Estate Planning

Graduation Gift Idea: Legal Documents

Graduation gift idea: legal documents. What's the best graduation gift idea for an 18-year-old? Legal documents! They're not quite as bad as coal in a Christmas stocking. But not quite as much fun as a MacBook Air, either. Think about it - an 18-year-old is a legal adult.   “What this means to each of us is the only individuals that can make financial or health care decisions for us are the individuals we legally appoint.  Mommy and Daddy are no longer the legal guardians,” says Clearwater, Florida attorney Linda Chamberlain in her own blog post on the topic: The Best Gift for the Graduate. But They Don't Own Anything! You might say, "But my 18-year-old doesn't own anything. Why do they need a will?" Other documents become important upon reaching adulthood. For 18-year-olds who don't own anything, they still have rights, such as: to private medical records, to make their own health care decisions, to sign their own lease or to open, close or pay bills on a bank account. If the young adult is incapacitated, parents can no longer legally do those things for them. One worst-case scenario is an accident where the young adult is hospitalized. This is when documents like: a HIPAA designation (allows consent to share medical records), Health Care Surrogate (consents to have health care decisions made), Durable Power of Attorney (for managing money and accounts), and Living Will could be crucial. A financial planning colleague in California shared a wild example: A couple's son attended college in Arizona. The son was in an accident with his girlfriend. The girlfriend was ok but the son was in serious condition. In the time it took for the parents to get to Arizona, the son gave the hospital staff permission to share his medical information with the girlfriend, but did not name (or was not asked about) the parents. He went into surgery and when the parents arrived, the staff would not immediately share information about his condition with them, but would do so with the girlfriend. So the parents had to ask the girlfriend for information about the condition of their own son. Ask Your Own Attorney In Florida, most estate planning attorneys will provide a set of documents for a young adult for a small flat fee, especially for children of their established clients. If it's about time to get your own set of documents reviewed (every 3 - 5 years is good), ask your attorney about preparing a simple set of documents for your adult child. Or, check your local estate planning council directory, or ask your professional advisors for referrals. What other financial concerns might you have for someone becoming a newly-minted adult? Comment below or schedule a call with the online calendar button at our page: Contact.

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Graduation Gift? How About Legal Documents?

Graduation gift - How about legal documents? Arguments have been made that a set of legal documents are the best gift for a high school graduate. Now that's not quite as bad as coal in a Christmas stocking. But not quite as much fun as a MacBook Air, either. . Think about it - an 18-year-old is a legal adult.   “What this means to each of us is the only individuals that can make financial or health care decisions for us are the individuals we legally appoint.  Mommy and Daddy are no longer the legal guardians,” says Clearwater, Florida attorney Linda Chamberlain in her own blog post on the topic: The Best Gift for the Graduate But They Don't Own Anything! You might say, "But my 18-year-old doesn't own anything. Why do they need a will?" There are other documents that become important upon reaching adulthood. For 18-year-olds who don't own anything, they still have rights, such as: to private medical records, to make their own health care decisions, to sign their own lease or to open, close or pay bills on a bank account. If the young adult is incapacitated, parents can no longer legally do those things for them. The most common worst-case scenario described is an accident where the young adult is hospitalized. This is when documents like: a HIPAA designation (allows consent to share medical records), Health Care Surrogate (consents to have health care decisions made), Durable Power of Attorney (for managing money and accounts), and Living Will could be crucial. In Florida, most estate planning attorneys will provide a set of documents for a small flat fee, especially for children of their established clients. Ask your attorney, check your local estate planning council directory, or ask your professional advisors for referrals. Contact us if you need referrals for Tampa Bay area attorneys or if you have other financial concerns for someone becoming a newly-minted adult. Schedule a call with the online calendar button at our page: Contact.

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Get a Go-Bag: Lesson from the Hospital

