Estate Planning

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 the child. This sounds cruel, but medical experts say it’s to get the child to embrace recovery. The goal is to get him into recovery and, eventually he might be able to stay clean long-term. An opioid trust is created to pay recovery-related expenses, such as rehabilitation bills, therapist payments and treatment bills. Optimally, the child gets a job. It’s this “tough love” that’s the only way this type of trust will work.

The money is never distributed directly to the beneficiary, nor is any property that could be easily converted into drug money. However, you can give them other, in-kind benefits, like the use of a car-but not the title to the car.

Naming a Trustee

Naming a trustee can be challenging in this kind of situation. This is a situation where a professional trustee, rather than a family member, may be a better choice. Achieva, a Pittsburgh-based organization, handles standard trust disbursements and has a team of social workers and counselors who work with trust beneficiaries.

An estate planning attorney will be able to help your family distribute assets through an estate plan that protects the family from the impact of addiction.“

Reference: Pittsburgh Tribune-Review(August 21, 2018) “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/

Other Resources

For families struggling with addiction and alcoholism – www.al-anon.org, www.nar-anon.org

For books addressing family dynamics with money, including enabling behaviors – see our Recommended Books page

Florida addictions counseling – www.kendonaldson.com or search for addictions counseling at the website of Psychology Today.

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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 chronic illness or dementia, you might want a trust.

What happens if you’re unable to manage your finances? People often don’t consider that a will only applies upon death. That’s why they should have a power of attorney (POA). Although much work has been done to get institutional agreement on POAs, your designated POA person might still face a custodian, attorney, or title company who won’t recognize it, or will at least give your person a hard time about it.

If an asset is in a trust, your person—the trustee or co-trustee—generally faces fewer roadblocks than with the POA.

6. If you are in a second (or later) marriage and have children from a previous one, you might want a trust.

Let’s say you both agree that the spouse gets the house, but the kids get the money you brought to the marriage. With a will and beneficiary designations, this basic idea can be accomplished. Sometimes life (and death) work out that simply, yet sometimes they don’t. (See last point.)

It’s possible your spouse could be left without enough money to live in the house, or the kids could be left with nothing. If either of those scenarios bothers you, a trust can allow for changing circumstances as you both age.

7. If you care about a loved one’s vulnerability in their time of grief, you might want a trust.

Probate is public. If you’ve ever known someone who has been through it, then you are familiar with the annoying phone calls and direct mail received after losing someone. If you haven’t, you might be shocked to know that … people troll public records.

Some trolls, I mean, people, especially like the records that declare which investment account(s) and which beach house go to whom. Then, out of the goodness of their hearts, they find the grieving loved one and offer to provide assistance and support in their time of need. (Ahem.)

Unlike probate, transferring property through a trust happens privately.

Ask Your Attorney

In summary, these are only seven of several reasons you might want a trust. But the best person to ask is a board-certified estate planning attorney. Find one through your local estate planning council (www.naepc.org) or ask your financial advisor for references.

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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 

 

Attorney Mike Mastry of St. Petersburg, FLIf 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.”

Digital Assets

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 social media accounts, in your will or trust.

If you have been reading or watching for a while, you know I am a fan of having a Notebook. But if you aren’t the paper Notebook type, or just ready to reduce paper, check out www.everplans.com. For $75, you can have a plan and inventory of your digital estate, easily accessible to those you trust. If you give it a try, let me know how it works out, and I’ll post feedback here for future readers. 

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Dig Those Digital Assets

Shortly before a relative of mine died in 2008, he showed me where and how he kept his financial life organized. He had accounts in more places than I could keep track of in my head. So we wrote them all down. Between the visit to his home office and our written instructions, I thought I was all clear on what he had and how to get to it. But when it came time, I still nearly missed one. It was the only account for which no statement came in the mail – a “digital asset” at Treasury Direct.  I uncovered it 11 months later as I was clearing out the file cabinet, in a manila folder with a scribbled label. The folder was empty, but a userid and several crossed-out passwords were written on the inside flap. It turned out to be a five-figure account. 

