Estate Planning and Trusts Blog

Yes, You Should Have a Will

Death comes whether you have a Will or not.
Don’t lie to yourself. Death comes for all of us, whether we have a Will or not. Make it easier for the ones you leave behind.

To avoid estate planning, people tell themselves all kinds of lies.

Forbes’s recent article, “3 Lies People Tell Themselves About Estate Planning,” discusses three lies people tell themselves to delay or avoid estate planning.

1. There’s No Need for a Will Because I Don’t Have Much Money.

This isn’t true. A typical Will covers more than just finances. Your Will can be used to protect your family by naming who should become the guardian for your minor children if you pass away. Your Will can also be used to state the way in which you’d like your body to be handled after your death. A Will provides details so your final wishes are carried out. Your family won’t be left guessing what you wanted.

2. There’s No Need to Update My Estate Plan Because Nothing’s Changed.

People say this all the time, but the law may have changed without your knowledge, necessitating modifications to your estate plan. For instance, many of the estate plans that were created years ago with the objective of minimizing federal estate tax are now out of date. You should also consider updating your estate plan to name younger adults to serve in critical fiduciary roles, because your original choices may no longer be able to serve.

3. There’s No Need to Update My Beneficiary Forms Because I Have a Will.

A Will doesn’t control the disposition of all of your assets; it only controls assets that pass through the probate estate. For example, married couples typically own their homes in joint tenancy, so the home automatically passes to the surviving spouse, no matter what the first-to-die spouse’s Will says. In addition, retirement accounts don’t pass via a Will. These accounts, such as IRAs, Roth IRAs, 401(k)s, 403(b)s and similar accounts, pass by beneficiary designations. It’s important to understand that your beneficiary forms generally supersede your Will.

Talk to an experienced estate planning attorney today.

Reference: Forbes (May 9, 2019) “3 Lies People Tell Themselves About Estate Planning”

Do I Need to Update My Estate Plan if I Relocate?

Relocate to Florida
Be sure to review your estate plan after you relocate to Florida.

Anyone who relocates to another state – for retirement, a new job or to be closer to family – needs to have a look at their estate plan to make sure it’s valid in their new state, advises the Boca Newspaper in the recent article “I’ve Relocated To Florida…Should I Update My Estate Plan?”

If an estate plan hasn’t been created, a relocation is the perfect opportunity to get this important task done. Think of it as preparation for your new life in your new home.

Because so many retirees do relocate to Florida, there are some general rules that make this easier. For one thing, most Wills that are valid in another state are recognized in Florida. There’s a specific law in the Florida statutes that confirms that a Will “other than a holographic or nuncupative will, executed by a nonresident of Florida… is valid as a will in this state if valid under the laws of the state or country where the will was executed.”

In other words, if the estate plan was prepared by an estate planning attorney and is legally valid in the prior state, it’ll be valid in Florida. Exceptions are a holographic Will, which is a handwritten Will that is signed by the person with no witnesses, or a nuncupative Will, which is a verbal statement made in front of witnesses.

However, just because your Will is recognized in Florida doesn’t mean it doesn’t need a review after you relocate.

There are distinctions in Florida law that may make certain provisions invalid or change their meaning. In one well-known case, a do-it-yourself Will was missing one sentence—known as a “residual clause,” a catch-all provision that distributes assets that are otherwise not specified. The maker of the Will wanted everything to go to her brother. However, without that one clause, property acquired after the Will was created was not included. The court determined that the property that was acquired after the Will was created would go to other relatives – despite the wishes of the decedent.

Little details mean a lot when it comes to estate plans. Just because an estate planning document is legally valid doesn’t mean it’ll be effective in carrying out your wishes.

It’s important to ensure that your Last Will and Testament properly expresses intentions under the laws of your new home state. After you relocate, it might be the time to speak with your estate planning attorney about whether any trusts are applicable to your estate. A revocable living trust, for example, would prevent the assets placed in the trust from having to go through probate.

It’s also a great time to review your Durable Power of Attorney, Designation of Health Care Surrogate, Living Will, and nomination of a Pre-need Guardian.

