Monday, October 15, 2018

What started as a dog walk ended with a lesson in life planning – and four stitches

What started as a dog walk ended with a lesson in life planning – and four stitches

by Tom Alberts Oct 15, 2018

Summary: There’s nothing like a real-life crisis to open one’s eyes to the need for proper planning. It’s difficult to predict what fate awaits us, so there’s no better time than now or the near future to get the proper paperwork in order. In the author’s case, it was a close call from a dog attack that provided instant motivation to utilize legal documents to protect his interests and ensure plans are in place for major life events. Among those documents are a last will and testament, a revocable living trust, powers of attorney, an advance health care directive, a HIPAA release and beneficiary designations.

In my new job, I haven’t been practicing what I’m preaching.

I’ve switched gears after spending three decades in newsrooms and now work in the estate planning business, extolling the virtues of preparedness as I write articles warning about the gravity of guardianship, the ills of intestacy and the perils of probate.

My new mission is to help spread the word about the importance of planning for the unexpected events in life and the vital need to create a comprehensive estate plan to protect your loved ones and your legacy.

But like two-thirds of Americans, I’ve put planning for life events and estate matters on the back burner. I haven’t executed a last will and testament, although I’ve spent a lot of time encouraging those of sound mind.

A revocable living trust? Haven’t been there or done that, despite the articles I’ve written imploring you to create and fund one.

I haven’t signed powers of attorney enabling a reliable person to handle my finances and make decisions about my health care if necessary – but I’ve pounded the keyboard to alert others about such oversights.

If I wind up in the hospital and lack my wits, I’ll be lacking a signed Health Insurance Portability and Accountability Act release to keep my loved ones in the loop with my doctors and nurses. I’ve been typing feverishly, nagging about the necessity of HIPAA releases, but I haven’t bothered to sign one.

While I sing the praises of advance health care directives (living wills), you will not find one in my binder of blank pages. Beneficiary designations for bank accounts and such? Don’t bet on it.

So what happened?

My lack of preparedness came to mind in a hurry recently while out for a walk with my dog, Scotty, a sprightly Scottish terrier mix with a penchant for hunting lizards, coaxing belly rubs and chomping on ice cubes. The after-dinner jaunt is part of a routine I’ve enjoyed with my four-legged friend the past decade or so. But this time, unlike thousands before, was different. Little did I know I was about to experience one of those unexpected events in life that could alter the future in a big way.

A few minutes into our stroll, we caught the attention of an aggressive dog being walked by a neighbor. The angry beast flashed its fangs, twisted its head and wriggled out of its collar as its owner screamed at me to “pick him up!” In the blink of an eye, the dog sprinted toward Scotty, clamping its powerful jaws onto my helpless little buddy’s neck. I wailed in horror as I put my hands in the offending dog’s mouth, fruitlessly attempting to loosen its tight-as-a-vice grip.

I instinctively punched the top of the dog’s head with my fist. It’s a miracle he released Scotty and turned his vengeance on me, treating my fingers like they were wayward sausages. A nearby neighbor swooped in and carried Scotty out of harm’s way. I’m blessed Scotty’s injuries were limited to a single bite wound to the neck, and his prognosis is good. Scotty’s collar absorbed the brunt of the bite and acted as a protective shield. I escaped with four stitches in one finger, a nice puncture wound in another and assorted dings and dents.

My experience doesn’t compare to much worse events that make headlines every day. Luck was with us, and the wounds will heal quickly. Scotty and I escaped a more serious fate, but there was no avoiding the wake-up call from our terrifying ordeal.

The day after the trauma and drama subsided, it was time for some serious reflection on following some of the planning suggestions I make my living espousing. I thought about how life is fragile and that in the time it takes a dog to snap its jaws, any number of other calamities could strike.

When do we need a plan?

Few people wake up in the morning and, over their cup of coffee, decide to create a comprehensive estate plan. Eventually, though, for some reason you may decide to prepare for life’s contingencies and endeavor to leave behind a legacy to benefit your loved ones when you’re no longer around. Some unforeseen event may serve as a trigger. It could be your own near miss. The demise of someone else. A medical condition. Or, in my situation, a dog attack.

There’s a natural reluctance to ponder one’s incapacity or death and imagine disasters that inspire you to get legal papers in order. Just ask two-thirds of Americans. A lack of urgency is normal, unless you’ve just received a doomsday diagnosis from your doctor. Maybe there are family dynamics that prevent you from broaching this sensitive subject with loved ones. Perhaps it’s hesitation about anticipated expenses for legal and planning services.

