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.

Six Tax Questions to Ask Before Year-End

Everyone’s “to-do” lists seem to grow longer at this time of year, but yours may be incomplete if you haven’t yet reviewed  and answered these six tax questions before the end of the year. If you need help answering these questions, please call our office at 720-248-7621 for an appointment or a referral to a trusted tax professional that can help you.

Should I defer or accelerate income?  If it looks like you’ll be in a higher tax bracket in 2014, ask if you should pull more income into this year.  Conversely, if you will be in a lower tax bracket next year, ask if you should defer income until January.  In addition, find out if you should accelerate deductions by paying any income or property taxes not due until 2014 this year.

Should I take any gains or losses this year?  If you are currently in a low tax bracket and have made gains on your investments this year, you may want to consider selling some investments to realize lower tax rates on those gains.

Should I do a Roth conversion?  If you have a traditional IRA, you may want to convert all or some of the assets to a Roth IRA, especially if your retirement is years away.  While you will pay taxes on those assets now, your earnings will grow tax-free in a Roth IRA.

Should I make any changes to my FSA or HSA for 2014?  If you have a flexible spending account or health savings account through your employer and anticipate bigger medical expenses in the new year, you may want to increase those funds to allow yourself to use pretax money for out-of-pocket medical costs.

Should I be making charitable contributions?  If you made more money this year, you may want to think about reducing your taxable income with charitable contributions.  Gifting appreciated securities will allow you to avoid the capital gains tax while still deducting the full amount of the donation.

Should I be making gifts to family?  In 2013, you can give up to $14,000 (or $28,000 if you are married and your spouse participates) to as many individuals as you want.  This allows you to assist family members while removing taxable assets from your estate.  It’s important that if you are going to be giving financial gifts, you call us before hand to discuss options available to so those gifts are protected from bankruptcy, divorce or other creditors forever.

If you would like more information about tax-saving strategies, call our office today at 720-248-7621 to schedule a time for us to sit down and talk.  Everyone’s calendars are pretty full this time of year, so call today to make sure you can get in.

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 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 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 an Initial Estate Planning Session to ensure that your estate plan takes into account your business needs.

IRS Provides Tax Relief to Colorado Storm/Flood Victims

Due to the Colorado flooding, the IRS is allowing 9/16 tax returns and payments due to be postponed until 12/2.  For more information about this visit IRS Provides Tax Relief To Victims of Colorado Storms.

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.

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.