Can I Protect My Family after Death?

Estate planning involves a close look at personal and financial goals while you are living and after you have died, as explained in a recent article titled “Professional Advice: Secure your future with estate planning” from Northwest Indiana Business Magazine. Having a comprehensive estate plan ensures that your wishes will be carried out and loved ones protected.

Your last will and testament identifies the people who should receive an inheritance—heirs—who will manage your estate—executor—and who will take care of your minor children—guardian. Without a valid will, the state will rely on its own laws to distribute assets and assign a guardian to minor children. The state laws may not follow your wishes. However, there won’t be anything your family can do if you didn’t prepare a will.

Assets with beneficiary designations can be passed to heirs without going through probate. Certain assets, like life insurance policies and retirement accounts, allow a primary and secondary beneficiary to be named. These assets can be transferred to the intended beneficiaries swiftly and efficiently.

Many people use trusts to pass assets for a variety of reasons. For example, a trust can be created for a family member with special needs, protecting their eligibility to receive government benefits. Depending on the type of trust you create, you might be able to eliminate estate taxes. Certain trusts are also useful in protecting assets from creditors and lawsuits, and ensure that assets are distributed according to your wishes.

Revocable living trusts provide protection in case of incapacity, avoid probate and ancillary probate and may provide asset protection for beneficiaries. If you are the creator of a trust—grantor—you will need to appoint a successor trustee to manage the trust if you are the original trustee and become incapacitated. Upon death, a revocable trust usually becomes irrevocable. Assets placed in the trust avoid probate, the court proceeding used to settle an estate, which can be both time-consuming and costly.

A Power of Attorney allows you to name a person who will handle your financial affairs and protect assets in the event of incapacity. That person—your agent—may pay bills, sell assets and work with an elder law estate planning attorney on Medicaid planning. The POA should be customized to your personal situation. you may give the agent broad or narrow powers.

Everyone should also have a Health Care Proxy, which gives the person named the legal right to make health care decisions on your behalf if you are unable to. You’ll also want to have a HIPAA Release Form (Health Insurance Portability and Accountability Act), so your agent can speak with all health care providers, access medical records and speak with the health insurance company on your behalf.

A Living Will is the document used to convey your wishes regarding end-of-life care if you are unable to do so yourself. It is certainly not pleasant to contemplate. However, it should be thought of as a kindness to your loved ones. Without knowing your wishes, they may be forced to make a decision and will never know if it was what you wanted. A Living Will also avoids conflicts between health care providers and family members and makes a stressful time a little less so.

Having a comprehensive estate plan provides protection for the individual and their family members. It avoids costly and stressful problems arising from the complex events accompanying illness and death. Every three to five years (or when life or financial circumstances warrant), meet with an estate planning attorney to keep your estate plan on track.

Reference: Northwest Indiana Business Magazine (Dec. 27, 2022) “Professional Advice: Secure your future with estate planning”

Do I Need a Last Will and Testament?

Estate planning encompasses everything from planning for property distribution at death to preparing for incapacity, tax planning and guardian planning for minor children. An experienced estate planning attorney is involved with far more than a last will and testament. However, this is what most people think of when they sit down for their first meeting.

A recent article titled “Last Will and Testament” from mondaq examines what the last will and testament does and how it differs from trusts. These two are only part of a comprehensive estate plan.

A will is only effective upon death. Its directions are not followed while living or if a person becomes incapacitated. A will does not avoid probate, rather it ensures assets go to the people as directed by the person making the will. Without a will, assets are distributed according to the laws of the state, usually determined by kinship. A certain percentage will go to a spouse and another percentage will go to biological children. Unmarried partners and stepchildren have no legal right of inheritance.

The will is also the legal document used to name an executor, the person responsible for carrying out the directions in the will and managing the estate. The executor has a long list of duties, from making sure the will is validated by the court during probate to applying for an estate tax identification number with the IRS, opening an estate bank account, notifying Social Security of the decedent’s passing, paying debts, paying taxes for the individual and for the estate and distributing property,

The will is used to name a guardian for minor children. When planning has been done correctly, the guardian is provided with information about the children’s lives and financial planning has been done for the children’s support and for their education. A trust is usually used to hold assets for the benefit of the children, with a trustee named to manage funds.

Wills go through probate, which varies by state. Once the will is filed in court, it becomes a public document. Heirs must be notified, even those not included in the will. An alternative is creating and placing assets in a trust to protect privacy and manage and distribute property.

