The Importance of Estate Planning for New Parents
June 14, 2011
News sources such as the Washington Post entertainment section promise that this summer will be flush with celebrity newborns and proud mamas and papas. Some of the stars expecting additions to their families include Natalie Portman, Kate Hudson, Jennifer Connelly and more. Here at our office we wonder how many of these new parents will remember to update their wills or estate plans after the birth of their child… and how many of our readers have remembered (or will remember, if they are currently expecting a new child or grandchild) to update their own estate plans after an addition to their families.
Every parent knows that the time after the birth of a new baby can be a tired, busy and chaotic transition, and updating their estate plan is probably the last thing on any new parent’s mind. But after the first few months, when things have calmed down and you’ve settled into a routine, updating your estate plan to include and provide for your new little one should take top priority.
Here are a few things new parents will want to consider as they prepare to update their estate plan:
- Guardians for your child. Who are the people who will raise your child if the unthinkable should happen to you and your spouse? Many people choose close family members, others choose trusted friends.
- Keep your child’s inheritance in trust. Settling your entire estate on a 5, 10 or 16 year old is never a good idea. Consider instead creating a trust for your child which will provide for him until he reaches maturity.
- Trustees of your child’s inheritance. Who do you trust to invest and distribute the estate for your child while she is still a minor? Some parents choose to have the guardians also serve as trustees; others prefer to nominate separate trustees and guardians who will work together, providing a natural system of checks and balances.
- Providing for your child’s special needs. If your child has special needs he will need special planning to ensure that his needs continue to be provided for. Ask us (or your own local estate planning attorney) about a special needs trust.
Guardians, trustees, trusts and special needs planning are the very basics of estate planning for families with minor children, and should serve as a jumping off point for further discussion with your estate planner.
New Estate Tax Portability Provision Should be Considered with Caution
April 30, 2011
Royal Couple Has Many Asking “How Effective Are Prenuptial Agreements?”
April 12, 2011
It’s all over the news lately that Prince William and his fiancé Kate Middleton will likely not sign a prenuptial agreement before the royal wedding on April 29th. Although many reasons have been given as to why the couple will forgo signing a prenup, one of the reasons is that “while prenuptial agreements are common in the United States, they are far less prevalent in the UK. Only in the last year have British courts agreed to recognize such deals.” This is a statement that has some Americans asking exactly how legally binding are prenuptial agreements here in the States?
The answer to that question depends on a number of factors: your state of residence, the terms of your prenuptial agreement, how long you stay married, and more. Fortunately, the longer prenuptial agreements are around, and the more common they become, the more respect they get from the courts. But if you’re worried that your prenuptial agreement won’t hold up in court, here are few tips to help ensure the validity of your agreement.
Neither party must be signing under duress. The more time each party has to review the agreement before the wedding the better. Any prenuptial agreement signed the day of or the day before the wedding could be looked upon as being signed under duress.
The agreement should include full disclosure of income and assets. If you live in a state where it is possible to waive full disclosure of assets then BOTH parties should specify that they do so knowingly.
Each party should have their own legal representation. In order to be sure that neither party is being taken advantage of, each party should have their own independent attorney review the document before it is signed.
Details regarding children or child support in a prenuptial agreement may not be enforced by most courts. Partners my want to include details about possible custody or child support arrangements in a prenuptial agreement, but keep in mind that any court will always give the best interests of a child the highest priority, even if it means disregarding those sections of the agreement between spouses.
Waivers of Spousal Support (alimony) Will Be Carefully Construed by California Courts. Any attempt to waive spousal support in the pre-nup will be carefully construed in the event of divorce, and may or may not later hold up, so just beware.
Seniors with children from prior relationshps, who remarry later in life, often consider pre-nups as a way to ensure the inheritance of their own children. So, its not just above divorce. Hopefully, these tips can help ensure that your agreement will be considered valid by a court should the need for enforcement arise down the road.
What Happens Now to Elizabeth Taylor’s Fortune?
April 6, 2011
The recent passing of Elizabeth Taylor has many wondering what will now happen with her sizeable fortune? According to this article in Forbes Ms. Taylor’s fortune includes not only the millions she made in the Hollywood movie industry, but the even greater amount made she made with her fragrance line.
“In her most savvy business move, Taylor licensed her name to Elizabeth Arden and came out with several perfumes, including Passion, White Diamonds, and Black Pearls. Her fragrances have reaped a reported $200 million in sales over the years. Perfumes are one of the highest margin products out there, which is why celebrities love them. Taylor was doing it before anyone.”
Furthermore, a recent article in ABC News reports that Elizabeth Arden has no plans to discontinue the Taylor brand anytime soon. “White Diamonds remains a best seller almost 20 years after its 1991 introduction, a testimony to her transcendent and enduring appeal… Our best tribute to Elizabeth Taylor will be to continue the legacy of the brands she created and loved so much.”
The question now is, what will happen to this sizeable (and growing) fortune now that Ms. Taylor has passed away? ABC News has some guesses: “On the question of what could happen to her estate now that she has passed away, many speculate it will be distributed to her four children and 10 grandchildren [with whom she is reported to have been on good terms]… And Taylor most likely bequeathed a substantial amount of money to her charitable work. Taylor was a devoted AIDS activist, helping form the American Foundation for AIDS Research in 1985 and the Elizabeth Taylor AIDS Foundation in 1991.”
