Should Parents of Young Children Have a Trust?

July 13, 2021

Let’s say that there’s a young father with a wife and young son, who owns a home and a Roth IRA account, with a few stock investments. On the stock investments, he’s filled out the beneficiary designation forms passing all his assets to his wife and son, should anything happen to him.

This father owns his home is joint tenancy with right of survivorship with his wife.

Does he need to set up a separate trust, if most of his assets pass through beneficiary designations?

Nj.com’s recent article entitled “Do I need a trust in case something happens to me?” says that leaving assets outright to a minor is typically a bad move. The son’s guardian and/or the court would take custody of the assets, both of which require significant court oversight and involvement.

The minor would also receive the assets upon attaining the age of majority, which in most states is age 18.

No one can tell what a young child will be like at the age of 18, especially after suffering the loss of their parents. Even if there are no significant issues, such as drug addiction or special needs, parents should think about what they’d have done with that much money at that age.

The best option is to leave assets in trust for the benefit of the minor son.

The trustee can manage and use the assets for the benefit of the young boy with limited court involvement.

The terms of the trust can also delay the point at which the assets can be distributed and ultimately paid over to the beneficiary, if at all.

For example, it’s not uncommon for a trust to stipulate that the beneficiary gets a third of the assets at 25, half of the remaining assets at 30 and the rest at age 35. However, other trusts don’t provide for such mandatory distributions and can hold the assets for the beneficiary’s lifetime, which has its advantages.

In some instances, the terms of the trust are included in a will. This creates a trust account after death, which is also called a testamentary trust.

Talk to an experienced estate planning attorney, who can assess your specific situation and provide guidance in creating an estate plan. The attorney can also make certain that trust assets are correctly titled and that beneficiary designations of retirement accounts and life insurance are correctly prepared, so the trust under the will receives those assets and not the minor individually.

Reference: nj.com (June 14, 2021) “Do I need a trust in case something happens to me?”

What are the Most Popular Estate Planning Scams?

July 10, 2021

The Wealth Advisor’s recent article entitled “Beware of These Common Estate Planning Scams” advises you to avoid these common estate planning scams.

Cold Calls Offering to Prepare Estate Plans. Scammers call and email purporting to be long lost relatives who’ve had their wallets stolen and are stranded in a foreign country. Seniors fall prey to this and will pay for estate planning documents. Any cold call from someone asking that money be wired to a bank account, in exchange for estate planning documents should be approached with great skepticism.
Paying for Estate Planning Templates. For a one-time fee, some scammers will offer estate planning documents that may be downloaded and modified by an individual. While this may look like a great deal, avoid using these pro forma templates to draft individual estate plans. Such templates are rarely tailored to meet state-specific requirements. Even for those templates that claim to be state-specific, they often fail to incorporate contingencies that are necessary for a comprehensive and complete estate plan. Instead, work with an experienced estate planning attorney.
Not Requiring an Estate Plan. Although less of a scheme, some people think they do not need an estate plan. However, proper estate planning entails deciding who can make health care and financial decisions during life, in the event of incapacity. These documents help to minimize the need for family members to petition the Probate Court in certain situations.
Paying High Legal Fees. Like many things in life, with an estate plan, you may get what you pay for. Paying money upfront to have your intentions memorialized in writing can minimize the expense. Heirs should be on guard if an attorney hired to administer an estate is charging exorbitant fees for what looks to be a well-prepared estate plan. Don’t be afraid to get a second opinion in these situations.
Signing Estate Planning Documents You Don’t Understand. Estate planning documents are designed to prepare for potential incapacity and for death. It is critical that your estate planning documents represent your intentions. However, if you don’t read them or don’t understand what you’ve read, you will have no idea if your goals are accomplished. Make certain that you understand what you’re signing. An experienced estate planning attorney will be able to explain these documents to you clearly and will make sure that you understand each of them before you sign.

You can avoid these common scams by establishing a relationship with an experienced attorney you trust.

Reference: The Wealth Advisor (June 7, 2021) “Beware of These Common Estate Planning Scams”

Can I Collect Social Security from an Ex-Spouse?

July 1, 2021

The divorce rate among Americans 50 and older has roughly doubled since the 1990s, and nearly tripled for those over 65. Kiplinger’s recent article entitled “Yes, You Can Collect Social Security from an Ex-Spouse: Here’s How” explains that you can collect on your ex-spouse’s record if:

You’re at least 62 and single
You were married to your ex-spouse for at least 10 years
The benefit you are entitled to receive based on your own work history is less than the benefit you’d get based on your former spouse’s work history; and
Your ex-spouse qualifies for Social Security.

