Estate Planning and Legacy Law Center, PLC


There are 3.3 million dogs housed in animal shelters each year. You can celebrate Adopt-a-Dog Month this October by adopting a homeless dog, providing it with a home, and gaining years of joy and companionship. But whether you are planning to adopt a new pet or already have one (or several), it is important not to forget to make arrangements for their care if something should happen to you.

Consider a Pet Trust

Although many pet owners consider their pets as members of their family, they often neglect to include their pets in their estate planning. Pet owners may assume that family will care for their pets if they become ill or pass away. But this can create a dilemma for family members who are unable to afford the costs of caring for another pet or who may not be animal lovers themselves. In the worst-case scenario, your beloved pet could end up in a shelter, where it could be euthanized if it is not adopted.

Making arrangements for your pet in your will may not be the best option, because it leaves the fate of your pet in limbo while your estate is probated—a process that could take several months. In addition, even if you name a caretaker in your will and give that person a gift intended to be used for your pet’s care, with a will, there is no way to guarantee that your wishes are ultimately carried out: The person you named could just take the money and give your pet away. Because your pet becomes the property of that person, the caretaker is free to make decisions about it that might be contrary to your wishes. Also, if the caretaker has any creditors or liabilities, the money you have provided for your pet’s care will be vulnerable to claims made by the caretaker’s creditors.

A pet trust will ensure that a caretaker of your choice is in place as soon as you are no longer able to care for your pet. In addition, the terms of the trust are binding, and the money you provide for your pet’s care must be disbursed and spent in the way you have designated in the trust—and can’t be reached by the caretaker’s creditors. The caretaker has a fiduciary obligation to take care of your pet in the way you spell out in the trust, and the trustee has a fiduciary obligation to make sure that the funds provided to the caretaker are used only for the purposes described in the trust. The trust could specify that the trustee will distribute money to the caretaker only for the benefit of the pet. Alternatively, the trust could require the trustee to make payments directly to veterinarians and other service providers for the pet.

Steps to Set Up a Pet Trust

  • Choose a caretaker. It is important to give thought to who will be the best caretaker for your pet. Be sure to obtain the consent of the person you would like to care for your pet: Don’t just assume someone is able or willing to take on the role. You can also name back-up caretakers if the initial caretaker is unwilling or becomes unable to care for your pet in the future.
  • Choose a trustee. One way to ensure that the money you provide in the trust is used only for the benefit of your beloved pet is to appoint a separate person to be the trustee. In this case, the person caring for your pet is not the same person managing the money, providing a check on the caretaker and oversight on how the money is spent. The trustee can be a trustworthy person who is good at managing money but not at providing day-to-day care for a pet.


  • Include instructions for pet care. These instructions can be included in the terms of the trust, but a better option may be to set forth the instructions in a separate document that is referenced in the trust agreement. The use of a separate document will enable you to easily update or modify the care instructions in the event that your pet’s needs change over time. You can provide specific instructions for exercise and grooming, general care, medical care, and even a memorial for your pet.


  • Determine the amount of funds that will be needed. This will vary widely depending upon the type and number of pets you own. Less money will be needed to care for an older cat than for a younger macaw (lifespan of 50 to 100 years in captivity) or a red-eared slider turtle (lifespan of 40 years in captivity). In addition, an exotic animal such as a reptile or bird is generally more expensive to care for than the average cat or dog.


Note: The laws of some states establish funding limitations for pet trusts. If someone contests the terms of the trust, a court can reduce the amount of funding for the trust and redirect it to other beneficiaries as specified in the statute if the amount of funding you have specified is found by the court to be excessive. As a result, you should consult with us to be sure that your trust complies with the law. Otherwise, your money could go to a beneficiary that you would not have chosen.


  • Designate a remainder beneficiary. In case the funds you provide for your pet’s care are not exhausted, you should name another beneficiary to receive any remaining money upon the trust’s termination. This could be a person or a charity: It is completely up to you.

Some states have limitations on the length of a pet trust, for example, 21 years. This may not be long enough for pets with longer lifespans, so check with us to be sure that the trust you establish will last for your pet’s entire lifespan. The trust can be set up in another state if necessary.

Additional Plans for Pet Care

You should also consider a durable power of attorney for pet care, which will authorize a caretaker to obtain medical care for your pet while you are traveling. In addition, a wallet card listing your pets and their location will provide notice that you have animals in need of attention if you become incapacitated or die while you are away from home so they will not be left without food and water for an extended period of time.

