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Can You Support a Child with Special Needs?

Families that include individuals with special needs require planning to secure their loved ones’ security in the future, both in legal and financial terms. There’s usually no expectation of the child becoming an independent adult, so careful planning is needed, as advised in the recent article “Financial Planning for Families with Disabilities” from Wealth Management.

Many families neglect planning for their retirement, focusing all their resources on developing a plan for their disabled child. However, retirement and their child’s future need to be secured, which is where an estate planning attorney can help.

In 2014, Congress created The Achieving a Better Life Experience (ABLE) accounts to allow disabled individuals to own accounts with up to $100,000 without the assets being counted against their eligibility for Supplemental Security Income. A parent may make annual contributions, and costs not covered by government benefits can be paid using this account.

A Pooled Special Needs Trust is a group of several Special Needs Trusts managed by a nonprofit, which, as its name implies, pools the assets of many Special Needs individuals together. Each account remains separate, and the trust provides management and investment services.

Unlike a typical SNT, people over 65 may participate in a pooled SNT. Medicaid and SSI beneficiaries wishing to spend down their assets to become eligible can transfer assets directly into a pooled trust account. Consult with an estate planning attorney to ensure that this occurs correctly.

The most significant responsibility for parents planning for their disabled child is to ensure that no one mistakenly puts their child’s eligibility at risk for Medicaid and SSI. A well-meaning family member leaving assets to the child could undo plans, so they must be informed of the necessary restrictions.

Medicaid does far more than provide health care benefits. It funds social and occupational programming, residences for group living and many other benefits of great value to the disabled individual. The eligibility rules are complex and require the help of a skilled estate planning attorney to navigate successfully.

Reference: Wealth Management (March 1, 2024) “Financial Planning for Families with Disabilities”

Why Communities Want Small Businesses to Have a Succession Plan in 2024

Entrepreneurship inspires new business openings every day. Small business owners may not consider succession planning when starting their new business. However, it is an essential step in any venture. Small businesses become a part of the community and make an impact beyond the owner’s livelihood. They add jobs, contribute to the community’s economic health, and become local fixtures for residents.

Based on Teamshares’ article, “Succession planning statistics in 2024: preserving a legacy,” we’re discussing the looming succession plan dilemma, why it’s essential and what it means for your business. As many small business owners without a succession plan set their sights on retirement in the next two years, those employees and their communities may lose wages and a business they love.

What Is the Small Business Succession Plan Dilemma?

Succession planning is ideally on every small business owner’s checklist, leaving a legacy in a family member’s hands once the owner retires. Owners should have a plan ahead of retirement if they become incapacitated or pass away unexpectedly. Succession planning is elemental for small business owners, much like estate planning is for anyone with assets.

Teamshares’ statistics indicate that over 60% of small business owners will retire between 2024 and 2026. Without a plan for family or someone else to lead the company once they retire, the company will likely close. You might be asking, “Why is that important?”

Why Small Business Planning Is Important for Your Company and Community

Small businesses employ nearly half of America’s workforce and contribute to local economies. With most owners retiring without a succession plan, chances are many of those companies will close across the U.S. in the next two years. Not having a succession plan for retirement or, in case of incapacity, could unwittingly be the catalyst for closing your company.

What Succession Planning Today Means for Your Company

Your company is built on hard work, entrepreneurship, and a dream. Having a successor running your business, if you retire or are unable, passes a legacy to family or someone you trust.

Work with an estate or business planning attorney to create a plan that protects you, any employees, your family’s livelihood, and your community. Like an estate plan, legal documents, such as living trusts, can keep your company open and pass on your legacy.

Establish a living trust, appointing a trustee or co-trustees to handle company operations and run the business. Draft financial and medical powers of attorney, empowering trusted agents to manage bill and invoice payments and bank transactions, employee payroll and oversee your healthcare, if you are mentally or physically impaired.

Small Business Succession Planning Dilemma Key Takeaways:

  • The Dilemma: Many small business owners will retire through 2026 and don’t have a succession plan to keep the business running.
  • Why Succession Planning is Important: Small business owners must create a plan for family or another trusted person to lead the company and continue its legacy.
  • What it Means for Your Business: Succession planning protects your business and legacy by empowering a successor after you retire or if you become incapacitated.

