AVERAGE AMERICANS TO THE UBER WEALTHY COULD PAY MORE ESTATE TAX TO UNCLE SAM

Proposed Estate Tax Reform Seeks to Cut the Stepped-Up Basis, Raise Tax Rate

A provision in President Joe Biden’s relief plan could cause average Americans along with the uber wealthy to pay more to the federal government when they die, which means your kids or other heirs may get less than they would under the current estate tax laws.

President Biden’s COVID-19 relief package, the American Families Plan, includes a proposal to change the way capital gains are taxed when people pass away. According to economic policy experts, the revision to a tax rule called the stepped-up basis has the potential of being a big revenue raiser for the plan. This, coupled with Biden’s proposed reduction in the federal estate tax exemption to $3.5 million likely will result in tax hikes for not only for the uber wealthy and the well-off but also for everyone who has something of value to pass along to heirs.

The proposed changes are not yet law, and there will surely be lots of Congressional haggling over the measures. But they’re out there and looming. Right now, it’s important for you to keep abreast of what’s going on in Washington and keep in touch with your accountant, financial planner, and estate attorney to make sure you get a handle on how estate tax reform will specifically impact your estate situation.

Inheritance With and Without the Stepped-Up Basis

The stepped-up basis is defined in IRS Tax Code 1014 which says the basis of an inherited asset rises to “the fair market value of the property at the date of the decedent’s death.” Inherited assets like your house or equities in your stock portfolio typically have gained in value since you purchased them. These capital gains are taxable, but the stepped-up basis wipes out the capital gains tax when heirs inherit an asset, which significantly reduces the tax liability when and if the inheritor eventually sells the asset.

For example, if the house you bought for $200,000 years ago has grown to a fair market value of $700,000, the $500,000 in capital gains would not be taxed when your son or daughter inherits it. Plus, if years later, they sell it for $950,000, their personal capital gains would be valued against the $700,000 fair market value of the house at the time they inherited it. The same would be true for stock. There would be no tax when your heirs inherit it and upon sale, the gains would be based on the difference between the market value at the time of your death and the time they sell it.

With the proposed Biden changes, the step-up basis would be eliminated, and your heirs would be taxed on the carryover basis of $200,000 either at the time of your death or at a future date when they sell the asset—and the taxation may be at a new, higher 39.6 percent rate (which is another part of President Biden’s proposal). The use of the carryover basis would be applicable on all assets transferred in the estate.

Then There’s the Gift Tax

Currently, the unified federal estate and gift tax exemption is at an historically high $11.7 million and integrates both the gift and estate taxes into one tax system. You can give as much as $15,000 to as many people as you want during the year without being subject to a gift tax. If any gift exceeds $15,000, you are required to submit a form to the IRS but not required to pay a tax until, if and when, you exceed the $11.7 million exemption. On December 31, 2025, that exemption, which was increased under the 2017 Tax Cuts and Jobs Act (TCJA), will sunset to the pre-TCJA level of $ 5.3 million per person. President Biden, however, has proposed that the estate and gift tax exemptions be decoupled and return to 2009 levels: $3.5 million for the estate tax exemption and $1 million for the gift tax exemption with an increased maximum estate tax rate of 45 percent up from the current flat 40 percent rate.

What You Should and Can Do Now

If you’re planning your estate now, reviewing your current plan, or expect to be the beneficiary of an inheritance, we recommend you consider these strategies to better arm yourself for potential changes Congress may make to the estate tax code.

  1. Gather Up all Your Records – If you’re not certain where you’ve put all these records, now is the time to find them, store them in a safe place, and send copies to your accountant and your estate attorney. One reason the current stepped up basis rule exists is that it can be difficult to keep track of an asset’s cost basis. In the case of real estate, for example, records of the kitchen renovation or the addition you built several years ago would favorably impact the carryover basis, making it higher. Similarly, if you reinvested dividends and interest in your stock portfolio, that too, would increase the carryover basis.
  2. Consider Making Charitable Donations or Establish Trusts – You can still donate an appreciated asset to a qualified charitable organization and receive a deduction on the full market value. Trusts will allow you to pass assets to heirs with as little tax as possible.
  3. Purchase an Insurance Policy – If you’re leaving an asset or assets that you anticipate will cause your heirs to face a big tax bill, consider including a life insurance policy as part of your estate. This will help your heirs pay the tax.
  4. Gift Prudently – You must seriously think about how you make large lifetime gifts. Even now, we advise clients who want to reduce their estate or get assets out of their names to gift liquid assets. Gifting liquid assets with no capital gains implications makes more sense than an asset like your house or your stock.
  5. Stay in Touch – Start talking or continue your dialogue with your tax advisors (e.g., your accountant, financial advisor, and your estate attorney). With potential estate tax reform on the horizon, staying connected with these professionals is more important than ever. Change can be daunting but being informed will enable you to be ahead of the curve and, therefore, more flexible and at the ready to make specific adjustments quickly.

At Phelan, Frantz, Ohlig & Wegbreit, LLC, we are knowledgeable of estate tax laws and issues and stay continually abreast of the ongoing changes in estate tax law—and are always available to provide you with the guidance you need for your unique situation.

Call us at (908) 232-2244 to ensure that you’ll be fully prepared for whatever estate tax reform Congress may send your way.

DON’T HAVE A HEALTH CARE PROXY? THE TIME TO DRAFT ONE IS NOW

During the Pandemic and in More Normal Times a Health Care Proxy Is Essential

COVID-19 has taught us many things. Wash hands. Wear masks. Stay socially distant. One item that doesn’t typically make the cut: Draft your health care proxy. In fact, it’s a serious omission.

Your health care proxy, or a durable power of attorney for health care, is the important legal document that gives another individual the legal power and responsibility to make medical decisions for you if you are incapacitated and cannot make decisions for yourself. That person, your health care proxy or health care power of attorney, advocates for you if you cannot advocate for yourself. Your proxy has access to your medical records, talks to your doctors and guides decision-making on care protocols. The goal is to make certain that the care you receive is in accordance with your pre-stated wishes.

Just listen to the news and hear the stories of serious illness and sudden death wrought by the pandemic. If there is ever a reason to have a health care proxy to face potential end-of-life issues, this is it. As important, though, it’s an essential document for every perfectly healthy over-18 adult during more “normal” times. If you haven’t yet visited your estate attorney to draft and execute this document, the time to do so is definitely now.

