One of the ways in which we show those we love how much we care is how we take care of them. We packed school lunches, helped with homework and drove to activities. We then saved for college and helped, as they started their lives as young adults. Now, as we lean into the senior years, it’s time to plan for the next phase of our lives as well as theirs.
That includes working with an estate planning or elder law attorney in the creation of a will and powers of attorney for both medical and financial decisions. It may also include trusts.
Think of elder law and estate planning attorneys as specialists. If you went to a geriatrician, it was because they focus their practice on the needs of seniors. These attorneys work with families to protect their legal needs, especially those that come with aging.
Some of the areas where estate planning and elder law attorneys are experts:
Creating a will and testament and helping you understand the difference between the two documents and which one you need.
Help with estate planning, including protecting any minors or special needs individuals who might need a guardian to be named, or a Special Needs Trust.
Income management, asset liquidation and gift tax management.
Finding long-term care facilities, senior assisted living facilities or other resources for the housing and care needs of seniors.
The attorney will typically spend time getting to know the individuals and the family, their goals and the how they expect to spend their later years.
To make a decision about working with an attorney, you’ll want to do some research. Read their website to learn about their credentials and any community or professional groups, where they are involved. Learn how much time they devote to elder law and estate planning, and if their practice includes related areas, like real estate law.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.
Digital could remain forever, unless action is taken.
The digital world has created many new issues which have an impact on almost everyone in today’s world. Unlike your other assets, digital isn’t a tangible item and could exist forever, according to the Press-Republican in “The great digital beyond.”
Digital is a relatively new issue, as people are just beginning to realize. Some information is saved on personal storage space, such as internal and external hard drives and thumb drives. Others live in the cloud, through social platforms like Facebook, Google Mail and YouTube.
What becomes of all that information when someone dies? Does it live on forever? How is it protected, or is it protected?
As more people have had to deal with the management of digital assets, more resources have been created. There are now companies that offer to help with this process. There are websites that allow you to upload all your information and set notifications to family members at future dates. They also handle the requirements from social platforms, so that digital assets are managed properly and legally.
Estate planning attorneys now include digital assets in their documents. However, you will also have to do some homework.
Just as you need to do an audit of your physical and financial assets to make sure your estate plan addresses their proper distribution, whether before or after death, individuals now need to create an inclusive list of their digital assets, including user names, passwords, answers to questions that are used to verify identities and what they want to happen to the digital asset after they have passed.
Some online services do have policies in place for providing access to accounts after the account owner has died. Facebook lets users designate a “Legacy Contact” who is legally allowed to enter an account to post, respond to friend requests and update the profile and cover photos. The Legacy Contact can be given the authority to download photos, posts and profile information or they can be given the permission to just delete the account. Google has an inactive “Account Manager” that lets users share parts of their account data or notify someone, if they have been inactive for a certain amount of time.
Critical point: Never put your user name, password or security question answers into your will, just as you would not put bank account numbers and financial access information into a will. If your will goes through probate, which is likely to be the case, it becomes a public document. You don’t want to hand the keys to your kingdom to the world at large. The information should be provided to your attorney and your heirs in a separate document.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, including your digital assets.
Therefore, why does it matter and what do you? Here are a few suggestions.
Determine priorities. Considering your legacy reminds us that our actions have an impact on those around us. It makes us think twice about how we live our lives. It allows us to stop and think, by stepping out for a moment from the day-to-day bustle of our lives.
Reminds us what needs to be done for those we love. Is your life insurance in place? How about your estate plan? Do you have a power of attorney and a health care proxy, in case something unexpected should occur? How will your family manage, if tragedy strikes? Having this in place is an expression of love and caring.
Think about the future. It’s easy to get caught up on the short-term. However, taking some time to consider how you want to be remembered in the future provides a different perspective. A temptation that you know is wrong, for instance, may pay off financially in the short term. How will it impact your legacy in the future?
Makes you a better person. Thinking about your legacy may inspire you to do the right thing, to be more selfless, more generous with your time and resources and to treat others with more kindness.
Bring values into focus. We all live with a moral code, whether we can articulate it or not. If your actions are not consistent with your values, it’s visible to those around you. Is this how you want to be remembered?
Define your legacy. Perhaps the last message we leave behind is how we prepare for our end. Whether it’s making sure your estate plan is properly prepared or planning a funeral, let those you love know that you cared enough to think about their needs, even after you have passed.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, as well as your legacy.
Many Americans don’t know about them or fail to use them, despite the advantages.Even though health saving accounts (HSA) are an excellent retirement tool, many people still don’t know about them or take advantage of them, according to CBS Moneywatch in “Many savers missing out on the HSA’s benefits for retirement.”
