Estate Planning Blog Articles

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What Estate Planning Does My Child Need at 18?

This 18th birthday milestone legally notes the transition from minors to official adults, bringing with it major changes in legal status, says NJ Family’s recent article entitled “What You Need to Know (Legally and Medically) On Your Teen’s 18th Birthday.”

Adults—even your 18-year-old— is entitled to privacy rights. This means that anyone not given explicit rights via a power of attorney and HIPAA (the Health Insurance Portability and Accountability Act) release, among other important documents, can be denied info and access—even parents. Here’s what every family should have:

Power of Attorney. A power of attorney (POA) gives an agent (such as you as the parent) the authority to act on behalf of a principal (your adult child) in specific matters stated in the POA.

You can also have a POA for medical decisions and one for finances.

HIPAA Release. When kids become legal adults, they have a right to complete health privacy under HIPAA. That means no one can see their information without permission, even you!

Ask your child to sign a HIPAA release form (which is often included along with the medical power of attorney), to let their health providers share relevant information.

Wills. A simple Will is a good idea. It may also be a good time for you to review your estate plan to see how circumstances changed.

The wisest and safest way to get a credit card for your adult child is to add your child to your account. That way you can monitor transactions. Students also get an immediate bump in their credit score, which is important for renting apartments. However, the main point is to teach them skills and how to be responsible with money.

Talk with an experienced estate planning attorney about drafting all of the necessary legal documents for your newly-minted legally adult kid.

Reference: NJ Family (Oct. 6, 2021) “What You Need to Know (Legally and Medically) On Your Teen’s 18th Birthday”

Why Should I Update My Estate Plan?

The majority of Americans don’t have an updated estate plan in place. This can create a major headache for their families, in the event that anything happens to them.

Fox 43’s recent article entitled “Majority of Americans have outdated estate plans” explains that estate planning is making some decisions now for what you want to happen in the future, if you’re unable to make decisions then.

It’s important that every adult has an estate plan in place. Moreover, as you get older and you have a family, an estate plan becomes even more important.

These decisions can impact your family. It involves deciding who will care for your children. If you’re a parent with children under the age of 18, your estate plan can name the guardians of those children.

This is accomplished by having a clause in your will that states which person(s) will have the responsibility of caring for your minor children, in the event that you and your spouse pass away unexpectantly.

In your will, you’ll also name an executor who will carry out your wishes after your death.

You may ask an experienced estate planning attorney about whether you should have a trust to protect some of your assets.

You also should have your attorney draft a power of attorney, healthcare directive, living will and HIPAA waiver.

Many people don’t know where to get started. However, the good thing is ultimately it’s your decisions about what you want to happen, if you are unable to care for your loved ones.

Talk to an experienced estate planning attorney and do this sooner rather than later.

Reference: Fox 43 (Oct. 27, 2021) “Majority of Americans have outdated estate plans”

Is There More to Estate Planning Than Writing My Will?

Having a will is especially important if you have minor children. That’s because you can nominate guardians for your minor children in your will. Guardians are the people you want to raise your children, in the event that neither you or your spouse can do so.

Fed Week’s article entitled “Estate Planning: It’s Not Just about Making a Will” explains that when designating guardians, a person should be practical.

Closet relatives—such as a brother and his wife—may not necessarily be the best choice. They may be busy raising their own family and have plenty to look after, without adding your children to the equation.

You’re acting in the interests of your children, so be certain that you obtain the consent of your chosen guardians before nominating them in your will.

In addition, make sure you have sufficient life insurance in place, so the guardians can comfortably afford to raise your children.

However, your estate planning shouldn’t stop with a will and guardians. There are a number of other components to include:

  • Powers of attorney. A power of attorney allows a person you name to act on your behalf regarding financial matters.
  • Health care proxy. This authorizes another person to make medical decisions for you, if you are unable to do so yourself.
  • Living will. This document states your wishes on life-sustaining efforts.
  • HIPAA Waiver. This document allows healthcare professionals to provide information on a patient’s health to third parties, such as family members.
  • Letter of Last Instruction. This personal document is an organized way for you to give your family important information about your finances and perhaps your reasons for your choices in your will or trust. This letter isn’t a will or a substitute for one.
  • This is a way to avoid assets going through probate. The assets in trust can provide funds for your heirs under the rules you set up.

Ask an experienced estate planning attorney about developing a comprehensive estate plan.

Reference: Fed Week (September 28, 2021) “Estate Planning: It’s Not Just About Making a Will”

Do College Kids Need Estate Planning?

The topic of estate planning is frequently overlooked in the craze to get kids to college.

