A Seniors Guide to Estate Planning

Most older adults acknowledge that estate planning is essential. Yet, nearly half of Americans age 55 or older do not have a will, and even fewer have designated powers of attorney, a living will, or health care directives.

These legal documents help guide your representatives to provide the end-of-life wishes you seek. Estate planning also reduces the burden your loved ones face and lessens the potential for conflict among your family members after you are gone.

Whether you own a little or a great deal, every senior should have an estate plan. Your estate comprises your home, real estate, vehicles, businesses, bank accounts, life insurance, personal possessions, and any debt you may owe. The goals of your estate plan include:

• Establishing who will receive your assets upon your death
• Setting up a durable power of attorney
• Selecting a trusted representative to make health care decisions on your behalf if you become unable to manage your own affairs due to illness or injury
• Creating a will and trust
• Minimizing estate taxes
• Appointing your estate executor or representative
• Providing peace of mind to you and your loved ones

Four basic elements of an estate plan can help you achieve these goals.

Creating Your Will

This legal document, called a testamentary will, transfers your estate, after you die, to the individuals or charities you name. Naming your executor or personal representative is another function of your will. This individual will ensure your wishes are carried out. Many older adults choose their most responsible adult child for this role.

Advise the person you choose to manage their expectations and advise your family of what to expect in your will. This way, you can address questions they may have and stave off family confrontations after you are gone.

Your will needs to include the following:

• your named executor,
• a list of individuals or charities you wish to receive your assets,
• a list of significant assets to leave to heirs, and
• your debts (mortgages, car loans, credit card debts, etc.).

Be aware that if you have substantial assets in probate court, the process can wind up costing 10 percent of your estate value. (Probate is the legal proceeding where the court oversees the distribution of your assets.) This can add stress to your executor's role, as well as increase the time it takes for your family members to receive their inheritance.

You may wish to establish a trust; you can do so by working with an elder law attorney or estate planning attorney. Creating a trust can minimize taxes, restrict asset distribution, and also bypass probate. These trusts are usually a revocable or irrevocable living trust, special needs trust, or spendthrift trust. Your attorney can identify the trust type that best meets your needs.

Your Living Will and Durable Health Care Power of Attorney

A living will outlines your choices regarding end-of-life treatments and will come into play while you are still alive but unable to communicate health care decisions. Similarly, a health care power of attorney's decision-making will only be active when you become unable to communicate your wishes. The person you name as your durable health care power of attorney is typically a caregiver or family member who inspires the utmost trust.

Here are some general issues to consider when creating a living will:

• Medications you are willing or unwilling to have administered to you
• Permission for a feeding tube if you are unable to eat
• Permission to be on life support and, if so, for how long
• Willingness to accept palliative care at the end of life
• Having a do-not-resuscitate order or DNR
• Your decision about being an organ donor

If you have both documents, a living will trumps your health care proxy. Many older adults prefer to forgo a living will. They instead opt to rely on their health care proxy to make medical decisions on their behalf in the event that they become unable to communicate their wishes for treatment and life-saving measures. Whatever you choose, it is important to inform your loved ones of your health care preferences.

Durable Financial Power of Attorney

Much like a health care power of attorney, a financial power of attorney becomes active when you can no longer make financial decisions. The person you designate will manage your finances on your behalf. To alleviate excessive burden, consider appointing a different individual than your health care power of attorney. However, note that it is legally permissible to name the same person.

Your financial power of attorney should be highly trustworthy and financially stable. When selecting an individual in your life to fulfill this role, you may consider someone who not only lives near you, but is also willing and capable of serving. The individual must be financially responsible, trustworthy, and able to act in your best interests. Finally, this person should be proactive and assertive in protecting your finances.

While these documents represent the basics of an estate plan, your situation may require far more detail and nuanced expertise that an elder law attorney can provide if they do not also offer estate planning. Begin with a checklist including:

• A list of your assets and debts
• Assemble important supporting documents
• Choose candidates for the executor (personal representative) and powers of attorney
• Draft an outline of estate planning documents as listed above
• Talk with your family about your goals and wishes

Connect With Your Estate Planning Attorney

When you accomplish these tasks, your attorney can review your efforts and put your plan into legal action. You will save time and money by being organized and having a basic understanding the estate planning process before meeting with them.

