Rowley Law

Taking Care of Your Furry Friends When You Die

“What to do when your pet outlives you.”

Pets are part of your family and can give you a lifetime of love and companionship. A recent 12 News Phoenix article, “What if your pet outlives you? Here are some options,” says that being a responsible pet owner means much more than the day-to-day care of your animal. You must think about possible life-changing circumstances that might leave you unable to care for your pet—as well as what happens if your pet outlives you.

Pet trusts and estate plans can be created to help your pets—along with some other legal options. To set aside some money, you can create a fund inside a trust and have that money managed for the pet guardian. If you can’t find someone to take responsibility for your pet, there are several options to prevent Fluffy from going to a public county facility or shelter.

For example, there is Gilbert's Furever Friends Rescue in Arizona that helps pets who outlive their owners. They help those in need pass along their pets before they’re unable to care for them. With all of the retirees in the Copper State, it’s common for people to move to the Southwest; however, their families haven’t all moved with them. As a result, there’s no one in the retirement community to help them out.

The rescue is totally nonprofit, and it aims to decrease the number of intakes and euthanasia cases in Maricopa and Pinal counties. Since it started four years ago, Gilbert's has managed to adopt out more than 1,500 dogs and cats and has helped more than 300 families.

Gilbert's doesn’t charge for animal surrender, but pets must be vetted, spayed and neutered, and have up-to-date vaccines.

A little planning can go a long way to give pet owners peace of mind. Talk to an estate planning attorney about pet trusts and estate planning. It is best to make these decisions about your pets before you have to. Be certain your pet will be cared for, even if it’s not with you.

Reference: 12 News Phoenix (September 5, 2016) “What if your pet outlives you? Here are some options”

Come On, Do I Really Need a Will?

“You might have heard that Prince died without a will, which is likely to lead to a major battle over his estate. But do mere mortals like the rest of us, with far smaller net worths, really need a will?”

The answer to that question has always been an unequivocal “yes”—especially when there’s a spouse, children or stepchildren. However, there are some financial advisers that now say many Americans might not need a will. Forbes’ article, “Do You Really Need A Will?” says that a simpler life may mean you will need a less complex estate plan. However, few people’s lives are that simple.

If you have minor children, you need a will to designate guardians for them. Also, a will or a trust will let you name someone to watch over assets for a disabled or elderly family member or a relative who may not be good with handling money.

Whether you have prized possessions or you want to bequeath some of your estate to the local animal rescue, a will is essential.

The state in which you live can make a big difference. In community property states, your surviving spouse will only inherit all your community property if all your children are also the children of that spouse. Otherwise, your one-half interest in your community estate will pass to your children. If there is any kind of animosity or resentment, they could make your spouse sell the house and send him or her packing because the kids own half the house.

Without a will, a pet can wind up in a shelter after you die if no one takes responsibility for it. A will can name a responsible person and make for a smoother transition for the animal.

A will can also help elderly parents avoid losing government benefits if you predecease them. If they are beneficiaries of your life insurance policy, a large payout may halt their government benefits unless you write a specific provision in your will.

Reference: Forbes (August 31, 2016) “Do You Really Need A Will?”

Check Out the Benefits of a Living Trust

“Having a will that defers to the living trust at death can greatly lessen the expense and duration of the probate court administration process.”

A living trust is a legal document created by an experienced trust attorney which can be extremely effective as an estate planning tool when teamed with a pour-over will that puts your assets into the trust. For anyone with accumulated assets, a living or inter vivos trust can do a terrific job keeping your financial affairs private while efficiently transferring assets after your death.

As The (Decatur, IL) Herald & Review’s recent article titled “The Living Trust: Your plan for your assets with the flexibility to change” notes, a will goes into effect only after a person’s death but a living trust can protect your interests if you become mentally or physically incapacitated. This trust directs how to manage your finances and provide for your needs. It also gives you considerable control, because when you act as trustee of your own revocable living trust, you’re free to buy and sell assets, amend the trust, and even cancel it at any time.

A common issue for those who establish a living trust is that they fail to fund it. This means you must move or re-title your assets like your home, property, or investment accounts into ownership by the trust.

If you establish a living trust, consider designating a co-trustee or successor trustee. While a relative or friend is often appointed to serve in this capacity, you can also opt for a corporate or institutional trustee, like a trust department at a bank. The experience and objectivity of a corporate fiduciary can make this choice attractive.

A revocable living trust is a very effective planning tool. Your estate planning attorney can tailor one to fit your particular situation.

Reference: The (Decatur, IL) Herald & Review (October 17, 2016) “The Living Trust: Your plan for your assets with the flexibility to change”

Planning on Long-Term Care

“Most people realize that they and their loved ones are likely to need long-term care as they progress through old age. But misconceptions abound concerning the best way to get that care paid for.”

