What Estate Planning Documents Should I Have for My College Student?

Kiplinger’s recent article, “Documents that Parents and College Students Need,” explains that many parental rights are no longer applicable, when a child legally reaches adulthood (age 18 in most states).

However, with a few estate planning documents, you can still be involved in your child’s medical and financial affairs. Many parents don’t know that they need these documents. They think they can access a child’s medical and other information, because their son or daughter is still on the family’s insurance plan and the parents are paying the medical and tuition bills.

Here are four documents you and your son or daughter will need.

HIPAA Authorization Form. This is a federal law that protects the privacy of medical records. You child must sign a HIPPA authorization form to let you to receive information from health care providers, such as the college’s health clinic, about their health and treatment. If your son or daughter doesn’t want to share her entire medical record, he or she can set restrictions on what information you can receive.

Medical Power of Attorney. This lets your son or daughter name a person to make medical decisions, if they are incapacitated and unable to make medical decisions. Your child should select both a primary agent and a secondary agent, in the event the first one is unavailable.

Durable Power of Attorney. This lets your son or daughter authorize a person to handle financial or legal matters on his or her behalf. A durable power of attorney is usually written, so it takes effect when a person becomes incapacitated. However, if your child would like you to manage his or her financial accounts or file tax returns while away at school, they can make the document effective immediately.

Family Education Rights and Privacy Act Waiver. Once your child is an adult, you’re no longer entitled to see their grades without express permission. It seems a bit crazy that you can be paying for tuition, but you don’t have access to their academic records. This waiver signed by your child will allow you permission to receive his or her academic record. Many colleges provide this form, or you can find it online.

Once you get these documents, make sure you have ready access to them, if required.

Reference: Kiplinger (September 24, 2019) “Documents that Parents and College Students Need”

 

Still Waiting to Update Your Estate Plan?
Don't put off updating your estate plan.

Still Waiting to Update Your Estate Plan?

If you are wondering if Franklin’s handwritten wills are valid, join the club. With an estate valued at least $80 million, it’s good news that some kind of will was found to divide up her assets. However, says Daily Reckoning in the article “Urgent: Your Will May Need Updates,” there’s no guarantee that those wills are going to hold up in court.

The problem with Aretha’s family? It proves how important it is to have a properly executed will and one that is also up to date. It’s different for every family and every person, but if you’ve done any of the following, you need to update your estate plan.

Moved to a different state. The laws that govern estate law are set by each state, so if you move to a different state, your entire will or parts of it may not work. If your estate is deemed invalid, then your wishes won’t necessarily be followed. Your family will suffer the consequences. For example, if your old state required only one witness for a will to be valid and you move to a state that requires two witnesses, then your executor is going to have an uphill battle. Some states also allow self-written wills but have very specific rules about what is and is not permitted. Thinking of relocating to Arizona?

Bought new property. People make this mistake all the time. They assume that because their will says they are gifting their home to their children, updating the new address doesn’t matter. However, it does. Your will must specify exactly what home and what address you are gifting. If you have a second property or a new property, update the information in your estate plan.

Downsized your stuff. Sometimes people get excited about getting rid of their possessions and accidentally discard or donate something they had promised to someone in their will. If your will doesn’t reflect your new, more minimal lifestyle, your heirs won’t get what you promised to them. Instead, they may get nothing. Therefore, review your will and distribute the possessions you do have.

Gifting something early and forgetting what was in your will. If your will specifies that your oldest son gets your mother’s mahogany desk, but you gave it to your niece two months ago, you may create some awkward moments for your family. Whenever gifting something with great sentimental or financial value, be sure to review your estate plan.

Having a boom or a bust. If your finances take a dramatic turn, for better or worse, you may create problems for heirs, if your will is not revised to reflect the changes. Let’s say one account has grown with the market, but another has taken a nosedive. Did you give your two children a 50/50 split, or does one child now stand to inherit a jumbo-sized pension, while the other is going to get little or nothing?

Had a change of heart. Has your charity of choice changed? Or did a charity you dedicated years to change its mission or close? Again, review your will.

Had a death in the family. If a spouse dies before you, your will may list alternative recipients. However, you probably want to review your will. You may want to make changes regarding how certain assets are titled. If a family member who was a beneficiary or executor dies, then you’ll need to update your will.