Contact Us for Help

If you are concerned about what will happen to your pets if you are unable to care for them, we can help you make arrangements for their care. You can gain peace of mind by not leaving your pet’s future up to chance. A pet trust will ensure that your beloved companions are well cared for and that your wishes are respected. Give us a call to set up a consultation.

Three Estate Planning Mistakes Farmers and Ranchers Make

Farming or ranching is more than a means of livelihood – it is about preserving a legacy and unique way of life.  Unfortunately, many farmers and ranchers fail to make an estate plan.  The farm or ranch that has been passed down for generations then ends up being sold and converted into non-agricultural use, cutting the legacy short and ending the family’s unique lifestyle choice.


Sadly, farmers and ranchers are not the only ones who avoid making or updating an estate plan – many others, including business owners and parents, also avoid planning, which can cut their legacy short.  Below are three common estate planning mistakes farmers and ranchers make and how to avoid them.


Mistake #1 – Failing to Plan


Farmers and ranchers have complex estate planning needs.  They may have children who want to continue the farming or ranching business and children who do not.  They will be forced to decide who inherits the land, the equipment, the livestock, and other assets, all the while trying to keep things fair and equal.  As a result, many farmers and ranchers cannot decide what to do and end up without any estate plan at all.  For others, this same circumstance can occur with the family home, rental properties, or the family business.


Fortunately there are many estate planning options available to farmers, ranchers, and others that will allow you to fulfill your ultimate goals.  No matter your occupation or asset mix, you need to work with a team of experts (including attorneys, accountants, bankers, insurance specialists, and financial advisors) who are familiar with the nuances of estate planning to insure that the plan will work as anticipated when it is needed.


Mistake #2 – Relying on Joint Ownership


Many people, including farmers, ranchers, and others, believe that the easiest way to plan their estates and avoid probate is to own property in joint names with family members.  However, farmland or ranch property that is jointly owned and enrolled in programs administered by the U.S. Department of Agriculture may result in subsidies being left on the table.  Aside from this, joint ownership causes you to give up control of your real estate. Unlike other planning options, joint ownership may not be easy to change, since “undoing” joint ownership can have significant costs and tax implications.


Holding real estate in the name of a business entity (corporation, partnership, or limited liability company) or a trust is a better option and will allow you, whether you’re a farmer or rancher, to maximize subsidies, minimize liability, and retain control.


Mistake #3 – Overlooking Liquidity Needs


Incapacity and death are expensive and often require cash to pay expenses. But, farmland, farming equipment, personal residences, automobiles, and other personal effects are illiquid.  Without properly planning for immediate and long-term cash needs, families will be forced to quickly sell land and equipment for pennies on the dollar.


Farmers, ranchers, and others have several options to choose from when creating a plan to manage debt and expenses after incapacity or death.  Financial advisors, bankers, and insurance professionals can assist with securing lines of credit and the proper amount of disability insurance, long term care insurance, and life insurance.  Attorneys can assist by creating life insurance trusts, business entities, and other more complex strategies like part gift/part sale arrangements in exchange for a note or private annuity.


Final Thoughts on Estate Planning for Farmers and Ranchers


Farmers and ranchers live a different lifestyle and require specialized estate planning solutions. But they’re not alone – everyone from business owners to parents has unique planning needs. A team of advisors, including attorneys, accountants, bankers, insurance professionals, and financial advisors, can assist you in creating and maintaining a plan that will preserve your legacy and unique way of life.  Our firm is experienced with supporting farmers, ranchers, and others in achieving their estate planning goals.  Please call our office if you have any questions about this type of planning and to arrange for a consultation.


Funeral Planning:

No one enjoys thinking about their own funeral, but making those arrangements in advance yourself may be one of the most thoughtful acts you can do for your loved ones. More and more people are including funeral planning as part of their estate plan, sparing their grieving families from having to make hasty arrangements during an already stressful time. A Remembrance and Services Memorandum will allow you to specify who should be notified of your death, provide personal information that should be mentioned in your service or obituary, indicate how your remains should be handled, and describe your wishes for your memorial service or funeral. Some people also opt to prepay their funeral expenses.


Why Does It Need to Be Written Down?


Death is a subject that many people do not want to talk about with their families. Consequently, although you may think that your loved ones know what kind of funeral or memorial service you want (if you want one at all), whether you want a burial or cremation, or other information related to your funeral, there is a good chance they do not know what your specific wishes are. In addition to creating an additional burden for your loved ones during a stressful time, the failure to leave written instructions can set the stage for conflict between emotionally overwrought family members who may have differing points of view about what you would have wanted regarding the disposition of your remains and memorial service.


