Estate Planning

When was the last time you reviewed your estate plan? 

Once you have completed estate planning documents, it is easy to move on and forget to come back to them for updates.  Periodically, it is a wise to review your estate plan to ensure your documents reflect your current wishes.  This is especially true if you have had a significant life event occur since your documents were created. 

Some life events that may require an update to your will or trust include, but are not limited to:

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Your family-owned business is not just one of your most significant assets, it is also your legacy.  Protect both by implementing a transition plan to arrange for transfer to your children or other loved ones upon your retirement or death.

More than 70 percent of family businesses do not survive the transition to the next generation.  Ensuring your family does not fall victim to the same fate requires a unique combination of proper estate and tax planning, business acumen and common-sense communication with those closest to you.  Below are some steps you can take today to make sure your family business continues from generation to generation:

• Meet with an estate planning attorney to develop a comprehensive plan that accounts for issues related to both the transfer of your assets and estate taxes.
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Every family should establish a clear plan to handle an emergency that occurs during school hours.  Unfortunately, many parents mistakenly believe that filling out the school’s emergency card is sufficient.  Sadly, this practice falls far short of what is truly necessary to protect your children in the event something tragic happens to you during the school day.

The emergency card only gives permission for certain named individuals to pick up your children if they are sick, but does not authorize them to take short-term custody if one or both parents are killed or become incapacitated.  Without having alternate arrangements in place, children in this situation would likely end up spending at least some time with social services.
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If you are about to begin the estate planning process, you have likely heard the term "funding the trust" thrown around a great deal. What does this mean? And what will happen if you fail to fund the trust?

The phrase, or term, "funding the trust" refers to the process of titling your assets into your trust, such as a revocable living trust. A revocable living trust is a common estate planning document and one which you may choose to incorporate into your own estate planning. Sometimes such a trust may be referred to as a "will substitute" because the dispositive terms of your estate plan will be contained within the trust instead of the will. A revocable living trust will allow you to have your affairs bypass the probate court upon your death, using a revocable living trust will help accomplish that goal.
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Becoming a new parent is a life changing experience, and caring for a child is an awesome responsibility as well as a joy. This is also the time to think about your child's future by asking an important question: who will care for your child if you become disabled or die? The best way to put your mind at ease is by having an estate plan.

The most basic estate planning tool is a Will, which enables you to determine how your assets will be distributed after death. Without this important estate planning tool, the state's intestacy laws will govern how your assets will be distributed. In addition, decisions about who will care for your minor children will be made by the court. For this reason, it is crucial for new parents to have a Will and to designate who you want as guardian for your minor children.

In this regard, selecting guardians involves a number of important considerations. Obviously, it is important to name individuals who are emotionally and financially capable of raising a child. At the same time, a Will can also establish a trust that provides funds to be used to provide for the child's needs. Ultimately, guardians should share the same moral and spiritual values, as well as childrearing philosophy of the parents.

In addition to naming guardians in your Will or separate designation of guardian document, it is also critical to plan for the possibility of incapacity by creating powers of attorney and advance medical directives. A durable power of attorney allows a new parent to name a spouse, or other trusted relative or friend, to handle financial affairs. Further, a medical power of attorney designates a trusted person to make medical decisions in accordance with the parent's preferences.

Finally, new parents should also obtain adequate life insurance to protect the family. The proceeds from an insurance policy can replace lost income, pay household and living expenses, as well as any debts that may have been owed by the deceased parent. It is also important to ensure that beneficiary designations on any retirement accounts are up to date so that these assets can be transferred expediently.

In the end, having a child is a time of joy, but also one that requires careful planning. The best way to protect your family is by consulting with an experienced estate planning attorney who can help you navigate the process. 

Do you want to leave a legacy that creates compounding wealth for your loved ones?

Your retirement funds can be your legacy-producing secret weapon. 

For many Americans, retirement accounts comprise a substantial portion of their wealth. Yet, few people think about utilizing their retirement assets to provide for generational wealth.  Statistics bear out the sad fact that most beneficiaries see these inherited funds as a windfall and choose to withdraw all your hard-earned money within 18 months of your death, usually at the highest tax rate and blowing one of the best opportunities they have for wealth generation.  However, when properly transferred, your retirement assets can be one of the greatest opportunities for wealth building available under the tax laws.