Once all of your estate planning documents are complete, you'll have a sense of peace knowing you have a solid plan that best protects you and your loved ones.

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Report: The Current and Future State of Estate Planning

Over the next two decades, experts foresee Baby Boomer households transferring more than $84 trillion in generational wealth. Amid challenging economic times, it is more important than ever to protect your assets for yourself and your loved ones. Without a well-crafted estate plan in place, you may be putting your legacy at unnecessary risk.

In a survey published this past fall, more than 1,000 participants aged 18 to 99 shared insights on their estate plans – or lack thereof. In fact, more than half said they have not consulted an estate planner regarding a trust or will.

Many respondents reported that they did not feel adequately informed about how to get the most out of their estate plan. The results also showed that it may be time to revamp people’s understanding of what estate planning is and how it works.

Misconceptions About Estate Plans

Ideas about legacy planning, the survey findings suggest, are ripe for change.

For one, households with higher net worth were more likely to have an estate plan in place. Among households worth more than $1 million, 77 percent report having an estate plan, will, or trust in place. In contrast, just 36 percent of households with a net worth under $1 million have a legacy plan. Yet, as the report emphasizes, “everyone, regardless of wealth, needs to have a well-structured estate plan.”

In addition, the results highlight the common fallacy that creating an estate plan is a one-and-done undertaking.

In reality, any number of life changes should prompt you to create or revisit your estate plan. Significant life events can include remarrying, relocating to another state, welcoming a child or grandchild into the family, or losing a spouse. At the same time, note that estate planning documents can become out of date over time as laws change. So, it’s still good practice to revisit your plan with an attorney every few years.

The survey also asked respondents to list life events that would prompt them to seek out the help of an estate planner. Participants cited a change in personal health as the top reason they would work with an advisor to start or revamp their estate plan. However, it can prove harmful to wait until you are sick to create your estate plan. To protect yourself as well as your loved ones, It’s best to prepare your legacy plan ahead of any potential crises.

Highlights From the Survey

Participants answered various questions regarding estate planning issues. Survey questions and respondents’ answers included the following:

Do your parents have an estate planner?

Three-quarters of survey participants whose parents had an estate planner said they had executed an estate plan, will, or trust for their own household.

As one may expect, people belonging to the Baby Boomer or older generations were the most likely to have completed an estate plan. However, having parents who had used an estate planner was even more likely than one’s age to correlate with putting a legacy plan in place.

Household wealth also seems to make a difference in this regard. For example, all survey participants worth more than $25 million said their parents had an estate planner. Among respondents in the Millennial generation, 87 percent of those with this level of ultra-high-net-worth estate said their parents had a financial advisor or estate planner. In contrast, 32 percent of Millennials with less than $1 million said their parents had one.

One of the implications here, the report suggests, is that estate planners should ensure they are making meaningful connections not just with their older clients, but also their heirs, particularly as the so-called “great wealth transfer” to the next generation gets underway.

What external factors are most likely to increase the likelihood of you creating or redoing your estate plan?

Most respondents cited changes in tax policies (30 percent) or inflation rates (29 percent). Those who are part of the Baby Boomer or older generations were the most likely to say tax policy would prompt them to rework their estate plan.

Others said they believe that changes in federal interest rates, stock market fluctuations, and student loan forgiveness would serve as the top external factors driving them to create or revisit their estate plans.

What do you think is the most damaging result of a poorly planned estate strategy?

Respondents were aware that bad estate management could be detrimental to their families and their legacies. Nearly a third of respondents stated that leaving their loved ones without sufficient assets would be the most damaging result of a poorly executed estate plan. Another 27 percent believed a bad estate plan would cause the most damage by sparking conflict among their heirs.

Do you have a plan for protecting your digital assets?

A major topic in the evolution of estate planning is ensuring that you protect your digital assets. This can include anything from your digital photo albums and social media accounts to your online account passwords.

When asked whether they had a plan for their digital assets, participants revealed the following points:

• More than half – 58 percent – had no plan for their digital assets.
• Baby Boomers were the least likely to have a plan for their digital assets.

As the report indicates, traditional estate plans likely do not include a provision for such digital assets as airline miles, credit card reward points, cryptocurrency, and log-in credentials. Be sure to ask a qualified estate planning attorney about how best to protect these types of assets.