Estate planning gives you peace of mind, knowing that the legal side of your life is all taken care of. It also avoids stress and unnecessary costs and delays to your family. To keep it current, it should be reviewed – and updated, if needed – at big events in your life, including when you relocate, when you sell or buy a home, or when you retire.

Reference: Boca Newspaper (May 1, 2019) “I’ve Relocated To Florida…Should I Update My Estate Plan?”

Other articles you may find interesting:

Your Executor Doesn’t Want to Serve?

Is Your Beneficiary Ready to Handle an Inheritance?

A Solo 401(k) Works for Self-Employed

A Solo 401(k) benefits small business owners
A Solo 401(k) benefits small business owners.

Have you heard about the Solo 401(k)?

Freelancers, gig-workers or solo entrepreneurs have always had a hard time saving for retirement. It takes a tremendous amount of self-discipline to take money that would otherwise go to run a household or pay quarterly taxes and set it aside in a retirement account. Without an automatic withdrawal from a regular pay check, it’s tough. However, there is an option, says Next Avenue in the article “A Retirement Plan for the Self-Employed: The Single 401(k).”

Known as the Solo 401(k), the Self-Employed 401(k), Individual 401(k), or the Single 401(k), this is a retirement plan designed for self-employed people or sole proprietors, and if applicable, also for their spouses. With a Solo 401(k), 100% employee salary deferral of up to $19,000 is permitted in 2019, if you are under 50. If you’re over 50, that number can go up to $25,000. It also allows an employer profit-sharing contribution of up to $56,000 per year, which lets you save even more by being both the employer and an employee of your business.

Using the Solo 401(k) can save you more than $14,000 in taxes per year (that is, assuming a $56,000 contribution and a 25.7% corporate tax rate), while simultaneously offering a loan provision, just in case you need to tap your savings.

Who qualifies for a Solo 401(k)? You have to be truly self-employed, either in your own full-time small business or a part time gig. Your business can be a sole proprietorship, partnership, or corporation, but it can only have no other employees or employees who aren’t eligible to participate in a traditional 401(k). Examples of people who aren’t eligible would be people who are under age 21 or who work fewer than 1,000 hours per year.

The Solo 401(k) works well for a husband/wife partnership or a small business with only part-time employees.

It provides flexibility so that when times are good, you can put away a lot. When times are lean, you can save less. Additional benefits:

  • Reduced taxable income for pre-salary contributions.
  • Built-in profit sharing for maximum savings deductible against business income.
  • The cost of the plan is a deductible expense.
  • Investments grow tax deferred.
  • Higher contribution limits than SEPs and SIMPLE IRAs.

Small business owners don’t have an HR department to rely on, so it’s a good idea to talk with your financial advisor or estate planning attorney about how a Solo 401(k) may work for your long-term retirement and estate plan.

Reference: Next Avenue (May 3, 2019) “A Retirement Plan for the Self-Employed: The Single 401(k).”

Your Executor Doesn’t Want to Serve?

Your Executor may decline to serve.
Your Executor (Personal Representative) may decline to serve if you don’t prepare ahead.

When you’ve finally decided who you trust enough to serve as your Executor (called a Personal Representative in Florida), you’ll need to take the next step. It involves having a conversation with the person about what you’re asking her to do. You’ll need to ask if she is willing, says the Pocono Record in the article “Don’t assume person is willing to be your executor.” People are often flattered at first when they are asked about this role, but if they don’t fully understand the responsibilities they may decide not to serve just when you need them the most.

Once your Executor has agreed to act on your behalf and you have a Last Will and Testament prepared by an estate planning attorney, tell your Executor where your original Will is located. Remember that in addition to knowing where the document is, she’ll also need to have access. If the original Will is kept at home in a fire-proof box or a locked document box, be sure to tell her where the key is located.

If you feel that the Will would be safer in a bank’s safe deposit vault, make sure that your Executor will be able to access the safe deposit box. That may mean adding her to the list of people who have access. After your death, she may be permitted to enter the box with a bank representative solely for the purpose of obtaining the Last Will and Testament – nothing else.  However, you should check with your branch first.

