Can I Be Sure My Estate Plan Works?

Most estate planning attorneys will tell you that the same mistakes recur with frequency whether the estate is worth a billion dollars, several hundred thousand dollars or anywhere in-between. Of course, the biggest mistake of all, reports the article “7 Steps To Ensure A Successful Estate Plan” from Forbes, is not having an estate plan at all. Having an outdated estate plan can be just as bad.

Everyone should have a complete estate plan and it should be reviewed every few years and revised as life and laws change. The estate plan should include a will, trusts, power of attorney, advance medical directives and other planning elements. However, there’s more to an estate plan success than documents.

Education and communication. If the next generation isn’t prepared for the contents of the estate plan, it’s going to be challenging for them to carry out your wishes. They may mismanage assets, or even lose them to scammers. At any age and stage, people who are not ready for an inheritance may easily go through their entire inheritance and find themselves at a loss for what happened.

One solution is to leave the estate in trusts and limit access. A better solution is to ensure your heirs are prepared and understand how to handle money. Children benefit from their parent’s teaching them about managing, accumulating and donating money.

Prepare for family conflict. Sometimes tensions are out in the open, but other times they hide below the surface until one or both parents die, or learning the details of the estate plan leads to family conflicts. Thinking the children will work things out on their own is asking for trouble. Siblings with very different economic situations or lifestyles respond differently to their parent’s estate plan. Don’t ignore these potential problems. Talk with your estate planning attorney. It’s likely that your estate planning attorney has seen just about every situation and will have good ideas for preserving family harmony.

Plan ahead for gifting. Gifting is often a large part of an estate plan. Gifts are a good way to get the next generation comfortable with inherited wealth. However, don’t just write checks. Create and execute a strategy. Know that cash gifts are definitely spent faster, while property gifts tend to be kept and held for the future.

Make sure you understand the plan. You’d be surprised how many smart and sophisticated people don’t actually understand their own estate plans. Meet with your estate planning attorney on a regular basis and ask questions – and keep asking until you understand everything. Take notes during your meeting, so you can go back and review to see if you have any other questions.

Get organized and prepare. The best estate plan in the world is at risk, if the executor doesn’t know where documents are located. Make sure the information is written down and the person you chose to serve as executor knows where things are. We should all be simplifying our lives and records as we age, both to make our lives easier as the inevitable cognitive decline occurs and to make the settlement process faster.

Create a business succession plan. Most business owners fail to do this. It makes it all but impossible for the next generation to keep the business going. The value of a small business declines rapidly and sometimes evaporates, when there is no plan for succession. If the intent is to sell or pass the business on, a succession plan needs to be prepared, long before it is needed.

Fund trusts. The most common mistake in estate planning is creating trusts and then failing to fund them. If the trust is created but assets are not retitled, the estate plan will fail. Real estate, vehicles, boats and financial accounts that are intended to be put into the trust need to be retitled.

My office is open to set up a consultation to discuss these issues or just to review your existing plan.

Reference: Forbes (May 27, 2021) “7 Steps To Ensure A Successful Estate Plan”

 

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Deadly Health Mistakes to Avoid after 50

All of us can improve the odds of a longer, more healthful life simply by avoiding the deadly health mistakes that people tend to make after age 50, published in Money Talks News’ recent article entitled “7 Deadly Health Mistakes People Make After Age 50.”

  1. Allowing social connections to fade. Loneliness is deadly. A 2018 study found that isolation may double a person’s risk of dying of cardiovascular disease. What’s more, social isolation is linked to increased risk of depression, cognitive decline, obesity and a weakened immune system. Men are at greater risk of suffering from social isolation, as a recent survey found just 48% of retired men living alone were very satisfied with the number of friends they had. However, about 71% of retired women living alone were very satisfied with their number of social connections.
  2. Enjoying too much high-sodium foods. About 90% of the sodium that we consume comes from salt. 90% of Americans over age two also consume too much sodium, so reduce your sodium intake. Do that and your blood pressure should fall within a couple of weeks, helping to lower your risk of deadly heart disease and stroke, the CDC says.
  3. Postponing colorectal cancer screening. Medical experts say that all adults 50 to 75 should have colorectal cancer screening. This test can find precancerous polyps, which are the main source of colorectal cancer, which is treatable when found in its early stages. With the Affordable Care Act of 2010, colorectal screening is among a list of preventive services that generally are free for people who have health insurance and are between the ages of 50 and 75.
  4. Not taking a daily aspirin. Not everyone over 50 should take an aspirin every day, but it can be good for those with certain potentially life-threatening health conditions. The Mayo Clinic says, “The U.S. Preventive Services Task Force recommends daily aspirin therapy if you’re age 50 to 59, you’re not at increased bleeding risk and you have an increased risk of heart attack or stroke of 10 percent or greater over the next 10 years.”

Taking aspirin makes blood platelets less “sticky,” helping to prevent the clots that lead to heart attacks and strokes, explains Harvard Medical School. Talk to your doctor before starting a daily aspirin regimen.

