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There’s really no reason not to have an estate plan, and no reason not to keep it up to date. However, if you are responsible for a family and a home, it becomes even more important to do.

If you have children under age 18, and you don’t have a will, you are choosing to put them in difficult circumstances in the event of your death. According to a Caring.com study conducted in 2017, only 36% of Americans with children under age 18 have a will. Only 42% of all Americans have a will. This leaves children unprotected, and families exposed to all kinds of estate disasters.

USA Today’s recent article, “Estate planning: 6 steps to ensure your family is financially ready for when you die,” explains that if you die without a will, state laws will decide what happens to your property or who should be legally responsible for minor children. That might be OK in some circumstances, but in others, a grandchild with special needs might not receive the resources you want him to have, or an estranged family member might get your house.

For some reason, people believe that if they don't do anything, things will “work out.” They often do not. Here is what you should consider:

Create a will. This document states who should get your money and possessions, as well as who would become a guardian to your minor children, if both parents die.

A living will and powers of attorney. This legal document states what medical procedures you want or don’t want, if you’re incapacitated and can’t speak for yourself, such as whether to continue life-sustaining treatment.  Similarly, powers of attorney let you appoint someone you trust to make legal, financial and health care decisions for you, if you are unable.

Trust. This is a legal entity that holds title to any property you want to leave to your beneficiaries. With a trust, your family won’t have to go through probate and you can avoid having your affairs made public. Trusts also let you set up instructions for how and when property is distributed. You’ll need to name a trustee who will manage the trust. Make sure you let people know, when you’ve designated them as a trustee. Name a secondary trustee, in case the primary trustee cannot or will not serve.

Beneficiaries. If you have investment accounts and retirement plans like a 401(k), make certain that the individual you’ve listed as the beneficiary is the person you want to receive those funds.  Remember to appoint a contingency or secondary beneficiary, just in case.  Under the right circumstances, your trust can be named as the beneficiary of your retirement accounts to provide asset protection to the retirement account principal, but this should only be done under the advice of an experienced estate planning attorney who can help you avoid problematic tax consequences when a trust is not drafted with the correct language.

Get to know an experienced, local estate planning attorney. Trying to use an inexpensive online will service, doesn’t work for every situation. A local attorney is familiar with the law in your state, which governs estate planning, and will get to know you and your family. They’ll be able to give you the help you need, without any surprises. An invalid will created on the cheap, ends up costing far more than a well-designed estate plan.

An estate plan protects you from incapacity when you are living and protects your family when you have passed. Make an appointment today with the Soto Law Firm, if you don’t have an estate plan yet. It’s never too early.

Reference: USA Today (April 1, 2019) “Estate planning: 6 steps to ensure your family is financially ready for when you die”

Don’t Wait on These Key Estate Planning Documents

Want another way to show your family how much they mean to you? Make sure you have these three critical documents in place, and let them know where they are.

You don’t have to be a globally-recognized musical genius to take care of your family. All you need to do is make an appointment with an estate planning attorney to have three relatively simple documents created. The families of Aretha Franklin, Kurt Cobain, and Prince may have been well-loved by their famous relatives, but none of these bold-face names had a will. Their families were left to engage attorneys and battle with each other and the courts to figure out who gets what.

Motley Fool reports in the article, “3 Must-Have Estate Planning Documents To Get Done This Year,” that dying without a will creates numerous problems for your family. If there are no legal instructions in place, probate law dictates the distribution of your assets and selection of guardians for your minor children, which may likely cause inter-family conflict. Regardless of your personal situation, you should think about creating these three important estate planning documents.

1. Will. A will is used to distribute your estate, according to your instructions. A will can say how much and what type of asset each heir will receive, to minimize family fighting after your death. If you have young children, you can designate guardians in your will to be in charge of their care. If you die without a will, the probate judge will order who becomes their guardian.  A will is also useful to make charitable bequests, to expedite the probate court process, and to reduce the risk of heirs fighting over your assets. 
2. Living will. A living will can take effect while you are still alive. This is a legal document that sets out your instructions for medical treatment, if you become unable to communicate, such as whether or not you want to be placed on life support. A living will can relieve the emotional burden from your family of having to make difficult decisions.
3. Financial Power of Attorney. This legal document helps in the event you’re incapacitated or in the hospital in an unresponsive state. A power of attorney gives the individual you designate the authority to transact financial and legal matters on your behalf. Set up a power of attorney, before you need it. If you don’t and you're unable to make decisions, your family may have to petition the court to get those powers, which costs time and money.