The Current Estate Planning System Is Not Serving the Less Wealthy

Perhaps one of the more striking findings of the survey is that the current estate planning system is not serving people with less money.

The survey found that, among participants, families with estates valued at less than $1 million tend to have less information about the estate planning process and a lower tendency to create an estate plan and keep it updated. In fact, of households with a total net worth under $1 million, 64 percent report not having an estate plan in place.

For the sake of your loved ones, take the time to prepare your legacy plan with a professional. A well-executed plan can help minimize family conflict as well as offer you peace of mind. It can also ensure that the individuals you love most receive your assets according to your wishes. Simply put, it may prove to be one of the most valuable gifts you leave behind for your heirs.

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Baby Boomers: Inheritance Conversations With Your Children

Not talking to your adult children about their inheritance comes at a cost. Do what you can to manage expectations for adult children as they forge their financial plans. Knowing their general inheritance situation can change their decision-making process and lead to better outcomes. These are practical matters of allocating resources for things like housing, retirement, 529 plans, and more.

When children don’t understand your inheritance intentions, it can result in arguments and legal battles among siblings and other heirs after you’re gone. The solution is a mature discussion with your inheritors, sharing details of your estate plan relevant to your child. You can withhold actual numbers by a range, such as enough for a home down payment. That way, you may provide a sense of magnitude without committing to exact amounts.

The Great Wealth Transfer

According to the Federal Reserve, the baby boomers are the wealthiest generation in US history. Baby boomers hold 70 percent of disposable income in the US and spend over $548 billion annually.

Forbes cites research stating that as much as $84 trillion may change hands by 2045. Much of the wealth is from high net-worth baby boomers. Millennials will control five times as much wealth in 2030 as they do today. Are they prepared for responsible stewardship?

Many who currently have substantial wealth have concerns that if their children know the extent of their wealth, it will reduce their motivation for productivity and growing into responsible citizens. Most parents prefer their children learn to grow their success independent of their parent’s wealth.

However, wealth is relative, and many parents also fear losing their ability to cover retirement, medical expenses, and long-term care. They want to maintain their quality of life while protecting their legacy. Because of this uncertainty, generally managing the expectations of their children’s future inheritance is better than providing exact amounts. After all, things always have the potential to change.

Failure to Prepare

Failing to prepare children for what they may inherit can hinder their ability to handle money wisely. Many suddenly feel separated from their friends, isolated, or even confused about relationships.

Others may be wasteful and spend their newfound money recklessly. Those who inherit even a modest amount can be just as imprudent without guidance. It’s all too common for some inheritors to splurge on expensive items, lavish vacations, and fast living.

The Conversation

Experts agree it’s important to talk to children about money and wealth during their adult years. It can help them learn how to manage money and live beneath their means as a lifestyle habit.

You might start conversations by discussing values, the opportunities money can provide, and their hopes of what they want to accomplish. For younger children, you may consider providing a modest sum of money and teaching them how to save, invest, and spend wisely. You may wish to demonstrate the importance of supporting charities, too.

Of course, one of the most effective strategies to teach children about values, spending, and investing money is by example. Parents must use their money in a way that reinforces their values.

One way to foster a positive relationship within the family is to purchase a vacation home. There, you can have everyone gather for summers, holidays, or annual family gatherings. Other techniques involve permitting children to choose charities to support and provide donations. If your children see you living your values, they will likely adopt similar values.

Estate Planning

Talking to your children about inheritance is an integral part of estate planning. Being transparent, fair, and open to their emotions can help ensure a smooth transition of your assets to the next generation. Keep a few things in mind during discussions:

Timing is Important

Have these conversations when children are mature enough to understand the implications of inheritance. Don’t create unnecessary anxiety or confusion by starting the conversation too early.

Be Transparent

Be clear about your estate intentions and plans without getting too detailed about the numbers. Being open about your goals and hopes for them can help avoid future conflicts. Not providing exact numbers keeps your estate planning flexible.

Consider Fairness

Consider what is fair and equitable when dividing your assets among children. Each child does not necessarily need to have an equal amount. Consider factors such as their financial situations, relationships with you, and levels of need.

Address Emotions

Inheritance can be an emotional topic for everyone. Acknowledge and address any feelings of anxiety, guilt, or resentment that may arise during the conversations.

