Welcome to the Blog

Last week, we discussed the benefits of a unique estate planning vehicle known as a Lifetime Asset Protection Trust (LAPT). We referenced this planning tool in the context of how it could have protected Clare Bronfman, the heiress to the multi-billion-dollar Seagram’s fortune, who was manipulated into blowing much of her $200 million inheritance by financing the cult-like group known as Nxivm.

Yet Clare’s case was quite extreme in terms of both the amount of her inheritance and the circumstances that wiped out her wealth. Though an LAPT would have almost undoubtedly protected both her and her family’s fortune, this planning vehicle can benefit families with far less wealth than Clare’s—and offer asset protection from far less outlandish threats.

Indeed, LAPTs are primarily designed to protect your loved ones and their inheritance from much more common threats, such as divorce, serious debt, devastating illness, and unfortunate accidents. At the same time, LAPTs can provide your heirs with a unique educational opportunity in which they gain valuable experience managing and growing their inheritance, while enjoying airtight asset protection.  

To demonstrate how LAPTs can provide protection to families of all asset profiles, here we’ll describe another true story involving a tragic—yet much more relatable—life scenario. While the following events are entirely true, the individual’s name has been changed for privacy protection.

The flooded penthouse

Eric was staying at a friend’s apartment in New York City. The apartment was the penthouse of the building, and Eric decided to run himself a bath. While the bath was running, another friend called and invited Eric to go out with him, which he did.

At about 2 a.m., Eric came back to the apartment and discovered he made a  huge mistake and left the bath running when he left the apartment. The resulting flood caused more than $400,000 in damage to the apartment and the one below it.

While there was insurance to cover the damage, the insurance company sued Eric for what’s known as “subrogation,” meaning the company sought to collect the $400,000 they paid out to repair the damage Eric caused to the property.

Because the flood was due to his negligence in leaving the bath running—a simple, but costly mistake—Eric was responsible for the damage. Now here’s where the inheritance piece comes into play and why it’s so important to leave whatever you’re passing on to your heirs in a protected trust. If Eric had received an inheritance outright in his own name, he would have lost $400,000 of it to this unfortunate mishap.

However, if Eric had received an inheritance in an LAPT, instead of an outright distribution, his inheritance would be completely protected from such a lawsuit—and just about any other threat imaginable.

Safeguarding your children’s inheritance

If you’re like most people, you hope to leave an inheritance for your children. Indeed, it may even be one of the primary motivations driving your life’s work. Yet if you don’t take the proper precautions, the wealth you pass down can easily be lost or squandered. And in certain cases, such as Clare’s, the inheritance can even end up doing more harm than good.  

When it comes to leaving an inheritance, most lawyers will advise you to place the money in a trust, which is the right thing to do. However, most lawyers would have you distribute the trust assets outright to your loved ones at specific ages, such as one-third at 25, half of the balance at 35, and the rest at 40. Check your own trust now to see if it does this or something similar.

But giving outright ownership of the trust assets in this way puts everything you’ve worked so hard to leave behind at risk. While a trust may protect your loved ones’ inheritance as long as the assets are held by the trust, once the assets are disbursed to the beneficiary, they can be lost to future creditors, a catastrophic accident or illness, divorce, bankruptcy—or as in Eric’s case, a major lawsuit.

Rather than risking their inheritance by leaving it outright to your children at certain ages or following certain life events, such as graduating college, you can gift your assets to your children at the time of your death using an LAPT. When you gift an inheritance to your kids via an LAPT, the trustee of the trust owns the assets, not your children.

Therefore, if your kids ever get divorced, file bankruptcy, have a major medical issue, or are ordered to pay damages in a lawsuit, they can’t lose their inheritance because they never owned it in the first place. An LAPT can be built into a revocable trust, which becomes irrevocable at the time of your death and holds your loved one’s inheritance in continued trust for their lifetime.

A trustee of your choice owns the trust assets upon your death. Because the LAPT is discretionary, this individual has the power to distribute the assets at their own discretion, instead of being required to release them in a rigid structure. This discretionary power enables the trustee to control when and how your kids can access their inheritance, so they’re not only protected from outside threats like ex-spouses and creditors, but from their own poor judgment as well.

And if you’re afraid that a trustee would keep your beneficiary from using the trust assets, you can build in protections to ensure your beneficiary has flexible use, unless there would be a significant risk of loss if he or she did. You can even allow your beneficiaries to become Co-Trustees and then sole Trustees of their own LAPT.

And contrary to what some might think, LAPTs are not just for the mega wealthy. In fact, the asset protection they provide is even more valuable for those leaving behind a modest inheritance. With less money to pass on, it’s much more likely that the inheritance could be totally wiped out by a single unfortunate event, as opposed to a much larger inheritance, which might survive even multiple mishaps.  

An educational opportunity

Additionally, you can use an LAPT as a unique way to educate your children about investing, charitable giving, and even running a business. This is done by adding provisions into the trust allowing the beneficiary to become co-trustee of the trust with a person you’ve chosen and trust to support their education.

In this way, the beneficiary would become co-trustee at a predetermined age or stage of life and be able to use and control the trust assets under the supervision of the other co-trustee you’ve named to guide them. You can even allow the beneficiary to become sole trustee later in life, once he or she has been properly educated and is ready to assume full control. As sole trustee, the beneficiary would be able to resign and replace themselves with an independent trustee, if necessary, to provide the ultimate asset protection.

