Pets Need Planning, Too

Dogs in CB photoAccording to animal welfare organization “2nd Chance 4 Pets,” over 500,000 pets are abandoned each year due to the death or disability of their human companions. That’s 500,000 too many. What’s worse is that those pets could have been protected with just a little planning.

Think about it: what will happen to your pet if you become disabled? What if you’re no longer able to speak for yourself? How will the courts know what to do with your pet? And how can you make sure that your beloved animal doesn’t end up in a shelter somewhere or worse, alone on the streets? Because sadly, that happens all the time.

According to the ASPCA, only about 17% of dog and cat owners have taken the necessary legal steps to ensure their pets are cared for after they die.  Most of us assume that because our close family members know how much our pets mean to us, someone in the family will take responsibility for our pets after we are gone.  However, many pets that outlive their owners wind up in shelters because no formal provisions have been made for them.

How to Create a Plan to Ensure Your Pet’s Care

First, it is important that you let your estate planning attorney know that you have pets and that you want to make sure they are cared for. Your attorney can then explore with you the appropriate avenues for providing for your pets within your estate plan.  It is important to have a plan for your pet even if you do have, or do not want to specifically leave, money for the care of your animal(s).

While you can leave provisions in your Will for who you would like to have your pets at your death, an animal cannot directly own property or money because they are considered under the law personal property themselves. Thus Pet Trusts are the best option for guaranteed care of your animal companions.

While the majority of states have some form of pet trust statute, Colorado has one of the best statutes in the entire country allowing for Pets Trusts. Colorado’s statute was enacted in 1995 and allows for a pet trust to be either a testamentary trust (part of a will) or an inter vivos trust, one that is effective during the owner’s life thus covering the possibility of incapacity as well as death.

In either type of trust, to ensure there are proper checks and balances, you may want to consider naming one person to serve as trustee to handle the money, and another person as your pet’s caregiver, who would be responsible for the day-to-day care of your pet.

In your trust, you can detail exactly how your pet is to be treated – how many vet and groomer visits per year, what the pet should be fed, and any special medical needs that will require special attention.  You will need to fund your pet trust sufficiently to cover your pet’s anticipated life span, including a cushion if your pet lives longer and needs additional medical care.

For additional reading about planning for your pets visit ASPCA’s pet care page or learn about the Denver Dumb Friends League Pet Guardianship program.

If you would like more information about protecting your loved ones – including your pets — call our office today at 720-248-7621 to schedule a time for us to sit down and talk.

New Resources for Financial Caregivers

If you are helping an elderly parent or relative manage their finances or have been given a financial power of attorney, then you have both legal and ethical obligations in your role as a fiduciary.  And even if you are not currently, the chances that you may be asked to serve in this role for a parent, aging relative or friend in increasing.

According to the Administration of Aging, by 2030, there will be about 72.1 million older persons, more than twice the number of adults 65+ than there were in 2000.  This age group will account for 19% of the population, and  many of these individuals will need some assistance at some point from a financial caregiver.

Basically, a fiduciary is legally bound to:

Act in the person’s best interest.  You are not allowed to use their money for yourself or others and need to avoid any conflict of interest.

Manage assets carefully.  Pay bills on time and consider investment decisions carefully.  Get help if you need it.

Keep money and property separate from yours.  Be sure you keep your assets totally separate from those you are managing on behalf of another person.

Maintain good records.  You are responsible for accounting for all transactions.

The Dodd-Frank Act of 2010 created the Consumer Financial Protection Bureau to protect consumers by making and enforcing consumer financial laws.  The CFPB recently contracted with the American Bar Association to develop four Managing Someone Else’s Money guides to help those who are acting as agents under (1) power of attorney, (2) court-appointed guardians or conservators, (3) trustees for revocable living trusts and (4) government benefits fiduciaries.

These guides help “lay fiduciaries” understand their responsibilities under the law, provide education on financial scams and exploitation and give tips on where to go for additional help from local, state and federal resources.

You can download these guides for free on the CFPB website.

If you would like more information about the responsibilities of a fiduciary or support talking with your parents about these issues, call our office today at 720-248-7621  to schedule a time for us to sit down and talk.

