Health Care Directive

What Goes into an Estate Plan?

The thought of creating an estate plan can be intimidating, but this article from Brainerd Dispatch, “Navigating your estate plan,” wisely advises breaking down the process into smaller pieces, making it more manageable. By taking it step by step, it’s more likely that you’ll be comfortable getting started with the process.  The first step is understanding what goes into an estate plan.

What goes into an estate plan?
Deciding what goes into an estate plan that fits your life and accomplishes your goals should be done with the help of an estate planning attorney.

Start with Beneficiaries. This may be the easiest way to start. If you have retirement accounts, like IRAs, 401(k)s, 403(b)s or other retirement accounts, chances are you have already written down the name of the people you want to receive your assets after you pass away. The same goes for life insurance policies. The beneficiary designation tells who receives the assets on your death. You should also note that there are tax ramifications, if you don’t have a beneficiary. Your assets could become taxable five years after you die, without a named beneficiary.

Be aware that no matter what your will says, the name on your beneficiary designations on these accounts determines who gets those assets. You need to check on these from time-to-time to be sure the people you have named are still the people who you want to receive your accounts. You should review the designations every time you review your estate plan, which should be every three or four years.

You should also name a contingent beneficiary on all accounts that allow it.  The contingent beneficiary is the person who will receive the asset is the primary beneficiary is unable to receive it for any reason.

Where There’s a Will, There’s a Way. The will is a key ingredient that goes into an estate plan. It can be used to ensure that your family has the management assistance they need, and, if you have minor children, establish who will raise them is you’re unable to (in fact, a will is the only way you can name a guardian for your children.)

Not having a will leaves your family in a terrible position, where they will have to endure unnecessary expenses and added stress. Your assets will be distributed according to the laws of your state, and not according to your own wishes.

Directives for Difficult Times. Health care directives give your loved ones direction when a difficult situation occurs. If you become incapacitated, through an accident or serious illness, the health care directive tells your family members what kind of care you want—or do not want. You should also name a health care surrogate, so that a person can make medical decisions on your behalf if you’re unable to speak for yourself. Working with an estate planning attorney who is licensed in your state is is important for this item because different states have different laws concerning naming a healthcare surrogate and the decisions they can make.

In addition, you’ll need a financial power of attorney. This allows you to designate someone to step in and manage your finances in the case of incapacity. This is especially important if you are single, because otherwise a court may have to name someone to be your financial guardian.

What About Trusts? If you own a lot of assets or if your estate is complicated, a trust may be helpful. Trusts are legal entities that hold assets on behalf of your beneficiaries. There are many different types of trusts that are used to serve different purposes, from Special Needs Trusts that are designed to help families plan for an individual with special needs, to revocable trusts used to avoid probate and testamentary trusts, which are created only when you die. An estate planning attorney will know which trusts are appropriate for your individual situation.

Working with a qualified and experienced estate planning attorney will help you understand what goes into an estate plan that makes the most sense for you and accomplishes your goals.

Reference: Brainerd Dispatch (Aug. 11, 2019) “Navigating your estate plan”

Leaving a Legacy Isn’t Just About Money

A legacy is not necessarily about money, says a survey that was conducted by Bank of America/Merrill Lynch Ave Wave. More than 3,000 adults (2,600 of them were 50 and older) were surveyed and focus groups were asked about end-of-life planning and leaving a legacy. The article, “How to leave a legacy no matter how much money you have” from The Voice, shared a number of the participant’s responses.

Leaving a Legacy
Most people would rather be remembered for how they lived their life instead of how much money they made.

A total of 94% of those surveyed said that a life well-lived, is about “having friends and family that love me.” 75% said that a life well-lived is about having a positive impact on society. A mere 10% said that a life well-lived is about accumulating a lot of wealth.

People want to be remembered for how they lived, not what they did at work or how much money they saved. Nearly 70% said they most wanted to be remembered for the memories they shared with loved ones. And only nine percent said career success was something they wanted to be remembered for.

While everyone needs to have their affairs in order, especially people over age 55, only 55% of those surveyed reported having a will. Only 18% have what are considered the three key essentials for leaving a legacy: a will, a health care directive and a durable power of attorney.

The will addresses how property is to be distributed, names a personal representative of the estate and, if there are minor children, names who should be their guardian. The health care directive gives specific directions as to end-of-life preferences and designates someone to make health care decisions for you, if you can’t speak for yourself. A power of attorney designates an agent to make financial decisions on your behalf if you’re unable to do so, because of illness or incapacity.

An estate plan is often only considered when a trigger event occurs, like a loved one dying without the proper documents in place. That is a wake-up call for the family, once they see how difficult it is when there is no estate plan.

Parents age 55 and older had interesting views on leaving inheritances and who should receive their estate. Only about a third of boomers surveyed and 44% of Gen Xers said that it’s a parent’s duty to leave some kind of inheritance to their children. A higher percentage of millennials surveyed—55%–said that this was a duty of parents to their children.

