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Estate Planning Blog

Serving Clients Throughout North Central Missouri

Retirement Planning

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

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”

 

estate planning and elder law

Will Melinda Gates Changed Estate Plan after Divorce?

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”

 

Retirement Planning

When Should an Estate Plan Be Reviewed?

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”

estate planning

Can Family Members Contest a Will?

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”

 

Approaching Retirement

Do You Know about the Grandparents Scam?

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’”

 

Trust Administration

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

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”

 

estate planning newsletter

Seven Items Medicare Doesn’t Cover

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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”

 

elder care

Should You Get Medical Power of Attorney?

The pandemic has created awareness that being suddenly incapacitated by an illness or injury is no longer a hypothetical. The last year has reminded us that health is a fragile gift, regardless of age or any medical conditions, explains the article “Now Is the Time to Protect Your Health Care Decision Making Rights” from Kiplinger. Along with this awareness, comes an understanding that having control over our medical decisions is not assured, unless we have a well-considered health care decision-making plan created by an estate planning attorney, while we are well and healthy.

Without such a plan, in the event of incapacity, you will not have the opportunity to convey your wishes or to ensure they will be carried out. This also leaves the family in a terrible situation, where siblings may end up in court fighting against each other to determine what kind of end-of-life care you will receive.

The best way to exercise your medical decision rights will vary to some degree by your state’s laws, but three are three basic solutions to protect you. An estate planning attorney will be needed to prepare these properly, to reflect your wishes and align with your state’s law. Do-it-yourself documents may lead to more problems than they solve.

Living Will. This document is used when you are in an end-stage medical condition or permanently unconscious. It provides clear and written instructions as to the type of treatments you do or do not want to receive, or the treatment you always want to receive in case of incapacity.

Health Care Durable Power of Attorney. The health care durable POA is broader than a living will. It covers health care decisions in all situations, when you are not able to communicate your wishes. You may appoint one or more agents to make health care decisions, which they will base on their personal knowledge of what your decisions would be if you were able to speak. Just realize that if two people are named and they do not agree on the interpretation of your decision, you may have created a problem for yourself and your family. Discuss this with your estate planning attorney.

Health Care Representative Laws. There are laws in place for what occurs if you have not signed a Health Care Durable Power of Attorney or a Living Will before becoming incompetent. They are intended to fill in the gap, by authorizing certain family members to act on your behalf and make health care decisions for you. They are a solution of last resort, and not the equal of your having had the living will and/or health care durable power of attorney created for you.

If the statute names multiple people, like all of your children, there may be a difference of opinion and the children may “vote” on what’s to happen to you. Otherwise, they’ll end up in court.

The more detailed your documents, the better prepared your loved ones will be when decisions need to be made. Share your choices about specific treatments. For instance, would you want to be taken off a ventilator, if you were in a coma with limited brain function and with no hope of recovery? What if there was a slim chance of recovery? The decisions are not easy. Neither is considering such life or death matters.

Regardless of the emotional discomfort, planning for health-care decisions can provide peace of mind for yourself and loved ones.

Reference: Kiplinger (April 29, 2021) “Now Is the Time to Protect Your Health Care Decision Making Rights”

 

estate planning

Should I Create a Trust?

Most people know that a will instructs your executor regarding where to transfer your assets when you die. You may also want to consider a trust.

Nbcnew25.com’s recent article entitled “Elder law and estate planning: What you need to know” explains that a trust can give you peace of mind that your wishes will be carried out when you pass away. Your property won’t need to go through the probate process, if it’s in a trust. Your family can focus on the grieving process without having any problems with wrapping up your estate.

In addition, financial and health care powers of attorney should also be part of your estate plan. Ask an experienced estate planning or elder law attorney to help you draft these documents to save your loved ones the worry, if you must be moved into a nursing home and are unable to make decisions for yourself.

