There is a common misconception that estate planning is only necessary for those who wish to preserve their assets for future generations. While protecting their wealth for heirs may not be a priority for couples without children, they can still benefit from estate planning in many ways.
Couples without children have specific needs when it comes to estate planning and wealth management. For example, married couples should consider what will happen to their assets when they pass away. While they tend to have more financial flexibility than families with children, starting their planning early can help avoid complications and unintended consequences in the future.
Some of the key elements of a basic estate plan are a revocable trust, will, Durable Power of Attorney and Advance Health Care Directive. The latter two are essential tools for naming individuals who will have the authority to make financial decisions and health care decisions, respectively, in the event of incapacity.
A Gallup survey from 2016 revealed that around 56 percent of Americans do not have a will, a worrying trend. Without a will, one has no control over how their assets will be distributed. State laws decide who will inherit them.
A well-crafted estate plan serves to realize a couple’s charitable wishes, financial goals and long-term care preferences, while helping to prevent exploitation. For example, there are special tax considerations for those who wish to leave their money to charity. Creating a charitable trust instead of making an outright gift can help save on estate taxes.
Establishing an estate plan early on is invaluable for both childless couples and families. An experienced estate planning attorney can help plan for a secure future in the best possible way according to one’s wishes.
Disputes involving inheritance have the potential to tear families apart. Fortunately, proper planning can help reduce the risk of disagreements among loved ones and ensure they will be provided for when you are no longer around.
Set up an estate plan as soon as possible. Old age and illness can make it difficult to communicate one’s wishes. As a result, the best time to create a comprehensive estate plan is when you are healthy and of a sound mind. Your estate plan should be reviewed regularly as tax and estate laws are constantly changing. Major life events such as marriage or the birth of a baby are also likely to warrant an update.
Have an open discussion with family members. Many people find it difficult to think about their own death, let alone have a conversation about what will happen to their assets afterwards. However, it is important to clearly communicate one’s wishes to loved ones. Be upfront with potential heirs about your intentions. For example, you may want to tell adult children about money you plan to set aside for your grandchildren’s education.
Consider creating a living trust. Property and financial assets can be put into a revocable living trust for protection. Doing so can help avoid the costly and lengthy process of probate, as well as unnecessary taxes and fees. After a person’s death, the contents of the trust are distributed to named beneficiaries either immediately or in the future, according to trust documents.
Consult an experienced estate planning attorney. Estate planning attorneys are in the best position to make sure your estate plan is right for you. They will help ensure that it carries out your wishes while avoiding family disputes. Along with being aware of changes in laws and tax regulations, the attorney will also cover matters you may not have considered. All attorneys are not equally capable. Consider experience, references, and indications of leadership.
Mark Gilfix has been keeping a close eye on innovation in the long term care space, and recently attended the Aging 2.0 “Optimize” Summit in San Francisco. He wrote an article sharing his insights with the The Elder Law Report, one of the top national publications for attorneys in the field. While at the Summit, he discovered many innovative and new start-up companies that were poised to assist seniors now and in the future. With technology moving as fast as it is, many of the offerings at Aging 2.0 “Optimize” are the next generation of assisted living concepts designed specifically for seniors.
One company that stood out at the Summit was Akili Interactive Labs – Cognitive Enhancement Video Games – developers of several video games focusing on cognitive enhancement with the ability to help heal the minds of those who face cognitive decline. The possibility also exists that these carefully crafted games may slow or halt memory decline for those with mild dementia.
Dr. Adam Gazzaley, a prominent neuroscientist from the University of San Francisco, demonstrated how the games could assist in helping those in their 80s to be as proficient and efficient as those in their 20s. This would be a powerhouse tool for the users and their families.
Some other companies that stood out to Gilfix:
Rendever – Virtual Reality in Elder Care – offers those who receive care and those who provide it with the ability to partake in cognitive stimulation that allows them to go anywhere – such as back to visit their childhood home or travel to a favorite place or country. Studies have shown that virtual trips greatly enhance the overall well-being of the participant. Software like this has the potential to be a game changer in improving the lives of geographically and socially isolated clients.
Silvernest – Vetted Roommate Matching Service for Seniors may also be revolutionary for older adults who have space in their home, would like to make extra income and wish to have a roommate or a companion. Silvernest offers a safer approach than advertising on the open market. The company does background checks, helps facilitate monthly payments and uses a special algorithm to help find suitable matches. A roommate or a companion could well help a senior renter improve the quality of their life.