Trusts are not just for wealthy people. They are used to maintain privacy, as the assets in the trust do not pass through probate. The trustee is in charge of the trust and making distributions to beneficiaries. There are many different types of trusts; an experienced estate planning attorney will be able to recommend the optimal one for each client based on their situation.

The trust is effective upon its creation and is a separate legal entity and is also used to protect assets from creditors. Trusts are more complicated than traditional bank accounts. However, their ability to protect assets and maintain privacy make them a valuable part of any estate plan.

If a person becomes incapacitated, the trust remains in effect. If the trust is a revocable trust, meaning the grantor is able to change its terms as long as they are living and the grantor becomes incapacitated, a successor trustee can step in and manage the trust without court intervention.

Trusts do require diligence to create. Trust must be funded, meaning assets need to be retitled so they are owned by the trust. New accounts may need to be open, if retitling is not possible. Beneficiaries need to be established and terms need to be set. The trust can be created to fund a college education or for general use. However, terms need to be established.

A comprehensive estate plan protects the individual while they are living and protects the family after they have passed. It is a gift to those you love.

Reference: mondaq (Nov. 16, 2022) “Last Will and Testament”

What Trust Documents are Needed in an Emergency?

Most people don’t have any idea where to start when it comes to their emergency documents.  This often keeps them from going anywhere near their estate planning. This is a big mistake, says a recent article, “3 tasks your family needs to complete to ease any anxiety over unexpected emergencies,” from MarketWatch.

Estate planning is not just about wealthy people putting assets into trusts to avoid paying taxes. Estate planning includes preparing for life as well as death. This includes a parent preparing for surgery, for instance, who needs to have the right documents in place so family members can make emergency medical or financial decisions on their behalf. Estate planning also means being prepared for the unexpected.

Power of Attorney. Everyone over age 18 should have a POA, so a trusted person can take over their financial decisions. The POA can be as specific or broad as desired and must follow the laws of the person’s state of residence.

Medical Directives. This includes a Medical Power of Attorney, HIPAA authorization and a Living Will. The Medical POA allows you to appoint an agent to make health care decisions on your behalf. A HIPAA authorization allows someone else to gain access to medical records—you need this so your agent can talk with all medical and health insurance personnel. A living will is used to convey your wishes concerning end of life care. It’s a serious document, and many people prefer to avoid it, which is a mistake.

All of these documents are part of an estate plan. They answer the hard questions in advance, rather than putting family members in the terrible situation of having to guess what a loved one wanted.

An estate plan includes a will, and it might also include a trust. The will covers the distribution of property upon death, names an executor to be in charge of the estate and, if there are minor children, is used to name a guardian who will raise them.

A list of important information is not required by law. However, it should be created when you are working on your estate plan. This includes the important contacts from doctors to CPAs and financial advisors. Even more helpful would be to include a complete health profile with dates of previous surgeries, current medications with dosage information and pharmacy information.

Don’t overlook information about your digital life. Names of financial institutions, account numbers, usernames and passwords are all needed if your agent needs to access funds. Do not place any of this information in your will, as you’ll be handing the keys to the vault to thieves. Create a separate document with this information and tell your agent where to find the information if they need it.

Reference: MarketWatch (Nov. 19, 2022) “3 tasks your family needs to complete to ease any anxiety over unexpected emergencies”

Should You Agree to Being a Guardian?

Yes, it is an honor to be asked to be the guardian of someone’s children. However, you’ll want to understand the full responsibilities involved before agreeing to this life-changing role. A recent article from Kiplinger, “3 Key Things to Consider Before Agreeing to Be A Guardian in a Trust,” explains.

For parents, this is one of the most emotional decisions they have to make. Assuming a family member will step in is not a plan for your children. Naming a guardian in your will needs to be carefully and realistically thought out.

For instance, people often first think of their own parents. However, grandparents may not be able to care for a child for one or two decades. If the grandparent’s own future plan includes downsizing to a smaller home or moving to a 55+ community, they may not have the room for children. In a 55+ community, they may also not be permitted to have minor children as permanent residents.

What about siblings? A trusted aunt or uncle might be able to be a guardian. However, do they have children of their own, and will they be able to manage caring for your children as well as their own? You’ll also have to be comfortable with their parenting styles and values.

Other candidates may be a close friend of the family, who does not have children of their own. An “honorary” aunt or uncle who is willing to embark on raising your children might be a good choice.  However, it requires careful thought and discussion.

