Planning Your Legacy

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Cyberwarfare is Hitting Close to Home

Last month I wrote about the growing threats to each of us from computer hackers and criminals.

Now the East Coast Gas Pipeline was compromised. Apple is being blackmailed, May Universities, government agencies, and now even smaller businesses are under attack. I just wanted to ring the bell again to warn you that this will be costly to us if we can’t figure want to real security online.

Sometimes problems as so large or confusing that they seem beyond us. I find that taking one small set can help: Back up your data consistently. We are now doing so with renewed vigilance. This a step that you can do to exert some control over this threat.

On a brighter note, there is another area in life where you can be a direct positive agent of change:

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 do 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 might you 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.
• Complete drug or alcohol addiction treatment, if applicable; 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 involve 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, 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 the power they find to be unreasonable. The trustee should be someone with integrity, competence, and common sense.

You should appoint several successor trustees to take over if the first persons you are relying on become unwilling or unable to perform the duties. Having a chain of command here is also critical because the most responsible person can have circumstances arise where their service becomes impractical. 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.

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The Digital Age: Securing Digital Assets

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information, be sure to visit our website, where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

The Digital Age: Securing Digital Assets and Cyberwarfare

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.

Besides preserving assets management, hackers’ and thieves’ protection is more important than ever, as assaults are multiplying geometrically.

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?

An estate executor could count on uncovering accounts while searching through boxes of paperwork and old files in the past. Usually, a bill or two would arrive in the mail to alert the executor regarding an unknown account. With more online banking and digital financial statements, even finding accounts without your help can be very difficult for your loved ones.  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 legacy information if you do not include digital assets in your estate plan.

While on the subject, pay attention to multiple and varied methods of backing up data. The rash of assaults on businesses, schools, and personal accounts with phishing schemes, hacking, and randsomware attacks has become daily events with more sophisticated plans.  We are actually at cyberwar, and the victims are very close to home.

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 to become part of the public record if your estate goes through probate. The inventory needs to include the digital asset’s web address, your username, and password if there are security questions used to confirm that the user is permitted to have access, including 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 the event of their death. This is not yet a common practice, so you will need to prepare your digital assets in advance.

One helpful tool to consider is password management and storage vendors, like “LastPass,” which will remember and monitor your passwords and sites.

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Estate Planning for Domestic Partners

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information be sure to visit our website where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Estate Planning for Cohabitants

Living together with a domestic partner is not a new concept. Many couples decide to live together, buy a property, and rear children together before they get married, or instead of getting married. For some couples, it makes more financial sense to remain unmarried. For others, the decision not to marry may be more personal. Regardless of the reason, the important point is to ensure that you are each protected in the event one or the other of you becomes incapacitated or passes away.

Too often, we hear about couples who have lived together for years, amassing assets, rearing children, and becoming financially and emotionally dependent on each other, only to have one partner die. This leaves the other partner with no legal rights to any of their deceased partner’s assets. Ever heard of “The Girl with the Dragon Tattoo”? Author Stieg Larsson passed away without a will, leaving his partner of 32-years without any legal rights to any of the book profits or the literary estate. Swedish law, like American law, grants estates left without a will to the next of kin.

With a little planning, you can avoid this type of negative outcome and take care of your domestic partner, in the event you pass away. Let’s review some of the important financial and medical documents you should have if you are cohabiting.

Maryland Inheritance Tax Considerations

Maryland charges a 10% on most assets that you leave to someone who is not a close relative. Spouses, ancestors, descendants, and siblings are exempt, as are tax-exempt charities. This tax must be paid by long-term significant others, even if they cohabitate. For example, if you name your significant other as the beneficiary on an IRA, even though the transfers to the beneficiary and avoids probate, the 10% tax must be paid.

A few things avoid this tax, such as life insurance and jointly owned real estate if owned with a “Domestic Partner”.

We recently worked with a woman who lived with a man for over 20 years in the home they bought together wanted to change the deed after his death. It is not clear if they qualify as Domestic Partners, and recording such a deed could result in her receiving a $20,000 tax bill. Some help from an experienced estate planning attorney would have assured their status as Domestic Partners and eliminated the possible tax. Establishing such facts after death is never preferable.