Draft Your Health Care Proxy Before a Crisis

Research shows that half of all people over 65 who are admitted to a hospital are unable to make health care decisions for themselves. Therefore, it’s a good idea to draft a health care proxy before a crisis and when you are healthy. This will ensure that your agent is prepared and that a trusted person will be available to interact with doctors to make sure your wishes are carried out. If not, you could end up with burdensome and potentially nonbeneficial therapies that could increase suffering for you and your family.  Unfortunately, research has also shown that this is too often the case, and a disconnect occurs between what a patient wants and what is actually carried out.

The health care proxy addresses many aspects of end-of-life care. In the case of terminal illness or a poor recovery prognosis, an individual may want only palliative care, symptom control and pain relief and may wish to decline other more aggressive measures. These aggressive medical measures may include CPR, mechanical ventilation and intubation, blood transfusions, a nasogastric feeding tube and dialysis to name a few. We recommend that you avoid being overly specific in your document, because it is difficult, if not impossible, to fully anticipate the nature of a medical crisis and the needs that may arise.

But Who to Choose?

This is not necessarily an easy decision. Your first thought may be to choose a member of your immediate family (e.g., your spouse, son or daughter), but that doesn’t have to be the case. Your proxy could be a friend, a more distant relative, or someone from your place of worship—the latter which might be a good choice if there are religious considerations attached to your wishes.

The important point is that your proxy really understands your wants regarding care. He or she must have the emotional conviction to carry them out, even if his or her wishes are different than your own. You must have confidence that your proxy’s emotional connection to you will not prevent him or her from advocating in accordance with your preferences, even if medical professionals and/or other family members think otherwise.

Your proxy’s willingness to speak up includes asking questions of doctors and other health care providers relative to your particular health situation. What’s more, persistence matters. Your proxy must probe fully to understand both the immediate medical situation and the subsequent treatment options.

Important Conversations: The Necessary First Step

Regardless of whom you choose, the important first step is having a serious conversation with your family about end-of-life issues. Once you can determine whom your proxy will be, you should engage that person in further conversations in which you address some medical issues that could conceivably come up. In that conversation, you must also articulate how you feel about those issues. For example, you might say things like: “I want to be at home near family and with private nursing care. I want to be comfortable, yet cognizant enough to recognize my loved ones. I want to be able to say my good-byes.” And one last point: You must ask the person you choose about their comfort level in assuming this responsibility. Even more, you must let that person know that it is okay to say no.

The Yin and Yang of Medical Advances

Today, the many innovations in research and technology have resulted in significant progress in the management of serious disease states and medical conditions and can both work for patients and against them. On the one hand, they have enabled medical professionals to diagnose and determine whether a condition is untreatable or irreversible and enable physicians to prolong life despite these determinations—but at what quality. On the other hand, the ability to diagnose terminal conditions, follow respective treatment protocols and determine how long a patient may live after receiving a terminal prognosis, enables individuals to determine the care they would want to receive under the circumstances.

With full understanding of all available options long before a medical crisis occurs, patients can make care choices, sometimes employing combinations of care alternatives. There is no one answer. There are no set formulas. And thinking about these matters, let alone having an appointed proxy act on them, is never comfortable nor easy. Nonetheless, appointing a health care proxy and executing the document that provides the proxy with legal authorizations to advocate is essential. At Phelan, Frantz, Ohlig & Weigbreit, LLC,we are here to give you guidance and to hold your hand through the process—even as early as the time of your first conversation with your family.

Call us at 908.232.2244 and let us help you address these issues sooner rather than later. While not for the faint of heart, they are important considerations for you and your loved ones.

USING A REVOCABLE TRUST TO PASS ON REAL ESTATE TO YOUR CHILDREN

Act Now to Prevent the Future Hassles of Out-of-State Probate

The concern is a common one: “I want to make it simple for my kids,” say aging parents of adult children. “I don’t want them to experience stress when the time comes to settle my estate.”

Estate attorneys have solutions to honor these wishes. These solutions are, in fact, quite simple to execute, provided they’re completed as part of your estate planning. Failing to attend to these matters during your lifetime may mean you are bequeathing not only an inheritance to your children, but also a probate nightmare, particularly if you own property in more than one state.

Jumping Through the Hoops of Probate in Several States

Many of our clients have a primary residence in New Jersey and own vacation homes or rental properties in other states such as Pennsylvania, Florida, or New York. If the goal is to pass these properties on to future generations in the simplest way possible, the focus should be on ways to avoid probate in more than one state.

States are possessive of real property located within their borders. Accordingly, the appointment of an executor in New Jersey is of little consequence outside of New Jersey. When it comes to the transfer of real property inside their state, individual states reserve the right to make their own determination as to who should be appointed pursuant to their state’s unique rules. And while New Jersey has a relatively straightforward probate process, other states do not. Going through probate in states like Florida and New York, for example, takes considerable time and money. Thus, effective estate planning that for individuals who own multiple properties often requires the implementation of a plan that helps families avoid having to institute probate actions in multiple states.

Transferring Property Into a Revocable Trust: Smart Estate Planning and Flexibility

There are various estate planning tools that can provide you with peace of mind knowing that your assets will be transferred seamlessly to your heirs. One such tool, a revocable trust, also known as a living trust, has multiple features that can benefit you during your lifetime and your heirs when it comes time to settle your estate. A revocable trust provides a prearranged mechanism that will ensure the continued management and preservation of your assets, should you become disabled. It can also set forth all of the dispositive provisions of your estate plan and detail how you want your assets to be disbursed. In addition, a trust protects your privacy and the privacy of your beneficiaries because unlike a Last Will and Testament, which is a publicly available document once probated, a trust is available only to the impacted beneficiaries.

Finally, transferring your various properties into a revocable trust will help your family avoid the nightmare of multiple probate actions and the corresponding costs of different lawyers in different states. Because you are the trustee of your living trust, you still have full authority with respect to how the property is used and managed during your lifetime and all income tax consequences are reported on your personal income tax return.

The creators or “grantors” of the trust, which can be either a single individual or a couple, can establish the terms that will dictate what happens to assets held in trust upon their death. To this end, successor trustees also are named by the trust, which ensures that the grantors’ designated agents have automatic authority to sell, transfer, and manage the property upon the grantors’ death without the need to seek court appointment. In short, when properties are owned or held by the trust, there is no need to probate a Will, whether the property is held in New Jersey or another state.

Further, revocable trusts offer a degree of flexibility. For instance, if you become incapacitated or ill during your lifetime, the successor trustee can step up to assist and run things, offering a seamless transition. In addition, other assets, such as bank or brokerage accounts, can be retitled into the trust. Many financial institutions prefer to manage assets held in this manner as it allows them to respond quicker in emergent situations and serve clients more nimbly than they would be able to if they had to wait for the production of a power of attorney or a court appointed guardian to provide instructions.

