Category: Estate Planning

Your Most Important New Year’s Resolution: Creating a Kids Protection Plan

Post author By Sara Thomas
Post date January 19, 2024
No Comments on Your Most Important New Year’s Resolution: Creating a Kids Protection Plan

As we welcome the New Year, filled with hope and resolutions for a brighter future, one commitment should be at the top of your list– creating a Kids Protection Plan™. It can be hard to think about a future where you couldn’t be there for your children, but having a plan in place will ensure that your kids stay in the care of the people they know and love in the event you become incapacitated or die (instead of their care decisions being left up to chance or whichever judge is overseeing the family court at the time).

This is not just some task to add to your to-do list; it’s a warm embrace of security for your little ones. So, why is this the ultimate resolution for you in 2024? Keep reading to find out.

Unforeseen Circumstances Can Leave Your Kids In Foster Care

Imagine your kids at home with a babysitter, and you don’t come home. You’ve been in an accident and are unconscious at the hospital. Authorities are called, but the babysitter doesn’t have the legal authority to care for your children until you return or until a Permanent Guardian is appointed. Even if you already named a Permanent Guardian for your kids, this doesn’t offer immediate legal authority for the Guardian to care for them.

In such scenarios, law enforcement might place your child into protective custody with social services. A Kids Protection Plan™ bridges this gap by providing legal documentation and instructions for Temporary Legal Guardians who have the immediate legal authority to care for your children until you return or until a Permanent Guardian is appointed by the court. This minimizes the risk of your children ending up in foster care or with a family member that you would never want in charge of your children.

Planning Lets You Pick Who Cares for Your Kids – Not a Judge

Is there someone in your life whom you unequivocally would never want raising your kids? Even if you’ve already named Permanent Legal Guardians for them, it’s still up to a judge to make the official determination of who should raise your children long-term. If this person is an immediate family member, the judge may choose them as your kids’ Permanent Legal Guardian if they come forward as a candidate, despite what your Permanent Guardian Nomination paperwork says.

A comprehensive Kids Protection Plan™ confidentially excludes anyone you would never want raising your kids and provides crucial information about your decision to exclude them that can be presented to the judge if needed. With this confidential document, you ensure that your children are always kept away from someone you wouldn’t want as their Legal Guardian.

You Have Unique Desires for Your Kids’ Education, Healthcare, and Financial Well-Being

Every parent has distinct desires regarding their children’s education, healthcare, and financial well-being. A Kids Protection Plan™ allows you to articulate these wishes thoroughly in a way that provides your kids’ Legal Guardians with guidance and your children with the comfort of their routine.

Plus, providing clear instructions to potential guardians ensures that your children’s upbringing aligns with your values and aspirations. This process not only secures their future but also grants you profound clarity about your parenting priorities.

Comprehensive Protection for the Ones You Love Most

While nominating Permanent Legal Guardians is fundamental, it might not suffice in every situation. A full-fledged Kids Protection Plan™ offers a holistic approach, addressing the potential pitfalls of leaving your kids with caregivers, excluding unwanted individuals from guardianship, and outlining your unique desires for their well-being. This comprehensive plan ensures that your children remain in the care of trusted individuals who understand and respect your values.

If you’re ready to make creating a Kids Protection Plan™ your most significant New Year’s resolution, the first step is scheduling a complimentary 15-minute call with us. And unlike other resolutions that may be hard to stick to, we’re here to guide and support you through every step to ensure your Kids Protection Plan™ offers the best protection for the people you love – both now and for years to come.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Tags Estate Plan, Excluded Guardian, Family Emergency Plan, Kids Protection Plan™, Permanent Guardian, Personal Family Lawyer®, Temporary Guardian

Estate Planning

What Caregivers Need to Know About Estate Planning for a Loved One With Dementia – Part 2

Post author By Sara Thomas
Post date January 12, 2024
2 Comments on What Caregivers Need to Know About Estate Planning for a Loved One With Dementia – Part 2

Last week, we started our discussion on estate planning for a loved one with a dementia diagnosis and what this means for their ability to protect their wishes through an estate plan. We covered:

What it means to have mental capacity or be incapacitated
How dementia affects capacity for estate planning purposes
The essential estate planning tools a person with dementia needs to create right away

However, as dementia progresses, estate planning must become more proactive and strategic than ever to avoid court and conflict over your loved one’s wishes in the future. If dementia becomes too advanced before planning is complete, the question of who will manage your loved one’s assets and care will be left to a judge who doesn’t know your loved one or their wishes.

Keep reading to learn what steps need to be considered when estate planning for someone with more advanced dementia.

Seek a Cognitive Evaluation

If your loved one’s cognitive capacity is in question, seeking a professional evaluation is a prudent and proactive step in the estate planning process. Schedule an appointment with your loved one’s primary care physician or a specialist in dementia care to assess their mental state and make a recommendation on your loved one’s ability to make estate planning decisions.

During this evaluation, the medical professional will talk to your loved one and ask them questions about their everyday life, how aware they are of their circumstances, and what they would do in certain situations, such as if a stranger came to the door or if a pipe burst in their home.

Your loved one doesn’t need to remember every detail about their life for the evaluation to be beneficial. The professional will be most concerned with your loved one’s ability to analyze a scenario and make a thoughtful decision on how to respond. For example, your loved one may not remember what day of the week it is but may remember they shouldn’t open the door for a stranger.

Receiving a report from your loved one’s doctor stating they have the cognitive ability to make estate planning decisions (at least when they are in a lucid state) protects their ability to make decisions for their finances and healthcare, and dissuades any future debate from third parties as to whether your loved one had the ability to make a plan in the first place.