These are not complicated documents and they won’t take years to create. They just need to be done. Call your estate planning attorney and make an appointment. If you haven’t updated these documents in a while, make an appointment for a review. You may not need a completely new estate plan, but there may be changes that need to be made.

Reference: Motley Fool (February 18, 2019) “3 Must-Have Estate Planning Documents To Get Done This Year”

How to Select a Health Care Proxy

You’ll need a brave soul with a backbone to make the hard, sometimes unpopular decisions on your behalf, if you become incapacitated.

Designating a health care proxy is like picking a guardian for your children, only it’s for yourself. Who would be the best person to make a decision on your behalf? Who would be able to follow your wishes, even when they are different from their own?

Many people get stressed when asked to supply a name for their healthcare proxy. As a result, they end up making a bad selection. They can also fail to share that information with the person they selected.

Forbes’ recent article, “How To Select A Healthcare Proxy,” says that while the odds of being called into service are low, the person we choose for such a role should be picked with great thought, as to their availability and their suitability. Let’s look at these guidelines that can help with the selection.

Your healthcare proxy should know you well, understand your values, and be able to distinguish them from his or her own. The person must also be willing to discuss sensitive topics in depth, in order to gain a true understanding of what you want and don’t want.

If you have close family, it may seem obvious to pick your spouse or your first-born child or your closest sibling as your proxy. However, ask yourself if this person is the best person for the job. He or she may have to deal with push-back from other members of the family or conflict among family, friends, and medical personnel. Can they handle this?

Age. Your proxy should be available long into the future. If you want someone in that position who’s close to your age, be sure to also select back-ups, and be select a person who’s much younger.

Geography. The person in first position on your healthcare proxy should live close by, because hospitals frequently require a live human being to make critical care decisions. Your proxy needs to be able to get to the facility quickly.

Choose multiples. Select more than one person named as a proxy. If the person in first position can’t get there or is incapacitated, someone else will have to take their place.

Don’t miss this step of health care proxy designation: the conversation. Sit down with the people who you have chosen for this role, one at a time and in a private setting. Ask their permission to be named in this role. Discuss your wishes, and your reasoning behind them. Be honest—you need this person to be able to act in your stead, and to do so, they need to really understand what you want. Give them a copy of your proxy. Tell your family members, so they know who has been selected for this task.

Reference: Forbes (April 10, 2019) “How To Select A Healthcare Proxy”

Top Five Estate Plan Epic Fails

The problem with mistakes to an estate plan, is that many are irreversible and cannot be fixed. Those that can be fixed are often expensive. It is best to do it right the first time.

Many of the top reasons for estate plans to fail, are a matter of maintenance. Just as your home or car needs ongoing care, so does your estate plan. The simple things often lead to the biggest problems.

Investopedia’s article, “5 Ways to Mess Up Estate Planning” gives us a list of these common issues.

Not Updating Beneficiary Designations. Be certain those to whom you intend to leave your assets are clearly named on the proper forms. Whenever there’s a life change, update your financial, retirement, and insurance accounts and policies, as well as your estate planning documents.

Forgetting Key Legal Documents. Revocable living trusts are the primary vehicle used to keep some assets from probate. However, having only trusts without a will can be a mistake—the will is the document where you designate the guardian of your minor children, if something should happen to you and/or your spouse.

 

Bad Record Keeping. Leaving a mess is a headache. Your family won’t like having to spend time and effort finding, organizing and locating your assets. Draft a letter of instruction that tells your executor or personal representative where everything is located, the names and contact information of your banker, broker, insurance agent, financial planner, attorney, etc. Make a list of the financial websites you use with their login information, so your accounts can be accessed.