Financial Considerations. What resources will be available to raise the children to adulthood? Do the parents have life insurance to pay for their needs, and if so, how much? Are there other assets available for the children? Will you be in charge of managing assets and children, or will someone else be in charge of finances? You’ll need to be very clear about the money.

Legal Arrangements. Is there a family trust? If so, who is the successor trustee of the trust? What are the terms of the trust? Most revocable trusts include language stating they must be used for the “health, education, maintenance, and support of beneficiaries.” However, sometimes there are conditions for use of the funds, or some funds are only available for milestones, like graduating college or getting married.

Lifestyle Choices. You’ll want to have a complete understanding of how the parents want their children to be raised. Do they want the children to remain in their current house, and has an estate plan been made to allow this to happen? Will the children stay in their current schools, religious institutions or stay in the neighborhood?

In frank terms, simply loving someone else’s children is not enough to take on the responsibility of being their guardian. Financial resources need to be discussed and lifestyle choices must be clarified. At the end of the discussion, all parties need to be completely satisfied and comfortable. This kind of preparedness provides tremendous peace of mind.

Reference: Kiplinger (Nov. 17, 2022) “3 Key Things to Consider Before Agreeing to Be A Guardian in a Trust”

Could Your Estate Plan Be a Disaster?

You may think your estate plan is all set. However, it might not be. If you met with your attorney when your children were small, and your children are now grown and have children of their own, your estate could be a disaster waiting to happen, says a recent article “Today’s Business: Your estate plan—what could go wrong?” from the New Haven Register.

Most estate planning attorneys encourage their clients to revisit their estate plan every three to five years, with good reason. The size of your estate may have changed, you may have experienced a health issue, or you may have a new child or a grandchild. There may be tax law changes, statutes may have been updated and the plan you had three to five years ago may not accomplish what you want it to.

Many people say they “have nothing” and their estate is “simple.” They might also think “my spouse will get everything anyway.” This is wrong 99% of the time. There are unintended consequences of not having a will—accounts long forgotten, an untimely death of a joint owner, or a 40-year-old car with a higher value than anyone ever expected.

Your last will and testament designates who receives your assets and provides for any minors. A will can also help protect your wishes from a challenge by unwanted heirs after your passing.

The federal estate tax exemption today is $12.6 million, but if your will was created to minimize estate taxes when the exemption was $675,000, there may be unnecessary provisions in your plan. Heirs may be forced to set up inherited trusts or even sub-trusts. With today’s current exemption level, your plan may include trusts that no longer serve any purpose.

When was the last time you reviewed your will to see whether you still want the same people listed to serve as guardians for minor children, executors, or trustees? If those people are no longer in your family, or if the named person is now your ex, or if they’ve died, you have an ineffective estate plan.

Many adults believe they are too young to need an estate plan, or they’ve set up all of their assets to be owned jointly and, therefore, don’t need an estate plan. If one of the joint owners suffers a disability and is receiving government benefits, an inheritance could put all of their benefits at risk. Minor children might inherit your estate. However, the law does not permit minors to inherit assets, so someone needs to be named to serve as their conservator. If you don’t name someone, the court will, and it may not be the person you would choose.

What about using a template from an online website? Estate planning attorneys are called in to set things right from online wills with increasing frequency. The terms of a will are governed by state law and often these websites don’t explain how the document must be aligned with the statutes of the state where it is signed. Estate plans are not one-size-fits-all documents and a will deemed invalid by the court is the same as if there were no will at all.

If you don’t have an estate plan, if your estate plan is outdated, or if your estate plan was created using an online solution, your heirs may inherit a legal quagmire, in addition to your coin collection. Give yourself and them the peace of mind of knowing you’ve done the right thing and have your will updated or created with an experienced estate planning attorney.

Reference: New Haven Register (Oct. 29, 2022) “Today’s Business: Your estate plan—what could go wrong?”

Should I List Beneficiaries on my Life Insurance?

What are the primary benefits of having a life insurance policy? In exchange for a monthly or annual payment to a life insurance provider, your beneficiaries get a pre-determined sum of money after you die. CBS News’ recent article entitled “Choosing life insurance beneficiaries? Make these 3 smart moves says it’s important to have the right amount of coverage. However, it’s equally important to make certain that your beneficiaries are selected properly and added to your policy.

When you buy a policy for a significant sum, you may want to list a variety of people as beneficiaries.  However, you should remember why you initially got a plan.

If the policy is primarily to support your children after you have died, then name them first. If you want to leave it to your spouse to make up for lost income in your absence, he or she should be listed as the primary beneficiary. If you want the policy to be used to keep a family business going, then adjust the beneficiaries accordingly.