Encourage Private Meetings Between Your Loved One and Their Lawyer

It may be second nature to help your loved one with appointments, especially if hearing and memory troubles make it difficult for your loved one to follow along. But as much as possible, allow your loved one to meet with their lawyer independently. A private meeting between your loved one and their lawyer will provide them with the opportunity to express their wishes without external influence.

Even if you have your loved one’s best intentions at heart and they would prefer to have you present during the meetings, encouraging your loved one to have private conversations with their lawyer when possible helps avoid questions about whether or not you influenced their estate planning decisions.

If it isn’t feasible for your loved one to have an entire meeting with their lawyer alone, make sure they at least have opportunities to talk to their attorney in private by leaving the room while your attorney confirms their wishes.

Be sure to document every time your loved one meets alone with their lawyer and ask their lawyer to document it as well.

Make Sure Their Estate Plan Is Executed Carefully

Unfortunately, errors that occur at the time an estate plan is signed are common. Every state has different laws for how estate planning documents are executed, how they can be signed, and what witnesses or notaries are required to make the document binding.

If your loved one’s plan isn’t executed properly, it can result in your family needing to involve a judge to determine whether the estate plan is still valid. This also creates an opportunity for family members to question whether your loved one had the mental capacity to create the plan at all.

It’s also essential to document your loved one’s capacity at the time the estate plan documents are signed. Make sure that their lawyer reviews the documents carefully with your loved one before they sign them, that the documents reflect your loved one’s wishes, and that your loved one is creating the plan of their own free will.

If you have any concerns about other family members questioning your loved one’s estate planning decisions or mental state at the time, ask your loved one and their attorney if they could record the signing meeting to dispel any claims that your loved one was coerced into planning or didn’t know what they were signing.

Conclusion

If your loved one received a dementia diagnosis and hasn’t addressed their legal matters, don’t despair. Even in the advanced stages of dementia, individuals may have moments when they can participate in decision-making and estate planning. But, due to the progressive nature of dementia, time is of the essence for your loved one to create an estate plan, and the sooner they plan, the easier it will be for them to get the help they need as their condition progresses.

In cases where your loved one’s capacity is severely diminished and estate planning hasn’t been completed, your family will need to pursue a court guardianship. This legal arrangement involves a court appointing a legal guardian who assumes responsibility for making decisions on behalf of the person with dementia. This process can be stressful, and it’s possible the court will appoint someone your loved one never would have wanted to manage their assets or healthcare decisions.

To make sure your loved one’s wishes are documented before it’s too late, I invite you to meet with my office today. Our team is dedicated to providing compassionate guidance and legal expertise to ensure the well-being and wishes of your loved one are preserved.

Tags Caregiver, Dementia, Estate Planning, Personal Family Lawyer®, Sandwich Generation

Estate Planning

What Caregivers Need to Know About Estate Planning for a Loved One With Dementia – Part 1

Post author By Sara Thomas
Post date January 3, 2024
3 Comments on What Caregivers Need to Know About Estate Planning for a Loved One With Dementia – Part 1

Caring for a loved one with dementia is a challenge that millions of families undertake each year. As a caregiver, understanding how a dementia diagnosis affects your loved one’s legal decision-making is crucial to ensuring their wishes are honored and that you are providing them with the best possible care.

In this blog, we’ll explore the importance of estate planning, even after a dementia diagnosis, as the best method to ensure the wishes and rights of your loved one are protected.

Understanding Incapacity

Dementia is a progressive condition that affects memory, cognition, and daily functioning. As dementia causes your loved one’s cognitive abilities to decline, there may come a time when they are no longer able to make sound decisions about their finances, healthcare, and overall well-being.

When the effects of dementia make it difficult for a person to understand information and make sound decisions, that person is considered to be incapacitated, which means they can no longer legally make healthcare or financial decisions for themselves. This change in their memory and cognition can be emotionally overwhelming for both your loved one and your whole family, and without proper planning, can require court involvement.

Thoughtful estate planning can ensure that your loved one is cared for by the people they know and trust if they can no longer care for themselves, and even if you’re loved one has already been diagnosed with dementia, it is still possible for them to create a legally-binding estate plan during the early stages of the disease.

Estate Planning In The Early Stages of Dementia

Every adult should create certain legal documents to protect their rights and wishes, and this is no different for a loved one with a dementia diagnosis. What is important to remember is that in order to create a legal document, you need to be fully aware of what you are doing and what the consequences of your choices will be.

Thankfully, a person does not need to constantly be in a state of capacity to create an estate plan. As long as your loved one has the mental capacity at the moment they sign their estate plan documents, the documents will be valid, even if they regress into a state of incapacity afterward.

In the early stages of dementia, and ideally long before any health problems surface, your loved one should create the following estate planning documents:

1. General Durable Power of Attorney

A General Durable Power of Attorney (POA) is a legal tool that allows your loved one to appoint someone to make financial and legal decisions on their behalf. Their POA can write checks, pay bills, maintain their home, and manage their financial assets.

This document becomes especially significant as dementia progresses. Encourage your loved one to designate a trusted individual as their Power of Attorney while they are still able to make such decisions.

2. A Revocable Living Trust

A General Durable Power of Attorney is an important tool, but many financial institutions place constraints on the use of a POA or don’t acknowledge their authority at all. To make sure your loved one has complete protection of their financial wishes, encourage them to establish a Revocable Living Trust and move their assets into the name of the Trust.

As part of creating a Trust, your loved one will name the person they want to manage their assets, called the Trustee. The Trustee and Power of Attorney are usually the same person, but not always. By having these two estate planning tools in place, you can rest assured that the people your loved one knows and loves will be able to manage their assets for them as their dementia progresses.