Your estate planning attorney will review your estate plan and talk about the various changes in your life. Life changes over the course of time, and your will needs to reflect those changes.

Reference: Daily Reckoning (Sep. 12, 2019) “Urgent: Your Will May Need Updates”

 

How Do I Find a Great Estate Planning Attorney?
How do I find a great estate planning attorney?

How Do I Find a Great Estate Planning Attorney?

Taking care of these important planning tasks will limit the potential for family fighting and possible legal battles, in the event you become incapacitated, as well as after your death. An estate planning attorney can help you avoid mistakes and missteps and assist you in adjusting your plans as your individual situation and the laws change.

Next Avenue’s recent article “How to Find a Good Estate Planner” offers a few tips for finding one:

Go with a Specialist. Not every lawyer specializes in estate planning, so look for one whose primary focus is estate and trust law in your area. After you’ve found a few possibilities, ask him or her for references. Speak to those clients to get a feel for what it will be like to work with this attorney, as well as the quality of his or her work.

Ask About Experience.  Ask about the attorney’s trusts-and-estates experience. Be sure your attorney can handle your situation, whether it is a complex business estate or a small businesses and family situation. If you have an aging parent, work with an elder law attorney.

Be Clear on Prices. The cost of your estate plan will depend on the complexity of your needs, your location and your attorney’s experience level. When interviewing potential candidates, ask them what they’d charge you and how you’d be charged. Some estate planning attorneys charge a flat fee. If you meet with a flat-fee attorney, ask exactly what the cost includes and ask if it’s based on a set number of visits or just a certain time period. You should also see which documents are covered by the fee and whether the fee includes the cost of any future updates. There are some estate-planning attorneys who charge by the hour.

It’s an Ongoing Relationship. See if you’re comfortable with the person you choose, because you’ll be sharing personal details of your life and concerns with them. As always, we are here to answer all of your estate planning questions. Contact Elisabeth Pickle estate planning attorney in Scottsdale. 

Reference: Next Avenue (September 10, 2019) “How to Find a Good Estate Planner”

 

Do It Yourself Estate Planning Leads to Bad Outcomes
Do It Yourself Estate Planning Leads to Bad Outcomes

Do It Yourself Estate Planning Leads to Bad Outcomes

While the attraction of simplicity and low cost is appealing, the results are all too often disastrous, affirms Insurance News in the article “Mind Your Mouse Clicks: DIY Estate Planning War Stories.” The increasing number of glitches that estate planning attorneys are seeing after the fact has increased, as much as the number of people using online estate planning forms. For estate planning attorneys who are concerned about their clients and their families, the disasters are troubling.

A few clumsy mouse clicks can derail an estate plan and adversely affect the family. Here are five real life examples.

Details matter. One of the biggest and most routinely made mistakes in DIY estate planning goes hand-in-hand with simple wills, where both spouses want to leave everything to each other. Except this typical couple neglected something. See if you can figure out what they did wrong:

John’s will: I leave everything to my wife Phyllis.

Phyllis’ will: I leave everything to my wife Phyllis.

Unless John dies and Phyllis marries someone named Phyllis, this will is not going to work. It seems like a simple enough error, but the courts are not forgiving of errors.

Life insurance mistakes. Jeff owns a life insurance policy and has been using its cash value as a “rainy day” fund. He had intended to swap the life insurance into his irrevocable grantor trust in exchange for low-basis stock held in the trust. The swap would remove the life insurance from Jeff’s estate without exposure to the estate tax three-year rule, and the stock would receive a stepped-up basis at death, leading to tax savings on both sides of the swap.

However, Jeff had a stroke recently, and he’s incapacitated. He planned ahead though, or so he thought. He downloaded a free durable power of attorney form from a nonprofit that helps the elderly. The POA specifically included the power to change ownership of his life insurance.

Jeff put his name in the space designated for the POA. As a result, the insurance company won’t accept the form, and the swap isn’t going to happen. Read more about using life insurance in your estate plan here.