Additional Considerations for Rental Properties: Limited Liability Companies

We frequently counsel clients who have rental properties to place such property into a limited liability company (LLC). Property ownership, especially ownership of rental property, comes with the risk of liability from injuries that take place while on the property, leaving you and your assets vulnerable to claims and/or exposing you and your assets to the risk of lawsuits. If your property is held in an LLC, and it is the only asset in the LLC, your liability is limited to that property, and your other assets are shielded from judgment if the formality of the LLC is honored and assets are kept separate.

Holding properties in trust and an LLC are not mutually exclusive planning techniques. Instead, the property can be placed in an LLC for liability reasons and the revocable trust established for estate planning purposes can serve as the sole member of the LLC. In other words, the trustees hold the LLC and the LLC holds the property. Although the structure is akin to the Russian stacking dolls, it makes sense for a multitude of reasons.

In either case, the trust assets, in this case the property, can easily pass on to your heirs. The trust itself may also continue with the trust assets managed and payments continued to the trust’s beneficiaries. What’s more, if your heirs decide to sell the property, they can do so easily and earn and retain money for that sale.

Life Happens: Realtime Action to Prevent Future Hassles

It’s important to remember that taking action now will prevent issues from complicating your children’s lives in the future. At Phelan, Frantz, Ohlig & Wegbreit, we are here to help you pass your property on to your beneficiaries easily and cost-effectively.

Call us at  (908) 232-2244 to develop an estate plan that will give you the peace of mind you need today, knowing your heirs will be well-protected tomorrow.

MORE THAN DIVVYING UP YOUR ASSETS: YOUR ESTATE PLAN BECOMES A GIFT TO YOUR FAMILY

Lessons of Intention and Preparedness That Stick

COVID-19 has taught us many lessons, including the importance of being intentional, prepared and ready to confront uncontrollable situations. New Year’s resolutions tend to do that for us, too, because they get us started on a focused beginning as we ring in another year. Should you be wondering what to include among your resolutions, consider putting a review of your estate plan at the top of the list. If you haven’t already visited your attorney to create these documents, or review them, it’s definitely time to do so—and pend your estate plan for at least five years when it will be time to re-evaluate it.

More than divvying up your assets

We’ve all heard about the importance of having a Will, but there’s more to estate planning than how to divvy up your assets. A number of our other blogs address the importance of having a fundamental estate plan in place. Two less frequently talked about but related issues include protections for your college or travel-bound 18+-year-old child and the importance of storing your account passwords in an accessible location.

If you’re the parent of an 18-year-old who’s heading back to college, you’d be wise to have your young adult sign a durable power of attorney with healthcare proxy language before taking off. By signing these documents, your children are giving you permission to act on their behalf and be their important and immediate fallback should a health or financial emergency occur.

A helicopter parent…not

You don’t have to be a helicopter parent to orchestrate this. In fact, COVID has highlighted the need for these documents. We’ve heard of too many kids, now chronologically and essentially adults, who went off to school and got sick with COVID. Their parents had difficulty gaining information about the severity of their child’s illness or finding out where their kids had been moved to quarantine. Plus, there were too many unanswered questions about how the school would plan to keep them safe going forward.

The unknown is tortuous

There’s nothing more troubling than the unknown when it comes to your kids’ wellbeing. The Health Insurance Portability and Accountability Act (HIPPA) works as a great safeguard to your individual privacy because it prevents individuals beyond adult patients and their health care providers from sharing information. But as a parent, it could work against you when it’s time to protect your son or daughter if they’re facing a scary health emergency.

COVID, as well as other health emergencies, could require intercession for life-saving decision-making. Your child may have a high fever and be too sick to discuss a need for surgery. Also, the treating medical professionals may need to know that your youngster reacts allergically to certain medications. Even financially, your child could be quarantined someplace in the states or abroad and unavailable to perform time-controlled financial activities like signing a lease or talking to a creditor.

Sowing privacy oats versus clear communication

The reality is, however, that although you can drive your kid to your lawyer’s office, they must cooperate. At 18, your youngsters may be feeling their oats. They may not want you to know their business, even though these documents benefit them as they would any adult who grants a trusted other the power to act on their behalf when situations require. Clear communication with your child about when and how the documents would be used is critical. Helping them understand that having a healthcare proxy and a durable power of attorney in place are safeguards not encroachments. An experienced estate planning attorney can help explain the value of these documents to your new adult and likely will ask you to leave the room in order to ensure complete understanding and consent.

Where are your passwords

Where are your passwords

Another important aspect of an effective estate plan is password accessibility. If you’re like many of us, you may misplace or forget your passwords. Passwords are not one of the first things we think about when it comes to estate planning. But nine-times-out-of-10, they are the key to where important information is located.

It’s a good idea to store your passwords in a special folder or envelope that you turn over to your estate attorney. This will make it easy to put a finger on everything when the information is needed. Also be sure to include your passwords on a spreadsheet that catalogues all your important documents and their whereabouts [e.g., Will, Durable Power of Attorney, Trusts, Living Will and Advanced Healthcare Directive, house deed and mortgage documents, investment and 401(k) accounts]. Storing extra password copies in a safety deposit box that holds important documents is also an added protection, as is providing your attorney and your appointed fiduciaries an extra key to your safety deposit box.

In the end, a gift

A new year, especially this one, comes with hope for the future. A topic like your estate may seem dark, an intrusion to holiday spirit and a counterpoint to positivity. But there’s no escaping the importance of the preparedness that comes with having an estate plan. There’s no time like the present and the symbolism of the new year’s resolution to take action. If you think about estate planning as a gift you’re giving your family, you just may decide that there’s no better way to ring in the new year.

When you turn to Phelan, Frantz, Ohlig and Wegbreit, LLC, we will partner with you on every step of your estate planning process. Call us at 908.232.2244 to set up an appointment, begin a new year with intention and be prepared for wherever life takes you and your family.

To Transfer or Not: Should You Deed Your House to Your Adult Children?

Thorough Research, Careful Evaluation and Attorney Consult Can Help You Decide

“Should aging parents transfer their home to their adult children?” You’ve probably heard others, perhaps even your friends, ask this question. This is a topic that also frequently makes the news.

The answer: There is no one “right” answer. No easy answer.

The best guidance is to diligently do your homework and consult your estate attorney. Research the pros and cons of a house transfer from a parent to an adult child. Then, determine how the implications of the transfer will apply to your particular family situation. It’s only then that you’ll be positioned to make a decision that works for you and your family.

