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Estate Planning for Snowbirds

This post explains the need for new estate planning for snowbirds.

The U.S. Constitution requires states to give “full faith and credit” to the laws of other states. As a result, your will, trust, power of attorney, and health care proxy executed in one state should be honored in every other state.

Although that’s the way it should work, the practical realities are different and depend on the document, says Wealth Advisor’s recent article entitled “Moving to a New State? Be Sure to Update Your Estate Plan.”

Your last will should still be legally valid in the new state. However, the new state may have different probate laws that make certain provisions of the will invalid.  In Florida, a personal representative must be a Florida resident or related to the person making the will.  This epitomizes the role of estate planning for snowbirds.

Powers of attorney and health care directives are authorized by each state in its statutes. As a result these estate planning documents may not be honored from state to state, and sometimes banks, medical professionals, and financial and health care institutions will refuse to accept the documents and forms. They may have their own, as is the case frequently with banks.

You should also know that the execution requirements of your estate planning documents may be different, depending on the state.  Florida requires that the maker of a will sign the document in the presence of two witnesses who also sign in the presence of each other and the maker.

Also, there are some states, such as Florida, that require witnesses on durable powers of attorney, and others that do not. A state that requires witnesses may not allow a power of attorney without witnesses to be used to convey real estate, even though the document is perfectly valid in the state where it was drafted and signed.  Again, this is another reason to engage in estate planning for snowbirds.

With health care proxies, other states may use different terms for the document, such as “durable power of attorney for health care” or “advance directive.”

When you move to a different state, it’s also a smart move to consult with an experienced estate planning attorney to make certain that your estate plan in general is up to date. There are also other changes in circumstances—like a change in income or marital status—that can also have an impact on your estate plan. Moreover, there may be practical changes you may want to make. For example, you may want to change your trustee or agent under a power of attorney based on which family members will be closer in proximity.

For all these reasons, when you move out of state it’s wise to have an experienced estate planning attorney in your new home state review your estate planning documents and help with estate planning for snowbirds.

Reference: Wealth Advisor (Jan. 26, 2021) “Moving to a New State? Be Sure to Update Your Estate Plan”

Estate Planning Documents For Retirees

Research of estate planning documents for retirees shows that most (53%) have a last will and testament. However, they don’t have six other crucial legal documents.

Money Talks News’ recent article entitled “6 Legal Documents Retirees Need — but Don’t Have” says in fact, in this pandemic, 30% of retirees have none of these crucial documents — not even a will — according to the 20th annual Transamerica Retirement Survey of Retirees.

In addition, the Transamerica survey found the following about estate planning documents for retirees:

  • 32% have a power of attorney or medical proxy, which allows a designated agent to make medical decisions on their behalf
  • 30% have an advance directive or living will, which states their end-of-life medical preferences to health care providers
  • 28% have designated a power of attorney to make financial decisions in their stead
  • 19% have written funeral and burial arrangements
  • 18% have filled out a Health Insurance Portability and Accountability Act (HIPAA) waiver, which allows designated people to talk to their health care and insurance providers on their behalf; and
  • 11% have created a trust.

The study shows there is a big gap that retirees need to fill, if they want to be properly prepared for the end of their lives.

The coronavirus pandemic has created an even more challenging situation. Retirees can and should be taking more actions to protect their health and financial well-being. However, they may find it hard while sheltering in place.

Now more than ever, seniors may need extra motivation and support from their families and friends.

The Transamerica results shouldn’t shock anyone. That is because we have a long history of disregarding death, and very important estate planning questions. No one really wants to ponder their ultimate demise, when they can be out enjoying themselves.

However, creating estate planning documents for retirees now will give you peace of mind. More importantly, this planning can save your heirs and loved ones a lot of headaches and stress, when you pass away.

Talk to an experienced estate planning attorney today to get your plan going.

Reference: Money Talks News (Dec. 16, 2020) “6 Legal Documents Retirees Need — but Don’t Have”

Estate Planning Documents You Should Have

This post describes estate planning documents you should have. You might think that the coronavirus pandemic has caused everyone to get their estate planning documents in order, but the 20th annual Transamerica Retirement Survey of Retirees found that 30% of all retirees have nothing prepared—not even a will. That’s not good, for them or their families, says this timely article “6 Legal Documents Retirees Need—but Don’t Have” from MSN Money.

