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Estate Planning Blog Articles

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How Estate Planning Prepares for Unexpected Medical Events

Estate planning is more than the distribution of property after a person dies—in fact, a large part of an estate planning attorney’s practice concerns helping people prepare for unexpected medical issues. A recent article from Merrill Foto News, “Know Your Legal Rights: Advance Care Planning Paves The Way For Future Medical Decisions,” explains what steps should be taken.

Anyone over 18 should have certain advance care plan documents in place, although these documents become even more critical as one reaches their later years. People who have been admitted to the hospital for emergency care, treatment for illness, or surgery all need someone else to speak with medical personnel on their behalf.

Having an Advance Directive, which is also known as Health Care Power of Attorney in some states, is necessary for another person to be able to be involved with your medical care. The healthcare law has become very restrictive, and simply being a person’s spouse or child may not be enough to allow you to make critical decisions on their behalf.

It’s best to name two people as your health care power of attorney—a primary and a backup in case the primary is unable or unwilling to act. If you and your spouse are both in a car accident, for instance, you’ll need someone else to advocate for both of you.

Who to name as your agent depends upon your situation. If your adult children live nearby, one of them may be the best choice if they can be counted on to follow your wishes. If no family is nearby, naming a trusted friend may work, unless you and the friend are both elderly. What would happen if your friend predeceased you or was unable to come to the hospital in the middle of the night? Your estate planning attorney can discuss your situation and help you determine the best candidates.

While many fill-in-the-blank Health Care Power of Attorney documents are available, it’s best to have one prepared by an estate planning attorney to reflect your wishes.

Your feelings about artificial life support also may have changed. Before COVID, people often said they didn’t want to be put on a respirator. However, respirators now save lives. Your wishes to be kept alive in the presence of different kinds of medical evidence may have changed from ten years ago. What if your heart is still working and a brain scan shows evidence of mental activities? Progress in medicine has led to more complex questions and answers about patients’ prognoses; you want a healthcare power of attorney document to reflect your wishes, given advances in medicine today.

Your feelings about healthcare decisions may have changed over time, so healthcare directives and an estate plan should be updated similarly to reflect changes in your life and circumstances.

Reference: Merrill Foto News (July 25, 2024) “Know Your Legal Rights: Advance Care Planning Paves The Way For Future Medical Decisions”

Well-Played: Country Legend Toby Keith’s Legacy Protected for His Family

Toby Keith, the famous country singer, passed away at the age of 62 after battling stomach cancer. Despite his illness, he ensured that his estate was in order before his death. In a story shared by InTouchWeekly and Survivornet, his widow, Tricia Covel, filed to be named the administrator of his estate shortly after his passing. Keith’s estate planning included a revocable living trust meant to ensure his family’s privacy and financial security.

Why Should You Plan Your Estate Early?

Planning your estate early helps reduce stress on your family during an already emotional time. When someone passes away, emotions run high, and conflicts can arise. Having a clear plan makes it easier for your family to follow your wishes without added stress or uncertainty.

What are the Key Documents in Estate Planning?

There are several critical documents to consider when planning your estate, especially if you are dealing with a serious illness like Toby Keith did:

  • Power of Attorney: This allows someone you trust to make legal, tax and financial decisions for you if you cannot do so.
  • Health Care Proxy: This person will make health-related decisions on your behalf.
  • HIPAA Release: This lets someone access your medical information and speak to your doctors.
  • Physician Order for Life-Sustaining Treatment (POLST): This outlines your wishes for life support.
  • Beneficiary Designation: This document names the beneficiaries of your life insurance and retirement assets.
  • Living Will: This states your health care wishes.
  • Will: This specifies how you want your assets distributed.

How Did Toby Keith Use a Revocable Living Trust?

Toby Keith’s estate planning included a revocable living trust. A revocable living trust is a legal document that places your assets into a trust while you’re alive and allows you to make changes as needed. After your death, the trust becomes irrevocable, meaning it can’t be altered. This type of trust helps avoid probate court, making the process smoother and quicker for your family.

Should You Consider a Trust?

