Category: Medical Directives

Most financially savvy individuals begin planning their estate when they’re in peak mental shape. The idea that this might change at some point in the distant future is an unpleasant one, and they would rather go about their estate planning as if they’ll be as sharp as a tack late into their golden years. Unfortunately, this common approach of ignoring a potential problem and hoping it simply won’t happen can leave a giant hole in your estate plan. Read on to find out that this common hole can be more easily filled than you might think. 

Expect the best, but plan for the worst

The reality is that an individual’s chances of experiencing some form of cognitive impairment rise with age. While it’s never certain whether cognitive impairment will occur, smart estate planning means factoring it in as a very real possibility.

As the huge baby boomer generation transitions from the workforce and begins to make their way into retirement, cases of Alzheimer’s are expected to spike from the current 5.1 million to 13.2 million as soon as 2050. Alzheimer’s is just one of several cognitive impairment conditions along with dementia and the much more common mild cognitive impairment, or MCI, which is often a precursor to those more serious ailments.

As U.S. life expectancies increase, the chances of living with cognitive impairment increase as well — with at least 9.5 percent of Americans over 70 experiencing it in one form or another.

No matter your age or family history, cognitive impairment can affect anyone although it’s widely accepted to affect mostly older adults. As you implement or revise your estate plan, it is well worth the effort to plan for this potential. Luckily, estate planning attorneys have developed good solutions to handle this circumstance and can help guide you on the best way to protect yourself and your family.

An easily-avoidable estate planning mistake

Consider Ashley’s story. A successful real estate agent with a stellar career in her hometown of Kalamazoo, MI, Ashley begins planning her estate in her mid-thirties.

She partners with an estate planning attorney, and together they draft a revocable living trust with Ashley’s preferred beneficiaries and charities in mind, figure out guardianship for her two sons in case she and her husband pass suddenly, and settle on an appropriate beneficiary for her life insurance policy. Now that she knows where her assets will go after her death, Ashley rests easy assuming there’s nothing more that needs doing in her estate plan.

Save your family from obstacles and conundrums

But forty years down the road, Ashley’s children realize her MCI is developing into Alzheimer’s. Although she’s occasionally visited with her attorney to make adjustments to her plan,  she never added any provisions for how she wanted her children and other guardians to handle a situation like this. Here’s where things get complicated.

Ashley did not work with her estate planning attorney to put disability provisions into her trust and never worked with an insurance professional to purchase adequate income insurance or long-term care insurance. The care she requires to live her best life possible with cognitive impairment doesn’t come cheap. Those mounting care costs will likely quickly erode Ashley’s estate. As a result, her estate plan may no longer work as intended, since it no longer lines up with her actual asset portfolio.

But since Ashley does not have the ability to rework her estate plan in her current mental state, her family is left with the burden of figuring out what to do while navigating a complex and bureaucratic legal system in the guardianship or conservatorship court. No one in the family really knows what Ashley’s wishes are regarding both serious medical decisions and financial changes. All Ashley’s family wants is to see her enjoying her remaining years in peace and security, but they are now tasked with using guesswork to make difficult choices on her behalf while a guardianship or conservatorship court watches every move.

Give us a call today

Factoring the potential for cognitive impairment into your estate plan doesn’t have to be a headache. In fact, a little effort now by legally designating who you want to be in charge and what you want them to do can have a wonderful impact on you and your family later on. We can work together to ensure your estate plan is ready for whatever life throws your way. Give us a call today to find out how painless and cost-effective this process can be.

The new tax legislation raises the federal estate tax exemption to $11.2 million for individuals and $22.4 million for couples. The increase means that an exceedingly small number of estates (only about 1,800, nationally) will have to worry about federal estate taxes in 2018, according to estimates from the nonpartisan congressional Joint Committee on Taxation.

So, you may be wondering, is estate planning even still necessary?

To put it simply: Yes!

Comprehensive estate planning does a lot more than guard against you owing federal estate taxes. Other than taxes, you and your family likely face a range of estate planning challenges, such as:

● Distribution of your assets. Create your legacy with the help of tools like a trust and/or a last will and testament.
○ If you die without a will, state intestacy laws determine where your stuff goes. You lose control, and the people closest to you may feel hurt or may suffer financially.
○ If your estate plans do not include asset protection strategies, your lifetime of hard work and savings could be squandered needlessly.

