Category: The Wealth Advisor

Planning With an Aim Towards Building Unity

A will or trust contest can wreak havoc on families. The conflict can result in possibly irreparable resentment and loss of familial communication. Old rivalries and disputes can resurface during the trying time that occurs after the death of a loved one, especially a parent.  But careful estate planning can help you substantially reduce the risk, or even avoid this problem entirely.
 
Let’s take a look at a few of the ways you can build your estate plan to minimize family conflicts after you’re gone.

• Keep your plan up-to-date: An up-to-date estate plan can help you preserve family unity after death or in the event of incapacity. Even if you have put an estate plan in place in recent years, estate planning is an ongoing process and needs attention at regular intervals. An out-of-date plan can become misaligned with your goals, new laws, and policies, rendering it less effective and more likely to generate conflict (the last thing you want).
• Select key individuals in your plan: You can give certainty to your family and make your wishes easier to carry out by selecting the right people as your key players in carrying out your estate plan. Make sure that you’ve thoughtfully selected the right people to carry out your estate plan. A few of the key individuals you’ll have to select:
  • Successor trustee – This person will manage your trust’s assets when you are unable to do so.
  • Executor (referred to as “Personal Representative” under Indiana law) – This person is appointed in your will to manage your probate estate if one is needed. In many cases, you may select the same person as your successor trustee. However, if you don’t, remember that your executor must work closely with your successor trustee to ensure that everything is handled smoothly and in a timely fashion.
  • Health care agent/proxy – This person is authorized to communicate with your medical providers and make medical decisions if you are unable to do so. This is typically under a Medical Power of Attorney.
  • Financial agent – This person is authorized to make financial decisions on your behalf and is typically appointed under a General Durable Power of Attorney. They will likely need to work closely with your successor trustee, or you may designate the same person to serve in both roles.
• Share your wisdom: By sharing your stories and wisdom (through ethical wills, intent letters, personal stories, videos, etc.) you can help your family understand the legacy you want to leave so that the wealth you’re leaving doesn’t become a distraction or point of contention.
• Don’t try to DIY: While it might be tempting to cut corners and take your estate plan into your own hands, taking a do-it-yourself approach is never wise. This sets the stage for potentially inadequate planning, which increases the likelihood of will or trust contests and will likely mean your estate isn’t distributed how you’d like it to be in the end. Let your estate planning attorney do the heavy lifting — we’re always here to help.
• Be clear about your intentions: Are you planning on giving more of your total assets to one child than the others? Or are there other ways in which your estate planning goals may upset some of your beneficiaries (or those who aren’t beneficiaries)? It can be a very tricky subject to broach, but if you foresee hurt feelings, consider being as clear as possible about your wealth distribution plans with those individuals. This will limit the potential for confusion and disagreement down the road. It may – or may not – make sense to explain this to your family. But, it’s always incredibly important to let us know the reasons so we can develop a rock-solid legal strategy for your goals.
• Consider discretionary trusts: If you have a child or other potential beneficiary who struggles with addiction, mental health problems, or other conditions that could hinder their ability to use their inheritance in a healthy way, you might want to consider a discretionary trust. With this type of trust, you can control the disbursements based on your beneficiary meeting certain requirements — such as attending a treatment program or enrolling in higher education. This can help you treat each child fairly by taking into consideration what is best for each child’s unique situation. 

Will or trust contests can tear a family apart, and can also be time-consuming, costly, and embarrassing for the family that remains. If someone who feels slighted by your estate plan can convince the court that your will or trust is invalid, chaos can break loose and your intended beneficiaries can lose their inheritances. Typical reasons a family member might use to say your estate plan is invalid are that it wasn’t signed, you didn’t have the capacity to make the estate planning decisions you made, the documents were fraudulent, or that you were pressured or influenced to sign documents.
 
Let us help you make sure that none of these events unfold. We’re here to guide you every step of the way through creating and maintaining a timely, robust, and strategic estate plan. Give us a call today to make sure your plan is current and includes all the necessary provisions to keep a contest from occurring in the future.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.