A revocable living trust might be a good option if you have significant assets, such as property or investments. Trusts offer more control over how your assets are distributed and can help avoid lengthy probate processes. Toby Keith’s trust ensured that his family could manage his estate privately and securely without the public scrutiny of a probate court.

What can You Learn from Toby Keith’s Trust?

Toby Keith’s careful planning illustrates the importance of addressing your estate needs early, especially when facing a serious illness. He documented his wishes and ensured they were legally binding, providing his family with clear instructions and avoiding potential disputes. Keith protected his legacy and provided for his family’s future by taking these steps.

How can You Start Planning Your Estate?

Starting your estate planning might seem overwhelming. However, protecting your loved ones and your legacy is essential. Here are a few steps to get started:

  • Make a List of Your Assets: Include everything from bank accounts to property.
  • Decide on Your Beneficiaries: Think about who you want to inherit your assets.
  • Choose Your Representatives: Select people you trust to act on your behalf, such as a power of attorney, health care proxy and executor.
  • Consult with an Estate Planning Attorney: An attorney can help you navigate the legal requirements and ensure that your documents are in order.

Take Inspiration From Toby Keith’s Trust and Secure Your Legacy

Contact our law firm today to schedule a consultation and learn more about how a revocable living trust and other estate planning tools can protect your family’s future. By taking action now, you can ensure that your wishes are honored and provide peace of mind for yourself and your loved ones.

Key Takeaways

  • Early Planning Reduces Stress: Addressing estate planning early can ease emotional and financial burdens on your family.
  • Essential Documents: Key documents include a power of attorney, health care proxy, living will and revocable living trust.
  • Privacy and Control: A revocable living trust helps maintain privacy and avoids the public process of probate court.
  • Toby Keith’s Example: Toby Keith’s thorough planning ensured his family’s security and upheld his wishes.
  • Professional Guidance: Consulting with an estate planning attorney is crucial for navigating legal complexities and securing your legacy.

References: InTouchWeekly (July 9, 2024) “Toby Keith Drafted Will for $400 Million Fortune Amid Cancer Battle | In Touch Weekly” and Survivornet (July 15, 2024) “Distributing Fortune & Legacy: Late Country Star Toby Keith’s Estate and the Sensitive Issue of Planning Your Will as a Patient”

What Is the Difference Between Dementia and Alzheimer’s?

Dementia is a serious and growing health concern affecting over 55 million people around the world. However, many mistakenly conflate the condition with Alzheimer’s Disease. Care highlights the differences between the two conditions and the importance of understanding them.

What Is Dementia?

Dementia describes a decline in cognitive function and mental ability severe enough to interfere with daily life. Memory loss is a common symptom. However, dementia can also impact reasoning, comprehension, language and spatial awareness. Different types of dementia have distinct symptoms and causes.

What Is Alzheimer’s Disease?

Alzheimer’s disease is a progressive brain disorder that primarily affects memory. It often starts with short-term memory loss, such as forgetting conversations, misplacing items and repeating oneself. As the disease progresses, it can also impact:

  • Language skills
  • Visual perception
  • Driving skills
  • Ability to manage finances or use technology

What are Other Forms of Dementia?

Besides Alzheimer’s disease, there are several other common types of dementia, each with unique symptoms and causes. Understanding these different types helps in recognizing symptoms and seeking appropriate care.

Lewy Body Dementia (LBD)

Lewy Body Dementia affects thinking, reasoning and processing information. It often presents with hallucinations and behavioral issues. People with LBD may experience agitation, memory problems and symptoms like Parkinson’s disease, such as tremors and slow movements.

Vascular Dementia

Vascular dementia is caused by reduced blood flow to the brain, often due to a stroke or chronic illness. Symptoms can include confusion, slowed thinking, difficulty concentrating and problems with organization. The symptoms vary depending on the location of the blocked or damaged blood vessels.

Frontotemporal Dementia (FTD)

Frontotemporal Dementia affects the frontal and temporal lobes of the brain, which control personality, language and movement. Symptoms can include changes in personality, behavior, language difficulties, memory loss and confusion.

How Is Dementia Diagnosed?

There isn’t a single test for dementia. Doctors instead use various sources of information, including patient history, family observations and physical exams, to determine the type of dementia. Cognitive testing and MRIs may also assess memory, attention, language and other cognitive abilities.

