ESTATE PLANNING TIPS FOR EMPTY NESTERS
No more school buses. No more huge grocery lists. The last bird has left, and now the nest is empty!
You may feel sad or you may be overjoyed. You may not truly feel like an “empty nester” if you are still paying college tuition or loans for college tuition. You may just be trying to remember what life is like without your kids in the house. Either way, one thing you may overlook is the importance of taking a step back and taking a look at your estate as a whole.
When was the last time you revised your estate plan?
If you’re like many busy parents of toddlers then teenagers, the answer is “decades ago.” Perhaps you put a will in place when your children were born, to ensure they were taken care of in the event of your untimely passing, but it’s probably gone largely unchanged since then. You may have acquired more property or assets. You may have had more children. You may have divorced and remarried.
At any time of change in your life (and becoming an empty nester qualifies), it’s smart to assess the validity and accuracy of your estate plan, ensuring it lines up with your current wishes.
Here are five quick tips on why and how to update your estate plan:
Tip #1: Revisit Powers of Attorney
One of the primary functions of a will is to name the individuals you’d wish to care for your finances if you become incapacitated or die, as well as the individual you’d like to make healthcare decisions for you. Have these people remained the same?
You may have previously named spouses, siblings or parents, but over the course of 18+ years, family members may have aged or passed, and you may have divorced. If your children are older and trusted, it may be time to pass this responsibility to them, as they are more likely to outlive you.
Also, you can get your adult children started on their own planning by getting them each a health care proxy and a durable power of attorney. Now that they are legal adults, you will not automatically be able to step into this role for them. Not only can this help protect them if they get sick or injured, but you can help get them thinking about taking responsibility for their planning in the process.
Tip #2: Determine How You Will Pass on Your Inheritance to Grown Children
If you created an estate plan when your children were very young, you may have left all of your assets to your spouse to distribute amongst your children, or you and your spouse may have created a trust to hold your collective assets until your children reached a certain age.
If your children are now adults, you may wish to revisit trust provisions put in place to care for minor children that are now outdated, and revise your trust to reflect the adults they’ve become. Have your children added grandchildren to the family? You will likely desire to revise your will to reflect any gifts to your grandchildren. You may also be at the point where you no longer feel you need to have assets held in trust for your children, and want to revise your documents to provide for a more immediate inheritance.
Tip #3: Address Life Insurance Needs (or Lack Thereof)
Your previous estate plan likely included life insurance policies for you and/or your spouse. The amount of insurance you carried was probably based on an amount that would have provided for raising your children, paying for their education, and keeping your family in the home.
But now that you have probably acquired more assets over the course of the last decade or two and your children are now self-sufficient, you may not need to maintain the same level of life insurance coverage you did previously. It’s the right time to look at what’s needed for your family members above and beyond your estate, and only pay for coverage for the gap.
Tip #4: Start Considering Long-Term Care Insurance
One critical part of your estate plan is who will care for you if you are disabled. Now that your children are grown, it might be clearer to you which should be primarily responsible for your well-being and day-to-day living.
On the other hand, maybe you see clearly that you will need to supplement your retirement funds to provide for your own welfare. In this case, long-term care insurance is a great option. You can rest assured that you’ll be able to afford assisted living or a place at a long-term rehabilitation facility and avoid putting the burden on your children. You may be interested in purchasing a policy for a disabled child, to provide for them after you pass on.
Tip #5: Begin Planning for Retirement
If you own and run a family business, you will inevitably come to a point in your life when you are ready to pass the torch to the next generation. Even if that time feels far away, it’s critical to begin putting a plan in place to pass on your interests to a child who has shown interest in running the business. If you don’t have a clear line of succession, that’s even more of a reason to start exploring your options.
Our team at slnlaw specializes in making estate planning realistic and simple. It’s okay if you don’t know all the answers. Let’s work on finding them together.
WHEN YOU’RE EXPECTING AN INHERITANCE
The “great wealth transfer” is underway. Over the next few decades, Baby Boomers will pass on $30 trillion in assets to Generation X and Y. If you’ve talked to your older loved ones about estate planning, you may have an idea of the scope of the assets that will wind up in your hands eventually. Have you calculated how this will affect your own estate planning?
Many members of Generation X are in their mid to late forties and fifties and are beginning to make estate planning a priority. You may have already drawn up a will and named your personal representative. But you likely only documented how you’d like your currently owned assets handled. What if there is a future windfall that completely changes your financial picture? How will this affect your estate plan and what should you do?
1. Understand the Rules, Especially About Estate Tax
The major way in which an inheritance is likely to change your estate planning needs is that it will bring you closer to- if not over- the $1 million threshold for Massachusetts estate taxes. If you made your will when you first started your family, you likely had limited equity in your home and had not accumulated a lot of value in your retirement savings. Now, you may have several hundreds of thousands of dollars in equity, a growing stock portfolio in your retirement account, and life insurance as well. Add a substantial inheritance, and you may well have crossed the $1 million mark. It is important that you work with someone to minimize the estate tax burden on your heirs, which could cost your estate $36,000 or more if you do nothing.