There are several different ways we can structure the trust to meet your family’s unique needs, so be sure to ask us what options might be best for your particular situation.

A priceless gift

If you wish to protect your child’s inheritance from all possible threats, while incentivizing them to invest and grow the money rather than squander and waste it, consider including a Lifetime Asset Protection Trust in your plan for the ones you love. Indeed, the trust’s highly flexible structure, combined with its bulletproof asset protection make it one of the most valuable gifts you can give your loved ones.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

In the first part of this series, we discussed the dangers of reverse mortgages for senior homeowners. Here, we’ll look at how these complex loans can negatively impact your family and estate plan.

For decades, reverse mortgages have been touted as an easy way for seniors to access extra money during retirement. Indeed, there was a time not too long ago when it was nearly impossible to watch TV without seeing at least one commercial extolling the benefits of these unique mortgages.

Yet, reverse mortgages turned out to be a financial disaster for many senior homeowners and their families. Tens of thousands of retirees lost their homes to foreclosure after defaulting on what was promised to be a “risk-free” way to convert the equity in their homes into cash.

Moreover, reverse mortgages were aggressively marketed mainly to low-income homeowners, who possessed minimal financial assets outside of the equity in their homes—the very people most likely to default. And though the federal government has recently enacted new laws to better protect seniors, reverse mortgages are still being hyped as a safe way for retirees to obtain much-needed cash.

Last week, we talked about how reverse mortgages work and discussed the devastating effects they can have on senior homeowners and their spouses when things go wrong. Here, we’ll cover the potential risks reverse mortgages pose for your family and estate plan.

A reverse in value

When it comes to reverse mortgages, you must not only consider the negative effects such loans might have on you while you are living, but also how they could affect your estate and family when you die. Like any loan, a reverse mortgage is a debt that decreases the value of your estate. But unlike most loans, the balance of a reverse mortgage increases with time, rather than decreases.

With a traditional mortgage, you accrue equity and lower the balance of the loan with each payment you make. Upon your death, your estate receives the net equity from your home, minus the balance, if any, remaining on your mortgage. So in most cases, the longer you hold a traditional mortgage (and the more payments you make), the more value your home will add to your estate.

But with a reverse mortgage, it’s the exact opposite.

With a reverse mortgage, you’re taking out a loan against the equity you already have in your home. Since you’re receiving payments from the lender, rather than making them, the equity you have in your home decreases over time, while your loan balance increases. Thus, the longer you hold a reverse mortgage, the less value your home is likely to add to your estate.

The effect on your family

If you take out a reverse mortgage, you can still leave your home to your family in your estate plan. However, you’ll not only leave your loved ones a less valuable asset, but they’ll also have to pay off the balance of the loan after you die, otherwise the lender will foreclose.

Whomever you select to inherit your home will typically get six months to pay off the reverse mortgage. And they should move as quickly as possible because until the loan is settled, interest on the balance and monthly insurance premiums will continue to eat into any remaining equity.

Unless your family has enough money on hand to fully pay off the reverse mortgage upon your death, they’ll probably end up having to sell the home. If so, the proceeds from the sale can be used to pay off the loan (including all fees and interest), and your family keeps any remaining equity. And this is the best-case scenario.

More trouble than they’re worth

While reverse mortgages are designed to stay within the equity value of your home, this only works as long as home values are rising. If home values crash, like they did during the recession, the balance of your reverse mortgage could end up exceeding the market value of your home.

The good news is reverse mortgages are “non-recourse” loans insured through the Federal Housing Administration (FHA). This means your family won’t ever owe more than the home’s appraised value, and lenders can’t come after your family or estate to recoup their loss. If your reverse mortgage balance exceeds your home’s value at the time of your death, your family is only responsible for paying the lender 95% of the home’s appraised value.

For example, let’s say your home is appraised for $100,000, but the reverse mortgage balance is $200,000. To keep the home, your family would need to pay $95,000—95% of the $100,000 market value. Federal mortgage insurance covers the remaining amount.

Lenders, however, still make back their money. If your home’s sale doesn’t meet the lender’s expenses, an FHA fund insuring the loan pays the difference. Not surprisingly, this fund is currently more than $13.6 billion in the red, which reflects just how risky reverse mortgages can be.

So in this scenario, your family would have to go through all of the hassle of selling the home and end up with nothing to show for it. In such a case, your home would be more of a burden than a benefit to whomever ends up inheriting it, which is the exact opposite of how your estate plan is supposed to work.

Given this, unless there’s equity in the home, your family would have little incentive to sell the property and may want to simply hand it over to the lender to avoid the time and expense of foreclosure. Known as “deed in lieu of foreclosure,” your loved ones can do this by signing the home’s deed over to the lender.

Mitigating the damage

Obviously, the best course of action is to never take out a reverse mortgage in the first place, but if you already have a reverse mortgage on your home, it’s absolutely critical that your family knows about it. This is something that you must not hide from your loved ones. If you have a reverse mortgage, talk to your family now to discuss the available options.

Telling your family that you’ve taken out a reverse mortgage may be embarrassing, but if your family is unaware of the loan and you die or need to move into a nursing home, they’re in for a potentially awful surprise. Indeed, your adult children may be counting on your home’s equity to help cover the costs of your long-term care and/or funeral expenses, so they’ll need to know as soon as possible to make other arrangements.

