Putnam County Estate Planning & Medicaid

Too Young to Die? You Might Want to Think Again

Most twenty and thirty year olds believe that they are immortal, but millennials do die prematurely. There are some basic steps you may want to consider in the unlikely event of your early demise.

Your mother may cry and your father will definitely be uncomfortable, but it's not a bad idea to discuss the "what if's" of your death if you are a millennial, even if you don't have any children or a spouse.

But you might think about it if you want to spare your family members the added stress of locating your financial accounts or bearing responsibility for your debts at the same time they are dealing with your death.

Unfortunately, it's entirely possible to die young. The leading cause of death for millennials is accidents or unintentional injuries. That's why you should take these four simple steps to protect your loved ones, says Forbes in "Here's How To Financially Prepare For Your Death While You're Still Young And Unmarried."

1. Check the beneficiaries on all your accounts. You probably can go online and change account beneficiaries. Let your beneficiary know what he or she is inheriting and where the account is located. Something like, "Hey, you'll be inheriting my 401(k) and here's the information on the sponsor of my company plan," would be good. You can also put beneficiaries on your bank accounts and other investment accounts with Payable on Death (PoD) and Transfer on Death (ToD) designations. Review your designations periodically for any updating after major life events like a marriage, the birth of a child, or divorce.
2. Try to Avoid Probate Court. Probate is where the authenticity of your will is determined, your debts and taxes are paid, and your heirs are given your belongings according to your wishes in your will. Placing beneficiaries on accounts keeps that money out of probate while saving you unnecessary fees because the money goes directly to your beneficiary.
3. Get a basic will! Creating a basic will is relatively easy and inexpensive. Your will should detail who is to receive various assets and should also provide guardianship for children and care for your pets.
4. Consider life insurance if you have co-signed student loans. Student loans may be a real curse, but it can quickly be transferred to your parents if they co-signed on a private loan. Federal student loans are usually discharged in the event of the death of the borrower, but private loans aren't always discharged. If your parents or anyone else co-signed on a student loan with you, you should have life insurance that at least will cover the loan. Set up the life insurance policy with the person who co-signed on your loan as the beneficiary. You also should have both life insurance and a will if you have children or other dependents who rely on your income.

Don't be surprised if your parents wave away your concerns and refuse to have the discussion with you at first. Use the steps outlined above as a guide for things you need to do and then speak with them about the steps you have taken. The goal is to make their lives easier and protect those you love should the unexpected occur.

Reference: Forbes (May 31, 2016) "Here's How To Financially Prepare For Your Death While You're Still Young And Unmarried"

Selecting an Executor Who is Not a Family Member or Friend

If you don't believe any friends or family members can serve as your executor, what are your options?

A question is raised by a well-to-do husband who is concerned that his wife is not prepared to handle a significant estate if he should predecease her. The couple has no children, and he is concerned about what will happen. In MarketWatch's "My wife and I don't trust anyone to be executor of our will," several different ways to prepare for this situation are examined.

One important note to consider: while mulling over the executor issue, do not table your estate planning. With both spouses still living, the planning should start right away.

Collect the information about important accounts and assets and keep it in a safe place at home or at your bank. Make sure you and your spouse know where these materials are located.

The best route is to have your spouse act as executor of your will with the help of a lawyer upon your death. As an alternative, an estate planning attorney can act as an executor. However, he or she will need to be paid.

The executor is required to act in your best interests. He or she must inventory the assets and coordinate cash for expenses, sales, and dealing with taxes.

There's no problem choosing an attorney you may not know personally, but you should do your research on www.lawyers.com and www.avvo.com. You can also ask friends for recommendations.

There are other, unforeseen issues you should take into account with your estate planning attorney—such as the unlikely event that both spouses pass simultaneously or a surviving spouse does not have mental capacity to handle his or her affairs. In such instance, you need an alternate executor, trustee, and/or power of attorney.

By virtue of having an estate plan in place that includes designating your favorite charitable organizations, you have already solved the biggest problem. Remember that most Americans still do not have a will, which puts you way ahead of your peers.

Reference: MarketWatch (May 31, 2016) "My wife and I don't trust anyone to be executor of our will"

When Life Throws You a Curve Ball, Be Prepared to Respond

We never know what's around the corner. Big changes come in all different types. Best strategy: be prepared and deal with whatever comes.

Of those Americans who actually have a will and an estate plan in place, there's still a tendency to let years go by before they update their wills and finances. Any good estate attorney will tell you that a will needs to be updated every three or four years to take advantages of any changes in the law and to address any life changes that occur.

The Middletown Transcript warns in "Game-changing life transitions that need attention" that sudden transitions need to be addressed immediately. However, many times these events will have more complex consequences impacting other parts of your life. Don't stick your head in the sand when such an issue comes up. Deal with it in the context of your overall life.