When your child leaves home, it’s important to understand that legally you may not hold the same rights in your relationship that you did for the first 18 years of your child’s life.

Wealth Advisor’s article entitled “Estate Planning Documents Every College Student Should Have in Place” says that it’s crucial to have these discussions as soon as possible with your college student about the plans they should put into place before going out on their own or heading to college. An experienced estate planning attorney can give counsel on the issues concerning your child’s physical health and financial well-being.

When your child turns 18, you’re no longer your child’s legal guardian. Therefore, issues pertaining to his or her health can’t be disclosed to you without your child’s consent. For instance, if your child is in an accident and becomes temporarily incapacitated, you couldn’t make any medical decisions or even give consent. As a result, you’d likely be denied access to his or her medical information. Ask your child to complete a HIPAA release. This is a medical form that names the people allowed to get information about an individual’s medical status, when care is needed. If you’re not named on their HIPAA release, it’s a major challenge to obtain any medical updates about your adult child, including information like whether they have been admitted to a hospital.

In addition, your child also needs to determine the individual who will manage their healthcare decisions, if they’re unable to do so on their own. This is done by designating a healthcare proxy or agent. Without this document, the decision about who makes choices regarding your child’s medical matters may be uncertain.

Your child should ensure his or her financial matters are addressed if he or she can’t see to them, either due to mental incapacity or physical limitations, such as studying abroad. Ask that you or another trusted relative or friend be named agent under your child’s financial power of attorney, so that you can help with managing things like financial aid, banking and tax matters.

Reference: Wealth Advisor (Sep. 24, 2021) “Estate Planning Documents Every College Student Should Have in Place”

Should I Write My Own Will?

Only a third of Americans have estate planning documents, according to a 2021 study. However, the pandemic has caused many to start taking estate planning more seriously. The research saw a 63% increase from last year in adults between the ages of 18 and 34 who have a will or another estate planning document. A total of 24% of all adults surveyed also said that COVID made them see a greater need for estate planning and take action.

Yahoo Life’s recent article entitled “Planning to Write Your Own Will? Here’s What You Need to Know” explains that an online form may be cheaper. However, hiring a lawyer could save you money in the future. If you don’t understand or review the probate laws in your state, when you try to write your will on your own, it can cost you and your loved ones more in the long run. It can mean added court fees, legal fees and stress. If there are any mistakes in your will, it can take a long time for it to clear probate court.

Drafting a will through an attorney is a way to make certain that your assets will be transferred the way you want them to, giving you and your loved ones more peace of mind.

You should hire an experienced estate planning attorney because the state’s probate code and tax laws are constantly changing.

If you write your own will, it is possible that a minor mistake can cause the will to be invalid or contested.

Once you create your will, it is vital that you execute or sign it correctly according to state law. That means having the correct number of witnesses, the right formal language above the will-maker’s signature and the legal requirements of your state.

Even if you decide to write your own will, you should ask an attorney to review it for you.

When you use an experienced estate planning attorney, you can fix any mistakes and know that your will is legally sound.

Many attorneys offer estate plan audits for those who have documents and want to make sure they work the way they think they do.

Reference: Yahoo Life (Sep. 17, 2021) “Planning to Write Your Own Will? Here’s What You Need to Know”

Don’t Follow Queen of Soul: Think about Estate Planning

The Albuquerque Journal’s recent article entitled “Learn from Aretha’s estate mess and ‘Think’” talks about the new bio pic called “Respect” that traces 20 years of the life of Aretha Franklin, the Queen of Soul and the number one singer of all time in a Rolling Stone ranking from 2010.

Aretha died in 2018. She had four sons from either three or four fathers. Their ages spanned 15 years. The oldest, born when Aretha was 12, has special needs and lives in a group home. When she passed, all evidence pointed to the fact that she had no will. The sons – in birth order, Clarence, Edward, Ted, and Kecalf – agreed to a friendly and equal split of the estate. Michigan law supported this. They designated a cousin, Sabrina, as the executor.

This was good, until Sabrina started finding wills. There were two from 2010 and one from 2014. They were all in Aretha’s handwriting, the last one in a spiral notebook found under cushions of a sofa.

Michigan law permits an entirely handwritten will and even allows a will to be unsigned, if it clearly shows the decedent’s wishes. Her 2014 will first named the three younger sons as co-executors.  Aretha then crossed out all names but Kecalf. Ted and an attorney appointed to represent Clarence challenged Kecalf’s competence to serve as Aretha’s executor.

But wait! A fourth will was found. That one was actually typed and established a trust for Clarence. Aretha initialed some pages, but she didn’t sign it.

At that point, Sabrina gave up and resigned as Aretha’s executor.

