Author Archive
PARENTS WITH YOUNG CHILDREN, BEWARE! REVOCABLE LIVING TRUSTS TO TAKE CARE OF MINOR CHILDREN
Many families with young children think they are too young to have a trust or that they don’t own enough for a trust. However, here is a true story showing that nothing could be further from the truth!
A few years ago, a young mother became an instant widow. Her husband died in an automobile accident. The husband had left life insurance, naming his minor son as beneficiary. So, not only did the young woman have to raise her son alone, but she had to go to court to be appointed guardian over the young son’s assets. This restricted her ability to use the assets, required her to account for every penny of the assets each year, and required her to pay court costs and attorney’s fees to do so.
Then, when the son reached age seventeen (17), he got into an argument with his mother and left. He moved out because he knew that he would be getting his inheritance within a year. Kids instinctively separate from parents in the early teen years, as any of us with teenagers can attest! The main leverage parents have to continue to encourage children is financial. Ordinarily, children are willing to stay with their parents until they have acquired the skills they need to go out and make their own way. However, when the financial balance is upset, children may be harmed by the assets they acquire.
Preventing children from receiving assets at eighteen (18), creating certainty in who will raise the children, and responsibly providing for them are goals that using a Revocable living trust for your planning can achieve. How much better would it have been for the family if the life insurance proceeds were left in trust for the child, with the mother appointed as trustee and able to use her discretion to invest and spend the money to raise the child without court supervision.
There are many aspects to family dynamics that come into play during the estate planning process. This is but one example. But it’s a good one!
SEPTEMBER 11-17 IS NATIONAL ASSISTED LIVING WEEK
Americans are living longer than ever before. Eventually, many of us will require nursing home care or assisted living. How many? Studies indicate that one in two women and one in four men will reside in a nursing home at some point in their lives.
The National Center for Assisted Living (NCAL), a division of the American Health Care Association (AHCA), helps Americans celebrate our aging citizens each year with an official “National Assisted Living Week”. In 2011, the celebration runs from September 11th through the 17th. During this time, assisted living facilities and nursing homes across the country will bring together nursing home residents, staff, families and community members for events, promotions and games honoring seniors.
This year’s theme is Forever Proud. It was chosen, in part, to remember the tragic events of 9/11/01 ten years ago and how our country pulled together in a spirit of unity and pride afterwards. On another level, the theme was chosen to address pride in other areas as well: pride in a lifetime of work well done; pride in skills mastered and goals accomplished; pride in the achievements of family and friends.
As an estate planning attorney, I applaud the efforts of the NCAL and hope that you will take part in this year’s celebration. We also hope that National Assisted Living Week serves as a reminder to you about the importance of long-term planning. If your current plan does not incorporate legal tools and strategies to protect your assets against the high cost of nursing home or assisted living care, now would be a good time to contact us to add this important component.
In a similar vein, if you, a loved one or a dear friend has recently been informed that they will need to enter a nursing home in the near future, we may be able to obtain assistance from Medicaid, the Department of Veterans Affairs and other sources to help cover the costs. Even if you or someone you care for is already in a nursing home and has been denied such assistance in the past, we may still be able to help.
As our nation reflects upon the events of 9/11/01 this year, we hope you will feel a surge of pride not only in our country, but also in your own accomplishments thus far in life, and for those yet to come.
PRICELESS CONVERSATIONS
In keeping with the theme of August as “What Will Be Your Legacy?” month, we would like to introduce you to “Priceless Conversations”. Share the meaning of your life, the events that shaped your decisions and which causes and people have significance. Thoughtful reflection gives heirs a sense of the wholeness of your wealth and the financial decisions you make. We have a tool for sharing your life story with future generations called “Priceless Conversations” – a precious gift that integrates legacy building into your estate planning.
Recording a “Priceless Conversation” is a way for us to make tangible the “non-financial” dimensions of your wealth for you and your loved ones. Using a handful of interesting questions and a digital recorder, we help you share and save the lessons and experiences of your life. There is no homework, no tedious research, no writing, and no camera. We help you turn a simple chat into a touching and lasting treasure. The process is simple, practical and fun. “Priceless Conversations” can be individual, family, or group events.
