Posts tagged ‘Estate Planning’
‘nest egg’ planning – an important end-of-year goal
The end-of-the-year rush is in full swing. You’re busy shopping for holiday gifts, planning and attending gatherings with family and friends and (hopefully) simply enjoying the magic of the season . . . so why make time in the midst of all this to think about your nest egg?
Because it’s the *ideal* time to focus on the simple steps to take to properly preserve and protect your nest egg. You can chart a course, follow it (at whatever pace YOU choose) and in the process check off some very important items from your to-do list. The bottom line: the greatest gift you can give your family is to put an organized and thoughtful estate plan into place – one that protects your nest egg.
We’ll go through the steps incrementally, starting out with the first seven estate planning items on the checklist. (My next post will cover insurance planning, which ties in directly to a thoughtful estate plan for most people.)
- Make (or update) your will document. If you don’t already have a will document, now is the time to put one in place. This isn’t a complicated or expensive task. I’ve written previously about why everyone should have a will – check out these posts for more information HERE and HERE. And if you already have a will, you should review it on an annual basis to make sure that it continues to carry out your wishes. Obviously, if you’ve had a change in life circumstances in 2010 – marriage, divorce, new child, etc. – then a review of your will is imperative.
- Create (or update) your powers of attorney and living will. Everyone should have two powers of attorney in place, if you reside in Tennessee: a general durable power of attorney and a power of attorney for healthcare. With these two documents, your family will be able to manage your affairs in the event you’re disabled. Without these documents, a conservatorship may be necessary – go here to read my article on this topic. And as with your will documents, the powers of attorney should be reviewed annually – make sure that the people you’ve designated are still appropriate for this position. As well, terms for the documents do change, so check with your estate planning attorney to see if your documents require substantive revision. A living will sets out your end-of-life health care preferences and is important information for health care providers and your family.
- Create a letter of instruction. This letter goes hand-in-hand with your will and powers of attorney documents. In this letter, you provide invaluable information to your heirs: where important documents are located, where your financial accounts are located, special burial wishes, and the like. I’ve written before about compiling this information for your heirs – you can read this article here.
- Calculate (or review) your net worth. The amount of your estate – e.g. the value of all of your assets – determines in large part what kind of estate planning you can/should do to protect your nest egg for your heirs. You should review your net worth annually and consult with your tax and/or estate planning advisors to determine if your plan requires any substantive changes in order to achieve your goals.
- Consider creation of a trust. Your annual review of net worth may lead to a recommendation that you establish a trust – either living (created and funded in the present) or testamentary (created and funded following your death). A trust often can be an effective vehicle for transferring wealth and protecting assets.
- Consider funeral pre-planning. This is a simple step to take, and can save cost and time for your family. It’s as simple as contacting local funeral homes and requesting pre-planning information.
- Arrange for the orderly transfer of business assets. If you are a small business owner, planning for the smooth operation (or sale) of your business in your absence requires more than a simple reference in your will document. Your entity documents (or legal agreements with business partners) should address what happens to the business upon death, and should be reviewed annually to confirm that the plan continues to meet such goals. As well, you should consider the purchase of life insurance as a vehicle for funding the transfer of business assets at death.
Take the above steps, one-at-a-time and at your own pace. But just do it. In my next post, I’ll add a few more to-do items to the list. And in the meantime, feel free to call (615.595.7776) or email (cnm@csquaredlaw.com) if you have question about your year-end planning.
As I write this post, my satellite weather station reports the temperature at 19 degrees, with a ‘feels like’ temperature of six degrees. I hope you’re staying warm and enjoying this holiday season!
With *warm* regards,
Caitlin Moon
How to save money on legal fees – really!
Yes – I am going to tell you how to save money on legal fees! Why? Because this is information that every consumer of legal services needs to possess, and it makes the entire experience more productive, efficient and positive – both for the attorney and the client.
