Family Security Law Group, APC

How Do I Plan for End-of-Life Measures for a Loved One?

“This is a sad reminder that families who don’t agree on end-of-life measures can cause friction and additional grief, at a time when unity should be a primary concern.”

It’s not that uncommon for a senior to injure himself in the regular course of living at home as he ages. A broken hip will mean a stay at the hospital. In many cases, a senior recovering from a broken hip in the hospital will be released to a nursing home. Sometimes, things can take a downward turn. The elderly are susceptible to other illnesses, and often just being in a care facility, even the best ones, can expose an already vulnerable patient to other illnesses, like pneumonia or a staph infection.

When more than one family member shares power of attorney, says The Grand Forks Herald’s recent article, “Joint power of attorney complicated this couple's wishes,” there can be emotional stresses that result from differing opinions about care.

In one situation, the wife alerted her adult stepchildren about her husband’s condition in a health crisis. He had been hospitalized for a broken hip, then released to a nursing home, where he developed pneumonia.

While she initially hoped that their arrival would be a comfort, the children had their own idea about what was best for their father. They basically took control of the situation and negated their father’s health care documents. They had him sent back to the hospital, thinking that would be best for his overall health.

Arriving at the hospital, the woman reported that her husband was weaker from the transfer and confused about why he was back in the hospital.

The children shared power of attorney, which was set up so that both the wife and the children could make decisions about the man’s medical care. The wife was troubled by the children’s insistence that he needed to return to the hospital. The children felt that his care at the nursing home was inadequate.

It’s hard to know what may motivate the stepchildren here, but an attorney who specializes in estate or elder law is the best resource for people when making decisions, while setting up powers of attorney. An attorney may not have advised that the wife and stepchildren share this decision-making power. Even when the intentions are good, sometimes its best when only one person is in charge.

Estates can be complex when there are adult children and a second marriage—even when the relationships are good.

It would have been better had the father spoken with his children beforehand to explain his overall wishes about his care, so that there would be less discord in the decision-making process. The treating physician might have been asked to speak with the children and explain the impact that a transfer would have on an already injured and ill person. In most cases nursing homes are just as able to treat pneumonia as a hospital, and it would have spared him the trauma of the move.

Handling end-of life measures is tricky and the input from an experienced estate planning attorney can prove invaluable.

Reference: Grand Forks Herald (March 8, 2019) “Joint power of attorney complicated this couple's wishes”

What Taxes Do I Owe When I Inherit My Dad’s House?

“There are many types of taxes to consider in connection with an estate: estate tax, inheritance tax and income tax.”

After the last surviving parent passes away, the estate may sell the family home. The proceeds are then divided up, pursuant to the directions set out in the will or trust. If children are the heirs, they may split the funds among themselves. However, what are the tax consequences?

nj.com’s recent article asks: “I inherited my father’s home. Do I owe any kind of taxes?”

The article explains that the federal estate and gift tax exemption amount is now $11.4 million. In New Jersey, residents who die on or after January 1, 2018 are no longer subject to a New Jersey estate tax and children are exempt from the inheritance tax. There is also, however, the question of income taxation.

The proceeds from the sale of the house will be subject to income tax. However, it’s unlikely that a person would incur the tax, because income tax is paid on the difference between the sales price and the basis of the asset, minus costs of the sale.

“Basis” is generally defined as the purchase price, plus the cost of improvements.

Assets owned by a decedent receive a “step-up” or a “step-down” in basis to the value, as of the date of death.

This means that a sibling inheriting a parent’s home and then selling it, would only be taxed on the difference between the sales price and the value at the date of death, less selling costs, assuming the parent owned 100% of the home at the time of his death.

If this difference between date of death and sale values is substantial, the adult child would incur a tax, typically at capital gains rates. However, as a general rule, there’s little or no gain to tax.

Be sure to keep evidence of the date of death value of the parent’s home, in case there’s an income tax audit down the road.

Reference: nj.com (March 11, 2019) “I inherited my father’s home. Do I owe any kind of taxes?”

Grieving Children Wish Mom Had an Estate Plan

“Legal experts say estate planning doesn't have to be complicated or costly.”

When a parent dies somewhat unexpectedly, adult children may be overcome by grief. However, they then may become overwhelmed by frustration.

It’s almost too difficult to mourn right now—because the family can be too busy trying to take care of her estate.