The survey revealed some troubling facts:

Only 32% have a Health Care Power Of Attorney or Designation of Health Care Surrogate, which allows named persons to make medical decisions on the retiree’s behalf.

Only 30% have an Advance Directive or Living Will, sharing their end-of-life wishes for medical care.

A mere 28% have a designated Durable Power of Attorney, so an agent can act on their behalf to pay bills and manage finances, if they are incapable of doing so themselves.

Worse, only 19% have written funeral and burial arrangements. Their families will be left to make all the decisions.

18% have a Health Insurance Portability and Accountability Act (HIPAA) waiver, which is needed so someone else may speak with health care and insurance providers on their behalf.

11% have a Trust of any kind.

The study shines a bright light on a big problem that will be faced by families, if their elders have not created the proper estate planning documents to prepare for incapacity or death. Ignoring the problem does not make it go away. It becomes more complicated, expensive and stressful for the loved ones left behind.

These estate planning documents and a last will and testament are needed, so families have the legal right to take care of their loved ones while they are living, as well as handle their estates after they pass.

Without these estate planning documents, the family may find themselves having to go to court to have a guardian appointed in the event their senior loved ones are too ill to manage their financial affairs.

If the loved one should die and there is no will in place, the court will rely on the state’s estate laws to determine who inherits assets. An estranged family member could end up owning the family home and all of its contents, regardless of their absence from the family.

An experienced estate planning attorney can work with the family in a safe, socially distanced manner to have the necessary estate planning documents created, before they are needed.

Reference: MSN MONEY (Dec. 15, 2020) “6 Legal Documents Retirees Need—but Don’t Have”

 

Basic Estate Planning Documents

Having a well-prepared estate plan means that you have a estate planning documents in place to distribute your home, assets and possessions. However, the estate plan does more, says the article “Trustee Tips: Estate Planning Basics” from Wilmington Biz Insights: it also gives your family the insight and legally enforceable directions to follow, so they may honor your wishes.

Estate planning eliminates uncertainty and maximizes the value of the estate, by streamlining the transfer of assets to beneficiaries and minimizing estate tax liability. In addition, estate planning documents protect your estate and your family from mismanagement, creditor claims or claims from people or companies outside of the family.

Many people equate estate planning with owning a large home and significant wealth, but that’s not true. An estate includes everything people own: their personal residence, retirement accounts, insurance policies, investments and possessions.

A case can be made that estate planning is more important for people with a modest estate to preserve and protect what assets they have, versus a large estate where the family enjoys a large cushion against poverty.

The basic estate planning documents are a last will and testament, trusts, financial power of attorney, health care power of attorney and a living will.

A Last Will and Testament provides instructions to the probate court of the decedent’s final wishes, including naming an executor to carry out the instructions. It also contains instructions on who will raise minor children by naming a guardian. This document, and any other documents filed with the probate court, become part of the public record, and can be accessed by anyone who wishes to see them.

A Revocable Trust also provides instructions but avoids probate. The trust creates a legal entity that owns assets (once they are retitled and placed in the trust). The individual who creates a revocable trust remains in control of the assets, as long as they are alive. The revocable trust can be changed at any time.

A Pour-Over Will is an estate planning document used with a revocable trust. It ensures that any assets not included in the Revocable Trust are “poured-over” into the trust upon death, protecting them from the probate process and keeping your wishes private.  Anything going through the Pour-Over Will goes through probate, so it should be used only as a safety net.

A financial Power of Attorney and Designation of Health Care Surrogate are documents used to give control of legal and financial affairs and health care decisions, in the event of incapacity.

The Living Will provides directions to designated persons, usually family members, about what kind of medical care is desired in the event of an inability to communicate. This is a gift to loved ones, who would otherwise be left guessing what the person would wish. A HIPAA release should also be prepared to allow doctors to discuss medical matters with the Health Care Power of Attorney.

An estate plan is a way to protect the family’s well-being, not just distributing property and minimizing taxes. Well-crafted estate planning documents, created for the family’s unique situation, helps avoid family fights, litigation within and outside of the family and provides direction for the next generation.  We can help you plan your estate.