All those roadblocks are understandable, but they put you on a detour from a path of certainty. I’m 53, and I know plenty of people my age who are among the ranks of the ill-prepared for those golden years, and grizzly bears, around the corner.

I like the idea of having someone I personally choose to act as my power of attorney to manage my medical treatment and finances if I can’t. I’ll take comfort knowing that a will and trust are structured to minimize the exposure of my assets to probate administration – and there’s a provision for Scotty’s care if I’m not around. I need to be confident my family members will get details from my doctors with no hassles with a HIPAA release. I want to make my own decisions about end-of-life care with my living will, sparing my family of this potential burden.

It took a dog bit out of the blue for me to get my planning priorities straight. The hours I spent at the vet and in the emergency room recounting a near tragedy helped me realize that now is the best time to act. What if the dog spared my fingers and nailed me in the neck instead? I simply would not have been prepared.

Some time and effort are required to create the right planning documents, and there’s an expense involved. But it’s a prudent investment to maintain control of your future affairs during life and beyond.

Have you considered Legacy Assurance Plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life’s contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

Tom Alberts is staff journalist for Legacy Assurance Plan. A graduate of Indiana University with a double major in journalism and English, he previously was a reporter and editor for newspapers in Indiana, Missouri, Texas, Pennsylvania and Florida. Alberts resides in Bradenton, Florida, with his dog, Scotty. You can contact him at talberts@ufresources.com and follow him on Twitter at @alberts_tom.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.

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Monday, October 8, 2018

Without regular reviews of your estate plan, here’s how a ‘paperwork nightmare’ could ruin your legacy

Without regular reviews of your estate plan, here’s how a ‘paperwork nightmare’ could ruin your legacy

by Tom Alberts Oct 8, 2018

Summary: The experience of a Missouri man who nearly lost his home in a tax sale because of a planning oversight – a failure to review and update documents – provides a valuable lesson. Life events such as a family member with special needs, deaths of loved ones, illness, incapacity, marriage, births and divorce require that you make sure your plans are adjusted accordingly. As life goes on, planning documents – such as your will, trust, beneficiary designations and powers of attorney among them – should be revised as necessary by a qualified attorney. Otherwise, you could wind up like the guy in St. Louis who had to fight to stay in his residence and off the streets.

A “paperwork nightmare” nearly cost a Missouri man his home of more than five decades, according to a TV news report in St. Louis.

It’s a dreadful estate planning slip-up that could happen to anyone.

“His story will have you double-checking some important paperwork all of us should be filling out,” says the report that aired Oct. 1, 2018. The story highlights an important lesson about unforeseen life events and how they can lead to devastating estate-planning blunders.

The camera focuses on the original 1963 certificate of title for the property, a modest home in suburban St. Louis. The yellowing document shows the property was clear of liens and encumbrances – other than the $8,000 mortgage at the time – and that no taxes were owed when the title was issued.

Donald Eckhard, 56, has lived in the quaint red-brick home in a quiet neighborhood since he was 2. Donald tells the interviewer he’s considered “not of legal mind” because of a brain injury he suffered as a teenager. His status as a special-needs adult, he says, leaves him between “a rock and a hard place” when it comes to managing his own affairs.

Recently, a letter from the collector of revenue arrived in the mail, and its message was serious. It was a stunning notice: The property had been sold because of delinquent taxes, and the purchaser sought possession of the property. Donald owed three years of back taxes and penalties.

When Donald’s father died in 1991, his mother, Mary, established a living trust to support Donald financially after her eventual death. Mary, who died about three years ago, had nominated her sister, Donald’s Aunt Sarah, as her successor trustee, giving Sarah responsibility to take over management of Donald’s financial affairs. One of Aunt Sarah’s obligations as successor trustee for her special-needs nephew was to pay his property taxes.

An unexpected life event, however, prevented Aunt Sarah from conducting her fiduciary duties, putting Donald at risk of losing the only home he has ever known. Aunt Sarah developed Alzheimer’s disease.

A family friend learned of Donald’s plight and reached out to help. Meanwhile, the deadline to pay the back taxes and penalties to redeem the property quickly approached. That’s when the friend contacted the TV station for assistance.

Where would he go if he lost his home? “The street I guess,” Donald tells a reporter. Part of the legacy Donald’s mother left behind was a home and financial support for her son. Now, her plan and his support were in serious jeopardy.

Even though Donald only collects $490 monthly in disability income, he doesn’t lack resources to pay his tax bill. Because Donald requires someone to manage his financial affairs, he was unable to access bank accounts in his name that hold the proceeds of his inheritance. The problem: Aunt Sarah and Donald’s mother failed to nominate a successor trustee for Donald, and there was no living person assigned to handle his finances.

