Month: December 2018

Who Gets Aunt Lydia’s Emerald Ring? Passing on Assets.

One of the largest transfers of wealth in our nation’s history is now getting underway, as boomers approach their later years and are starting to prepare to move their assets to the next generation, reports Kiplinger in the article “Estate Planning Answers for ‘Hard’ Assets Like Art, Heirlooms.”

It’s one thing to transfer stocks, bonds, cash and other assets that are generally considered “liquid.” However, it’s different when the assets are “hard,” like real estate, art, and jewelry. Most families don’t keep a comprehensive inventory of these assets, their value may be unknown and chances are good family members have different ideas regarding how they want to have them distributed.

If all of this is not enough, what about the difficulty of talking about what the current owner would like to see happen to the asset.

So, what happens? In many cases, these hard assets end up being overlooked and sometimes undervalued.

A better solution would be to create a formal plan that begins with the owners, the family advisors and, depending on the nature of the asset, professional appraisers.

Here are three key questions to keep in mind:

What’s it worth? You need to establish any asset’s fair market value. That number needs to be appraised by an objective and properly credentialed appraiser, who is knowledgeable in their area. For instance, a jewelry collection that has grown from its original value when first acquired, may have doubled in value over the decades. Select an appraiser who is certified by an accredited organization. The cost of the appraisal will be well worth the fees.

Who wants what? You may be emotionally vested in an heirloom that came to you from your great grandfather, but your kids may be more attached to the family home. If more than one sibling wants an asset, you’ll need to figure out a way to share it. If one child insists on keeping the family vacation home, for instance, but the other two aren’t interested, you might need to set up an equitable buyout solution.

If the asset is artwork or a collectible, remember that these items are often cyclical in popularity and so is their value. One individual who inherited a collection from his parents knew that the artist was a family friend, but had no idea of the value, if any, of the collection. His timing was sheer luck—he wanted to sell exactly when this artist was popular. Three years later, he may not have been so well rewarded.

Can it be passed on to the next generation? Our estate planning attorneys will assist you with the best way to pass on illiquid assets. They may be put into a trust, a family partnership or an LLC, and the transfer of ownership can be done in a tax-efficient way. If you really don’t think your heirs appreciate the asset, then you can sell it for a fair price, pay the necessary taxes and gift the tax.

Conversations about these kinds of assets can become emotional, because the assets have sentimental value. However, don’t let that fact dissuade you from passing them along in a way that benefits everyone, addresses potential conflicts and lets you and your family prepare for the future.


Reference: Kiplinger (Nov. 5, 2018) “Estate Planning Answers for ‘Hard’ Assets Like Art, Heirlooms”

How Do I Avoid the Three Biggest Estate Planning Mistakes?

The Street lists the “3 Worst Estate Planning Mistakes and How to Avoid Them.” These are issues that frequently mess up an estate plan:

Lack of Information. Unwinding the various pieces of your estate can be a monumental task. Some folks leave this all to chance. They fail to leave their executor and loved ones with a complete and updated list of where everything is located and how to get to it.

Think for a minute about all the assets you’ve accumulated in a lifetime: this will include your brokerage accounts, bank accounts, mutual fund holdings, IRAs, pensions and others. They’re hopefully all protected by a host of user names and passwords and maybe even by the answers to questions, like the hospital of your birth and your first pet’s name.

While things like insurance policies are likely online, some of your holdings are not available electronically. In addition, other possessions are totally digital, and you should guard against cyber-theft and hacking. Create a list of all your user names and passwords for investment accounts and other financial holdings.

Beneficiary Designations Issues. It’s not uncommon for people to forget that they’re required to name beneficiaries for their retirement accounts, annuity contracts and insurance policies. Messing this up is a guarantee that your assets will wind up in probate. It can be an expensive and time-consuming legal process, where your wishes may be disregarded.

Outdated Plans. Sometimes, decades pass after estate documents are executed and put away. In the meantime, divorces and other life events happen, radically impacting the original estate planning objectives. In addition, changes in tax laws might impact your initial intentions. It’s smart to periodically review what is in your will and your beneficiary designations.

Are you concerned about mistakes in your current estate plan? Our estate planning attorneys can help you achieve your desired outcomes.


Reference: The Street (November 29, 2018) “3 Worst Estate Planning Mistakes and How to Avoid Them”

How Should I Title Property For My Estate Plan to Work?

The way property is titled can mean different probate consequences. Reflector.com’s recent article, “Joint-ownership property titling can avoid costly probate process” discusses the five common methods of joint-ownership property titling.

