Rowley Law

Here's How to Leave a Legacy

“Consider the following four ways to leave a legacy to your heirs, your friends or your favorite charities.”

The Northwest Herald’s recent article, “4 Ways of Leaving a Legacy” says that after toiling hard for many years in a career to accumulate wealth, you want to make certain that, at your death, your assets are properly distributed.

You need to have a Will. It’s essential. Even if you have other estate planning strategies and documents, a Will lets you direct specific assets to a particular person or to make a general bequest. A Will names an executor to settle the estate, a guardian for minor children and instructions to distribute property, according to your instructions.

A Trust is an option preferred by many experienced estate planning professionals. You should work with a veteran trust lawyer to create one. A Revocable Living Trust is flexible and can be changed at any time. It can protect your property, if you become incapacitated. An Irrevocable Trust can’t be modified. However, it can reduce estate taxes and offer protection from potential creditors. The key advantage of using a trust is that it avoids probate and eliminates the need for a financial guardian in the event of physical or mental incapacity.

A Beneficiary Designation is important for contractual-type property, like life insurance policies, annuities and retirement accounts. You need to make sure that you have updated primary and contingent beneficiaries. Re-evaluate your choices regularly, as circumstances change and life events occur. Beneficiaries can only be changed by signing a new beneficiary designation form. Your will or trust have no impact on them.

Joint Ownership arrangements transfer property to the co-owner, in the event of the other owner’s death. This is common with the family home and it’s appropriate for some types of property. Speak with your attorney about how to use this approach.

Although leaving a legacy can be complex, consult with a qualified estate planning attorney to guide you in the right direction.

Reference: Northwest Herald (November 28, 2017) “4 Ways of Leaving a Legacy”

More Reasons for Estate Planning

“There are two types of powers of attorneys.”

Estate planning is critical for everyone. That goes double for seniors.

Basic estate planning means you’ve drafted and properly recorded legal documents, such as wills and powers of attorneys, and they’re all up-to-date. Wills written 20 years again after a child is born are now severely dated and possibly inaccurate.

There’s a fair chance that things have changed, and the will may be missing all of the grandchildren or still includes individuals whom you no longer want as primary beneficiaries.

The Herald-Standard explained, in its recent article, “Your Financial Future: Estate planning,” that powers of attorney come in two general flavors.

One power of attorney is for health care. This document designates an individual and gives him or her the authority to make health care decisions for you, if you are incapacitated. Capacity is the ability to understand your options and pick the best one. There are times when people may not have capacity temporarily, such as when they are in a coma. It can also be long term, when a person suffers from dementia.

The other type of power of attorney is for financial matters. This permits the appointed individual to make decisions concerning paying your bills and those that keep your family’s financial life functioning. Note that powers of attorney end upon your death.

Powers of attorney are granted under state laws. Because of this fact, federal government agencies don’t typically recognize them.  Since federal law supersedes state law, your power of attorney may not be recognized by agencies, like the Social Security Administration.

The Social Security Administration has its own form which appoints a personal representative. The agency requires that its own form be used to make decisions on behalf of another. If someone may need this, it’s prudent to prepare Social Security Administration paperwork in advance while the senior can still make sound decisions. This may be called for, if he or she moves into a nursing home, and their benefit checks are mailed to their old address. Yes, this is another good reason to receive your payments by direct deposit.

That individual may also want to set up a Social Security Administration account online at Social Security/myaccount. Changes can be made here at any time without the need to speak to a Social Security Administration employee.

Reference: Herald-Standard (November 23, 2017) “Your Financial Future: Estate planning”

Easy Estate Planning Mistakes You Can Avoid

“Estate planning is done for a number of purposes. One is to transfer assets to your heirs, according to your wishes once you pass on. Unfortunately, just having the documents in place may not be enough, as mistakes can be made.”

WMUR provides some of the most common things to review within your own planning in its recent article, “Estate planning mistakes.”

