Houston Estate Planning and Probate Blog

Friday, October 8, 2010

10 Phone Calls to Make After the Death of a Loved One

Coping with the death of a loved one can be a crushing task.  There are so many things to do and details to remember; all of this at a time when each small task can serve as a reminder of your loss. At such a time it can be helpful to know that you’re not going through this alone; there are a number of people who can help when you begin to feel overwhelmed.   To relieve some of the stress, and help ensure that no important task is forgotten, we offer a list of people to call after the death of a loved one:

Funeral home - This will likely be your first call.  The funeral home you or your loved one has selected will be able to help you with a lot of the immediate details and tasks.  The funeral director will also be able to help you obtain copies of the death certificate - something you will need later. Many people order at least 10 or more copies for future needs.

Family and Friends - This probably goes without saying.  Not only will you want to notify family and friends, but they can also help with a lot of the endless tasks and overwhelming details.  Don’t be afraid to ask for help and delegate.

Veteran’s office (if deceased was a Vet.) - If the deceased was a Veteran you may have to stop benefit payments; you may also be able to get assistance with the funeral or memorial service.

The deceased’s employer - You will need to do this not only to inform the employer of the death, but also to terminate health insurance and to obtain information about any employee benefits that might be due and payable.  

Attorney and Tax Professional - You will need to know what to do about probating the deceased’s estate, filing tax returns, dealing with bank accounts, etc.  An attorney and a tax professional can help. It is especially important to find out if your loved one had any existing estate documents such as a will, or living trust or irrevocable trust.

Office of Social Security - If your loved one was receiving benefits you’ll need to stop payments. You will also want to find out if survivors are entitled to any benefits.

Insurance company of the deceased - If your loved one had life insurance, you will probably need to file a claim.  This is something your attorney can help you with.

Local Newspaper - You may want to publish an obituary or notice of death, as well as information about the funeral or memorial service.

Credit card companies and utilities - Before you pay any debts or claims, discuss the claims procedure with your attorney.

Bank - Before you make any changes to bank accounts, discuss the procedure with your attorney. Do not close any accounts right away!

Although this list is a good starting point; a complete list of people to call and things to do will depend on where the deceased lived and the details of his or her estate. Contact your loved one’s estate planning attorney (or your own) to ensure that nothing is left to chance.

Wednesday, October 6, 2010

Power of Attorney from the Agent’s Perspective

In our last post we discussed the importance of choosing the right person as your agent or executor and some of the things to consider as you make your choice.  In today’s post we’ll look at the agent/executor situation from a different perspective—that of the person serving in the role.

What happens if you’re named as agent or executor and don’t have what you need to do the job well? In this recent post on the New Old Age Blog, a reader asks the question of what to do if you are named co-agent of a power of attorney and the other agent isn’t doing his share.  This is just one example of some of the difficulties that can crop up when you’re serving in a fiduciary capacity.

The first thing to remember is that just because you’re nominated doesn’t mean you have to take the job. Serving as power of attorney can be a weighty job, and if you don’t have the time or energy to put into the role it might be better all around for it to pass to an alternate nominee.

Another thing to keep in mind is that you don’t have to do it alone.  This is not to say that you should have a co-agent (although as evidenced by the article above some people do choose to name co-agents rather than just one person), but it does mean that you can ask for help.  If you aren’t sure what to do don’t be afraid to ask your attorney (or the testator’s attorney) for help.

Finally, if you know ahead of time that a friend or relative is naming you for a fiduciary role, take the time to talk to that person about their values and wishes.  Ask the questions you anticipate might crop up later.  Having the conversation when you still can will help immensely when the time comes to make decisions on that person’s behalf.

Monday, October 4, 2010

Executors and Agents: Choosing Your Own Replacement

When people think about estate planning they generally think about inheritance, or taxes, or even guardianship—but rarely are the words “executor” or “agent” the first ones that come to mind.  And yet, choosing your executor or your agent is one of the most important decisions you’ll ever make.

Your executor is the person who carries out the instructions in your will.  You may spend hours (sometimes months or even years) agonizing over inheritance plans and making decisions; but in the end, when the time comes for all of those decisions to be implemented, you’re not going to be around.  If there are any questions to be answered or clarifications to be made they’re going to fall to your executor.

Your agent is the person who—depending on whether the document is a health care directive or a financial power of attorney—will make your important financial or health care decisions when you are unable. This person is your proxy during your life, signing checks on your behalf or talking to doctors about your treatment.

