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Preparing Your Beneficiaries to Receive Their Inheritance
When you hire an estate planning attorney, you are often looking for help with preparing your accounts and property to ultimately pass smoothly and safely to your loved ones. This is a key component of estate planning. An experienced estate planning attorney will put much thought and effort into ensuring that an appropriate estate plan is created using a variety of legal documents including wills, trusts, powers of attorney, and health care directives. These important tools can ensure that what you own ends up in the right hands, at the right time, and with as little cost and delay as possible.
Prepare beneficiaries to receive assets. An often-overlooked aspect of estate planning, however, is preparing beneficiaries to receive money and property. With all of the thought that goes into making sure taxes are minimized, probate is avoided, and accounts and property are protected, few clients give sufficient thought as to whether their beneficiaries have been adequately prepared to suddenly receive large amounts of cash or manage property. Working through the following questions with your beneficiaries can pay huge dividends by ensuring that they are prepared to receive your accounts and property.
Identify successors for a family business. If a family business makes up a large portion of your family’s wealth, have you identified who will continue to run the business if you become incapacitated or suddenly pass away? Will your successor be a family member who has been working in the business, and is this person fully prepared to take over your role? If a family member will take over, does the person understand the extent to which they will manage the business for the benefit of other family members? Or does the successor have expectations about the financial rewards of participating in the business that differ from those of the rest of the family? These questions can cause a great deal of discord within a family if left unanswered.
Consider complicated assets. Perhaps the wealth of your estate is made up of a complicated portfolio of stocks, bonds, cash, and investment accounts. If that is the case, do your beneficiaries understand the basics of investing with these types of accounts? Do they understand the tax implications? Are your beneficiaries used to taking advice from attorneys, financial advisers, and tax professionals, which will allow them to achieve the most benefits from the accounts left to them? Or do your beneficiaries consider such advice needless, expensive, or untrustworthy, and will such attitudes come back to haunt them down the road?
Discuss the challenges of co-owning real estate. If you have a large amount of real estate, farmland, or commercial property or rentals, have your beneficiaries been taught how to manage such properties? Will these properties be passed on to beneficiaries through a trust or through a business entity such as a limited liability company or family limited partnership? If an entity is being used, how has the management structure been set up? Do all beneficiaries understand their roles within the management structure? What if one of the beneficiaries no longer wants to be in a partnership with his or her siblings? Is there a clear path for the beneficiary’s exit from such an arrangement that is fair to both the departing beneficiary and the remaining beneficiaries? Is that exit spelled out clearly in an operating, partnership, or other type of agreement for later reference by your beneficiaries?
Even something as seemingly innocuous as passing on a family vacation property to adult children can pose a significant risk of rekindling old sibling rivalries. Have you and your attorney met with the beneficiaries, either as a group or individually, to make sure your goals and hopes are clear with regard to the property being left to them? What do you hope your beneficiaries will do with the property you leave to them? Have you asked them whether they even want the property, or in what manner they would like to receive it? Many parents have been completely surprised at their children’s responses to these questions.
Consider asset protection. Parents sometimes think that their children are not at all concerned about asset protection and believe their children would be upset if they were left anything with “strings attached” or conditions on how to use the money or property. Imagine the parents’ surprise when the children share their reasons for why receiving an inheritance outright would be a disaster. Parents are not always aware of the marital or financial challenges their children may be facing that have the potential to lead to a significant, if not total, loss of their inheritance.
Gift today rather than at death. In many cases, it makes sense for parents, during their lifetime, to give their children a portion of the accounts and property that they ultimately want to leave them at death so that the parents can observe how their children will manage and use the property. In some cases, parents have learned a great deal about how their children are likely to handle even larger infusions of cash or property from an inheritance after they are gone. On a more positive note, giving children a substantial amount of their inheritance prior to death can provide a valuable opportunity for parents to mentor their children in the appropriate use and management of the accounts and property, preparing them for the additional accounts and property earmarked for them at the parents’ passing.
We are here to help. Preparing your beneficiaries to receive money and property can in many ways be an even greater challenge than preparing your money and property for your beneficiaries. Nevertheless, putting sufficient effort into such an undertaking has the potential to pay huge dividends by helping to ensure the money and property you have spent your life accumulating will be used to truly benefit your loved ones in the way that would be most satisfying to you. If you are uncertain about where you should start, please reach out to us. We have significant experience helping our clients determine the right questions to ask to begin this important process. We are here to help—call today to set up a virtual or in-person meeting.
