The ABCs of Estate Planning

Estate Planning ChartEstate planning comes in two parts: basic and advanced.

A basic estate plan benefits both you and your loved ones in the event of your incapacity and upon your death. People plan when they are healthy to choose appropriate fiduciaries to handle their affairs. Without such a plan in place, the court will appoint a conservator if you are incapacitated and will appoint an administrator upon your death. The court will also appoint guardians for your minor children.

By taking the time to plan now, you make these decisions yourself instead of leaving it up to the court. Moreover, you choose your beneficiaries instead of having the state determine them for you; you are able to plan the manner and timing of distributions to those beneficiaries; and you can avoid probate and minimize taxes.

People who come to see us to discuss estate planning are discussing business issues at the same time. Thus estate planning has benefits to business and these benefits to business will have benefits to the estate.

 

Generally, the documents comprising a basic estate plan are:

  • A revocable living trust
  • A pour over will
  • An advance health care directive or health care power of attorney and living will
  • A durable power of attorney for financial matters, and
  • A Health Insurance Portability and Accountability Act Authorization

Revocable Living Trust

People often use a revocable living trust to avoid probate, for tax planning and to control the manner and timing of distribution to beneficiaries. Unlike a will, which is a public document filed with the court, the trust is private. Property held in the name of the trust is not subject to probate proceedings.

You need to transfer your assets (e.g. real estate) into the trust, generally with the assistance of an attorney. You continue to control and manage the assets as you do now, but upon your incapacity, your named successor trustee manages the trust assets on your behalf without a court having to appoint a conservator. Upon your death, your successor trustee distributes the assets to your beneficiaries according to the terms of the trust.

Will

A “pour-over” will is typically used in conjunction with a living trust, to catch any assets that may not have been transferred to the trust, so they can be distributed according to the trust’s terms. You also nominate guardians for your minor children in the will.

Durable Power of Attorney

A Durable Power of Attorney for property management enables a designated individual to handle your non-trust assets (e.g. pay your bills from a non-trust checking account, transfer assets to your trust) in the even you are incapable.

Advanced Health Care Directive and Living Will

An Advance Health Care Directive or Power of Attorney for Health Care allows you to designate an agent to make health care decisions for you in the event you are incapacitated. In addition to the release and execution of health care records and forms and consent to surgery and the like, it can be used to express your preferences regarding life sustaining care. In some states, you express your directives to medical providers and medical institutions in a living will.

Health Insurance Portability and Accountability Act Authorization

A Health Insurance Portability and Accountability Act (“HIPAA”) authorization permits your designated agent to obtain protected medical information about you in order to handle your medical affairs.

These wrap through a basic estate plan and are the building blocks of advanced plans, which are used to transfer assets to the next generation. We’ll talk about advanced estate planning in this space at a later time. We’ll also talk about some common client comments about estate planning in this space, as well.

If you haven’t taken care of your own estate planning, there are a lot of great lawyers that can help you with these decisions. If you live near us, give us a call. We would love a chance to work with you. If you don’t live near us, give us a call anyway and we will route you to some very good people.

We can be reached at 617-357-9333.

 

IT’S YOUR CHOICE! You can choose us to close your refinance loan

calculator with the word refinance

Many of you have seen the recent headlines:

“Mortgage rates rise in another sign that, yep, it’s a global economy!”

“Mortgage rates rise in anticipation of Federal Reserve rate increase later this year!”

As you probably know, refinance mortgage rates are on the rise!  Many of our clients are now considering refinancing.  If you have been planning on refinancing and haven’t started the refinance process yet, now is the time.

What you may not know is that you have the right to choose the attorney who closes your refinance loan with most lenders.

If you don’t choose an attorney, your lender will choose one for you.

We make it simple: When you are considering refinancing, email me the contact information of your Loan Officer and I will take care of the rest!

Haven’t chosen a lender yet? Call us and we will help you choose the best lender for your needs based on our knowledge of your particular needs and knowledge of what the various lenders have to offer.

Remember that along with the potential benefits to refinancing, there are also costs. Your home may be your most valuable financial asset, so you want to be careful when choosing a lender or broker and specific mortgage terms.