And once you’ve spoken to your loved ones, mitigate any potential fallout through proactive planning strategies.

A trusted advisor

The vast majority of seniors should simply avoid reverse mortgages all together. If you’re in desperate need of extra money during retirement, there are numerous safer options to consider.

And before you make any major life decision, especially one involving the family home, discuss the potential impact on your loved ones’ future. You never know when one seemingly minor choice might end up causing all kinds of trouble for your family down the road.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

If you’ve watched TV lately, you’ve likely seen ads touting the benefits of reverse mortgages. The spots typically feature famous actors like Henry “Fonzie” Winkler, Robert Wagner, and former U.S. Senator Fred Thompson telling elderly homeowners how they can dramatically improve their retirement with a reverse mortgage.

But what the ads don’t show is that reverse mortgages have actually caused heartbreak and financial devastation for thousands of elderly homeowners and their families. In fact, a USA TODAY review of government foreclosure data between 2013 and 2017 found that nearly 100,000 reverse mortgages failed during the years following the recession.

As a result, thousands of elderly citizens ended up losing homes that had been in their families for generations. In other cases, adult children, who expected to inherit the family home, were forced to sell the property (often below market value) or sign it over to the lender a few months after their parent’s death.

To make matters worse, the hardest hit have been low-income homeowners, targeted by shady lenders who dramatically underemphasized the risks of the loans and oversold their benefits. In particular, USA TODAY found that reverse mortgages were six times more likely to end in foreclosure in predominantly black neighborhoods than in neighborhoods that are 80% white.

While the Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB) have recently enacted new laws to better protect seniors, reverse mortgages are still heavily marketed as an easy way to access extra money in retirement. Given this, seniors and their families should exercise extreme caution when considering reverse mortgages—and in most cases, avoid them entirely.

How they work

A reverse mortgage is a complex loan that allows homeowners 62 and older to convert some of the equity they have in their primary residence into cash. The amount of equity required to obtain a reverse mortgage depends on your age. Younger borrowers need about 60% equity in their homes to qualify, while those over 80 may need just 45%.

Once approved, you can receive the money in one of three ways: as a lump sum, as monthly installments, or as a line of credit. Because you receive payments from the lender, your home’s equity decreases over time, while the loan balance gets larger, thus the term “reverse” mortgage.

With a reverse mortgage, you no longer have to make monthly mortgage payments, and you can stay in your home as long as you keep up with property taxes, pay insurance premiums, and keep the home in good repair. Lenders make money through origination fees, mortgage insurance, and interest on the loan balance, all of which can exceed $10,000 to $15,000.

Although you often have to read the fine print to learn this, the reverse mortgage loan (plus interest and fees) becomes due and must be repaid in full when any of the following events occur:

●       Your death●       You are out of the home for 12 consecutive months or more, such as in the case of needing nursing home care●       You sell the home or transfer title●       You default on the loan by failing to keep up with insurance premiums, property taxes, or by letting the home fall into disrepair

How things go wrong

While reverse mortgages may seem like a good deal (and they can be for those with ample financial resources) the surge in foreclosures occurred mainly among low-income homeowners—the very demographic most likely to default. These seniors were aggressively targeted by lenders after the recession, when money was tight and credit was less accessible.

Homeowners were attracted by flashy ads claiming reverse mortgages were a way to “eliminate monthly payments permanently,” with “a risk-free way of being able to access home equity.” Other ads promised “you can remain in your home as long as you wish” and “you can’t be forced to leave.” Other times, the sales pitches came directly to seniors’ doorsteps vial mailers, door hangers, and door-to-door salesmen.

Some consumer advocates believe the upswing in reverse mortgages was a result of predatory lenders, who simply switched from selling risky subprime mortgages to selling reverse mortgages after the real-estate crash. Whatever the case may be, those who fell prey to these tactics eventually defaulted on their loans for a variety of reasons.

Some people fell behind on their property taxes after their tax rates went up. Some took the lump sum payment, spent the money too quickly, and then left with nothing to live on. Others defaulted after having to move into a long-term care facility or after their finances were depleted by a medical emergency.

Some of the saddest cases involved spouses who were not listed on the reverse mortgage because they were too young to qualify when the loan was taken out by their older spouse. Younger spouses can be listed as co-borrowers, but they have to be at least 62. These widows and widowers were tragically forced from their homes upon their spouse’s death, after they were unable to pay back the balance of the loan.

New rules offer little help

In 2014, HUD developed new policies to better protect at least some surviving spouses. Under the rules, if a married couple with one spouse under age 62 wants to take out a reverse mortgage, they may list the underage spouse as a “non-borrowing spouse.”

If the older spouse dies, the non-borrowing spouse may remain in the home. But he or she cannot access the remaining loan balance and must continue to meet the loan requirements like paying property taxes and insurance premiums. While this may delay things, these surviving spouses are still likely to be foreclosed on down the road.

In 2011, the CFPB cracked down on some of the most misleading ads. All reverse mortgage advertisers are now required to disclose that the loans must be repaid after death or upon move-out. Additionally, the ads can no longer claim the loans are a “government benefit” or “risk free.”