Your 3-Step Guide to Creating an Informed Estate Plan

Are you concerned about any of your adult children? Estate planning can pose extra challenges for families with adult children struggling with addiction, marital issues, or irresponsibility with money. The last thing you want is for your wealth to end up having a negative impact on your child, or to see them squander their inheritance. Many parents are concerned about what they can do to shield an adult child who struggles with problems like these from bad decisions and bad people that could worsen their child’s situation.
 
This is often a hidden issue within estate planning conversations, as it’s a sensitive topic that can bring up painful memories or emotions. Some parents are apprehensive to discuss their troubled adult children with friends or colleagues because of its private nature and potential for judgment from those outside the family.
 
However, estate planning offices like ours are safe spaces where we work diligently to craft the best possible plan for your family while taking your unique challenges into account. While these conversations may be difficult to have, they are crucial to ensuring that your wishes are carried out the way you want. It is important to put your trust in your estate planning attorney knowing that they have both you and your troubled adult child’s best interests in mind.

Step #1: Figure out what works for your family

First, understand that what works for your family doesn’t necessarily mean an identical plan for each of your children — it’s okay to customize your plan to work differently for each beneficiary depending on their unique path through life. Feel welcome to initiate a frank discussion with us about any issues you may be concerned about regarding your adult children. The worst course of action is to pretend the issue isn’t there or that it will somehow resolve itself. Bringing these factors to light can only improve the situation and help you create the best possible plan for your family.

Step #2: Create a tailor-made plan to mitigate risk

A lifetime trust can be a great solution to prevent an inheritance from making a troubled child’s situation worse. Lifetime trusts spread distributions over the course of your beneficiary’s entire life, significantly reducing the risk that they waste their entire inheritance on harmful substances, irresponsible spending, or contentious divorce proceedings. Lifetime trusts keep your wealth out of the hands of the probate and divorce courts and ensure that the assets contained in the trust stay in the family even after a divorce. If you don’t already have the benefits of lifetime trusts written into your estate plan (or simply aren’t sure), we can review your current plan to make sure that it is customized to optimize your child’s long-term security and well-being.

Step #3: Follow up with us continually

Once we have a plan in place to protect all members of your family, make sure you follow up with us, your financial advisor, and your family to make sure the plan continues to work as intended. You can rely on your financial advising and estate planning professional team to answer any questions that arise and make any necessary changes as time goes by. Staying in touch frequently means that your plans stay up to date and will continue to further your goals for your family.
 
Give us a call today so we can make sure all your children get the most out of life and enjoy ongoing financial security for years to come.

A Guide for How Much to Share and With Whom

As tax season has wound down you likely finished your tax returns. Most of us don’t feel comfortable sharing the details of our tax returns, unless we have to, say for a mortgage. But, your estate plan, an important part of having your affairs in order, is a bit different. You might be wondering whether or not your family should be acquainted with the details of your estate plan.
 
When it comes to their estate plan, many people are often confused about when and what to share with their family, so you’re not alone if you’re trying to decide what to do. There are several reasons for concern, ranging from worry over stirring up family tension to a concern that broaching the subject of powers of attorney and healthcare directives isn’t the sunniest of dinner table topics.
 
However, there are a number of benefits to letting your family know some of the key points covered in your plan, especially regarding your incapacity planning. If your family knows what your wishes are and understands how they’re expressed in your health care proxy and powers of attorney, they will be much more prepared to carry out those wishes if the need arises. Telling your family about your preferences in the event of incapacity will save them from encountering an extra level of stress and confusion.
 
While it’s by no means necessary that you share the entirety of your estate plan with your family, it doesn’t have to be an all-or-nothing decision. Here are a few different ways you might choose to get your family acquainted with your plan.
 
Option #1: Share everything with everyone
Total transparency is certainly an option, but it might not be the ideal choice depending on your family dynamics. This level of openness is usually only appropriate for you if you anticipate needing help soon or are already receiving help from your successor trustee and/or other agents. Consider what you would want to know if you were in your family members’ shoes. Too much information can be overwhelming, and could also lead to disputes between family members. However, too little information can cause misunderstandings, stress, and time delays when the time to act comes.
 