Incomplete documents. Ellen created an online will leaving her entire probate estate to her husband. It was fast, cheap and she was delighted. However, she forgot to click on the space where the executor is named. The website address for the website company is the default information in the form, which is what was created when she completed the will. The court is not likely to appoint the website as her executor. Her heirs are stuck, unless she corrects this, hoping the court will understand. Hope is a terrible estate plan.

Letting the form define the estate plan. Single parent Joan has a 6-year-old son. Her will includes a standard trust for minors, providing income and principal for her son until he turns 21, at which point he inherits everything. Joan met with a life insurance advisor and applied for a $1 million convertible 20–year term life insurance policy. It will be payable to the trust. However, her son has autism, and receives government benefits. There are no special needs provisions in her will, so her son is at risk of losing any benefits, if and when he inherits the policy proceeds.

Don’t set it and forget it. One couple created online wills, when the estate tax exclusion was $2 million. They created a credit shelter, or bypass, trust to reduce their estate taxes, by allowing each of them to use their estate tax exclusion amount. However, the federal estate tax exclusion today is $11.4 million per person. With $4 million in separate assets and a $2 million life insurance policy payable to children from a previous marriage, the husband’s separate assets will go into the bypass trust. None of it will go to his wife.

An experienced estate planning attorney who is licensed to practice in your state is the best source for creating and updating estate plans, preparing for incapacity and ensuring that tax planning is done efficiently.

Reference: Insurance News Net (Sep. 9, 2019) “Mind Your Mouse Clicks: DIY Estate Planning War Stories”

 

Know Your Rights as LGBT Residents in Nursing Homes
LGBTQ elder rights

Know Your Rights as LGBT Residents in Nursing Homes

Many people who identify as lesbian, gay, bisexual, or transgender (LGBT) report having significant fear of discrimination and mistreatment as they age. Many LGBT older adults experience violations of their rights, when they try to access long-term care services and supports. Surveys have revealed concerns about discrimination by the staff and negative treatment by other residents, including verbal harassment and physical abuse. If you are facing this situation, you need to know your rights as LGBT residents in nursing homes.

Federal nursing home regulations and state and federal anti-discrimination laws protect all residents, including LGBT individuals, living in nursing homes from discrimination, harassment and abuse. You need to know the laws that protect you, so you can take action when someone violates your rights.

If a long-term care facility receives any Medicare or Medicaid funding or has Medicare or Medicaid certification, even if no current resident receives this funding, the facility must honor the following rights. The individual resident in a care center has these rights, whether he receives Medicare or Medicaid funding or not.

  • Freedom from abuse. The facility must develop and follow policies that prohibit mistreatment of residents, including things like physical, mental, verbal, sexual, or financial abuse or neglect. The center must investigate and take action on allegations of abuse or neglect. Harassing a resident or refusing to provide good care based on a resident’s sexual orientation or gender identity violates the right to be free from abuse.
  • The right to privacy includes the right to private communications, whether in-person or through electronic or any other means. The facility must also maximize the resident’s right to privacy about his body and his medical, personal and financial matters.
  • The facility cannot restrict the right of a resident to receive visitors based on gender identity or sexual orientation. This issue comes up when a facility treats same-sex spouses or same-sex domestic partners different than different-sex couples.
  • The right to participate in activities includes taking part in events of a religious, community, or social nature within and outside the facility. The staff cannot prevent you from taking part because of your sexual orientation or gender identity. You should be allowed to be involved in and promote LGBT events, support groups and other resources without concern about abuse or discrimination.
  • The guarantee of respectful treatment includes dignity, respect, and consideration and being allowed to make your own decisions. This right also mandates you be addressed by your preferred pronoun and wear clothing and groom yourself, according to your gender identity.
  • The right to participate in your care, includes designating someone as your decision-maker for medical, financial and other matters. Federal law protects the right to name your same-sex spouse as your legal representative. The nursing home must treat a same-sex spouse decision-maker the same as a different-sex spouse legal representative.
  • The right to be fully informed protects a same-sex spouse’s right to the same information as a different-sex spouse.
  • Your right to make your own choices includes what you wear and how you express yourself. You can choose to share a room with the person of your selection, as long as both people agree. The facility cannot discriminate on the basis of gender identity, sexual orientation, or marital status.
  • The right to remain in the home bans the facility from discharging a resident on the basis of sexual orientation or gender identity.