Retirement Account Basics for 2020
The COVID-19 pandemic has led to volatile markets, and your retirement account may have a much smaller balance than only a few short months ago. In response to the economic fallout stemming from the pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed into law on March 27, 2020. The CARES Act was primarily aimed at providing quick and substantial relief to individuals and businesses affected by the economic shutdown in response to the spread of COVID-19. Several of the relief measures can provide significant peace of mind, as they provide you with the option to access some of the funds in your retirement accounts without the usual penalties if you have been negatively affected by COVID-19. In addition, the new legislation contains other provisions that may lower your tax bill for 2020.
Early Distributions. Under the CARES Act, the 10% early distribution penalty tax that would otherwise apply to the majority of distributions made before a participant turns age 59 ½ is waived for “coronavirus-related distributions” (CRD) made at any time during 2020 from qualified retirement plans, such as IRAs, 401(k)s, 403(a) and (b) plans, and 457 plans, for distributions of up to $100,000.
A CRD is a distribution from an eligible retirement plan made during 2020 to a qualifying individual who is diagnosed with coronavirus, or whose spouse or dependent has been diagnosed with it, or who has experienced adverse financial consequences from a coronavirus-related quarantine, furlough, layoff, work reduction, business closure or reduction in hours (for business owners) or an inability to work due to lack of child care related to coronavirus. The distributions will be subject to income tax, but if you qualify, you may opt to spread the payments evenly over three years rather than having to pay it all in 2020. You may also recontribute the distributed funds to the retirement plan or another retirement plan (with an exception for 457 plan distributions), by a single rollover or multiple rollovers, within three years of the date of the distribution regardless of any contribution limit established by the plan.
Loans. During the 180-day period from the date of enactment of the CARES Act, plans can increase their loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance for qualified individuals, up from the previous limits of $50,000 or 50% (note that loans are not permitted from IRAs) for participants adversely affected by coronavirus as discussed above. In addition, qualified individuals with an existing loan from a retirement plan that is due to be repaid by December 31, 2020, can delay repayment by one year. Later repayments will be adjusted to reflect the delayed due date plus interest accruing during the delay. The one-year period of delay in repayment is disregarded in determining the maximum five-year loan period.
Required Minimum Distributions. If you are a participant in a 401(k), 403(a) or (b) plan, a 457, or an IRA (not a defined benefit plan), the CARES Act waives required minimum distributions (RMDs) for the calendar year 2020, meaning that if you do not need the distribution, you can leave the funds in your account, avoiding any income tax that would be due if you took a distribution. The CARES Act waiver also applies to RMDs for account owners who reached age 70 ½ in 2019 but deferred taking an RMD in 2019 until April 1, 2020. Normally, account owners in this category would also have to take a second RMD for 2020 by December 31, 2020, but this RMD is waived as well.
Under the previous tax law, an RMD you have taken cannot be rolled back into an IRA unless this is done within 60 days after the distribution, and a rollover from one IRA to another IRA (or from one Roth IRA to another Roth IRA) can be done only one time per year (365 days). Under the CARES Act, if you had already taken an RMD prior to the passage of the new law, you are allowed to roll it over into the original account within 60 days, and this time limit was extended by IRS Notice 2020-23 for distributions—including RMDs—taken between February 1st and May 15th if the rollover occurs by July 15th. If you took an RMD in January, it may not be returned unless the IRS provides additional relief.
Although the once-per-year IRA rollover rule is still in effect, if you have already used your IRA rollover, you are permitted to do a rollover to a non-IRA retirement account such as a 401(k). The once-per-year rule does not apply to RMDs taken from a 401(k) or to Roth conversions.
The waiver is also applicable to designated beneficiaries who have inherited retirement accounts. Further, 2020 is not counted for purposes of the post-death payout “five-year rule” applicable to non-designated beneficiaries when the owner died before his or her own required beginning date.
However, the CARES Act has no impact on the new 10-year payout rule required by the SECURE Act, which precludes most non-spousal beneficiaries from stretching their distributions over their lifetime, as 2020 is the first year that non-eligible designated beneficiaries would be subject to that rule when they inherit a retirement account. Because the 10-year payout does not start until the year after the year in which the account owner died, 2021 counts as year one rather than 2020.
Note: The CARES Act does not affect your ability, if you are 70 ½ years old or older, to make an annual qualified charitable distribution (QCD) of up to $100,000 from your IRA directly to a qualified charity in 2020 without counting the distribution as taxable income. However, the suspension of RMDs may reduce your incentive for doing so because the distribution will not offset the RMD, thus enabling you to avoid taxable income. However, a QCD will reduce your taxable IRA balance, so it will still provide a tax benefit to you. Further, under the CARES Act, for 2020, individuals who itemize their deductions can elect to deduct up to 100% (up from 60%) of their adjusted gross income for cash charitable contributions, so if you choose to take a cash distribution from your IRA and contribute that cash to a qualified charity, you can potentially completely offset the tax attributable to the distribution using the charitable deduction.