Let us reward your loyalty, streamline the process and greatly reduce your frustration.  Here are the benefits of working with us again:

  • Pay less. Some lenders use their own settlement companies that could cost you almost double.
  • Lender’s Title Insurance Policy: We will ALWAYS give you a substantial discount – 40%!
  • Less work = Less frustration. We already have your title insurance policy and your property information.
  • Less Delay. We have previously searched your property’s records to ensure that you are the rightful owner and have checked for liens. If there is a prior title issue that arises, we have the backup title information to resolve the problem.
  • We will accommodate you. With three convenient locations in the South End, Back Bay and Provincetown, where we do the closing IS YOUR CHOICE.
  • YOU KNOW US and the high level of quality service we provide.
  • WE KNOW YOU. If you haven’t already chosen a lender we can also help you find the best refinance deal with the lender that is right for you.

So, when you’re asked to select a qualified attorney, closing agent, or title company, we hope you’ll choose David Marshall Datz, P.C.  Give us a call at 617-357-9333 or by email us at Info@DatzLawOffices.com.

We sincerely appreciate your business and thank you for your continued loyalty.

LINKS FOR ABOVE HEADLINES:

http://www.bankrate.com/finance/mortgages/mortgage-analysis-101216.aspx#ixzz4NjKNx5vt

https://www.washingtonpost.com/news/where-we-live/wp/2016/10/13/mortgage-rates-rise-in-anticipation-of-federal-reserve-rate-increase-later-this-year/

 

Beyond Wills and Trusts: 3 Documents Everyone Needs

When it comes to estate planning, you probably think of wills and trusts. But there are three other estate planning documents you should think about to make your plan complete:

  1. A Living Will
  1. A Healthcare Directive, also called an Advance Directive, Medical or Healthcare Power of Attorney, or Designation of Healthcare Surrogate
  1. A Financial Power of Attorney

Planning for Medical Emergencies with a Living Will and Healthcare Directive

Having the right legal documents in place in case of a medical emergency is essential to providing a family member or trusted friend with guidance and decision-making authority during a difficult time.

A Living Will allows you to state your wishes about the type of medical treatment you do, or don’t, want to receive if you are injured and not expected to recover or become terminally ill.

A Healthcare Directive allows you to choose the trusted family member or friend who will be responsible for making healthcare decisions if, for any reason, you lose the ability to make them for yourself.

Don’t End Up Like Terri Schiavo

One of the well-known cases that highlights the need for a medical emergency plan is that of Terri Schiavo, a 26-year old Florida woman who collapsed and fell into a coma in February of 1990. Mrs. Schiavo didn’t have a Living Will or Healthcare Directive, and as a result was kept alive for 15 years while her husband and parents fought in court over taking her off life support. Finally, in March 2005, a Florida court ordered removal of Mrs. Schiavo’s feeding tube. She died 13 days later – and the autopsy proved that she had been brain dead since she collapsed 15 years earlier.

While the Schiavo case is an extreme one, it emphasizes the fact that without a medical emergency plan, your family members may be left to guess (or possibly fight) about your medical treatment and end-of-life wishes.

But, it doesn’t have to be that way. A Living Will and Healthcare Directive can make your wishes known and legally enforceable. If you haven’t reviewed your healthcare documents in the last year, now is the time to make sure it reflects your current wishes. Call us today if you have any questions about health care decisions and how to best communicate them to your loved ones.

Planning for Property Management with a Financial Power of Attorney

A Financial Power of Attorney allows you to select a trusted family member or friend who will be responsible for managing your money and other property if you become mentally incompetent. Without this document, bank and investment accounts held in your name will become inaccessible, IRA distributions can’t be requested, bills won’t get paid, tax returns won’t be filed, and property can’t be bought or sold. Instead, a loved one may be forced into court to be appointed as the legal guardian, and a judge will oversee the guardian’s every move. A Financial Power of Attorney can provide authority to handle these issues without the court’s involvement.