Long-term care is assistance with personal self-care needs and can be help at home or in a skilled nursing facility for medical needs or activities of daily living, like eating, dressing, personal hygiene, using the bathroom, and even household chores and money management.

About 80% of people who need assistance get it at home, according to caregiver.org, the website of the Family Caregiver Alliance. This organization was cited in the Queens Chronicle’s recent article, “Shielding assets when it’s time for Medicaid.”

Long-term care also encompasses post-hospital rehabilitation, even if the person eventually returns home to independent living.

Many people are under the impression that once a senior gets into Medicare at age 65, along with a Medicare supplement plan, his or her long-term needs are totally covered. Not quite. Medicare and Medicare supplement plans cover doctor visits and hospitalizations for acute and chronic illnesses, but not long-term care. Medicare and Medicare supplements only cover up to 100 days of rehabilitation. Those seniors who require more rehabilitation or need assistance for the rest of their lives will need to pay for it out-of-pocket, use long-term care insurance purchased in advance, or qualify for Medicaid.

Anyone under 60 years of age should be investigating long-term care insurance. Although people over age 60 might be able to buy LTC, they might not qualify for health reasons. Plus, the premiums become very expensive as one gets older. This could result in an insured paying an insurance bill for years, and then discover that he or she can’t afford the expense. They end up without coverage when it’s needed. Another option is hybrid LTC insurance. This provides a set dollar amount of coverage that will goes to heirs as a life insurance payout if it isn’t used for care during the insured’s lifetime.

Those with moderate incomes who are less likely to be willing to pay for long-term care insurance must do Medicaid planning, as Medicaid eligibility is limited to those with very limited assets.

It’s possible to transfer assets to someone else, such as a child, and have them excluded from consideration for Medicaid eligibility. But it has to be done correctly. This means the transfer has to be done five years or more before applying for nursing home care, or one month for home care. If the applicant doesn’t satisfy this “look back” provision, they’re responsible for covering the cost of the care.

Giving your home to a child or adding the child’s name to the deed with yours isn’t the best option because this causes the loss of tax advantages for both the homeowner and the heir, and reduces or eliminates the parent’s control over the home.

Speak with an elder law attorney about your options, as this is not a do-it-yourself project and the consequences of making a mistake can be catastrophic.

Reference: Queens Chronicle (October 6, 2016) “Shielding assets when it’s time for Medicaid”

Is It Time to Draft My Will?

“When should you write up a will?”

We all want to put this off: who wants to think about their own death—and then plan for it? Even though it’s a bit uncomfortable, detailing what will happen to your assets will let you be assured that your assets will go to the right people and places.

A recent article in The Week asks “When should I write a will?”According to the article, here is a list of some life events that provide good reason to write a will:

1. You had your 18^thIn most states, you’re a real adult, and this is your first opportunity to write a legally valid will.
2. When you’ve saved up some money or assets.Of course, the concept of "some money" will be different for everyone. The point is that if you die without a basic will, you'll be "intestate." If that happens, your estate will be settled in accordance with state law, which will determine who inherits your assets. The way in which those assets will be divided among heirs varies from state to state, so without your specific instructions, they might end up being distributed very differently than you wanted.
3. When you get married… or divorced… or remarried.These changes are important reasons to write or rewrite your will. Some state laws say that if you had a will before your marriage, it may be invalid when you wed.
4. When you have kids and when they grow up. A will guarantees your children are provided for exactly the way that you intend. You should name a guardian for your minor children in the event that both parents die. All this may change when they become adults, and you may even want to name one of them to be your executor.
5. When you start a business. You should consider your succession plan, if you want family or someone else to take over the business. If you leave the company to several individuals, think about what share of the business will go to each.
6. You purchase a home. This is going to make a big change in the worth of your estate and could impact the beneficiaries you choose to name and how much you leave them. In some instances, purchasing a home means a move to a new state. You need to consult an estate planning attorney about the laws for wills for your new state.
7. It's been how many years? There will be numerous variables that can affect how you opt to distribute your estate. These include changes in personal priorities, family relationships, as well as tax and estate regulations. You need to review and update your estate planning documents every few years.

Reference: The Week (September 29, 2016) “When should I write a will?”

Complete a Complete Estate Plan

“Estate planning does focus on you and it does provide you greater security and peace of mind.”

When it comes to planning, the focus is typically on making you better prepared for the future. That means limiting taxes, creating wiser investment strategies, knowing when it’s best to claim Social Security and developing sustainable retirement income plans. All of these help you on the path to your financial future and your long-term goals. But The Brainerd (MN) Dispatchreports in “3 common estate planning questions, answered,” that there is, however, one exception. That’s estate planning. While much of financial planning primarily benefits you, your estate planning primarily benefits your family and loved ones.