Considering all of this, it is understandable why so many people have trouble naming an agent or executor.  It’s not easy to choose your own replacement, so to speak.  But the most difficult decisions are often the most important. If you are a parent of more than one child then you know about the sibling fights that can erupt seemingly out of nowhere, even in loving and agreeable families. This is especially true when there is any uncertainty about what mom or dad’s true wishes were.  The right agent or executor can relieve much of that uncertainty.

So how do you choose the right agent or executor?

First of all, think it through carefully.  Choose someone reliable, whose decisions you trust. You’ll want someone who’s careful; and you’ll want to choose someone who isn’t already overloaded, because they’ll need to have time to do a thorough job. Choose someone who knows you and who knows your family; a familiar face will be comforting in hard times.  On the other hand, nominating a financial institution rather than a personal friend can work out well under the right circumstances, but research your choices carefully.

If there isn’t one clear choice you may decide to nominate two people to make decisions together.  This can be a good alternative, but it can also be a recipe for disaster, so be sure to build in some protections: name an uneven number of agents or executors to prevent tie-decisions, or nominate a mediator or tie-breaker who can step in to prevent serious disagreements from having to be decided in court.

Wednesday, September 29, 2010

What “The Cost of Aging” Means Today

“The cost of aging” used to mean failing eyesight, bodily aches and pains, and maybe the loss of your teeth; but nowadays “the cost of aging” can mean the loss of your happy marriage!

With growing numbers of senior citizens being diagnosed with debilitating elderly illnesses, and with the cost of nursing care on the rise, more and more couples are finding that they simply can’t afford to pay for the numerous visits to the doctor, endless medical treatments, and rising cost of prescription medicines. Many seniors hope that Medicaid will help, but before you can get assistance from Medicaid you will have to spend down your own assets to almost nothing—this includes spending down any savings or retirement assets you may have.  

If you are the spouse of someone diagnosed with an illness such as Alzheimer’s or dementia you can really get the short end of the stick. As this editorial in the New York Times points out, you can put all of your financial resources toward your spouse’s care, only to find that at the end of it all you “face a bleak retirement with neither [your spouse] nor your savings.” Some seniors are discovering a dismaying truth: that if they want to keep some kind of nest-egg for themselves, one of their only options is divorce and the separation of finances that comes with it.

This isn’t the first time the subject of divorce for financial reasons has come up.  MSNBC dealt with the issue earlier this year with this segment on “Today”.  But there is some good news amongst all this gloom and doom—poverty or divorce don’t have to be your only choices.  If you start planning early, you can be prepared should something like this happen to you and your spouse.  Long-term care insurance is one good preventative measure, or ask your estate planning attorney about other asset protection strategies you can employ.

Aging is hard enough without having to end a happy marriage (and feel like you’re abandoning a beloved spouse) to ensure your own financial future.  Please call our office to find out what your options are.

Monday, September 27, 2010

How to Keep Your Children from Squandering Their Inheritance

Many parents come into our office with one concern on their minds: protecting and providing for their children. We help these parents select loving guardians and set up solid trust or inheritance plans to ensure that their children will have everything they need.  But parents often have another concern as well—how to keep their children from squandering an inheritance received too early. 

These parents want to protect their children from "predators" and "creditors"  including the potential disaster of being given too much financial responsibility before they are mature enough to handle it; they either want to keep their inheritance in trust for the children or gradually relinquish control or assets as each child reaches the milestones which prove they are fiscally prepared. We are happy to help parents design a plan that helps them achieve this goal. 

One strategy to help a child reach financial maturity is to specify an age at which a child may be co-trustee of his or her own trust. The child can then partner with a co-trustee of the parents’ choosing; this could be a close friend of the family, a trusted financial advisor, or even a corporate trustee such as a bank. This gives the child the opportunity to get a taste of responsibility and begin making decisions, but with a safety net beneath them. When the child reaches a certain age (or alternatively, after attaining a goal such as graduation from college or graduate school, or gainful employment for a specified amount of time) he or she may then become sole trustee of his or her own trust.

If parents don't want to keep the inheritance in continuing trusts for their children, another strategy is to give the child access to the trust principal itself in gradual increments. For example, the child may receive 1/3 upon graduation from college, another 1/3 ten years later, and the remaining 1/3 ten years after that. Of course the ages and amounts are completely up to each client, but the slow distribution of assets allows the child to have a learning curve, something which makes the parents (and the child) much more comfortable.

At our office we understand that there is no substitute for parental involvement, but we can give our clients options that can lay a strong foundation for fiscal responsibility. If you are a parent with similar concerns, contact our office for more information.

