The next time you see your financial advisor, you may be asked to provide a trusted point of contact, such as a relative or friend, for the advisor to call if he has a reasonable belief that you might be a victim of financial exploitation.
Kiplinger’s recent article, “New Rules Battle Financial Scams, Elder Abuse” says that your adviser could place a temporary hold on a suspicious disbursement request from you, so your money is protected until the concern is investigated. When money leaves an account, it’s hard to get it back.
Changes include several new laws that protect seniors and their money. For older adults, financial exploitation is a growing problem. One in five older Americans are the victim of financial exploitation each year, resulting in the loss of $3 billion annually.
Mild cognitive impairment can result in older adults not seeing red flags for fraud, says Michael Pieciak, president of the North American Securities Administrators Association (NASAA), which represents state securities regulators. The ability to judge risk may be diminished. He noted that social isolation plays a part, with vulnerable seniors home during the day and apt to answer the phone when a fraudster calls.
Federal and state lawmakers, along with the financial services industry, have initiated new rules to help safeguard seniors and their assets. The idea is that financial institutions and professionals are on the front lines when it comes to spotting elder financial abuse. The changes are designed to protect seniors and to shield financial professionals from liability for reporting possible exploitation.
Congress passed the Senior Safe Act in 2018. This law protects financial services professionals from being sued over privacy and other violations for reporting suspected elder financial abuse to law enforcement, provided they’ve been trained. If a bank teller notices that a senior seems confused about withdrawing money or is making puzzling transactions, the teller could tell a superior, who could contact authorities, if necessary.
Nineteen states have enacted some version of a NASAA model act that provides registered investment advisers and broker-dealers with guidance on telling a trusted point of contact and putting a temporary hold on a client’s account to investigate financial fraud.
Does your parent have a Power of Attorney? Do you have a copy?
Imagine that your perfectly fine, aging-well parent has had a minor stroke and is no longer able to manage her financial or legal affairs. Your parent has been living independently, waving off offers of help or even having someone come in to clean for years. It seemed as if it would go on that way forever. What happens, asks the Daily Times, when you are confronted with this scenario in the aptly-titled article “Senior Life: What a nightmare! Untangling a loved one’s finances”?
After the health crisis is over, it’s time to get busy. Open the door to the home and start looking. Where’s the original Will? Where are the bank statements and where’s the information about Social Security benefits? When you start making calls or going online, you may run into a bigger problem than figuring out where the papers are kept – no one will talk with you. You are not legally authorized, even though you are a direct descendant.
This happens all the time.
Statistically speaking, it is extremely likely that your parent will end up, at some point, in a nursing home or a rehabilitation center for an extended period of time. Most people have no idea what their parent’s financial situation is. They don’t know where and how Dad keeps his financial and legal records or what they would need to do to help him in an emergency.
It’s not that difficult to fix, but you and your healthy parent or parents need to start by planning for the future. That means sitting down with an estate planning attorney and making sure to have some key documents executed – especially a Power of Attorney.
A Power of Attorney (POA) is a legal document that gives you permission to act on another person’s behalf as their agent, if they are unable to do so. It must be properly prepared in accordance with your state’s laws. It allows you to pay bills and make decisions on behalf of a loved one while they are alive. Without it, you’ll need to go to court to be appointed as legal guardian. That takes time and is much more expensive than having a POA created and properly executed.
If you’ve downloaded a Power of Attorney and are hoping it works, be warned: chances are good it won’t. Many financial institutions are very picky about the POAs they’ll accept, and most generic forms won’t have many of the special provisions estate planning and elder law attorneys know need to be included to allow you to have certain powers in place to help your parent.
If your parent has a POA in place, and you have to step in, then it’s time to get organized. You’ll need to go through your parent’s important papers, setting up a system so you’ll be able to see what bills need to be paid and how many bank accounts or investment accounts exist.
Next, it’s time to consolidate. If your parent was a child of the Depression, chances are she has money in many different places. This gave her a sense of security but it’ll give you a headache! Consolidate multiple CDs, bank accounts, and investment accounts into one institution. Have Social Security and any pension checks deposited into one account.