Note that you should also list contingent beneficiaries on your life insurance policy. This is a person (or multiple people) who will receive the policy proceeds, if the primary beneficiary is not around. Primary beneficiaries may be hard to find, may refuse the funds, or could have passed away. Therefore, make sure that you have someone else to receive those funds. If you have more than one contingent beneficiary, allocate the policy proceeds as you wish (provided they combine for 100%).

If you want to leave the plan to your spouse, list him or her them as the primary beneficiary. If you have children, list them as secondary beneficiaries.

However, take care when listing minors.

You can list minors on your policy. However, if you die, and your beneficiaries aren’t of legal age, they may face a long road to see the funds. Restrictions on how much money minors can access via a life insurance policy vary from state to state, so the transfer won’t be as clean and simple as it would be with an adult. In some cases, the court may even have to appoint a guardian to administer the funds.

It’s not that you have to avoid listing minors. However, you must understand what may happen if you do.

An adult you trust to administer the funds in your absence may be a better choice to make certain that your minor beneficiaries don’t have to fight for the money. However, do not list that trusted adult as the beneficiary if it is not your spouse. Why? If you die, then they die, the life insurance proceeds will be administered according to their estate plan and not yours! This is where estate planning kicks in to avoid such unintended consequences with legal strategies, like trusts.

When it comes to life insurance policies and protections, recommendations are specific to your individual personal financial situation, preferences and goals. Keep this in mind at all times.

Reference: CBS News (Oct. 6, 2022) “Choosing life insurance beneficiaries? Make these 3 smart moves”

How Can I Minimize My Probate Estate?

Having a properly prepared estate plan is especially important if you have minor children who would need a guardian, are part of a blended family, are unmarried in a committed relationship or have complicated family dynamics—especially those with drama. There are things you can do to protect yourself and your loved ones, as described in the article “Try these steps to minimize your probate estate” from the Indianapolis Business Journal.

Probate is the process through which debts are paid and assets are divided after a person passes away. There will be probate of an estate whether or not a will and estate plan was done, but with no careful planning, there will be added emotional strain, costs and challenges left to your family.

Dying with no will, known as “intestacy,” means the state’s laws will determine who inherits your possessions subject to probate. Depending on where you live, your spouse could inherit everything, or half of everything, with the rest equally divided among your children. If you have no children and no spouse, your parents may inherit everything. If you have no children, spouse or living parents, the next of kin might be your heir. An estate planning attorney can make sure your will directs the distribution of your property.

Probate is the process giving someone you designate in your will—the executor—the authority to inventory your assets, pay debts and taxes and eventually transfer assets to heirs. In an estate, there are two types of assets—probate and non-probate. Only assets subject to the probate process need go through probate. All other assets pass directly to new owners, without involvement of the court or becoming part of the public record.

Many people embark on estate planning to avoid having their assets pass through probate. This may be because they don’t want anyone to know what they own, they don’t want creditors or estranged family members to know what they own, or they simply want to enhance their privacy. An estate plan is used to take assets out of the estate and place them under ownership to retain privacy.

Some of the ways to remove assets from the probate process are:

Living trusts. Assets are moved into the trust, which means the title of ownership must change. There are pros and cons to using a living trust, which your estate planning attorney can review with you.

Beneficiary designations. Retirement accounts, investment accounts and insurance policies are among the assets with a named beneficiary. These assets can go directly to beneficiaries upon your death. Make sure your named beneficiaries are current.

Payable on Death (POD) or Transferable on Death (TOD) accounts. It sounds like a simple solution to own many accounts and assets jointly. However, it has its own challenges. If you wished any of the assets in a POD or TOD account to go to anyone else but the co-owner, there’s no way to enforce your wishes.

An experienced, local estate planning attorney will be the best resource to prepare your estate for probate. If there is no estate plan, an administrator may be appointed by the court and the entire distribution of your assets will be done under court supervision. This takes longer and will include higher court costs.

Reference: Indianapolis Business Journal (Aug. 26,2022) “Try these steps to minimize your probate estate”

Why You Need an Estate Plan

Did you think you had to be rich to have an estate? Think again! From a legal perspective, your estate includes everything you own, from tangible property like a car, house, furniture, as well as intangible assets like insurance policies, bank accounts, retirement and investment accounts. You don’t have to be rich to have an estate, says the recent article “How to Plan Your Estate” from The Military Wallet. However, you do need to have an estate plan, and the best time to start planning is right now.

