Capital District - NY Estate & Elder Law

It Is a Good Idea to Have an Advanced Directive

 

While it may be difficult to come to conclusions needed to create an Advanced Directive, it is really a good idea to have one when you reach the age of majority, according to The Herald News in “Being Prepared: Advanced Directives.” An Advanced Directive lets your family and the medical community know what you would want, if you become incapacitated

An estate planning attorney can help you ensure that you have an Advanced Directive in place which conveys your wishes to your loved ones. Discuss this ahead of time and let your family members know what you would want to happen in advance.

Select a person you know and trust to be your healthcare agent. Tell them you have selected them to serve in that role. Don’t let this be a surprise to them at the last minute. They will need to fully understand your wishes and be willing to carry them out.

Be as specific as you can about what kind of treatment you would want and which you would not. That includes medical ventilation, a feeding tube, kidney dialysis and other treatments.

Do you want to be resuscitated if you stop breathing, or have CPR performed, if your heart stops working? You’ll want to have a DNR—Do Not Resuscitate—if you don’t want extreme measures to be taken to keep you alive.

Once you have made your decisions, meet with an estate planning attorney to complete a written advanced directive.

States have different sets of rules regarding advanced care directives, so an estate planning attorney in your state of residence is necessary.

 You should keep your advanced directive and DNR document where someone can get them, if an emergency occurs. Do not give it to a relative who lives two states away—they will not get to you in time. Be sure that everyone involved with your healthcare has a copy. This includes your primary care physician. Ask that your directive be maintained in your official medical file.

If you are wondering how or when to have this conversation about a loved one’s end-of-life preferences, the answer is now. Start by sharing your own wishes and then ask them to share theirs. Ask if they have made the proper preparations for their wishes to be carried out and discuss what must happen to have their wishes followed.

Resource: The Herald News (Aug. 10, 2018) “Being Prepared: Advanced Directives”

 

 

Have Young Children? Estate Plan Is a Priority

 

 

 

Many young families with small children do not have estate planning at the top of their list. However, it really should be a top priority, according to The Daily Sentinel’s in “What is missing from your estate plan?”

Some information in estate planning that should be known is a last will and testament. It is the document which parents need to legally nominate guardians to rear their children, if orphaned. While some people name one person to rear the children and handle the money, it’s a good idea to separate the two roles.

Without these instructions in a will, those left behind can have very different ideas about where the children should live and who should care for them. If the two parent’s families have very strong opinions, suddenly both families have hard choices to make about what will happen to the children.

No parent wants to leave a legacy of court battles and family division.  However, that’s what is likely to happen without a will.

There are other issues that estate plans address while you are alive.  It is also necessary to plan for incapacity. A living will, also known as an “advance directive,” is important because it helps pre-answer questions, regarding what treatment and care you would want if unable to speak for yourself. Do you want to be kept alive by artificial means? You do not want your loved ones making this decision during a time of great emotional stress, so this is an important document to have in your estate plan.

Finally, your estate plan should include a medical durable power of attorney to deal with all other medical decisions other than end of life. Without it, if you are not near death but not able to share your opinions about your care, your family and your medical providers are placed in a difficult position. In contrast, those who care enough about their family designate an agent and ensure that their wishes are made legally binding.

The big question everyone must face is “When should I start working on my estate plan?” If the answer is “Later,” then the real answer is “No time soon.” For young parents, that puts your minor children in a bad position, where a court may make the decision about who will rear them and how their lives will go on after you are gone.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances, including families with young children.

Resource: The Daily Sentinel (Aug. 12, 2018) “What is missing from your estate plan?”

 

 

Children Can Contest Glen Campbell’s Will

 

Three of Glen Campbell’s children, who were intentionally left out of his will, have been given the right to contest the will by a judge, according to Wealth Management.com in “Glen Campbell’s Kids Come After the Rhinestone Cowboy’s Estate.”

Campbell, who recently passed away, left two wills from 2001 and 2006. The 2006 will names Campbell’s fourth wife Kimberly, who is the executor of the estate, and five of Campbell’s other children as his beneficiaries. Campbell went public with his Alzheimer’s diagnosis in 2011.  However, it’s not known how far back his illness began. The legal burden facing his children: prove that he lacked the needed capacity to execute both wills.

