As reported by the National Association of Counties and the National Association of Medical Examiners, families everywhere are unable to afford the costs associated with burying their loved ones. Unable to afford their funeral services, some families have decided to forgo claiming their loved ones altogether. Some relatives have no choice but to leave their loved ones’ remains unclaimed at their local coroner’s offices. There is also an increase in the numbers of cremations. Traditionally, cremation services are less expensive than funeral services with open or closed caskets.
Many communities sponsor programs that offer low-income families reduced cost or free funeral services. If you’re unable to pay for a loved one’s burial services, you may want to consider asking for donations in lieu of flowers. You may also be able to qualify for some low-interest or no-interest payment plans if offered by your local funeral home.
With this in mind, this article may be your reminder to look into pre-need funeral planning to be certain your family is not left with the financial burden when the time arrives. It is one of the easiest items to check off your to do list, but also easy to postpone. No need to procrastinate; take care of this obvious need right away.
Estate planning for a married couple can be complicated under the easiest of circumstances. When the couple has a significant age gap between them, estate planning can get even more complicated. With an age gap of ten years, for example, it is more than likely that the two will not be retiring at the same time, may not need long-term care at the same time, and may not have similar financial portfolios.
When a married couple who are roughly the same age sit down to create an estate plan, both incomes and financial portfolios can typically be combined, working under the assumption that the pair will face about the same issues at about the same time. When one spouse is going to retire at a time when the other spouse is at the height of his or her career, both financial and estate planning become more complicated.
Without careful estate planning, all of one spouse’s income could be spent paying for long-term care for the other, for example. Retirement planning may also be skewed because the couple will have an artificially high retirement income for a number of years before the younger spouse retires.
If you are part of an age gap marriage, make sure you sit down with your financial advisor as well as your estate planning attorney to make sure that the age difference is taken into consideration when looking at both your financial future and your estate plan.
An amazing percentage of Americans do not have a comprehensive estate plan. Unmarried individuals are even more likely than married people to put off creating an estate plan, including a simple Last Will and Testament. Contrary to what many single people think though, an estate plan is every bit as necessary to a single person as it is to a married individual.
If you die without leaving behind a Will, the state intestate laws will determine what happens to your assets. While state laws vary, this likely means that your parents or siblings will be first in line to inherit unless you have children. These may not be the people you want to inherit your estate. Just because you are single doesn’t mean you do not have close relationships and emotional ties to people. Maybe you have nieces or nephews that you are close to or even a friend's children to whom you would prefer to leave your assets. This can only be accomplished by creating an estate plan.
What may be an even bigger issue is what will happen to you and your assets if you become incapacitated. Physicians are required to follow federal laws that forbid divulging a patient’s medical information to someone who is not legally authorized to receive the information. If you have not executed a living will, or similar document, a court battle could ensue to determine who will make medical decisions for you if you are incapacitated. In addition, without proper estate planning, the same could happen for the right to control your assets.
Being single is not an excuse to put off creating an estate plan. On the contrary, it is often precisely why you do need a plan.
Although saddened that a loved one is gone, most people are not going to turn down an inheritance. There are, however, reasons why you may want to do just that. If you do decide you do not want an inheritance, you may have to submit the proper paperwork to a probate court and/or the Internal Revenue Service to properly disclaim an inheritance.
A sudden windfall can present problems. For some, it can cause disqualification for much needed programs such as Medicaid or SSI. If the decedent failed to create an estate plan that considered the tax ramifications of the gift, that can also create a problem. An individual, for example, may inherit from a deceased spouse. This gift may not be subject to a federal estate tax due to the unlimited marital deduction, but the receipt of the deceased spouse share of their estate may cause the surviving spouse's estate to be subject to the federal estate tax at the death of the second spouse. By disclaiming the inheritance, the assets may pass to an exmpet trust established for the benefit of surviving spouse or if the couple did not have a trust to the next in line to inherit, often a child. In either event, the disclaimed funds would not be subject to estate tax at the death of the second spouse.
If you find yourself in a position where your estate may be subject to estate taxes at your death talk to a qualified estate planning attorney before you accept more assets from another estate to see whether discliaiming is a viable option.
