Johnson County Estate Planning

What Happens when Mom Refuses to Create an Estate Plan?

“If there's a family member or a friend in your life who refuses to do their will and get their estate in order, here are some tips to finally get them to take action.”

This is a tough scenario. It happens more often than you’d think. Someone owns a home, investment accounts and an inheritance, but doesn’t want to have an estate plan. They know they need to do something, but keep putting it off—until they die, and the family is left with an expensive and stressful mess. A recent article titled “How to Get a Loved One to Visit an Estate Planning Attorney Before It’s Too Late” from Kiplinger, explains how to help make things right.

Most people put off seeing an estate planning attorney, because they are afraid of death. They may also be overwhelmed by the thought of how much work is involved. They are also worried about what it all might cost. owever, if there is no estate plan, the costs will be far higher for the family.

How do you get the person to understand that they need to move forward?

Talk with the financial professionals the person already uses and trusts, like a CPA or financial advisor. Ask them for a referral to an estate planning attorney they think would be a good fit with the person who doesn’t have an estate plan. It may be easier to hear this message from a CPA, than from an adult child.

Work with that professional to promote the person, usually an older family member, to get comfortable with the idea to talk about their wishes and values with the estate planning attorney. Offer to attend the meeting, or to facilitate the video conference, to make the person feel more comfortable.

An experienced estate planning attorney will have worked with reluctant people before. They’ll know how to put the older person at ease and explore their concerns. When the conversation is pleasant and productive, the person may understand that the process will not be as challenging and that there will be a lot of help along the way.

If there is no trusted team of professionals, then offer to be a part of any conversations with the estate planning attorney to make the introductory discussion easier. Share your own experience in estate planning, and tread lightly.

Trying to force a person to engage in estate planning with a heavy hand, almost always ends up in a stubborn refusal. A gentle approach will always be more successful. Explain how part of the estate plan includes planning for medical decisions while the person is living and is not just about distributing their assets. You should be firm, consistent and kind.

Explaining what their family members will need to go through if there is no will, may or may not have an impact. Some people don’t care, and may simply shrug and say, “It’ll be their problem, not mine.” Consider what or who matters to the person. What if they could leave assets for a favorite grandchild to go to college? That might be more motivating.

One other thing to consider: if the person has an estate plan and it is out of date, that may be just as bad as not having an estate plan at all, especially when the person has been divorced and remarried. Just as many people refuse to have an estate plan, many people fail to update important documents, when they remarry. More than a few spouses come to estate planning attorney’s offices, when a loved one’s life insurance policy is going to their prior spouse. It’s too late to make any changes. A health care directive could also name a former brother-in-law to make important medical decisions. During a time of great duress, it is a bad time to learn that the formerly close in-law, who is now a sworn enemy, is the only one who can speak with doctors. Don’t procrastinate, if any of these issues are present.

Reference: Kiplinger (May 11, 2020) “How to Get a Loved One to Visit an Estate Planning Attorney Before It’s Too Late”

Estate Planning Basics for Difficult Times

“With all these anxieties and unknowns weighing on your mind, it might feel like there’s suddenly a pressing need to get your affairs in order―just in case.”

Most people who contract COVID-19 experience mild symptoms, but it does not hurt to be prepared just in case you need to be hospitalized, explains the article “A Guide to Estate Planning During the Coronavirus Pandemic” from HuffPost.com. It is scary to think about being so sick that you aren’t able to make decisions for yourself. However, that’s the point of an estate plan: to ease your fears. You’ll feel better knowing you’ve made health and financial decisions in advance and your loved ones won’t have to guess about your wishes.

Even without a global pandemic, everyone should have an estate plan. If you don’t have one, now is the time to get it done, even if you are single and have limited wealth. An estate plan includes documents like a revocable trust, financial powers of attorney (FPOA), health care powers of attorney (HCPOA) and more.

Right now, the medical and financial powers of attorney are on everyone’s mind. These two documents allow a person you name to do your banking, pay your bills and make medical decisions, if you are quarantined at home, admitted to the hospital, or become incapacitated. If you don’t have a financial power of attorney, a family member will need to request the probate court to appoint a guardian. This will be expensive and time-consuming. The same goes for the health care power of attorney. If a decision needs to be made in an emergency situation, the family will not have the ability to enforce your wishes.