The Importance of Early Planning

The sooner someone facing a dementia diagnosis begins planning for their future care and financial decisions, the better for their loved ones. This planning involves discussing the person’s wishes and preparing legal documents.

“Have the conversation,” says Martha Mannix, a clinical associate professor of law at the University of Pittsburgh Law School. In an article by Tribdem, she emphasizes the importance of discussing who the person wants to be with, how they want to spend their time and putting themselves in the person’s shoes.

How Powers of Attorney and Advance Healthcare Directives Can Help

Legal documents, like advance healthcare directives and financial power of attorney, are indispensable to protecting yourself against dementia. These documents ensure that power over your finances and healthcare lies with your family, not a court-appointed guardian. Establish a financial power of attorney, a healthcare power of attorney and an advance healthcare directive to control your end-of-life care, emergency healthcare and finances.

Start Planning for Alzheimer’s and Dementia Today

If you or a loved one faces a dementia diagnosis, a good estate plan makes all the difference. Contact our law firm today to schedule a consultation and learn how estate planning can support you and your family in the face of cognitive decline.

Key Takeaways

  • Understanding Dementia: Dementia is a decline in cognitive function severe enough to interfere with daily life, encompassing various symptoms beyond memory loss.
  • Alzheimer’s Disease: The most common form of dementia, primarily affecting short-term memory and progressively impairing cognitive functions.
  • Different Types of Dementia: Lewy Body Dementia, Vascular Dementia and Frontotemporal Dementia each have distinct causes and symptoms, requiring unique approaches to care and treatment.
  • Have Essential Conversations: Discussing wishes and preparing legal documents, like advance healthcare directives and financial power of attorney, ensures that an individual’s preferences are respected.

References: Care (Jan. 7, 2022) “Understanding the difference between dementia and Alzheimer’s: What experts say you need to know” and Tribdem (Jul. 29, 2023) “Dealing with dementia | Planning ahead: ‘Have the conversation’ | News | tribdem.com”

Godparents Lack Legal Rights If Not Named as Guardians for Minor Children

Choosing godparents for your children is an important decision for many families. However, it’s crucial to understand that godparents do not have any legal rights, unless you name them guardians in your will. If you’d like your children’s godparents to serve as guardians in an emergency, consider if they’re suitable for the responsibility and take the legal steps needed to recognize them as guardians.

What Is the Difference between a Godparent and a Guardian?

Parents often choose godparents to have a religious or spiritual influence on their children. They are typically involved in special ceremonies, such as baptisms, and may play a supportive role in their children’s upbringing. However, being a godparent does not grant any legal rights or responsibilities over the child.

 

On the other hand, a guardian is legally responsible for the care and upbringing of a minor child if the parents pass away or are unable to care for them. According to Forbes, guardianship is a significant legal role that includes making decisions about the child’s education, healthcare and general welfare.

Why Can’t Godparents Automatically become Guardians?

The main reason godparents cannot automatically become guardians is that the roles are different in nature and responsibility. While godparents are chosen for their moral and spiritual guidance, guardians are chosen to take on the full parental role in case of an emergency. While there is overlap between these roles, a capable spiritual guide will not always have the time and resources to become a parent.

What Should You Consider when Choosing a Guardian?

Choosing a guardian for your children is a complex and often emotional decision. Here are some key factors to consider:

Lifestyle Fit

Think about the potential guardian’s age and life situation. Asking someone to raise your children is a big request, and choosing someone whose lifestyle can accommodate this responsibility is essential. For example, a guardian with grown children might face a significant lifestyle adjustment if asked to care for young children again.

Location

Ideally, the guardian should live near your home. This minimizes the disruption to your child’s life, allowing them to stay in the same school and community, which can be a source of comfort during a difficult time.

Financial Circumstances

Raising children can be expensive. Make sure that the potential guardian is financially stable, and consider setting up a trust to cover your child’s expenses. This will help avoid placing a financial burden on the guardian and ensure that your child has the resources they need.

Shared Values

Choose a guardian who shares your values and parenting philosophy. While no one will be a perfect match, it’s important that the guardian can provide a similar upbringing to what you would have wanted for your child.

