What Should I Know About Finances for My New Blended Family?

What Should I Know About Finances for My New Blended Family? The blended family is a family dynamic that is increasingly common, which can make addressing financial issues much more of a challenge. In a blended family, a one or both spouses have at least one child from a previous marriage or relationship, and together they create what’s known as a new combined family.

CNBC’s recent article, “4 ways to help blended families navigate finances,” reports that a staggering 63% of women who remarry come into blended families, with 50% of those involving stepchildren who live with the new couple, according to the National Center for Family & Marriage Research.

The issues in a blended family can be demanding, so couples often delay having the “money talk.” This is an important piece of the family financial puzzle. Let’s look at some of the ways you can work on that puzzle:

  1. Get expert advice. Talk to an estate planning attorney about the specifics of your blended situation.
  2. Create a plan for merging relationship and money. Understanding the role money plays in combining two families is critical to the success of a healthy blended household. A basic step may be to draft a detailed plan of how the couple is going to care for one another in their marriage and in their family, in addition to how they will care for one another’s children. Try to determine the ways in which money plays a role in coming together. The more you can communicate and the more that you can exhibit a united front, even from a financial perspective, the stronger a couple will be.
  3. Collect documentation and monitor your money. It’s good to understand the work involved with the preparation and paperwork after divorce and remarriage. You’ll have a divorce decree or a domestic partner agreement, as well as instructions on child support and alimony. You also need to keep track of all the different financial accounts.
  4. Discuss your financial issues regularly. First, ask about the financial obligations to the ex-spouses. Make sure both spouses understand if there’s child support and/or alimony, as well as responsibility for paying for housing or their utility bills.

Reference: CNBC (November 23, 2019) “4 ways to help blended families navigate finances” 

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-449-8191 to schedule your free consultation.

 

How Much Will I Really Spend in Retirement?

How Much Will I Really Spend in Retirement? People are living longer today, compared to previous generations. This means that their retirement savings need to last longer. As a result, you’ll need to be certain that you’re calculating your retirement spending accurately.

Kiplinger’s recent article, “Planning for Retirement? You’re Probably Underestimating Your Spending,” explains that general figures and trends don’t consider a person’s health and many other factors. Still, you should anticipate a lengthy retirement, which makes it even more critical to understand your cash flow and break out your expenses.

It’s not uncommon for people to totally underestimate their post-retirement spending. They don’t see the many additional expenses they’ll incur after ending their employment or selling their business. The common notion is that as you get older, you spend less. However, there are new expenses that come with retirement and current costs that you may not be accounting for.

Let’s look at the four main types of expenses that prospective or new retirees need to plan, when creating a budget. Educating yourself in these areas will help to have a comfortable retirement.

  1. Formerly business-subsidized expenses. For many, the job provides more than a salary. It can include health benefits, cell phones and health club memberships. To avoid some surprise when you retire, make a list of the expenses that are now covered by your employer or business. Some you might be able to do without, while others may be a necessity in retirement.
  2. Overlooked expenses. Many people do the majority of their primary spending on one credit card. However, when they estimate their spending for retirement, they forget about spending on other credit cards and regular services and charges that may be paid for by cash or check, such as landscaping, housekeeping and real estate taxes. Prior to retirement, go through all your expenses and how they’re being paid. This should help flesh out a thorough understanding of your spending.
  3. Health care expenses. Even if you hit retirement without a major accident or illness, you’re still probably going to spend a good portion of your income to stay that way. A recent study found that a healthy male-female couple retiring at 65 in 2019 can expect to spend $285,000 on health care over their retirement years. Medicare begins at 65 and covers many expenses, but there are many common health care costs that are not covered, such as dental and vision services, prescription drugs (unless you buy a supplemental plan, such as Part D), and long-term care. Out-of-pocket costs can also shoot up, if a senior has a serious or chronic disease, like a heart condition.
  4. Recurring non-recurring expenses. You may get a new car or need a major repair in your house. These are considered non-recurring expenses you commit to sparingly, or just once in your life. However, big purchases and unexpected costs occur more often than you’d imagine. It’s a good practice to plan for at least one “one-time purchase” each year to cover these unanticipated bills.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-449-8191 to schedule your free consultation.

 

What Estate Planning Documents Do You Need?

What Estate Planning Documents Do You Need? Wouldn’t your children be relieved to learn that you’ve done all the necessary advance planning so that if you should become incapacitated, someone has been properly appointed to help with health care and financial decisions? The Tennessean suggests that you “Give your loved ones peace of mind with legal documents” so that your spouse and your family will be able to take the necessary steps to give you the care and dignity you (and they) deserve.