When it comes time to sit down and create or update an estate plan, married couples are faced with the decision whether to create a joint plan or create two separate plans. Ultimately, only you and your spouse can decide whether you want to combine your plans, but there are a few important points to consider.
Is this the first marriage for both? If either, or both, of you has been married before, you may have obligations from the prior marriage that make creating separate estate plans the better choice.
Do you have children from a previous relationship? Whether you were previously married or not, if either of you has children from a pervious relationship, combining your estate plans can be more complicated.
How do you handle your finances? Married couples usually decide among themselves how they will handle the day to day finances. Does everything go into one big pot or do you and your spouse maintain entirely separate accounts? If your accounts are combined, then combining your estate plans may be a natural progression.
Do you have joint assets? Whenever a married couple own joint assets, such as a home, combining estate plans often makes more sense. The transfer of ownership of those assets may be accomplished in a more efficient fashion after the death of one spouse in a joint estate plan. A competent estate planning attorney should address these and other important considerations when preparing your separate or joint estate plans.
If you are like millions of Americans, you probably own at least one pet. Have you taken the time to consider what will happen to your pet when you die? If you haven’t, now is the time to do so before it is too late.
When you die, your assets will all be secured until your executor or personal representative has the chance to inventory them and file the proper documents with the probate court. But what about your pet? Someone needs to look after your pet immediately after you die. A well meaning loved one may step in for a few days, but what happens after that? Who will pay for his or her care? Sadly, thousands of cats and dogs end up in shelters each year because their owner failed to make plans for the animal in the event of their death. You can ensure that your beloved pet is not one of these animals by creating a pet trust.
A pet trust takes all the guesswork out of your pet’s future after your death. Not only can you appoint a trustee whose job it is too ensure that the pet is well cared for, but you can also leave behind sufficient funds that are earmarked just for your pet to cover the cost of his or her care. Don’t take any chances with your pet. Take the time now to create a pet trust and give both you and your pet some peace of mind.
As recently as a decade ago, most estate planning attorneys were not using terms like “electronic estate” or “digital property” with the average estate planning client. Times have changed and so should your estate plan.
Your estate plan should cover all of your property whether it be personal or real, tangible of intangible. In the 21st century, that includes digital property. Take a minute to stop and think how much of your life is now in some sort of electronic or digital format. Family photos, your address book, your bank account and bills, are all stored electronically if your are like a growing number of Americans. Much of this digital information may be property that should be accounted for in your estate plan.
Take the time now to make a list of where everything is stored. Include websites, account numbers, passwords and anything else that is relevant. Then decide who you want to “own” your electronic estate when you die. If all of your family photos are stored in the clouds, for example, who do you want to have them when you die? Likewise, who do you want to be able to access your social media accounts such as Facebook or Twitter? Once you have made these decisions, sit down with your estate planning attorney and make provisions for your electronic estate in your estate plan. Future revisions may become necessary as the laws pertaining to digital property change.
Estate planning can be complicated and stressful. Trying to make the right decision for you and your loved ones can be a difficult process. Assuming that you have committed to creating an estate plan, make sure you don’t make any of the following common mistakes.
Gifting Too Late. If you have a substantial estate, you may not want to wait until the last minute to start gifting assets. Waiting until your death may subject your estate to hefty estate taxes. If you start years before your death, you can make small gifts each year free from gift and estate taxes. You may also be able to incorporate trusts and other estate planning tools into your plan to reduce tax exposure.
Gifting Too Early. On the other end of the spectrum, don’t give everything away to beneficiaries who are ill prepared to handle it early on. Create trusts or slowly gift assets so that your beneficiaries can adjust to the money they are inheriting.
Too Much Control. While it is perfectly understandable that you want to retain a certain degree of control over your wealth after it has been passed down, too much control can create resentment and can thwart the purpose of your gift. If you create a trust, for example, make sure that you leave some room for discretion on the trustee’s behalf since there is no way to foresee the future. If the gift has too many strings attached, the IRS may not consider it to be a gift at all.
Too Little Control. Again, don’t go too far in the other direction either. Make sure that you give your trustee some broad guidelines to work from. At a bare minimum, make your distribution schedule clear.
