The Five Legal Documents Your Family Must Have, Regardless of Your Net Worth
Watch the following video from CNBC, where my fellow estate planning attorney Alexis Neely discusses the five legal documents every family needs, regardless of wealth.
http://www.youtube.com/watch?v=ky9SIT7eOJE
If you are a Louisiana resident, after you watch the video, visit www.EZWillForms.com to see how you can get these documents in place for your family. My online estate planning law firm is ready to assist you with wills, powers of attorney, guardian nominations, trusts, and all of the documents Alexis discussed in the clip.
Online Estate Planning Tool Now Available for Louisiana Residents
You can now prepare an attorney-assisted estate plan online in Louisiana. The Louisiana Will Forms Website can help you protect your family and create an estate plan affordably and without having to go to an attorney’s office. Visit http://louisianawillforms.com for more information.
It is easy. First you register and answer a questionnaire about your family and wishes. The software will create a set of estate planning documents for you (wills, powers of attorney and trusts). These documents are then reviewed by a licensed Louisiana attorney. When review is completed, you will recieve documents that are ready for you to take to a notary for execution.
The result for you - you get a high quality Louisiana estate plan that would normally cost thousands for just a few hundred dollars. You avoid time consuming appointments and are able to take care of this from your home or office without hassle and for a small fraction of what I charge my clients for a full-service estate plan.
For more information, visit http://louisianawillforms.com.
Estate Planning is Not Just About Money…
This article in the NY Times (click here to view) points out that for many families, estate planning is more about family issues than tax issues.
Increasingly, wealthy families are designing estate plans to pass values of philanthropy and work onto their children, using charitable planning to split the benefits of the estate between the kids and worthy charities. This avoids “trust-fund baby” syndrome, and provides your children with incentives to become independent.
If you are intersted in thoughtful wealth transfer strategies that leave your children values as well as money, contact my office and schedule a consultation on values-based estate planning strategies for large estates.
Heath Ledger Estate Planning Out of Date and No Mention of Daughter Matilda or Her Mother Michelle Williams in Will
Once again, another celebrity has died with an out-of-date Will. Heath Ledger’s Will has been made public (as all Wills are public documents after death) and it turns out that the Will, made three years prior to his daughter’s birth, leaves everything to his parents and sister. We saw the same thing recently when Anna Nicole Smith died and her Will left everything to her deceased son, made no mention of her baby daughter Danielynn or her long-time life/love partner Howard K. Stern, who stuck by her through all of her ups and downs for years prior to her death.Heath’s parents have publicly assured that Matilda will be well taken care of and she’s likely to be deemed a pretermitted heir or omitted heir anyway, which would mean she’ll end up inheriting Heath’s estate and a Los Angeles Court has established Dannielynn as Anna Nicole’s sole heir, so in the end the kids will be taken care of but those results only tell part of the story.First off, neither Michelle Williams, Matilda’s mother, nor Howard K. Stern, Anna Nicole’s long-time partner, were provided for and the law doesn’t make any provision for unmarried spouses. Would Heath and Anna really have wanted Michelle and Howard to get nothing?Second, while Matilda and Dannielynn will ultimately inherit from their parents due to the pretermitted heir laws noted above, Heath and Anna lost out on the chance to decide the terms under which their babies would receive the money they left behind and to name who would take care of that money until the received it.
These incidents are indicative of a greater national problem that exists - the current model for providing legal services in the
Here’s the amazing thing . . . whether you spend $13.50 or $2,750.00, at the end of the day all you end up with is documents that in many cases won’t work when your family needs them.
What you want when it comes to estate planning is not a set of form documents. What you want is a relationship with a personal lawyer who is going to guide you to make the best decision throughout your lifetime, be there for your family when you can’t be, and make sure your estate plan stays up to date so when you have a new baby, they know about it, the baby gets added to your plan and your plan works when your family needs it.