If you need help, don’t hesitate to ask for it. The stress of organizing a loved one’s home, caring for him or her, and managing the winding down of a home can be overwhelming. Your estate planning attorney will be able to connect you with a number of resources in your area.
IRS scams seem to be getting more common. The other day I spoke with a sweet elderly client who had received a voicemail message from a man who claimed he was from the IRS. He told her they’d be issuing a warrant for her arrest if she didn’t call them back immediately. Of course, that frightened her and she called the number he left. Luckily, she was a bit wary and when the person on the other end told her to buy some Google Play gift cards as payment, she was pretty sure it was a scam and hung up. But she called me for reassurance that she’d done the right thing (she had).
The creepy thing is that while I was on the phone reassuring my client, my paralegal received a recorded IRS scam message on her cell phone! And I seem to get at least one recorded voicemail per month claiming there’s a warrant out for my arrest due to nonpayment of taxes.
It’s almost an epidemic. You get a phone call or robotic-sounding message from someone who says he is from the Internal Revenue Service (IRS). He says that you owe money for taxes and that the authorities will come and arrest you unless you wire money or buy prepaid debit cards, Google Play gift cards, or iTunes gift cards immediately. Of course, the caller isn’t with the IRS. He’s a thief.
The government has hard numbers only for the people who reported the theft to the Treasury Inspector General for Tax Administration (TIGTA), so the total scope of the crimes is likely much larger than the numbers make it appear. Since late 2013, more than 15,000 people have reported losses totaling nearly $75,000,000 to these illegal IRS scams. The average amount stolen is nearly $5,000 per victim, but at least one person lost more than $500,000, and at least one other person committed suicide after realizing he had been conned.
Thankfully, the word is getting out about these IRS scams, and would-be victims are reporting the impersonators. More than 2,500,000 people have contacted TIGTA to report suspicious calls from people claiming to be with the IRS.
What to Do If You Get a Suspicious Phone Call
If you get a phone call from someone who claims to be an IRS employee, just hang up. TIGTA agents advise that you not engage with the person at all. Don’t try to pull a prank on him or blow an air horn into the phone. Just get off the phone immediately.
Why just hang up? Apparently there have been several instances where the IRS scammers got angry at the people they were trying to victimize and took revenge. They called the police and gave false reports of violent criminal activity, such as reporting an armed home invasion happening at the person’s house. This dangerous, illegal act is known as “swatting,” named for the SWAT teams that respond to the alleged threat, sometimes with deadly force.
So, hang up immediately and report the IRS scam. If you didn’t fall for the scheme, report the call on the TIGTA website: www.tigta.gov. If you did fall prey to the con artists, then call the TIGTA hotline (800-366-4484).
What to Do If You Might Owe Back Taxes
The IRS contacts people by mail about delinquent taxes. They do not start the process by telephoning taxpayers and threatening them with arrest, jail, or forfeiture of their homes. If you are worried about whether you really do owe any taxes, the best thing to do is to go to the IRS website, www.irs.gov, and see if you owe any back taxes. If you do, the IRS will work with you and set up a payment plan. They won’t tell you to go to Walmart to buy prepaid debit cards.
Keep yourself safe from financial predators, including IRS scam artists, by using some common sense. Don’t anger them, but also don’t ignore the situation if you actually do owe taxes. Interest and penalties can add up quickly. You’ll sleep much better at night if you get a payment plan in place and know what to expect.
Your state’s regulations might be different from the general law of this article, so it would be a good idea to talk with an elder law attorney in your area.
Becoming a widow or widower after decades of marriage is crushing enough, but then comes a tsunami of decisions about finances and tasks that demand attention, when you are least able to manage it. Even highly successful business owners can find themselves overwhelmed, says The New York Times in the article “You’re a Widow, Now What?”
Most couples tend to divide up tasks, where one handles investments and the other pays the bills. However, moving from a team effort to a solo one is not easy. For one widow, the task was made even harder by the fact that her husband opted to keep his portfolio in paper certificates, which he kept in his desk. His widow had to hire a financial advisor and a bookkeeper, and it took nearly a year to determine the value of nearly 120 certificates. That was just one of many issues.