A living will, known in some states as an advance health care directive, lets you be specific about what end-of-life treatment you do or do not want to receive, if you become terminally ill or permanently unconscious. Without a living will, the decision to remove life support must be made by loved ones, without knowing what you want.

A HIPAA waiver permits your loved ones to access medical information. Even when there is a health care power of attorney, there are some institutions that will refuse access to medical information without a standalone HIPAA waiver.

The last will and testament is the legal document that is used to direct distribution of property at the time of death, appoint an executor who will oversee the distribution of assets, and, if you have minor children, name a guardian for them. Without a last will, the court will rely on state laws to determine who inherits your property and who will raise your children.

A living trust is a legal contract that creates an entity to hold your assets. If it is a revocable trust, you control it and you can make changes to it anytime you wish. If you become incapacitated or unable to manage your estate, the living trust avoids the need for a court-appointed conservatorship. When you create the living trust, you appoint a successor trustee who will step in when you are unable to manage your affairs. The living trust creates privacy, since the assets in the trust do not go through probate, which is a public process.

Once you have an estate plan, make sure that the documents are safe and the right people can access them. Some estate planning attorneys store documents for their clients. Copies of relevant documents should be given to your treating physician, financial advisor, family members and any trustees or agents. Keep high quality scanned copies on your computer, and label them, so that they can be identified. Don’t name them “Scan1” and “Scan2.” Label them accurately and include the date the documents were signed.

Speak with your estate planning attorney to ensure that you have all of the necessary documents to protect yourself, your loved ones and your property.

Reference: HuffPost.com (April 7, 2020) “A Guide to Estate Planning During the Coronavirus Pandemic”

Top 10 Reasons to Get Going on an Estate Plan

“It took my husband Mike's heart attack to force us to recognize the need for having an estate plan. It was not smart. You are smarter than that. Create an estate plan today.”

The time to have an estate plan really begins the moment you have assets that need to be distributed, but most people put off this important task. There are more than ten good reasons to talk with an estate planning attorney and get your estate plan in order, says the article “Top ten reasons to create an estate plan today” from OakPark.com, but these ten should be compelling enough to get you started.

10-It’s better to start with a plan than with an emergency. A sudden health crisis, whether a global pandemic or a spouse’s heart attack, should not be the reason for you to get going on your estate plan. Get an estate plan done, before you or a loved one needs it.

9-Don’t hope for the best for your minor children. A will is used to name guardians for minor children and to name a financial guardian who will oversee assets left for them. Without a will, the court will make that decision. The person selected by the judge may not be the person you’d want.

8-Equal is not always fair. If you paid for your oldest child’s college education, and your youngest is still in middle school, how will an equal division of your assets be fair to the child who has yet to go to college? A will and estate plan lets you map out how assets can be distributed equally, taking a variety of factors into consideration.

7-Inheritance begins at age 18, ready or not. With no will, children 18 and over will inherit assets all at once, no questions asked. If you have a son who likes expensive cars, there won’t be anything stopping him from spending his entire inheritance on a Ferrari.

6-Estate planning is an act of love. Couples strengthen their relationship, when they create an estate plan. It’s a love letter to your spouse and your family that demonstrates a tangible desire to protect them.

5-Build personal connections. Asking someone to be there for you and your family when you are the most vulnerable—incapacitated or deceased—is a strong statement of trust. Creating an estate plan cements relationships and sends a clear message that you believe in others to care for your loved ones.

4-Make parenting your college-age children easier. In the eyes of health care privacy laws, your children are strangers to you, once they reach the age of majority in your state (i.e., usually age 18). With young adult health care powers of attorney and HIPAA (Health Insurance Portability and Accountability Act) privacy waivers in place now, you can be informed and involved in case of an emergency later.

3-The state wants you to have an estate plan. One of the results of the coronavirus pandemic is that many states have made it lawful to have estate plans witnessed and notarized by video conference. You don’t have to leave the house to create or update your estate plan. There are no excuses now!

2-Your mortality is basically 100%. People procrastinate having their estate plans done because who wants to think about death and dying? However, whether or not you procrastinate doesn’t matter. We will all die one day, and an estate plan will make it better for those we leave behind.

1-There is a good chance that you have more time on your hands now, than before the coronavirus pandemic. Call an estate planning lawyer, and get it done. There’s no time like the present.

