Tag: Estate Plan

3 Estate Planning Documents Your Parents Need

Post author By Sara Thomas
Post date March 19, 2024
No Comments on 3 Estate Planning Documents Your Parents Need

As your parents gracefully navigate their golden years, ensuring their peace of mind (and yours!) becomes a priority. One of the very best things you can do for your own future, and that of your entire future lineage – your children, grandchildren, and beyond – is to take great care of the people you were born to or raised by.

The questions to start asking are:

How will you help them if they become ill or injured?
Who will take care of their bills and make sure their health needs are met?
How do they want to be cared for, if and when they cannot care for themselves?

The starting place is open conversation and a power trio of estate planning tools swoop in to save the day: the General Power of Attorney, the Power of Attorney for Healthcare (including a Living Will), and the HIPAA Waiver.

Let’s break down why these tools are the unsung heroes of comprehensive estate planning for your parents, and how to bring them up so you can support your parents to get them created or updated, no matter their net worth.

1. General Power of Attorney (POA)

A General Power of Attorney (or POA) grants a person you name (often a family member or trusted friend) the authority to manage your financial affairs if you become unable to do so yourself. From handling bills to making investment decisions, the General POA ensures that your financial matters are handled, whether you’re experiencing a temporary illness or a long-term inability to manage your money, such as in the case of memory problems.

If your parents have assets that you must be able to access easily in the event of their incapacity, you may decide that a POA for accessing their accounts is not sufficient, as it can be difficult to get access to bank accounts even with a POA in place, and will require court action. In that case, the best course of action is to ensure that their assets are titled in the name of a trust, with you or someone you trust as the named successor Trustee, who can step in and handle financial matters for your parents, without any court involvement, when needed.

2. Power of Attorney for Healthcare and Living Will

It’s possible your parents already lean on you for guidance with their healthcare decisions, and it’s equally possible they don’t share details of their healthcare with you at all. No matter which side of the spectrum your parents stand on, the question of what will happen to their healthcare needs if they become seriously ill can feel overwhelming — and trust me, it’s even more overwhelming during moments of medical crisis.

Thankfully, a Power of Attorney for Healthcare and Living Will allow your parents to explain their medical wishes to guide medical providers and family members on what treatments and life-saving measures they’d like to have, even in the toughest of times.

The Power of Attorney for Healthcare designates someone to make these medical decisions on behalf of your parents if they’re unable to do so. This trusted individual becomes the advocate, ensuring that healthcare choices align with your parents’ values and preferences.

Meanwhile, the Living Will – also known as a Declaration to Physicians – outlines your parents’ wishes regarding life-sustaining treatments in the event they’re unable to communicate. From CPR to artificial hydration, this document provides clarity amidst uncertainty, giving both your parents and their loved ones peace of mind that the decisions being made around their care are what they themselves would want.

3. HIPAA Waiver

In the digital age, privacy is paramount – but what happens when privacy becomes a barrier to essential healthcare-related communication? Enter the HIPAA Waiver, the ultimate tool for opening communication roadblocks in times of need.

HIPAA (the Health Insurance Portability and Accountability Act) protects the privacy of individuals’ medical records. While this is crucial for safeguarding sensitive medical information, it can sometimes hinder the flow of communication between healthcare providers and family members, especially for the elderly and those incapacitated by an illness or injury.

By signing a HIPAA Waiver, your parents authorize specific individuals to access their medical information and speak directly to their medical providers, ensuring seamless communication and informed decision-making. This is essential in medical emergencies but is also extremely helpful if your parents need help hearing their doctor or understanding their medical advice.

How to Bring Up Estate Planning With Your Parents

The best way to bring up estate planning with your parents is to get your own planning handled first. Then, let your parents know that in the process of handling your own planning, your lawyer raised the question of whether you were an agent under anyone else’s power of attorney, or named as a successor Trustee in your parents’ Trust, or if you are going to be caring for aging parents at some point.

And, if you have worked with a lawyer and they didn’t ask you those questions, give us a call and let’s review your plan and your parents’ planning to make sure that everything you’ll need is dialed in. This can all get quite messy very quickly, and now is the time to talk with your parents.

