Parents Make a Plan for Minors

Two thumbs up for making a plan for your minor children BEFORE going on a “parents only” getaway.

If you are a parent of a minor child (or children) you should think about who would take care of your kid or kids if you suddenly perished. Regardless of whether you’re planning an “adults only” vacation, you should have a Will and it should name a Guardian to take care of your children, and also a Trustee to manage the money (typically life insurance benefits) you have set aside for them. This type of simple planning is one of the best things you can do to protect your family in the event that tragedy hits.

No Will? That’s OK, Connecticut has a Plan for You

When a person dies without making a Will he or she dies “intestate.” If you die intestate your property will pass according to the State of Connecticut Intestate Succession Laws. If you’re married, this means that your spouse will receive the first $100,000 plus one half of the balance of the intestate estate. Your children will receive the remainder. And if your kids are 18 or older, they will receive the money outright.

For example, let’s assume you’re married with 19-year-old twin daughters and have a $500,000 estate. If you died without making a Will, your spouse would receive $300,000 ($100,000 plus half of the remaining $400,000) and your daughters would each receive $100,000. Even the most mature 19-year-old may have difficulty managing a check for $100,000. A new car, luxury vacations or other temptations may be too much for a young person with a large sum of inherited money to handle.

Making a Will allows you to direct where your assets go, as well as enact measures to protect your children from the perils of receiving a large sum of money outright. Remember, if you don’t make an estate plan Connecticut will make one for you. Protect your family and your interests by creating a Will that reflects your wishes. Don’t wait until it’s too late.

 

Helpful Links:

Dying Without a Will – Connecticut

Intestacy in Connecticut

FAQs about Estates from Connecticut Probate Court

 

 

 

Probate is Prevalent in Estate Planning

If you die with a valid Will your estate will go thru the probate process. If you die without a Will and own property, your estate will also have to go through probate. Probate is the process of admitting your Will as a valid legal document, and then disposing of the property of the estate according to the guidelines set forth in the Will. In short, probate is the process of gathering your assets; paying your debts, expenses and taxes; and distributing property to designated beneficiaries. In Connecticut, this process typically takes up to a year to complete and can be expensive and cumbersome.

If all of this sounds a little confusing, that’s because it is! If you’ve ever wondered what actually happens when one probates an estate you should join Attorneys George and Marc for a free workshop on Saturday, July 26^th at 10 am at our offices in North Haven. The program, “Demystifying the Probate Process” will address the ins and outs of the process, the probate timeline, non-legal practical matters involved and how to avoid probate altogether. Please call 203-234-7400 to reserve your seat or email info@guertinlaw.net.

Choose Your Executor Wisely

Image Copyright 2014 by Guertin and Guertin, LLC. All rights reserved.

Part of making your Will in Connecticut includes the naming of an executor. An executor is the person you pick to wrap up your earthly affairs after you’ve passed away. The person you pick to fill this role does not need to be a legal or financial expert, but he or she must have a high level of honesty and integrity, as well as a keen attention to detail. The executor has a legal duty (or fiduciary duty) to act solely in another party’s interests. Their responsibilities include collection and distribution of assets, as well as payment of your debts. Choosing the wrong executor can be an invitation to a Will Contest, family fights, delays, and loss of assets. Think long and hard about this decision, and choose wisely!

I’ll See You in My Dreams

I’ve been having this reoccurring dream:  I am in my office and my phone rings.  I answer.  On the other end is my dog, Ernie and he talks.  It is funny, in my dream, I do not seem to be phased (at all) by the fact my dog is on the phone.  The conversation goes something like this:

Ernie/Dog:  “Marc, I’m going in for surgery in the morning…I’m just a little worried.  What will happen if I  die?”

Marc/Lawyer:  “Ernie, have you ever seen the movie All Dogs Go to Heaven?”

Ernie/Dog:  “I don’t watch TV.  What’s going to happen to my stuff if I die?”

Marc/Lawyer:  “Let me check your file.  I’ll give you a call back.”