Wills & Trusts

A will enables you to designate how your assets will be distributed upon your death. Trusts can do the same thing, although there are certain assets that cannot be held in trust. Trusts are beneficial because they allow assets to pass to your beneficiaries, without having to go through probate. Each situation is unique, so great care should be taken when evaluating whether a will, a trust, or both, is appropriate for you and your partner.

Without a will, your estate will be distributed, according to your state’s intestate laws. This generally means that your children, siblings, or parents will receive your assets when you die — not your Dometic Partner. For cohabiting couples with minor children, remember to designate your partner as guardian (i.e., backup parent) of your children in your will.

Beneficiary Designations

Bank accounts, investment accounts, and retirement accounts allow you to designate one or more beneficiaries to receive those assets when you die. You will want to check these designations annually and whenever you have a major life event, such as a birth, death, or change in marital/relationship status — just to make sure that each asset is designated to pass where you intend.

Life Insurance

If you have minor children or if one partner relies heavily on the other for financial support, then adequate life insurance is essential. Life insurance can help defray the costs of your funeral, help your partner pay off debts, fund college educations, and meet day-to-day living expenses. Life insurance proceeds can give your partner some breathing room during a difficult time.

Financial & Health Decisions

A durable power of attorney for financial matters gives your partner (or other trusted agent) the power to sign documents and manage your financial affairs, in the event that you become incapacitated.

Like a financial power of attorney, the healthcare power of attorney gives your partner/agent the power to make healthcare decisions on your behalf, should you become incapacitated.

Living Will/Health Care Power of Attorney

This document enables you to document how you would like to be treated if you are rendered unconscious for an extended period of time or suffer from catastrophic injuries. To empower your Domestic Partner as your decision-maker, having a Living Will and Health Care Power of Attorney is critical. It is also a good idea to discuss your wishes with your partner, before either of you becomes incapacitated, to ensure that you are on the same page.

Funeral Wishes

Writing down your funeral wishes can help take a load off of your partner, as well as take any guesswork out of the process. This also can avoid arguments with family members, who may have a different idea as to how to memorialize your partner’s death.

Domestic Partner Agreement

Every relationship deserves to have its terms set down in advance. Like a prenuptial agreement, a Domestic Partnership agreement outlines how income and assets will be treated during the course of the relationship and how assets will be distributed, when the relationship ends.

Property Title

In general, when two people buy property jointly, whether married or unmarried, they often do so as joint tenants with rights of survivorship. This means the property automatically passes to the surviving owner, without going through probate. For unmarried couples, this may have unwanted tax and non-tax consequences. Accordingly, be sure to get legal and tax advice, before changing the title to assets in this form of ownership.

Child Custody

When it comes to children, non-biological parents can often run into trouble when the biological parent dies. Second-parent adoptions are an option in some states, but it is always a good idea to spell out who will have custody of your children when you die. In most, but not all states, a will is the appropriate legal document to nominate the guardian (backup parent) for your minor children. If the other biological parent is deceased or legally unfit, then you may nominate your partner as guardian in place of other family members.  Non-biological parents may also need to have documentation giving them the right to authorize medical treatment for their non-biological children.

The Takeaway

The decision to marry is a personal one. If you choose not to, consult an Estate Planning Attorney to ensure protection for yourself, your Domestic Partner, and any minor children you may have. There is no better way to show that you love and care for your partner than by reducing his or her stress if life gets complicated.

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To Probate or Not to Probate?

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information be sure to visit our website where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

To Probate or Not to Probate?

Generally speaking, most people die with one of three estate plans. Some die with a last will and testament (will), others die with a fully funded revocable living trust (RLT), while still others die with neither a will nor a RLT. The purpose of this brief article is to introduce each of these three estate planning approaches, not to serve as an in-depth treatise on the benefits and drawbacks of each.

Will-Based Planning

When a close loved one dies, you need to go through his or her papers as soon as possible to look for a will. Why? This traditional estate planning legal document often contains critical instructions regarding any “final wishes” of the decedent. For example, some people include funeral and burial instructions in their wills. Time is of the essence when it comes to those decisions.

Assuming that you have found the will, the first thing you should do is read it and determine who is appointed as its executor. If you are the executor, you need to know who the beneficiaries of the will are, what they are to get and when. You also need to determine whether the will identifies anyone else as a co-executor. For example, a parent might name her two adult children as co-executors of her will. All co-executors must be involved in the probate process, unless they refuse the appointment. Read the will to see if it creates any “testamentary trusts” to administer the inheritance. Parents often provide that the inheritance of any minor child shall be held in trust and distributed according to its terms, instead of distributed outright in a lump sum.

