Part 2
In Part 2, I want to give you what I think are the most important estate planning tips that are not so obvious but can create havoc if not properly addressed. Many people believe that, once they’ve completed a Will, they’ve done their estate planning. And most of those people – or unfortunately, their heirs – eventually find out they’ve only scraped the surface.
So we’ll pass over the “make a Will” and discuss the following:
Many years ago we started making “asset lists” for all or our clients. It’s one of the best tools I ever discovered. It allows us to make sure that everything is titled properly (or retitle as necessary), and that beneficiary designations are consistent with the goals of the client. We make sure that we haven’t missed anything and have avoided probate. Clients love to see it all on one sheet of paper!
If you’ve acquired any new assets during the year – maybe you inherited money or you acquired some real estate, artwork or collectibles, your estate planning documents should reflect those changes. At a minimum, you may need to update your will and or title the assets in your trust.
For instance, if you’ve purchased a vacation home, you’d need to transfer its ownership to your trustee to have it included in the trust. Otherwise, it’s a probate asset.
I call this “the talk”. No one wants to have it but it’s a very good idea. As you make changes and adjustments to your estate and long term care plan, you may want to share it with your family. This is also a good time to allow your family members a chance to raise any questions they may have about your estate plan. And don’t forget to impart your final wishes. Then enjoy the holidays with your family!
Have you provided your family with the tools they need if you become incapacitated? A Durable Power of Attorney grants someone else the ability to act on your behalf in certain situations. It gives the person you choose control over your financial affairs. A health care power of attorney gives your agent authority to make medical decisions for you if you’re temporarily incapacitated or unconscious. A durable power of attorney is used in situations where you become mentally incompetent as a result of illness or injury.
These documents are critically important for estate planning because they can be used to cover just about any eventuality while ensuring that your estate is managed according to your wishes.
True story. Mrs. F, an old client in Coconut Creek, came in with her daughter. She hadn’t been in for almost 20 years. Her husband, 91 years old, was ill and homebound and she needed to access an account with only his name. Apparently, she tried to use her “old” durable power of attorney for her husband at her bank. The bank would not take it because it was done before the 2011 law changes. The 2011 changes in the durable power of attorney laws didn’t make the old ones “bad”. But financial institutions won’t accept them. To make sure we don’t have problems in the future for you or your family, get a checkup!
Nearly a third of Americans (30%) believe home health care expenses are under $417 a month, but the national median rate is about nine times that: $3,861 per month for an in-home aide Assuming 44 hours per week.
50% of those age 85 or over have some form of dementia, the most expensive medical condition to treat. Because neither Medicare nor health insurance cover long-term care costs beyond a maximum of 90 days in most cases, this leaves many small to medium-sized estates vulnerable to the expenses of uncovered long-term care costs.
You must plan ahead and get educated about your options:
There are certain assets in your estate plan that you might have named beneficiaries. For example, you may have named your son as the beneficiary of a CD. You can also name beneficiaries in your will to ensure that they receive any assets you want to leave them.
Are these designations consistent? Did you name your son the beneficiary on the CD but give it to your daughter in your will?
If you did, your son gets it all. Beneficiary designation takes precedence over what a Will says. And assets that have beneficiaries go immediately to the beneficiary with no ability to control the money. So if you have an IRA or insurance policy with an individual beneficiary that money will go directly to the named beneficiary. This has the potential of losing some important income tax benefits and making it subject to their creditors, spending habits, ex-spouse etc.
That’s why we review it all and make sure the documents and beneficiaries are coordinated.
Review the people you’ve named to act for you – your “fiduciaries” Are you comfortable with your executor, trustees, agents named in your documents? Fiduciary is the broad name of a person in a position of trust for another. You must completely trust the person(s) you name as they will have important responsibilities. Will they carry out your wishes? Can they handle money?. This is a very important decision which should not be taken lightly.
Estate planning largely centers on planning for tangible assets, like property you own, investments, bank accounts, family heirlooms and other items of value. But, your estate plan should also include provisions for your digital assets. That includes things like online accounts, photos, and copyrights.
Some digital assets have financial value, while others have purely personal value. In any case, your estate planning agenda should outline how you want these assets to be handled if you pass away and who is responsible for taking care of them. Please provide passwords to a trusted person. That’s particularly important if you have financial assets in online bank or investment accounts that your loved ones will need to have access
Next blog: Estate planning is for everyone. And everyone has their own special considerations.
