Salt Lake City Estate Planning

New York Woman Makes Sure Her Kitties Have the Best Care After She’s Gone

WealthAdvisors published the story last fall of a Bronx widow who left $300,000 to her two cats in her will, along with instructions that the funds be used to make sure the felines, Troy and Tiger, would “never be caged” and always be lovingly cared for.

That’s a lot of Meow Mix, according to the article, “New York Widow Leaves $300G To Her Cats.”

Tiger struck it especially rich. This former alley cat is now living the high life in sunny Florida, dining on filet mignon-flavored Fancy Feast and napping in a plush faux-fur bed with silk lining.

“He deserves it,” said Dahlia Grizzle, the former home health aide to the late Ellen Frey-Wouters and now Tiger’s caretaker. “He’s a wonderful cat.”

Frey-Wouters was a native of the Netherlands, who worked for the United Nations. She died in 2015 at age 88. Her husband was a Brooklyn College professor who died in 1989. They had just one child who died in infancy.

“The cats were like her babies,” Grizzle said.

Her attorney was surprised when Frey-Wouters suggested that she leave the large sum to her cats.

The attorney said he didn’t think that $300,000 was necessary. He pointed out the case of Leona Helmsley, who left $65,000 to a dog and became a subject of some amusement. In fact, Helmsley left $12 million to her Maltese, Trouble.

Frey-Wouters insisted that her cats be taken care of.

Generally, a pet owner can’t leave any part of his or her estate outright to a pet, but the owner can leave a sum of money to the person designated to care for the pet, along with a request that the money be used for the pet's care. As an alternative, a pet trust is a legal arrangement to provide care for a pet after its owner dies. Either of these options should be discussed with an experienced estate planning attorney.

Reference:  WealthAdvisors (September 7, 2017) “New York Widow Leaves $300G To Her Cats”

If you would like to set up your Estate Plan, give our office a call for a free consultation 801.438.7120!

Save Some Big Bucks for You and Your Loved Ones

You may believe you've developed a well-researched and comprehensive retirement plan, but be certain that your plan hasn’t left out any of these common issues. If so, you could end up with a much smaller retirement income than you expect, as your savings gets eaten up by these unexpected expenses. Motley Fool’s recent article, “4 Retirement Issues You're Probably Not Planning For,” discusses some of those unexpected expenses.

Inflation. Inflation is the quiet retirement-killer. It is the reason why a dollar won't buy as much today as it would 20 years ago. Inflation has averaged around 3% per year since the government began tracking it in 1913.  Therefore, you can assume that your retirement savings will lose about 3% of their value every year. It is possible to beat inflation by selecting investments that will produce high enough returns to outpace the loss of your money's value. Stocks historically are the only investment to reliably beat inflation year after year: large-cap stocks produce an average return of around 10% before inflation over the past century. This is considered by many to be a good reason for retirees to keep some money in stocks, despite their volatility.

Taxes. If your retirement plan doesn't consider future taxes, your budget could be wrecked. Think about how you can minimize the amount of income you give to the government. The best way to go might be a Roth IRA. With a significant percentage of your retirement savings in a Roth, you’ll have greater control over how much income tax you pay each year. It also minimizes your required minimum distributions and allows your investments to grow tax-free, for as long as they are in the account.

Estate Planning. Without at least minimal estate planning, you place a terrific burden on your family. It could also mean that your beneficiaries will have greater expenses, like administrator's fees and other legal fees that will come out of your estate. The essentials of an estate plan are a will, naming beneficiaries for all your accounts, and a power of attorney in case you become incapacitated, along with an advance medical directive to direct the types of extreme lifesaving measures you want your physicians to undertake, if you're incapacitated. You should also ask your estate planning attorney about setting up trusts to manage probate issues and estate taxes.

Long-Term Care. The average cost of long-term care for a couple is around $130,000.  Therefore, you should add in long-term care expenses to your retirement planning. Don’t rely on Medicare to help with these expenses because it doesn’t cover long-term care expenses, unless there's a clear medical necessity, and even in that case, Medicare only covers the first 100 days. Purchase long-term care insurance to protect yourself from these expenses.  You should get it while you're relatively young and in good health to keep your premiums as low as possible. A long-term care insurance premium is predictable and easier to fit into your budget than unexpected long-term care you pay for out-of-pocket.

