Category: Estate Planning/Wills and Trusts

Online Estate Planning Docs. Can Devastate-Money Can Be A Curse

Posted by heschlawadmin on

Reason 2: Ignorance Is Bliss! Don’t be a fool and do your own Generic Online Estate Planning Documents

The second reason in our series on how online estate planning documents can devastate your family and leave them in financial ruin is because online documents are generic and will oftentimes make your plan more complicated and confusing for your family.  If you have ever been in a position where a family member was sick or passed away, you know how much stress the situation can cause your family.  Unfortunately, some people have good intentions of making things easier for their family by using online estate planning documents, but oftentimes that decision just makes matters worse for everyone.  Online document users find it unnecessary to meet with a lawyer because they think that their situation isn’t complicated and that their online Will, Power of Attorney, and health care documents will suffice.  However, online documents are overly generic and usually do not serve the needs of even the most basic family situations.  In Reason 2 of this blog series, I will analyze how generic online documents can make matters worse for your family. More specifically, Part I of Reason 2 will address how customization issues can cause confusion and chaos for your loved ones.

Part I. Online documents don’t allow customization for your family’s unique situation – causing confusion and chaos for your loved ones

In estate planning, one size does not fit all. Over the years, I have found that no two families are alike.  Each family has unique issues and online documents typically cannot address those issues.  If your issues are overlooked or ignored, your estate plan will probably not work the way you intended.  Most online documents lack the proper customization you need to address these overlooked or ignored issues.

  • For example, when you begin the online document process, the software will ask you for basic information such as who you want to serve as your children’s guardian under your Will. After careful consideration, you determine that you want your sister and her husband (your brother-in-law) to serve as co-guardians of your children under your online Will.  After completing and signing your Will, you think your children will be properly cared for if something happens to you.  However, do you want your brother-in-law raising your children if he and your sister get divorced or if your sister passes away?  As a named co-guardian, your brother-in-law can present a strong case to the court that he should raise your children pursuant to the Will.  Although it was your intention for him to raise your children with your sister, the Will does not address what happens upon death or divorce.  An estate planning attorney should be able to recognize this co-guardian issue and could implement the appropriate contingency in your Will that would remove him as guardian upon your sister’s death or divorce.  If you use online documents to name your children’s guardian, you might be unaware of this issue or unable to customize your documents to address that concern.
  • Furthermore, a lack of customization with online documents might cause the inclusion of wrong provisions in your documents. One essential estate planning document is the financial power of attorney (POA).  This document allows your designated agent to make financial decisions for you on your behalf.  A POA usually contains large amounts of standard boilerplate provisions that can be confusing to some people and may not be applicable to your situation.  For example, buried in your online POA might be a provision that allows your agent to make unlimited gifts to anyone.  For some, unlimited gifting might be necessary.  For others, unlimited gifting simply gives your agent a wonderful opportunity to deplete all of your assets.  Unfortunately, elder abuse is very common and it’s usually done by those who are appointed as POA.

Online document providers are not attorneys and do not counsel and recommend what provisions you should have in your documents.  Online providers do provide an option for you to consult with an attorney.  Will that attorney practice near you and be available to meet with you face to face?  Will you be able to select an attorney that has the experience in estate planning that you need?

In conclusion, those who use online estate planning documents might think that estate planning is as simple as filling names into blanks.  In reality, estate planning is complicated and needs to be customized to your specific needs even in the simplest of situations.  Simply filling in blanks can cause chaos for your loved ones down the road.  Online estate planning websites want you to believe that you have peace of mind that your affairs will be in order because ignorance is bliss! It has been often said that every attorney who represent himself or herself is a fool.

Bill Hesch is an attorney, CPA, and PFS (Personal Financial Specialist) who is licensed in Ohio and Kentucky and helps clients get peace of mind with their tax, financial, and estate planning.  He focuses his practice in the areas of elder law, corporate law, Medicaid planning, tax law, estate planning, and probate in the Greater Cincinnati and Northern Kentucky areas.  His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky.

 

(Legal Disclaimer:  Bill Hesch submits this blog to provide general information about the firm and its services.  Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel.  While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog.  Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)

10 Reasons to Use a Trust in Your Estate Plan

Posted by heschlawadmin on

While trusts may seem necessary only for the wealthy, there are actually many benefits for creating them, even if you’re a member of the middle class.  Here are the top 10 reasons why you might consider using a trust in your estate plan:

