Do-It-Yourself Estate Planning – The Good, the Bad & the Ugly

America is a nation of do-it-yourselfers, but building a deck and creating a legally valid estate plan are two entirely different things – and a less-than-perfect deck won’t devastate your family’s financial future or the relationships among the people you care about most.

The prevalence of online legal services has led many people to believe that they can create legal documents cheaply and those documents will be just as effective as if they had visited an estate planning attorney.   The majority of the time this is wrong.

The Good

I am slightly tempted to leave this section blank.  But in all seriousness, DIY is very tempting to a lot of people so here  are a few of the perceived goods:

Inexpensive – a lot of individuals interested in doing estate planning think that all they need is a “simple will” and have sticker shock after speaking with an attorney or law firm over the cost of a complete estate plan.   While going it alone with a book or a form may save you money now, it likely will cost you and your loves ones more in the future.

Time Savings/Flexibility – Do-it-yourself estate planning can be done on your own time schedule.  That much is true.  But to do it right, you will need to spend your evenings, weekends or other free time educating yourself about the law and the available options so you can make the right choices or the documents you complete might not be doing what you think they do.  Remember attorneys spend 3 years after college studying the law and then, in Colorado, 45 hours (minimum) of continuing legal education every 3 years.  That doesn’t even include their own on the job training.

As demonstrated by a recent case in Florida highlighted by the ABA Journal, what you save today may cost your heirs or beneficiaries much, much more later.

Why DIY Estate Planning is a Bad Idea 

No legal advice – Online sites offering “estate plans” are little more than document mills that churn out the same generic forms over and over.  They are not attorneys and cannot advise or warn you if you make a mistake. Plus, who will be there for your family when something happens to you if you’ve used an online document drafting service?  Think your family doesn’t need an advisor to support them when you are gone?  Or incapacitated? Think again.

Consider this: Erica’s father was killed in a motorcycle accident. Dad didn’t leave much behind, but he did leave an estate plan prepared by a trusted family attorney.  Had the family attorney not been there for Erica and her brother, they would have taken what dad did leave and drowned their sorrows in a European backpacking trip.  Thanks to this family attorney, though, Erica and her brother now have a healthy trust fund set up for them for life with the proceeds of a successful wrongful death case.

Leaving it to your family to know what to do after you’re gone is a big mistake for the people you love.

One size doesn’t fit all – your family is different from everyone else’s family.  Just like every state has different inheritance laws, every family has different situations.  An online form will not help you protect child or relative with special needs, or protect a child’s inheritance from creditors or a nasty divorce.  An online form cannot tell you how to protect assets from taxes or help you achieve your financial or charitable goals.

And, an online form cannot keep your family out of conflict during a time of grief.  Even if you don’t have a lot of assets to leave, whatever you do have will be subject to distribution between the people you care most about.  Some of the biggest disagreements we’ve seen after death, aren’t about loads of money, but about the little things, like burial wishes, and who was promised grandma’s wedding ring, dad’s hunting knife or the heirloom teapot, and those little things aren’t going to be dealt with well with form documents.

Save now, pay later – you may think you are saving money by using an online service to create your will or trust, but it is impossible to make a fair comparison since the services provided are entirely different.

An estate planning attorney creates an entire plan tailored to your individual needs in legal documents that will stand up in court, and advises you on ways to cut taxes now as well as in the future, save for retirement and long-term care and truly protect your unique wishes.  No online service does that.

In addition, your trusted advisor is going to be there for your family when you cannot be. The people you love will need someone to turn to after you are gone.  Do you want them to be stuck with figuring out who that should be during their time of grief? Or do you want to leave behind the gift of having taken care of things well during your lifetime and a trusted advisor to hold their hand when you no longer can?

We invite you to take advantage of our specialized legal services for families with a Family Wealth Planning Session.  Call our office today at 720-248-7621 to schedule a time for us to sit down and talk about designing an estate plan that fits the needs of you and your family.

Preparing for Fire Season

4302-black-forest-fire-coloradoWildfire season is upon us.  After the last two years, those of us living in the South Metro area of the Front Range are particularly aware  of the risks we face here in Colorado.   This risk is still  very real despite the good moisture we have received this winter and spring. Make sure you, your organization, and your family are prepared for the active season ahead with this Wildfire Checklist.   Don’t live in a wildfire-prone area? Click here to check out these tips from Ready.gov on preventing home fires.  

How Advance Medical Directives Became a Way of Life in One American Town

This is a heart warming story about a town has done what National Healthcare Directives Day hopes to achieve for all of America…

With just over 50,000 residents, La Crosse is a lot like other small American towns – but there is one thing that makes La Crosse stand out:  96% of La Crosse residents who have died have had an advance medical directive in place.  Nationally, the percentage of Americans with an advance directive stands at about 30%.

Actually, there are two things that make La Crosse stand out:  the town also has lower healthcare costs than any other place in the U.S.  And these two things – a high incidence of residents with advance directives and low healthcare costs — are inextricably linked.

According to a recent NPR story, all this came about because of one man:  Dr. Bud Hammes, Medical Humanities Director at Gundersen Hospital in La Crosse.  Dr.Hammes often found himself sitting with families of terminally ill patients, trying to figure out what to do next.  He said the conversations were excruciating: “Did mom ever say anything to you?” “Do you know what dad wants?”  He said that the moral distress of the families was tangible.

