cases in which clients went weeks without getting a call back from their lawyer. This is all too common, but totally unacceptable, especially when you’re paying them big bucks.

That said, in most cases, these lawyers aren’t blowing you off—they simply don’t have enough support or the systems in place to be able to be responsive. Far too many lawyers believe they can take care of everything themselves. From paperwork and client meetings to scheduling and returning phone calls to connecting their clients with other advisors, there are just too many responsibilities for one person to manage all on their own.

Ask them how quickly calls are typically returned in their office, ask them if there will be someone on-hand to answer quick questions, and ask them how they will support you to keep your plan up to date on an ongoing basis and be there for your loved one’s when you can’t be.

A great way to test this is to call your prospective lawyer’s office and ask for him or her. If you get put through right away—or even worse, your call gets sent to a full voicemail—think twice about hiring this lawyer. This means they don’t have effective systems in place for managing and responding to calls or answering quick questions.

Instead, what you want is for the person who answers the phone—or another team member—to offer to help you. And if that individual cannot help you, then he or she should schedule a call for you to talk with your lawyer at a future date and time. Ideally, all calls with your lawyer should be pre-scheduled with a clear agenda, so you both can be ready to focus on your specific needs.

Next week in part two, we’ll talk more about the ways in which your attorney should communicate with you and list the remaining three questions to ask before hiring your estate planning lawyer.

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6 Things You Should NOT Include in Your Will

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Writing a Will: Avoid these 8 mistakes while writing a will to ensure your assets are passed onto your heirs

 

A will is one of the most basic estate planning tools. While relying solely on a will is not a suitable option for most people, just about every estate plan includes this key document in one form or another.

A will is used to designate how you want your assets distributed to your surviving loved ones upon your death. If you die without a will, state law governs how your assets are distributed, which may or may not be in line with your wishes.

That said, not all assets can (or should) be included in your will. For this reason, it’s important to understand which assets you should put in your will and which assets you should include in other planning documents like trusts.

While you should always consult with an experienced planning professional when creating your will, here are a few of the different types of assets that should not be included in your will.

      1. Assets with a right of survivorship: A will only covers assets solely owned in your name. Therefore, property held in joint tenancy, tenancy by the entirety, and community property with the right of survivorship, bypass your will. These types of assets                 automatically pass to the surviving co-owner(s) when you die, so leaving your share to someone else in your will would have no effect. If you want someone other than your co-owner to receive your share of the asset upon your death, you will need to change             title to the asset as part of your estate planning process.

  1. Assets held in a trust: Assets held by a trust automatically pass to the named beneficiary upon your death or incapacity and cannot be passed through your will. This includes assets held by both revocable “living” trusts and irrevocable trusts.In contrast, assets included in a will must first pass through the court process known as probate before they can be transferred to the intended beneficiaries. To avoid the time, expense, and potential conflict associated with probate, trusts are typically a more effective way to pass assets to your loved ones compared to wills.

However, because it can be difficult to transfer all of your assets into a trust before your death, even if your plan includes a trust, you’ll still need to create what’s known as a “pour-over” will. With a pour-over will in place, all assets not held by the trust upon your death are transferred, or “poured,” into your trust through the probate process.

 

  1. Assets with a designated beneficiary: Several different types of assets allow you to name a beneficiary to inherit the asset upon your death. In these cases, when you die, the asset passes directly to the individual, organization, or institution you designated as beneficiary, without the need for any additional planning.The following are some of the most common assets with beneficiary designations, and therefore, such assets should not be included in your will:
  • Retirement accounts, IRAs, 401(k)s, and pensions
  • Life insurance or annuity proceeds
  • Payable-on-death bank accounts
  • Transfer-on-death property, such as bonds, stocks, vehicles, and real estate
  1. Certain types of digital assets: Given the unique nature of digital assets, you’ll need to make special plans for your digital assets outside of your will. Indeed, a will may not be the best option for passing certain digital assets to your heirs. And in some cases—including Kindle e-books and iTunes music files—it may not even be legally possible to transfer the asset via a will, because you never actually owned the asset in the first place—you merely owned a license to use it.What’s more, some types of social media, such as Facebook and Instagram, have special functions that allow you to grant certain individuals access and/or control of your account upon your death, so a will wouldn’t be of any use. Always check the terms of service for the company’s specific guidelines for managing your account upon your death.