Option #2: Share the basics with everyone
Sometimes, sharing a summary rather than all the details is a simpler and more effective choice. If you’re going the summary route, talk about how your estate plan works or “flows” without including any information about the specific assets. For example, tell your family about the types of documents in your plan and the function each document serves so that your loved ones understand who will be in charge and the general manner of distribution and management of your assets. This might mean explaining the basics of how health care directives, powers of attorneys, and trusts work. We are always here to help you figure out how to best describe your plan in simple terms and may even be able to help you with a family meeting.
 
Option #3: Share your list of point people
Another route to take if you don’t want to divulge every detail of your plan is to simply share who you’ve “cast” in different roles in your plan. Let your family know who your trustees, executors, and health care agents are so there are no surprises later on and so they know who to look to, when the time comes. If you sign a waiver with us, we can even be authorized to provide a copy of your documents upon your incapacity or death. This option will help prepare your family for the future without overwhelming them with the specifics. It can also help maintain a greater level of privacy for you.
 

Does your list need a checkup?

As you ponder how much to share with your family, seize this opportunity to review your “cast.” If you were re-doing your plan today, would you still select that person as successor trustee? Health care agent? Guardian for your children? Caretaker for your pets? Changes like these are fairly straightforward, but incredibly important to get done so your plan works as intended. If you have any questions or need to make changes, give us a call. We’re here to help.
 

The Practical Aspect of Sharing

If you intend to share the actual documents with your family, give us a call. We can work with you to provide paper or electronic copies to those family members that need them.

It’s possible that none of these options suit your family’s unique needs, and that’s perfectly fine. We can work with you to create a custom strategy. Let us know if we can help you develop your own family meeting agenda.

In December 2017, Congress passed, and President Trump signed a sweeping tax reform bill commonly known as the Tax Cuts and Jobs Act. This Act contains significant changes that will impact your estate planning and income tax situation going forward.

Estate Tax Changes

Starting January 1, 2018, the estate, gift, and generation-skipping transfer (GST) tax exemptions double from $5 million to $10 million (adjusted for inflation after 2011). For 2018, the exemption is now $11.2 million per person ($22.4 million for a married couple). The exemption will adjust for inflation each year. This doubled exemption remains in effect until December 31, 2025, at which time the law sunsets and the exemptions revert to the $5 million level (indexed for inflation).

These changes open significant opportunities to remove assets from your estate and permanently exempt future appreciation of those assets from estate, gift, and GST taxation. Of course, whether tax-driven planning is appropriate for you depends on many factors. We are here to help answer any questions you have and also work with you to optimize your existing plan or to build a new plan for you.

Remember, estate tax planning is only one aspect of estate planning. Incapacity issues, protecting financially imprudent heirs from themselves, asset protection for you and for beneficiaries, avoiding probate, and minimizing income taxes are all other aims that can be achieved with proper estate planning. Don’t think that you do not need additional estate planning because of the increased exemption. Proper, up-to-date estate planning is absolutely essential for protecting your family and allowing you to rest easy knowing that everything is in order.

Changes to Individual Taxation

The Act retains a seven-bracket rate structure but changes the income level and rate for each bracket. The standard deduction is increased from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples. However, the personal exemption deduction has been repealed.

The widening of brackets, rate reductions, and increase in standard deduction are all intended to offset the repeal of the personal exemption. Congress’s hoped-for result is lower effective income tax rates for individuals. The new $10,000 aggregate cap on state and local tax deductions, the $750,000 acquisition indebtedness cap on the mortgage interest deduction, and the removal of so-called miscellaneous itemized deductions will all affect your income tax planning going forward. The tax incentives for purchasing a larger, more expensive home have been reduced, meaning it might make sense to remain in your current home. If you anticipate a significant state income tax bill in 2018, talk with us about options that may help you avoid the pain of $10,000 aggregate cap, like a income-tax-saving non-grantor trust or a charitable remainder trust.

The capital gains rate and net investment income tax are unchanged. The top long-term capital gains rate remains at 20 percent, and the net investment income tax rate remains at 3.8 percent. If you anticipate a significant capital gain during 2018, perhaps from the sale of a business, real estate, or an investment, contact us, so we can work with you and your other advisors to implement a legal, tax, and financial strategy that will reduce taxes as much as possible.