Without delay, contact the attorney who prepared the will. That attorney is likely the person who knows the “testamentary intent” of the decedent, along with the nature and location of all estate assets.

Proving the Will

The first responsibility of the probate court is to “prove” the will. In other words, is the will presented truly the “last will” and not the “second to the last will”? If the judge determines that the will presented is the “last will” and is otherwise legal in all technical respects, the judge will issue “letters testamentary,” giving you legal authority to act as executor on behalf of the estate. You can use this key document, when dealing with the decedent’s banks, brokerage firms and insurance companies, and fulfilling the many responsibilities that come with being the executor of the estate.

Probate Administration

A will plan guarantees probate. This like other court cases, generally involves expenses, time delays, and a lack of family privacy.

With a valid will and letters testamentary in hand, the duties of the executor regarding probate administration may vary from state to state, but generally the executor follows these fundamental steps:

• Collects, protects, values, and insures (if needed) the assets of the estate,
• Files an inventory with the court listing the assets subject to probate,
• Provides actual notice to known creditors and notice by publication to potential creditors,
• Pays the final expenses, taxes, and legitimate debts of the decedent,
• Files appropriate state and federal income tax returns for the decedent and the estate,
• Distributes the assets according to the will (with the approval of the judge, if needed),
• Follows any additional specific instructions under the will (with the approval of the judge, if needed), and
• Closes the estate and receives formal discharge by the probate judge.
• Note: the executor is often appointed to serve as the trustee for any “testamentary trusts” created over the inheritance. While your services as executor may end with the closing of probate, it may only be beginning, if appointed as trustee.

Revocable Trust-based Planning

If the decedent left a trust agreement, the estate will be distributed according to the terms of the trust document, with little if any involvement by the probate court. In many states, the trust agreement itself is not filed with the court, unless there is a contest or dispute. As a result, there is no need for the court to declare whether the trust agreement is valid and appoint a trustee. This lack of probate is one of the chief advantages of a RLT-based estate plan. However, probate would still be necessary to approve of any guardian nominated to serve as the backup parent for an orphaned minor child.

In contrast to probate administration under the supervision of an impartial judge, the trustee is responsible for the complete stewardship over the trust assets and fulfilling its terms. This responsibility includes paying final expenses, taxes, and legitimate debts of the decedent, managing assets, paying the debts and expenses, filing the tax returns, and distributing the trust assets according to the terms of the trust agreement. As with a “testamentary trust” created under a will, these distributions may be made in an immediate lump sum, staggered over years, or continue over multiple generations.

No Will or Trust

Every state has “intestate succession” laws governing what happens when a person dies without a valid will or RLT. As described above, it is even possible to have a will declared invalid, resulting in the estate going through intestacy. One of the greatest drawbacks to “dying intestate” is the complete lack of input that the decedent has when it comes to who serves as executor and how the inheritance is distributed. For example, in many states, if the decedent was married with minor children, then the surviving spouse does not inherit the entire estate. They would manage the share allotted to the children until each respectively reaches age 18. Upon reaching that age, the inheritance for each child must be paid over in one lump sum, even if the child has special needs or suffers from addictions.

Your life, loved ones, and estate are all unique. In turn, your estate planning should reflect your goals to protect everyone you love and everything you have.

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What are the Side-Effects of the COVID-19 Vaccine?

This past week my mother-in-law got her first COVID-19 Vaccine. She is a nursing home resident. After months of no visits, then a short time of distant short no contact visits, then no visits again, the whole family is hoping that we will shortly be able to hug again. Are there side effects that make taking such a shot risky?

AARP’s recent article entitled “What Are the Side Effects of COVID-19 Vaccines?” reports that the FDA says the most common side effects among participants in both the Pfizer-BioNTech and Moderna Phase 3 clinical trials were the following:

• Injection site pain
• Fatigue
• Headache
• Muscle pain
• Chills
• Joint pain; and
• Fever.

These reactions are temporary and will “self-resolve” within a few days.

Side effects from vaccines aren’t uncommon. For example, the seasonal flu shot can cause fever and fatigue, or reactions.

