Estate Planning and Trusts Blog

Be a Smart Snowbird

Florida snowbird
The snowbirds are coming…  If you’re a snowbird, a little planning can make your stay even more pleasant.

The interstates get busy in September, when retirees take to the highways to leave the north behind and head to their southern or southwestern homes, reports Next Avenue in “7 Tips for Being a Successful Snowbird.” Some snowbirds have a more enjoyable experience than others, in part because of their preparation.

Here are a few lessons from the experienced snowbirds:

Choose a location that suits you. Don’t confuse a cold-weather home with a vacation spot. You’ll be living your daily life here. Therefore, you want to find the activities that you enjoy on a regular basis. If your regular life at home is busy and you like it that way, moving to a laid-back beach town or an isolated cabin in the woods may not be a good fit for more than a few days.

Look before you leap. Rent a place for a month or two, before committing to spending an entire winter there. You can’t know if you love a place before you live there for an extended period of time. If you’re not happy, you can try someplace else. Once you find the right spot, book the whole winter. Book the whole next winter as well. Good spots go fast.

Switch bills to be paid online. Before everything was online, it was tricky to take care of your home bills while living somewhere else. Make all your bills payable online or put them on autopay. If your bank doesn’t have a branch nearby, open an account in a nearby bank and link with your home bank, so you can easily move money between accounts.

Make new friends and new connections. One of the adjustments of snowbird life is leaving family and friends back up north. If you are in a community with lots of snowbirds, they are likely to be in the same position as you. Introduce yourself, join clubs and get active.

Don’t overbook your time with guests. You may love having friends come down, but being a frequent host takes a lot of time and energy. Don’t turn your winter residence into a bed and breakfast. Don’t be afraid to limit the number of nights for your houseguests. This is your home, not a hotel.

Make it a second home if you own it. If you buy rather than rent, it’s easier to keep some things there. Therefore, you are not lugging quite as much back and forth. However, even in a rental, you may be able to store some items, or rent a small storage unit nearby. Doing so will make traveling easier, and your snowbird nest will feel more like home.

Enjoy the ride back and forth. There’s no need to rush, if you’re going to be staying for a few months. If you’ve always travelled by interstate, maybe a side trip along local roads will break up the monotony and create some new memories. Stop by to visit with relatives along the way, or the national park that you’ve been meaning to experience. Make the ride an enjoyable part of your journey.

Reference: Next Avenue (Sep. 13, 2019)  “7 Tips for Being a Successful Snowbird.”

Other articles you may find interesting:

Help Your Elderly Parent Without Ruining Your Relationship

What Do I Do With Dad’s Timeshare When He Dies?

Demystifying Probate

Death and probate
Probate is the orderly distribution of a deceased person’s assets after all lawful debts are paid, and it is overseen by a judge.

Probate can be avoided with proper estate planning.

The Street’s recent article on this subject asks “What Is Probate and How Can You Avoid It?” The article looks at the probate process and tries to put it in real-life terms.

Probate is an estate administration process that works within a probate court with a probate judge presiding over the proceedings. Usually, surviving families and other interested parties initiate the process to address issues relating to the deceased individual’s estate settlement. These include:

  • The handling of the deceased’s valid will;
  • Properly citing and categorizing the deceased’s assets;
  • Appraising the deceased’s estate and property;
  • Paying off any of the deceased’s existing debts; and
  • Distributing the deceased’s property to those directed by the will (or, if there’s no will, the probate court will direct the distribution of estate assets, according to the laws of intestacy).

The personal representative (also known as an executor) handling the deceased’s estate will typically start the process with the help of a probate attorney. Here are the basic steps:

File a Petition. The estate’s personal representative will file a request for probate where the deceased resided.  Once all the required paperwork is in order, the probate judge will officially open the case.

Notice. The personal representative must send a legal notice to all applicable beneficiaries, heirs, debtors, and creditors that the deceased’s estate is officially in probate.

Inventory Assets. The personal representative will then collect, list, and provide a value for all of the deceased’s assets and supply this to the court.

Pay the Bills. The personal representative will need to pay all outstanding debts owed by the estate.

