Estate Planning Attorney

Be Careful Granting Power of Attorney

Power of Attorney abuse has emerged as a serious problem for elderly people who are vulnerable to people they trust more than they should, reports the Sandusky Register in the article “Consumer beware: Understanding the powers of a Power of Attorney” The same is true for a Durable Power of Attorney for Health Care document, which should be of great concern for seniors and their family members.

Care should be taken when choosing an agent to act in your behalf

This illustrates the importance of a Power of Attorney document: the person, also known as the “principal,” is giving the authority to act on their behalf in all financial and personal affairs to another person, known as their “agent.” That means the agent is empowered to do anything and everything the person themselves would do, from making withdrawals from a bank account, to selling a home or a car or more mundane acts, such as paying bills and filing taxes.

The problem is that there is nothing to stop someone, once they have Power of Attorney, from taking advantage of the situation. No one is watching out for the person’s best interests, to make sure bank accounts aren’t drained or assets sold. The agent can abuse that financial power to the detriment of the senior and to benefit the agent themselves. It is a crime when it happens. However, this is what often occurs: seniors are so embarrassed that they gave this power to someone they thought they could trust, that they are reluctant to report the crime.

Similarly, an unchecked Health Care Power of Attorney can lead to abuse, if the wrong person is named.

The following is a real example of how this can go wrong. An adult child arranged for their trusting parent to be diagnosed as suffering from dementia by an unscrupulous psychiatrist, when the parent did not have dementia.

The adult child then had the parent admitted into a nursing home, misrepresenting the admission as a temporary stay for rehabilitation. They then kept the parent in the nursing home, using the dementia diagnosis as a reason for her to remain in the nursing home.

The parent had to hire an attorney and prove to the court that she was competent and able to live independently, to be able to return to her home.

Meet with an experienced estate planning attorney to discuss your situation and figure out who might become named as Power of Attorney and Health Care Power of attorney on your behalf. The attorney will be able to help you make sure that your estate plan, including your will, is properly prepared and discuss with you the best options for these important decisions.

Reference: Sandusky Register (Feb. 5, 2019) “Consumer beware: Understanding the powers of a Power of Attorney”

Suggested Key Terms: Power of Attorney, Health Care, Principal, Agent, Elder Abuse, Estate Planning Attorney,

Do-It-Yourself Will Leads to Disaster

This is a cautionary tale of what can happen when people create a do-it-yourself will without the help of an estate planning attorney. As Ms. Cockrum told News 2 in the article “The power of a will and trouble without one,” she’s going from court procedure to court procedure, and feels overwhelmed. The entire issue would have been prevented with a properly prepared will.

Work with an estate planning attorney to avoid the many pit-falls of the do-it-yourself will

Without a valid will, a judge must determine how to divide assets in an estate. In this case, the biggest issue concerns the family home. The mortgage for the home is in her late husband’s name, even though they bought the house and maintained it together.

Here’s the problem: his children from a previous marriage are legally entitled to half of his assets.

Without a will, battles among family members are common. One purpose of the will is to name an executor (also known as the personal representative) who takes charge of distributing assets, including selling a home, paying off any debts and making sure that final wishes are carried out, as the decedent wanted. Without an executor, the first battle is over who will be in charge. That can take months and delay any resolution to the estate.

If there are minor children and no will, the opportunity to determine who will take care of the children is left to the court. Someone who does not know the family will make a decision to appoint the person who becomes their guardian. It may be someone you would not have wanted to raise your kids.

The will also outlines who gets what possessions from the estate. Family heirlooms and artifacts, like china, jewelry, collections and all kinds of items hold emotional and financial value. Fighting over who gets what, happens often when there’s no will. That takes time to resolve.

Without an estate plan to help manage tax liabilities, there may be taxes that could have been minimized. The cost of attorney’s fees to settle an estate without a will is typically going to be much higher than working with an attorney in the first place to create a will and other important documents.

Another surprise that families run into when there’s no will is that people think the surviving spouse inherits everything. However, this is not always true. Without a will, the state law determines what happens to the estate’s assets. Depending on the state, your spouse may get 50% and your kids may get 50%, or the surviving spouse might get everything. In other states, the surviving spouse receives a third.