Joint tenancy. In this situation, two or more persons own equal shares of a property. The owners don’t have to be related or married to each other. When the asset is owned jointly by spouses, the asset is passed onto the surviving spouse at the death of the other spouse. However, when the asset is owned jointly by unmarried people, the entire value of the asset is included in the deceased’s estate and is subject to probate. Therefore, joint tenancy might not be the best property titling method, if you want to share joint ownership with somebody other than your spouse. If one of the owners doesn’t honor his/her financial obligations, the asset can be subject to the pursuit of creditors up to that owner’s respective ownership percentage.

Tenancy in common. This is similar to joint tenancy in many ways.  However, the big difference between joint tenancy and tenancy in common, is that the relative ownership percentages of the tenants in common may differ. One owner can own 25% of the asset, while the other can own the other 75%. If one tenant in common dies, the percentage of her ownership in the asset is included in her estate and is subject to probate.

JTWROS. Joint Tenancy with Rights of Survivorship (JTWROS) means that the right of survivorship distinguishes JTWROS from joint tenancy and tenancy in common. When the owner dies, her share of the ownership is transferred to the surviving joint owner automatically by operation of law without probate. Each joint owner also has the right to transfer or sell his or her interest in the property without the consent of the other joint owner, and thereby destroy the JTWROS status. Were this to happen, it would convert a JTWROS into a tenancy in common.

Tenancy by entirety is a JTWROS between spouses. However, neither spouse can transfer or sell their interest, without the consent of the other spouse. Tenancy by entirety is better protection from the creditors against one spouse than a JTWROS. That is because the asset isn’t owned by either the husband or the wife but by the marital entity.

Community property. This is recognized in Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Community property provides that married couples own an equal and undivided interest in all assets accumulated while they are married. Each spouse owns half of the value of the community property, and either spouse can transfer or sell one half of the assets. When one spouse dies, one-half of the value of the community property is included in the probate estate and gross estate of the deceased spouse.

There are different methods of joint-ownership property titling. Select the right method with the help of your estate planning attorney to avoid a future costly probate process.

Reference: Reflector.com (December 2, 2018) “Joint-ownership property titling can avoid costly probate process”

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Why Do I Need an Estate Plan?

Investopedia’s recent article, “4 Reasons Estate Planning Is So Important,” says you should think about the following four reasons you should have an estate plan. According to the article, doing so can help avoid potentially devastating consequences for your family.

  1. An Estate Plan Keeps Your Assets from Going to Unintended Beneficiaries. Families need to plan in the event something unfortunate happens to a family’s breadwinner(s). A primary part of estate planning is choosing heirs for your assets. Without an estate plan, a judge will decide who gets your assets. This process can take years and can get heated. There’s no guarantee the judge will automatically rule that the surviving spouse gets everything.
  2. An Estate Plan Protects Your Young Children. If you are the parent of minor children, you need to name their guardians, in the event that both parents die before the children turn 18. Without including this in your will (in most, but not all states), the courts will make this decision.
  3. An Estate Plan Eliminates a Large Tax Burden for Your Heirs. Estate planning means protecting your loved ones—that also entails providing them with protection from the IRS. Your estate plan should transfer assets to your heirs and create the smallest tax burden as possible for them. Without a plan, the amount your heirs will owe the government could be substantial.
  4. An Estate Plan Reduces Family Headaches After You’ve Passed. There are plenty of horror stories about how the family starts fighting after the death of a loved one. You can avoid this. One way is to carefully choose who controls your finances and assets, if you become mentally incapacitated or after you die. This goes a long way towards eliminating family strife and making certain that your assets are handled in the way you want.

If you want to protect your assets and your loved ones after you’re gone, you need an estate plan. Without one, your heirs could face large tax burdens and the courts could decide how your assets are divided or who will care for your children. Our estate planning attorneys can help you create an estate plan to take care of your loved ones.


Reference: Investopedia (May 25, 2018) “4 Reasons Estate Planning Is So Important”

How Do I Discuss Care With My Aging Parents?

Discussing the next steps for aging parents isn’t an easy conversation, but if you plan ahead it can be less painful for everyone involved, says KARE 11 in Minneapolis in the article, “Making the best care decisions for aging parents.”

Many families find this out the hard way. When an aging parent requires immediate urgent care, the family must jump into “go” mode. It can be overwhelming. There are many options, which range from various levels of in-home care, to independent living, to assisted living and even to skilled nursing care. You should understand the level of care you need and what you can afford.