In many states, your survivors are legally obligated to comply with your written wishes about the disposition of your remains. However, if you do not record your wishes in writing, state law will determine who will make those decisions on your behalf. Your state law indicates the hierarchy of relatives who are legally entitled to make decisions about how to handle your service and the disposition of your remains.  The typical order of the hierarchy is:


  • Spouse
  • Children
  • Parents
  • Next of kin
  • Court-appointed public administrator


If you are estranged from the person designated by state law, or if you have two children who disagree about how your service should be handled, the resulting dispute could end up in court—the last thing grieving family members should have to face after you pass away.


In addition, even close family members may have values or religious convictions that are very different from your own. Completing a Remembrance and Services Memorandum can help ensure that your family members will not have to guess about what you want, avoiding this extra burden at a difficult time.


Why Shouldn’t I Just Include It in My Will or Trust?


Memorial or funeral services typically occur within a few days of a person’s passing, while your will or trust is not likely to be accessed or read until weeks or even months after your death. Wills and trusts are intended to deal with the distribution of your property, which is not as time sensitive as your funeral or memorial service and the disposition of your remains. The original version of your Remembrance and Services Memorandum can be provided in advance to your attorney, the executor of your will, or the trustee of your trust, with additional copies provided to your family members, avoiding confusion or disagreements between survivors who may think you expressed other wishes elsewhere or verbally.


Should I Prepay for My Funeral?


Funerals and related arrangements can be shockingly expensive. Prepaying for your service is an option that you can consider to help your grieving loved ones avoid incurring significant debt. Also, if you prepay for your funeral arrangements, you can comparison shop just as you would when making other large purchases, without any time constraints. This will benefit your family members, who may make rushed arrangements without time to consider the cost or may make an emotion-based decision to spend a large amount of money as a means of honoring you. In addition, you can pay for the arrangements at their current prices, which may represent a substantial savings if you pass away many years in the future. Planning in advance can also ensure that you can obtain a cemetery plot or mausoleum of your choice, rather than leaving family members to hurriedly select a site that they may not have time to visit in advance.


There are some potential downsides to prepaying for your arrangements, however. If there is a possibility that you may move in the future and want to have your service in another location, you should not bind yourself to a plan that cannot be canceled or transferred without substantial additional cost. Some larger cremation service providers and funeral homes have prepaid plans that will be honored nationwide, so be sure to do your research beforehand. You should also keep in mind that the funds you pay in advance for your arrangements will not be available to you for living expenses or emergencies. In addition, there is a risk that your funeral provider will close or mishandle your funds. We can help you verify that state law provides adequate protection for the funds you have prepaid—for example, by requiring some or all of the funds to be placed in a state-regulated trust.


Note: The Federal Trade Commission’s Funeral Rule guarantees certain rights to consumers. For example, consumers have the right to choose only goods and services they want rather than a package, to be given written or verbal price lists for items and services offered by funeral providers, to be provided itemized statements showing what they are purchasing and the price of each item or service, and to have the right to use a casket or urn purchased from a vendor other than their funeral provider.


Give Us a Call


Making arrangements for the disposition of your remains and your memorial service in advance can provide peace of mind for both you and your loved ones. We can help you memorialize your wishes in writing or update any pre-existing arrangements. Give us a call today to set up a meeting.


Planning for your Automobile

In 2019, it is projected that there will be 281.3 million registered vehicles in the United States. Your car is a valuable asset—as well as a potential source of liability—that you should consider in your estate plan. Cars can be owned or leased. The way they are handled after you die depends on these and other circumstances. There are some steps you can take in your estate planning to make sure the transfer occurs smoothly.


Is the Car Part of Your Estate?


If you are leasing your car, it is not actually part of your estate because you do not own it. A lease is a contractual relationship, so what happens if you pass away will depend upon the terms of the lease. Do not assume that your family can just return the car to the leasing company with no further obligations or simply continue to drive the car. The terms of car leases vary, so it is important to review the contract carefully.


Leases are often for a certain duration and sometimes specify that they are binding on heirs, successors, and assigns. Also, under the provisions of some leases, if the person who leases a car dies, then an “early termination” of the lease is triggered, but often, there is still a financial obligation to make some or all of the remaining payments. When the lease contains these types of terms, even after your family returns the car to the leasing company, your estate may still have to satisfy the amount of the remaining payments on the lease or pay an early termination fee. There may also be fees, for example, for processing paperwork or excessive wear and tear. Under these circumstances, we can help your family determine if your estate is responsible for the remaining payments under the lease, and if so, try to reach an agreement with the leasing company to satisfy the lease obligations for a reduced amount.