Some of the major transitions that impact us are retirement, the sale of a business, divorce, the disability of an adult child, the loss of a business or life partner, and perhaps an inheritance. While some of these are negative and some are good, each one necessitates a thorough review of your entire financial situation—includes your estate plan.

If you come into an inheritance, you should assess its impact. Research whether there are any financial or estate planning opportunities that might mitigate the cost or tax burden within the estate.

If your spouse has no estate plan, it may be a rather large headache. It can be exceptionally painful to suffer through an extended and possibly contested period of settling the estate. Even if your spouse had a plan, this transition may necessitate some revisions to your own plan or changes to your beneficiary designations.

When there's a divorce, the majority of the time is spent dealing with the financial settlement of marital assets, child custody, and any future division of earnings. However, a lot of divorce attorneys don't help you with the tax issues and other financial matters that come into play beyond the negotiation of the settlement agreement. You need to take a look at your entire financial picture.

Any kind of large life event requires a thorough examination of your entire estate plan and your financial situation. Having a trusted group of professionals that includes an estate attorney is the best way to protect yourself and those you love.

Reference: Middletown Transcript (May 31, 2016) "Game-changing life transitions that need attention"

Protecting the Family Farm or Business For the Next Generation

If you have a family business or family farm, you know how hard it is to be successful. But if you’d like that success to continue after you retire or after you die, the challenge may be even greater. Succession planning is more than choosing who’ll succeed you as “boss.”

A well-thought-out succession plan can:

• Keep things running smoothly after you retire or after you die. That can mean more income for you and your loved ones, now and into the future.
• Transfer management responsibilities to someone you choose, with the skills to succeed (perhaps with input from your family or from other business advisors).
• Give your successor(s) time to grow into the job. (Having your successor work alongside you, gaining experience and expertise, is better than having him or her thrown into the job when you can’t do it anymore.)
• Help fund your retirement. The business, if it keeps running smoothly, can provide you with much-needed income. Or if you choose to sell it, the business can provide a tidy sum to invest in other ways.
• Help your successor(s) buy the business or pay required taxes. Having someone buy your business can be a big plus, but only if the buyer has the money to pay you. And leaving the family farm to your children may mean a lot to them, but only if they can pay any taxes that might be due. Life insurance can provide your successors with funds to buy the business or pay any taxes owed.
• Distribute assets fairly. Some of your children may have contributed to the success of your business, while others pursued a career of their own. Some family members may want land or a piece of the business, while others would prefer to have cash. A proper plan can address these issues.
• Reduce taxes. If you plan ahead, estate taxes, property taxes and capital gains taxes can be managed or reduced.
• Protect your assets from lawsuits, creditors and more. Proper planning can protect your business and your personal assets so they can’t be taken from you or your loved ones – now or after you’re gone.

What’s included in a succession plan? From the list above, you can see that there are lots of things to consider. It all depends on what you’d like to accomplish. An estate plan and a financial plan are essential. You may also want to do tax planning, asset protection planning and more.

If you run a business or a farming operation, you probably rely on some professional advisors already. Talk to them about goals and objectives for your retirement and your estate. Your accountant, financial advisor, insurance agent and attorney can each be helpful.

If you can, get your key advisors to work together as a team. That way, you can create a comprehensive and coordinated succession plan – one that addresses all your needs and concerns.

How Powers of Attorney Are Used in Planning for the Future

The same level of advance planning needed for a new baby or for a child going to college is necessary for retirement and estate planning.

Decisions about housing, income, health care and your heirs' lives after you pass away are not always easily made. These decisions involve emotional, financial and legal considerations. Timing these decisions and creating the necessary documents requires good planning, as many of these decisions must complement each other.

According to The Harvard Press in "Older & Wiser: Powers of Attorney," the complexity of these issues leads most people to seek professional assistance regarding retirement living and estate planning. While many of us are tempted to avoid uncomfortable decisions, careful planning can save you thousands of dollars and can help you avoid unnecessary guardianship or institutionalization.

Powers of attorney are documents executed by an individual, the "principal," to give another individual, the "attorney-in-fact," power to decide issues on the principal's behalf. The principal has the ability to define the scope of decision-making authority in the power of attorney document.

Based on how they're drafted, powers of attorney can become effective in different ways. A durable power of attorney must be executed while the principal is still competent. It will be immediately effective and stay in effect, even if the person becomes incapacitated. A springing power of attorney is different. It becomes effective when the person is no longer competent.

A durable power can be used without the consent of the individual but must be used to the person's benefit. The springing power lets the person creating the document keep control over his or her affairs as long as it is practical. Both of these types of documents may be revoked by the principal in writing.