You can even begin drawing benefits before your ex-spouse has retired, provided he or she qualifies, and you’ve been divorced at least two years. You can receive up to 50% of the amount your former spouse would receive in benefits at their full retirement age (this is for all spouses, not just exes). This is not in addition to your own benefit. Your benefit has to be lower than half of your ex’s benefit for you to apply.

Many divorced spouses are eligible for the same survivor benefits as current spouses. This means you could get the full amount of your ex’s benefits, not just half. Your marriage has to have lasted at least 10 years, and the amount has to be greater than what you’d receive based on your own record. There’s also another big difference: you can start getting survivor benefits at age 60, or 50 if you’re disabled.

The Social Security Administration (SSA) says that if you are divorced, when applying for benefits on your ex’s record, you will be asked questions about your name and work history. You may need to provide:

A birth certificate or other proof of birth.
Proof of U.S. citizenship or lawful alien status, if you were not born in the United States.
S. military discharge paper(s), if you had military service before 1968.
W-2 forms(s) and/or self-employment tax returns for last year.
Your marriage certificate.
Your final divorce decree.

Speak with an experienced elder law attorney before deciding how and when to take Social Security.

Reference: Kiplinger (May 13, 2021) “Yes, You Can Collect Social Security from an Ex-Spouse: Here’s How”

Do I Need an Estate Plan If I’m Not Married?

June 29, 2021

The County 17 recent article entitled “Even ‘Singles’ Need Estate Plans” says if you die intestate (i.e., without a last will and testament), your assets could be subject to the probate process. Translation? Your assets would be distributed by the court according to your state’s intestate succession laws. That means it’s done without any regard for your wishes. Even if you don’t have children, you may have nephews or nieces, or even children of cousins or friends, to whom you would like to leave some of your assets. This might include not just money but also cars, collectibles, or family memorabilia. However, if everything you own goes through probate, there is no guarantee that these people will get what you want them to have.

If you want to leave something to family members or close friends, you will need to make this instruction in your last will. You also may want to provide support to some charitable organizations. You can just name these charities in your last will, but there may be options that could provide you with more benefits.

One is a charitable remainder trust. With this, you would transfer appreciated assets, like stocks, mutual funds, or other securities, to an irrevocable trust. The trustee, whom you’ve named (you could serve as trustee yourself) can then sell the assets at full market value, avoiding the capital gains taxes you’d have to pay if you sold them yourself, outside a trust. If you itemize, you may be able to claim a charitable deduction on your taxes. With the proceeds, the trust can purchase income-producing assets and provide you with an income stream for the rest of your life. At death, the remaining trust assets will pass to the charities you have designated.

Aside from family members and charitable groups, there’s a third entity that’s critical to your estate plans: you. You should make arrangements to protect their interests, but, in the absence of an immediate family, as a single person, you need to be especially watchful of your financial and health care decisions. As a result, as part of your estate planning, you may want to include these two documents: durable power of attorney and a health care proxy.

A durable power of attorney lets you name a trusted individual to manage your finances, if you become incapacitated. This is especially important for anyone who doesn’t have a spouse. If you become incapacitated, your health care proxy (also known as a health care surrogate or medical power of attorney) lets you name another person to legally make health care decisions, if you are unable to do so.

Estate planning moves can be complex, so you’ll need help from an experienced estate planning attorney. While you may not have an immediate family, you still need to take steps to protect your legacy.

Reference: County 17 (May 24, 2021) “Even ‘Singles’ Need Estate Plans”

Will Melinda Gates Changed Estate Plan after Divorce?

June 24, 2021

Divorce experts say there are signs that Melinda Gates’ divorce filing shows that she’s going to change her three children’s inheritance after her estranged husband, Bill Gates, has said he’s leaving them only $10 million each.

Page Six’s recent article entitled “Melinda Gates could be angling to change kids’ $10M inheritance in split” says that Melinda has taken the highly unusual step of designating some top trust and estate lawyers as her representatives in her divorce filing, along with the customary matrimonial attorneys. This move signals that Melinda has potential plans for her family which are not the same as Bill’s.

Bill Gates has previously said his children will get a “minuscule” piece of his $130 billion fortune. The Microsoft mogul plans to leave just $10 million to each of his three children.