The Sooner the Better

You might be thinking, “Why the rush? Can’t we tackle this later?” Here’s the scoop: Life is unpredictable, and procrastination can be a costly gamble. Waiting until a crisis strikes to get these tools in place can lead to a whirlwind of legal and emotional chaos, leaving your parents’ wishes unfulfilled and their affairs in disarray.

By proactively planning ahead, you’re not just checking items off a to-do list – you’re investing in your parents’ peace of mind and yours.

Don’t wait for a storm to hit – schedule a 15-minute call today to learn how our unique Life & Legacy Planning process is designed with your family’s well-being in mind, offering personalized guidance and support every step of the way.

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, Health Care Directives, HIPAA Waiver, Parents, Power of Attorney, Sandwich Generation

Estate Planning

13 Ways to Show Your Finances Some Love This Year – Part 2

Post author By Sara Thomas
Post date March 14, 2024
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Last week we explored seven ways to show your finances and your family some love with smart, tax-advantaged financial tips for the new year:

Make a Qualified Charitable Distribution (QCD)
Front-load Your 401(k) Contributions
Set Up a Roth IRA for a Child
Make Donations During Spring Cleaning
Give the Gift of Appreciated Stock Shares
Establish a 529 College Plan
Make a Roth Conversion

If you missed it, check out Part 1. This week, we are continuing the financial love with 6 more tips you can use to benefit your family this month and the year ahead.

Let’s dive in.

8 | Spread The Love With The Annual Gift Exemption

Do not underestimate the power of spreading love through financial generosity. By leveraging your lifetime gift tax exemption, you can minimize estate taxes and provide a significant financial boost to your heirs during your lifetime. Did you know you can gift up to $18,000 per person to an unlimited number of people each year without having to file a gift tax return? This allows you to share your wealth with family and friends in a tax-efficient manner. These gifts not only escape the estate tax but also foster stronger connections and deepen relationships with your loved ones. Whether it’s helping with educational expenses, supporting a dream vacation, or simply offering a helping hand, using this exemption allows you to share your wealth and make a lasting impact on those you cherish most. The current high exemption amount of $13.61 million is set to sunset in 2025, so if your estate is greater than $5M, now is the time to plan.

9 | Allocate More Funds To The Generation Skipping Tax Exemption

As you plan for the future, it’s essential to consider the next generation. By allocating additional funds towards your generation-skipping transfer tax exemption (of up to $13.61 million), you provide a seamless transfer of assets to your grandchildren or future beneficiaries. This strategic move not only minimizes tax implications but also lays the groundwork for preserving your family’s wealth for generations to come.

10 | Make an Extra Mortgage Payment

Your home is more than just a place to live—it’s also a valuable asset that can offer tax advantages. By making an extra mortgage payment on your primary home loan, you can increase your mortgage interest deductions on your tax return. Not only does this reduce your taxable income, but it also accelerates your path to homeownership, saving you money in the long run.

11 | Complete Repairs on Rental Property

Investing in your rental property not only enhances its value but also offers tax benefits. By completing repairs on your rental property, you can offset rental income on your tax return while providing a better living environment for your tenants. It’s a win-win situation that improves your property’s profitability and strengthens your relationship with your renters.

12 | Create a Lifetime Asset Protection Trust

Planning for the unexpected is an act of love towards your spouse and children, and when you know the right tools to use (like we do) you can make sure your family is provided for and protected for generations to come. One of my favorite ways to do this is using a Lifetime Asset Protection Trust. This tool allows you to protect the assets you leave for your children from any future financial trouble, like lawsuits or divorces.

13 | Create Your Estate Plan

Finally, don’t overlook the importance of estate planning in showing love to your family. By finalizing your Will, Revocable Trust, Power of Attorney, and Advance Medical Directive, you ensure that your wishes are carried out and that both you and your loved ones are protected in the event of incapacity or death. It’s a vital step towards providing peace of mind for you and your family, allowing you to focus on enjoying life’s precious moments together. And remember, a plan is more than a set of documents. It’s a lifetime of wise decisions about your life and legacy.

Show Your Love Where It Matters Most

It’s never too late to make loving financial and planning decisions for your loved ones – and yourself!

We know the value of planning for the future. But we also know the value of planning for the life you want today and the legacy that extends far beyond your assets.