After you die, your Executor (Personal Representative) and your estate’s attorney will file your original Last Will and Testament with the probate court. The judge then issues Letters of Administration (called Letters Testamentary in other states), which says that your Executor has the authority to open the safe deposit box to inventory its contents. The Executor must complete an inventory form and have any personal property found in the safe deposit box appraised at its fair market value as of the date of your death.

To make your Executor’s job easier, create a list of your assets and debts and include information she’ll need to complete her task, such as account numbers, titling, etc. She’ll also need contact information and account numbers for insurance policies (homeowners, car, Medicare supplements, life), veterans’ benefits, pensions, retirement accounts and any other assets.

Some people store their information on their computer. But if your Executor can’t access your computer due to distance, or can’t get into your computer because she doesn’t have your password, you may want to create a hard copy document in addition to keeping the information on your computer.

Taking on the role of an Executor (Personal Representative) is a big job. You can show your appreciation, even after you are gone, by making it easy for your Executor to find all the information she’ll need.

Reference: Pocono Record (May 1, 2019) “Don’t assume person is willing to be your executor”

NFA Firearm Trust FAQs

NFA firearm trust FAQs
Do you have questions about NFA firearm trusts?

Here are a few of the most common questions I receive about NFA (National Firearms Act of 1934) firearms and NFA gun trusts:

If I’m carrying an NFA firearm in Florida, and am stopped by a LEO (law enforcement officer), what do I need to produce to prove that I legally possess that item?

Technically, you have no obligation to prove ownership to a police officer, sheriff, deputy, or FWC officer. Only the ATF and perhaps the IRS have the legal authority to demand to see your tax stamp. But, unless you potentially want to spend a night in jail, common sense dictates that you produce a copy of your tax stamp. That’s all that’s required. You don’t have to carry around a copy of your trust. (Although, I do have several clients who store a copy of their trust and their tax stamps in the cloud so they can access them if absolutely necessary). Keep your original tax stamps somewhere safe, put a copy in your binder, and keep a copy with the weapon AT ALL TIMES.

I’m at a range with friends and my NFA regulated weapons are present. Can my friends legally handle and fire those items?

As long as your have your tax stamp in your possession and the weapons are within a few feet of you, you can share away. This is true whether your NFA weapons are in a trust or not. However, if none of those people are named as current trustees in your NFA firearm trust document, the law is strict – within your presence means within your presence. As long as those NFA weapons are where someone who isn’t legally authorized can touch them, you can’t leave the immediate area to go to the bathroom, buy more ammo, or grab something from your car.

I have a friend who I know is a responsible non-NFA gun owner. He’d like to use one of the NFA regulated firearms in my trust for an afternoon at the range when I cannot attend. My brother has also asked me whether he can take it on a hunting trip if I’m not with him. Can I let them borrow an NFA firearm that’s in my trust?

It depends on how your NFA firearm trust document is written. Some are written to allow the Grantor/Trustee (you) to appoint a temporary special trustee and lifetime beneficiary. This person can possess and use the trust property for a certain period of time while you’re still alive, but has no power to sell or otherwise transfer the property and has no power over the trust document. Other trusts make no provisions for a special trustee. Consult with the attorney who drafted your gun trust to see if it’s allowed and what you’d have to do to make it legal.

Of course, NFA firearms that are owned by individuals – not trusts – can never be loaned to anyone who isn’t a couple of feet away from the registered owner.

What are the legal risks to the trust and to me if there is a mishap involving a NFA weapon?

Most NFA firearm trusts are revocable living trusts, which means the trust provides absolutely no liability protection to you or anyone using any of the guns – NFA firearm or not. If you loaned the firearm to someone else, you’ll probably be sued. To protect yourself, do your due diligence and make sure the person you loan any weapon to isn’t a criminal and doesn’t have a history of carelessness, drug or alcohol abuse (remember – medical and recreational marijuana users are prohibited from possessing any guns), anger issues, domestic violence, etc).

 

Angelina Jolie Leaving Her Estate to One Child?

Angelina Jolie and Maddox
Angelina Jolie and Maddox

Angelina Jolie has allegedly made the decision to reward her son Maddox for supporting her during her divorce from Brad Pitt. Jolie wasn’t happy that only one out of her six children totally sided with her in the couple’s divorce. Others close to the Jolie/Pitt family say that Brad is upset with Jolie for leaving the other children out and treating Maddox as her “Golden Child.”