Drafting and executing power of attorney documents is an individualized process that varies depending on the circumstances. So it's never a good idea to use a boilerplate form from the Internet that doesn't reflect the individual's needs and circumstances.

There is no doubt that taking care of these matters in a timely manner can provide you with peace of mind and the assurance that your affairs will be handled. Speak with a qualified estate planning attorney to ensure that you have a properly drawn and executed power of attorney—and other estate planning—documents in place.

Reference: Harvard Press (April 28, 2016) "Older & Wiser: Powers of attorney"

Think Way Outside the Box When Faced With a Mystery

When a beloved member of the family passes away without a will, heirs are left with a mystery that requires creative thinking to solve.

Put on your detective hat if a loved one passed away with no will or estate plan. According to MarketWatch in "My wealthy grandmother left no will — how do we find her stocks and bonds?," you are going to need to think like an investigator, looking for clues in the most unexpected places.

The executor may have to do a lot of gumshoeing.

You can contact grandma's estate planning lawyer, if she had one, as well as anyone who had access to her home—like housekeepers, friends, and other relatives. You can also see if she had a safe deposit box at her bank and watch the mail for updates on any accounts.

According to recent research, women in particular are often faced with this problem when their spouse dies. Women are also less likely to know the terms of their spouse's life insurance policy (57% versus 69% of men) and less likely to locate family financial documents in an emergency (32% versus 21% of men).

To avoid putting your loved ones in this position, make sure that your financial documents are in a place where they can be located easily when you die. Unfortunately, there's no law that says we have to make out a master list of where our assets are located. The deceased had to have independently made a list. Also, it's not unusual for assets to go undiscovered: grandma may have had a bank account in northern Minnesota or a timeshare in Hawaii. If there's no documentation, you'd never know.

State law usually appoints the closest living relative to be the administrator, or a relative can file papers to begin probate proceedings. This is a court appointed process that will include conducting an inventory of all assets and paying debts and taxes. A far better way to go? Speak with an experienced estate planning attorney to prepare the necessary documents. Also, put your important papers in order and have a conversation with your loved ones so that they will be better prepared.

Reference: MarketWatch (April 30, 2016) "My wealthy grandmother left no will — how do we find her stocks and bonds?"

Six Key Estate Planning Documents To Protect Your Loved Ones

We don't learn about the private lives of celebrities who have done their estate planning. Privacy and a faster resolution to settling estates are just two good reasons to create an estate plan.

You really don't have to be a millionaire or famous to create an estate plan, as noted in an article appearing on the Forbes' website, "Prince and Estate Planning: What We Can Learn from the Late Musician's Financial Picture." All you have to do is make sure that you have six basic estate planning documents in place to protect your loved ones from additional stress and worry when you pass away.

Here are the six key documents you should have to protect your assets and your family in the event of your passing:

1. Beneficiary Forms. This indicates who gets the assets in your 401(k)s, IRAs, life insurance policies, pensions, and other financial accounts upon your death. These designations take priority over the directives in your will, so keep them up to date.
2. POD and TOD Designation. A payable on death (POD) form typically says who should receive the money in your checking or savings accounts when you pass away. A transfer on death (TOD) form is similar but typically for brokerage accounts. A TOD deed says who takes over the deed to your home after you die.
3. Durable Power of Attorney. This important document designates a person to make health care or financial decisions for you if you become incapacitated or unable to make them for yourself.
4. Living Will. This is also called an Advance Health Care Directive. It details the way in which you want your doctors to treat you should you become unable to communicate those wishes.
5. Will. This outlines how you want your probate assets divided, as well as who should become guardian of any minor children.
6. A Living Trust. This document, like a will, says how you want your property and funds distributed and who will take care of your minor children. It also appoints a trustee to carry out specific wishes for your assets. Unlike a will, assets held in a trust don't have to go through probate. A trust can be used to help manage your assets and property while you're still alive.

Every situation is different and depends on your circumstances. By working with an estate planning attorney, you can rest assured that your heirs will be protected and your wishes will be carried out.

Reference: Forbes (April 29, 2016) "Prince and Estate Planning: What We Can Learn From the Late Musician's Financial Picture"

Does Your Loved One Have an Eldercare Plan for Daily Care and Wishes?

Spelling out intentions in basic estate planning documents is good, but adding a plan that addresses preferences regarding care is even better.

There is an expression among elder law attorneys called being "elderproofed," according to the Huffington Post in "Writing an Eldercare Plan." This takes planning to the next level, and includes things like how the person wises to be cared for, medical treatment preferences, whether they want to be cared for at home or in a facility, and more. These cover the day-to-day decisions to ensure that desires are followed once a person is unable to make those decisions known.