Schedule a complimentary 15-minute call to learn how we can help you create a Life & Legacy Plan that will take care of everyone and everything you love.

Tags Annual Gift Exclusion, Estate Plan, Family Finances, Generation Skipping Tax Exclusion, LAPT, Mortgage, Personal Family Lawyer, Rental Maintenance

Estate Planning

13 Ways to Show Your Finances Some Love This Year – Part 1

Post author By Sara Thomas
Post date March 7, 2024
No Comments on 13 Ways to Show Your Finances Some Love This Year – Part 1

While thoughtful financial planning doesn’t sound as fun as a fancy night out or a night in with Netflix, making smart planning decisions with your assets is one of the best gifts you can give – and a gift that keeps giving over time.

This week, we explore seven tax planning tips that not only secure your financial future but also spread love and prosperity to those you cherish most.

1 | Make a Qualified Charitable Distribution (QCD)

Want to spread love to a charity you’re passionate about? Is your retirement account looking good? Consider making a Qualified Charitable Distribution from your account directly to charity. Not only does this fulfill your required minimum distributions, but it also exempts the amount from your taxable income. By giving back to causes close to your heart, you can make a meaningful impact while reducing your tax burden.

2 | Front-load your 401(k) contributions

Show love to your future self by maximizing your 401(k) contributions early in the year as opposed to spreading them out evenly over 12 months. By reaching the 2024 limits of $23,000 sooner, your investments will have more time to grow, potentially enhancing your retirement nest egg even more. It’s a proactive step toward securing financial stability for yourself and your family down the road.

3 | Set Up a Roth IRA for a Child

Want to inspire financial skills in your kids while getting a tax advantage? Teach the next generation the value of financial planning and responsibility by setting up and contributing to aRoth IRA for a child who has earned income. If your child has earned from babysitting or odd jobs, you (and they!) can contribute to a custodial Roth for their benefit, and every dollar invested grows tax-free, providing a solid foundation for their future financial well-being.

4 | Make Donations During Spring Cleaning

Ah, the annual ritual of spring cleaning. This year, let’s infuse this mundane task with a dose of love and generosity. As you sift through your belongings, consider the items that no longer serve you but could bring joy to others. From gently used household furnishings to clothing and books, each item holds the potential to make a difference in someone’s life.

Here’s the cherry on top: for items in good condition, you may claim a charitable deduction on your 2024 income tax return, making your act of kindness even sweeter. So, as you purge the old and welcome the new, keep receipts of your donations – it may add up to some real tax savings.

5 | Give the Gift of Appreciated Stock Shares

Strengthen familial bonds while supporting charitable causes by giving appreciated securities and stock shares directly to your sibling’s favorite charity. By donating your appreciated stock instead of selling it, you can potentially avoid recognizing the gain as your income, maximizing the impact of your charitable giving while minimizing your tax liability. Sweet deal, right?

6 | Establish a 529 College Plan

Invest in the educational future of your loved ones by setting up a 529 plan. While the contributions you make to a 529 account aren’t tax deductible, contributions to these plans grow tax-free and can be withdrawn tax-free when used by your loved one for qualified education expenses like housing, books, tuition, and more. Whether it’s for your child, grandchild, niece, nephew, or another family member, a 529 plan is a gift that keeps on giving.

7 | Roth Conversion

Show love to your retirement savings by considering a Roth conversion on a traditional IRA. If your traditional IRA has declined in value, now is the ideal time to convert it to a tax-saving Roth. Doing so can reduce your income tax liability later on and let you potentially enjoy tax-free withdrawals in retirement. It’s a strategic move that can optimize your retirement income while minimizing tax obligations.

Let Us Help You Show Your Finances Some Love

There’s no time like the present to demonstrate love through practical Life & Legacy Planning®. By incorporating these tax planning tips into your overall planning strategy, you can secure a brighter future for yourself and your loved ones while making a positive impact on your community.

Not sure where to start? We’re here to guide you through every step of your planning journey, from taking inventory of what you have and what’s important to you, to the practical steps of how to plan for the life and legacy you dream of.

Schedule a complimentary 15-minute call with our office to learn more.