Unfortunately, by the time Aunt Sarah became ill with dementia, it was too late for a family discussion and to update the estate plan and transfer her duties. As a result, Donald’s trust funds were inaccessible to him – or anyone else – and the taxes went unpaid. Delinquent taxes led to the tax sale, potentially driving a man into homelessness over a paperwork nightmare.

The good news is that the helpful friend contacted a qualified attorney to investigate Donald’s situation. The lawyer was able to petition the court to serve as Donald’s trustee. The back taxes were paid before the deadline, and Donald was able to remain in his home. It was a close call and a tangible example of why proper planning and reviews are required to avoid a document-driven disaster.

Are you prepared for unexpected life events?

You’ve made a significant achievement if you have a comprehensive estate plan with a last will and testament, a revocable living trust, powers of attorney for health care and finances, an advance health care directive, appropriate beneficiary designations for financial accounts and insurance policies as well as funding strategies to deal with the possibility of long-term care.

But problems arise when those carefully crafted plans get hidden in a filing cabinet somewhere, out of sight and out of mind, ignored and neglected. Unexpected life events can upend even the best-laid plans that are out-of-date and not revised to keep up with the times.

In Donald’s case, his mother’s estate planning oversight – not planning for incapacity and not naming an alternate successor trustee to handle Donald’s affairs – was easily avoidable. Her mistake is an example why it’s important to review and update your will, trust, powers of attorney, advance health care directive and beneficiary designations regularly and following major life events. The law requires modifications to your plan be done while you are of sound mind. Before you become seriously ill or incapacitated, you should utilize important estate planning tools that protect your interests, honor your intentions and manage your health care and finances. For example, your trust can be structured so that your successor trustee and your hand-picked agents with powers of attorney can oversee your affairs and meet your obligations to others if you wind up in a situation like Aunt Sarah and Donald.

If there is a new member of the family, the death of a loved one or the acquisition or disposition of a significant asset, it’s time to review and amend provisions of your will, trust and other documents as necessary. A new baby means there’s a new beneficiary with a new universe of considerations. You may want to establish a trust to address a child’s special needs (like Donald’s), future education and financial well-being. You can appoint successor trustees and alternates to manage the trust in your absence and clearly state your intentions in the trust document.

Perhaps you’ve recently discovered a future beneficiary of your trust has gambling issues, a substance abuse problem or just a huge hole in his pocket. You may want to add spendthrift safeguards in the language of your trust document. Maybe potential heirs are being sued or face legal judgments. Their future inheritance could be exposed to a successful claimant unless a trust is properly revised. A blended marriage or complicated divorce among any of your beneficiaries is another reason to review and update your plans.

Paperwork is vitally important. That’s especially true for trusts. For a trust to be valid, transferred assets must be fully “funded” into it. The documentation must be in order, reviewed and updated to reflect life’s changes. When transferring ownership of an asset into a trust, the complexity of the procedures varies. For example, to merely open a checking account for a trust, banks usually require copies of the trust instructions, the notarized signature page, amendments, a description of trustee powers and the list of beneficiaries. Formalities need to be followed for the host of other assets – savings and retirement accounts, real estate, stocks, bonds and other investments among them.

Conclusion

Fortunately, membership with Legacy Assurance Plan provides valuable resources and guidance to develop comprehensive estate plans that take life’s contingencies into consideration and leave a positive impact for generations to come. Periodic reviews are part of the important services Legacy Assurance Plan offers. There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come.

Friday, October 5, 2018

Planning for life’s most stressful events will ease your anxiety

Planning for life’s most stressful events will ease your anxiety

by Tom Alberts Oct 5, 2018

Summary: There are a litany of events throughout life that cause stress. The death of a spouse, divorce, marital separation, loss of freedom, death of a family member, a major personal injury or illness and marriage rank high on the list. Fortunately, there are ways to deal with these events long before they take place. There’s no avoiding fate, but when you plan well in advance for life-altering and life-ending contingencies, you can have peace of mind and reduce anxiety when they happen. You can develop plans to utilize wills, trusts, powers of attorney, advance health care directives, HIPAA releases and other tools as part of a powerful arsenal to combat a host of trying situations.

The normal tribulations of life itself – sitting in traffic, going to the dentist, watching your favorite team lose – are stressful enough. And that’s before life’s real curveballs come our way.

