Category Archives: Estate Planning

Someone Had to Say It

Memorial Day Weekend- 2016: My Mom, Dad, sister, brother and me, celebrating my parents’ 50th Wedding Anniversary at The Hotel Manisses on Block Island.

You do know Sue, if something happens to Mom at this point, there’s no way Dad can stay in the house by himself”.

I still remember where I was parked when my sister spoke these words to me. Although our mom’s terminal cancer was “stable” at the time, our dad had entered into early stages of dementia and without her, would not be able to care for himself. Someone had to say it.

But we didn’t need to worry about that now, mom was finewe had time.  

I also remember the intense fight my sister and I had after our mother passed, while having a discussion about our father, moving him out, selling the house. My brother was in on this one too. It was not a discussion at all actually, it was a screaming match between me and my sister, wrought with grief. Two against one, and I was the odd man out. I knew intellectually what needed to be done, I just wasn’t ready emotionally for all that it meant. Someone had to say it.

I will add, my sister and I are extremely close, yet there we were.

It’s very difficult to have these conversations during a time of crises or grief.  

There are many articles written about how adult children should approach these tough topics with their parents because it is so hard for any of us to face getting older and what these changes mean for all family members. I think there should be more written for parents along the lines of, “Talk to Your Adult Children Before Things Get Ugly, Because It Can Get Ugly”.

Have these conversations with your adult children now. Let them know what you want, but keep in mind their lives as well if what you want has a heavy impact on them. Don’t be afraid of hurting anyone’s feelings. You know your kids better than anyone. There’s potential for worse fall out and hard feelings amongst your children after you are gone. When you have these hard conversations ahead of time when things are good, your kids are secure in knowing your wishes and that they are doing the right thing by you in the future, because “Mom and Dad said so”.

Some pointers for families:

1. Start Early
The sooner you begin to open up these conversations the better. No one is in crisis and it’s much less threatening for all involved.

2. Ensure your Estate Planning is in proper orderEstate Planning is one of the most important things a family can be sure is buttoned up tight. Work with a qualified estate planning attorney to be sure your wishes/concerns are addressed fully in a legal capacity. Documents such as health care proxies and durable powers of attorney are critical to have in place at all times, but especially as we age.

While these may be generic legal documents, their impact is anything but. There’s a heavy human component to those pieces of paper, and you must be sure to choose a person(s) you know you can trust explicitly to carry out things the way you would want. A conversation should be had with anyone involved in your wishes. These directives will potentially be a huge responsibility for this person at some point. Be sure the person(s) you are choosing are up for the task that may one day fall on them. Don’t be afraid of hurting anyone’s feelings when making your choices. It’s too important for that.

3. Organize Important Documents Personal, financial and legal documents should be organized and kept in one place. Tell a trusted family member or friend where they are should they need to be accessed.

4. Talk About the What IfsHave open conversations about what things might look like if things were to either suddenly, or over time, change. Discuss what options there are, what that might look like for all of you as a family, what would be the ideal solution if you could have it, what monies might be needed, who may need access to certain things like financial or legal documents. It’s a lot to think about, and not pleasant to talk about, but it’s harder when there’s been no discussion at all.

5. Enlist the Help of OthersIf you find starting these types of conversations too difficult on your own or fear emotions escalating, enlist the help of a trusted professional who is well versed in your wishes. It may be your estate attorney, financial advisor, doctor, or clergy member that could help facilitate a family discussion and help keep emotions in balance. We work with clients and families touching the most personal side of their lives every day. We can help here too.

There are no easy answers, I’m not going to pretend there are. Facing one’s mortality or that of someone we hold dear is as real as it gets when it comes to human emotion, but having these conversations in an open and honest manner may be one of the greatest gifts you can give to each other. 

Financial Fitness Tip

If your income was too high in 2019 or 2020 to receive the latest round of recovery stimulus, you will again have the opportunity to receive the recovery rebate (January 2021) as a tax credit when you file your 2021 return.  If you made too much prior to now but have since lost a job, or were close to the threshold and will be close to the threshold again in 2021, you can take steps now to reduce your taxable income.
 