Nowadays, it’s estimated the average American has between 30 and 80 online accounts with passwords. Of course, not all of them have money in them, but they still might be “assets.” Paypal accounts, frequent flyer accounts, Amazon accounts, eBay accounts, and any kind of points-earning sites might be worth a little, or a lot. Membership sites – AAA, AARP, fraternities, sororities, national professional associations, etc. might hold some kind of group life or accidental death policies. A blog or YouTube channel might bring in a little advertising revenue. Even if the site or account has no potential for ever producing money, most people have some kind of online presence, even if it’s simply their Facebook page, that they might not want hanging out there if they’re no longer around. There are 4 categories that our digital assets can fall into. Next week I’ll go into more detail and how to plan for them.

But while it’s tax time and you might have all of your financial life pulled together, give it some thought: how could someone easily take over my digital life if necessary? One app I am using is Dashlane – it sits on my hard drive and remembers all my sites and passwords. All someone needs to do is enter my Dashlane password, and they can see what I’ve got and how to get to it. Scary? Perhaps. To play it a little safer, I chose not to use the “cloud ” version of Dashlane to share among all my devices.  I’ll be providing lots of other resources in an upcoming e-book on end-of-life planning and digital assets (Porchview Publishing, $7.99). If you would like to be on the pre-order list for a coupon, become a subscriber to the free monthly e-letter, “The View From The Porch,” at https://www.hollydonaldsonfinancialplanner.com. 

Continue ReadingDig Those Digital Assets

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. But when you think about it, estate planning attorneys 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.
Continue ReadingLetting Indecision Delay Your Estate Plan

Selecting a Trustee: Talent, Temperament and Time

Professional advisor or trustee

Selecting a trustee: talent, temperament, and time. Sometimes an estate planning attorney will recommend setting up a trust. One of the decisions to make in setting up a trust is selecting a successor trustee.  Who is the best person or persons to step into this role if you are unable to? Should it be a family member or a professional trust company?

The requirements for this role often boil down to talent, temperament, and time.

Following this outline, here are some questions to ask when considering a person, or an institution, as a successor trustee:

Selecting a Trustee: Talent

First, talent. Is the potential trustee detail-oriented? For example, trustees are required to provide annual accountings to beneficiaries.

Are they familiar with keeping track of which money is considered “principal,” and which is considered “income”? This can make a difference when there are both current beneficiaries and remainder (future) beneficiaries.

How familiar is the trustee with the spectrum of investments? Does he, she, or it understand the risk factors of all kinds of investments? Would he, she, or it know which investments are in the best interest of the beneficiaries? Trustees are “fiduciaries,” which means they are liable if their investment choices are not considered to be in the beneficiaries’ best interests at all times.

That said, would the trustee understand when it is wise to watch pennies, and when it is “pound-foolish”?

Selecting a Trustee: Temperament

Next, temperament. Will naming this person cause family tension?

Will they have conflicts of interest?

Do they have problems dealing with other family members?

Can they be sensitive to family dynamics and unbiased in decision making?

Will this person put my interests ahead of his or her own?

Selecting a Trustee: Time

Finally, time. Will serving as trustee pose a time burden on a person? Trustees must have time to:

  • review and pay bills,
  • review investment decisions (jointly or with professional investment managers), and
  • communicate with beneficiaries as necessary.

How is the health of the potential trustee being considered? Will the beneficiaries likely outlive this person?

Further Questions

For shortfalls in any of these areas, an estate planning attorney should be consulted on whether any of the following may help:

  1. Naming two or three people as co-successor trustees.
  2. Considering a current co-trustee or –trustees.
  3. Considering a “trust protector,” a third-party person who oversees the trustee and can replace them if they are doing an unsatisfactory job.
  4. Having a family meeting to discuss the  provisions of the trust with the successor trustees, attorney, financial planner, and accountant.

For some, a corporate trustee has distinct advantages. Corporate trustees have entire staffs of trust officers and lawyers. They have accounting systems set up to provide accountings and pay bills. Most have salaried staff investment managers with performance-based bonuses. They purchase stocks, bonds, and funds at institutional pricing with no markup to clients.

Additionally, trust companies operate as unbiased professionals, with experience handling reasonable and unreasonable family members. They have loads of liability insurance. Finally, beneficiaries can’t outlive (most) corporate trustees. If the corporate trustee goes bankrupt, client accounts are protected and can be transferred in-kind to another corporate trustee or custodian.

Of course, corporate trustees come with a price. Normally the fee is a percentage of the assets being managed. A family member may not charge anything although by some state statutes, they can. The decision to make is whose talent, temperament, and time is worth it.

For a listing of local estate planning attorneys, look up your local Estate Planning Council at https://www.naepc.org.

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