Like the changes to pass-through businesses (more below), these changes to the standard deduction, brackets, and the personal exemption are in effect from January 1, 2018, through December 31, 2025. Expect to see some changes to your tax withholding possibly as early as February, and some different looking 1040s when you file your 2018 tax returns in early 2019.

Pass-Through Business Changes

If you own a small business, the reform of taxation for pass-through entities (sole proprietorships, partnerships, S corporations, and LLCs taxed as partnerships or S corporations), is likely an incredibly welcome change. The Act provides for a 20 percent deduction for most pass-through businesses which reduces the effective top tax rate to 29.6 percent (37 percent highest bracket less the 20 percent deduction yields a 29.6 percent effective rate). Owners of some service businesses, including those in the fields of health, law, consulting, athletics, and financial services, are subject to income limitations. If you earn a high income in a service business you will not receive the 20 percent deduction, but other strategies are available to help you reduce your income tax burden. Give us a call today so we can discuss your options and strategize.

This 20 percent deduction mentioned above is available from January 1, 2018, through December 31, 2025. If you are considering transitioning to or opening a new pass-through business entity be aware of this and consult with your CPA as part of your professional advisor team. Depending on your situation, a C corporation may also be a sensible idea, but again, your CPA should be actively helping you decide upon the proper business structure. The Act also reduces the C corporation rate from up to 35 percent to a flat 21 percent. Each situation is unique, and we are here to help you and your other advisors navigate the tax maze, so you can focus on building your business.

Putting It All Together

The Act is perhaps the most significant tax legislation in over 30 years. Continued study and experience with the Act will undoubtedly reveal numerous new tax planning opportunities in the coming months and years. Stay tuned for more details. In the meantime, feel free to give us a call with any questions you have about tax reform or estate planning.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.

Many people who inherit wealth or small businesses are at significant risk for essentially squandering the wealth. An Ohio University study shows that an astonishing 33 percent¹ of all beneficiaries lose their entire inheritance within two years of receiving it. The ways they manage to do so are as varied as the imagination, but in our experience we have seen a common thread: mismanagement.

How beneficiaries lose their way

There are a few key ways beneficiaries struggle to make the right financial decisions with their inheritances. For example, a beneficiary might not have been brought up with a strong education on the basics of money management. Or, even if the beneficiary knows what to do to properly manage their money, it can be challenging to manage an inheritance while dealing with the loss of a loved one.

A beneficiary may invest unwisely, resulting in significant losses, or spend their wealth on an unsustainable lifestyle, rapidly exhausting an inheritance. Worse still, some heirs develop a sense of entitlement that can lead to problems like the well-publicized “affluenza teen,” Ethan Couch.

No one wants these outcomes for their family.

While a live-in-the-moment attitude can serve young people as they gain life experience, it can be very dangerous when large sums of money are added to their lifestyle. Often, they do not have the same experience and hard-won wisdom as the generation that acquired or built the wealth.

Share your wisdom with your wealth

One of the greatest gifts you can leave your children, grandchildren, and other beneficiaries is the gift of your wisdom. Sharing the stories, struggles, and journey of success that brought you to where you are, along with the money wisdom you’ve gained, is as important as leaving a financial legacy in your will or trust.

Money alone can become just as much a burden as it is a gift if it doesn’t go hand in hand with practical guidance. Let your beneficiaries know that they can help build a legacy of wealth that supports them throughout their lives and for generations to come.

3 tips to set your beneficiaries up for success

Here are a few pointers for setting up your beneficiaries for success:

1. Use estate planning tools like discretionary and incentive trusts. In addition to talking with your beneficiaries about financial well-being, you can also use certain types of trusts that will reward their smart behavior. Discretionary and incentive trusts are two such tools that can hold payments until beneficiaries complete college or withhold payments unless beneficiaries are proven to be clean and sober. If you don’t already have a trust like this, we can work with you to tailor these types of trusts to your unique family goals.
2. Talk to your beneficiaries about the right way to use their inheritances. Tips about compartmentalizing money for paying off debts and saving for the future might be second nature to you but a complete mystery to your heirs. Teach them the basics of money management and share your knowledge about smart investing. When you define a purpose for the money you’re leaving, you enhance the meaning of your estate plan.
3. Bake your wisdom into your estate plan. Consider adding a supplement to your plan that includes your stories, struggles, and journey of success so your wisdom is passed to the next generation along with your wealth.