Not Enough Planning. Over planning can cause "paralysis by analysis." Get the process started even if you haven't resolved all the imponderables such as what happens if a beneficiary who is now 9 years old later marries the wrong person or attends the wrong college. Plan early and revisit your plan regularly. As life changes--either for you or for your beneficiaries--those changes often require changes in your estate plan. Review your plan annually and every three to five years with your estate planning attorney.
In the age of computers and mass information, people often think that legal advice is not always necessary. Take, for example, estate planning. In an effort to avoid probate upon death, people sometimes make the mistake of signing over the deed to their home to an adult child, grandchild, brother or sister or making that individual a joint tenant on the deed. While this will accomplish the goal of avoiding probate, it can have a number of disastrous consequences as well. Imagine the following possible scenarios.
Your child/grandchild/sibling is sued as a result of a personal injury accident and a jury awards a large sum to the plaintiff. Insurance does not cover all of the award. Your home could be liened and sold to pay off the award.
Your child/grandchild/sibling gets into debt and the creditors lien and sell the home to pay back the debts.
Your child/grandchild/sibling uses the home as collateral on a loan and them a catastrophe strikes and cannot pay back the loan. The lender then forecloses on home.
Your child/grandchild/sibling dies without leaving behind a valid Last Will and Testament and the home is left to his or her spouse. Do you trust this person to give you back your home or at least allow you to live in it?
Your child/grandchild/sibling is involved in a divorce. Legally, the home may be marital property and could be sold in order to divide the profits or awarded to the spouse instead of your child/grandchild/sibling.
Your child/grandchild/sibling may refuse to sell the property if you need the proceeds to pay for assisted living or long term care.
I recommend that you see a qualified estate planning attorney to discuss other planning options before you take your estate planning into your own hands and transfer ownership of your home to another.
When it comes time to create an estate plan, most parents assume that they should treat their adult children the same under the plan. A parent may not want the children to think they are favoring one child over another. While equal treatment may be the goal, it doesn’t necessarily mean treating them all the same.
Your children have their own individual strengths and weaknesses. They each have chosen separate paths in life. They each, no doubt, want different things from life. Just as they are all individuals, you may treat them as such in your estate plan.
If you happen to have one child who is an attorney, an accountant or a financial advisor, it may make sense to nominate them as the personal representative or trustee as opposed to someone with less business experience.
In deciding who gets what, the same philosophy applies. You may want to give them all equal shares, but you should consider discussing the issue with the children or other beneficiaries. While one may need a home more than cash, before making that choice for them discuss whether it would be fair or prudent to leave them a particular piece of real property or cash to purchase the place they would prefer. Another may have issues such as creditors, special needs or substance addiction, that call for creating a trust instead of outright distribution to her. Yet another may be a philanthropist and prefer that you contribute his share to a charity.
Your estate planning attorney can guide you through this process and help you find solutions to these challenges, so take advantage of the experience and expertise available to you.
Americans are living longer, which is generally good news. The average life span of the ancient Greeks was about 18 years. The average lifespan of an American male is now around 75 years and for females even longer. Advances in medicine and technology as well as a better understanding of how to live a healthy life are allowing us to enjoy not only our grandchildren, but our great-great grandchildren as well. Living longer comes at a cost, though. No one has yet figured out how to stop the natural aging process, meaning that we typically need significantly more help taking care of daily needs and staying healthy as we age. For many, this means that we will need long-term care at some point. Now is the time to consider purchasing a long-term care insurance, or LTCI, policy.
An LTCI policy works in much the same way as any other insurance policy. When the policy holder reaches a point at which long-term care is required, the policy coverage will take effect and cover most of the costs associated with the care. Considering the fact that long-term care costs can run upwards of $100,000 a year, an LTCI policy can be a lifesaver from a financial perspective.
If you decide to purchase an LTCI policy, do your homework before you buy. As with other types of insurance, there are many choices and considerations. Make sure that you fully understand what coverage you are purchasing and what conditions must be met before the coverage will take effect. Research the company as well to make sure it is financially sound. Finally, sit down with your estate planning attorney with any questions or concerns that you have before you commit to purchasing the policy.