Complete Any Tax Returns. The estate may also have existing tax returns that need to be filed. An accountant can be hired by the personal representative to work on this, or the personal representative may choose to file the taxes on his or her own.

Pay the Heirs. The personal representative can now distribute the remainder of the estate to any heirs, according to the will’s instructions.

Close the Estate. Finally, the personal representative will file paperwork with the court and file to close the estate.

An experienced estate planning attorney licensed to practice in your state will be able to explain what strategies are used to avoid probate, how to remove certain assets from the process, or whether it needs to be avoided at all. In some regions, probate is swift, while in others it is long and tiresome. A local estate planning attorney is your best resource.

Reference: The Street (July 29, 2019) “What Is Probate and How Can You Avoid It?”

Other articles you may find interesting:

Does Having a Will Avoid Probate?

What Happens To Mom’s House When She Dies?

Roth IRA Tips and Tricks

Roth IRA
Roth IRAs are powerful tools in your retirement planning arsenal.

There’s a lot that most people don’t know about Roth IRAs, as detailed in the article “9 Surprising Facts About Roth IRAs” from the balance. Some of them may surprise you.

Roth IRA contributions can be used for emergencies. In a perfect world, no one would ever need to use retirement money for anything but retirement, but because Roth contributions are not deductible, they can be withdrawn at any time, for any reason, without taxes or penalties. A Roth IRA can serve as an emergency fund. However, it needs to be noted that the funds you can withdraw do not include amounts that were converted to a Roth IRA or investment gains. Therefore, if you put $5,000 into a Roth IRA that grew to $6,000, you may only withdraw the $5,000 without taxes and penalties.

You might be able to use a non-deductible IRA to fund a Roth. If you make over a certain limit, you can’t contribute to a Roth IRA—or can you? Some people who keep other retirement money inside qualified retirement accounts are permitted to make a non-deductible IRA contribution every year and then convert that into a Roth. This is sometimes called the “backdoor Roth.” However, you’ll need to be careful, and you may need help. In some cases, you can even roll a self-directed IRA back into a company plan, so in future years you could use the backdoor Roth strategy without having to pay taxes on the converted amount. Get a professional to help you with this: mistakes can be expensive!

You may roll after-tax 401(k) contributions into a Roth IRA. Many employer plans let you make after-tax contributions and then, at retirement, these after-tax contributions can be rolled into a Roth IRA. Any investment gain on the after-tax contributions can’t go into the Roth, but the contributions can.

Roth IRAs have no RMDs (Required Minimum Distributions). There aren’t any age requirements for when you take money out, so there are no delayed tax bombs lurking. However, non-spouse heirs will have to take required distributions from an inherited Roth. The nice thing: they will be tax free.

You can contribute to both a SIMPLE IRA and a Roth IRA. As long as your income is within the Roth IRA limits, then you can contribute to both the SIMPLE and the Roth. The contributions to the SIMPLE IRA will be deductible, the Roth contributions will not be. This dual funding strategy lets you reduce taxable income now and have funds in the Roth accumulate for tax-free benefits in retirement. For the self-employed person, who is diligent about saving for retirement, this is a good plan.

Your employer plan may allow Roth contributions. Many 401(k) plans let you make Roth contributions. They are called “designated Roth accounts.” Check with your HR department to see if their plan let you choose which type of contribution to make. Some may be all or nothing, while others let you do some of each.

Age is not the key factor in determining whether or not to use a Roth IRA. The primary deciding factor here is your income bracket, your tax rate now and your expected tax rate during retirement. If your expected tax rate during retirement will be lower, the deductible contributions may be better. If your tax rate during retirement is going to be the same or higher in retirement, which is often the case for people with large IRAs or 401(k)s, then a Roth IRA may make a lot of sense, regardless of your age.

You might be able to make a spousal Roth contribution. Even if your spouse has no earned income, as long as you have an earned income, you can make an IRA contribution on their behalf. Many couples can double their tax favored retirement account savings by doing this.