Not Funding Your Trust.  A Trust can be thought of as a legal container into which you fund your assets during your lifetime.  Your trust then controls your assets in the event of disability or death.  Just like a shiny new car, a new trust is a great thing to have, and just like a car that won't be going anywhere without gas in the tank, your assets are the fuel for your trust.  If you don't properly fund, coordinate, or re-title assets into the trust, it will be much more difficult to get where you want to go.   You should also keep up to date with funding as you sell or acquire new assets.  Keeping your trust properly funded is a moving target that needs to be constantly reviewed and kept up to date.

Not Creating a Plan. This last one is one of the most common. There are plenty of stories of extremely wealthy people who lose most, if not all, of their estate to court fees and legal costs, because they didn’t have an estate plan.

The solution is simple: make a recurring appointment with your estate planning attorney every two or three years, or when something big in your life changes. Follow through on the instructions, like funding a trust or talking with heirs about your thought processes for asset distribution.  Contact the Soto Law Firm today to make sure that your estate plan will be an epic success.

Reference: Investopedia (September 30, 2018) “5 Ways to Mess Up Estate Planning”

An Estate Plan is About People, Not Just Things

An Estate Plan is About People, Not Just Things

If the first thing parents learned about estate planning, was that it is a way to protect their children from being raised by their rebellious brother, chances are good that every parent would rush to have their estate plan done.

Most of us understand that an estate plan is to distribute assets after we die. However, anyone with children under age 18, need to know that their will is used to name who they want to raise their children if they should both die. A will is also used to name the person who will take care of the money left for the children. This should be taught in Parenting 101.

Wealth Advisor’s recent article, “What's missing from your estate plan?” advises that it’s not a good idea to have the same person perform both of these tasks. Separating the people who care for your kids from those with free access to the money left behind, is a better choice. If the parents’ estate plans do not include instructions concerning the children, those left behind can have drastically different opinions about where the children should live and how they should be cared for.

When families feel strongly about those issues, it also creates difficulties for the children. They’re not only mourning the loss of the parents, but now their loved ones may be at each other’s throats, in a legal attempt to gain custody that will drain resources and divide the family. However, there are some simple steps that can avoid this additional cost and emotional trauma.

Don’t leave a hole in your estate plan by omitting a document that addresses what happens to you, if you become incapacitated. A living will, also known as an advance directive, is an essential component of a complete estate plan. This document answers "end of life" questions, particularly whether a person should be kept alive by artificial means. Most of us don’t want our families making those difficult choices, so have your estate planning attorney draft an advance directive, so they won’t have to.

Another part of your estate plan that protects people, is a medical durable power of attorney.  If you don’t have one in place, and you are incapacitated, your family and medical providers have to guess what you want. Name a person to take on this role and have candid conversations about what you would want. This spares your loved ones from further stress during a difficult time, and lets you have more of a choice about your own care.

Parents of young children need to have an estate plan, as soon as they become parents. See an estate planning attorney, who will be able to make sure that you and your young family are prepared for the ups and downs of life.  Contact the Soto Law Firm today for a free consultation to get your planning started.

Reference: Wealth Advisor (August 27, 2018) “What's missing from your estate plan?”

Get These Documents in Order for Your College Student

Get These Documents in Order for Your College Student

By now, the dorms are filled, and a new winter semester is underway. However, you can still take care of these often-overlooked details for your college student.

If you were so busy focusing on the logistics of getting your student off to college, that you didn’t have time to get to the details below, now is the time to get it done. As listed in this article from nj.com, “Don't let your kid go to college without these 10 things,” these are important for your student and you to have in place.