You don’t have to go it alone

Feel free to contact us to ensure that your will or trust is completely up-to-date and that we’ve included strategies like lifetime discretionary trusts, incentive trusts, trust protectors, substance abuse protection language, and more, so that your family’s financial legacy is as safe as possible. We can even help you navigate discussions with your beneficiaries so you can rest assured that you’re doing what’s necessary to make your wealth last.

1 Ausick, Paul. “A Third of Americans Blow Through Their Inheritance.” 247wallst.Com, 8 Nov. 2015, 247wallst.com/investing/2015/11/08/a-third-of-americans-blow-through-their-inheritance/.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.

With only a handful of legislative days remaining in 2017, many Americans are waiting with bated breath to find out when (or if) President Trump’s proposed tax reform plan will change the tax landscape. As you already know, any changes to tax policy may mean you’ll need to revisit certain parts of your estate plan to ensure everything continues to effectively protect your family.

The Trump administration and Congressional Republicans have been busy with many issues, but, as of now, there have not been any significant legislative enactments. Proposals ranging from tax cuts or reform, immigration reform, healthcare reform, and more still loom large.

The state of proposed tax reform

If Trump’s tax plan pushes through as it currently reads, it will create a system with three tax brackets rather than seven. It would also completely eliminate estate and generation-skipping transfer taxes. Mortgage interest deductions would get an overhaul, and most itemized deductions would disappear. The stated goal of the President and Congress is a simplification of the tax rules, but like all prior tax laws, there will still be complexity.

Yes, these are all very substantial changes. And in addition to the uncertainty about how these changes would impact you as an individual, it also still remains to be seen whether this proposal will become law or not. So we find ourselves with two primary considerations: The tax proposal would mean drastic changes, and no one is certain when, or even if, it will go into effect.

Is your estate plan in standby mode?

This means the best course of action is to hold tight until the outcome becomes clear, right? Actually, this  attitude could cost you. Now is not the time to wait for news from the government before taking action, even though uncertainty about tax and health care policies may leave you thinking that doing nothing right now is appropriate.

But, the “wait and see” approach can spell disaster for your family if you die or become incapacitated without adequate, up-to-date planning in place — an obsolete estate plan or a plan that doesn’t match your current estate planning goals and needs won’t serve you no matter what happens in the White House, but an up-to-date one always will. That’s why the process of reviewing and revising your wills, trusts, and other estate planning documents now is as important as ever.

Here’s what you can do today

Regardless of what the future holds, you should always focus on what you can control. Although changes to tax rates, deductions, exemptions, and so on may impact how much tax must be paid in any given year and the future of the death tax is uncertain, there are no credible proposals that do away with taxes altogether. You must have some plan in place to ensure your financial legacy avoids as much tax as possible, while also achieving all of your other estate planning goals and protecting your family’s wealth.

Review your will or trust summary or diagram. As you do, ask yourself three questions:

1. Am I 100% confident that I’ve named the best possible trustees, executors, agents, and guardians for children?
2. Am I 100% confident that my children, grandchildren, other relatives, charities, or others designated to receive my estate are the same beneficiaries I would name today?
3. Do my trust asset schedules accurately list all of my financial accounts, insurance policies, retirement plans, rental or vacation properties, and other assets?

 If you aren’t entirely comfortable with your answers to the questions above, then the best response to “How do I move forward in uncertain times?” is to get your planning 100% up-to-date by giving us a call so we can ensure it meets your current goals and needs.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.

(Finally) Finishing Your Tax Returns Isn’t the Final Step
 
Hopefully you did not run up to the last minute for filing your 2016 tax returns (October 16, 2017 was the due date). Or maybe you even finished them in time for the April deadline! But even after your returns are filed, there are still a few items which should be on your financial to-do list.
 