Be careful about Roth conversions. As stated previously, mistakes here can become expensive, so don’t rely on online Roth calculators to manage conversions. Talk with an experienced professional who can help make sure that your numbers and your strategy fits with your personal retirement scenario. Every person and every situation is different, so planning needs to be specific to your needs.

Reference: the balance (August 13, 2019) “9 Surprising Facts About Roth IRAs”

Other articles you may find interesting:

Avoiding the Epic Fail of a Business Succession Plan

How Do Transfer on Death Accounts Work?

Florida’s Troubled Guardianship Program

Guardianship program - DNR
Florida’s guardianship program is under scrutiny after a professional guardian signed DNRs for people who allegedly didn’t want them.

Legislators and officials from Governor DeSantis’ administration met with judges, guardian trade groups, state attorneys and representatives from the Elder Law section of the Florida Bar to discuss how to protect seniors from exploitive and neglectful guardians, as reported in the article “DeSantis, Florida lawmakers consider changes in troubled guardianship program” from the Orlando Sentinel.

The Department of Elder Affairs Secretary Richard Prudom said that more must be done to enhance the accountability of guardians and be sure they are acting in the best interest of their wards. He added that the matter extends beyond the Department of Elder Affairs, and that families, communities, and public officials need to work together.

This past summer, reports surfaced about a professional guardian who was responsible for more than 400 wards. She reportedly signed “Do Not Resuscitate” orders for clients against their wishes. She also double-billed a healthcare company for nearly $4 million over a ten-year period.

Florida has 550 registered guardians.

Some of the suggestions made included capping the number of wards a person could take on and requiring a judge to approve a DNR order. Sen. Kathleen Passidomo, R-Naples, and Rep. Colleen Burton, R-Lakeland said that increased standards for guardians and more thorough monitoring was called for.

More stringent penalties for guardians who violate the law may be in the works. However, judges would have to approve the removal of any guardian from the state registry, and that action could be appealed.

Lawmakers said that more money to address the caseload isn’t the issue. Monitoring of guardians needs to be increased, said Passidomo.

As yet, there is no concrete plan in place to address this issue.

The Department of Elder Affairs houses the Office of Public and Professional Guardians, which currently has four employees. Prudom took charge of the department when the agency’s director, who was in charge when the guardian mentioned above was asked to resign.

The governor’s administration will publish a budget request for the Department of Elder Affairs, which could include more funds for investigators to review complaints.

Reference: Orlando Sentinel (September 16, 2019) “DeSantis, Florida lawmakers consider changes in troubled guardianship program”

Other articles you might find interesting:

Expressing Your End-of-Life Wishes

Grandparents Lose Millions to Fake Grandchildren

What Happens to Eddie Money’s Money?

Eddie Money
Eddie Money’s money – what happens to it now?

“The Money Family regrets to announce that Eddie passed away peacefully early this morning,” his family said in a statement (via Variety). “It is with heavy hearts that we say goodbye to our loving husband and father. We cannot imagine our world without him. We are grateful that he will live on forever through his music.”

Wealth Advisor’s recent article, “How Much Is Eddie Money’s Estate Worth?” said that earlier this year, Money revealed on his Real Money reality TV show that he’d been diagnosed with stage 4 esophageal cancer.

“I thought I was just going in to get a checkup, and he told me I got cancer,” he said. “Am I gonna live a long time? Who knows, it’s in God’s hands,” he continued. “But you know what? I’ll take every day I can get. Every day above ground is a good day.”

However, TMZ reported that Money died of complications from a heart valve procedure that he underwent a few months ago.

Eddie Money’s road to rock stardom was a strange one. He was the son of an NYPD police officer and originally wanted to stay in the family business. Money served on the force for two years, before quitting and pursuing his rock and roll dreams.

“I would have been a very lenient cop,” he told Rolling Stone in 2018.

Money struggled with drug addiction during his career, and in the early ’80s, his life almost ended. According to People, Money overdosed on fentanyl in 1981. This led to him badly damaging his sciatic nerve. His 1982 album, “No Control,” was written about the experience.

Money had eleven Top 30 hits on Billboard’s Hot 100 and earned a Grammy nomination for his hit “Take Me Home Tonight.” According to Celebrity Net Worth, he may have been worth about $20 million at the time of his death.