Preserving assets: a top priority

The most important consideration is to preserve assets. A house is typically your largest asset, especially if your mortgage is fully or significantly paid off. It is, therefore, undesirable to put a drain on any of your assets while you are alive but in need of the long-term care that can bankrupt you financially or force you to sell your house. In these situations, people often wish to seek relief by turning to Medicaid, the joint federal and state program that helps people with limited income and few assets cover health care costs.

Puzzling over Medicaid and some misconceptions

People often think they are ineligible for Medicaid coverage of nursing home costs and doctor’s bills simply because they own property or have some money in the bank. They believe that getting their home out of their own name will enable them to receive the benefit more easily and often use it as a go-to strategy. The reality is, however, that the transfer of assets can have wide-ranging impacts which, in the end, can impact your ability to be considered eligible for Medicaid.  What’s required is understanding the rules and making a legal and financial plan, typically with legal and financial professions, to ensure they are met.

Medicaid eligibility requires that an individual’s combined assets be less than $2,000 in order to receive help with payment for care. In certain situations, your home is not considered a countable asset for Medicaid eligibility purposes, especially if you, your spouse, or a dependent relative continues to reside in the property.

Medicaid’s five-year lookback period is perhaps the largest factor that must be considered. Any gifts or uncompensated transfers that have been made in the five years immediately prior to the Medicaid application will result in a penalty period and delay eligibility for months, even permanently. Therefore, an ill-timed transfer could penalize an individual rather than enhance eligibility.

Still, there are circumstances in which it is legal to transfer a house, but these circumstances often come with a double-edged sword. You may freely transfer your home without incurring a transfer penalty to:

Adult daughter with elderly parents

That being said, Medicaid can put a lien on your house for the amount of money spent on your care. Similarly, if the house is sold while you are still alive, you will likely have to satisfy the lien by paying back the state. There is also an option called estate recovery which under certain conditions allows the government to recover the cost of your care from your estate.The appropriateness of a decision to transfer one’s home for Medicaid purposes is one with which many seniors and families struggle. More often than not, it’s a choice dependent on an individual’s unique circumstances and the real-time monetary values involved in a situation.

For example, a typical scenario which could favor moving the home out of a couples’ name may involve a 70-year-old couple, say, a healthy wife and a husband suffering with Alzheimer’s. The cost of the husband’s long-term care may be exorbitant and the wife will need money to live on herself.  And there is always the desire to leave a financial legacy of their hard-earned money for their kids and grandchildren.

Avoiding a hefty tax bill with a Will or Trust

Taxation is another reason you may give thought to transferring your home to your adult children. In lieu of simply handing over the deed to your son or daughter, there are other ways to transfer your home out of your name. The fact is that gifting your home can involve a hefty bill that taxes your son or daughter on the capital gains derived from your home’s increased market value.

Say you bought your home 50 years ago for $25,000, and now it’s worth half a million dollars. That $475,000 increase comes with a huge tax hit for your kids on the capital gains earned between the purchase price and the current market price. That tax could be avoided if they inherit the property after you die. In the latter scenario, your kids will receive what’s called a step-up basis equal to the value of the house at the time they inherited it rather than the value of the house at the time you purchased it.

Worrying needlessly

People are also skittish about probate and sometimes rush to judgement and transfer their home willy-nilly to their kids. In reality, in most states—New Jersey among them—probate is nothing to fear. In fact, most states even have simplified probate procedures for smaller estates. If you are really worried about probate, you can also establish a living or revocable trust to avoid probate—not estate taxation—but this may not really be necessary depending on the cost and complexity of probate in your estate.

Probate is quite expensive and time-consuming in only a few states, such as California and Florida. In those states, as well as in the situation in which you own homes in more than one state, you may want to work with your estate attorney to develop strategies for wealth transfer. In general, however, many individuals perceive probate as something much more daunting than it actually is.

Trusting your kids: a must

One of the most important considerations for you when reflecting on how to treat your home centers on the conversations you have with your children about your intentions regarding your assets. If your objective is to keep the house in the family, it’s essential that you trust that your adult children are aligned with that value especially while you are alive.

This goal is often compromised when adult children live out of state and feel increasingly detached from the home in which they were raised. They could also be facing their own, sometimes extreme, financial difficulties which could subject your home to liens and/or require your adult child to sell your house to satisfy his or her creditors.

Then, too, if your child divorces, your house could be considered an asset to be divided or dealt with as part of the property agreement with his or her former spouse. Finally, there are health situations in which a transfer could work to your adult child’s disadvantage. Your grandchild, for example, could become disabled and require Medicaid or other government benefits. The fact that your adult child owns your house could prevent your grandchild from qualifying for those benefits.

At Phelan, Frantz, Ohlig and Wegbreit, LLC, we are here to help you navigate these challenging conversations and decisions so that you can better evaluate your options and determine the best way to preserve your assets, among them your home. We will help you gain clarity around your unique family situation and will work tirelessly to guide you to effective strategies that will best serve your wishes and the future needs of your family.

Call us at 908.232.2244 to schedule an appointment and ensure that the legacy you leave to your loved ones fulfills your every intention and keeps the best interests of you and your family top of mind.

 

 

 

2 IMPORTANT DOCUMENTS PARENTS AND COLLEGE-BOUND KIDS NEED TO DISCUSS

Pragmatism versus privacy

It may seem like just yesterday that your son or daughter was breaking the bonds of home to go to preschool. Now, the kid on whom you’ve devoted so much time and care over the years, whom you’ve laughed and cried with through joys and sorrows, is heading off to college or even a gap year abroad.

Your kids are 18 now, or almost so. Chronologically, they are adults, and entitled to all the rights that come with adulthood. Privacy is among those rights. Believe it or not, even if you’re paying college tuition for your kids, claim them as dependents on your tax returns and insure them on your health insurance plans, you cannot intercede on issues concerning their health or finances without their permission.

healthcare proxy and durable power of attorney

You don’t have to be a helicopter parent to have them sign two important documents, a healthcare proxy (also called a healthcare power of attorney) and a durable power of attorney. By signing these documents, your children are giving you permission to act on their behalf when situations necessitate this. These documents allow you to be your kids’ important and immediate fallback in a health or financial emergency. Otherwise, you may face delays in gaining information or, in a worst-case scenario, be required to petition the court for conservatorship or guardianship.

Thanks to the Coronavirus (COVID-19) pandemic you may be looking at an early summer send- off for your college bound youngster, and we’re only now getting out of lockdown. Still, scheduling a trip to your attorney’s office is a priority. Having your young adult understand the importance of these documents and sign them is a must-have addition to your summer parental to-do list.