Having the correct documents in place before you or a loved one goes into a nursing home is extremely important. With a financial power of attorney, an elder law attorney could design a Medicaid plan for someone entering a nursing home to help protect their assets.

If the correct documents aren’t in place when a loved one enters a nursing home, it could create issues—one of which is the inability to protect their assets. In that case, you may also be required to appear in front of a judge to get permission for an elder law attorney to assist in protecting assets. That request could even be denied by the judge.

For a married couple, 100% of cash assets, plus the home, can be protected, and Medicaid would cover most of the nursing home cost. This is big because the cost of nursing homes can exceed be tens of thousands of dollars every month.

For married couples, in many instances, the income of the spouse who is entering the nursing home may be able to be transferred to the spouse who still lives at home. That’s important because the spouse at home may depend on the other spouse’s income to help make ends meet.

For singles, at least 60% to 70% of cash assets, plus the home, can be protected, so that Medicaid would cover most of the nursing home cost.

Moving a loved one into a nursing home can be stressful enough, without having to worry about the cost. Help yourself and your family, by preparing the proper documents ahead of time to eliminate some of the stress.

Working with an elder law attorney who specializes in Medicaid planning is a wise move. Don’t wait until it is too late.

Have things in order, so you or a loved one can avoid any unnecessary stress and keep the assets that you’ve acquired during your lifetime.

Reference: nbcnew25.com (April 30, 2021) “Elder law and estate planning: What you need to know”

 

ims

How to Protect Digital Property

When people built wealth, assets were usually tangible: real estate, investments, cash, or jewelry. However, the last year has seen a huge jump in digital assets, which includes cryptocurrency and NFTs (Non-Fungible Tokens). Combine this growing asset class with the coming biggest wealth transfer in history, says the article “What happens to your NFTs and crypto assets after you die?” from Tech Crunch, and the problems of inheriting assets will take more than a complete search of the family attic.

One survey found only one in four consumers have someone in their life who knows the details of their digital assets, from the location of the online accounts to passwords. However, digital assets that require two factor authentication or biometrics to gain access may make even this information useless.

There are many reports about people who purchased digital assets like Bitcoin and then lost their passwords or threw away their computers. More than $250 million in client assets vanished when a cryptocurrency exchange founder died and private keys to these accounts could not be found.

Digital assets need to be a part of anyone’s estate plan. A last will and testament is used to dictate how assets are to be distributed. If there is no will, the state’s estate law will distribute assets. A complete list of accounts and assets should not be part of a will, since it becomes a public document when it goes through probate. However, a complete list of assets and accounts needs to be prepared and shared with a trusted person.

Even traditional assets, like bank accounts and investment accounts, are lost when no one knows of their existence. If a family or executor doesn’t know about accounts, and if there are no paper statements mailed to the decedent’s home, it’s not likely that the assets will be found.

Things get more complicated with digital assets. By their nature, digital assets are decentralized.  This is part of their attraction for many people. Knowing that the accounts or digital property exists is only part one. Knowing how to access them after death is difficult. Account names, private keys to digital assets and passwords need to be gathered and protected. Directives or directions for what you want to happen to the accounts after you die need to be created, but not every platform has policies to do this.

Password sharing is explicitly prohibited by most website and app owners. Privacy laws also prohibit using someone else’s password, which is technically “account holder impersonation.” Digital accounts that require two factor authentication or use biometrics, like facial recognition, make it impossible for an executor to gain access to the data.

Some platforms have created a means of identifying a person who may be in charge of your digital assets, including Facebook and more recently, LinkedIn. Some exchanges, like Ethereum, have procedures for death-management. Some will require a copy of the will as part of their process to release funds to an estate, so you will need to name the asset (although not the account number).

A digital wallet can be used to store access information for digital assets, if the family is reasonably comfortable using one. A complete list of assets should include tangible and digital assets. It needs to be updated annually or whenever you add new assets.

Reference: Tech Crunch (April 5, 2021) “What happens to your NFTs and crypto assets after you die?”

 

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