Rowley Law

No Way, I Don’t Need Estate Planning!

“Regardless of your age or the amount of wealth you have, everyone needs estate planning.”

Estate planning is a method for determining how to distribute your property during your life and at your death, which varies with each person.

In a recent article, “Business viewpoint: Estate planning important tool after your death,” The Tulsa World says that everyone needs a plan for the distribution of their assets after death according to their wishes. Another reason to have an estate plan is to avoid probate, which can be expensive and time-consuming.  All of the information is also in the public record, so anyone can see the details of your financial affairs.

Prior to speaking with an experienced estate planning attorney, take some time to think about these questions:

• Who you want to inherit your assets, such as your kids, grandchildren, or your favorite charity?
• If you own your business, who is going to succeed you?
• Who will manage your affairs, if you’re unable to do so?

Younger parents should also think about who would care for their children. If there are special personal property assets like grandma’s silver or a valuable baseball card collection that you’d like to see go to a specific individual, you should make a list for these gifts. Speak with your estate planning attorney, who will suggest available strategies and assist you in creating and implementing your estate plan. Many people think that a will is all you need in an estate plan. However, you really should have these four basic estate planning documents:

• Last will and testament provides direction on how your assets should be dispersed. You should nominate an executor or a personal representative, as well as a guardian, if you have minor children.
• Power of attorney is a legal document that authorizes another person to act on your behalf, called the attorney-in-fact, should you become incapacitated. He or she has to be the age of majority. It ends at your death.
• A health care directive and health care power of attorney lets an individual who you select, make decisions on your behalf on health issues, such as whether to withhold future medical treatment and whether or not to use medication and/or provide life-sustaining care.
• A trust is a legal entity created when you transfer property to a trustee for the benefit of another, the beneficiary. By placing your assets in a trust, you can avoid probate. You select the beneficiary and the trustee. A trustee manages the property for the beneficiary in accordance with the terms of the trust document.

Once you’ve created these four documents for your estate plan, you might think you are done, but you need to fund the trust.

Make sure to review your plan periodically, particularly if a significant life-changing event occurs.  In that way, your estate planning documents will have your wishes and intentions up-to-date.

Reference: Tulsa World (December 11, 2016) “Business viewpoint: Estate planning important tool after your death”

Top Reasons to Update Your Estate Planning Regularly

“There are a number of personal and financial reasons to review your estate plan on a regular basis.”

Hearty congratulations if you created your estate plan in 2016. That’s a big item to cross off the “to do” list. But if you nailed this job some time ago, you need to add a task back on the list: a periodic review of your estate plan.

Forbes’ article, “6 Reasons to Revise Your Estate Plan as Soon as Possible,” says that periodically reviewing your estate plan will ensure that it accurately reflects your current goals and requirements. If your personal or financial situation changes, you should be certain to revise your estate plan. Here are some of the top reasons to see your estate planning lawyer and make changes:

• If you divorce and when it’s final, you need to revise your plan to reflect any new goals and desires.
• If you remarry, you and your new spouse may reach have children from a previous marriage or relationship… so you need to work with an experienced estate planning attorney to go over what can be the confusing realities of planning for the children of blended families.
• If you have a new addition to your family, by birth or adoption, you’ll want to ensure your new child’s financial future and to designate a legal guardian in case you and your spouse pass away or are incapacitated.
• In the event that you or one of your family members becomes seriously ill, you might think about a change to your plan to reflect their increased needs… a special needs trust may be in order.
• The tax code is always undergoing review, updating, and change… these rules may significantly impact your estate plan. Your estate lawyer is your best bet to ensure your plan is in compliance with any new legislation.
• Finally, the increased value of your estate may make you rethink inheritances and how you’d like your assets to be distributed upon your death.

So enjoy crossing off “Make Estate Plan” from the list, but be sure to add the task of reviewing that plan back on your “to do” list soon. Make sure your estate plan is always up-to-date.

Reference: Forbes (January 2, 2017) “6 Reasons to Revise Your Estate Plan as Soon as Possible”

Top Reasons to Update Your Estate Planning Regularly

“There are a number of personal and financial reasons to review your estate plan on a regular basis.”

Hearty congratulations if you created your estate plan in 2016. That’s a big item to cross off the “to do” list. But if you nailed this job some time ago, you need to add a task back on the list: a periodic review of your estate plan.

