Estate Planning Updates | Marketing and practice development tips for estate planning and elder law attorneys.

June 30, 2021 admin

What are the Most Common Estate Planning Mistakes?

The most common estate planning mistake is failing to have a plan. Estate planning attorneys know people prefer not to address their own incapacity and death. They also know the problems that result when there is no plan. Having a properly prepared estate plan alleviates some of the financial and emotional stress for a surviving spouse and other family members.

Failing to Fund Trusts Undermines the Best Estate Plan

If you have a revocable living trust, then “funding” the trust is required to take assets out of your direct ownership and make your trust the owner. This is the process through which homes, vehicles and any other assets owned through titles or deeds are formally transferred to your trust. A properly funded revocable living trust can help your estate avoid probate. Depending on your state of residence, this can expedite the settling of your estate, save unnecessary legal expenses and keep your private matters private.

Neglecting Incapacity Planning

Planning for incapacity due to illness or injury is as important as planning for the eventual administration of your estate at death. Without proper legal documents—advance health care directive, HIPAA authorization, healthcare proxy, living will, and general durable power of attorney —family members, including spouses, may not be able to access medical information or be part of your health care and financial decision-making process, without first going to court. At a time of family stress, this is no time to pile on any additional legal red tape.

Creating an Estate Plan Without Professional Guidance

Expecting an online, DIY last will and testament to replace a comprehensive estate plan prepared by an experienced estate planning attorney is risky at best and disastrous at worst. Not surprisingly, each state has its own laws when it comes to the proper preparation and execution of a last will and testament. If your last will fails to comply with state law, then it may be declared invalid. In that case, the only option for your surviving spouse or other family members will be to process the estate under the intestate succession law of your state. In other words, when your last will is declared invalid, then state law decides who will inherit what and when from your estate. This is best avoided. The good news? You will not be around to see the mess you left. The bad news? Your loved ones will have to clean up your mess.

Leaving Original Beneficiaries on Non-Probate Assets

Every account with a designated beneficiary transfers on death to that beneficiary. Failing to review and update those beneficiary designations, however, may result in loved ones being unwittingly disinherited. For example, take life insurance. It is not uncommon for an ex-spouse to receive an unintended windfall, when the policy owner dies. Fortunately, such outcomes can be easily avoided simply, by updating the beneficiary designations on all assets for which beneficiaries have been designated. Review them on a regular basis or whenever a major life event occurs, like a divorce or the death of a spouse.

Not Updating Estate Plans to Stay Current with Changes in Estate and Tax Law

Just as changes happen throughout our lives, estate and tax laws change also. In the coming year, major changes are expected to occur in both estate and tax laws. An estate plan created five to ten years ago may not provide the same financial protection or legal outcomes as one created last year. Changes coming in 2021 may require further updating.

Let Adult Children or a Trusted Friend Know Where Documents Can be Found

Having an estate plan is a gift to your loved ones—unless they cannot locate the documents in a timely fashion following your incapacity or death. Would those appointed to have an active role in your estate plan know where you keep your essential estate planning, financial, tax and personal documents? Would they be able to access them? Do you really want them to wade through file drawers and boxes of thirty, forty, and fifty-year old paper records to find important information? While a safe is a great place to store original documents, it can defeat the purpose if the password is not known or available. Similarly, a safe deposit box may require a court order to access the contents, unless you include your spouse, adult children, or others on the signature card at the bank.

Leave a Legacy by Preparing for the Future

The loved ones you leave behind will recognize the effort you made to address your estate planning. It is part of caring for your family and the legacy you will leave with them.

May 31, 2021 admin

Asset Alignment Fundamentals in Estate Planning

Successful Asset Distribution Requires an Estate Plan That Has Crossed the “t’s” and Dotted the “i’s”

The distribution of assets through estate planning takes many different forms. “Asset alignment” refers to aligning asset titles and beneficiary designations to flow according to an estate plan. It sounds simple, but is often overlooked or left incomplete.