Written by Alexis Martin Neely, mom, writer, speaker and Personal Family Lawyer. Alexis makes it super easy for your family to talk about and plan for sticky subjects like money, death and taxes. Get Alexis’ humorous, enlightening, and often quite revealing “Family Wealth Secrets” at: www.FamilyWealthMatters.com.
Ten Costly Mistakes Families Make When Planning for a Special Needs Child, and How to Avoid Them
COSTLY MISTAKE #1: Disinheriting the child.
Many disabled people rely on SSI, Medicaid or other government benefits to provide food and shelter. You may have been advised to disinherit your disabled child - the child who needs your help most - to protect that child’s public benefits. But these benefits rarely provide more than basic needs. And this “solution” does not allow you to help your child(ren) after you become incapacitated or die. When a child requires, or is likely to require, governmental assistance to meet his or her basic needs, parents, grandparents and others who love the child should consider establishing a Special Needs Trust.
Planning Tip: It is unnecessary and in fact poor planning to disinherit a special needs child. Families with special needs beneficiaries should consider a Special Needs Trust to protect public benefits and care for the child during the client’s incapacity or after the client’s death.
COSTLY MISTAKE #2: Procrastination.
Because none of us knows when we may die or become incapacitated, it is important that you plan for a beneficiary with special needs early, just as you should for other dependents such as minor children. However, unlike most other beneficiaries, a child with special needs may never be able to compensate for a failure to plan. A minor beneficiary without special needs can obtain more resources as he or she reaches adulthood and can work to meet essential needs, but a child with special needs may never have that ability.
Planning Tip: Parents, grandparents, or any other loved ones of a special needs child face unique planning challenges when it comes to that child. This is one area where you simply cannot afford to wait to plan.
COSTLY MISTAKE #3: Failure to coordinate a planning team effort.
It is critical that your Special Needs Planning Team include: an attorney who is experienced in this planning area; a life insurance agent who can ensure that there will be enough money to maintain the benefits for the special needs child; a CPA who can advise on the Special Needs Trust’s tax return; an investment advisor who can ensure that the trust fund’s resources will last for the child’s lifetime; and any other key advisors that may support the goals of the trust going forward.
Planning Tip: Special needs planning dictates that your advisors work together to ensure that there are sufficient trust assets to care for your child throughout his or her lifetime.
COSTLY MISTAKE #4: Ignoring the special needs when planning for the child’s benefit.
Planning that is not designed with the child’s special needs in mind will probably render the child ineligible for essential government benefits. A properly designed Special Needs Trust promotes the special needs person’s comfort and happiness without sacrificing eligibility.
Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment (for example, a specially equipped van), training and education, insurance, transportation, and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment & appliances, computers, vacations, movies, payments for a companion, and other self-esteem and quality-of-life enhancing expenses: the sorts of things your clients now provide to their child or other special needs beneficiary.
Planning Tip: When planning for a child with special needs, it is critical that you utilize a Special Needs Trust as the vehicle to pass assets to that child. Otherwise, those assets may disqualify your child from public benefits and may be available to repay the state for the assistance provided.
COSTLY MISTAKE #5: Creating a “generic” special needs trust that doesn’t fit.
Even some “special needs trusts” are unnecessarily inflexible and generic. Although an attorney with some knowledge of the area can protect almost any trust from invalidating the child’s public benefits, many trusts are not customized to the particular child’s needs. Thus the child fails to receive the benefits that the parent provided when they were alive.
Another frequent mistake occurs when the Special Needs Trust includes a “pay-back” provision rather than allowing the remainder of the trust to go to others upon the death of the special needs child. While these “pay-back” provisions are necessary in certain types of special needs trusts, an attorney who knows the difference can save your clients hundreds of thousand of dollars, or more.
Planning Tip: A Special Needs Trust should be customized to meet the unique circumstances of the child and should be drafted by a lawyer familiar with this area of the law.
COSTLY MISTAKE #6: Failure to properly “fund” and maintain the plan.