The first – and perhaps easiest – step you can take to reduce the time spent by an attorney on your matter (and thus reduce the fee) is to provide organized, responsive information as requested by your attorney. If I must spend time combing through a client’s disorganized file to retrieve the necessary information, I’m charging for this time. I save time and you save money if I can skip this step and start with a neatly organized file.
In my practice, I often utilize worksheets to assist clients in identifying and organizing the necessary information. When a client provides a full response on the worksheets – along with organized documents (see above) – then less of my time (and thus less of the client’s money) is required for me to get straight to the ‘real’ legal work required. So the second step is to complete worksheets (or checklists) fully, responsively and timely.
A third tip: offer to do some of the work yourself. Yes, I am telling you that there are certain tasks that I am happy to have the client tackle – again, saving my time and the client’s money. Of course, I’m glad to request documents from the Secretary of State – or complete and file simple forms with this office (and many of my clients are happy to pay for my time in doing this). However, if saving money is a priority and you have the time – offer to do as much work yourself as is possible and appropriate, given the matter in question.
A great example of how doing it yourself can save money: you can utilize the c2lawonline.com ‘virtual law office’ to create a complete estate plan online via secure checklists and e-mail communication with me. You save substantially because the process is streamlined (versus the traditional in-office consultation process) – and you, the client, are responsible for execution of the documents, thus saving even more attorney time.
Along the same lines, you can also ask your attorney to be your ‘coach’ – you receive advice on how to proceed, but do the actual work yourself. This may or may not apply to your specific legal matter, but if you have the time and inclination to do most of the work yourself and simply have an attorney as a ‘coach,’ then ask if this is a viable option!
Finally, one of the easiest ways to save on legal fees is to group all of your legal matters together, working with a single attorney or firm. Why this costs less is obvious – an attorney (or firm) who already knows a lot about your business/family/legal history will be able to complete work much more efficiently, even in different areas of the law. Each time you commence to work with a ‘new’ attorney, that person faces a learning curve – he/she must review files, documents, ask you to complete worksheets, and so on, to gather the necessary background and information. By keeping your work grouped with one attorney, this learning curve disappears – and you save in legal fees as a direct result.
Many of my clients benefit from this concept – starting out as business clients, I then work with them on an estate plan. For the vast majority of small business owners, it is crucial that an estate plan adequately address the business – and often the business documents and estate planning documents work together. Because I am already familiar with the business structure, I can skip the step of gathering and processing this information and get right to the estate planning. The result? My client spends much less on his or her estate plan.
If any/all of these steps apply to your legal matter – put them in place and start saving money on legal fees!
Even more reasons to have a last will + testament . . .
In my last post, I reviewed the law in Tennessee on intestate succession – e.g., what happens to your estate (your stuff) when you die without a will. This ‘default’ plan for distributing your estate likely is reason enough to create a last will and testament.
But there are more reasons, just in case you were wondering . . .
In discussing with clients why they want to create a well-thought-out will document, I universally get agreement with the proposition that a properly-drafted will should both save the time and effort of the person/people who are dealing with the estate’s probate process AND it should eliminate as much probate-related expense as possible. Both of these are worthy goals, and are easy to achieve. But planning is necessary!
In Tennesssee, there are a lot of ‘hoops’ one must jump through when administering an estate that didn’t plan properly for probate – whether an intestate estate (no will at all) or an estate of someone who simply had a poorly-drafted will document.
One of the hoops – that can require significant time on the part of the executor, or significant expense on the part of the estate if professionals must be hired to complete this requirement: an accounting of the estate’s contents. The personal representative has to file a statement of all receipts, disbursements and distributions of principal and income for the accounting period and the remaining assets held in the estate – both initially, when the estate is opened, and annually until the estate is closed. See Tennessee Code 30-2-601 et seq.
The accounting can be effectively waived in a properly-drafted will, thus saving your executor a great deal of time and your estate the expense.
Another hoop is the estate inventory. Unless properly waived in a will, then the personal representative has to make a “complete and accurate inventory of the probate estate of the deceased.” This is then filed with the probate court clerk. See Tennessee Code 30-2-301 et seq.