The simplest way to avoid the troubles associated with a do-it-yourself will is to make an appointment with an experienced estate planning attorney and have an estate plan created that will protect your surviving spouse and your family. The attorney will also help you prepare for incapacity, with a power of attorney and healthcare power of attorney. This is not a do-it-yourself task.

For information about working with Mastry Law to insure your will transfers your assets how you want, visit our website and request a consultation.

Reference: News 2 (Jan. 29, 2019) “The power of a will and trouble without one”

What Do I Need to Do To Get Financially Fit in My 30s?

Whether you’re 30 or 39, retirement will come up faster than you think. Many people are surprised when they see how much they need to put away to keep their current standard of living in retirement.

Once you decide when you want to retire, you need to calculate how much money you’ll need and how you’ll get there. Of course, you should take advantage of company matching and various tax deductions, when saving for retirement. But, don’t wait until your 40s or 50s to try to catch up. That will be painful, or worse, impossible.

Forbes’s recent article, “3 Steps To Financial Fitness In Your Thirties,” advises that when you start to accumulate wealth, be sure someone is watching your investments and that those investments are suitable for your time frames and financial goals.

Working with a fiduciary advisor can help improve your situation. This should be someone you trust, and most important of all, who you feel has your best interests at heart.

If you are accumulating assets, make sure they’re protected. Be certain you and your family are covered by having the correct insurance policies. Of course, in a perfect world nothing would happen. For instance, most people on disability would much rather be healthy. They’d love to be able to joke and say that having that disability insurance was a “bad investment”. However, those who are disabled and aren’t covered with a disability insurance policy, most likely wish they’d made sure they had this income protection in place.

Another form of protection is an emergency fund. If you don’t have one, start by regularly putting some amount of money into a non-retirement account. Even if it’s a small amount, something is better than nothing. If you were to be laid off, chances are that your unemployment benefits would not be enough to pay the rent or make a mortgage payment.

If you’re single, you should protect yourself—even more so than someone who has a partner to rely on. Many life insurance policies have living benefits that can protect you, if an emergency happens.  You may also be able to use cash value life insurance to partially fund your retirement.

Finally, it’s critical that you think about estate planning. You should have an estate plan, including a will, Powers of Attorney, health care power of attorney and, if you have minor children, a guardian should be named in your will.

Let’s say you’re living with someone. If something happens to either of you, the living partner will most likely be treated as a roommate—and have no legal rights to your property. An estate plan can be prepared to provide your partner with legal protection.

Reference: Forbes (December 17, 2018) “3 Steps To Financial Fitness In Your Thirties”

Here’s a Happy Way to Start the New Year – A Gift of Estate Planning

If you think of estate planning as a gift to your loved ones, and not an obligation, then you will understand why the start of a new year is the perfect time to give your family the peace of mind that an estate plan can bring. The article “Give the gift of estate planning to loved ones this holiday season” from the Brainerd Dispatch describes how stress and guilt for the family can be alleviated just by having a good estate plan in place.

Your estate plan will provide your family with clear directions on where you want your assets to go when you have passed, but that’s just for starters. They will be dealing with many moving parts when you pass: funeral arrangements, notifying family members and grief, which can be overwhelming.

If you don’t have a will or haven’t done any planning, the process for your family to gain access to your assets becomes extremely problematic. The process is called probate, and it can take months and cost a great deal to unlock real estate ownership, account information or other assets for your spouse, children and grandchildren.

There’s also no way to ensure that your assets will be distributed as you wanted, if you do not have a will or an estate plan. Let’s say you have a non-traditional family. You’ve lived with your partner for decades, even raised children together, but never married. Your partner and your children may find themselves completely without any voice in your estate, and no right to any assets. Without a will, the state’s laws will determine who receives your assets, and that may be a sibling or a parent, if still living.

Your estate plan becomes your legacy, and it’s not just for family members. If there are causes or organizations that have meaning for you, they can be included in your estate plan. Lifetime giving or giving “with warm hands” is rewarding, because you get to see the impact of your generosity. However, you can use an estate plan to make a gift to an organization, which serves a dual purpose. It decreases the value of your estate, and can lessen the tax burden of your estate, giving your family more money.

