A last will and testament is the most commonly thought of document when it comes to an estate plan. But, really, it’s a very small part of an integrated plan that ensures your family stays out of Court and out of conflict when something happens to you.
Don’t think you can just write your own Will and that will help your family. Instead, consider the reality that trying to do so could actually create far more trouble for them down the road. They need you to get professional support from someone who can help you look at what you own, who you love, what would happen to you, what you own, and everyone you love, if and when something happens to you.
Death is unavoidable. And incapacity may happen before that. Facing these matters head-on leads you (and your loved ones) to having the best life possible. Otherwise, it’s the people you love who get stuck with everything you weren’t willing to take care of now.
Unfortunately, if you go it alone, you may miss important facets of what happens in the event of your incapacity or death. For example, you may think that a Will is sufficient, when what you really need is a trust to keep your family out of Court.
Or, you may think your kids are adequately protected because you have a Will, but you may really need a full Kids Protection Plan® and without it your kids could end up in the care of strangers, even if just temporarily. Before you do anything, get educated and empowered to do what’s right.
The right plan for you begins with knowing what you have. Then, being clear on what is necessary to keep your family out of court and conflict and keep your assets out of the State Department of Unclaimed Property. If you are ready to write your Will, that’s great. And, come see us first.
The biggest mistake you can make is not facing the reality of death, the second biggest mistake is facing it alone. If you need help getting started, consult with a Personal Family Lawyer®. We’ll help you through the process so you can make sure your loved ones are protected and your wishes are honored.
It’s sad but true that many pets end up in shelters after their owner dies or becomes incapacitated. In fact, the Humane Society estimates that between 100,00 to 500,000 pets are placed in shelters each year for exactly this reason, and a large number of these animals are ultimately euthanized.
Whether we like it or not, the law considers pets to be nothing more than personal property just like cars, furniture, and electronic devices. In light of this cold reality, it’s vital that you provide for your pet’s future care through estate planning, so when you die or if you become incapacitated, your beloved friend won’t wind up in a shelter or worse.
The following tips offer helpful advice to ensure your faithful companion receives the best possible care when you’re no longer able to do it yourself.
Identify a new caregiver for your pet
Selecting a trustworthy caregiver is the first—and most important—step in protecting your pet(s) through estate planning. Many people assume their children, relatives, or friends will be suitable guardians, and these folks may even tell you as much in conversation. But the reality is, properly caring for most pets is a major commitment of time, emotion, and finances.
It’s best to come up with a list of potential candidates, and then have a frank talk with each of them, discussing the extent of care your pet requires and whether they have any personal issues (allergies, housing, other pets) that might prevent them from providing the necessary care.
If you don’t know any suitable caregivers, charitable groups, such as the Safe Haven® Surviving Pet Care Program, can provide for your pet in the event of your death or incapacity.
Get it in writing
Once you’ve chosen a guardian—along with one or two alternates in case something happens to your top choice—outline all of your pet’s care requirements, listing its health issues, dietary concerns, medications, etc. These requirements should be indicated within a properly drafted legal document to ensure that your wishes are properly carried out and enforceable.
As your Personal Family Lawyer®, we can help you create a legally binding agreement detailing your pet’s specific needs, which can be easily added to your other estate planning documents.
Provide funding for your pet’s continued care
All pets have basic food, shelter, and medical needs, and these needs can be quite expensive, depending on the animal’s age and health. And if you’re like most pet owners, you probably want your pet to receive more than just the bare necessities, so it’s imperative that you leave enough money to cover all such expenses.
Be sure to not only provide clear, detailed instructions on how your pet should be taken care of in your estate plan, but also include the necessary funding to cover these costs. And be sure you think about all of your pet’s future needs, including any extra services—grooming, boarding, and walking services—when calculating these expenses.
Set up a pet trust
Because pet care can be quite complicated and costly, the best way to ensure your wishes are properly carried out is to set up a pet trust.
While it’s possible to leave care instructions and funding for your pet in a will, a will cannot guarantee the new caregiver will use the funds properly or even that they’ll care for your pet at all. Indeed, a person who’s left your pet in a will can simply drop the animal off at a local shelter and keep the money for themselves.
A pet trust, on the other hand, allows you to lay out detailed rules for exactly how the trust’s funds can be used. To ensure your wishes are accurately carried out, you should name someone other than the caregiver as trustee, so this person can manage the funds and make sure they’re only used as spelled out by the rules you’ve created.
While leaving assets in a pet trust is fairly simple, creating a properly drafted trust that includes all of the necessary terms can be quite complex. Given this, you should work with us as your Personal Family Lawyer®, to be certain that all of the necessary elements are in place to ensure your pet will continue to receive the love and care it deserves if you aren’t around to do it.
While purchasing life insurance may seem pretty straightforward, it’s actually quite complex, especially with so many different types available.
In order to offer some clarity on the different types of policies out there, we’ve broken down the most popular kinds of life insurance here and discussed the pros and cons that come with each one.