In spite of these new restrictions, the number of  ads for reverse mortgages hasn’t seemed to decline in any significant way, with more seniors and their families likely to fall for them.

Next week, we’ll continue with part two in this series on the dangers of reverse mortgages, focusing on how these loans can negatively affect your family and estate plan.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

This week Tom Petty’s daughters escalated the battle over their late father’s estate by filing a lawsuit against Petty’s second wife that seeks $5 million in damages.

In the lawsuit, Adria Petty and Annakim Violette claim their father’s widow, Dana York Petty, mismanaged their father’s estate, depriving them of their rights to determine how Petty’s music should be released.

Petty died in 2017 of an accidental drug overdose at age 66. He named Dana as sole trustee of his trust, but the terms of the trust give the daughters “equal participation” in decisions about how Petty’s music may be used. The daughters, who are from Petty’s first marriage, claim the terms should be interpreted to mean they get two votes out of three, which would give them majority control.

Alex Weingarten, an attorney for Petty’s daughters, issued a statement to Rolling Stone magazine asserting that Petty’s widow is not abiding by his wishes for his two children.

“Tom Petty wanted his music and his legacy to be controlled equally by his daughters, Adria and Annakim, and his wife, Dana. Dana has refused Tom’s express wishes and insisted instead upon misappropriating Tom’s life’s work for her own selfish interests,” he said.

In April, Dana filed a petition in a Los Angeles court seeking to put Petty’s musical assets under the control of a professional manager who would assist the three women in managing the estate’s assets. Dana alleged that Adria has made it difficult to conduct business by acting abusive and erratic, including sending angry emails to various managers, record label reps, and even members of Petty’s band, the Heartbreakers.

Since Petty’s death, two compilations of his music have been released, including “An American Treasure” in 2018 and “The Best of Everything” in 2019. Both albums reportedly involved intense conflict between Petty’s widow and daughters, over “marketing, promotional, and artistic considerations.”

In reply to the new lawsuit, Dana’s attorney, Adam Streisand, issued a statement claiming the suit is without merit and could potentially harm Petty’s legacy.

“This misguided and meritless lawsuit sadly demonstrates exactly why Tom Petty designated his wife to be the sole trustee with authority to manage his estate,” he said. “Dana will not allow destructive nonsense like this to distract her from protecting her husband’s legacy.”

Destructive Disputes

The fight over Petty’s music demonstrates a sad but true fact about celebrity estate planning. When famous artists leave behind extremely valuable – and highly complex – assets like music rights, contentious court disputes often erupt among heirs, even with planning in place.

The potential for such disputes is significantly increased for blended families like Petty’s. If you are in a second (or more) marriage with children from a prior marriage, there is always a risk for conflict as your children and spouse’s interests often are not aligned. In such cases, it is essential to plan well in advance to reduce the possibility for conflict and confusion.

Petty did the right thing by creating a trust to control his music catalog, but the lawsuit centers around the terms of his trust and how those terms divide control of his assets.

While it is unclear exactly what the trust stipulates, it appears the terms giving the daughters “equal participation” with his widow in decisions over Petty’s catalog are somewhat ambiguous. The daughters contend the terms amount to three equal votes, but his widow obviously disagrees.

Reduce Conflict With Clear Terms and Communication

It is critical that your trust contain clear and unambiguous terms that spell out the beneficiaries’ exact rights, along with the exact rights and responsibilities of the trustee. Such precise terms help ensure all parties know exactly what you intended when setting up the trust.

You should also communicate your wishes to your loved ones while you are still alive rather than relying on a written document that only becomes operative when you die or should you become incapacitated. Sharing your intentions and hopes for the future can go a long way in preventing disagreements over what you “really” wanted.

For the Love of Your Family

While such conflicts frequently erupt among families of the rich and famous like Petty, these can occur over anyone’s estate regardless of its value.

Working with the right lawyer to draft clear terms for your plan as well as facilitate family meetings where you can explain your wishes to your loved ones in person and answer any questions they may have both can dramatically reduce the chances of conflict over your estate and bring your family closer at the same time.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Nobody likes to admit they’ve fallen for a financial scam, but the fact is, it’s easier than ever to get caught up in one. This is especially true in today’s all-digital world, where practically every shred of data related to your personal and financial background can be found online.

While no one is forcing you to use the Internet to manage your financial accounts, purchase goods and services, or communicate with the outside world, these days it’s nearly impossible to live your life without the web. This net-based existence can feel somewhat unnerving for those of us who came of age while the tech revolution was already underway, but for the elderly, who lived the vast majority of their lives offline, it can be absolutely overwhelming.Given their lack of tech experience, coupled with the fact that many of them are undergoing varying levels of cognitive decline and sometimes live lonely, isolated lives, scammers view seniors as easy targets. And many of today’s con artists are so sophisticated, even the most intelligent and educated can be duped.

To protect your aging loved ones (and yourself) from such predators, it’s critical to know the warning signs of financial exploitation. The following are three big red flags to watch for:

1. Unexpected requests

If a family member or friend contacts you out of the blue asking for money, especially via email or text, you should be wary. If the request comes from an unfamiliar email address or phone number, you should be extremely wary. While such requests aren’t totally unheard of, never send money unless you can verify the individual’s identity.

