A common misconception that we frequently hear is the notion that Estate Planning is Elder Law. Both are important. But they are not the same.
Protecting the Senior Population
Elder law covers a broad sphere of legal issues faced by a maturing population, including the rights of our elderly family members. This includes protecting seniors from abuse, preserving their assets in the face of significant elder care and living expenses, and ensuring access to medical care.
Elder law often involves long-term planning for a client’s future medical needs. It is important to take steps to ensure your that family members’ financial and care issues are addressed if they should become unable to make decisions on their own. By working with an elder law practitioner, you make plans for medical care you may need should you become incapacitated in the future.
Another central focus of elder law is preparing to qualify for Medicaid, VA benefits or other benefits earned or the may become available. In some cases, programs will have strict income or asset tests. Elder law attorneys help make long-term plans to take program qualification into account.
Estate Planning Is Implementing The Client’s Wishes After Death
Estate planning is proactive; taking steps so you can plan for the distribution of your property and valuables after you are gone. Failing to develop an estate plan leaves the possibility that someone else will make these decisions for you. It is important to you to direct who will receive your gifts, protecting their inheritance when the time comes, avoiding court delay and additional expense. And more. . .
Estate Planning Is Planning For Lifetime Issues
Talking with an Estate Planning attorney should also include considering how property and health care decisions can be made for you if there is a time that you are incapacitated (permanently or temporarily).
And of course, there are tax considerations, and many other important events in your life that are also worthwhile to discuss with your Estate Planning Attorney — like business succession planning, preserving or selling your home or investment property.
Finding the right “fit” between you and an Attorney for these important discussions is the first step. Reach out to Attorney Marc Sherman or Attorney Maureen Meersman, https://mshermanlaw.com/contact/. Start the conversation. There’s no reason to wait.
Many people who create living trusts are under a misconception that the trust protects the assets that are included in the trust (we say “funded into” the trust). But a living trust, also called a revocable trust, does not afford any more protection during the life of the trust creator (called the grantor) than the protection that exists under the law without the trust.
There are however circumstances in which the trust that you create can be used as an effective asset protection tool – sometimes for you, as the grantor, and sometimes for your beneficiaries.
If the trust that you create limits the distributions to be made to you, as the beneficiary, and if you put control of the trust into the hands of an independent trustee, then the trust assets will have greater protection from your creditors. To accomplish this purpose, you need to work with your Estate Planning Attorney to properly create the language of the trust.
Two elements are particularly important here: First, your trust must either limit distributions by an ascertainable standard or by reference to the trustee’s exclusive discretion.
Second, and equally important, the trustee must be an independent trustee. This means that the trustee cannot be a person who is ‘interested’ in you (as transferor or beneficiary) because they are related or subordinate to you, and the trustee cannot be able to be removed and replaced by you as an alternate trustee or replaced with another person who is related to you or is subordinate to you.
If one of your goals is to protect the trust assets for those like your children who will be beneficiaries after you pass away, then separate protections can be included in the trust declaration document to further that goal as well.
Your Attorney can help you by reviewing the reasons for your interest in focusing on protection of your assets from your creditors (for example, risky business ventures or a job with heightened risks). Then the Attorney can review existing laws that protect your assets, and then help you to determine whether your estate planning trust should have special provisions.
If you are unsure if your current trust takes into consideration asset protection considerations, or if you are interested in exploring and creating a trust, reach out to the Attorneys at Marc D Sherman & Colleagues, PC.
The Holidays have been an opportunity to see what’s going on with our children. Perhaps they shared with you their newest plans and expectations. Perhaps the discussions hinted at difficult issues that your child is facing.
It’s time to use the information gleaned during these interactions. Whether your role is gently nudging positive action and reflection, or providing direct guidance for your unmotivated child, this is a good stepping off point to guide and offer help in many ways.
Think medical concerns, both short term and long term. A Healthcare Power of Attorney is a key part of every adult’s planning. This is particularly true for adult children who are moving into new relationships and new adventures with their own children. Everyone hopes for healthy children, but we can all agree that being prepared for the unexpected is important.