Reference: OakPark.com (April 15, 2020) “Top ten reasons to create an estate plan today”

Estate Planning Is For Everyone

“The most common misconception estate planning attorneys hear, is that someone doesn’t need an estate plan because their client isn’t elderly or on death’s door.”

Estate planning is something anyone who is 18 years old or older needs to think about, advises the article “Estate planning for every stage of life” from the Independent Record. Estate planning includes much more than a person’s last will and testament. It protects you from incapacity, provides the legal right to allow others to talk to your doctors if you can’t and takes care of your minor children, if an unexpected tragedy occurs. Let’s look at all the ages and stages where estate planning is needed.

Parents of young adults should discuss estate planning with their children. While parents devote decades to helping their children become independent adults, sometimes life doesn’t go the way you expect. A college freshman is more concerned with acing a class, joining a club and the most recent trend on social media. However, a parent needs to think about what happens when the child is over 18 and has a medical emergency. Parents have no legal rights to medical information, medical decision making or finances, once a child becomes a legal adult. Hospitals may not release private information and doctors can’t talk with parents, even in an extreme situation. Young adults need to have a HIPAA release, a durable power of medical attorney and a power of attorney for their finances created.

New parents also need estate planning. While it may be hard to consider while adjusting to having a new baby in the house, what would happen to that baby if something unexpected were to affect both parents? The estate planning attorney will create a last will and testament, which is used to name a guardian for any minor children, in case both parents pass. This also includes decisions that need to be made about the child’s education, medical treatment and even their social life. You’ll need to name someone to be the child’s guardian, and to be sure that they will raise your child the same way that you would.

An estate plan includes naming a conservator, who is a person with control over a minor child’s finances. You’ll want to name a responsible person who is trustworthy and good with handling money. It is possible to name the same person as guardian and conservator. However, it may be wise to separate the responsibilities.

An estate plan also ensures that your children receive their inheritance, when you think they will be responsible enough to handle it. If a minor child’s parents die and there is no estate plan, the parent’s assets will be held by the court for the benefit of the child. Once the child turns 18, he or she will receive the entire amount in one lump sum. Few who are 18-years old are able to manage large sums of money. Estate planning helps you control how the money is distributed. This is also something to consider, when your children are the beneficiaries of any life insurance policies. An estate planning attorney can help you set up trusts, so the monies are distributed at the right time.

When people enter their ‘golden’ years—that is, they are almost retired—it is the time for estate plans to be reviewed. You may wish to name your children as power of attorney and medical power of attorney, rather than a sibling. It’s best to have people who will be younger than you for these roles as you age. This may also be the time to change how your wealth is distributed. Are your children old enough to be responsible with an inheritance? Do you want to create a legacy plan that includes charitable giving?

Lastly, update your estate plan any time there are changes in the family structure. Divorce, death, marriage or individuals with special needs all require a different approach to the basic estate plan. It’s a good idea to revisit an estate plan anytime there have been major changes in your relationships, to the law, or changes to your financial status.

Reference: Independent Record (March 1, 2020) “Estate planning for every stage of life”

Your Estate Plan is a “Dynamic Document”

“Failing to ensure that your asset titling and beneficiary designations are coordinated with your estate plan, can lead to unintended costs, taxes and outcomes.”

One of the most common mistakes people make about their estate planning is neglecting to coordinate all of the moving parts, reports the Dayton Business Journal’s article “Baird expert gives estate planning advice.” The second most common mistake is not thinking of your estate plan as a dynamic document. Many people believe that once their estate plan is done, it’s done forever. That creates a lot of problems for the families and their heirs.

In the last few years, we have seen three major federal tax law changes, including an increase in the federal estate tax exemption amount from $3,500,000 to an enormous $11,580,000. The estate tax exemption is also now portable. Most recently, the SECURE Act has changed how IRAs are distributed to heirs. All of these changes require a fresh look at estate plans. The same holds true for changes within families: births, deaths, marriages and divorces all call for a review of estate plans.

For younger adults in their 20s, an estate plan includes a last will and testament, financial power of attorney, healthcare power of attorney and a HIPAA authorization form. People in their 40s need a deeper dive into an estate plan, with discussions on planning for minor children, preparing to leave assets for children in trusts, ensuring that the family has the correct amount of life insurance in place, and planning for unexpected incapacitation. This is also the time when people have to start planning for their parents, with discussions about challenging topics, like their wishes for end-of-life care and long-term care insurance.