  1. Wasteful spending. Some experts estimate that heirs spend 80% of their inherited money in the first 18 months of receiving their inheritance.  Without a trust in place, your heirs will receive their inheritance outright.  A trust can protect your heirs from quickly depleting their inheritance by spacing out distributions over a certain number of years or for their lifetimes.
  2. Wrong heirs. A trust can keep your estate assets in your blood line and not to your heir’s in-laws or your surviving spouse’s new partner. A trust can delay distributions so that your grandchildren inherit your estate after the death of your children instead of your children’s spouses.
  3. Worthless investments. A trust can protect your loved ones from investing their inheritance in worthless investments that will quickly deplete their inheritance or provide little to no return.
  4. A trust can ensure that assets and IRA/pension plans are used to provide for the surviving spouse for life, rather than being liquidated and spent on a new partner.
  5. A trust can control how assets are allocated among children and step-children upon the death of the surviving spouse. If you have a blended family and have children from a prior marriage, a trust can ensure that all of your children will be taken care of after your surviving spouse passes away.
  6. A trust can maximize federal estate tax savings, if necessary.
  7. A trust can control/hold assets in trust and limit distributions if heirs have alcohol/drug issues. Failure to leave your estate in trust to these individuals means they might stop working or going to school and use their inheritance to fund their lifestyle of drugs and alcohol.
  8. A trust can create asset protection for heirs from their creditors. Failure to leave your estate to your heirs in a trust means that family members own the assets outright and if they are subject to a lawsuit or the claims of their creditors, their inheritance may be lost to their creditors. Inherited IRAs also can get asset protection with a trust.
  9. A trust can avoid probate delays, costs, and burdens for your loved ones. Probate is costly, stressful, and time-consuming.  The only people who benefit from probate are the attorneys.
  10. Lastly, a trust can keep your estate private from the public. Simply implementing a Last Will and Testament will not keep your estate private.

The purpose of establishing a trust is to ultimately help you determine and implement who gets what and when.  When you meet with your estate planning attorney, make your intentions known so that your trust can be tailored to your specific needs.  It becomes extremely important that your trust be properly drafted and funded, so that you can maximize all the benefits a trust has to offer.

Bill Hesch is an attorney, CPA, and PFS (Personal Financial Specialist) licensed in Ohio and Kentucky who helps clients with their financial and estate planning.  He also practices elder law, corporate law, Medicaid planning, tax law, and probate in the Greater Cincinnati and Northern Kentucky areas.  His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky.

 

(Legal Disclaimer:  Bill Hesch submits this blog to provide general information about the firm and its services.  Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel.  While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog.  Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)

Top 3. Estate Planning Docs. Can Devastate-Pt. 4

Posted by heschlawadmin on

The Top 3 Reasons How Online Estate Planning Documents Can Devastate Your Family and Leave Them In Financial Ruin – Money Can Be A Curse!!

Reason 1: The Pitfalls of Not Getting Legal Advice from an Attorney Can Cause Your Estate Plan to be Defective Because of Wrong Heirs, Wasteful Spending, and Worthless Investments

Arguably one of the biggest reasons why online estate planning documents can devastate your family’s estate plan and leave them in financial ruin is because you don’t get legal advice with do-it-yourself documents.  What most people don’t realize is that the value of an estate plan isn’t just in the documents – it’s in the advice and counsel you get from your estate planning lawyer.  An estate planning lawyer can identify issues that are unique to your financial and personal life that will affect your estate plan.  Some of those issues might include: blended families, predeceased beneficiaries, family drug/alcohol problems, problems with the in-laws, careless spending, worthless investments, and Medicaid planning opportunities. Part I, Part II, and Part III of this series addressed the concerns you might have if the wrong heirs inherited your estate, concerns you might have with wasteful spending and worthless investments, and concerns with outliving your money.  This blog, which addresses the last part of Reason 1, will present an unfortunate, but all too common case study on how do-it-yourself documents can ruin your estate plan.

Part IV.  Don’t get false peace of mind! A case study on how do-it-yourself documents can ruin your estate plan!

Kim’s Financial Situation

Kim is a resident of Ohio.  She is 72 years old, widowed, retired, and has two independent adult children.  Her estate consists of two main assets: a large retirement account and a $75,000 checking account.  When Kim set up her retirement account many years ago, she listed her husband as the beneficiary but never updated it when he passed away.  She also added her son as a joint owner on her checking account to help pay her bills.

Kim’s Plan

Like most people from Kim’s generation, Kim does not like talking about end of life planning with her children and thinks lawyers are a waste of money.  She decides to use a popular do-it-yourself legal website to set up her estate plan.  Kim recently heard a statistic that 80% of lottery winners go broke within 18 months.  She wants to limit the amount her two children inherit to annual payments over ten years to avoid wasteful spending and bad investments.  She also knows that she wants her children to inherit everything equally and she wants to avoid probate to save money and keep her finances private.

Kim’s Online Documents

Kim decides to implement a Trust in her estate plan because a Trust will satisfy all of those concerns.  Her Trust ultimately provides that her two children shall receive equal distributions of her Trust assets in annual installments for ten years.  The website also suggests that Kim needs to implement a Last Will and Testament.  She executes a Will and Trust which simply lists her two children as equal beneficiaries.  Kim feels confident that her “basic” website documents were done properly and can’t understand why anyone would spend the money to consult with a lawyer.  She puts her executed documents in a desk drawer and never thinks about them again.