It's very important for seniors and their loved ones to discuss a care plan for the future before disease or dementia come into play, or a crisis causes eldercare services to become urgently needed. Get the plan drafted while the senior is still fully cognizant and rational. They can be signed when other end-of-life documents are put in place.

In truth, everyone wins with early discussions. When the patient is involved in the decisions for his or her potential care, the family has a better understanding of their preferences and are prepared for tough questions.

A good eldercare plan designates the roles and responsibilities for the care of the senior to specific individuals in writing. In addition, healthcare preferences and treatments can be detailed.

If your loved one has been diagnosed with Alzheimer's or Parkinson's disease, families should begin their elder and estate planning soon after the diagnosis, so that the patient can be an active participant. As part of your end-of-life documents make sure your elder law attorney drafts a health care proxy so that your loved one can designate a trust person to make decisions if he or she becomes incapacitated.

Planning for eldercare begins with a conversation with an elder law attorney, who will be able to guide the process. Include all of the family members who will be involved with care. This may also include good neighbors who have been involved with your loved one. Planning in advance will help as the years go by and care needs change.

Reference: Huffington Post (March 30, 2016) "Writing an Eldercare Plan"

Second Marriage Makes Estate Planning Critical to Protect All Parties' Interests

The time to discuss inheritance issues when there has been a second marriage is while family members are alive and well.

When a parent passes away and there is a second spouse, children from the first marriage have certain concerns, according to a thoughtful description of property ownership in New Jersey 101.5's post, "What to know about a second marriage and an inheritance."

There are two types of property at death, and understanding the difference will be helpful with understanding the distribution of assets. These are probate assets and non-probate assets.

Probate assets are those that a person owns alone without a named beneficiary. The probate assets will pass in accordance with the terms of a person's will. However, if there's no will, the assets pass according to the state's laws of intestacy. Non-probate assets include assets that a person owns jointly with another person, like a home or a joint checking account, and assets which designate a beneficiary. These are things like life insurance and retirement assets. Non-probate assets pass to the joint survivor or the named beneficiary by operation of law. These aren't governed by the person's will or the laws of intestacy (unless the named beneficiary is the estate).

In one example, if the father died with probate assets, his estate would be required to be administered through the probate court in the county of his residence at the time of his death. If the father had a will, it's presented for probate. The person named in the will as the executor can qualify and obtain Letters Testamentary—these authorize him or her to act on behalf of the estate. If there isn't a will, an administrator is appointed. Generally, the spouse and then the children will have the first right to such an appointment. In either situation, everyone named in the will and all heirs at law (which include children) must be given notice of probate. They can also request and get a copy of the will.

A person can choose to leave nothing to a spouse; a spouse is typically entitled to claim an elective share. In many states, this is one third of a decedent's estate.

If the father died with no will and no premarital agreement, then the estate's assets pass in intestacy. In many states, the surviving spouse receives the first 25% and the rest passes to the children. If any of the children are deceased, their share passes to the deceased children's children.

Reference: New Jersey 101.5 (March 29, 2016) "What to know about a second marriage and an inheritance"

Discovering Additional Assets After Estate Taxes Have Been Filed

Whether you are filing tax returns for the living or the dead, you need to follow the rules. Penalties for failing to amend an estate tax return can include criminal and civil penalties.

Here's an ethical dilemma. You learn that your late mother had a safe with $100,000 cash in it after the estate has been finalized. Do you pocket the cash and tell no one, or add it to her assets? The temptation is obvious, but the right and legal thing to do is correct the error.

New Jersey 101.5 says in its recent article, "Why it's important for executors to report all estate assets," that the executor of an estate must prepare and file the necessary returns. In doing this, he or she has to collect, value and report all of the assets of the estate.

If a failure to include the cash in the inventory of the estate assets keeps the estate below the reporting threshold and no return was filed, the unpaid tax on the cash will accrue interest. Plus, the estate and executor may be subject to penalties for nonpayment, as well as facing civil and criminal penalties if this failure to file is deemed fraudulent.

Unlike cases where a return is filed, there's no statute of limitations where assets are not reported; the assets haven't been disclosed, and the tax authorities haven't been given an opportunity to review and evaluate reported information.

Even if the failure to file is an honest mistake, if the estate is audited, the executor can be personally liable for the unpaid tax, interest and penalties because he has distributed the estate's assets.

If you properly prepared but filed the return late, if one was never filed or if one was filed but the cash not reported, taking care of this should give a person peace of mind that it's likely to be a pretty small tax cost.

An experienced estate attorney will be able to help you fix this error before it becomes a serious problem for you and your family.

Reference: New Jersey 101.5 (April 5, 2016) "Why it's important for executors to report all estate assets"