She had to settle the affairs of the estate, deal with insurance companies, banks and credit cards that had to be cancelled. Her husband was also a partner in a business, which added another layer of complexity.
She decided to approach the chaos, as if it were a business. She worked on it six to eight hours a day for many months, starting with organizing all the paperwork. That meant a filing system. A grief therapist advised the widow to get up, get dressed as if she was going to work and to make sure she ate regular meals. This often falls by the wayside, when the structure of a life is gone.
This widow opened a consulting business to advise other widows on handling the practical aspects of settling an estate and also wrote a book about it.
A spouse’s death is one of the most emotionally wrenching events in a person’s life. Statistically, women live longer than men, so they are more likely to lose a spouse and have to get their financial lives organized under duress. The loss of a key breadwinner’s income can be a big blow to a widow who has never lived on her own. The tasks come fast and furious, in a terribly emotional time.
You’ll likely be very vulnerable after the death of your long-time spouse. Hold off on any big decisions (like moving, quitting a job, selling the house) and attack your to-do list in stages. Some of a widow’s first tasks will be contacting the Social Security administration, calling the life insurance company, and paying important bills, like utilities and property insurance premiums. If your husband was working, contact his employer for any unpaid salary, accrued vacation days, group life insurance, and retirement plan benefits.
Next, contact an estate planning attorney to make sure your own estate plan is in order. Name your adult children, trusted family members, or friends as agents for your financial and health care power of attorney, and consider creating a revocable living trust. Update your beneficiaries on life insurance and annuity policies. If probate is needed for your spouse’s estate, the estate planning attorney can advise you (many handle probates) or refer you to another lawyer.
Deciding how to take the proceeds from any life insurance policies depends upon your immediate cash needs and whether you can earn more from the payout by investing the lump sum. Make this decision part of your overall financial strategy – ideally with a trusted financial advisor.
Determining a Social Security claiming strategy as a widow comes next. You may be able to increase your benefit, depending on your age and income level. If you wait until your full retirement, you can claim the full survivor benefit, which is 100% of the spouse’s benefit. If you claim it before that time, the amount will be permanently reduced. If you and your spouse are at least 70 at his death, you may benefit by switching to a survivor benefit if your benefit is smaller than his. Your financial advisor or the Social Security office can help you crunch the numbers.
It’ll be quite a while before you feel like you’re on solid ground. If you were working when your spouse died, consider continuing to work to keep yourself out and about in a familiar world. Anything you can do to maintain your old life, like staying in the family home, if finances permit, will help as you go through the grief process.
What exactly is a pet trust? A pet trust is basically an agreement between the pet parent (grantor), a future pet parent (caretaker) , and a future money handler (trustee). The agreement specifies how and when the trustee will pay the caretaker for caring for the pet. To ensure there are no misunderstandings, this type of agreement is put in writing – generally as a standalone legal document, but sometimes it’s incorporated in a Will or a Revocable Living Trust.
Sounds complicated. Can’t I just leave some money and my pet to my son/mother/nephew/friend in my Will? Yes. Under the law, your beloved Harley is just property – like your xbox – and you can leave him to anyone you want. You can also leave your money to anyone you want.
Then why would I need a pet trust? You might not need a pet trust if all the stars are aligned just right. If your daughter loves Harley, is able to take him when you die, and has plenty of money, everything could end happily ever after. But, sadly, life rarely works that way.
What could go wrong? Lots.
Legally, just because you left Harley and some money to your daughter, there’s nothing to stop her from taking the cash and dropping Harley off at a local shelter on her way to the bank. Even if you write something in your Will saying she only gets the money if she keeps Harley, there’s no one who can enforce that. Your Personal Representative (Executor) is responsible for distributing your stuff and once it’s distributed, his job is done.
What if, when you die, your daughter is living in a condo that doesn’t allow dogs? Or doesn’t allow big dogs?
What if she has a child that’s afraid of dogs?
What if she has a new husband who hates dogs?
What if Harley is showing the first signs of aging or cancer when you die and your daughter can’t afford special food and other treatments?
What if your daughter won’t tolerate accidents on her spotless white carpets?