  1. Failing to lift weights. As we get older, the risk of the bone disease osteoporosis increases. About 10 million people have osteoporosis, and 44 million more have low bone density, which puts them at risk for the disease, according to the National Osteoporosis Foundation. Women are especially at risk for osteoporosis, since one in two women will break a bone due to osteoporosis. This happens more often in women than a heart attack, stroke and breast cancer combined. Getting sufficient calcium and vitamin D is critical to preventing osteoporosis. Weight-bearing exercise is also a great way to strengthen bones.
  2. Not drinking enough water. Hydrate! The Mayo Clinic says that older adults carry a lower volume of water in their bodies. In addition, they are more likely to take medications that boost the risk of dehydration. Their sense of thirst is less acute, making it easy for them to forget the need to drink. Severe dehydration can lead to:
  • Seizures
  • Life-threatening heatstroke
  • Urinary and kidney issues; and
  • Hypovolemic shock (low blood volume shock).

As a general rule, men should drink 15.5 cups (3.7 liters) of fluids and 11.5 cups (2.7 liters) of fluids a day for women. 20% of daily fluid intake also typically comes from food.

  1. Continuing to smoke. “Puff, puff, puff that cigarette!” Kicking the nicotine habit pays dividends at any age. The improvements accumulate over the next nine months, and by one year after quitting, your heart attack risk drops dramatically. However, improvements can be fast. For example:
  • Your heart rate and blood pressure drop 20 minutes after quitting:
  • The carbon monoxide level in your blood drops to normal a few days after quitting; and
  • Circulation improves and your lung function increases two weeks to three months after quitting.

Reference: Money Talks News (May 24, 2021) “7 Deadly Health Mistakes People Make After Age 50”

 

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What Happens If an Unmarried Partner Dies?

If you, like so many others, found yourself settling the affairs of a loved one in the last 18 months, you may be well aware of the challenges created when there is no estate plan. The lack of planning can create an enormous headache for loved ones, explains a recent article titled “3 Estate Planning Tips for Same-Sex Couples” from The Street. If this is true for married couples, then it’s even more important for unmarried couples.

Planning for incapacity and death is not fun, but unmarried couples in serious relationships need to plan for the unknown. Even married same-sex couples may face hostility from family members, including will contests and custody battles over children. There are three key issues to address: inheritance, incapacity and end-of-life care and beneficiary designations.

If a partner in an unmarried relationship dies and there is no will or trust, assets belonging to the decedent pass to their family, which could leave their partner with nothing. With no will or trust, the estate is subject to the laws of intestacy. These laws almost always direct the court to distribute the property based on kinship.

A will establishes an unmarried partner’s right to inherit property from the decedent. It is also used to name a guardian for any minor children. Concern about the will being contested by family members is often addressed by the use of trusts. When property is transferred to a trust, it no longer belongs to the individual, but to the trust. A trustee is named to be in charge of the trust. If the surviving partner is the trustee, he or she has access and control of the trust.

A trust helps to avoid probate, as property does not go through probate. A will also only goes into effect after the person who created the will passes away. A revocable living trust is effective as soon as it is established. Trusts allow for more control of assets before and after you pass. The trustee is legally bound to carry out the precise intentions in the trust document.

Establishing a trust is step one—the next step is funding the trust. If the trust is established but not funded, there is no protection from probate for the assets.

Incapacity and end-of-life planning allows you to make decisions about your care, while you are living. Without it, your unmarried partner could be completely shut out of any decision-making process. Here are the documents needed to convey your wishes in an enforceable manner:

Healthcare power of attorney (proxy). This document allows you to name the person you wish to make healthcare decisions on your behalf. You may be very specific about what treatments and care you want—and those you don’t want.

Healthcare directive. The healthcare directive lets you designate your wishes for end-of-life care or any potentially lifesaving treatments. Do you want to be resuscitated, or to have CPR performed?

Durable financial power of attorney. By designating someone in a financial power of attorney, you give that person the right to conduct all financial and legal matters on your behalf. Note that every state has slightly different laws, and the POA must adhere to your state’s guidelines. You may also make the POA as broad or narrow as you wish. It can give someone the power to handle everything on your behalf or confine them to only one part of your financial life.

Beneficiary designations. Almost all tax-deferred retirement accounts and pensions permit a beneficiary to be named to inherit the assets on the death of the original owner. These accounts do not go through probate. Check on each and every retirement account, insurance policies and even bank accounts. Any account with a beneficiary designation should be reviewed every few years to be sure the correct party is named. Estranged ex-spouses have received more than their fair share of happy surprises, when people neglect to update their beneficiaries after divorce.

Some accounts that may not have a clear beneficiary designation may have the option for a Transfer on Death designation, which helps beneficiaries avoid probate.

Review these steps with your estate planning attorney to ensure that your partner and you have made proper plans to protect each other, even without the legal benefits that marriage bestows.

Reference: The Street (June 2, 2021) “3 Estate Planning Tips for Same-Sex Couples”

 

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