Reference: Wilmington Biz Insights (Nov. 17, 2020) “Trustee Tips: Estate Planning Basics”

 

Get Your Estate Plan Done!

It is important to stop procrastinating and to get your estate plan done.  While many people have had their wills updated or created in response to the pandemic, millions of Americans have yet to do so, reports the article “How to Stop Stalling On Getting a Will and Estate Plan” from AARP Magazine. The main reasons for the big stall? They haven’t “gotten around to it,” or, they think they don’t have enough assets to leave to anyone and don’t need a will. Neither reason is valid.

Estate Plans Protect Us During Life. A will is a legal document used to distribute assets after death. It saves families from unnecessary costs and stresses resulting from intestacy, which is what having no will is called. However, there are more documents to an estate plan than just a will. Two of them are health care directives, often called a living will and a Designation of Health Care Surrogate. These documents name someone of your choosing to make medical decisions for you if you are unable. It is also used to outline the kind of medical treatments you do or do not want.  These scenarios are vital reasons for getting your estate plan done.

Imagine your family faced with making the decision of keeping you on a heart and lung machine or pulling the plug and letting you die. Would they know what you want them to do? Without a living will, they have to make a decision, and hope it’s the one you would have wanted. That’s quite a burden to put on your loved ones, especially since there is a simple way for you to convey your wishes in a legally enforceable manner.

You also Need a Power of Attorney. A financial power of attorney appoints a person of your choosing to make financial and legal decisions on your behalf, if you are incapacitated. This is an important document and can be created to be as broad or as narrow as you want. You can provide the direction for someone—a trusted, responsible adult—to manage finances, including paying bills, managing a portfolio, paying a mortgage and generally taking over the business of your life. Without it, your family will need to go to court to obtain a guardianship and/or conservatorship to take care of these matters.

Estate Planning Requires Hard Conversations. When people say they “haven’t gotten around” to doing their wills, what they are really thinking is “This is too unpleasant a topic for me” or “I can’t bring myself to have this conversation with my children.” Death and sickness are uncomfortable topics, and most people find it painful to discuss them with their spouses and their children, and result in not getting your estate plan done.

However, imagine the great relief you will feel when your loved ones know what your wishes are for sickness and death. You can also imagine the relief they will have in knowing that you took the time give them the tools needed to deal with whatever the future will bring.

Joint Wills are Never a Good Idea. A joint will can leave a surviving spouse in a terrible legal and financial situation. They are not even valid in certain states. They can restrict a surviving spouse from changing the instructions of the will, which could create all kinds of hardships. Circumstances change, and a joint will won’t allow for that. Most couples opt for a “Mirror” will, where they leave the estate to each other and/or their children.

Blended Families Need Special Treatment. If your family is made up of children from different parents, it is important to understand that stepchildren are not treated the same as children by the law. You may love your stepchildren as if they were your own, but unless you specifically name them in the will, they will not be included. Your estate planning attorney will know how to address this issue.

A few final thoughts: estate planning laws of each state are different, so you should meet with an estate planning attorney who practices in your state. The Power of Attorney and Health Care Directives should name the people who you feel will carry out your wishes and can be trusted to do as you want. The person does not have to be the oldest male child. They don’t even have to be related to you, as long as the person you choose is trustworthy, responsible and good with managing money and details. But most importantly, get your estate plan done.

Reference: AARP Magazine (Nov. 12, 2020) “How to Stop Stalling On Getting a Will and Estate Plan”

Everyone Needs an Estate Plan

Many people think you have to be a millionaire to need an estate plan and investing in one is too costly for an average American. Not true! People of modest means actually need an estate plan more than the wealthy to protect what they have. A recent article from TAPinto.net explains the basics in “Estate Planning–Getting Your Affairs in Order Does Not Need to be Complicated or Expensive.”

Everyone needs an estate plan consisting of the following documents: a Last Will and Testament, a General Durable Power of Attorney and an Advance Medical Directive or Living Will.

Unless your estate is valued at more than $11.58 million, you may not be as concerned about federal estate taxes right now, but this may change in the near future. Some states, like Florida, don’t have any state estate tax at all. There are states, like Pennsylvania, which have an “inheritance” tax determined based on the relationship the person has with the decedent. However, taxes aren’t the only reason to have an estate plan.