Setting aside money for someone to care for your pets after you’re gone is not only for the rich and famous. Creating an estate plan that includes your pet should be the typical practice for all animal owners. You can make sure when someone takes care of your best four-legged friend after you pass away, you are not creating a financial burden. A pet trust must be done right, so be certain to consult with your estate planning attorney. Your attorney can recommend a proper estate plan that includes your pets.
Although creating a pet trust may seem like the most obvious way to care for your pet, you can make sure your beloved pet continues receiving proper care after you’re no longer around by creating a conditional Will. Your estate planning attorney can help you determine whether creating a pet trust or a conditional Will would better accommodate your individual needs.
A pet trust is a written document that you create while you are alive. To establish a valid trust, you need to fund it and appoint a trustee. Most states allow their residents to establish pet trusts for the benefit of their pets. A conditional will allows you to place a condition on an heir’s right to receive an inheritance. Typically, the condition you place on your heir is that he or she must take care of your pet to be able to receive the inheritance. Speak with your estate planning attorney about leaving a conditional bequest to a trusted friend or relative.
Pet Trusts and Conditional Wills: Ways to Include Your Pet in Your Estate Plans
American legend Dick Clark died at the age of 82 this week. Clark suffered a heart attack following a medical procedure on April 18th. It would be difficult to find anyone over the age of 30 who doesn’t identify with Clark for one reason or another. The world mourns his loss. According to reports, the workaholic left behind a fortune that likely reaches into the hundreds of millions of dollars.
As the host of American Bandstand, from 1957 to 1987, Clark has the honor of being the host of the longest running variety show ever on American television. You would be hard pressed to come up with a music group or singer that did not perform on AB during that time period. Clark hardly sat back and took it easy though when AB went off the air. He went on to host the game show Pyramid as well as becoming the host of Dick Clark’s New Year’s Rockin’ Eve broadcast live each year from Times Square. When we all watch the ball drop this New Year’s Eve it will be bitter sweet as well all remember the voice of New Year’s Eve, Dick Clark.
Although no Last Will and Testament has been produced at this point, reports are that Clark left behind a fortune. Given how careful he was in all his dealings, it is probable that he had an elaborate estate plan which included trusts, so the estate will likely never appear in court.
Clark never stopped working, despite his age and a stroke he suffered in 2004. Clark reminds us all that our golden years can continue to be eventful and productive.
Most of us assume that anyone worth millions of dollars would certainly go to the trouble of creating a comprehensive estate plan, or at the very minimum a Last Will and Testament. As with many assumptions, that one would be incorrect. A surprising number of the rich and famous have died intestate, or without leaving behind a valid Will, including the following:
Sonny Bono: Best known early on as half of “Sonny and Cher”, Bono later went on to become the mayor of Palm Springs, California and a member of the U.S. House of Representatives before dying in a tragic skiing accident in 1998. Bono did not leave behind a Will. Shortly after his death, his wife and mother became embroiled in a legal battle over Bono’s estate.
Steve McNair: The NFL star was shot and killed by an alleged girlfriend at the age of 36. McNair left behind a family and a fortune, but no Will.
DJ AM: Although this name may only be familiar to those of a certain age group, the famous DJ died of a drug overdose in 2009 without having executed a Will prior to his death.
Howard Hughes: The eccentric billionaire who was worth in the neighborhood of $2.5 billion when he died in 1976 failed to leave behind a Will. Although one was produced after his death, it was later determined to be a forgery. Eventually, 22 cousins inherited Hughes’s fortune.
Pablo Picasso: The famous artist died at the age of 91 leaving behind homes, cash and artwork valued in the millions, but did not leave behind a Will. Six years later, at an estimated cost of $30 million, his estate was settled.
You may not be famous or rich, but if die intestate you leave the problems for the courts and the state to decide. It leaves children unprotected, special people in your life disappointed and causes undue financial expense on the estate.
Unfortunately, stories of Marines returning home from combat are not uncommon. Likewise, stories of dog owners who form a bond with their pet are also not uncommon. A story, however, that combines the two has moved thousands to get involved and lend support.