The basic component of your estate plan is your will but there may be other parts you need. Depending on your estate, you may want to consider a trust, in addition to healthcare directives, powers of attorneys and guardian designations. You should also remember that your will isn't necessarily the only instruction when it comes to distributing your assets. The beneficiary designations on your retirement and brokerage accounts, and the life insurance policies you own will take precedence over what you say in your will. Review beneficiary designations regularly to be sure the money in your accounts or the death benefit on a life insurance policy goes to the right person.

A trust can be complicated, so talk with an estate planning attorney to see if it makes sense and whether you'll actually benefit from using a trust. If most of your assets are covered by beneficiary designations or owned in joint tenancy, those assets are already exempt from probate, so they won’t necessarily benefit from a trust strategy.

The executor or the personal representative is the person who will be responsible for carrying out the instructions in your will, settling your debts and paying taxes on your estate. As far as selecting an executor, it should be someone with the capacity to carry out the needed tasks of the position. It also needs to be someone who is willing to serve and is familiar with your situation such as a family member or a close family friend.

If you don't spend every last dollar you have to your name on the day you die, you'll need to have an estate plan. Speak with an experienced estate planning attorney to develop one.

Reference: The Brainerd (MN) Dispatch (Sept. 23, 2016) “3 common estate planning questions, answered”

Digital Asset Estate Planning

“The goal is having enough money to live the rest of your life on your terms.”

There are many things to consider when drafting your planning, such as dividing up your assets and ensuring that your family members all get a share. This can be a real challenge, but now you also need to include your online assets.

Starts at 60 explains in “The assets you probably haven’t thought of in your will,” that your digital assets are worth considering when drafting your will. Estate planning attorneys have seen an increasing number of cases where digital assets are left in limbo because people failed to take them into account.

There are two different kinds of digital assets, sentimental and financial. Sentimental assets are your social media accounts, photos, videos, and emails. There’s no real reason to include your sentimental digital assets in your will, but it’s still relevant to your estate planning because of the issues concerning the cancellation of your Facebook account.

Facebook and Google allow for a legacy contact person to be appointed prior to death. He or she is given rights to handle the account after the owner’s death. To access the account, you need to appoint someone as the digital heir. If you don’t, your family will need a court order to authorize the deletion of accounts.

Other types of financial digital assets can include intellectual property. These are things like books, screenplays, and computer programs.  It can be thought of as anything worth money that’s on your computer or in the cloud. Some experts say that digital assets should be owned by a company or a trust. That’s because assets held by a person are part of his or her estate and they pass in accordance with the will. If they’re not owned by the person in their own name, but instead are held in a trust, there are no transfer issues that would apply in a will.

To develop a sound plan, understand who owns the asset, where it’s located, and how to gain access. It’s important to consider what you’d like to happen with your digital footprint, and to identify any valuable assets that may be out there.

Reference: Starts at 60 (November 14, 2016) “The assets you probably haven’t thought of in your will”

The Truth about Living Trusts

“A Living Trust is totally private–as opposed to your Will, which becomes public when it is probated after your death.”

A recent nj.com article, “Living Trusts explained,” says that you should think of a living trust as a contract between the current “you” and the future “you.” Practically speaking, it can also duplicate and/or replace the provisions of your durable power of attorney and even your will.  This is how a living trust addresses three major concerns:

1. Real estate in another state. Laws are different in each state, so estates may be treated differently. There are some states that include all owners of property within their state in their tax laws. When the real estate owner is a trust, those rules don’t apply. You also avoid a potential battle with another state about your residency and property ownership.
2. Meddling relatives.All trust documents are private, so family meddlers won’t have access to your affairs. The people you designate will know who’ll be managing your finances and who gets what when you pass away.
3. Health issues of one or both partners/spouses. If you know that some conditions "run in the family" or are concerned about dementia as you age, a living trust can detail all of your wishes. It can also make provisions for carrying out your wishes in the event you’re unable to manage your affairs. Your designated successor trustee will immediately step in to support you and take over.

A living trust is revocable, so at any point you can change your mind and change any provision … or get rid of the whole thing. However, when you die, the living trust becomes irrevocable and directs the disposition of your estate. You’ll still need a will, but that includes language referring to the living trust for instructions and details.

Make sure you have the trust document prepared by an experienced estate-planning attorney who specializes in this area. If you decide that a living trust is right for you and have the document prepared by an attorney, you may want  to change the title of your accounts and assets from you to the name of the trust, or name your trust as a beneficiary of your accounts, make sure to discuss these options with your attorney or financial planner to find what will work best for you. A living trust can provide comfort and reduce stress for your family.

Reference: nj.com (November 13, 2016) “Living Trusts explained”

Can You Name the Three Objectives of an Estate Plan?