In their 60s, the estate plan needs to reflect the goals of the couple, and expectations of what you both want to happen on your passing. Do you want to create a legacy of giving, and what tools will be best to accomplish this: a charitable remainder trust, or other estate planning tools? Ensuring that your assets are properly titled, that beneficiaries are properly named on assets like life insurance, investment accounts, etc., becomes more important as we age.

This is also the time to plan for how your assets will be passed to your children. Are your children prepared to manage an inheritance, or would they be better off having their inheritance be given to them over the course of several years via a trust? If that is the case, who should be the trustee?

Some additional pointers:

• Revise your estate plan every three or five years with your estate planning attorney.
• Evaluate solutions to provide tax advantages to your estate.
• Review asset titling and beneficiary designations.
• Make sure your charitable giving is done in a tax efficient way.
• Plan for the potential tax challenges that may impact your estate

Regardless of your age and state, your estate planning attorney will be able to guide you through the process of creating and then reviewing your estate plan.

Reference: Dayton Business Journal (February 4, 2020) “Baird expert gives estate planning advice”

Special Needs Planning is a Lifelong Event

“Linda Smyth has spent more than 20 years fighting her way through a complicated maze of paperwork, assessments and denials in the attempt to secure services for her son, who is on the autism spectrum.”

Working to get her son assessed to qualify for support programs, fighting to get benefits and finding therapists became a full-time job, and one that led to enormous costs, even with the family’s having good health insurance. In a recent article “Their Child Has Special Needs. Here’s How They’re Planning for a Lifetime of Assistance” Barron’s explores the life-long journey of caring for a special needs family member.

Smyth’s biggest worry is the same as other parents in her situation: what will happen to her now 23-year old son, when she and her husband are no longer around to support him?

For families with a special needs child, the focus is on the health of the child, but the financial and legal planning to care for someone whose life will likely extend beyond the traditional financial life of the parents is critical.

The estimates of costs are overwhelming. The lifetime cost for a person with autism averages from $1.4 million to $2.4 million, depending on whether the person has an intellectual disability, according to Autism Speaks, an advocacy group. Residential or 24/7 care can easily cost $100,000 a year.

The medical assessment is often the first step to getting benefits, through Medicaid and developmental disability and autism programs. How much and which programs may be covered, depends upon the state. Where you live matters. For parents who are thinking about where to retire, moving to a condo in Florida might be great for lowered costs and taxes, but it could mean a special needs child loses important benefits.

Beneficiary designations must be planned carefully, since a special needs individual may not own more than $2,000 in assets. An inheritance or even a job could disqualify them from accessing programs. One way to avoid this is to open an ABLE account. It’s a state-run savings account that can be funded by the special needs individual or family members with after-tax money up to $15,000 a year, and can be used for housing, education, transportation, and other services. The account’s assets are not included in the benefits calculation as long as the total balance is under $100,000.

Another option is a special needs trust, which can shelter assets. Grandparents who want to leave money to special needs children leave it in a special needs trust. The same holds for life insurance policies that pay out on the death of the parents for the special needs child. Just be careful about over-funding the trust too early, as money that goes in cannot be withdrawn for other purposes. The beneficiary of the trust after the special needs child dies, does not get a step-up in basis for taxes.

Talk with an elder lawyer about planning for the special needs child. You’ll also need to have a health care proxy, a power of attorney, a HIPAA release form and a last will and testament. The estate planning elder law attorney with experience helping special needs families may also know of important resources in your community, which can be invaluable to the qualify of life for you and your child.

Reference: Barron’s (November 29, 2019) “Their Child Has Special Needs. Here’s How They’re Planning for a Lifetime of Assistance”

A Good Estate Plan Equals Peace of Mind and Peace in the Family

“More than likely, most people may not want to envision a time spent in court, arguing with siblings and other family members, or fighting with financial institutions and health providers to uphold end-of-life wishes and the management of personal assets.