The AGI income thresholds are more stringent for this latest round than they were for the previous two:
 
Single/MFS:        $75,000 – $80,000
HOH:                   $112,500 – $120,000
MFJ:                    $150,000 – $160,000

My Favorite Quotes

This one is for the Class of 2021 all over the world who had their moments big and small rocked by this pandemic for the past 14 months (or really, any of us):
 
“The Oak fought the wind and was broken, the Willow bent when it must and survived.”
                                                                       -Robert Jordan, The Fires of Heaven

Alleviate This Planning Headache Now, Before it Becomes a Bigger One

I’ve noticed that the older my kids get, the further away my marker gets for true adulthood.

When I was the mother of toddlers, older kids in high school and college seemed so grown up to me, ready to support themselves and make smart decisions. I’d see them driving around town, getting their first jobs, heading off to college, starting a career. Adults, right?

But then your own kids start to get to that age and you learn that despite this outward appearance of “young adulthood”, they are still just KIDS. Sure, they are getting there, but they won’t truly arrive for years to come.

In most states, they legally become adults at 18. As any parent of a 17 year old knows, that’s crazy talk.

The idea of not being “here” to get them all the way “there” is not a thought we like to ponder.

One of the things you can do as a parent is put an effective estate plan in place in the event something should happen.

This is even more critical if you are a single parent, as you are the last line of defense. Even if there is an ex-spouse involved in their lives, once the horse has left the gate (i.e. they inherit all of your assets outright), that parent has no legal say about how those assets are spent.  

I shared last month that my husband and I were in the process of updating our estate documents. When we last updated them, age 25 seemed fairly adult to me, an appropriate time for our children to receive our assets should something happen to us.

Wait, what??? No way. I’ve changed my mind. At least not all of it, at once, for any old thing they wanted.

Pay off college loans? Sure. Buy a (reasonable) car? That makes sense. Maybe take a chance of a lifetime trip around the world before they start their career? Well, maybe.

Depending on what is going on in my kids’ lives at that time, I’ve legally entrusted their Auntie Beth to guide them in making good decisions around money while they continue to learn to make those sound decisions on their own.
When I meet with prospects and clients, I tell them that a financial plan is a living, breathing thing. It’s not just one and done. Life is always changing.

Estate planning, as part of your overall financial plan, is very much the same. You first create an estate plan when you are newly married or have young children. You can’t possibly create a single document that addresses all situations forever. You have no idea what life will look like in 5 years, never mind 25.

In addition, estate tax laws are ALWAYS changing and with that, estate planning techniques are adjusted to meet your needs within the context of these changes.

Life happens. If you haven’t updated your estate documents in the last 3-5 years, take time to review them now and answer these questions: 

  • If the proverbial “hit by a bus tomorrow” happens to you, is your estate in proper order for the person you trust with your life to step in, literally that day, and take over with as little roadblock as possible?
  • Does this plan still reflect your wishes and the wishes you have for your beneficiaries?
  • Are the people you’ve named as health care proxy, power of attorney and/or trustee still the ones you trust the most to handle these responsibilities? Are they getting older and maybe no longer the best choice? Are their values similar to yours? Remember, they may be making major decisions in your place.
  • If you’ve created trusts, are your assets titled appropriately to “fund” the trust?
  • IRA, 401(k) and life insurance assets pass by way of beneficiary designation and NOT by will or trust. Do you have beneficiaries named appropriately? Again, it does not matter who or what you have in a will or trust. It won’t apply to these types of assets. 

Honestly, there are many other pieces of the estate planning puzzle to consider. A qualified estate planning attorney will walk you through it all.

You can’t take away the heartache, but you can alleviate some of the headache.

Financial Fitness Tip

Last March, I reminded you that you have until the current tax filing deadline to make IRA contributions for LAST YEAR.
 
But my tip this month is to point out that your child who works a part-time job can also still make a 2020 contribution – and it should be to a Roth IRA.
 
If they had earned income in 2020, consider opening a Roth IRA and having them fund it with their earnings or, if you are in a financial position to do so, fund it for them, or a combination of both.
 
They can contribute up to the lesser of $6,000 or their earned income for 2020.
 
They are most likely earning too little to owe any federal or state income taxes, which means this “income tax free” money is being invested into an account that will grow tax free forever. NO TAXES EVER, even when they take it out.
 