Regardless of the type of digital asset involved, NEVER include the account numbers, logins, or passwords in your will, which becomes public record upon your death and can be easily read by others. Instead, keep this information in a separate, secure location, and provide your fiduciary with instructions about how to access it.

       5. Your pet and money for its care: Because animals are considered personal property under the law, you cannot name a pet as a beneficiary in your will. If you do, whatever money you leave it would go to your residuary beneficiary (the individual who                   gets everything not specifically left to your other named beneficiaries), who would have no obligation to care for your pet.

It’s also not a good idea to use your will to leave your pet and money for its care to a future caregiver. That’s because the person you name as beneficiary would have no legal obligation to use the funds to care for your pet. In fact, your pet’s new owner could legally keep all of the money and drop off your furry friend at the local shelter.

The best way to ensure your pet gets the love and attention it deserves following your death or incapacity is by creating a pet trust. A good estate planning attorney can help you set up, fund, and maintain such a trust, so your furry family member will be properly cared for when you’re gone.

  1. Money for the care of a person with special needs: There are a number of unique considerations that must be taken into account when planning for the care of an individual with special needs. In fact, you can easily disqualify someone with special needs for much-needed government benefits if you don’t use the proper planning strategies. To this end, a will is not a suitable way to pass on money for the care of a person with special needs.If you want to provide for the care of your child or another loved one with special needs, you must create a special needs trust. Given these are extremely technical, you should always work with an experienced planning lawyer to create a special needs trust.

Don’t take any chances
Although creating a will may seem fairly simple, it’s always best to consult with an experienced planning professional to ensure the document is properly created, executed, and maintained. And as we’ve seen here, there are also many scenarios in which a will won’t be the right planning option, nor would a will keep your family and assets out of court

 

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Getting Divorced? Don’t Overlook These 4 Updates to Your Estate Plan- Part 1

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How Divorce Affects Your Estate Plan | legalzoom.com

Going through divorce can be an overwhelming experience that impacts nearly every facet of your life, including estate planning. Yet, with so much to deal with during the divorce process, many people forget to update their plan or put it off until it’s too late.

Failing to update your plan for divorce can have a number of potentially tragic consequences, some of which you’ve likely not considered—and in most cases, you can’t rely on your divorce lawyer to bring them up. If you are in the midst of a divorce, and your divorce lawyer has not brought up estate planning, there are several things you need to know. First off, you need to update your estate plan, not only after your divorce is final, but as soon as you know a split is inevitable.

Here’s why: until your divorce is final, your marriage is legally in full effect. This means if you die or become incapacitated while your divorce is ongoing and haven’t updated your estate plan, your soon-to-be ex-spouse could end up with complete control over your life and assets. And that’s generally not a good idea, nor what you would want.

Given that you’re ending the relationship, you probably wouldn’t want him or her having that much power, and if that’s the case, you must take action. While state laws can limit your ability to make certain changes to your estate plan once your divorce has been filed, here are a few of the most important updates you should consider making as soon as divorce is on the horizon.

1. Update your power of attorney documents
If you were to become incapacitated by illness or injury during your divorce, the very person you are paying big money to legally remove from your life would be granted complete authority over all of your legal, financial, and medical decisions. Given this, it’s vital that you update your power of attorney documents as soon as you know divorce is coming.

Your estate plan should include both a durable financial power of attorney and a medical power of attorney. A durable financial power of attorney allows you to grant an individual of your choice the legal authority to make financial and legal decisions on your behalf should you become unable to make such decisions for yourself. Similarly, a medical power of attorney grants someone the legal authority to make your healthcare decisions in the event of your incapacity.

Without such planning documents in place, your spouse has priority to make financial and legal decisions for you. And since most people typically name their spouse as their decision maker in these documents, it’s critical to take action—even before you begin the divorce process—and grant this authority to someone else, especially if things are anything less than amicable between the two of you.

2. Update your beneficiary designations
As soon as you know you are getting divorced, update beneficiary designations for assets that do not pass through a will or trust, such as bank accounts, life insurance policies, and retirement plans. Failing to change your beneficiaries can cause serious trouble down the road.

