Go Ahead, Talk Turkey over the Holidays

With Thanksgiving and the winter holidays rapidly approaching, there is a slew of opportunities to gather the family under one roof and get talking. Estate planning and Wills should be part of that discussion. Although it may be tempting to avoid what many consider to be a morbid topic, it’s important to talk to your loved ones so they will know what to do when the time comes.  Communicating openly and honestly with your heirs while you’re still around can help everyone avoid conflict after you’ve passed. Here are eight tips for broaching the sensitive subject with your loved ones.

Be as transparent as possible.

Give your family a heads-up that you would like to discuss your estate plan when you gather.  Have an agenda that outlines the discussion points and circulate it to family members a few weeks in advance to avoid surprises and to allow everyone to mentally prepare for the discussion.

Strategize for any likely sticking points.

You know your family’s internal dynamics.  Maybe your son will be taken aback that his sister was selected as your executor.  Or maybe your daughter will be upset by the details of your advance healthcare directive.  If you predict that something might present a significant issue for a family member, consider reaching out to them to touch on it beforehand so that it doesn’t derail the family meeting.

Avoid holding the meeting at a time when everyone has had a few drinks.

As tempting as it may be to hold the meeting in the evening after the kids have been put down and everyone has a glass of wine in hand, resist the inclination to include alcohol at this meeting.  As we all know, alcohol can amplify peoples’ emotions and exacerbate existing issues.  Pick a time when everyone is fresh, relaxed and sober.

Arrange for childcare.

Keep this meeting an adults-only event so that everyone can participate without the distractions of babies and children.  Perhaps hold the meeting after bedtime or ask the older children to supervise a movie night in a different part of the house.

Don’t immediately dive into the heavy stuff.

Start the meeting with a discussion of a lighter part of the plan.  Perhaps start the meeting by sharing the name of a charitable cause that you have included in your plan.

Prepare your paperwork.

Once you’ve hammered out the details of your estate plan, have the appropriate documents drafted and notarized to cement your wishes before you sit down with your loved ones.  Bring copies to ensure clarity and reduce the chances of misunderstanding your plan.

Set an inclusive tone.

While you should remain firm in your estate planning decisions during this meeting, try to convey that you are welcoming the family to share your vision and goals through this discussion. Try to communicate that every decision was made with their best interests at heart.  If you can get everyone on the same page and openly communicating about the matter from the get-go, you will reduce the risk of disputes later.

Consider inviting a professional to attend the meeting if you feel it would be appropriate.

Depending on your family dynamics, it may be helpful to have an outside expert, such as your financial advisor, estate planning attorney or accountant, help facilitate this conversation, explaining the reasoning and implications of decisions.  Keep in mind that this could possibly make the meeting more of a formal affair than if only family members attend.

All too often, surviving loved ones are left searching for necessary documents, or worse, suffering through expensive legal processes because no estate planning documents were ever created.  Take advantage of the high spirits and cheer of the holiday season to launch this crucial conversation on a positive note.

5 Scary Mistakes People Make When Estate Planning (and How to Easily Avoid Them)

An estate plan is a complex, essential set of legal documents that can offer a person a great deal of financial and emotional security. But, while the estate planning process is far less prolonged and painful than some people fear, there is, like any legal process, no shortage of ways in which someone can stumble when it comes to making their arrangements.  Here are five of the most common (but by no means only) estate planning mistakes to avoid.

You don’t have an estate plan at all.

Approximately 60% of adults don’t have a Will or Estate Plan.  Are you part of the majority?  Perhaps you assume estate plans and Wills are only for the extremely wealthy. Perhaps you are in your 20s or 30s and feel that you don’t need one yet.  Perhaps it overwhelms you so you’d rather keep bumping it to the bottom of your to-do list.  Regardless of your reasons, every adult needs at least a simple Will.

A Will documents your wishes regarding your property and assets, and appoints a legal representative to oversee the process of distributing your estate to your beneficiaries.  If you pass away without a Will (or die “intestate”), the state will appoint someone to decide how your property will be distributed. This could mean that your assets end up in the hands of people other than those you intended. Moreover, the important needs of loved ones that you’ve prioritized may not be addressed. Having a simple Will in place can prevent delay, expense, frustration, and even loss after you pass. More importantly, a well drafted Will provides security for those you leave behind.

You don’t talk to an attorney.

While it isn’t required that you use an attorney to prepare your Will and estate plan, I strongly recommend it, especially if you have significant assets, minor children or a blended family.  Involving an attorney early in the process will ensure that your wishes will be carried out appropriately later down the road. If you opt to go the DIY route, consider having an estate lawyer review the will you created, just to be safe.

