You Can Protect Pets after You’re Gone

Many of us consider our pets members of the family, but the law does not. In Arizona, pets are considered property, reports the East Valley Tribune in the article “Trusts can help provide for a pet’s future.” That means you can’t leave them your house, or open a bank account in their name.

However, you can take measures to protect your pets from what could happen to them after you pass away.

The simple thing to do is to make arrangements with a trusted family member or friend to take care of your pet and leave some money for their care. The problem is, there’s no way to enforce this, and it’s all based on trust. What happens if something unexpected happens to your trusted family member or friend, and they can’t care for your pet?

You’ve also given them funds that they are not legally required to spend on your pet.

Another choice is to leave your pet to a no-kill animal shelter. However, shelters, even no-kill shelters, can be stressful for animals who are used to a family home. There’s also no way to know when your pet will be adopted, since most people come to shelters to adopt puppies and kittens. There is also the issue of the shelter. Will it continue to operate after you are gone?

The best way that many people care for their pets, is by having a pet trust created. An estate planning attorney in your state will know if your state is among the many that allow a pet trust to be created to benefit your pet.

Start by naming a guardian for your pets, including instructions on whether your pets should be kept together. If you are not sure about a guardian, name additional guardians, in case one does not wish to serve. Then determine how much money you need to leave for the pet’s care. This will depend upon the animal’s age, health and life expectancy. There will need to be adequate funding for any medical issues. The trust can specify whether you want your pet to undergo expensive surgeries or whether they should be kept comfortable at any cost.

You’ll want to make sure to name a guardian who you are confident will care for your pet or pets in the same manner as you would.

A pet trust will require you to name a trustee, who will be in charge of disbursing the funds as they are needed and can also check on the pet to be sure they are well, and your instructions are being followed. The money in the trust must only be used by person for the care of the pets.

A pet trust will give you the peace of mind of knowing that your beloved companion animals are being cared for, even when you are not here to care for them. Speak with an estate planning attorney to learn how to make a pet trust part of your overall estate plan.

Reference: East Valley Tribune (Oct. 14, 2019) “Trusts can help provide for a pet’s future”

How Do I Change My Will?

Many parents have wills that were drafted years ago. Now they want to leave some specific items to people. Those are items not specifically mentioned in the will.

How can he change his will? Can he just write this list and sign it in front of a notary, or does he need to have his will changed?

If you’re the executor and don’t want your father to have to spend more money to add these items to the will, how is it done?

Dad can keep it simple, says nj.com’s recent article, “Does my dad need to pay money to get a new will?” However, doing so will likely cause more trouble for the executor.

The father can create a written list that disposes of tangible personal property, not otherwise identified and disposed of by the will.

The list must either be in the testator’s handwriting or be signed by the testator. This list also must describe the item and the recipient clearly. This list can be created before or after the will is signed.

This list can be amended or revoked. It should be kept with the will or given to the executor, so he or she knows about it and can ensure it is followed.

This list isn’t legally enforceable. The executor may elect to honor such a distribution, assuming the beneficiaries of the other tangible personal property and/or residuary estate agree. That’s so, even if the will doesn’t reference the written list but the testator nevertheless leaves the list.

However, it would not be in the interest of the executor and may be perceived as a breach of fiduciary duty to honor such a list and make such a distribution, if the beneficiaries named in the will object. No one wants to cause a fight over the items on the list, after the parent is gone.

As a result, it would be wiser to invest in having the items added to a revised will to protect the father’s wishes. If some of the beneficiaries got into a quarrel over the items on the list, it could result in a family fight that a properly drafted and executed revision or amendment could prevent.

If you would like assistance or have questions about changing you will click here to sign up for a consultation.

Reference: nj.com (October 14, 2019) “Does my dad need to pay money to get a new will?”

It’s Like Going to the Dentist: You Need to Get Your Estate Plan Ready

This is one of those things that you know you should do, but you keep finding reasons not to. After all, says the article Estate planning: How to quit stalling and write your willfrom The Orange County Register, none of us likes to think about dying or what might occur that would require someone else to raise our children.