1. Health Insurance Information. Most colleges offer some free health services to students. However, that might not be enough for most healthcare needs, especially for emergencies. Even if the student is on your plan, the coverage may not be enough, if the student goes to college in a different state. The possible need for out-of-network care could get very pricy. Ask your insurance company to calculate how the student’s bills would be covered. You should also take a look at any insurance offered by the school.
2. A Local Providers List. An out-of-state student can get an annual check-up when she’s home for the summer, but some medical needs may not conform to the times when they’re home. Before students get to campus, prepare a list of local care providers who take your insurance.
3. Durable Power of Attorney and Healthcare Power of Attorney. When your student was a minor child, as the parent, you had the right to receive information about his medical care, and you were authorized to make medical decisions on his behalf. Remember that, when your child reaches the age of majority, you lose those rights. That’s why it’s critical for your student to sign durable power of attorney and healthcare power of attorney documents. These two documents will authorize you to make financial and healthcare decisions for your student, and to get information about his care. Ask an estate planning attorney to create these documents for you.  It’s well worth the time and expense.
4. A Budget. Aside from how to pay tuition, students need to have a plan for other expenses, like textbooks, pizza, and toothpaste. Create an estimated budget with all possible expenses and examine discretionary costs.
5. A Money Back-Up Plan. You know that even with a great prepared budget, there may be times when your son calls home asking for money. A slick way to transfer funds to your student is to have a linked bank account. You can easily transfer money from your account to his.
6. A Credit Card. Credit cards in college take some discipline. Help your student find one credit card with a low available balance. She can use the card for a few regular expenses each month, which are accounted for in your budget. You should stress the importance of paying on time, every time. That will help to build a strong credit score. With a solid credit history, after graduation it will help her get an apartment or a car loan.
7. Renter's Insurance. Ask your homeowner’s insurance company about how and if your student’s possessions will be covered by your policy when she moves into a college dorm. Most policies will give coverage but be sure it’s not limited. If it’s not as comprehensive as you’d like, you should consider purchasing an additional renter’s policy, especially if the student is living in an apartment instead of a dorm.
8. An Emergency List. Create a shared online document that has all the student’s essential information, so you can both easily access it. It should include the student’s bank and credit card account numbers and how to contact the bank, if the cards are lost or stolen. You should also have college contact information, like a student ID number and account information for financial aid and student loans.
9. A Local Buddy. If your kid’s going to college far from home, see if you can find a friendly face for her near the college. It could be a Facebook friend from high school who lives near campus. Maybe your sister’s college roommate has a relative there. It’s reassuring to have another responsible adult as an emergency contact, particularly if the parents are many hours away from campus.  Introduce your student to this person, even if it’s only over email, and make sure they have each other’s numbers—just in case. Your student may even get a couple of free home-cooked dinners from it. You should also be sure that you have a phone number for your student's roommates or friends—just in case you urgently need to contact your student, but he is not answering your texts.
10. Absentee Ballot. When your student turns 18, she’s a prospective voter. Make sure your student applies for an absentee ballot and exercises her new right!

Your student may want to wave away your concerns about these details, but if an emergency occurs you and your child will be better prepared. Yes, they will be home for spring break, but a lot can happen between now and then.

Reference: nj.com (August 13, 2018) “Don't let your kid go to college without these 10 things”

How Married Women Can Prepare for Being on Their Own

It’s easy to become complacent about household finances, if your spouse handles everything. That’s why it’s so important for both partners to be involved with bills, investments and estate planning.

Women who struggle the most with adjusting to being widowed or divorced, are usually who those who haven’t been involved with family finances, according to Kiplinger in the article, “3 Things Married Women Need to Know About Their Money.”

They may not know how much money they have or if there’s enough to keep the household running after the loss of the main breadwinner. If they haven’t handled budgets and planning, they may not be at all confident that they can.

Women need to have a basic knowledge of how much money they have and how it is allocated. A 2014 study by Prudential found that 27% of married women say they “take control” of financial and retirement planning and manage it themselves. That means that 73% of married women do not. With this gap in knowledge, here are the three basic financial measures that all married women should know about their money:

Research Your Annual Household Income. Determine how much you and your spouse earn together. Review your income from investment accounts, jobs, rental real estate, pensions, Social Security and business investments. If there’s a divorce, the lists of assets and income are an important part of the property settlement. Review your tax returns from the past two years and keep a copy of each tax return going forward.

Understand Your Assets and Debts. At least once a year, make a list of everything you own. Don’t forget checking and savings accounts, 401(k) retirement plans, life insurance and real estate. It’s important to know your net worth, so next to each asset, make a note about any corresponding loans. An annual review also helps make sure couples don’t forget about any investments they may have made years ago, like a stock that may not be performing well.  It is also important to determine ownership in each asset. This will be important, if your spouse passes away, and could affect the income tax you pay each year.