Melinda said in her divorce filing that a separation agreement was in place, and sources say that if the parameters of the couple’s inheritance are not detailed in the pact, either party could change the amount their children inherit.

Inheritance typically isn’t addressed in such separation agreements.

Melinda’s filing for divorce and potentially changing her children’s inheritance follows a path of female empowerment increasingly expressed by the philanthropist. Gaining control in her share of the fortune and coming out from under Bill’s shadow is a big step for empowerment. Bill and Melinda announced on May 3 that they were getting divorced after 27 years of marriage.

They added: “Over the last 27 years, we have raised three incredible children and built a foundation that works all over the world to enable all people to lead healthy, productive lives. We continue to share a belief in that mission and will continue our work together at the foundation, but we no longer believe we can grow together as a couple in this next phase of our lives. We ask for space and privacy for our family as we begin to navigate this new life.”

There are reports that Melinda grew concerned about Bill’s association with the late pedophile investor Jeffrey Epstein. Melinda had reportedly warned her husband that she was uncomfortable with Epstein after they met him in 2013. That was the same year Bill allegedly flew on Epstein’s private jet from New Jersey to Palm Beach, Florida.

A spokesperson for Gates has previously said he stands by a 2019 statement that he met Epstein but “didn’t have any business relationship or friendship with him.”

Reference: Page Six (May 17, 2021) “Melinda Gates could be angling to change kids’ $10M inheritance in split”

When Should an Estate Plan Be Reviewed?

June 22, 2021

If your parents don’t remember when they last reviewed their estate plan, then chances are it’s time for a review. Over the years, wishes, relationships and circumstances change, advises the recent article, “5 Reasons To Have Your Parents’ Estate Plan Reviewed,” from Forbes. An out-of-date estate plan may not achieve your parent’s wishes, or be declared invalid by the court. Having an estate planning attorney review the estate plan may save you money in the long run, not to mention the stress and worry created by an estate disaster. If you need reasons, here are five to consider.

Financial institutions are wary of dated documents. Banks and other financial institutions look twice at documents that are not recent. Trying to use a Power of Attorney that was created twenty years ago is bound to create problems. One person tried to use a document, but the bank insisted on getting an affidavit from the attorney who prepared it to be certain it was valid. While the son was trying to solve this, his mother died, and the account had to be probated. A “fresh” power of attorney would have solved the problem.

State laws change. Things that seem small become burdensome in a hurry. For example, if someone wants to leave a variety of personal effects to many different people, each and every one of the people listed would need to be located and notified. Many states now allow a separate writing to dispose of personal items, making the process far easier. However, if the will is out of date, you may be stuck with a house-sized task.

Legal document language changes. The SECURE Act changed many aspects of estate planning, particularly with regard to retirement accounts. If your parents have retirement accounts that are payable to a trust, the trust language must be changed to comply with the law. Not having these updates in the estate plan could result in an increase in income taxes or costly fees to fix the situation.

Estate tax laws change. In recent years, there have been many changes to federal tax laws. If your parents have not updated their estate plan within the last five years, they have missed many changes and many opportunities. It is likely that your parents’ assets have also changed over the years, and the documents need to reflect how the estate taxes will be paid. Are their assets titled so that there are enough funds in the estate or trust to cover the cost of any liability? Here’s another one—if all of the assets pass directly to beneficiaries via beneficiary designations, who is going to pay for the tax bills –and with what funds?

Older estate plans may contain wishes from decades ago. For one family, an old will led to a situation where a son did not inherit his father’s entire estate. His late sister’s children, who had been estranged from him for decades, received their mother’s share. If the father and son had reviewed the will earlier, a new will could have been created and signed that would have given the son what the father intended.

These types of problems are seen daily in your estate planning attorney’s office. Take the time to get a proper review of your parent’s estate plan, to prevent stress and unnecessary costs in the future.

Reference: Forbes (May 25, 2021) “5 Reasons To Have Your Parents’ Estate Plan Reviewed”

Can Family Members Contest a Will?

June 19, 2021

Estate planning documents, like wills and trusts, are enforceable legal documents, but when the grantor who created them passes, they can’t speak for themselves. When a loved one dies is often when the family first learns what the estate plans contain. That is a terrible time for everyone. It can lead to people contesting a will. However, not everyone can contest a will, explains the article “Challenges to wills and trusts” from The Record Courier.