Unless you qualify for Medicaid, you’ll need to pay for assisted living out of your own pocket. For most of us, this could drain assets in short order. Many people also aren’t planning for long-term care in retirement.

It’s best to plan early. If you’re going to buy a long-term care policy, the best time to apply is in your 40s or 50s, when your health is good and the cost is cheaper.

Sit down with our elder law attorneys, regardless of your assets, because the laws concerning Medicare and Medicaid are confusing. Every situation is also different.

Many people aren’t aware that Medicare doesn’t cover many long-term care services. In fact, that limited benefit is designed to get somebody back to independent living, not help them with basic activities of daily living. Therefore, if it becomes a situation where an aging parent is going to need help with such basics as dressing, bathing and other activities of daily life for the rest of their life, Medicare is not going to cover it.

If you believe gifting your estate away now will stop you from losing it in the future, remember that most states have a five-year look back period. Any gifts of money or property in the 60 months before applying for Medicaid, can be taken back to pay for the program or the applicant will be penalized.

It’s difficult enough to make the decision to place your aging parent in someone else’s care, let alone to fret about how you’re going to pay for it. Plan now, if you can.


Reference: KARE 11 (Minneapolis) (November 27, 2018) “Making the best care decisions for aging parents”

Can I Give Real Estate to a Charity in my Estate Plan?

Many nonprofits are now encouraging donors to make gifts of non-liquid assets, like real estate. If it’s thoroughly vetted and properly structured, real estate gifts can help donors meet their financial planning and philanthropic goals, and at the same time give charities a new source of funding.

Real estate holdings account for a major part of the assets in U.S. households. However, just a small proportion of charitable contributions are land or buildings. Many individuals with surplus real estate may want to consider donating their appreciated property to charity, instead of selling the property themselves. That’s particularly true, if they want to minimize taxes or generate retirement income.

The fact that many real estate gifts are more complex and costlier for charities to process and manage than cash donations, means that it’s important to think about donating to charitable organizations that have developed a clear set of gift acceptance policies and procedures in place. As a prospective donor, you should look for policy guidelines that detail the kinds of properties that will and won’t be accepted. Perhaps the charity only accepts commercial or undeveloped land.

It is also important to look for the types of estate planning structures donors are allowed to use, when making these gifts. These can include charitable remainder trusts, charitable gift annuities and retained life estates. You should also see if there are any stipulations on the charity’s acceptance of properties that come with mortgages or other risk factors.

Once a real estate gift has been approved on a preliminary basis by a charity, the donor may then be required to provide additional information about the property. This “due diligence” phase typically entails a title search, assessments of the local market and environmental conditions, a professional inspection and a site visit by the organization’s representative. It is customary for the charitable organization to defray the costs of conducting these studies.

After the due diligence has been finished, and the charity has agreed to accept the gift, the donor will be notified of the results of the investigations, and of the plans for how the final transfer of the property will take place.

This type of donation can offer many advantages to donors, including generating income, deferring or lowering taxes and decreasing the expenses of property maintenance. Be sure to consult our estate planning attorneys to discuss real estate contributions to charities.


Reference: TC Palm (November 8, 2018) “Donation of real estate is nice form of charitable giving”

Estate Planning Documents You Need While Living

Statistically, we know without a doubt that we are all going to die. That’s 100% certain. However, we know that the chances of becoming disabled are also high. For that reason, everyone should have a Power of Attorney, or POA, as well as a will. In fact, says nwi.com in the article “Estate Planning: 3 important estate planning docs, and 2 maybes,” everyone should have a POA, a will, an advanced medical directive and more specifically, a living will.

How many times have you heard the story about someone’s aging mom becoming disabled and the hospital asking if she has a POA? The problem is we’re so reluctant to ask mom about a POA, that we tend to neglect this difficult conversation. Then, when we are faced with a medical emergency, it’s too late.

The time to have a POA created, is before an emergency or health crisis, not afterwards!

In a medical emergency, people are actually far more likely to become disabled or incapacitated than they are to die. Therefore, you need a POA.

The living will is an equally important estate planning document to have in advance of an emergency. With a living will to provide instructions for when you are terminally ill, and death is expected to occur in the very near future, you will have had the opportunity to state your wishes regarding medical care in advance.

A living will should be part of your estate plan.

The third must-have estate planning document is a will. The will is the document where you tell your heirs exactly how you want your assets distributed. If you have children who are not yet of legal age, you name a guardian for them in your will.