The most common asset alignment is the use of a Revocable Living Trust (RLT) to remove assets from the probate estate, minimize taxes and assert control over the distributions for beneficiaries. The asset is placed in a RLT by changing the title into the RLT name. This confers ownership of the asset into the RLT. Unless the asset ownership is properly changed, the RLT will not work as intended.

The Best Estate Plan Only Works When Assets Are Aligned

Failing to fund a RLT occurs when it has been created but assets have not been retitled to reflect a change in ownership from the individual to the trust.

Assets to be aligned include:

Bank accounts
Investment accounts
Real estate property
Insurance policies
Any account with a beneficiary designation
Business interests, partnerships and/or shares of closely held or family businesses

Real estate holdings owned by individuals are placed into trusts by retitling the title or deed. The homeowners or commercial property insurance will need to be updated once the change is made. If there is a mortgage on your home, contact the mortgage company just to confirm that retitling it will have no impact on the mortgage. Get written approval, if necessary.

Life insurance also requires asset alignment. For example, an elderly couple owns life insurance policies designating each other as the beneficiary. When the first spouse dies, the insurance proceeds will pass to the surviving spouse with no probate required. However, when the second spouse dies, the proceeds from both policies will become part of the probate estate. Changing the beneficiaries of the policies to the adult children or to a RLT would avoid probate. Similarly, bank accounts may be arranged to Pay on Death (POD) to one or more designated beneficiaries upon the death of the owners without probate.

Attention to Details and Follow-up for Complete Asset Alignment

Asset alignment is not completed when a request has been made to a financial institution. Trust, but verify! Confirm the requested change with proper documentation and diligent follow up. In fact, you should track the asset for at least six months after the change. While this may sound tedious, the failure to monitor requested asset alignments has doomed more than a few estate plans.

Other elements of the estate plan must be in alignment. For example, a General Durable Power of Attorney, which appoints a person to act as your agent for financial matters, must align with the rest of the estate plan. If an individual was appointed by you ten years ago, then their willingness or ability to serve needs to be confirmed. The same is true for when it comes to guardians you have nominated in your Last Will and Testament to raise your minor children. A family member who was willing and able to raise your children at ages 5 and 7 may not be as willing when they are 11 and 13.

Asset alignment is an essential (and often overlooked) step to finish an estate plan. Only when asset alignment is completed, maintained and monitored will your estate plan be ready to protect everyone you love and everything you have.

April 30, 2021 admin

Buy-Sell Agreements for Privately Held Businesses

The worst time to negotiate a business sale is when the owner has died, and the owner’s family or ex-wife is attempting to gain control. If the business has a buy-sell agreement in place, the transfer of equity from one owner to another, even at the time of a dramatic trigger event, will be smoother and less contentious.

A buy-sell agreement serves several functions:

Defines an exit strategy for the owner
Provides for business continuity to the next generation or a chosen next owner
Manages tax liability for the seller, and
Prepares the business in the case of an unexpected event, including death, divorce, disability, or a disabling mental illness.

A buy-sell agreement should be created when all parties are actively engaged in the negotiations. It should be designed to work with the estate plan for the business owner. In many cases, the buy-sell agreement is a substantial part of the estate plan. The agreement will require the services of an attorney, a CPA and a business valuation expert, who might be a CPA with special accreditation in business valuation.

The language must be clear and specific to avoid interpretations that could lead to litigation. Similar to a divorce agreement, it is wise for each party to have the agreement reviewed by independent attorneys to eliminate any potential conflicts of interest. Litigation between the parties in the future will cost far more than the cost of a thorough and well-crafted buy-sell agreement.

The buy-sell agreement must have an accurate and agreed-upon valuation of the company. Terms like “fair market value,” “market value,” or “book value” are general terms and are not adequate. There are many different ways to value a business, and all must agree on how this is to be done.

Maintaining Your Buy-Sell Agreement and Planning for the Unexpected

Like an estate plan, a buy-sell agreement requires upkeep. A good rule of thumb is to have the business obtain a certified valuation from an appraiser on an annual basis. If this seems like an unnecessary cost, consider the cost of litigation. It will be higher than an annual valuation.