An estate plan is more than simply passing your property along to heirs. It is also how you prepare for the unpleasantries of life, including becoming incapacitated or being unable to make decisions on your own.

Your estate plan protects you and your beneficiaries. Without a will, the court will determine who will get your assets subject to probate, following the laws of your state. With a will, you determine who should receive your probated property, from family members to charities.

Your estate plan protects your children. Your will nominates a guardian who will care for your children if you die before they turn age 18, or, if you have a disabled child with special needs, who will care for them for the rest of their life. Without a will nominating a guardian, the court will make these decisions.

Your estate plan protects your family by preventing conflict. Your wishes are made clear in a will and in other estate planning documents. The more details, the better. No one can say they knew what you really wanted, because what you really wanted is documented and memorialized in your estate plan.

Getting ready to meet with an estate planning attorney will be easier if you take it step by step.

Make an inventory of all assets, including

  • House, land and any real estate property
  • Cars, boats and any other vehicles
  • Bank, investment and retirement accounts
  • Life insurance policies
  • Health savings accounts
  • Jewelry, valuables and collectibles
  • Digital assets, including website URL, username and password
  • Cryptocurrency, including all information for an executor to be able to access accounts

Create a plan for the different scenarios in your life. Who would you want to raise your children if you and your spouse die while children are minors or are unable to care for them because of illness or injury? How will your spouse pay the mortgage if you die unexpectedly?

Make a list of all accounts with designated beneficiaries. This typically includes life insurance, retirement plans and annuities. Any time you have a major life event like marriage, divorce, birth or death, these designations should be reviewed.

You’re now ready to meet with an estate planning attorney. Your estate plan should include a last will and testament, outlining who should receive your property, who will distribute your estate (your executor) and who should raise your children if you die while they are under legal age.

A Health Care Proxy is used to name a person who can make decisions about your healthcare if you cannot. A Living Will outlines the details for medical treatment you want or don’t want when you are near death.

Power of Attorney is a document giving someone else the power to take care of your finances at any point, if you can’t because of illness or incapacity. This avoids your family members having to go to court to obtain a guardianship, which takes time and is a costly proceeding.

Reference: The Military Wallet (Aug. 25, 2022) “How to Plan Your Estate”

Why Do I Need a Will?

Perhaps getting hit by a cement truck is too blunt for some, but unexpected things happen all the time. An estate plan, including a will and other important documents, is good preparation, especially for caregivers of people with special needs. A recent article from Forbes titled “Where There is a Will, There is a Way” explains the steps everyone, especially caregivers, need to follow.

Creating a last will and testament

This is the foundation of an estate plan. Without a will, the court will distribute assets to children equally. If a disabled person receiving government benefits receives an inheritance, they will become ineligible and lose access to services. The court will also assign guardianship to minors or disabled individuals, if there is no will. A will, in tandem with proper estate planning, ensures protection for an individual with special needs, including naming a guardian of your choice.

Having a General Durable Power of Attorney for Finances

A POA allows you to name a person you trust to manage finances, real estate property, investments, or any aspect of your life, if you become incapacitated. A POA should be created for your needs, so you may decide in advance what you do and do not want your agent to be able to do for you.

Creating a Durable Power of Attorney for Healthcare

This important legal document, paired with a HIPAA release form, allows someone of your choice to take charge of your healthcare, talk with healthcare providers and make decisions based on your expressed wishes. You may name more than one person for this role but doing so could make it harder if the two people don’t agree on your care.

Naming a Guardian

This is a critical step if you are a caretaker for a person who will likely be unable to manage their own affairs, even after attaining legal age. By naming a guardian in your will, you can select the people who will be in charge of your special needs family member or minor children. Without a guardian named in your will, the courts will make this decision.

Drafting a “Letter of Intent”

A letter of intent is a guide with important information only you know. It is especially important for caretakers. Explaining in detail your disabled individual’s preferences can make a huge difference in the quality of their lives when you are no longer available. What are their likes and likes, what people do they enjoy spending time with and what foods do they prefer, etc. If your children are minors, this letter is an opportunity to describe your preferences for how they should be raised, including religious preferences, vocational choices and even nighttime rituals.

Providing Financial Security

If your family includes a loved one with Special Needs, you can protect their ability to have funds for things not covered by government benefits through a Special Needs Trust. Your estate planning attorney will create an SNT with a trustee and a secondary trustee to oversee the funds and ensure that they are used for qualified expenses.

Reference: Forbes (July 6, 2022) “Where There is a Will, There is a Way,”