Delay. The easiest mistake to avoid, and probably the biggest, is procrastination. Just doing nothing at all in your estate planning is a common mistake. If you fail to create a plan for yourself, the state may apply the intestacy laws and determine who will receive your assets and how they’ll acquire them. This might not be the plan you wanted.

Review. You should conduct a periodic review of your estate planning documents to be certain they still match your current wishes. There are changes that occur over time, like life circumstances and the estate tax laws. Be sure your chosen executor is still able to take on the responsibility.

Titles and Beneficiary Designations. The correct titling of your assets and up-to-date beneficiary designations are also areas where people commonly make mistakes. Update your retirement plan and life insurance policy beneficiaries, so these proceeds pass to the correct beneficiaries. An asset owned in joint tenancy with rights of survivorship will pass directly to the surviving joint tenant.

Trust Funding. Another common mistake is not funding your revocable trust. Perhaps you have a trust that accomplishes all that you wish. If you don’t fund the trust with assets, it’s of no use to you or your beneficiaries. Trusts are helpful when dealing with younger heirs, because a trust can control when the income can be received and for what purposes, until the beneficiary reaches a certain age or other milestone.

The Barry Manilow Records. Think about the disposition of family heirlooms, collectibles, and other items of sentimental value. You’d be surprised what siblings fight over, and sometimes the squabbles grow into all out fractures for families.

Passwords. Create a master document that has all your social media, online accounts, and passwords, allowing your heirs ready access to them to close them.

Location. Make sure that a family member knows where the documents are located at your passing. If your estate planning documents can’t be found, or no one knows that they exist, your plans probably won’t be executed.

Reference: WMUR (December 28, 2017) “Estate planning mistakes”

What “Getting Your Affairs in Order” Really Means

“Make it easy on your family, put your affairs in order.”

Part of estate planning is making the situation after your death as palatable as possible for those dealing with your estate. You should consult with an experienced estate planning attorney today: you don’t know what lies ahead.

A recent article in The (Prescott) Daily Courier asks “I’m dead. Now what?” The article advises you to act now and get your affairs in order, just to be safe. Take a look at a few of the things you’ll need to get started.

Collect all of your important papers in one place and tell someone where they are, preferably a trusted family member. These might include things such as:

• Your Social Security card, living will, military records and other legal documents;
• Contact information for your estate planning attorney, accountant, banks, investment firms and life insurance company;
• Bank account info, safe deposit box key, vehicle titles, the deed to the house and last year’s tax return. You may want to avoid probate by adding another person to titles and property—ask your attorney how to do this correctly;
• Monthly bills, property tax bills, credit card companies, passwords for online billing, as well as passwords for PCs and electronic devices.

Go through your home with family members and/or friends and inventory the items they would want to receive after your death. Put your list with your important papers.

Part of your planning must include taking steps for incapacitation. Give permission in advance through a durable power of attorney for health care and a regular durable power of attorney to someone you trust. Without your authority, your caregiver won’t be able to access information, consult with your doctor or pay your bills. An advance directive is used when you get sick. If you know what kind of care you want or don’t want, draft a living will so that your family won’t have to make the difficult decision to take you off life support. You will have made that decision in this document long before the situation arises. A durable power of attorney for health care gives your designated agent the power to make medical decisions for you, if you are unable to do so.

Make your own funeral and burial arrangements, to alleviate the burden on your family and to be certain that your wishes will be followed after death. Pre-pay your burial and funeral expenses to lock in today’s cost.

Talk to a knowledgeable estate planning attorney about setting up your will, and other important documents in estate planning.

Reference: The (Prescott) Daily Courier (January 11, 2018) “I’m dead. Now what?”

Remember Your Heirs in Estate Planning

“Estate planning can feel overwhelming for individuals without an ‘heir apparent.’”

For those without children or close family, it can be difficult to choose who will handle your affairs, let alone who will inherit your estate when you die. The most common concern for many, is who should be trusted with important decisions, should you become incapacitated.

