Tag: Estate Planning

Important Planning Conversations to Have With Your Parents

Post author By Sara Thomas
Post date February 8, 2024
No Comments on Important Planning Conversations to Have With Your Parents

If you’ve given any thought about estate planning, you probably associate it with preparing for death. But there are critical reasons for and significant benefits to planning while you’re still alive and well. Planning for your assets and your death is something that should start right now through honest, open conversations with your family.

It starts by talking with your parents, siblings, and children about what you want the future of your family to look like, how you’d like assets managed, and what type of care each family member would want in the event of a debilitating or terminal illness.

You may have already started a conversation about estate planning with your family. But this week, I dive deeper into the conversations you need to have to truly understand your family’s financial picture and plan for the future in the best way.

Conversation #1: What Exactly Do Your Parents Own?

The first conversation involves fundamental questions for the older members of your family: “What do we have? Where is it? And, how would I access it if you weren’t here to guide me?”

The potential risk to your family’s wealth is intricately tied to the costs incurred in the event of a passing or incapacity. Beyond the visible expenses of funerals, burial, or cremation, and end-of-life medical care, there are a myriad of unseen costs.

Unclaimed assets, amounting to approximately $70 billion in various departments across the U.S., often slip through the cracks because family members don’t know where the assets are, how to get them, or that they even exist.

Because of this, tracking and documenting assets, including crypto assets, before incapacity or death is essential to protecting your family’s wealth when someone dies or becomes incapacitated.

It may be difficult to bring up this topic with your parents or other family members, but how you approach it with them will make all the difference. The secrecy of asset locations or the fear of appearing greedy may hinder an open discussion between family members, but this can be overcome by building trust between relatives and entire generations.

For the junior generation, building trust involves understanding the root causes of distrust and stepping into a mature, caring perspective for the greater family good. Similarly, senior generations can nurture trust by taking ownership of past parenting shortcomings and demonstrating faith in the individuals their children have become.

Navigating these challenges may be daunting, but the rewards of building trust and initiating this crucial conversation are immeasurable. Use the conversation as an opportunity to record the locations and access permissions of family assets. If you aren’t sure how to do this, we can help you create a clear inventory of your assets so nothing is lost when death or illness strike.

Conversation #2: What Are Their Wishes for Long-Term Care?

The next conversation you need to have with your parents is about long-term care planning. This conversation extends beyond financial considerations and looks into the emotional intricacies of care, posing questions about who will provide care if your parents become incapacitated or disabled, how it will be administered, and the potential burdens on loved ones.

While money can be a less vulnerable entry point to this conversation, the core involves the tender question of personal care. Addressing concerns such as, “Who will take care of me? How will I be cared for? Will I be a burden on my loved ones?” brings a level of vulnerability that goes beyond financial considerations.

Neglecting this conversation can leave crucial decision-making up to the medical system, often resulting in undesirable outcomes and accumulating costs. By engaging in the long-term care conversation, clarity emerges on preferences, funding, and avenues for protection against unforeseen care costs.

Let Us Guide The Conversation

If initiating these conversations feels challenging or uncomfortable, we can help. We focus on building personal relationships with our clients and their families, and can help guide you and your family through difficult discussions and tough questions about your family’s assets and wishes.

It starts with a planning session, where we look at everything you own and everyone you love to identify gaps in your family’s security and make a plan that ensures everything will be cared for the way you want when you die or if you become incapacitated.

To learn more, schedule a complimentary 15-minute discovery call with us.

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 Aging Parents, Estate Planning, Family Conversations, Money, Personal Family Lawyer

3 Best Practices For Setting Up Your Life Insurance Policy

Post author By Sara Thomas
Post date February 1, 2024
No Comments on 3 Best Practices For Setting Up Your Life Insurance Policy

A comprehensive Life & Legacy Plan is about creating a strategy that lets you enjoy your life to the fullest while protecting your loved ones’ future when you can no longer be there. It might seem like life insurance is an easy way to help secure your loved ones’ future – and it is – but your policy must be set up in the right way to have the best possible impact on your family.

The way you set up your beneficiary designations on your insurance policy can significantly impact its effectiveness, how it’s used, and who controls it after you die. In this blog, we’ll explore how to name beneficiaries to ensure your loved ones have the funds they need to thrive when something happens to you.

DO NOT Name a Minor As The Beneficiary of Your Life Insurance Policy

Naming your child or grandchild as a direct (or even backup) beneficiary of your life insurance policy may seem like a natural choice.

However, if a minor child is the beneficiary of a life insurance policy, it guarantees a court process called “guardianship” or “conservatorship” must occur to name a legal guardian or conservator to manage the assets for your minor beneficiary until they turn 18. Then, at 18, your minor child receives everything left in the account–outright and unprotected–with no oversight or guidance. This is the worst possible outcome for everyone involved.

You might think the answer is to name a trusted family member or friend as the beneficiary of your life insurance, hoping they’ll use the funds for your kids, but that may not produce the desired outcome either.

If you name another adult as the beneficiary for a life insurance policy intended for your kids, your kids will have no legal right to the money. The adult you named as beneficiary can use the money however they want and don’t have to use it for your kids at all!

So what’s the solution? Keep reading until the end to find out what to do instead.

DO NOT Name Adult Beneficiaries Directly

Direct payouts to adult beneficiaries may seem straightforward, but can have unintended consequences. Life circumstances change, and the lump sum received from a life insurance policy might be at risk if not managed properly. By avoiding direct payouts, you can ensure that the financial security provided by the insurance is preserved for the long term.

