What to Do When Dad’s Ability To Manage His Finances Begins To Slow Down
May 27, 2011
One of the most difficult aspects of caring for an elderly parent (or helping an aging parent who lives far away) is keeping one step ahead when that parent begins to lose the ability to manage his or her own finances. Many seniors can be very resistant to discussing what they feel is an extremely private and sensitive topic. Furthermore, according to this article in AgingCare.com, “for many elders, being able to take care of their own finances is an important symbol of independence and self-worth,” and one that they are not likely to relinquish easily.
Unfortunately, an elderly parent’s ability to manage their own money may cease before they are willing to ask for help. In these cases, it may be up to their children and loved ones to step in and help as best they can. What follows is a list of some non-invasive, non-offensive steps adult children and caregivers can take to help aging parents manage their finances.
- Ask for a list of important people and information you might need in case of emergency. This list would include contact information for an attorney, financial advisor, primary care physician, and insurance agent.
- Ask where your parent keeps important documents and how an executor or advisor could access those documents upon your parent’s death or incapacity.
- If your parent is willing, discuss their estate plan with them, including who they have chosen as their agent or executor, and what you can do if something happens.
- Ask your parent to make a list of monthly bills, expenses and account numbers. Although your parent may not want to hand over this information right away, the list should be stored with other important estate planning documents so that it can be accessed in case of emergency.
- As you keep track of your own financial deadlines (tax filing deadlines and the like) set up reminders for your parent as well.
- Ask that your parent list you as an “emergency contact” with their utility services, so that you would be informed if your parent’s service is in danger of being terminated.
- And finally, talk to your parent as often as you can. Keeping open lines of communication is the very best way to stay informed about the abilities and well-being of your aging parent.
5 Missteps That Can Sabotage Your Estate Plan
April 27, 2011
When it comes to protecting your wealth and your family creating an estate plan is one of the most important things you can do. An estate plan is your key to ensuring that your hard-earned assets are distributed (or saved or invested) as you designate. An estate plan is your family’s safety net. Unfortunately, too many people attempt to take shortcuts with their plan, and find themselves with a safety net that is falling apart just when they need it most. Below are 5 of the most common missteps that can sabotage your estate plan, and how you can avoid them.
1. Neglecting to fund your trust. A trust can be a wonderful tool for protecting your assets; flexible and customizable, a useful trust can be created for just about every situation. But a trust is like a strongbox—if you don’t fill it up it has nothing to protect. Accounts and assets must be put in the name of your trust for it to work as you’ve designed it to.
2. Not enlisting the help of an estate planning attorney. There are a number of Do-It-Yourself will and estate planning programs out there that promise you a full estate plan for a cheaper price; but estate plans are complicated things, requirements change depending on your state of residence, the size of your estate, the age and situation of your beneficiaries, and much more. If you aren’t able to work with an attorney to create your plan, at the very least we urge you to have an attorney review your plan before you sign it.
3. Neglecting to mention previous estate planning documents, or making unofficial changes in the margins of documents that have already been signed. When creating a will or a trust or any other common estate planning document it is usually necessary to revoke any previous documents so there is no confusion about which document is current and valid. Neglecting to do this can end with your assets tied up in probate court for months or years—or even worse, invalidating both documents completely.
4. Putting your plan somewhere safe—somewhere so “safe”, in fact, that nobody can find or access it! People recognize that estate planning documents are things of value, and as such should be protected in a locked filing cabinet or safe deposit box. Wherever you choose to store your documents, be sure one or two trusted individuals have not only the knowledge of where the documents are, but also the ability to access them. An estate plan does no good if it cannot be accessed when it’s needed.
5. And finally, one of the most common missteps that can sabotage your estate plan is failing to update your plan regularly. Not only do federal and state laws change periodically (as we have recently experienced) but you will undoubtedly experience changes in your own life and fortune. Failing to update your plan to keep up with the law or with your own life can result in an estate plan that is as useful as a car you neglected to maintain—it may look fine on the outside, but it simply won’t run anymore.