A popular con, known as the Grandparent Scam, involves someone calling and pretending to be your grandchild. The “grandchild” explains he or she is in trouble and needs money immediately. The caller then asks you to wire the money or give it to a third party, usually someone posing as a lawyer or police officer.

No matter how urgent the caller may sound, you should always verify their identity. One of the easiest ways to do this is by having the person call you back on his or her phone. Or if the individual’s phone is dead or lost, you can ask them questions only the actual person would know the answer to, such as the name of their first pet. If they refuse, seem unusually aggressive, or act odd, do not send money.Outside of relatives and friends, scammers often pretend to be from the IRS or another government agency, demanding immediate payment of back taxes or some other debt. They might even threaten you with arrest, ruined credit, or additional fines if you fail to comply. And if they don’t directly ask for money, they sometimes ask for verification of your personal information or direct you to visit a phishing website that secretly puts data-collecting viruses on your computer.Regardless if it’s done by phone, email, social media, or text, no government agency collects money this way. Moreover, legitimate organizations will be more than happy to verify they are who they claim to be, and will never demand on-the-spot payment. No matter if it’s a government agency, a financial institution, law enforcement, an attorney, or a private business, you should always be allowed to verify the legitimacy of the request and consult with a trusted advisor like us before making any financial transaction.

2. Unsolicited money-making ventures

Whether through a savvy business deal or by winning the lottery, we all fantasize about striking it rich. And if you’re retired on a fixed income, this fantasy can be all-the-more alluring. Scammers know this and will use your dreams of easy money to trick you into investing in a too-good-to-be-true venture that promises big bucks for little or no effort.

There are endless variations on this popular con, from wealthy foreign nationals needing assistance transferring money to more legitimate-sounding business deals offering huge payoffs with no risk. These messages sometimes appear as if they were sent to you accidentally, making it feel like fortune has finally favored you—just like you always dreamed it would.

But in reality, strangers don’t just randomly offer other strangers incredible money-making opportunities. What kind of trustworthy business person would seek to partner with someone they’ve never met? And if it’s such a great investment, why not recruit someone they know or simply do it themselves? Indeed, any unsolicited money-making venture you receive online from a person you don’t know is almost certainly a scam.

Many such scams originate in foreign countries with people who aren’t fluent in English, so messages with incorrect spelling, poor grammar, and/or unusual phrasing are often a dead giveaway. Other tip-offs include messages containing the following (or very similar) language:  

• You’ve won one of several valuable prizes.
• You’ve been specially selected for this one-time offer.
• You’ll get a free bonus if you buy our product.
• You’ve won money in a foreign lottery.
• This investment is low risk and offers a higher return than anything else.
• Our product is free, but we need to put shipping and handling charges on your credit card.
• Advance payments or fees are required to clear the promised funds or complete the offer.

3. Requests for personal information

Whenever someone unfamiliar asks you for personal information like a credit card number, Social Security number, or your mother’s maiden name, proceed with extreme caution. Ask them why they need this information. Request they verify their identity. Enquire about alternate methods of proceeding that do not require such private information.

Reputable sources will respect your privacy and be more than willing to provide you with identity verification, or at least offer an alternate way for you to proceed without the need for such personal data. For example, if you receive an email request for your credit card number, look up the organization’s phone number using a source other than what they provide in the email, and ask if you can call and give your information over the phone instead.

One such con has scammers call claiming to be from the Social Security Administration (SSA), and the number may even come up on your caller ID as the SSA. The caller says your Social Security number has been stolen, used in a crime, or suspended. To protect your funds, they direct you to withdraw the money in your bank account and transfer it to a gift card. The scammers then ask for the gift card PIN number for “safekeeping.” They also may try to get you to reveal your SS number by having you verify it over the phone.

However, the SSA does not suspend your Social Security number, nor will it ever direct you to withdraw money from your bank account. What’s more, any situation in which you’re told to buy gift cards and then give out the cards’ PIN number is undoubtedly a scam.

Today’s most sophisticated scammers don’t even need to ask you for your personal data: They can steal it simply by having you open an email attachment or visit a website that’s loaded with data-scraping bots. Don’t open email attachments from strangers—or even friends and family if the attachment seems unusual. Set all of your social media accounts to private so that your personal info isn’t public. And invest in anti-virus and anti-spyware programs to protect your computer from hacking.

Protect your loved ones from all possible threats

By becoming familiar with how such deceptions work and knowing what to look for, you and your loved ones will be far less likely to be conned. At the same time, you should also do everything you can to safeguard your family’s finances from other threats that have nothing to do with fraud.

Without comprehensive estate planning, your family’s wealth and assets are in real danger of being seriously depleted or lost in the event of your death or incapacity. Meet with us to learn about the best planning strategies to put in place to ensure your loved ones will be taken care of no matter what happens to you.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

​When it comes to estate planning, most people automatically think about taking legal steps to ensure the right people inherit their stuff when they die. And these people aren’t wrong.

Indeed, putting strategies in place to protect and pass on your wealth and other assets is a fundamental part of the planning equation. However, providing for the proper distribution of your assets upon your death is just one part of the process. And it’s not even the most critical part. Planning that’s focused solely on who gets what when you die is ignoring the fact that death isn’t the only thing you must prepare for. You must also consider that at some point before your eventual death, you could be incapacitated by accident or illness.Like death, each of us is at constant risk of experiencing a devastating accident or disease that renders us incapable of caring for ourselves or our loved ones. But unlike death, which is by definition a final outcome, incapacity comes with an uncertain outcome and timeframe.

