Estate Planning Blog Articles

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Major Blunders in Estate Planning

Kiplinger’s recent article entitled “5 Common Estate Planning Mistakes to Avoid” warns that if you overlook an important step or make a misstep in your estate planning, everything could be undone. You could instead burden your family with a challenging and headache-inducing estate.

There are many ways to get things wrong. Let’s look at a few:

  1. Not preparing for incapacity. The main reason to create a will is because we know that some day we’ll pass away. A will lets your family know how to distribute your property and other assets. A well-thought-out estate plan should identify the people authorized to make important decisions on your behalf regarding finances, health care and other critical matters. This is accomplished with powers of attorney. Once you are unconscious or afflicted with dementia, it will be too late. Make a list of decision-makers now, inform them of your wishes and create the necessary powers of attorney.
  2. Failing to include funeral and burial wishes. If you can purchase a burial plot and make funeral plans, put this in your estate planning documents. If you don’t, it may mean a lot of work for your family after your death. Name someone to be in charge of the funeral and burial arrangements and make sure that person understands your wishes. If you don’t detail your wishes prior to your death, it may become an issue for your loved ones.
  3. Ignoring the tax implications of transferring property. As generous as it may seem to give property to your family during your lifetime, it is usually much smarter – and far more generous – to delay the transfer until you’re deceased. If you convey the deed to property to your next of kin before you die, they may see a hefty tax bill whenever they sell the same property. That’s because the basis for that property will be tagged to the date on which you made your purchase, not the date you made your gift. As a result, it could leave your heirs scrambling to pay an enormous sum that would have been averted, had they been granted the deed after your death.
  4. Failing to designate backups for decision-makers. The best of plans can go south without a secondary beneficiary. This will address any unforeseen events. Name backups for your executor and other decision-makers. If they can’t fulfill their obligations, a court will name substitutes unless you’ve already planned for these contingencies.
  5. Not tracking beneficiary designations. In addition to stating the beneficiaries and their respective shares in your will, you must also communicate a directive to your bank that sets forth the interests in your account after your death. If you fail to do this, the bank’s rules will override anything you’re written in your will as to that account. That means your percentages will be different from those expressed in your will.

Take steps now to make certain there are no hidden issues that will haunt your family after you’ve passed.

Reference: Kiplinger (Oct. 17, 2022) “5 Common Estate Planning Mistakes to Avoid”=

What Should I Know About Buying Funeral Services?

People usually don’t buy funeral services frequently, so they’re unfamiliar with the process. Add to this the fact that they’re typically bereaved and stressed, which can affect decision-making, explains Joshua Slocum, executive director of the Funeral Consumers Alliance, an advocacy group. In addition, people tend to associate their love for the dead person with the amount of money they spend on the funeral, says The Seattle Times’ recent article entitled “When shopping for funeral services, be wary.”

“Grieving people really are the perfect customer to upsell,” Slocum said.

The digital age has also made it easier to contact grieving customers. Federal authorities recently charged the operator of two online cremation brokerages of fraud. The operator misled clients and even withheld remains to force bereaved families to pay inflated prices.

The Justice Department, on behalf of the Federal Trade Commission, sued Funeral & Cremation Group of North America and Legacy Cremation Services, which operates under several names and the companies’ principal, Anthony Joseph Damiano. The companies, according to a civil complaint, sell their funeral services through the websites Legacy Cremation Services and Heritage Cremation Provider.

These companies pretend to be local funeral homes offering low-cost cremation services. Their websites use search engines that make it look like consumers are dealing with a nearby business. However, they really act as middlemen, offering services and setting prices with customers, then arranging with unaffiliated funeral homes to perform cremations.

The lawsuit complaint says these companies offered lower prices for cremation services than they ultimately required customers to pay and arranged services at locations that were farther than advertised, forcing customers to travel long distances for viewings and to obtain remains.

“In some instances when consumers contest defendants’ charges,” the complaint said, the companies “threaten not to return or actually refuse to return” remains until customers pay up.

Mr. Slocum of the Funeral Consumers Alliance recommends contacting several providers — in advance, if possible, so you can look at the options without pressure. And ask for the location of the cremation center and request a visit. Also note that cremation sites in the U.S. are frequently not located in the same place as the funeral home and may not be designed for consumer tours.

Note that the FTC’s Funeral Rule predates the internet and doesn’t require online price disclosure. Likewise, most states don’t require this either.

Last year during the pandemic, the government issued a warning about fraud related to the funeral benefits. They said FEMA had reports of people receiving calls from strangers offering to help them “register” for benefits.

Reference: Seattle Times (May 15, 2022) “When shopping for funeral services, be wary”

Should I Create a Funeral Trust?

The IRS defines a funeral trust as “a pooled income fund set up by a funeral home/cemetery to which a person transfers property to cover future funeral and burial costs.”

Funeral trusts are typically set up between three parties: a bank that holds the assets in the trust, you (the grantor) and the funeral home that will receive the funds to cover the cost of the funeral after your death.

Yahoo Life’s recent article entitled “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?” explains that there are two types of funeral trusts: revocable and irrevocable.