Get a go-bag: lesson from the hospital. A 73-year-old client recently had an unplanned hospital stay and gave permission to share her story. She originally had an outpatient foot surgery. Subsequently it developed an infection missed by her physicians. Once her foot swelled up and was bursting with pain, only then did they send her immediately to the ER. As you might expect, it was an ordeal of mixed experiences. Once she got a (semi-private) room, the nursing staff was wonderful. The cleaning staff - not so much. Evidently they had missed cleaning her room's bathroom after the last patients left. Before getting a room, she spent 15 hours parked on a gurney in the ER hallway. Doctors would walk by, see her foot, stop and simply say, "Wow, that looks painful." Then keep going. In case you're wondering, she has a the "Cadillac" Medicare Plan F (no longer available to new enrollees) with supplemental coverage. She spent three days there, which was long enough for this astute patient to think of all the things she would do differently next time before coming. She had her toothbrush, but not her eye mask for sleeping. She had socks, but shower shoes would have been nice. She didn't have her face soap, so for three days she used the "industrial" hospital hand soap. Minimalists might think this is minor stuff. But when you are in a most uncomfortable situation and place, isn't that when comforts are needed the most? Lesson Learned She wanted to ask her partner to bring some of these things, but she realized he really wouldn't know what all the stuff in her medicine cabinet was. It seemed like a big ask. He had already held ice packs on her feet for 4 hours straight. How could she describe which of her many bottles to bring? If it had been me, once I got home, I would have been relieved to be out of the hospital, get on with my life and try to forget it ever happened. Not this lady. She immediately shopped for everything she wanted to have but missed. Then she assembled everything in two go-bags. Now, if she is unable to grab them herself, she has told her partner about them, written down on the medicine cabinet where to find them, and what needs to be added at the last minute. All he has to do is bring them along. Comfort and Dignity When my grandmother, a tall, beautiful, always put-together woman, was in the hospital, dying, she asked for someone to make up her face every morning. At that time I was a teenager. I didn't understand this request. It seemed so unimportant in the scheme of things. Several decades later, when my mother-in-law was in a similar state, I read on a Hospice brochure how rubbing the feet is one of the best things you can do. Hospice is the authority on being comfortable and retaining dignity at a time of greatest discomfort…

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You Might Want a Trust If….

You might want a trust if.... “Do I need a trust?” Although it's a legal question, it's frequently asked of financial advisors. What do they say?  “Hey, I’m not an attorney,” is one possible—but maybe not the most helpful—answer.  “Hey, I’m not an attorney, but I can play one,” may be polite, but inadvisable.  “That’s interesting you bring that up. I’m curious how you heard about trusts.” This reply seems a little better. It keeps the focus on the questioner, and it’s pretty safe legally.  Pros and Cons of Trusts  Answers people may give for curiosity about trusts range from, “I dunno," to citations of articles, websites, conversations with friends, family members, or even an estate planning attorney. All of the mixed messages about them can get pretty confusing.  For some people, trusts are a mysterious-yet-evil domain of the ultra-rich. This belief isn’t surprising. When was the last time you saw positive media coverage of a trust? It typically pops up when a billionaire’s “trust fund baby” is arrested.  There are dozens of kinds of trusts. For this post, “trust” means a revocable living trust. They tend to be the most common and relevant.  Trusts aren’t for everyone. They are costly to set up. Some people have difficulty implementing and maintaining them. They are powerful. Scary powerful, sometimes. Rather than answering, “Do I need a trust?” directly, I prefer to channel comedian Jeff Foxworthy’s famous phrase, “You might be a redneck if …” (anyone under 40 may have to look him up). It seems to help people discover for themselves whether a trust might be useful. 7 Reasons You Might Want a Trust 1. If you own property in more than one state or country, you might want a trust. Trusts avoid probate—if drafted, executed, and implemented properly. Property in two states/countries means probate in two states/countries. In many states, probate attorneys charge a percentage of the probated asset value. Dollars spent now on a trust could seem small compared to the dollars spent on lawyers and court fees in two places later. 2. If you are concerned about a grown child’s ability to handle money, you might want a trust. A child gets the money with no strings attached if left through a joint account, will, payable-on-death (POD) designation, or beneficiary designation. Trusts let you build strings. One common example is to pay one-third of principal at age 30, one-third at age 35, and the remainder at age 40. As your family ages and changes, you can revise trust provisions like these. Revocable living trusts are amendable. 3. If you have a concern about a child’s current marriage, you might want a trust. Trusts can be written so that inherited assets can be protected in a divorce. Assets inherited other ways, especially if commingled with other marital assets, can be harder to protect. 4. If you have a concern about a child’s future marriage, you might want a trust. Trust provisions can be written for future spouses, too. 5.…

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Estate Planning, Opioids and Addiction