Tags 401(k), 529, Appreciated Stock Shares, Assets, Donation, Estate Plan, Finances, IRA, Personal Family Lawyer, QCD

Estate Planning

How to Save for Retirement and Pay Off School Loans at the Same Time

Post author By Sara Thomas
Post date February 23, 2024
No Comments on How to Save for Retirement and Pay Off School Loans at the Same Time

Navigating your financial journey with the heavy burden of student loan debt on your back can feel overwhelming. You’re faced with a critical decision: should you prioritize paying down those loans, or should you focus on the future, contributing to your workplace retirement plan? It’s a tough call, especially when choosing loan payments means missing out on the opportunity to grow your savings through employer retirement matches.

But there’s good news on the horizon, thanks to the SECURE 2.0 Act. This groundbreaking legislation is here to offer a helping hand, allowing your student loan payments to qualify for employer retirement matching contributions. It’s a win-win, enabling you to tackle your debt while also building your nest egg.

Are you wondering if this financial boost applies to you? Keep reading, because we’re about to explore how the SECURE 2.0 Act could be the solution you’ve been searching for.

What The SECURE 2.0 Act Means for The Student Loan Dilemma

For many of us, juggling student loan debt is a bit like trying to balance a coffee cup on a stack of books—tricky and maybe a bit messy, especially when we’re also trying to save for retirement. Those monthly loan payments can take a big bite out of our budgets, making it hard to stash away cash for our future selves. And when we skip on contributing to our retirement plans, it’s like missing out on the whipped cream in our favorite latte—those employer retirement matches that could seriously boost our savings.

Enter the SECURE 2.0 Act, ready to smooth out this balancing act. This new legislation suggests to employers a clever workaround: treating your student loan payments as if they were direct deposits into your retirement savings account.

This shift is subtly brilliant. It means the money you’re dedicating to student loans can now help you unlock those employer retirement contributions, offering a streamlined path to beef up your retirement savings. It’s a bit like finding a shortcut on your daily commute that makes life just a little easier and a lot more rewarding. So, let’s explore how this can help secure your financial future.

How It Works

The SECURE 2.0 Act is like a breath of fresh air for employees weighed down by student loan payments. It gives employers the green light to get creative with retirement benefits, turning those hefty student loan payments into a force for good in your retirement savings plan. By treating these payments as if they were contributions to your retirement account, employers can now match them, just like they would with traditional retirement contributions. Imagine that—your student loan payments not only help you chip away at your debt but also build your nest egg, without you having to put extra money into your retirement account.

This twist means you can focus on paying down your student loans without missing out on the magic of compounding interest in your employer-sponsored retirement account. It’s a game-changer for anyone who’s felt stuck between a rock and a hard place, trying to decide between paying off debt and saving for the future.

However, there’s a catch… Not every employer will automatically jump on this bandwagon. The SECURE 2.0 Act opens the door, but it’s up to individual companies to walk through it. This means the availability of this perk will vary from one employer to the next.

So, what’s your next move? Start a conversation with your employer to see if they’re planning to offer this innovative benefit starting in 2024. It’s an opportunity too good to miss for anyone looking to make their student loan payments do double duty.

Helping You Navigate Towards Financial Wellness

If you’re one of the many people grappling with student loan debt, the SECURE 2.0 Act offers a ray of hope. Now, individuals can navigate the intricate landscape of student loan relief without sacrificing their long-term retirement goals. As employers have the option to align student loan payments with retirement savings, employees can effectively manage their finances and work towards a more stable financial future.

No longer bound by the dilemma of choosing between student loan payments and retirement contributions, individuals who qualify for the benefit can strategically plan their finances for a brighter future.

Want to take control of your financial future and that of the ones you love most? Then I invite you to meet with us. We look at everything you own and everyone you love to determine whether your assets and your loved ones will be cared for exactly as you want if you die or become incapacitated. And if the way things are currently set up doesn’t serve you, your assets, or your family exactly as you want, we can help you develop a Life & Legacy Plan that will protect everything you love for generations to come.

Schedule a complimentary 15-minute call.

