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.

Interested in scheduling an appointment for yourself or your child? Please 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.

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. I can further advise you on all your options and make things as easy as possible for your family during an Initial Estate Planning Session.

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.

It’s National Small Business Week – Find Out What’s Happening in Colorado or Online

This week is National Small Business Week, celebrating 50 years of by the U.S. Small Business Administration.   The SBA is offering a number of online webinars as well as local activities around the country.  The main events are being streamed live at http://www.sba.gov/nsbw/

Some of the great webinar/Google+ offerings include:   Getting Started with Social Media, Managing Your Business’s Online Reputation, How a Mentor Can Help Your Business and How to Get a Business Loan.

There are also local events being held around Colorado.   If you want to find something near you, a great place to start is the Colorado SBDC.  There is also great information on activities in Colorado Springs from the CS Business Journal.

 

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 an Initial Estate 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.

Best Mother’s Day Gift Ever? The Kids Protection Planning Kit

Best Mother’s Day Gift Ever?  Protecting Your Kids. 

By now, the flood of floral commercials has already reminded us that Mother’s Day is this Sunday, May 12.  But before you plunk down hard earned cash on something that will wilt and die in a week or so, consider a gift that is truly priceless: a plan for your kids (or grandkids) that provides Mom with the peace of mind that if anything should happen to her (or both of you), her children will always be in the care of  people she knows, loves and trusts.

We all hate to think that something could happen to us, but we know it happens to others like us every day.

We’ve all seen the news stories of moms and dads who leave their children with a babysitter, get into a terrible accident and don’t make it home.

The babysitter calls and calls, but there is no one to answer. The police are summoned and the children have to be placed with Child Protective Services. It’s one of a parent’s worst fears.

We’ve seen the stories of children placed in the care of people they barely know just because they are related by blood since there was no plan in place that dictated who would take on this incredible responsibility.

And we have seen the fall out of family fights created when mom and dad didn’t make a plan and the family couldn’t agree on what would happen.  Or in the worst case, what happens when there is no family available.

In all of these cases, it’s left up to a judge to decide when mom and dad don’t.

We know you don’t want this for your children (or grandchildren, nieces or nephews).  And this is where good estate planning can ensure it never does. Not for your kids.

A good estate plan includes planning and tools that allow Moms (and Dads) to make sure there is never a question about who will take care of your kids if you are in an accident.  Estate planning for those with minor children includes, as needed, the following types of documents:

  • Legal documents to name short-term guardians who can be there immediately for your children so they’ll never be taken into the arms of strangers or anyone you wouldn’t want. Not even for a moment.
  • Letters to the people you name as short-term guardians so the people you’ve named will know just what to do if called upon.
  • Instructions to everyone who takes care of your kids as to exactly what to do if you are in an accident … so there’s never any question about who to call.
  • Legal documents to name long-term guardians who will raise your children just as you would so there is no family feuding over your children.
  • Letters to your long-term guardians letting them know what to do if called upon.
  • Instructions and guidelines for your long-term guardians on how you want your kids to be raised…make sure your kids are raised with your values, insights, stories and experience.
  • Delegations of Power and/or Medical powers of attorney for your minor children so the next time they travel without you or you travel without them, you know they’ll get the medical care they need.
  • A custom, personalized I.D. card for your wallet stating that you have minor children at home and who should be contacted if you are in an accident.

As an estate planning attorney with kid of my own, I want to make sure a legal plan is in place to take care of your kids and think this Mother’s Day is the perfect time to gift this planning to your family.

We include specific planning for minors with all the planning we do for families who plan with our office.  You can purchase a special gift certificate and flowers from our office to give this Mother’s Day, with the flowers being on us.  Mention this post when you call 720-248-7621 to schedule your appointment.

 

 

A Conversation You Must Have About Your Healthcare

The Conversation You Must Have With Your Kids and Your Parents

Every single adult needs to have an advance health care directive written, signed and in place. This includes your children, as soon as they turn 18.  This includes you. This includes your parents.

Without an advance health care directive in place, you would not be able to access your child’s medical records once they are the age of majority, if they are unable to communicate permission. You would not be able to ensure your health care decisions will be made the way you choose. And your parents lose the ability to communicate their wishes and remain in control as long as possible.

Here is what you can do today  to begin the conversation you need to have about advance healthcare planning:

1.  Look inward.  Before executing an advance healthcare directive with the help of your Personal Family Lawyer®, think about what you do – or don’t – want to happen if you were unable to make your own decisions.  Think about the people you would want to carry out those decisions and if the person you have in mind will follow your wishes.

2.  Talk to your family.  One of the most tormenting things for families is having to make healthcare decisions for a loved one by having to guess what they would want. Communicate your wishes to your family so you don’t put them in this stressful position.

3.  Talk to your healthcare providers.  Let your primary physician and any other healthcare provider know about your decisions about your healthcare.  Ask any questions to alleviate any concerns you or your family may have.

4.  Execute your advance healthcare directive.  Once you have decided upon your healthcare options and have chosen an agent, meet with your Personal Family Lawyer® to complete your official advance healthcare directive.  Have copies made for your family and your primary healthcare provider.

We are happy to help you prepare a health care directive for you, your parent(s) or your adult child(ren) and discuss any other estate planning needs you may have.  Call 720-248-7621 to schedule your appointment today.

Striking a Balance Between Your Retirement and Your Child’s Education

Striking a Balance Between Funding Your Retirement and Your Child’s Education

Many parents perceive a conflict between funding a child’s college education and building their own retirement nest egg.  The conflict usually arises from the lack of financial resources to do both while funding daily living expenses, so parents become stuck between priorities and usually wind up doing nothing at all.

One of the things a Personal Family Lawyer® can help you do is sort out your priorities in a way that supports your family for the long-term.  With that in mind, here are some guidelines on striking a balance between saving for your retirement and your child’s education:

Build an emergency fund first.  This should be 3-6 months of living expenses that you have saved to fall back on in an emergency.  If you don’t have it, you will likely be forced to raid your 401(k) or other retirement account, spending more for penalties and taxes to cover the cost of the emergency. A great way to start this fund is to set up an automatic transfer to a savings account not linked to the account(s) you use for daily or monthly expenses.

Save for your retirement or build a business to fund your retirement second.  It is difficult for many parents to accept that they may not be able to fully fund a child’s college education, but consider the alternative.  You aren’t being “selfless” if you spend what you should have saved for retirement or to create a business to fund your retirement on a child’s education, and then run out of money right when your kids are having their own families and trying to save for their own retirement.  Then you will be financially dependent on them – just what you (and they) don’t want.  There’s a reason there are loans for education but not for retirement.

Save for your kids’ college education last.  Only after you have funded your emergency stash and your own retirement accounts (or built a business to fund your retirement) should you funnel cash to a child’s education fund.

If you would like to learn more about strategies for getting your financial future in balance, call our office today at 720-248-7621 to schedule a time for us to sit down and talk.