Leaving a legacy involves more than just dollars and “cents”. Help future generations have a “sense” of who you are.
When you’re gone, how will you be remembered?
At the end of the day, how will your life have made a difference?
When all is said and done, what will those you love say about what you’ve done?
What have you accomplished with your wealth?
Not just your money, but all the wealth – the real wealth – you have at your disposal?
Whose lives have been touched by your life?
Let us know if you wish to explore how recording “Priceless Conversations” can benefit you.
JULY IS NATIONAL RECREATION AND PARKS MONTH
Let’s take a break from discussing boring new Legislation. Did you know that 75 percent of Americans live within two miles of a public park or recreation facility, and that more than 75 percent of us visit them each year? In recognition of the importance of parks and recreation facilities in our lives, and to foster the well-being of our environment and communities, the National Recreation and Park Association designated the month of July as Recreation and Parks Month in 1985.
As your estate planning law firm, we tend to focus on the financial security of you and your family. Of course, we are also concerned with your physical and emotional well-being. This is why we wholeheartedly support National Recreation and Parks Month and hope that it will serve as a reminder for you and your loved ones to take advantage of our valuable resources. Here are just a few of the benefits afforded by taking advantage of what America’s parks and recreation facilities have to offer:
• Improved physical and mental health. Recreation and active living can help increase life expectancy by as much as two years and make for a more balanced, happier life
• The development of specialized skills, a positive self image and creativity in children and grandchildren
• Increased ability to concentrate and learn
• The opportunity to build stronger family relationships by spending quality time together
• And, perhaps most of all, the opportunity to get out and enjoy time spent with family and friends in a beautiful setting
If you would like to learn more about the parks and activities near you, visit NRPA.org. Then, take advantage of the next nice day, gather your family and friends together, and head out to the nearest park for a little recreating!
NEW LEGISLATION: PART II
For those of you who are married and have not had your own Will or Living Trust prepared, the Florida Legislature has just changed your “Will”. The bill was sent to the Governor for his signature on June 13th and was signed in June 21st.
Previously, your government-made “default will” provided that if you are survived by a spouse and children of that spouse, the surviving spouse would receive the first $60,000 of your estate and then one-half (½) of the remaining estate. The other half (½) would be divided equally among your children (or their descendants). That now has been changed. In the traditional marriage situation, where all of the decedent’s surviving children are also the children of the surviving spouse, the surviving spouse now receives one hundred percent (100%) of your estate (providing the surviving spouse has no children or grandchildren [descendants] from another relationship).
This change in the “default will” does bring the state’s version of estate planning more in line with the typical choices of married couples. Most married couples do choose to leave everything to their surviving spouse.
In cases of second marriages and/or blended families, the State’s “default will” remains unchanged. Fifty percent (50%) of the estate goes to the surviving spouse and the other fifty percent (50%) is divided equally among the decedent’s lineal descendants (children/grandchildren). This new law does not have any effect on Florida’s current elective share, homestead, exempt property or family allowance provisions.
So, if you like the Will the Florida legislature has prepared for you, stand pat. If you’d like to make your own choices and/or learn how the laws mentioned in the previous paragraph affect your “default will”, call us…we can help.
MOVIE REVIEW: “LIFE AS WE KNOW IT” (Bad Estate Planning Makes for an Awful Film)
This surely predictable attempt at romantic comedy is awkwardly wrapped in a tragic incident. The thin plot involves a married couple, Allison and Peter, trying to set up each of their best friends, Holly and Messer, on a blind date. It proves to be a disaster. Over time, Allison and Peter have a baby; Holly and Messer dutifully attend birthday parties and remain antagonistic toward each other. Suddenly, Peter and Allison are killed in an automobile accident and, …surprise…, they have named Holly and Messer as co-guardians for their child. The remainder of the movie involves Holly and Messer trying to care for the baby and ending up falling in love. A predictable, and unbelievable, affair.