Each type has benefits and drawbacks. The drawback to a trust in many cases is that if you die, and the funeral home isn’t paid in full, or you haven’t put in enough to cover your funeral expenses and the amount that’s currently in the trust is all that you will have—and your family will be responsible for the difference. An advantage of trusts is that, in some states, they can be used primarily for people who aren’t insurable because of extreme health conditions, old age, or imminent death.

If you set up a revocable funeral trust, then you retain control of your assets and can make changes to your terms, including dissolving the contract and getting most of your prepaid funds back.

Funerals can be quite expensive and are often an unexpected expense for which grieving families are not fully prepared. A funeral trust can help families pay for these expenses, which may include:

  • Embalming or cremation
  • A casket, burial vault, or urn
  • Dressing and casketing
  • Clothing, makeup, and hairstyling
  • A burial plot, headstone, and cemetery fees
  • Fees for the visitation and funeral service
  • Service charges for the funeral director and staff
  • Fees for clergy and musicians
  • Hearse and limousines
  • Obituary and death certificate fees; and
  • Stationery and flowers.

While discussing your death and end-of-life planning with your loved ones isn’t easy, the benefit of knowing that you’ve eased the emotional and financial burden that funeral planning can entail in times of grief is worth it.

Reference: Yahoo Life (Feb. 17, 2022) “Should You Pre-Pay for Your Own Funeral as Part of Estate Planning?”

New Rules for Burial at Arlington National Cemetery

In testimony before the House Appropriations Committee, Karen Durham-Aguilera, Executive Director of Army National Military Cemeteries and Arlington National Cemetery, said she expects revisions to those rules in coming months, but would not say whether that would tighten or loosen the proposed eligibility restrictions.

Military Times’ recent article entitled “As space dwindles, final rules on burial eligibility for Arlington Cemetery expected this fall,” reports that new eligibility rules for Arlington Cemetery would exclude most non-combat veterans.

“We continue to explore all viable options to ensure Arlington National Cemetery continues to honor our nation’s heroes for generations to come,” she said. “It’s really an impossible problem for us. The eligible population is more than 22 million … currently today, we have less than 85,000 spaces.”

The proposed changes are aimed at extending the use of the cemetery for several more decades.

In 2019, Army officials suggested restricting all below-ground burial sites to combat heroes, battle casualties and a small pool of notable dignitaries. Other veterans would be eligible for placement of cremated remains in above-ground structures at the cemetery. However, many veteran groups were against this, saying it could upset numerous families’ end-of-life plans and risks the perception that certain military experiences are more valuable than others.

About 400,000 individuals are buried at Arlington now, and roughly 7,000 individuals are interred at the cemetery annually.  those numbers were reduced last year due to COVID restrictions.

The expansion plans are expected to add about 80,000 new burial spaces to the cemetery.

“Without changes to eligibility, Arlington National Cemetery will run out of space for new burials in the early 2040s or the mid-2060s with the construction of the Southern Expansion project, even for those service members who are killed in action or are recipients of the Medal of Honor.”

With the eligibility changes, officials estimate the site can remain an active cemetery for more than 150 years.

These proposed rule changes for Arlington wouldn’t change the veterans cemetery sites run by the Department of Veterans Affairs across the country.

Reference: Military Times (May 5, 2021) “As space dwindles, final rules on burial eligibility for Arlington Cemetery expected this fall”

green burial

What Should I Know about a ‘Green’ Burial?

Right now, only about 5% of today’s burials are green. However, roughly 72% of cemeteries are reporting an increased demand for the practice, according to a survey from the National Funeral Directors Association (NFDA).

Considerable’s article entitled “More Americans are skipping traditional funerals in favor of green burials” says that in the same survey, about 54% of Americans said they’d consider green burial options.

A green burial doesn’t put anything into the ground that doesn’t decompose. As a result, there’s no steel, concrete, copper, and bronze used for coffins and vaults. Instead of a traditional coffin, a biodegradable option, such as a shroud or plain pine or cardboard box is used.

Most green burials also don’t do embalming, which is done mainly for cosmetic reasons. Embalming puts gallons of toxic chemicals into the earth each year with each burial.

Green burials also are now an alternative to cremation, which totals 50% of the funeral business. However, cremation has its own environmental hazards. They include using an outsized amount of energy and potentially releasing toxins when ashes are spread.

Green burials have an advantage over traditional ones as far as cost. The price is significantly less for a natural burial than the $8,500 median cost of a funeral. That’s because there’s no vaults and coffins, or embalming, viewing and other funeral service fees. However, the one exception is the cemetery plot itself. Real estate is real estate.

Because green burials are still a small part of the business, it’s important to search for providers and cemeteries yourself, instead of leaving the job to loved ones during a difficult time.

With this growing interest, an increasing number of conventional cemeteries are offering green burial areas within their parameters. They charge the same or lower fees for individual plots, as they do for traditional burials.

For more information about green burials and a list of certified providers in your area, look at the Green Burial Council’s website.

A natural burial can also be an opportunity for your loved ones to create new, meaningful rituals around death.

Reference: Considerable (July 25, 2020) “More Americans are skipping traditional funerals in favor of green burials”

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