Here’s a checklist of the documents that everyone should have in place:

Power of Attorney for Health Care. When you have mental capacity, you can make your own decisions. When you do not, you need someone to be appointed who knows your beliefs and wishes and has the ability to advocate for you. Ideally, you should name one person to be your agent to minimize arguments. Talk with your family to explain who has been named your power of attorney for health care, and if need be, explain why that person was chosen.

Power of Attorney for Finances. There are different kinds of POA for finances. The goal of the POA for finances is so they can make decisions on your behalf, when you become incapacitated. Some states use “springing” POA—but that may mean your family has to go through a process to prove you are incapacitated. Check with an estate planning elder law attorney in your state to see what the laws are.

Advance Directive. This describes what kind of life sustaining treatment you do or do not want if you are in a coma, are terminally ill or have dementia. You can direct whether you want CPR, tube feeding, and other life-sustaining procedures to be withheld, if your quality of life is diminished and there is no hope of improvement. This will help your family to know what you want in a time when emotions are running high.

Last Will and Testament. Have a will created, if you don’t already have one. This directs distribution of your assets to your wishes and does not leave them to the laws of your state. Not having a will means your family will have to go through many more court proceedings and people you may not want to receive your worldly possessions may get them.

Trusts. Talk with your estate planning attorney about placing assets in trust, so they are not subject to the public process of probate. Your wishes will be followed, and they will remain private.

Reference: Tennessean (Nov. 16, 2019) “Give your loved ones peace of mind with legal documents”

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-449-8191 to schedule your free consultation.

 

A Good Estate Plan Equals Peace of Mind and Peace in the Family

A Good Estate Plan Equals Peace of Mind and Peace in the Family: The problems aren’t always evident when the first parent passes. Often, it’s when the second parent becomes gravely ill, that lapses in estate planning become evident. For one family, everyone thought estate plans were all in place after their father died. When their mother suffered a stroke, the adult children learned that they had no access to her financial accounts or her health care directives. No one had thought to update the estate plan.

However, when one parent passes, the family needs to take action. That’s the lesson from the article “Avoid heartache and anxiety with estate planning” from Post Independent. In this case, the family never thought to modify or add anyone’s name to the financial accounts, power of attorney documents, medical power of attorney documents, or HIPAA consent forms. What often happens in these cases, is that family members start bickering about who was supposed to do what.

For those who have not taken the time to learn about estate planning, planning for end-of-life legal, financial and medical matters, the quarrels may be inevitable.

Estate planning is not just for wealthy families. If your aging loved one own property, stocks, bonds or any other assets, they need to have a will, advance directives, powers of attorney and possibly some trusts. Take the time to understand these documents now, before an urgent crisis occurs.

There are few formal courses that teach people about these matters, unless they go to law school. Nearly half of Americans age 55 and over don’t have a will, according to an article appearing in Forbes. Fewer than 20% of these people have health care directives and the proper types of powers of attorney in place.

When it comes to preparing for these matters, the laws are very specific about who can participate in health care and financial conversations and decisions.

Here are some of the documents needed for an estate plan:

  • Last Will and Testament
  • General, Limited and/or Durable Power of Attorney
  • Health Care Power of Attorney
  • Living Will
  • Advance Care Directive
  • HIPAA Consent Form

Preplanning will greatly assist family members and loved ones, so they know what medical and financial efforts you or your parents would want. Having the documents in order will also provide the family with the legal means of carrying out these wishes.

The legal documents won’t solve all problems. Your brother-in-law will still be a pain in the neck and your oldest sister may still make unrealistic demands. However, having these documents in place, will make the best of a bad situation.

Speak with an estate planning attorney to ensure that your estate plan, or your parent’s estate plan, is properly prepared. If someone has moved to another state, their estate plan needs to be updated to align with their new state’s laws.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable TrustsEstate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

Reference: Post Independent (November 3, 2019) “Avoid heartache and anxiety with estate planning”

 

Do you know what a Pour-over will is?

If the goal of estate planning is to avoid probate, it seems counter-intuitive that one would sign a will, but the pour-over will is an essential part of some estate plans, reports the Times Herald-Record’s article “Pour-over will a safety net for a living trust.”

If a person dies with assets in their name alone, those assets go through probate. The pour-over will names the trust as the beneficiary of probate assets, so the trust controls who receives the inheritance. The pour-over will works as a backup plan to the trust, and it also revokes past wills and codicils.