One strength of an HSA is, unlike flexible spending accounts, HSA funds never expire, and they stay with you from job to job. HSA account holders have accumulated more than $51 billion in these special savings plans, a 20.4% increase since 2017. The number of HSAs exploded by more than 11%, totaling 23.4 million accounts.
Despite these numbers from the 2018 Midyear Devenir HSA Market Survey, many people who have HSAs aren’t taking advantage of the tremendous long-term benefits the accounts offer. Through the first half of 2018, the story reports that total HSA contributions were nearly $20 million, while withdrawals totaled more than $13.7 million.
In other words, more people are using HSAs as a pass-through and are receiving only a small benefit of using tax-free dollars to pay for out-of-pocket medical costs.
The study indicates that more than 80% of HSA assets are not invested in any of a wide range of possible available investments. Invested HSA assets total only $10 billion, a small percentage of the overall accounts. HSAs with invested assets have an average balance of more than $16,000—seven times higher those without invested assets.
HSAs present great potential value.However, most people don’t understand the opportunity they present.
In fact, people are best served by making the maximum contribution before putting money into another account, with the exception of the matching contribution from their employer’s 401(k) plan.
The money you invest in an HSA is tax-free when it goes into the account, grows in the account tax-free and it’s tax-free when it is used for qualified medical costs. It’s a three-way tax free!
To contribute to an HSA, you must be covered under a health insurance plan with an annual deductible of at least $1,350 for an individual and $2,700 for a family. The maximum annual contribution is $3,450 in 2018 for an individual and $6,900 for a family. If you are 55 or older, you can contribute an additional $1,000.
Remember, the money must be used for qualified medical expenses, although there is considerable flexibility. There are no time limits as to when the money must be used. There’s no age at which you have to start taking money out of the HSA, as there are with IRAs.
If your budget allows, contribute to the HSA and try not to use it for out-of-pocket medical expenses. If there is money in the HSA when you die, and if your spouse is the named beneficiary, the spouse becomes the account owner and can use it. The biggest downside to the HSA, is if you fail to name your spouse as a beneficiary. In that case, the account is fully paid out at your death and is considered taxable income to the non-spouse beneficiary.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include an HSA.
It could happen to anybody, including your family, if you don’t update your estate plan on a timely basis. Making sure that your assets and prized possessions end up with the right people, requires more than just having a will created. Many accounts have designated beneficiaries, like IRAs and 401(k) accounts, and insurance policies. If the person designated to be a beneficiary is an ex-spouse or a family member from whom you’re estranged, then it won’t matter: the named beneficiaries supersede anything contained in your will.
Just as everything about celebrity lives is oversized, so are their estate planning mistakes.
With no will, Prince died intestate. A judge in Minnesota made the decisions about his assets and there were significant delays due to people who claimed to be his heirs. It has been two years since his death and heirs have yet to receive their inheritances.
Singer Barry White died in 2003, while he was separated but not divorced from his second wife. She inherited everything. His live-in girlfriend of several years and his nine children received nothing. The legal battle got ugly with his girlfriend, daughter and son all filing lawsuits. Until you are legally divorced, you are still married, as far as your estate is concerned. Update your will, your financial and healthcare power of attorney and check your beneficiary designations. Don’t wait.
When actor Heath Ledger died, his will left everything to his parents and three sisters. His daughter and her mother were left with nothing. His family later gave all the money from the estate to his daughter. Use life-changing events, like the birth of a child, as reasons to review and update your estate planning documents.
Olympic sprinter Florence Griffith-Joyner died at age 38. It was believed that she had a will. However, no one could find it. The legal battles between her husband and her mother went on for years. Most estate planning attorneys will keep a copy of your will and other estate planning documents on file. However, you should also keep the original documents in a safe, readily-accessible place and tell at least two people where they are located.
When acting legend Marlon Brando died, he left most of his approximately $26 million estate to his producer and other associates. A long-time housekeeper said that Brando had promised to give her his home when he died, but he never put it in writing. She sued the estate for the value of the home plus $2 million in damages. The case settled three years later for $125,000. If you are making promises to people that you wish to take care of, put those in writing.
Pop icon Michael Jackson’s death set off a long series of legal battles over his estimated $500 million estate. He had created a revocable living trust designed to pass his wealth to his children and his mother, when he passed. However, he never funded the trust. His entire estate had been left outside of the trust. That meant that it had to go through the probate process, while his children and mother lived on an $8 million annual allowance managed by the estate’s executor and a judge. There were also many legal challenges from creditors and family members.