National Estate Planning Awareness Week

History of National Estate Planning Awareness Week

In 2008, the NAEPC Education Foundation worked with a number of Congressional leaders to pass House Resolution 1499 which proclaimed the third week in October as National Estate Planning Awareness Week. According to the resolution passed by Congress, “Many Americans are unaware that lack of estate planning and financial illiteracy may cause their assets to be disposed of to unintended parties by default through the complex process of probate.”

The resolution goes on to state that “careful planning can greatly assist Americans in preserving assets built over a lifetime for the benefit of family, heirs, or charities.” It is estimated that over 120 million Americans do not have proper estate plans to protect themselves or their families in the event of sickness, accidents, or untimely death. This costs many families wasted dollars and hours of hardship each year that can be minimized with proper planning.

Help Dispel the Myth That Estate Planning is Only for the Rich and the Elderly

Another startling statistic from the 2010 Industry Trends Survey of estate planners found that 62% of the respondents believed that many American do not plan because they have the erroneous assumption that estate planning is only for the wealthy or the elderly.

Estate planning is important for adults of all ages. Read the September 27, 2011 article in U. S. News & World Report entitled “What You Need to Know About Estate Planning” which highlights the importance of single 20-somethings having an estate plan that includes a medical directive in the event of unexpected injury or illness.  Another interesting article worth a read is this article published in the Ventura County Reporter entitled “Where There’s a Will.”

For young families, estate planning is particularly important, as those who stand to lose the most are their young children. In the event of the death of both parents, who will care for the children? Who will handle the affairs of the estate and ensure that property will be transferred according to the wishes of the deceased parents? If there is no estate plan or will, the courts will appoint a guardian for the children, and the guardian may be an individual who does not share the values and religious beliefs of the deceased parents.

Or in the event of divorce and remarriage, how will property pass from the former spouse to the children living in a household with a stepparent?

In the event of the death of the primary breadwinner, is there sufficient life insurance coverage for purposes of income replacement to support the surviving spouse and children who were dependent upon the primary breadwinner for their daily maintenance and support.

Advanced age and substantial wealth are not the primary indicators of the need for an estate plan. Young families, especially those with children who have special medical or educational needs, should seek the advice of an estate planning attorney who can guide them in providing for the current and future needs of their young children.

If you want additional information about estate planning no matter your age or economic status, please call our office at 720-248-7621 to begin to get your questions or visit our Resources Page for additional links to website that can provide you with the information you need to protect assets and, most importantly, your loved ones!

Consider Your Estate Plan Before You Travel

We are fast approaching the holidays, when travel is the busiest and careful planning is necessary to nab the best airfare or book that New Year’s beach cottage before it slips away.  One thing that is probably not on your travel to-do list is estate planning, but it should be  – so you can travel with peace of mind.

Here are some tips to pack away your worries before you board that flight:

Complete your estate plan.  If you’ve been putting it off, now is the time to complete your estate plan.  If money is a consideration, then start with those the most important items: a will, power of attorney and advance health care directives.

Update an existing estate plan.  Has something changed in your life since you last updated your estate plan?   A birth, a death, a marriage, a divorce?  Each of these triggers your need to update your estate plan.

Establish guardianship for minor children.  If you have ever gotten a nagging fear about what would happen to your children if something were to happen to you, then use that fear to follow through on naming a guardian for raising your minor children.  If you have young kids, there is never an excuse for you to neglect this important step.

Review beneficiaries.  Beneficiaries of your retirement accounts, life insurance and other assets must be kept current or your assets will not pass correctly to the individuals you want to benefit upon your death.  If you have minor children, you will need to set up a trust and name the trust as beneficiary so your assets can pass without court intervention.

Review/update incapacity and medical documents.  Two very important health care documents – a durable power of attorney for health care and a Declaration of Medical or Surgical Treatment, also commonly referred to as a living will,  will determine what kinds of treatment you receive and who can make medical decisions for you in the event you are unable to communicate your own preferences.  It is also important to either execute a separate HIPAA Authorization or include it within these documents to provide your loved ones with access to your medical records in case of incapacity.  Be sure you have these documents before you travel and consider using an online service such as DocuBank to allow immediate access to these documents by hospitals and doctors in the event of an emergency.