The problems aren’t always evident when the first parent passes. Often, it’s when the second parent becomes gravely ill, that lapses in estate planning become evident. For one family, everyone thought estate plans were all in place after their father died. When their mother suffered a stroke, the adult children learned that they had no access to her financial accounts or her health care directives. No one had thought to update the estate plan.

However, when one parent passes, the family needs to take action. That’s the lesson from the article “Avoid heartache and anxiety with estate planning” from Post Independent. In this case, the family never thought to modify or add anyone’s name to the financial accounts, power of attorney documents, medical power of attorney documents, or HIPAA consent forms. What often happens in these cases, is that family members start bickering about who was supposed to do what.

For those who have not taken the time to learn about estate planning, planning for end-of-life legal, financial and medical matters, the quarrels may be inevitable.

Estate planning is not just for wealthy families. If your aging loved one own property, stocks, bonds or any other assets, they need to have a will, advance directives, powers of attorney and possibly some trusts. Take the time to understand these documents now, before an urgent crisis occurs.

There are few formal courses that teach people about these matters, unless they go to law school. Nearly half of Americans age 55 and over don’t have a will, according to an article appearing in Forbes. Fewer than 20% of these people have health care directives and the proper types of powers of attorney in place.

When it comes to preparing for these matters, the laws are very specific about who can participate in health care and financial conversations and decisions.

Here are some of the documents needed for an estate plan:

• Last Will and Testament
• General, Limited and/or Durable Power of Attorney
• Health Care Power of Attorney
• Living Will
• Advance Care Directive
• HIPAA Consent Form

Preplanning will greatly assist family members and loved ones, so they know what medical and financial efforts you or your parents would want. Having the documents in order will also provide the family with the legal means of carrying out these wishes.

The legal documents won’t solve all problems. Your brother-in-law will still be a pain in the neck and your oldest sister may still make unrealistic demands. However, having these documents in place, will make the best of a bad situation.

Speak with an estate planning attorney to ensure that your estate plan, or your parent’s estate plan, is properly prepared. If someone has moved to another state, their estate plan needs to be updated to align with their new state’s laws.

Reference: Post Independent (November 3, 2019) “Avoid heartache and anxiety with estate planning”

What are the Legal Steps when a Spouse Passes Away?

Protection for you and your heirs is important.

When a spouse passes away, it is likely to be difficult to concentrate. However, it is important to focus on the needs of the surviving spouse, according to The Legal Intelligencer’s article “Estate Planning for Surviving Spouses: What to Do ASAP.”

The first thing that needs to happen is to make sure that the surviving spouse is protected for his or her lifetime. The surviving spouse needs to have his or her will and any estate planning documents reviewed. Some documents are intended for the benefit of the surviving spouse during his or her lifetime, while others are concerned more with the treatment of heirs.

One couple changed the beneficiaries on their retirement plans to name each other and opened joint checking and savings accounts and a brokerage accounts when they married. Since he had two children from a prior marriage, they were left as the beneficiaries on his insurance policies. Over the course of time, their original plan no longer worked. They knew they needed new trusts and healthcare proxies. When the husband became seriously ill, they knew it was time to act.

Here’s what they had to do, and what the surviving spouse needs to do:

Durable Powers of Attorney authorizes a named individual to act on your behalf for financial matters during your lifetime. Most spouses will name each other, so that one spouse can sign for and make decisions on behalf of the other. Have this in place before anything happens; when something happens, it is too late.

When a spouse dies, the surviving spouse must act quickly to name someone else to replace the decedent. The spouse must decide whether they want the person to act as power of attorney at any time, or only if/when the surviving spouse becomes incapacitated. If there is no power of attorney and the spouse becomes incapacitated, it will take a court order to appoint someone to have this power.

Health care proxies are used to make medical decisions, if the person is not able to communicate their wishes. If the decedent was named as the health care agent, then the person named as the alternate agent will become the healthcare agent.

The surviving spouse needs to look at these papers, see who the alternate agent is and see if they still want to have that person in the role.

Health care proxies are often given to physicians or hospitals, so if you want to make a change, make sure that a copy of your health care proxy is given to anyone who might have the old health care proxy on file.

Strict rules today require that anyone who wants access to your health care information needs to have a HIPAA release form signed by you. It is useful when you are still able to communicate with doctors but want to have someone you trust able to speak with your doctors and have access to your medical information.