Not about spying

Your youngsters may be feeling empowered by their new independent status. You certainly respect that independence and want them to use that privilege wisely. The issue is not about your need to keep an eye on them. There’s an important distinction to be made between their desire to keep the events of their lives close to the vest and the necessity of them—like all adults—having responsible people to assist or take over in critical situations.

Your child’s medical records, for example, are like the medical records of all adults: protected by the Health Insurance Portability and Accountability Act (HIPAA), HIPPA states that health records are private between the adult patient and their health care provider. Without authorization, parents are not entitled to access their adult children’s records. In fact, under HIPAA, medical facilities (including college infirmaries) can withhold information about whether your child is admitted.

Sadly, situations requiring intercession in decision-making could be life threatening. All too often we hear of bad accidents or hospitalization from alcohol poisoning. Or, your youngster could have a ruptured appendix and be too sick to discuss a need for surgery. There could also be nonlethal issues. Your kids may have to head to the college infirmary, and the medical staff must contact you for history on your child’s allergies to certain medications.

Even financially, while studying abroad, your youngsters may be unavailable to perform time-controlled financial activities. You could be called upon to sign a summer apartment lease on their behalf or talk to one of their creditors. In fact, you’ll be able to conduct all financial business for your child when he or she signs this document—anything from writing checks, buying/selling or renting real estate, contacting creditors and making investments to contacting his or her insurance company, renewing his or her vehicle registration, or putting money in his or her bank account—even wiring funds to the American embassy where he or she is living.

Both the healthcare proxy and the durable power of attorney may kick in from the moment your child signs it, which is the preferable handling. Alternately, your adult child can specify that it be activated by a specific event, for instance, if he or she becomes incapacitated. The latter, called a springing power, however, requires that someone (typically a medical professional) must decide when an individual is actually unable to advocate for him- or herself. In life-threatening moments, determining incompetence can take added precious time when you can’t spare it.

Their willingness is all

As you might expect, you can take your rising freshman to your lawyer’s office, but at the end of day, he or she must be willing to sign the documents. At 18, your youngster may still think you are clueless—even more, that now on the brink of true adulthood, they don’t want Mom and Dad to know their business.

The mentality of “what happens at college, stays at college” is understandable and learning to manage crisis independently is an important part of the college or young-adult experience.  More importantly, your children have the right to maintain their privacy.  But the reality is that health issues arise, and financial matters often must be handled quickly. Having a healthcare proxy and/or a durable power of attorney in place are critical safeguards that benefit your adult children—just as they benefit any adult who grants another trusted person the power to act on his or her behalf when situations necessitate this.  As in any case, communication with your child about when and how the documents would be used by you is critical.

Alternate appointees for strained relationships

As a parent, you are the best person to be in charge of your child’s medical and legal matters. But sometimes parent-child relationships are strained. In these situations, you or your attorney can encourage your child to appoint another trusted adult like an aunt, uncle or older sibling. In these cases, it’s also a good idea to name an alternate. Your child’s first choice may be unable or unwilling to serve in this role at a given time.

The primary message to convey to kids is that it’s imperative to have a responsible person at the ready to act in their stead if and when time-sensitive health or financial issues arise.

At Phelan, Frantz, Ohlig and Wegbreit, LLC, we understand this is a delicate conversation for you to have with your children and know we can be of assistance. In these situations, because your children become our clients, we’ll discuss these issues with them privately. At a time when these young people are on the brink of being the most independent they’ve been in their lives thus far, we will counsel them. And as we do with all our clients, we will guide them to act in their best interests.

Call us at 908.232.2244 to schedule an appointment for your young adult and put these important documents in place.

ESTATE PLANNING DURING COVID-19: ADAPTING TO THE TIMES

More People Get Onboard With Estate Planning During COVID-19

The corona virus (COVID-19) has changed lives in ways we’ve never experienced or even imagined before. In short order, we’ve been required to stay home, practice social distancing and take diligent safety and health precautions as recommended by the Centers for Disease Control and Prevention to flatten the curve and prevent the spread of this highly contagious disease.

Heightened awareness regarding the importance of estate planning during this time is one silver lining that may result from the dark cloud of this devastating pandemic. In response to the critical need for conversations about existing estate plans or the creation of a concrete plan, trust and estate attorneys have been forced to recreate the way in which they consult with clients. Attorneys have been finding creative and safe ways to confront the logistical obstacles posed by the legal formality that accompanies the execution of estate planning documents.

An abundance of calls and inquiries

We have been struck by an increase in calls from individuals inquiring about estate planning. Understandably, these calls are taking on a much different tone. In the past, when people came to the office to discuss their estate plan, it was clear the conversations were theoretical—a talk about something hopefully very far off. Now, whether a caller is young, old or middle-aged, the tone is heavier. Rather than checking another item off their to-do lists, the indiscriminate nature of COVID-19 has forced us all to focus more on our own mortality. Offering a safe and open space for clients to have these conversations and provide some peace of mind is important to the lawyers at Phelan, Frantz, Ohlig & Wegbreit.

Business, but not as usual: Technology is key

In most instances, the key estate planning documents are the Will, which controls the proper disposition of assets at death, and the Durable Power of Attorney and Advance Directive/Health Care Proxy, both of which enable others to make financial and medical decisions for us if we are not able to do so. Technology has become a powerful force in how attorneys and clients get the planning process under way and, sometimes, in facilitating the execution of final documents.

For the planning piece, most lawyers are using video conferencing technology to facilitate conversations between clients and counsel so that the appropriate documents may be crafted. More ingenuity is required when it comes to signing the documents. This is so because under New Jersey law, Wills are only valid if executed in the presence of two witnesses. Further, they are only “self-proving” if a notary (third-party) notarizes the signatures of the person making the Will and the witnesses. POAs and Health Care Proxies similarly must be witnessed (only one) and notarized.

New places to execute documents

Under normal circumstances, witnesses preferably are not “interested parties” – beneficiaries or fiduciaries – of the estate for which a document is being executed. Conditions caused by the pandemic, however, may limit the options available to those signing documents.

Face-to-face signings may still occur – most typically in law office parking lots with gloves and masks intact, each participant using separate pens and exercising proper distancing but within sight and sound range of the person (the testator) signing their Will and for whom it is being prepared. Once signed, documents can be witnessed, notarized and collated by staff who have remained at a safe distance. Porches or window-separated settings provide alternate and acceptable locations.

Earlier this month, Governor Phil Murphy signed into law a bill that permits remote notarization effective immediately. This provision eases the need for face-to-face meetings for document execution and allows estate planning attorneys a greater degree of flexibility to accommodate the health and safety concerns of their clients.