Review beneficiary designations. Now is also a great time to reach out to your financial advisor to review your beneficiary designations. As you know, life circumstances can change very quickly. If a marriage, death, or divorce has occurred since you last reviewed your beneficiary designations, you should give some thought to whether they are still consistent with your estate planning objectives. It would be unfortunate if your retirement funds went to an ex-spouse or someone else you no longer want to benefit. In addition, alternate beneficiaries should be named in case the primary beneficiary passes away before inheriting the account.
If a trust is the beneficiary of your retirement account, it is crucial for us to meet to review your estate plan. Before the SECURE Act was passed, we may have included “conduit” provisions in your trust so that the trust would qualify as a designated beneficiary of a retirement account, allowing the RMDs to pass through to the trust’s primary beneficiary for their individual life expectancy. Now, conduit trusts are ineffective after ten years, at which point the retirement account balances must be paid directly to the trust’s beneficiaries, which may substantially increase the income taxes they owe and make the entire amount available to claims by their creditors or divorcing spouses. Needless to say, if your estate plan includes this type of trust, it may no longer achieve your goals.
We Can Help
We have all been affected by COVID-19 in one way or another, but we want to let you know that we are available to help. If you would like to discuss how to best include your retirement account, which may be one of the largest assets you own, into your estate plan or have any other estate planning concerns, please give us a call. Our goal is to make sure that you have the best estate plan in place so you can gain peace of mind from knowing that you and your loved ones are secure, both now and in the future. We are happy to meet with you by video conference or by phone if you prefer.
 Under the new SECURE Act, effective January 1, 2020, account owners are typically required to take an RMD from their plan upon reaching age 72.
 The plan participant’s estate, a charity, or a trust that does not qualify as a see-through trust.
 Beneficiaries who do not fall within one of five categories (surviving spouse, minor child of the participant, disabled beneficiary, chronically ill individuals, beneficiaries less than 10 years younger than the plan participant) of beneficiaries that are still allowed to use the life expectancy payout.
Estate Planning as a Powerful Exercise in Optimism
Estate Planning as a Powerful Exercise in Optimism
Many scientific studies have established that there is a wide range of benefits flowing from a positive attitude and positive thinking. At a time when many are focused on worst-case scenarios and gloomy predictions, you can resist the pull of negativity and embrace the beneficial results of positivity. This is not just an attempt to make yourself feel better in spite of reality, but rather to take full advantage of the proven benefits of positivity. You can increase not only your own wellbeing but also that of your children or other beneficiaries by creating an estate plan designed to promote their happiness, which in turn, will enable them to live healthier and more successful lives. Fortunately, if you are someone for whom it does not come naturally, positive thinking can be learned by surrounding yourself with positive people, deliberately engaging in positive self-talk, and living a healthy lifestyle, just to name a few common methods.
Health Benefits of Positivity
According to the Mayo Clinic, positive thinking has a multitude of health benefits, including an increased life span, lower rates of depression, lower levels of distress, greater resistance to the common cold, more psychological and physical well-being, better cardiovascular health and less risk of death from cardiovascular disease, and better coping skills. Happiness, a byproduct of a positive attitude, has repeatedly been shown to boost the immune system, with studies showing that happy people who were exposed to illnesses were less likely to become sick or had milder symptoms than others who were less happy.
Impact of Positivity on Success
Dr. Martin Seligman, a well-known researcher in the field of psychology, has found that those who are happy and satisfied with their lives are more likely to have desirable outcomes in school, work, social relationships, health, and life in general. Negative emotions narrow our perspective, driving us toward a single, instinctive action (reacting to danger) while ignoring everything else around us. In contrast, positive emotions are accompanied by a broadened perspective that allows us to see and examine a variety of options and then choose the one we believe is best for that moment.
Those who tend to be more optimistic are more likely to establish clear life goals, focus on different ways to reach their goals, and believe that their goals will become a reality. Hopeful people view negative events as temporary setbacks or isolated unfortunate events. As a result, they are more resilient and able to handle challenges and view them as learning experiences. They have confidence that they can take action to improve their lives, and thus, are more likely to do just that.
Use Your Estate Plan to Create Positivity and Appropriate its Benefits for Your Beneficiaries
Rather than focusing primarily on negative goals, such as preventing a spendthrift child from wasting his or her inheritance, view your estate planning as a way to pass along a positive legacy. One method is to create an ethical will that shares your important values, religious beliefs, life lessons, and blessings with your family members. An ethical will, which could be in written or video form, is something that could be shared during your lifetime as a way of drawing family members closer together, or it could be one of the most meaningful gifts you leave for family members when you pass away. The positive emotions that come from the enhanced relationship and knowledge that they are loved could be a powerful catalyst that increases the wellbeing of your family.