We can’t stop inevitable events from happening, but when they do, having a plan in place can mitigate some of the anxiety, heartache and hardships they cause.

The sources of stress are seemingly endless, but experts say certain life events are more traumatic than others. The Holmes-Rahe Stress Scale identifies 43 of the most stressful events that people endure. Not surprisingly, the majority involve issues directly related to proper life and estate planning.

Those stressful life events include overwhelming challenges that involve all aspects of our existence from health, wealth and death to love and liberty. The ranking, considered the gold standard for stress assessment, was created in 1967 by psychiatrists Thomas Holmes and Richard Rahe. The researchers ranked life’s most stressful events based on a scale of severity of 1 to 100. Here are the top seven that scored 50 or above.

Death of a spouse (100)
Divorce (73)
Marital separation from mate (65)
Detention in jail or other institution (63)
Death of a close family member (63)
Major personal injury or illness (53)
Marriage (50)

Fortunately, there are numerous strategies available to reduce the emotional burdens and financial hardships that may confront us. Planning is important because when these stressful life events occur, their impact can snowball into many new challenges. Tools that we use to prepare for life and death events – wills and trusts, powers of attorney, advance directives and beneficiary designations among them – can help you cope when those difficulties come your way. Simply having your estate plan in order can reduce the anguish during the most difficult of times.

Stressful events can change our priorities and force us to modify strategies as life goes on to create a legacy to benefit loved ones and others.

So, let’s consider the list of life’s top traumas and steps you can take to lighten the stress load.

Death of a spouse

It doesn’t get any worse, according to the Holmes-Rahe survey, than losing the love of your life. The passing of your “other half” marks the end of your most important relationship and the beginning of new challenges. But as a younger couple, you both nominated a guardian in your last will and testament for your minor children in the event you both were to die or become incapacitated at the same time. You’ve created a trust to hold your assets and enable your estate to bypass the lengthy, costly and public process of probate. You’ve also invested in life insurance that provides liquidity to pay for funeral expenses and loss of income and helps take care of other financial needs when a spouse dies. If you are an older couple, and the surviving spouse may be incapacitated or need assistance managing their affairs, you’ve drafted legal documents giving power of attorney to those you trust to avoid a court-appointed guardianship and enable them to make health care and financial decisions on your behalf. Perhaps your spouse had been suffering from a terminal illness before dying. You both were able to plan ahead for this situation by creating an advance directive for health care that specified wishes for end-of-life care, such as the use of artificial life-support and certain treatments.

Divorce

Aren’t you glad you both agreed to that premarital agreement before taking the walk down the aisle or a postnuptial agreement shortly after? After all, divorce is the No. 2 most stressful life event. Knowing that divorce rates are in the 50% range, you took action to designate property each person acquired prior to the marriage as a nonmarital asset. That way, if the marriage were to dissolve, ownership disputes over those items can be avoided. A divorce decree does not automatically invalidate all beneficiary designations. After a divorce, you’ll need to revise your estate planning documents – beyond your will and living trust – to ensure former spouses no longer have power-of-attorney authorization to make health care decisions on your behalf, handle your finances or serve as your guardian if you become incapacitated. Other revisions may be needed for your property deeds; titles to vehicles; beneficiaries for life insurance, annuities and retirement accounts; and online account usernames, passwords and contact emails.

Marital separation from mate

There’s not a lot you can do to prevent the heartbreak of a troubled relationship, and many couples choose separation as an alternative to divorce, especially if there is a chance at reconciliation and children are involved. A legal separation, however, has some special estate planning considerations that should be addressed because the couple remains legally married. In a typical marriage, spouses grant each other power of attorney to make decisions on health care and finances on behalf of an incapacitated spouse. But if you are legally separated, those POA designations may not be in your best interests. You’d probably want someone else instead of an estranged spouse making medical and financial decisions for you – or serving as your guardian if you become incapacitated. Also, your will and living trust may require revision to ensure your spouse only receives the legally required spousal share and no more. Remember, couples who are married but separated cannot disinherit each other; only a divorce or prenuptial and postnuptial agreements can sever inheritance rights. The matter of custody of minor children during the separation is another major issue to address. The best option is for the couple to reach a separation agreement, otherwise they’ll need to petition the court for a decision on custody. The agreement also should address responsibility for debts incurred during the separation period, the use of marital assets to pay separate expenses, insurance needs and other matters as necessary.