Estate planning, opioids and addiction: Addiction is one of those common issues everyone thinks is uncommon. But if it was talked about more, more people would realize addiction is a widespread illness, affecting many families. Before Covid-19, the opioid crisis was one of the worst epidemics to affect the U.S. Like Covid-19, there were outbreaks and hotspots. Unlike Covid-19, the opioid epidemic was brought about by unscrupulous doctors and pharmaceutical companies. Below is an excerpt from a guest blog post by Mike Mastry, Esq. of Mastry Law in St. Petersburg, Florida. In it, he details how opioids and addiction are affecting families and attorneys as they document their estate planning. Mike Mastry is an estate planning attorney located in St. Petersburg, Florida. Mike’s goal is to simplify the process of estate planning by crafting individualized plans that provide each client with peace of mind. He does this by maintaining a client centered practice that focuses on creating comprehensive estate plans that are tailored to fit each client’s unique circumstances. Mike's ideas are relevant for planning involving any kind of addiction - the kinds that are easier to see, like drugs and alcohol, as well as the kinds that aren't - like gambling, sex, or porn. All addictions, seen or unseen, hurt the addict and the people who love them. Having a good estate plan in place can't take away the hurt, but it can hedge against making it worse. Opioid Epidemic Now Impacting Estate Planning, by Mike Mastry, Esq. "Estate planning often serves as a reflection of a family's experiences. In this instance, estate planning is used to protect the family and individuals with substance abuse problems. Estate planning attorneys hear all kinds of stories about bizarre family dynamics and difficult relatives. However, the national opioid epidemic is relatively new to the estate planning world. Sadly, it is likely here to stay. The Pittsburgh Tribune-Review's recent article, "Pittsburgh attorney sets up 'opioid trusts' for beneficiaries with addiction issues," https://archive.triblive.com/local/regional/pittsburgh-attorney-sets-up-opioid-trusts-for-beneficiaries-with-addiction-issues/ reports that the American Family Survey, commissioned annually by the Deseret News, found that 12% of families in 2017 said they had an opioid-addicted relative. Opioid overdoses nationally were the leading cause of death for people younger than 50, according to the Centers for Disease Control and Prevention in 2017. Attorneys Getting Creative The opioid epidemic has led some attorneys to get creative and establish what are being called "opioid trusts." Some folks don't want to leave anything outright to a child with a dependency issue, because of what can happen to the money. Estate planning attorneys are regularly asked to create trusts for beneficiaries with intellectual disabilities, who are entitled to public-health benefits through Social Security or Medicaid and receive supplemental trust payments that add to those. However, the so-called opioid trust is somewhat different. Parents may be paying for the child's basic support needs. However, is that money going to buy drugs? If so, have they cut him or her off completely? With an opioid trust, there's no support to…

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Channeling Jeff Foxworthy – You Might Want a Trust If….

“Do I need a trust?” Although it's a legal question, it's frequently asked of financial advisors. What do they say?  “Hey, I’m not an attorney,” is one possible—but maybe not the most helpful—answer.  “Hey, I’m not an attorney, but I can play one,” may be polite, but inadvisable.  “That’s interesting you bring that up. I’m curious how you heard about trusts.” This reply seems a little better. It keeps the focus on the questioner, and it’s pretty safe legally.  Pros and Cons of Trusts  Answers people may give range from, “I dunno," to citations of articles, websites, conversations with friends, family members, or even an estate planning attorney. All of those mixed messages can get pretty confusing.  For some people, trusts are a mysterious-yet-evil domain of the ultra-rich. This belief isn’t surprising. When was the last time you saw positive media coverage of a trust? It typically pops up when a billionaire’s “trust fund baby” is arrested.  There are dozens of kinds of trusts. For this post, “trust” means a revocable living trust. They tend to be the most common and relevant.  Trusts aren’t for everyone. They are costly to set up. Some people have difficulty implementing and maintaining them. They are powerful. Scary powerful, sometimes.  Rather than answering, “Do I need a trust?” directly, I prefer to channel comedian Jeff Foxworthy’s famous phrase, “You might be a redneck if …” (anyone under 40 may have to look him up). It seems to help people discover for themselves whether a trust might be useful.  You Might Want a Trust If....7 Reasons  1. If you own property in more than one state or country, you might want a trust.  Trusts avoid probate—if drafted, executed, and implemented properly. Property in two states/countries means probate in two states/countries. In many states, probate attorneys charge a percentage of the probated asset value. Dollars spent now on a trust could seem small compared to the dollars spent on lawyers and court fees in two places later. 2. If you are concerned about a grown child’s ability to handle money, you might want a trust.  The child gets the money, no strings attached, if left through a joint account, will, payable-on-death (POD) designation, or beneficiary designation. Trusts let you build strings. One common example is to pay one-third of principal at age 30, one-third at age 35, and the remainder at age 40. As your family ages and changes, you can revise trust provisions like these. Revocable living trusts are amendable. 3. If you have a concern about a child’s current marriage, you might want a trust. Trusts can be written so that inherited assets can be protected in a divorce. Assets inherited other ways, especially if commingled with other marital assets, can be harder to protect. 4. If you have a concern about a child’s future marriage, you might want a trust. Trust provisions can be written for future spouses, too. 5. If you aren’t as concerned about dying as living a long time with…