Incapacity can be a temporary event from which you eventually recover, or it can be the start of a long and costly event that ultimately ends in your death. Indeed, incapacity can drag out over many years, leaving you and your family in an agonizing limbo. This uncertainty is what makes incapacity planning so incredibly important.

In fact, incapacity can be a far greater burden for your loved ones than your death. This is true not only in terms of its potentially ruinous financial costs, but also for the emotional trauma, contentious court battles, and internal conflict your family may endure if you fail to address it in your plan.  The goal of effective estate planning is to keep your family out of court and out of conflict no matter what happens to you. So if you only plan for your death, you’re leaving your family—and yourself—extremely vulnerable to potentially tragic consequences.

Where to start

Planning for incapacity requires a different mindset and different tools than planning for death. If you’re incapacitated by illness or injury, you’ll still be alive when these planning strategies take effect. What’s more, the legal authority you grant others to manage your incapacity is only viable while you remain alive and unable to make decisions about your own welfare. If you regain the cognitive ability to make your own decisions, for instance, the legal power you granted others is revoked. The same goes if you should eventually succumb to your condition—your death renders these powers null and void.To this end, the first thing you should ask yourself is, “If I’m ever incapacitated and unable to care for myself, who would I want making decisions on my behalf?” Specifically, you’ll be selecting the person, or persons, you want making your healthcare, financial, and legal decisions for you until you either recover or pass away.

You must name someone

The most important thing to remember is that you must choose someone. If you don’t legally name someone to make these decisions during your incapacity, the court will choose someone for you. And this is where things can get extremely difficult for your loved ones.

Although laws differ by state, in the absence of proper estate planning, the court will typically appoint a guardian or conservator to make these decisions on your behalf. This person could be a family member you’d never want managing your affairs, or a professional guardian who charges exorbitant fees. Either way, the choice is out of your hands.Furthermore, like most court proceedings, the process of naming a guardian is often quite time consuming, costly, and emotionally draining for your family. If you’re lying unconscious in a hospital bed, the last thing you’d want is to waste time or impose additional hardship on your loved ones. And this is assuming your family members agree about what’s in your best interest.

For example, if your family members disagree about the course of your medical treatment, this could lead to ugly court battles between your loved ones. Such conflicts can tear your family apart and drain your estate’s finances. And in the end, the individual the court eventually appoints may choose treatment options, such as invasive surgeries, that are the exact opposite of what you’d actually want.

This potential turmoil and expense can be easily avoided through proper estate planning. An effective plan would give the individuals you’ve chosen immediate authority to make your medical, financial, and legal decisions, without the need for court intervention. What’s more, the plan can provide clear guidance about your wishes, so there’s no mistake or conflict about how these vital decisions should be made.

What won’t work

Determining which planning tools you should use to grant and guide this decision-making authority depends entirely on your personal circumstances. There are several options available, but choosing what’s best is something you should ultimately decide after consulting with an experienced lawyer like us.

That said, we can tell you one planning tool that’s totally worthless when it comes to your incapacity: a will. A will only goes into effect upon your death, and then it merely governs how your assets should be divided, so having a will does nothing to keep your family out of court and out of conflict in the event of your incapacity.

The proper tools for the job

There are multiple planning vehicles to choose from when creating an incapacity plan. And this shouldn’t be just a single document; instead, it should include a comprehensive variety of multiple planning tools, each serving a different purpose.

Though the planning strategies you ultimately put in place will be based on your particular circumstances, it’s likely that your incapacity plan will include some, or all, of the following:

Healthcare power of attorney: An advanced directive that grants an individual of your choice the immediate legal authority to make decisions about your medical treatment in the event of your incapacity.Living will: An advanced directive that provides specific guidance about how your medical decisions should be made during your incapacity.Durable financial power of attorney: A planning document that grants an individual of your choice the immediate legal authority to make decisions related to the management of your finances, real estate, and business interests. Revocable living trust: A planning document that immediately transfers control of all assets held by the trust to a person of your choosing to be used for your benefit in the event of your incapacity. The trust can include legally binding instructions for how your care should be managed and even spell out specific conditions that must be met for you to be deemed incapacitated.

Don’t let a bad situation become much worse

You may be powerless to prevent your potential incapacity, but proper estate planning can at least give you control over how your life and assets will be managed if it does occur. Moreover, such planning can prevent your family from enduring needless trauma, conflict, and expense during this already trying time.

If you’ve yet to plan for incapacity, we can counsel you on the proper planning vehicles to put in place, and help you select the individuals best suited to make such critical decisions on your behalf. If you already have planning strategies in place, we can review your plan to make sure it’s been properly set up, maintained, and updated. Contact us today to get started.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Going on vacation entails lots of planning: packing luggage, buying plane tickets, making hotel reservations, and confirming rental vehicles. But one thing many people forget to do is plan for the worst. Traveling, especially in foreign destinations, means you’ll likely be at greater risk than usual for illness, injury, and even death.In light of this reality, you must have a legally sound and updated estate plan in place before taking your next trip. If not, your loved ones can face a legal nightmare if something should happen to you while you’re away. The following are 5 critical estate planning tasks to take care of before departing.