The probating of Aretha’s estate went from a friendly division of assets to a hot mess.

The sons were now “playing games that they can score,” and wondering if Aretha stopped to think what she was trying to do to them.

The Probate Court judge appointed Aretha’s friend Reginald Turner, who recently was named President of the American Bar Association, as temporary estate representative.

The sons’ fighting is ongoing.

Aretha’s estate has a lot of issues. Don’t be like the Queen. Get your estate plan set and revise it, as needed, with the help of an experienced estate planning attorney.

Reference: Albuquerque Journal (Sep. 12, 2021) “Learn from Aretha’s estate mess and ‘Think’

Why Do Families Fail when Transferring Wealth?

A legacy plan is a vital part of the financial planning process, ensuring the assets you have spent your entire life accumulating will transfer to the people and organizations you want, and that family members are prepared to inherit and execute your wishes.

Kiplinger’s recent article entitled “4 Reasons Families Fail When Transferring Wealth” gives us four common errors that can cause individuals and families to veer off track.

Failure to create a plan. It’s hard for people to think about their own death. This can make us delay our estate planning. If you die before a comprehensive estate plan is in place, your goals and wishes can’t be carried out. You should establish a legacy plan as soon as possible. A legacy plan can evolve over time, but a plan should be grounded in what your or your family envisions today, but with the flexibility to be amended for changes in the future.

Poor communication and a lack of trust. Failing to communicate a plan early can create issues between generations, especially if it is different than adult children might expect or incorporates other people and organizations that come as a surprise to heirs. Bring adult children into the conversation to establish the communication early on. You can focus on the overall, high-level strategy. This includes reviewing timing, familial values and planning objectives. Open communication can mitigate negative feelings, such as distrust or confusion among family members, and make for a more successful transfer.

Poor preparation. The ability to get individual family members on board with defined roles can be difficult, but it can alleviate a lot of potential headaches and obstacles in the future.

Overlooked essentials. Consider hiring a team of specialists, such as a financial adviser, tax professional and estate planning attorney, who can work in together to ensure the plan will meet its intended objectives.

Whether creating a legacy plan today, or as part of the millions of households in the Great Wealth Transfer that will establish plans soon if they haven’t already, preparation and flexibility are uber important to wealth transfer success.

Create an accommodative plan early on, have open communication with your family and review philosophies and values to make certain that everyone’s on the same page. As a result, your loved ones will have the ability to understand, respect and meaningfully execute the legacy plan’s objectives.

Reference: Kiplinger (Aug. 29, 2021) “4 Reasons Families Fail When Transferring Wealth”

How Is a Notary Used in Estate Planning?

After the coronavirus pandemic hit, and the virus spread continued to surge throughout 2021, the methods of getting a document quickly and safely notarized evolved, reports WTOP’s article entitled “What Is a Notarized Document — and Where Can I Get Something Notarized?”

“Notaries have bent over backwards to accommodate the varying needs during the pandemic,” says Bill Anderson, vice president of government affairs at the National Notary Association. “The pandemic didn’t stop business. Even though we’ve been working from home, and it’s been harder than usual to get work done, the types of documents that required notarization before the pandemic continue to require notarization during the pandemic.”

A notary is appointed by the state to serve as an impartial witness to protect against fraud. They act as gatekeepers during the signing of important documents. Moreover, they’re required to follow specific rules in accordance with state laws and regulations. Notarization is an official process in which the parties of a transaction make certain that a document is authentic and legitimate.

Notarization entails the verification of a signer’s identity, their willingness to sign without duress or intimidation, along with their awareness of the document’s contents.

Notarizations can also be called “notarial acts.”

There are three common types of notarial acts:

  • Acknowledgments, where a signer declares the signature on the document is his or her own, made willingly, for documents, such as real property deeds, powers of attorney, and trusts.
  • Jurats which verifies that paperwork is truthful. This typically involves documents associated with criminal or civil justice systems.
  • Certified copies include certifying the copying or reproduction of certain papers.

A notary will ask to see a current ID that has a photo, physical description and signature. He or she will also record the details of the notarization in a chronological journal of notarial acts.

If a document fails any of the criteria, the notary will refuse to validate the document.

The process is complete when the notary affixes his or her signature and seal of office on a notarial certificate.

Reference: WTOP (Aug. 26, 2021) “What Is a Notarized Document — and Where Can I Get Something Notarized?”

How Do I Write a Will?

You should get the basic estate planning documents in order and revisit them regularly. Everyone should have a will, but it’s only one of several significant estate planning documents in a comprehensive plan.