Estate planning attorneys have years of experience analyzing clients’ unique circumstances, explaining the ramifications of their decisions, and tailoring documents to address their unique needs and specific objectives.  This experience means that you walk away with a comprehensive estate plan that you know will stand up in court even if it is contested.  Many people find that this peace of mind alone makes it all worth it.

You don’t update your will.

Once they have finalized and signed their Will, many people file it away in a safe deposit box and forget about it. However, there are many reasons to regularly revise your Will and other estate planning documents after you’ve initially sorted it all out.  Every major life change should be reflected in your estate plan.  This includes a divorce, the death of one of your heirs, the birth of a potential new heir, a major change in your financial situation, and significant modifications to your investment portfolio.

You assume that you don’t need a trust.

Many people assume that trusts are reserved for those of extreme wealth, but the benefits that they can offer to someone with even moderate assets can be significant, depending on the individual’s circumstances.  Wills only account for divisions of assets after your passing, but trusts govern the distribution of your assets for an extended period of time.

Since trusts enable restrictions on the timing of asset distribution and conditions for heirs to receive bequests, they can be useful tools to help to care for heirs who are unable to manage their finances, such as minor or special needs child.  They can also be used to shelter certain assets from estate tax or to provide for a surviving spouse or a charity of the grantor’s choosing.

You name the wrong executor.

When crafting your estate plan, a crucial step includes selecting the person who will be responsible for administering your estate and carrying out the provisions of your will.  This person, the executor, will help ensure the timely, accurate distribution of your estate.  Picking the right executor is vital, even if your estate is not large.

Many people appoint a relative or old friend as their executor without much thought. These people usually know us best, so naming a significant other, adult child, or dear friend to fill this role seems like the most logical choice. And often, it probably is.  But other factors should be considered as well.  First and foremost, your executor should be someone that is likely to outlive you.  Beyond that, they should have the time and willingness to handle the responsibilities of executorship.  Ultimately, you want to pick someone who respects your wishes and won’t let their personal feelings about those you’ve named in your will get in the way of executing your estate plan as you’ve intended.  Read more about selecting an executor here.

Estate planning is undoubtedly complex, but a properly prepared plan can save your loved ones a lot of grief and hassle.

Estate Planning Milestones for Parents

There’s no question that having kids changes your life. Naturally, your priorities and responsibilities shift, and this should also be reflected in your estate plan. Here are a few checkpoints
throughout your child’s life when you should recalibrate your estate plan, ensuring that, no matter what, your child is provided for if something were to happen to you.

Newborn

In the midst of adjusting to parenthood and sleepless nights, crafting an estate plan can easily slip down to the bottom of your to-do list.  Without a doubt, it can be a daunting process.  Many new parents would prefer to avoid thinking about such a grim topic during one of the most exciting times of their lives.  Regardless of how much you’d rather push the matter to the back of your mind, this significant development within your family requires that you update your estate plan (or create one if you don’t already have one in place).

When welcoming a new member of your family into the world, there are two important things to address within your estate plan: the care and custody of that child and the management and distribution of the assets you will leave to them.

For most new parents, writing or revising their will is less about leaving their assets than it is about naming a guardian for their child.  This guardian will assume all responsibility for your child if something happens to you.   They will decide where your child will live and attend school, what type of health care your child will receive, and make other day-to-day decisions regarding your child’s upbringing.  If you don’t name a guardian and a situation arises where your child will need one, the Court will choose the guardian. Because the Court isn’t familiar with your family or your child individually, the person they choose may not be in line with your preferences.

In addition to selecting a guardian, you may also want to set up a trust for your child to preserve your assets for your child when they get older.  This trust could include assets such as your home, your life insurance, your retirement accounts, your savings and investments.  These assets and funds can then be used your child’s education, living expenses, and health care expenses.

Age 5

As your child heads off to kindergarten, you will most likely begin to plan for the upcoming years of schooling and how to lay the best foundation for their future.  You may begin to grapple with
the eventual costs of their education.  When you sit down to plan for their college fund or strategize how to pay for their private education, consider including these plans in your estate plan as well.

There are a few options for how to plan for your child’s education, many parents opt to utilize a 529 plan.   Also known as “qualified tuition plans,” 529 plans allow investment earnings to grow sheltered from federal income taxes.  Withdrawals used to pay for qualified higher education expenses are tax-free.

Age 13

As kids grow up, they organically develop their own relationships with family members and loved ones.  Certain relationships may grow stronger or weaker over time.  Due to these shifting dynamics, it is wise to reevaluate who is named as your child’s guardian when they enter their teenage years.  Does your child have a healthy relationship with the person you’ve designated as their guardian?

