Archive for Estate Planning
Not Too Late To Let Someone Know
Posted by: | CommentsApril 16th was National Healthcare Decisions Day. The point of this “holiday” is to encourage adults to share their private wishes about medical care and end-of-life decisions. Way too many adults harbor the mistaken belief that their loved ones would “just know” what would be desired in an emergency situation. That assumption could have adverse consequences.
The last thing your family needs in a moment of crisis is a family fight, and that’s exactly what could happen if your loved ones disagree about what you “would have wanted.” It’s a problem that is so easy to address…so easy to avoid, that it makes absolutely no sense to leave this issue to chance.
A National Case Study
Do you remember Terri Shiavo? The case in Florida that tore a family apart, drew the attention of national media, and became the topic of debate in households across America? Shiavo was 26 years young when she had a heart attack that left her in a permanent vegetative state. Shiavo’s family went to court and stayed in court for years, all over questions regarding the removal of life support and feeding tubes.
That’s right… YEARS in court. People take these issues very seriously, and many folks are very black and white about their beliefs. There is nothing wrong with being black and white in how you feel about life support. Just be clear about what you want because not everyone shares your beliefs and desires (including people who may be called upon to make decisions on your behalf).
Get It On Paper
Sharing your desires simply isn’t enough. Make sure that you get your wishes down on paper and that the proper legal formalities are followed to a “T”. Otherwise, your directives might not be followed despite your best intentions. Besides that, having your wishes expressed in writing—expressed literally in black and white—will make things easier on your loved ones.
Emotions run rampant when emergency situations present themselves. Your family members love you and they will think about life without you around. There might even be feelings of guilt over how certain they are about your wishes, and there might be dissension between your loved ones about what you want… unless your wishes are in writing.
In Honor of The Holiday
Take this opportunity, the day we have been given, to share your wishes about end-of-life care and emergency medical treatments with loved ones. Think about and discuss artificial life support (e.g. feeding tubes and respirators). Consider types of care you would never want, if any, and think about the types of side effects that would simply be unacceptable to you. Talk about options and desires for long-term care, should the need arise.
Finally, you need to decide who you trust to make important decisions on your behalf. We are here to support you as you begin thinking about these important issues. Of course, the topic of conversation isn’t exactly a walk-in-the-park, but it’s won’t be as hard as you think, either.
Get started by giving us a call and scheduling a Family Wealth Planning Session™. We will talk through all of the important decisions that need to be made, and we can help you get educated on the issues so that you can pass on the knowledge to your family and friends. In honor of National Healthcare Decisions Day this April, we are going to waive our customary fee for a Family Wealth Planning Session™ (a $750 value). So please recognize that time is truly precious and you can’t afford to waste it wondering what will happen to your family (and you) if you become incapable of making your own choices.
Creating Liabilities Out of Love
Posted by: | CommentsThere are some pretty basic reasons to carry life insurance. One of the top reasons we hear is that clients simply want to make sure that their loved ones will be cared for if the client dies other than “as planned.”
That’s certainly fair enough. We all want to make sure that our spouses and children have their financial needs met. With respect to children, they will have financial needs until they are out of college and on their own career paths. Spouses have a range of varying needs, depending on whether or not they work and whether or not they are the primary breadwinners in the family.
It Should Change At Retirement
In theory, the need for life insurance diminishes and should, in theory, disappear at retirement. The reason is that by the time you retire, your children should have their own careers, and you and your spouse should have enough money to live the rest of your lives in relative comfort. So the need for life insurance certainly diminishes over time (even though premiums often increase later in life).
The fact that the need for insurance diminishes over time does absolutely nothing to negate the fact that you likely need life insurance right now. So what is the point that we’re trying to make?
Ownership of your policy matters . . . tremendously.
What we’ve been talking about is insurance on your life. The question, however, is who should own the insurance policy on your life?
Well, who do you trust not to kill you for . . . wait, that’s not where we’re going with this.
Ownership of your life insurance policy matters because if you own the policy yourself, proceeds from the insurance will be included in your estate when you die. Yes, this is true even if you’ve designated a beneficiary other than your estate.
So in reality, something bought out of love (life insurance) can create a huge potential liability for your heirs, since tax rates on estates are some of the highest around.
And That Could Make Your Estate Taxable
On occasion, life insurance policies are large enough to move an estate from non-taxable status to taxable status. That’s simply a waste of your family’s dollars, because some very simple planning can solve the tax problem completely.
There are two simple ways to remove life insurance proceeds from your estate:
- Totally relinquish control and ownership of the policy, or
- Create a life insurance trust to hold the policy.