One key concern is the potential for beneficiaries to hastily misuse or exhaust the funds. A sudden windfall might lead to imprudent spending, leaving your loved ones without the financial support you intended. Additionally, if your beneficiaries are not financially savvy, they may struggle to manage a lump sum effectively, meaning the policy might lose money over time.

Even if an adult beneficiary is financially responsible and savvy – or knows enough to speak to a financial advisor – life events can put the funds at risk. Because the life insurance proceeds now belong entirely to your beneficiaries in this case, the proceeds of the policy are now completely vulnerable to any future divorces or lawsuits that your beneficiary may go through in the future.

That means that if your beneficiary is divorced, sued, or accumulates debt, all the money they received from your insurance policy could be lost.

Plan For Your Life Insurance The Right Way: Use a Trust

A Trust is an agreement you make with a person or an institution you choose. This person is called your Trustee, and their job is to manage the assets you put into or leave to your Trust, according to the rules you create.

Instead of naming minors or adult loved ones as the direct beneficiaries of your life insurance, name your Trust as the beneficiary of your policy instead. By doing this, your loved ones will still receive the funds you intend for them while the decisions you made in the Trust maintain control over how the funds are managed and distributed. This ensures that your wishes for your assets and your loved ones are carried out even after you’re gone.

How does it work?

A well-drafted Trust allows you to specify conditions for distributing the Trust funds, ensuring that the funds are used for intended purposes such as your beneficiaries’ education, homeownership, or other specific needs. Distributions from the Trust can also depend on the ages and circumstances of each beneficiary. This level of control can prevent the misuse of funds and promote responsible financial behavior for everyone involved. Plus, assets held in a Trust bypass the probate process, ensuring a more efficient and timely distribution of funds to your beneficiaries. This can be crucial in providing immediate financial support to your loved ones when they need it the most.

And while you can choose to have your Trustee distribute life insurance proceeds directly out to your beneficiaries outright, at specific ages and stages, you may want to provide even more protection for your beneficiaries. One of the considerations we’ll help you make is whether to retain the assets in trust, giving your beneficiaries control over the Trust assets, but in a manner that keeps the inherited life insurance protected from lawsuits, future divorces, and creditors.

Let Us Set Up Your Entire Plan In The Best Way Possible

Setting up your life insurance policy with the right beneficiaries involves careful consideration of your unique family dynamics, financial goals, and long-term objectives while being proactive to avoid future issues. By doing so, you maximize the benefits of your life insurance to provide a lasting legacy of financial security and support for your loved ones.

But planning for your life insurance is only one step in creating a plan for everything you own and everyone you love today and in the future. My mission is to guide you to create a comprehensive estate plan that ensures your wishes are fulfilled and your family’s future is protected no matter what the future holds.

Schedule a complimentary call with my office to learn more. Contact us today to get started.

Tags Asset Protection, Estate Planning, Life Insurance

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 Tax

8 Things To Do Now to Lower Your 2023 Taxes – Part 2

Post author By Sara Thomas
Post date October 28, 2023
22 Comments on 8 Things To Do Now to Lower Your 2023 Taxes – Part 2

Last week we looked at four different ways to lower your tax liability for 2023, from adjusting your tax withholding to strategically planning your medical procedures. In this week’s blog, we discuss four more tax-saving methods you can use right now to owe fewer taxes come April 2024.

If you missed part 1 of this series, be sure to read it here so you don’t miss out on these money-saving techniques.

Make Charitable Gifts

Giving back to your community or supporting causes you care about is not only rewarding but can also provide tax benefits if your family’s tax deductions are close to exceeding the standard tax deduction.

The standard deduction for 2023 is $12,950 for individuals and $25,900 for married couples filing jointly. Remember that the total of your itemized deductions, including charitable contributions, must exceed the standard deduction for your filing status to provide a tax benefit.

If you’re nearing the top of the standard deduction threshold, this year may be a great time to contribute to a charitable organization that is important to you. Doing so will help support a good cause and allow you to make itemized deductions for an extra reduction in your taxable income for the year.

If you make any charitable donations, keep detailed records of your donations, including receipts and acknowledgments from the charities. If you donate non-cash items (such as clothing or household goods), make sure to document their fair market value.

If you aren’t sure how to document your donations or aren’t sure if a charitable donation will be advantageous to you this year, be sure to discuss this with your tax professional.

Consider Tax-Loss Harvesting

Tax-loss harvesting is a strategy designed to offset capital gains by selling underperforming investments. This technique can help you minimize the taxes you owe on your investment gains.

The first step is to identify investments in your portfolio that have experienced losses and then sell those investments to realize the losses. After all, you haven’t actually lost or gained capital until the money enters or leaves your portfolio.

By selling underperforming investments, you can now use the lost capital to offset any capital gains from other investments that are doing well. Losses can be used to offset up to $1,500 for individuals filing separately or up to $3,000 for couples filing jointly.

It’s important to remember that there are rules and limitations when it comes to tax-loss harvesting. Consult with a financial advisor or tax professional to ensure you execute this strategy correctly and in a way that aligns with your overall financial goals.

Pay Your January Mortgage Payment in December

If you’re a homeowner with a mortgage, making your January mortgage payment in December can provide a valuable tax advantage. Mortgage interest is deductible on your income tax return, and prepaying your January mortgage payment in December gives you an extra month of interest to deduct on your 2023 taxes.

However, before implementing this strategy, check with your mortgage lender to ensure that they apply the payment correctly. Some lenders may automatically apply extra payments to your principal balance rather than counting them as interest for the next month.