Buy-sell agreements also restrict outsiders or unwanted business partners from being involved in the business. This is especially important for family businesses. The stakes are high, when it comes to preventing ownership battles from in-laws, ex-spouses and others.

Additional provisions to include:

Right of first refusal
Valuation clause requiring ongoing valuations by an accredited professional
Deadlock provisions to allow the owners to dissolve the business at any point, and
Terms of the financing and payout, interest rates, business value and timing.

There should also be a plan in place for what would happen, if the owner elects not to go forward with the agreement.

Tax planning needs to be part of a buy-sell agreement to protect the seller’s profit. Many buy-sell agreements provide for the payments to take place over a period of years to soften the tax liability.

Remember, a buy-sell agreement created with an end-date ten years in the future must also work if a triggering event occurs and the agreement must be used within six months of its date of execution.

March 30, 2021 admin

Estate Planning for Your Business

Estate planning for a business, known as business succession planning, imposes a discipline that is not always welcome by business owners or their employees. The plan is based on what is unthinkable for most business owners: that they will one day exit the business, pre- or post-mortem. However, lacking a succession plan almost guarantees that any business will fold after the owner becomes disabled, dies, or retires.

How to Start the Business Succession Plan Process

An understanding of the business organization itself and all of its moving parts is necessary. Each company must evaluate all processes, management, finance, product/service delivery, tech infrastructure, etc. While a business owner and the key employees understand the entire business from soup to nuts, the attorneys and financial professionals who will create the legal documents and provide funding products (e.g., disability insurance and life insurance) also need this information.

A business succession plan does not happen in a week, or even in a month. It can take a year or longer to design and implement a plan, depending upon the size and complexity of the company. An accurate valuation of the business, usually performed by a CPA with valuation credentials, is also a lengthy process. Do not be surprised if there is pushback within the business against the professional performing the valuation. An outsider digging deeply into the business financials is often treated like an interloper. Consequently, make sure that everyone in the business knows the valuation expert is a fiduciary and is providing a valuable service to the business. Cooperation is essential.

Aligning with the Personal Estate Plan

Crafting a business succession plan without regard to the personal estate plan of the business owner is reckless and exposes the family and the business to potential catastrophic financial losses. The personal estate plan will contain strategies used to limit the family’s exposure to tax liability, when the business is sold or transferred. It also protects shareholders, if the family is maintaining control of the business, from personal legal and financial challenges. Coordination is key.

Preparing for the Unexpected Fosters Focus on the Future

Preparing for the sale or transfer of a privately held business provides a sense of security and continuity for all involved. Key stakeholders appreciate the investment, confident that their efforts will not evaporate, if an unexpected event occurs. Family members who depend upon the business for income may not be directly involved with the succession plan, but the security it creates is appreciated.

How Intrusive and Time Consuming will Creating the Business Succession Plan Be, and What Will It Cost?

These are the bottom-line reasons that business owners do not like succession plans. The cost must be understood as an investment in the future of the company. Intrusion is a real problem in companies where teams do not work together or there is infighting among departments. The business succession plan forces these issues out into the open. Bringing internal issues to light, especially if they are deeply embedded in the culture of the company, could be the difference between the company surviving through a change of ownership and having it implode for reasons the owner and the heirs of the owner could never otherwise anticipate.

Just as every high-net worth individual needs a comprehensive estate plan, so, too, does every business. This is true whether the goal is to continue the company or sell it for the highest possible price. If you are a business owner, then take steps now to complete (or update) and coordinate your personal estate plan with the estate plan for your business.

February 26, 2021 admin

Alternatives to Traditional Inheritance Planning

When using alternatives to traditional last will-based inheritance planning to avoid probate and maintain privacy, avoiding errors is critical, since certain mistakes cannot be fixed. This approach requires careful planning. Even when most or all assets are moved out of the estate, there may still be some estate administration involved.

Here are some simple alternatives to traditional inheritance planning:

Transfer on Death Account Ownership

When assets are owned jointly and titled as “Transfer on Death” or TOD ownership, either party may access all or a portion of the assets without permission or knowledge of the other owner. If either party is vulnerable to creditors, the TOD account could be at risk. If one of the owners needs to apply for Medicaid, the account will be considered a countable asset. The assets only “transfer on death” upon the death of the last surviving joint owner.