Most of the time, I wake up at that point.  When I am awake and on the job, I get similar calls from my clients.  Being a sympathetic person, I bite my tongue and resist the urge to mention the bad results of planning during the 11^th hour

Time can be your best friend, or your worst enemy, and when you are planning or trying to understand the ramifications of your plan on the way to the hospital, time is not on your side.  There is a line in a Bob Dylan song “Time is an ocean, but baby it’s at the shore.” When you are having surgery in the morning, time is “at the shore.”

Trying to pull a plan together in a day or a week before some sort of major surgery is risky.  It is certainly not a big picture approach and there are many reasons why it is inadvisable.    Two major reasons are Contemplation and Cost.

This approach usually lacks the contemplation (on the part of both the client and the attorney) that is necessary to create a plan that is comprehensive and correct.  To get the most benefit out of your estate plan, lots of thought should be put into its’ design, which is difficult to do in an extremely short time frame.

This approach also costs more (note:  other lawyers hate when I talk about how jobs are priced, I mean they want to charge you lots of money- but they are generally horrible at communicating the reasons why).  On pricing, an old, salty lawyer once said to me “You can have it Fast, Correct and Cheap- Pick two out of three.”  If you want it, Fast and Correct- it is not going to be cheap.  If the attorney has to interrupt his schedule to create, draft and properly execute a plan under the gun, before you go under the knife, it is going to cost more, much more.  If the attorney then has to leave, his office to see you at the hospital, it’s going to cost you much, much, much, much more.

You can get a much better plan for less money if you do not wait until the last minute.  If you’ve got surgery planned, make sure your plan is in place long before you go under the knife.

Talking Turkey aka Having “The Talk” with your parents.

 

Do you need a help desk to talk with your parents?

According to recent research conducted by insurance “mega-company” The Hartford, it seems like many baby boomers would rather see their dentist for a root canal than talk to their aging parents about estate planning.   Research indicated  71% of parents of baby boomers were comfortable discussing estate planning with their children, whereas only 54% of their children were comfortable having such discussions. It turns out that parents are more comfortable discussing estate planning than are their baby-boomer children-who knew? This “communication gap” can have serious consequences for your parents and family.  The lack of planning can have devasting effects on the finances, relations and spirit of a family.

 

Talking about your parents dying is not a fun topic to explore- except for a few of you “sickos” out there. Although it may be a hard conversation to have, it can make such a difference if your parents should become seriously ill and especially after your parents are gone. This is too important of a conversation not to have.

Getting the conversation started is the hardest part. A few simple guidelines can help turn this conversation into a positive experience. The most important rule (in my experience) is to include ALL of your siblings in the conversation. Nothing works quicker to undermine your intentions than excluding someone (even if they are an incredible pain in the…um…neck). Group discussion fosters a free exchange of ideas.  Try to listen more than you talk.   Choose a comfortable and private setting for this family meeting that is free from distractions.

The family is assembled, in a comfortable, private, space…then what? How do you actually start the conversation? A good way to start is to discuss your own plan. Discuss with your parents what your estate planning experience was like. Talk about what your estate plan contemplates. Another way to start the conversation is with an article or book on estate planning. If your parents are readers this is a terrific place to start.

Assuming that you have created an opportunity to talk to your parents about their “exit plan” you should discuss several different aspects. Remain focused on the fact that you are trying to help your parents maintain independence and control over assets that took a lifetime to accumulate. Focus on long term care: have they considered what would happen if one or both of them had to spend time in a nursing home? Nursing home costs can quickly eliminate your parent’s life savings. Ask about what type of estate plan they have in place. Make sure the plan fits their estate. Explore whether their estate plan contemplates tax issues, probate costs, or beneficiaries with disabilities? Don’t neglect to focus on lifetime planning. Make sure your parents have updated Powers of Attorney and Living Wills, these simple documents are worth their weight in gold when you really need them.

Remember, most parents want to discuss their estate plan with their adult children. Finding out that your parents have planned their estate will be very comforting. Finding out your parents have not made a plan is a great opportunity to help them get their affairs in order.

 

Asset Protection for the Elderly: How to Protect Your Assets from Nursing Home Costs

Most people never think that they will ever end up in a Nursing Home.  However, the sad reality is that almost half of the population will spend some time in a nursing home during their lifetime.  Currently, the average time spent in a nursing home is 2.5 years

A long term stay at a nursing home can be financially devastating for you and your family.  Connecticut Nursing home care rates of $12,000-$15,000 per month can quickly eliminate a lifetime’s worth of hard work.  Long term care in a nursing home can devour your savings and force your home to be sold at a “fire sale” price to pay for your care.