Money is survived by his wife and five children. However, the terms of his Will are not yet clear. As a California resident since 1968, his family won’t be subject to a state inheritance or estate tax because the state doesn’t have these taxes. Depending on what form his fortune takes, his estate could liable for several million dollars in federal estate taxes. It’s not known who owns the rights to his music catalog.

While his success peaked in the mid-’80s, he still had a strong fan base and made several concert appearances each year, in the years before his death.

Reference: Wealth Advisor (September 17, 2019) “How Much Is Eddie Money’s Estate Worth?”

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Billionaire Conrad Prebys’s Son Gets $15M after Being Disinherited

Prince’s Estate Battle Drags On

Titling Property Correctly for Your Estate Plan

Titling assets is like putting together a puzzle.
Titling assets properly is an important part of the estate planning puzzle.

The way you title your real and personal property and who you name as your beneficiaries is just as important in your estate planning as your Will or Trust, says The Black Hills Pioneer’s recent article, “Titling of property is just as important as your Will or Trust.”

There are some kinds of property that, depending on how they’re titled or who’s the named beneficiary, will flow outside your Will or Trust.

For instance, if you designate a beneficiary on your life insurance policy or on your retirement account, that money goes directly to the named beneficiary at your death—not in accordance with your Will or Trust (provided you haven’t named your estate or Trust as the beneficiary).

In addition, you could designate another person as payable on death (POD) designee or transfer on death (TOD) designee on your investment account or your bank account. These types of accounts also transfer automatically to the named designee and not with any regard to your Will or Trust (unless you named your estate or Trust as the designee).

Jointly owned real estate, bank accounts, or investment accounts will typically flow to the surviving joint owner, not pursuant to your Will or Trust. However, the fact that two people own one piece of real estate doesn’t mean the property will flow automatically to the survivor. It depends on how the property is titled. For example, in many states, language needs to be included in the deed conveying that real estate to both individuals as “joint tenants with rights of survivorship.”

So, you can see how critical it is that you discuss these issues with your estate planning attorney. In addition to questions about Wills and Trusts, you should also be discussing the titling of your property and the beneficiaries you’ve named on your life insurance and retirement accounts, along with any POD and TOD designees you’ve named on your investment accounts or bank accounts.

If you don’t, you could create unintended consequences for your loved ones.

Reference: Black Hills Pioneer (August 5, 2019) “Titling of property is just as important as your Will or Trust”

Other articles you may find interesting:

How Do Transfer on Death Accounts Work?

Change Your Life Insurance Beneficiary After Divorce

Estate Plan Like George Washington

George Washington's Will
George Washington’s Will was very detailed and personal.

Estate planning for those you love can dramatically change your family for generations. Did you know that in his Last Will and Testament of 1799, George Washington detailed his vision for his legacy? He bequeathed the “use, profit, and benefit” of his whole estate to his “dearly beloved wife Martha Washington.” In addition, he forgave the debts of many of his family members, financed the establishment of a school for orphans, set aside stock for what’s now Washington and Lee University, and made arrangements for the care of other loved ones.

Kiplinger’s recent article, “Smart Tips for Estate Planning: Write Your Will Like George Washington Did” reports that Washington’s estate plan was more than 5,500 words—the equivalent of nine single-spaced pages.

While your estate planning may not require the same degree of detail, there’s an important lesson to be learned from Washington: his writing was personal and captured his exact situation at the time and laid out his future vision. Hopefully, your own estate plan will have the same personalization. However, remember that today’s estate planning isn’t limited to a single legal document.

It’s imperative for both spouses to have a good working knowledge of a family’s intentions. Both spouses should participate in drafting the documents to avoid unforeseen complications during stressful times. It’s also good for both spouses to be comfortable with the family’s financial adviser, attorney, and accountant. In addition, communicating the plan to the couple’s children is essential.

Of course, not every spouse will take an eager interest in estate planning, and not every child will want to see the detailed disposition of assets. If this happens to you, put in place a basic protocol, such as “call our estate planning attorney.”

