Van Dyck Law

What REALLY Happens After You Die?

“What happens after you leave this world and pass on into the next one, whatever that may be? That depends on you! I’m not talking about what happens to your remains or whether or not there is an afterlife. I’m talking about what happens right here on earth after you depart.”

You should care about this, Forbes says, in its recent article, “What Will Really Happen After You Depart?”

No, not just because it’s the right thing to do and not just because you’re curious. It’s because you want your family to remember you for the awesome legacy you plan on leaving, not because of the horrible hot mess you left behind that they spent three years trying to figure it out, while trying to live their lives.

Estate organization is not the exact same thing as estate planning. An experienced estate attorney or elder law attorney can help you draft your will, your advance directive, your power(s) of attorney and a trust, if you need it. Your attorney most likely also has a copy of those documents.

However, the attorney has no power over what you do with your original estate planning documents, once you leave their office.

One idea is to develop a guidebook or “game plan” for your family and loved ones, while you’re alive. It’s known that there’s a strong correlation between how we face death and prepare our families—and their ability to survive, adjust and start the recovery process. Organizing your estate has been called a “gift of love” that goes far beyond when you can be around to take care of your family.

Answer these questions to start the estate organizing process:

• Does a family member know where to find your advance directive, if you end up in the hospital?
• Where are your legal documents and who in your family knows where to find them?
• Who has access to your bank accounts and knows your login data?
• Are you now caring for someone? Who’d assume that responsibility, if you’re unable to do so?
• Have you made final arrangements for your death, funeral and burial or cremation?
• Who knows about the plans and where the paperwork is located?
• Where are your insurance documents, and who knows where to find them?
• Who’ll take care of your pets, when you are no longer able?

Lastly, keep in mind that creating the plans and organizing documents is only half of the task. You also need to communicate. The more you’re able to communicate your wishes and what you have organized to your family, the more love you’re showing them while you’re around to enjoy each other. They will also be better prepared to grieve in a good way, embrace your memory and move on with their lives.

Reference: Forbes (September 13, 2018) “What Will Really Happen After You Depart?”

 

Do You Have a Will Yet?

“Of course, you know you should have a will. Then why do so many people procrastinate on getting a will?”

There’s news of a celebrity dying without a will nearly every month.

Merrill Lynch and the consulting firm Age Wave found from their recent survey that about 50% of study participants age 50 and older didn’t have a will.

The Minneapolis Star Tribune’s recent article, “How to get started on making a will,” reported that many people don’t care to talk with close family members about important financial topics, like their level of financial security, plans for living arrangements in retirement, inheritance or long-term care.

The Merrill Lynch/Age Wave report, “Family & Retirement: The Elephant in the Room,” explains that some of this is due to time constraints and that people say they’ll do it eventually.

However, it’s easy to get started. You can draft an ethical will, also known as a values statement or letter. Do this in the next few weeks or month. The thought is to capture for your immediate family, as well as your grandchildren and great grandchildren, what you want them to know about your values, what mattered to you in life, what traditions you hold dear and how you’d like the world to become a better place.

Creating an ethical will begins with a family conversation. Once you begin recording your values and discussing them with your family, it’s a short hop to discussions about your estate plan.

A great benefit of starting the dialog with an ethical will, is that there’s less pressure on the family and more time to become comfortable with the topic.

These discussions will lead you to finally meet with an estate planning lawyer to write your will.

In addition to creating your estate plan, you’ll want to arrange your finances, so you can age comfortably, draft a durable power of attorney, in case you become incapacitated and write an advanced health directive.

These details will come out of those initial discussions about values, and not the other way around.

Reference: Minneapolis Star Tribune (September 8, 2018) “How to get started on making a will”

 

 

Do You Have a Ticking Time Bomb in Your Estate Plan?

“There’s a time bomb ticking in many estate plans.”

Forbes’ recent article, “Defusing The Time Bombs In Your Estate Plan,” explains that the “bomb” that may be ticking and ready to explode is the person, or people, you name to act for you.

Whether they act during your lifetime or after you pass away, these individuals frequently can make or break your estate plan. They have the ability to determine the fates of family relationships and financial security.  However, most people don’t realize the potential consequences of their surrogates’ actions. As a result, they don’t give sufficient thought to whom they appoint to these important roles.