1. Make sure your beneficiary designations are up-to-date

Some of your most valuable assets, like life insurance policies and retirement accounts, do not transfer via a will or trust. Instead, they have beneficiary designations that allow you to name the person (or persons) you’d like to inherit the asset upon your death. It’s vital you name a primary beneficiary and at least one alternate beneficiary in case the primary dies before you. Moreover, these designations must be regularly reviewed and updated, especially following major life events like marriage, divorce, and having children.

2. Create power of attorney documents

Outside of death, unforeseen illness and injury can leave you incapacitated and unable to make critical decisions about your own well-being. Given this, you must grant someone the legal authority to make those decisions on your behalf through power of attorney. You need two such documents: medical power of attorney and financial durable power of attorney. A medical power of attorney gives the person of your choice the authority to make your healthcare decisions for you, while durable financial power of attorney gives someone the authority to manage your finances. As with beneficiary designations, these decision-makers can change over time, so before you leave for vacation, be sure both documents are up to date.

3. Name guardians for you minor children

If you’re the parent of minor children, your most important planning task is to legally document guardians to care for your kids in the event of your death or incapacity. These are the people whom you trust to care for your children—and potentially raise them to adulthood—if something should happen to you. Given the monumental importance of this decision, we’ve created a comprehensive system called the Kids Protection Plan that guides you step-by-step through the process of creating the legal documents naming these guardians. You can get started with this process right now for free by visiting our user-friendly website

4. Organize your digital assets

If you’re like most people, you probably have dozens of digital accounts like email, social media, cloud storage, and cryptocurrency. If these assets aren’t properly inventoried and accounted for, they’ll likely be lost forever if something happens to you. At minimum, you should write down the location and passwords for each account, and ensure someone you trust knows what to do with these digital assets in the event of your death or incapacity. To make this process easier, consider using LastPass or a similar service that stores and organizes your passwords.

Complete your vacation planning now

If you have a vacation planned, be sure to add these 5 items to your to-do list before leaving. And if you need help completing any of these tasks—or would simply like us to double check the plan you have in place—consult with us.We recommend you complete these tasks at least 8 weeks before you depart. However, if your trip is sooner than that, call and let us know you need a rush Estate Plan Strategy Session, and we’ll do our best to fit you in as soon as possible. Contact us today to get started.  

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Selecting a beneficiary for your life insurance policy sounds pretty straightforward. But given all of the options available and the potential for unforeseen problems, it can be a more complicated decision than you might imagine.

For instance, when purchasing a life insurance policy, your primary goal is most likely to make the named beneficiary’s life better or easier in some way in the aftermath of your death. However, unless you consider all of the unique circumstances involved with your choice, you might actually end up creating additional problems for your loved ones.

Last week, we discussed the first three of six questions you should ask yourself when choosing a life insurance beneficiary. Here we cover the remaining three:

4. Are any of your beneficiaries minors?

While you’re technically allowed to name a minor as the beneficiary of your life insurance policy, it’s a bad idea to do so. Insurance carriers will not allow a minor child to receive the insurance benefits directly until they reach the age of majority—which can be as old as 21 depending on the state.If you have a minor named as your beneficiary when you die, then the proceeds would be distributed to a court-appointed custodian tasked with managing the funds, often at a financial cost to your beneficiary. And this is true even if the minor has a living parent. This means that even the child’s other living birth parent would have to go to court to be appointed as custodian if he or she wanted to manage the funds. And, in some cases, that parent would not be able to be appointed (for example, if they have poor credit), and the court would appoint a paid fiduciary to hold the funds.

Rather than naming a minor child as beneficiary, it’s better to set up a trust for your child to receive the insurance proceeds. That way, you get to choose who would manage your child’s inheritance, and how and when the insurance proceeds would be used and distributed.

5. Would the money negatively affect a beneficiary?

When considering how your insurance funds might help a beneficiary in your absence, you also need to consider how it might potentially cause harm. This is particularly true in the case of young adults. For example, think about what could go wrong if an 18 year old suddenly receives a huge windfall of cash. At best, the 18 year old might blow through the money in a short period of time. At worst, getting all that money at once could lead to actual physical harm (even death), as could be the case for someone with substance-abuse issues.To help mitigate these potential complications, some life insurance companies allow your death benefit to be paid out in installments over a period of time, giving you some control over when your beneficiary receives the money. However, as discussed earlier, if you set up a trust to receive the insurance payment, you would have total control over the conditions that must be met for proceeds to be used or distributed. For example, you could build the trust so that the insurance proceeds would be kept in trust for beneficiary’s use inside the trust, yet still keep the funds totally protected from future creditors, lawsuits, and/or divorce.

6. Is the beneficiary eligible for government benefits?

Considering how your life insurance money might negatively affect a beneficiary is absolutely critical when it comes to those with special needs. If you leave the money directly to someone with special needs, an insurance payout could disqualify your beneficiary from receiving government benefits.Under federal law, if someone with special needs receives a gift or inheritance of more than $2,000, they can be disqualified for Supplemental Security Income and Medicaid. Since life insurance proceeds are considered inheritance under the law, an individual with special needs SHOULD NEVER be named as beneficiary.