3. Power of Attorney for Healthcare

Similar to a General Durable POA, a Power of Attorney for Healthcare (HPOA) appoints someone to make medical decisions on behalf of your loved one when they are unable to do so for themselves. Discussing and establishing a Healthcare Power of Attorney early on allows your loved one to express their medical preferences and ensures their wishes are honored.

Their Power of Attorney for Healthcare should also include a Declaration to Physicians, also called a Living Will, that outlines their desires regarding medical treatment, life support, and end-of-life care. Creating a Declaration to Physicians and discussing their wishes with you ensures that their preferences regarding life-sustaining treatment, resuscitation, and other medical interventions are documented and respected.

Plan As Early As Possible

One of the most crucial steps in preparing for the challenges of dementia is to help your loved one complete their estate planning while they still have the capacity to do so. Waiting until the later stages of the disease can limit their options and increase stress for everyone involved.

By addressing legal matters early on, you can ensure that your loved one’s wishes are respected, and their affairs are managed in the way they intended, by the people they trust, without the need for court involvement.

If you have a loved one with more advanced dementia, check back here next week as we explore late-stage estate planning options and methods to avoid family and legal conflict over your loved one’s care.

To learn more, schedule a complimentary 15-minute call with our office. Contact us today to get started.

Tags Caregivers, Dementia, Estate Plan

Estate Planning

3 Ways to Comfort and Support A Loved One in Mourning

Post author By Sara Thomas
Post date December 21, 2023
2 Comments on 3 Ways to Comfort and Support A Loved One in Mourning

Losing a loved one is an incredibly challenging experience, and the journey through grief can be both complex and overwhelming. Unfortunately, we all experience grief at one time or another, and knowing how to manage your own grief and how to be there for others who are grieving is an important skill that can improve your life and relationships.

Our firm understands that our role extends beyond legal matters. In times of loss, it’s crucial to provide comfort and support to those grieving, and when they’re ready, guidance for the steps ahead.

In this blog, we explore practical and heartfelt ways to hold space for your loved ones who are mourning.

01 | Express Empathy

When someone is grieving, the simple act of expressing empathy can provide immense comfort. Let your loved one know that you are there for them, ready to listen without judgment. Phrases like “I’m here for you,” or “I’m so sorry for your loss” can make a significant impact.

If you have also lost a loved one, consider relying on your own experience to relate to their feelings and encourage the person that they will make it through this. Just be mindful to keep the focus on their feelings, as everyone experiences the emotions of loss differently.

If you aren’t sure what to say or aren’t able to be with them physically, a heartfelt card or a handwritten note can convey your sympathy in a tangible and lasting way. Being present on a telephone call can also be extremely comforting. Even if your loved one doesn’t want to talk, just being together in silence can help.

02 | Create a Safe Environment

Grief is a personal journey, and everyone copes differently. Some may need solitude, while others seek companionship. Respect your loved one’s grieving process and offer support tailored to their needs.

Grieving individuals often need a safe space to express their feelings without fear of judgment. Encourage open communication and let your loved one know that it’s okay to feel a range of emotions. Avoid offering unsolicited advice and instead, provide a listening ear. Sometimes, just being present and allowing them to share memories or express their pain can be incredibly therapeutic.

If your loved one doesn’t feel like talking or being around others, don’t push them. Leave them a message of support and give them space. Check in with them only if you haven’t heard from them in an unusual amount of time based on your relationship with them.

Be patient and understand that the stages of grief are unique to each individual. Even if your loved one is feeling better, they will likely have days or weeks where they will feel overwhelmed by grief again. Offer comfort in these moments without trying to change how they feel.

03 | Offer Practical Help

During times of grief, even daily tasks can feel insurmountable. Offering practical help, such as preparing a meal, running errands, or assisting with household chores, can make a world of difference to someone in mourning. Small gestures can alleviate the burden on your loved one, allowing them the time and space they need to navigate their emotions.

If your loved one is grieving for their spouse, they may be at a loss for how to manage their finances or other daily tasks that their partner normally would have handled. Offer to help them pay their bills, set up memorial arrangements, or inform your other relatives about the loss. If your loved one has children to care for, offer to watch their kids for a while, pick them up after school, or help with homework.

Where you’re able, try to assist your loved one as part of a routine or ritual. Establishing routines can provide a sense of stability amid grief. This could be as simple as giving them a weekly phone call to check in, a monthly visit to a special place, or inviting them over for dinner every Sunday. The consistency and socialization these routines bring can offer a source of connection and help ease the depression that comes with loss.

Ease The Burden of Loss on Your Family By Planning Ahead

In times of grief, the support of friends and family is crucial. But the best way to alleviate some of the stress and anxiety that comes with the loss of a loved one is to create a plan ahead of time. By doing so, everyone you love will know exactly what you want to happen if you become incapacitated or die, and the care of your assets, bills, and loved ones will be handled quickly and smoothly by the people you trust.

Even more importantly, your loved ones will have our support to walk them through any necessary legal steps they need to take during the mourning process.

To learn more about how we can help you create a plan that will provide guidance, comfort, and ease for your loved ones after your death or incapacity, schedule a complimentary call with our office.

We would be honored to be there for your family.

Tags Estate Plan, Estate Planning Attorney, Grief, Mourning, Personal Family Lawyer ®

Estate Planning

Roll Unused 529 College Savings Into a Roth IRA

Post author By Sara Thomas
Post date December 18, 2023
2 Comments on Roll Unused 529 College Savings Into a Roth IRA

In December 2022, Congress passed the SECURE 2.0 Act, bringing significant changes to the world of retirement savings and student loans. Two key parts of the Secure 2.0 Act are in effect, and they could substantially impact your family’s financial future.