Should You Name a Single Guardian or a Couple?

While many consider naming a married couple as co-guardians, it’s often simpler to name a single individual. This helps avoid complications if the couple divorces or disagrees about how to care for your child. You can also name one or more successor guardians who will take over if the primary guardian is unable or unwilling to take on the role when the time comes.

Is It Important to Get the Guardian’s Permission?

Always ask the person you want to name as guardian if they are willing to accept the role. This way, you can be sure they’re prepared and willing to take on the responsibility. Naming someone without their consent can lead to confusion and complications.

How to Name a Guardian in Your Will

In most states, you must include this information in your will to legally name a guardian for your minor children. This is a critical step to ensure that your wishes are followed and to avoid leaving the decision up to the courts.

What Happens If You Don’t Name a Guardian?

If you don’t name a guardian in your will, the courts will decide who will take care of your children. This can lead to family disputes and result in a decision that may not align with your wishes. Naming a guardian in your will gives you control over who will care for your children and helps stabilize them during a challenging time.

Request a Consultation to Name Guardians for Minor Children

Choosing a guardian for your children is one of the most important decisions you will make as a parent. Contact our law firm today to learn more about how to name a guardian in your will and to start creating a comprehensive estate plan. We can help you secure your child’s future by finding the right person to care for them if you ever can’t.

Reference: Forbes (May 29, 2018) “Selecting Your Children’s Guardians Is Very Different Than Naming Their Godparents”

Role of Estate Planning for the Great Wealth Transfer

The “Great Wealth Transfer” refers to the significant shift of wealth expected to occur over the next decade. According to a recent report by Altrata, individuals with a net worth of over $5 million are set to pass on nearly $31 trillion to the next generation. This monumental transfer of wealth will impact various sectors, including family offices, financial services, luxury goods and nonprofits.

What Is the Importance of Estate Planning to the Great Wealth Transfer?

Estate planning is essential to ensure that your wealth is transferred according to your wishes. Your assets could be subject to legal disputes, taxes and other complications without a proper plan. Estate planning provides clarity and security for your loved ones, helping to preserve and protect your legacy.

Who Benefits from the Great Wealth Transfer?

While the media often focuses on Millennials and Gen Z, the Altrata report highlights that Generation X is first in line to inherit. Now in their mid-to-late 40s, these individuals are set to receive significant inheritances from their wealthy parents. Younger generations, including Millennials and Gen Z, are more likely to inherit from grandparents, typically resulting in smaller sums.

What Challenges Do Wealthy Families Face?

Wealthy families face unique challenges during the wealth transfer process. Some of these include:

  • Succession Planning: As families become more globalized, succession planning grows more complex. It’s crucial to have advisors who understand international laws and regulations.
  • Generational Differences: There can be a disparity between the values and aspirations of wealth holders and their younger benefactors. Clear communication and planning can bridge this gap.
  • Early Transfers: Wealth is increasingly being passed on during the lifetime of the head of the family. This requires early engagement and preparation to manage assets effectively.

Can Estate Planning Help?

Estate planning can address these challenges by providing a structured approach to wealth transfer. Here are some key benefits:

  • Minimize Taxes: Proper planning can help minimize estate taxes, ensuring that more wealth is passed on to your heirs.
  • Avoid Legal Disputes: Clear documentation of your wishes can prevent legal battles among family members.
  • Protect Beneficiaries: Estate planning can protect beneficiaries from potential creditors and other financial risks.

Key Estate Planning Steps to Take

First, consult an estate planning attorney to create a comprehensive plan tailored to your needs. Review your assets, including properties, investments and personal belongings. Set clear goals for how you want your assets distributed and who will manage them. Finally, update your estate plan regularly to ensure that it remains relevant as your life changes.

Take Control of Your Legacy Today

The Great Wealth Transfer is a significant event affecting millions of families and the US economy. If your family will be part of this wealth transfer, understand that proper estate planning is a must to reduce your tax burden and see your wishes go into effect.

If you haven’t developed an estate plan, now is the time. Contact our law firm to schedule a consultation and learn more about creating a plan that protects your wealth and provides for your loved ones.