The list goes on.
Okay. I really love my pet, so maybe a pet trust is a good idea. Can I find one online? Probably. You can find almost anything online today. But using a form pet trust will provide very limited options and may not provide any more protection that leaving money and your pet to someone in your Will.
So, you’re saying I should have a lawyer create my pet trust? Yes. An estate planning attorney who has experience drafting all different types of pet trusts will be able to create the trust that’s just right for your particular situation.
Wait! You mean there are different kinds of pet trusts? Yes. Everyone’s situation is different, and I’ve never created two pets trusts that were exactly the same. These are not “find and replace” documents – each one has to be exquisitely tailored. One client may want to leave enough money so his trustee can buy a house for his six dogs and their caretaker. Another may leave her cats and all her assets to a no-kill rescue shelter that has a lifetime care program. Yet another may leave her horse to her child, but will have her trustee reimburse the child regularly for the horse’s expenses. Pet trusts are as unique as you are.
How much money should I leave for the care of my pet? That’s a difficult question to answer. You should leave enough money to pay for the ordinary and some of the extraordinary expenses your pet may incur over its lifetime. That answer can be wildly different depending on whether your pet is a dog or a horse or a parrot. Even different breeds can have different medical needs – German Shepherds may have hip problems, Maine Coons may be more prone to kidney disease, etc. Food costs for a St. Bernard or Great Dane are much greater than those of a Chihuahua. As a rule of thumb for a dog, plan on leaving at least $5,000- $10,000 per dog; somewhat less for cats or parrots, and much more for horses. A small life insurance policy naming your pet trust as the beneficiary may be an economical way to provide the funds for your pet’s care.
What if I don’t know anyone who will take my pet when I die? That’s a fairly common scenario today, but you do have options. We’re blessed to have so many wonderful rescues and shelters in Southwest Florida. Some rescues will keep your pet forever, while others will actively search for a new forever home for your pet. Several local organizations have programs you can enroll your pet in while you’re alive, and thus you can be assured that Harley and Fluffy will be cared for the way you wish. I also work with a non-profit organization, Animal Care Trust USA, which will act as trustee of your pet trust and, depending on your wishes and resources, place your pets in a forever home, a sanctuary (especially for senior pets, horses, etc.), or even find someone to care for your pets in your own home!
Pet trusts sound like a lot of work for the lawyer. Are they expensive? They can be, but most of the time they’re a very modest investment for loving pet parents who wants to make sure their pet is taken care of properly if they become disabled or die. As I mentioned earlier, while it’s best to create a standalone pet trust, some people choose to incorporate pet trusts into their estate planning documents – which is usually more cost effective. Once I understand what is needed, I quote a price for the entire package – which would include the pet trust.
If you plan ahead, you can have some control over what happens to your fur baby in the future. If you just hope for the best, Harley may end up with other abandoned pets. If you love your pet, at least talk with a pet trust lawyer to see if adding a pet trust to your estate plan would be right for you.
***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***
Rocker Tom Petty was wise enough to execute a revocable living trust before his unexpected death in 2017, but his heirs are now arguing over some of the wording in the trust.
Tom Petty’s widow and sole successor trustee of his trust, Dana York Petty, planned to include unreleased tracks from her late husband’s celebrated 1994 solo album, Wildflowers, as part of a 25th anniversary edition box set.
Dana says the daughters are interfering with her ability to manage Tom’s legacy. She’s reportedly requested that a judge name a day-to-day manager for the estate.
Adria argues that she and her sister were promised an equal share of control in their father’s estate, according to his will. She says her father’s “artistic property” was supposed to be placed into a separate company to be jointly administered by the three women. However, Dana disagrees with Adria’s interpretation of the term “equal representation.”
Annakim seems to reference the battle in a recent Instagram post. She displayed a photo of her father with the caption, “We don’t sell out. No Vampires 2019.”
A subsequent reply in the comments section mentions Petty’s will.
Wildflowers was initially designed to be a double album, with Petty completing more than 25 songs in the initial sessions. However, he was convinced by his record label to take some some songs off for the final version.
