Below are some of the more popular articles from our past newsletters. If you wish to learn more about how to plan your estate and protect your family, please feel free to call us at (914) 686-7272 to schedule a consultation.
How to Ensure that Your Most Important Wishes will be Followed
Most people generally know what they want when it comes to their assets and health care. Unfortunately, however, many individuals do not have the necessary legal documents in place to ensure that their wishes are carried out. To make sure your wishes are followed, you (and every adult) should have, at a minimum, the following basic estate planning documents: (1) General Durable Power of Attorney, (2) Health Care Proxy, (3) Living Will and (4) Last Will & Testament.
The first three of these documents are commonly referred to as “advance directives.” If advance directives are properly prepared and executed, they will serve to provide you with a certain level of control over your financial affairs and health care wishes even if you later become incapacitated or are otherwise unable to make these important decisions for yourself. Additionally, these documents will serve to provide your loved ones with guidance as to your wishes as well as the necessary legal authority to carry out those wishes.
The Last Will & Testament, on the other hand, is a document that sets forth your wishes to be carried out after your death. Generally, the Last Will & Testament addresses issues such as your funeral arrangements, who should inherit your remaining estate, and who is responsible for administering your Will. For parents with young children, the Will could also be used to designate a guardian to care for the children and a trustee to manage the money for the children until they become older.
Without valid estate planning documents in place, these very important issues will default to, and be decided by, the laws of the State in which you reside rather than by your desires and wishes. Therefore, if you want to make sure that your wishes are carried out, it is imperative that you, at a minimum, have these very important estate planning documents.
This article only touches upon some of the most basic estate planning issues. To ensure that your estate planning needs are fully addressed, you should consult with a qualified estate planning attorney. If you already have certain estate planning documents, it would be wise to periodically have a document “check-up” to make sure your documents reflect your current wishes and comply with the latest changes in the law.
Discussing Estate Planning Topics with Loved Ones
Whether you are a parent talking with your children, a wife speaking with a husband, or an adult child talking with an aging parent, most would agree that sitting down to have a discussion about life & estate planning issues could be difficult, emotional, heated, and stressful. In fact, if given the choice between such planning discussions with family members and having teeth drilled, many would probably opt for the trip to the dentist. However, any discomfort that may be involved with estate planning discussions is often significantly less than the pain felt by family members whose loved ones ignored discussions and failed to implement certain planning strategies.
Here are some helpful ways to initiate estate planning discussions with your loved ones:
Starting the Conversation. This is probably the most challenging task, especially with elderly parents who may perceive the discussion as the first step to giving up control. You need to emphasize that estate planning is about providing more control, not less. Legal documents such as Powers of Attorney, Wills, and Trusts are tools that will enable your parents to control the management and distribution of assets during life and after death.
Choose a Comfortable Setting. Have the conversation in an environment that will be comfortable and private. You want your parents to feel as comfortable as possible, which will encourage an open and honest discussion.
Eliminate/Limit Distractions. Having photos of children or grandchildren in the room where you have your discussion is a good idea. Having children or grandchildren running around or bouncing on laps will distract and limit the effectiveness of the overall objective.
Suggest a Group Discussion. Invite siblings or other close family members to join you in initiating the conversation. Having a number of family members present may provide your parents with a sense of the topic’s importance and make them more willing to discuss their plans.
Express Your Concern for Their Well-Being. Let your parents know that you are genuinely concerned for their future well-being and that it is important that they implement an effective estate plan that will address their needs and ensure that their wishes are carried out.
Share Your Estate Plan. If you have prepared your own estate plan, share your plans with your parents. By discussing your plans, they may be more open and willing to discuss their plans with you.
Discuss Long-Term Care. Most people will require some form of long-term care during their lifetime. Typically, long-term care insurance can help pay for the cost of home health care, assisted living facilities, or nursing homes. Ask your parents if they know of any friends who have done some long-term care planning.
Use Books or Articles. Mention to your parents a book or article that you read about estate planning and then ask them what steps they have taken toward securing their estate. Occasionally, there is an article in the newspaper about an estate that wasn’t properly planned. These examples often illustrate the consequences of not having a sufficient estate plan in place.
Bring-Up Real-Life Situations. Most of us know of someone, whether a friend, co-worker, or neighbor who has experienced a family crisis. It may have involved having to sell the family home to pay for the costs associated with long-term care or the turmoil that ensued following the death of a parent who did not properly plan their estate. Share these real-life situations and ask your parents what steps they have taken to avoid a similar fate.