Key Takeaways

  • Secure Your Legacy: Ensure that your wealth is transferred according to your wishes.
  • Minimize Taxes: Proper planning can reduce estate taxes, preserving more for your heirs.
  • Avoid Disputes: Clear documentation helps prevent legal battles among family members.
  • Adapt to Changes: Regularly update your plan to reflect life changes.

Reference: Altrata (Jun. 11, 2024) “Family Wealth Transfer 2024”

How to Create a Caregiver Contract

Taking care of elderly parents is rewarding. However, it’s also challenging. Many families face the decision of whether to hire a professional caregiver or take on the responsibility themselves. According to ElderLawAnswers, creating a caregiver contract can provide clear communication and fair compensation for all involved.

What Is a Caregiver Contract?

A caregiver contract, or personal care agreement, is a formal agreement between the caregiver and the elderly individual receiving care. This contract outlines the duties, compensation and other important details of the caregiving arrangement. It’s a legal document that can help prevent misunderstandings and financially protect both parties.

Why Is a Caregiver Contract Important?

One of the primary benefits of a caregiver contract is that it ensures the family member providing care is fairly compensated and reduces family tension. A caregiver contract can also be an essential part of Medicaid planning. By compensating the caregiver, the elderly individual may be able to spend down their savings and qualify for Medicaid long-term care coverage assistance.

How to Create a Caregiver Contract

If you’re considering becoming a caregiver for your elderly parents, starting with a well-drafted caregiver contract is essential. This legal document can provide peace of mind and ensure that both the caregiver and the elderly individual are protected. Consider five key steps to take when drafting yours.

1. Consult an Elder Law Attorney

Be sure to consult with an elder law attorney when you want to create a caregiver contract. They can verify that the contract is legally binding and provide guidance on meeting other goals through the contract, such as qualifying for Medicaid.

2. Define Caregiver Duties

The contract should clearly outline the caregiver’s duties. This can include tasks such as driving to doctor’s appointments, grocery shopping, and helping with bill payments. It’s important to cover all potential needs, even those that might not be necessary now. This way, you avoid any stress or confrontation over a likely expansion of duties in the future.

3. Establish Payment Terms

Payment for caregiver duties can be made in lump-sum or regular installments. For Medicaid purposes, the compensation must not be excessive. It should align with what other caregivers in your local area are earning. If your payment exceeds normal rates, the Medicaid administration may determine part or all of it to be a gift rather than payment. This could prevent you or your elderly loved one from qualifying for government assistance.

4. Address Tax Considerations

Income received by the caregiver is taxable. This means you must fully factor in payroll, federal income and other potential taxes. Calculate tax withholding properly to stay on the right side of the law.

5. Explore Other Payment Sources

If the elderly individual cannot afford to pay the caregiver, other sources such as long-term care insurance or state and federal programs may be available. It’s worth checking with local agencies to explore these options.

What are the Benefits of a Caregiver Contract?

A caregiver contract provides numerous benefits, including:

  • Clarity and Structure: Outlining duties and payment terms prevents misunderstandings and ensures that everyone is on the same page.
  • Financial Protection: Fair compensation for the caregiver and potential Medicaid planning benefits.
  • Emotional Relief: Reduces tension among family members by providing a clear, fair arrangement.

Contact our elder law firm today to learn more about creating a caregiver contract or to start planning for your family’s future. Take the first step towards ensuring that your loved one’s care and your own financial security.

Key Takeaways

  • Fair Compensation: Ensures that the family member providing care is fairly compensated, reducing potential family tensions.
  • Medicaid Planning: Helps in spending down savings to qualify for Medicaid long-term care coverage.
  • Clarity and Structure: Prevents misunderstandings by clearly outlining duties and payment terms.
  • Tax Considerations: Addresses the tax implications of caregiver income.
  • Financial Protection: Provides financial security and peace of mind for both the caregiver and the elderly individual.

Reference: ElderLawAnswers (Feb. 13, 2023) “Caregiver Contracts: How to Pay a Family Member for Care”

Single and Over 50? Estate Planning Is a Must

Estate planning might seem like something only families need to worry about. However, it’s just as crucial for single people, especially those over 50. Without a plan, your assets and healthcare decisions could end up in the hands of the state or distant relatives you barely know. Kiplinger makes the case that estate planning is essential for single people’s well-being and control over their assets.