Throughout the years, a few of the extra songs were released on various collections. However, Tom never relinquished his idea of releasing the set as a double LP.
Petty was reportedly planning a Wildflowers tour, before his death in October of 2017, to showcase all the leftover material.
The beneficiary designation is the form that you fill out when opening many different types of financial accounts. You select a primary beneficiary and, in most cases, a contingent beneficiary, who will inherit the asset when you die.
Typical accounts with beneficiary designations are retirement accounts (including 401(k)s, 403(b)s, IRAs, and SEPs), life insurance, and annuities. Many financial institutions also allow you to name beneficiaries on non-retirement accounts; these are most commonly set up as Transfer on Death (TOD) or Pay on Death (POD) accounts.
It’s easy to name a beneficiary and be confident that your loved one will receive the asset without having to wait for probate or estate administration to be completed. However, there are some problems that can occur and mistakes can get expensive.
Here are some mistakes you can avoid if you review and update your beneficiary designations regularly:
Failing to name a beneficiary. It’s hard to say whether people just forget to fill out the forms or they don’t realize they have the option to name a beneficiary. Either way, not naming a beneficiary becomes a problem for your survivors. Each company has its own rules about what happens to the assets when you die without naming a beneficiary. Life insurance proceeds are typically paid to your probate estate, so your family will need to go to court and probate your estate.
When it comes to retirement benefits, your spouse will most likely receive the assets. However, if you aren’t married, your retirement account will be paid to your probate estate. Not only does that mean your family will need to go to court to probate your estate, but taxes will be levied on the asset. When an estate is the beneficiary of a retirement account, all the assets must be paid out of the account within five years from the date of death. This accelerates tax payments that would otherwise be deferred over many years.
Neglecting special family considerations. You may discover when you review and update your beneficiary designations that there are members of your family who are not well-equipped to receive or manage an inheritance. A family member with special needs who receives an inheritance is likely to lose needed government benefits due to the windfall. Therefore, your planning should include a SNT — Special Needs Trust.
Also, minors cannot legally claim an inheritance, so a court-appointed person will claim and manage their money until they turn 18. This is known as a conservatorship or guardianship. Conservatorships and guardianships are costly to establish – and the money comes directly out of the assets meant for the minor. The conservator or guardian must also make an annual accounting to the court. The conservator or guardian may also need to file a surety bond with the court, which is an additional expense.
Additionally, if you follow this course of action, your beneficiary may have access to a large sum of money at age 18. That may not be a good idea, regardless of how responsible they might be. A better way to prepare for this situation is to create a trust. The trustee you name would be in charge of the money for a period of time that you can determine based on the personality and situation of each of your beneficiaries.
Using an incorrect beneficiary name. This happens quite frequently. There may be several people in a family with the same name. However, one is Senior and another is Junior. Or they may have a different middle name, which was omitted. A beneficiary may also have changed her name through marriage, divorce, etc. Not only can using the wrong name cause delays, but it can lead to litigation – especially if both people believe they were the intended recipient.
Failing to update beneficiaries. Just as your will must change when life changes occur, so must your beneficiaries. It’s that simple, unless you really wanted to give your ex a windfall.
Failing to review and update your beneficiary designations with your estate planning attorney. Beneficiary designations are part of your overall estate plan and financial plan. For instance, if you are leaving a large insurance policy to one family member, it may impact how the rest of your assets are distributed.
Take the time to review your beneficiary designations, just as you review your estate plan. You have the power to determine how your assets are distributed, so don’t leave that to someone else.
Medical marijuana and gun laws don’t play well together.
Medical marijuana has been legal in Florida for a while. First we had a statute that allowed terminally ill people to use a non-smoked, low-THC form of Mary Jane. Then on November 8, 2016, Florida voters approved a constitutional amendment (effective July 1, 2017) that extended the use of medical marijuana to people with “debilitating illnesses,” such as glaucoma, HIV, AIDS, PTSD, ALS, Crohn’s disease, Parkinson’s disease, multiple sclerosis, and other illnesses and conditions. That’s a lot of people who are now able to use medical marijuana to ease their symptoms.
