“No one wants to think about dying. But refusing to look at the documents that will determine where your money goes when you pass away will not make you live longer. It will just make sorting through everything more difficult for your heirs.”

So begins Paul Sullivan’s recent article in the New York Times, and we must admit, we couldn’t have said it better ourselves. Most people simply don’t want to deal with what they imagine will be a mountain of decisions and paperwork to create an estate plan, and they especially don’t want to think about their own death. It’s not that they truly believe avoiding it will help them live forever, it’s just that they know they aren’t going to die tomorrow or next week, so estate planning really isn’t a high priority… yet.

It’s time now for some straight talk. Any one of us—including you—could die tomorrow. Or next week. You could be in a car accident, your plane could crash, or you could simply be in the wrong place at the wrong time. If and when that occurs, what will happen to your spouse and children?

There are two answers to that question:

1. If you have no planning in place your assets will likely go through a lengthy and expensive probate process, losing some value in the process, eventually to be divided amongst your closest living relatives. If you are married your spouse may have to fight your parents about your wishes regarding burial and memorial. And if your spouse dies with you in that terrible car crash your children will be raised by whichever faintly qualified relative steps up to the plate—your parents? Your in-laws? Your 23 year old sister? And if nobody steps up…
2. If you DO have planning in place your assets will transfer quickly and smoothly to the beneficiaries you’ve named, in the amounts you have specified. If you have a spouse that person will be taken care of, while perhaps some of your estate is set aside for your children’s education, or to help them buy a home. Your children will receive their inheritance at a time of your choosing; when you feel they will be ready for the responsibility. Your parents and your spouse will know exactly how to arrange your burial and memorial, and will feel a sense of peace and closure knowing that they are following your wishes.

These are hard truths, and no one denies that they are difficult and uncomfortable to consider, but the heartache that can result from neglecting to think about these things is even more painful to imagine.

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When it comes to estate planning there are two major vehicles for the distribution of property: A will and a trust. Both are very useful tools and can accomplish specific goals—but how do you know which one is best for your family? Which document you will need depends on a number of factors, some of which may seem completely irrelevant at first: the size of your estate, your goals for that estate, the age of your children, your marital status, your retirement account, and many, many more. But the first step to understanding which tool may be right for you is to understand what each document does.

A Will: A will is a formal declaration of your wishes.  It is a document you create to declare the extent of your privately held property (it does not cover jointly owned property) and what your wishes are for the distribution of that property.  You name an executor to carry out your wishes, and you can even include a nomination of guardian for young children in your will.   A will does not go into effect until after you die; before then it is simply a piece of paper containing your private wishes.  However, once you have passed away your will no longer remains private, it now becomes a matter of public record, available to anybody who would like to view it, and overseen by the court in a sometimes lengthy and expensive process called probate.

A Trust: A trust is a far more extensive tool than a will.  In fact, there are many different kinds of trusts, each of which may be used for specific situations.  Most trusts created for estate planning purposes are revocable living trusts (or RLTs.) An RLT is a document created not simply to distribute your property, but to own your property on your behalf, to be invested and spent for your benefit or the benefit of your named beneficiaries.  As such, a trust takes effect as soon as you sign it and your property is protected by and subjected to the trust parameters as soon as you place them in the name of your trust. There is a lot of flexibility available with a trust, and yours can be created to fit your unique situation.  Most RLTs name the trust creators as the initial trustees, nominating individuals or banks to take over as trustee when the creator becomes incapacitated or passes away.  The benefit of a trust is that when the creator passes away, property is not merely distributed and that’s the end of it; the creator can instruct the trustee to distribute the money slowly and in any number of ways, even to the extent of creating new trusts for each beneficiary.  Trusts can last for generations, as evidenced by the enduring Kennedy trusts.

Wills and trusts are necessary tools in estate planning, each one working in unique situations.  Your attorney will be able to tell you which one is best for your family.