The best aspect of the film for me, is that it provides an opportunity to point out the estate planning errors of Allison and Peter (the married couple). Although they had a lawyer and a Will naming co-guardians, their first mistake was that they did not prepare emergency temporary guardianship documents which would have enabled Holly and Messer to pick up the baby the night of the accident. Instead, the baby was placed in the care of child protective services and it was several agonizing and scary days of working through red tape before the screen couple was able to retrieve the child. Depending upon the age of the child, even a few days in foster care can be quite shocking.
The child was with a babysitter on the night of the accident, but the babysitter was a minor. We generally recommend that someone within a five to ten minute drive of your home be appointed emergency temporary guardian of your minor children. In the event that such a tragedy occurs, that person can keep the child until the permanent guardians can arrive. The babysitter must be aware of the names of these emergency guardians so that the police can notify them to come pick up the children before they are taken away to foster care. We believe this to be an extremely important and overlooked part of estate planning.
The next mistake Allison and Peter made was to select two single people who hated each other and had no parental experience as co-guardians. This was compounded by the fact that neither Holly nor Messer was informed prior to the couple’s death that they had been named guardians. It is unlikely that real life would work out as smoothly as the scripted movie. Considering who should raise your children in the event of a tragedy requires substantial thought as well as making the people you choose aware of the possible responsibility. Their agreement to serve should be discussed, agreed upon and secured at the time of the preparation of the estate planning documents.
Finally, Allison and Peter did not leave sufficient funds to raise the child. Apparently, there was no life insurance or other savings, just enough insurance to cover the mortgage on a large house. This led to financial difficulties for Holly and Messer. It is your responsibility to provide the financial resources for raising your child. That should not be the responsibility of the guardians.
The movie is not an enjoyable experience, but it does offer a platform for discussing how to come to terms with the tragedy of a young couple dying and leaving their only child without a temporary guardian or confirmed permanent guardian, and for how to make sure their child will be financially secure upon their death.
Please call my office if any of these issues apply to you or anyone you know. Properly naming guardians is an extremely important part of being a parent.
NEW LEGISLATION (Good News for a Change!)
The busy beavers in the Florida Legislature have passed several bills this year which affect our clients in the estate planning and asset protection areas. This newsletter will be our first report on new legislation and focuses on two new bills which were passed to either overturn or clarify recent decisions of the appellate courts. Both of these new laws became effective on May 31, 2011 and contain good news.
First is an act relating to individual retirement accounts (IRAs), amending Florida Statute Section 222.21. This new law provides that inherited IRAs are exempt from claims of creditors. An individual’s IRA (to which he/she has contributed) clearly has been exempt from claims of creditors. However, once the IRA accountholder died and passed those assets to a spouse or children, even if the assets remained in a “rollover” or inherited IRA, they no longer were exempt from creditor’s claims. This law overturns the court case which decided that inherited IRAs were not exempt from the beneficiaries’ creditors and has retroactive application to all inherited individual retirement accounts without regard to the date such account was created.
The second bill relates to limited liability companies (LLCs), amends Florida Statute Section 608.433 and provides that a charging order against a member’s limited liability company interest is the sole and exclusive remedy available to enforce a judgment against a member of a multi-member LLC. This new law clarifies the primary asset protection benefit of an LLC.
This new law was passed because in 2010, the Florida Supreme Court held in the case of Olmstead v. Federal Trade Commission, 44 So.3d 76 (Fla., 2010), that a charging order is not the exclusive remedy available to a creditor holding a judgment against the sole member of a Florida single-member limited liability company. This ruling caused uncertainty in the business community about its breadth and questions arose as to whether businesses were better off organizing LLCs under the law of other jurisdictions where a charging order is clearly the exclusive remedy available to a judgment creditor. The legislature has now made it clear that the major asset protection benefit of organizing as an LLC remains intact, so long as there is more than one member of that LLC.