Of course, as with all qualified accounts, there are rules as to when distributions can be taken tax and penalty free, but as long as they follow the rules, this savings vehicle is a slam dunk.

My Favorite Quotes

I’m sure many of the women being honored this March for Women’s History Month followed this type of mindset:
 
“You can never leave footprints that last if you are always walking on tiptoe” – Leymah Gbowee

Someone Had to Say It

Memorial Day Weekend- 2016: My Mom, Dad, sister, brother and me, celebrating their 50th Wedding Anniversary at The Hotel Manisses on Block Island. 

“You do know Sue, if something happens to Mom at this point, there’s no way Dad can stay in the house by himself”.

I still remember where I was parked when my sister spoke these words to me. Although our mom’s terminal cancer was “stable” at the time, our dad had entered into early stages of dementia and without her, would not be able to care for himself. Someone had to say it.

But we didn’t need to worry about that now, mom was fine, we had time.  

I also remember the intense fight my sister and I had after our mother passed, while having a discussion about our father, moving him out, selling the house. My brother was in on this one too. It was not a discussion at all actually, it was a screaming match between me and my sister, wrought with grief. Two against one, and I was the odd man out. I knew intellectually what needed to be done, I just wasn’t ready emotionally for all that it meant. Someone had to say it.

I will add, my sister and I are extremely close, yet there we were.

It’s very difficult to have these conversations during a time of crises or grief.  

There are many articles written about how adult children should approach these tough topics with their parents because it is so hard for any of us to face getting older and what these changes mean for all family members. I think there should be more written for parents along the lines of, “Talk to Your Adult Children Before Things Get Ugly, Because It Can Get Ugly”.

Have these conversations with your adult children now. Let them know what you want, but keep in mind their lives as well if what you want has a heavy impact on them. Don’t be afraid of hurting anyone’s feelings. You know your kids better than anyone. There’s potential for worse fall out and hard feelings amongst your children after you are gone. When you have these hard conversations ahead of time when things are good, your kids are secure in knowing your wishes and that they are doing the right thing by you in the future, because “Mom and Dad said so”.

Some pointers for families:

  1. Start Early
    The sooner you begin to open up these conversations the better. No one is in crisis and it’s much less threatening for all involved.
     
  2. Ensure your Estate Planning is in proper order
    Estate Planning is one of the most important things a family can be sure is buttoned up tight. Work with a qualified estate planning attorney to be sure your wishes/concerns are addressed fully in a legal capacity. Documents such as health care proxies and durable powers of attorney are critical to have in place at all times, but especially as we age. 

    While these may be generic legal documents, their impact is anything but. There’s a heavy human component to those pieces of paper, and you must be sure to choose a person(s) you know you can trust explicitly to carry out things the way you would want. A conversation should be had with anyone involved in your wishes. These directives will potentially be a huge responsibility for this person at some point. Be sure the person(s) you are choosing are up for the task that may one day fall on them. Don’t be afraid of hurting anyone’s feelings when making your choices. It’s too important for that.
     
  3. Organize Important Documents
    Personal, financial and legal documents should be organized and kept in one place. Tell a trusted family member or friend where they are should they need to be accessed.
     
  4. Talk About the What Ifs
    Have open conversations about what things might look like if things were to either suddenly, or over time, change. Discuss what options there are, what that might look like for all of you as a family, what would be the ideal solution if you could have it, what monies might be needed, who may need access to certain things like financial or legal documents. It’s a lot to think about, and not pleasant to talk about, but it’s harder when there’s been no discussion at all.
     
  5. Enlist the Help of Others
    If you find starting these types of conversations too difficult on your own or fear emotions escalating, enlist the help of a trusted professional who is well versed in your wishes. It may be your estate attorney, financial advisor, doctor, or clergy member that could help facilitate a family discussion and help keep emotions in balance. We work with clients and families touching the most personal side of their lives every day. We can help here too.

There are no easy answers, I’m not going to pretend there are. Facing one’s mortality or that of someone we hold dear is as real as it gets when it comes to human emotion, but having these conversations in an open and honest manner may be one of the greatest gifts you can give to each other.