In addition, you can provide funds for activities that create positive experiences for your beneficiaries, ultimately enhancing their wellbeing. Although providing financial security for family members and loved ones is clearly a positive goal, rather than simply thinking of your wealth as a way for your children or loved ones to acquire more “stuff”, you can be more deliberate and thoughtful about your estate planning, setting aside money for meaningful experiences, e.g., family trips, schooling, or volunteer activities, that will allow your beneficiaries to flourish and develop their strengths and interests. In fact, research shows that experiential gifts (gifts of events that recipients experience) result in a stronger relationship between the giver and the gift recipient than material gifts, even if the gift giver does not experience the event with the recipient. The improvement in the relationship is the result of the positive emotions that are experienced while the recipient is experiencing the gift. These positive emotions also can ultimately increase their physical and mental wellbeing and likelihood of success in life.
Let Us Help You Achieve a Positive Goal
During this time of crisis, a positive attitude is more important than ever. We can help you think through and identify the ways you can incorporate positivity into your estate planning, which will provide you with the confidence and peace of knowing that you are not only providing your family with financial security, but also that you are leaving a positive legacy that will promote your loved ones’ physical, emotional, and spiritual wellbeing and future success. Please call us today to schedule a meeting so we can discuss how you can best achieve your positive estate planning goals. We are more than happy to meet with you over the phone or videoconference if you prefer.
 “Positive Thinking: Stop Negative Self-Talk to Reduce Stress,” last visited April 16, 2020, https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/positive-thinking/art-20043950
 Mark Holder, “Happiness and Your Immune System,” Psychology Today, June 9, 2017, https://www.psychologytoday.com/us/blog/the-happiness-doctor/201706/happiness-and-your-immune-system
 Cindy Chan and Cassie Mogilner, “Experiential Gifts Foster Stronger Relationships than Material Gifts,” 43(6) Journal of Consumer Research 913 (April 2017), https://acadehttps://academic.oup.com/jcr/article/43/6/913/2632328mic.oup.com/jcr/article/43/6/913/2632328
Celebrate Single Parent Day: Take Steps to Provide for Your Kids’ Future
In 1984, Congress issued a resolution, signed by President Reagan, establishing March 21st as National Single Parent Day: a day devoted to recognizing the dedication of single parents, who make self-sacrificial efforts to care for their children’s needs, and encouraging family members, friends, and communities to help provide an optimal environment for their children. As a single parent, you should feel proud of your efforts to nurture and care for your children. Here are a few additional things you can do to provide for your children’s future that you may not have considered.
Name a guardian. If your children’s other parent is willing and able to care for them if you pass away unexpectedly, he or she will likely be given physical custody of the children and responsibility for their care. In the case of single parents, however, the other parent often may not be able or willing to take on this role. This is why it is crucial for you to name a guardian who will step into your shoes to provide day-to-day care for your children if something happens to you. If you do not name a person you trust, a court will step in to appoint someone. Because the person the court chooses to be your children’s guardian may not be the person you would have chosen, it is vitally important that you designate this person in advance. You can name a guardian in your will (and in some states, a separate document can be used specifically for this purpose): Although the court will still have to appoint the guardian, the court will typically defer to your wishes.
In making your decision, there are a few factors to keep in mind: Does your chosen guardian share your values and parenting style? Will your chosen guardian require your children to relocate? Does your chosen guardian have the energy and stamina needed to care for your children? Do they have the time to be an involved caregiver? Do you want more than one guardian to care for multiple children, or do you prefer for the children to stay together? It is important to weigh the importance of these considerations in making your decision.
Create a custodial account. If your children are minors, you can establish a custodial account to hold an inheritance under a law called the Uniform Transfer to Minors Act or the Uniform Gifts to Minors Act. If you do not appoint the custodian, the court will appoint someone to control and manage your children’s inheritance until they reach the age of majority. This is necessary because minors legally cannot own money or property on their own. A custodian will manage the funds in the account for the benefit of your children, but the downside is that when they reach the age of majority (18-21 years old depending on applicable state law), the funds will be distributed to them in a lump sum. At that point, they can spend the money as they wish, which may not be optimal for a young person who is not yet mature enough to make prudent financial decisions. In addition, any present or future creditors could try to reach your children’s inheritance to satisfy their claims.
Create a trust. A trust is often preferred over a custodial account because it is more flexible and can be designed to protect the funds against your children’s future creditors and their own imprudent spending. You can name someone who is adept at handling money to manage and disperse the funds for the benefit of your children if you die before they reach adulthood—or the age you have decided to the funds should be distributed to them. This can be the same person who will act as the children’s guardian, or a different person if you do not trust the guardian (e.g., an ex-spouse) to handle the money you have left to your children.