We’ll explain how the new law affects your unused 529 college savings account and what that means for your future savings.

You Can Now Roll 529 College Savings Into A Roth IRA

A 529 college fund is a tax-advantaged savings account that is designed to help families save for their children’s college education. With the SECURE 2.0 Act, Congress expanded the ways you can use these accounts by introducing a new rollover option, which is especially helpful if the beneficiary has money left over after their education is complete.

Starting this year, a 529 plan account beneficiary will have the opportunity to roll over up to $35,000 from your 529 college savings plans into a Roth IRA – and the best part is it’s tax and penalty-free.

But there are some rules you’ll need to follow to take advantage of this retirement fund boost:

01 | Annual and Lifetime Contribution Limits

Any rollover from your 529 account is subject to annual Roth IRA contribution limits. For example, if in 2024 the Roth IRA contribution limit remains the same as in 2023 ($6,500 for individuals under 50), you can roll over an amount up to this limit, including yearly contributions withheld from your income. There is also a rollover contribution limit of $35,000 over your lifetime.

02 | The 15-Year Rule

To qualify for tax and penalty-free rollovers, the 529 plan must have been open for at least 15 years. This 15-year clock starts ticking from the day the 529 plan was initially opened, usually by a parent or grandparent. It’s crucial to remember that changing the beneficiary of the 529 plan at any point may potentially restart this 15-year clock.

03 | 5-Year Rollover Blackout

Funds that were contributed to your 529 plan within five years of the rollover date cannot be rolled over. Only contributions made outside of this five-year window are eligible. But, you can continue to rollover funds as time goes on and the 5-year window moves farther away from the most recent contributions.

Here’s an example of how these rules work in real life: Imagine your mother opened a 529 account for you in 2001. She contributed money to the account every year for 20 years, through 2020. When you graduated college in 2022, there were some funds left in the 529 account. You want to roll over these funds into a Roth IRA on January 1, 2024.

In this scenario, the account has been open for at least 15 years, so you can roll over funds into a Roth IRA, up to the annual contribution limit of $6,500 per year. But, the funds you roll over from the 529 cannot include funds your mother contributed in the 5 years before your rollover date of January 1, 2024. That means you can’t roll over funds contributed to the 529 account between January 1, 2019, and January 1, 2024.

Let’s look at another example: Your father opened a 529 college savings account for you in 1998 and contributed money to it every year until your graduation from trade school in 2015. Since graduation, you and your employer have contributed a total of $3,000 to your retirement account this year. There is $10,000 left in the account and you want to roll over the funds into a Roth IRA on January 1, 2024.

In this example, the account has been open for more than 15 years and all of the funds in the account were contributed to it more than five years ago, so all of the funds are eligible for a rollover. However, you can only contribute up to $6,500 to your retirement accounts annually. Because of this, you can only roll over a maximum of $3,500 from your 529 account into your Roth IRA this year if you or your employer don’t make any more contributions to your retirement this year. After the rollover, you’ll have $6,500 in your 529 account at the end of 2024.

In 2025, you’ll be able to roll over the remaining $6,500 from your 529 into your Roth IRA (if you make no other contributions from your income that year).

An Extra Bonus For Grandparent-Owned Accounts

In order to be considered for federal financial aid, students must disclose their personal and family financial information on the Free Application for Federal Student Aid (FASFA). Funds in a 529 account created by a parent are counted as a financial asset of the student on the FAFSA application.

But funds in a 529 account owned by a grandparent or other third party have never been counted as an asset for FAFSA purposes. Only money withdrawn from the account is considered untaxed income of the student which FAFSA considers in its application review.

The big news is that with the new Secure 2.0 Act, any withdrawals from a grandparent-owned 529 for education expenses will no longer be considered untaxed income of the student, which means the funds will not hurt the student’s eligibility for federal aid.

Planning for What’s Really Important

While you take steps to secure your financial future, don’t forget to protect everything you’ve worked so hard to build. Your retirement savings is likely the largest asset you own, and making sure it’s managed and passed on in the best way possible is essential for your well-being and the future well-being of those you love.

To make sure there’s a plan for your future, give our office a call. We’d be honored to learn more about your goals for your family and share with you the unique process we use to ensure everything you own and everyone you love is cared for, no matter what.

Schedule a free 15-minute discovery call to learn more.

Tags 529 College Savings, Estate Plan, Grandparent-Owned accounts, Personal Family Lawyer®, Roth IRA, SECURE 2.0 Act

Estate Planning

How To Pass On Family Heirlooms and Keepsakes Without Causing A Family Feud

Post author By Sara Thomas
Post date December 11, 2023
No Comments on How To Pass On Family Heirlooms and Keepsakes Without Causing A Family Feud

When creating an estate plan, people are often most concerned with passing on the “big things” like real estate, bank accounts, and vehicles. Smaller items, like family heirlooms and keepsakes, which may not have a high dollar value, frequently have the most sentimental value for our family members. However, these personal possessions are often not specifically accounted for in wills, trusts, and other estate planning documents.

It’s important that you don’t overlook this type of property in your estate plan, as the distribution of such items can become a source of intense conflict and strife for those you leave behind. In fact, if you don’t properly address family heirlooms and keepsakes in your estate plan, it can lead to long-lasting disagreements that can tear your family apart.

Little Things With Big Value

Heirlooms and keepsakes are both prized for their sentimental value, but these possessions are slightly different from one another in terms of the manner in which the items are passed on.

Heirlooms: Heirlooms are passed down among family members for generations, and the passing of heirlooms sometimes involves traditions.