Be Sensitive & Patient. Last but not least, be extremely sensitive and patient when discussing these important issues with your parents. Your compassion will help comfort and assure them that you have their best interests at heart.
Like visiting the dentist, estate planning discussions are necessary. Speak with your parents and loved ones about arranging a convenient time in the near future to begin the discussion. If necessary, schedule more than one meeting. By having these conversations now, you can help avoid significant family and financial problems in the future.
What Happens if You Die Without a Will?
We all know we’re supposed to do estate planning, but not all of us get around to it. So what happens if you don't have a will when you die?
Well, your estate will be distributed according to state laws, which may or may not be the way you want it to be distributed.
Dying without a will is called dying "intestate." Each state has laws that determine what happens to your estate if you don't have a will. If you are married, most states award between one-third to one-half of your estate to your spouse, with the rest divided among your children; or, if you don't have children, to other living relatives such as your parents or siblings. If you are single, most states provide that your estate will go to your children or, if you don’t have children, to other living relatives. If you don’t have any other living relatives, then your estate will go to the state.
It should be noted that any jointly held assets, such as bank accounts or houses, will go directly to the co-owner. In addition, any life insurance policies or retirement accounts will go directly to the beneficiary designated on the account. And if you have a trust, any assets in the trust will go to the beneficiary designated in the trust.
Another important reason to have a Will is to designate a guardian for your young children. If you don’t have a Will, the court will end up determining who will act as guardian(s) for your children. The court will also appoint a person who will administer your estate. In addition, if you are unmarried, but have a partner, your partner will not inherit anything from your estate unless you have a will (or trust) naming him or her as a beneficiary.
If you would like to make sure that all your wishes are carried out, you should have a Will and/or a Trust. To learn more about the benefits of Will and/or Trust planning, please feel free to call us at (914) 686-7272.
‘Tis the Season to Make Sure Your Affairs are in Order
Life is uncertain - so why wait until the new year begins to make a resolution to put your affairs in order? There's no better time (or "Season") than the present when it comes to engaging in planning. A simple resolution that you could undertake NOW is to review your affairs and make sure that they are in proper order. Once this is accomplished, you can have confidence and peace of mind knowing that you and your loved ones will be in good shape should something unexpected (e.g., an accident, illness, medical emergency, etc.) happen to you in the future.
Here are some helpful tips for organizing and putting your affairs in order:
Prepare a List of Assets. Prepare a list of your assets (e.g., financial accounts, real property, etc.), sources of income (e.g., salaries, pensions, social security, etc.), and financial obligations (e.g., mortgages, loans, etc.). If something should happen to you, this list will provide your loved ones with a good picture of your financial situation and enable them to more readily handle your affairs.
Convey Location of Important Documents. You may know that your life insurance policy and other important documents are at the bottom of the third bureau drawer, but does anyone else know that? Keep your important financial and legal documents (e.g., account statements, Power of Attorney, Health Care Proxy, Living Will, Last Will & Testament, Deed to home, etc.) in a safe but accessible place and make sure that your loved ones know where they are located.
Check Beneficiary Designations. Life insurance policies, annuities, retirement accounts, brokerage accounts, and mutual funds permit you to designate beneficiaries. Check to make sure that you made your beneficiary designations and that they reflect your current wishes. If you didn’t make your beneficiary designations or if your designations are outdated due to changes in your family structure (marriage, divorce, re-marriage, death, etc.), it could greatly affect how your assets are distributed and have significant adverse tax ramifications.
Select an Agent. Select a responsible and trustworthy person to “stand in your shoes” and act on your behalf for financial and medical matters. This will become extremely important if you are in an accident or become incapacitated and are no longer able to manage your financial affairs or communicate your healthcare wishes. To ensure that your wishes are followed, they should be set forth in a Power of Attorney, Health Care Proxy, and Living Will.
Decide How Assets are to be Distributed. Decide how you want your assets and personal items to be distributed in the event of your death. These wishes should be conveyed in a Will or Trust to ensure that your wishes are carried out. If you don’t specify your wishes, the government will determine who gets your assets.