● Cognitive impairment. Dementia, Alzheimer’s disease or other disorders could make handling your own affairs impossible or at least ill-advised. Executing a durable power of attorney (POA), for instance, allows you to choose a person, referred to as an agent or attorney-in-fact, to step in and manage your financial affairs on your behalf. Without this arrow in your quiver, your fate will be left to the public whims of the court, which could appoint someone else—for instance, a public conservator.

● Medical emergencies. What if you become unable to communicate your preferences regarding medical care yourself? Naming someone as your health care power of attorney under a Medical Power of Attorney allows him or her to act as your voice for medical decisions. In addition, a living will or advance directive allows you to specify the types of life-sustaining treatment you do or do not want to receive.

● Specific family situations. Life is unpredictable. You need to consider (and proactively deal with) challenges like the following:
○ If you have minor children, you can name a guardian for them and provide for their care through your estate plan. Without a named guardian, the decision of who raises your children will be left to the whims of a judge. Your children may even end up in foster care while the courts sort your affairs out.
○ If you care for a dependent with a debilitating condition, provide for her and protect her government benefits using tools like the Special Needs Trust (SNT).
○ If you’re married with children from a previous relationship, you need clear, properly prepared documents to ensure that your current spouse and children inherit according to your wishes.

● Probate. Probate is the court-supervised process of the distribution of a deceased person’s assets. A veritable avalanche of paperwork awaits your loved ones. But it doesn’t have to happen to your family! Through proper planning, you can keep all of your assets—such as your IRA, life insurance and family residence—outside of probate.

Estate Planning Involves Much More Than Minimizing Estate Taxes. Even prior to the Tax Cuts and Jobs Act, relatively few Americans needed to worry about the estate tax. However, virtually everyone faces one or more of the issues outlined above. Shockingly, a 2016 Gallup poll found that 56% of Americans do not even have a simple will. A 2017 poll conducted by Caring.com found similarly alarming news—a majority of U.S. adults (especially Gen-Xers and Millennials) do not have their estate plans in order.

We can help you add yourself to the list of prepared Americans! Get in touch with our team to begin your plan today and get the peace of mind you need.

2017 is now fading into the rearview mirror. As we all look ahead to 2018, let’s consider a few things to watch regarding estate planning, so you and your family can be completely protected.

 ●     The death tax. The death tax has been in a state of flux ever since the early 2000s when the Bush administration’s first tax cuts changed the exemption and tax rates. The recently-passed Tax Cuts and Jobs Act is the latest significant change. Starting January 1, 2018, the estate tax exemption amount doubled to $11.2 million per person (married couples have $22.4 million of combined exemption). This amount will adjust annually for inflation. However, this enhanced exemption expires on December 31, 2025, at which time it will return to an amount similar to the $5.49 million per person exemption we had in 2017. Similar to what happened when the Bush tax cuts phased in (and were scheduled to expire) during the 2000s, we’ll face the same situation over the coming years – the law provides a deadline and timetable, but political activity may result in something entirely different. Regardless of your stance on this new tax law, if you have a plan based around the now-old rules, it’s time to visit with us, so we can make sure the plan still meets your needs and goals while maximizing the benefit to your family, charities, or other beneficiaries.

●     Incapacity planning. What happens if you don’t die? Historically, much of estate planning focused on what happened to your assets after your death. With cognitive impairment at near epidemic proportions, you must plan for the contingency that you don’t die and instead require assistance managing your affairs. Depending on your circumstances, this could range from a relatively simple matter of ensuring you have a trusted person authorized to make decisions to extensive planning to become eligible for help paying for nursing home care. Either way, now is the time to work with us to ensure that your plan protects you, even if you don’t die.

●     Giving your family lifelong financial security. Although you may not have a “large” amount of wealth now, you probably have an IRA or a life insurance policy. A modest IRA or life insurance policy could be the foundation for lifelong financial security for your family. To make this a reality, you need to set up your affairs with the proper structures to ensure money avoids costs, taxes, and the risk of financial immaturity or ignorance. We are here to help you ensure that the savings you’ve spent a lifetime building will be there for your family.