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Whether or not we do it regularly, all of us know how to plan ahead: We plan for travel and vacation, we plan weddings, and we plan for natural disasters, for retirement, or what to make for dinner tomorrow night. Why is it, then, that so few of us will create a plan to help our families and loved ones when we die?

Part of the reason may certainly be fear and discomfort. Nobody likes to think about their own death, let alone talk about it with others; but neglecting to have this conversation now, while you are still alive, means that you are leaving the conversation for your loved ones to have later, when they are hurt and grieving. It also means that you are unfairly asking them to guess at what your wishes may have been, and make difficult decisions that should have yours to make.

This article by Michael O’Mara lists 10 things to for your family before you die. 10 things may seem like a tall order, especially when the subject is “the great hereafter”; but it seems a whole lot easier when you consider that 7 of the things listed are generally addressed as part of your estate planning with our firm—and we can help you with the other 3 things if you so desire.

You wouldn’t leave it for your children to pack your suitcase after you’ve left on vacation—don’t leave it for them to make your difficult decisions after you’ve passed away. Call our office to help you with your estate planning today.

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Would you ever turn down an inheritance?

Your first reaction might be “Of course not!” But don’t speak too soon. Most estate plans are created at least in part to protect heirs (generally spouses and children) from the sometimes devastating blow of estate taxes; but with the estate tax in a confusing state of flux this year some of these plans won’t work as their creators intended—and heirs may end up looking for a way to protect themselves against the unintended consequences of well-intentioned estate plans.

This article in the New York Times explains what it means if you disclaim (or turn down) an inheritance, and when you may want to employ this tactic.

“Historically, lawyers have recommended disclaimers to repair estate planning oversights that bring negative tax consequences — as when parents left money to already affluent adult children. In such a case, the children could disclaim, so the inheritance would go their own children instead, rather than facing the possibility that this money might be taxed in their own estates.”

The article goes on to explain why some people might consider using this strategy this year, when—due to the expiration of the estate tax—“a formula clause could wind up allocating all the money to one [heir] or the other, rather than dividing it between the two.”

Although this is an interesting solution to be considered in some cases, there are no easy answers to the question of what to do when you are the beneficiary of an estate that has taken an unexpected turn. If you have any questions whatsoever about an inheritance—or about your own estate plan—call your estate planning attorney for help.

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It’s that time of year when many high school seniors are starting to prepare for graduation and eventually to head off to college; these seniors are close to turning—or in some cases have already turned—eighteen. It’s almost time to spread their wings, leave the nest, and be on their own…

… Except that most 18 year old college freshmen aren’t actually ready to be on their own. They still rely on their parents for financial support, emotional support, credit card payments, physical transportation… even clean laundry! And just about all of them still rely on their parents’ medical insurance when they need health care. You would think, then, that you as parents would be able to make medical and financial decisions for these fresh 18 year olds when they need help… except you can’t.

Once your child is 18 you as a parent are no longer their legal guardian. No longer will you be able to easily call the shots in the hospital or doctor’s office. You may pay the credit card bill, but you may not always get a representative to talk to you if there is a problem with that credit card. Likewise you may not make decisions regarding their bank account, or have legal dealings on their behalf with their landlord. Not unless your child gives you permission, that is—written permission in the form of a durable power of attorney and/or a healthcare directive.

By naming you as his agent in a durable power of attorney and/or a healthcare directive, your brand new 18 year old is giving you the power to keep doing what you’ve been doing all along… be his loving parent and help with the tough decisions; or—heaven forbid—step in to take charge in case of an emergency.

Durable powers of attorney and health care directives are documents that can be easily executed by our office or your own trusted attorney. Creating one of these documents for the first time is a good opportunity to discuss responsibility with your child, and encourage him or her to begin thinking of these decisions that you have helped them make all these years as their own. We know, however, that this isn’t always an easy subject to discuss with your young adult. If your child is resistant to discussing this with you, perhaps he or she will be willing to discuss it with your family estate planning attorney instead. This is an important subject, not only for you as a parent, but also for your young adult’s safety and well being.

Popularity: 7% [?]