If you wait until you are retired to add these expenses into your budget, you may need to make some significant sacrifices to fit them in.

Reference: Motley Fool (October 1, 2017) “4 Retirement Issues You're Probably Not Planning For”

Call our office for a free consultation if you would like more information, 801-438-7120!

What to Do with a Large Inheritance?

We all have wished for a million dollars.  However, what if you really received a big chunk of cash?

A large inheritance for some may be the largest sum of money for which they’ve been responsible. There can be considerable pressure to use those assets wisely or in the manner that their predecessor would have wanted. Here are some things you should think about to wisely put those assets to work, courtesy of The Times Standard Business in “Business Sense: Inheritance — At a loss for your recent gain?”

Your inheritance is likely due in some way to well-prepared estate planning. That said, it’s a good time to secure those assets so they continue on the path you want, in case you pass away before the assets are used. Ask a qualified estate planning attorney about a trust or will, and if you have an estate plan, a large inheritance is good motivation to review the documents to be certain it’s up-to-date.

If you have minor children, it’s essential that you create an estate plan. This is because children under 18 can’t legally take outright possession of assets. Talk to an estate planning attorney about trusts and wills, guardianship, powers of attorney and maybe maintaining separate property.

Be sure you have an adequate cash cushion for emergencies. This is usually three to six months of your expenses, depending on your situation.

A question of many recent inheritors is to whether or not they should either pay down debt or invest, and it really depends. Speak with your tax professional prior to putting a significant amount of your new funds towards your home loan or other major debts, because your money may be better off in an investment portfolio or tax-deferred retirement accounts.

When you have your estate planning, tax planning and emergency cash situation settled, you’ll have an idea of how much can be invested. How to invest is the next issue. You should work with a professional to discuss your specific circumstances.

Reference: (Eureka CA) Times Standard Business (September 30, 2017) “Business Sense: Inheritance — At a loss for your recent gain?” 

If you would like more information, give our office a call for a free consultation, 801-438-7120! 

Estate Planning Eliminates Headaches

 

Planning your estate now can prevent a lot of headaches for your heirs after you pass. Remember that your estate is everything you own: your home, personal property, car, land, stocks and bonds, life insurance and any other property in which you have an ownership interest.

The McPherson Sentinel recently published an article, “Estate planning prevents headaches” that says there’s no way to determine your wishes regarding distribution of your property after your death, unless you take action before you pass away. Estate planning is worthwhile, regardless of the size of the estate.

Probate is the legal process by which the court validates the decedent’s will, if there is one, gives authority to the executor, or appoints an administrator if there’s no will. This process assures that taxes get paid, any property is distributed correctly and legally transfers the ownership of the property.

All property is subject to probate proceedings, with or without a will. The only exceptions are the following:

• Property owned in joint tenancy with another;
• Property placed in a trust;
• Property subject to a transfer on death deed;
• Payable on death accounts; or
• Life insurance proceeds designated for a named beneficiary.

Property in any of these categories automatically passes to the joint tenant, designated beneficiary or trust beneficiary.  However, these assets may be subject to inheritance and estate taxes.

Typically, a regular probate proceeding can take a minimum of six months from the date the interested parties receive notice to file their claims against the estate. Some states have more streamlined and simplified proceedings that are less time-consuming which can be used in certain situations.

The cost of the probate proceedings depends upon the complexity and value of the estate. In Kansas, fees for the attorney and executor or administrator are also charged to the estate.

There are a number of options available to avoid probate. You can ask an experienced estate planning attorney about transfer on death deeds, pay on death beneficiaries for bank accounts, mutual funds, bonds and CDs and life insurance proceeds.

Reference: McPherson (KS) Sentinel (September 29, 2017) “Estate planning prevents headaches”

If you need help with you estate plan, give our office a call for a free consultation, 801-438-7120!

A Lesson on Estate Planning from the Delaware Supreme Court

The Delaware Supreme Court recently decided a case that stresses the importance of carefully reviewing your estate planning documents every year to be certain that the documents are still accurate and do not inadvertently allow your testamentary plans to be changed.

The Delaware Supreme Court’s August 2017 decision in the case, “In the Matter of the Estate of Edward J. Burke,” ruled that the decedent should have made better plans to ensure that his wishes were effected upon his death.