Just as law enforcement officers are sometimes paired with a canine partner, military personnel can also be paired with a canine partner. Former Marine Cpl. Megan Leavey, 28, and her military service dog named Sgt. Rex completed over 100 missions together during two six-month tours in Iraq. Upon returning home in 2007, Leavey realized that she could not imagine not having Rex with her in her civilian life. Leavey wanted to adopt Rex; however, adopting a military service dog is far from an easy task to accomplish. Leavey refused to give up her mission. Eventually, her story went public and garnered the support of U.S. Senator Schumer as well as over 21,000 people who signed an online petition asking for Leavey to be given permission to adopt Rex. Her efforts finally paid off -- Leavey was given permission to adopt Rex and they will soon be reunited.
If you have a pet to whom you are equally attached, make sure you think about him or her when you create your estate plan. Just as you create a trust for a family member, you can create a pet trust for your pet, thereby ensuring that he or she will be provided for in the event you are no longer here to do so yourself.
A comprehensive estate plan that was well prepared will include a funeral plan. By creating a funeral plan you will spare your loved ones additional grief and ensure that your wishes are carried out. Once written down, be sure to leave a copy with the trustee or executor of your estate and your estate planning attorney. Consider including the following information in your funeral plan:
A little advance planning can make a very difficult time for your faily much easier.
Each estate plan is as individual as the person who creates the plan. Having said that, one of the most common components to an estate plan is life insurance. Whether or not you should include life insurance as part of your estate plan will depend on a number of factors; however, there are some things you should take into account when making the decision.
Your age and health. Life insurance is less expensive to purchase when you are younger and healthy, meaning you should be able to lock in the best rates. This is also when most people need life insurance for wealth and income replacement -- before they have other estate assets that can be passed down in the event of death.
Know what kind you are buying. Life insurance falls into two basic types -- term and insurance with cash value such as whole life or universal life. Term insurance only provides a death benefit while insurance with a cash value component potentially earns cash value, as the term implies.
Know your objective. If you only want to provide a financial safety net to your family, sticking with term insurance is likely your best bet. Talk to a financial advisor if you are considering whole life insurance. It can be a complicated investment strategy, but there are benefits that are not available to term policy holders.
Decide how much you need. This can change over the years. If you are young and single, you may only need enough to cover debts and your funeral. As you age, you should factor in what it will cost to raise your children if you die before they reach the level of maturity when they will be able to fend for themselves.
Shop around. Just as with other types of insurance policies the policy rates can vary widely. Take your time and compare rates before you commit. You should also be certain you are dealing with a company that is secure, so look at their rating with AM Best or Standard and Poors.
Know when to terminate or convert. Life insurance is rarely the best way to invest your money, but when it comes time to collect, your loved ones will find that you have provided well for them. Review your financial portfolio and your needs on a regular basis not only with your financial adviser, but your attorney, as well. You may find that you no longer need to include a life insurance policy for wealth or income replacement, but it could be useful in your estate plan as protection from estate taxes, expenses of administration, or other financial burdens of which you may not be aware.
We all leave behind a legacy when we die -- what your legacy is depends on how much time and effort you put into creating it prior to your death. You don’t have to have a vast fortune in order to create a legacy plan; however, the wealthier you are, the more important it is to create a legacy plan that is consistent with your objectives.
A legacy plan is your chance to elaborate on your basic estate plan. Your basic estate plan allows you to determine who will receive your assets when you die. A legacy plan allows you to ensure that those assets are preserved for generations to come and/or allows you to continue contributing to causes that have meant something to you during your lifetime. Without a legacy plan, your wealth may be significantly reduced by various taxes levied on your estate at the time of your death. In addition, you will lose the opportunity to direct how your wealth will be managed after your death.
A legacy plan often incorporates trusts and other estate planning tools that can allow you to direct how your assets will be used for generations to come. A generation skipping trust, for example can provide income for your children and ensure that assets are preserved for your grandchildren. A charitable trust can be created to provide a mechanism for you to continue to support a cause that was important to you during your lifetime long after your death. Start planning now so you can create a legacy of which you can be proud.