Let’s examine some of the major potential surrogates:

Agent: This is the person who acts for you under a power of attorney or advance medical directive.

Trustee: If you create a trust, you’ll create some limits in the trust agreement, and the trustee has the authority to make the final decisions about managing the investments, making distributions, paying taxes and other aspects of managing the trust.

Executor: This person manages and distributes your estate, after you pass away. Also known as a personal representative, the executor is charged with carrying out the wishes expressed in your will and other estate planning documents.

Social Security representative payee: Social Security will appoint someone to manage the benefits of someone who is unable to do so; usually it’s a family member or friend. The beneficiary can contact Social Security and ask that a particular individual be appointed, and they will consider the request.

Long-term care insurance lapse designee: Most insurers now allow the insured to choose an individual who’ll get a notice, if the LTC premiums aren’t paid. You also can name an alternate payee who’ll receive and manage benefit payments, when you can’t.

Agent for funeral decisions: States have varying regulations about who can make funeral decisions, and some have laws recognizing the appointment of an agent.

Financial account designees: When opening a financial account, some people like to select the transfer on death (TOD) option, or they open joint accounts with a relative or friend. This allows someone else to manage the account, when he or she isn’t able and who will inherit it without going through probate.

One issue with many of these surrogate designations is that different people frequently are named for tasks and responsibilities which overlap. Another issue is that people often are appointed without being asked or even told until they have to act. Finally, the person named to handle these responsibilities must be qualified.

Speak with your estate planning attorney to be sure you have consistency and avoid conflicts between the different surrogates.

Reference: Forbes (July 23, 2018) “Defusing The Time Bombs In Your Estate Plan”

 

What are the Financial Advantages and Disadvantages for Gay Couples Getting Married?

“Financial implications are likely not at the top of the list for gay couples deciding to declare their devotion in matrimony, but there are several to consider.”

The U.S. Supreme Court ruled same-sex couples nationwide could legally wed in June 2015, and gay couples have been getting hitched ever since. A recent WTOP article, “Gay and Getting Married? Financial Advantages and Disadvantages,” reports that a 2017 Gallup poll found 10.2% of gay couples in the U.S. are now legally married.

Financial implications are probably not at the top of the list for gay couples deciding to marry. However, there are several to consider. Some may not be beneficial, but some are. The most significant issues for married gay couples, like married straight couples, should be retirement planning, estate planning and tax planning.

The major benefit for gay couples marrying is the survivor’s Social Security benefits. If you’re lucky enough to have a retirement plan where there is a pension benefit, it can be transferred from spouse to spouse. The other big issue is gifting: spouses can leave an unlimited amount of money between spouses. But if you’re not married, that doesn’t happen.

A major difference in what each partner makes can gum up the works, especially with the IRS. Consider the marriage penalty tax and figure out if you’re better off being married or not being married. You could be subject to not getting some of the tax exclusions that would’ve worked to your advantage, if you weren’t married. This is especially true, if there is a wide variance in income between both partners. You should also think about loss-limit deductions on things such as investment property, IRA and retirement account deductions, and other tax planning situations that can become significant considerations, when one partner earns much more than the other.

When combining the income of the two spouses, it may put them both into a higher tax bracket. This will add more tax liabilities. You should also think about homeownership and retirement. For unmarried gay couples with a big variance in incomes who own their home as joint tenants with right of survivorship, the surviving individual will get the house when the first one passes away.  However, there could be some gift consequences, depending on how the money went into paying for the house and who put more money into it versus who didn’t.

There are also retirement accounts to look at. Married couples can pass IRAs or 401(k)s to one another at death, without triggering taxes. If you die with money in your retirement accounts, the IRS starts taxing that money as soon as your beneficiaries withdraw the money.  It also forces a withdrawal within a certain amount of time. However, there’s an exception for distributions to spouses, allowing the money to keep growing tax deferred.

 You should also analyze health care. Many businesses offer health care coverage to their employees’ domestic partners. Depending on company policy for family coverage, legal marriage ensures it. There’s also a financial benefit for surviving spouses in a health saving account because that money can be transferred to the surviving spouse. Likewise, a married couple in a joint health savings account can contribute more pretax dollars.