Doctors say that a mild to moderate reaction is a good thing because it shows that the immune system is responding to the vaccine. However, the tradeoff, experts say, is temporary discomfort versus the long-term benefits of a potentially high level of protection from COVID-19, a disease that’s responsible for the deaths of more than Four million people globally.

Unfortunately, scams have been part and parcel to fighting the pandemic.

Federal analyses of both vaccine trials show that few adverse events, which the CDC defines as any health problem that happens after a shot (separate from the less serious side effects), were reported. There have been a few people who’ve reported severe allergic reactions — known as anaphylaxis —after receiving the Pfizer-BioNTech vaccine. As a result, the CDC is recommending that anyone who has ever had a severe allergic reaction to any ingredient in a COVID-19 vaccine not get it. The ingredients of authorized vaccines are on the FDA’s website. Talk to your doctor, if you have questions, and keep in mind that serious reactions are relatively rare.

People must continue their prevention efforts to help slow the spread of the disease: mask-wearing, social distancing, and frequent handwashing. Note that it typically takes a few weeks for the body to build immunity to disease after vaccination, so it’s possible you can get sick with COVID-19 even after you’ve been vaccinated. Experts also aren’t certain if the vaccines also block transmission of the virus.

Remember that it takes time to build up herd immunity, where enough of the population is protected from the virus that transmission slows significantly. Scientists aren’t sure what the magic number is to obtain herd immunity for COVID-19, but they think it’s around 70% of the population, which could take months to achieve through vaccination.

Three other relatives of mine have also received the first vaccine shots, as they are all health care workers. None have had side-effects. As the vaccines become more available, we will have some return to normalcy.

We are hopefully rounding third and heading for home on the battle with COVID-19 and the vaccine is the key.

As repeated in the Musical Hamilton, I know “I’m Not Going to Miss My Shot”.

Neither should you.

Reference: AARP (Dec. 21, 2020) “What Are the Side Effects of COVID-19 Vaccines?”

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information be sure to visit our website where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Post Election Planning

With President-elect Joe Biden in the wings to take office in January, there is much uncertainty surrounding what the law will be for death taxes in the next year.

What happens next? The reality TV show continues…

The Democratic Party platform proposes to return federal estate taxes to their historic norms, taxpayers need to act now before Congress passes legislation that could adversely impact their estates. Currently, the federal estate and gift tax exemption is set at $11.58 million per taxpayer. Assets included in a decedent’s estate that exceed the decedent’s remaining exemption available at death are taxed at a federal rate of 40 percent (with some states adding an additional state estate tax). The proposal is to reduce the tax exemption to 3.5 million.

It is yet unclear who will control the Senate, as the balance of votes there will come down to a Georgia runoff in early January. Aren’t you glad you don’t live there right now? If the election results in a complete political party change, it could mean not only lower estate and gift tax exemption amounts (which will affect the wealthy) but also the end of the longtime taxpayer income tax benefit that will affect middle-class families: Ending an adjusted basis at death.

Stepped-Up Basis

If I buy a stock for $10 and sell it for $100, I will owe some tax on that $90 increase, called a capital gain. The rate might be 15% (going up) and a state income tax, which for Maryland I estimate at 7%. On a $90 gain, I owe $21. The $10 purchase price is the “Basis”, or measuring point of the gain.

If I die (I will) those inheriting this stock from me would get it as if they bought it the day I died. The basis “adjusts”, by stepping up from $10 to $100 due to my death. Why? Because it is subject to death taxes if I have enough money.

This occurs with real estate, including rental property and many investments. Not IRAs or accrued bond interest.

Due to the current high death tax exemptions, most people will not pay death taxes, unless the rules change. Ending the adjusted basis will affect the children of most of my clients.

I know this is a little bit complicated. If I haven’t lost you completely, at least be aware that the tax law changes aren’t just about somebody else.

If the death taxes do change we will follow up in this newsletter. Stay tuned. Some thoughts for those who may want to act before January 1 to take advantage of the high death tax exemption. Other than dying before then consider these:

Irrevocable Life Insurance Trust

An existing insurance policy can be transferred into an irrevocable life insurance trust (ILIT), or the trustee of the ILIT can purchase an insurance policy in the name of the trust. The donor can make gifts to the ILIT that qualify for the annual gift tax exclusion, and the trustee will use those gifts to pay the policy premiums. Since the insurance policy is held by the ILIT, the premium payments and the full death benefit are not included in the donor’s taxable estate. Furthermore, the insurance proceeds at the donor’s death will be exempt from income taxes.