Select a Guardian. If you have minor children, it is important to select a guardian to care for your children in the event something should happen to you. You should also make provisions to ensure that your children and their financial needs (e.g., cost of education, etc.) will be provided for as you wish. If a guardian is not designated, the court system could end up determining who gets custody of your children.
Make a List of Important Contacts. This list should include the names, addresses, and telephone numbers of your emergency contacts as well as your attorney, accountant, financial planner, insurance agent, clergyperson, etc. Anyone designated as your personal representative (e.g., agents, trustees, executors) should be provided with a copy of this list.
Review Your Plan Regularly. Generally, you should conduct a financial and legal check-up at least once a year. Over time, various life events take place (e.g., marriage, births, divorce, re-marriage, deaths, address changes, etc.) and laws change, so you may need to update your documents and adjust your plan accordingly.
Planning for Loved Ones with Special Needs
Like many parents, Carol and Jim very much love and care for each of their four children. Fortunately, over the years, they have attained a certain level of financial comfort which allows them to assist their children in various ways; whether it’s helping out with a down-payment on a new home, repairs for the family car, or a grandchild’s college tuition. Recently, however, Carol and Jim have become increasingly concerned with their youngest son’s, Jim Jr., special needs.
Several years ago, Jim Jr. was diagnosed with Multiple Sclerosis (“MS”) which has been steadily worsening during the course of the past few years. As a result of his MS, Jim Jr. is no longer able to work and earn an income. He struggles to survive on the monthly Supplemental Security Income (“SSI”) and Medicaid benefits he receives. Carol and Jim would like to help Jim Jr. with his monthly living expenses, but they fear that any money they provide to him will jeopardize his entitlement to the government benefits he’s receiving.
Upon consulting with an attorney experienced in special needs planning, Carol and Jim learned about a certain type of trust called a Supplemental Needs Trust (sometimes referred to as “Special Needs Trust”) which is specifically designed for situations like Jim Jr.’s. With a properly prepared Supplemental Needs Trust in place, they are now able to supplement their son’s government benefits and provide for his special needs (e.g., physical therapy, medications, transportation, etc.) and other life-enhancing items (e.g., education, entertainment, vacations, companionship, furnishings such as a television or computer, etc.) without disqualifying him from his government benefits.
The Trust that was created for Jim. Jr. was just one type of Supplemental Needs Trust known as a “third-party” trust because it is funded with assets other than the disabled person’s (in this case, the parents’ assets). There is also another type of Supplemental Needs Trust known as a “self-settled” trust, termed as such because it is instead funded with the disabled person’s assets (typically funds received from an inheritance or personal injury settlement). While the rules pertaining to these two types of trusts vary somewhat, the important point to keep in mind is that Supplemental Needs Trusts (whether third-party or self-settled) provide an important vehicle by which a disabled person’s special needs can be provided for while, at the same time, preserving his/her access to government benefits.
To learn more about disability and special needs planning, please feel free to contact us at (914) 686-7272.
Guardianship and the Importance of Protecting Incapacitated Loved Ones
Matters hit rock bottom the night a neighbor called to inform Joan that her mother, Grace, was found confused and wandering aimlessly down the street from her home. It was a cold, rainy night and her mother was found dressed in nothing more than her nightgown and slippers. It was at that point Joan realized something more had to be done to protect her mother and deal with her steadily worsening dementia condition.
Up until that point, Grace had been living alone in the same home she had been living for the past 54 years. It was the home she and her husband purchased when they were married, and where they raised their family of five children. Shortly after her husband passed away, Grace’s overall health began to steadily deteriorate. It was around that time her children started noticing that Grace would frequently misplace things around the house. At first, they good- naturedly teased her about her absent-mindedness. But as time went by, their concern grew as they noticed that Grace was becoming confused while performing regular tasks (e.g., preparing a meal, making a phone call, etc.), asking the same questions over and over again, and becoming increasingly irritable and suspicious of everyone around her, including her family.
Initially, in an effort to assist Grace around the house and look after her safety, Joan and her siblings coordinated their schedules to spend more time at the house with their mother. However, even with the sharing of this responsibility, this task proved to be rather overwhelming because of their other life commitments (e.g., jobs, spouses, children, etc.) and Grace’s worsening condition which required more and more attention.
On several occasions, the children tried to hire a home care attendant to care for their mother. However, Grace adamantly refused to allow any “strangers” in the house and, not recognizing her deficiencies, continued to insist that she is perfectly capable of caring for herself. The more the children pressed the issue, the more belligerent Grace would become.