If the will is deemed invalid because of lack of capacity or undue influence, the immediately preceding will is resurrected, said one estate planning attorney who is not affiliated with the case. The previous will probably disinherited them also, which is why they must prove the invalidity of both wills.

Kimberly has told a local newspaper that she would not challenge the kid’s right to contest the wills and the judge’s decision noted the lack of opposition. She has also filed a claim seeking reimbursement from the estate for more than $500,000 to cover the cost of his medical care.

It was also reported that one of his daughters, Debbie Campbell-Cloyd, has filed for a complete accounting of all payments made by the estate, as well as payments to and from a previously undisclosed bank account. She alleges that royalties that should have been deposited into an account controlled by Campbell’s estate, were instead deposited into this account, which is now controlled by Kimberly. The singer’s former manager has power of attorney over the account.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may include a blended family.

Resource: Wealth Management.com (Aug. 2, 2018) “Glen Campbell’s Kids Come After the Rhinestone Cowboy’s Estate”

 

 

Your First RMD May Be Looming

 

You have been fortunate over the years to grow your IRA tax free.  However, withdrawals from your traditional IRA is taxable income. You will have to make Required Minimum Distributions starting at age 70½. It is a good idea to be prepared financially, according to Kiplinger in “When Do I Have to Take My First RMD?”

If you miss that deadline, be warned: penalties are expensive. How does half of your required withdrawal amount sound? It is bad enough to be sure you won’t miss this deadline!

It’s not as hard today to find out when you must take your RMD, although in the past this was challenging. There are online calculators that can help, and you can always ask your estate planning attorney, just to be sure. The IRS gives you a little wiggle room for that first RMD–until April 1 of the year that you reach age 70½. However, here’s the kicker: the second RMD is due on December 31 of that same year. Therefore, you might end up taking two RMDs in one tax year, which could make your tax bill bigger than you had expected. You may be tempted to defer taking the first RMD, but don’t. Take it by the first calendar year in which you turn 70½ and avoid that double-RMD whammy.

There are a few factors that could change your RMD. One of them—if your spouse is more than 10 years younger than you are and is named as the sole beneficiary on at least one of your IRAs—the RMD will be less than what some online calculators show.

If you discover that you missed your RMD, don’t delay trying to fix the error. Figure out how much you should have taken and remove that amount as soon as possible from the IRA.

File Tax Form 5329, “Additional Taxes on Qualified Plans (Including IRAs) and Other Tax Favored Accounts.” You can file this with your tax return or by itself.  If you are requesting that the 50% penalty be waived, payment does not have to be made when the forms are filed.

Last, attach a letter explaining what happened steps you’re taking to fix the error.

If you’re still working, you can delay taking RMDs from your current employer’s 401(k) until after you stop working in that job, unless you own 5% or more of the company. The important word here: current employer. You’ll have to take RMDs from prior employers, even if you’re still working. However, you might be able to delay your RMD, if your current employer lets you roll over money from other retirement accounts into the current employer’s plan.

After you’ve taken your first RMD, subsequent years get a little easier. They’re due by December 31.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and can also make sure that your retirement and estate plans work well together.

Resource: Kiplinger (July, 2018) “When Do I Have to Take My First RMD?”

 

 

There are Many Reasons and Uses for an Estate Plan

 

Why should you have an estate plan? There are many reasons and many goals, including providing for your spouse and children, as well as dealing with a family business, minimizing tax liabilities and naming the people you want to act on your behalf when you’re gone, according to the Brainerd Dispatch in “Wealth Column: Estate Planning Basics,”

So, what do you need? First, you’ll need a will, which is the basic tool for estate planning. It prevents two very expensive and stressful issues: managing your wishes for your estate and possibly losing hefty sums through unnecessary taxes.  However, that’s just the start.

You may also need trusts, depending on your family’s situation. You’ll want to have life insurance policies with beneficiaries. Life insurance proceeds are not governed by the will, so your heirs will receive any funds directly. Benefits from retirement funds fall into this same category. That’s why making sure that your beneficiary designations are up-to-date, is so important.