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In the unsettled time after a loved one’s death, imagine the added stress on the family if the loved one died without a Will or any instructions on distributing his or her assets.  Now, imagine the even greater stress to grieving survivors if they know a Will exists, but they cannot find it!  It is not enough to prepare a Will and other estate planning documents like trusts. To ensure that your family clearly understands your wishes after death, you must also take good care to preserve and protect all of your estate planning documents.

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A tax basis is essentially the purchase price of a piece of property. Whenever that property is sold, the seller must pay taxes on the difference between the sale price and the original purchase price.  This concept applies to all property, including stocks, bonds, vehicles, mechanical equipment, and real estate.  If debts are assumed along with the purchase price, the principal amount of the debt will be included in the basis.  The basis can be adjusted downwards when a person deducts depreciation costs on his or her income tax returns, and may be increased for capital investments towards improving the property that are not deducted for income tax purposes.  Selling a property that has been held for a long time can carry a serious tax burden, particularly when real estate prices have increased substantially.

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During the estate planning process, your attorney will draft a number of legal documents such as a will, trust and power of attorney which will help you accomplish your goals.  While these legal documents are required for effective planning, they may not sufficiently convey your thoughts and wishes to your loved ones in your own words.

A non-binding letter of instruction is a great compliment to your “formal” estate plan, allowing you to outline your wishes with your own voice.  

There is no set format as to what to include in this document, though there are a number of common themes.  First, you may wish to explain, in your own words, the reasoning for your personal preferences for medical care, especially near the end of life.
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Joint Bank Accounts and Medicaid Eligibility

You may be in the process of assisting an aging parent in need of nursing home care.  There are many regulations and eligibility requirements to obtain governmental assistance to help pay for their care.  Consultation with an elder law attorney is critical before proceeding to making sure actions are not taken that would penalize them from getting the care they need.  

Like most governmental benefit programs, there are many myths surrounding Medicaid and eligibility for benefits. One of the most common myths is the belief that only 50% of the funds in a jointly-owned bank account will be considered an asset for the purposes of calculating Medicaid eligibility.
Medicaid is a needs-based program that is administered by the state.  Therefore, many of its eligibility requirements and procedures vary across state lines.   Generally, when an applicant is an owner of a joint bank account, the full amount in the account is presumed to belong to the applicant. Regardless of how many other names are listed on the account, 100% of the account balance is typically included when calculating the applicant’s eligibility for Medicaid benefits.    

Why would the state do this?  Often, these jointly held bank accounts consist solely of funds contributed by the Medicaid applicant, with the second person added to the account for administrative or convenience purposes, such as writing checks or discussing matters with bank representatives.  If a joint owner can document that both parties have contributed funds and the account is truly a “joint” account, the state may value the account differently.  Absent clear and convincing evidence, however, the full balance of the joint bank account will be deemed to belong to the applicant.  

If you are considering Medicaid for a loved one, it is important to seek expert advice on how to deal with assets and income correctly.  Preplanning or a strategic crisis plan can make the difference between qualification and disqualification.  

Do I Really Need Advance Directives for Health Care?

Many people are confused by advance directives for health care.  They are unsure what type of directives are available and whether or not they need directives at all, especially if they are young.  There are several types of advance directives.  One is a living will, which communicates what type of life support and medical treatments, such as ventilators or a feeding tube, you wish to receive.  Another type is called a medical power of attorney.  In a medical power of attorney, you name another person to make health care decisions for you in the event are unable to do so for yourself.  A third type of advance directive for health care is a do not resuscitate order or a DNR.  A DNR is a request that you not receive CPR if your heart stops beating or you stop breathing. 

If you are 18 or over, it is time to establish your health care directives.  Although no one thinks they will be in a medical situation requiring a directive at such a young age, it happens every day in the United States.  People of all ages are involved in tragic accidents that could not be foreseen which result in the use of life support.  If you plan in advance, you can make sure you receive the type of medical care you wish, and you can avoid a lot of heartache for your family, who may be forced to guess what you would want done.

Many people do not want to execute health care directives because of some common misperceptions about them.  People are often frightened to name someone to make health care decisions for them, because they fear they will give up the right to make decisions for themselves.  However, an individual always has the right, if he or she is competent, to revoke the directive or make his or her own decisions.  Some also fear they will not be treated if they have health care directives. This is also a common myth – the directives and medical power of attorney simply inform caregivers of the type of treatment you would like to receive in various situations and the person you designate to make health care decisions if you cannot.  Planning ahead can ensure that your treatment preferences are carried out while providing some peace of mind to your loved ones who are in a position to direct them.