Using Trusts to Avoid Probate

Trusts are used to solve multiple potential inheritance problems. A “testamentary” trust is created through instructions in the last will and comes into existence when the owner dies, the will has been probated and the executor settles the estate. Consequently, a testamentary trust requires probate, it does not avoid it.

A revocable trust is created while the owner (known as the trustmaker, grantor, settlor, or trustor) is living, and the owner may make changes or terminate the trust at any time. Upon the death of the owner, the trust converts to an irrevocable trust and only then does the trust provide creditor protection.

Credit shelter trusts are commonly used by married couples. The trust is created and funded while both spouses are living. On the death of the first spouse, the surviving spouse may use the trust assets. When the second spouse passes, the beneficiary is typically the couple’s children. Because the surviving spouse never actually owns the assets in the credit shelter trust, the surviving spouse’s estate does not include the assets of the trust, helping to minimize tax liability.

Beneficiary Designations

Retirement accounts, pensions, insurance policy proceeds, investment accounts and any financial assets with a beneficiary designation do not pass through probate and are not governed by a last will. Beneficiary designations should be checked regularly, and the estate should never be named as a beneficiary.

Make Gifts While Living

Gifting while living is a simple way to move assets out of an estate, but it might not be appropriate for everyone. For example, an adult child who is careless with money will benefit from a trust that controls when and how much money may be given. Have a family member headed off to college? Consider opening a 529 account in a child’s name and funding it annually to help finance their education. What about a loved one with “special needs”? No one with special needs who is receiving (or perhaps may become eligible for) means-tested public assistance benefits, should be gifted assets directly. This could compromise public benefit eligibility. Consider creating a “supplemental needs trust” to own the gifted asset for the benefit of the beneficiary with special needs. Alternatively, consider opening an ABLE account, which functions much like a Section 529 account, but for those with special needs.

Another gifting option is to pay certain bills for loved ones in a way that does not impact gift tax exclusions. A second option is to pay tuition bills at every level of education, from elementary school to post-graduate programs. The condition is that payments must be made directly to the educational institution for authorized expenses (i.e., books and tuition).

The same option exists to pay for medical bills, but payment must be made directly to the health care facility or provider directly.

Final Thoughts

Undertaking planning to distribute your assets to heirs in non-traditional ways has rewards and risks. Be certain that the different parts of your plan align with goals for tax planning, long term care costs and asset distribution.

January 29, 2021 admin

Steps to Create an Estate Plan

Estate planning is the process of preparing for incapacity and death. An estate plan is also used for tax planning, conveying wishes for medical care, end-of-life decisions and post-mortem directions. While most estate plans should include a last will and testament, a last will by itself is not an estate plan.

Creating an estate plan requires time and effort. However, without an estate plan, children can be disinherited, end-of-life decisions can be made by strangers and wealth can be consumed by taxes or go to the wrong person.

Making the Estate Planning Process Easier

The estate plan begins with discussions and goal setting:

Who will make critical medical and financial decisions in the event of incapacity?
Will all assets pass to your spouse upon your death?
Who will raise your minor children to adulthood, if they are orphaned?
Should children receive a large lump sum when you die?
Will federal or state estate taxes present a problem for heirs?

How you and your spouse answer these and other questions will guide the preparation of your estate plan. Different goals require different strategies. A modest estate plan will be simpler than one comprised of significant assets, properties in multiple states or children from different marriages.

Once goals have been established, strategies can be developed. If taxes are a concern, trusts can pass assets across generations. If the family includes a family member with special needs, a Special Needs Trust (SNT) will be needed to protect the his or her eligibility to receive government benefits while having access to an inheritance. To keep a vacation home in the family, it may be productive to create a legal entity to own the property and pay for maintenance and taxes.