Gifting

The current tax exemption of 11.58 million per taxpayer is a unified credit for both estate and gift taxes, meaning that you can gift up to that amount now without owing gift taxes. If you give someone more than $15000 in a given year, you generally must file a gift tax return. However, the credit tax is not owned unless you exceed the current very high exemption amount. Simply completing the gift before December 31 and then filing a gift tax return by April 15 is a simple alternative.

When Should I Talk to an Estate Planner?

If any of the strategies discussed above interest you, or you feel that potential changes in legislation will negatively impact your wealth, we strongly encourage you to schedule a meeting with us at your earliest convenience and definitely before the end of the year. We can review your estate plan and recommend changes and improvements to protect you from potential future changes in legislation.

Find Us Online

Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information be sure to visit our website where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Special People, Special Needs, Special Plans

Find Us Online

Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information be sure to visit our website where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Special People, Special Needs, Special Plans

Do you or a close friend have a child or other loved one with special needs? Do you have concerns about his or her future financial security in a world without you? If the answer is yes, then you need to ensure that you “do no harm,” when including them in your estate plan.

This applies to families with a beneficiary who may be relying on Supplemental Security Income (SSI) and other government-assisted programs for housing, health, and support programs. This includes people with Downs Syndrome, mental illness, or significant physical disabilities. If this applies to a loved one, you are in good company.

There are approximately three million families who report having at least one child with a disability. No one needs to tell you or these families about the unique major and minor daily challenges that come with having a child with special needs. This hands-on caregiving leaves little time to ponder what would happen in terms of financial security, was your child with special needs to outlive you.

Research also bears this out. Shockingly, more than half of all parents caring for a child with special needs have no long-term care plan in place, including an estate plan. Of those parents who have created an estate plan, about half report planning to leave an inheritance outright to their child. Many of them have already designated their child as a direct beneficiary on life insurance and retirement funds. Does this sound familiar?

The Challenge

Most public assistance programs are means-tested. In other words, a child with special needs can only own or have access to limited financial resources in order to first become and then remain eligible for benefits. Inherited assets can be more of a problem than a solution when they make your loved one in need of assistance ineligible for such aid. If your loved one is eligible for benefits, then any direct inheritance will be claimed by the government as reimbursement for benefits paid during his or her lifetime. Only after such reimbursement, may any remaining funds pass as directed to family members.

How can your estate planning avoid triggering ineligibility for benefits and keep the inheritance in your family long-term?

The Solution

The appropriate estate planning approach to provide an inheritance “safety net” for your child with special needs is known as a special needs trust (SNT). The primary objective of a SNT is to pay for goods and services to benefit your child, without disrupting eligibility for public assistance programs. In short, your child may only “own” limited resources, but he or she can use assets owned by the SNT or enjoy services paid for by the SNT.

For example, the SNT may own the condo where your child resides. Even though dental and vision examinations, braces, and eyeglasses are not provided by government assistance programs, the SNT can pay for them directly. In short, the goods and services benefitting your child through the SNT cannot “supplant” benefits otherwise provided by public assistance.

Not a Do It Yourself Challenge

The rules and regulations governing all aspects of a SNT are complex. As a result, there are many moving parts when it comes to creating, funding, and administering a SNT. The consequences of a single misstep can be financially fatal to your estate plan. A SNT can be established as a standalone legal instrument, under a last will and testament, or under a revocable living trust. Regardless, you do not want to try to create a SNT as a DIY project. Work with an experienced estate planning attorney.

Unfortunately, many parents with special needs children never get around to actually having a plan in place.  This option of doing nothing is especially risky when beneficiaries have special needs.

Upcoming Webinar

We will be exploring aspects of Special Needs Planning in an upcoming Webinar. Check our Events Tab for times.

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Dementia & Estate Planning

Dementia & Estate Planning

In our experience, as someone begins to realize that he or she is starting to lose their capacities, they are far less likely to share control of assets and decision making. This clinging to the reins of what they can control often gets tighter as memory fades, making it harder and harder to have them get the planning done at all. It is less threatening to make plans that are largely theoretical.

This is a strong reason to get planning in place or updated before it is needed. If you know someone who is starting to struggle with memory, encourage them to speak with an estate planning lawyer.