It’s fair to say that both clients and attorneys are finding that these alternate ways of doing things are cumbersome, if only because they are so different and, right now, feel unnatural. But it’s the best clients and attorneys can do to avoid delays at this time.

Not easy but necessary

Important as it is, estate planning is always a delicate subject. These days the discomfort associated with the topic is ten-fold. The anxiety being experienced by everyone is legitimate and as professionals, spouses, parents, and sons and daughters, we have these same worries.

Regardless of whether legal interactions by Zoom or in parking lots becomes the new norm, we will continue, as always, to make our clients’ needs a priority. We remain focused on our clients’ safety during this difficult time and are committed to being a partner who will listen and assist.

At Phelan, Frantz, Ohlig & Weqbreit, LLC, we will carefully listen to your unique family circumstances and, as always be responsive, and intuitive in handling the difficult questions that you have regarding your estate planning during COVID-19 or anytime. Please call us at 908.232.2244 to learn how we can assist you in crafting your Will and important accompanying documents that best fit your wishes and needs.

YOU’RE THE CEO OF YOUR ESTATE PLAN

5 important questions to help you choose Fiduciaries who are right for the job

Developing and managing your estate plan is much like being the CEO of a company. To have your plan run smoothly, you need to make spot-on decisions when selecting the individuals to fill the requirements of the plan’s important Fiduciary roles. Fiduciaries are granted certain rights and powers to be exercised on your behalf and without your supervision if you are incapacitated, unable to handle your own affairs or deceased.

You can have all the right documents in place, leave instructions as to where your important papers are located and update your investment accounts and beneficiary designations. But, if you choose the wrong people to manage your affairs, your plan may not operate as you had envisioned.

No Honorariums. Conscientious decision-making

Like any important decision made by a CEO, choosing the right Fiduciaries requires careful forethought, consideration and evaluation. In reality, you are choosing individuals to do a job. There’s no other way to look at these selections. In some roles, Fiduciaries also get paid for their work.

Fiduciary roles are not honorary positions and need not be assigned to immediate family members.  These selections should be made thoughtfully and wisely. And, as CEO, you should choose the individual with the best qualifications, skill set and temperament for the job.

Across the board, Fiduciary roles require expertise, the right skill set, propriety and the characteristics of utmost loyalty to your wishes and values, along with responsibility and trustworthiness.

Here are five important questions to consider when you put on your CEO hat to make these designations:

1.  What are these Fiduciary positions?Fiduciaries

POWER OF ATTORNEY/ATTORNEY-IN-FACT

Role – Assists in the management and control of your financial and life affairs in the event you become incapacitated

Duties – Assumes the right to pay your bills, sign documents and conduct financial transactions on your behalf, may also make decisions about your living situation in cases of ongoing incapacity

Skill set – Someone who’s responsible about managing money and has the good sense to know what he/she doesn’t know and seeks guidance from a professional such as your financial advisor or estate attorney; has the ability to handle challenges to his/her authority when others (including family members) challenge decisions being made on your behalf

EXECUTOR

Role – Individual charged with wrapping up your final affairs.  This individual is appointed in the Will and charged by the court to oversee the administration of your estate by collecting assets, paying final debts, and making distributions under the terms of your Will; an Executor is entitled to compensation from your estate

Duties – Finds all your important documents, takes charge of your property, pays creditor claims, files tax returns, distributes the assets of the estate to beneficiaries and files the final accounting with the court.  Unless you have appointed a Funeral Agent, your Executor also is tasked with making arrangements for your burial or cremation.

Skill set – Again, an individual who’s responsible about managing money; someone with good discretion who communicates clearly and is good at conflict resolution because sensitive relationships among heirs sometimes exist; is quick to reach out for assistance from professionals if and when needed

TRUSTEE

Role – Appointed pursuant to a Will or standalone Trust, this individual will manage and invest trust assets as well as administer the trust agreement using the terms you created; position is entitled to compensation

Duties – This can be a long-term responsibility, because Trusts are often established to handle funds for many years after you die, typically for the benefit of minor/young beneficiaries or for those who have special needs. If you have a business, he/she will manage it until it is sold or transferred to the next generation.

Skill set – A financial or legal background is helpful; also, someone who does not have any conflicts with beneficiaries

MEDICAL/HEALTHCARE PROXY

Role – This appointee makes healthcare decisions for you if you are unable to make them yourself because you are incapacitated

Duties – Communicates with medical professionals overseeing your care and makes certain the protocols they are using align with your wishes regarding methods, extent and scope of care

Skill set – Understands complicated medical terminology, protocols and outcomes; knows how you would make healthcare decisions regarding your care and is stalwart in carrying out your wishes; is able to remain calm under pressure

GUARDIAN

Role – A guardian is appointed when you have minor children (children under 18 years of age) or adult family members with special needs

Duties – A guardian of a minor is a person who has the powers and responsibilities of a parent concerning the child’s support, care, education, health, and welfare.

Skill set – An individual who will parent with your parenting style, who will make the well-being of your children a priority and who will love your children as you do.

2.  Are two individuals (co-Fiduciaries) better than one?

Appointing co-Fiduciaries to serve together is a good idea, especially if at least one of your appointees lives out of your geographic area. It also provides an opportunity to allow family members to share responsibilities, and, in some cases, check and balance each other. Make sure that the two people you choose will get along and act in concert. Don’t select two just because you want both to feel honored or to avoid an argument between the two of them.

3.  How about backups?

Always have backups. Life changes, the unexpected happens and a Trustee, for example, may serve for years which makes backups critical. Also, if you’re a parent appointing a guardian, a backup ensures that your wishes will dictate, influence and inform a decision should something happen to the first guardian as opposed to a decision made through the guardian’s choice.

4.  And what about professional Trustees?

This is a circumstantial decision. A professional Trustee is more objective, so this makes sense if there’s a pattern of family discord. But it costs money. Think carefully and make sure your situation commands this alternative.

5.  Can a Fiduciary be a Beneficiary, too?

Yes, and usually is. And this works in most circumstances, unless you anticipate conflict. In that case, choosing an objective person is preferable. Indeed, there’s much to consider when filling Fiduciary roles. Ensuring you choose the right individuals can make or break your estate plan—even more so because Fiduciary responsibilities must be carried out during a challenging and grief-filled family time.

Your estate planning attorney: always on hand to help

Your estate planning attorney will help you evaluate your options based on the nature and extent of your assets, the personal qualities of the individuals you consider and the unique nature of your family dynamics. After all, like all capable leaders, as CEO of your estate plan, you will know when it’s time to reach out.