For example, if you get remarried following your divorce, but haven’t changed the beneficiary of your 401(k) plan to name your new spouse, the ex you divorced 15 years ago could end up with your retirement account upon your death. And due to restrictions on changing beneficiary designations after a divorce is filed, the timing of your beneficiary change is particularly critical.

In California, once either spouse files divorce papers with the court, neither party can legally make changes to non-probate transfers without the consent of their soon to be ex-spouse. This means you can make a new will (since that’s a probate transfer) but you cannot change your trust, IRA, 401k or life insurance beneficiaries. With this in mind, if you’re anticipating a divorce, you may want to consider changing your beneficiaries prior to filing divorce papers, and then post-divorce you can always change them again to match whatever is determined in the divorce settlement.

 

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Your “Blended” Family Is Likely Headed to Court Unless You Do This

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Arizona Family Court – Changes During the COVID-19 Pandemic

 

 

 

If you have a blended family and do not plan for what happens to your assets in the event of your incapacity or death, you are almost certainly guaranteeing hurt feelings, conflict, and maybe even a long, drawn out court battle.

 

So let’s start with clarity around what a blended family is and whether you have one. If you have stepchildren, or children from a prior marriage, or other people you consider “kin” who are not considered legal relatives in the eyes of the law, you’ve got a blended family.

 

Bottom line: if you have a blended family, you need an estate plan, and not just a will you created for yourself online, or a trust that isn’t specifically and intentionally designed to keep your family out of court and out of conflict. Period. End of story. Unless you are okay with setting your loved ones up for unnecessary heartache, confusion, and pain when something happens to you.

 

What Will the Law Do?

“Blended Families, once considered “non-traditional” families are swiftly becoming the norm. Currently 52% of married couples (or unmarried couples who live together) have a stepkin relationship of some kind, and 4 in 10 new marriages involve remarriage. So, clearly, this is no longer “non-traditional” but quite traditional, though our laws about what happens if you become incapacitated or die are still very much based on tradition.

 

Every state has different provisions for what happens when you become incapacitated or die, and the laws of California may not necessarily match your wishes.

 

For example, in California, all community property assets would go to your surviving spouse, and separate property assets would be distributed partially to a surviving spouse and partially to children, if living, in amounts depending on the number of surviving children.

 

This may not result in the outcome you want for your loved ones, especially if you have a blended family situation. If you have something different in mind as to how you would want things to go, there is good news. The state of California allows you to circumvent those laws, but only if you have an alternate plan in place BEFORE your incapacity or death.

 

Even within “traditional” families, I want to emphasize that having a full plan is the best way to provide for your loved ones. However, with “blended” families, carefully considered estate plans are often even more vital to avoid massive misunderstanding and conflict, and having your assets tied up in court instead of going to the people you want to receive them.

 

Disputes Between Spouse and Children from Previous Marriage

One of the most common problems that arises in a blended family is that the deceased’s children from a prior marriage and the surviving spouse end up in conflict. The courts are filled with these kinds of cases. But it doesn’t have to be that way.

 

When you’re considering all of this for the people you love, it’s important to have a trusted advisor who can help you look at the reality of what will happen if you become incapacitated or when you die. With the complexities of modern families, it’s far better to know and plan than to leave it up to the law or a court to decide. That way, not only do the people you love get the assets that you want them to receive, but you will also be saving them from years of potential legal conflict.

 

Dedicated to empowering your family, building your wealth and defining your legacy,

 

 

 

 

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Who Would Care for Your Children If You Got Sick With COVID-19?

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The pandemic is causing us to consider a lot of things that we may not have before, even if maybe we should have.

It brings to mind something a colleague of mine shared recently. One weekend last year, she left her small children with a babysitter and headed out to enjoy dinner at a restaurant with her husband. But as she sat there, a thought crept into her head and wouldn’t leave.

What would happen to her kids, she thought, if she and her husband got into a car accident on the way home?

And even though my colleague is a lawyer herself, and she had a will at home naming guardians for her kids, she didn’t have a definite and clear answer that provided the comfort she wanted. Her will was in a vault, and her named legal guardians lived on the other side of the country.  It was that thought that spurred her to take action.

Chances of COVID-19 Infection in the Family
If you are young and healthy, it might be hard to imagine that you won’t be there to care for your kids. But if the COVID-19 pandemic is showing us anything, it’s that even a healthy person can contract a serious illness that leaves them incapacitated and unable to care for their children.