In addition, some Florida cities such as Miami Beach and Tampa, have decriminalized the possession of a small amount of illegal weed, making it a civil offense rather than a criminal offense.
But what few people are talking about is how using recreational or medical marijuana and gun laws affect each other.
Florida can pass all the pro-marijuana laws it wants, but pot’s still a Schedule I controlled substance under Federal law – and Federal law trumps state law when it comes to drugs. And guns.
So, I’ll make this easy for you. Marijuana use = no gun possession. Period. End of discussion. It doesn’t matter what the state says. And here’s why…
The federal law governing who can and cannot possess and own firearms (18 U.S.C. § 922(g)(3)) prohibits possession or ownership by a person who is “… an unlawful user of or addicted to any controlled substance (as defined in section 802 of the Controlled Substances Act (21 U.S.C. 802)).” We’re talking about the unlawful user here – which means either 1) the user of an illegal controlled drug, or 2) the wrongful user of a legal controlled drug (i.e. taking legal drugs prescribed for someone else).
The Controlled Substances Act (1970) divides drugs into five Schedules depending on the drug’s perceived usefulness for medical reasons and its addictiveness. Marijuana is a Schedule I controlled substance – along with heroin, LSD, peyote, mescaline, etc. All Schedule I drugs are illegal to prescribe and use under federal law. (Doctors who write prescriptions for these drugs can lose their DEA license; so, in states where medical marijuana is allowed, they generally merely “recommend” it instead).
So, if you use medical marijuana, you are automatically an unlawful user of a controlled substance and cannot possess, use, buy, sell, gift, or otherwise transfer firearms. You are now a prohibited person under federal law (18 U.S.C. § 922(g)(3). The mere possession of a firearm by a prohibited person is a crime, and you MUST disclose your illegal drug use on ATF Form 4473 when you buy, sell, or otherwise transfer a gun through a FFL. Failure to disclose your use of marijuana (medical or otherwise) is a federal felony. In a private transaction, if the seller knows or has reasonable cause to believe the buyer uses marijuana (medical or otherwise) the transaction cannot be completed without both parties committing a felony (18 U.S.C 922(d)).
If you own an NFA weapon in your individual name, such as a silencer or SBR, it becomes contraband as soon as that recommendation letter, medical marijuana card, or ticket for illegal pot possession is issued.
If you own an NFA weapon in a gun trust, you can no longer be a trustee or lifetime beneficiary of that trust (you might be able to be a death beneficiary of someone else’s gun trust if appropriate language is added to the trust to prevent possession by a prohibited person).
As a prohibited person, you cannot have control of any firearms if you’re the personal representative (executor) or trustee of someone else estate or trust – which means you can’t legally sell the guns.
If your spouse or child is taking medical marijuana, he or she cannot have access to any of your weapons or know your safe combination. All your estate planning documents should be reviewed to ensure that any such prohibited persons are removed from certain roles or additional language is added to prevent an accidental felonies.
I know some of you are reading this and thinking, “This is just stupid. People who need medical marijuana won’t care about their gun rights.” Some may not, but some may. This won’t affect just terminally ill people any more.
Or you might be thinking, “I’ve smoked/I know people who have smoked pot for years and I/they still own guns. No one’s going to catch me.” Maybe, maybe not. I’m just educating you on the law – following it or breaking it is always your choice. Do you know for sure that state-issued medical marijuana cards or tickets for pot possession won’t ever be submitted to the NICS background check system? Do you trust your government to protect your individual Second Amendment rights? Are you aware of what’s been happening to the right to self-defense for certain veterans and the disabled?
Here’s the letter the ATF sent to all FFLs back in 2011 when states first started “legalizing” medical marijuana. Pretty cut and dried, and no newer guidance has been issued. The fact is that until ganja is removed from Schedule I, it’s an illegal drug under federal law.
If you’re a Florida gun owner and anyone in your immediate family is unfortunate enough to need medical marijuana, please be sure to plan ahead before obtaining that card.
If you’re wondering how medical marijuana affects your Florida concealed carry license, see this article.