Also, consider the general health and circumstances of the guardian you had previously selected.  Have they experienced health complications that might prevent them from performing this role?  Have they moved to another state that would mean uprooting your child if they needed to fulfill these duties as the guardian?  Have they undergone any financial hardships?  As a parent, you know that raising a child is expensive, so consider whether or not this role would strain your chosen guardian’s financial resources.  (Find out more about guardianships)

Age 17

All Wills where a minor will inherit should include a trust to hold and manage the assets until the child reaches the age of majority.  However, when your child approaches adulthood, you may want to reevaluate if you want to give them access to these assets at 18 or later to give them time to mature.   Regardless of how mature your son or daughter may be, they may still fall victim to the bad judgment of others.   There are many potential issues that can put your child’s inheritance at risk, but some of these hypotheticals can be addressed if your plan is updated to take your child’s maturity into account as he or she ages.   (Read more about trusts)

Age 18

Once your child turns 18, he or she is considered an adult.  This means that your son or daughter is legally in charge of their own life now.  If a medical emergency arises, health care providers are no longer authorized to discuss or disclose the details of their condition or care with you.  Nor are you authorized to make medical or financial decisions on their behalf – even if you pay their tuition, cover their health insurance and claim them as dependents on your tax returns. Ensure that you can assist your child with decision-making if they suffer a serious illness or disability by having them sign a Medical Power of Attorney and a Durable Power of Attorney before they leave home for college or take the next step in life.

Age 25

Your estate plan should be revisited once your child marries or starts to have kids of their own.   Consider if you would like to include your grandchildren in your plan, and if you would, when they should be added.

Once an estate plan is completed, many people will put it in a safe deposit box and then forget about it.  I encourage you to avoid this “checked-the-box” mentality.  Estate planning isn’t a one-time thing, it’s a lifetime process. Your estate plan should evolve as your life evolves.

 

Surviving the Sandwich Generation

A unique situation is on the rise in the United States and could affect you now or in the future. People are finding themselves caring for their aging parents while simultaneously raising and caring for their children. There is a term for this; the sandwich generation. Adults who are part of the sandwich generation have a living parent age 65 or older and are either raising a child under the age of 18 or supporting a grown child.

If you are a part of this group, you are undoubtedly challenged by the emotional, physical and financial demands of juggling the roles of caring for your own children and your aging parents. With so many people relying on you, it is that much more important that you take the time to carefully plan for the stressors that can come up along the way.

If you haven’t taken some of the following steps and they still apply to you, get started immediately.

  • Have a family meeting to discuss what your parent’s wishes. If you don’t have the conversation with your parents while they are still in good health and of sound mind, there’s a good chance you’ll find yourself unprepared if a crisis occurs.
  • Plan for your parent’s future. One of the most important steps you can take towards helping your parents in the future: making sure their estate plan is up to date.
  • Plan for your family’s future. Many of the same key documents are required for your estate plan, but a few additional things need to be considered.
  • Balancing it all. Assessing your financial situation and maintaining your emotional health is imperative.  Don’t hesitate to ask for outside help.

Taking these steps can certainly help you be prepared for the “unknown.” If you have any questions about your unique situation, don’t hesitate to reach out to me.

[Read more here…]

The Importance of Leaving a Will… and What Happens When You Don’t

February is a month notoriously marked by love and romance. I’ve said it before and I’ll say it again, leaving a Will is one of the most generous and thoughtful gifts you can give. While you may not exactly want to present your Will over a candlelit dinner, this time of a year is an excellent reminder that taking care of your loved ones long after you’re gone is the ultimate gift that keeps on giving.

Many people believe you should be a member of AARP or be wealthy before you put a Will in place. But that’s just not the case. Whether you are young or old, rich or poor, you should consider creating a Will.

What Happens If You Die Without a Will?

When you die without a Will, an already difficult time can become a complicated legal situation for your loved ones. The State of Texas essentially creates one for you. If you are a resident of Texas and die without a valid Will, your property will be distributed to your heirs as determined by Texas law. Your assets will be distributed according to a statutory formula that doesn’t take into account your wishes or unique circumstances.

  • The Deceased is Married. The division of property at that point is dependent on whether it is characterized by separate or community property.
  • The Deceased is Single and Doesn’t Have Children. The state looks to parents, siblings or other relatives on either side of the family to find a qualifying heir. If someone dies and leaves behind no surviving heir, the estate would go to the State of Texas.
  • The Deceased is Unmarried and Has Children. The state code prioritizes the descendants by closeness in the family tree.