“An estate plan has three objectives.”

The first goal of an estate plan is to preserve the wealth you have accumulated during your lifetime. Next is to clearly define who’ll receive your assets after you die. And the third goal is to name the person and give control to the person who will make medical and financial decisions on your behalf in the event you’re unable to do so. With the passing of time, your feelings about your goals may change, and you might want to reconsider how you want to distribute your wealth.

The (Oak Creek AZ) Villager recently considered why it is so critical to review your estate plan every few years in a recent piece titled “Updating your estate plan—When should you review?”

Over the years, your personal and financial health, along with your outlook on life may change to a great degree. So it’s key to be aware of the life events that may necessitate an updated estate plan.

• Just married or divorced? If so, your estate plan will need revision, and if your children or grandchildren marry or divorce, that’s another call to your attorney.
• Any loss or serious illness within your family? If yes, your named executor or health care agent may need to be changed. Also, if a family member is now physically or financially dependent on you, that’s another reason to review your plan.
• Has your net worth changed a lot since created your plan? If you’re now wealthier (or much less wealthy), your ideas about how you want your assets distributed at your death may have changed. Maybe you want to give more to a favorite charity or to one of your heirs.
• Changed your mind about what you want your wealth to accomplish? You might think of your wealth differently than you did when you were in your 20s.
• Have your executors or trustees changed their mind about their roles? That can happen. If they’re no longer interested taking on the task, they’re passed away, or no longer have capacity, its revision time.
• Retired, moved to another state, or bought or sold real estate? A yes to any of these events means an estate plan review with your attorney.

First, when you revise your estate plan, you need to update essential documents. This includes not just your will or your trust, but also your financial power of attorney and health care proxy. The next step is to review your risk management. Perhaps a trust created long ago needs to be modified or swapped out. Check your life insurance beneficiary forms for any updating.

Third, be certain that your assets line up with your plan, such as transferring ownership of all those assets that are going into a revocable trust, as well as adding acquired new assets.

Even if there are no big changes in your life, review your plan every few years because tax laws, financial markets, and business climates can change significantly, which can affect your estate planning strategy.

Reference: (Oak Creek AZ) Villager (October 29, 2016) “Updating your estate plan—When should you review?”

The ABC’s of Trusts and Why You Might Want One

“So, what is a trust?”

A professionally-designed trust can help just about everyone. Physician’s Money Digest, in “6 Reasons You May Need a Trust,” reminds us to think of a trust as a holding spot where you put your assets before they are released to the people or organizations you eventually want to receive them. Anything you transfer to the trust becomes property of the trust. The trust then holds the property for your benefit, or for the benefit of those whom you choose.

The three separate parties to a trust are: (i) the grantor, who creates the trust; (ii) the beneficiaries, who receive income and/or principal from the trust; and (iii) the trustee, who manages the trust pursuant to the trust document. The trust document has the rules set by the grantor regarding how the trust is to be managed. These rules instruct the trustee on administration, such as how to invest and manage trust assets, any limitations on trust activities, when and how to distribute principal and income earned, and who receives the distributions.

There are many different kinds and uses for trusts. Here are a few of the reasons for considering one:

Protection from predators. If you want to leave property to a relative but need to make sure the beneficiary doesn’t lose it in a lawsuit, a properly drafted trust is untouchable by the legal system.

Protection for someone from themselves. Too many young adults’ lives are ruined by inheriting large sums of money while they are young and irresponsible. A trust can give the authority to a reliable trustee to determine when beneficiaries are ready for their money.

Disability planning. You can provide for a disabled relative without disqualifying him or her from Medicaid or other government assistance with the help of a “Special Needs Trust” (SNT). This lets you set aside funds for the care and benefit of a person with special needs and the trust isn’t considered an asset when he or she applies for government benefits.

Estate planning. The first $5.45 million of property per decedent is exempt from taxation. Multiple marriages are a good reason to use a trust in estate planning. If you and/or your spouse have children from previous marriages, you can use a trust to be certain that the remainder of the estate of the first to die goes to your own children by blood, while giving support to the surviving spouse during his or her lifetime or until remarriage.

Privacy and simplicity. No one will know who owns trust property except for you, your attorney, and the trustee. Trust property doesn’t pass through probate.

Asset protection. A trust can be a powerful tool to protect your assets from bankruptcy, lawsuits, and divorce. If your child doesn’t need all of the trust principle for living expenses, you might think about a provision to allow assets that won't be spent to remain "locked in" and secure from others.

Trust law is complicated, so you should consult an estate planning attorney who has experience in estate and trust planning. Call Rowley Law today to schedule an appointment, 847-490-5330. 

 

Refference: Physician’s Money Digest “6 Reasons You May Need a Trust,”