When people are faced with choosing between preserving their assets and paying for care, there really is no choice, unless the costs of long term care in a nursing home are planned for.  Giving away your money (to a child, for example) before needing long-term care may sound like a good idea, but it can be risky.  Children get divorced, sued, have creditor issues, or can become catastrophically ill.  The assets gifted to your child could be lost through divorce, lawsuits, etc. and would not be available to you.  Furthermore, due to restrictive gifting laws, you may not qualify for Medicaid because you gave your money away.

An Irrevocable Asset Protection Trust (IAPT) provides an opportunity for individuals, both single and married to protect their assets long term.  These assets could be available to you at sometime in the future to pay for things that Medicaid does not, or for an individual’s spouse or as a legacy for future generations, without the risks associated with giving these assets away to another individual.

An IAPT is a legal entity separate from the person who creates it (the Grantor).  It is created by signing a Irrevocable Trust Agreement where the Grantor irrevocably transfers assets to a third person called the Trustee (often the Grantor’s children or other relative) who holds that property in Trust for the benefit of the people who are named as beneficiaries.

Timing is extremely important when establishing an IAPT.  “Beat the Clock” is the name of the game.  In order for an IAPT to work it must be set up well in advance of anticipated nursing home care (currently 5 years).  After the passage of enough time the assets held by the IAPT will be insulated from the ravages of a long term stay in a nursing home, as well as creditor issues, and lawsuits.  Furthermore, the assets held inside of the trust will pass to your beneficiaries probate free and within weeks, as opposed to months if these assets were to pass through the probate process.

If you would like to learn more about protecting your assets, Guertin and Guertin, LLC offers a free consultation on protecting your assets.  Give us a call at 203-234-7400 to schedule your appointment today.  We also will be hosting informational workshops on this topic and others this fall- be on the lookout for dates and times.  If you’d like to be added to our mailing list (to be notified of future workshops) drop us a line at info@guertinlaw.net.

If you have questions that you’d like answered here, please  email me at marc@guertinlaw.net.

Marc Guertin, is a partner at Guertin and Guertin, LLC, a law firm dedicated to Estate Planning, Elder Law, Trust and Probate Administration.  He is co-author of Planning for the Future:  A Practical Guide to Estate Planning and Avoiding Bad Heir Days. Visit us on the web: http://www.guertinandguertin.com.   Call us at 203-234-7400 for a free consultation. Read Marc’s blog at: http://www.deathslittleinstructionbook.wordpress.com. Guertin and Guertin, LLC is located at 26 Broadway in North Haven, Connecticut

BAD HEIR DAYS/Incarcerated Beneficiaries

Do you have children, or other relatives who have found themselves on the wrong side of the law?  Have they spent a little time in the pokey?  If any of your potential heirs have spent time incarcerated in the state of Connecticut, you may want to think twice about leaving them anything of value in your estate plan. 

Leaving assets to a person who has been a “guest” of the state of Connecticut for any amount of time presents a major good news/ bad news situation for the heir.  The good news is, somebody cared about the heir enough to leave him/her something-good news.  If we could just stop there, everything would be fine.  Rarely is their good news without a little dose of bad news.    And now…the bad news.  The state wants to be reimbursed for the cost of incarceration.  That’s right, the state of Connecticut wants to be paid back for the cost of the inmates “three hots and a cot.”   The cost of housing and feeding an inmate over a number of years can really add up.  Paying your debt to society never had a more clear meaning.

Thinking about “hiding” the money somewhere?  Be forewarned- the Connecticut Department of Revenue Services (DRS) are very, very, very good at their job- finding the money.  The DRS has been there and done that and they are always sure to check under the mattress.

There are options (not many) if you want to leave something to someone who is or has been incarcerated.  There are some good ideas and some not so good ideas on what to do with an incarcerated beneficiary.  It is important to note that there is no magic bullet here; every option has its own unique drawbacks.  Professional counsel should be sought before making any decisions or changes to your estate plan.