Thus far no last will and testament has been released, which suggests that Ms. Taylor may have had a trust, an document which typically ensures privacy. While it is only our speculation at the moment, given what we do know about Ms. Taylor, it is not unreasonable to believe that her estate will be split between her family and her charitable endeavors, especially the AIDS Foundations to which she gave so much in life.
New POLST Raises Awareness About End-Of-Life Decisions
March 26, 2011
A recent article in the Wall Street Journal shines the light on a new program being instituted by a growing number of states called “Physician-Orders for Life Sustaining Treatment,” or POLST. “A POLST, which is signed by both the patient and the doctor, spells out such choices as whether a patient wants to be on a mechanical breathing machine or feeding tube and receive antibiotics.” In current medical practice, it is usually discussed and signed in a hospital or long term care setting, when a patient’s health is fragile but the patient is still able to give meaningful direction to his or her physician. However, we see no reason that it cannot be discussed and signed at an earlier time, say, when you and your attorney are discussing your estate plan and your end-of-life wishes.
It is different from an Advance Health Care Directive, in that the POLST is an actual medical order from your physician.
Creating a POLST is an important step toward getting the care and medical treatment you want at a time when you may no longer be able to communicate those wishes to your family or medical staff.
Keep in mind that although the POLST is an important step in making your wishes known, the POLST is not intended to replace an Advance Directive. The POLST programs “are meant to complement advance directives, sometimes known as living wills, in which people state in broad terms how much medical intervention they will want when their condition no longer allows them to communicate.”
The WSJ article states that “A study supported by the National Institutes of Health last year found that patients with POLST forms were more likely to have treatment preferences documented than patients who used traditional documents such as living wills and do-not-resuscitate orders.“ This comes as no surprise, considering that executing a POLST includes getting the document signed by your doctor, thus ensuring that you doctor is not only aware that you’ve expressed your wishes for end-of-life care, but has also likely had a part in helping you understand exactly what your options are. A short audio recording is available in the WSJ site.
Our office recommends that our clients go one step further—in addition to having your doctor sign your POLST, give your doctor a copy of your Advance Directive as well. Once you have things squared away with your doctor we also recommend giving a copy of your POLST and your Advance Directive to the person you’ve named as your healthcare agent.
For more information, including the April, 2011, update to the POLST form used in California, visit the site of the Coalition for Compassionate Care at http://www.capolst.org/
The more informed you doctors and family are about your wishes for end-of-life care, the more likely it is that you will receive the treatment you prefer.
Tragedy in Japan Inspires Reflection: Are You Prepared for Disaster?
March 18, 2011
Only a few days ago the world was shocked by the terrible earthquake and tsunami in Japan. Our hearts and prayers go out the people affected by the tragedy, and many people are asking what they can do to help.
The sudden violence of nature has many of us looking at our own situations as well, wondering if we are prepared—as a country and as individuals—should an equally devastating natural disaster strike our own shores. Of course the first thought most of us have in this regard is whether or not we have a well-stocked supply of emergency rations, but as this article from CBS MoneyWatch.com points out, there is much more to surviving a natural disaster than the first 24 hours. “Most people never think about the items to take that help protect your financial assets.”
Author Steve Vernon includes in his article a list of things you can do to prepare for what comes after the first 24 hours of a natural disaster, including:
- A stash of cash in case ATMs are shut down for a long period of time.
- Contact information for family members, close friends, and work contacts.
- A cell phone and charger, plus batteries and chargers for other necessary electronic equipment.
- A list of account numbers and contact information for all your regular bills and payment obligations.
- Your insurance company contact information.
These are only a few of the things you’ll want to have ready (or at least have thought about) if disaster strikes here at home.
Some natural disasters are so big in scope they are almost impossible to comprehend, let alone try to prepare for; but preparation is the best way to keep fear and panic at bay. It doesn’t help anybody to dwell too much on what “might happen,” but having a basic emergency plan in place gives you the freedom to go on with your everyday life, knowing that you’ve done what you can to be ready if disaster does strike.
For more information about disaster preparedness please visit the FEMA website here: FEMA Emergency Planning Checklists.
For more information about how you can help the disaster victims in Japan please check the Crisis Response Page on Google.
Coming in 2012: Change for Retirees
March 12, 2011
With the Federal Estate Tax Set at $5 Million, Escaping the State Death Tax Is Now An Issue For Migrating Seniors
March 8, 2011
For wealthy seniors, state death taxes may now be a big issue, especially if the seniors have the ability to relocate to a “death tax” friendly state.
The federal estate tax is set (for at least another two years) but we still expect some states to continue making changes to their own estate tax. The fact is that state governments are caught between a rock and a hard place. According to an article in Forbes Magazine, “The changing state landscape… reflects a lot of ambivalence by state officials themselves. They want the estate tax revenue, but worry about chasing wealthy seniors across state borders.”
If you’re looking for an estate-tax-friendly state to which to retire you can check out the link to the map in the Forbes article; but before you move be sure to do your research. Just because a state has no estate tax (or a high exemption amount) one year doesn’t mean it won’t change the next. The best strategy is to be familiar with the state’s history. How long has their estate tax been in place? Has there been any legislation proposed recently regarding the tax? How likely is it that their tax policies will remain the same as they are when you move?
Illinois recently made changes to the state laws regarding estate tax, and other states that are most likely to make changes in the future include Hawaii, Ohio, Connecticut and Vermont. “But don’t count on these efforts… even if you get relief one year, the levy can go up again the next.”
As always, the best strategy is to plan ahead, review your plan often, and have a knowledgeable estate planning attorney on your side.
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