Conclusion

Whether you’re creating an exit strategy, empowering family members to take over, or preserving the company’s livelihood in a crisis, a succession plan protects you, your family and community from your company closing. Losses include income, employee wages and resident patronage. Consider a succession plan to empower a successor who will keep your business running.

Reference: Teamshares (Dec 22, 2023) “Succession planning statistics in 2024: preserving a legacy”

How Parents and Adult Children Talk about Money and Aging

If you thought it was hard to talk with your children about sex, try talking with them about money and death. Americans generally steer clear of talking about death and money. Nevertheless, these conversations are necessary, according to a recent article, “Let’s talk about money and death: Why aging parents and their adult children should have ‘the talk,’” from MarketWatch. Sharing information about finances and end-of-life wishes can prevent resentment or stress before a crisis and gives everyone involved peace of mind.

If an estate plan has been created and financial and tax planning accomplished, but the adult children aren’t told a plan exists, there may be general worry over decades as parents age. What will happen when they die? Will the siblings know what to do? Who will be in charge? A family meeting to discuss the plan and the parents’ wishes can address these issues.

This is especially important for members of Generation X (Americans born between 1965 and 1980). This cohort has the most assets, may deal with a significant wealth transfer and often cares for its children and aging parents.

Start by putting together an agenda for the family meeting. Understand that there may need to be more than one meeting, since there is so much ground to cover. Long-term Care planning, the current status of the parent’s living situation and plans for a possible move to a continuing care facility are just the start. Do the parents have an estate plan and documents like a Power of Attorney, Healthcare Proxy, Advanced Care Directive and the like?

Money can be an emotional conversation, especially if there are disparities in the sibling’s financial status. Parents are often extremely reticent to share information about their net worth, sometimes because they don’t want their children to lose incentive to work, and in other situations because they are embarrassed about not having enough money to sustain them through their later elder years.

Having a neutral third party in the meeting, like an estate planning attorney, can be helpful when emotions are running high. Holding a family meeting in a law office may sound formal. However, having a professional on hand who can clarify estate, financial and tax matters may help keep the conversation focused. If the estate planning attorney works with a therapist or geriatric specialist who facilitates family discussions, they may be able to help the family move past the emotions of anticipated grief into productive, concrete planning.

Confronting the realities of mortality and money is difficult even in the best of circumstances. Nevertheless, with the support of skilled professionals, a focus on care and the creation of a no-judgment zone, the family will be able to help each other as they prepare for the future.

Reference: MarketWatch (March 23, 2024) “Let’s talk about money and death: Why aging parents and their adult children should have ‘the talk’”

Unraveling the Mystery of Trusts: What Your Estate Planning Attorney Wishes You Knew

Trusts are invaluable tools in estate planning when it comes to securing your financial future and ensuring that your assets are handled according to your wishes. However, the intricacies of trusts and their tax implications can feel like deciphering a complex legal code. Fear not; we’re here to demystify trusts and shed light on what your estate planning attorney wishes you knew. This article outlines trust basics, types of trusts for estate planning and tax implications for 2023 and 2024.

Trust Fundamentals: Understanding the Basics

Trusts are based on three elements: the legal document for the grantor/creator who funds the trust or transfers their assets, the trustee named to administer or manage the trust according to the terms and beneficiaries to receive the assets once the grantor is gone.

Trusts are a go-to tool in estate planning. They serve different purposes for estate owners planning, from college funds to keeping a beloved home in the family for generations. Let’s walk through the fundamental types of trusts based on SmartAsset’s article, “Trust Tax Rates and Exemptions for 2023 and 2024.”

A trust can be revocable or irrevocable and is often used to avoid probate. The trust creator could also be the trustee and beneficiary to have access to and income from the trust. Revocable trusts are flexible and allow easy changes or cancellations. Irrevocable trusts are not easily changed or revoked but are most often used to exclude assets from an estate.

Simple Trust

This straightforward trust model holds income-producing assets. All earned income, such as dividends, is distributed to beneficiaries without tapping into the principal. The one caveat with a simple trust is income distribution at least once a year or annually.

