Estate Tax Laws Aren’t the Only Things That Change: A 7 Point Checklist
February 19, 2011
We’ve written before about the importance of reviewing and updating your estate plan, but it’s a topic worth mentioning again—especially in light of the many recent changes to estate tax law. The plain truth is that no matter how perfect your estate plan is when you create it, change is inevitable, and when your life (or the tax law) changes, it’s important that your estate plan change with it.
Reviewing your estate plan every 2-5 years is essential to keeping it up to date and working the way you intended it to work. Luckily, reviewing your estate plan can be quick and easy if you know what you’re looking for. Here are 7 key components you’ll want to review:
- Fiduciaries-How have the people in your life moved or changed?
- Assets-Are your finances different than they were a few years ago?
- Distribution and Beneficiaries-Are there any new members of your family?
- Health Care-What changes have you experienced in your health recently?
- Long Term Care: Are long term care issues on the horizon?
- Capacity: Do you see needing assistance to manage finances in the near future?
- Legal Updates-Have the laws changed?
If we’re lucky, our lives are constantly changing—our families evolve, our finances improve or decline, we meet and form strong relationships with knowledgeable friends and professionals. It only makes sense that your estate plan should change too. What seemed best for your family 4 years ago might not be the ideal situation now. By reviewing and updating these 7 components on a regular basis, and touching base with your attorney for guidance, you will insure that your estate plan will continue to protect yourself and your family the way you intended it to when you first created it.
Planning to Make Your Life Extraordinary
February 4, 2011
One of the best parts about doing the work that our firm does is that we get to help people evaluate their priorities and define for themselves what is truly important. Sometimes it’s too easy to get caught up in the day-to-day stresses and activities and to lose sight of what your true focus is. In the concerns of the ordinary it’s easy to forget to pay attention to the extraordinary.
It may not sound appealing, but planning for your death makes you take a look at life from a very different point of view. Take the typical To-Do list, for example. Most people have a To-Do list filled with tasks such as “pay the bills” or “wash the car”, but don’t these lists evoke a feeling of heavy obligation rather than pleasant anticipation? If you were to take your list of Things to Do and add onto the end of it “Before I Die”, how would that change your list? Recall the recent movie, “The Bucket List” and the fun that Jack Nicholson and Morgan Freeman had together in what each thought was the last weeks of their lives.
This is a large part of what estate planning is all about. It’s about separating the wheat from the chaff, about evaluating your life, realizing what is truly important, and planning to accomplish and protect those things of value.
Of course, nobody can live every minute in this state of heightened awareness. The bills do need to be paid and the car does need to be washed. But as you make that list of ordinary To-Do’s each morning try to include one thing that brings you closer to your extraordinary goal. Keeping the big picture in mind can give you perspective, and keep you focused on what’s really important. Make your own “To Do” list one that will bring you a sense of pleasant anticipation at the dawn of each day, and of peace and contentment when you turn the final page.
Technology for the Older Generation
January 7, 2011
There is a common complaint among Baby Boomers when it comes to aging parents and grandparents: It’s hard to keep in touch with them. Most communication among the middle and younger generations now takes place on the computer—e-mail, Facebook, electronic photo-sharing and more. Very rarely do we pick up the phone for a good old-fashioned chat; and when we do it’s usually on the go, in the form of a quick call or text message from our cell phones. Unfortunately, where all this technology helps us to be more connected to friends and family in our own cohort, it ends up leaving our elderly loved ones out of the conversation.
Karen Stabiner, in her article “Elder Tech: What’s Important” argues that it doesn’t have to be this way. Stabiner states that the key to getting elderly relatives involved in high-tech communication is to get out of our own heads and look at it from their point of view. “For technology to become ‘sticky’ with the older generation, we have to get into their heads and understand what would make them think this is fun… The bells and whistles that might attract us are too often counterintuitive [for them.]”
The younger, tech-savvy generations tend to look for high-tech devices that do everything, but that’s not necessarily what’s going to be appealing to grandma or grandpa. This article in GrayTimes.com suggests that single-purpose gadgets—devices designed only for e-mail or only for sharing photos—are more intuitive for elderly users.
New high-tech devices may be harder for parents or grandparents to use, but being able to connect with their loved ones can be a huge motivating factor. Being able to communicate with family makes our elderly parents and grandparents happy, but it also helps keep them safe. Adult children who communicate with their parents on a regular basis are better able to recognize and respond when mom or dad suddenly have trouble caring for themselves.
Resolutions to Last You Through the Year
January 6, 2011
What are your resolutions for 2011? A majority of New Year’s resolutions have to do with money and health—or more specifically, with saving money and losing weight. Unfortunately, most New Year’s resolutions don’t last through the first month of the year. But what if there were steps you could take in that first month, when you’re still feeling inspired and motivated, that would pay-off throughout the rest of the year when all your good intentions fall by the wayside?
Luckily, there are steps you can take right now that will help you save money throughout the rest of the year. This article in USA Today lists 5 steps you can take right now to help you save money in 2011:
- Order your free credit report
- Get a medical exam
- Update your beneficiaries
- Increase your 401(k) contributions
- Rebalance your portfolio
All of these will help you keep your 2011 resolutions throughout the entire year, but the ones we’re most concerned with are #s 2 and 3. Too many people “take care of business” pertaining to beneficiaries and 401(k)s when they first get hired (or open a new account or life insurance policy) and then never think of it again. But lives change over the years, and the people you listed, or the amount you contributed 5 or 10 years ago is probably not what’s best for your family right now.