In the case of a single-member LLC, the ability to protect that member’s assets is not as strong. A charging order is not the sole and exclusive remedy by which a judgment creditor may satisfy the judgment against a judgment debtor who is the sole member of an LLC. If a judgment creditor establishes to the satisfaction of a court of competent jurisdiction that distributions under a charging order will not satisfy the judgment within a reasonable time, then, upon such showing, the Court may order the sale of that member’s interest in the LLC pursuant to a foreclosure sale. Accordingly, the asset protection benefits of a single-member LLC in Florida remain limited. However, if an LLC can be established with multiple members, the asset protection benefits of an LLC are much stronger.
This newsletter is only intended to provide a general overview of these two new laws. As always, if you have any specific questions or concerns about these laws, please do not hesitate to contact me.
ESTATE PLANNING THOUGHT FOR THE DAY: “I Ieave everything to my children in equal shares.” Why it might not always be the best idea.
It is understandable that parents typically want to treat all of their children equally when preparing an estate plan. However, all children are not created equal. One may be self-sufficient, even wealthy, and not need an inheritance. Another may not be able to manage money for one reason or another. Another child might have a drug or other addiction problems. In such examples, parents need to work with their estate planning attorney to create a plan that takes care of each individual child according to his or her needs.
Another common problem is the large family. If you have seven (7) children and leave your house to them equally in your estate planning documents, heartache is likely to follow. How can seven (7) people own a house? Is it likely that all seven (7) will agree on how to maintain or sell the property? Well, if you do not leave the house to specific individuals with specific instructions in a Will or Trust, then, in Florida, (without a Will or Trust) your assets will be left equally to your children. This can turn a house the children used to love into a house of tears. Even if you want to have all of the children benefit equally from the sale of your house, you would be wise to consider leaving the house in trust, with one of the children in charge, with instructions to distribute the proceeds equally. If seven (7) children have to unanimously decide to sell a house (or do most anything to maintain it), you are asking for trouble. So, please stop and think before saying “I want to leave everything to my children equally.”
WHAT IF THE MAYANS ARE WRONG!
I am sure by now everyone is familiar with the idea that the Mayan Calendar ends in 2012, and, according to the History Channel and other news media, so do we! What if this theory is incorrect?! What if, there still is life on earth after 2012? Will you wish you had planned for the future to protect yourself and your family from disability, an untimely death or paying unnecessary taxes? Or, will you just assume the future will take care of itself?
It just makes sense to take care of yourself and your family now, by making sure you have a will or trust, healthcare directives, guardians for your children, power of attorneys, etc.
There seems to be a general malaise in our country and people are terrified to move forward…but, you can’t move backward! Log onto our website and see all the services we provide. Be brave, plan for the future!
WHEN IS THE “RIGHT TIME” TO BEGIN ESTATE PLANNING?
Recently, I was asked by a young, healthy, successful, single female professional when she should start thinking about estate planning. Although I wanted to scream “yesterday!”, I did not. Instead, I hemmed and hawed so that it would not appear that I was trying to “sell” my services or to be unnecessarily alarmist. Then I attended a presentation concerning estate and financial planning issues for people with chronic illness, which reinforced my backbone so that I may answer this type of question more forthrightly in the future.
Estate planning is not only about protecting others by planning how you leave your assets after death. In fact, you should start by protecting yourself and planning for the possibility that you may become disabled. There are 120 million Americans today living with chronic illness or disability. They are not all elderly. Sixty percent (60%) of those living with chronic illness are between the ages of 18 and 64. The time to protect yourself is now.
Another young, 30-something female professional friend of mine recently was diagnosed with multiple sclerosis. Statistics show that eighty percent (80%) of those diagnosed with MS are women (seventy percent (70%) of those are single), and the diagnosis most often is made when the female is in her 30’s. If you wait to begin estate planning until after you are diagnosed with a chronic illness, it may be too late. Although you can have legal documents prepared after such a diagnosis of a physical illness, the opportunity to purchase long-term care insurance, disability insurance or even a life insurance policy to provide the protection and financial means to pay for the estate plan, may be gone. If you become mentally disabled, it will be too late to do any planning at all.
So, the true answer is that it is never too soon to start your estate planning. We are here to help.