Complex Trust

Offering more flexibility, a complex trust may retain some income, distribute principal and allocate some funds to charitable causes. The trust’s principal assets include real estate, investment-generating dividends, cars, bank account funds and jewelry.

Grantor Trust

With the grantor maintaining control, this trust allows for more hands-on management of assets and tax responsibilities.

What the Tax Terrain: 2023 vs. 2024 Means for Estate Planning

Trusts are not immune to paying taxes. Working with an estate planning attorney can help you implement the trust that best fits your intentions. Irrevocable trusts can shield assets from taxation. However, IRS rules are changing that.

Here’s a glimpse into the tax brackets for both 2023 and 2024:

  • 2023 tax brackets range from 10% to 37% for ordinary income and from 0% to 20% for long-term capital gains.
  • 2024 slight adjustments see brackets for ordinary income ranging from 10% to 37% and for long-term capital gains from 0% to 20%.

Understanding these tax nuances can empower you to make informed decisions regarding your trust’s financial management.

Key Takeaways:

  • Trust Basics: Trusts consist of a grantor, trustee, and beneficiary.
  • Trusts and Taxes: Trust income is subject to taxation, with rates varying based on the type of income and the tax year.
  • Types of Trusts: The most basic types of trusts are revocable, irrevocable, simple, complex and grantor.
  • Trust Creation: A seasoned estate lawyer can provide invaluable guidance, ensuring that your trust aligns with your long-term financial goals.

Conclusion

Embarking on the estate planning and trust management journey can be daunting. However, you don’t have to navigate these waters alone. Seek the guidance of a trusted estate planning lawyer to chart a course that safeguards your assets and secures your financial legacy for generations to come.

Reference: SmartAsset (Jan. 5, 2024) “Trust Tax Rates and Exemptions for 2023 and 2024.”

Estate Planning Strategies to Care for Aging Parents

Our parents are pillars of support along our journey through life, guiding us through the ups and downs with unwavering love and care. As our parents age gracefully, we can choose estate planning strategies that support them along their journey to retirement and beyond. These strategies address long-term care and living arrangements for our parents’ well-being and peace of mind. We explore why caring for aging parents in estate planning is necessary to preserve their dignity, security and legacy.

Comprehensive Estate Planning Strategies to Care for Aging Parents

Modern estate planning goes beyond wealth protection to create a roadmap for the future. It encompasses health care decisions, financial management and a delicate balance between independence and security. Kiplinger’s article, “Estate Planning for Your Aging Parents: A Delicate Balance,” helps us discuss estate planning strategies to care for aging parents. An estate plan with these strategies provides clarity and guidance to loved ones on aging parents’ wishes, while retaining control for aging parents over financial and health-related matters.

Estate Planning for Aging Parents – How to Balance Independence and Care

Balancing a parent’s independence and care as they age is challenging. Declining cognition and physical health increase the need for legally documented healthcare wishes and appointed representatives to manage financial affairs.

Aging adults value autonomy and may be reluctant to relinquish control over their daily lives. Open and honest communication is the key to finding this balance. Conversations should be encouraged about medical wishes and future goals with an aging parent or parents. An estate plan can then be created that honors their decisions.

Consider how a trust can protect a parent’s wealth, with a trustee overseeing their estate’s administration and asset distribution. A will is another vital estate-planning component, naming beneficiaries to simplify the distribution of assets after a parent passes away.

Plan for long-term care and Medicaid. An irrevocable trust can preserve your parents’ assets during Medicaid approval, while income-producing investments supplement their income.

Incapacity Planning to Respect an Aging Parent’s Health Care Preferences

As parents age, their healthcare needs may become more complex, necessitating careful planning for incapacity. Advanced directives and health care proxies empower parents to designate trusted individuals to make medical decisions, ensuring that their preferences for medical treatments and end-of-life care are honored with dignity and respect.

Tax Planning: Minimizing Burdens for Heirs

Tax planning is another central element in a comprehensive estate plan. Aging parents passing their wealth to the next generation look for ways to minimize the tax burden on their beneficiaries. Gifting, establishing trusts and utilizing tax-advantaged accounts can reduce taxes, maximize inheritance and transfer their wealth more efficiently.