If you would like to set up a trust that can be used to manage your money and property for your (and your children’s) benefit if you become too ill to do it yourself, you can establish a revocable living trust with yourself as the trustee. This type of trust will remain in effect if you pass away, and the successor trustee you have named can continue to manage the funds and make distributions for the benefit of your children. The successor trustee can also step in to manage and distribute the funds for your benefit if you are unable to do so. An often less preferable option is to include provisions in your will for the establishment of a trust at your death. This type of trust will not help if you become disabled because it will not go into effect until your death. In addition, it will not be funded until your will has been probated, a process that may be expensive and time-consuming. Also, by creating the trust through your will, the management and distribution of funds may also be subject to ongoing oversight by the probate court.
The trust terms can specify the purposes for which the trust funds can be used, how and when the trustee should make distributions, and, if you so choose, the age at which you would like the trust funds to be fully transferred to your children—which does not have to be at the age of majority. You can choose the type of distributions you believe are best for your children: Some parents give the trustee the discretion to make distributions for specific purposes, such as the children’s health, maintenance, education, or support, or even for a down payment on a house or to provide funding for the child to start up a business. Others give the trustee complete discretion in making distributions for the benefit of the children. The timing of distributions, which can be designed to meet your particular goals, can also be spelled out in the trust.
If you have more than one child, you can specify whether the distributions should be for equal amounts or if a greater percentage of the money in the trust should be distributed for the benefit of certain children, e.g., children with special needs or younger children who did not get as much financial assistance from you while you were alive. In addition, you can address specific issues that may be of concern. For example, you can indicate whether you would like a home you own to be sold, or if you prefer for the children’s guardian to move into the home so they will not have to relocate. If your home is not sold, the terms of the trust can also indicate who will be responsible for paying the real estate taxes, utility bills, and maintenance expenses. The home is a particularly complex issue to consider, as there are often emotional ties and memories connected to it, as well as ongoing costs, and frequently, a mortgage. As experienced estate planning attorneys, we can help you think through the best course of action for your family.
Consider writing down your wishes regarding grandparents’ visitation. If you have named someone other than a grandparent (your parent) to be your children’s guardian, it is important to specify in your estate planning documents whether you wish the grandparents to be able to visit with your children.
While you are living, it is your fundamental constitutional right to determine whether–and how often– your children will see your parents (their grandparents). However, when you pass away, grandparents may have a right to see your children. Every state has enacted a grandparent visitation statute, and they vary regarding their permissiveness or restrictiveness. Some statutes only allow grandparents to obtain a visitation order when the children’s parents have separated, divorced, or one or both of them have died. Others are less restrictive and allow grandparents to obtain a visitation order even if the parents are still married and are both still living. What both types of statutes have in common is that they both require visitation not to interfere in the parent-child relationship and to be in the best interests of the child.
Call Wiles Law Today
As a single parent, you can gain substantial peace of mind by creating an estate plan that ensures your children will be properly cared for—both physically and financially—in the unlikely event that something happens to you while they are still too young to take care of themselves. Please call our office today to schedule a consultation.
Caregivers, You’re Not Planning Just for Yourself
As a caregiver, you spend much of your time, money, and energy taking care of the needs of others. Those who have taken on the role of caregivers for ill or disabled spouses, aging parents, children, or other loved ones with special needs are typically selfless and giving individuals who may not stop to consider their own needs.
Your job is invaluable, but it may exact a heavy toll if you do not seek out the help of others. We want you to know that you are not alone: There are resources available that can make your job as a caregiver easier. It is important to seek out the emotional support of others, either family members or other caregivers, who can understand and empathize with both the rewards and the physical, emotional, and financial burdens associated with caregiving. There are also programs that provide respite care or adult daycare that can allow you to take a much-needed and well-deserved break. State or federal aid and tax credits or deductions may be available to help ease your financial burden as well.
Care for Yourself and Your Loved Ones by Creating an Estate Plan
As your estate planning attorneys, we are another resource you can look to for support. If you are caring for aging parents or other family members with disabilities, it is essential to ensure that you not only address your own emotional and financial health, but that you have an estate plan in place that addresses both your needs and the needs of those you care for. We can provide you with the peace of mind that comes from knowing not only that a plan is in place for your future, but also the future of the loved one under your care. Knowing that your loved one will continue to receive loving care, even if something happens to prevent you from continuing to acting in the role of caregiver, will help ease any concerns you have about your loved one’s care.
Name a Guardian
If you are a parent who is acting as a caregiver for a special needs child, you should name a guardian—and more than one alternative—in your will to serve in the role of physical caregiver if you pass away or are no longer able to care for your child. Otherwise, the decision about who will act as a guardian will be left to the court, which may not reflect your wishes.
If the care recipient is an adult, you must ask a court to name you as your loved one’s guardian and/or conservator to be able to make decisions about their health care, living arrangements, and finances. If you are providing day-to-day care, you may want another trusted person who can handle your care recipient’s financial matters to act as conservator.