One “maybe” document is a trust. Trusts are used to protect assets. There are many different types of trusts. An estate planning attorney, the same one who will help you with your POA, living will and will, can also help with trusts, if you should need one. They are not simple to set up and you’ll want to get the one that best fits your needs.

Another document is called a “letter of instruction.” This is a set of directions that you leave to your family that tells them what you would like to happen. It’s not legally binding, so it falls into the “maybe” document category. However, you may find it satisfying to put down on paper what you would like them to know, what you would like them to remember, etc.

If you want to dictate your funeral, memorial services and the like, work with an estate planning attorney to execute a funeral planning declaration. This document can be legally enforced.

Remember, the laws about estate plans vary by state, so you’ll want to speak with our estate planning attorneys to ensure that your wishes, your documents and your estate plan will be properly prepared.


Reference: nwi.com (Nov. 25, 2018) “Estate Planning: 3 important estate planning docs, and 2 maybes”

New Medicaid Bill Introduced on Spousal Impoverishment Rules

Typically, to financially qualify for Medicaid long-term services and supports (LTSS), a person must meet specific low-income and asset requirements. Marriage often makes working through those eligibility requirements more difficult. It can mean potentially placing a spouse in the position to “spend down” or bankrupt themselves to secure care support for their partner.

Home Health Care News reports in a recent article, “Medicaid Bill Would Prevent Spousal Impoverishment as Route to Home Care Coverage,” that as of August 2018, more than 73 million people combined were enrolled in Medicaid and the Children’s Health Insurance Program (CHIP). Those numbers are from federal Medicaid data; more than 66 million individuals were enrolled in Medicaid, while about 6.5 million were enrolled in CHIP.

In order to prevent self-induced bankruptcy to keep a spouse eligible for Medicaid, Congress created spousal impoverishment rules in the late 1980s. Those rules originally required states to protect part of a married couple’s income and assets to give the “community spouse” adequate living expenses, when determining nursing home financial eligibility. However, states were also given the option to apply the rules to home and community-based services (HCBS) waivers.

Section 2404 of the Affordable Care Act (ACA) changed that and required the spousal impoverishment rules to treat Medicaid HCBS and institutional care the same way. That law is set to expire at the end of December. That means that individual states would once again be the decision-makers, when it comes to spousal impoverishment in home care.

In 2018, all 50 states were applying the spousal impoverishment rules to HCBS waivers, and five states (Arkansas, Illinois, Maine, Minnesota, and New Hampshire) plan to stop applying the spousal impoverishment rules to some or all of their HCBS waivers, if Section 2404 expires at the end of the year.

With support from LeadingAge, the National PACE Association, the National Council on Aging and several other groups, U.S. Representatives Debbie Dingell (D-Mich.) and Fred Upton (R-Mich.) on Friday introduced the Protecting Married Seniors from Impoverishment Act. If the bipartisan piece of legislation passes, it would permanently extend spousal impoverishment protections for Medicaid beneficiaries receiving long-term care in a home or community care setting.

“Our long-term care system is broken,” Rep. Dingell said in a statement. “Seniors and their families already face too many challenges when navigating long-term care, and they should not have to get divorced or go broke, just to be eligible for the care they need.”

It’s not known the level of Congressional support the Protecting Married Senior from Impoverishment Act will get, but the fact that most states plan to continue protections on an optional basis is encouraging, LeadingAge President and CEO Katie Smith Sloan said in a statement.

“As a national organization, LeadingAge has consistently supported federal law establishing protections against spousal impoverishment,” Sloan said. “We support the legislation to extend the current protection.”

LeadingAge in Washington, D.C is an industry association that represents more than 6,000 not-for-profit senior care providers. If the Dingell-Upton bill fails, LeadingAge members in states that don’t plan to continue impoverishment protections will likely be negatively affected.

The National Academy of Elder Law Attorneys, Inc., the National Association for Home Care & Hospice, and AARP are the three organizations lobbying on issues, such as “spousal impoverishment” in the past two years.


Reference: Home Health Care News (November 19, 2018) “Medicaid Bill Would Prevent Spousal Impoverishment as Route to Home Care Coverage”

What are the Top Four Estate Planning Mistakes Made by Celebrities?

The Reno Gazette Journal gives us the top four estate planning mistakes by celebrities you need to avoid in the article, “Yes, even celebrities make estate planning mistakes.”