Unique Situations and Other Questions

No two families are the same. While the state qualifies inheritance without a Will quite clearly and specifically (as seen above), there are still many alternative scenarios that come up that I can walk you through.

What Can Your Family and Loved Ones Do Now?

There are not a lot of options for your family if you die without a Will. By not leaving a Will, you inevitably cause difficulties for those you leave behind, at a time when they are likely already distressing. They will likely have to go through a lengthy legal process that involves time and money for them to help determine who will gain power over your estate. If a Will had been prepared, this process would be unnecessary.

I cannot stress the importance of creating a Will enough. I hope this article is useful for those who are dealing with a death with no Will left behind. I am also optimistic that this information will reassure anyone who is without a Will to seriously consider putting one together.

Click here to read a more detailed explanation.

What You Need to Know About Disinheriting a Child or Grandchild

With Halloween behind us, it’s time to look forward to the holiday season. Thanksgiving may be your first chance in months to gather with loved ones to catch up and overstuff your bellies. It is also an excellent time to think about planning for the future.

While reuniting over turkey, you may notice that some loved ones have changed, and not for the better. Maybe they have made some irresponsible life choices or you are just reminded of their bad habits. Whatever the reason, sometimes you change your mind about who you want to include in your will.

Deciding to Disinherit

In Texas and many other states, you can legally disinherit an adult child or grandchild. To disinherit someone is to intentionally prevent them from receiving property from your estate after you die. The decision to disinherit a child or grandchild can be emotionally trying and can be legally difficult to do.  Including someone as a beneficiary in your will is usually done with deep thought and consideration, so the removal should require the same amount of attention.

How to Disinherit

The best way to disinherit someone may be to add a provision to your will. It is generally advisable to plainly and clearly state your intention to omit the individual. No matter what, you should review your will with your attorney every 3-5 years or when there is a major life change. If you are considering disinheriting someone from your will, you should consult with an experienced estate planning lawyer to walk you through the process and help you accomplish your goals.

For more information on disinheritance, click here to read more.

Celebrities Who Disinherited Their Children

If you make it big in Hollywood, you’re likely going to amass a great deal of wealth. If you happen to be the lucky offspring of Hollywood royalty, it’s assumed you’re set for life. But some celebrities believe their children should have to work hard for their money. Or in other cases, internal family drama has led to one or more children being cut out of the inheritance.

These celebrities chose not to leave a dime to some or all of their children:

  • Mickey Rooney
  • Marlon Brando
  • Tony Curtis
  • Joan Crawford

Estate Planning for Blended Families

Not every blended family is going to look like the Brady Bunch. There are numerous aspects of forming a new family that can create challenges. Everything from the number and age of the children to the attitudes and actions of the other biological parents as well as the respective financial statuses of the new couple. The new couple will have separate property and may or may not be planning to have community property. The new couple will need to determine how they want to provide for each other, their own children, their step children and any children they have together. While taking care of your spouse and the children may be a top priority, implementation can be rocky. The following is a guide to help you take on some of the issues associated with planning for your new family.

Communication

The first step is to have an open and honest conversation with your new spouse about your current finances, goals for the future and how you see your assets being distributed. Sometimes this conversation is a time to discuss what legal documents include your ex. You’ve combined your life with someone new and need to make sure all documents reflect this. Bring these legal documents when discussing your options. Recognize this should not be a single conversation but a dialogue that will continue throughout your life. Your goals may change over time based on the duration of the marriage, the age of the children and the nature of the assets to be distributed.

Wills
A will is important for everyone, but they are critical for a blended family and simplifies the probate process for your beneficiaries. A properly executed Will assures that your property passes to the loved ones of your choosing. Sometimes people forget to change their will when they get divorced and remarry. Joining together a new family is an excellent time to revisit the issue because you may want to treat your minor children with your current spouse differently than your adult children from a previous relationship. You may also want to include step-children, who would not be included under the law.

Trusts

If you want to provide for both your spouse and your children should something happen to you, then outright gifts of property may not be the best solution. Many blended families use trusts to provide for a spouse, while simultaneously ensuring their children end up with property as well.

Powers of Attorney

A Power of Attorney is a document that gives a trusted individual the ability to make decisions for you. Each document will perform exactly as the title suggests. While Texas gives very broad authority to your spouse if you are unable to act, there are some exceptions and your spouse may not be the best person to take action. Additionally, if something should happen to both you and your spouse, you may need someone else to take over the decision making. If you want to name your adult children, step-children or siblings to act on your behalf, you need to document your wishes.