What do you need to get motivated and stop procrastinating?

Remember who you are creating a will for. Think of it as a love letter to those you leave behind. You want to provide specific instructions for the people you love about what you want to happen to your minor children, beloved pets and possessions. You are saving them the worries of trying to guess what you would have wanted, and the cost of having to pay attorneys to clean up a mess after you have died.

Legal visualization. Think about what will happen in the absence of a will. Without an estate plan, a court will decide who will raise your children. State law determines who inherits your possessions, and maybe the laws won’t follow your wishes. Every estate planning attorney has stories of people who die without planning. A spendthrift heir can easily spend a lifetime’s work in less than two years. A trust can be used to control how and when money is distributed.

Simple works. Don’t let the term “estate plan” throw you. A basic estate plan is not as complicated or as expensive as you might think. An experienced estate planning attorney will guide you through the process. You should also think about the short-term: what do you want to happen, if you die sometime in the next five years? You can always update the plan, if things change.

Give yourself a realistic timeline. Setting specific dates for tasks to be done and breaking the project out into smaller parts, can make this easier to address. Start by getting an appointment with an attorney on your calendar. Then, set a date to have a conversation with your family members about guardians, charities and other intentions for your legacy. That might take place around Thanksgiving, when families have extended time together. By December 1, clarify and confirm your documents, and get them signed before the holidays. You should also make sure to retitle any assets that are being moved into trusts.

If you were to start today, you could be done by New Year’s Day, 2020. Wouldn’t that feel great?

Reference: The Orange County Register (October 1, 2019) Estate planning: How to quit stalling and write your will

How Can I Make Amendments to an Estate Plan?

If you want to make changes to your estate plan, don’t think you can just scratch out a line or two and add your initials. For most people, it’s not that simple, says the Lake County Record-Bee’s recent article “Amending estate planning documents.” If documents are not amended correctly, the resulting disappointment and costs can add up quickly.

If you live in California, for example, a trust can be amended using the method that is stated in the trust, or alternatively by using a document—but not the will—that is signed both by the settlor or the other person holding the power to revoke the trust and then delivered to the trustee. If the trust states that this method is not acceptable, then it cannot be used.

In a recent case, the deceased settlor made handwritten notes—he crossed out existing trust language and handwrote his revisions to a recently executive amendment to his trust. Then he mailed this document, along with a signed post-it note stuck on the top of the document, to his attorney, requesting that his attorney draft an amendment.

Unfortunately, he died before the new revision could be signed. His close friend, the one he wanted to be the beneficiary of the change, argued that his handwritten comments, known as “interlineations,” were as effective as if his attorney had actually completed the revision and the document had been signed properly. He further argued that the post-it note that had a signature on it, satisfied the requirement for a signature.

The court did not agree, not surprisingly. A trust document may not be changed, just by scribbling out a few lines and adding a few new lines without a signature. A post-it note signature is also not a legal document.

Had he signed and dated an attachment affirming each of his specific changes made to the trust, that might have been considered a legally binding amendment to his trust.

A better option would be going to the attorney’s office and having the documents prepared and executed.

What about changes to a will? Changing a will is done either through executing a codicil or creating and executing a new will that revokes the old will. A codicil is executed just the same way as a will: it is signed by the testator with at least two witnesses, although this varies from state to state. Your estate planning attorney will make sure that the law of your state is taken into consideration, when preparing your estate plan.

If you live in a state where handwritten or holographic wills are accepted, no witnesses are required and changes to the will can be made by the testator directly onto the original without a new signature or date. Be careful about a will like this. Even if legal, it can lead to estate challenges and family battles.

Speak with an experienced estate planning attorney, if you decide that your will needs to be changed. Having the documents properly executed in a timely manner ensures that your wishes will be followed.

Reference: Lake County Record-Bee (October 5, 2019) “Amending estate planning documents.”