Do You Have an Estate Plan? If you and your spouse don’t have a will, talk to a qualified estate planning attorney and bring the household balance sheet to the meeting. If you’ve made a will, review it and make certain you know which assets you’ll inherit if your spouse passes away. You should also determine how much income will be available from life insurance and other sources to support you for the rest of your life.

The emotional loss of a spouse, or the end of a marriage, is tough enough. Add financial worries to it, and the burden becomes that much harder. Women who are accustomed to dealing with finances and estate planning, will be much better prepared to cope with their new lives as singles.  Contact the Soto Law Firm today for a free consultation about your estate plan and to learn more about what you can do now to be prepared for important life events.

Reference: Kiplinger (March 13, 2018) “3 Things Married Women Need to Know About Their Money”

Can You Protect Your Family from the Impact of a Sudden Death?

Family finances can take a huge hit from the unexpected death of the main breadwinner. Advance planning, even when death seems like a remote possibility, can help.

Several national conversations were launched when two bold-name celebrities— Kate Spade and Anthony Bourdain—took their lives. One was about suicide, the other about what happens to families in the face of an unexpected death, from a financial and estate planning perspective.

CNBC’s article, “Sudden deaths like those of Kate Spade and Anthony Bourdain can devastate family finances,” explains that a number of the leading causes of death in the US are events that happen without warning. These are things like heart disease, accidents, stroke, and suicide, which are among the leading causes of death across the country, according to data from the Centers for Disease Control and Prevention.

An unexpected death has a tremendous impact on a family—mentally, emotionally and physically. In addition, it can also affect family finances, depending on the amount of planning the deceased had in place. Think about the following items following the unexpected death of someone you know:

1. Get organized. You should secure all of the deceased’s financial and legal documents, along with his or her keys, wallet, and phone. Next, find the will, if there is one. If an executor or personal representative is named, make sure he or she takes on their responsibility to lead going forward. If you are the personal representative of the estate, you should change locks on their residence, cancel or rearrange home deliveries, coordinate the care of any pets, have their mail forwarded to the authorized person, and arrange for the care or disposal of perishable food items.  There are many other issues that you will need to discuss with an experienced attorney to help you complete your fiduciary duties as the personal representative of the estate.
2. Look to your own mental and financial health. It’s critical to get the support and help that you need, as you grieve. The death of a loved once can take time to properly process and understand how it will affect your future life.
3. Delay major financial decisions for at least a year. Some folks want to make big life changes right away, but experts say to wait. You're grieving and may not be thinking clearly. You may make a decision that you will regret later. If you do need to make a significant financial decision, talk with an attorney first.

Everyone should create their own estate plan, no only to help your loved ones or persona representative avoid the headaches of probate, but also to achieve peace of mind know that can come from having an estate plan in writing.  Work with an attorney to draft the basic estate planning documents, like a will, power of attorney, and health care power of attorney.  Many estate administration problems and headaches can be avoided through the implementation of a living trust.

When you work with an experienced estate planning attorney to draw up these documents, be sure to communicate both the name of your attorney who drafted the documents and your wishes to your loved ones.

To make sure that your plan continues to stay up to date, review estate planning documents on a regular basis—your estate planning attorney will be able to tell you if you need any minor adjustments, or if larger revisions are necessary. Changes in the law often necessitate a review. The same goes for any major life event, like marriage, separation, divorce, birth, death, adoption, etc.   Contact the Soto Law Firm today to schedule a free consultation with an attorney to discuss how an estate plan can help you and your family achieve the peace of mind you seek.

Reference: CNBC (June 8, 2018) “Sudden deaths like those of Kate Spade and Anthony Bourdain can devastate family finances”

Why Do I Need a Living Will?

Unless you want your spouse or your children to make a lot of very difficult decisions during a difficult time, you should have a living will in place.

A living will provides instructions about how you want to be cared for at the end of your life. It allows you to convey your wishes regarding life support and comfort care decisions during a time when you may be unable to do so. It also spares loved ones from having to guess at what you wanted.