Max Out Your IRA (Individual Retirement Account) or Roth IRA

Retirement planning is crucial for long-term financial security, and IRAs are excellent vehicles for saving for your golden years. For the 2023 tax year, the maximum contribution limit for both traditional and Roth IRAs is $6,500, with an additional $1,000 allowed for those aged 50 or older. It’s essential to understand the differences between these two types of IRAs to choose the one that suits your needs best.

Traditional IRA contributions may be tax-deductible, potentially reducing your taxable income for the year. However, withdrawals in retirement are subject to taxation.

Roth IRA contributions are made with after-tax dollars, so they don’t provide an immediate tax deduction. However, qualified withdrawals in retirement are entirely tax-free.

By maximizing your contributions to your IRA of choice, you can secure a more comfortable retirement and possibly reduce your tax liability for this year.

The Foundation of Life-Long Support and Security

Proactive year-end tax planning can significantly impact your financial well-being. By implementing these eight tax-saving strategies, you may be able to keep more money in the bank and take a step toward a brighter financial future.

But good money management is only one part of the equation for a life you love and a legacy that will guide and support your family for generations to come.

Making the best strategic decisions to protect your family’s health, finances, and happiness is equally, if not more, important. If you want to make sure that both your financial and personal life are in order today and structured to give your family the best support possible tomorrow, give us a call.

We would be honored to help you protect everything you own and everyone you love through our heart-centered estate planning services.

Tags 2023 Tax Planning, Estate Plan, Estate Planning, Income Taxes, IRS, Personal Family Lawyer®, Tax Savings

Estate Planning

8 Things To Do Now to Lower Your 2023 Taxes – Part 1

Post author By Sara Thomas
Post date October 21, 2023
23 Comments on 8 Things To Do Now to Lower Your 2023 Taxes – Part 1

It might seem a bit early to think about your 2023 taxes, but as the year draws to a close, it’s the perfect time to take a closer look at your financial situation and make some strategic moves that can help you minimize your tax liability come April.

Year-end tax planning isn’t something you do at the last minute; it’s a series of thoughtful steps you can start taking right now. In this blog series, we’ll explain eight key actions you can take during this last quarter of the year to save money on your 2023 taxes.

Let’s get started.

Contribute to Your HSA (Health Savings Account)

A Health Savings Account (HSA) can be a powerful tool for both managing your healthcare costs and reducing your taxable income. HSAs allow you to set aside pre-tax dollars to cover future qualified medical expenses. Contributions to your HSA are tax-deductible, and the earnings grow tax-free. To make the most of this tax-advantaged account, consider maximizing your contributions to your HSA before the year ends.

For the 2023 tax year, you can contribute up to $3,650 if you have self-only health insurance coverage or $7,300 for family coverage. If you are 55 or older, you can also make an additional $1,000 catch-up contribution. By increasing your HSA contributions, you not only reduce your taxable income this year but also build a valuable fund for future healthcare expenses.

If your employer offers an HSA account they may make an annual contribution to the account. If you’re self-employed or don’t have access to an employer-sponsored HSA, you can set up your own through most financial institutions.

Even better, the money you contribute to your HSA never expires and can be used years into the future. Just keep in mind that if you’ve taken money out of your HSA this year to pay a medical expense, that withdrawal will be counted as income on this year’s income tax return.

Contribute to a 529 College Fund

If you have aspirations of sending your children or grandchildren to college, establishing or contributing to a 529 college savings plan is a strategic financial move. These plans offer a tax advantage, as contributions are tax-deductible on the state level. While contributions aren’t deductible on the federal level, any earnings in the account grow tax-free as long as they are used for qualified education expenses.

In 2023, you can contribute as much as you like to a 529 plan, but contributions above $16,000 per year ($32,000 for married couples filing jointly) may be subject to gift tax. Nevertheless, contributing now can help you leverage potential state tax deductions while investing in your loved ones’ future education.

Not sure your child or grandchild will attend college? Funds in a 529 account can also be used for vocational and trade school tuition and fees or elementary and high school tuition costs.

Adjust Your Tax Withholdings

If you are an employee, form W-4 determines how much income tax is withheld from your paycheck each month. It’s essential to review and, if necessary, update your withholding information, especially if you’ve experienced significant life changes such as marriage, divorce, the birth of a child, or changes in your income during the year.

Adjusting your tax withholdings can help you avoid overpaying taxes throughout the year, leaving you with more money in your pocket. On the other hand, failing to update your W-4 could result in underpaying your taxes, which means needing to make a tax payment instead of receiving a refund come tax season, as well as potential penalties. Consult with a tax professional or use the IRS’s online withholding calculator to determine the correct withholding for your specific circumstances.

If you work as a 1099-independent contractor or own a business, you should meet with your tax professional to determine if you need to make any changes to the structure of your business, or establish retirement accounts, before the end of the year. If you need help knowing what to bring to your tax professional, or how to ask the right questions, give us a call.

Schedule Medical Procedures Strategically

Medical expenses can add up quickly, and the tax code provides a deduction for qualified medical expenses that exceed 7.5% of your adjusted gross income (AGI) for the 2023 tax year. To maximize your deduction, consider scheduling necessary medical procedures before the year ends.

While not every medical need can be planned ahead of time, if you know you’ll need or want an elective surgery, try to schedule it before December 31. Similarly, if you’ve met your out-of-pocket maximums for health or dental insurance, now is the time to get all members of your family in for any remaining check-ups or follow-up procedures.