It is possible that the leasing company or the terms of the lease may permit the transfer of the lease to another person in your family. This arrangement may involve transfer fees, but at least your family may have the opportunity to continue using the car for the remaining period of the lease.


Are There Ways to Avoid Probate?


If you do own your car, it may be part of your estate and subject to probate. However, there are some ways you may be able to avoid probate and the costs and delays associated with it.


(1)   In many states, if an automobile is titled only your name, it can be transferred to your beneficiary without having to go through the probate process, which can be lengthy and expensive. The appropriate person, usually a surviving spouse or a child, typically must sign an affidavit before a notary, provide your death certificate, and show identification to the department of motor vehicles, secretary of state, or other government entity. There may be some limitations: Many states allow this simplified procedure only if probate is not necessary for any other assets. In addition, although some states allow it regardless of the number or value of your cars, others allow it only if the total value of the vehicles is under a certain dollar amount.


(2)   In some states, if you own a car jointly with another person, then the surviving owner automatically becomes the sole owner if you die, even without any specific language included on the car title. In other states, this is the case only if the joint owners are spouses. In most states, you must specify on your title that you and someone else, often your spouse, own the car as joint tenants with right of survivorship. This means that upon your death, ownership vests automatically 100% in your surviving spouse, with no need to probate. Typically, all that your spouse will need to do is go to the department of motor vehicles with the title and the death certificate to obtain a new title in his or her name alone.


Warning: If you are considering making someone else a joint owner of your car just to avoid probate, keep in mind that you will be making a permanent gift to that person which could be seized by his or her creditors. Also, if the co-owner’s interest is worth more than the annual gift tax exclusion (currently, $15,000), you will have to file a federal gift tax return—though no gift tax will be due unless you exceed the federal gift and estate tax exemption, which for 2019, is $11.4 million for an individual.


(3)   Several states also offer car owners the opportunity to name a transfer-on-death beneficiary on their registration form that allows the car to be quickly and easily transferred to that person without probate when you pass away. Some states allow this only for cars with one owner, but others allow it for cars with joint owners, in which case, the beneficiary will own the car only after both joint owners have died. The beneficiary does not have any rights while you are still alive, so you can still decide to sell or donate the car prior to your death.


(4)   If you have a small estate, you may be able to transfer your car (and any other assets) without a lengthy probate procedure. Most states have probate shortcuts or allow you to avoid probate completely by allowing those who will inherit your property to claim it by filing an affidavit or by using simplified court procedures. The availability of this option and the amount considered a small estate varies depending upon state law.


(5)   Another option to avoid probate is to title the car in the name of your Revocable Living Trust (RLT) when you purchase it, or if you already own an automobile, obtain a new title in the name of the RLT. This will enable the car to be transferred pursuant to the terms of the trust rather than going through the probate process. If you have a car loan, it may need to be paid off before the transfer, as your lender may not agree to a transfer of title to the RLT. In addition, changing the title might involve paying a sales or transfer tax or fee. Also, keep in mind that if you are involved in an accident, the fact that you are driving a car titled in the name of a trust may give the other driver (and his or her attorney) the impression that you have deep pockets, which may make them more inclined to sue you!


Some people worry that transferring your car into an RLT will expose the rest of the assets to liability resulting from a car accident. However, generally, RLTs do not provide asset protection, so there is usually no increased creditor risk associated with including a car as part of the trust’s assets.


However, in some states, there may be increased vulnerability for married couples who have transferred their assets into a joint RLT. A judgment against one spouse following an automobile accident could put all the assets in the joint trust at risk. This really depends on state law. In states in which married couples can own property as tenants by the entirety, a creditor with a judgment against only one of them cannot seize property owned by both of them as tenants by the entirety. Some states have extended this protection to the property even after it is transferred to a joint trust. In states that have not, separate trusts for spouses may provide better protection if one of them is sued for damages after being involved in an automobile accident.


What Happens If There Is a Car Loan?


If your car is financed by an automobile loan, it is important to let your family members and estate planning attorney know. Whether ownership of your car is transferred with or without probate, it is important to make arrangements to avoid a default if there is a car loan. Otherwise, the lender could repossess the car. The new owner, executor of your estate, or court-appointed administrator will need to quickly contact the loan company after your death to take the necessary steps to continue making the car payments or pay off the remaining debt.