How to Manage the Cost of Long Term Care

A single woman has seen her annual premiums for long-term care rise by more than 60% over the last six years. Her cost in 2018 was $2,721, up from $1,626 in 2013. She’s keeping her policy, reports CNBC in the article “Long-term care insurance costs are way up. How advisors can help clients cope”

For her, the price she is paying is worth the cost. However, these types of increases can take older individuals off guard, especially if they are living on a fixed income.

Last year, Genworth Financial received 120 approvals by state regulators to increase premiums on their long-term care insurance business. The weighted average rate increase was 45%. General Electric said earlier this year that it expects to raise premiums on its LTC policies by $1.7 billion in the next ten years. Insurers hold between $160 to $180 billion in LTC reserves, covering 6 to 7 million people, according to estimates from Fitch Ratings.

Elder care has also become increasingly expensive. The annual national median cost of a private room in a nursing home was $100,375 in 2018, according to Genworth Financial. The annual national median cost of a home health care aide was $50,336 in 2018.

Insurers entering the business in the 1990s and early 2000s didn’t anticipate that so many policyholders would continue to pay their premiums and eventually file claims. Fewer than 1% of policyholders have let their policies lapse, and this caught many companies off guard.

Low interest rates have also hurt overall profitability for the insurance companies.

About 40% of the bonds held in insurance companies’ general accounts had a maturity of more than 20 years at purchase, said the American Council of Life Insurers.

There are a few ways to tweak benefits to keep premiums more affordable, while continuing to have this essential coverage.

Daily Benefit. Policies sold in 2015 had an average daily benefit of $259. Paring down the daily benefit could keep premiums down.

Benefit Period. Insurance contracts sold in the 1990s and early 2000 could pay out for the remainder of a client’s life. Reducing that period to five or ten years could make premiums lower.

Inflation Protection. Inflation riders help stay ahead of the rising cost of care. For older policyholders, this might reduce the inflation protection.

Waiting Period. Most policies have a waiting period before benefits will be received. Adjusting this period of time might reduce benefits.

Policyholders are advised to speak with the insurance company directly, instead of relying on the premium increase notices. This may reveal more options that can be used to reduce the premiums, without sacrificing too much in the way of coverage. If you do not have long-term care insurance, there may still be options. Speak with a qualified elder law attorney to see if there are options available to you.

Reference: CNBC (September 8, 2019) “Long-term care insurance costs are way up. How advisors can help clients cope”

Protect Your Pets After You’re Gone

Currently, 67% of American households own at least one pet, and many people now consider long-term planning for them just as important as they would for two-legged family members, says The Atlanta Journal Constitution in the article “When you’re gone, what happens to your pets?”

If you think about it, our animal companions are completely vulnerable. They can’t take care of themselves. If something happens to their owners, it is possible that they could be taken to a shelter and euthanized. If you don’t want to be kept up at night worrying about this, a pet trust should be part of your conversation with an estate planning attorney.

Pets are viewed as valued members of the family in many homes. They provide companionship, and there have been studies showing that their presence helps to reduce stress. They often sleep in the same bed as their owners and go on vacations with their human family.

A 2018 Realtor.com survey found that 79% of millennials who purchased a home, said that they would pass on a home, no matter how perfect, if it did not meet the needs of their pets.

How can you protect your pets?

Understand that pets are considered property and have no legal rights. It’s entirely up to their owners to plan for their care. Some questions to consider:

  • What’s the difference between a pet trust and a will?
  • Do pet trust laws vary by state?
  • Is a trust independent from a will?
  • What happens to any funds left over, when the pet dies?
  • Can you tap 401(k) or other retirement funds to care for a pet?

To begin, look at the life expectancy of each pet and factor the average vet bill, food bill and any additional money in case of an emergency. The ASPCA says that the annual cost to care for a dog is between $737 to $1,404. Caring for a cat averages about $800. Of course, caring for cats or dogs depends upon the age, breed, weight and whether the animal has any medical needs. Some pets can live a very long time, like horses, and certain birds can live more than seventy years.