At Phelan, Frantz, Ohlig & Weqbreit, LLC, we take our responsibility to provide families with conscientious estate planning and guidance very seriously. Please contact us if we can be of assistance to you in developing and/or reviewing the appropriate estate plan for your family, including your designation of individuals to fill these important Fiduciary roles.

8 STEPS TO CREATING YOUR ESTATE PLAN IN THE NEW YEAR

Procrastination is often the biggest enemy of estate planning!

We’ve all heard stories like this: A couple is about to head out on a prolonged business/pleasure trip involving considerable air travel. Panic sets in five days before their departure when it dawns on them that they don’t have Wills. Though immediate outreach to their attorney may enable them to get documents drafted and executed before they leave, this scenario is hardly ideal.  Harried or rushed actions can result in improper or faulty planning, which in turn may lead to family misunderstandings and disputes, assets going into the wrong hands, court cases, and the corresponding expense in legal fees and/or taxes.

As the saying goes, there’s no time like the present, even when planning for events likely to occur in the distant future. The New Year is the perfect time to get started or review a plan you already have to make sure it is on track.

Wherever you are in your estate planning process, our eight-point New Year’s checklist will help you get off on the right foot.

1. Make an appointment with an experienced estate planning attorney

There’s no better way to get the wheels turning than to sit down with an attorney experienced in estate planning. In this initial visit, your attorney will familiarize you with all the issues you must consider.

Estate planning is serious business and far more than a last-minute scramble to execute a Will. Its goal is to ensure the seamless transfer of assets to your heirs. It also safeguards your assets and the care you receive during times of critical illness if and when you cannot advocate for yourself. Estate planning takes considerable thought, important family conversations and the painstaking development of a plan geared to your unique family situation.

2. Take inventory

Assimilating information on your assets, tangible and intangible, is critical. This means listing what they are and how they are held. Some of these assets will pass to your survivors under your Will, others will pass to beneficiaries outside of your Will.

Tangible Assets include Real Property, land and whatever is built on it, typically your house, and Personal Property, which includes your physical possessions: jewelry, art and antiques and other collectibles; television sets, computers and other electronics. These will be just some of the items on the list.

Intangible assets include the things you own on paper: bank accounts, stocks, bonds, insurance policies, and retirement accounts (IRA’s). Items like bank accounts and stocks and bonds in a brokerage account likely will pass through your Will or to a joint account holder. Items like your insurance policy, IRA or 401(k) already have named beneficiaries and will pass to your survivors outside of your Will regardless of what your Will dictates.  Reviewing these distinctions is a KEY piece of crafting an appropriate estate plan.

3. Get organized

Getting organized is another vital step. It requires that you create a spreadsheet that itemizes all of the above items, again both tangible and intangible. Make copies of deeds and mortgage documents related to real estate, make copies and place originals and copies in a safe place. Ideally, your estate attorney will retain the original and a trusted designee named in a legal document will securely retain the other.

All documents should be recorded on a spreadsheet which accurately identifies the institution or institutions in which an asset is held and account numbers and passwords to the accounts, and contact information for the representative in the institution who handles your account. It is imperative that your estate attorney and the designated fiduciaries have copies of these spreadsheets or knows where to find them.

If you have a safety deposit box that holds important documents or information, make certain your attorney and survivors know the box number and in which bank the box is located. It is advisable to provide your attorney and your designees an extra key.

Note: Once you and your attorney have actually developed a plan, you will have created a Will, Durable Power of Attorney, Living Will and Advanced (Healthcare) Directive, essential documents which may be held in your safety deposit box and/or with your attorney as well as with other fiduciaries and designees.

4. Designate Fiduciaries (Financial), Healthcare Proxy and Create the Necessary Documents

Fiduciary roles refer to any person or institution that has the power to act on your behalf in situations in which you are no longer capable of acting or advocating for yourself and following your death. Plus, any adult can serve as your Healthcare Proxy. Fiduciaries can assume many roles in your estate, and, depending on a particular fiduciary designation, can act either before or after your death…or in both situations.

The law stipulates that your fiduciaries be legally competent individuals over 18 years of age and capable of managing their own affairs. But that’s where the requirements stop and where your careful thought and good judgement come in. Because these positions require the utmost honesty, loyalty and trustworthiness, the individuals you choose must be able to set aside their own personal inclinations and motivations to act in a manner consistent with your financial and health goals. Plus, if you have children who are minors, it is wise to appoint a guardian who will parent in a manner consistent with your parenting style and love your children as you would.

Each role requires a different skill set. To choose the most appropriate fiduciary, align the strengths and characteristics of the person you want to designate with the functions required for that position.  It is also advisable to have an alternate or backup in case logistically there is a problem with the primary person being available when it’s time to serve.

Keep in mind also that you must reach out to the individuals whom you want to serve in these roles and ask/confirm that they are willing to assume the associated responsibilities. While being selected may be considered an honor, these positions take time, require work and, in many cases, require a stalwart mindset.

5. Draft your Will

A Will is one of the main, if not the primary, components of every estate plan, even if you don’t have substantial assets. Wills ensure property is distributed according to your wishes and drafted according to state laws. In it, you state who you want to inherit your property, name the person (the Executor) who is in charge of distributing your assets as instructed in the Will, and address the contingency of the simultaneous death of you and your spouse, name a guardian to care for your young children.

Simply having a Will isn’t enough, though. The proper wording of the document is critically important, which is why it is highly recommended that you work with an estate attorney when executing this document. Sometimes, when individuals try to do this themselves with one of the Do It Yourself apps, they overlook important considerations or fail to comply with laws in their state. This can cause probate problems that may require your heirs to spend time and money attempting to rectify misstatements, omissions and other mistakes

6. Consider a Trust

A trust is legal entity that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when your assets pass to your heirs.

Trusts typically avoid probate, so your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred through a Will. And, because assets that you’ve held in a trust may be able to pass outside of probate, this saves your heirs time, court fees, and potentially reduces estate taxes as well. An irrevocable trust, for example, may not be considered part of your taxable estate, so fewer taxes may be due upon your death.

You can specify the terms of a Trust down to the letter, controlling when and to whom distributions may be made. What’s more, if you set up a revocable trust, the Trust assets remain accessible to you during your lifetime; you designate to whom the remaining assets will pass, even when there are complex situations such as children from more than one marriage.

A properly constructed Trust can also help protect your estate from your heirs’ creditors, future ex-spouses, or from beneficiaries who may not be adept at managing money. Again, working with an experienced estate attorney will ensure you set up a Trust with the best governance for your unique situation.