In reality, these two solutions are really the same thing. They involve you giving up the rights associated with ownership of insurance policies on your life, but the result is that the proceeds from insurance will not be included in your estate, and as a result, they will not be taxable in any manner whatsoever.
Setting Up a Life Insurance Trust
It’s not difficult for you to set up life insurance trusts – simply call us. If you have questions regarding whether or not your existing policies will move your estate into the taxable bracket and you’d like to do something about it, contact our offices. We normally charge $750 for Family Wealth Planning Sessions™, but if you mention this article when you call (and if we still have space on our calendar), then we will meet with you for free.
The Romance Business
Posted by: | CommentsIf you are getting married soon, CONGRATULATIONS! So many details… planning, family and friend invitations, caterers, details details details. But don’t forget some of the most enduring decisions you will make BEFORE you tie the knot! Protecting your new family with sound planning and decisions can literally prevent divorce down the road.
With the number one reason for divorce being financial conflict, you’ll want to make sure that you have a plan for handling these issues BEFORE you take the leap to becoming husband and wife. Everything flowers, romance, spontaneous hugs and kisses makes the natural progression to real life issues like bills, wills, financial planning, children, in-laws and division of responsibility sometimes taking precedence in the relationship.
Settling these issues while you’re planning the wedding can save years of heartache and eventual divorce.
Let’s say you’re planning on buying a house. It looks good, it feels good when you walk inside (most people buy a house for purely emotional reasons), and it seems to fit what you envision your lifestyle being when you move in.
But don’t forget: Check for termites. How’s the plumbing? The electrical system? The roof? Is it in a flood zone? Does it have a clear title?
While it’s not very romantic to compare getting married to buying a new house, you are smart enough to know that you have to make sure it’s not going to fall apart or cost you more than you planned once you’ve made the commitment. With marriage, when you invest so heavily emotionally, financially, professionally, and socially, any edge you can have beforehand is going to greatly reduce the chances of divorce and disappointment.
I’m not encouraging you to plan for divorce, but I am saying it’s imperative that you plan NOT to be divorced.
Here are some conversations you will want to consider having before saying, “I do.”
1. Make sure you both know exactly what your financial situation is now and what your prospects are for the future. Make a list of credit cards, loan balances, other debts and monthly bills you currently have and what will continue after the wedding. Share this list with each other, keeping detailed, permanent records of these items so that, in the future, if a dispute arises, you know exactly what your status was at the time you married. Include bank statements, credit card statements, information about life insurance, tax records, and everything that you will need to avoid disagreements in the future. Generally, in community property states, spouses can be liable for each other’s debts.
2. Do you need a pre-nup? In the past, requesting your intended to sign a pre-nup was sometimes akin to being received as, “I don’t trust you.” A pre-nup may be important in situations where one spouse comes into the marriage with substantially more assets or in second marriage situations. You can fix what is considered separate property and community and decide in advance on such things as spousal support, taxes,and bills. Today, we know that in many marriages it’s just good business and is to protect both parties in case of divorce or lawsuits.
3 Make a list of all property you own that is not in already in a trust and decide how it’s to be “distributed” after the wedding. As unnecessary as you think it might be, discuss what will happen to property that is accumulated in the future. What if one of you inherits a substantial sum of money or property from a parent or family member? Get it in writing beforehand if you do not want these future assets to become community property in a divorce.
2. Discuss life insurance, health insurance, and other related issues and determine if you are both in agreement as to what should be acceptable when you are a couple and what levels of coverage you both feel would be best for each of you.
3. Discuss your estate plan – your Will or Trust. Do you have one now? Whether you do or not, discuss with your Personal Family Lawyer ® a will or trust that will go into effect once you have become a married couple. Married couples have certain tax advantages that can be lost without the proper planning. These things should not be filed away mentally as something you’ll take care of when you have kids or get close to retirement. Do it now!
4. Discuss your taxes and how you will handle filing and tax liabilities for the future.
5. Discuss health and medical issues. Determine your current health status and decide for the future what you would want to happen should you become incapacitated – will you want to remain on life support and receive nutrition and hydration? As your Personal Family Lawyer, I can help you create an Advanced Health Care Directive that will avoid stress and anxiety should something happen requiring one of you to make these decisions without knowing what your spouse’s wishes might be.
There are so many things you need to decide before getting married. Which flowers and what colors the attendants will wear should be accompanied by deciding some of the issues I’ve listed above. And keep in mind, these are just a few topics to start a dialog allowing both of you to get married with your eyes wide open and avoid serious pitfalls in the future.
