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Don’t Be Like Abraham Lincoln. Create a Will

WillWhat do Abe Lincoln, Bob Marley and Prince have in common?
You guessed it…they all died without a will.
But why?
Kiplinger’s article, “4 Strategies to Avoid an Estate-Planning Mishap,” says that their reasoning was the same as it is for most people: just “too busy.” They were busy with life’s daily demands on their time. Also, many people don't want to think about it or take the time to sit down and get it done.
People don’t realize how much can be accomplished in a very short time with an experienced estate planning attorney. Similarly, they also don’t understand the issues that can pop up if they don't have a plan in place.
While you may hear about income and investments at every turn these days, you may not hear about important topics like taxes, health care, asset protection and leaving a legacy for your family, friends, and charities.
Be certain that you’ve made every effort to express how you want your assets distributed when you die. Take a look at these four basic strategies and discuss them with an experienced estate planning attorney to help you avoid an estate planning mishap.
1. Get that will in place. A will directs your executor about your wishes and spells out how you want your assets distributed when you pass away.
2. Consider a living trust. This can protect your assets and can help your estate avoid probate. While you may believe you don't need a living trust, it can help make certain your assets are managed according to your wishes even in the event that you’re no longer able to manage them on your own. In addition, you can sign a health care directive and power of attorney so those you trust can make decisions about your physical and financial well-being. Finally, trusts are not public court records so your affairs remain private.
3. Title your accounts appropriately. Get that trust in place or set up a "transfer on death" designation. This lets assets pass directly to the beneficiaries named by the owner. Also, make sure you’ve properly named the beneficiaries and contingent beneficiaries on IRAs and other tax-qualified accounts.
4. Think about life insurance. A policy is used to provide a death benefit for your family and can augment the legacy you pass down. It can help cover final expenses—like funeral, burial and medical bills.
Do it now. Your picture on the five-dollar bill might be a nice lasting tribute, but your family will like a comprehensive estate plan much more.
Reference: Kiplinger’s (August 2016) “4 Strategies to Avoid an Estate-Planning Mishap”

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It’s Time for a Midyear Checkup—Financially Speaking

Reviewing documentsOver a third of Americans thought about a financial resolution this year, according to a Fidelity Investments survey. Their top goals were to save more, spend less and pay down debt.
If you were one of these go-getters and goal-setters, this summer is a perfect time to look at your progress, says US News in “Keep Your Money Goals on Track with a Midyear Financial Checkup.”
While summer is a natural halfway point between New Year's financial resolutions and year-end tax planning, it's also a convenient time to contact financial experts, tax planners, human resources representatives and other advisors—who are less busy during their “off-season.” For your midyear financial checkup, look at each of these financial areas.
Taxes. By summer, you should have a decent idea of what's going on with your tax situation and can start planning. Are there any major life changes since last year to include in your tax strategy? This will mean a transition in your tax situation. Also, if you earned a nice tax refund in April or paid a large tax bill, you should ask for a W-4 from your employer and adjust your withholding. Also, look and see if you're maxing out workplace tax benefits—like your flexible spending accounts and retirement contributions.
Insurance. Use the summer to determine if your insurance plans are meeting your needs. Many employers have an open enrollment for health insurance and other benefits in late fall, so now’s the time to think about this.
Estate Planning. If you don't yet have an estate plan in place, speak with an experienced estate planning attorney. Don’t be one of the 64% of Americans that don't have a will. Get the basics prepared, such as an up-to-date will, power of attorney and health care directive.
Emergency Fund. Check on your emergency fund and see if it was depleted by a summer vacation or another event like a change of jobs. Time to beef it up! You should keep three to six months' worth of living expenses readily available. Build your rainy day fund by putting a percentage of your paycheck into savings every month. If you don't see that money available in your checking account, you won't miss it.
The Long Term. Summer vacation is also a great time to look ahead and consider where you'd like to see yourself in the future. Get started with financial strategies that will help you reach those goals.
Reference: US News (July 28, 2016) “Keep Your Money Goals on Track with a Midyear Financial Checkup”

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Getting Married Again Means “You Do” Need to Review Your Assets and Estate Plan

Wedding older coupleA major challenge for those walking down the aisle again is how to reconcile preserving assets for children from a prior marriage and still taking care of the commitment to a new spouse.
CNBC’s article, “Getting remarried? Protect your assets and your interests,” recommends looking ahead and addressing questions about your goals, how your existing family and new spouse will relate to one another when you're gone and who will be in charge of the money. The big issue that heirs of a remarrying couple need to worry about more than federal estate tax is the new spouse.
The reason for this is that every state except Georgia gives rights to a spouse to make an elective share against a decedent spouse's estate or have the right to community property. That means that a portion of an estate could go to the new spouse even if the decedent's will disinherits him or her. Unless you expressly exclude your new spouse from your will, he or she typically has an intestate right against the probate estate.
If an individual has an ERISA retirement account, the spouse likely has certain rights to it—whether it is a defined benefit or a defined contribution plan. IRAs aren’t subject to the same rules. In many states, the surviving spouse has rights to certain personal property. Sometimes this is based on values, and other times it’s set out in a state statute.
If there is no estate planning document, such as a will, power of attorney or health care directive, the new spouse is often statutorily designated as the first decision-maker with the legal authority to deny access to anyone who might want to have a say in the affairs or care of the incapacitated spouse.
The ex-spouse may still be involved because assets could still be left to your ex if you fail to update your beneficiary designations—even if you intended to leave things to your new spouse and/or children instead. You might be contractually obligated to keep your ex-spouse as beneficiary of a retirement account or life insurance policy for a certain period of time. Check the fine print.
When you’re updating your estate planning documents, also think about the following issues. First, consider whether you’d like to name your new spouse as your trustee/executor/agent because the disposition of assets becomes tricky when there are kids from prior marriages. Next, take a look at your assets and decide if you want to hold them individually or jointly. Jointly-held assets with rights of survivorship means that your surviving spouse will inherit these assets automatically without probate. Note that in a community property state, property that is obtained prior to marriage or in an inheritance can retain its character as separate property.
If your new spouse moves into your house, you’ll have to decide if you want to add his or her name to the deed and to the mortgage. You should consider where your spouse will live if you die first. Also, you may need to specifically bequeath certain personal items to your children—depending on family significance and your wishes—and be aware of how “children” is defined by your will. This could include only your own children or also your spouse's children. Here are a few other common estate planning mistakes people make after remarrying:
· Beneficiary designations left out-of-date;
· Assets unintentionally comingled;
· Failure to work with estate planning attorney on new estate planning documents;
· No prenuptial;
· Instructions to loved ones are verbal, not in writing;
· Failure to properly title the house; and
· Not buying long-term care insurance or planning for possible nursing home care.
Have a qualified estate planning attorney walk you through these details in a step-by-step manner to help avoid pitfalls. Don’t make one or more of these errors. These kinds of little mistakes can have big consequences.
Reference: CNBC (July 28, 2016) “Getting remarried? Protect your assets and your interests”