If you don’t think they’ll meet the threshold for medical deductions this year but anticipate a large medical bill like a birth or surgery next year, consider delaying any unnecessary medical work until January to take advantage of the medical expenses deductions next year.

Be sure to keep detailed records of your medical expenses, including bills, receipts, and insurance statements, to support your deduction claims.

Looking Out for Your Family and Your Finances

Looking at your finances and seeing where you can save money on your taxes isn’t just about finishing the year off strong and getting organized for tax season. It’s about making strategic moves that position you for success now and help protect and support your loved ones in the future.

To make sure your family is cared for no matter what the future holds, schedule a complimentary 15-minute call. We’d be happy to talk with you about how we guide our clients to create a plan that protects their assets and their family for years to come.

And don’t forget to tune in for part two of our year-end tax planning series, where we’ll explore even more strategies to help you keep more of your money where it belongs – in your pocket.

Tags Estate Planning, Income Tax, IRS, Personal Family Lawyer®, Year-End Tax Planning

Estate Planning

Got Minor Kids? 3 Instances When Your Estate Plan Must Include A Kids Protection Plan®

Post author By Sara Thomas
Post date October 2, 2023
2 Comments on Got Minor Kids? 3 Instances When Your Estate Plan Must Include A Kids Protection Plan®

As a parent, you have probably thought about the importance of naming permanent legal guardians for your child in case something happens to you, and maybe you have already done it. If you haven’t yet, take this as the sign that now’s the time to do it, in case the unthinkable happens to you.

But in some cases, naming permanent legal guardians for your child may not be enough to guarantee your kids will always be cared for in the way you want by the people you want. And, there may even be a risk of your kids being taken into the care of strangers or someone you would never want.

Read on to find out if that’s the case for your family, and if it is, contact us to get your Kids Protection Plan® in place.

You Leave Your Kids With Non-Related Caregivers

Your kids are home with the babysitter. You don’t make it home, and the authorities are called. The authorities show up at your house, and what would they do?

Would they leave your children at home with the person taking care of them while they attempt to find your Will or legal guardian nomination? Would they even be able to find your legal documents? Would your legal documents name someone who would be immediately available to come to stay with your children, and would the authorities leave your children with those people without a court order?

Permanent guardian nominations only take effect upon your passing and are made official through the court system. This means that they do not give any legal authority to your chosen guardians in an emergency or if you become incapacitated. Because of this, law enforcement could place your child into protective custody with social services in the event of your sudden absence or incapacity due to an illness or injury.

This is where a Kids Protection Plan® fills in the gap. To minimize the chances that would happen, we can name legal guardians for the short-term, and give those named guardians the legal documentation they would need and instructions on what to do immediately if something happens to you.

In addition, we will give you the tools to ensure that anyone staying with your children while you aren’t there knows exactly what to do if something happens to you.

You Have Someone In Your Life You Would NEVER Want Raising Your Kids

While this may not apply to you, if it does, you absolutely, 100%, without question need to contact us for a Kids Protection Plan®. If you have anyone in your life you would never want raising your kids if you aren’t able to due to illness or injury, we can ensure that person is confidentially excluded from your plan using a Kids Protection Plan®. And, we can structure it so that this confidential document is only brought forward if necessary to keep your children out of the care of the person you would never want to raise them.

You Have Unique Desires For Your Kids’ Education, Health Care or Financial Well-Being

You’ve probably given a lot of thought to how you want to educate your children, the kinds of healthcare decisions you make for them, and how you want them to experience reality from a financial perspective. If that’s the case, then you absolutely want to ensure that anyone raising your children, if you can’t, will know how you would have wanted these decisions to be made.

Otherwise, if you don’t take the time to leave instructions to the people who could raise your children, they will not know how you would make decisions if you cannot be there to communicate your hopes, dreams, wishes, and desires.

And, here’s the great thing about this … there’s a 99% chance that you are not going to become incapacitated or die while your children are minors (phew), and yet taking the time to write down your unique desires for their well-being and care is an illuminating process in and of itself that will make you a better parent right now. You’ll have more clarity about what’s really important to you, what you want to emphasize, who you want your children to develop relationships with, and where you can better focus your own time, energy, and attention.

If you aren’t sure where to start when creating these instructions, don’t worry. We will support you with the whole process when we create your Kids Protection Plan®.

Comprehensive Protection for The Ones You Love Most

Nominating permanent legal guardians is an essential piece of your estate plan, but in reality, it often isn’t enough to ensure your child remains in the care of people you choose, know, love, and trust if something happens to you. If your children are ever left with a relative, or if there is anyone in your life you wouldn’t want raising your kids, or if you have unique high-value wishes for the way your children are raised when it comes to their education, health, or financial well-being, you need a full-fledged Kids Protection Plan®.

If you’re ready to create a Kids Protection Plan® for your child, or want to learn more, schedule a complimentary 15-minute call. We can’t wait to protect your children and your entire family through comprehensive planning.

Tags Estate Planning, Kids Protection Plan®, Minor Children, Parents, Personal Family Lawyer®

Estate Planning

6 Estate Planning Must-Do’s After You Say “I Do” – Part 2

Post author By Sara Thomas
Post date October 1, 2023
No Comments on 6 Estate Planning Must-Do’s After You Say “I Do” – Part 2

Getting married and starting a new chapter in your life is an exciting time. It’s also a time that requires a lot of housekeeping such as updating your address if your marriage includes a move, changing your tax filing status with your employer, and adding your new spouse to your bank and credit card accounts.

But did you know that creating (or updating) your estate plan should also be on your post-wedding to-do list?