Living trusts became more widely used after a 1991 AARP study concluded that families should be using trusts rather than wills, and that wills were obsolete. Trusts were suddenly not just for the wealthy. Middle class people started using trusts rather than wills, to save time and money and avoid estate battles among family members. Trusts also served to keep financial and personal affairs private. Wills that are probated are public documents that anyone can review.

Even a simple probate lasts about a year, before beneficiaries receive inheritances. A trust can be settled in months. Regarding the cost of probate, it is estimated that between 2—4% of the cost of settling an estate can be saved by using a trust instead of a will.

When a will is probated, family members receive a notice, which allows them to contest the will. When assets are in a trust, there is no notification. This avoids delay, costs and the aggravation of a will contest.

Wills are not a bad thing, and they do serve a purpose. However, this specific legal document comes with certain legal requirements.

The will was actually invented more than 500 years ago, by King Henry VIII of England. Many people still think that wills are the best estate planning document, but they may be unaware of the government oversight and potential complications when a will is probated.

There are other ways to avoid probate on death. First, when a beneficiary is added to assets like bank accounts, IRAs, life insurance policies, or stock funds, those assets transfer directly to the beneficiary upon the death of the owner. Second, when an asset is owned JTWROS, or as “joint tenants with the right of survivorship,” the ownership interest transfers to the surviving owners.

Speak with an experienced estate planning attorney to talk about how probate may impact your heirs and see if they believe the use of a trust and a pour-over will would make the most sense for your family.

Reference: Times Herald-Record (Sep. 13, 2019) “Pour-over will a safety net for a living trust.”

 

Avoiding a Family Feud When Choosing a Power of Attorney
family upset over power of attorney decisions

Avoiding a Family Feud When Choosing a Power of Attorney

The challenge in tasking a family member or trusted friend is not just making sure they have the necessary skills, but to navigate family dynamics so that no fights occur says Considerable.com in the article “How to assign power of attorney without sparking a family feud. Every family situation is different, but in almost all cases, transparency is the best bet.

Start by understanding exactly what is meant by power of attorney, how it functions within the estate plan, and how siblings can all be involved to some degree with the family’s decision-making process.

Power of attorney is a term that gives an individual, or sometimes, individuals, the legal authority to act on behalf of someone else. It is usually used when a person, usually a parent or a spouse, is unable to make decisions for themselves because of illness or injury. It must be noted that power of attorney generally relates to financial and legal decisions. There are methods to address making decisions for another person for their health care or end-of-life decisions, but they are not accomplished by the power of attorney (POA).

It should be noted that there is a distinct difference between power of attorney and executor of the estate. Power of attorney is in effect while the person who has granted the authority is alive.  The executor of the estate assumes responsibility for managing the estate through the probate process. While they are two different roles, they can be held by the same person, usually an adult child who is responsible and has good decision-making skills.

There are different types of power of attorney roles. The most common is the general power of attorney, followed by the health care or medical power of attorney. The general power of attorney refers to the person who has the authority to handle financial, business or private affairs. If a parent grants power of attorney to one of their children, that child then has the authority to act on behalf of the parent.

Trouble starts if the relationship between siblings is rocky, or if major decisions are made without discussions with siblings.

It’s not easy for siblings when one of them has been granted the power of attorney. That means they must accept the inherent authority of the chosen sibling to make all decisions for their parent. The sibling with the power of authority will have a smoother path if they can be sensitive to how this makes the others feel.

“Mom always liked you best,” is not a sentence that should come from a 50 year old, but often childhood dynamics can reappear during these times.

Remember that the power of attorney is also a fiduciary obligation, meaning that the person who holds it is required to act in the best interest of the parent and not their own. If the relationship between siblings is not good, or there’s no transparency when decisions are made, things can get bumpy.

Here are some tips for parents to bear in mind when deciding who should be their power of attorney:

  • Understand the great power that is being given to another person.
  • Make sure the person who is to be named POA understands the entire range of responsibilities they will have.
  • The siblings who have not been named will need to understand and respect the arrangement. They should also be aware of the potential for problems, keeping their eyes open and being watchful without being suspicious.

Some families appoint two siblings as a means of creating a “checks and balances” solution. This can be set up so the agents need to act jointly, where both agree on an action, or independently, where each has the full authority to act alone. In some cases, this will lesson the chances for jealousy and mistrust, but it can also prolong the decision-making process. It also creates the potential for situations where the family is engaged in a deadlock and important decisions don’t get made.

Parents should discuss these appointments with their estate planning attorney. Their years of experience in navigating family issues and dynamics give the attorneys insights that will be helpful with assigning these important tasks.