Edward named his wife of then 13 years, Mildred, as his Power of Attorney on March 17, 1998. On the same date, he executed his will. In the will, he left his Virginia property to the Trustee of the Trust that was created in his will. Edward instructed the Trustee to let his daughter live on the property for three years and then sell it. The proceeds from the sale were to go to Mildred for life and after her death, the remaining sum was to be distributed to his four children. Edward left the residue of his estate to Mildred.

However, in 2012, Edward sold the Virginia property for $150,000 and deposited the proceeds into a separate and new bank account in just his name. His son Kevin said that Edward had repeatedly told his children these funds were being held for them in accordance with the 1998 will. Testimony was given to show that Edward had repeatedly denied Mildred’s request to gain access to this account, because he wanted the funds to go to his children.

Edward became sick and Mildred added her name as a joint owner to the account, using the Durable Power of Attorney, which Kevin said was done without Edward’s knowledge or consent. Edward died in 2013, and was survived by Mildred and his four children from his first marriage, including Kevin.

There was nothing left in Edward’s name alone when he died, so Mildred didn’t probate his estate and—because she retitled Edward’s account (which held the proceeds from the sale of the Virginia property)—the Virginia sale proceeds passed to Mildred.

Kevin sued Mildred, claiming that Edward had purposefully divided the proceeds from the sale of the Virginia property with the desire to preserve the funds for his children. Mildred responded that Edward changed his testamentary plan when he sold the Virginia property under the doctrine of ademption. That means the failure of a bequest from a will, because the property is no longer in the estate.

The Court also held that even if Edward hadn’t known about or approved of Mildred’s adding herself to the account, and even if the Court held that Mildred had to return the money from the account to the estate, the money would have still flowed under the Will into the residuary clause and ended up in Mildred’s hands anyway, because she was the sole remainder beneficiary.

The Court quoted the Hobson decision that held that “in Delaware the rule of ademption is not dependent on the apparent intention of the testator. In fact, the application of the rule may, in many instances, defeat the intention of the testator.”

So, even if Kevin could have shown that his father intended to leave this money to his children, it wouldn’t have been enough for the children to inherit the sales proceeds because Edward’s Durable Personal Power of Attorney was broad enough to let Mildred to retitle the funds jointly, thereby defeating Edward’s intent. In addition, Edward didn’t change his will after the sale of the Virginia property. Since his wife was the residuary beneficiary, the money from the sale would have flowed through to the residue to her, not to the children.

If Edward wanted this money to go to his children, he should have modified his will after the sale of the Virginia property and left the proceeds from the sale to his children. He should have also revised his Durable Power of Attorney to stop Mildred’s right to add her name to this account.

As you can see from this case, a Durable Power of Attorney is a powerful document. With this document, it’s possible to totally change a person’s testamentary strategy.

This case presents a very good reason for why it is very important to review estate planning documents annually to be sure they still work for you and your family.

Reference: Delaware Supreme Court (August 24, 2017) “In the Matter of the Estate of Edward J. Burke”

If you need help planning your Estate, please give our office a call for a free consultation, 801-438-7120!

What to Do With Your Money before a Baby Arrives

The Business Insider’s recent article, “The first 3 things to do with your money before you have a baby are easy to overlook,” discusses the most important things to do with your money, when you're preparing to have a baby.

1. Understand your health insurance. Pregnancy and birth are major medical events and result in big bills. With a high-deductible compared to a more traditional group plan, there could be a wide range in your share versus what the insurance company covers.
2. Access to cash. You need liquidity, and should plan on keeping 12 months of anticipated spending in a checking, savings, or money market account you can access easily, without unnecessary risk.
3. Guardianship. There are some other things that many expectant parents fail to think about with kids. This includes insurance, wills, and guardianships. New flash: you're now responsible for someone other than yourself! If something unfortunate were to happen to you, you now have the added responsibility providing for the care of your children.
4. Estate Planning. It’s common for those without significant assets to overlook their will and estate planning. This includes establishing who will raise your child should something happen to you and your spouse and how that care will be paid for. People forget about the guardianship of their children.

Guardianship is now an important part of your total estate plan. Talk with an experienced estate planning attorney and be certain that all the right pieces are in pace for your family’s sake.