Term life insurance
Term life insurance is the simplest—and typically least expensive—type of coverage. Term policies are purchased for a set period of time (the term), and if you die during that time, your beneficiary is paid the death benefit.
Terms can vary widely—10, 15, 25, 30 years or longer—and if it’s a Level Term policy, the premium and death benefit remain the same throughout the duration. If you survive the term and want to retain coverage, you must re-qualify for a policy at your new age and health status.
In addition to Level Term, other variations include “Annual Renewable Term,” in which the death benefit is unchanged throughout the term, but the insurance is renewed annually, often with an increase in premiums. With a “Decreasing Term” policy, the death benefits decrease each year until they reach zero, but the premium remains the same.
Decreasing Term life insurance is often used to cover a mortgage, student loan, or other long-term debt, so the policy expires at the time the mortgage/debt is paid off.
Whole life insurance
Whole life, or permanent, insurance pays a death benefit whenever you die, no matter how long you live. With a whole life policy, both the death benefit and premium stay the same for your entire life span.
However, depending on when you purchase coverage, the premium can vary widely depending on how much the policy’s death benefit is worth. So, for example, purchasing whole life in your senior years can be extremely expensive and possibly not even available at all.
What’s more, your whole life policy premiums will be much higher than your term life insurance premiums because the insurance company knows the policy will pay out when you die, no matter how long you live.
Indeed, the premium for whole life policies can be among the most costly of all types of life insurance coverage, including similar types of “permanent” policies discussed below. This is simply the price paid for the guaranteed death benefit and a level premium.
Universal life insurance
Universal life is a variation on whole life—it covers you for your entire lifespan, but also contains a “cash-value” component. Rather than putting 100% of your premium toward your death benefit, part of your premium is put into a separate cash-value account that earns interest and is tax-deferred.
The insurance company invests the cash-value funds in various investment vehicles of its choice, and provided the market performs well, you can access those extra funds for things like paying the policy’s premiums, paying off debt, or supplementing your later-in-life fixed income. Some insurance companies will even let you take tax-free loans against the policy’s cash value.
That said, the cash-value account is set at an interest rate that can adjust to reflect the market’s current rates, so if the interest rate of the cash value account decreases to the minimum rate, your premium would need to increase to offset the account’s reduced value.
While universal life premiums are typically more costly than term policies, universal life also allows you to adjust the death benefit within certain guidelines. This added flexibility allows you to choose how much of one’s premium funds will go toward the death benefit and how much goes into the cash value, offering you the ability to adjust the death benefit as your financial circumstances change.
Variable universal life insurance
Variable universal life insurance is quite similar to normal universal life except that variable policies allow you to choose how your cash-value funds are invested, rather than the insurance company. This offers you more control over the cash-value investment and potentially higher returns.
However, if the invested cash-value funds perform poorly or the market tanks, your policy could be at risk. Given a major drop in the cash-value account investments, you may have to pay increased premiums just to keep the policy in force. Moreover, the fees and expenses associated with the cash value investments for variable policies may be much higher than you would pay if you simply invested the funds on your own.
Because understanding life insurance can be confusing, it’s best to get the advice of a trusted advisor before you meet with an insurance agent, who might try to talk you into more coverage than you need in order to earn a larger commission. By sitting down with us as your Personal Family Lawyer®, we can work with you and your insurance advisors to offer truly unbiased advice about which policy type is best for your family and life circumstances.
Contact us today, and we’ll walk you step-by-step through the different life insurance options and help you with your other legal, financial, and tax decisions to ensure your family is planned for and protected no matter what happens.
Multi-generational households are becoming the new (or maybe it’s really old) in vogue way to handle the care of aging parents. And we’re all for it so long as you consider the implications and set your family up for success.
With Mom or Dad moving in, you can anticipate some extra expenses, not just financially, but possibly emotionally as well. But it’s hard to know what to expect, and you might face costs you didn’t see coming. Having an elderly parent move in with you is a major life event that requires financial and emotional preparation. Here are some unexpected costs of caring for elderly parents to get you thinking about what lies ahead, if you decide to move mom or dad into your home.
Many people don’t think about the modifications they might need to make to their home to welcome an elderly parent. If your parent is living with you long-term, you will want to make him or her comfortable, which might entail adding a new addition to your home, creating a private living space out of a shared area, making accommodations for single-level living if your parent cannot navigate the stairs, or adding mobility adaptations such as a walk-in bath or chair lifts.
Lost Work Productivity
Moving your elderly parent in, helping him or her get acquainted with the area, and checking out activities can all eat into your work week. Expect further loss of productivity if you have to take your parent to run errands, to medical appointments, or to therapy sessions. You can look into senior transportation services if you are unable to take time off from work, but remember to budget for the extra expense.
In-home care can be a significant expense, but unless you are able to take time away from your busy day, your elderly parent might need it. Long-term care insurance will sometimes cover some or all of the costs, and you might be able to get assistance from certain programs through the VA or other community organizations.