Key Takeaways:

  • Aging Parents: We can choose estate planning strategies that support aging parents in their journey to retirement and beyond.
  • Balance Independence and Care: Encourage conversations about medical wishes and future goals with an aging parent or parents. An estate plan can then be created that honors their decisions.
  • Incapacity Planning: Advanced directives and health care proxies empower parents to designate trusted individuals to make medical decisions,
  • Tax Planning: Gifting, establishing trusts and utilizing tax-advantaged accounts can reduce taxes, maximize inheritance and transfer their wealth more efficiently.

Conclusion

Caring for aging parents in estate planning is practical and necessary. It is also a profound expression of love and gratitude. Embracing this responsibility with compassion, empathy and diligence helps our parents navigate this stage of life with dignity, security and peace of mind.

If you’re ready to embark on this estate planning journey for your aging parents, our experienced legal team guides you every step of the way. Contact us today to learn more and confidently start planning.

Reference: Kiplinger (February 2024) “Estate Planning for Your Aging Parents: A Delicate Balance.”

Why Estate Planning Is Essential for Small Business Owners

Estate planning should be a top priority for anyone who has built and grown a successful small business, especially if they intend to build generational wealth and create a legacy. The title of a recent article from Business Insider says it all: “You might not want to think about estate planning, but as a financial planner, I know it’s essential for small-business owners.”

There are more complex issues for business owners than employees for estate planning. Therefore, be sure to work with an experienced estate planning attorney who will create a plan to protect you, your family and your business. As you go through the process, keep these basics in mind:

Last Will and Testament. This document is the foundation of an estate plan, providing directions to the state probate court regarding your wishes for distributing assets. It also names a guardian responsible for minor children upon your passing. If you don’t have a will, assets are distributed according to your state’s intestacy laws, typically based on kinship. You can update and change your will throughout your lifetime, and it should be reviewed every three to five years.

Revocable Living Trust. Having a revocable living trust gives you more control over assets, which could be necessary to distribute business assets. A revocable living trust can be altered while you are living, so changes in your business can be reflected in the directions in the trust.

Financial Power of Attorney. This document is critical if you are the business owner who performs most of the financial tasks of your business. When a business owner becomes incapacitated, having someone named Power of Attorney gives the POA the ability to pay bills, make bank deposits and withdrawals, file business and personal taxes and make any other financial decisions you wish. POA can be limited if you only want someone to pay bills, or they can be broad, allowing the agent to do anything you would do to keep the business running while you are incapacitated. Your estate planning attorney can craft a POA to suit your needs.

Business Succession Plan. A business succession plan should be in place as soon as your business gains traction and becomes successful. Distributing shares of the business after you pass is fine. However, what if your heirs don’t have a clue how the business works? Do you want them to sell it after you pass or maintain it for the next generation? A succession plan requires the help of an estate planning attorney, CPA and financial professionals to create a management team, define roles, set performance guidelines, etc.

Digital Estate Plan. We spend so much time online. However, few have plans for our digital assets. If your business is online, has a website, and uses social media, online finances, and cell phones, you need a digital estate plan to identify assets and provide instructions on what you want to be done with those assets after you have passed.

Review Beneficiary Designations. Any account that can name a beneficiary, such as retirement plans, investment accounts, or life insurance policies, must be reviewed every few years or whenever a trigger event, including birth, death, divorce, or remarriage. Upon your passing, these assets will be passed directly to the beneficiary. Be sure the person you named twenty years ago on your life insurance policy is still the right person to receive proceeds upon your passing.

An experienced estate planning attorney can review your current estate plan to ensure that it covers all bases for you and your business.

Reference: Business Insider (March 22, 2024) “You might not want to think about estate planning, but as a financial planner, I know it’s essential for small-business owners”

Can Estate Planning Address ‘Third Generation Curse?’

Have you heard of the “Great Wealth Transfer?” It’s the period when Baby Boomers are projected to pass trillions of dollars to the next generation, according to a recent article from Kiplinger, “How Estate Planning Can Thwart the ‘Third-Generation Curse.’”

The anticipated $84 trillion expected to be bequeathed to Generation X, Millennials, and Gen Z beneficiaries sounds enormous, but the third-generation curse may leave heirs with far less than expected. Often, wealth is earned by one generation, grown by the second generation who witnessed firsthand how hard their parents worked to maintain their wealth, and mismanaged or wasted by the third generation members, who are too far from the original wealth creation to respect it.