Reference: Business Insider (August 22, 2017) “The first 3 things to do with your money before you have a baby are easy to overlook”

If you want help figuring out the best plan for your family, contact our office for a free consultation, 801-438-7120!

 

A Guide to Charitable Giving with Potential Tax Reform Looming

 

There are many reasons that motivate charitable giving. They include a moral obligation, religious tithing, a desire to improve the world, or to create a legacy. One other factor is the tax benefits for giving. This may soon change, if Congress is successful with tax reform legislation.

While few people donate just for the tax breaks and are unlikely to stop giving altogether, the Congressional Budget Office and other analysts say tax incentives increase how much you donate, both in life or at death.

CNN Money recently reported in the story, “How tax reform could hit charitable giving,” that Republicans are proposing to reduce or eliminate key tax breaks for giving, which some note has worried charitable organizations.

Republicans have proposed to nearly double the standard deduction, lower income tax rates and repeal the estate tax. Most believe the charitable deduction would remain, but an increase in the standard deduction would result in fewer people itemizing deductions and being able to claim the break. Lowering tax rates also would make the deduction less worthwhile for those who still take it.

The double impact of doubling the standard deduction and decreasing the highest tax bracket to 35% from 39.6% could reduce giving by between $5 billion and $13 billion a year, or up to 4.6%, according to research by Indiana University.

An increase in the standard deduction would have the greatest negative impact because it would reduce those who itemize to just 5% of filers, compared to about 30% currently. This is because the main reason to itemize, is when your deductions are more than the standard deduction.

The 25% who used to itemize will probably give, but maybe less.

Many charity groups have asked Congress to make the charitable deduction "universal," so that everyone can take it even if they don’t itemize. Lawmakers say they are considering this, but a universal deduction would cost the federal government between $191 billion and $515 billion in lost revenue over ten years.

Reference: CNN Money (August 6, 2017) “How tax reform could hit charitable giving”

If you would like help with you Charitable giving taxes, give our office a call for a free consultation, 801-438-7120 

Minnesota’s Governor Asks Legislature to Review Elder Abuse Law

Minnesota Governor Mark Dayton has asked the state legislature to look at a law that critics say restricts the families of vulnerable adults from receiving information about cases of abuse and neglect. KARE 11 TV says it its recent report, “Governor wants review of elder abuse secrecy issue,” that the governor wants lawmakers to examine how state regulators balance the needs of families with the need to protect whistleblowers. The governor said, “I am very concerned that current state law prevents family members from knowing that their loved ones may be facing unsafe living conditions in an assisted care facility.”

The case of Suzanne Edwards brings the issue into focus. The report highlights secretly recorded cell phone videos that appear to show two aides at an assisted living facility taunting and demeaning Suzanne. “Go to bed,” an aide screams at Suzanne in one video. In another video, both women taunt Suzanne, singing “I’m going to live longer than you,” and “I can wipe my own ass.” The two aides are heard laughing at Suzanne in an audio recording, because she’s not wearing underwear. They call it “disgusting,” and tell her she smells.

The two aides were criminally charged with Stalking and Criminal Abuse of a Vulnerable Adult, as a result of the incident. Both pleaded not guilty. The charges allege that the two also put a lighter flame near Suzanne’s face, made multiple threats against her and pulled her nightgown up exposing the 70-year-old patient’s nude body. However, Suzanne Edwards’ son Kent said he didn’t learn any of this for months. The assisted living facility notified police and state regulators, but Edwards—who’s his mother’s health agent—says he was blocked when he called the Department of Health trying to locate a copy of the report.

 The state law is currently aimed at encouraging whistleblowers and protects the identities of people who report abuse. State officials also say they can’t even share details of the alleged abuse with victims or their families, until they conduct a full investigation. But the issue is that, according to the Minnesota Department of Health’s own statistics, they only do full investigations in 1% of the cases reported by facilities.

The governor expressed his concern about balancing the needs of families and those who report abuse. He noted that “their need for information must be weighed carefully against protection for the people who report those incidents.” The Governor said he “will encourage the State Legislature to review this law in the next Legislative Session.”

State Senator Karin Housley, (R-Stillwater) also wants to investigate the issue, noting “The system is definitely not working as it should,” she told KARE 11. “That’s a law that needs to change.”