This latest wandering incident combined with several other recent incidents (e.g., leaving the gas stove on, mismanaging her finances, and repeatedly forgetting to pay household bills, etc.) finally convinced the children that something more had to be done on Grace’s behalf. However, without Grace’s cooperation, the children were afraid there wasn’t much they would be able to do.
Upon visiting with an estate planning and elder law attorney, the attorney inquired as to whether Grace had ever executed a Power of Attorney, Health Care Proxy, and Living Will authorizing any of the children to act on Grace’s behalf. However, since it was learned that Grace didn’t have any advance directives, and she no longer has the mental capacity to validly execute such documents, the attorney advised Joan and her siblings about a viable alternative - initiating a guardianship proceeding on Grace’s behalf.
The attorney explained that through the guardianship proceeding, Joan and her siblings could petition the Court to be appointed as Grace’s legal guardian and thereby obtain the authority needed to make decisions regarding Grace’s health care, financial matters, and personal affairs including living arrangements, medical treatment, collecting income, paying bills, managing assets and establishing eligibility for government benefits, should Grace subsequently need to avail herself of such benefits.
With the attorney’s assistance, the children were able to obtain the required legal authority to manage their mother’s affairs and make important life decisions on her behalf. Thereafter, the family was able to place Grace in a nearby Assisted Living Facility geared towards caring for individuals with Dementia, while accessing and utilizing Grace’s monthly income to help pay for the cost of her care.
Today, the family has peace of mind knowing that their mother is safely living in an apartment with assistance and round-the-clock supervision. More importantly, Grace seems to be adjusting well and her spirits are lifted as she is now making new friends and enjoying many of the social activities offered by the Assisted Living Facility; and, most of all, she continues to enjoy the frequent visits of her children and grandchildren, all of who are happy to see their mother/grandmother doing so well.
If you know of a friend or loved one whose well-being is endangered and could benefit from the appointment of a legal guardian, please feel free to contact us at (914) 686-7272 to learn more about guardianships.
Shedding Light on Life Estates
Transferring a home subject to a retained life estate is frequently considered by families engaging in life and estate planning. A retained life estate enables you to transfer your home to your children (or other desired beneficiaries) while retaining the right to occupy and use the property for the remainder of your life. The life estate serves to provide you with a certain level of comfort and control knowing that your legal right to remain in the home is reserved in the deed and that your beneficiaries cannot sell the home without your consent.
Upon your death, the home will automatically pass by operation of law (i.e., without having to go through probate), and your beneficiaries will inherit the home at a “stepped-up basis” thereby enabling them to sell the house with little or no income tax consequences. In addition, as the holder of the life estate, you can continue to benefit from the STAR, Veteran’s, and other tax exemptions.
While there are many benefits to transferring a home subject to a life estate, there are some issues that should be carefully considered prior to utilizing this planning technique. For example, a life estate may not be the best choice if you intend to sell or refinance the property in the near future. In addition, you may not want to transfer assets into your children’s names if they are experiencing marital, creditor, or other legal difficulties.
Before transferring your home, these issues should be fully discussed with an experienced life & estate planning attorney in order to make sure that you avoid any adverse tax, financial and legal consequences. Under the proper circumstances, transferring your home while retaining a life estate can be an effective planning strategy that allows you to preserve your estate while also maintaining a certain level of control over this very important asset.
Do You Know Who Your Beneficiaries Are?
Life insurance policies, annuities, IRAs, and retirement plans are just some types of assets that permit you to designate beneficiaries. Generally, beneficiary designations take precedence over instructions in your Will, which means that the assets will automatically be distributed to your designated beneficiaries upon your death without having to go through the probate process.
While designating account beneficiaries may provide certain advantages, it could end up altering your estate plan. Therefore, you should be careful to coordinate your beneficiary designations with the provisions of your Will (or Trust) so that you do not inadvertently leave more assets to a designated beneficiary (or less assets to your other beneficiaries) than you intended. Also, whenever you experience a major life event such as a marriage, birth, divorce, or death in the family, you should consider how the change may affect your beneficiary designations and overall estate plan.
When utilized properly, beneficiary designations can prove to be a very effective planning strategy. To learn more about the possible advantages and pitfalls of making (or not making) beneficiary designations, please feel free to contact us at (914) 686-7272.