Friday, September 24, 2010

Lapse in Generation-Skipping Transfer Tax Makes Giving to Grandkids Easier Than Ever

Wealthy grandparents have a unique opportunity this year to give their grandchildren gifts of substantial value without incurring a hefty tax. This is a huge savings opportunity!—so why aren’t more people taking advantage of it? 

Part of the reason may be lack of awareness. Everyone knows about the Bush administration’s year-long repeal of the estate tax, but very few people seem to be aware that the Bush tax cuts included a year-long lapse of the generation-skipping transfer (GST) tax as well, as discussed in this article in Reuters

But before you call the grandkids with the good news, consider whether or not you feel comfortable giving them a large sum outright.  If your grandkids are still young (and not yet responsible about money and finances) you may not want them having such a large sum to play with; and unfortunately, giving the gift in trust is not an option in this case.  “To take full advantage of the GST tax break, assets should be transferred directly to beneficiaries and not to a trust. Money placed into a trust may lead to taxes when distributions are made later on.”

If your grandchildren are responsible adults, and if you’ve been considering giving them a monetary gift anyway, this lapse in the generation-skipping transfer tax could be just the push you need.  Talk to your attorney or financial advisor about your gift-giving options.

Wednesday, September 22, 2010

Charitable Remainder Trusts: Philanthropy in Death Can Benefit You in Life

If you have a favorite cause, foundation or charity you have probably considered leaving some money to that organization in your will or living trust. Perhaps you’ve even taken it a step further and toyed with the idea of specifying that the executor of your will or trustee of your trust set up a trust in the name of your favorite charity, rather than simply giving a one-time gift.

If you have ever considered either of these options you may want to ask your estate planner about setting up a Charitable Remainder Trust, which, according to this Elder Law Answers article, not only supports your favorite charity after your death, it also benefits you during your lifetime.

“A charitable remainder trust is an irrevocable trust that provides you (and possibly your spouse) with income for life. You place assets into the trust and during your lifetime you receive a set percentage from the trust. When you die, the remainder in the trust goes to the charity (or charities) of your choice.”

The altruistic reasons for setting up a charitable remainder trust are obvious, but here are some other advantages you may not have considered:

  • Reduction of your taxable income
  • Charitable tax deduction at the time you fund the trust
  • Diversification of assets
  • Income from the trust during your lifetime

In addition to all of these financial advantages, setting up a charitable remainder trust provides you with the opportunity to leave a family legacy and impress your values upon your children and grandchildren.

 Please remember that charitable remainder trusts are irrevocable trusts, which means once they’re done they can’t be undone, so it’s not something to take lightly.  If you are interested in creating a charitable remainder trust, call our office or talk about it with your own attorney before you take action.

Monday, September 20, 2010

Help for Alzheimer’s Patients AND Their Caregivers

Shakespeare said that old age is a return to childhood; without teeth, without voice... and in the case of Alzheimer’s patients, without memories.  But if the elderly have to endure the drawbacks of childhood, shouldn’t they get some of the benefits too?

The Family Caregiver Alliance must have thought so too, because a few times a year they sponsor a weekend sleepover in Alamo California called Camps for Caring. The program provides campers with an experience “of shared meals and stories, of activities creative and expressive, of exercise in the outdoors and of new friends and memories made over the weekend.” But the significance of the experience can go far beyond that.

According to a recent story about Camps for Caring on NPR, although “campers typically don't remember details of the retreat... the experience significantly lifts their mood.”  In fact, “Post-camp surveys of family caregivers indicate that the ‘good feeling’ lingers, and it even can improve daily functioning.”

Beyond being a beneficial experience for the elderly attendees, Camps for Caring provides a much-needed break for overworked caregivers, who often attend to their elderly loved one around the clock, and can quickly find themselves dangerously close to the burnout breaking point.

Out of state residents may find it difficult to take advantage of the Camps for Caring program, but that doesn’t mean that caregivers or their elderly charges must leave themselves at the mercy of the effects of Alzheimer’s.  In addition to information about Camps for Caring itself, the NPR article includes some tips from experts that can make dealing with Alzheimer’s easier on everyone. Or you can go to the Family Caregiver Alliance’s Family Care Navigator to find organizations and resources in your area.

Friday, September 17, 2010

Those Who Hesitate Can Still Achieve the Liberation of Retirement

In spite of all the advice you see out there to start saving early for your eventual retirement, we’re realistic.  We know that many people—either out of choice, neglect or necessity—put off saving for their retirement, only to find themselves up against a wall of anxiety when they realize that retirement isn’t very far away.  However, according to Carla Fried of CBS Money Watch, it may not be as bad as you think. In fact, according to Fried, “he who hesitates can in fact win at retirement.”