Proper estate planning is essential for every adult American, but especially for those in the early stages of Alzheimer’s disease and other forms of dementia. Action must be taken sooner rather than later if you want to participate in the planning process itself.

While you might not think you are at risk for dementia, one in three adults over the age of 65 develops dementia. Even if you do not experience dementia yourself, the odds are that someone close to you will.

Estate Planning for Seniors without Dementia

Knowing the numbers, it would be a wise decision to create your estate plan before there is any question about whether you have sufficient legal capacity. Still, if you are 65 or older, you might want to include a letter from your primary care physician confirming that you are of sound mind at the time you prepare and sign your legal documents.

Things to discuss with your estate planning lawyer include:

• Developing a strategy for long-term care. This includes evaluating your long-term care insurance policy provisions or, if you are uninsured, your Medicaid planning options.
• Designating your key decision-makers. You will need to legally appoint someone now to make your personal, health care, and financial decisions, if you unable to make or communicate them in the future. An advance health care directive with a durable power of attorney for health care decisions and a general durable power of attorney for financial decisions are key legal documents for every adult American.
• Creating or updating your will or living trust. Many of us execute these legal instruments then stick them in a drawer and promptly forget about them. We simply set it and forget it. This is the time to locate your will or living trust, dust them off, and read them. Like many people, you will likely find that your will or living trust is out-of-date. For example, your documents might include a former spouse or contain terms that were appropriate when you had young children but no longer apply.

Estate Planning for Seniors in the Early Stages of Dementia

Even after a diagnosis of dementia, you may still prepare or update your estate plan. However, the estate planning process must carefully assess and memorialize your mental capacity. As noted above, it is always a good idea to have a medical doctor evaluate and certify in writing your ability to understand the content of your estate planning documents and the consequences of signing them.

The medical evaluation and certification of mental capacity should be kept with your important legal papers, including your estate planning documents.

What to Do When a Person with Dementia Lacks Mental Capacity

We do not always have the luxury of knowing that there is a “problem” before there is a problem, especially when someone close to us experiences diminished mental capacity. Unfortunately, at some point, that someone loses the legal capacity to participate in preparing and signing legal documents. In hindsight, loved ones should have recognized the warning signs of dementia. Nevertheless, whether due to denial or the business of daily life, no action was taken to create an appropriate estate plan.

What then?

If you find yourself in this situation with a close loved one, you will need to initiate a probate process to be formally appointed as a guardian/conservator by the court. Once appointed, you will be able to make personal, health care and financial decisions for your incapacitated loved one under the ongoing supervision of the court. You will need the assistance of an attorney to process this legal action.

Final Thoughts

As with most things in life, prevention is always more prudent than the cure. It is the same in the face of an Alzheimer’s or a dementia diagnosis. If you have not taken care of your legal business, then there is no time like the present. While you are at it, share this advice with those near and dear to you.

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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information be sure to visit our web site where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

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Maryland’s New Augmented Estate

A Significant Change

There has never been a more important time to consider a prenuptial or postnuptial agreement.

Maryland has enacted a new Augmented Estate law which providing much greater protection at one spouse cannot disinherit the other. This will be effective on October 1, 2020. The new law has far-reaching changes. This may affect you or someone you know.

Today, if your spouse dies and leaves you out of the will, you can elect to receive a share of the probate estate, usually one third. However, life insurance, IRA accounts, joint accounts, and trust assets would be beyond the reach of that election. After October 1, the calculation changes and allows for consideration of all those assets.

If you are married or getting married, and intend to have all your assets go to your spouse, then this won’t affect you. However, if you have children from a prior relationship, or your spouse does, and you want to have the freedom to leave all assets to them, then you need to visit an estate planning or family law attorney soon. Here is some information about these agreements.

Find Us Online

Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends, and favorite charities. For more information be sure to visit our web site where you will have access to our blog, events schedule, and a complimentary newsletter subscription!

Prenuptial and Postnuptial Agreements 101

Parental permission asked and granted. Check. The engagement ring purchased. Check. Acceptance of marriage proposal. Check. Wedding date, officiant, venue, caterer, photographer, and music all selected and confirmed. Check. Save the date announcements sent to the invite list. Check. A prenuptial agreement drafted, negotiated, and signed. What?