Detention in jail or other institution

Legal troubles and the loss of your freedom are traumatic enough, but you can minimize the negative impact on your spouse, children, yourself and others. Your will and trust may need to be updated to limit the exposure of your assets to outside claims. POA designations involving an inmate must be changed. An imprisoned spouse, for example, can’t act on the other’s behalf and make decisions regarding health care and finances. If you are serving as guardian, a successor will need to be appointed. If you’ve been nominated as a guardian, you’ll need to remove yourself from that designation. If you are in line for an inheritance, it may be in your best interest to amend your status as a beneficiary. Assets inherited by an inmate could be forfeited as reimbursement for incarceration costs or to satisfy judgments. Your inheritance could be left in trust with the trustee having full discretion over its distribution. You also could request that family members designate others as heirs in your place. You’ll also need to consider your status as a recipient of life insurance proceeds, payment-on-death accounts and transfer-on-death deeds.

Death of a close family member

Besides dealing with grief, the death of a beloved family member can carry extra burdens. Often, family members are given the responsibility of serving as executor of an estate or a successor trustee for deceased loved ones. The process can be less difficult if comprehensive estate planning – in which probate-avoiding trusts and beneficiary designations are carefully addressed – was completed well in advance along with funeral arrangements. The death of another family member requires that you and other loved ones review and update your own estate plans. The deceased family member, for example, could be named in beneficiary designations, as a potential guardian or power of attorney, or as a successor trustee for several people. Legal documents must be updated to reflect those changes. Another issue is privacy for the entire family. When all members plan their estates using trusts and other tools to avoid probate, they can help keep details of the entire family’s financial affairs under wraps and out of the courthouse. Also, other family members, as part of their own estate planning, can consider establishing a charitable trust to honor the memory of a deceased loved one.

Major personal injury or illness

The thought of a debilitating medical condition is unnerving enough. When you consider the possibility being declared incapacitated and placed in a guardianship, the specter can be terrifying. Planning for the possibility of incapacity, however, is a powerful antidote for the stress that you and your family may endure during a health crisis. A major injury or illness can happen at any time, so it’s important to provide critical guidance to your loved ones ahead of time. If you don’t provide a plan, your family could wind up in court seeking permission from a stranger (the judge) to have a say in how your treatment and finances are handled. Failure to plan is a key contributor to the appointment of an unknown guardian, who may not have the best intentions concerning your financial affairs, health care and freedom to make even the most basic decisions for yourself. Some key legal documents can help avoid that scenario. By utilizing a living trust, your assets can be managed by a successor trustee of your choosing – not the court’s – in case of incapacity. You should also authorize a power of attorney for health care and finances to trusted representatives. Your POA for finances can handle matters outside the purview of the trust, such as paying bills and managing daily finances. The POA for health care – someone you entrust to make the right call on your behalf – is authorized to make medical decisions based on situations you can discuss and consider ahead of time and often is nominated to serve as your guardian. Another legal document to employ during this trying time is a living will, also called an advance health care directive, providing guidance on the extent of end-of-life care you wish to receive if incapacity or terminal illness strike. It’s also suggested you sign a HIPAA (Health Insurance Portability and Accountability Act) waiver to enable your doctors to share medical information with the people of your choosing.

Marriage

Although matrimony is one of life’s great joys, there’s plenty of stress to deal with from the moment a proposal is accepted until the honeymoon is over and life as a married couple begins. The good news is that engaging in life and estate planning can help untie those knots in your stomach and help with your pursuit of a happy life ever after. Also, planning is a great way to reduce stress caused by life’s challenges and your quest to leave a legacy that benefits your spouse, family and the people and causes you care about. To develop a comprehensive plan, couples should begin with the basics, such as executing wills and creating probate-avoiding, privacy-protecting living trusts to safeguard and distribute their assets when life ends. In their wills, couples can nominate a guardian for minor children if the other parent is unable to assume that role in case of an untimely death or the onset of incapacity. Other key components are power-of-attorney designations for finances and health care. Those POA designations grant your spouse or other designated representatives immediate authority to make financial and medical decisions for you in case of incapacity. The POA for health care also should nominate potential guardians to prevent an unexpected appointment by the court. An advance health care directive, or living will, is another crucial document to spell out your preferences on end-of-life treatment limitations. A HIPAA waiver also is suggested so that you can preauthorize individuals of your choosing to discuss your medical status with health care providers.

Stressful life events come in many varieties, but they all tend to trigger a reason to create or review and update plans that address the many obstacles we encounter as the world turns. Meanwhile, other life events lower on the list can be mitigated with many of the same planning tools that have been discussed. Other quandaries may include, for example, getting fired from work; a major change in the health or behavior of family members; gaining new family members; a major business readjustment; or a son or daughter leaving home.