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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends and favorite charities. For more information be sure to visit our web site where you will have access to our blog, events schedule and a complimentary newsletter subscription!

Who Me? A Fiduciary?

Fiduciary: involving trust, especially with regard to the relationship between a trustee and a beneficiary (adjective). A Trustee (noun).

So, has a family member or friend appointed you as a “fiduciary” for his or her estate plan? If yes, then consider it an honor to be considered worthy of such trust and confidence. On the other hand, be mindful of the attending responsibilities you will need to fulfill. In fact, any failure to satisfy these responsibilities could land you in hot water. Those are consequences you want to avoid.

What is a Fiduciary?

For our purposes, the legal titles for a fiduciary in the estate planning, estate administration and estate distribution contexts include executor, personal representative or trustee. The difference between these titles is the specific role played by the fiduciary at a given time. Commonly, the roles of executor, personal representative and trustee are played by the same person.

Executor and personal representative are really different titles for the same role: the person appointed in a will to wrap up an estate in probate. This role lasts only until the probate process is formally closed and the will directs that the estate is either distributed outright to the beneficiary (or beneficiaries) or to a trustee appointed in the will as “beneficiary” for administration and distribution to the actual beneficiaries under the will.

As an alternative to using a will and its eventual probate, a living trust can be created while the estate owner is living. If properly created and funded, this approach may avoid any future probate of the estate whether distributed outright or otherwise.

Why do people choose to leave estate assets in trust for their loved ones instead of simply providing for outright distributions? The reasons are as varied and unique as each family situation. For example, heirs may have special needs, spendthrift tendencies, marital problems, lawsuits or bankruptcy issues. In addition, there may be legacy assets to preserve and retain long-term, such as family businesses, farms, ranches or vacation homes.

All that noted, before you agree now to serve as a fiduciary later, you should get informed, organized, connected and, ultimately, protected.

Get Informed

If you have been appointed as a fiduciary, there are certain steps you should take to help ensure all goes according to plan when the time comes for you to assume your duties.

For example, what is the estate game plan, and how do you fit into it? What better person to educate you regarding the estate plan and the assets involved than the person actually appointing you in his or her estate plan. Schedule time to meet face to face and request copies of all relevant legal documents in advance. Also suggest that the drafting attorney be present to provide an overview of the estate plan and answer any questions you may have after reading the legal documents.

Consider making a list of questions before the meeting. For example, you may want to know who will be guiding you through the process, whether co-fiduciary and successors have been appointed, whether you may hire legal, accounting and/or investment professionals and whether you can appoint a corporate fiduciary if anything gets too complicated. Also, you may want to know whether you will be compensated for your services (or at least reimbursed for out-of-pocket expenses).

Get Organized

One of the essential keys to a successful estate plan is the degree to which it is organized and the level of recordkeeping before you step in as trustee. Why? The person who owned the assets, created the estate plan and appointed you will no longer be among the living when you assume your responsibilities. Without proper organization and recordkeeping, you could spend months (or years) on a very time-consuming and expensive “treasure hunt” that could have been avoided. For example, does the estate owner have a safe-deposit box? If yes, which bank, what is the box number and where is the key kept?

Therefore, in addition to copies of all relevant legal documents, ask the estate owner to provide you with a detailed schedule of his or her assets. This schedule should include what they are and where they are located. The more detail, the better.

Get Connected

While you are at it, after having met with the estate planning attorney, have the estate owner provide the names and contact information for his or her CPA, insurance agent and financial advisor. Follow up with a quick note or email introducing yourself, as communication is a two-way street. Consider meeting with these individuals, as you may be working closely together and having a relationship established beforehand may make working together easier.

Get Protected

Your fundamental duty as a fiduciary is loyalty to the estate owner and his or her beneficiaries while remaining impartial and avoiding conflicts of interest. You also must manage and account for the assets under your stewardship even more carefully than your own. This includes insuring physical assets and taking steps to preserve the value of invested assets.

What about taxes and creditors? If you are less than timely when it comes to filing appropriate tax returns and providing required notice to creditors of the estate, then you may be held personally liable!

Serving as a fiduciary is at once an honor and a serious responsibility. Before you agree to serve, look before you leap.

Find Us Online

Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends and favorite charities. For more information be sure to visit our web site where you will have access to our blog, events schedule and a complimentary newsletter subscription!