There are many ways to make planned giving part of your estate. Donor advised funds are increasingly popular, or you may want to use a charitable trust or fund a scholarship. Your estate planning attorney will be able to help you determine the best way to structure your giving.

An experienced estate planning attorney has worked with families of all different types and will have the knowledge and skills to help you create an estate plan that works best for your family. The attorney will also encourage you to talk with your family members to make sure they know that you have put a plan into place. You may wish to have a family meeting with your estate planning attorney, to ensure that everyone understands why you made the decisions you did and ensure that the family understands that your estate plan is a gift from the heart.

Reference: Brainerd Dispatch (Dec. 8, 2018) “Give the gift of estate planning to loved ones this holiday season”

Awareness and Communication Can Help Head Off Elder Abuse

It’s great that overall our life expectancies have increased, but with longer lives, comes a greater risk of bad choices and financial elder abuse. There are steps you can take to protect those you love.

As we age, so does our brain. Even high functioning retirees, who have no outward signs of dementia, find it more challenging to distinguish between safe and risky investments, according to recent studies. The numbers say it all: only 7% of seniors over 60 have dementia, but nearly a third of those who are 85 years old or older have dementia.

MP900407501If you’re a senior or you have one in your life, it’s critical to know how to prevent abuse. The Kansas City Star provides some helpful ways to prevent abuse in its recent article, “Five ways to avoid elder financial abuse.”

Communication. Speak with your elderly loved ones on a regular basis to check in on their health and their activities. Remind them to maintain safe practices, like shredding receipts and account statements. You should also remind them to be cautious about opening unknown emails and that they should never give out their Social Security number or banking information online or on the phone. Keep open communication, so you can see if they’re showing any signs of confusion or mental decline.

Stay attentive. Know how your loved ones are spending time and their money. If they hire outside help, try to be involved in the hiring process and try to know their health care aides. In addition, take a look at their monthly or quarterly statements to identify any unusual, frequent, or large payments. If your loved one is showing signs of decline, ask if you can pay bills for them, so you’ll know what’s going on.

Create a system of checks and balances. Make sure that your senior has the proper estate planning documents in place that will let trusted family members help them as needed. If you have siblings or other family members, divide responsibilities and then swap responsibilities every few months.

Build professional relationships. Ask your senior to let you come to meetings with them, when visiting advisers, like their estate planning attorney.

Streamline accounts. Conduct an inventory of their financial documents. This includes their life insurance and long-term care policies, bank accounts and investment accounts. Try to make your loved one’s finances more manageable and consolidate their accounts where possible, which will make it easier to spot any unusual withdrawals or transactions.

If, despite all of your efforts, financial fraud or elder abuse takes place in your family, reach out to law enforcement in your area and talk with an elder law attorney. You can protect your loved one (or yourself) after the fact.

Reference:The Kansas City Star (September 8, 2018) “Five ways to avoid elder financial abuse”

How Does Rolling a 401(k) into an IRA Fit into My Retirement Plan?

Whether or not to roll a 401(k) into an IRA when you are changing jobs or retiring early, does not have a simple yes/no answer. There are a number of factors to consider.

If your retirement plan includes retiring before you reach age 59 ½, you may not want to move your 401(k) into an IRA at all. It may be better to move it into your current employer’s 401(k) plan. Moving those funds into an IRA, may limit your withdrawal options in retirement, says Forbes in the article, “Should I Roll My Old 401(k) To An IRA If I Want To Retire Early?”

MP900409252There’s a 10% penalty to withdraw funds from your traditional IRA before 59½, unless you qualify for an exception. However, many people don't know that the IRS lets employees who retire or otherwise leave a company at age 55 or older, to withdraw from their employer's plan without a penalty. Therefore, if you retire at age 55 and roll over your 401(k) to an IRA, you'll have to wait 4½years longer to withdraw your funds without a penalty.

At any age, there will be income taxes to pay on withdrawals. If you have a traditional 401(k), you got a tax break when you invested. Your funds then grew tax-deferred all those years. The IRS now wants to tax your money. When you withdraw from your traditional 401(k), your funds will be taxed at ordinary income tax rates.