What Happens without an Estate Plan?

If you pass away without an estate plan, the courts will distribute your property according to state laws. The state will look for your next of kin, which could mean your assets end up with distant relatives. If the state can’t find any relatives, it may claim your assets itself.

What’s more worrying is what happens if you’re indisposed. A spouse, parent, or child will normally make your financial and healthcare decisions if you cannot do so. Absent such a person, the state will appoint someone you probably don’t know to be responsible for you.

Choose Someone to Make Your Healthcare Decisions

A healthcare power of attorney is essential for single people. This document allows you to designate someone to make medical decisions on your behalf if you can’t. You can choose a trusted friend or relative who understands your wishes. Combine a healthcare power of attorney with an advanced healthcare directive to lay out your values, wishes and end-of-life care preferences.

Maintain Control of Your Finances

A financial power of attorney designates someone to handle your finances if you cannot do so. This person will pay your bills, manage your accounts and make financial decisions on your behalf. When you recover from an event that leaves you indisposed, you’ll be much better off having had a trustworthy financial power of attorney.

How Do You Plan Your Inheritance?

Creating a will is the foundation of an estate plan. It lets you decide who inherits your property, whether friends, charities, or other organizations. You can even make provisions for your pets and specify who should care for them. By naming an executor you trust, you can rest assured of your wishes going into effect.

The Importance of Trusts

While a will is the basis of an estate plan, trusts are vital to achieve specific goals. A revocable trust can avoid probate, the court process of validating a will and directly fund goals that are important to you.

State Inheritance Taxes

While federal estate taxes may not concern many, state inheritance taxes can be significant. Many states have lower exemption limits and impose taxes on property left to non-family members. Planning for these taxes is crucial to ensure that your beneficiaries receive the intended amount of your estate.

Can You Pre-Arrange Your Funeral?

You have broad leeway to prearrange your funeral in your will. You can specify whether you want to be cremated or buried and even arrange the details with funeral homes or cemeteries. Documenting your wishes ensures they are followed, preventing confusion or conflict among loved ones.

Who Will Take Care Of You?

Decide whether you want to stay at home with the help of in-home care services or move to a nursing home, if necessary. If you choose to stay at home, making accessibility modifications to your home can go a long way toward making single living practical in later life. Good estate planning can also help you reserve funds for these eventualities.

We Provide Estate Planning for Single People

Estate planning for single people over 50 isn’t just about distributing assets but also about securing the quality of life in your later years and protecting your wishes. Don’t leave your future to chance; contact us today to schedule a consultation and start crafting an estate plan tailored to your unique needs.

Key Takeaways:

  • Ensure That Your Wishes Are Respected: Without a plan, the state decides what happens to your assets and healthcare.
  • Designate Decision Makers: A healthcare power of attorney and financial power of attorney ensure that trusted individuals make decisions if you’re incapacitated.
  • Direct Your Inheritance: A will allows you to specify who inherits your property, including friends and charities.
  • Pre-Arrange Your Funeral: Planning your funeral in advance ensures that your wishes are followed and relieves your loved ones of this burden.
  • Prepare for Long-Term Care: Planning for long-term care, including funding and home modifications, is essential for maintaining independence.
  • Protect Yourself in Relationships: Keep finances separate and avoid giving control to new partners too quickly.

Reference: Kiplinger (May 21, 2024) “10 Things You Should Know About Estate Planning for Singles”

Back to School Planning to Protect Your Kids

As the school year kicks off, life can get hectic for parents. Between juggling school schedules, extracurricular activities and daily responsibilities, it’s easy to overlook important tasks. According to Kiplinger, one of the most crucial forgotten tasks is using estate planning to safeguard your child’s future from unforeseen circumstances. As your minor children return to school and work toward their future, it’s the perfect time to do your part.

Why Should You Plan for Your Child’s Future?

Every parent dreams about their child’s future; you might have ideas about the college they will attend, the career they will pursue, or the values you want to instill in them. However, have you considered what would happen if you were no longer around to guide them? It’s not a pleasant thought. However, every parent must ensure that their children will always be secure.