2. Assemble Your Team
There are three professionals that you can rely on for assistance: an estate planning attorney, a financial advisor and an accountant.
A financial advisor can help you look at the big picture – how will your inheritance help you accelerate towards your previously determined goals? Next, an estate planning attorney applies their knowledge of tax and inheritance laws, providing specific strategies to save you money and ensure your assets are handled according to your wishes. Finally, an accountant can help you make sure all of your present filings are in order so you’re not surprised with a major tax bill.
At slnlaw, we like to think we’re more than just estate planning attorneys. We help you look at your assets and finances from a 10,000 foot view, but we also provide the up-close expertise needed to preserve your resources. We have your best interests in mind. If you don't already have a financial advisor or an accountant, we are happy to make an introduction to one of our trusted referral partners who can work with us to make sure you have what you need to protect your assets and your family.
3. Ask the Right Questions
Once you’re in front of the right professional, it’s time to make decisions. In order to make sure these decisions are ones you won’t regret, ask yourself the following important questions:
How much of this inheritance do you need right now?
The answer will vary based on your age, income and net worth. You may want to use it to fund a child’s college education or retire earlier. Consider how the inheritance can help your current situation.
What is the actual value of all of your assets?
First, figure out how you’re going to meet the goals you’ve set with your current assets, then calculate how the inheritance can help you get there. One of the reasons why seven out of 10 people will spend their entire windfall is because they use the inheritance as leverage for a lifestyle inflation, such as using the money as a down payment on a property with a mortgage they can’t afford.
Are you on track with your retirement savings?
Before you move assets out of reach for estate planning purposes, make sure you are on track with your retirement savings.
Where are your children in life and what major expenses are still ahead of you?
How you manage a new influx of assets will depend on what is still in front of you. If you are done paying for your children's education and other big ticket items like weddings, and you are relatively secure in your retirement, it may be time to start thinking about putting some assets out of reach to protect them from both taxes and the costs of long term or nursing home care in the future for you or your spouse.
4. Plan Your Own Legacy
The inheritance you receive represents someone else's legacy that they worked hard to accumulate and preserve, then made plans to pass on to you. It is your turn to do the same for the ones you love. The inheritance you receive may include something important to your family that you want to protect for your children- a family business, a family home or vacation property, or some other asset that has been preserved through multiple generations. Now is a good time to consider how to safeguard that asset, which could include putting it in a trust. If there is something in your legacy that matters to your family, you also want to make sure your heirs are not put in a position of selling or liquidating assets just to pay estate tax. Remember that If your inheritance adds significantly to your net worth, it may push you over the estate tax exemption. By setting up a trust to bequeath funds to family or charity, you will protect your estate from tax penalties and ensure your beneficiaries are in the best position possible after your passing.
Finally, when you or your spouse receive an inheritance from your parents, it is frequently a great learning opportunity for you and your children. Talking with your family about your parents' legacy and what it means to you is also an opportunity to educate your children (assuming they are old enough for this conversation) about what you are planning.
In all of the above, consider slnlaw LLC your trusted partner when navigating estate planning after an inheritance. Contact us today to set up a free consultation with our team.
WHAT WILL HAPPEN TO YOUR DIGITAL ASSETS WHEN YOU PASS AWAY?
Much attention is given to how to handle your personal property after death, in the physical world. What about the digital footprint you have left behind? From cryptocurrency to domain names to online stores to your Twitter feed – do you have a plan in place for each of these digital assets and who will assume ownership or responsibility for termination?
While laws are continually proposed to help manage and make digital estate planning more viable and easier for those left behind, it is still on you to ensure your beneficiaries are aware and prepared to take charge of your digital assets in the event of your death.
Why Should You Care?
For the most part, these digital assets don't have a monetary value (though they could, especially if they are assets you have amassed as part of a business venture). But they do represent a great deal of information about you and your family that you may not want lost, and may not want still circulating freely in the world after you are gone.
Then there is the ever-present nature and vulnerability of social media. We all know someone whose facebook account has been hacked, and whose hundreds of facebook friends have received new "friend" requests allegedly from them. You may not want to leave your account out there with nobody monitoring it, so that your friends and loved ones are not subject to the macabre experience of receiving fake friend requests from you after you are gone.
Take Inventory of Your Digital Assets
The first step: take stock of the digital assets in your name. What is considered a digital asset may surprise you.
Not only does this term include all email and social media accounts, but it could also include your Amazon, Netflix, Hulu or other audiobook account. It includes cloud storage where your photos, videos and texts are backed up. It includes all digital music files you have purchased. It includes e-commerce websites and domain names you own.
Work on compiling an in-depth inventory of every site where you have an account – it’s critical to make sure each account is handled appropriately in the event of your death to prevent identity theft and future challenges for your beneficiaries.