Creating or updating an estate plan to protect family wealth from the third-generation curse requires communication between generations centered on the values leading to wealth creation and a financial education on how to preserve and grow wealth.

Many estate plans are structured to address tax planning, but that’s only one aspect of estate planning. Communicating the “why” of the estate plan, including where the money came from, how it has been stewarded over the years, and what needs to happen to protect it, will help beneficiaries have a deeper regard for their inheritance.

Boomer values may differ from their heir’s values, but they may also be similar, as they use different language to describe the same thing. Clarifying these values and communicating with heirs may help to give context to their inheritance and its importance.

Understanding your priorities and values should ideally lead to an estate plan reflecting your wishes. For instance, if the family prizes education, your estate planning attorney may advise you to create a trust to fund advanced education. Such a trust should be accompanied by a letter of intent explaining your wishes and values to both trustees and heirs.

If you’re unsure about mandating the use of funds, you may have your estate planning attorney create a discretionary trust with a similar letter explaining what you’d like them to use the funds for and why it’s important to you. Because circumstances change, the trustee will have the flexibility to distribute the funds as they see fit.

When the estate plan is completed, have a series of conversations with family members about what’s in the plan and why. They don’t need to know every detail, but broad strokes will go a long way in letting them know what you’ve done, your wishes, and your hopes for their future.

Reference: Kiplinger (March 12, 2024) “How Estate Planning Can Thwart the ‘Third-Generation Curse’”

Aging Baby Boomers Highlight Significance of Elder Law in Estate Planning

As the baby boomer generation ages, the significance of elder law in addressing the unique legal needs of older adults has never been more pronounced. From helping to establish financial security to long-term care planning, elder law attorneys play a vital role in safeguarding the rights and interests of seniors in an increasingly unique legal landscape. Based on ABA Journal’s article, “Why elder law is a growing, ‘anything-can-happen practice,’” we’ll discuss the importance of elder law and how it’s poised to meet the evolving needs of our aging population.

Why Elder Law Is a ‘Must Have’ in Today’s Estate Planning

The sheer number of aging baby boomers drives the demand for elder law attorneys. The changing world in which they are aging fuels the need for elder law strategies in your estate plan. Working with an elder law attorney to create your estate plan blends the best of many worlds, covering everything from asset protection and preservation to Medicaid planning and advance health directives. Plan your retirement and beyond and leave the most abundant legacy to your heirs.

The Financial Realities of Aging

Baby boomers, born between 1946 and 1964, face unique financial realities compared to previous generations. Many lack the robust pension and Social Security benefits enjoyed by their predecessors, raising concerns about financing long-term care as they age.

Older adults have become easy targets for fraud and financial exploitation, making asset protection strategies a no-brainer in estate planning. Living trusts, powers of attorney, and advance health directives can protect an older individual’s financials by granting trusted family or friends the power to advocate or act on your behalf if you aren’t physically or cognitively up to it. Having someone you trust as a gatekeeper to your wealth blocks scammers from accessing your life savings if you are cognitively impaired.

Medicaid planning, however, presents its own set of challenges, with potential pitfalls for the unwary. Elder law attorneys play a crucial role in providing counsel and guidance to baby boomers navigating this minefield, ensuring they can access essential long-term care services without depleting their assets.

Empowering Seniors through Estate Planning

As the aging population continues to grow, the role of elder law attorneys becomes increasingly indispensable to protect the rights and dignity of older adults through estate planning. Whether protecting against financial exploitation, facilitating long-term care planning, or a medical power of attorney, elder law attorneys serve as trusted allies for senior support.

Key Takeaways:

  • Aging Baby Boomers: Aging baby boomers highlight the significance of elder law in addressing the unique legal needs of older adults through estate planning.
  • Elder Law in Estate Planning: Plan your retirement and beyond and leave your heirs the most abundant legacy.
  • The Financial Reality of Aging: Protect against issues like less robust pension and Social Security, rising long-term care costs, and vulnerability to financial exploitation.
  • Empowering Seniors Through Estate Planning: An estate plan provides financial security and protection of one’s decision-making authority.