If you have young children, your will is the legal document used to tell your personal representative and the court who you want to care for your minor children by naming their guardian. The will is also used to explain how your minor children’s inheritance should be managed by naming trustees.

Why do you need a Durable Power of Attorney? This is the document that you need to name a person to be in charge of your affairs, if you become incapacitated and can’t make or communicate decisions. Without a DPOA in place, no one, not even your spouse, has the legal authority to manage your financial and legal affairs. Your family would have to go to court and file a guardianship action, which can be expensive, take time to complete and create unnecessary stress for the family.

Advance Medical Directives, also known as a Designation of Health Care Surrogate and Living Will, is used to let a person of your choice make medical decisions, if you are unable to do so. This is a very important document to have, especially if you have strong feelings about being kept alive by artificial means. The Advance Medical Directive gives you an opportunity to express your wishes for end of life care, as well as giving another person the legal right to make medical decisions on your behalf. Without it, a guardianship may need to be established, wasting critical time if an emergency situation occurs.

Most people of modest means need only these three documents, but they can make a big difference to protect the family. If the family includes disabled children or individuals, owns a business or real estate, there are other documents needed to address these more complex situations. However, simple or complex, your estate and your family deserve the protection of an estate plan.

Let us help you with your Estate Plan.

Reference: TAPinto.net (Sep. 23, 2020) “Estate Planning–Getting Your Affairs in Order Does Not Need to be Complicated or Expensive”

 

What are Power of Attorney Options?

FedWeek’s recent article entitled The Options in Granting Powers of Attorney” explains that a power of attorney designates someone else to handle your affairs, if you can’t.

Here are the major types:

  • Limited power of attorney. This allows an agent to act on your behalf under specific circumstances, like a home sale closing that you can’t attend, and/or for a defined period of time.
  • General power of attorney. Gives broad authority to your agent, who at any time can write checks to pay your bills, sign contracts on your behalf and take distributions from your IRA.
  • Springing power of attorney. This isn’t effective when you execute it, but rather “springs” into effect upon certain circumstances, such as your becoming incompetent. You can say in the document what’s needed to verify your incompetency, like letters from two physicians stating that you no longer can manage your own affairs.  Due to a recent change in the laws, the springing power of attorney is no longer available in Florida.   All powers of attorney are effective upon signing.

A power of attorney is important because your agent can act when you become incapacitated. To serve this purpose, a power should be “durable,” so it will remain in effect if you become incapacitated. Other powers of attorney may not be recognized, if a judge determines that you no longer can manage your affairs.

Without a power of attorney, your family may have to ask a judge to name a guardian to act in your best interests. A guardianship proceeding can be expensive and contentious. You might also wind up with an unwelcome interloper managing your finances. To avoid this situation, designate a person you trust as agent on your durable power.

A health care power of attorney, also known as a designation of health care surrogate, should be a component of a complete estate plan. This document names a trusted agent to make decisions about your medical treatment, if you become unable to do so.

The person you name in your health care power doesn’t have to be the same person that you name as agent for a “regular” power of attorney (the POA that affects your finances).

For your health care power, chose a person in your family who is a medical professional or someone you trust to see that you get all necessary care.

Depending on state law, it may go into effect when a doctor (whom you can name in the POA) determines in writing that you no longer have the ability to make or communicate health care decisions.

Reference: FedWeek (Aug. 26, 2020) “The Options in Granting Powers of Attorney”

 

You Need More than a Will for Estate Planning

As the coronavirus continues to sweep across through the U.S. and the death tolls continue to rise, many people are starting to put their estate plans in place, as reported by CNBC.com in the article “A will doesn’t cover all your bases when it comes to end-of-life decisions. Here’s what else you need.”

It’s true–your will, or last will and testament, is just one of several legal documents you need to help loved ones know what your wishes are. If there is no will, all kinds of problems are created. If you have minor children and no will, the court will decide who will care for them. With no will, the laws of your state determine who will receive your assets—even if it’s a relative you’ve never met—or one you’ve loathed for decades.

For those who have partners but are not married, no will means your assets won’t go to them. They also won’t have legal standing to fight back. The courts typically pass assets on to your closest blood relatives. That might not be what you want.