Last week, we started to explore the key estate planning components every newlywed couple needs to protect their rights, wishes, and plans for their assets now and in the future. This week, we’re continuing the conversation with three more estate planning must-do’s for newlyweds. If you missed last week’s blog, be sure to click this link to catch up.

04 | A Living Trust

Are you surprised to see a Trust on our list before a Will? Here’s why a Trust is next on your to-do list. If you are newly married, there’s a strong likelihood that you are relatively young in your life and your career, which means there will be many changes in your assets, family, and wishes as the years go by.

Or, you might be re-marrying or getting married later in life and already have a well-established home, financial portfolio, and family that you are now combining with your partner’s life.

In either situation, you’re in a position of blending your life as a single person with the life and wishes of someone else, and the best way to make sure your wishes for your assets and your new family are honored during your lifetime and after your death is to legally document them through a Trust.

With a Will, assets must first pass through a court process known as probate before they can be transferred to your spouse or any other beneficiary. But once probate is completed, your loved ones can do whatever they want with the assets they received from you through your Will. The purpose and power of your Will ends when probate ends.

The court probate process required for Wills can take months or even years to complete, and can often lead to ugly conflicts between your spouse and other family members. Plus, a Will only governs the distribution of assets upon your death that are not already covered under your Trust or by your beneficiary designations.

With a Trust, no court involvement is needed, and you can set parameters for how you want your assets distributed over a predetermined amount of time. For example, if you have children or plan to, you can ensure the assets are safeguarded in the Trust until your children reach a certain age. If you have children from a prior relationship, you can also make sure that your new spouse is financially supported by your assets during their lifetime but that your remaining assets will be returned to your children after your new spouse’s death instead of going to your spouse’s side of the family.

Having a Trust hold your children’s inheritance can also help eliminate conflict between step-siblings and between your children and your spouse. Even if your children are adults, leaving their inheritance in a Trust can help avoid family conflict and provide them with a lifetime of asset protection from creditors and lawsuits.

Finally, using a Trust as the main vehicle to distribute your assets during your incapacity and after your death allows you to design a custom plan for what happens to your assets far into the future, ensuring that the goals you have for your loved ones are nourished and that your assets are carefully managed and protected even after you’re gone. You can do this by creating contingencies and incentives in your Trust that encourage your heirs to behave in certain ways. For example, for your sibling to receive their inheritance you could require that they seek drug counseling first, or that your children pursue a course of study before receiving a distribution of income from the Trust.

05 | A Will or Pour-Over Will

A Will allows you to designate who should receive any assets of yours that aren’t already included in your Trust or directed by beneficiary designations. Ideally, your Trust will include all of your assets. But, if you forget to add an asset to your Trust, a Will ensures that the forgotten asset is “poured over” into your Trust and included under its terms for how you want your assets to be distributed and managed.

If you don’t have a Trust, your Will designates who will receive your assets through the court probate process. Your Will may also direct any charitable donations you want to make and can be used to create a Trust upon your death if the circumstances call for it- such as if one of your heirs is disabled at the time of your death.

Even if you don’t think you need a Will because you don’t have many assets or have other estate planning pieces in place, having a Will as a backup or “pour-over” tool is an essential part of your estate plan. Plus, depending on state law and whether or not you have children, your assets may not get divided according to your wishes if you don’t have a Will, so it’s always a good idea to create one (or update your old one) when you get married.

06 | Legal Guardians for Your Minor Children

Finally, if either you or your spouse have minor children from a prior relationship, or if you are planning to have kids of your own soon, it is crucial that you select and legally document guardians for your children. Guardians are people legally named to care for your children in the event that you or your spouse die or become incapacitated.

To make sure your children are never left in the care of strangers for even a minute, it’s crucial to name both long-term and short-term legal guardians for your kids. That way, someone you trust will always have the authority to be with your children during a short-term emergency or a long-term situation.

Do not assume that just because you have named godparents or have grandparents living nearby that they will automatically have the authority to care for your children if you can’t. The only way to ensure that your children are cared for by the people you would want is to name guardians in a legal document. Otherwise, you risk creating needless conflict between family members and a potentially long, expensive court process for your loved ones.

Planning for a Lifetime of Happiness

If you’re newly married or are planning to be married soon, I wish you true happiness in your marriage and your new life ahead, and I truly want to help you protect the dream and future you are building with your new spouse. With the excitement of your wedding coming to an end, now is the best time to create an estate plan for your new family, and it may even be the most crucial time to create a plan for them.

We often think that incapacity and death simply don’t happen to newly married couples, but unfortunately, no one can predict the future. If an illness or tragedy does strike you or your new spouse, the ramifications of not having an estate plan in place can be even worse than for a couple who has been married for a long time.

No matter the stage of your relationship or marriage, I can help make sure your spouse and family are protected and cared for now and for years to come. Through our Life & Legacy Planning™ process, I’ll guide you from the heart on the estate planning questions and decisions that are essential for your family’s well-being and that feel comfortable to you.

To learn more about how I can help protect your family’s future, schedule a free 15-minute discovery call today.

Here’s to a very happy ever after.

Tags Beneficiary Designations, Estate Planning, Newlyweds, Personal Family Lawyer®, Power of Attorney

Estate Planning

6 Estate Planning Must-Do’s After You Say “I Do” – Part 1

Post author By Sara Thomas
Post date September 22, 2023
3 Comments on 6 Estate Planning Must-Do’s After You Say “I Do” – Part 1

Wedding season is winding down, and if you are a newlywed or are planning to tie the knot soon, it’s time to make your first legal move as a married couple – creating an estate plan. With all the joy and happiness a new marriage brings, planning for your potential incapacity and future death may feel out of place, but creating your estate plan as part of your post-nuptial to-do list is the greatest gift you can give your new spouse.