If there is more than one adult in the house, that may alleviate some of your worry. While naming legal guardians for your kids usually feels especially urgent for a single parent, parents with partners aren’t off the hook. You should take precautions too, especially since there are high infection rates among people who live in the same household.

A professor at the University of Florida has found a more than 19% chance that someone else in the household of a person infected with COVID-19 will also contract the disease. Researchers estimate the average incubation time is about four days and could be infectious for up to two weeks. That means it’s not outside the realm of possibility that you and your partner could both contract the illness, possibly at the same time.

An Easy Way to Find Guardians for Your Children
Even if you never contract COVID-19, you are of course still human, and vulnerable to accidents and other dangers that could separate you from your kids—either temporarily or permanently.

If you haven’t already done so, there’s no better time to decide who would care for your children in the immediate term if something happens to you, even on a short-term basis. 

And, if you are having a difficult time deciding who to name as legal guardians for your children, we can even help you make the right decisions.

Officially answering the question of who will care for your kids if you can’t—even for a short time—is one of the best things you can do right now. It is a real, concrete way you can protect your kids during this scary time.

If you need help with the process, please do give us a call and we’ll be glad to walk you through it.

Dedicated to empowering your family, building your wealth and defining your legacy,

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3 Unique Ways to Handle the Guilt Inherent to Being a Parent

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If you’re a parent, you may feel even more guilty than usual.  If so, you are not alone. Currently, the burden is on you to both carry on with your work and manage your child’s full-time care and education. Two full-time jobs that you’re trying to do by yourself, likely without teachers or care providers to help you.

If you are like most parents, you were probably struggling with guilt even before the virus. You may not always make it to every award ceremony or recital, and you might not have as much time to play with your kids or help them with their homework as you’d like. Those feelings of guilt may now be compounded by all the additional responsibilities you’ve taken on in a short space of time.

Take a deep breath and let yourself off the hook. I’m sure you are doing the best you can, and your kids see it, and know it too, even when they are being ungrateful pains in the rear.

Keep reading for a few ideas about how to shift the guilt.

Name Legal Guardians
Let’s start with one thing that is fully within your control, can help to alleviate feelings that you are not doing enough, and that you can get handled easily — name legal guardians for your kids, so only the people you choose will take care of them if anything happens to you.

Legally documenting your choices for who you want to take care of your kids if you can’t is a great first step to getting legal planning in place for the people you love. (Yes, I said “choices” because you want to name at least two alternates after your first choice.) And doing so can provide you with a lot of relief, if you have not yet taken care of this for your kids.

Quality Time Doing…Nothing
While you’re probably already spending a significant amount of time with your kids, you may be too tired or overwhelmed to plan big activities, or the things you used to do for “quality time” may not be available.

So, what’s a parent to do?

Nothing.

Yes, you read that right, nothing.

If you can take 15 minutes or so out of your day and do nothing with your child, it could be the best 15 minutes you spend with them, and with yourself, all day.

It’s truly one of the best gifts you can give to your kids, and the best part is you don’t have to do anything. Mostly, our kids really just want to know we are there, and will give them our full attention, without screens, even if they aren’t paying attention to us.

Talk About It
If you’re on an emotional roller-coaster right now, your kids are probably having some similar struggles. This is an opportunity to connect with them, and a good time to show them a little vulnerability of your own. Remember how important sharing words of love and comfort can be, both to them and to you.

If you have been feeling alone and need support, you can also reach outside of your family for help. Sometimes venting to your friends is enough, and chances are they’ll be able to relate! But if you are not getting the support you need, there are professionals who will communicate via phone and even text message. You can always reach out to us for a referral but you can also find local therapists and phone, video, and online therapists through Psychology Today’s directory.

The point is, you are NOT alone, and you don’t have to feel alone. There are resources available and if we can be of support to you in any way, please don’t hesitate to get in touch.

Dedicated to empowering your family, building your wealth and defining your legacy,

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Protecting Your Elderly Parents from Undue Influence During Covid and Beyond

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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:

  1. Preventing important communication between family members;
  2. Withholding documents from other family members;
  3. Encouraging financial gifts or economic benefits to recently met connections (usually in the same network as your parents’ “new friend”);
  4. 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;
  5. 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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Are You Clear About How Your Parents Estate Plan Will Impact You?

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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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