How an Estate Planning Attorney Can Help

There are several ways an estate planning attorney can help when organizing your children’s inheritance, including:

1. Legal and Tax Implications
   Estate planning attorneys understand the current legal and tax implications of inheritance. Your lawyer can help you navigate complex laws and regulations, ensuring your assets’ distributions are most efficient and tax effective.
    
2. Drafting Legal Documents
   Estate planning attorneys can draft wills, trusts, powers of attorney, and more to help you plan for your children’s inheritance. Tailoring these documents to your specific needs ensures your assets are distributed according to your wishes.
    
3. Reviewing and Updating Documents
   Estate planning attorneys can review your existing planning documents to ensure they are up-to-date and reflect your current wishes. They may also recommend changes based on shifts in your family or financial circumstances. Informing your adult children of substantial changes is crucial in your inheritance conversations.
    
4. Guiding Asset Protection
   Estate planning attorneys can guide strategies to protect your assets from potential creditors or legal claims. They can also help plan for long-term care and other future expenses to keep the bulk of your estate intact for your children.
    
5. Fostering Communication
   Estate planning attorneys can facilitate communication between you and your children about your estate planning decisions. These discussions can help prevent future arguments.

While an estate planning attorney can help ensure your children’s inheritance is organized and distributed effectively, parents also play a key role. Parents must educate their children regarding the value of money, what it can and can’t do for them, and have open conversations about their future inheritance. Including your estate planning attorney in some of the more crucial conversations with your children about their inheritance can be invaluable.

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

Using a QTIP Trust in Estate Planning

Estate planning is crucial when managing valuable assets and ensuring the smooth transfer of wealth to future generations.

There are various types of estate planning tools available, some of which may be more useful depending on your circumstances. For some, a qualified terminable interest property (QTIP) trust may be one practical option to take into consideration. Note that this type of trust can prove especially suitable for people who have married more than once.

QTIP trusts enable individuals to maintain control over their assets while providing for their loved ones. This type of trust isan essential tool for those seeking to preserve wealth and leave a meaningful legacy.

What Is a QTIP Trust?

A QTIP trust is an irrevocable trust. It allows an individual (the grantor) to transfer assets into a trust to benefit their spouse and other named beneficiaries. What sets QTIP trusts apart is not just their ability to provide for the surviving spouse. These trusts also outline how to distribute the remaining assets after their surviving spouse's passing.

This arrangement is especially beneficial when the grantor wants to provide for their spouse during the remainder of their spouse's lifetime. It also ensures that the remaining assets go to designated beneficiaries, such as children from a previous marriage.

Advantages of QTIP Trusts

Asset Distribution

One of the primary advantages of a QTIP trust is the grantor's ability to control the distribution of assets. The terms of the trust ensure that the grantor’s spouse has the financial support they need once the grantor passes away.

In addition, the trust directs how to distribute any remaining assets after the surviving spouse's death. This preserves wealth within the family and also prevents the dissipation of assets through future marriages or other unforeseen circumstances.

Estate Tax Benefits

QTIP trusts also provide significant estate tax benefits. By transferring assets into a QTIP trust, the grantor effectively removes those assets from their taxable estate. This can lead to substantial tax savings. This is because the assets held in the trust are not subject to estate taxes upon the grantor’s death.

Instead, estate taxes are deferred until the surviving spouse passes away. This provides an opportunity for additional estate planning strategies to minimize the tax burden further.

Note that, as of 2023, federal estate taxes will apply only to significantly sized estates – those worth more than $12.92 million.

Protection From Creditors

QTIP trusts also protect assets by placing them in an irrevocable trust. This effectively shields the assets from potential creditors and legal claims. For example, a QTIP trust can be particularly valuable when the grantor or surviving spouse faces potential financial liabilities or risks. The assets held within the QTIP trust remain protected and preserved for the intended beneficiaries, even in challenging circumstances.

QTIP Trust Considerations

QTIP trusts do have some limitations to consider, however.

Because they are irrevocable trusts, you generally cannot:

• revoke them,
• remove assets you have put into them, or
• return assets to the grantor.

Therefore, it’s crucial to plan carefully and consider the specific circumstances and goals you have for this particular kind of trust.

The surviving spouse must receive income payments at least once per year from the trust while they are alive. If the assets in the trust are not generating any income, the surviving spouse can require the trustee to convert them into assets that do generate income. Income-generating assets might include rental property, for example.