●     Fixing broken or old trusts. Many people have inherited assets from parents, aunts, uncles, and others through a trust. Some of these trusts may use old strategies or be expensive or difficult to administer. The law recognizes that old trusts may need some refreshing. There are many options available to modernize an old trust, and the best way to get started is to meet with us so we can explore which option is best for you and the trust you inherited.

 2018 will likely be an exciting, dynamic year. No matter where you are on the estate planning journey, carve out some time to talk with us to make sure that you and your family are fully protected. Give us a call today.

‘Till Death Do Us Part, Too: Estate Planning Tips for Commitment Without Marriage

Advice columnist Ann Landers once observed that “love is friendship that has caught fire.” If that’s true, there are thousands of ways for that blaze to unfold. For many Americans, such devotion and passion do not need to be neatly formalized as marriage.

In fact, our cultural norms are shifting, and quickly. Consider the following:

● Per the U.S. Census Bureau, approximately 112 million people in the U.S. are unmarried;
● 45 percent of our country’s households are “unmarried households.”
● In 2013, the CDC found that “cohabitation [without marriage] is now a regular part of family life in the U.S.”

Unfortunately, the law has not kept up with these societal trends. If you and your significant other love each other but don’t want to tie the knot, you need an estate plan that takes into account your specific situation while protecting you both, along with any other family members or loved ones you wish to include.

Estate planning for married couples can seem pretty straightforward because it relies on long-standing, proven legal and tax strategies. Unmarried couples, however, may need to take a more individualized approach in order to achieve their goals. Here are some of the documents and methods you need to consider when creating or updating an estate plan.

1. Living Trusts

Living trusts allow you to use your assets while you are alive and then bypass the probate process when transferring property to loved ones after you die. A trust can also keep your business out of the public record, and it can empower someone else to handle your finances if you become unable to do so. Even though trusts tend to cost more up-front than related solutions, the benefits they provide cannot be easily or reliably replicated with other planning options. On balance, a trust is the superior tool for virtually everyone; it should be the cornerstone of almost any comprehensive plan, especially for couples who have not formalized their relationships with a legal marriage.

2. Wills

A pour-over will can be an effective “backup” and compliment to a revocable trust. When you die, your assets get funneled into (or “poured-over” into) your trust and then distributed to your beneficiaries per the terms and instructions of that trust. The pour-over will keeps things simple, making the process less stressful (and prone to error) for your executor and trustee. It also helps wrap up loose ends, in case you didn’t transfer every last asset to your trust before you die.

What happens if you die without a will or other estate plan? Courts refer to this as “dying intestate,” and it means that the rules that will apply to your estate will be those written into your state’s laws. These laws rarely, if ever, account for long-term unmarried partners, so a will is essential to protect the person to whom you are committed. As an unmarried couple, you simply cannot rely on the intestate laws to work for you.

3. Beneficiary Designations

Most retirement accounts and many other types of accounts allow you to designate a “beneficiary,” or a person who will automatically receive what’s in the account when you die. Make sure you update your beneficiaries on your 401(k), IRA, or other retirement accounts, as well as on life insurance and other documents. Depending on how your trust is designed, your circumstances, and your goals, you may name one or more trusts as the beneficiary rather than an individual person.

4. Power of Attorney, Designation of Health Care Surrogate, and Similar Documents

These documents allow you to designate your significant other as the person who has the right to make certain types of decisions and sign documents on your behalf if you become incapacitated. If no such power exists, the decision-making task typically passes to a close blood relative and typically also requires a court proceeding called a guardianship or conservatorship, depending on the type of help you need and what state you in live. Your lawyer can help you determine which powers should be covered by documents like these to ensure that enough authority is granted while still providing protection against unauthorized actions.

Whether you’ve been living with a life partner for decades, and you’re now eyeing retirement options; or you’re just beginning a family with a person who has not formally and legally been recognized as your wife or husband, you probably have questions. How should you protect yourself and family financially as you get older? What can you do to enshrine the values you hold dear for the next generation? What if an unwanted event happens, throwing you and your partner off balance — what contingency plans can be put in place?

Our experienced estate planning attorneys can help you identify a strategy to get the peace of mind you need. Please call or email us to schedule a private consultation.