Federal law orders nursing home staff to protect all residents from abuse and neglect, and to promptly report and investigate allegations of mistreatment. You can also contact your state’s ombudsman for long-term care to advocate for you.

An elder law attorney near you can explain how your state’s regulations differ from the general law of this article.

References: National Consumer Voice. “LGBT Elders.” (accessed August 15, 2019) https://ltcombudsman.org/issues/lgbt-elders

 

Estate Planning for Physicians
Estate Planning for Physicians

Estate Planning for Physicians

Three Liability Planning Tips for Physicians Anyone Can Use

Whether you are a physician or not, you probably know that the practice of medicine is a profession fraught with liability.  It’s not just medical malpractice claims either – employment related issues, careless business partners and employees, contractual obligations, and personal liabilities add to the risk assumed by a physician in private practice.  Unfortunately, in our litigious society, these liability risks are not unique to physicians.  Business owners, board members, real estate investors, and retirees need to protect themselves from a variety of liabilities too.

Below are three liability planning tips anyone – physicians and non-physicians alike – can use to protect their hard earned money.

Tip #1 – Insurance is the First Line of Defense Against Liability

Liability insurance is the first line of defense against a claim.  Liability insurance provides a source of funds to pay legal fees as well as settlements or judgments. Types of insurance you should have in place include (as applicable):

  • Homeowner’s insurance
  • Property and casualty insurance
  • Excess liability insurance (also known as “umbrella” insurance)
  • Automobile and other vehicle (motorcycle, boat, airplane) insurance
  • General business insurance
  • Professional liability insurance
  • Directors and officers insurance

Tip #2 – State Exemptions Protect a Variety of Personal Assets From Lawsuits 

Each state has a set of laws and/or constitutional provisions that partially or completely exempt certain types of assets owned by residents from the claims of creditors.  While these laws vary widely from state to state, in general you may be able to protect the following types of assets from a judgment entered against you under applicable state law:

  • Primary residence (referred to as “homestead” protection in some states)
  • Qualified retirement plans (401Ks, profit sharing plans, money purchase plans, IRAs)
  • Life insurance (cash value)
  • Annuities
  • Property co-owned with a spouse as “tenants by the entirety” (only available to married couples; and may only apply to real estate, not personal property, in some states)
  • Wages
  • Prepaid college plans
  • Section 529 plans
  • Disability insurance payments
  • Social Security benefits

Tip #3 – Business Entities Protect Business and Personal Assets From Lawsuits

Business entities include partnerships, limited liability companies, and corporations.  Business owners need to mitigate the risks and liabilities associated with owning a business, and real estate investors need to mitigate the risks and liabilities associated with owning real estate, through the use of one or more entities.  The right structure for your enterprise should take into consideration asset protection, income taxes, estate planning, retirement funding, and business succession goals.

Business entities can also be an effective tool for protecting your personal assets from lawsuits.  In many states, assets held within a limited partnership or a limited liability company are protected from the personal creditors of an owner.  In many cases, the personal creditors of an owner cannot step into the owner’s shoes and take over the business.  Instead, the creditor is limited to a “charging order” which only gives the creditor the rights of an assignee.  In general this limits the creditor to receiving distributions from the entity if and when they are made.

Final Advice for Protecting Your Assets

Liability insurance, exemption planning, and business entities should be used together to create a multi-layered liability protection plan.  Our firm is experienced with helping physicians, business owners, board members, real estate investors, and retirees create and—just as important—maintain a comprehensive liability protection plan.  Please contact Elisabeth if you have any questions about this type of planning.

Estate Planning: Funding A Special Needs Trust For Your Child
How to fund a special needs trust for your child.

Estate Planning: Funding A Special Needs Trust For Your Child

One of the toughest things about planning for a child with special needs is trying to calculate the amount of money it’s going to take to provide both while the parents are alive and after the parents pass away.

Kiplinger’s recent article asks “How Much Should Go into Your Special Needs Trust?” The article explains that it’s not uncommon for folks to have done some estate planning but not necessarily special needs estate planning. And they haven’t thought about how much money they should earmark to fund that trust someday and which assets would be the best to use.