This time can be especially hard, if the recently departed parent failed to leave a trust or will, a trust or any estate planning whatsoever.

The recent article published on WSAV’s website entitled “Family warns others to not put off estate planning” says that in one instance, the family was forced to leave their mom while she was dying in the hospice to try and organize the paperwork done for her estate.

An estate plan is a guide for your family. A good estate plan will include not only a will, but also a health care power of attorney and a living will.

Work with one of our experienced estate planning attorney at Family Security Law Group, APC and try even harder to get everyone to the table to discuss the issues.

One way to approach aging parents, is to say “You are helping me, if you could write this down.”

Many regret not taking action sooner to save stress and energy.

"You have every emotion you could ever have, because you are about to lose your loved one and you have to deal with everything else on top of it," one woman commented.

We are here to assist you.  Contact us for a complimentary consultation.

Reference: WSAV (February 26, 2019) “Family warns others to not put off estate planning”

How Do I Know If My Mom’s Estate Was Divided Properly?

“Try to work things out with the executor, before you take the next steps in a dispute over an estate.”

It’s not uncommon for a senior to let her adult children know about her life insurance policies. In many cases, it’s because that child or all of her children are the beneficiaries. It is also not unusual for one child to be named executor of the parent’s estate.

The trouble arises, if Mom took actions before she died and didn’t tell anyone, or if she only told one child. In this case, the mother kept important documents in a safety deposit box. A brother, who lived closer to the mother, told his sister that before their mother died, she made some big decisions: she cashed out the life insurance policies, emptied the safety deposit box, sold her car and signed a reverse mortgage on the house.

Therefore, how does the sister determine if whatever's left was evenly divided?

It will take some investigating. The good news is that there's always a paper trail.

nj.com’s recent article asks, “My mom died. How can I know I'm getting the right inheritance?” As the article explains, if the policies were cashed out by the parent, they no longer exist.

If you know the name of the insurance company and policy number, you can try to call the life insurance company’s home office to confirm this. However, they may not give out much information, if you weren’t the named beneficiary.

There are a few tips to help track down life insurance old policies.

If Mom had a reverse mortgage, then you know she owned a home. If the home wasn’t owned jointly, then it would be a probate asset.

One way to determine this, is to check with the county court where she died, to see if a will was probated or any estate administration application was filed. The home would need to be sold by the executor or administrator, so there would be some paperwork. If there was, you can contact the executor/administrator for more information.

With a parent’s safety deposit box, the executor/administrator, once appointed, would have the authority to empty the contents of the box. However, if Mom previously emptied the contents, there’d be nothing for the executor/administrator to retrieve. You should check with that individual.

If you don't believe the executor is being honest with you, you may need to work with your own attorney to make sure you’re getting what you're due from Mom’s estate.

Reference: nj.com (February 21, 2019) “My mom died. How can I know I'm getting the right inheritance?”

How Do I Avoid Life Insurance Mistakes?

“Life insurance may play a vital role in an estate plan, because insurance proceeds can be counted on to provide liquidity when it’s needed. With proper planning, insurance money can pay expenses, such as the estate tax and keep other assets intact.”

Let’s say that Howie passes away and leaves a big estate to his daughter Eva, and there’s an equally large estate tax due. However, most of Howie’s assets are tied up in real estate and in his IRA.

With that scenario, Eva might not want to immediately force a sale of the real estate. However, if she accesses the inherited IRA to raise money, she’ll have to pay income tax on the withdrawal and lose a terrific opportunity for extended tax deferral.

FedWeek’s recent article, “Common Mistakes in Life Insurance Designations,” explains that considering this type of scenario, Howie could purchase insurance on himself.

The proceeds from Howie’s life insurance policy would then be used to pay the estate tax bill. With that taken care of, Eva could keep the real estate, while taking only minimum required distributions from the inherited IRA.

If the insurance policy is owned by Eva or by a trust, the proceeds probably will not be included in Howie’s estate and will not increase the estate tax obligation.

That’s a smart way to plan it out. However, some life insurance errors can wreak havoc with an estate plan. Let’s look at some common mistakes:

Naming your estate as beneficiary. This puts the proceeds in your estate—and the money will be exposed to estate tax and your creditors. Your executor will also have more paperwork, if your estate is the beneficiary. Instead, designate the appropriate people or charities.