After all, in the midst of wedding plans, what could be more “romantic’ than making plans for the division and distribution of marital and separate assets in the event the marriage ends due to potential legal separation or divorce, or eventual death? When might you consider a postnuptial agreement? This article is not intended to be a treatise on the subject of prenuptial or postnuptial agreements, but rather an introduction to what is a complex area of law requiring the assistance of competent legal counsel.

According to the 2017 National Marriage and Divorce Rate Trends gathered by the National Center for Health Statistics at the Centers for Disease Control and Prevention (with 45 states reporting, along with the District of Columbia), there were 2,236,496 reported marriages and 787,251 divorces that year. The report notes that, out of 1,000 Americans, there were 6.9 marriages and 2.9 divorces. Given these numbers, the importance of a premarital agreement seems to be increasing.

Why Consider a Prenuptial Agreement?

No longer reserved for the province of only the “rich and famous,” everyday Americans should consider a prenuptial agreement, after taking a sober look at the reality of legal separations, divorces, and even protection of inheritances. Without a prenuptial agreement between the directly affected parties, family law attorneys, judges, and state laws will decide the allocation of a couple’s joint and separate assets for them.

As a wise sage once noted, when contemplating marriage, remember that love may be blind, but it is prudent to proceed with both eyes open. This applies to those of all ages contemplating marriage. For example, did you know that fully two-thirds of previously married Americans who are 55 or older have remarried? When it comes to millennials, they may be the richest generation in history. Forbes magazine cited a study revealing that millennials will be five times wealthier than they are right now, as they collectively inherit more than $68 trillion from their baby boomer parents by the year 2030. That is a lot of wealth that needs protecting!

For people with children from prior relationships, working out what is set aside for them at your death is am important detail often glossed over before the marriage. It shouldn’t be.

Why a Postnuptial Agreement?

Heraclitus, an ancient Greek philosopher who lived around 500 BC said, “The only thing that is constant is change.” No truer words from tongue or pen (a tip of the hat to John Greenleaf Whittier) than these for what happens in a marriage. Change.

There will be good times, bad times, happy times, and sad times. There may be children born, businesses formed, and even marital misconduct in the mix. Couples who never considered a prenuptial agreement, often create a postnuptial agreement, when any of the above “changes” occur while their marriage is well underway. Much like an airline pilot will make adjustments while in flight, a postnuptial agreement can provide for “course corrections” to keep a marriage together.

“Legal” Agreement Requirements

The rules for these prenuptial and postnuptial agreements vary from state to state, but in general, the parties should follow these rules:

• Both parties must disclose the full extent of their assets in detail. For example, it is not legally sufficient to note that one party owns a brokerage account. On the contrary, that party must disclose in writing that she has a brokerage account with XYZ financial institution and its value.
• Both parties must disclose the full extent of their debts in detail. Whether you are a baby boomer with a multi-million-dollar business that has a multi-million-dollar line of credit or you are a millennial with $250,000 in Ivy League student loan debt, your liabilities must be disclosed. The disclosure must include the type of debt, name of the creditor, and amount. If you are in a remarriage situation after a divorce with minor children, do not forget to disclose both child support and separate maintenance (i.e., alimony).
• Especially when it comes to the prenuptial agreement, it should not be a surprise to your intended. Limit the prenuptial surprises to happy things, like jewelry and candlelight dinners. When one party presents the other with a prenuptial agreement shortly before exchanging vows, it rarely ends well. For starters, what a way to begin your marriage with an “ambush” of the lowest order. Someday, when the prenuptial agreement is challenged, a judge will suspect (rightfully so) that the person receiving the document did not have time to review it, seek independent legal counsel and think about whether to sign the agreement. It is best if the non-drafting spouse has an adequate opportunity to review it, seek legal counsel, and propose any revisions prior to signing the agreement.
• The terms of the agreement should be fair to both parties. While this is obvious, if the document contains terms that are harsh, punitive, or shocking to the conscience, a judge may declare the agreement invalid.
• Both parties should have independent legal counsel. In other words, each spouse should have an opportunity to engage an independent attorney to review and provide advice regarding the proposed prenuptial or postnuptial agreement. Do not try to “go it on the cheap” with one attorney representing both parties. That rarely ends well. To avoid any real or perceived conflicts of interest, one attorney should not represent both parties.

State laws vary when it comes to the legal requirements for valid and binding prenuptial or postnuptial agreements. Competent legal representation can keep your agreement from being declared unenforceable. Too much is at stake.

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