Reference: Considerable.com (July 10, 2019) “How to assign power of attorney without sparking a family feud”, and edited for Florida relevance 

 

Why It’s Always Better to Plan Ahead

Two stories of two people who managed their personal lives very differently illustrate the enormous difference that can happen for those who refuse to prepare themselves and their families for the events that often accompany aging. As an article from Sedona Red Rock News titled “Plan ahead in case of sudden sickness or death” makes clear, the value of advance planning becomes very clear. One man, let’s call him Ben, has been married for 47 years and he’s always overseen the family finances. He has a stroke and can’t walk or talk. His wife Shirley is overwhelmed with worry about her husband’s illness. Making matters worse, she doesn’t know what bills need to be paid or when they are due.

On the other side of town is Louise. At 80, she fell in her own kitchen and broke her hip, a common injury for the elderly. After a week in the hospital, she spent two months in a rehabilitation nursing home. Her son lives on the other side of the country, but he was able to pay her bills and handle all the Medicare issues. Several years ago, Louise and her son had planned what he should do in case she had a health crisis.

More good planning on Louise’s part: all her important papers were organized and put into one place, and she told her son where they could be found. She also shared with him the name of her attorney, a list of people to contact at her bank, primary physician’s office, financial advisor, and insurance agent. She also made sure her son had copies of her Medicare and any other health insurance information. Her son’s name was added to her checking account and to the safe deposit box at the bank. And she made sure to have a legal document prepared so her son could talk with her doctors about her health and any health insurance matters.

And then there’s Ben. He always handled everything and wouldn’t let anyone else get involved. Only Ben knew the whereabouts of his life insurance policy, the title to his car, and the deed to the house. Ben never expected that someone else would need to know these things. Shirley has a tough job ahead of her. There are many steps involved in getting ready for an emergency, but as you can see, this is a necessary task to start and finish.

First, gather up all your important information. That includes your full legal name, Social Security number, birth certificate, marriage certificate, divorce papers, citizenship or adoption papers, information on employers, any military service information, phone numbers for close friends, relatives, doctors, estate planning attorney, financial advisor, CPA, and any other professionals.

Your will, power of attorney, health care power of attorney, living will and any directives should be stored in a secure location. Make sure at least two people know where they are located. Talk with your estate planning attorney to find out if they will store any documents on your behalf.

Financial records should be organized. That includes all your insurance policies, bank accounts, investment accounts, 401(k), or other retirement accounts, copies of the most recent tax returns, and any other information about your financial life.

Advance planning does take time, but not planning will create havoc for your family during a difficult time.

Reference: Sedona Red Rock News (July 9, 2019) “Plan ahead in case of sudden sickness or death”

 

What Can I Do with a Trust to Help My Kids?

Young people like to keep things simple. Millennials don’t want their parents’ furniture or antiques. They want to be able to move easily without a lot of headache. Millennials are okay with jewelry, art, and cash. Likewise, with estate planning, Millennials want a simple will. This can be a wise choice if they’re just married and under the estate tax threshold. But when they have children of their own, they should consider a trust.

Forbes’s recent article, “Why A Simple Will Won’t Cut It If You Have Young Children,” explains that without a trust, minor children inherit assets outright when they turn 18. And that may be a problem if your kids are apt to blow through their inheritance in a few years, instead of using the money wisely.

But an inheritance could last a lifetime if the beneficiary lives within her means, doesn’t tap into the principal, and works to help support her lifestyle and supplement her income. But this isn’t always the case.

A trustee can make certain that your children and young adults are cared for long-term. If you’re not alive to guide and direct your children, a trust can set the necessary limitations for their finances. Also, the trustee can help with your children’s financial literacy, so they’ll possess tools if and when they’re given additional responsibility for their inherited assets.

This isn’t just for minor kids who are under 18 years old, but also for young adults. The fact that a child is “legal” in the eyes of the law doesn’t mean she’s responsible enough to invest a million-dollar inheritance. A trust sets up an experienced advisor to manage inherited assets along the way.

One option, when they’re mature enough, is to set up the trust so they will become a co-trustee. This lets them have a say with the trustee and to make decisions about the management of the trust assets. Your trust can also give them access to distributions of principal slowly over time, so they get used to managing large sums of money.

Other options include appointing a Trust Advisor/Trust Protector that can oversee and protect the trust, its assets & the beneficiaries as time goes on and things change regarding same.

Simple solutions can work for some people, and there are definitely situations in which a simple will is appropriate. But if you have minor children, you usually don’t want to allow them to inherit money at 18.

Ask your estate planning attorney about the options available to set up a trust to work for your family.

Reference: Forbes (July 12, 2019) “Why A Simple Will Won’t Cut It If You Have Young Children”