Estate planning can help you make your wishes felt even when you’re gone. Single or unmarried parents can use an estate plan to decide the guardians for their minor children rather than the state deciding. Trusts can set aside assets to fund specific goals.

What are Goals for Your Child?

Think about the goals you have for your child. Do you want them to achieve a higher education? Learn a valuable trade? Maybe you hope they will start their own business or spend time volunteering for important causes. Your goals can shape the kind of estate plan you create.

Can an Estate Plan Help?

An estate plan can help in many ways. An estate plan allows you to document your own values and goals for using money through how it is distributed to your children. You can create a plan for your child’s education, whether it is college or trade school. You can also incentivize them to achieve certain milestones, like maintaining a job or participating in charitable activities, by offering financial rewards. If experiencing the world is something you value, you can set aside money for travel or other experiences.

One of the most critical opportunities estate planning trusts offer is an alternative to the unlimited lump sum payment. Eighteen-year-old new adults are rarely ready to receive a five-, six-, or seven-figure payment all at once.  This lump-sum payment occurs when parents fail to plan for inheritance or settlement money or when parents have listed minor children as life insurance or retirement plan beneficiaries and pass away unexpectedly. Lacking the financial savvy to appropriately use a large sum of money, new adults often squander the money or develop an unhealthy, unsustainable lifestyle. As such, structuring the assets you leave behind to minor children through an estate plan is invaluable.

What Is a Continuing Trust?

One useful tool in estate planning is a continuing trust. A continuing trust can hold and manage money for your children until they reach a certain age or achieve specific goals. This can prevent them from receiving a large lump sum at 18, which they might not be mature enough to handle. They can instead receive smaller distributions over time, which can help them learn financial responsibility.

How Does a Continuing Trust Work?

A continuing trust allows you to decide your children’s ages and amounts for disbursements. This type of trust can be particularly beneficial if your child is still a minor or if they might struggle with financial responsibility. It can also protect your child’s inheritance from being squandered on unnecessary expenses.

What are the Benefits of a Continuing Trust?

Continuing trusts are especially helpful in protecting minors from inheriting large sums of money they might not be ready to manage. It can also provide safeguards for children who might struggle with financial decisions or face risks from addiction or lawsuits. The trust ensures that the money is used responsibly and can support your child’s future in a meaningful way.

What are the Potential Issues with Continuing Trusts?

While continuing trusts have many benefits, they need to be carefully drafted. There might be situations where your child needs a large sum of money, and the trust doesn’t allow it.  Managing a trust also takes time and money. Trustee fees and income taxes can add up, so it’s essential to consider these costs. You need to choose a trustee who can manage the trust effectively and has your child’s best interests at heart.

What Other Types of Trusts Can Help?

Other trusts can support your child’s future. Health and Education Exclusion Trusts (HEETs) can cover educational and healthcare costs. Incentive trusts can motivate your child to achieve goals, like getting good grades or starting a business.

Beneficiary-controlled trusts give your child some control over their inheritance, while protecting it from creditors and other risks.

Start Planning Your Minor Children’s Future

Creating a comprehensive plan for your child’s future might seem daunting. However, it’s an essential step in protecting it. Contact our law firm today to schedule a consultation and get started.

Key Takeaways

  • Protect Your Child’s Future: Ensure that your child’s financial and emotional security through proper estate planning.
  • Tailored Trusts: Set up continuing and other specific trusts to responsibly manage and distribute your child’s inheritance.
  • Controlled Inheritance: You can control when and how your child receives their inheritance, avoiding large sums at a young age.
  • Motivate Achievement: Utilize incentive trusts to encourage educational and personal milestones.
  • Professional Assistance: Gain peace of mind by collaborating with an estate planning attorney to create a thorough and effective plan.

Reference: Kiplinger (Nov 18, 2023) “To Protect Your Kids, Consider These Estate Planning Steps”

What are Risks of a DIY Estate Plan?

The number of online tools purporting to create estate plans easily and cheaply makes it tempting to forgo working with an estate planning attorney, but the long-term consequences of a DIY estate plan could be disastrous. A recent article from mondaq, “Risks of DIY Estate Planning” takes a close look at what can go wrong.