The biggest surprise of the survey: 65% of people 55 and older reported that they would prefer to give away some of their money, while they are still alive. A mere 8% wanted to give away all their assets, before they died. Only 27% wanted to give away all their money after they died.

Reference: The Voice (June 16, 2019) “How to leave a legacy no matter how much money you have”

Aging Parents and the Important Conversations to Have Now, Not Later

The roles are reversed when parents age. You can’t count on them to take the lead in having discussions about money, health, aging and other concerns that come in the later years.

When you were a kid, your parents were in charge. Now your parents are older, and you must be the adult in the room. Embracing that role, with thoughtfulness, will make it easier for you and your parents as you address the issues that come with aging. As recommended in the article “How to Have Difficult Conversations With Your Aging Parents” from Next Avenue, having these conversations will help you all avoid some of the uncertainty and stress in the future.

MP900430865 (1)Here are the conversations you need to have:

The Money Talk. What’s their financial situation? Do they have enough to pay their bills right now? What if they live another ten or twenty years? Do they have a will? Do you know where the will is, and the name of the estate planning attorney who created it? Do they have powers of attorney for finances in place?

The Health Talk. Medical issues that you’ve heard about but aren’t fully informed about need to be clarified. What medications do they take, and is there a list posted on the refrigerator, or located somewhere you can get to it, in the event of an emergency? Have they properly documented a power of attorney for healthcare?

The Aging Talk. Do they plan on aging at home, or are they considering moving to a continuing care facility? What senior living options should they consider, if and when they can’t live on their own anymore?

The End of Life Talk. This is the hardest one, but it is hard for everyone. If they should have a terminal illness, what do they want to happen? Do they have a medical directive, or a living will? How do they feel about extreme measures being taken to sustain life, if they are incapacitated?

The Family Legacy Talk. This is a warmer, happier conversation. What do they want the family to remember about them, and how can you work together to assemble the things that will help accomplish this? Are there family recipes, photo books, treasured heirlooms, videos or jewelry they want to pass along? Are there stories they want to share?

Note that these are not one-time conversations, but processes. Everyone will respond differently, and some parents may need more time to reflect and consider their answers than others. Your parents will need to be ready to have these conversations with you. Some conversations may touch on a raw memory and have to stop, to resume at a later point.

Depending on your parents’ personalities, you may want to speak with them together, if they are both living, or individually. One might be more comfortable discussing certain matters without the other present.

Take notes of the conversation. You’ll be able to review the notes with them if need be and share that information with siblings and family members. You can also see what’s left out. Your notes are not a legally binding document, but they can help when their wills are created or revised.

Estate planning attorneys work with families and aging issues on a regular basis and will be able to discuss these matters with your parents and with you. They’ll know about issues you may not even be aware of. If possible, go with your parents to meet with their estate planning attorney, so that everyone is on the same page.

Reference:Next Avenue(September 21, 2018) “How to Have Difficult Conversations With Your Aging Parents”

What are Pastors Doing about Estate Planning?

You might think that pastors, who lead congregations in occasions of birth and death, would be a little more aware than the rest of us of the events of life, and by extension, the need for an estate plan. However, a recent survey shows otherwise.

A survey of Southern Baptist pastors conducted for the Southern Baptist Foundation has revealed that more than half of them don’t have the estate basics, including a will, trust, living will, electronic will, legacy story or durable power of attorney with health care directives.”

MP900390083 (1)In its recent article on the survey, TheBaptist Pressreports, “Young or old, many pastors lack a will, survey finds,”that 74% of the pastors surveyed think estate planning should be considered part of a person's complete financial stewardship.

However, executives at LifeWay Research say the survey shows a lack of awareness about estate planning and the laws which may be factors in pastors not having a plan in place. Procrastinating is common, but failing to have an estate plan in place can have a devastating impact on an estate.

Of course, basic estate planning saves a lot of trouble for family and loved ones. However, in addition, taxes can be minimized and assets protected.

According to the survey, pastors age 18-44 are the least likely to have a will (31%) or a durable power of attorney with health care directives (14%). Only about half of those pastors closest to retirement (age 55-64 and 65-plus) have a will (54% for both groups). Likewise, few of those closest to retirement (age 55-64 and 65-plus) have a health care durable power of attorney (25% for both groups).

It’s a bit of a surprise that so many pastors don’t have a plan for their families and property after their death, especially those that should be most likely to be thinking about this issue—the ones with young families. They seem to be the least prepared.

About 64% of the clergy surveyed, agree with a statement that the court decides who will care for a child, if the last parent dies without a will; 16% percent disagree, with 21% saying they didn’t know. When asked about assets, the survey showed that 48% of pastors said that if someone dies without a will, their family decides what happens with the assets of the deceased; 33% disagree, and 19% "don't know."

However, both with property and children, it’s the court that decides what happens to them, if there’s no will.

The survey reflects the data from more than 1,100 completed surveys that were conducted, both by mail and online, this past spring.