Understanding Short-Term and Long-Term Disability Insurance

For most of us in the workforce, we keep the thought of disability tucked away into the deepest, darkest recesses of our minds. If we do not think about it, it will not happen, right? The fact is, before 20-year-old workers hit retirement age, about one in four will be out of work for 12 months due to disability. What is worse, fewer than half of all adult Americans have enough in savings to last three months without an income. With a better understanding of your options, and a little planning, you can rest easier, knowing that you have the means to protect your financial security, should you ever become disabled.

Short-Term Disability Insurance

Short-term disability insurance provides an income to employees who are too sick or injured (due to a non-work-related cause) to work. Short-term disability insurance may come from a variety of sources, including some state governments, employers and self-paid.

The federal government does not provide short-term disability insurance. However, five states do (i.e., California, New York, Hawaii, New Jersey and Rhode Island), replacing between 50 and 75 percent of a worker’s income for a specified period of time. Employees in the rest of the country must rely on some form of private short-term disability insurance.

Many employers provide short-term disability insurance plans to their employees in order to attract and reward top talent. Depending on the employer, these plans may come with various requirements, including:

• Minimum service requirements,
• Full-time status,
• Use of sick leave prior to use of insurance, and/or
• A doctor’s note confirming eligible illness or injury.

Like the state government funded insurance plans, these employer-paid short-term disability plans offer a percentage of the employee’s salary and last from 10 to 26 weeks.

For those individuals who do not have employer-paid short-term disability insurance benefits, like self-employed individuals, there are options for private, self-pay short-term disability insurance plans. Like the employer-paid plans, there are often varying levels of coverage that you can obtain. Most short-term disability insurance plans begin after a 14-day waiting period, and can last from a few weeks to a year, depending on the coverage you obtain. Like most health-related insurance plans, your age and current health status will be taken into account, when considering your insurability and premium costs. You will likely need to have a medical exam, prior to obtaining short-term disability insurance.

Short-term disability insurance covers employees or self-insured individuals who have a long-term illness, a severe disability or a pregnancy. These plans vary significantly in terms of premiums and benefits, so if you are paying for this insurance out-of-pocket, then you will want to shop around for the best premium-to-benefit plans for your needs and budget. To obtain financial security for injuries or illnesses extending beyond the short-term, long-term disability insurance should be considered.

Long-Term Disability Insurance

Like short-term disability insurance, long-term disability insurance can come from a variety of sources, including: the federal government in the form of Social Security Disability and Supplemental Security Income (SSDI) or Supplemental Security Income (SSI), employers and self-paid.

The federal government provides SSDI for workers who have worked for at least 10 years and paid Social Security taxes, and SSI for those who have not satisfied those work and Social Security tax requirements and have limited resources. If eligible to receive SSDI, you must wait five months from the date your claim is approved for benefits. For Supplemental Security Income (SSI), benefits begin one month from the date you filed your claim, or the date you became eligible for SSI, whichever is later.

SSDI and SSI can be difficult to obtain, with claims often extending years before being approved or denied. Working with an experienced social security disability attorney can help shorten that process and increase the odds of approval of your claim. Given the low odds of approval, it is also wise to obtain your own long-term disability insurance policy, if you have the means to do so, either through an employer-paid policy or a private pay policy.

Employers often offer long-term disability insurance to eligible employees. These private pay plans begin once short-term disability options have expired. These long-term benefits can last anywhere from two years, up until the employee turns 65. Since benefit requirements differ between plans, it is a good idea to review your long-term disability insurance plan to ensure that it fits your needs. For example, some plans pay if you are unable to work in your chosen profession (own occupation plans), while others require that you take any job you are physically able to do. This could mean a significant decrease in income for some people, which defeats the purpose of having a long-term disability insurance policy.

For individuals who are not eligible to receive employer-paid long-term disability insurance, there are private, self-pay plans available for purchase. These insurance plan premiums can cost anywhere from $25 to $75 a month for a $30,000 salary, to $166 to $500 for a $200,000 salary. The cost of LTD insurance will vary, based on other factors as well, including:

• Coverage amount,
• Benefit period,
• Waiting period,
• Your age,
• Your health status,
• Your occupation, and/or
• Your geographic location.

With a one-in-four chance of becoming disabled during your working lifetime, it pays to know your options to protect your financial security. By taking some time to review your short-term and long-term disability insurance options, you can help safeguard your income and protect your family, in the event you are unable to work due to illness or injury. Doing so will provide financial peace of mind.