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Talent, Temperament and Time: Three Criteria for Choosing a Trustee

Talent, temperament and time: three criteria for choosing a trustee. When it comes to more advanced estate planning, many people choose to go the route of forming a trust. Reasons for doing so can be as simple as avoiding probate in another state, or as complex as managing family dynamics in multi-generational blended families. (For top 10 reasons you might want a trust, see: You Might Want a Trust If...) Trusts should be formed with the assistance of a board-certified estate planning attorney. At some point the attorney will ask, "And after you, who do you want to be trustee? Successor trustee?" Often the first person who pops into mind is a relative, especially if they wouldn't charge anything. But acting as trustee can be a serious duty and responsibility (read: headache, in some instances) to ask someone to assume. For some people, naming a family member may be the best option. Others might benefit from a large corporate trust company. Still others may want something in between, perhaps an independent fiduciary or an attorney or CPA. When choosing a trustee, it's best to include at least three criteria: talent, temperament, and time. The relative importance of each will depend on the trust’s purpose. As you review them, keep in mind, why is the trust being established in the first place? Talent How much talent does a trustee need, and what kind of talent? Talent in a particular area may be a necessity, or just nice to have. Talent needs to be considered in four main areas: legal, accounting, taxes, and investments. Trustees may be accountable to and liable for decisions made on behalf of all beneficiaries, both current and future. Therefore, if a trustee is managing a trust for a current beneficiary (say a widowed spouse), they might also have to look out for future beneficiaries (say, children). That can feel like a delicate balancing act. For example, if the trust beneficiaries are apt to question the trustee’s decisions, legal talent would be not only beneficial, but possibly necessary. In some states, trustees are required to provide an annual report to beneficiaries showing all sources of income, expenditures, and (here’s where many get tripped up), expenses paid from income or principal. If the trust is or becomes irrevocable, it must file its own tax return. Trusts are subject to an entirely different set of tax rules than individuals. Accounting talent is critical for that. Further, once the trust is established and funded, will it be around long enough that money must be invested? How will it be invested with the best interests of the beneficiaries in mind? Investment management talent might be needed at that point. A family member lacking one or more talents can still make a good trustee, if there is a plan to hire out the talent.  For example if all four areas will be critical, it might be worthwhile to hire a corporate trust company as co-trustee with the family member and give the family member…

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Guest Post – Attorney Mike Mastry: Beneficiary Designations

This week we welcome a guest post from Attorney Mike Mastry on beneficiary designations. He has an instructive story that illustrates why it is important to double-check them.  Mike can be reached at mike.mastry@mastrylaw.com    If you haven’t reviewed your beneficiary designations recently, now would be a good time to take a look. The number of horror stories of assets going to unintended people would surprise you. It’s such an easy fix that is all too often forgotten. Recently, the Fifth Circuit Court of Appeals reversed a trial court decision and held that a pension plan administrator didn’t abuse her discretion in determining that a deceased plan participant’s stepsons weren’t considered his “children” under the terms of the plan. As a result, the deceased participant’s siblings received the payout instead of his stepsons. In that case, John Hunter died in 2005. He had retired from Marathon Oil, where he participated in the company pension plan, which let him name a primary and secondary beneficiary. Hunter designated his wife as the primary beneficiary but didn’t designate any secondary or “contingent” beneficiary. After his wife died, he didn’t update the document to add a new primary beneficiary. Under the plan’s terms, when a participant died without designating a valid beneficiary, benefits were distributed in the following order: (1) surviving spouse, (2) surviving children, (3) surviving parents, (4) surviving siblings, and finally (5) the participant’s estate. After Hunter died, the plan administrator rejected the claim that his two stepsons would qualify as “children” who’d be entitled to all the benefits. Instead, the plan administrator distributed the benefits of more than $300,000 to Hunter’s six siblings. Although the evidence seemed to indicate that he probably did mean to leave his benefits to the stepsons, the Fifth Circuit agreed with the administrator’s interpretation that the term “children,” meant biological or legally adopted children. The pension benefits then went to Hunter’s six siblings. The moral of the story: regularly review and update beneficiary designations (including secondary beneficiaries).  If their names don’t appear on the beneficiary form, they will not receive anything. Furthermore, your will or living trust will not override a beneficiary designation. Mike's website is www.mastrylaw.com.