Estate and tax laws are both complicated and nuanced. Without an experienced estate planning attorney overseeing the creation of an estate plan, a homegrown plan isn’t likely to achieve the desired results. In addition, chances are good it won’t follow state law. If a last will and testament is found to be invalid during probate, it’s as if there was no will at all.

Estate planning needs to be created for each person’s unique situation. Do family members get along, or should the estate plan be designed to be litigation-proof? Are there large assets held in trust or corporations with complex tax consequences? If there are family members with special needs, have the proper trusts been established to protect them over their lifetimes?

Tax planning is often a significant part of an estate plan. Depending on your state and where you own property or businesses, your estate must consider many different types of taxes. Transfer tax, capital gains taxes, income taxes, and estate taxes are just a few of the taxes to be addressed. If the estate plan doesn’t dovetail with tax liabilities, beneficiaries could find themselves with a far smaller inheritance than anticipated.

Today’s modern family is not as straightforward as in the past. Families come in many different variations, all of which have their own special challenges. Blended families are fairly common, and a traditional “I love you” will, where one spouse leaves the other everything and vice versa, may result in some children being disinherited. Same-sex married couples with children need to be sure their children, biological and adopted, are protected with an estate plan designed to protect all members of the family.

Comprehensive estate plans should address asset distribution issues, guardianship for minor children, and name an executor and heirs. A Power of Attorney is needed so spouses may be involved in each other’s healthcare. Living Wills are required to clarify wishes for end-of-life care, as are Advanced Medical Directives. There are a host of documents to be created and decisions to be made, all of which require the knowledge and experience of an established estate planning attorney.

Reference: mondaq (July 1, 2024) “Risks of DIY Estate Planning”

Celebrity Estate Planning Mistakes to Avoid

It’s hard to miss the major mistakes celebrities make—their lives and deaths are public and not always pretty. Expensive mistakes on a grand scale aren’t what most of us deal with, but there are good lessons to learn from their mistakes, says a recent article from Market Watch, “Sharon Stone’s missing $18 million, Prince’s estate back in court: what to learn from celebrity estate mistakes.”

Eight years after Prince’s death, his estate is back in court, while Sharon Stone was in the news when she revealed $18 million in savings disappeared while she suffered a life-threatening illness more than two decades ago. For conservatorship stories, while we aren’t hearing much about Britney Spears anymore, Jay Leno has filed for conservatorship for his wife Mavis, who has dementia, and musical legend Brian Wilson of the Beach Boys faced conservatorship issues when his caretaker wife died, and another caretaker had to be named.

We expect people with great professional success to be surrounded by a small army of trusted caretakers, estate planning attorneys, accountants, managers, and others. And we’d also expect them to want to keep as much of their lives private as possible. But as headlines show, people who are incredibly talented performers aren’t necessarily skilled in the legal and business aspects of their lives.

In 2001, Sharon Stone suffered a stroke. It took seven years for her to overcome the effects of the stroke, and she counted on others to manage her affairs. When she was finally able to start taking control of her life, she found everything had been put into someone else’s name, and $18 million was missing from her bank account.

While she’s not forthcoming with details, this was likely a trusted person abusing their role as Power of Attorney, where a fiduciary was appointed without enough oversight. For regular people, an estate planning attorney could create a plan where, in addition to a Power of Attorney for certain accounts, like running the household, more considerable assets are placed in a trust, and the trustee is not the same person as the POA. Checks and balances need to be built into an estate plan to protect individuals in case of incapacity.

In cases where the fiduciary has performed poorly, and a family member challenges the results, the results are common. When the court reviews the matter, changes can be made to appoint another person to the POA. Courts can also step in to take over another person’s finances, but it usually doesn’t happen until after significant damage has been done.

A meeting with an estate planning attorney should include discussions about who is qualified to serve as a Power of Attorney and how their actions may be reviewed. In many instances, trust is not the issue, but competence is. Are they capable of managing the affairs of an incapacitated person? If not, another person should be selected, regardless of whose feelings might be hurt by the decision.

Reference: Market Watch (July 13, 2024) “Sharon Stone’s missing $18 million, Prince’s estate back in court: what to learn from celebrity estate mistakes”

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