Review/update insurance.  Does your life insurance coverage still meet your family’s needs?  If not, it is time to update your insurance policy before you hit the road.

In addition, you need to be sure you have an organized file of all your accounts and estate planning documents and you need to tell your family where they can locate the file if and when it becomes necessary.

The time to create a plan that spells out how you will pass on your values, beliefs and your money to your children is now.  You can begin by calling our office today at 720-248-7621 to schedule a time for us to sit down and talk. We normally charge $500 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge.  Call today at 720-248-7621 and mention this article.

Don’t Bet the Family Business on No Estate Plan

Don’t Bet the Family Business on No Estate Plan

Being the owner of a family business can complicate your personal estate planning, since no doubt much of the wealth you want to pass on to your heirs is tied up in the business.  Being able to do so in a tax-advantaged way – and in a way that won’t cause a family feud – is one of the best reasons you should be talking with a lawyer about a business succession or exit plan as part of your own estate plan.

Even if you don’t have to pass on as much as the Waltons (Walmart), the Fords or the Murdochs, you do need to plan for what you have.  Here are some things you should be considering:

  • How to handle not only the death of a family business owner, but also his or her possible disability, incapacity, bankruptcy or retirement.  The owner needs to not only think of the impact on the business for any of these events or circumstances but also on his/her family, both now and in the future.
  • Do your heirs want to continue to run the business without you?  If so, a business succession plan needs to be put into place.   If you transfer family business assets to the next generation before you die, you will be able to lower estate and gift taxes.  If not, then an exit strategy for selling the business and divvying up the proceeds would be a necessary task.

Remember not having a plan is a plan… just a really bad one.  Not taking steps to provide instruction and cover a variety of circumstances will in the best case result in unnecessary expense for the business you built and your loved ones, and in the worst case mean the end of your business.

If you’re a small business owner, call us today at 720-248-7621 to schedule a Family Wealth Planning Session to ensure that your estate plan takes into account your business needs.

Estate Planning as a Rite of Passage

Why Every 18-year-old “Kid” Should Have An Estate Plan

We are fairly certain the last thing your 18-year-old kid is thinking about is an estate plan.  And you are probably not thinking about one for them either, but you should be.  Here’s why:  once your child turns 18, in Colorado they have reached the age of majority.

What exactly does this mean?   Individuals that are age 18 or older are treated as adults, with some exceptions, such as drinking alcoholic beverages, renting cars, and purchasing a hotel room. (More about acts allowed in Colorado upon age of majority).When an individual reaches the age of majority his or her parents are no longer liable for their child’s actions.   And transversely,  as parents you can no longer legally make many decisions for them, including decision about their medical treatment or even being entitled to know about their medical records.

Can you imagine your child needing medical treatment in some college town and you are not able to help in any way without a court saying you can?  It can, and does, happen.

What you need to do is have your adult child fill out a Medical Power of Attorney (also known as a health care proxy) with a HIPAA release (HIPAA refers to the Health Information Portability and Accountability Act, the law that makes health records private for those over the age of 18).  On the form, your child can designate you as their agent, allowing you to have access to medical records and to make health care decisions for them in case they cannot do so themselves.  Your child can also execute a Declaration of Medical and Surgical Treatment (also known as a living will) that specifies their preferences surrounding life support, pain management and other medical treatment preferences.

While you’re at it, have your child complete a financial Durable Power of Attorney  as well, which will give you the right to oversee their finances.  This document can be drafted to be effective upon signing or only in case of your child’s incapacity.

Hopefully you will never need to use these three documents, but having these necessary protections in place will give you both peace of mind.

Be one of the first two families to mention this post  and I’ll create these three legal documents for your child before going off to college as my gift to you plus waive the regular Family Wealth Planning Session fee (a $750 value).   Call today:  720-248-7621.

Additionally, share this great guide, So You’re 18 Now – A Survival Guide for Young Adults, put together by the Colorado Bar Association with your child.