Forbes’ article, “6 Reasons to Revise Your Estate Plan as Soon as Possible,” says that periodically reviewing your estate plan will ensure that it accurately reflects your current goals and requirements. If your personal or financial situation changes, you should be certain to revise your estate plan. Here are some of the top reasons to see your estate planning lawyer and make changes:

• If you divorce and when it’s final, you need to revise your plan to reflect any new goals and desires.
• If you remarry, you and your new spouse may reach have children from a previous marriage or relationship… so you need to work with an experienced estate planning attorney to go over what can be the confusing realities of planning for the children of blended families.
• If you have a new addition to your family, by birth or adoption, you’ll want to ensure your new child’s financial future and to designate a legal guardian in case you and your spouse pass away or are incapacitated.
• In the event that you or one of your family members becomes seriously ill, you might think about a change to your plan to reflect their increased needs… a special needs trust may be in order.
• The tax code is always undergoing review, updating, and change… these rules may significantly impact your estate plan. Your estate lawyer is your best bet to ensure your plan is in compliance with any new legislation.
• Finally, the increased value of your estate may make you rethink inheritances and how you’d like your assets to be distributed upon your death.

So enjoy crossing off “Make Estate Plan” from the list, but be sure to add the task of reviewing that plan back on your “to do” list soon. Make sure your estate plan is always up-to-date.

Reference: Forbes (January 2, 2017) “6 Reasons to Revise Your Estate Plan as Soon as Possible”

Yes, You Can Provide for Your Furry Loved One in Your Planning

Legal planning for pets is still the exception rather than the rule, but for animal lovers, the end result can be heartbreaking.

It’s not uncommon for seniors' pets to appear at an animal shelter. This is because they’re often abandoned when their owners become infirm or die without making any arrangements for their pets to be taken in by someone else.

Reuters’ recent article, “Your Money: How to protect your prized pet with a trust,” acknowledges that wills and estate plans are hard enough for most of us to comprehend, let alone thinking of planning for our pets. A total of only 67% of Americans over 55 have a will, and provisions for pets have been thought of as a fancy of the ultra-rich. Some of the bad association stems from a 2007 lawsuit over real estate tycoon Leona Helmsley's attempt to leave $12 million to her dog, which was later reduced to $2 million.

One way to solve this issue is to create a trust for your pets. Work in this area has evolved and  there are now ways for pet owners to make legal arrangements so their animal companions don’t end up abandoned. When a pet owner is incapacitated or dies and there’s no plan for the pet, by law, they are deemed to be abandoned and are required to go to a city shelter. In other words, the pets are deemed to be property.

Only about 25% of people make a provision for their pets in their wills. It’s easy to add. In fact, it can be as simple as providing “I leave my dog to...” However, you can also do more and write in details, such as “My dog Fluffy only eats Alpo dog food, and please take him to his vet, Dr. Applewhite.”

You can also leave funds for the care of the pet and more detailed instructions in a formal document. The average person leaves $25,000 for the animal’s care, but every situation is different. Speak with a knowledgeable attorney who specializes in estate planning for pet owners to protect your beloved furry family members. Call Rowley Law today at 847-490-5330, to schedule your appointment. 

Reference: Reuters (December 13, 2016) “Your Money: How to protect your prized pet with a trust”

Get an Estate Plan Check-Up

“You should review and update your estate planning documents as personal situations change and, at a minimum, every five years.”

Wilmington (NC) Insights’ recent article, “Signs Your Estate Plan Needs a Lift,” shares some common indicators that you may need to visit your attorney and review your estate planning documents.

Unsigned documents. These aren’t enforceable until they’ve been properly executed. Poor planning and out-of-date documents may be worse than no plan at all, so be certain that all of your estate planning documents are up-to-date and have been fully executed. The executed documents should then be placed in a lock-box or given to a trusted advisor.

Untitled or incorrectly titled assets. If you are using a trust, you have to follow through with your plan by titling assets in the name of the trust. If you fail to do so, assets outside of the trust will be disposed of by your will or, in the case of life insurance, to the named beneficiary.

Putting family members in charge. Naming family members as power holders can create problems. Naming family members as your executor or trustee needlessly puts them in the line of fire. Allowing a third party to take the heat in carrying out your wishes, may not be popular with some family members.

Leaving assets outright to beneficiaries. This inheritance you wanted to pass to your heirs can be unprotected from creditors, divorcing spouses, and lawsuits. This is critical if you have an heir who has physical or other disabilities. He or she should have a Special Needs Trust.

Beneficiary designations. These need to be up to date. Review your beneficiary designations for life insurance policies, 401(k) plan, 403(b) accounts, annuities and IRAs. Changes in the lives of your family such as deaths, marriages, births, divorces, and the like could have a big impact on your estate plan.