There are also some side benefits to staying with a 401(k), instead of opening up a rollover IRA. First, it simplifies your investments. If you roll your 401(k) to your current firm when you switch jobs, you know exactly what your funds are invested in and can check the balance all in one place. It could also protect you from legal judgments. Keeping retirement funds in a company plan, instead of an IRA, will keep it safe.

You should discuss your asset protection strategy with your estate planning attorney.

Remember, not everyone qualifies to invest in a Roth. However, it is possible to contribute to a Roth IRA in a roundabout way, called a "backdoor” Roth IRA. It is complicated and you will need to talk to your tax advisor. Basically, you can open a non-deductible IRA and contribute to it, up to the maximum of $5,500 (or $6,500 if you are over age 50), then immediately convert it to a Roth IRA. Because you haven’t earned any interest, you don’t have any taxes to pay on the conversion.  Now you have a Roth IRA!

However, if you own any other traditional IRAs, you may have to pay pro-rata taxes on the conversion. If you want to try a backdoor Roth IRA, transferring your old 401(k) to your new employer’s plan may be the best way to go.

Speak with an experienced estate planning attorney to ensure that you don’t run afoul of any IRS rules on retirement accounts, if you intend to retire early. Making an expensive mistake could undo your early retirement.

Reference: Forbes (August 31, 2018)“Should I Roll My Old 401(k) To An IRA If I Want To Retire Early?”

Making Financial Planning Part of Your Wedding Planning?

Once you’ve worked through the financial and legal part of planning your new life together, many issues that plague marriages will be resolved.

No, it’s not as romantic as planning a honeymoon along a sandy beach. But once you’ve worked through the financial and legal part of planning your new life together, many issues that plague marriages will be resolved. That’s romantic!

26201363701_de6af9d0ed_oThe leading cause of stress in relationships in general and marriages in particular are finances, as reported in an article from My Primetime News, “Hearing Wedding Bells? Be Sure Finances are Included in Your Planning,”by Gerald Rome, Colorado Securities Commissioner. As many as a third of people, say that money is the primary source of discord in their partnership. Therefore, why not eliminate the problem by addressing it?

Rome notes that summer is wedding season. Whether you’re taking the plunge later in life—maybe for the second time or advising a young couple about to make the ultimate commitment—much of the thought process is the same. There’s perhaps no topic less uncomfortable, but more important, than finances.

Before you or a loved one say, “I do,” be sure to consider the following:

Transparency.Many divorces stem from a lack of honesty about finances. Before you walk down the aisle, be sure you know everything about your betrothed’s financial past, spending habits, investing philosophy, and goals for the future. That means sharing information on major debts from education, business, and home loans, as well as credit scores and bankruptcy history. If you’re entering a second marriage, be truthful about any alimony being paid to or received from a former spouse.

For those marrying later in life, think about how or whether to merge accumulated assets and how to compromise on handling financial affairs, after what may have been many years of individual decision-making.

Financial Roles.For co-mingled finances, it’s important to be certain that you’re clear on who will handle what. Many financial issues that arise later in life, are due to one spouse not knowing what’s going on and being deluged with a mountain of new information and decision-making, in the event of a spouse’s sudden illness or death.

Prenuptial Agreement.Detailing what will happen to assets if the marriage fails, isn’t about a lack of trust—it’s about being prepared.

Estate Planning.Organize your property to ensure that no matter what happens, your family’s financial needs will be met. This includes drafting powers of attorney, creating or revising your wills, purchasing life insurance policies, revisiting retirement accounts and investment funds, establishing trusts and naming beneficiaries and considering any tax implications.

By dealing with the business side of marriage from the start, you may learn a lot more about your intended than you would if you had avoided the conversation. Once you know what each other’s financial status is, good or bad, you can figure out how to fix it—or enjoy it! By working with an experienced estate planning attorney and getting your estate plan prepared, you’ll be ready to relax and enjoy each other, without any nagging worries about financial or legal mysteries.