• Focus On Finance And Financial Protections:
Financial protections and estate literacy are equally important, whether for our kids just entering adulthood or older. Our children will face the same financial concerns and will have access to the same financial assets and obligations as we have had, and more. Financial independence brings fresh reasons to know about Power of Attorney for Property (financial) matters.
We know that new purchases of home/condo, car and ‘toys’ are good reasons to learn about planning that includes protecting those assets and considering possible bumps in the financial road. Children getting into new projects, new partnerships and new jobs have new vulnerability. Talk about it.
• A Good Time To Consider The Bigger Picture
As each of us grows, our views on how fragile our lives are can involve practical, cultural and religious considerations for those who our children will surround themselves. Of course, that means considering a Last Will And Testament, too. Simple planning can provide value and peace of mind.
Your Own Estate Planning:
This is also a good time to discuss your own estate plan and how your children fit within your own expectations. Make sure your child knows what roles are important for you as you age (healthcare surrogate, successor trustee and estate executor). Explain what plan you have made for distribution of your personal and financial assets, and for your medical care.
If you have not made a plan, it’s time to do so. Lead by example!
If you previously made a plan, then this is an optimal time to review and update your own Estate tools.
However you celebrate the Holiday Season and New Year, we hope that you will enjoy with friends and family, and reflect and plan for the coming years!
Our pets are a part of our life. We rely on them for companionship and they rely on us for care. It’s an awesome responsibility, and a strong relationship that is created.
If you go on a trip, or you plan for some other temporary hiatus, then you routinely handle those things necessary to make sure that your pets are going to be well cared for.
But what happens if you are unable to take care of your pets because of your own illness or an unexpected situation?
With luck, someone close to you will know your pets and will take a leading role. You know all too well that the Vet visits and bills for sick and well care, payment for food expense and arranging for grooming doesn’t stop. If you are incapable of making payments and arrangements, then you have to rely on the good nature of a good samaritan, or someone might involuntarily make that decision for you.
Or, you can be sure that you have a Power of Attorney for Property in place so that your appointed Agent can step in and help to take care of things, including your pets, without much delay.
A Power of Attorney for Property, sometimes called a Power of Attorney for Finances, is designed to be sure that someone is able to handle your financial affairs during periods of your incapacity, without the need to have a court appoint a guardian for that purpose. Guardianship proceedings in Court can be quite expensive. The POA on the other hand is not expensive to create. And you decide who is appointed to be the Agent.
Here’s how it works:
You identify the person who will be your “Agent”. This is the person who is going to step into your shoes as they say to take care of your financial matters if you cannot do so. The POA is effective whether temporarily or on a permanent basis. Attorneys recommend that you select at least one successor Agent. In this way, if your initial agent is unable or unwilling to act in that role then you have identified at least one back-up. You can make changes whenever necessary.
Your Agent is a fiduciary, meaning that your Agent has one of the highest duties in the law to act for you, in the same manner that you would act for yourself, to safeguard your property and handle the Agent’s responsibilities. The Agent cannot commingle your funds with their own.
The Agent can take steps necessary to care for your pets and to pay for care, in addition to the many other things that are needed to be handle your personal matters on a regular basis during times of incapacity. This includes contracts for services and renewal of contracts, paying bills, handling purchases and sales, filing tax returns, applying for benefits, hiring an Attorney or other professional, and much more.
For your pets, think Vet visits and bills, medications, contracts with sitters, boarding arrangements, and paying for out of pocket expenses for food and other payments and expenses.
And if your Agent is unable to manage the pet responsibilities on her own, then she can delegate the responsibilities to another who is capable and compentent to do so.
Does the Agent under your POA continue to manage these matters if you should pass away? No. The Agent’s power to act for you under a POA does not continue after you are gone.
If you are concerned for the continued care and ownership of your pets following death, consider discussing with your Attorney the use of a Pet Trust or the other means available for that purpose.