Make sure to speak with an experienced attorney to ensure that the planning you did, still works for you. Call Rowley Law today at 847-490-5330, to schedule an appointment

Reference: Wilmington (NC) Insights (November 29, 2016) “Signs Your Estate Plan Needs a Lift”

Who Will Care for My Disabled Child When I Die?

“It is the biggest fear for every parent in this situation: What is going to happen when I’m gone?”

Thinking about who will care for a family member with an intellectual or developmental disability after parents die is difficult. However, you can help everyone by planning wisely and early.

Sacramento Magazine’s recent article, “When the Caregiver Dies,” reports that millions of parents of children with an intellectual or developmental disability (“I/DD”) must address the real likelihood their children will outlive them and that the responsibility of caring for the child will eventually fall to another. Across the country, there are more than 880,000 people with I/DD who live with a family caregiver over the age of 60, according to The Arc, an advocacy organization for people with I/DD.

Personal safety is a primary concern of these parents because those with disabilities are disproportionately vulnerable to violence. The U.S. Department of Justice says the age-adjusted rate of violent crime against people with disabilities is almost triple that of people without disabilities, and among individuals with disabilities, those with cognitive disabilities experience the highest rate of violent victimization.

There are also other vulnerabilities. Some individuals with I/DD may place trust in people who want to take advantage of them. There are also practical considerations surrounding the loss of a trusted caregiver. A parent who’s intimately involved in daily caregiving is acutely aware of all of the details that make a day run more smoothly. This includes the person’s likes and dislikes, things that can trigger negative behavior, and how to help him or her after an unpleasant experience. It’s very hard to replace a caregiver who has that kind of deeply personal knowledge.

You can increase the odds of a good quality of life and happiness by advocating and planning for your child as soon as possible.

Devising a care plan for someone whose disability prevents them from living independently may involve having a sibling or another close family member assume the caregiving responsibilities in the parents’ home after the parents die. If that’s not an option, families may consider a non-family caregiver, a group home or another place that satisfies the particular needs of the individual.

Regardless of their living arrangements, families of children with I/DD must usually deal with many years of expensive care. One way to plan for a child’s financial future is by creating a special needs trust, which serves as a receptacle for assets intended for the child with a disability. The assets in a special needs trust are generally used to pay costs that government benefit programs don’t cover. By leaving assets to the trust, a person with special needs can still qualify for government benefits. Families can fund a special needs trust by starting early with savings or investments. Buying a life insurance policy with the special needs trust as the recipient of the proceeds is also a good start.

Make sure that you use an attorney with considerable experience setting up special needs trusts, since some estate planners who are not well-versed in disability benefits may not set up the trust correctly and not adequately serve the needs of the child. Call Rowley Law today to schedule your appointment, 847-490-5330. 

A letter of intent, typically written by one or both parents, provides practical guidance about the person’s daily needs, special interests and personal wishes. A letter of intent is very important. Parents should keep a diary for a month about everything they did on a daily basis to care for the child, then translate that into a letter and review it every year. The letter should detail things like the person’s daily schedule and medical history, religious preferences and favorite foods. This is a good way to help current and future caregivers be aware of the needs of the whole person, rather than just their housing or medical needs.

Parents who have a child with a brain-based diagnosis should know, as early as possible in that child’s life, how they operate, their strengths and weaknesses, their likes and dislikes and their desires.

Reference: Sacramento Magazine (November 14, 2016) “When the Caregiver Dies”

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 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.  Call Rowley Law today at 847-490-5330, to schedule and appointment to speak with an attorney about what is best for you. 

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”

Posted by Rowley Law on 12/06/2016 at 07:24 AM | Permalink

Be a Neat Freak and Organize Your Affairs as Part of Estate Planning

“I don’t want to make the same uninformed errors with my estate, so I need to plan and execute documents for my estate.”

The Washington Post reminds us of underlying matters that come to mind when we hear people talk about getting their estate in order in “How to organize your home and finances in your estate.”

First, start with your personal effects and personal financial information. You should make sure that your documents and files are in good order. This includes items like credit card statements, bank statements and auto titles. Everything that you’d need to know should be in one place, labeled neatly. This makes it easy to find everything required to settle your affairs after you pass away.

Next, sort through your personal effects and be sure you know what you have and what you need. If you don’t, it will be no easy feat for your children to take care of your estate and clean things out of your home. This can be a great help to your family later on. As you decide what you should keep and what should go, you’ll also be making your home less cluttered and easier to live in!