Appoint a Digital Trustee
The individual you would like to handle your digital assets may very well differ from who you’d like to inherit your vehicle or home, and that’s okay. Perhaps you would like to have a trusted friend manage the deletion of social media profiles and email accounts. There may also be different people you want to put in charge of different accounts or assets. For example, if you have a body of creative work stored in the cloud you may want someone who understands your work to be the one who decides what gets preserved and what gets deleted, while it may be a completely different person who is entrusted with making decisions about your social media accounts. If this is what you prefer, it must be clearly stated in your will.
Set Up Access
Under no circumstances should you list username and password information in your will, since after your death this document will become public. There are multiple ways to store online account login information. Something as basic as a password-protected Excel sheet (with the sheet’s password communicated through your lawyer), or something as secure as a digital lockbox could be a good solution. You can also use old fashioned pen and paper, and while the information should not be contained within your will, that piece of paper can be stored in the same place as your will and other estate planning documents so that it is easy for your family to find.
Provide Instructions for Each Asset
After you’ve made a comprehensive list of all digital assets, decide how you would like each account handled.
Any online payment accounts that contain a balance of cash, credits or points may be transferable, but it depends on each platform’s specific user agreement. Some organizations may cancel all benefits upon death, while others operate more like bank accounts, with beneficiaries able to transfer assets to their name.
For social media, the policy varies from site to site. Facebook allows you to input a legacy contact before death and upon your passing, this individual is able to moderate your memorialized profile. They cannot receive or respond to messages. Alternatively, you could choose to have your account completely deactivated upon death.
LinkedIn requires proof of death. Pinterest requires a copy of the death certificate and proof of the petitioner’s relationship with the deceased. Google requires the name of legal counsel as well as full documentation of the individual’s death.
Make sure you are clear in your instructions on who you want to handle these processes, and what you’d like done. While some photos you have stored in the cloud you may want to pass to a loved one, you may rather have personal documents erased.
The Bottom Line
In today’s digital world, estate planning doesn’t only encompass your bank accounts. You need to consider how to handle the digital assets that are your personal property and incorporate a thoughtful approach on dealing with each into your larger estate plan. The team at slnlaw is happy to answer your questions and share effective strategies you may find useful – contact us to set up your free consultation.
HOW ESTATE PLANNING CHANGES AFTER YOUR CHILDREN GRADUATE
Young children in the family offer a powerful motivation for parents to put an estate plan in place. It’s imperative to ensure growing young ones will be taken care of by the desired guardian in the event of a parent’s premature passing, and it’s important that the guardian have access to the funds to “launch” the child in place of the deceased parent.
How you and your spouse structure an estate plan when your children are young will be much different from how you’d like your estate handled when they are grown. By the time they’ve earned their college diploma, it’s time to take another look at how you’d like your assets handled. You now have adult children, and your estate plan should reflect these changed circumstances.
Is Your Adult Child Ready for a Full Inheritance?
Your son or daughter is no longer two years old, but just because they’re 22 doesn’t mean they are ready to accept a full inheritance, no holds barred. Even if they are much more responsible than their peers, or maybe than they were when they were 16 just a few years ago, as their parent, it’s still your responsibility to look out for their best interests. If you bequeath them a large inheritance before they have learned how to manage money and plan for the future, will it do for them what you want? If they receive a large inheritance in the middle of an ugly divorce, will half go to their departing spouse? If you’re worried about a dependency on substances or a gambling problem, should you appoint another party guardian of the funds? What if your child is simply prone to spending, and you’re wary of imparting your estate fully before they’ve worked to earn their own assets?
On the other hand, post-college, your adult children could be about to enter the phase of their lives when an inheritance could be the most helpful to them- putting a down payment on their first house, paying for graduate school, starting a family...
These questions, and how to approach the various balances you will need to strike, are best asked and answered with the assistance of a lawyer who has experience setting up sensible, tailored estate plans based on estate size, parental concerns and best interests of their children, no matter their age.
Have Your Needs Changed After College is Finished?
For many families, the ability to ensure that their children's education is paid for is a key goal in their planning process. Once they have graduated, you may be in a position to rethink your goals. This includes perhaps reducing the amount of life insurance you carry and pay for. It may also mean that you are ready to place some assets out of your reach, to protect those assets for your children and against the costs of nursing home care. You also may be rethinking your durable power of attorney or health care proxy, if you think your children are ready to assume those roles for you and your spouse.
For many people, this is the age when they start to consider Medicaid planning- isolating some assets in an irrevocable trust so that if you or your spouse ever needs nursing home care you will not need to spend those assets in order to be eligible for Medicaid assistance with that care.
It is also a time when many people begin to implement annual family gift strategies to start moving assets out of their estates to avoid or minimize estate tax liability. If your children are young adults, this is also a way to start introducing themselves to managing money, by transferring up to $15,000 a year to them from your assets.
Who Is Your Personal Representative?
A young parent may have appointed their adult brother or sister as their personal representative, but once their children reach adulthood, they may want to make a switch, especially if their siblings are no longer in the best of health. Adult children are also often appointed power of attorney or health care proxy, given the parental trust that the child will know their wishes and act accordingly. You also now know your children's strengths and weaknesses, and are in a position to make a good decision about who could most comfortably manage each of these roles- personal representative, power of attorney, and health care proxy.