US News’ recent article entitled “10 Steps to Writing a Will” says that many of a typical household’s assets, such as retirement accounts, can be transferred outside of a will by naming beneficiaries. Documents, like financial and medical powers of attorney, can also be more powerful in determining the outcome of an estate.

Find an Experienced Estate Planning Attorney. Most situations will require an estate planning attorney, especially when you have a large estate, a blended family, or other complex situations.

Select Beneficiaries. A common mistake people make when planning their estate is failing to name or update beneficiaries on key accounts that work with the plans outlined in their wills. The beneficiary listed on bank accounts, life insurance and other financial accounts will have control over the will.

Choose the Executor. The executor of your will has the task of carrying out your wishes detailed in the will.

Choose a Guardian for Your Minor Children. If you have minor children, you must designate a guardian in your will. That way you can name the person you want to care for your children, in the event you die while they are yet minors.

Be Specific About Who Gets What. One of the most time-consuming aspects of creating a will may be deciding which assets to include and determining who will receive what. Consider the types of assets being allocated to heirs to help with decision-making and management.

Be Clear About Who Gets What. Think practically about how your property will be distributed. A big reason children stop speaking after a parent’s death is because there’s boilerplate language directing tangible assets, such as artwork, collectibles, or jewelry, to be divided equally among children.

Attach a Letter. You can attach an explanatory letter to your will. This letter may provide additional detail about certain wishes. This is also called a “Letter of Last Instruction.”

Sign the Will Properly. If you fail to execute your will properly, it may result in the document being deemed invalid. An experienced estate planning attorney will know precisely what is required as far as witnesses and notarization.

Find a Place for Your Will. Inform a person you trust about the location of your will as well as any other important legal papers and passwords to financial institutions. In addition, it’s wise to store the original copy somewhere secure, such as in a fireproof safe.

Review and Update Your Will. A will should be updated every few years.

Reference: US News (May 31, 2021) “10 Steps to Writing a Will”

Will Inflation Ruin My Retirement?

The 5.4% rise in the consumer price index in the last year is the highest inflation in almost 13 years. Kiplinger’s recent article entitled “How Big of a Threat Does Inflation Pose to Your Retirement? explains that even moderate inflation can have a big effect on a retiree’s savings. The Federal Reserve’s target inflation rate is 2%. However, it said it will let inflation rise above that mark for some time. Here’s how an average annual inflation rate of 3% over the next 20 years would affect your finances.

If you needed $60,000 for your first year of retirement, in 20 years you’d need more than $108,000 to match today’s purchasing power of $60,000. Said another way to look at it: at a 3% annual inflation rate, that initial $60,000 would be worth only $33,000 in 20 years.

You have to take into account inflation in your retirement plan because you can expect that everyday items, travel and other expenses will continue to rise in cost. Inflation decreases the value of savings and will continue to do so after you retire. As a result, it’s important to look at your investment strategy and retirement income plan to determine if you’re protected against inflation for the long term.

The Senior Citizens League estimates that the average Social Security benefit has lost almost a third of its buying power since 2000 because benefit increases have failed to keep up with the increasing cost of prescription drugs, food and housing. This has happened even with yearly cost-of-living adjustments (COLAs) for Social Security benefits that are designed to make benefit amounts keep up with inflation.

Think about what would happen if all your retirement income lost a third of its value over the course of 20 years. Would that scenario make it more likely that you’ll run out of money? How can you know how much income you will need in retirement, when inflation insists on complicating the situation? Here are some things to keep to consider

  1. Fixed-Income Sources. Look at any fixed-income sources in retirement that won’t keep pace with inflation. Consider the amount of interest you’re earning from money in a savings account or CD. It’s unlikely that we’ll see a substantial interest rate hike in the next few years, so be ready to continue earning little interest. Assess your investment strategy and retirement income plan to see if you’re protected against inflation for the future.
  2. Look at Your Nest Egg. See how much your nest egg is right now and factor in inflation over the next 10, 20, and 30 years. Know that while overall inflation rates may fall from what they are now, that might not be true for some of the specific goods and services that could take a large chunk of your income, like utilities, food, health care and long-term care costs.
  3. Will Your Strategy Need to Change? Think about whether your current investment strategy will need to be modified when you retire. You may want to contemplate a strategy that continues to grow your money in retirement, so when transitory events like inflation hit, you’re okay. A solid plan will make certain that your purchasing power needs are always satisfied. Some people may need to take on less investment risk when they are approaching and hit retirement. However, having the right risk asset allocations for your particular circumstances may help to thwart the eroding effects of inflation on your nest egg over the course of your retirement.

Reference: Kiplinger (Oct. 3, 2021) “How Big of a Threat Does Inflation Pose to Your Retirement?