Is this the year you get your plan together?

On behalf of all of us at Guertin and Guertin, LLC, I’d like to wish you a happy, healthy and peaceful New Year.  The beginning of a new year is always a great time to reflect on the past and look forward and make plans for the future.

Last year we were able to help a lot of your friends, family and neighbors to get on the right path to protecting their assets and ensuring a legacy for their children and grandchildren.

As we start this new year, we are excited to continue to help our clients protect their assets, and ready to face the challenges that can and do arise.  Some challenges can be avoided however, and now is the perfect time to give your estate plan a quick, new year checkup (skip the gym membership this year- you know by March your done).  Take out your estate planning documents, life insurance policies, financial records and other important documents and read through them.  When reading through your documents keep the following questions in mind:

• Do I understand what these documents do/mean?
• Do the documents still represent my wishes?
• Are the beneficiaries still correct?
• Are the people I have put in positions of power (executor/guardian/trustee/power of attorney) still the right people for the job?  Are they still alive?
• Are these Wills so old that they should be in a museum?

Make sure that your plan conforms to your wishes, if it does not, do what is necessary to make the changes you desire.  An ounce of prevention is worth a pound of cure.

If you are having trouble getting started or just don’t know where or how to start, we would like to help you with this and are currently offering a no-cost estate plan consultation.  We’ll look over your plan and make any necessary recommendations or we’ll work with you to develop a plan.  All too often people come to us too late, waiting until after something tragic has happened to start planning.  Many headaches and heartaches can be avoided with advanced planning.  That is why an estate plan checkup is so critical.

Please call my office at 203-234-7400 to schedule your estate plan check up and let us help you make sure your estate plan still works for you.  Law changes and life changes could affect you and you might not even know it.  Make 2011 the year that you get your affairs in order.

Good Times. Bad Times.

Earlier this week the business section of The New York Times ran a great article about a recently deceased Texas billionaire, Dan L. Duncan.  According to Forbes Magazine, Mr. Duncan’s net worth was about $9 Billion, making him the 74^th richest person in the world. Not bad for a guy who started his business with $10,000 and two propane trucks. 

Mr. Duncan died earlier this year creating a good news/bad news tax “situation” for his family.  The New York Times did a wonderful job of highlighting the good news; however, they completely missed the boat on the devastating bad news.

The good news was really (really, really) good.  Because Mr. Duncan died in the 2010 tax year, his $9,000,000,000 estate escaped a 45% estate tax.  Mr. Duncan’s fortuitous death saved his family at least $4,050,000,000 (wow that’s a lot of zeros).  Due to a lapse in the estate tax this year, Mr. Duncan’s estate received “uber-favorable” tax treatment (or no tax treatment at all).  That’s the good news and that’s what The Times focused on, and who could blames them- they were probably blinded by all of those zero’s.

2010’s estate tax anomaly will surely be fixed soon.  Many practitioners believe that next year the estate tax exemption will settle at $1,000,000, putting everyday families at the risk of having to fork over nearly half of the amount over a million to the federal government.

Mr. Duncan’s estate saved $4.5 billion, this year- that’s good.  Mr. Duncan passed a large chunk of his estate to his wife via a Will, that’s bad.  A Will…that’s right, no sophisticated estate/tax planning for this billionaire-his estate got lucky, but I’ve got a feeling there will come a time when the luck will run out. 

So where is the dark lining in this silver cloud?  The dark lining, in this case, is how Mr. Duncan passed these assets to his wife- a Will.  Most likely, at this point, she owns the assets outright and free of trust.  Now for the bad news:  When Mrs. Duncan dies, there surely will be an estate tax and all those assets that she now owns will be taxed.  Uncle Sam is patient- he can wait a few years, especially when the tax treatment of these assets will be more favorable to him.  If Mr. Duncan had planned better and utilized even a simple revocable living trust, it is quite possible that these assets would NEVER be taxed by the estate tax.

The New York Times only highlighted the  good news:  Huge tax savings in 2010, not the bad news:  A  multi-billion dollar estate tax time bomb set to go off once Mrs. Duncan dies.  Many would argue that there are billions of reasons for Mrs. Duncan to die this year.  Be careful Mrs. D.