***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***
It’s especially important for unmarried couples to do proper estate planning. There can be serious problems for people living together without the benefit of marriage. One is that they don’t have any legal right to make medical decisions for each other. Another is that without any Will or estate plan in place, the surviving partner has no legal right to any of the deceased partner’s property. That’s just for starters, explains the article “Longtime unmarried couple hasn’t planned for future” from the Santa Cruz Sentinel.
An unmarried couple may be pleased with their decision to live on their own terms. However, by refusing to plan for the inevitable, they’re creating unnecessary difficulties for their loved ones. Their children and grandchildren will likely have to sort out the mess after one of the partners dies. They may end up in court, battling over the house or other assets.
If an unmarried couple wants their property to end up in the hands of their own children when they pass away, they need to create an estate plan to make that happen. Otherwise, when the first partner dies, any assets owned in joint tenancy will go to the surviving partner. Then, when the surviving partner dies, those assets will go to his or her children, and nothing will be passed to the other family. Even worse, if the surviving partner enters into another relationship, the deceased partner’s assets could end up with a complete stranger or that stranger’s children!
The surviving partner will have no legal right to any of the deceased partner’s assets, other than those that were titled jointly or those that have the surviving partner named as a beneficiary. Without a Will, assets owned by the deceased partner that are titled in his or her name only belong to the decedent’s probate estate and will pass to the decedent’s children. The surviving partner could easily be left homeless.
This situation that adversely affects unmarried couples can be easily remedied with an estate plan, creating Wills and Trusts that clearly spell out how each partner wants his or her assets to be distributed upon death. There are many different ways to make this happen, but it’s best to work with an estate planning attorney. Where will the surviving non-homeowner will live after the homeowner dies? An estate planning attorney may recommend options such as leaving the surviving partner a life estate in the home, or creating a Trust that holds the home for the surviving partner’s use. When the survivor dies, the home can then pass to the homeowner’s children. In that case, a series of agreements about how the home will be maintained may need to be created.
An indifferent attitude about the future can be very painful for those who are left behind. But taking the time and making an investment in comprehensive estate planning benefits the unmarried couple and their families.
The best goal to set after filing your tax returns is to make or review your estate plan, says The Pathway in the timely article “Giving your estate plans a check-up.” After all, this tends to be the time of year when you have the most current and complete look at your financial status. Taking that next step can give you the peace of mind that comes from having a plan that cares for your family and any charities that are important to you.
If you have an estate plan in place, when was the last time you reviewed it? A person’s estate plan isn’t a “once and done” thing. It needs attention on a regular basis; life changes and tax law changes should be considered when you review your estate plan.
Here are some key reasons to review your estate plan:
People in your life. The relationships you have with the people named in your Will or in your Trusts may have changed. There may have been happy changes, like birth and marriage, or sad changes, like divorce and death. You might not be close with your colleagues at work because of a job transfer, or your college friends have moved far away and would not be able to serve as your agents. Life changes, and so does your estate plan.
Assets undergo changes as well. If your estate has changed for better or worse since the last time your estate plan was executed, there may be provisions that no longer make sense. If life has been good to you, you may decide to expand an initial donation to a charity that would welcome your generous gift. If you’ve added life insurance coverage, you may want to change how other assets are distributed.
Locations change. Have you moved? If you’ve changed your state of residence, you should have your estate plan reviewed with an attorney as quickly as possible. Estate law is governed by each state, and what worked well in New Jersey may not work in Florida.
Changes in tax laws. After the latest large federal tax law was enacted, estate tax exemptions changed dramatically. Plans that you made prior to the tax change may no longer be necessary or may fail to accomplish your goals. There may be advantages that you are missing.
The passage of time. If it’s been more than three years since you’ve reviewed your estate plan and Will, it’s time to do so. Locate your original Will, review it with an attorney and see if any changes are needed. In a perfect world, you would do this every year after completing your taxes.
People who reach age 70½ years are required by law to start taking Required Minimum Distributions (RMDs) from their IRAs, 401(k)s, SEPs or other qualified plans. As you review your retirement accounts, you should also review your beneficiary designations.
The estate plan is your opportunity to protect your family and your assets. Don’t leave it to chance or neglect it. An estate plan should be reviewed and given a regular checkup, just like a person.