A person must have what is called “standing,” or the legal right to challenge an estate planning document. A person who receives property from the decedent, and was designated in their will as a beneficiary, may file a written opposition to the probate of the will at any time before the hearing of the petition for probate. An “interested person” may also challenge the will, including an heir, child, spouse, creditor, settlor, beneficiary, or any person who has a legal property right in or a claim against the estate of the decedent.

Wills and trusts can be challenged by making a claim that the person lacked mental capacity to make the document. If they were sick or so impaired that they did not know what they were signing, or they did not fully understand the contents of the documents, they may be considered incapacitated, and the will or trust may be successfully challenged.

Fraud is also used as a reason to challenge a will or trust. Fraud occurs when the person signs a document that didn’t express their wishes, or if they were fooled into signing a document and were deceived as to what the document was. Fraud is also when the document is destroyed by someone other than the decedent once it has been created, or if someone other than the creator adds pages to the document or forges the person’s signature.

Alleging undue influence is another reason to challenge a will. This is considered to have occurred if one person overpowers the free will of the document creator, so the document creator does what the other person wants, instead of what the document creator wants. Putting a gun to the head of a person to demand that they sign a will is a dramatic example. Coercion, threats to other family members and threats of physical harm to the person are more common occurrences.

It is also possible for the personal representative or trustee’s administration of a will or trust to be challenged. If the personal representative or trustee fails to follow the instructions in the will or the trust, or does not report their actions as required, the court may invalidate some of the actions. In extreme cases, a personal representative or a trustee can be removed from their position by the court.

An estate plan created by an experienced estate planning lawyer should be prepared with an eye to the family situation. If there are individuals who are likely to challenge the will, a “no-contest” clause may be necessary. Open and candid conversations with family members about the estate plan may head off any surprises that could lead to the estate plan being challenged.

One last note: just because a family member is dissatisfied with their inheritance does not give them the right to bring a frivolous claim, and the court may not look kindly on such a case.

Reference: The Record-Courier (May 16, 2021) “Challenges to wills and trusts”

Do You Know about the Grandparents Scam?

June 10, 2021

The Miami-Dade State Attorney’s Office explains that the Grandparents Scam involves someone posing as a grandchild or relative of the victim and claiming to be out of town and in need of help, usually involving an arrest.

Local10.com’s recent article entitled “Man, 22, arrested in connection with ‘Grandparents Scam’” notes that, in some cases, the scammer says he or she is a relative’s lawyer or bail bondsman.

County prosecutors explain that the fake relative claims to require cash for bail, hospital bills, or other bogus expenses. The caller provides the victim with directions on how to deposit money into their bank account.

The victims are asked to not tell anyone and are sometimes called again, so the fake relative can ask for additional funds due to “negative developments” in their case, prosecutors said.

“When a 22-year-old like Alvaro Esteban Jaramillo Fajardo revels in helping to allegedly steal the savings of caring grandparents and the elderly, there is something truly wrong. Sadly, some people seem to believe that it’s always easier and more sophisticated to take someone else’s money rather than work for it oneself,” State Attorney Katherine Fernandez Rundle said in a statement.

“The grandparent scammers and those ensuring that the scam works all deserve to hear the sound of a jail door closing behind them.”

Jaramillo Fajardo is facing charges in connection with eight victims, ranging in age from 71 to 88.

In all, these Grandparents Scam victims suffered financial losses of more than $480,000.

According to a news release from the state attorney’s office, Jaramillo Fajardo acted as the facilitator of the cash withdrawals from his associates’ bank accounts, “which effectively laundered the stolen money.”

Prosecutors explained that Fajardo paid the account holders about $2,000 for each incident in which they were involved.

Authorities say the Defendant frequently sought out his associates on social media and also offered a finder’s fee, if they obtained new, usable bank accounts to receive the illicit funds.

Fajardo also boasted that none of the account holders had previously gotten into any trouble, prosecutors said.

Reference: local10.com (April 15, 2021) “Man, 22, arrested in connection with ‘Grandparents Scam’”

Did Pop Entertainer Pink Change Estate Plan because of COVID-19?

June 8, 2021

Pink and her four-year-old son, Jameson, tested positive for the virus in March 2020, but her husband, Carey Hart, and daughter, 9-year-old Willow, did not contract the coronavirus.

MSN’s recent article entitled “Pink Reveals She Rewrote Her Will Because She Thought ‘It Was Over’ Amid COVID-19 Battle” reports that the entertainer did change her will.