To avoid disqualifying an individual with special needs from receiving government benefits, you would create a “special needs” trust to receive the proceeds. In this way, the money will not go directly to the beneficiary upon your death, but be managed by the trustee you name and dispersed per the trust’s terms without affecting benefit eligibility. The rules governing special needs trusts are quite complicated and can vary greatly from state to state, so if you have a child who has special needs, meet with us to ensure you have the proper planning in place, not just for your insurance proceeds, but for the lifetime of care your child may need.

Make sure you’ve considered all potential circumstances

These are just a few of the questions you should consider when choosing a life insurance beneficiary. Consult with us to be certain you’ve thought through all possible circumstances.And if you think you may need to create a trust—special needs or otherwise—to receive the proceeds of your life insurance, meet with us, so we can properly review all of your assets and consider how to best leave behind what you have in a way that will create the most benefit—and the least challenges—for the people you love. Schedule your Estate Plan Strategy Session today.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Being asked by a family member or close friend to serve as trustee for their trust upon their death can be an incredible honor. At the same time, however, serving as a trustee can be a massive responsibility—and the role is not for everyone. In fact, depending on the type of trust, the assets held by the trust, the specific terms of the trust, and the beneficiaries named, the job can require you to fulfill a wide range of complex (and potentially unpleasant) duties over the course of many years. What’s more, trustees are both ethically and legally required to properly execute those duties or face liability. Given this, agreeing to serve as trustee is a decision that shouldn’t be made lightly. Indeed, sometimes the best thing you can do for everyone involved is to politely decline the job. Remember, you don’t have to take it. That said, depending on who nominated you, declining to serve may not be an easy or practical option. Or you might enjoy the opportunity to be a trustee, so long as you understand what it entails.It’s best to make your decision about serving as trustee with eyes wide open. Here’s a brief look at what the job will likely entail, along with some situations where you might want to seriously think twice about agreeing.

What trustees do

As mentioned earlier, a trustee’s duties can vary tremendously depending on the size of the estate, the type of trust, and the trust’s specific instructions. That said, every trust comes with a few core requirements, primarily revolving around accounting for, managing, and distributing the trust’s assets to its named beneficiaries.

Regardless of the type of trust or the assets it holds, some of a trustee’s key responsibilities include:

• Identifying and protecting the trust assets
• Determining what the trust’s terms actually require you to do
• Managing the trust assets for the term specified and distributing them properly
• Filing income and estate taxes for the trust
• Communicating regularly with beneficiaries
• Being scrupulously honest, highly organized, and keeping detailed records
• Closing the trust when the trust terms specify

Ultimately, trustees have a fiduciary duty to properly manage the trust in the best interest of all the trust beneficiaries. Consult with us for more in-depth details regarding the duties and responsibilities a specific trust will require of you as trustee.

Can I get help?

Fortunately, you’re not expected to go it alone: Trustees are encouraged to seek assistance from outside professionals to fulfill their duties. Remember, you do NOT need experience in law, finance, or taxes to serve as trustee. And while you won’t be able to profit from the job, you are able to be paid for your role as trustee. That said, many trustees, especially family members, choose not to accept any payment beyond what’s required to cover the trust expenses. Yet, this all depends on your personal situation and relationship with the trust’s creator and beneficiaries, and of course, the nature of the assets in the trust. In either case, however, you won’t have to use your own funds to get the job done.

Signs the trustee role might be a bad idea

Given the sense of loyalty and filial responsibility that’s often involved, it might feel difficult to turn the trustee role down. But for a number of reasons, saying “no thanks” can sometimes be the best decision, not only for you, but for all parties involved. Of course, this is an entirely personal decision and one you’ll ultimately have to make for yourself after considering all of the factors. That said, here are a few red flags that can signal the role might be better fulfilled by someone other than you:

• Your job, family, and/or health situation is such that you won’t be able to give the job the time and attention it deserves. Some trusts can require far more work than others, and if the role would seriously impede your own life, you might consider declining.
• You don’t get along with the beneficiaries. If there are underlying conflicts or bad blood with the people you’ll be required to serve, this could make the job incredibly difficult and unpleasant for everyone.
• The trust’s terms are vague and/or unclear, leaving you in the position to make difficult decisions you don’t feel qualified to make. Such grey areas are especially troublesome when it comes to distributing trust assets to young adult beneficiaries, who might not be the most responsible with their spending and/or lifestyle.
• It’s not clear exactly what assets the trust creator (grantor) owned, and/or the estate is highly unorganized. Tracking down and managing unorganized and/or poorly funded assets can be a massive undertaking—and potential liability.
• Lawsuits are likely or already underway. As trustee, it’s your duty to defend the trust against lawsuits, and just doing this can be a huge expenditure of your time and energy. What’s more, if a lawsuit against the trust is successful, it could seriously reduce the trust’s value, making your job infinitely more challenging.

We can help you decide

Given the serious nature of a trustee’s responsibilities, you can meet with us for help deciding whether or not to accept the job. We can offer a clear, unbiased assessment of what will be required of you based on the specific trust’s terms, assets, and beneficiaries.And if you do decide to accept the trustee role, we can guide you step-by-step through the entire process, ensuring you effectively fulfill all of the grantor’s wishes with minimal risk. Serving as trustee can be a lot of work, but if you go into the job with eyes wide open and have the proper guidance, it can be an immensely rewarding experience. Contact us today to learn more.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Estate Plan Strategy Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.