You may have a trust based estate plan, which, if properly maintained, will avoid the court probate process for your family at your death. 
 
However, trust-based estate plans can fail if your assets aren’t properly funded into your trusts or otherwise aligned with your plan. Follow these three easy steps as soon as possible to make sure you’re wrapping up the year wisely by leveraging the time you’ve already spent finishing your tax returns. 

1. Review your trust or summary to ensure it still matches your goals.

If you’ve experienced some changes since you last visited your estate plan, such as welcoming a new baby to the family, suffering the death of a loved one, or experiencing major health concerns, you might have a new perspective on what you’d like your long-term estate planning goals to look like. It’s always a good idea to revisit how your plan is structured periodically to make sure it still works with your current situation. 

2. Gather your most recent bank statements, investment statements, beneficiary designation forms, and other paperwork concerning new accounts.

You’ve already put together a stack of documents in order to prepare for tax season (or you were an early bird and did this back in April). Consider bringing those documents to us to make sure we don’t need to change anything in your existing estate plan based on your current account statements and other financial data. Remember, estate planning isn’t a one-and-done exercise! We need to routinely review and update your plan to ensure it meets your goals and works with ongoing changes to your assets, your family dynamics, and the law. 

3. Call us to discuss updating your trust if needed and ensuring that all of your property is properly funded into your trust or otherwise aligned with your plan.

Things change over time. You may have closed prior accounts or opened new ones.  Are you certain those new accounts are in your trust name?  Perhaps you have purchased a new home since you executed your trust. Was it properly titled at the real estate closing?  Did you refinance and a lender required you to retitle the home back to your own name for the refinancing?  If so, did the title company also assist you in putting it back in trust name?  Things can get complicated (and potentially expensive or confusing for your family) when the titling does not match up correctly. Also, simply listing an asset on a trust schedule doesn’t transfer title of that asset from you to your trust on its own, so it’s important to make sure that actual ownership of all of your assets aligns with your estate planning goals and documents.
 
Once we make sure that all three of these steps are taken care of, you can focus your energy on enjoying the coming holiday season with your loved ones rather than worrying about your estate plan. If you would like to make sure your trust based estate plan will work as intended, give us a call today to schedule a time to review your plan, update your asset schedules and ownership records, and otherwise help you achieve your estate planning goals.

There’s no perfect time to broach the subject of estate planning with your family. We all know that everyone passes away eventually, but many of us often want to conveniently forget that reality.

Faced with the decision between taking the initiative to start a family discussion about estate planning and putting it off until later, most people are more inclined to the latter. But that means opening your family up to some really unpleasant consequences in the future. That is why, unappealing as it may seem at first, the perfect time to schedule your family meeting is now.

The short- and long-term value of calling a family meeting

Procrastination is often the biggest obstacle to successful estate planning. It may have been a while since your plan was updated or reviewed, and you may have never discussed it with family.

Contrary to what you might expect, the best way to begin usually isn’t to talk about specific documents like wills, trusts, and powers of attorney or your assets. Rather, it’s to have a conversation with your family about goals, plans, and hopes for the future.

In the short term, you’ll meaningfully connect with your family and express the care for them that your estate plan represents. In the long term, you can sleep more soundly knowing your family will be prepared to know you have a plan as well as the reasons you designed it the way you did.

How to get started on securing your family’s future

An estate plan can help empower your family’s goals by providing a framework for the effective passing of wealth from this generation to the next. But the conversation must be had within the family. It starts with meeting with your estate planning attorney to get your plan up to date and continues with a discussion about your plan with your family, especially those who are designated to serve as successor trustees, executors, and agents.

It’s much better to start this discussion while everyone is still here (and doing well) rather than waiting until after a loss or significant medical issue. After all, no one is psychic—it’s much easier to carry out someone’s wishes if they’ve been explicitly stated and discussed beforehand. And when everyone in the family knows what to expect in the event of a death in the family, they can spend that time focused on supporting one another and grieving rather than scrambling with paperwork. In some cases, sharing the reasons behind your plan can even eliminate or minimize conflict that sadly too often occurs after the death of a parent or grandparent.