Tags Estate Plan, Personal Family Lawyer, Retirement, SECURE 2.0 Act, Student Loans

Estate Planning

This Change to the FAFSA Rules Could Help Your Grandkids Qualify for More Student Aid

Post author By Sara Thomas
Post date January 25, 2024
No Comments on This Change to the FAFSA Rules Could Help Your Grandkids Qualify for More Student Aid

Want to contribute to your grandchild’s future college education? The FAFSA Simplification Act, which went into effect in December, now makes it possible for grandparents to do even more to help finance their grandchild’s education.

In the past, any contributions or distributions from a grandparent’s 529 college savings plan were subject to FAFSA reporting, potentially impacting the student beneficiary’s eligibility for federal financial aid. The new changes, however, bring a breath of fresh air.

In this blog, you’ll learn what has changed under the new rule and how grandparents can leverage it to support their grandchild’s educational pursuits.

Understanding the 529 Account

First things first – what exactly is a 529 college savings account? It’s a special savings account designed to help individuals, including grandparents, set aside money for future college expenses. Contributions aren’t federally tax-deductible, but the good news is that earnings within the account grow tax-free. When funds are withdrawn for qualified education expenses, they remain untaxed.

What The New Rule Changes

When the account owner is a dependent student or custodial parent, the total value of the 529 plan is reported as an investment asset on the Free Application for Federal Student Aid (FAFSA). Previously, if a grandparent owned the 529 plan, any distributions were considered untaxed income for the student, potentially affecting financial aid eligibility. The upcoming change eliminates this concern.

In a nutshell, a 529 plan owned by a grandparent will no longer require reporting on the FAFSA. Even more impactful is that distributions from this grandparent-owned 529 plan will not be deemed as untaxed income for the student. This opens up opportunities for grandparents to contribute to their grandchild’s education without jeopardizing financial aid eligibility.

Maximizing Grandparent Contributions

It’s important to keep the following in mind when you make contributions to a 529 account for a grandchild:

1 | Funds Must Be Used For Qualified Educational Expenses

Grandparents can use 529 plan funds for a range of qualified educational expenses, including tuition, room and board, books, supplies, laptops, and internet access. However, certain expenses like insurance, student health fees, transportation, and extracurriculars are not covered and may incur a ten percent penalty if 529 plan funds are used toward these expenses.

2 | The Annual Gift Exclusion

While grandparents can contribute to their grandchild’s 529 plan, it’s essential to be mindful of the federal annual gift exclusion, which is the amount of money a person can gift to someone else without needing to file a gift tax return. The limit currently stands at $18,000 for an individual and $36,000 for those filing jointly with a spouse. A special rule allows gift givers to spread larger one-time gifts across five years to stay within their lifetime gift exclusion.

3 | Reconsider Payments Made Directly to The School

Distributions directly paid to the school from grandparent-owned 529 accounts will not affect aid eligibility. However, for now, it’s recommended to pay the grandchild directly.

4 | Timing Matters

When withdrawing funds from the 529 plan, it’s crucial to do so within the same tax year as the educational expenses. This strategic move ensures smooth financial transactions and adherence to tax regulations.

5 | Watch Your Withdrawal Limits

The amount withdrawn from all 529 plans should be no more than the total cost of the qualified educational expenses billed by the school. Excess withdrawals may incur a 10 percent penalty, but there’s a 60-day window to rectify the situation without penalties.

Helping You Plan For Your Family’s Future In The Most Loving Way Possible

It’s a heartwarming prospect to be able to help shape a brighter future for the younger generation. By understanding the new FAFSA rule and strategically utilizing 529 plans, you can contribute meaningfully to your grandchild’s education without compromising financial aid opportunities. This makes a 529 account an even better investment tool that not only helps your grandchild afford their education but leaves behind a legacy of love and wisdom.

At our firm, we believe this is what estate planning is all about – your Life & Legacy. That’s why we refer to estate planning as Life & Legacy Planning. It isn’t just about making a plan for what happens to your assets when you die – it’s about making meaningful, heart-centered decisions that provide peace, love, and guidance to the ones you love today and for years to come in the future.

If you’re ready to create a plan that takes care of everything you own and everyone you love in the most loving way possible, schedule a complimentary 15-minute call to find out what our heart-centered approach can do for you.

Tags Estate Plan, FAFSA, FAFSA Simplification Act, Grandkids, Kids, Personal Family Lawyer®, Student Ai

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.

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 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

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