Reference: KARE 11 TV (August 18, 2017) “Governor wants review of elder abuse secrecy issue”

If you want help protecting you elders, please give our office a call for a free consultation 801-438-7120

Consider a Trust to Protect Your Assets

There’s a misconception that trusts are just for the uber rich. This is not so.

If you've ever listed your spouse or child as a beneficiary on a bank account, in theory, you've just created a simple trust. This is an important point made by Madison.com in the recent article, “3 Types of Trusts That Can Cover Your Assets.” They describe three types of trusts that can help you protect your assets.

A trust is simply a device used to divide ownership of property between its legal title and its beneficial enjoyment. The trustee is responsible for managing the property and the terms of the trust will state directions for the benefit of the named beneficiary. A trust can be revocable, meaning that you can change your mind about the beneficiaries or you can even cancel the trust entirely.  However, an irrevocable trust doesn't let you modify the terms, once the trust has been established. The distinction is important, because some types of trusts won't work, if you set them up with the wrong kind of revocability.

Asset Protection Trust. This trust is designed to protect money from creditors. The trust creator transfers ownership of cash or property to a trustee. The property is now owned by someone else and creditors arguably can't reach it. This type of trust must be irrevocable. Work with a trust attorney to set it up exactly the way you want before you execute it.  Since not every state permits asset protection trusts, ask your attorney if this applies to your situation.

Bypass Trust. This trust is designed to help married couples avoid unnecessary estate tax liability. Each spouse creates their estate planning documents to leave property (up to the threshold of the estate tax exclusion) to the bypass trust. They then bequeath everything else that they own to the other spouse. Any property left to a spouse qualifies for a marital deduction to the estate tax. Thus, when one spouse dies, the other gets the bequeathed property tax-free. The property in the trust is covered by the estate tax exclusion, but is not subject to estate tax in the surviving spouse's estate. Therefore, as the property increases in value, it can safely grow above the exclusion amount without any estate tax at the death of the surviving spouse.

Totten Trust. The bank account set up with a beneficiary is a Totten trust. It’s used to avoid probate. Totten trusts won’t work for real property, like a house. That calls for a specialized trust.

There are also other, more specialized types of trusts that can be helpful in some situations. A spendthrift trust, for instance, can help protect money for a financially irresponsible beneficiary. A charitable trust can allow you to make charitable gifts and keep an income stream flowing to the donor. A special needs trusts lets you provide for the support of a family member receiving government benefits (like Medicaid) without disqualifying him or her based on income.

If you think that a trust might help you and your family, consult with a qualified estate planning and trust attorney.

Reference: Madison.com (August 1, 2017) “3 Types of Trusts That Can Cover Your Assets”

If you need helping deciding what trust is right for you and your family, give our office a call for a free consultation 80101-438-7120 

Special Needs Planning

Do you have a family member with special needs? If yes, then leaving your estate without proper planning can mean serious consequences for that loved one

The Middletown Transcript’s article, “Caring for family member with special needs requires planning,” begins with a child born with a lifelong condition.

The hardest thing is the 24/7 aspect of a job that you love doing. It is important to understand, however, that it’ll wear you out. Parents must find support and breaks for the care, but also must determine what to do when they pass away.

There is usually state agency help or aid from a government program.  However, the aid is always at the whim of politicians, so you must plan for the child’s inheritance. That means a type of estate planning to preserve certain benefits for your child and allow any funds you’ve saved for them to supplement their lifestyle.

Another type of special needs is for those family members with substance abuse issues. This type of condition leaves parents knowing that any day could be ‘the’ day. However, similar to special needs from birth, this loved one must be protected from having access to large sums of money.

Over the long term, the issues are similar to a traditional special needs scenario.  However, there’s always a chance of a full recovery. That hope often turns to despair, but it doesn’t mean a family wants to stop supporting their loved one.

Another type of special needs are those conditions that are the result of medical conditions that may or may not be terminal, such as a stroke, paralysis, or blindness. These conditions and diseases may be sustained for a long time in a permanently disabled state. When these conditions occur, you need to update your estate plan.

Plan ahead and address your issues now with the help of an experienced estate planning attorney.

Reference: Middletown (DE) Transcript (August 1, 2017) “Caring for family member with special needs requires planning”

If you need help developing a Special Needs Plan please contact our office for a free consultation 801-438-7120.