Give Us a Call


Help lessen the stress on your loved ones by making plans in advance for a smooth transfer of all of your assets, including your automobile. We can help you think through who you would like to receive your car after you pass away and the best way to accomplish the transfer of ownership, as well as draft any documents needed to carry out your wishes. Please contact us to set up a meeting to discuss your options.


The ABCs of RLTs

You may have heard of a revocable living trust (RLT), which is a commonly used estate planning solution. But what exactly are they, who is affected by them, how can they be changed, and what do they accomplish?


What Are They?


Trusts, which are legal entities that hold title to property for the benefit of a living person, are often used as an alternative or supplement to a will. A revocable living trust (sometimes called a revocable trust, an inter vivos trust, or a living trust) is a trust that you create during your lifetime and can change at any time prior to your incapacity or death. RLTs are distinguishable from irrevocable living trusts, which are difficult to alter after their creation (though there are a few possible ways, for example, by making limited changes permitted by the terms of the trust, asking a court to order changes, or shifting the trust’s assets into a new trust).


Who Is Affected by Them?


The living person or charity benefited by the trust, but who does not have legal title to the money or property in the trust, is called a beneficiary. The individual who creates the trust, decides how it will operate, and determines what property or funds to include in it is called the grantor (but may also be called the settlor or trustor). The trust is administered by a trustee, who is in charge of managing and investing the funds or property in the trust and distributing them to the trust beneficiary according to the grantor’s instructions, memorialized in a trust agreement. Typically, the grantor names a successor trustee in the trust agreemnt who will manage the trust if the original trustee becomes incapacitated, passes away, or is otherwise unable to serve.


Often, though not always, the grantor of th RLT is both the initial trustee and primary beneficiary. So, you create the trust and provide the funds or property for it, you manage, invest and control the property and money owned by the trust, and you distribute the trust funds to yourself as desired. While the grantor is alive and well, the tax identification number of an RLT is the grantor’s social security number, and any income earned by the trust is taxed as the grantor’s personal income.


How Can They Be Changed?


If circumstances change, as they often do, you can alter the RLT through amendment, restatement, or revocation. Typically, a trust amendment can be made by attaching a properly drafted and executed amendment to the original trust document. An amendment may be appropriate for minor changes or deletions, such as replacing a successor trustee. If more significant changes are needed, such as changing beneficiaries of the trust, or if the trust has already been amended multiple times, a document called a restatement of trust should be created. This document allows you to “restate” or rewrite the entire original trust agreement incorporating any necessary changes instead of revoking the original trust and creating and transferring assets to a completely new trust.  There are circumstances that neither an amendment nor a restatement are appropriate, in which case you can revoke the trust. A revocation may be warranted if a major change such as a divorce or death of a beneficiary occurs and involves dissolving the trust entirely and transferring the assets owned by the trust back to yourself or into another trust.


The law of most states provides that changes should be made according to instructions provided in the trust document, or if there are no instructions, in a way that clearly evidences your intention to make the changes. For example, if you amend the trust, you should create a written document, signed by the grantor and trustee, with a title that shows it is an amendment to the specific trust you are amending. The document should set forth the trust’s name, the date, and the name of the trustee. It should also mention the portion of the trust document that allows amendments to be made and should identify the part of the trust that will be changed, deleted, or added. If there is more than one grantor and the changes are made by fewer than all of them, notice should be provided to the grantors who did not participate in the changes.


Warning: If the trust has grantors who are spouses or domestic partners, and the trust document does not provide otherwise, most states have special rules regarding changes:

  • If the trust owns community property—which, according to the law of some states, consists of all the money earned, property acquired, and debts incurred during a marriage, the trust can be revoked by either spouse or partner, but can only be amended by both of them.
  • If the trust consists of separate property—defined as property owned by one spouse and not the other, regardless of whether it was acquired during the marriage, either spouse or partner can amend or revoke the trust without any action or approval of the other one with regard to the portion of the property attributable to their contribution.
  • In most states, the character of the property interest as community or separate property is not altered when it is transferred to or from a revocable trust.


Joint property, that is, property you own with another person, can also be placed in an RLT. You can put your own interest in jointly owned property in a revocable trust without affecting the rights of other joint owners. Spouses can create a living trust to hold both joint, community, and separate/individually owned property, in which both are grantors and trustees, and which either of them can amend or revoke during their lifetime. In fact, each spouse should be given the power to withdraw his or her separate property at any time without the consent of the other spouse to avoid possible gift tax liability.