Is it Time to Rethink Who Gets What Assets?
Just because you have multiple children does not mean you want them all to split your assets equally, or that each get the same percentage of each specific asset. As a parent, you are allowed to allocate your assets however you wish. If one child moves out of state and has no desire to come back, maybe you want to leave the family home to the child who loves living in their hometown, but gift more liquid assets to the other. You may also consider the financial standing of each child. Maybe one has grown a successful company, but the other has less financial security. This is particularly complex if you or your spouse have your own business. Now that your children have become adults, can you foresee one or all of them playing a role in that business, or should you instead make plans to have your estate cash out of the business so that they can receive the money instead? Either approach requires careful planning, either to groom one or more of your children to take over the business or to make sure the business is set up so that it can be sold for maximum value when the time comes.
What About Grandchildren?
Back when you formed an estate plan when your children were young, grandchildren might have seemed like a distant prospect. Now that your children are older, you can’t wait for it to become a reality! Your new graduate may be a long way away from thinking about starting their own family, but that doesn't mean you can't think about it as part of your estate planning. While you work on a current estate plan, ask your lawyer about whether your plan is set up to account for grandchildren, or if there is something you can do now to plan for a growing family.
Your Estate Planning as Part of Your Adult Child's Financial Education
As your child enters the world of "adulting," he or she is no doubt taking the first steps toward budgeting and financial planning. Conversations you have about these issues are a great opener for some education about how you are planning your legacy for them, which in turn can help open their eyes about the idea of saving, managing and protecting assets, and thinking about the long term.
It’s not enough to just create a general estate plan. You need an estate plan customized to your family – your life, even as your needs change over the years Set up a consultation with slnlaw today and let’s get started.
WHAT WOMEN NEED TO CONSIDER DURING THE ESTATE PLANNING PROCESS
What Women Need to Know About Estate Planning
Estate planning is critical for every person, but women in particular face challenges that make preparation essential to avoid hardship in later years. At slnlaw, we are fully conscious that estate planning is an issue affects both men and women, but we also know that the statistics emphasize the importance for women specifically to exercise this task.
Women Are Likely to Outlive Male Spouses
The average life expectancy for women in the U.S. is 80.1 years. For men, it’s 73.4 years. Also, women are more likely to marry older spouses, only increasing the chances that they will be the surviving spouse. This means both retirement and estate planning is more likely to have a direct effect on a woman’s later years.
It’s important to plan in advance, well before retirement. Here’s an example of why: if the woman’s spouse has a pension, they may be able to choose if they should take the higher payments or allow the pension to continue for their wife after they die. The couple should decide together which option to choose so both parties can understand how it will affect both their retirement income and the surviving spouse’s benefits after the pensioner dies.
Also, paying attention to estate planning while both spouses are alive can be a lifeline to the surviving spouse (again, most often the woman) in terms of avoiding a large estate tax hit in the aftermath of a spouse's demise. Specifically, due to allowances like the unlimited marital deduction, there are tax saving strategies women can utilize to reduce estate taxes on their spouse’s assets after they pass on by essentially pooling both spouse's $1 million exemption. This can mean the difference between liquidating hard assets to pay the state and maintaining a home and financial security in the transition. Though it can be a sensitive issue to discuss while both spouses are alive, every scenario should be considered in an estate planning session with an attorney.
Women Do Not Earn as Much
Over the course of a lifetime, women do not earn as much as men. According to research conducted by the National Women’s Law Center, women in the U.S. lose $403,440 over the course of a 40-year career, and this figure is not adjusted for inflation. The effect accumulates over a lifetime, and can substantially reduce a woman’s ability to take care of herself through retirement, particularly coupled with the loss of income if the woman outlives her spouse. There are state and federal equal pay laws that try to mitigate these issues, but in planning for the future it is important to remember that the wage gap does exist, and can seriously affect a woman's financial security if she outlives her husband by many years.
There are additional statistics that contribute to a woman’s critical responsibility to plan for herself and her loved ones. For example, five out of six women gain sole custody of children in a divorce. Child support notwithstanding, both divorce itself and the primary responsibility for children can add additional strain to the financial picture.
While laws continue to be enacted to remove the wage gap, the fact remains: retirement and estate planning is an essential action to take for women who plan to independently rely on themselves for income in their later years.
Why an Estate Plan Is Essential
A woman’s estate plan plays an important role in her well-being. In addition to the very real issues surrounding income and protecting family assets from estate taxes, if she is widowed, there are other considerations as well. For example, she may not automatically have a healthcare proxy or a durable power of attorney, so creating or updating these documents after a spouse dies can relieve confusion and indecision amongst family members.
If a woman outlives their spouse, she is also the one solely responsible for how assets are distributed in the family- mostly likely the deceased spouse will have left all or most of their assets to the wife, who then has to be the final say in how those assets are distributed when she is gone. She is also the one solely responsible for planning for the possibility of her own serious illness or incapacity, without a spouse to take care of the home and other affairs if she needs nursing home or long term care.