Given the circumstances that often lead to the creation of a QTIP trust, it's usually better if the surviving spouse is not the trustee. The goal of a QTIP trust is to provide a consistent income stream to a surviving spouse while also protecting the principal for other beneficiaries, such as the grantor's children. So, it may be best to choose a trustee who is likely to outlive the surviving spouse. An estate planning attorney or financial advisor would be good options.

Will a QTIP Trust Work for You? Consult Your Estate Planning Attorney

A QTIP trust could be a valuable part of your estate plan, but it does depend on your unique situation. Creating these types of trusts can also get complicated.

Contact your estate planning attorney today to talk through the benefits and requirements of QTIP trusts. 

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

What Does Incapacitated Mean in Elder Law & Estate Planning?

When working with an attorney to prepare for your future and address the challenges associated with aging, you will likely come across the term “incapacitated.”

Incapacitated Definition

Someone who is incapacitated cannot make personal decisions or understand legal documents. An incapacitated person requires a surrogate decision-maker, such as an agent under a health care power of attorney or a guardian.

When a person has the mental state to execute a valid legal document, such as a will or trust, this is known as having capacity. Capacity is the opposite of incapacity. If a court finds that a person signed a will while incapacitated, the court can invalidate the will.

(Note that while certain states use the term “incapacity,” others refer to this same concept as “incompentence.”)

Causes of Incapacity

You or your loved one could become incapacitated for a variety of reasons, including illnesses, injuries, and disabilities. A person with a severe developmental disability may be legally incapacitated for their entire adult life.

Someone who experiences a disability later in life may become incapacitated after the onset of an illness or injury. For example, an older adult who develops dementia may become incapacitated once the dementia progresses, such that the individual cannot understand a legal document or make personal decisions.

Incapacity in Elder Law

Elder law involves preparing for and addressing incapacity associated with injury, illness, disability, or aging. It is essential to understand the concept of incapacity applies to power of attorneys, wills and estate planning, and guardianship of an adult.

Power of Attorney

A power of attorney is a legal document that allows you to appoint someone else to make decisions for you.

• A health care power of attorney allows you to select someone to make health care decisions for you. You can also give your agent instructions for the type of care you would like to receive, including end-of-life care.
• With a power of attorney for property, you can give someone the authority to handle your financial affairs, such as paying your bills and managing your accounts.

Creating a valid power of attorney requires you to have mental capacity to understand the contents of the power of attorney. If you become incapacitated, a power of attorney allows you to preserve your autonomy, as you have selected a surrogate decision-maker to make decisions according to your wishes.

Depending on how you and your attorney structure your power of attorney, it could take effect only after you become incapacitated, once a physician determines that you cannot make decisions for yourself. However, many choose to allow trusted individuals authority as soon as they create a power of attorney, as this avoids having to wait for a physician’s determination of incapacity.

The court may appoint a guardian for those who become incapacitated without a power of attorney.

Guardianship of an Adult

Incapacity is a central concept in the guardianship of an adult. Guardianship of an adult is a court-supervised arrangement where one person assumes responsibility for an adult who is incapacitated.

The court must first determine that a person is incapacitated before permitting someone to become the legal guardian of an adult. In making this determination, the court relies on evidence from the individual’s physician.

According to the National Core Indicators Data Brief, those with significant autism, severe intellectual disability, or Down syndrome are more likely to have guardians.

Wills and Estate Planning

Making a will or any estate planning document that needs your signature, such as a trust or transfer on death deed, requires you to have capacity. You must understand what you are signing.

A will is only valid if you had the required mental capacity when you signed it. The court can invalidate your will if it finds that you were incapacitated when you signed it.

For people with cognitive difficulties impacting capacity, it is possible for capacity to fluctuate. A person with dementia may cycle through periods of lucidity and incapacity.

Consult With Your Estate Planner

As you age, it is a good idea to meet with your estate planner early and begin the process of developing a will and estate plan. Dementia, a disease that can affect capacity, impacts approximately 10 percent of adults 65 and older, according to Columbia University.

By working with your estate planner, you can help prevent others from challenging the validity of your will after you pass and ensure that you have a valid will in place. 

Contact us

Questions? Contact us at Elise Lampert, Attorney at Law

   

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com