Keepsakes: Keepsakes, on the other hand, are possessions that are given or kept specifically for sentimental or nostalgic reasons, and these items may only get passed on once.

Although just about any personal possession could be considered an heirloom or keepsake, some of the most common examples of these items include the following:

Jewelry
Photographs
Books
Art
Musical instruments
Furniture
Clothing
Bibles
Recipes
Family documents (such as birth certificates, baptism records, and citizenship papers)
Collections (such as sports memorabilia, coins, stamps, and doll collections)

Issues Raised By Passing On Heirlooms & Keepsakes

In the legal world, both heirlooms and keepsakes are considered “non-titled personal property.” Given the potential trouble the distribution of heirlooms and keepsakes can cause for your heirs, you’ll want to take extra care in seeing that these family treasures are passed on properly. And this means incorporating them into your estate plan in one way or another.

Strategies For Peacefully Distributing Heirlooms & Keepsakes

While there is no one perfect way to distribute these items in your estate plan, your primary goal should be to maintain harmony among your loved ones during an already emotional time. As with most sensitive issues, clear communication is vital to this process.

Because your family members can have vastly different values associated with certain heirlooms and keepsakes and you may have little idea about how each person feels, you should speak with each family member in advance. By talking with family members about their feelings and expectations regarding your possessions ahead of time, you will have a much better idea how to distribute these items to your loved ones with the least amount of conflict.

Additionally, you should decide ahead of time if you need to have any of your heirlooms or keepsakes appraised. In doing so, you provide your heirs with the necessary documentation to gauge the monetary value of these items. Again, the manner in which you distribute your heirlooms and keepsakes will depend largely on the items you have to pass on and your specific family situation.

That said, here are a few estate planning strategies to consider when passing on these precious possessions:

Gifting during your lifetime: Of course, you don’t have to wait until you die to pass on your heirlooms and keepsakes, and you may prefer to give away certain special items while you are still living. By doing so, you get to personally witness the joy your loved ones experience when they receive the gift, and you can also personally explain the reasons you want each person to have a particular item.

If your heirlooms and/or keepsakes have a high monetary value, you should keep gift tax issues in mind when you give them away. If you have possessions you want to give away that might trigger gift taxes, meet with us to discuss your options.

Include items in your estate plan using a personal property memorandum: As with other assets you want to pass on after your death, you should include heirlooms and keepsakes in your estate plan by adding them to your will or trust. The best way to do this is by using what’s known as a personal property memorandum.

A personal property memorandum is a separate document that is referenced in your will or living trust. The memorandum allows you to list which items you wish to leave to each individual and detail the reasons you are giving each item. In many states, if it’s properly incorporated into your will or trust, a personal property memorandum is a legally binding document.

Furthermore, unlike a will or trust, you can create and update your memorandum without a lawyer’s help. You can change your memorandum as many times as you like, just make sure you sign and date it each time to ensure authenticity. Your memorandum can be as long or short as you like, which allows you to account for even the smallest or seemingly insignificant possessions.

Most types of tangible personal property can be included in your memorandum, but it’s important to note that you cannot list certain assets in a memorandum, including titled property, such as real estate and vehicles; assets with a beneficiary designation, such as life insurance, 401(k)s, and bank accounts; or intellectual property, such as works protected by a copyrights or trademark. If you are unsure if you should include a certain possession in your personal property memorandum, consult with us.

Pass on the values and stories behind the possessions: You may want to consider making audio recordings to accompany your heirlooms and keepsakes. In this way, your loved ones not only get to hear your voice, but they will also be able to learn the stories behind the possessions, as well as the reasons why you gave each person a particular item.

Maintain an inventory of your assets: Of course, if no one can find your heirlooms and keepsakes, they aren’t going to do anybody any good. It’s vital that you create and maintain a comprehensive inventory of all of your assets, including each of your family heirlooms and keepsakes and make sure your inventory stays consistently updated throughout your lifetime.

Keep The Peace After You Are Gone

To ensure your heirlooms and keepsakes don’t create any unnecessary conflicts among your heirs, make sure that your estate plan includes all of your assets, especially your family heirlooms and keepsakes. We can support you to ensure these precious treasures are protected and preserved as part of your Life & Legacy Plan, and that they pass to each of your loved ones in exactly the manner you would want, without causing a family feud.

Tags Estate Plan, Family Heirlooms, Family Keepsakes

Estate Planning

Protect Your Children’s Inheritance With A Lifetime Asset Protection Trust

Post author By Sara Thomas
Post date December 5, 2023
No Comments on Protect Your Children’s Inheritance With A Lifetime Asset Protection Trust

As a parent, you’re likely hoping to leave your children an inheritance. In fact, doing so may be one of the primary factors motivating your life’s work. But without taking the proper precautions, the wealth you pass on is at serious risk of being accidentally lost or squandered due to common life events, such as divorce, serious debt, devastating illness, and unfortunate accidents.

Creating a will or a revocable living trust offers some protection for your kid’s inheritance and you can set parameters for distribution at specific ages and stages. In our planning process, we offer parents the option of creating a Lifetime Asset Protection Trust for their children’s inheritance. These unique trusts safeguard your kids’ inheritance from being lost to common life events, such as divorce, serious illness, lawsuits, or even bankruptcy.

These trusts offer kids the best of both worlds: 1) airtight asset protection and 2) the ability to use and control their inheritance. You can even provide your heirs with a unique educational opportunity in which they gain valuable experience managing and growing their inheritance.

Not Only For The Super Rich

Contrary to what you might think, Lifetime Asset Protection Trusts are not just for those with massive wealth. In fact, these trusts are even more useful if you’re leaving a relatively modest inheritance because they can be used to educate your children about how to grow your family wealth, instead of quickly blowing through it.