Next, identify caregivers who will commit to caring for your pets. You should then talk with your estate planning attorney. If you rely on an informal plan, your pet may be out of luck, if something happens to the caregivers, or if they have a change of heart.

A pet trust allows you to leave money to a loved one or friend to care for the pet in a trust that is legally binding. That means the money must be used for the pet’s care. It can be very specific, including how often the pet should go to the vet and what its standard of living should be. The executor or lawyer could go to court to enforce the contract.

Typically, the trustee holds property “in trust” for the benefit of the pet. Payments to a designated caregiver are made on a regular basis. The trust, depending upon the state in which it is established, continues for the life of the pet or 21 years, whichever comes first. Some states allow the pet trusts to continue beyond 21 years.

Speak with your estate planning attorney about protecting your pet. You’ll feel better knowing that you’ve put a plan into place for your beloved furry friends.

Reference: The Atlanta Journal Constitution (September 24, 2019) “When you’re gone, what happens to your pets?”

Americans Still Aren’t Planning for The After Life

Think Advisor reported on a survey conducted by a financial services firm that revealed good news and bad news about Americans and estate planning. In the article “Americans, Even Advisory Clients, Have a Big Estate Planning Problem: Survey,” the firm Edward Jones found that two-thirds of those with an advisor have not discussed estate goals and legacy plans. That’s the bad news. The good news is that 77% said estate and legacy strategies are important for everyone, not just wealthy individuals.

Most people do understand how a properly prepared estate plan puts them in control of what happens to the people that matter most to them, including minor children, their spouses and partners. It also indicates that they recognize how estate planning is necessary to protect themselves. That means having documents, like Power of Attorney and Medical Health Care Power of Attorney.

However, the recognition does not follow with the necessary steps to put a plan into place. That is the part that is worrisome.

Without a will, assets could be subject to the costly and time-consuming process of probate, where the entire will becomes a public document that anyone can look at. Nosy neighbors, creditors and relatives all having access to personal and financial information, is not something anyone wants to happen. However, by failing to plan, that’s exactly what happens.

The survey of 2,007 adults showed little sense of urgency to having legacy conversations. Only about a third of millennials and Gen Xers said they’d spoken with their advisors about the future. Surprisingly, only 38% of baby boomers had done so—and they are the generation most likely to need these plans in place in the immediate future.

Where do you start? Begin with the beneficiary designations. Check all investment accounts, bank accounts, insurance policies and retirement accounts. Most, if not all, of these financial documents should have a place to name a beneficiary, and some may permit a secondary beneficiary to be named. Make sure that you name a person you want to receive these assets, and that the person named is still in your life.

The beneficiary designation is more powerful than your will. The person named in the beneficiary designation will receive the asset, no matter what your will says. If you don’t want an ex to receive life insurance policy proceeds, make sure to check the names on your life insurance beneficiary designations.

Meet with an estate planning attorney to create an estate plan. If you haven’t updated your estate plan in three or four years, it’s time for an update. It’s equally important if you should become incapacitated and you want someone else to make financial and medical decisions on your behalf, to have up to date Power of Attorney and Health Care Proxy forms.

Reference: Think Advisor (September 16, 2019) “Americans, Even Advisory Clients, Have a Big Estate Planning Problem: Survey”

 

How to Choose an Estate Planning Attorney

Estate planning is a critical part of financial planning, but it is something that many Americans prefer to procrastinate about. However, drafting a will, health care proxy, and power of attorney are too important to leave to chance, says Next Avenue in the article “How to Find a Good Estate Planner.” An experienced estate planning attorney can help prevent critical mistakes and help you adjust your plan as circumstances change.

Here are a few tips:

Look for an estate planning attorney. An attorney who practices real estate law is not going to be up on all of the latest changes to estate and tax laws.

Next, determine if the attorney deals with families who are in similar situations to yours. An attorney who works with family-owned businesses, for instances, will be more helpful in creating an estate plan that includes tax and succession planning.

Experience matters in this area of the law. The laws of your state are just one of the many parts that the attorney needs to know by heart. The estate planning attorney who has been practicing for many years, will have a better sense of how families work, what problems crop up and how to avoid them.