An estate planning session with an expert in the field can reveal ways to avoid taxes and ensure the recipients receive the maximum benefit after their death. It can also help you understand how to strike a balance between the assets you need to keep liquid in order to support yourself and strategies like irrevocable trusts to preserve assets for your children should you need to enter a nursing home in the future, or need to move assets out of your own estate for tax planning purposes.
What You Need
No matter what, estate planning is different for everyone because no one situation is the same. What matters it that your specific needs are met with a comprehensive, tailored approach, and that’s what we offer here at slnlaw. Contact us today to set up a free consultation and let’s examine your current estate plan together, or let’s build one that puts your wishes and your loved ones first.
5 FACTORS TO CONSIDER WHEN NAMING A PERSONAL REPRESENTATIVE
So you’ve decided to have your will and estate plan drafted. This process involves identifying what assets you own, where they should go and how they should be given to the recipient. Another important step in estate planning is choosing an individual to oversee the entire process once you’re gone. This person was once called an executor, but under current Massachusetts law the term is "personal representative."
The personal representative plays a critical role in the management and distribution of your assets after your passing. To have control over the individual chosen for this responsibility, you must name the person in your will. If you do not, the court will select a representative for you. This will most likely be your spouse or a close relative, but not necessarily the person in your life who is best suited to the task.
Dealing with funeral arrangements and legal matters can be an emotional and challenging process, which is why choosing a personal representative is a critical decision. Below, we’ve listed five factors to consider when naming this individual:
When handling finances and personal affairs, you would like your personal representative to be someone close to you and honest, whom you can trust. This is why many people opt for relatives, such as their child or spouse. Close family members may have a deeper understanding of your intentions and a personal desire to carry out your wishes. However, to avoid internal family conflict, it is also common for people to choose a trusted friend who is not also a beneficiary of your estate, and has no vested interest other than getting through the process and ensuring that everything is distributed to the people who are supposed to receive it.
2. Responsibility and Availability
Aside from trust, your representative should understand the importance and length of time required for successful completion of their role. This person is in charge of submitting your will to the court and handling your finances after your passing. Your beneficiaries will look to the executor for distribution of your assets, as well as notifying everyone, including creditors, of your passing. Probate can take months and sometimes years. You may have family members who you trust completely, but who are not the right choice for a task that will require their consistent attention for a long period of time, either because of their personalities, or because they have significant other demands on their time.
As mentioned above, the appointee is left with many tasks. After the probate process, where the court deems your will is a legal document, they have a list of jobs to complete. This includes gathering and identifying all of your assets, taking inventory of your estate, terminating your credit cards, filing your final tax returns, paying off funeral costs and bills using your estate funds, and so on. The individual must be well-organized and able to keep up with valuable information of your life, while still managing their own.
Depending on your residency, some states legally require your appointee to live in the same state, unless they’re a relative. Be sure to check your state’s law before naming a personal representative, in case it imposes preconditions. Whether required by law or not, you should consider the logistics involved and the extent to which someone located far away will be in the best position to handle them. That said, your priority should be picking the right person, and if the right person happens to live out of state, know that he or she can also hire legal counsel or other help to handle matters on the ground.
5. Age & Wellbeing
Last, but not least, you should consider the age and health of the prospective personal representative. Many people, if they make their estate plans when they are younger, include parents as personal representatives or guardians of minor children, but it may be a good idea to re-think this, especially as you (and your parents) get older. Because they are expected to carry out your wishes and legal affairs long after your passing, it’s wise to choose a personal representative who is younger and in good health.
Be sure to get approval from the person you choose as your personal representative before naming them in your will. It’s vital that the individual understands their responsibility and can commit to the role. It is also recommended to appoint a successor, or even more than one successor, in case your primary choice is unable to meet demands.
Another simple thing that is often overlooked is that your personal representative should be told where to find your will and other estate planning documents. Too often we have seen families spend unnecessary time and energy just trying to locate these basic documents. Wherever you decide to keep them, consider sending a set of instructions to your personal representative so that he or she can immediately get to the business of getting your estate finalized and distributed.
For more information regarding this individual’s responsibilities, or assistance in choosing one, our knowledgeable lawyers at SLNLaw are here to help.
HOW TO TALK WITH AGING PARENTS ABOUT ESTATE PLANNING
“Mom, dad, we need to talk.” Many people dread discussing financial arrangements with their elderly parents. It’s not easy reminding our parents that their time left on this earth is limited. This can be especially challenging if one or both of your parents is becoming less sharp mentally or showing signs of early dementia. These discussions are difficult, but necessary for their (and your) peace of mind. From something as simple to knowing where they have stored their wills and other estate planning documents to the more complex, like understanding what is being passed down and how, what their wishes are for final arrangements, and whether and to what extent you and your siblings need to be prepared to deal with estate taxes, having the whole family on the same page will only help everyone get through the difficult times when your parents pass.