A lot changes once your marriage is official, but how you and your spouse want your finances to be managed or how you would want medical decisions to be made for each other are not automatically documented when you say “I do.”

If you become incapacitated for any reason before your estate plan is complete, your spouse would not have the legal authority to make medical decisions for you even though you’re married. Your loved one would also have no access to your bank accounts, and in the event of your death, could even be put into a position of losing the home and possessions that you owned together.

Instead, your choices for yourself, each other, and your life together need to be properly documented to ensure your wishes are respected and honored no matter what the future holds.

Here are 6 essential estate planning tools you need to put in place right now.

01 | Updated Beneficiary Designations

One of the easiest estate planning tasks that newlyweds often overlook is updating their beneficiary designations. Some of your most valuable assets, such as life insurance policies, 401(k)s, and IRAs, do not transfer via a will or trust. Instead, they have beneficiary designations that allow you to name the person (or persons) you’d like to inherit the asset upon your death.

While every couple should consider creating and using a Trust to transfer retirement (only with the guidance of a lawyer, as this can be complex) or life insurance distributions, you shouldn’t wait until your Trust is created or your estate plan is complete to update your beneficiary designations. Until your estate plan is finished, if you would want your spouse to receive your retirement account benefits or life insurance at your death, you need to proactively name your spouse as your primary beneficiary, and then name at least one contingent, or alternate, beneficiary in case your spouse dies with or before you.

If you have minor children at home, remember to never name a minor child as a beneficiary of your life insurance or retirement accounts, even as a contingent beneficiary. If a minor is listed as the beneficiary, the assets would be distributed to a court-appointed custodian, who will be in charge of managing the funds until the child reaches the age of eighteen, at which point the funds would be distributed to them outright, to do with what they want. Instead, you can set up a Trust and name the Trust to receive your life insurance or retirement account benefits.

If you have children or you plan to have children in the future, you should set up a Trust to receive those assets instead so they can be properly managed for your child’s well-being while keeping the funds safe from any future overspending, debt, or legal trouble your child may have. Creating a Trust to hold and distribute assets to your children is even more important if your marriage creates a blended family, as it will ensure your children inherit from you in the way you want and avoid conflict between step-siblings.

02 | A Durable Financial Power of Attorney

Estate planning is not just about planning for what happens when you die. It’s equally about planning for your life and the unexpected events life throws your way like a serious illness or accident that may leave you incapacitated.

If you become incapacitated and have not added your spouse as an owner on your bank accounts or legally granted them permission to manage your financial and legal interests, they may have to petition the court to be appointed as your guardian or conservator to handle these affairs for you. This is surprising to many newlyweds and long-time married couples who assume their spouse has automatic access to all of their assets at any time. Sadly, this isn’t the case, and without giving written permission to your spouse through a Durable Financial Power of Attorney, that authority could be given to someone else by the court, even a stranger or a family member you would never want to have control over your financial life.

A Durable Financial Power of Attorney would grant your spouse the immediate authority to manage your financial, legal, and business affairs in the event of your incapacity, and give them a broad range of powers to handle things like paying your bills and taxes, collecting government benefits for your care, selling your home or car, and managing your banking and investing.

Creating a Durable Financial Power of Attorney is especially important if you don’t live in one of the community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In every other state, the law does not assume your spouse has any ownership of property in your name alone, which means your spouse could be forced to move out of your shared home or give up your shared property with little notice and little legal recourse.

03 | A Power of Attorney for Health Care and Living Will

Where a Durable Financial Power of Attorney gives your spouse the authority to manage your financial and legal matters, a Power of Attorney for Health Care lets them make medical decisions for you if you can’t communicate them for yourself.

For example, a Power of Attorney for Health Care would let your spouse make decisions about your medical treatment if you are in a serious car accident or hospitalized with a debilitating illness. If you don’t name your spouse as your Power of Attorney for Health Care and you do become incapacitated, your spouse would have to petition the court to become your legal guardian before they can make any major medical decisions on your behalf.

Even though your spouse is generally the court’s first choice for your legal guardian, relatives may also petition the court to be appointed as your guardian, which can create severe conflict and financial strain in your family. Creating a Power of Attorney for Health Care that names your spouse as your decision-maker far in advance will spare your spouse the time, money, and stress involved with a court guardianship process.

Within or attached to your Power of Attorney for Health Care should be your Living Will. A Living Will explains to medical providers and to your decision-maker how you would want your medical care handled, particularly at the end of life. Because a Power of Attorney for Health Care and a Living Will go hand-in-hand, they are often combined into a single document.

In your Living Will, you can explain your wishes for life support, whether you would want hydration and nutrition supplied intravenously, and even what kind of food you want and who can visit you in the hospital. It is always a relief to your spouse to have instructions and wishes written out by you in advance that they can lean on, rather than having the added stress and trauma of trying to guess what your wishes would be in these situations.

Through Sickness and Health, We Can Help

Between moving in together, establishing a new routine, and combining your finances, estate planning can seem like a low priority for newlyweds. But in reality, estate planning shortly after getting married is one of the smartest decisions you can make for your marriage. Creating your plan shortly after your wedding is also the most convenient time to plan since you will inevitably be going to the bank and contacting your financial institutions to update your new marital status.

To make sure your new spouse has immediate access to your assets and that you can always care for them in the way they would want, give me a call. It would be my honor to help you and your spouse plan for your new life and your future through my unique, heart-centered process.