Schedule a meeting with us before the holidays

With the holiday season coming up, you’re probably already starting to look at flights and locations for holiday parties and such. Now is the time to organize your thoughts so that, in addition to the merriment of the coming holiday season, family gatherings can include a discussion about what’s next for the family’s estate planning. Give us a call today so we can get you ready to cover all the important points with your family. You‘ll be able to rest easy and focus on quality time together when you have an organized plan.
 
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies. 

We’re Moving Our Office!

On September 1, 2017 we will be moving our office to:

1211 N. College Ave.

Bloomington, IN 47404

Our phone number remains the same.

Our office will be closed for packing, moving, and unpacking from August 30 – September 5, 2017.  We will re-open at our new location on September 6, 2017.  We look forward to seeing you at our new location.

Now, on to this month’s article titled “What if you don’t die.”

Why Ignoring the Importance of Incapacity Planning Can Have Serious Consequences

It’s a common misconception that all your efforts to create a comprehensive estate plan are focused on what happens after your death. That is very much not the case, and it’s a dangerous misconception to plan by.

Estate planning does not equate to death planning. There are several ways in which your estate plan can drastically impact you and your loved ones’ quality of life well before you pass away. That is why it’s also crucial that your plan includes up-to-date provisions for what will take place if you don’t die.

The relationship between incapacity and your estate plan

Many people become legally incapacitated, where they lose the ability to make their own legal decisions on either a temporary or permanent basis. This legal incapacity is not the same as being disabled for social security or workers compensation purposes. Rather, it is the result of coma, cognitive impairment caused by degenerative illnesses, or other situations in which a person is no longer able to make their wishes known due to loss of physical or mental function.

What if you don’t die and are instead in need of help because you can’t manage your finances any longer? A robust, trust-based estate plan will include the necessary documents to make sure your wishes are carried out to a T — even if you aren’t able to express those wishes at the time.

You need a plan that will protect your privacy, free you from court interference, help you protect and manage your assets, save you money on taxes, and enable you to name the people you trust the most to act on your behalf. Without a comprehensive incapacity plan in place, a judge can appoint someone to take control of your assets and make all personal and medical decisions for you through a court-supervised guardianship or conservatorship. You and your loved ones could lose valuable time, money, and control until you either regain capacity or die.

The components of your plan that impact incapacity

• A revocable living trust: In the typical situation, you will be the trustmaker, the trustee, and the beneficiary of your revocable living trust. But if you ever become incapacitated, your designated successor trustee will step in to manage the trust assets for your benefit
• Powers of Attorney: Be they medical or financial (you should have both in place), powers of attorney give your agent the authority to pay bills, make financial decisions, manage investments, file tax returns, mortgage and sell real estate, and address other financial matters that are described in the document. Powers of Attorney come in two forms: “durable” and “springing.” A durable power of attorney goes into effect as soon as it is signed, while a springing power of attorney only goes into effect after you have been determined to be mentally incapacitated. Keep in mind that medical powers of attorney can also be called health care proxy or advance directive.
• Living Will: This legal document memorializes your medical decisions about end of life care. The goal is to keep you as comfortable as possible, but not extend your life with useless medical heroics. Even though these may not be legally enforceable in some states, they can provide a meaningful sharing of your wishes to help guide your decision makers.
• HIPAA Authorization: Federal and state laws dictate who can receive medical information without the written consent of the patient. This legal document gives your doctor or other health care provider the authority to disclose your health information to the agent selected by you.
• Nomination of Guardians: You can nominate guardians for yourself as well as for minor children. You may also want to create a legal pet trust if you have strong feelings about who you’d like to care for your animals should you become incapacitated.

Don’t let a lack of incapacity planning damage your quality of life and cause undue stress for your loved ones. Even if you have a plan in place you need to review it periodically to make sure it stays up to date with the laws. Also, if the people you initially chose are no longer appropriate for your situation those plan documents should be updated. Let’s schedule a time to make sure your estate plan has solid, up-to-date provisions in place that make your wishes regarding incapacity plain and clear.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.