And, at a much more basic level, the only way to find out if they even have an estate plan in place is to ask. The sooner you ask, the better their chances of getting something in place before it is too late.
So, what’s the best way to talk to your aging parents about estate planning? We’ve provided a few sincere approaches to help broach that intimate conversation.
Ask About Their Wishes
Often, it’s not what we say, but how we say it. For example, consider the following questions:
Instead of focusing on your parents’ death or incapabilities, focus on their desires. In this context, your parents have control over their decision. This approach opens up a comfortable pathway to discussing funeral arrangements and property matters, such as what to do with their house or to whom they desire to pass down assets. They may or may not have updated their estate planning documents recently, and asking about whether what is in those documents still reflects their wishes can also serve as a gentle reminder for them to check in with their estate planning lawyer, especially if you are concerned that one or both of them may be facing a decline in cognitive functioning or decision making.
Express Yourself as a Concerned Child
Many loving parents shudder at the thought of worrying their child. If you know your aging parents care deeply about your anxiety or concerns, start off the discussion by explaining a few things you’re worried about. Have you stressed about their debt and how it will be paid off? Are you unsure of how to handle their medical affairs in case of illness? Are you worried about how the family will manage either keeping them in their home or the costs of assisted living if that becomes impossible? Are you concerned about disagreements between your siblings about things like where they should be buried and how the funeral should be handled?
Explain to your parents that you and your siblings will be at ease if you’ve prepared as a family ahead of time before the unexpected has a chance to occur. Your parents might realize it’s better to discuss familial matters now rather than leave you scrambling in a crisis, and may be more open to talking about how to solve a problem for you than they are to thinking about their own needs and wishes.
Come Seeking Advice
“Mom, dad, I want to consider the kids’ well-being in case something happens to me. What are your thoughts on me hiring an estate planning attorney?” Open the floor by inquiring about their own estate planning attorney. It’s a good way to tell if your parents have considered estate planning already. Guide the conversation about how you desire to handle medical and financial affairs, going through a checklist of everything you need to address, such as designated beneficiaries, power of attorney decisions, and estates. Seeking your parents’ advice may change their perspective on solving their own matters.
Don't Forget These Are Still Their Decisions
It is important to remember that, no matter how concerned you may be about how your family manages after their passing, ultimately the decisions they make in their estate plans is up to your parents. Your conversations will be more productive, and cause less anxiety for them, if the clear purpose is not to try to change their minds about what they want, but to make sure you and your siblings understand it and that your family is prepared.
What If They Have Not Done Any Estate Planning?
The bad news if you find out your parents have no plan in place is that you and your siblings are at much greater risk for strife, turmoil and expense after their passing. The good news is that if your parents are both still mentally competent, there is still time for them to set things in order. It is important that they speak with an estate planning lawyer as soon as possible. The lawyer will most likely want to have a conversation alone with your parents as well- do not be alarmed- this is a necessary part of the process. The lawyer simply needs to make sure that your parents are expressing their own voluntary wishes. It is not meant to shut you out of the process, but to help ensure that the documents they put together are legally valid.
We’re Here for You
We understand that money and health are not always easy topics of discussion to bring up with your parents. However, a gentle, strategic approach may be what you need to get the conversation going. For legal advice, helpful planning tools and financial guidance, the experienced attorneys at slnlaw are here for you.
HOW TO PREPARE FOR YOUR FIRST ESTATE PLANNING SESSION
Whether you’re a newlywed or a retiree, you should have an estate plan. An estate plan is more than a will alone. An estate plan consists of multiple documents underlining the “whos,” “whats,” and “hows” of the management of your finances, assets and family matters in case of your absence.
The first step is often the hardest- deciding to make an appointment to talk to a lawyer about your estate plan. Most of the time, we find that once you take that step, the rest of the process is much easier than the process you went through in the first place to take that step.
As opposed to the average firm that may ask their clients to come prepared with countless document copies and tough decisions already made, our team offers guidance through every step of the process. In preparation for your first estate planning session, we came up with a brief list on how you can prepare to meet with us, which does not involve making a painstaking and detailed inventory of everything in your life, but simply organizing your thoughts so that we can better help you get the plan in place that gives you peace of mind.
Write Down Your Questions
Before the initial meeting, we suggest that clients write down any questions they may have for us. We encourage our clients to think of us as a resource. We want you to be comfortable asking us anything (especially how you can avoid probate and taxes!). As your estate planning lawyer, it’s essential for us to build a rapport, forming a deep understanding of what you need and the best way to handle your affairs.
Some questions we frequently hear from our estate planning clients include:
You don't have to have the answers to these questions for your first estate planning session, but knowing what is on your mind is a big help to us as we think about the plan that best meets your needs and addresses your specific concerns.
Visualize Your Family’s Future
Second, we’d like our clients to think about the future. What assets do you have and want to leave behind for your loved ones? What should become of your children and household after your passing? Who in your family is qualified to make financial decisions and medical decisions if you’re incapacitated?