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.
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.
How a Special Needs Trust Can Help Your Child
March 5, 2011
You know how important it is to protect your family with an estate plan, but if you have a child with special needs then taking steps to protect them if something should happen to you is essential. Unfortunately, for families which include special needs children, knowing exactly the best way to protect your child(ren) isn’t always so clear. As Joe Perez, the widowed father of 14 year old Danny, and the subject of this article on the ABC News website found out, it’s not as simple as leaving your child with a good guardian and decent inheritance—special needs children need a little more planning than that.
You know what you want for your child, you want him to live as contentedly as possible, with loving guardians and engaged in activities which will bring pleasure and peace. But how can this dream be achieved on the limited assets that Medicaid recipients are allowed to have without losing their government benefits? How can responsible parents safely leave an inheritance to their special needs child? For many parents, part of the answer to that question is having a special needs trust.
Unfortunately, not all parents are aware of the benefits of a special needs trust, or how easy it can be to create one—with the right help. A special needs trust is the vessel that will hold your child’s inheritance (from you or from another source) without disrupting that child’s government benefits. It gives your child the funds they need beyond the basic living expenses provided by SSI or Medicaid.
If your family could benefit from a special needs trust, please contact our office for more information. A special needs trust is not the kind of document that can be found in a software package or created from a standard trust template. The needs of your child are unique, and should be addressed as such. For more information, click on “Special Needs Planning”.
Estate Tax Lessons from 2010 and Things to Watch Out for in 2011
February 14, 2011
We all know from the many news stories of last year that estate tax laws are not set in stone, they can fluctuate and change both at the state and the federal level; and as this article in Forbes points out, keeping up with those fluctuations can be of the utmost importance to you and your loved ones.
The many celebrity news stories we saw last year provide all the examples we need of what can happen when you plan well (as was the case with Brittany Murphy’s estate plan) or when you neglect your estate plan—or even worse, when you fail to plan at all. Here are some celebrity examples of common estate planning pitfalls and mistakes:
Failing to update your estate plan. We tell all of our clients how important it is to review and update your estate plan every 2 to 5 years; Gary Coleman provides a prime example of what can happen if you neglect to follow through on those updates and reviews. “[Coleman] created a handwritten codicil to his will in 2007 leaving much of his estate to his wife, Shannon Price. After they divorced, however, Coleman never updated his will or created a new one. That led to a court fight after he died about whether Coleman was still married to Price. Even though they never officially tied the knot for a second time, Price claimed they had a ‘common-law marriage,’ which would mean that the handwritten will would be valid.”
Failing to fund your estate plan. A revocable living trust is a wonderful tool, but it’s just an empty vessel until you fund it by re-titling your assets in the name of your trust. Michael Jackson created what is most likely a wonderful living trust, but his failure to fund it properly means that 2010 saw “The estate of Michael Jackson… dragged on with no end in sight.”
Waiting too long to create your plan. If you are a senior citizen, waiting too long to create your plan leaves you open to the exploitation or undue influence of acquaintances or family members who might try to take advantage of you. Even if nothing of the sort has taken place, just the suspicion of undue influence can land your estate in a lengthy court battle. “Does the Anna Nicole Smith case come to mind? The United States Supreme Court ruled in 2010 that it will hear her case for the second time. Did she wrongly take advantage of her 90-year old husband, or did his son use fraud and other improper means to stop the billionaire from leaving money to Anna Nicole?”
We can all benefit from the very public airings of these celebrity estates. We stand ready to help you avoid the mistakes listed here, plus many more. The new laws of 2011 provide the perfect opportunity to create a plan (or update your existing plan), and ensure that your family will be well protected now, and in the future.
Minnesota Health Care Dispute Raises Fears for Everyone
February 5, 2011
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.
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