Working with a team of trusted advisors, is productive for most people. Remember that your estate plan touches on taxes and investments as well as your will, power of attorney and medical directive. Consider these steps to get your entire estate plan in order:

• Gather personal data about yourself and your family,
• Create a balance sheet of your assets and liabilities,
• Review your will and any existing trusts,
• Evaluate all estate tax options, such as the best method of disposing of your share of community property—considering the unlimited marital deduction and the use of tax-sheltered trusts,
• Consider the optimal way to distribute your retirement plan benefits,
• Calculate potential estate, gift and income tax liabilities,
• Determine the availability of liquid assets to meet potential estate expenses and taxes.

An estate planning attorney can work with the information you have gathered to create an estate plan that fits your unique circumstances.

Resource: Brainerd Dispatch (Aug. 3, 2018) “Wealth Column: Estate Planning Basics”

 

 

Prepared for Retirement? Maybe, Maybe Not

 

You can put a lot of effort into saving for retirement and still have questions.  However, it is important to know that the success of your plan will often be your income to expense ratio, according to Investopedia’s article “Determining If You’re Prepared for Retirement.”  

Commonly asked questions are:

• Am I saving enough, or did I save enough?
• Can I retire, or did I make a mistake and retire too early?
• Were my investment decisions the right ones?
• How am I doing, compared to my peers?

The answers to these questions are important, but like so many things in life, there is no “one-size-fits-all” answer. Just because you’ve accumulated six, seven or even eight figure retirement savings, doesn’t mean you’ve “won” the retirement game. In this case, size doesn’t always matter.

One of the key factors to a successful retirement is your income to expense ratio. Can you generate enough income from all sources, without drawing down too much from your portfolio?

If you have a small to non-existent portfolio, but you have a good-sized pension, maybe you don’t need such a big portfolio. If you live very simply, it’s possible that Social Security benefits and modest withdrawals from your investments might take care of your needs.

Remember that just because you have a large portfolio, does not mean you don’t risk running out of money during retirement. If you spend lavishly on first-class vacations, drive luxury cars and live in a house that costs a fortune to run, you can easily get yourself into a tight spot.

Take a long hard look at all sources of income to determine how long your portfolio will last. You should include Social Security, pensions, retirement accounts and any other sources of income. It is important to figure out how much income you’ll need on annual and monthly basis. You’ll then have a better sense of whether you are prepared for retirement.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, as well as point out options on planning for your retirement.

Resource: Investopedia (July 19, 2018) “Determining If You’re Prepared for Retirement”

 

 

Going Off to College? Documents are Helpful

 

If your child is heading off to college you have prepared them already with background education and the ability to live away from home. However, are they prepared with the documents that an adult needs? They should be, according to the Monterey Herald in “Liza Horvath, Senior Advocate: Off to College.”

When college students go to off to a world of dorm living, classes and increased independence, many are on their own for the first time. If they are 18 or older, they are legally considered adults. If they become sick or injured while away, the rules of HIPAA, the Health Insurance Portability and Accountability Act, prohibit anyone from speaking with a doctor, gaining access to medical records or being informed of their status–even their own parents!

If your college admissions package did not include an Advance Health Care Directive and a HIPAA release form giving you permission to speak on behalf of your student, speak to doctors and to be part of any medical decisions. Your estate planning attorney will be able to draft those documents for you.

Make sure that your college-bound student also has a list of who they should contact in an emergency, including cell, home and work numbers and email addresses. This list should include their primary treating physician and a history of their immunizations, chronic conditions, medications and  other relevant medical issues.

This information can be stored in the cloud or on their phones.  However, if the phone is stolen or lost, so is a lot of sensitive data. Write it down on an old-fashioned piece of paper and keep a hard copy at home and one on your own computer, so it can be easily sent if necessary.

You should also consider having a power of attorney for finances and a directive to the college, so information on your student can be released to you. This will allow you to see the academic records and act on your child’s behalf on any legal matters.

If you have adult children, even those who graduated long ago, you may also to wish to have some of these documents prepared.  

Resource: Monterey Herald (July 28, 2018) “Liza Horvath, Senior Advocate: Off to College”

 

What about Assets If There are No Kids or Spouse?

 

 

 

If you do not have any children or a spouse, there are many options available for creating an estate plan that benefits others, according to nj.com in “Single without kids? Who should be your heir?” This is not an unusual situation and an estate planning attorney will be able to help you examine your options. You have many choices, although it may not seem that way at first glance.

Yes, start with considering family members. If you leave money to older siblings who are dependent upon programs like Medicaid, you might put their financial situation at risk. If the older sibling dies shortly after receiving the inheritance, then the money will be part of their estate.