The article suggests that due to the recent economic downturn many people are choosing to put off their retirement until they feel more secure... a feeling that may never materialize.  But that hesitation can serve a purpose: It provides the opportunity to take a good look at your finances and your choices, “take a deep breath and make some smart tweaks to your plan [so] you can still pull off a successful retirement.”

These are some of the tweaks Fried recommends:

Put Off Your Retirement Date.  At best you give yourself a few more years to bulk up your savings account, at worst you’ve eased some of the pressure on the savings you already have.

Consider Downsizing Your Home.Moving into a more economical home not only gives you some breathing room on the monthly mortgage once you retire, but you may be able to put some of the proceeds from the sale into your savings.

And there’s one more that isn’t included in the article, but that you won’t want to overlook:

Talk to Your Attorney About Estate Planning.  You may not expect it, but estate planning includes thinking about health care, long-term care, and how to work with the departments of Social Security and Medicaid instead of against them. Making a plan before you retire can relieve a lot of stress.

Wednesday, September 15, 2010

State Of Washington Takes Action Against DIY Legal Document Retailers

There has been lot of hullabaloo in the news recently about Do-It-Yourself Wills and Estate Planning, most notably a debate on with articles presenting The Case For Do-It-Yourself Wills and The Case Against Do-It-Yourself Wills. Well, the state of Washington just weighed in on the subject with a settlement between the Washington Office of the Attorney General and Legal Zoom, a company that offers DIY legal documents online; and the ruling leaves no question as to where the Washington Attorney General stands in his opinion:

“’LegalZoom offers do-it-yourself legal documents online but can’t provide you with legal advice or tell you which forms to fill out,’ Attorney General Rob McKenna said.

Under a settlement with the Attorney General’s Office, LegalZoom can’t compare its costs to attorneys’ fees unless the company clearly discloses that its service isn’t a substitute for a law firm.

Simply selling legal forms doesn’t constitute the practice of law. LegalZoom can only provide an online form service that allows consumers to choose and complete their own legal documents, explained Consumer Protection Division Chief Doug Walsh.

The agreement filed today in Thurston County Superior Court also prohibits LegalZoom from engaging in the unauthorized practice of law, selling personal information obtained from Washington customers or misrepresenting the benefits of any estate distribution document.”

Regardless of your existing thoughts on the subject of DIY wills and estate planning, the comments and actions of the Washington Attorney General certainly provide food for thought.

Monday, September 13, 2010

How to Prepare for Dismaying Changes to Estate Tax Law

This may seem like we’re listening to a broken record, but once again Congress’ inability to act is creating uncertainty in the estate-tax-planning world.  We’re little over 3 months away from a major upheaval in the estate tax, and according to the New York Times the upcoming law is likely to cause a lot of grumbling unless Congress takes action.  And it’s no wonder when the new law will mean that more families are taxed at a higher percentage:

“The amount of each estate that is exempt from estate tax is scheduled to become $1 million in 2011 (down from $3.5 million in 2009, when the tax was last in effect). The tax on the balance is to rise to 55 percent in most cases (up from the 2009 rate of 45 percent). So now is the time to consider the various tax strategies available.”

What this lower exemption rate really means, however, is that more families will be caught off-guard when a loved one passes away and the survivors are suddenly hit with a massive tax bill.

That is unless families start planning now.

The Times article mentioned above suggests that “the easiest way to reduce the tax bill is to give as much as $13,000 a year each to as many people as you like — which you can do without paying gift tax;” but when you consider how little $1 million really is (especially when the value of your home, retirement savings, etc. are all included when adding up your total assets) we’re guessing that there are a lot of people out there who are over the exemption amount, but don’t feel they can afford to go handing out $13,000 every year. Much more appealing are some of the other planning strategies suggested in the article, including:

  • “Buy a one- or two-year [life insurance] term policy to cover the tax billif the exemption amount is only $1 million.” The policy will help your heirs cover what could be a hefty tax bill, but the policy “[could] be canceled if Congress eases your estate tax concerns;” and
  • “Create a trust.”The article suggests a GRAT (Grantor Retained Annuity Trust), which is a great tool for high-value assets that are expected to appreciate during your lifetime; but for married couples simply looking for a way to protect their children from a hefty federal estate tax down the road a Credit Shelter Trust may be a better option.

There are a number of other ways you might be able to prepare for the coming estate tax upheaval—the best way to protect your own family is to contact an estate planning attorney and ask about your options.

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