Reference: Baptist Press (August 31, 2018) “Young or old, many pastors lack a will, survey finds”

Another Reason Why You Need an Advance Care Directive and an Updated Will

What kind of funeral do you think your almost ex-spouse will plan on your demise?

What kind of funeral do you think your almost ex-spouse will plan on your demise? Avoiding that scenario is easy to fix, even if you intend to stay permanently separated: update your estate plan.

ZXVjCOREBCyGThe unsettling week that brought news of two very accomplished people who took their own lives also put a spotlight on their marital status. Kate Spade and Anthony Bourdain were not divorced from their spouses, so their “not-quite ex’s” will be in charge of everything, unless their estate plans were updated to reflect other wishes.

Forbes’s recent article, “Kate Spade, Anthony Bourdain And Estate Planning When You Are Separated,” explains that when spouses decide to divorce, it’s usually a legal process. However, it’s becoming more common for spouses to remain permanently separated but not divorced. This is a gray area for both family law and estate law, where many don’t realize the legal implications.

Although the details of Kate Spade’s separation aren’t known, Bourdain’s separation from his second wife are, and his situation is a common one. He and his estranged spouse were together for years, but their work and other commitments caused them to move in separate directions. They had one child, whom they wanted to co-parent together.

However, with his untimely death, it brings up an odd result: his estranged spouse is his beneficiary.  She will also be the owner of his legacy. In terms of immediate issues, she controls his remains and his funeral. Bourdain’s mother told the media that she was unsure of funeral plans with his estranged spouse still legally his next of kin. She said, “Although they are separated, she’ll be in charge of whatever happens.”

While this might be okay for the Bourdain family, in the event you consider a permanent separation, it may be wise to consider the pros and cons of an estranged spouse’s rights. When you get married, spouses are given rights previously unavailable to them in their single status with their partner.  Separation doesn’t mean your spousal rights are immediately wiped out. Only a final divorce decree can fully terminate spousal rights. If there’s a death prior to a divorce, in most situations the surviving spouse will have legal control.

Even if the separation is amicable, there are a few things to consider. Make sure someone other than your estranged spouse is able to plan your funeral. To do that, you need to have a newHealth Care Directiveput in place. That’s a legal document, in which a person specifies what actions should be taken for their health, if they’re unable to make those decisions. It also address the disposition of the body in the event of death. Make sure that your funeral plans are included in your health care directive. In contrast to changing beneficiary designations or your estate plan in a divorce proceeding, you can make a new directive, and you aren’t required to name your spouse.

A final piece when the estate plan is updated: make sure to tell the people who will be involved: adult children and any others who will be in charge of you and/or your estate. Make sure that your estate planning attorney and your matrimonial attorney are in touch so that all bases have been covered.

Reference: Forbes (June 12, 2018)“Kate Spade, Anthony Bourdain And Estate Planning When You Are Separated”

How to Address the Business Side of a Second Marriage

before your wedding celebration, consider these steps

A second (or third) marriage comes with certain legal and financial issues that are best dealt with before you walk down the aisle.

26201363701_de6af9d0ed_oA new marriage feels like a fresh start and a chance to move forward in life.  However, before your wedding celebration, consider these steps recommended in Nasdaq’srecent article, “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again).”

Create a consolidated net worth statement. One fundamental mistake many couples make is failing to look at their combined net worth, until they start talking about how they will pay for their wedding or another big-ticket item. Those who remarry frequently have more complex financial responsibilities, such as child support, liquid and illiquid investment assets, as well as estate planning and tax-planning strategies. The best course is to be upfront from the start to avoid damaging your relationship in the long run. Take time to review your individual financial situations, including liabilities, before you create a consolidated statement of net worth.

Sign a pre or postnuptial agreement. This can be uncomfortable but can be valuable for both parties, if there’s a divorce. A pre or postnuptial agreement is particularly important,  since it's the only way to legally claim specific assets within a marriage. In addition, a prenuptial agreement may ensure that any children within the marriage are financially protected, in the event one spouse dies. It’s also important to remember, even if you're recently married and don't have a formal prenuptial agreement, state law will often have one for you.

Think about all of your kids. Some spouses who were married previously may bring children into their new relationship. This creates many financial issues. Determine as a couple how you’ll financially address major expenses, like health care, child care, and tuition. When you've decided, discuss your plan of action with an attorney to be sure you're considering all potential options and their long-term implications.

Update your beneficiary designations. This is a common error. Assuming you want to name your new spouse as a beneficiary, you should review all your accounts and update the documents.

Review and update your estate plan. This step often gets forgotten in the rush of planning the ceremony, reception and honeymoon. You’ll both need to meet with an experienced estate planning attorney to review your individual wills from the past and prepare new wills, powers of attorney and health care directives to reflect your new status.

Reference: Nasdaq(April 20, 2018) “Getting Remarried? 5 Financial Steps to Take Before Tying the Knot (Again)”

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