What happens if you are no longer able to act in the role of guardian for your adult care recipient? State law varies regarding the designation or appointment of a successor guardian for an adult. Some states allow a standby guardian to be appointed at the same time the first caregiver is appointed or to be designated in the initial guardian’s will or in another written document, as long as it is properly witnessed. If anything happens to you, the standby guardian can immediately step in to begin providing care. Some states allow a standby guardian to serve for a brief time but require approval by a court before being appointed as the permanent guardian. Still, other states have laws enabling the court to consider an individual you nominate in your will as a successor guardian when the court is making the decision about who is the best person to take on that role. We can help you determine the best course available for you.
Consider a Special Needs Trust
A will alone is unlikely to adequately address the needs of your care recipient. If you leave money outright to the person for whom you are caring or to another caregiver, it could be spent in a way that is contrary to your wishes, and will now be vulnerable to creditors of the recipient. In addition, it could make your loved one ineligible for government benefits or aid.
A special needs trust is an estate planning tool that may be very beneficial for your care recipient. A special needs trust can help preserve the beneficiary’s eligibility for government benefits, name a well-qualified trustee to manage the trust funds, designate a care manager, and preserve your loved one’s quality of life. Along with your financial advisor, we can help determine which of your resources can be used to fund the special needs trust or if a life insurance policy may be needed to ensure that there are sufficient funds available to provide for the beneficiary’s care. We can help you create a trust that sets aside, protects, effectively manages, and distributes assets for your care recipient’s lifetime, and equally important, designates a trusted individual to act as an advocate for your loved one if you cannot.
Wiles Law Is Here for You
It is important not only to recognize your own emotional needs and develop the skills needed to deal with the stresses of caregiving, but also to reach out for help when you need it. As a caregiver, it is crucial to ensure not only that your own future is secure, but to also create plans that provide for your family and care recipient if something should happen to you. Take the time to create an estate plan, or if you have a plan in place, to reevaluate it at regular intervals to address changing life circumstances and laws. Please call us today to set up a meeting. We can help put your mind at ease by designing a plan that provides security for you, your family, and your care recipient.
Steps to Take When a Loved One Dies
As your estate planning attorneys, we are here to help you when your family member or loved one dies. If you are simply too overwhelmed to call us during the first couple of weeks after your loved one passes away, it is important to keep in mind that there are several practical and legal considerations that the person named as the executor of the estate or trustee of the trust should address in the initial weeks following the death, prior to the administration of the estate or trust. During this stressful and emotional period, it is easy to forget about certain tasks which may lead to problems if left undone, as well as important legal considerations you must heed. Here is a list of some important initial steps:
Checklist of Initial Responsibilities
- Make burial arrangements. If some time is likely to pass before burial, for example, if there will be a delay prior to a special ceremony and burial in a veteran’s cemetery, make arrangements with your funeral home to store your loved one’s remains until the service.
- Obtain ten original certified death certificates. After someone passes away, their death should be registered with the local or state vital records office, which can then issue official death certificates. A state-licensed funeral director or coroner typically prepares and files the death certificate with the state. A death certificate is often required to claim life insurance benefits, close bank accounts, transfer titles, and take care of other matters connected to your loved one’s estate.
- Ascertain the immediate needs of beneficiaries and expenses that must soon be paid. Determine which of your loved one’s accounts contains cash that can be accessed for the beneficiaries’ needs and other expenses. The last thing you want is for an item to be repossessed or the electricity turned off due to non-payment.
- Arrange care for animals. If your loved one had pets or other animals, you should immediately arrange care for them. Your loved one’s will or trust may name the person your family member has chosen to care for them, but if there was no will or trust, you may need to arrange for someone to look after the animals until a caretaker can be determined.
- Inspect your loved one’s home to make sure it is secure. If your family member owned a home, walk around the home to make sure any points of entry are locked and that there are no maintenance issues that need to be addressed. Notify the police department that the home will be vacant so police can patrol the area more frequently.
- Change the locks. It is important to change the locks on the home to ensure that neighbors, service providers (maids, dog walkers, etc.), and even family members who had keys are no longer able to enter the home. This is important to ensure that no one prematurely removes any property from the home, even if they are well-intentioned.
- Remove valuables from the home and store them in a secure place. Jewelry, cash, works of art, furs, and other especially valuable property should be kept in a safe place until the estate or trust is administered and the items are transferred to the proper beneficiary. Check on the insurance coverage for these items.
- Secure vehicles. Any cars your family member owned should be locked. No one should drive the car, and the odometer should be checked to determine the mileage at the time your loved one passed away. If the car is parked on the street or in a driveway, you should notify the police to keep a closer eye on it. Insurance on the car should be maintained.