Create an Estate Inventory

An inventory of assets should be created. In addition to assets like real estate, savings, investments, life insurance, retirement funds, personal property and even “digital assets,” be sure to include account numbers, institutional information and contact information. Calculate your net worth, which will be used to determine if your estate may be subject to federal or state estate taxes. Some states also have inheritance taxes.

Develop a Plan for the Family

If there are minor children, the last will is used to name a guardian in many states. Review the family budget to ensure that enough money would be available to support the family in the event of the death of one or both parents. Life insurance is a great financial tool for this purpose.

Have the Correct Estate Planning Documents Prepared

Last Will and Testament. A last will provides for the distribution of property, nominates an executor to administer the estate and to nominate guardians for minor children. Jointly owned assets, Payable on Death (POD) assets and assets controlled by beneficiary designations are not governed by a last will.
Financial Power of Attorney. This person, often called an “agent” or “attorney in fact,” will act on your behalf, if you are incapacitated. The POA may give broad powers or be limited to specific transactions, when it comes to your financial affairs.
Healthcare Power of Attorney. This names a person who may make treatment decisions, if you are incapacitated.
Trusts. The size and complexity of the estate determines which type of trust may be most appropriate.

Final Steps to Completing an Estate Plan

Once the estate planning documents are prepared and executed, the estate plan is not done. There are two final steps: checking beneficiary designations and funding trusts.

Assets having a designated beneficiary, like IRAs and pensions, need to be reviewed and updated. This should happen every few years and more often, if there is a divorce, death, or remarriage in the family.

Assets placed into trusts must have the ownership status changed. If real estate is placed into a trust, the deed must reflect the change in ownership. If trusts are not funded, the goals of the estate plan will not be achieved.

December 30, 2020 admin

Change How You Think About Estate Planning

People procrastinate with their estate planning for many different reasons. However, the results are always the same: a disaster for loved ones, often at great financial and emotional cost. Why do people put off estate planning? Considering our own certain mortality or potential incapacity is unsettling. Excuses come easily, and other tasks take precedence, like planning a vacation or cleaning out the garage.

Think about your life and legacy instead. The more planning you do, the more control you have over the final outcome. A completed estate plan means you have done the work of preparing for the future.

Estate Planning for the Living

Many people think they are too young to need an estate plan. However, the opposite is true. While the legal documents used in an estate plan may be known by different names, depending on your state of residency, the need to execute them begins upon reaching adulthood. This is age 18 in most states.

In many states, parents need a Last Will and Testament to nominate a guardian for their minor children. Without a Last Will, a judge in the local probate court must be petitioned to select and appoint a guardian to serve as the backup parent. A Last Will empowers parents with the authority to decide who will raise their minor children, if orphaned. In addition, the Last Will is used to designate a trusted family member, friend or institution to be in charge of the children’s inheritance under terms provided by the parents. You may designate the same person, but the duties of raising minor children and administering their inheritance are often divided between two people.

Estate Planning for Incapacity

If you become incapacitated due to illness or injury without having executed the necessary legal documents in advance, your family will need to petition the court to appoint someone to make medical and legal decisions for you. This requires filings with the court, at least two attorneys and testimony from family, friends and medical providers. In addition, this court process exposes private and confidential information regarding your health and finances to the public record.

Consequently, an estate plan should include a Durable Power of Attorney for Financial Matters, a Durable Power of Attorney for Healthcare Decisions and a Living Will. Through these fundamental legal documents, you determine who would make your legal, financial and medical decisions, were you ever incapacitated. This is far less stressful and less costly when done in advance.

Overwhelmed by Paperwork?

The thought of wading through years of paperwork is another reason people put off creating an estate plan. If you are not organized, it can be daunting. However, who would you rather go through your personal, financial and medical files: yourself, your children, or a court-appointed stranger? Your estate planning attorney will give you a list of the documents needed, which will keep this task focused.

Cost Concerns

Creating an estate plan with an experienced attorney is far less costly than the expense, stress and family strife resulting for your loved ones, when there is no estate plan. If you are planning your estate for the first time, you may only need the legal documents described in this article. However, if your assets include a family-owned business or significant assets, there are many other strategic legal tools available to protect you and your loved ones. Regardless, whether you are of modest means or live in a mansion, a well-designed and legally executed estate plan is essential to protect your loved ones and assets.