Taking Care of Minor Children

If you have minor children and your former spouse has been removed as a legal guardian or is no longer living, it is important to have a plan for their future should something happen to you . Minors are not legally able to control assets and a guardian may have to be appointed by the court to manage any assets until the minor turns 18. There are ways to avoid court intervention while allowing your child to benefit from the legacy you will leave them. An attorney can explain your options and help determine your best strategy.

Personal Information and Contacts

You and your new spouse may still be learning about each other, and that may include details about financial assets. Now is the time to share information regarding your 401k and bank account information. It could also be time to make changes or transfer those accounts. It will be so helpful for your grieving spouse and family to not have to play detective after your death.

Hire and Attorney

Every state has different requirements regarding who will have the right to make decisions if you should become incapacitated or pass away. It’s important to talk to an attorney to develop a plan that meets the needs of your unique family situation. You don’t want to make promises to loved-ones and then have a plan that leaves them high-and-dry.

For more detailed information on planning for a blended family CLICK HERE.

Everything You Need To Know About Guardianships

We’ve all seen those tragic turned inspirational movies where parents die and leave behind an orphan – insert just about any Disney movie. Sometimes it’s a more thought-provoking flick where an adult has lost their ability to care for themselves. Either way, this is a tale as old as time, yet so little is known about guardianship.

A “guardian” is someone who is chosen or appointed to make legal decisions for another person who is unable to make those decisions on their own. Guardianship can be over a child or an individual who has become incapacitated through age or disability.

Diffhappy family with child and shopping bags in cityerent Types of Guardianships

Many people assume that a guardian is someone who simply cares for someone who is unable to care for themselves. That is not the case. There are actually two types of guardians and guardianships. We commonly think of a guardian as someone who is appointed to care for the well-being of an individual; guardian of the person. There may also be a guardian of the estate, who is appointed to manage that individual’s property. The incapacitated individual is referred to as the ward by the courts.

Guardian of the Person

A guardian of the person is authorized to make decisions involving the life and person of the ward, including health care decisions and place of residence. This guardian is tasked to oversee the ward’s personal care, medical care, maintenance and support. As stated above, guardianship can be over a child or an individual who has become incapacitated through age or disability. But what does that mean, specifically?

Guardian of the Estate
A guardian of the estate is someone who attends to the ward’s financial affairs. They can be the same or different from the guardian of the person. Their duty is to manage, protect, preserve and dispose of the ward’s estate in the ward’s best interests, in accordance with the law. The guardian isresponsibleto use the estate assets to provide for the care and maintenance of the ward. Generally, the guardian is granted the authority to make decisions on the ward’s property and estate as if it was their own. The court is responsible for settling conflicts between the two. Ultimately, the court will side with whatever is in the ward’s best interests.

Why Legal Representation is Important

There is no telling what the future holds, so establishing guardians for you and your children is not something to be put off. Consult an attorney and get started on the legal documents that put your own wishes into place. Verbal discussions amongst family and friends is not enough to protect you and your loved ones from an unexpected outcome.
If you are considering becoming a guardian, it is equally important to consult an attorney. The process is tedious and can be very expensive. It is wise to consult an attorney before going down the road of becoming a guardian, as there may be better alternatives out there for everyone involved.

Read more about Guardianship here.

Back-to-School Season: A Wise Time for Estate Planning

As summer winds down parents and kids are preparing for a brand new school year. Whether your kids are little or headed off to college, you’re busy settling into a new routine. Estate planning is probably the last thing on your mind. But the beginning of a new school year can actually be the perfect time to give your estate planner a call.

During the first week of school most parents have to fill out an emergency contact form. These forms are critical for the safety of your child. You must list who the school should call in case of an emergency when parents can’t be reached, and who might be authorized to make medical decisions for your child if their parents are unavailable. The names you put on these forms can be the perfect way to start thinking about who you (and your children) love and trust enough to serve as guardians of your minor children should anything happen to you. All parents wish to provide for their children and protect them from harm whenever possible. Make sure your legal documents are in order to ensure their safety should something unexpected happen to you.

Parents of college students have a different set of challenges. Despite this being your baby, your child is now considered an adult. This means that hospitals and medical personnel are no longer required to ask the parent’s permission before performing medical procedures. In fact, once your child turns 18, health care providers are no longer allowed to share information with the parents at all. To avoid any roadblocks, you can have your young adult execute two documents:

  • A Medical Power of Attorney: Nominate an agent for medical decisions
  • A HIPPA Authorization Form: Give permission to receive medical records

Vaccines, school supplies and a new wardrobe are just a few of the many things you need before the bell rings. Taking care of estate-planning at this time can lift a heavy burden of stress from both parents and children, leaving you all free to enjoy the new year together.

Learn more about how to protect your child here.