Special needs estate planning involves creating a special needs trust that allows a person with a disability continue to receive certain public benefits. Typically, ownership of assets more than $2,000 would make the individual ineligible for certain public benefits. Assets held in a special needs trust don’t count toward this amount.

A child with special needs can generate multiple expenses. The precise amount will be based on the needs and lifestyle of the family and the child’s capabilities.

When the parents die, this budget must be increased because the things the parents did must be monetized.

A special needs trust usually isn’t funded until the parents’ death. Then, the trust would need to file a tax return each year and pay taxes.

There are also legal and trust administration expenses to think about. Public program benefits can in many cases offset many of the above-mentioned costs.

It’s vital to conduct a complete analysis of the future costs to provide for a child with special needs so that parents can start saving and making adjustments in their planning.

Speak with an elder law or estate planning attorney about special needs trusts.

Reference: Kiplinger (June 10, 2019) “How Much Should Go into Your Special Needs Trust?”

 

What Should You Do When You Turn 59½?
What should you do when you turn 591/2?

What Should You Do When You Turn 59½?

Minor stuff aside, there are some real financial benefits to reaching age 59½, says Kiplinger in the article “What Should You Do When You Turn 59½?” Here are some important tasks to accomplish when you turn 59½ that will help you explore new opportunities and build a strong foundation for your future retirement.

Review Your 401(k). At age 59½, you reach the magic age when you can start taking money out of your retirement accounts without penalty. That’s not to say it’s time to drain your accounts, but it does give you more options.

Create a Safety Net. Hopefully you know about the benefits of having an emergency fund. Having a “rainy day” fund can give you peace of mind.

Until now, your only real options to beef up such a fund were a savings or money market account that couldn’t even keep up with inflation. Now that you’re 59½ and the withdrawal penalty is no longer applicable, you can actually use your 401(k) as a readily accessible, tax-deferred safety net. Plus, in a retirement account, you can invest some of the funds for growth. Still, you should keep a bit of cash for emergencies. In addition, withdrawals from retirement accounts will be taxable because you’ve never paid taxes on that money.

Take Advantage of Catch-Up Contributions. The IRS lets folks age 50 and older contribute extra to their retirement accounts—both IRAs and employer-sponsored accounts. This not only builds your retirement savings, it can decrease your taxable income. A lower income can keep you in a lower tax bracket and make you eligible for more tax deductions. That saves money on taxes.

Look into an In-Service Rollover. The major complaint with 401(k) plans is the lack of investment options available within a given plan. The average 401(k) plan has fewer than a dozen options, according to FINRA. Compare that with the variety of options available on the open market. Once you hit 59½, you may be eligible for an in-service rollover, which lets you to move 401(k) funds into an IRA without penalty while still working at the same job. It’s a unique opportunity to access better investments that’s not available to most workers. There are more investment options within an IRA and greater flexibility and control.

Monitor Your Spending. One of the tough things about retirement planning when you’re younger is that you have almost no idea what your retirement needs will be. However, at 59½, it’s near enough that you should have a better sense of what your needs will be.

Start tracking your spending to create a retirement budget. This will help you decide when to retire because you’ll be able to see the trade-offs between working longer and the lifestyle you’ll be able to afford in retirement.

Remember Health Care. Start to consider your health care. A common mistake people make when retiring early is to neglect health insurance. While you can access your money penalty-free now, you don’t have access to Medicare until age 65. If you’re playing with the notion of retiring before 65, start looking into your health care options now and make certain that you have coverage until you reach Medicare eligibility.

Reference: Kiplinger (June 28, 2019) “What Should You Do When You Turn 59½?”

 

Don’t Have A Will? Arizona Has One For You
Don't have a will? Arizona has one for you.

Don’t Have A Will? Arizona Has One For You

Drafting a will is an essential part of estate planning. Even though it’s vitally important, a recent survey from AARP revealed that two out of five Americans over the age of 45 don’t have one.

The Reflector’s recent article, “Things people should know about creating wills,” says that writing your wishes down on paper helps avoid unnecessary work and stress when you die. Signing a will allows heirs to act with the decedent’s wishes in mind and also will make certain that assets and possessions go to the right people. What might you need in addition to a will? Read more here.