Caution:  Financial Powers of Attorney Can Become Obsolete

Many Financial Powers of Attorney can be “obsolete” in as short as one year, because many institutions don’t want to rely on stale documents. Depending on your circumstances, a stale, obsolete power of attorney may not be able to help you and your family with:

  • Insurance contracts – life, disability, long term care, property and casualty.
  • Annuity contracts.
  • Retirement plans – pension, profit-sharing and stock bonus plans, IRAs, 401(k)s and 403(b)s.
  • Online financial accounts for banking and investments.
  • Online personal accounts such as email, Facebook, Instagram and LinkedIn.
  • Elder care and special needs planning.

If it’s been more than a year or two since you’ve signed your power of attorney, it might be time for a fresh one. Call us – we can help make sure you and your family are fully protected.

A Good Estate Plan Needs Up to Date “Ancillary” Documents

 
In the estate planning community, Living Wills, Healthcare Directives and Powers of Attorney are called “ancillary” documents. But don’t be fooled by the name – these documents are essential and should be updated as lives, finances, and laws change. Call us today with your questions, we’re always here to help.

The Only Constant in Life is Change

When Circumstances Change, So Should Your Estate Plan

 

Change Ahead photoYour estate plan was written to reflect your situation at a specific point in time –  and – as we all know – our lives continually change, unfolding in ways we might not have anticipated. Just like you meet with your doctor, financial advisor, or CPA on a regular basis, you need to meet with us on a regular basis as well.
In this post, we:

  • Identify and provide examples of life changes which typically trigger a need to update your plan
  • Examine how often you should “check in” with our office

The goal?  To make sure that your estate plan achieves your goals and works for your family.

 

Update Your Estate Plan if Any of These 6 Circumstances Apply to You

  1. Marriage, divorce, or death of a spouse
  2. Changes in financial status – good or bad
  3. The launch or wind down of a business
  4. Birth, adoption, or death of a child or grandchild
  5. Change in personal or family circumstances – including the need to replace trustees, address disabilities or addictions, moving to a new state, and more
  6. Change in your goals – such as changing amounts of inheritances, adding or removing a charity, and more

It’s not just changes in your life you need to think about – Congress, the courts, and the legislatures are constantly changing the rulebook. If you haven’t had your will, trust, or estate plan reviewed since 2012 or if any of these 6 circumstances apply to you, it is essential to contact us, so we can get you back on track.

Examples of When You Should Update Your Trust

To illustrate when a revocable trust should be updated, let’s take a look at the Thomas family:  Jim and Carol have been married for 20 years and have three grown children. Several years ago, they created a trust to provide for themselves and their children.
However, since that time, their family has gone through many changes – some good and some not so good. Jim and Carol are considering updating their estate plan to reflect changes in their family’s circumstances. Here’s a look at their circumstances and how they may affect their estate plan:

  • Divorce. Their eldest son has filed for a divorce from his wife. Jim and Carol need to update their revocable trust to exclude the soon to be ex-wife as an intended beneficiary.

 

  • Changes in financial status. Carol’s aunt passed away and left her a great deal of money. Jim and Carol need to determine how this inheritance will affect their current plan and future estate tax liability.

 

  • Birth. Their youngest child recently announced that she and her husband are Change Ahead photoexpecting their first child. Jim and Carol need to update their trust in order to provide for the child.

 

  • Changes in personal circumstances. Their middle son was recently diagnosed with a severe disability and can no longer work. He is eligible for government disability benefits, but receiving traditional trust income would disqualify him. Jim and Carol need to convert their son’s current trust into a special needs trust so the government does not consider that income for qualification purposes.

 

  • Changes in tax law / venue. Jim and Carol moved from Chicago to Miami to beat the cold winters. Since their estate plan will now be subject to Florida (rather than Illinois) law, it’s time to determine if Florida law might provide them with additional benefits.

 

How Often Should You “Check In” On Your Estate Plan?  Change Ahead photo

It is a certainty that your life will change. All manner of life and financial changes make it necessary to “check in” on your estate plan.

We can help you to manage your plan. If it’s been 3 to 5 years – or – you have experienced significant life change since you signed your estate planning documents, call our office now. We’ll help you determine whether your estate plan needs to be updated. Life moves fast and procrastination can harm you and your loved ones. We welcome your call now.

This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.