Designating a single beneficiary. Always name at least two contingent or “backup” beneficiaries, which will decrease or eliminate any confusion, if the primary beneficiary predeceases you.

Filing and forgetting the policy. Review your policies every three years. If the beneficiary is an ex-spouse or someone who’s died, make the appropriate change and get a confirmation, in writing, from the insurance company.

Not having adequate coverage. If you have young children, it will take a small fortune to pay for their expenses, including college, in case of your untimely death. Be wise with enough coverage for your children and for whoever will take care of them. It may not or may not be a spouse, but children don’t raise themselves and you don’t want a bargain basement mom for your kids.

Reference: FedWeek (February 14, 2019) “Common Mistakes in Life Insurance Designations”

How Do I Know When It’s Time to Retire?

“After years of hard work, you are certainly entitled to a happy retirement. You may have already started daydreaming about it, at least a little. Will you travel the world, volunteer for your favorite charity, go fishing every day, or just spend more time with the grandkids? The post-retirement possibilities are practically endless.”

Many senior workers are actually a little afraid of retirement, because they’ve heard too many horror stories about people who retire too soon and wind up outliving their nest eggs. This is reflected in a 2016 survey from the Transamerica Center for Retirement Studies, which found that 51% of American workers say their top retirement worry is outliving their investments and savings.

Here are the key indicators that you’re probably ready to retire, according to this recent article from Investopedia’s, “6 Signs That You Are OK to Retire.”

1. Hit Your Full Retirement Age. If you were born between 1943 and 1954, your full retirement age is 66. If you were born after 1959, it’s 67. You can start claiming Social Security benefits as early as 62, but your benefits will be much higher, if you wait until your full retirement age.
2. Retire Debt-Free. If you have a ton of credit card debt or still owe a lot on your home or car, you may want to wait to retire because when you’re on a fixed income, a big mortgage or car payment can put a major dent in your finances. Before you retire, pay off all your debts, if possible, and get on a budget.
3. Not Financially Supporting Your Kids (or Parents). If your kids still live with you–or you’re paying for their college education–you probably should wait with your retirement plans. Likewise, it might be smart to delay retirement, if you’re financially responsible for your elderly parents. If that’s you, retirement probably isn’t an option until your situation changes.
4. Make a Retirement Budget. Prior to retiring, calculate whether you can live comfortably on your post-retirement income. Add up your mandatory monthly costs, like a mortgage or rent, groceries and utilities. Next, add in your 'wants,' like travel, entertainment shopping and eating out. You can then determine whether you’ll have enough retirement savings to cover all of this. Add your Social Security payments, pension, retirement account distributions and any other sources of income. Your retirement budget (if you retire in your mid-60s) shouldn’t be more than 4% of your investments, plus Social Security and pension payments.
5. Review Your Portfolio. You’re going to depend a lot on your investment portfolio in retirement. If you haven’t had a portfolio review in a while, do it soon. Reassess your portfolio and determine if you need to make any modifications. As you get close to retirement, you may want to move to lower-risk investment strategies to protect your wealth.
6. Plan with Your Spouse. Unless you live alone, retirement will have a major effect on your spouse or partner. Retirement should be reviewed together. Look at how the reduction in income will affect your lifestyle, and consider what changes may need to occur to make it enjoyable for you both.

These are just the basic elements to determine when you’re ready for retirement. You should also think about how you’ll spend your days, where you want to live and whether most of your friends will still be working. All of these things could have a big effect on your general enjoyment of retirement.

Reference: Investopedia (June 1, 2018) “6 Signs That You Are OK to Retire”

When Should I Review My Estate Plan?

“As life happens and things change—and as you pass big milestones like getting married, having children or retiring—your estate plan and will should change too.”

When a person hits the age of 18, they should at least have powers of attorney to designate who will make their healthcare decisions and handle their finances, in the event of any incapacity. When a person starts to accumulate assets and have children, it’s critical to have an estate plan in place.

Bankrate’s recent article, “Estate planning triggers: When to re-evaluate your estate planning strategy,” says the risk of not having a current estate plan and will that state your
wishes is significant. When  people fail to put any plan into place, it leads to confusion, chaos and unintended consequences. Use this list of important life events as triggers to remind you to discuss your current situation with a trusted attorney.