Wills and trusts need to be reviewed when a spouse has passed. Is the estate plan still the right fit? Are there children or stepchildren who are having financial issues or a divorce that would make an inheritance a problem? The surviving spouse may want to direct that property be distributed in a different matter. A trust where the surviving spouse is a trustee would be better, for example, if a child has an opioid addition.

Beneficiary designations need to be reviewed for life insurance, retirement accounts, brokerage and bank accounts. They may be in the surviving spouse’s name or are accounts that the spouse inherited from the decedent. If the spouse inherits retirement funds, retirement beneficiary forms need to be reviewed, because the alternate beneficiary on the decedent’s form is no longer applicable.

Your estate planning attorney can guide you through the process of making sure the basic needs of the widowed person are handled.

Reference: The Legal Intelligencer (Sep. 18, 2018) “Estate Planning for Surviving Spouses: What to Do ASAP.”

Going Off to College? Documents are Helpful

There are tools in an estate plan that a college student may need and are also beneficial to you.

If your child is heading off to college you have prepared them already with background education and the ability to live away from home. However, are they prepared with the documents that an adult needs? They should be, according to the Monterey Herald in “Liza Horvath, Senior Advocate: Off to College.”

When college students go to off to a world of dorm living, classes and increased independence, many are on their own for the first time. If they are 18 or older, they are legally considered adults. If they become sick or injured while away, the rules of HIPAA, the Health Insurance Portability and Accountability Act, prohibit anyone from speaking with a doctor, gaining access to medical records or being informed of their status–even their own parents!

If your college admissions package did not include an Advance Health Care Directive and a HIPAA release form giving you permission to speak on behalf of your student, speak to doctors and to be part of any medical decisions. Your estate planning attorney will be able to draft those documents for you.

Make sure that your college-bound student also has a list of who they should contact in an emergency, including cell, home and work numbers and email addresses. This list should include their primary treating physician and a history of their immunizations, chronic conditions, medications and  other relevant medical issues.

This information can be stored in the cloud or on their phones.  However, if the phone is stolen or lost, so is a lot of sensitive data. Write it down on an old-fashioned piece of paper and keep a hard copy at home and one on your own computer, so it can be easily sent if necessary.

You should also consider having a power of attorney for finances and a directive to the college, so information on your student can be released to you. This will allow you to see the academic records and act on your child’s behalf on any legal matters.

If you have adult children, even those who graduated long ago, you may also to wish to have some of these documents prepared.  

Resource: Monterey Herald (July 28, 2018) “Liza Horvath, Senior Advocate: Off to College”

Prepare Legal Documents as College Approaches

Your child is getting ready to leave the nest and head off to college. Now would be a good time to make sure proper legal documents are ready, before the student departs.

There are several standard preparations required, as your child gets ready to head off to college life. In addition to the usual preparations, it would also be wise to have certain legal documents prepared before they go, according to getintocollege.com in “Legal Documents Your Child Needs to Sign Before Heading to College.”

Once your child turns 18, your access to their medical records ends unless they complete a form called a HIPAA Authorization. Your child must sign the form to give you access to their records, appointments, test results, etc. If your child is going to a school out of state, you may need a state-specific form. Keep these documents in a safe place, where you can access them quickly, in case of an emergency.

Chances are your student is heading off to college with a debit card and a credit card.  However, do you have access to those accounts? Talk with your estate planning attorney about creating a Financial Power of Attorney form, so you don’t run into any roadblocks, if your child needs help handling their finances. Opening a bank account or having a credit card attached to your account makes it easier for you to transfer money to your student. It also makes it easier for you to keep a watchful eye on their spending. Make a copy of the front and back of all cards so you can easily report them if lost or stolen.

Colleges have a form known as FERPA (Family Educational Rights and Privacy Act), which you usually can obtain at some point during orientation. This is a document that gives you the legal right to your child’s academic and financial information through the college. Think of this as the college’s HIPAA law. It’s not the same, but it can create the same level of obstruction, if you do not address it in advance. With it in place, you’ll be able to discuss their finances with the bursar’s office, their grades with their academic advisor and many other offices in the college that will otherwise refuse to speak with you.

An estate planning attorney can advise you in preparing the proper legal documents.

Reference: getintocollege.com (March 29, 2018) “Legal Documents Your Child Needs to Sign Before Heading to College.”