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Helping a Loved with Alzheimer’s Disease

DownloadIt’s important to plan for the future. This is especially true for families who have a loved one with Alzheimer’s disease or another form of dementia. If planning is done early, the person with the disease may be able to participate more in the decision making. Planning early can also reduce future stress for the family of the person with the disease. When someone has Alzheimer’s disease or another dementia, legal plans and financial plans are important to put in place.

The Lincoln (NE) Journal Starrecently contained an article about caring for a loved one with Alzheimer’s disease or another form of dementia. “Planning the future of a loved one with dementia” discussed some helpful information in both financial and legal planning.

You will encounter a number of costs in caring for a person with dementia. Planning for these expenses and costs throughout the course of the disease will involve examining all the costs you could possibly face now and in the future. These can include prescription drugs, personal care supplies, adult day care services, in-home care services, and residential care services.

Discuss financial needs and goals as early as possible. This way the person with the disease will be able to comprehend the issues, take a role in mapping out his or her objectives, and clarify their wishes. An experienced elder law attorney will have worked with financial advisors and will be able to point out potential financial resources, uncover tax deductions, and counsel against imprudent investment decisions. You may have these financial resources available to help you with the costs during the course of the disease:

  • Health care coverage
  • Long-term care insurance
  • Life insurance
  • Medicaid
  • Veterans benefits
  • Other public programs:

In addition, many states have state-funded, long-term care available, such as adult day care and respite care.

Legal capacity is the ability to understand the meaning and importance of a legal document, such as a power of attorney. A person suffering from dementia who has the ability to understand and appreciate the consequences of his or her actions to execute a document needs to be the decision-maker. As long as he or she possesses legal capacity, they should take part in legal planning. The article recommends these documents:

  • Living will
  • Power of Attorney
  • Health Care Directive or Power of Attorney
  • Will
  • Living Trust
  • Guardianship/Conservatorship

Talk to an experienced and qualified estate planning attorney if you have questions about elder care for your loved one.

For more information about estate planning, please visit my estate planning website.

Reference: The Lincoln (NE) Journal Star (July 20, 2015) “Planning the future of a loved one with dementia”

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Survey Says … “More Estate Planning!”

SurveySaysWhen Craig Evans Carnick accompanied his wife of 46 years to a medical procedure recently, he got a bit of a surprise when he asked a nurse a question about her care. "She ignored me, then asked my wife if it was all right to talk with me," said Carnick, a financial planner in Colorado Springs, Colo. It was a small hiccup, but also a stark reminder about today's medical information disclosure laws.

This isn’t just a concern for spouses. With many adult children putting off marriage and with their elderly parents living longer, many people in the “Sandwich Generation” really aren’t ready to care for loved ones, warns the a recent Chicago Tribune article titled “Checklist for updating, organizing estate planning documents.”

The Tribune reports that a new survey of 1,000 adults for www.caring.com shows these startling figures:

  • Roughly 55% said their parents have a will or trust document;
  • 25% of people 65 and older said they don't know where their elderly parents keep their estate planning documents; and
  • 44% don't know what's in those documents.

Those are some big numbers!

The survey officials commented that many respondents reported situations where parents passed away without leaving behind legal documents. This has led to some sad stories about people having money tied up in court and not being able to pay their parents' final bills and funeral costs.

In addition, the survey revealed that very few families have health care directives for adult children. It’s not just about the elderly parents, the article reminds us. This is a major issue for people with adult children who are away at school or living on their own as an unmarried adults. What happens if they get in an accident?"

The article offered these tips to keep in mind when working on these tasks:

  • Take Five: No, don’t take a break! Estate planning attorneys suggest that you update your will, trusts, powers of attorney, and health care directives at least every five years or when a major life event happens, such as a new child or grandchild, moving, a new job, or divorce.
  • Share the Secret: If you have estate planning documents, it's very important to share the information with those who will be helping you as you get older. For example, your physician needs a copy of your health care directives.
  • Get It Together: Many folks use binders for keeping important documents with notes on financial account information and passwords. While this is a great idea, the binders are usually locked away for safe-keeping. Keep the documents in an electronic format that can be accessed by your representatives when needed.

Some estate-planning attorneys also recommend designating trusts as retirement account beneficiaries, even though the accounts already might contain beneficiary designations.

These are very tricky issues to tackle, so ask talk to an estate planning attorney before taking action.

For more information about estate planning, please visit my estate planning website.

Reference: Chicago Tribune (May 10, 2015) “Checklist for updating, organizing estate planning documents”

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