Hollywood News Daily reports in its article, “Angelina Jolie Plans To Leave Son Maddox Millions Ignoring Other 5 Children Per ‘Radar’” explains that the final estate planning decision to will Maddox her empire was made by Jolie because of his loyalty.

“Brad is in an absolute fury and fit to be tied over Angie’s moves!” revealed the insider. “It finally seemed like they were reaching some kind of compromise with the divorce. But he’s been blindsided by this mess over Maddox.”

In September of 2016, the story surfaced that Jolie decided to file for divorce from Pitt, after becoming increasingly worried about his parenting methods. The news reportedly followed a nasty encounter between Brad, Angie, and Maddox that put the family through one of the nastiest celebrity divorce and custody battles in recent memory.

Jolie claimed that Pitt allegedly attacked Maddox during the fight. An investigation was made by the Los Angeles County Department of Children and Family Services, but no charges were filed. However, according to a family friend Brad remains very upset by the entire situation and especially angry with Angelina for not setting the record straight.

Brad feels that his other children are getting short-changed, and he won’t permit it, the friend says.

Brad Pitt is angry that Angelina Jolie would treat their children so differently, cutting out Pax, Zahara, Shiloh, and 10-year-old twins Knox and Vivienne. Leaving it all to Maddox is just wrong in Brad’s view.

“Maddox took his mother’s side in the divorce, and now she’s made him the head of her movie empire,” said the insider.

“He’s her golden boy, but Brad feels someone needs to remind her that she has five other children!”

If this rumor is true, then most likely Pitt and Jolie will continue to wage brutal battles regarding the welfare of their children for years to come.

I have no idea how old these children are, but a parent can’t completely disinherit her minor children – at least not in Florida. Maybe they can in California – it’s like another country out there. 🙂 But Angelina Jolie certainly can leave her assets to her children unequally and she can disinherit them once they’re adults.

Reference: Hollywood News Daily (April 24, 2019) “Angelina Jolie Plans To Leave Son Maddox Millions Ignoring Other 5 Children Per ‘Radar’”

ABLE Accounts: No More Medicaid Recovery

ABLE accounts are a simple way for disabled families to save.
ABLE accounts are a simple way for families with disabled loved ones to save, and now they’re even better in Florida.

ABLE account holders received a boon recently, but it seems to have gone unnoticed.

Florida Governor DeSantis signed 38 bills the other day, but the only one widely reported had to do with emergency personnel being given permission by the government to exercise a certain Constitutional right when entering dangerous situations. But one of those many bills was a game-changer for families with disabled loved ones.

ABLE accounts have been around for a few years. They provide people with disabilities a simple, tax-advantaged way to save without affecting government benefits like Supplemental Security Income (SSI) and Medicaid. But there was one huge drawback – when the account holder died, Medicaid could take what was left in the account, up to the amount of Medicaid benefits the person received.

Governor DeSantis eliminated that provision in Florida, effective June 30, 2019. Now, when the account holder dies, anything left in the account goes to his or her chosen beneficiaries.

These accounts do have some limitations, and a special needs trust is sometimes a better solution. But, in many cases, an ABLE account and a special needs trust work together beautifully. If you or someone in your family has a qualifying disability that occurred before age 26, talk to your estate planning attorney, elder law attorney, or financial advisor to see whether an ABLE account is a good choice for you.

Other articles you may find interesting:

ABLE Accounts for Special Needs Planning

Financial Planning when a Family Member has Special Needs

Time to Take Over A Parent’s Finances?

Determining whether it's time to take over a parent's finances can be tricky.
Determining whether it’s time to take over a parent’s finances can be tricky.

When is it time to take over a parent’s finances? The realization that parents can no longer be entrusted with their own finances often comes on the heels of the decision to take away the car. This is a very difficult issue because the parents of Baby Boomer kids are the “Greatest Generation.” As a general rule, they were and are extremely private about finances. The steps to take are outlined in this article, “Here’s how to know when it’s time to take control of your parent’s finances,” from Considerable.

The tricky part is figuring out the timing. If it is done too soon, you’ll be battling with your parents. Conversely, if it is done too late, major financial damage may be done.