Proper estate planning is not a “do it yourself” project, since there is little margin for error. This article is strictly educational and must not to be relied upon as personal legal advice. Accordingly, your estate planning attorney can ensure that your estate plan is just right for your unique circumstances.

Final Thoughts on Estate Planning

Consider your estate plan to be like a owning a home. It requires insurance, maintenance and when necessary, a refresh in design. As a “rule of thumb,” you should at least review your estate plan every two years, when members of the U.S. House of Representatives are chosen. This event alone can trigger significant tax law changes impacting your estate plan. In addition, during the time period between reviews, there may be changes in your life and your important relationships. To help keep your estate plan properly maintained, your estate planning attorney can provide thorough reviews and updates, as needed.

November 30, 2020 admin

The Digital Age: Securing Digital Assets

As you prepare your estate plan, you need to address a new kind of asset you might not have thought about: digital assets. These assets are accounts accessed online and data in platforms like Apple, Yahoo, Google and others. Digital assets are mobile phones, laptops, tablets and personal computers. Digital assets are also the platforms you use to stay connected with friends and family.

What is at stake?

You must take steps now to secure digital assets and delegate access information (log ins), so your executor can locate and save family photos, take down social media pages, gain control of email accounts or sell the website addresses. In short, you need to protect your digital assets from being shut down involuntarily and inaccessible to your loved ones.

Why are these assets different than tangible assets?

In the past, an estate executor could count on uncovering accounts, while searching through boxes of paperwork and old files. Usually a bill or two would arrive in the mail to alert the executor regarding an unknown account. Digital assets are a lot harder to find than tangible assets and there is a real risk that years of data, valuable files or photos could be lost easily – and forever.

Can you protect your digital assets?

Many lawsuits against big tech companies have been brought by families trying to get photos, emails, videos and business records of their loved ones. Some companies automatically delete accounts and data, if there is an extended period of inactivity. Your family could lose a legacy, if you do not include digital assets in your estate plan.

Start with a complete inventory.

A digital asset inventory helps your executor or surviving spouse gain access to your accounts. You should not include your digital inventory in your will. That could lead your digital assets becoming part of the public record, if your estate goes through probate. The inventory needs to include the web address of the digital asset, your username and password. If there are security questions used to confirm that the user is permitted to have access, include the questions and the answers in your inventory.

Many banks will text a security code to a user’s cell phone or send an email to their computer to verify that the person accessing the account is the owner. Part of your digital asset estate plan should include log in information to your cell phone and computer, so your executor may access these security confirmations.

A handful of digital platforms, like Facebook and Google, have started to provide users a means of establishing an alternate contact, in event of their death. This is not yet a common practice, so you will need to prepare your digital assets in advance.

October 31, 2020 admin

Assessing Assisted Living Facilities

Watching the health of our parents decline with age is a challenge for them and you. Our parents may enter a stage where they require some support in daily living but are otherwise able to live independently. This stage can be especially difficult, when you are unable to provide the support they need. In these instances, an assisted living community may be a suitable option. These communities provide residents with a comfortable lifestyle, the help they need and increased social opportunities. Not all facilities provide the same level of care. Therefore, research is essential to select the best option for your loved ones.

Gathering Information Objectively

Choosing an assisted living community should be done with care. For some, the cost is an important factor. Some individuals are willing to pay for a luxury residence with every imaginable amenity. Others prefer basic living environments with dining, social activities and transportation provided. Learning what each community provides can help you when comparison shopping.

Who Regulates the Assisted Living Facility?

Assisted living communities are regulated by a host of federal and state laws. They must meet certain standards or risk losing their operating licenses. Despite these regulations, it is wise for family members to continue to be involved with their loved ones after they move into an assisted living facility, to ensure that appropriate care is being provided.

What Questions Should You Ask?

Moving into an assisted living facility during a pandemic presents unique challenges. Onsite visits may be different, but they are important when it comes to vetting a community. Talking with staff and management will show how well the facility is run, especially during a difficult time.