You can plan for the continued care of your pet through your Last Will And Testament or your Living Trust by use of specific Estate Planning tools designed for personal and financial care continuation for your pets.
If you are concerned for your pets’ welfare, then you will include instructions in your Estate Documents so that the important people you have selected to be Executor or Trustee will know how you have decided to handle those matters. Who will be identified for adoption of your pets? Who will have responsibility to care for your pets until they can be placed for adoption with others in the event that the person you hope to be your pet’s new guardian cannot do so?
And, of course, will you arrange to set aside funds for your pet’s care? Will that be a simple, general gift to the new parent for your pets? Or, is the gift to be made in your Will or Trust be held and distributed over time? These are just some of the questions that will require planning and drafting.
Illinois adopted the concept of the Pet Trust many years ago. If you would like to discuss the use of such trusts and the other subjects in this article, reach out to the Attorneys at Marc D Sherman & Colleagues PC to set up a time to discuss your thoughts. Find our contact information here: https://mshermanlaw.com/contact/
The Estate Planning Competence Matrix here will help you maximize your planning, or maximize your Parent’s planning if you are looking for a productive way to approach the considerations and the helpful Estate Planning materials that you should be considering.
The basic considerations and information gathering (below the line). Where you are or should begin:
THE INFORMATION ZONE
Nobody likes to do this, but taking stock is the key to success above the line on your journey to Estate Planning Competence!
Start with information gathering. You and your Attorney need to know the complete asset and property picture, as well as the current personal information and background. An Estate Plan cannot be derived in a vacuum. Well, it can, but it would likely leave unnecessary holes and fail to produce optimally effective documents for you and for your Estate Executor or Living Trust Successor Trustee.
Gather the following documents and information:
1. Copies of insurance binders or information concerning insurance policy numbers and insurance company and rep/agent (with phone number) for policies now in force. This includes Homeowners/Auto (is there an umbrella policy?), Life (term, whole, variable; who are beneficiaries; face amount), Health and Disability Insurance.
2. Information concerning major personal assets:
A. Copy of title for autos, boats and other titled vehicles;
B. Real Estate Properties Owned (pull copy of deed for home residence, investment properties, timeshare interests, and leasehold interests);
C. Account information, including all financial, stock, bank and other accounts (and estimated value); Identify if any of the accounts are jointly owned with others, or if you have given permission to other persons to sign and authorize transactions for the account;
D. If not included with the other account information, list 401k, Pension, Annuity, IRA, CD and similar accounts and whether beneficiaries have already been identified for those accounts;
E. Bonds, stocks held in “street name”;
F. Other significant assets (include jewelry, antiques, collections, cryptocurrency, intellectual property assets such as patents, copyrights, and options to acquire assets or business interests).
3. Information concerning any businesses or business interests owned by you. Identify others who own an interest in the business; Is there a buy-sell agreement, shareholder agreement or operating agreement (for an LLC) controlling transfer of interests/shares during lifetime or at death?
4. Information concerning major current liabilities, such as a recent mortgage statement, or business guaranty or lease guaranty information. Are there any personal loans from others to you or from you to others? Auto financing or auto leasing information, including a copy of a recent statement.
5. Include copies of other documents not already identified, such as:
A. Copies of birth certificates, for you and your spouse or partner, and children; as well as adoption records for adopted children;
B. Copies of death certificates for spouse, children;
C. Information concerning military service and discharge;
D. Information concerning important memberships (are you entitled to death benefits, pension-type accounts if any, etc.?);
E. Copies of burial plot deed, contracts for perpetual care for you and for relatives for whom you have responsibility to oversee those issues; cremation and other plans and contracts made (if any); and
F. Significant Agreements and Contracts: storage/warehouse leases, USPS or UPS Store box rental agreements, Safe Deposit Box rental agreement, and employment agreement or independent contractor agreement, and others.
6. And, if this Estate Planning Competence review is to update your previous considerations and documents that you have implemented or considered implementing, including copies of prior Last Will & Testament, Living Trust, HIPAA Authorizations, Living Will Declaration, Power of Attorney for Health Care and Power of Attorney for Property, and other documents that may have been drafted for you and signed by you.