When planning for children with special needs, it is absolutely critical that there are sufficient assets available for the special needs beneficiary throughout his or her lifetime. In many instances, this requires utilization of a funding vehicle that can ensure liquidity when necessary. Oftentimes permanent life insurance is the perfect vehicle for this purpose, particularly if the clients are young and healthy such that insurance rates are low.
Also, because this is an ever-changing area, it is also imperative that the clients revisit their plan frequently to ensure that it continues to meet the needs of the special needs beneficiary.
Planning Tip: You should consider permanent life insurance as the funding vehicle for special needs beneficiaries, particularly when the beneficiary is young given the often staggering costs anticipated over that beneficiary’s lifetime.
If your estate may be subject to estate tax, consider having an Irrevocable Life Insurance Trust own and be the beneficiary of the policy, naming the Special Needs Trust as a beneficiary. Alternatively, in a non-taxable situation, consider naming the client’s revocable trust as the beneficiary to help equalize inheritances if that is the client’s objective.
COSTLY MISTAKE #7: Choosing the wrong trustee.
During your life, you can manage the trust. When you are no longer able to serve as trustee, you can choose who will serve according to the instructions that you have provided. You may choose a team of advisors and/or a professional trustee. Whomever you choose, it is crucial that the trustee is financially savvy, well-organized, and, of course, ethical.
Planning Tip: The trustee of a Special Needs Trust should understand your objectives and be qualified to invest the assets in a manner most likely to meet those objectives.
COSTLY MISTAKE #8: Failing to invite contributions from others to the trust.
A key benefit of creating a Special Needs Trust now is that the beneficiary’s extended family and friends can make gifts to the trust or remember the trust as they plan their own estates. For example, these family members and friends can name the Special Needs Trust as the beneficiary of their own assets in their revocable trust or will, and they can also name the Special Needs Trust as a beneficiary of life insurance or retirement benefits.
Planning Tip: Creating a Special Needs Trust now allows others, such as grandparents and other family members, to name the trust as the beneficiary of their own estate planning.
COSTLY MISTAKE #9: Relying on siblings to use their money for the child with special needs’ benefit.
You may be relying on their other children to provide for their child with special needs from their own inheritances. This can be a temporary solution for a brief time, such as during a brief incapacity if their other children are financially secure and have money to spare. However, it is not a solution that will protect the child with special needs after you die or when siblings have their own expenses and financial priorities.
What if the inheriting sibling divorces or loses a lawsuit? His or her spouse (or a judgment creditor) may be entitled to half of it and will likely not care for the child with special needs. What if the sibling dies or becomes incapacitated while the child with special needs is still living? Will his or her heirs care for the child with special needs as thoughtfully and completely as the sibling did?
Siblings of a child with special needs often feel a great responsibility for that child and have felt so all of their lives. When you provide clear instructions and a helpful structure, you lessen the burden on all their children and support a loving and involved relationship among them.
Planning Tip: Relying on siblings to care for a special needs beneficiary is a short-term solution at best. A Special Needs Trust ensures that the assets are available for the special needs beneficiary (and not the former spouse or judgment creditor of the sibling) in a manner intended by you.
COSTLY MISTAKE #10: Failing to protect the child with special needs from predators.
An inheritance from parents who fund their child’s special needs trust by will rather than by revocable living trust is in the public record. Predators are particularly attracted to vulnerable beneficiaries, such as the young and those with limited self-protective capacities. When you plan with trusts rather than a will, you decides who has access to the information about their children’s inheritance. This protects your special needs child and other family members, who may be serving as trustees, from predators.
Planning Tip: A Special Needs Trust created outside of a will ensures that information about the inheritance is not in the public record, protecting the special needs beneficiary from predators.
Conclusion
Planning for special needs beneficiaries requires particular care and the participation of all of the client’s wealth planning advisors. A properly drafted and funded Special Needs Trust can ensure that your beneficiary has sufficient assets to care for him or her, in a manner intended by you, throughout the beneficiary’s lifetime.