The (St. George UT) Spectrum’s recent article, “How to Make a Living Will,” explains that to adequately detail your wishes concerning your end-of-life medical treatment, you should have two legal documents: a living will that tells your physicians what kind of care you want to receive, if you become incapacitated; and a health care power of attorney. The health care power of attorney designates health care agent(s) you authorize to make medical decisions on your behalf, if you become incapacitated. These documents are only used if you are unable to make medical decisions yourself.  These documents can be changed and updated if you choose to name different health care agents or if you wish to communicated different instructions to your agents.  It’s recommended that you have these documents prepared by an attorney who focuses their practice on estate planning.

Some individuals may also choose to sign a Do-Not-Resuscitate Order (DNR) as part of their health care documents.  Individuals who choose this course do so because an advanced directive doesn’t protect you from unwanted emergency care, like CPR.  Doctors and hospitals in all states accept a DNR.  To create a DNR, ask your physician to complete a form that’s accepted in your state and sign it.  Make sure to tell friends and family where it is located, if the time comes that it is needed.

To be certain that your final wishes are followed, make sure that you have a conversation with your physician, family members, and healthcare team, so they all are informed of your expectations.

You should provide copies of your advanced directives and health care documents to all those involved, to help prevent stress and arguments when the time comes.

If yours is a tech-savvy family, you may want to consider the use of an online service that stores your advance directive and health care documents, so that anyone with access to the account can obtain the right document instantly when needed. Either, be certain that everyone has log in information, or make sure that you carry a  wallet card informing health care providers and first responders of the existence of these documents and how to gain access to them.

Contact the Soto Law Firm today to discuss your options and how the creation and implementation of this planning can provide you with the peace of mind you desire.

Reference: The (St. George UT) Spectrum (June 11, 2018) “How to Make a Living Will”

The Value of an Estate Plan Created by an Estate Planning Attorney

There are certain tasks that require the specialized knowledge of a professional. An experienced elder law or estate planning attorney will protect your family and is well worth the investment.

Estate planning and elder law attorneys often receive phone calls from people whose parents decided to write their own wills or downloaded a will that doesn’t comply with state laws. The family is then faced with the expensive and stressful process of dealing with the probate estate. That’s why nj.com’s article, “Why an estate planning attorney is worth the money,” takes a strong stand in favor of working with an estate planning attorney.

With properly prepared estate planning documents, you will benefit yourself, your family, and beneficiaries, both emotionally and financially. At a minimum you should have the following documents: (i) health care power of attorney, (ii) living will, (iii) financial power of attorney, and (iv) a last will and testament.

A health care power of attorney allows named health care agents to make heath care decisions on your behalf when you become incapacitated or are unable to make your own health care decisions.  A living will, also known as advance health care directive, gives written direction to your health care agents regarding the life support and comfort care decisions you would like made on your behalf at the end of your life.

A financial power of attorney, also known as a general durable power of attorney, designates an agent to take care of your financial affairs during your lifetime.  If you become incapacitated without a power of attorney, it’s likely that a costly and time-consuming conservatorship proceeding will be required to appoint a conservator to handle your financial and personal affairs. A conservatorship proceeding can be expensive.  Not only is the conservator represented by an attorney, but a court may also appoint an independent attorney for the alleged incapacitated person. Furthermore, two doctors are also required to examine the alleged incapacitated person and prepare affidavits for the court. All these people need to be paid.

A last will and testament is the instrument that names a personal representative, who will be appointed by the court, and directs the distribution of your assets to your desired beneficiaries.  If you pass away and have a will, it’s more likely that your assets will be disposed of in the way you want and administered by the person you selected, instead of by the intestacy laws.  Without a will, a state’s intestacy laws state who the lawful beneficiaries of your estate will be regardless of whether or not you wish those people to inherit your assets.

At the Soto Law Firm, we help clients avoid the costs and headaches associated with intestate probate proceedings and  conservatorship proceedings, which would cost  far more than the fees charged by experienced estate planning. The anxiety and stress created by do-it-yourself estate plans can’t be measured in dollars alone.  A little bit more money spent with an experienced estate planning attorney now can save you thousands of dollars down the road and make like so much easier for those loved ones taking care of you or administrating the distribution of your assets.  Contact us today for a free consultation to learn more about how we can help you.

Reference: nj.com (June 3, 2018) “Why an estate planning attorney is worth the money”