Miscellaneous Household Expenses
The costs of simply having another household member can be unexpectedly high, especially if that member spends most of his or her day at home. You should expect such extra expenses as increased heat and electricity bills, special foods, and personal care products. Remember that elderly parents have special needs, and those needs can be expensive.
ven with insurance, your parent might have steep out of pocket costs for co-pays, prescriptions, mobility aids, supplements, vitamins, and other uninsured medical expenses. For certain conditions, these costs can quickly add up.
As your parent ages, his or her needs will change, too. These changing needs can result in unexpected long-term costs. When your parent’s retirement funds are exhausted or when they face deteriorating health, you might have to consider the staggering costs of long-term care in an assisted living facility or nursing home.
Moving mom or dad into your home could bring up all of the unresolved emotional issues that have not yet been addressed within your family dynamic. This isn’t something to be afraid of, so long as you have the right support. On the contrary, it can be a great opportunity to heal inter-generational wounds that would otherwise get passed on to you and your children and their children.
Caring for an elderly parent can result in unexpected expenses and unexpected benefits, as well. Now that they have become dependent on you, you might also need to consider making changes to your insurance policies or revising your estate plan. If you are ready to take the step of officially becoming caregiver for mom or dad, meet with us for guidance.
Since estate planning involves thinking about death, many people put it off until their senior years or simply ignore it all together until it becomes too late. This kind of unwillingness to face reality can create major hardship, expense, and mess for the loved ones and assets you leave behind.
While not having any estate plan is the biggest blunder you can make, even those who do create a plan can run into trouble if they don’t understand exactly how estate plans function.
Here are some of the most common mistakes people make with estate planning:
Not creating a will
While wills aren’t the ultimate estate planning tool, they’re one of the bare minimum requirements. A will lets you designate who’ll receive your property upon your death, and it also allows you to name specific guardians for your minor children. Without a will, your property will be distributed based on your state’s intestate laws (which are probably not in alignment with your wishes), and a judge will choose a guardian for your children under 18. Oh, and then your kids will get whatever you own outright, with no guidance, direction, or intention, as long as they’re over 18.
Not updating beneficiary designations
Oftentimes, people forget to change their beneficiary designations to match their estate planning desires. Check with your life insurance company and retirement-account holders to find out who would receive those assets in the event of your death.
If you have a trust, you’ll likely want the trust to the beneficiary. This does not happen automatically upon creating a trust. You actually have to make the change. See the section below for more on funding your trust.
And you never want to name a minor as a beneficiary of your life insurance or retirement accounts, even as the secondary beneficiary. If they were to inherit these assets, the assets become subject to the control of the court until he or she turns 18.
Not funding your trust
Many people assume that simply listing assets in a trust is enough to ensure they’ll be distributed properly. But this isn’t true. Some assets—real estate, bank accounts, securities, brokerage accounts—must be “funded” to the trust in order for them to be actually transferred without having to go through court. Funding involves changing the name on the title of the property or account to list the trust as the owner.
Unfortunately, most lawyers have been trained to create a trust, but not make sure assets are actually transferred into the trust. Crazy, right?!? But we see it all the time. And of course, when you acquire new assets after your trust is created, you must make sure those assets are also titled into your trust. However, most lawyers are not trained to make sure this happens either.
Part of being a Personal Family Lawyer® law firm means we make sure your assets are inventoried, titled properly, and the inventory is maintained throughout your lifetime, so your assets aren’t lost and do not get stuck in court upon your incapacity or death.
Not reviewing documents
Estate plans are not a “one-and-done” deal. As time passes, your life circumstances change, the laws change, and your assets change. Given this, you must update your plan to reflect these changes—that is, if you want it to actually work for your loved ones, keeping them out of court and out of conflict.
We recommend reviewing your plan annually to make sure its terms are up to date. And be sure to immediately update your estate plan following major life events like divorce, births, deaths, and inheritances. We’ve got built-in processes to make sure this happens—ask us about them.
Moreover, an annual life review can be a beautiful ritual that puts you at ease knowing you’ve got everything handled and updated each year.
Not leaving an inventory of assets
Even if you’ve properly “funded” your assets into your trust, your estate plan won’t be worth much if heirs can’t find your assets. Indeed, there’s more than $58 billion dollars worth of lost assets in the U.S. coffers right now. Can you believe that? And it happens because someone dies or becomes incapacitated but their assets cannot be found.
That’s why we create a detailed inventory of assets, indicating exactly where to find each asset, such as your cemetery plot deed, bank and credit statements, mortgages, securities documents, and safe deposit box/keys. And don’t forget digital assets like social media accounts and cryptocurrency, along with their passwords and security keys. We cover all of this in our plans.
Beyond these common errors, there are many additional pitfalls that can impact your estate planning. As your Personal Family Lawyer®, we’ll guide you through the process, helping you to not only avoid mistakes but also implement strategies to ensure your true Family Wealth and legacy will continue to grow long after you’re gone.