If you decide to leave assets to your siblings and have a will properly prepared by an estate planning attorney, then the assets will be distributed according to the terms of the will, regardless of how the siblings feel about it. Is it likely that there will be a will contest? If no, then make an informed decision based on how you want your assets distributed.

There are other things that you can do with your assets. Consider making a charitable donation to an organization you have been involved with during your lifetime or one that shares your values and goals. A scholarship to your college or to a local community group would be greatly appreciated and may create a lasting legacy to your memory. You can also give with “warm hands,” which is making charitable donations while you are alive, to nonprofit organizations. That way you can enjoy seeing the impact of your gift, while you are alive.

Make sure to consider the tax ramifications of any estate plan. There may be an inheritance tax in your state that will have a significant impact on the inheritance. Will your heirs be able to afford that?

Sit down with an estate planning attorney and talk about what it is you’d like your estate to achieve after you’ve passed.

Resource:nj.com (July 20, 2018) “Single without kids? Who should be your heir?”

 

Multigenerational Living on the Increase

 

There are a record number of multigenerational homes in the U.S. and that trend is expected to keep rising, according to a Pew Research Center analysis reported in Financial Advisor Magazine in “How to Address Multigenerational Estate Planning Issues.”  

For some families, it’s college students moving back with mom and dad while they pay off student loans or newly married couples living with one set of parents while they save money to purchase a home of their own. New parents are recruiting their own parents to combine households, so child care and a stronger sense of family is created. In other families, having elderly parents move into their children’s home helps the seniors with aging issues.

In many instances, families add separate living quarters to their existing homes. States are addressing zoning issues that prohibited this kind of construction in the past. 

Pressures created by rising housing costs, housing shortages and demographics have all contributed to this new trend. How to navigate this kind of family “merger” requires a lot of planning, including estate planning. How will the property pass to the next generation? What about siblings who are not involved in the shared housing space?  How should their portion of the inheritance be handled?

There are many ways to navigate the closer relationship with aging parents or childcare needs. Some elect to purchase a nearby condo where parents are living, so at some point the parents can move from their single-family home to an apartment. For others, the parents move to an apartment within the home, so their children and grandchildren can enjoy the larger living space. 

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may include a multigenerational home.

Resource: Financial Advisor Magazine (July 31, 2018) “How to Address Multigenerational Estate Planning Issues”

 

 

Blended Family Can Challenge Estate Planning

 

A second marriage can sometimes create a problem, because the biggest reason that stepparents and stepchildren fight is over money, according to the AARP in “Don’t Split Heirs With Your Estate.”

If you and your spouse are each financially independent and leave your assets to your heirs, you’ll be less likely to run into the big money issues.  However, if one spouse depends on the other for support, assets will be needed for the other spouse’s lifetime. When there’s a big age difference, the children of the older spouse may end up waiting 10 to 15 years for their inheritance.

The couple’s first responsibility should be to their spouses. You can do this through your will, or a prenuptial or a postnuptial agreement. The goal is to make sure that the other spouse has enough money to live on. A surviving spouse does have the right to make a claim to a certain amount of the late spouse’s assets, in the absence of a will or a proper prenup. However, by taking care of this in the will, you can spare each other and your blended family from the time and delay that a claim will take. The award may be large or small, depending upon the laws in your state.

One way to head off some of the anger that may follow a first spouse’s death in a second or subsequent marriage, is to distribute at least a little bit of cash to all of the adult children in equal amounts. It’s not about the amount, but it is a signal that you are aware of them and their needs.

In blended families with good relationships, it would be ideal for children and stepchildren to be treated equally. If there’s a rational reason not to, like younger children who need college education funds, make it clear to all what the thoughts are behind the distribution.

Personal property is another source of conflict within blended families. If first-family heirlooms are claimed by second-family children, the whole family could be headed to court. Create a document that makes your wishes clear about which child should get what possessions and attach it to your will with the help of your estate planning attorney.

If you leave everything to your spouse, there’s no way to be sure your own children will inherit anything. There is a chance that after your death, the ties between children and stepparents could weaken. You may need to leave money for your children in a trust that provides income to the spouse for life.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and may include a blended family.

Reference: AARP (July/August 2018) “Don’t Split Heirs With Your Estate”