If talking about finances and death shortly after your wedding feels heavy, don’t worry. I’ll guide the discussion in a way that feels casual, natural, and helps facilitate open communication between you and your new spouse.

Don’t forget to check back next week for part two of this series!

Tags Beneficiary Designations, Estate Planning, Newlyweds, Personal Family Lawyer®, Power of Attorney

Estate Planning

AARP and The Red Cross Celebrated Make-A-Will Month, But Here’s What They Didn’t Tell You

Post author By Sara Thomas
Post date August 28, 2023
No Comments on AARP and The Red Cross Celebrated Make-A-Will Month, But Here’s What They Didn’t Tell You

August was National Make-A-Will Month and you may have received an advertisement in your inbox or mailbox from AARP or the American Red Cross reminding you to get your Will taken care of this month. Both AARP and the Red Cross promoted their partnerships with FreeWill.com, a website that claims to help you create a legally valid Will in just 20 minutes.

A Will, otherwise known as a Last Will and Testament, is usually the first thing that comes to mind when you think of getting your affairs in order, so the advice presented by AARP, the Red Cross, and National Make-A-Will Month itself sounds really good. But in reality, the message of AARP and the Red Cross for Make-A-Will Month could leave your family with a stressful mess when you die or if you become incapacitated first.

To understand why, it’s important to know what a Will does and where its limits lie.

A Will Does Not Cover All of Your Assets

Advertisements and public campaigns about making a Will can make it seem like a Will can take care of all of your needs and all of your assets after you’ve died. In reality, a Will only covers certain items of your property, including any property owned solely in your name and any property that doesn’t have a beneficiary designation.

That means a Will does not control property co-owned by you with others listed as joint tenants or owned as marital property with a spouse, meaning you can only give away your share of any property you own with others, not the entire property.

Assets such as retirement accounts and life insurance policies that have beneficiary designations are not controlled by your Will at all but will instead be paid out directly to the person listed as your beneficiary on each account. Because of this, it’s especially important to make sure your account beneficiaries are up-to-date. And, that you have backup designations in case your chosen beneficiary isn’t living at the time of your death.

Even if your Will states that you want your wishes to apply to all of your assets, the wishes in your Will are always trumped by beneficiary designations and co-ownership laws.

A Will Does Nothing For You If You Become Incapacitated

Since your Will doesn’t have any authority until after you’ve died, you can’t use it to give someone you trust the power to make decisions for you if you’re incapacitated due to illness or injury. An incapacity can occur as a result of a car accident, an injury sustained while playing with your softball league, or due to an illness, and may be temporary or permanent.

Tasks like paying your bills, managing your money, and maintaining your home may all require help if you become incapacitated. Likewise, you’ll need someone who can make medical decisions for you if you’re unconscious or unable to communicate your medical choices effectively, such as if you’re in an induced coma in the hospital or have memory problems due to an injury or degenerative condition.

Unfortunately, the people named in your Will have no authority to make decisions for you or act on your behalf while you’re alive unless you’ve given them that power through a separate Power of Attorney. Without it, your loved ones may need to go through a court guardianship process to gain the authority to take care of you and your home.

A Will Must Be Filed in Court to Be Used

One of the biggest estate planning myths I hear from clients is the belief that by having a Will, their loved ones won’t need to go to court after they die.

Sadly, this is the opposite of the truth.

A Will only has the authority to control your assets and represent your decisions when it is filed under a probate case in court after your death. If you named someone in your Will to manage your estate or watch over your children, that person will have no authority to do so while you’re alive.

Your chosen representatives can only begin the process of managing your assets and following the wishes you’ve left in your Will only after a judge or court commissioner has formally given them the power. While court oversight can be helpful if there is any confusion or disagreement about your estate, the probate process can be long and expensive. Often, the process can take 12 – 18 months or sometimes even longer.

Due to the length and complexity of the process, going through probate can easily cost your family thousands of dollars.

In addition, because probate is a public court proceeding, your Will becomes part of the public record upon your death, allowing everyone to see the contents of your estate, who your beneficiaries are, and what they’ll receive. Unfortunately, it’s not uncommon for scammers to use this information to try to take advantage of young or vulnerable beneficiaries who just inherited money from you.

A Will is Not an Estate Plan

Organizations often promote a message of the importance of creating a Will because a Will is a tool that most people have heard of and are familiar with, which makes it an easy launching point to talk about the importance of planning for your assets and your loved ones. But the thing is, a Will isn’t the one-and-done solution that most people are led to believe.

The terms “Will” and “estate plan” are often used interchangeably to mean a tool for dispersing your assets and protecting your wishes, but these two terms are not the same. In reality, a Will is just one piece of your overall estate plan, not the entire plan itself. An estate plan isn’t just one or two documents – it’s a range of strategic decisions about the allocation and title of your assets, and it’s a set of tools and counseling-oriented planning that make sure everything and everyone you love is taken care of both while you’re alive and after you’re gone.

Your complete estate plan may include a Will, a Trust, Powers of Attorney, and other tools that are tailored to your specific situation, local laws, and your vision for the future.

And even more important than both a Will and a Trust, is an inventory of your assets so your family knows what you have, where it is, and how to find it when you become incapacitated or die. Without an inventory of your assets, your family will be lost when something happens to you. A comprehensive inventory updated throughout your lifetime is a critical, and often overlooked, piece of an estate plan that is just a Will.