Ask about costs. Don’t be shy. You want to be clear from the start what you should expect to be spending on an estate plan. The attorney should be comfortable having this discussion with you and your spouse or family member. Remember that the attorney will be able to understand the scope of work, only after they speak with you about your situation. What may seem simple to you, may be more complicated than you think.

If a trust is added, the fees are likely to increase. A trust can be used to avoid or minimize estate taxes, avoid probate, save on time and court fees and create conditions for the distribution of assets after you die.

Don’t neglect to have the attorney create a Power of Attorney form and any other advance directives you need. These vary by state, and you don’t want them to get too old, or they may become out of date.

Recognize that this is an ongoing relationship. Make sure that you are comfortable with the attorney, how the practice is run and the people who work there—receptionist, paralegals and other associates at the firm are all people you may be working with at one point or another during the process. You will be sharing very personal information with the entire team, so be sure it’s a good fit.

This is also not a one-and-done event. Having an estate plan is a lot like having a home—it requires maintenance. Every four years or so, or when large events occur in your life, you’ll need to have your will reviewed.

Your estate planning attorney should become a trusted advisor who works hand in hand with your accountant and financial advisor. Together, they should all be looking out for you and your family.

Reference: Next Avenue (September 10, 2019) “How to Find a Good Estate Planner”

A Will is the Way to Have Your Wishes Followed

A will, also known as a last will and testament, is one of three documents that make up the foundation of an estate plan, according to The News Enterprises’ article “To ensure your wishes are followed, prepare a will.” As any estate planning attorney will tell you, the other two documents are the Power of Attorney and a Health Care Power of Attorney. These three documents all serve different purposes, and work together to protect an individual and their family.

There are a few situations where people may think they don’t need a will, but not having one can create complications for the survivors.

First, when spouses with jointly owned property don’t have a will, it is because they know that when the first spouse dies, the surviving spouse will continue to own the property. However, with no will, the spouse might not be the first person to receive any property that is not jointly owned, like a car.  Even when all property is jointly owned—that means the title or deed to all and any property is in both person’s names –upon the death of the second spouse, a case will have to be brought to court through probate to transfer property to heirs.

Secondly, any individuals with beneficiary designations on accounts transfer to the beneficiaries on the owner’s death, with no court involvement. However, the same does not always work for POD, or payable on death accounts. A POD account only transfers the specific account or asset.

Other types of assets, such as real estate and vehicles not jointly owned, will have to go through probate. If the beneficiary named on any accounts has passed, their share will go into the estate, forcing distribution through probate.

Third, people who do not have a large amount of assets often believe they don’t need to have a will because there isn’t much to transfer. Here’s a problem: with no will, nothing can be transferred without court approval. Let’s say your estate brings a wrongful death lawsuit and wins several hundred thousand dollars in a settlement. The settlement goes to your estate, which now has to go through probate.

Fourth, there is a belief that having a power of attorney means that they can continue to pay the expenses of property and distribute property after the grantor dies. This is not so. A power of attorney expires on the death of the grantor. An agent under a power of attorney has no power, after the person dies.

Fifth, if a trust is created to transfer ownership of property outside of the estate, a will is necessary to funnel unfunded property into the trust upon the death of the grantor. Trusts are created individually for any number of purposes. They don’t all hold the same type of assets. Property that is never properly retitled, for instance, is not in the trust. This is a common error in estate planning. A will provides a way for property to get into the trust, upon the death of the grantor.

With no will and no estate plan, property may pass unintentionally to someone you never intended to give your life’s work to. Having a will lets the court know who should receive your property. The laws of your state will be used to determine who gets what in the absence of a will, and most are based on the laws of kinship. Speak with an estate planning attorney to create a will that reflects your wishes, and don’t wait to do so. Leaving yourself and your loved ones unprotected by a will, is not a welcome legacy for anyone.

Reference: The News Enterprise (September 22, 2019) “To ensure your wishes are followed, prepare a will.”