- Arrange for the home and yard to be maintained. Continue lawn care and general home maintenance to ensure that the house does not become an eyesore and a target for thieves.
- Discontinue services that are no longer needed, and hire any new personnel required by a beneficiary or dependent. If your deceased loved one had domestic help, security guards, or assistants that are no longer needed, stop the services after checking any contracts or written agreements. If a beneficiary or dependent now needs the help of an assistant or maid, hire the necessary workers to ensure they receive the proper care.
- Leave the heat or air conditioning on. To prevent any problems that may arise as a result of very high or very low temperatures, it is important to continue to heat and cool the home. In addition, if the home is vacant during cold winter months, a faucet should be turned on to prevent pipes from freezing and bursting.
- If required, alert local officials of the vacant home. In some jurisdictions, a higher tax rate is applied to vacant homes, so in those places it is important to notify the city if the home is vacant and part of an estate administration.
- Contact agencies to cancel benefits. If your family member was receiving Social Security, veterans, or other benefits, notify the relevant agency of the death. Do not cash any benefits checks that arrive after death, and if any benefits are received covering a period after death, they should be returned. Depending on the timing of your family member’s death, the government agency may automatically withdraw the last electronic payment.
- Cancel subscriptions and monthly service agreements. If your loved one was receiving a newspaper, magazine, or other regular subscription or monthly service, it is important to cancel them, and if applicable, request a refund.
- Cancel credit cards and charge accounts. Notify all of your loved one’s credit card companies of the death and close the accounts as soon as possible. It is also important to notify all three major credit bureaus of the death to avoid identity theft.
- Locate insurance policies. Find all your loved one’s insurance policies. Call the homeowner’s insurance company to confirm that there is coverage for fire, flood, and/or other needed items as part of the homeowner’s insurance policy. In addition, locate your family member’s life insurance policies, which may have been issued by alumni associations, travel clubs, credit card companies, trade associations, etc.
- Gather personal records. Locate all bank statements, checkbooks, canceled checks, and at least the past three years of income tax returns.
- Determine if anyone owed money to your loved one. While gathering the needed personal records, check to see if there are any documents reflecting debts owed to the deceased individual. Contact those individuals to collect the amounts owed.
Legal Considerations to Keep in Mind
- Once your loved one has passed away, anyone authorized by a power of attorney to act on his or her behalf is no longer valid. Therefore, if a family member was in charge of paying the deceased person’s bills as an agent under a financial power of attorney, that person should stop paying those bills after the individual has died. The executor of the will or trustee of the trust is now the proper person to handle those matters.
- If your family member made arrangements for his or her funeral in advance utilizing a document such as a Remembrance and Services Memorandum, the deceased person’s written instructions may be legally binding under state law, and thus, the survivors may be obligated to comply with them. It is also possible that your family member prepurchased their funeral arrangements through a local funeral home.
- If any of your loved one’s property or money was not part of his or her trust at the time of death or was not made a part of the trust at the time of death automatically, that money or property must be handled through the probate process. That is, the money or property cannot be distributed to anyone, including the trust, without involvement by the probate court.
- If there is any possibility that you or any other family member may want to disclaim any money or property you will inherit, it is important not to take any action that would be considered an acceptance of the inheritance. For example, if you are one of the beneficiaries of your loved one’s life insurance, but decide that you would like for your share to go to the next beneficiary in line, do not complete any paperwork or accept checks involving the life insurance policy.
- Do not prematurely distribute any of your loved one’s property or funds. The executor of the will or trustee of a trust are the only individuals allowed to distribute your loved one’s money or property and must pay all debts and taxes before transferring any funds or property to the beneficiaries.
Call Wiles Law As Soon As Possible – (843)-718-0232
Although you can take care of many of these initial concerns on your own, the administration of your loved one’s estate or trust can be quite complex. Even small mistakes could end up being a major headache. It is important to contact an experienced estate planning attorney to help you with probate or trust settlement and/or administration, as well as any other legal matters that may arise during this difficult and emotional time. Our goal is to provide you with peace of mind by guiding you through the administration and settlement of your family member’s trust or estate, so please call us as soon as you can.
Millennials, You Need an Estate Plan Too
As millennials (born 1981 to 1996), you are well known for your distinctiveness as a group. Your generation has followed paths and set goals that are decidedly different from those chosen by previous generations. You are highly diverse, better educated, more socially conscious, and wait longer to have families than your parents and grandparents. But one thing you have in common with other generational groups is the need for estate planning. Unfortunately, a startling 79% of millennials do not have basic estate plans in place. Your needs and goals may vary, but having an estate plan in place is crucial for every adult, including millennials. You do not know what the future holds, and we can help you make sure that plans are in place that not only provide for your own future needs but also those of your loved ones and pets.