Not All Trusts Are Created Equal

When it comes to leaving an inheritance, most lawyers will advise you to place the money in a revocable living trust, which is the right thing to do. However, most lawyers would have you distribute the trust assets outright to your loved ones at specific ages, such as one-third at 25, half of the balance at 35, and the rest at 40. Check your own trust to see if it does this or something similar.

But giving outright ownership of the trust assets in this way puts everything you’ve worked so hard to leave behind at risk. While a living trust may protect your loved ones’ inheritance as long as the assets are held by the trust, once the assets are disbursed to the beneficiary, they can be lost to future creditors, a catastrophic accident or illness, divorce, bankruptcy—or even a major lawsuit.

Rather than risking their inheritance by leaving it outright to your children at certain ages or following certain life events, such as graduating college, you can gift your assets to your children at the time of your death using a Lifetime Asset Protection Trust. When you gift the inheritance to your kids via a Lifetime Asset Protection Trust, the Trustee of the trust owns the assets, not your children. A Lifetime Asset Protection Trust can be built into a revocable living trust, which becomes irrevocable at the time of your death and holds your loved one’s inheritance in continued protective trust for their lifetime.

A Trustee of your choice holds the trust assets upon your death for the benefit of your child or children. Because a Lifetime Asset Protection Trust is discretionary, the Trustee has the power to distribute the assets at their own discretion, instead of being required to release them in a rigid structure. This discretionary power enables the Trustee to control when and how your kids can access their inheritance, so they’re not only protected from outside threats like ex-spouses and creditors, but from their own poor judgment as well.

A Lifetime Of Guidance & Support

Given that distributions from a Lifetime Asset Protection Trust are 100% up to the Trustee, you may be concerned about the Trustee’s ability to know when to make distributions to your child and when to withhold them. Granting such power is vital for asset protection, but it also puts a lot of pressure on the Trustee, and you probably don’t want your named Trustee making these decisions in a vacuum.

To address this issue, you can write up guidelines to the Trustee, providing the Trustee with direction about how you’d like the trust assets to be used for your beneficiaries. This ensures the Trustee is aware of your values and wishes when making distributions, rather than simply guessing what you would’ve wanted, which often leads to problems down the road.

In fact, many of our clients add guidelines describing how they’d choose to make distributions in up to 10 different scenarios. These scenarios might involve the purchase of a home, a wedding, the start of a business, and/or travel. Some clients choose to provide guidelines around how they would make investment decisions, as well. This is something we can support you with if you decide to use a Lifetime Asset Protection Trust.

An Educational Opportunity

Beyond these benefits, a Lifetime Asset Protection Trust can also be set up to give your child hands-on experience managing financial matters, like investing, running a business, and charitable giving. And he or she will learn how to do these things with support from the Trustee you’ve chosen to guide them.

This is accomplished by adding provisions to the trust that allow your child to become a Co-Trustee at a predetermined age. Serving alongside the original Trustee, your child will have the opportunity to invest and manage the trust assets under the supervision and tutelage of a trusted mentor.

You can even allow your child to become Sole Trustee later in life, once he or she has gained enough experience and is ready to take full control. As Sole Trustee, your child would be able to resign and replace themselves with an independent trustee, if necessary, for continued asset protection.

Regardless of whether or not your child becomes Co-Trustee or Sole Trustee, a Lifetime Asset Protection Trust gives you the opportunity to turn your child’s inheritance into a valuable teaching tool. Do you want to give your child the ability to leave trust assets to a surviving spouse or a charity upon their death? Or would you prefer that the assets are only distributed to his or her biological or adopted children? You might even want your child to create their own Lifetime Asset Protection Trust for their heirs.

Find Out If A Lifetime Asset Protection Trust Is Right For Your Family

Of course, Lifetime Asset Protection Trusts aren’t for everyone. If your kids are going to spend the vast majority of their inheritance on everyday expenses and consumables, they probably don’t make much sense. But if you want the assets you are leaving behind to be invested and grown over the long term, even through their own business or investments, a Lifetime Asset Protection Trust can be immensely valuable.

When you meet with us, we will work with you to look at your family circumstances and your assets to decide together if a Lifetime Asset Protection Trust is the right option for your loved ones. In the end, it’s not about how much you’re leaving your heirs that matters. It’s about ensuring that what you do pass on is there when it’s needed most and put to the best use possible. Schedule a complimentary call today to learn more.

Tags Asset Protection, Estate Plan, Inheritance, LIfetime Asset Protection Trust, Personal Family Lawyer®

Estate Planning

What You Need To Know About The Corporate Transparency Act Reporting Deadline

Post author By Sara Thomas
Post date December 1, 2023
No Comments on What You Need To Know About The Corporate Transparency Act Reporting Deadline

Business ownership is a fulfilling and exciting endeavor, but it also comes with rules, responsibilities, and reporting requirements that can be hard to track. If you own a small business or have a Trust that owns a business interest, you’ll need to comply with the Corporate Transparency Act (CTA).

Beginning January 1, 2024, the Corporate Transparency Act (CTA) will require small companies to disclose the names of any owners who hold a 25% or more ownership interest in the company, as well as any individuals who exercise significant control over the company’s activities. This new rule also applies to Trusts that own or control a company.

The Corporate Transparency Act (CTA) was enacted in 2020 to enhance corporate transparency and prevent money laundering, terrorist financing, and other financial crimes. By requiring businesses to report information about their owners and controllers, the Act seeks to make it easier to identify “shell” corporations – companies that don’t actually perform an active business or trade and which are often used to move money around illegally.

Since money laundering and terrorist financing are usually conducted using small businesses, the Act largely aims to collect information on these companies, so entrepreneurs and small business owners should take extra care to meet the filing requirements.