In addition to your Last Will and Testament, you may want to think about a “personal statement of intent” or a “letter of wishes” within your own legacy design. This document works in concert with your Will to provide your heirs with a deeper level of personalization and explanation of your rationales. This document is non-binding and typically is accessible only to the people you stipulate, such as your executor, trustee, and heirs.

As you consider your estate plan, think of George and remember the foundational values of communication, clarity and customization.

Reference: Kiplinger (August 9, 2019) “Smart Tips for Estate Planning: Write Your Will Like George Washington Did”

Other articles you may find interesting:

New Income Tax Form Designed for Seniors

What Happens When Real Estate Is Inherited?

Amy Winehouse’s Ex Filing a $1 Million Claim

Amy Winehouse
Amy Winehouse (Image may be subject to copyright)

Amy Winehouse’s ex-husband, thirty-seven-year-old Blake Fielder-Civil – the man who admitted that he started Amy on heroin – is asking for a lump sum payout plus a monthly allowance from her estate.

Fox News’ recent article, “Amy Winehouse’s ex files $1 million claim on late singer’s estate,” reports that one family member was quoted as saying, “To say that it would be inappropriate for him to benefit from her estate would be an understatement.”

Amy Winehouse died at aged 27 of alcohol poisoning in 2011. She didn’t leave a Will, and her after-tax assets of $3.64 million went to her parents. Since her death, the value of her estate is thought to have grown considerably from song royalties.

Fielder-Civil has told Amy’s family his legal counsel believes that he has a valid claim, because he was with her for six years when she released some of her best-selling material. The two were married for two years and split in July 2009.

Amy gave Blake a $309,000 payoff, but attorneys say the details of that settlement will be critical in Fielder-Civil’s legal claim. If it was designated as a “clean-break,” then he has no real argument for demanding more money. However, if it didn’t, he may have a case.

Fielder-Civil, the inspiration for the late Grammy winner’s heartbreaking hit single “Back to Black,” was in prison from July 2008 to February 2009.

Amy’s parents created the Amy Winehouse Foundation to help young musicians and people with addiction problems. The family inked a deal to make a biopic about her life. The proceeds will go to the foundation.

Amy’s friends and family are upset that any successful claim by Fielder-Civil could take money from the charity.

Reference: Fox News (July 28, 2019) “Amy Winehouse’s ex files $1 million claim on late singer’s estate”

Other articles you may find interesting:

Angelina Jolie Leaving Her Estate to One Child?

Actor Robert De Niro’s Bad Prenup

Avoiding the Epic Fail of a Business Succession Plan

Business succession
A business succession plan should be part of every business owner’s estate plan.

For a business owner, the success of our business impacts our daily lives. The success of our business succession plans (say that five times fast!) is inexorably linked to having a well-conceived and properly prepared plan which is coordinated with our estate plan. Both plans need to be built to withstand challenges, which are outlined in the article “Five events that can ruin a succession plan” from Kenosha News.

Let’s take a closer look at the “Five D’s of Succession Planning.”

Death. Believe it or not, businesses can succeed in the face of the owner’s death. However, this is only if all of the right steps are taken, and the right people are prepared to lead. If the business owner has named a successor, created a plan, and purchased business interruption insurance and/or life insurance, the business has a shot at continuing. However, in most cases, the estate plan fails to address leadership succession, liquidity, and leadership.

Disability or Disease. Sometimes disability and disease can be worse than death to a business. If the right advisors and plan are in place for death, the business may survive. However, a sick or disabled business owner, especially one who has been making all the key decisions, makes it less likely that the business will survive. If a disabled business owner has lost some cognitive function and isn’t able to make the best decisions on behalf of their business and their employees, the business may lose value.

Divorce. Nothing destroys a business like extended litigation. This often happens when a business owner divorces. A smart couple will work together, despite their personal acrimony, to protect the value of the business and their joint assets. Tearing each other apart harms their children and their business. The best approach is to have a plan created that includes what would happen to the business if the owner divorced. Think of it as a prenup for the business.