However, a will is only one part of your entire estate plan. You don’t need to live on “an estate” to have an estate. Actually, your estate refers to everything you own—financial accounts, possessions, real estate and digital assets. Putting a plan in place for those assets helps lessen the chances your family will fracture when you have died. Your assets will also go where you want them. It’s a kindness to your loved ones.

A will lets you convey your wishes about who gets what when you die, except for assets that pass outside of a will. These are accounts where you have named a beneficiary, like insurance policies, retirement accounts and jointly owned property. The beneficiary designations and joint ownership (with rights of survivorship) always supersede your will, which is where many people make big mistakes. If you don’t update your beneficiary designations as you move through life, the wrong person might inherit significant assets. There also won’t be anything your intended heirs can do about it.

Another big part of your will involves choosing a person to be in charge of carrying out your intentions—the personal representative (or executor). This is a job that requires someone who is responsible, reliable and comfortable with handling financial and legal matters.

You’ll also need a health care directives, sometimes called designation of health care surrogate and living will, to outline your wishes, if you become incapacitated because of illness or injury. This gives loved ones the instructions they need if, for example, you are on life support and a decision has to be made about whether to continue or to let you pass. Don’t forget a Durable Power of Attorney. This document allows a person of your choice to carry out all of your financial and legal affairs on your behalf. You want to pick someone who is smart and trustworthy. They might need to do everything from selling your home to managing your investments.

Estate planning also includes preparing all of the important documents in your life, so that your executor can find them easily, including your will itself, other legal documents, information about bank accounts, investment accounts and even your Social Security number. The more organized you can be, the more easily your loved ones will be able to administer your estate.

If you want your children to receive money from you but are concerned about their ability to manage an inheritance, you may want to add a trust to your estate plan. Your assets go into the trust, instead of directly into their hands. You also name a trustee who will oversee the trust. The trustee will decide when your children receive the money, according to your instructions. The distribution could be tied to achieving certain goals—like graduating from college or getting their first apartment. Further, if the trust is a revocable living trust, all assets titled in the trust will avoid probate.

One last point: many people today are downloading estate planning forms from the internet. The problem is, you don’t know if they are up-to-date, or even admissible in your state. Every state has its own estate laws, and no one document works in all states. Working with an estate planning attorney who knows the laws in your state eliminates the risk that a judge will toss out your will, because it does not comply with state law.

Reference: CNBC.com (July 27, 2020) “A will doesn’t cover all your bases when it comes to end-of-life decisions. Here’s what else you need.”

 

What Does Pandemic Estate Planning Look Like?

In the pandemic, it’s a good idea to know your affairs are in order. If you already have an estate plan, it may be time to review it with an experienced estate planning attorney, especially if your family’s had a marriage, divorce, remarriage, new children or grandchildren, or other changes in personal or financial circumstances. The Pointe Vedra Recorder’s article entitled “Estate planning during a pandemic: steps to take” explains some of the most commonly used documents in an estate plan:

Will. This basic estate planning document is what you use to state how you want your assets to be distributed after your death. You name an executor to coordinate the distribution and name a guardian to take care of minor children.

Financial power of attorney: This legal document allows you to name an agent with the authority to conduct your financial affairs, if you’re unable. You let them pay your bills, write checks, make deposits and sell or purchase assets.

Living trust: This lets you leave assets to your heirs, without going the probate process. A living trust also gives you considerable flexibility in dispersing your estate. You can instruct your trustee to pass your assets to your beneficiaries immediately upon your death or set up more elaborate directions to distribute the assets over time and in amounts you specify.

Health care proxy: This is also called a Designation of Health Care Surrogate. It is a legal document that designates an individual to act for you, if you become incapacitated. Similar to the financial power of attorney, your agent has the power to speak with your doctors, manage your medical care and make medical decisions for you, if you can’t.

Living will: This is also known as an advance health care directive. It provides information about the types of end-of-life treatment you do or don’t want, if you become terminally ill or permanently unconscious.

These are the basics. However, there may be other things to look at, based on your specific circumstances. Consult with an experienced estate planning attorney about tax issues, titling property correctly and a host of other things that may need to be addressed to take care of your family. Pandemic estate planning may sound morbid in these tough times, but it’s a good time to get this accomplished.

Reference: Pointe Vedra (Beach, FL) Recorder (July 16, 2020) “Estate planning during a pandemic: steps to take”

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