All married couples also legally speak for each other in terms of medical decisions. Unmarried couples, either straight or gay, don’t automatically have that legal representation. For gay couples who opt not to marry, that can be solved with a medical power of attorney, an advanced medical directive or health care proxy. These legally binding documents should be drafted, certified and available, in the event of an emergency. A power of attorney can cover both health care and financial decisions, if one unmarried partner becomes incapacitated.

One size most definitely doesn’t fit all gay couples, when it comes to the financial implications of marriage. The best advice for gay couples planning to wed is to get professional advice. Talking to a qualified estate planning attorney isn’t costly, and understanding what to expect before saying “I do” can eliminate some surprises.

Reference: WTOP (May 30, 2018) “Gay and Getting Married? Financial Advantages and Disadvantages”

 

Simple Estate Planning Needed for All

“No matter your age or socioeconomic status, estate planning is something you need to consider.”

Estate planning isn’t just about leaving assets to heirs. A recent twincities.com article, titled “Your Money: Medical power of attorney: the missing piece of too many estate plans,” asks the reader to consider what would happen, if they were in an accident or suddenly became extremely sick.

This means determining the person who will look out for your best interests, if you are unable to speak. In short, it involves naming someone you trust as your medical power of attorney.

A living will is an important document in your estate plan.  However, you also need a medical power of attorney to help ensure that you are getting the kind of care you would want. A medical power of attorney, sometimes known as a health care power of attorney, designates the individual(s) you would want to make health care decisions in your stead, if you’re unable to communicate. This is your health care agent or representative.  Unlike a living will, your health care agent can make decisions for you when your incapacitation isn’t life threatening.

If you don’t have a valid power of attorney designating your official health care agent, most likely either your spouse, an adult child or parent will be asked to make medical decisions on your behalf. This depends on the state in which you live and your circumstances.

Appointing a medical power of attorney is the only way to be certain the person you feel most comfortable with, is in charge in case of an emergency.

When you choose your representative, make sure he or she is willing to take on that responsibility. You should also name an alternate representative, if your primary person is unavailable. Be certain that he or she is comfortable in abiding by your wishes and relaying that information to your doctor.

Ask your estate planning attorney to complete the correct forms for your state of residence and have them notarized and/or witnessed.

Reference: twincities.com (December 16, 2017) “Your Money: Medical power of attorney: the missing piece of too many estate plans”

 

Understand the Complexities of Remarrying Later in Life

“Remarrying later in life can create several complex financial, legal, and emotional matters that should be addressed.”

About a third of U.S. residents ages 15 and older have been married at least twice, according to the U.S. Census Bureau, and remarriage among Americans ages 55 and older is increasing. At the same time, younger people are becoming less likely to have remarried.

The Flagstaff (AZ) Business News recently published an article, “Financial Issues to Consider in Remarriages,” which suggests that you should be candid about your financial situation. Couples who are marrying for the second (or third) time frequently have financial baggage. You should eliminate issues later in the marriage by having open and honest discussions about assets, debts and obligations. Think about the following questions to get the talks started:

• What financial obligations are we bringing to our marriage?
• How are our credit scores?
• Do we have financial obligations (alimony, child support) to our ex-spouse(s)?
• Do we want to pool our finances?
• Where will we live?
• How will our marriage impact college financial aid for our children from previous marriages or relationships?

It is also important to update life insurance, medical directives and beneficiary designations. If you don’t do this and you (or your spouse) die, part of your estate could go to a previous spouse. If you and your spouse have living wills, health care powers of attorney or healthcare directives, review them with your estate planning attorney to ensure that these documents reflect your current wishes.

You should also consider how remarriage affects your retirement planning, like the benefits your partner may be receiving. These can include a deceased spouse’s social security benefits or pension payments.

Discuss estate planning with your attorney because subsequent marriages can impact estate plans—a common concern among older couples. An older couple is more likely than younger newlyweds to bring property and other valuables into the relationship. They often may want these family valuables to go to their own children from a prior marriage.

Beginning again with a new partner is exciting, even when the new marriage introduces complex financial considerations. Talking to each other, as always, is the key to long-term success.

Reference: Flagstaff (AZ) Business News (October 26, 2017) “Financial Issues to Consider in Remarriages”