THE IDEA ZONE
Here, before putting pen to paper for formulate the Estate Planning ideas with your Attorney, begin to identify some of the key people who will play a role in your plan – both now and after you are no longer here. This means that you will start to point to the following persons and information:
A. Contact information for spouse (domestic partner, significant other), children, parents and siblings;
B. Religious affiliation, religious leader’s name, city/state and phone contact;
C. Insurance agent(s);
D. Accountant/tax preparer(s);
E. Primary physician/internist/obgyn;
F. Business partners;
G. Property managers/caretakers;
H. Veterinarian (and identify pets); and
Make your notes for answers to the following important questions:
Are there any health or other conditions affecting you, your spouse or significant other, or your child or parent that should be discussed (even if the condition is not now presenting itself)?
Who will be the guardian for minor children if you are unable to care for them?
Who will take care of an aging parent or other person that you care about?
Who will make healthcare decisions for you if you cannot make those decisions for yourself? Have you considered at least one alternate who could act in that role for you?
Who will make property-related decisions for you if you cannot make those decisions for yourself? Have you considered at least one alternate who could act in that role for you?
Lastly, for this pre-discussion/pre-documentation stage, have you heard about Wills, Trusts and other Estate Planning Tools that you believe you may want to explore? Have friends or family members mentioned their use of a life insurance trust, special needs trust, transfer-on-death-instrument or other mechanism? Be sure to be ready with your questions, even if you are not sure whether those items may not ultimately be for you.
You are now ready to consider those Estate Planning Competence items that are above the line:
THE GROWTH & DRAFTING ZONE
Here, you will meet with your Attorney. A call or remote Zoom video conference may be worthwhile before a first face-to-face meeting. Your Attorney can understand the information that you have gathered, can be mindful of the timing of your planning (including any outside pressures that need to be considered). And, together you and your Attorney can identify any worrisome issues (such as, perhaps, a pending or anticipated divorce, or the illness affecting a child or significant other, or the loss of home or business or employment).
Your Attorney is there to share the good and the bad. Setting expectations for what your Attorney can accomplish and when is an important part of the journey.
Your Attorney will discuss a proposal for the type of Estate Planning materials will be beneficial to accomplish your goals. You will agree on the timeline for preparation of the materials and the fees and expenses to be expected. You will, as well, identify any additional documents that are necessary or useful for the Attorney’s work for you.
Then comes the important step of reviewing the Estate Planning documents prepared for you, tweaking those documents to ensure that they are ready for signature, and arranging for and executing the documents.
OK, you are reaching an optimal level of Estate Planning Competence! You are ready to take the next step on the journey:
THE SWEET SPOT
Here, you know you have reached an optimal level of readiness and planning when you have stepped ahead to do the following:
Assemble your Estate Planning personal resource. You will be pulling together into a central location (a “hard” file or a digital file) with your important Estate Planning documents and the materials that you have gathered in order for your family to be best able to assist you in the event of an illness or injury or other event. Discuss with your Attorney the use of a cloud service account (DropBox, Box or other service shared account) where you can securely maintain your important documents and information.
Fund your Trust! If you have decided with your Attorney that a living, revocable trust is going to be part of your Estate Plan, then you will take the next steps for the funding of your trust. Your Attorney will provide for you a Certification of Trust and provide guidance for your next actions with accounts, property deeds into trust, and other important functions.
And, don’t forget that the Sweet Spot is forward-looking: You will review regularly any questions that you have, changes that may be necessary because of significant life events for you or your family members or others close to you, and review your Estate Planning documents and the people that you have selected to act in important capacities for you (usually every 12 to 18 months).
Attorney Maureen Meersman and Attorney Marc Sherman are available to discuss your own Estate Planning Competence, or to address concerns that you have with your family member or significant other who need help to focus on their own Estate Planning questions and concerns. Our Contact Information is available here: https://mshermanlaw.com/contact/