The Green Bay Press-Gazette says in its recent article, “Intimidated by estate planning? Here are key first steps,” that not knowing the precise way to draft an estate plan may lead you to do nothing.

Remember, if you die intestate, or without a will in place, your assets and property will be disbursed according to state statutes by the probate court. This may result in leaving your estate in limbo, transferring it to relatives you hardly know, or giving a big chunk in probate costs to the state.

While estate planning can raise difficult questions—for those with and without children—there are four key topics that need your immediate attention.

Estate Executor. Select an executor for your estate. It doesn’t have to be a family member or friend. Many lawyers, banks, and other planning professionals can be named to carry out your wishes.

Living Will. A living will is a document that states your wishes, in the event you become incapacitated, placed on life support or suffer from a terminal condition.

Designate Your Agents. Name a health care proxy or power of attorney who is tasked with making decisions about your health in situations that aren’t covered by your living will.

Update Beneficiaries. Be sure you designate and keep current your named beneficiaries for your 401(k) plans and life insurance policies. These assets aren’t tied to your will, so you need to be clear on your directions for these proceeds.

These are crucial first steps to making certain your estate is passed on the way you want. Review your options regularly to ensure that everything is accurate.

Reference: Green Bay Press-Gazette (January 17, 2018) “Intimidated by estate planning? Here are key first steps”

Widow/Widower Preparation 101

“Among the risks that married couples face in retirement, this one is unavoidable. It’s the risk of becoming a widow or widower.”

According to USA Today’s recent article, “How to prepare financially for being a widow/widower,” the death of a spouse frequently results in a decline in economic status. For example:

• Some income may cease when a spouse or former spouse dies.
• The death of a disabled person’s caregiver spouse may result in financial issues at a very difficult time.
• The surviving spouse may be unable or unwilling to manage the family’s finances.
• The inability to cope with a spouse’s death or terminal illness plays a part in high rates of depression and suicide among the elderly.

There are several things you and your spouse can do to manage the risks associated with becoming a widow or widower. One is talking about money matters together.

First, spouses (especially women) need to know about the household’s finances. This includes where all accounts are located. In addition, it’s critical that they know what benefits might be available from employment-based plans, like pensions, 401(k)s, life insurance and medical insurance, and how to contact the appropriate people to access any benefits that may be due.

Figure out if your financial plan will provide enough lifetime income for the surviving spouse. Note that the surviving spouse may have less to live on, if he or she has to spend down assets to take care of the spouse that dies. If, after running all the variables, there’s a shortfall, think about upping your savings, decreasing expenses, downsizing and buying life insurance.

If you’re the higher earner, you might delay Social Security until at least full retirement age (FRA)—or better yet until age 70—if there’s a good possibility your spouse will outlive you, because the surviving spouse collects a higher lifetime benefit based on the primary earner’s benefit.

Investigate whether you have a traditional defined benefit pension plan and select the joint-and-survivor annuity, instead of the single life annuity.  You should also check your beneficiary designations.

Make a list of your employer-sponsored retirement plans, as well as your life insurance plans, bank and credit union checking and savings accounts and titling on real estate. Be sure the credit cards and other accounts are set up so that both spouses have access.

You might also look at long-term care and consider what would happen if one or both spouses needed LTC.

Create or update your estate planning documents. This includes your will, trusts, powers of attorney for financial matters, advance directives, living wills and powers of attorney for health care and physician orders for end-of-life care. You may want to file a “do not resuscitate” or DNR order with your hospital to avoid aggressive attempts to prolong your life. It can also help to prevent incurring large medical bills for the surviving spouse to pay.

Consider planning your funeral arrangements in advance.

Review all of your assets and property with an experienced estate planning attorney and be sure that you understand what is in individual and joint names, and the way it might be disposed.

Reference: USA Today (January 19, 2018) “How to prepare financially for being a widow/widower”