The next step is to make sure that what you own is passed down according to your wishes. If you have an estate that includes a home, bank accounts, retirement accounts and a car, make sure to designate a beneficiary on any retirement account, life insurance policy or annuity. Those types of accounts will then pass automatically to the designated beneficiary upon your death solely with the presentation of your death certificate.

You can place your home and other personal effects into a living trust that allows for the transfer of ownership of those items automatically upon your death to the person designated in the trust.

You can also have an estate planning attorney draft a will that states who you want to get your home and personal effects upon your death.

Either way, it’s better to have a legal document in place to make those decisions than no document at all. The choice of a living trust and/or a will depends on your situation.  You speak with an estate planning attorney about the benefits of each and which option would be better for you. Call Rowley Law today at 847-490-5330, to schedule an appointment. 

Reference: The Washington Post (November 14, 2016) “How to organize your home and finances in your estate”

Some Tips for Baby Planning

“Of course, the reward of raising kids is totally worth it, whatever it costs. Nevertheless, it’s better to be prepared than to be sorry. Here are some money saving tips that will help you save for your family’s future.”

Starting a family is exciting, but studies show that the average cost of raising a child ranges from $183,000 to $282,000. More couples are factoring finances into the decision to start a family.

One out of five parents are now delaying having another child for monetary reasons.  Therefore, it’s wise to have sound financial preparation if you want to have kids soon.

The Morning Ledger’s article, “5 Money Saving Tips for Couples Who Want Kids,” first highlights the importance of creating or updating your estate plan. Anyone over 18 should create a will as part of their estate plan. If you have a family with a baby on the way, this should be a top priority. If you’re not here to care for your baby, who will do it? Without a will, the court makes this decision.

Create a ‘Baby Budget’ Beforehand. Start living on your “baby budget” ahead of time, and calculate your change in income. You should begin living on a new budget before the baby arrives.  If you do this, you can put the extra cash that is accumulated into savings.

Purchase Adequate Life Insurance. Getting life insurance is for the benefit of your family, and provides you with peace of mind.

Save First. To be able to do the three items listed above effectively, always divide your money as soon as you get paid so you’ll have your monthly saving goals set before you run out of money. It’s also a good way to develop your budgeting and financial management skills.

Don’t Overspend. It’s tempting to splurge, but overspending is the opposite of saving. To avoid doing this, organize your shopping by having a list of the things you need to buy. Do your homework first.

Reference: Morning Ledger (November 10, 2016) “5 Money Saving Tips for Couples Who Want Kids”

Putting Life Insurance into Your Estate Plan

“With proper planning, insurance money can pay expenses such as estate tax and keep other assets intact.”

Many folks fail to realize that life insurance can be a major component of an estate plan. An insurance policy’s proceeds can provide liquidity when it’s needed, as FEDweek reminds us in “Proper Use of Insurance in Estate Planning.”

For example, if Dad passes away and leaves a sizeable estate to his daughter Bev, there could be a big estate tax due. But if most of Dad’s assets are tied up in real estate and an IRA, Bev might not want to be in a hurry to sell the real estate. She might think about withdrawing some of the inherited IRA to raise cash, but she’ll have to pay income tax on the withdrawal and lose a valuable chance for extended tax deferral.

A better strategy would be for Dad to buy insurance on his own life, and use those proceeds to pay the estate taxes. Then Bev can keep the real estate while taking only required minimum distributions (RMDs) from the inherited IRA. If the insurance policy is owned by Bev or by a trust, the proceeds probably won’t be in Dad’s estate and won’t raise the estate taxes.

Here are a few common life insurance errors that can wreak havoc with an estate plan:

• Naming your estate as beneficiary. This puts the policy proceeds in your estate, exposing the money to estate tax and creditors. It also gives your executor more paperwork if your estate’s the beneficiary. Instead, be certain to name the appropriate people or charities.
• Naming just one beneficiary. Designate at least two backup beneficiaries to eliminate confusion if the primary beneficiary dies before you.
• Filing your life insurance and forgetting about it. Review your policies at least once every three years for changes in life circumstances.
• Having too little insurance. With a young child, it’ll take hundreds of thousands of dollars to pay all his or her expenses, like college bills, in the event of an untimely death.

Skimping on insurance may hurt your survivors, and term insurance is a very low cost way to provide your survivors with a layer of protection.

Reference: FEDweek (November 3, 2016) “Proper Use of Insurance in Estate Planning”