What Must Be Done to Comply with the CTA?

In order to comply, a business must file an annual report to the Financial Crimes Enforcement Network (FinCEN) with the following information on each owner or controller of the business:

Business name and current business address
State in which the business was formed and its Entity Identification Number (EIN)
Owner/controller’s name, birth date, and address
Photocopy of a government-issued photo ID (such as a driver’s license or passport) of every direct or indirect owner or controller of the company

If a company doesn’t file an annual report, it may be penalized with a $500 fine for every day the report is late and its owners could even face imprisonment for up to two years.

When Do Businesses Need to File Their Report and How Can You Extend Your Deadline?

If your company’s formation occurred on or before December 31, 2023, you have until January 1, 2025, to file its CTA report.

If your company was created after January 1, 2024, you’ll need to file your report within 30 days of the company’s creation.

This means if you’re thinking of creating a new company or changing the entity structure of an existing company, doing so before January 1, 2024, will give you a year-long grace period to file the report. Otherwise, once January 1 rolls around, it’ll be too late to take advantage of this extension.

The extension provides a valuable window of time for business owners to understand the reporting requirements thoroughly, gather the necessary information, and engage with legal professionals to ensure they’re in compliance with the Act without the pressure of a 30-day deadline.

The Act’s reporting rules seem straightforward, but the penalties for non-compliance can be substantial. Creating your new business entity by year-end provides a cushion against potential penalties and risks associated with overlooking or misunderstanding reporting requirements. It’s a proactive step that gives your business the advantage of time.

There is no fee for the annual report, and it may be filed electronically with FinCEN. The system and report are currently under development and won’t be ready to accept submissions until January 1, 2024.

For more information about the annual report, please check out their FAQ page.

Helping You Make Strategic Moves for The Wellbeing of Your Family and Your Business

If you own a family business or you’re thinking of creating a new business entity soon, I encourage you to do it NOW before the end of the year so you can take advantage of the year-long window to file your Corporate Transparency Act report for existing businesses.

And don’t wait until the end of December to get started, as we anticipate there will be a rush of new business entity filings at the end of December as business owners and their professionals rush to file their creation documents before the new year. If you need assistance filing your report or aren’t sure whether the CTA rule applies to your company, we can help.

Our goal is to guide your family (and business!) through every stage of life and every change in the law through an ongoing relationship with you. Our approach to serving clients doesn’t end when the paperwork is filed. We keep in touch with you and keep you abreast of any changes in the law so you can have peace of mind knowing that your family and assets are well cared for now and in the future.

Schedule a complimentary call with my office to learn more.

Tags Beneficial Ownership, Corporate Transparency Act, Family Business, Financial Crimes Enforcement Network (FinCEN), Personal Family Lawyer®, Small Business

Estate Planning

3 Things You Need To Know About Retirement Distributions

Post author By Sara Thomas
Post date November 27, 2023
No Comments on 3 Things You Need To Know About Retirement Distributions

If you’re part of a blended family (meaning you are married with children from a prior marriage in the mix), you’re no stranger to the extra considerations and planning it takes to keep your family’s life running smoothly. You’ve also probably given some thought to what you want to happen to your assets and your family if something happens to you.

But what you might not have realized is this: If you don’t create a plan for your assets before you die, the law has its own plan for you that might not reflect your wishes for your assets, especially your retirement assets. And if you’re in a blended family, this can have a significant financial impact on the ones you love and even create expensive, long-term conflict.

This week, I explain how the law affects retirement distributions for married couples, and why you need to be extra careful with your retirement planning if you’re in a blended family to ensure your retirement account assets go to the right people in the right amounts after you’re gone.

01 | Be Aware of How ERISA Affects 401K Distributions

If you’ve remarried, you and your new spouse have probably talked about updating the beneficiary designations on your retirement accounts to reflect your blended family arrangement. (If you haven’t talked about it, you need to talk about it ASAP). Sometimes, people who are remarried decide to leave their retirement funds to their children from a prior marriage and leave other assets like their house and savings accounts to their current spouse. You may do this to avoid future conflict between your spouse and your children over your assets.

However, if you’re married and your retirement account is a work-sponsored account and you want to leave your retirement for just your children, there are other considerations to make. The federal Employee Retirement Income Security Act (ERISA) governs most employer-sponsored pensions and retirement accounts. Under ERISA, if you’re married at the time of your death, your spouse is automatically entitled to receive 50 percent of the value of your employer-sponsored plan – even if your beneficiary designations say otherwise.

The only time that your surviving spouse would not inherit half of your ERISA-governed retirement account is if your spouse signs an official Spousal Waiver saying they are affirmatively waiving their right to inherit 50 percent of the account, or if the account beneficiary is a Trust of which your spouse is a primary beneficiary.

02 | IRAs Have Different Rules Than 401Ks

If you want your children to inherit more than 50 percent of your work-sponsored retirement benefits, and completing a Spousal Waiver isn’t an option, consider rolling the account into a personal IRA instead.

In contrast to 401(k)s and similar employer-sponsored plans, IRAs are controlled by state law instead of ERISA. That means that your spouse is not automatically entitled to any part of your IRA.

When you roll a 401(k) into an IRA, you gain the flexibility to name anyone you choose as the designated beneficiary, with or without your spouse’s consent.

On the other hand, if you want to ensure your spouse receives half of your retirement savings, make sure to include them as a 50 percent beneficiary or better yet, have your individual retirement account payout to a Trust instead. With a Trust, you can:

Document exactly how much of your retirement you want each of your loved ones to receive.
Control when they receive the funds outright.
Easily update and change the terms of your Trust without having to remember to update your financial accounts.