Estate planning can be complicated, and that’s the reason why many folks turn to estate planning attorneys to make sure this important task is done correctly and legally. Here are some of the estate planning topics to discuss with your lawyer:

List of Your Assets. Create a list of your assets and determine the ones covered by the will and those that will have to be passed through joint tenancy on a deed or a living trust. For instance, life insurance policies or retirement plan proceeds will be distributed by the beneficiaries you named in each account. Remember that your will can list other assets, like memorabilia, antiques, cars, and jewelry.

Naming a Guardian. Parents with minor children should definitely designate the person or persons whom they want to become guardians if they were to die unexpectedly. They can also use their will to name a person who will be in charge of the finances for the children.

Remembering Your Pets. It’s common for pet owners to use their will to detail guardianship for their pets and to leave money or property to defray the cost of their care. But remember that pets don’t have the legal capacity to own property, so don’t leave money directly to pets in a will. A pet trust is legal in most states and is the best way to leave money and name a caretaker for your pets.

Stating Your Funeral Instructions. Settling probate won’t occur until after the funeral. As a result, any funeral wishes in a will frequently aren’t read until after the fact.

Designate an Executor. This is a trusted individual who will execute the terms of the will. He or she should be willing to serve and be capable of executing the will.

Those who die without a valid will become intestate. This will result in their estate being settled based on the laws of where that person lived. A court-appointed administrator will have the authority to transfer the assets and property. This administrator is bound by the state’s intestacy laws and may make decisions that go against the decedent’s wishes.  This is incredibly difficult for the heirs and causes families to be torn apart. To avoid this, work with an experienced estate planning attorney to draft a will and other estate planning documents.  Elisabeth can help! Book a call today.

Reference: The Reflector (July 15, 2019) “Things people should know about creating wills”

 

Finding Mom and Dad’s Important Documents
Finding mom and dad's important documents.

Finding Mom and Dad’s Important Documents

If you are serving as a caregiver for an aging relative, you know the job involves more paperwork than you ever imagined before taking on the responsibility. The task of caregiving is even more challenging when your loved one cannot find her essential documents. You might need a copy of your parents’ wedding license from 1950 so your mom can get her spousal retirement benefits. Your dad might need his military service records to enroll in veterans’ benefits programs.

Before you start pulling out your hair trying to find these papers, it is good to have a plan. For example, the first three places in the house you will check, people you can call who might have useful information about where the documents might be stored, and a list of the banks where your mom or dad might have rented a safe deposit box. It also helps to know how you will go about getting replacement copies of the documents you cannot find. Here are some tips on how to locate or get copies of your aging relative’s important documents.

Let the Scavenger Hunt Begin

Before you rifle through all of his personal belongings, ask your loved one where he keeps his important papers. You might be amazed at some of the bizarre places that people put their documents. It would take you a month of Sundays to find the papers if the person had not told you where to look. A hollowed-out book, a cigar box, and a coffee can often hold treasure troves of paperwork. Some people keep valuable documents in the freezer, hidden in a closet, under a floorboard, or under the bed.

Make it easy on yourself and ask Dad where he keeps his papers. Explain why you need a particular document, and you would like to organize the rest of his papers so you can easily find things you need to help take care of him.

If he cannot remember or the papers are no longer where he thought they were, check the desk drawers, the family bible, a file cabinet, the attic, the basement, and shelves. If he put the documents in a safe deposit box, you will have to take him and the key, along with his government-issued photo identification to the bank. After you inventory the contents of the box, keep the list and have him add you to the safe deposit box so you can access the documents in the event of his death. Never leave funeral instructions or documents in the box.

When You Cannot Find It, Get a Replacement Copy

It can take weeks or longer to get replacement documents, and it is best to start this process well before you need the papers. You can contact the applicable state’s or county’s vital records office to get certified copies of certificates of birth, death, marriage, and divorce. Make sure you have your loved one’s Social Security card, driver’s license or state identification card, Medicare and Medicaid cards, and military records. If any of these are missing, contact the appropriate government agency to get replacement copies.

References: AARP. “Find or Replace Your Loved One’s Missing Documents.” (accessed July 22, 2019) https://www.aarp.org/caregiving/financial-legal/info-2018/replacing-important-documents.html?intcmp=AE-CAR-LEG-EOA1