Lessons from Sopranos Star James Gandolfini’s Estate Plan

Learn From the Expensive Mistakes & Smart Decisions Made By Sopranos Actor James Gandolfini In Planning for His Estate

James Gandolfini, the actor best known for his portrayal of Tony Soprano on HBO’s The Sopranos, died suddenly last month while on vacation in Italy.  His will is already on the Internet, available for everyone to read!  Thus, the first lesson we should all take away from what he did and did not do right in his estate plan –  establishing a trust keeps your private estate and financial matters private!

Estate planning attorney Julie Garber, who writes a column on Wills & Estate Planning on About.com, lists 5 other estate planning lessons learned from James Gandolfini:

Lifetime trusts are often better for beneficiaries.  James Gandolfini’s 13-year-old son and infant daughter will inherit a large portion each of the actor’s estimated $70 million estate once they reach the age of 21.  It may have been better to establish lifetime trusts for each of the children, then making them co-trustees at 25 or 30, then sole trustees at the more mature age of 35 or 40.  This would have protected their inherited assets for life, from creditors, bankruptcy, lawsuits and divorce.

If you own foreign real estate, you need a foreign estate plan.  James Gandolfini owned property in Italy, which his will specified should be turned over to his children.  However, Italy has forced heirship laws that may trump the will.  He should have consulted with an Italian attorney and had an Italian will drawn that passes the property in accordance with Italian law.

Update your will regularly.  James Gandolfini had updated his will just six months prior to his death, and a few months following the birth of his daughter.  By taking action to update his will following the new birth, he saved his heirs a lot of headaches and heartaches. But unfortunately, he missed a big one — he didn’t update for estate taxes.

Irrevocable Life Insurance Trusts are a smart move.  James Gandolfini established an ILIT for his son Michael and funded it with a $7 million life insurance policy.  By setting up an ILIT, the proceeds from the insurance policy flow directly to the trust, with no New York or federal estate taxes on the $7 million.

Multiple executors and trustees can provide necessary checks and balances.  James Gandolfini had two children with two different wives.  He named his sister, his current wife and one of his attorneys as co-executors of his will and co-trustees of the testamentary trusts set up in his will, which was a savvy move to prevent any one beneficiary from being favored.

The one thing that Gandolfini and his lawyers did not think about enough was his estate taxes.  He’ll owe nearly $30,000,000 in estate taxes and much of it could have been avoided with good planning in advance.

As a Personal Family Lawyer®, I can further advise you on all your options and make things as easy as possible for your family during a Family Wealth Planning Session.  If you would like to have a talk about estate planning for your family, call our office today at 720-625-6597 to schedule a time for us to sit down and talk.

How to Ensure Your Life Insurance Benefits Go To Your Heir

 

Recently, 11 major life insurance companies agreed to pay $763 million to the heirs of deceased policyholders after it was discovered the companies continued billing customers for their policies even after they were dead.

This agreement is the second in the last two years to be reached with insurance companies, which had previously agreed to provide restitution and do a much better job of locating beneficiaries after being sued by the attorneys general of several states for not paying out benefits to the heirs of deceased policyholders.

This pattern seems to indicate that we all need to do a better job to ensure that the life insurance benefits we pay out come back to our heirs, or named beneficiaries, in the way we intend.  Here are 5 tips for making sure those you intended benefit from your life insurance:

Be truthful in your application.  If you have not been completely forthcoming about a major medical issue or your health habits (smoking, drinking, etc.) in your application for a life insurance policy, that policy could be declared null and void and your heirs or beneficiaries would be out of luck.

Don’t let it lapse.  If your family is counting on life insurance benefits to pay the bills if something should happen to you, and you have not been paying the bills for the policy, your family is left unprotected.  If you are having trouble paying a more expensive whole life policy, consider exploring a less expensive term policy.

Have a beneficiary bench.  Having a beneficiary on your policy who dies before you do is a recipe for disaster – and it happens much more than you think.  Designate a secondary as well as a final beneficiary for your life insurance benefits, and update them as the need arises. We recommend naming your trust as the beneficiary of your life insurance benefits, rather than naming an individual or even series of individuals.