Keep your eyes open for signs that your parents are not able to maintain their responsibilities. That includes changes in their behavior, misplacing things and not being able to locate them, or making too many trips to the bank for reasons that they can’t or won’t explain. Other clues that it may be time to take over a parent’s finances: purchasing things they never bought before, or paperwork piling up on a desk that used to be tidy and organized.

One adult daughter didn’t realize that her mother was being scammed until Mom had sent more than $100,000 to scammers. Elderly financial abuse is pervasive, and the Senate Special Committee on Aging estimates that elderly Americans lose some $3 billion annually to financial scammers – including family members!

One elderly woman, suffering from dementia, forgot to pay her long-term care insurance premiums and lost the coverage. The company had sent five notices, but she didn’t understand the importance of those notices. (Many insurance companies now request a back-up contact person who can be notified if a payment is missed).

Even children who have close relationships with their parents can miss the signs. Often, the children don’t step in until the parent has a health crisis, and, at that point it becomes clear that things have not been right for a while. If one parent is overwhelmed by taking care of his or her spouse, an otherwise organized parent may become prone to making mistakes.

The earlier children can become involved, the better. Children should ideally become involved with their parents while they are still healthy and able to communicate the necessary information about their financial lives. If the family waits until illness strikes or dementia becomes apparent, there may be significant and irreversible damage done to the parent’s finances. Sadly, even with well-drafted estate planning documents, a guardianship court may have to become involved if the parent is not willing to let the children help.

An elder law attorney will be able to help the family as they transition the parents away from being in charge of their own finances. It’s not always an easy process but sometimes it’s necessary.

Reference: Considerable (April 18, 2019) “Here’s how to know when it’s time to take control of your parent’s finances”

Other articles you may find interesting:

Using a Power of Attorney for a Parent

Financial Advisors Try to Prevent Financial Exploitation

Medicaid and Estate Planning Documents

medicaid and estate planning
Medicaid for payment of long-term care is becoming a factor in many estate plans.

The conversation that you have with an estate planning attorney when you’re in your thirties – with a new house, young children, and many years ahead of you – is different than the one you’ll have when you are much older, maybe just before you retire. The estate planning attorney will know that you are about to enter a time in your life when the legal documents you prepare are more likely to be used, says the article “Learn about legal documents and Medicaid” from the Houston Chronicle.

It should be noted that everyone needs an estate plan at any time of life so they can state their wishes for how assets are distributed and also name a person who will speak on their behalf in the event of incapacity because of an illness or injury.

So an estate plan should include a Durable Power of Attorney, which names someone you chose to serve as your agent to transact business and handle your financial matters. There should also be a Declaration of Preneed Guardian, in the event of later incapacity, and a HIPAA medical authorization document. In some instances, a designation of remains is prepared in order to name an individual who will be the appointed agent to care for the body at the time of death.

However, there’s another reason why you’ll need to meet with an attorney later in life. As we get older, the need to address long term care becomes more important. Medicaid eligibility may be part of that plan. Making the right decisions now could have a big impact on the quality of your retirement and your medical care.

If you haven’t updated your Will or your Powers of Attorney, it would be wise to do so now. You’ll need a document to clearly authorize your agent to deal with assets. If your documents are out of date, or named agents have predeceased you, it may not be effective, which could lead to problems for you and your heirs.

The document may also need to include a broad gifting power for your named agent, so assets can be transferred out of the estate. If this detail is overlooked, your agent may not be able to protect your assets.

This is also the time when you may want to take steps to protect your children upon your death or upon the death of the second parent. If your goal is to arrange your assets to be eligible for Medicaid coverage, this planning should be done well in advance. Many states pursue recovery of assets when a person has received Medicaid benefits, so it needs to be done correctly.

Your attorney will be able to work with you and your family to address your specific situation. It may mean that your estate plan will include trusts, or that certain assets will need to be retitled. Meet with an estate planning attorney who is familiar with your state’s laws. And don’t procrastinate.

Reference: The Houston Chronicle (April 19, 2019) “Learn about legal documents and Medicaid”

Other articles you may find interesting:

A Health Care Surrogate’s Powers

Yes, You Should Have a Will