You don’t have a will. Your affairs should be properly handled, and your family should be protected, when you pass away. However, neither singers Aretha Franklin nor Amy Winehouse had a will. Franklin left behind four sons with some financial issues. Amy didn’t take the time to plan either. She didn’t say how she wanted her $6.7 million estate to be distributed. Without any written instructions, her estate went through probate and was distributed to her parents. The primary purposes of a will are to designate the guardians of minor children, an executor of your estate and which beneficiaries are to get what assets.

Not considering a trust. Who wants to be a celebrity when it comes to private matters? Remember that a will is a public document, and anyone can go to the courthouse and look it up. However, with a living trust, your wishes remain private. Learn from the saga of the late Whitney Houston, who died at age 48. First, her will named her daughter Bobbi Kristina Brown as sole beneficiary. However, her daughter then died three years later at age 22. Houston’s estate was then involved in a battle with the IRS over the valuation of recording royalties and was assessed a tax bill of $2.2 million. To top it all off, her ex-husband Bobby Brown, ironically may be the heir of the Houston estate.

A living trust can help your estate plan remain private and away from others. It names who is entitled to your assets and how they are to get them. A trust names trustees. It also may provide estate tax benefits. If you look at Whitney Houston’s situation, a living trust may have helped by providing guidance to daughter Bobbi, after her mother’s death.

Failing to update your estate plan. We all experience changes throughout our lives. This includes finances, health, family dynamics and relationships—any one of these can mean it’s time for an estate plan review with your attorney. Look at the late Michael Crichton, the author of Jurassic Park, who was diagnosed with throat cancer, when his sixth wife was pregnant. Crichton failed to update his estate plan to include his soon-to-arrive son. His wife sued to include the baby as an heir, and Crichton’s daughter from a prior marriage opposed. The judge ruled the baby could inherit. Crichton could have saved everyone a lot of stress, anguish and money, by simply updating his estate planning documents.

Failing to plan for disability before death. You should also think about planning for the possibility of being disabled and needing assistance in managing your affairs. Ask your estate planning attorney about powers of attorney and living wills to help protect you and your loved ones, in case of incapacity. For example, the final years of blues singer Etta James, known for “At Last” and “Tell Mama,” were full of court hearings. The legal battle was between her husband of 42 years and her son from a prior marriage. Etta signed power of attorney over to the son in 2008, but her husband claimed that she suffered from dementia and was incompetent. Her son wanted to restrict the amount of money Etta’s husband spent for her medical care. They settled, and the husband was named as conservator. However, he was limited to $350,000 for medical care for his wife. Etta James passed a short while later.

These celebrity misfortunes with their estate planning don’t need to be a roadmap for you and your family. Talk with our estate planning attorneys now to avoid estate planning mistakes of your own.


Reference: Reno Gazette Journal (November 14, 2018) “Yes, even celebrities make estate planning mistakes”

Digital Estate: Is Your Junk Drawer Better Organized?

If your digital assets are not organized and your digital estate is not properly cared for, it can lead to problems for your heirs, including an opportunity for hackers to try to get at whatever assets they can, reports the White Mountain Independent in the article titled “Is your ‘digital estate’ in order?”

Think about how many of your personal accounts are online:

  • Financial accounts: banking, brokerage, bill-paying utilities;
  • Virtual property: credit card points, frequent flyer miles, cryptocurrency;
  • Business accounts: eBay, Amazon, Etsy; stock photo accounts;
  • Email accounts: Gmail, Outlook, Yahoo;
  • Social network: Facebook, Twitter, LinkedIn, Instagram; and
  • Online digital storage: Dropbox, Google Drive, iCloud.

Those are many assets to protect. Where do you start?

First, create an inventory. Use the categories above or create your own. However, you should make it organized.

Document your wishes for how you want your digital assets to be managed. If you don’t specify this, you may be leaving a wide-open arena for long legal battles. Your heirs and beneficiaries may never gain access to them. Hackers might go after your digital estate and use your identity. Your heirs may also have to engage in an expensive and protracted battle with a social media giant with costs eating into their inheritance.

Name a digital executor in your will. This is a relatively new area, but you can name a person to be your digital executor. Not all states recognize this position, so you’ll want to speak with our estate planning attorneys to find out what the laws are in your state.

You will also need to go through all of your online accounts and learn what each platform requires, in the instance of the account owner’s death.

Review your plans, especially as you add new digital assets.

Managing digital assets can be as difficult as managing tangible assets. The laws are still evolving, so speak with our estate planning attorneys to make sure that your estate is prepared, and your heirs will not face a digital nightmare after you have passed away.


Reference: White Mountain Independent (Oct. 26, 2018) “Is your ‘digital estate’ in order?
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