What Goals Can an RLT Help Accomplish?


Avoid probate. When you pass away, none of the assets properly titled in the trust will need to go through a long and potentially expensive probate process that could delay a beneficiary’s access to those assets for months or even years. In addition, the trust assets will be distributed privately, and do not become part of the public record, as is the case when a will must go through the probate process, which is overseen by a court. All probate files, including wills, asset inventories, and distribution reports, are open for any member of the public to review, but your family’s privacy is preserved when assets are distributed according to an RLT.


Protect inheritances. You can include provisions in your RLT that will help ensure that, after you die, the trust assets intended to benefit the next generation will not be spent too quickly, vulnerable to creditors, lost in a divorce, or wiped out as a result of other life events your beneficiaries may experience.


Plan for your own incapacity. Although an RLT allows you to retain control over your assets, it is important to plan ahead in case you are unable to do so in the future. In an RLT, you can authorize a co-trustee or a successor trustee to manage the trust property if you become incapacitated as a result of an illness, accident, or incapacity. Otherwise, your family member will have to rely on a financial power of attorney or go to court to ask for legal authority to manage your finances.


What to Do Next


An RLT has many benefits, including enabling you to continue to manage your assets while also providing protections for your beneficiaries. As experienced estate planning attorneys, we can help you plan for the future by establishing a new RLT or changing the terms of an existing one. Call us today to schedule an appointment to discuss this or any of your other estate planning needs.


Home DNA Tests - A Bump In Your Estate Plan

Discovering your ancestry can be both fun and fascinating. At-home DNA tests have grown in popularity in recent years. Often given as a unique gift for loved ones, the kits reveal details about our individual and collective pasts. Unfortunately, these tests aren’t all fun and games. When a test reveals an unexpected relative or biological child, your estate plan may need updating.

If you do not have a will, a newly discovered biological child could be entitled to inherit your assets just like your other children. This could spell serious trouble for your known-family after your passing. Without proper planning, a person with whom you have no relationship could end up with the same inheritance as your other children.

Even with a will, a newly discovered biological child may be able to claim a share of your assets under the pretermitted heir rules of your state. A pretermitted heir is someone who has not been mentioned or specifically left anything in a will. Regardless of being left out, such “heir” may still be able to demand their legal share under the state laws of distribution and descent.

Genealogy isn’t the straight-forward hobby it once was. If you decide to take a DNA test, it’s important to be aware of the risks. We may be used to our medical information staying private, but commercial DNA testing companies are not subject to the same privacy laws that hospitals must obey. As soon as you send your DNA off for testing, it becomes part of a database regulated by the company behind the kit. These companies can volunteer their database for all kinds of unexpected uses. Police, pharmaceutical companies, and app developers are all hungry for this kind of data.

While it’s never a good idea to let fear guide your decision-making process, it’s a good idea to know exactly what you are getting into when taking these DNA tests. Even if you are certain you don’t have an unknown child to worry about, these tests can bring about all kinds of unexpected legal consequences. With the proper planning, though, you can rest easy knowing your assets are protected.


If you’re concerned about your estate planning after taking a home DNA test, schedule an appointment to meet with us as soon as possible. We can help you formally outline the specific individuals you want to inherit your assets in your estate planning documents and those you wish to disinherit. By avoiding general terms like “children” in your plans and being as specific as possible regarding your wishes, we can eliminate confusion that could lead to demands from an unknown biological child.

What Could the SECURE Act Mean For You?

If you have kept up with current events, you know that there is real potential for change to your retirement accounts. The Senate is working to pass new legislation that would help seniors prepare for their golden years more efficiently. Better known as the SECURE Act, Setting Every Community Up for Retirement Enhancement seeks to make Individual Retirement Accounts (IRAs) more appealing for Americans of all backgrounds.

Though the legislation has not yet cleared the Senate, the SECURE Act saw wide bipartisan support in the House of Representatives. And while some details within the law may change, the Act could have a serious impact on the future of your estate plans. One major provision of the SECURE Act is the elimination of the lifetime “stretch” for beneficiaries, with a few exceptions. Instead of requiring a non-spouse beneficiary to withdraw the required minimum distribution (RMD) over his or her life expectancy, the SECURE Act looks to shorten this time frame to either 5 or 10 years.

What Does This Mean?