03 | Beneficiary Designations Always Trump Your Will

Whether you have an employer-sponsored 401K or an IRA you manage yourself, there is one critical rule that everyone needs to know: beneficiary designations trump your Will.

A Will is an important estate planning tool, but most people don’t know that beneficiary designations override whatever your Will says about a particular asset.

For example, if your Will states that you want your retirement account to be passed on to your brother, but the beneficiary designation on the account says you want it to go to your sister, your sister will inherit the account, even though your Will says otherwise.

Similarly,if you forget to update your ERISA-controlled account and have remarried, your current spouse would receive half of the account and your former spouse would receive the other half. That’s why it’s so important to work with an estate planning attorney who can make sure your accounts are set up with the proper beneficiary designations and ensure that your assets are passed on according to your wishes.

Work With An Attorney Who Makes Sure All Your Assets Will Be Passed On How You Want Them To

Understanding how the law affects different types of assets is essential to creating an estate plan. But there’s more to it than just having a lawyer – you need an attorney who takes the time to really understand your family and your assets so they can design a custom plan that achieves your goals for your assets and your legacy.

That’s why we help our clients create an inventory of all of their assets to ensure that every asset they hold is accounted for and passed on to their loved ones exactly as they want it to.

Learn more about how we serve our clients differently than most lawyers; schedule a complimentary call with us. We’d be honored to share how our unique process can help your family.

Tags Beneficiary, Blended Family, Estate Plan, Retirement, Retirement Benefits, Spousal Rights

Estate Planning

3 Tips For Discussing Finances With Your Family Over The Holidays

Post author By Sara Thomas
Post date November 17, 2023
No Comments on 3 Tips For Discussing Finances With Your Family Over The Holidays

The holidays are right around the corner, which means more time to gather with family and relatives than any other time of the year. If you’ve been meaning to talk with your family about finances, inheritance, end-of-life decisions, estate planning, and creating a plan for your whole family’s wealth – now and in the future – having everyone in the same room is ideal.

But asking your relatives how they want their assets handled when they die or if they become incapacitated might not go over well while opening presents or carving a turkey.

To keep your family from feeling blindsided and to make the most of your conversation, consider the following three tips.

01 | Share Your Intention Ahead of Time

To help your loved ones feel at ease, don’t bring up finances and estate planning for the first time while the family is gathered around the TV watching football. Instead, approach the topic weeks ahead of time if possible.

If you have regular visits or phone calls with your loved ones, let them know you’ve been thinking about creating a plan for your own finances and the care of the family in case something happens to you. Casually mentioning that it’s on your mind will help plant the seed for a future conversation with your loved ones and likely get them thinking about their own plan or lack of a plan.

As your family gathering approaches, bring up the subject again, this time with more intention and detail. Consider asking the host of your family gatherings, whether it’s your sibling, parent, or adult child when the best time would be to have an all-family conversation for 90 minutes. Schedule it and let everyone know that you’ve got something meaningful planned.

If the host pushes back against the idea, respond with curiosity about their experience, what they feel apprehensive about, and if there is a way that you could mitigate their apprehension perhaps by speaking with other family members in advance.

If you’ve already completed your own planning, use your experience as a springboard for the conversation.

02 | Set Aside a Time and Place to Talk

Be upfront with your family about the meeting’s purpose so no one is taken by surprise and so they come prepared for the discussion. Choose a setting that’s comfortable, quiet, and private. The more relaxed everyone is, the more likely they’ll be comfortable opening up.

Begin by sharing the context of why it’s important to you that your family begin having conversations about finances, life, and death. You may even want to share that the topic is uncomfortable for you, but that it’s important enough that you are willing to be uncomfortable because you know that these conversations can bring your family closer together, create more family resilience, and ensure you are all financially well-cared for.

Finally, as part of setting context, set a start and stop time for the conversation. Remember, the goal is to simply get the conversation started, not work out all of the details or dollar amounts, so don’t expect this to be the one and only conversation you have – it’s a start.

03 | Share Your Planning Experience

If you’ve already created your own plan, and it included an inventory of your assets, a look at what is enough, and what would happen to it all when something happens to you (which is what we do during our first Planning Session with you), you can start by explaining how you felt during the process, how easy it was, and how you feel now knowing that your assets and loved ones will be cared for the way you want if something happens to you.

If you’ve worked with us, describe how the process unfolded and how we supported you to create a plan designed for your unique wishes and needs.

Share any concerns or doubts you initially had about planning and how we worked with you to address them. If you have loved ones who’ve yet to do any planning and have doubts about its usefulness, empathize with them in a supportive and understanding way, and share your own journey learning the benefits of planning for your finances and your wishes.

If you haven’t created a plan yet, or have doubts about a plan you created with another attorney, be open about why you want to create a plan for your life and death, such as a desire to avoid family conflict, to ensure that a child, disabled relative, or senior parent is cared for in the future, or to build generational wealth and a legacy for your family. Focus on the benefits that planning will have for both your immediate family and your extended family as a whole.

Bringing Families Together

Speaking with loved ones about finances and estate planning can be difficult, but we can guide and support you in having these intimate discussions with your loved ones. When done right, planning can put your life and relationships into a much clearer focus and offer peace of mind knowing that your assets will be protected and that the people you love most will be provided for no matter what.

If you haven’t created your own estate plan, doing so before you talk with your family can help your loved ones be more open to the idea and can help them see the incredible benefit of planning from one of their own family members.

Schedule a complimentary call with us to learn more.

Tags Estate Plan, Estate Planning Attorney, Family Discussions, Family Finance, Holidays, Personal Family Lawyer®

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