If you can tour the facility, be sure to visit over a mealtime. Taste the food served to the residents. Breathe in the smells. If the facility reeks of urine or disinfectant, these are warning signs. Watch how the staff treats the residents. Are they kind and caring? Listen to the sounds. Are there loud beepers, buzzers and announcements?

Ask for a copy of the contract and fee schedules. You will want to review these contracts carefully. If they refuse to share a contract with you, find another facility.
What are the costs? Are any costs covered by Medicaid or Medicare? If you are purchasing an apartment within the community, what happens when you leave? Do your heirs get any of the purchase price back? Who handles the sale of the apartment?
What is the ratio of staff to residents? Do they run employee background checks and drug testing, when hiring and randomly thereafter? Are there training manuals and is on-going training conducted?
How is the facility prepared for medical emergencies? Is there a nurse onsite at all times and is a doctor on call? How far is the nearest hospital?
What is the “culture” of the community? Do residents have freedom of choice, or does the activities schedule look limited? Request copies of activity schedules or a newsletter.
Talk to residents and their family members for candid “insider” information from those already part of the community.

Planning for the Future

When individuals move to a “continuous care community,” they are there for care as they move through various life stages. Should an illness or injury require someone to receive more ongoing medical attention, the resident would merely transfer to the nursing home branch of the facility for care and rehabilitation. This alternative would save you and your loved ones from starting a search for another facility during a trying time. Like Goldilocks, you need to evaluate a variety of senior living arrangements to find one that fits just right.

September 30, 2020 admin

Planning Your Legacy

“Estate planning” traditionally means making legal arrangements for how you want to transfer your assets to your loved ones, charities and others after you die. “Legacy planning,” on the other hand, can involve the same steps as estate planning, as well as others. Over the last few years, legacy planning has grown in popularity and frequency of use. This is a brief overview of some key legacy planning considerations.

How to Create a Legacy

The key to the process, is carefully considering what you want. Topics to address include:

What kind of legacy you want to leave?
Do you want your assets to go entirely to loved ones and friends?
Do you want to make substantial charitable gifts?
If you made charitable gifts, would you want your loved ones to be involved in administering your generosity through a donor-advised fund, rather than leaving lump sum charitable gifts?
Are you interested in creating your own family foundation?
How you might want to transfer your most important values to your loved ones?

Incentivizing a Legacy

You can impart values to your loved ones through various means. A popular option is to connect incentives to the receipt of an inheritance. You may choose to have your loved ones accomplish one or more life goals to receive their inheritance. For example, you may encourage them to:

Graduate from college
Maintain gainful employment or contribute to society through service, even if they were to inherit enough assets to meet their financial needs without working for a paycheck
Be involved in your family foundation
Successfully complete drug or alcohol addiction treatment, if relevant; or
Pass ongoing drug tests to continue receiving installments from a trust fund, if relevant.

Although these options are not comprehensive, they provide a basic example of incentives you might choose to include in your legacy plan.

Choosing a Trustee

If your estate and legacy planning involves ongoing distributions to loved ones, then your plan will likely require someone to administer those distributions. in keeping with any attending incentives. In short, with legacy planning you will need the right person or institution to serve as trustee. Although you can carefully create a plan to achieve your goals and yet be sensitive to the individual skill sets and challenges of your loved ones, a trustee who does not follow through on the terms and conditions will cause your plan to fail.

Selecting a trustee can be a delicate balance between authority and compassion. Your loved ones could resent power they find to be unreasonable. The trustee should be someone with integrity, competence and common sense.

You should appoint at least one successor trustee to take over, if the initial trustee becomes unwilling or unable to perform the duties. Even so, many people have difficulty designating one person in whom they would have sufficient confidence. Accordingly, the best option may be to select a professional or corporate trustee from the start. Having an unbiased third party making tough calls can prevent damaged relationships within the family.

Alternatively, there is yet another option to consider. Depending on your unique circumstances, you may want to appoint a trusted family member or friend, along with a professional or corporate trustee. That way you may have the best of both worlds covered to carry out your legacy planning.