The New Year brings with it new beginnings… and new hopes. Why not take advantage of this feeling of optimistic euphoria by taking steps now that will carry you through the entire year?
Make This Year Memorable: A 2010 Gift-Giving Guide
December 8, 2010
Fruit baskets, kitchen gadgets, and Kindles aren’t the only gifts you can give loved ones this year (although you’ll see below that video game systems still make the cut.) Instead, why not give something unique that will leave a lasting impression and help protect your loved one? Here are a few non-traditional ideas for friends and family of every age.
Young Adults: What do you get the kid who already has all the video games he could want? How about a meeting with a financial planner? It may not sound exciting, but young adults are leaving home with less financial experience than ever, making it difficult for them to know how to budget for their own household, plan to eventually buy a house, or even stick to a strategy to pay off credit debt or student loans.
Parents of Young Children: A nomination of guardians drafted by a qualified estate planning attorney is an excellent gift for young parents. So also are advanced healthcare directives and a last will and testament. All of these will help protect the young family as well as provide peace of mind.
Baby-Boomer Friends and Family: The big concern among Baby-Boomers right now may be planning for their own long-term care. After seeing their own elderly parents deal with the dramatic cost of long term care, Boomers may now be turning a concerned eye to their own futures. What about arranging a consultation with an Elder Law attorney to help them review and update their own estate planning?
Elderly Parents and Grandparents: Forget your teenage nephew; your elderly grandparent is the person who could benefit from having a video game. According to this story in the New York Times game systems such as the Xbox Kinect and Nintendo Wii Fit help get the elderly up and moving and can significantly improve their balance.
This year, forget about the impersonal gift cards or scented candles; instead give a gift that will leave a legacy.
Can You Foolproof Your Power of Attorney?
October 18, 2010
“The best laid plans of mice and men often go awry.” Although we hate to admit it, this statement will also sometimes apply to estate planning; and more often than we would like, it happens with powers of attorney.
A power of attorney is the document in which you nominate an agent (or attorney-in-fact) to make financial decisions and take legal action for you when you are incapacitated or otherwise unable. (This does not include healthcare decisions, covered in another document called a health care directive.) Unfortunately, depositors sometimes experience difficulty in getting banks or other financial institutions to recognize the authority of an agent under a power of attorney.
This difficulty usually has nothing to do with the validity of the document; rather, it is the bank’s attempt to protect itself. But while a little bit of caution is understandable, it can have frustrating—or even tragic—results if not addressed. Luckily, there are steps you can take to improve your chances of having the bank honor the powers you have delegated to your Agent. Here are a number of suggestions:
- Talk to your bank about your plans ahead of time.
- Sign the bank’s own forms in addition to the more comprehensive one prepared by your attorney.
- Ask your financial institutions if they have any requirement for powers of attorney.
- Update your power of attorney forms or documents frequently (every 2-5 years.)
Talking to a representative from your bank every 2-5 years may seem like an inconvenience now, but imagine the inconvenience if you are incapacitated and your agent is unable to access the funds he or she needs to pay your bills, make your mortgage payment, or provide for the needs of your family. A little bit of time spent now can save a mountain of stress later on. If all else fails, you might need your attorney to remind the bank that California laws imposes monetary penalties upon banks and others who refuse to honor valid powers of attorney; the threat of legal action from a credible source will often solve the problem.
10 Phone Calls to Make After the Death of a Loved One
October 15, 2010
Executors and Agents: Choosing Your Own Replacement
October 9, 2010
When people think about estate planning they generally think about inheritance, or taxes, or even guardianship—but rarely are the words “executor” or “agent” the first ones that come to mind. And yet, choosing your executor or your agent is one of the most important decisions you’ll ever make.
Your executor is the person who carries out the instructions in your will. You may spend hours (sometimes months or even years) agonizing over inheritance plans and making decisions; but in the end, when the time comes for all of those decisions to be implemented, you’re not going to be around. If there are any questions to be answered or clarifications to be made they’re going to fall to your executor.
Your agent is the person who—depending on whether the document is a health care directive or a financial power of attorney—will make your important financial or health care decisions when you are unable. This person is your proxy during your life, signing checks on your behalf or talking to doctors about your treatment.
Considering all of this, it is understandable why so many people have trouble naming an agent or executor. It’s not easy to choose your own replacement, so to speak. But the most difficult decisions are often the most important. If you are a parent of more than one child then you know about the sibling fights that can erupt seemingly out of nowhere, even in loving and agreeable families. This is especially true when there is any uncertainty about what mom or dad’s true wishes were. The right agent or executor can relieve much of that uncertainty.
So how do you choose the right agent or executor?
First of all, think it through carefully. Choose someone reliable, whose decisions you trust. You’ll want someone who’s careful; and you’ll want to choose someone who isn’t already overloaded, because they’ll need to have time to do a thorough job. Choose someone who knows you and who knows your family; a familiar face will be comforting in hard times. On the other hand, nominating a financial institution rather than a personal friend can work out well under the right circumstances, but research your choices carefully.
If there isn’t one clear choice you may decide to nominate two people to make decisions together. This can be a good alternative if the two work well together and share your values, but it can also be a recipe for disaster, so be sure to build in some protections: instead, consider naming an uneven number of agents or executors to prevent tie-decisions, or nominate a mediator or tie-breaker who can step in to prevent serious disagreements from having to be decided in court. If you wish to include the power to make family gifts, special legal considerations come into play: talk to your attorney about gifting powers if you wish to include them in your documents. They can often be very helpful, especially if you wish to delegate the authority to qualify you for a long term care subsidy under the Medi-Cal program.
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