With a comprehensive estate plan, these matters are addressed adequately. You’ll receive the proper guidance on specific choices and how to handle your requests, including care for children, a particular property, and choosing your power of attorney. Clients aren’t required to have all of the answers to these questions, but they are helpful to consider beforehand.
Involve Your Spouse
You may be the one tasked with actually coming to the appointment, but these conversations should also involve your spouse. Most likely your ultimate estate plan will include reciprocal documents for each of you, in order to take maximum advantage of estate tax exemptions but also to make sure that the plan for your children is clear and settled, no matter which one of you passes first. If your spouse can't be at the initial appointment with you, then it is helpful to go through the exercise of writing down your questions together, so that when we meet we can have a complete picture of the issues your family is trying to resolve. You might also consider having your spouse available for a phone call when you have your first appointment, in case there are any questions about your options or how you move forward that you should both have a say in.
Consider End-of-Life Issues
Last, but not least, we strongly suggest that you think about your health care, funeral and burial wishes. These may be sensitive topics to consider, but they are important. Who you choose as a health care proxy should be someone who understands your wishes (for example, when do you or do you not want intrusive life-saving care), and who you trust to honor those wishes. It is also highly recommended to include your preferences with respect to final arrangements in a comprehensive estate plan. Including funeral arrangements in your will ensures your requests are honored and legally bound. It will also reduce the potential for family disagreements at an emotionally difficult time.
Clients may not come fully prepared for their first estate planning session, and that is okay. Our attorneys at SLN Law understand. We work with you to gather all paperwork and documentation needed as we walk through the process together. We also offer your first consultation free of charge. Estate planning doesn’t have to be overwhelming, not with our help!
5 ESTATE PLANNING RESOLUTIONS TO FOLLOW IN THE NEW YEAR
Change is inevitable, but preparation is not. If you don’t invest time in estate planning, your family could be caught unawares by a sudden change nobody has prepared for. With the new year upon us, why not add estate planning to your list of resolutions? Many unforeseen events occur every year, and in case of sudden misfortunes, it’s wise to protect your loved ones and assets. Below are five estate planning resolutions to consider for the new year, or any time, really, if you are reading this long after the new year:
1. Understand Why You Need an Estate Plan
You’re off to a good start if you already have a will; however, it may not be enough. As explained in one of our former blog posts, a will has limitations, and even if it gets your assets distributed the way you want, will not make the easiest path for your family members. Where a will merely expresses your basic wishes, comprehensive legal documents confirm your beneficiaries will receive specific assets, and smooth out the process for them so that assets can be distributed more quickly and without unnecessary legal and court expenses.
Estate planning also ensures you have appointed decision-makers for medical and financial matters in case you are incapacitated and unable to make decisions. Drafting and implementing your power-of-attorney and health care proxy, or updating them if circumstances have changed for the people you designated previously, is one easy step to take in the new year. Another is to check your life insurance policies and retirement accounts to make sure that your designated beneficiaries are up to date.
2. Have the Necessary Tough Conversations
No matter how delicate and sensitive it may be, one should not avoid conversations about death and disability. It’s better to discuss vital decisions and issues with your loved ones now, such as dividing assets, to eliminate friction and ill-feelings escalating. It’s imperative for family members to know and agree on an action plan in case of incapacity or untimely death. Also, at a very basic level, if you have invested time and money in creating an estate plan, you want to make sure your family knows where to find it, and knows who is going to be responsible for administering your estate. If you haven’t done so already, make it a priority to arrange those types of family discussions during the new year.
3. Make Time for an Update (If You Already Have an Estate Plan)
If you already have an estate plan in place, make sure to keep it updated. Significant milestones or life events, such as marriage, divorce, career change, or children who’ve reached adulthood can significantly affect your current estate plan. There is also the possibility of law and tax changes within your state that can do the same. It’s wise to review your estate plan periodically to ensure everything is up to date. If you do nothing else to start the new year, a simple call to your estate planning attorney to ask whether anything has changed in the law is an easy way to put your mind at ease for the rest of the year.
4. Create Specific Goals for Your Assets
To whom do your assets pass down after your passing? Are you passing on things that can be easily divided between your heirs, like money, or do you have to figure out how to liquidate or divide things like real property? Do you own a business that you intend for someone to carry on for you into the future?Do you have body of creative work that you want either given to specific people, published, destroyed, or some combination of all three? Are you aware of all of your assets? Before naming beneficiaries and making arrangements, it’s best to have full knowledge of all of your assets. Once you’re fully aware of what legally belongs to you, it’s easier to make the decisions for your family and loved ones accordingly. Another easy step to start the year on the right foot is to make a simple list of what you have and where you want it to go. Once you do that, you can easily hand off the work of creating your estate plan to your lawyer.
5. Prepare for the Unexpected
Death isn’t the only unexpected misfortune that can affect your family. What if you have an accident or illness that creates the need for long-term care, or renders you incapacitated temporarily? More than often, disabled individuals cannot make sound decisions about their finances or legal assets on their own, and sometimes even if you eventually make a full recovery a could be unable to make those decisions for weeks or months. Take into consideration the possibility of unforeseen events and establish plans that protect your loved ones. The simplest way to do this is to prepare a durable power of attorney and a health care proxy for each adult in your family, making clear who will be authorized to make those decisions.