Will and/or Trust
As a millennial, you may not have accumulated as much wealth as members of older generations, but it is important for you to make sure that your money and property will go to the family members or loved ones you have chosen if something happens to you. If you do not have a will or trust, your money and property will pass to the person designated by state law, which may not be the person you would want to inherit your prized possessions and money. In addition, if you are married and have young children, you need to take steps to ensure that your spouse and children are provided for. A trust is often the best solution: If your spouse inherits your money and property outright under a will, and your spouse eventually remarries, your assets could go to the second spouse instead of your children. In addition, the inheritance will be vulnerable to claims made by your spouse’s creditors. A trust can avoid these results by allowing you to choose who receives your property and money, as well as the timing and size of the gifts.
Pet trust. If you are one of many millennials, especially those who live in large urban areas, who chose either to delay having children or to remain childless, you may have adopted pets that you love and dote upon just as you would a child. Especially if you are single, you should consider a pet trust to provide for your pet’s care if something happens to you. The pet trust can allow you to make arrangements for your pet if you die or are physically unable to care for them yourself. The pet trust can not only specify a caregiver for your pet, it can also provide care instructions and set aside funds sufficient to care for your pet’s needs (medical care, grooming, exercise, etc.). You also have the ability to name an additional person to manage the money you have set aside for your pet, if you would rather have someone other than the caregiver in charge of the money.
Charitable remainder trust. Millennials are well known for being socially conscious and wanting to make a positive difference in the world. If you want your money and possessions to support a charitable cause when you pass away, you may be interested in establishing a charitable remainder trust, which enables you to benefit from a stream of income for your own life, with the remaining money in the trust going to a charity you have selected upon your death.
Planning for Student Loans or Credit Card Debt
As the cost of college tuition continues to increase, the level of debt millennials have begun their adult lives with is startlingly high. The average student loan debt of adults aged 25 to 34 is $33,000 per borrower. Federal student loans typically are forgiven upon the borrower’s death, but the estates of borrowers who obtained private loans can be pursued by those lenders. In addition, high credit card debt is prevalent among millennials. If you have incurred substantial debt, life insurance sufficient to cover income tax on the cancellation of debt in the case of a federal student loan or to cover the debt itself if a student loan is owed to a private lender or money is owed to a credit card company may be a good solution if you are concerned about the burden your debt could place on your loved ones upon your death.
If you are like many millennials, who are the first generation who grew up using the internet, you have likely amassed a much greater quantity of digital assets than members of previous generations. These assets may include social media accounts, blogs, photographs and videos, financial accounts, and email accounts, among many others. A comprehensive list of these of these assets, which may be among your most prized possessions, as well as the accompanying usernames and passwords, and instructions for their management, is essential to ensure that your wishes are honored if you pass away or become too ill to manage them on your own. Depending upon your wishes, you can appoint a separate person to wind up (or continue managing, e.g., in the case of a blog) these assets and accounts, or you can choose to have your executor or trustee handle this aspect of your estate. The list, which can be incorporated by reference into your other estate planning documents, should be stored in a secure place along with your will and/or trust.
Powers of Attorney
Medical power of attorney. If you are a younger millennial, you may not realize that your parents no longer automatically have the right to make medical decisions on your behalf if you become too ill to make them on your own or if you are unable to communicate your wishes. Even if you are married, your spouse may still need to be properly named in a medical power of attorney to make decisions for you when you cannot. It is also important to designate a trusted person to act on your behalf if your spouse is unavailable. If you fail to have a medical power of attorney prepared, a court proceeding may be necessary to appoint someone to fill that role if, e.g., you are in an automobile accident and are unconscious. You should also consider completing a living will spelling out your wishes regarding medical treatment you want–or don’t want–at the end of your life or if you are in a persistent vegetative state.
Financial power of attorney. Another document that is essential for your care if you were to become unconscious or too ill to make your own financial decisions is a financial power of attorney. It allows a person you have named to pay bills, take care of your home, manage your accounts, and make other money-related decisions for you. Even if you are married, a financial power of attorney is important because any bank accounts or other property that are not jointly owned cannot be managed by your spouse without it—unless your spouse goes to court and asks to be appointed as your guardian, causing unnecessary stress in an already distressing situation. A financial power of attorney can also be helpful if you do a lot of international travel and may occasionally need someone to handle your financial matters while you are out of the country.
Let Wiles Law Help You Prepare for the Future
You may think that estate planning is only for the elderly. However, even if you are young, an estate plan is crucial, regardless of whether you have accumulated much money or property. A properly executed estate plan provides not only for the well-being of your family, loved ones, and pets, but also allows you to put plans in place in case you become ill or are severely injured and cannot make medical and financial decisions for yourself. Call us today to prepare for the future.