“It was really, really bad, and I rewrote my will,” she said. “… At the point where I thought it was over for us, I called my best friend and I said, ‘I just need you to tell Willow how much I loved her.’ It was really, really scary and really bad. ”

The experience inspired her single, “All I Know So Far.” Pink described the song as “a letter to my daughter.” The single was released May 7, and a documentary and album of the same name will follow on May 21.

“As a parent, you think about, ‘What am I leaving for my kid? What am I teaching them? Are they going to make it in this world, this crazy world that we live in now? What do I need to tell them if this is the last time that I get to tell them anything?'” she said. “So, that was kind of the song.”

Pink first announced that she and Jameson were fighting the coronavirus in April 2020. That same month, she described “the scariest thing” she has ever been through on The Ellen DeGeneres Show, sharing that her son was the first one to get sick.

“[It] started with a fever for him and it would come and go, and he would have stomach pains and diarrhea and chest pains and then a headache, sore throat,” she said. “It sort of was just all over the place. Every day was just some new symptom. His fever stayed it did not go. It just started going up and up and up and up and then at one point it was at 103.”

As for herself, Pink said, “I woke up in the middle of the night and couldn’t breathe and I needed to get to a nebulizer for the first time in 30 years. I have this inhaler that I use, this rescue inhaler, and I couldn’t function without it, and that’s when I started to get really scared.”

In a December 2020 Instagram post, Pink, whose real name is Alecia Beth Moore, called 2020 a “poop sandwich of a year.” She also had a staph infection and a broken ankle.

See your estate planning attorney about changing your will based on current events.

Reference: MSN (May 4, 2021) “Pink Reveals She Rewrote Her Will Because She Thought ‘It Was Over’ Amid COVID-19 Battle”

Seven Items Medicare Doesn’t Cover

June 3, 2021

AARP’s recent article entitled “7 Things Medicare Doesn’t Cover” talks about some needs that aren’t part of the program — and how you might pay for them.

Opticians and eye exams. Original Medicare will cover opthalmologic expenses like cataract surgery, but it doesn’t cover routine eye exams, glasses, or contacts. In addition, it’s usually not covered by Medigap plans (supplemental insurance available from private insurers to augment Medicare coverage). Some Medicare Advantage plans cover routine vision care and glasses. As such, it may be wise to purchase a vision insurance policy for a few hundred dollars a year for the expense of glasses or contact lenses.
Hearing aids. Medicare covers ear-related medical conditions, but original Medicare and Medigap plans won’t pay for routine hearing tests or hearing aids. You may need to purchase insurance or a membership in a discount plan that helps cover the cost of such hearing devices.
Dental care. Original Medicare and Medigap policies don’t cover dental care like routine checkups, dentures, or root canals. Some Medicare Advantage plans offer dental coverage, but if yours doesn’t, or if you opt for original Medicare, you may want to get an individual dental insurance plan or a dental discount plan.
Care When Overseas . Original Medicare and most Medicare Advantage plans offer next to no coverage for medical costs incurred outside the U.S. However, there are a few Medigap policies that cover certain overseas medical costs. However, if you travel a lot, you might want this option. In addition, some travel insurance policies provide basic health care coverage. You should also look at medical evacuation (medevac) insurance for your time abroad. This is an inexpensive policy that will transport you to a nearby medical facility or back home to the U.S. in an emergency.
Podiatry. Routine medical care for feet, such as callus removal, isn’t covered. Medicare Part B does cover foot exams or treatment, if it’s linked to nerve damage because of diabetes, or care for foot injuries or ailments. Therefore, you may want to set up a separate savings program for this expense.
Cosmetic surgery. Elective cosmetic surgery isn’t included in Medicare. This includes procedures, such as face-lifts or tummy tucks. However, Medicare will cover plastic surgery in the event of an accidental injury. So, if you face these costs, you also may want to set up a separate savings program for them.
Nursing home care. Medicare pays for limited stays in rehab facilities. This may be a situation where you have a hip replacement and need inpatient physical therapy for a few weeks. However, if you become so frail or sick that you must move to an assisted living facility or nursing home, Medicare doesn’t cover your custodial costs.

Reference: AARP (Oct. 1, 2020) “7 Things Medicare Doesn’t Cover”

Estate Planning Blog

Serving Clients Throughout North Central Missouri

Should Parents of Young Children Have a Trust?

What are the Most Popular Estate Planning Scams?

Do I Need an Estate Plan If I’m Not Married?