Other Notable Innovations in Development
In the home-sensor field:
- Stack Care – light-bulbs containing radar-based sensor technology capable of tracking falls and other changes in a senior’s daily activities
- Echo Care Technologies – non-wearable system capable of detecting falls and other issues
- UnaliWear – classic-style watch with the ability to respond to voice commands, track movements and provide other assistance as necessary
To read more about other new innovations download the full article here.
Mark Gilfix recently sat down in the offices of criminal defense attorney, and cable TV star, Melissa Lewkowicz, to discuss the 3 key estate planning documents that every American needs. Watch the Facebook video below.
You can watch Melissa Lewkowicz in Reasonable Doubt on Investigation Discovery or see clips at https://www.investigationdiscovery.com/tv-shows/reasonable-doubt/.
A Durable Power of Attorney (DPOA) allows an individual to give a designated person — known as an “attorney in fact” — authority to sign documents and act on their behalf. The legal document is particularly beneficial for individuals who are worried about mental or physical incapacity in the future. For example, an elderly person may be aware of their gradual memory loss, which may soon render them incapable of making important decisions.
Some people might view the idea of preparing and signing a DPA as a sign of losing their independence. However, it allows individuals to specify how they want things handled while they are still alive but unable to manage their affairs. Without a DPA in place, family and friends will not be able to make any important financial decisions in the event of unforeseen incapacity.
The attorney in fact has a significant amount of control over an incapacitated individual’s financial and legal affairs. They have the power to make decisions about assets, enter into contracts, manage businesses, and handle tax and trust matters. Therefore, it is critical to choose a trusted individual such as a family member or friend and to fully discuss the scope of responsibility.
The DPA can either be effective immediately once signed, or when and if a person becomes incapacitated. The document is legally valid for a person’s entire lifetime unless he or she revises or revokes it at any time while being of sound mind.
An experienced estate planning attorney can provide guidance on selecting the best approach to protecting one’s future interests. For example, in some cases a court-appointed conservatorship may be necessary when the individual lacks the capacity to sign a DPA or does not have anyone to name as an attorney in fact.
“We all want to avoid court involvement,” warns nationally known attorney Mark Gilfix. “Signing a well-drafted Durable Power of Attorney is therefore an essential part of proactive planning.”
The elderly can be vulnerable to various forms of elder abuse, one of which is financial exploitation. Financial exploitation involves unauthorized use of an elderly person’s finances or property, either by a family member, caregiver or an unknown scammer.
The media recently reported the case of an elderly California couple who faced eviction from their home of 56 years after falling victim to a scam devised by their grandson. Chad Moore defrauded his grandparents Hank and Helen Kawecki out of their deed, defaulted on nearly $500,000 in loans and lost their Thousand Oaks house to foreclosure.
Moore convinced the couple he would provide them with lifelong financial support if they transferred the house over to him. After taking out a loan, he initially kept his promise to give his grandparents monthly payments. However, he stopped the payments after a few months and allegedly spent all the money in Las Vegas.
Instead, Moore put the house up for sale. He also lured his grandparents out of their home while realtors hosted open house events for potential clients. The couple filed a lawsuit against Moore with their neighbor’s help. Police are investigating the case.
The National Committee for the Prevention of Elder Abuse has identified a number of behaviors commonly associated with financial fraud. These include: taking money or property, forging the elderly person’s signature, and failing to follow through on promises for lifelong care in exchange for money or property. An older person may also be coerced or deceived into signing a will, power of attorney or deed.
Creating an estate plan can help protect the elderly from financial exploitation. A living trust, Durable Power of Attorney and Advance Directive are all excellent safeguards. Each document names a trusted individual who can manage assets and health care according to specified wishes in the event of incapacity.
Life is ever-changing, and so are an individual’s estate planning needs. A key feature of estate plans is that they should be flexible enough to adapt to circumstances at various stages throughout one’s lifetime. There are a number of major life events that can help shape the scope of an estate plan. Any major life changes will likely require wills and related planning documents to be reevaluated and updated.
A change in marital status — whether it involves getting married, divorcing or remarrying — is likely to have significant impact on asset management, advance directives, powers of attorney and other estate planning documents. A new spouse does not automatically become the chief heir. Additionally, some couples may choose to draft a prenuptial agreement to manage inheritance rights to each other’s estates. For example, a spouse may choose to protect their biological children’s inheritance in the event their partner remarries.