Play it safe.  If you die because you engaged in risky behavior (not covered by the policy) – or you take your own life – your heirs or beneficiaries will likely receive back only what you paid in premiums, and not the full value of your policy.

Talk about it.  The primary reason that a vast majority of potential beneficiaries never see a dime in life insurance benefits is because policies were lost or misplaced and family members were never told of their existence in the first place.  So if you have a life insurance policy, let your family know.  And ask them if they have one, too.

If you do planning with our firm, we prepare a Family Wealth Inventory (and keep it updated annually) for all of our clients.  Give us a call at 720-248-7621 if you’d like us to help you with this too and ensure your family never loses track of any of your assets after you are gone.

Fatal Legal Mistakes Family Businesses Can Avoid With Planning

Fatal Legal Mistakes Family Businesses Can Avoid With Planning

Anyone involved in a family business knows that working with family has its pleasures and its pitfalls. However,  some legal pitfalls can prove deadly to your family business.  Here is a list of four commonly seen mistakes and how to fix them with fairly simple planning.

1.  Mixing family & business finances.  Unfortunately, we live in a litigious society, so as soon as your family business is up and running, it’s important to shelter your personal assets by forming a legal entity like a corporation or limited liability company, which will protect the personal assets of investors/owners (i.e., family members) from business liabilities.  Without that protection, everyone’s assets are vulnerable if something goes wrong with the business.

2.  No business license.  Many businesses, even those that are home-based, require a local, state or federal license to operate.  Without the proper license(s), you can face stiff fines or even be shut down.  Your city hall or county government office can tell you what is necessary to operate your business legally in your area of Colorado.

3.  No agreements.  Unless you want employment in your family business to be a birthright, you need to have employment (or Independent Contractor) agreements that spell out – in writing – what the expectations are for the job each family member is doing and how they will be compensated.  These agreements should also have termination guidelines because there will probably come a time when you will have to transition a relative out.  Having a written agreement to refer back to can help keep things civil and maintain important personal and familial relationships.

4.  No succession plan.  You must start your business with the end in mind so you can ensure your business takes care of your family throughout all of your life’s stages, including retirement and beyond your life as well. And what happens if the person who started it all suddenly wants to cash out, falls ill or dies?  If you want your business to go on without you, a succession plan that spells out how this will be accomplished is crucial.

If you’re a small or mid-size business owner, call us today at 720-248-7621 to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit or LIFT Start Up Session.

5 Cases When A Trust is Better Than a Will

5 Cases When a Trust is Better Than a Will in Colorado

A will is one of the most basic Colorado estate planning documents, and everyone should have one to make sure that there is no question about what would happen to your assets and kids if something happens to you.  But there are some cases when having a trust in addition to a will may be the better option. Here are six of them:

Privacy.  When a will undergoes probate in Colorado, it becomes public record.  A trust is private.  If you don’t want just any one to be able to learn about what your assets are and how you have chosen to distribute them, a trust is a great option. The probate process also takes months to a couple years to complete with associated costs depending on the complexity of the situation, while a trust will bypass this process.

Providing for a person with special needs.  If you have a child or another dependent with special needs, a trust commonly known as a Special Needs Trust can protect assets for a special needs person without jeopardizing their qualification for government benefits.  A will allows you to transfer assets to a special needs person, but will not protect those assets and could potentially put a special needs person’s government benefits in jeopardy.

Blended families.  If you are part of a blended family, a trust can give you the flexibility you want to make sure that children from prior marriages are provided for in the way you want.

Out-of-state property.  If you own property in another state besides Colorado, you can more easily transfer ownership via a trust than a will.  Transferring out-of-state property in a will usually means additional legal expenses because you could have ancillary probate in multiple states.

Asset protection.  If you want to protect the assets you leave your loved ones from creditors (including bankruptcy and divorce) a trust is the way to go.

If you would like to learn more about the use of trusts in Colorado to pass on what you care about to the people you love, call our office today to schedule a time for us to sit down and talk.  We normally charge $500 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to complete a planning session at half off. Call 720-248-7621 today and mention this article.