Trusted Guidance and Counseling

An online program may be able to give you a legally valid Will or other legal documents, but just because something is legally valid doesn’t mean it will be effective. And any document created through a 20-minute online tool is almost guaranteed not to work for you and your loved ones when they need it.

Most importantly, any document created using an online tool will lack the knowledge, guidance, and personal counseling of a trusted expert who knows your situation and cares about your plan’s effectiveness.

That’s why I don’t just create documents – I guide you and your family through every step of the process, now and at the time of your passing. I even help all of my clients pass on something more valuable than their money – their values, stories, and wisdom – through a Family Legacy Interview.

If you’re ready to see how having an estate plan created for your family with heart-forward professional guidance is different from just creating a Will online, schedule a free 15-minute call with us.

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.

Tags AARP, Estate Plan, Estate Planning, Estate Planning Attorney, Last Will and Testament, Make-A-Will Month, Online Wills, Personal Family Lawyer®, The Red Cross, Wills

Estate Planning

What the National Debt Ceiling Extension Means for Your Family

Post author By Sara Thomas
Post date July 24, 2023
No Comments on What the National Debt Ceiling Extension Means for Your Family

You’ve probably heard about the national debt ceiling and its recent extension, but you might wonder what it has to do with your everyday life as a family. While it may seem like a distant matter, the national debt ceiling extension can have a significant impact on your family’s financial well-being and future planning.

So what exactly is the national debt ceiling extension?

The national debt ceiling is a legal limit set on the amount of money the government can borrow to finance its operations and meet its financial obligations domestically and around the globe. When the government reaches this limit, it cannot borrow more money unless Congress raises or extends the country’s debt ceiling. If the ceiling isn’t raised and the United States can’t pay back its debts, the country’s global creditworthiness is affected as well as financial security abroad and at home.

Congress raised the national debt ceiling on June 3, 2023, which means the United States will not default on its loans. This is good news, and yet the extension of the debt ceiling can still affect the economy and your family.

Here’s how the national debt ceiling extension can affect the economy, and your family, and what you can do to mitigate the impacts.

Access to Credit and Loans

You likely rely on credit and loans for various purposes, such as buying a home, financing education, or handling unexpected expenses. When the national debt ceiling is extended, it can create uncertainty in the financial markets, leading to higher interest rates and tighter lending conditions. This means that securing affordable credit and loans for major life milestones or managing financial emergencies may become more challenging.

One of the ways you can mitigate this impact could be to consider starting a business or a side hustle, so you can create multiple revenue streams instead of just being reliant on one, and leverage access to business credit, which can be more accessible and less expensive than using personal credit, even in tight lending markets.

Consumer Confidence and Spending Habits

Your family’s financial health may be closely tied to the state of the external economy. When there is uncertainty surrounding the national debt ceiling, coupled with high inflation, it can affect consumer confidence and spending habits. As people become concerned about the government’s ability to manage its debt, they may tighten their spending, leading to decreased demand for certain goods and services. This can have a direct impact on your job stability, income growth, and even your ability to save and invest for the future.

One way to mitigate this risk is to begin to separate the well-being of your family from the greater economy by creating your own local economy, wherever possible. If that feels far afield, consider ways that you can begin to generate income locally by making a product that friends and neighbors would want and need, or providing a side service within your local community.

If you decide to go this route, contact me to discuss options to create your side business in the most tax-advantaged and liability protected manner.

Government Programs and Support

Government programs and support play a crucial role in many families’ lives, especially during challenging times. However, when the national debt ceiling is extended, it can put pressure on government budgets, leading to potential cuts or delays in funding for essential programs and services. This may directly affect your access to healthcare, education, housing assistance, and other forms of support that your family relies on.

If you have a child or family member with special needs or an elderly family member you are supporting this may affect you even more. Now is the time to tighten relationships with your nuclear and extended family, marshall all the family resources, and get into conversation around how you can use all the family resources to support all of the children and elders in the best way possible. If you need help speaking to your parents, or considering how best to ensure a lifetime of support for a child with special needs, give us a call and let’s strategize together.

Tax and Fiscal Policies

Changes in tax and fiscal policies, often influenced by the national debt, can have a significant impact on your family’s finances. As the government seeks ways to manage the national debt, it may consider adjustments to tax rates, deductions, or credits. These changes can directly affect your take-home income, savings, and overall financial planning. Understanding and adapting to these shifts is crucial for effectively managing your family’s budget and long-term wealth and legacy.

You can be fairly certain tax rates will go up to support the debt extension. And, the middle class, especially those who do not know how to mitigate tax impacts with legal entity structuring, are likely to bear the burden. If you want to leverage the tax-advantaged strategies of the wealthy to keep more money in your local community, and in your family’s bank account, contact us to discuss options.

Ongoing Guidance for Your Family

We understand that managing your family’s financial and legal well-being can feel overwhelming, especially when it’s hard to know how changes in the law and the financial landscape will affect you. But remember, you don’t have to face these challenges alone. Our mission is to provide you with the support and guidance you need as you navigate changes in the law so you can build a life you love while protecting and preserving your wealth and legacy for the next generation.

While we aren’t financial advisors, we can connect you with a trusted network of professionals and work alongside your financial and tax advisors to make sure your estate plan coordinates with your overall financial plan and protects your family’s wishes and wealth no matter what the future brings.

Ready to protect your family’s wealth and preserve your assets and your story for generations to come? We invite you to schedule a free 15-minute call to learn more.

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.

Tags Estate Plan, Estate Planning, Estate Planning Attorney, Legacy Planning, National Debt Ceiling Extension, Personal Family Lawyer®

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