Conclusion

Elder law is pivotal in addressing the evolving estate planning needs of aging baby boomers. Thoughtfully tailored estate plans safeguard seniors’ financial health, medical decisions during incapacitation, and best interests.

Reference: ABA Journal (Jan. 30, 2024) “Why elder law is a growing, ‘anything-can-happen practice.’”

Digital Life Lives on After You’re Gone, Unless You Plan Ahead

Every year, Americans receive Facebook reminders to wish departed friends a happy birthday. It’s a sad reminder, but it happens because most people don’t address digital footprints as part of their estate plans. A recent article from the Monterey Herald, “Liza Horvath, Senior Advocate: Your digital life does not die with you,” explains how to get started.

Ensure that your executor has a list of websites and apps where you are a user. This includes Facebook, Instagram, X (formerly known as Twitter), Linked In, Snapchat, WhatsApp, Google email, Microsoft Outlook, bank accounts, investment accounts, photo storage and any other sites you use. You can use an online password manager or paper to make a list. If you create a spreadsheet on your computer, you’ll want to encrypt it to prevent unwanted access and ensure that your executor has the password. Whatever method you use, make sure that your executor knows where the information can be found.

When you die, certain platforms allow you to name someone to become your Account Manager or Legacy contact. Google’s Account Manager lets you set up parameters to notify someone if you have been inactive for a certain period of time. Facebook enables you to name a person to manage your account after you pass away. Apple also has a Legacy Contact option.

Like everything else online, website guidelines change, so you’ll want to create a Digital Will establishing your wishes for your social media and online accounts, referred to as “Directives.”

If you have digital currency or cryptocurrency, you’ll need an executor who understands how crypto works. They should be able to access your digital wallet and “key”, so they may access your assets. These funds are frequently lost due to a lack of planning and no paper trail to follow.

Depending upon your state, you may be able to give your Power of Attorney access to your digital assets in case of incapacity. Speak with your estate planning attorney to be sure that your will or trust addresses the ability to manage digital assets according to the laws of your state.

If creating a list of digital accounts seems too much to deal with, imagine your executor having to figure out your digital life. Without digital estate planning, your assets could be lost. As a result, your entire online life is vulnerable to digital identity theft that could easily continue for decades.

Reference: Monterey Herald (March 1, 2024) “Liza Horvath, Senior Advocate: Your digital life does not die with you”

Estate Planning Checklist for 2024: A Comprehensive Guide

Estate planning is more than writing a will; it’s a plan to manage and distribute assets to your dependents. It documents your healthcare preferences, so a loved one decides on medical care according to your wishes. The National Council on Aging (NCOA) Adviser’s article, “Estate Planning Guide and Checklist for 2024,” offers a comprehensive overview of what to consider when planning your estate. This blog post distills the key points from the article and provides an actionable checklist for 2024.

Understanding Estate Planning

Estate planning organizes your affairs to fulfill your wishes after you pass away. It encompasses decisions about money, property, medical care and dependent care. The process includes creating essential documents like wills, trusts, powers of attorney and living wills. Estate planning provides peace of mind that your wishes are known and respected, benefiting your loved ones.

Key Documents in Estate Planning

  • Wills: A legal document that outlines how to distribute assets after your death.
  • Trusts: Contracts that allow a third party, or trustee, to hold property and other assets on behalf of a beneficiary.
  • Powers of Attorney: Legal documents that grant someone else the authority to make decisions on your behalf, in general or specific situations.
  • Living Wills: Documents that state your wishes regarding medical treatment when you cannot communicate your choices.

Key Takeaways

  • Common Estate Planning Documents: Wills, trusts, powers of attorney and living wills are fundamental to estate plans.
  • Everyone Needs a Will: Regardless of the size of your estate, a will is crucial to fulfill your wishes.
  • Update Your Estate Plan Regularly: Significant life events necessitate updating your estate plan to reflect your current wishes and circumstances.

Conclusion

Consider estate planning to be a critical process to protect your assets, provide for beneficiaries and have peace of mind for the future. Follow the NCOA Adviser’s comprehensive checklist to create your personalized estate plan.

Reference: NCOA Adviser (Aug 21, 2023): Estate Planning Guide and Checklist for 2024.

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