An attorney can help you through your decision-making process, ensuring everything is up to date by both terms of law and personal life changes. The trusted attorneys of SLN Law are skilled at thoughtful estate planning, offering proper guidance on decisions that can protect your family from all circumstances.
6 ESTATE PLANNING MISTAKES YOU SHOULD AVOID
You want peace of mind knowing that your loved ones are taken care of after your death. While it may be difficult to think about, preparing a will and revisiting and updating existing estate plans that may have been made years ago are the best way to prevent needless mistakes in the future, many of which could cost your family thousands of dollars.
Attorneys that are experienced in this area can help their clients avoid making these six disastrous estate planning mistakes:
1. Not Having an Estate Plan in the First Place
No estate plan? You can bet there will be some confusion on how your assets should be distributed after your death. The law will decide which family members get your assets, but it does not provide a clear path for how to divide things like real property, interests in a business, or other things that your heirs could be forced to sell in order to divide. Also, the cost of getting through the probate process can eat up 3% to 8% of the value of your estate, which in turn takes that money out of the pockets of the people you mean to take care of with your estate planning.
Even if you have a will, it may not be enough. For example, most people think that all they need is a will, but many assets are typically not named in a will, such as IRA accounts and life insurance. Those assets will pass to whomever you have named as a beneficiary, no matter what your will says. And for a lot of people, these assets can represent most of what you have to distribute to your loved ones. You don't even need a lawyer for this part- you just need to check and make sure that your designations are up to date and accurately reflect who you mean to receive those funds.
2. Not Having Your Estate Plan Examined by a Professional
Do-it-yourself (DIY) wills that you create online might save you a few bucks, but it can cost your family thousands of dollars if it lacks in-depth tax planning strategy. That’s not even counting the costs of hiring a lawyer to mitigate the damage after the fact! In the worst case scenario, the probate court may not admit the DIY will at all. In this situation, assets will pass to those who would receive it, as dictated by state law, which may not be what you intended and may create confusion and stress for your family.
In the age of the internet, it is easy to be misinformed, and it is important to know what your state (meaning the state of your primary residence) requires. For example, there are states that recognize "holographic wills"- a handwritten will signed by the person making it, and you may read about this online. Massachusetts does not recognize any will, handwritten or not, unless it meets the specific signature requirements under state law.
3. Trusting Your Children with More Than They Can Handle at Their Age
Every parent wants to believe their children are fit to responsibly manage and benefit from their inheritance as soon as they turn 18, but that isn’t usually the reality. Most young adults typically aren’t experienced enough to manage large sums of money efficiently. When you add to that the fact that they will be receiving an inheritance at the same time that they are grieving and processing a parent's passing, and you have a potential recipe for poor choices that are hard to undo later. Setting up a trust with provisions regarding when your children can receive their inheritance and what kinds of things a trustee can authorize expenditures for in the meantime can not only protect your children, but also give them a structure and a person they can turn to as the learn how to manage their own affairs.
4. Depending on Family Members to “Do the Right Thing”
Rule of thumb: it’s better to establish a trust than to simply trust. Don’t rely on the goodwill of others to use your assets for the good of another, such as to take care of someone in your family. Anyone, including a family member, can opt to change their mind and oppose how you intended to use your assets after your passing. People's lives also change- the spouse you entrust with managing your assets for the benefit of your children may remarry and have other children competing for the same resources.
5. Not Realizing the Impact Taxes Can Have
Gift, income, and estate taxes all impact the sum passed to your descendants. For example, if you leave life insurance to one child and your Individual Retirement Account (IRA) to another, the child with the IRA will have to pay income taxes, while the one who received the life insurance will not. While you intended was to split your assets between them equally, the final amount they receive will differ. Also remember that in Massachusetts if your estate is worth $1 million or more (counting your life insurance, retirement savings, and real property like your home), your entire estate will be taxed. At $1 million exactly, your approximate tax liability will be $36,000. That is well more than the cost of a little planning ahead of time to avoid or minimize that tax burden.
6. Not Understanding That Specifics Matter
Let’s say you decided to write a will that leaves all of your assets to your “surviving children.” If one of your children passes before you, would you like for your assets to pass to only your remaining children, or for your deceased child’s portion to pass to his/her children? It’s important to be specific when properly drafting an estate plan, factoring any and all worst case scenarios that might arise.
Hiring an attorney will not only save you from making unexpected estate planning mistakes, but also will give you access to immediate legal advice and guidance when revisiting estate planning decisions. Our experienced attorneys at SLN Law will help you create the best plan for you and your family and make sure you receive exceptional legal guidance. When you’re ready to prepare for your family’s future, we are one call away.
slnlaw is a law firm in Sharon Massachusetts providing business, employment law and estate planning services to individuals and small businesses