7. Make a Living Will

A Living Will, also called an Advanced Directive, is a written statement that details the type of care you want or don’t want if you become incapacitated. A Living Will bears no relation to your conventional Will or Living Trust used to bequest property upon your death. It’s strictly a document that spells out your health care preferences and addresses a number of possible end- of-life care decisions and whether you want or do not want them. While you may indicate you do not want heroic measures, you must define heroic and answer questions regarding whether you want:

Creating your Living Will requires you to think about your values as well as your wishes: Questions like how important it is to you to be independent and self-sufficient? What circumstances might make you feel like your life is not worth living? Would you want treatment to extend your life in any or all situations, or only if a cure seems possible?

Also, beyond treatments during illness, you can specify your wishes to donate your organs and tissues or donating your body to scientific study.

8. Draft a Power of Attorney

A Power of Attorney (POA) is a very important estate planning tool which allows a person you appoint—your Attorney-in-Fact or Agent—to act in your stead in financial and legal matters.

A POA grants broad authority to your agent to sign documents, pay bills, and conduct financial transactions on your behalf.  In other words, your agent will be authorized to handle “the business” of your life.

The Bottom Line 

As is evident from the above considerations, there is more to estate planning than deciding how to divvy up your assets and provide for your loved ones and other beneficiaries when you die. Estate planning also ensures that the right individuals have access to your assets upon your temporary or permanent incapacity so that your affairs can be handled appropriately and the care you receive will ensure the dignity and quality of life you deserve and desire.

While estate planning may seem like a bleak and uncomfortable task for the start of a new year, it is a necessary one to address. You can adjust your mindset to think of your estate planning in a positive light. Just consider: Thorough preparation now will give your family peace and comfort and a stress-free probate process at some future time when your family will be dealing with emotions of loss and sadness.

When you think of estate planning in this way, you will likely come to realize that planning today is a gift you are giving your loved ones for some time in the future. And giving a meaningful gift to your loved ones…there’s no better way to start a new year!

At Phelan, Frantz, Ohlig & Wegbreit, LLC, we take our responsibility to provide families with conscientious estate planning very seriously…in the new year and beyond.  Please enjoy the year ahead and contact us if we can be of assistance to you in developing and/or reviewing the appropriate estate plan for your family.

WHEN IT COMES TO YOUR ESTATE PLAN, DIY JUST WON’T DO

The do-it-yourself mentality has become an integral part of many areas that inform our lives. Thanks to the Internet and even YouTube, consumers now have all the tools and how-to’s they need to create anything from simple arts and craft gifts, to more upscale inspirations like DIY fashion, printed merchandise or any number of home remodeling projects. This DIY mentality has even expanded to the potentially intricate, increasingly personal and definitely legal task of estate planning and the execution of your Will. Most often undertaken to save money, even the “simplest” DIY Wills may contain pitfalls that end up costing families large amounts of grief or money.

Seen it all

Mixing online programs like LegalZoom, Rocket Lawyer and Quicken WillMaker Plus to lay down the groundwork that will protect and provide for loved ones after you’re gone in the hopes of saving time and money in the here and now can be a recipe for disaster.  Most trust and estate lawyers likely will tell you that choosing these options for estate planning documents may be a real disservice to your heirs.

Estate lawyers should know. They’ve seen it all when it’s come to unraveling the intended bequests of DIY Wills that were erroneously drafted. When a person has passed there’s literally no resource available to clarify his or her intent. Some people will tell you a DIY Will is better than no Will at all. But a bad DIY Will inappropriately and incompletely done does NOT trump no Will status. If you shortchange the process on the front end, there can be significant legal costs incurred after death either due to errors in the execution of the Will or lack of clarity about dispositive wishes.

False sense of security

In fact, DIY estate planning may give benefactors a false sense of security even if you have only modest assets and plan to draft the “simplest of wills”—a term with which legal professionals take issue.  There is no such thing as a “simple will.” First, every individual’s circumstances are unique with particular family complexities that impact to whom and how assets should pass. Second, there are so many assets that pass outside an estate such as insurance policies, 401(k)’s and IRA’s to name a few that there must be careful coordination between probate (the Will) and non-probate or beneficiary assets. It’s imperative that you have a full understanding of what will happen with your assets when you die—which is why a conversation with a lawyer is critical.

With DIY sites, there’s limited, if any, professional guidance. Some sites do provide some attorney assistance, but you don’t get to choose the person with whom you’re working or have any sense of their background with trusts and estate law. For a sensitive subject like the financial protection of your loved ones, the client experience matters and so does interaction with a professional who knows you and understands your family situation.

You don’t know what you don’t know

The lack of appropriate guidance can lead to ignorance, which is a real deficit to DIY planning. Choosing a DIY option for your estate planning is like looking for cures to your ailments on WebMD—most individuals have no real idea what they need when it comes to protecting themselves and their loved ones. For example, every state has unique rules, particularly when it comes to estate/inheritance or “death” taxes. None of this is contemplated in a DIY will. Some sites may not offer the right tools for state-to-state differentiation. Others may offer graded packages and you may inadvertently or for cost reasons choose the wrong one.

Then, too, DIY sites do not lend themselves to the intricacies and/or depth of complex family and financial situations such as blended families, stepchildren and the like.

Plus, a host of other issues can unknowingly arise when upon death, your Will is passed on to the surrogate or probate court. The surrogate court oversees matters of probate, the administration of estates and the process of distributing the decedent’s assets to the proper beneficiaries. To name some of the most common problems that can arise with DIY Wills at this time:

Where’s the Will?

Another wrinkle that occurs with DIY Wills is when the individuals who take on the responsibility of executing their own Wills forget or simply don’t let anyone know where their Will is located.  If the original Will can’t be located, it’s as good as dying without a Will.

It’s also important to remember that your Will is a living, breathing document. This means it must be reviewed regularly and revised with changing life situations like marriage, childbirth, inheritance, etc. Choosing the DIY route to estate planning just may make an individual less aware or inclined to make regular reviews and subsequent revisions.

Covering All the Bases

But when you work with an estate attorney, you have an accountability partner who can help you stay on top of these very important matters—from the sometimes uneasy but serious and important planning process, to choosing the right fiduciaries, to reviewing your Will at least at five-year intervals, down to keeping the original document in safekeeping. Then, when the inevitable time comes for your loved ones to inherit and carry on your legacy, everything will be in order.

When it comes to providing for the precious people in your life, you will surely want nothing less than that.

At Phelan, Frantz & Ohlig, LLC, we take our responsibility to provide families with conscientious estate planning very seriously.  Please contact us if we can be of assistance to you in developing the appropriate estate plan for your family.

 

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