Getting married. You and your future spouse probably have had some financial conversations before getting engaged. However, if you haven’t, once wedding plans are set, it’s vital to discuss all aspects of each partner’s financial situation and the desired distribution of assets. You should decide whether to sign a prenuptial agreement, the totals of your separate and joint assets and who you want inherit those assets should on or both spouses pass on. In light of these factors and the prenuptial agreement, an estate plan that satisfies both parties must be created.

Starting a family. The decision to have a child comes with the responsibility of planning for that child’s care. You and your partner will want to determine the amount of your assets you want to pass to your children in the case of a death, at what age your children will inherit those assets and name a legal guardian.

Divorce. If a couple decides to divorce, it’s important to update their separate estates. If you fail to change the beneficiary designations for a trust or life insurance policy after getting divorced, your ex-spouse may receive the life insurance that was supposed to be paid out to the trust to provide liquidity to pay off debts and administration expenses.

Retirement. Beneficiaries are named when setting up a 401k or Roth IRA account. If you started the account years ago, the beneficiaries may be out-of-date. Retirees should look at their total retirement assets and update their beneficiaries to reflect their current relationship and financial circumstances.

Other life events. Any significant change in assets, a move to another state, the death or disability of a person named in your estate plan, a change in tax laws, a disability of a beneficiary that arises after the initial plan is executed, and/or the birth, adoption, or death of a child are all important life events that should trigger a revision of your estate plan.

Family Security Law Group, APC is here to assist with all of your life changes.  Schedule your complimentary consultation with our estate planning attorney to  to review your estate plan.

Reference: Bankrate (March 4, 2019) “Estate planning triggers: When to re-evaluate your estate planning strategy”

Why Do I Need Estate Planning If I’m Not Rich?

“Estate planning isn't only for the rich. Without a plan in place, there could be a long-lasting impact on your loved ones, even if you don’t have a pricey home, large IRA or valuable art to pass on.”

Many people spend more time planning a vacation than they do thinking about who will inherit their assets after they pass away. Although estate planning isn’t an enjoyable activity, without it, you don’t get to direct who gets everything for which you’ve worked so hard.

Investopedia asks you to consider these four reasons why you should have an estate plan to avoid potentially devastating results for your heirs in its article “4 Reasons Estate Planning Is So Important.”

Wealth Won’t Go to Unintended Beneficiaries. Estate planning may have been once considered something only rich people needed, but that's changed. Everyone now needs to plan for when something happens to a family's breadwinner(s). The primary part of estate planning is naming heirs for your assets. Without an estate plan, the courts will decide who will receive your property.

Protection for Families With Young Children. If you are the parent of small children, you need to have a will to ensure that your children are taken care of. You can designate their guardians, if both parents die before the children turn 18. Without a will and guardianship clause, a judge will decide this important issue.

Avoid Taxes. Estate planning is also about protecting your loved ones from the IRS. Estate planning is transferring assets to your family, with an attempt to create the smallest tax burden for them as possible. A little estate planning can reduce much or even all of their federal and state estate taxes or state inheritance taxes. There are also ways to reduce the income tax beneficiaries might have to pay. However, without an estate plan, the amount your heirs will owe the government could be substantial.

No Family Fighting (or Very Little). One sibling may believe she deserves more than another. This type of fighting can turn ugly and end up in court, pitting family members against each other. However, an estate plan enables you to choose who controls your finances and assets, if you become mentally incapacitated or after you die. It also will go a long way towards settling any family conflict and ensuring that your assets are handled in the way you wanted.

Our Thousand Oaks estate planning attorneys at Family Security Law Group, APC are here to help you begin your estate planning. Schedule your complimentary consultation now.

Reference: Investopedia (May 25, 2018) “4 Reasons Estate Planning Is So Important”

Can I Draft My Own Will?

“In this article, we are going to give you the reasons why you should hire a Thousand Oaks Estate Planning lawyer for your estate plan.”

A common question among people is “Can I write my own will?” or “Do I really need a lawyer to do my estate planning?”

The Frisky‘s recent article, “Why You Should Hire A Lawyer to Write Your Estate Plan,” says that writing your own estate plan can be a complicated thing—and one that a non-attorney may find very difficult.