Reference: My Primetime News (May 2, 2018) “Hearing Wedding Bells? Be Sure Finances are Included in Your Planning”

What Goes into a Good Will?

If you are a parent, you need a will that names guardians for your minor children. Anyone who is an adult, should have a will.

If you are an adult, you need a will. If you are a parent, you need a will that names guardians for your minor children. Anyone who is an adult, should have a will.

Th (2)The core of an estate plan is a document known as a will, the legal document that tells your heirs and the court how you want your assets handled upon your death. If you don’t have a will and you die, decisions about the distribution of your possessions and property are made by a judge, who likely doesn’t know who you are, or what you might have wanted to happen to your assets. If you have minor children and have not had a will created, then a judge will also be the one making the decisions about your children. That’s probably not what you or your family want to have happen.

Health Day’s recent article, “Wills & Living Wills,”provides some general rules for writing a will:

  • In most states, you must be 18 years of age or older.
  • The testator (author) of the will must be of sound mind for the will to be valid.
  • The document must clearly state that it’s your will.
  • You must name an executor–that’s the individual who will see that your estate is distributed, according to your wishes.
  • You must sign the will in the presence of at least two witnesses.
  • In many instances, notarizing or recording your will is not required. However, it can protect against any claims that it's invalid.
  • You and your spouse should have separate wills.

You should also review your will regularly and consider making changes if:

  • The value of your assets changes.
  • You marry, divorce, remarry, or expand your family with another child.
  • You move to a different state.
  • Your executor passes away or becomes incapacitated, or your relationship changes.
  • One of your heirs or a loved one dies.
  • The probate and tax laws affecting your estate change.

It’s also important to draft an advance directive. This includes a living will with directions on what medical care you do or don't want, if you're unable to speak.

Your best course of action is to meet with an experienced estate planning attorney and let him or her guide you through the estate planning process. Because every state has different rules, your estate planning attorney will know what your state does and does not allow.

Reference: Health Day (March 21, 2018) “Wills & Living Wills”

Proper Planning for the Distribution of an IRA

Understand the rules, so the money goes where you want it to.

The rules for IRA distributions can be complicated. Unforeseen circumstances can make things even more complex. Understand the rules, so the money goes where you want it to.

Bigstock-Family-Portrait-At-Christmas-4881212What happens if you designate each of your two adult children as 50/50 beneficiaries of your IRA, and then one of them dies? Will the funds go to your grandchildren?

MarketWatchanswered that question in its article, “Who gets your IRA when you die? It’s not so simple.”The answer to what happens to the IRA money is dependent upon what the beneficiary designations say and when one of the children passes away. The beneficiary designations state how it will be distributed. However, that may not be what is written in your will.

If the children are alive when the IRA owner dies, and she simply named them 50/50 outright beneficiaries, they will each get half the funds. Each child could do whatever they wanted, including placing the funds in an inherited IRA account and naming their choice of beneficiaries.

 However, if either child dies before the parent with the IRA passes away, and she doesn’t update the beneficiary designation before she dies, there are two common default arrangements built into account forms for IRAs, retirement accounts, life insurance policies, annuity contracts, and “transfer on death” arrangements available in some states. One is per capita: if one child is dead at the time of the parent’s death and is still listed as a 50% beneficiary, then 100% of this share will go to the surviving child.

The other common arrangement is per stirpes—Latin for “by the root.” Here, rather than the predeceasing child’s share going to their surviving sibling, the share goes to the deceased beneficiary’s children.

Be sure to obtain a copy of what you filed for your beneficiary designations.  You should carefully review the language to be certain that it meshes with your wishes. If you want your assets to flow differently, speak with an estate planning attorney about drafting a custom beneficiary designation. Some people don’t want one of their beneficiaries to inherit outright and have free reign with the funds. An attorney can help protect that person and the money.

If you want to have people who are not “linear” decedents be beneficiaries, such as family friends or spouses of children, you’ll need to sit down with an estate planning attorney to make sure that the legal documents are correctly drafted. You may decide to use a custom beneficiary designation or trusts to achieve this.

Reference: MarketWatch(March 17, 2018) “Who gets your IRA when you die? It’s not so simple”

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