Again, this hoop requires a significant expenditure of time on the part of the personal representative – and/or expense if professionals must be paid to complete this work.
I once worked on behalf of a family whose matriarch had died rather unexpectedly. Her will was drafted decades earlier, and didn’t waive inventory. It turned out that she had thousands of antique items – she’d been an avid collector for years. The family was ready to simply divvy everything up and sell what no one wanted, and had even reached agreement on these points. But a full inventory was still required, which took a LONG time to document. The cost was real in terms of time, but also in terms of emotional involvement. The family members weren’t well-served by dealing with this administrative task while in the midst of mourning their loss.
Creating an effective will document, whether your circumstances are simple or complicated, can be a fast and easy process. Just do it.
Exactly WHY do I need a will?
I offer no-cost consultations with anyone interested in planning his/her estate – and while I’ve been talking with folks about their wills and related documents for more than 12 years now, it still amazes me how many people have no idea what happens to their ‘stuff’ when they die without a will.
I practice in Tennessee, so what I’m about to say only applies in this state. Each state has its own laws, but they all do have ‘rules’ about where stuff goes at death if a person doesn’t make other plans through a will.
So where does my stuff go if I die in Tennessee without a will? This is a multi-level question, and depends upon a lot of factors. The formal term for this is ‘intestate succession’ and details are set out in TCA § 31-2-101 through 110.
So where to begin? Pick the description of your situation:
Married with no children: your entire estate goes to your spouse
Married with children: your spouse receives 1/3rd or a child’s share, whichever is greater (e.g. if you are married and have one child, then your spouse receives half and your child receives half; if you are married with three children, your spouse receives 1/3rd and your children each receive 1/3rd of the remaining 2/3rds, which equals 2/9ths; in any of these instances, if a child is deceased, then his/her share goes to his/her living children if any (your grandchildren) or if none, then your remaining children share equally)
Unmarried with children: your children each receive an equal share
Unmarried with no children: to your parent(s), if living; if only one living parent, then he/she takes all
If parents aren’t living: to your brothers and sisters equally (or to a sibling’s children if a sibling is deceased but has children – the children then share equally in the deceased parent’s share)
If no siblings, nieces or nephews: one-half to paternal grandparents (if living) and one-half to maternal grandparents (if living) – the children/grandchildren (whomever is the closest in kinship still living) take the share of a deceased grandparent; example: if your paternal grandmother is living but your paternal grandfather is deceased, then your paternal grand-mother receives ½ of your estate and the rest is shared between your maternal grandparents if both are still living – but if both maternal grandparents are deceased, then their ½ is shared equally by all of their living children (your cousins) or if they have no living children but do have living grandchildren, then the grandchildren receive the grandparents’ share
*However – if there are no living relatives on one side, then the other side receives your full estate; for example, if your paternal grandparents are deceased and have no living children,grandchildren, etc., then your entire estate passes to your maternal grandparents or their closest living relatives if they are deceased
There are yet more twists and turns if you die without any living relatives whatsoever. But that is a subject for another day.
Suffice it to say, most folks would make plans other than the path Tennessee provides when you die without a will. If you are married and have two very young children, do you intend for your children to inherit as much as one-half of your estate? Most often, the answer to this question is no. You likely want your spouse to inherit everything, and have full legal authority to use your entire estate in a manner that is best for your family.
There are many, many scenarios that can be painted, all of questionable desirability, when following the intestate succession flow chart through to many possible conclusions. Controlling the ultimate destiny of your estate is not a complicated process. It involves education and thoughtful consideration. Rely on a knowledgeable estate planning attorney to obtain the education. You will then be prepared for the thoughtful consideration!
Generally the estate planning process takes about two weeks with my clients, from start to finish, and depending on the client’s schedule. Next week’s blog entry will discuss the steps involved in the estate planning process – knowing what to expect can help you make the most of the process and work through it as thoughtfully and efficiently as possible.
In the meantime, feel free to contact me with any questions about this or any other estate planning topic – 615.656.4044 or cnm@csquaredlaw.com.
Change is in the air!