A beneficiary would be required to withdraw the full amount of an inherited retirement account within either 5 or 10 years of the original account owner’s death. One major implication of this is that income tax due on any inherited accounts will be accelerated. Instead of the income tax being paid over the lifetime of the beneficiary, it will now be due either five or ten years after the death of the plan participant. This will allow the government to receive the income tax on the retirement account faster; however, because of the acceleration, non-spouse beneficiaries will end up with less of the value than anticipated. While nothing is set in stone, it’s important to update your estate plan to adjust for this change in the law.

Trusts as Beneficiaries of Accounts

Once considered a safe harbor approach, “conduit trust” provisions were often included in Revocable Living Trusts so that the trust would qualify as a designated beneficiary.  Under a conduit trust, any required minimum distributions (RMDs) would be paid directly to the trust’s beneficiaries, leaving the retirement account itself safe from creditors (and preventing the premature liquidation of the account). With a 5 or 10 year mandatory liquidation of retirement accounts, conduit trusts will no longer provide the protection many account owners want for their beneficiaries. If you named your Revocable Living Trust as the beneficiary of your retirement accounts, you will need to revisit your plan and instead consider a Standalone Retirement Trust with accumulation provisions. This will ensure that even if a 5 or 10-year payout is required under the new law, the balance of the account will remain protected within this trust for the benefit of your intended beneficiary–safe from creditors.


Charitable Giving As A Solution

A charitable remainder trust may be the right solution to plan for the disposition of your retirement accounts. Such a trust would allow you, the grantor, to retain or name beneficiaries to receive an annual income stream from the retirement account. At the end of the term, the remaining funds would go to a charity named in the trust agreement.

When the trust is created, the net present value of the remainder interest must be at least 10 percent of the value of the initial contribution. It can be payable for a term of years, a single life, joint lives, or multiple lives. Upon the plan participant’s passing, the estate will receive a charitable deduction for distributing the retirement account to the trust. Depending on the value of the retirement account, the age of the trust beneficiaries, and the current tax rate, the deduction will likely cover a large portion of the retirement account.

There are still a lot of questions surrounding the SECURE Act and how it will impact the American people. Should the legislation become law, it’s important to understand the specific ways in which your wishes regarding the ultimate beneficiaries of your IRA could be affected. Schedule an appointment today to meet with us for guidance on how the SECURE Act could impact your estate plan.

Sometimes, Two Heads are Better than One

We rely on our friends, family, and colleagues to help us through life’s challenges. These trusted individuals can also be incredibly important when setting up an estate plan. It is vital to appoint a fiduciary to act on your behalf. A fiduciary acts on your behalf, carrying out your wishes should you become incapacitated or pass away. Legally bound to make decisions with your best interests in mind or in accordance with your written instructions, the fiduciary is invaluable in times of uncertainty.


Many people select a single fiduciary to manage their affairs. However, the amount of time associated with the role can be overwhelming for some people. When deciding who to appoint as fiduciary, be mindful of the degree of effort associated with maintaining and managing your affairs.


In some cases, you may want to nominate co-fiduciaries. This ensures there is always someone available to act even in the event of the death, incapacity, or unavailability  of one of them. Of course, choosing more than one fiduciary has its drawbacks. If you choose to have more than one, you will need to decide if they must act unanimously, or if one can act on your behalf without the consent of the other. If an even number of fiduciaries is named, serious tension can arise when important decisions need to be made. If you require a unanimous decision be made, a deadlock can happen. To avoid this issue, you may want to nominate more than just two fiduciaries, or name another individual to cast the deciding vote in these instances.


Co-fiduciaries may also struggle to coordinate schedules, especially if they are located in different geographical areas or have demanding jobs. Regardless of whether a unanimous decision is required, it is crucial for everyone to be involved in the process of making big decisions on behalf of a loved one. That said, it is also important that all parties involved in the decision-making process get along – which is no easy feat for some families.


Nevertheless, the benefits of having co-fiduciaries may outweigh the drawbacks. If you’re confident that the people you select can get along and make good decisions together, and there are appropriate provisions written into your estate planning documents to address the risk of deadlock, it may be worth appointing several trusted fiduciaries.


Should you decide to appoint just one person as fiduciary, you have a couple of options. As previously discussed, appointing a trusted family member or friend can be a good choice depending on the type of work involved. However, if you do not want to pick one person over another, or if your loved ones are not able to act on your behalf, look to a professional to represent your needs. They’ll generally be more available to manage your assets and make unbiased decisions based solely on your wishes and best interests. Although appointing someone outside of the family may ruffle some feathers initially, it can lead to less animosity after you pass.