The arrival of children is a significant life-changing event. Although it may be unpleasant to think about death or incapacity, parents must address the question of how their children will be cared for in case something happens to either one or both of them. Drafting a will provides the opportunity to name a guardian to care for the child. Parents may also consider establishing a trust in order to manage assets.
Moving to a different state also entails estate planning revisions. Each state has its own estate planning and tax laws. Therefore, related documents should be reviewed accordingly. For example, community property states and common law states have different rules on spousal ownership. An existing estate plan should match current requirements and anticipate future needs.
While these are just a few major life events to consider, there are countless others that may prompt an individual to periodically review their estate plan to ensure it meets their objectives.
Although winning the lottery can be exciting, it carries enormous estate and gift tax implications. Finances can dwindle away in no time if they are not managed properly.
Lottery winners have the option of taking the prize as a lump sum or an annuity that is divided into 30 annual payments. California exempts lottery winnings from income tax. However, a chunk of winnings are withheld for federal taxes. The annuity payments are also subject to the same federal tax albeit spread over each installment.
Establishing a trust can help lottery winners maintain a degree of anonymity and provide a tool for managing assets and finances. Trusts can also allow the future transfer of wealth to children and other heirs with minimal estate tax exposure. If a prize is assigned to a qualifying revocable living trust, the lottery will make installment payments to the trust.
Lottery winnings present a number of estate planning challenges. If a person with special needs wins the lottery, the winnings are likely to affect eligibility for government benefits such as Medicaid.
If the prize is received in an annuity towards the end of a winner’s expected lifetime, they could die before receiving all the installments. The balance of future payments then become part of the estate, like other assets. In such cases, the estate’s representatives will begin the process of transferring payments to heirs. The process is simpler if the winner has designated beneficiaries.
One of the first things a lottery winner should do is consult a lawyer to prevent making major mistakes. The cost of not taking the necessary estate planning measures can be devastating.
Under California law, once a child turns 18 years of age they are viewed as an adult. Entering adulthood involves taking steps to prepare for the unexpected, whether it is a sudden illness or a serious accident. No one likes to think of themselves in such terrible circumstances in which they are unable to make their own informed decisions. However, preparing for the future can help provide peace of mind.
Few young adults are aware of the need for at least a basic estate plan. According to a 2015 study by Fidelity Investments, 41 percent of millennials have not discussed wills and estate planning with their parents. Parents tend to assume they are entitled to make legal decisions for their college-aged children. However, once a person turns 18, they have “the legal right to privacy and to govern their own lives” as an adult.
Key estate planning documents a young adult should have are a will, power of attorney, advanced health care directive and HIPAA release. A HIPAA — or Health Insurance Portability and Accountability Act — release gives doctors permission to share medical information with those named on the form in case of an emergency.
While it is not necessary for every 18-year-old to have a will, they should appoint a trusted friend or family member to serve as a health care proxy. This person has the authority to make medical decisions on the young adult’s behalf in the event they are unable to.
Young adults would also benefit from a general power of attorney. In many cases parents are named appointees. However, without the proper documents, they would be unable to access their child’s financial accounts. Not having such estate planning documents could create serious complications in case of an accident or other unforeseen circumstances.
Robin Williams’ widow Susan Williams settled out of court a lawsuit over the late actor’s estate last year. The highly publicized dispute with his children revolved around an estate worth an estimated $100 million.
Disagreements over trusts and wills between family members tend to be fraught with strong emotions and can quickly escalate. Although a loved one may have left instructions regarding the division of assets upon their death, beneficiaries may question their legitimacy and accuracy. Upon a family member’s death, challenges to a trust or will can be asserted by any interested party — whether it is a spouse, children or other heirs and possible claimants — when there is a perceived unequal division of assets. In such circumstances, a resolution may have to be sought in court.
In this case, much of the dispute concerned what items constituted celebrity memorabilia and what counted as personal keepsakes. Susan Williams was unhappy with trustees claiming many possessions as memorabilia for the estate. She also said she was not receiving enough money from the actor’s estate to maintain their home in Tiburon, California.
Robin Williams’ trust had established guidelines about how his assets were to be distributed among his family members. The actor left the majority of his estate to his three adult children from his first two wives. The children’s attorney said they had been “following both the letter and the spirit of Robin’s instructions” and could not understand why Susan Williams “acted against his wishes by challenging the plans he so carefully made for his estate.”
In the settlement, Susan Williams received just a fraction of the overall estate — enough for the lifetime upkeep of the home. She was also able to keep some sentimental objects such as wedding gifts and clothing. The children received the bulk of the items, including bikes, watches and their father’s Academy Awards statue.