There’s a good reason for the time that’s passed since my last blog post – I’ve created a new law firm with another Franklin attorney, Christina Daugherty. Our new venture – C²Law :: creative legal counsel – is located at the Factory in Franklin, in a space overlooking the Artist Row area in the main building.
Christina and I were co-founders and partners at Harpeth Law Group, PLLC, which was the predecessor to my HarpethLaw practice. She moved her practice to Nashville to better serve her clients north of Franklin, but she soon realized that she missed the pace of worklife – and the great community of clients and fellow attorneys – here in Williamson County.
In our new venture, we both focus our practice on those areas in which we have depth of experience and expertise. I will continue my estate planning, elder law and business law practice, and Christina will be offering legal counsel in these areas:
- General civil + business litigation
- Family + juvenile law
- Criminal defense
- Personal injury
You can visit our brand new website for more information about what we do, and how and why we do it: www.csquaredlaw.com
I will be posting very soon with more information about our practice areas and the unique services we’re offering our clients at C²Law (pronounced ‘C squared law’). For instance, we now create an online portal for each client – called a client extranet – that gives clients instant, 24-hour SECURE access to all communication and documents in their matter. This revolutionizes communication with clients, keeping all information organized and accessible by both clients and their legal counsel. It also creates greater efficiency, which means we can do more work at less expense for our clients.
Stay tuned for further updates – and stop in to see our new space!
C²Law :: creative legal counsel
In the Factory
230 Franklin Road, Suite 12-I
Franklin, Tennessee 37064
615.595.7776
Considering a special needs trust.
With a special needs trust (otherwise known as a supplemental needs trust), you can plan for the future financial security of your child with special needs. This estate planning tool is very effective in creating a clear course for directing, protecting and preserving assets that can be used to provide for the financial security of a disabled child, regardless of age.
To create a plan that is truly protected and thus provides the greatest security, it is important to consult with an attorney experienced in this area of the law. One major goal of such a trust is to protect the trust assets from creditors of the beneficiary (the child with special needs), and to insure that the trust assets are excluded from consideration for needs-based aid and programs a child might otherwise be entitled to (such as Medicaid and Social Security benefits). An improperly-formed trust won’t provide these protections.
Before engaging in the trust planning process, I suggest a family should consider the following issues – discuss your thoughts and feelings with each other, consult with your financial advisors, and raise these matters with your legal counsel:
•If you have more than one child, consider the division of assets among the children – a simple, equal division is not always ideal, especially if one child has special needs. The type of assets in question can also lead to a division other than in equal parts.
•Research and understand the difference between government assistance programs that may be available to your child with special needs – Medicare, Medicaid, Social Security Disability Income and Supplemental Security Income, for example.
•Review all beneficiary designations (e.g. life insurance contracts) to insure that no assets/resources pass directly to the child with special needs.
•Consult with your insurance agent to determine if a second-to-die life insurance policy is an appropriate and cost-effective way to fund a special needs trust.
•Consult with your financial advisor if using retirement accounts to fund a special needs trust – these must be structured properly in order to avoid negatively affecting a disabled child’s ability to qualify for needs-based aid.
•Create an estate plan that protects assets left for the benefit of a child with special needs. Such a plan could, and probably should, include the following:
1•a special needs trust, which is funded by parents’ assets, and which won’t be included in an asset calculation for needs-based aid if properly drafted
2•carefully choose a trustee of the special needs trust, and draft a supplemental letter to the trustee, to assist the trustee in carrying out his/her duties on behalf of your child
3•parents’ powers of attorney should permit the designated agent to make discretionary, non-support distributions to or for the benefit of a child with special needs
4•include contingent special needs provisions in all estate planning documents
Creating an effective special needs trust doesn’t require great complication or expense, but it must be drawn properly in order to achieve the desired effect. Understanding the relevant variables and carefully considering your planning choices is the first step.
For a basic overview of this topic, you can visit the following link to Justia’s article on the topic: http://www.justia.com/estate-planning/special-needs-trusts/.