An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. It is important to keep it up to date, especially in the event of life-changing events.
Saving over time is a good way to create security.
National 401(k) Day and Grandparent’s Day in September were special days to teach grandchildren about saving, but every day presents some kind of teachable moment, according to the Tuscon.com in “Retirement Planning: A 401(k) Day message.”
One point you should stress to kids and grandkids: they’ve got a great built-in advantage, when it comes to saving for anything, including retirement. Having an extended time in which to save and for money to grow, is something most of us don’t understand, until that advantage is long gone.
Try this example:
Let’s say you have a 22-year-old granddaughter named Chelsea. She’s 22 and works with Becky, 25, and Ben, 30. They both work for a company with a generous 401(k) plan with an amazing dollar-for-dollar match. They each start participating in the program at the same time. They contribute $150 every month through payroll deductions. Add to the fact that contributions increase by 3% every year and assume a nice 8% annual rate of return.
How much of a difference will there be when they reach age 65?
For Ben, who contributes over the course of 35 years, there will be $900,000 by the time he celebrates his 65th birthday.
For Becky, who contributes the same as Ben, has an additional five years on Ben to add to her account, so she’ll have $1.1 million.
Your smart granddaughter, Chelsea, who started working at 22, with eight more years than Ben to contribute and benefit from the company match, will celebrate her retirement at 65 with $1.7 in her 401(k).
They each contribute the same amount. But the mathematics of compounding, also known as the multiplier effect, makes a difference of hundreds of thousands a year.
Here’s another example. Take a sum of money and invest it at 8%. Leave it invested for nine years, and you will double the original investment. Leave it for another nine years, and you will quadruple the investment. The passage of time drives compounding. The longer time you have, the greater the results.
Do you have digital assets but aren’t sure if you should do something to protect them?
Even though your digital assets may not seem important, it is best to give them special consideration and include them in your estate plan, according to The St. Louis American in “Have you done estate planning for your digital assets?” This new kind of asset requires the same level of care, when it comes to transferring or administrating assets as more traditional and tangible assets.
Digital assets include social media, email accounts, creative works, photos, e-commerce accounts, domain names and documents kept in the cloud. Your digital assets may or may not be of great financial value. However, they still need protection against exploitation and abandonment.
Distributing digital assets is part of fiduciary duty, which is why they must be included in a will that articulates your wishes. Many social media and e-commerce websites will not readily allow a family member or personal representative to transfer or administer these accounts, unless direct permission is given by the user or their heirs.
Some social media platforms have a legacy contact system for heirs and a few different options, once establishment of authority has been done. A legacy contact on Facebook can respond to friend requests, change the cover photo and profile photo or write a notice about your memorial service. However, they are not permitted to log in with your password or user name, read messages or modify account settings.
Google has an “Inactive Account Manager” option that will let you leave instructions for what should be done with your Google Drive docs or Gmail account, once you are deceased.
Linked In offers an online form that is reviewed by Linked In before representatives reach out to the person. Documentation and information must be provided, before anything can be done.
Twitter also has an online form and a process. However, note that Twitter accounts are frozen upon death and access is even barred to members of the immediate family.
Your digital assets also include your devices. Give your executor or trustee locations and passwords of computers, tablets, e-readers, phones, laptops and any other devices you use. Locating backups may be crucial if the devices contain business information. Just like insurance on a car or home needs to be paid after a person dies, payments for anti-virus programs, service contracts for software updates and other ongoing fees relating to digital services, also need to continue to be paid.
Your will probably needs to be amended to include language regarding your digital assets. At the very least, make sure your executor or trustee knows where digital assets are stored. Your will should also give your executor the authority to administer, archive, alter or destroy digital assets, in addition to being able to distribute them to heirs or other named beneficiaries.
An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and includes digital assets. If you already have an estate plan, you can update and include digital assets.
Ephron’s attention to detail came as no surprise to her friends and family, although her death did come by surprise. The meticulous care in which she planned her memorial was true to character. She gave it a title: “A Gathering for Nora” and set it out in a folder labeled “Exit.” It was thoughtful, personal and helped her family and friends grieve more effectively. However, you don’t have to be a celebrated author to do this kind of planning. You can—and should—write down your wishes in your estate plan.
Most people don’t. A study conducted by the National Funeral Directors Association found that while nearly 75% of Americans know it’s important to have a plan that is communicated before death, only about 25% do so.
However, some plan a very personal exit. Designer Alexander McQueen’s memorial service at London’s St. Paul’s Cathedral was as chic and au courant as any of his designs.