It’s More Than a Will. Many people believe that a will and an estate plan are the same. This is not true. An estate plan is a legal strategy that prepares you for potential incapacity and eventual death. A will is a legal document that’s part of the estate plan.

Money, Time and Energy Savings. Creating your own estate plan will be more time-consuming than you may have thought. Hiring a lawyer to do this will cost you—but it will cost you more, if you decide to do it on your own. Hiring a lawyer for your estate plan will save you time, because he or she is trained in the law to do it the right way.

If you do finish your own estate plan and you realize that it really is a mess, you can hire a lawyer to do it over for you. However, calculate how much time, energy, and resources you’ve spent on making on your quick DIY estate plan. Work with an experienced Thousand Oaks estate planning attorney and create a sound estate plan.

It’s Complicated. If you don’t fully understand what you’re doing, estate planning can drive you nuts. That’s because every word you write is crucial. Everything you write counts and may be interpreted differently. The law in this area also changes all the time. Agencies in the federal government, the IRS and the courts are always creating new regulations and decisions. Your estate planning attorney monitors all of this, makes sure your estate plan is in compliance and takes the best advantage of the current law.

Objectivity. Another thing your attorney adds to the mix—in addition to legal expertise—is objectivity. Your Thousand Oaks estate planning attorney will give you a clean, unbiased view of your current situation, along with a fair and honest assessment of your options.

Family Security Law Group, APC is happy to assist with all of your estate planning needs.  Schedule your complimentary consultation here.

Reference: The Frisky (February 6, 2019) “Why You Should Hire A Lawyer to Write Your Estate Plan”

What Do I Need to Know About Estate Planning After a Divorce?

“If you were one of the masses whose divorce was finalized in 2018, now is the time to revise your estate plan.”
The recent changes in the tax laws created increased year-end activity for those trying to finalize their divorces by December 31—prior to the effective date of the new rules.

The new tax laws stipulate that alimony is no longer deductible by the payor, and it’s no longer taxable by the receiver—this creates a negative impact on both parties. The payor no longer receives a tax deduction, and the receiver will most likely wind up with less alimony because the payor has more taxes to pay.

Forbes’ recent article, “9 Things You Need To Know About Estate Planning After Divorce” suggests that if you were one of those whose divorce was finalized last year, it’s time to revise your estate plan. It’s also good idea for those people who divorced in prior years and never updated their estate plans. Let’s look at some of the issues about which you should be thinking.

See your estate planning attorney. Right off the bat, send your divorce agreement to your estate planning attorney, so he or she can see what obligations you have to your ex-spouse in the event of your death.

Health care proxy. This document lets you designate someone to make health care decisions for you, if you were incapacitated and not able to communicate.

Power of attorney. If you had an old POA that named your ex-spouse, it should be revoked, and you should execute a new POA naming a friend, relative, or trusted advisor to act as your agent regarding your finances and assets. 

Your will and trust. Ask your attorney to remove the provisions for your ex-spouse and remove your ex-spouse as the executor and trustee.

Guardianship. If you have minor children, you can still name your ex-spouse as the guardian in your will. Even if you don’t, your ex-spouse will probably be appointed guardian if you pass away, unless he or she is determined by the judge to be unfit. While you can select another responsible person, be sure to leave enough cash in a joint bank account (with the trusted guardian you name) to fund the litigation that will be necessary to prove your ex-spouse is unfit.

A trust for your minor children. If you don’t have a trust set up for your minor children, and your ex-spouse is the children’s guardian, he or she will have control of the children’s finances until they turn 18. You may ask your estate planning attorney about a revocable trust that will name someone else you select as the trustee to access and control these funds for your children, if you pass away.

Life insurance. You may have an obligation to maintain life insurance under the divorce agreement. Review this with your estate planning attorney and with your divorce attorney.

Beneficiary designations. Be certain that your 401K and IRA beneficiary designations are consistent with the terms of your divorce agreement. Have the beneficiary designations updated. If you still want to name your ex-spouse as the beneficiary, execute a new beneficiary designation dated after the divorce. It’s also wise to leave a letter of intent with your attorney, so your intentions are clear.

Prenuptial agreement. If you’re thinking about getting remarried, be certain you have a prenuptial agreement.

It’s a great time to settle these outstanding issues from your divorce and get your estate plan in order.

Reference: Forbes (January 8, 2019) “9 Things You Need To Know About Estate Planning After Divorce”