Whether you opt to appoint several fiduciaries, family members, or trusted professionals, it’s always smart to plan ahead. Although it might not seem pressing right now, selecting a fiduciary can help you protect the legacy you have worked so hard to build. Should you become incapacitated, you’ll be grateful to have someone you can trust represent you in managing your property, taking care of your finances, and addressing other legal matters, instead of having the court appoint someone you might not have chosen.


Get the guidance you need to plan for your future. We are here to help memorialize your wishes to protect your loved ones and safeguard your assets.


Happy 18th Birthday!! Now What . . .

Congratulations! You are now considered a legal adult. Aside from purchasing alcohol, there is now very little you cannot legally do. Even though you may not feel any different, from a legal standpoint, a lot has changed.


When you were a minor (under the age of 18), your parents were considered your legal guardians and were responsible for making all of your decisions for you. Now that you are an adult, their legal authority is very limited if not completely gone. Although this new found freedom may sound exciting, there are a few things you need to consider:

  • Access to medical information. As a legal adult, you are protected by the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA). This means that your private medical information can only be disclosed to those individuals you have authorized. If you want your parents to continue having access to this information, you will need to have a HIPAA Authorization Form prepared appointing your parents, or anyone else you designate, as an Authorized Recipient.
  • Medical decisions. Chances are, if something were to happen to you rendering you unable to make decisions, it would be your parents that you would rely on to make decisions about your medical treatment. As a minor, your parents automatically had that authority, but now that you are an adult, you must formally grant them this authority. This can be accomplished through the preparation of a Health Care Power of Attorney. Not only can you name someone to act on your behalf (an agent), but you can also provide some general guidelines regarding your healthcare wishes.
  • Financial decisions. If you are planning on going away to college or spending any significant time away from home, having a Durable Financial Power of Attorney in place may be helpful to you. Up until now, if you needed a parent to make a withdrawal from a bank account, or sign something on your behalf, there was no need for any additional steps because they were your legal guardians. However, now, if you want them to continue providing the same services, you will have to grant them this authority through the Financial Power of Attorney.
  • Managing your stuff when you die. You just turned 18, not 98, but now is a good time to begin some responsible habits and consider what will happen to your assets when you pass away, since no one knows when this will happen. You may think that you do not have any assets, but you actually do. In this digital age, each one of your social media accounts is considered an asset. What will happen to these accounts when you pass away? You also have tangible personal property, which might have more sentimental than financial value. The execution of a simple will or trust will allow you to dispose of your assets to whom you want in the manner you want, no matter their monetary value.


Now that you are an adult, it is time to start thinking like one. The first step is meeting with an experienced estate planning attorney to ensure that you are properly protected now that it is your responsibility. We are here to help you navigate this next chapter in your life and ensure that you are protected for the future to come.

HIPPA: An overview for Young Adults

The Federal Health Insurance Portability and Accountability Act of 1996 (HIPAA) was enacted to provide guidelines to the healthcare industry for protecting patient information and privacy. For minors, this is a non-issue because parents, as legal guardians, have access to their children’s medical information and are the ones making most of the medical decisions, as well as paying the expenses.


However, once the individual turns 18 years old, he or she is no longer a minor. This means that the hospitals and doctor’s offices must safeguard the patient’s information from everyone, including the parents. While it makes sense that a legal adult would be the one in charge of his or her own medical information, this can pose some problems for young adults. Most 18-year-olds are still in high school, live at home, and have their expenses paid for by their parents. Although they are considered a legal adult, their day-to-day lives look more like that of a child.


Young adults should consider executing the required documentation to ensure their parents can access their medical records and discuss their medical care. This is accomplished through the use of a HIPAA Authorization Form. With this form, the young adult can designate any individual to be his or her Authorized Recipient of the medical information. Executing this document can be incredibly helpful if there is a question about the young adult’s care while the parent is paying the corresponding medical bill.


A properly executed HIPAA Authorization Form can also be beneficial in the event the young adult ends up in the hospital. Because hospitals do not want to be fined for violating HIPAA, most will err on the side of caution and refrain from disclosing any information to family members without the properly executed documentation. Without this exchange of information, families can feel out of control and doctors may miss important family medical information.


As a companion to the HIPAA Authorization Form, it is also important to have a Health Care Power of Attorney executed so that someone will have the authority to make medical decisions on behalf of the young adult if he or she is incapacitated. Without this document, the family may end up having to go to court in order to have someone appointed to make crucial medical decisions.


If you, or someone you know, has recently turned 18 years old or is in need of a HIPAA Authorization Form, please give us a call. We are here to protect you and your family through all the major milestones in life.