Drama. Our tendencies toward drama impact our businesses. If there’s a business succession plan and those plans are communicated to the leaders, and those leaders make clear to middle management and the employees that there are plans in place to continue the business, the company can remain stable. In the absence of communication, rumors will impact everyone – from key employees to management to vendors. Nothing hurts a business more than other companies in the same business gossiping about its impending demise. The shining stars of the company will flee for more stable opportunities, vendors may refuse credit, and it spirals downward.

Drive. Most business owners are self-driven individuals who love to see their inspiration, ideas, and energy grow into successful businesses. But when it’s time to get into the weeds of managing details or people, they’re generally not that interested. Or, they dig into the details and then the company is depending on one person to succeed—rarely a good idea. When that drive is lost and there’s no plan to hand things over to the next generation or key employees, the business can slump, lose value, and eventually, close its doors.

A strong business succession plan does more than protect a business owner. It protects the owner’s family, the employees, and their families and communities. An estate planning attorney who routinely works with business owners will be familiar with the strategies available to ensure that all the pieces are in place to continue the business and protect the family.

Reference: Kenosha News (August 25, 2019) “Five events that can ruin a succession plan”

Other articles that may interest you:

Time to Review Your Estate Plan?

Planning for the Unexpected

Help Your Elderly Parent Without Ruining Your Relationship

Elderly parent
Even if your  family was like the Cleavers in “Leave it to Beaver,” providing care to an elderly parent can sometimes be difficult for the parent and the child.

If you have elderly parents, you might have to step in at some point and provide caregiving services. Whether that concept means hands-on personal assistance with things like bathing, dressing, grooming, and feeding, or handling their finances and making decisions for them, this change in your roles can be challenging for you and your parent. Here are some issues to consider about how to help your elderly parent without ruining your relationship.

It’s Usually Not “Leave It to Beaver”

Many people grow up seeing fictional families on television and wish their parents and siblings got along like those families. But very few families measure up to the fictional ones. You and your parent may not have had the kind of relationship in which you would regularly get together for coffee or shopping. That’s not unusual; many people have strained interactions with their parents.

Relationships carry the baggage of the past. Your parent is the same person with whom you have had conflict, which means he or she will continue to do things that upset you. And you will do things to upset him or her. If your parent was extremely authoritarian or independent, it’ll be very difficult for him or her to accept someone telling them what to do – especially a child.

Patience versus Doormat

You should try to be understanding of what your parent is going through – losing independence and feeling less valuable and weak can be very difficult. Forgetfulness can also be an issue. Dad might get confused and forget you already did things – which he now accuses you of not doing. He might also be dealing with chronic pain and other health issues.

However, you should set boundaries. Getting old does not give your parent a right to be physically, verbally, or emotionally abusive. Be firm with your parent if any of these things happen. Being a dutiful son or daughter does not include being a doormat. Calmly inform your parent that the behavior is not acceptable. You might want to consider having someone in social services arrange for counseling to help your parent adjust to the realities of aging and of needing assistance.

The Silver Lining

For some people, this stage of life is a time to deal with unfinished business. You may be able to talk out problems or get answers to questions. You might be able to resolve conflicts that could have caused you regrets down the road. But the best approach for this goal is to tread lightly. Just because your parent is frail doesn’t give you the right to beat her up verbally with a long list of criticisms and complaints.

Address just one piece of a small issue during a visit, and don’t dredge up unpleasant topics on every visit. You don’t want your parent to dread seeing you. Be the kind of person you might wish your parent had been when you were a child – kind, compassionate, and nurturing.

For those of you who have enjoyed a happy, healthy relationship with your parents, this time together can deepen your mutual affection and interaction. Since your parent is no longer rushing around to work and raise a family, you can have uninterrupted conversations and create memories to treasure. Even children and parents who had strained relationships in the past may end up having pleasant times with each other.

References:

A Place for Mom. “Parenting the Parent: Caring for Elderly Parents.” (accessed August 21, 2019 ) https://www.aplaceformom.com/planning-and-advice/articles/caring-for-elderly-parents

Other articles you may find interesting:

Having the “Someday” Talk with Parents

Understanding Palliative Care