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Letting Indecision Delay Your Estate Plan

The best reason I ever heard for not seeing an estate planning attorney came from a late client who, upon learning that over half of his estate might be taxed, said, “I don’t mind. The government has a lot of good programs.”  (I responded, “Ok. How can you be sure your money will go to the programs you like?”) I don’t believe, despite his political views, that he really wanted to leave half of his money to the government. I do believe it seemed better than addressing his mortality, though. Talking and thinking about our own death is stressful, so it’s no wonder many people avoid it, deny it, and don’t want to deal with it. But what if your reason is simply, “It’s too hard to decide”? No doubt about it, estate planning can involve gut-wrenching decisions, like choosing a potential guardian for your minor children. (Ugh.) Or figuring out what’s “equal” vs. what’s “fair.” Who to include and who to exclude? Which charities will handle a bequest most responsibly? Leave money in a lump sum, or spread it out over time? In-laws, multiple marriages, step-relatives, girlfriends, boyfriends….today’s families are complicated. Perhaps you and your spouse or partner disagree. Or you and your children do. The more you delay, the more the questions, and their unknown answers, multiply. You might want to brush it off, like my client, since you “won’t be around anyway to worry about it.” But until then, it can still eat at you. A lot of people think they must make all the decisions before they go see the attorney. Estate planning attorneys, though, deal with such decisions all the time. Many of them are actually pretty good at suggesting alternatives you might not have considered. Attorneys are more than just note-takers; they are advisers and advocates. The good ones are smart people who love to come up with creative solutions to legal questions. So when I hear someone can’t decide, I encourage them to make the appointment anyway. Addressing our mortality may not be pleasant, but it’s better than being eaten alive by indecision. Don’t know how to choose an attorney? Contact me at holly@hollydonaldsonfinancialplanner.com for helpful hints.

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Mind Your 4 Digital Asset Types

An attorney I met had a father-in-law who ran 3 businesses from his Blackberry. When he died suddenly, she was shocked at how difficult it was to access his emails, accounts, and online life. Every online provider had different requirements. This was her introduction to the concept of the "digital asset." Have you ever given thought to your digital assets and how someone else would step in your shoes? It's estimated the average American has between 30 and 80 online accounts with passwords. Keeping track can be overwhelming, but we can begin by naming 4 main types - personal, financial, business, and social: 1) Personal assets: Photos, Movies, Books, E-books, Music, and Podcasts. Unlike your Simon and Garfunkel records, Michael Jackson CD's, or Rocky DVDs that the kids will get whether they want them or not, there are some e-libraries you can't leave to anyone. For example, access to Kindle and iTunes libraries die with their owners.  For all your photos and videos stored in the cloud, make sure you have a backup, especially if it's iCloud. Upon proof of death, all content in an iCloud account is deleted. 2) Financial assets: Bank, Brokerage, PayPal, Frequent Flyer, Bitcoin, etc. Did you sign up for paperless statements? Good for you, but make sure you have documented somewhere that the accounts exist. If no one can get into your email, and you haven't kept good notes or a plan somewhere, they may not know you opened a new Treasury Direct account.  Additionally, once the bank or brokerage company learns of your demise, they may lock out the online account, preventing anyone from accessing statements. Statements are essential for understanding how much was in the account at date of death, but primarily, how your assets are titled. 3) Business assets: Blogs, E-books, Books, E-commerce sites. Intellectual property is often housed digitally. Have you inventoried any copyrighted works and addressed them in your estate planning documents? Can someone get to them in a way that will continue to produce revenue or royalties?  4) Social accounts: Email, Text messages, Facebook, Twitter, Instagram, Pinterest, LinkedIn, etc..  An elderly friend of mine passed away 6 years ago but his face and profile still pop up occasionally as someone "I might know" on my Facebook and LinkedIn. I am guessing his family either aren't involved with social media, or simply were not able to log in and post a nice memorial tribute to a wonderful man. What do you want your online presence to look like, if at all, and for how long, once you're gone?  With all of these different, it seems like you might need a digital asset will and executor. It turns out there are such things now, and 10 states, including Florida, have ratified them through passage of the Revised Uniform Fiduciary Access to Digital Asset Act (RUFADAA). (You can more about it here: https://www.onefpa.org/journal/Pages/APR18-Estate-Planning-for-Digital-Assets-Understanding-the-Revised-Uniform-Fiduciary-Access-to-Digital-Assets-Act-and.aspx. In the act, you can name a digital asset executor - someone to access your email, text messages, and…

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