Funerals are typified by five “anchors”—significant symbols, a gathering community, ritual actions, cultural heritage and transition of the remains. Add another anchor: planning.
Here are lessons from Norah Ephron:
Decide what you want. Address key questions like:
Do you want to be buried or cremated? If cremated, where do you want your ashes to go?
Do you want a funeral or memorial service? Graveside service or a chapel?
What, if any, religious ceremony do you want?
How do you want your family and friends to grieve your loss or to celebrate your life?
Prepare for the financial aspect of your funeral. Consider prepaying, so that loved ones won’t be scrambling to pay for the funeral, which average from $8,000 to $10,000 and up. One widely available option: a small insurance policy dedicated for the cost of the funeral or a Payable on Death (POD) account set aside for that same reason.
Don’t be afraid to plan your funeral. You can be as structured and specific as you want, and your loved ones will be relieved to not need to make any further decisions. Want to share a specific song or a prayer? Put it in your instructions. Ephron listed who she wanted to speak and for how long.
Planning your funeral in advance, along with having an estate plan prepared in advance, will let your family and loved ones know that you cared enough to prepare, so that they would be spared the heavy lifting that comes when there are no plans in place.
An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and can include your funeral plans.
The article describes a case where an adult child wanted a parent’s ranch to be sold and the proceeds split between family members. What happens if the parent doesn’t agree and there are threats to have the parent declared incompetent and institutionalized?
There are protections available. However, action needs to be taken, including meeting with an estate planning attorney. Start by naming someone as Medical Power of Attorney to make any decisions regarding medical treatment in case you can’t make them for yourself. Don’t name your son or daughter—without the POA, the state law would put your adult child in that position of power.
Discuss with the person you want to designate as your POA what your wishes are about health care and whether you want to have extreme measures taken if they were to become necessary. Make sure they understand that their role is to carry out your wishes and they must be prepared to make some hard decisions.
In some states, a competent person can name the preferred guardian of their person or their estate as well as the person(s) they do NOT want to be appointed. Have your attorney prepare and sign a declaration to that effect, in compliance with the laws of your state.
Your goal is to protect yourself, as well as your family ranch.
If you were to become incompetent, the judge appointing a guardian for you would be required to follow the directions in your declaration, unless that person is found to be disqualified or would not serve your best interests.
This is a heartbreaking scenario and its one you hope you’ll never have to face. However, we know our children better than anyone else and we know what they may or may not do as we age.
An estate planning attorney can advise you in creating the proper documents to address a situation.
It can be the best of times and it can be the worst of times.
When the kids head off to college, you will find that the move will have an impact on your finances and how you handle those changes may well have an impact on your future, according to The Cross Timbers Gazette in “Financial Considerations for Empty Nesters.”
Suddenly all that cash on hand that used to go toward allowances, lunch money, shopping for clothes, gas money and your kid’s cell phone bill, is staying in your bank account. It’s tempting to do some “catch up” spending and indulge yourself in all the things you’ve put off, waiting until the kids were grown. However, this is a unique opportunity to bolster retirement savings and build up (or build back) the emergency cushion that so many of us forget we need—until there’s an emergency.
There’s always the temptation to help the kids out, as they set off on their new lives as independent adults. That’s a great thing to do if you and your retirement accounts can afford it. Consider putting a time limit on any continuing support, like paying a monthly phone bill or a credit card bill.
In some instances, kids never become completely financially independent. If you are in a position to fund them, that’s great. If they have disabilities that limit their earnings abilities, you may want to look into what social service programs are in your area that may help with finding safe and affordable housing, social programs and other services.
Make sure your estate planning attorney and your financial advisor are aware of your plans, if they include continuing to support your children. This may impact your estate plan and investment choices.
Now, have some fun. It’s time to focus on you and your spouse. Make a budget and figure out how much you can reasonably afford to spend on a special vacation or to fix up the spare room.
If you haven’t updated your will, since the last presidential election, put this on your “before the holidays” list. There have been many changes to tax laws and your life may have experienced some changes as well. Review your estate plan with your estate planning attorney to be sure you aren’t missing any opportunities to minimize taxes or maximize your planned giving legacy.
This is also the time to check on your beneficiary designations. If the last time you looked at them was when your now adult children were small, you definitely need to make a complete list of all of your accounts that have beneficiary designations and make sure they are up to date. If you haven’t checked them since before you were last married, it’s time.
Now that the kids are grown, it’s a good time to revisit your power of attorney and medical directives. If your child is responsible enough, you may want to name your child as your power of attorney. Accidents happen, and we never know when we might become incapacitated.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, including the impact of that nest emptying out.