Dr. Hammes knew that this could be avoided, since most patients were usually sick for years.  So he started training nurses to ask patients if they wanted to sign an advance directive and over the years planning for death has become a way of life in La Crosse.

And the lower healthcare costs?  Dr. Hammes said that the reduction in spending was an accident, a byproduct of letting people make their own choices.  He said that when you let patients choose and direct their care, they often make a much less expensive choice.

You can listen to the entire NPR story here:

NPR: Living Wills are the Talk of The Town in La Crosse, Wis.

Making end of life plans is one of the most comforting things you can do for your loved ones.  We strongly believe in the importance of this for every adult, and encourage families to have conversations about each others wishes.  To put the proper protections in place for your family, contact our office 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 and mention this article.

What’s Changed in Your Life?

Estate planning is not a “set it and forget it” kind of thing. Your life changes, your assets change, the laws change — and if your plan doesn’t change, your family gets caught holding the bag. The people you love most end up bearing the brunt of your failure to act.

Conducting a proper review of your estate plan will help identify the potential need to update your plan because of:

Life transitions:  Have any babies been born, loved ones died, people gotten divorced or married?   If so, you need to revisit your plan.

Changes in the law:  Changes in federal and state tax laws may require updates to your healthcare and financial powers of attorney. State regulations can also be revised to open up new wealth planning strategies that should be a part of your estate plan.

Changes in assets:  Has your net worth gone up or down?  Have you invested in any new assets, such as businesses,  opened new bank accounts, retirement accounts, insurance policies, real estate or anything similar?  If so, your plan needs to be revisited.  And the spreadsheet of assets you have for your family (you DO have one, right?) needs updating.

Funding of assets and beneficiary designations:  One of the most common mistakes people make is not properly completing the transfer of assets into a trust within their estate plan.  Another common error is having beneficiary designations that are inconsistent with the distribution language in the estate plan.  We recommend a review of those matters annually.

If you do not review your plan and update it regularly, your family will have to deal with the consequences. If you would like more information about creating or updating your estate plan, call our office today at 720-248-7621 to schedule a time for us to sit down and talk. We normally charge $750 for an Estate Plan Review but if you are an existing client, we’ll waive that fee and if you are coming to us for the first time and book an appointment in April or May, we will waive all but $250 of the fee.  Call 720-248-7621 today and mention this article.

Upcoming Kids Protection Planning Presentation

Please join us on Wednesday, March 12th at 9:30am at Cookies and Crema in Castle Rock for a free one hour presentation on Kids Protection Planning.

In this educational, informative, empowering class —for parents with children at home —local mom and attorney Karen H. Shirley will cover what you need to know about making sure your kids are taken care of by the people you want, in the way you want, no matter want.  Karen will guide you to take charge and ensure you have done the right thing by your family.

During this no-charge class, you will discover:

  • The 6 most common mistakes parents make when naming guardians, even when working with a lawyer — and how to fix them.
  • How to choose the right guardians for your children and make sure your children are never taken from your home or placed with strangers if something happens to you.
  • How to make sure your assets are immediately and privately available to the people you’ve named to care for your children.
  • Why a Will alone is simply not enough to make sure your kids are taken care of the way you want, by the people you want, no matter what.

Those attending will be entered into a drawing to win a copy of the book “Wear Clean Underwear! A Fast, Fun, Friendly – and Essential – Guide to Legal Planning for Busy Parents” by Alexis Martin Neely.  Space is limited, so reserve your spot by calling 720-248-7621 or registering online.

Year End Beneficiary Designation Review – Make it A Holiday Tradition

When you look around your holiday table this year, you will probably not be thinking about the beneficiary designations on your 401(k), IRAs or life insurance policies.  But you should… perhaps make it a new holiday tradition.

Having the wrong beneficiary designated on these assets and on other things like bank accounts, annuities and 529 college savings plans is probably one of the biggest estate planning mistakes people make.  This is because most of us name those beneficiaries when we initiate a plan or open an account and then forget to change or update the designations as our personal and financial lives change.

However, life does change.  Often more frequently than we think. This is why you need to review and update your beneficiary designations at least once a year.  For example, here are seven scenarios that could cause a change in beneficiary designation:

  • You got married, divorced or remarried
  • You changed jobs and moved your retirement account
  • One of your beneficiaries died
  • The birth of a child or grandchild
  • You moved your account to another financial institution
  • One of your beneficiaries became disabled
  • You did created or updated a trust or will

Additionally, it is not uncommon for an institution to incorrectly process a beneficiary designation, especially if you are not designating “standard” beneficiaries.

Not having the correct beneficiary designated (or designating a minor) can wreak havoc on your family when something happens to you as well as create tax issues for your heirs.  You could unintentionally disinherit the very people you care the most about and potentially tie up your estate in probate or, worse, litigation.

Enjoy your holiday with family, but take an hour or two before the New Year and make it a point to review your beneficiary designations and , if necessary, update them.

If you don’t already have an estate plan – or have one that needs to be reviewed and updated – make 2014 the year you get this done.   Please call us today to schedule your appointment at 720-248-7621.

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.

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.

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.