What Happened When Kim Died

A few years later, Kim passes away.  Her deceased husband is still listed as the primary beneficiary of her retirement account and no contingent beneficiary is listed.  Her son is also still a joint owner on her checking account.  While cleaning out Kim’s house, her children discover Kim’s Will and Trust.  They consult with an estate planning attorney to find out how they need to proceed.  The attorney tells the two children that the Will and Trust are valid.  He further explains that any assets titled in the name of the Trust would have passed equally to the two children over ten years pursuant to the terms of the Trust.

The attorney indicates that Kim’s Will governs all probate assets which are owned in Kim’s name individually.  Such assets will have to pass through probate and will be distributed to the two children outright, pursuant to the terms in the Will.

After reviewing Kim’s assets, the attorney determines that the retirement account will pass to the children outright under the Will through probate because the account has no living designated beneficiary.  He also concludes that the checking account will not pass under Kim’s Will through probate at all, but will rather pass to the joint-owner child individually.  The attorney confirms that the Trust does not hold or will not hold any of her assets and it will not govern how her estate is to be administered.

Kim’s Estate Plan Flaws

In this example, Kim tried to accomplish her estate planning goals to make things easier for her family, but she ultimately failed to properly memorialize her wishes in several different ways:

  • She does not avoid probate. By failing to remove her deceased husband and failing to add her Trust as beneficiary of her retirement account, her estate becomes the beneficiary of the account, resulting in probate. When an estate is probated, it becomes public record.
  • Failing to review and update her retirement account beneficiaries resulted in her children inheriting her retirement account outright rather than in Trust over ten years. If Kim had named the Trust as the beneficiary of her retirement account (no probate) or named the Trust as the sole heir under her Will, her retirement account would have been owned by her Trust rather than by her children outright.
  • Her children will not inherit her estate equally. Kim added her son to her checking account for convenience purposes but failed to provide that the account would be payable on death to her children equally.  What seemed like a simple means of convenience for Kim ended up with a $37,500 inequality for her one child who inherited none of the checking account.
  • Kim wasted money using online documents. She tried to save money using online documents, but she ultimately paid for a Trust that was never used and her estate plan failed because none of her goals were accomplished.

In conclusion, Kim got a false sense of peace of mind by preparing her own documents.  If she had met with an estate planning attorney, she would have received invaluable advice on how to avoid probate and make sure that her estate plan was set up properly.  Her attorney would have also identified the estate flaws detailed above.  Unfortunately, Kim’s example is all too common in the estate planning world.  What should have been a fairly simple estate plan turned out to be something completely different than what she wanted.

Bill Hesch is an attorney, CPA, and PFS (Personal Financial Specialist) who is licensed in Ohio and Kentucky and helps clients get peace of mind with their tax, financial, and estate planning.  He focuses his practice in the areas of elder law, corporate law, Medicaid planning, tax law, estate planning, and probate in the Greater Cincinnati and Northern Kentucky areas.  His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky.

(Legal Disclaimer:  Bill Hesch submits this blog to provide general information about the firm and its services.  Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel.  While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog.  Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)

Top 3-Estate Planning Docs. Can Devastate-Pt. 3

Posted by heschlawadmin on

The Top 3 Reasons How Online Estate Planning Documents Can Devastate Your Family and Leave Them In Financial Ruin – Money Can Be A Curse!!

Reason 1: The Pitfalls of Not Getting Legal Advice from an Attorney Can Cause Your Estate Plan to be Defective Because of Wrong Heirs, Wasteful Spending, and Worthless Investments

Arguably one of the biggest reasons why online estate planning documents can devastate your family’s estate plan and leave them in financial ruin is because you don’t get legal advice with do-it-yourself documents.  What most people don’t realize is that the value of an estate plan isn’t just in the documents – it’s in the advice and counsel you get from your estate planning lawyer.  An estate planning lawyer can identify issues that are unique to your financial and personal life that will affect your estate plan.  Some of those issues might include: blended families, predeceased beneficiaries, family drug/alcohol problems, problems with the in-laws, careless spending, worthless investments, and Medicaid planning opportunities. Part I and Part II of this series addressed the concerns you might have if the wrong heirs inherited your estate, as well as with concerns you might have with wasteful spending and worthless investments.  This blog addresses how online documents miss planning opportunities for unforeseen circumstances in your life, such as nursing home care.

Part III.  Does your Estate Plan Address Unforeseen Circumstances? Don’t outlive your money!

If you’re a baby boomer, Social Security suggests that you will likely live between ages 83 and 90.  If you do live that long, you should be concerned that you might outlive your money.  The number one fear of baby boomers is outliving their money during retirement due to unforeseen circumstances.  Such unforeseen circumstances include rising medical costs and the costs of long-term care.  If you ultimately need nursing home care, be prepared to deplete your hard-earned assets before Medicaid will help pay for your care. If you are married and you need to enter the nursing home, the most you and your spouse can keep is between approximately $23,000 and $120,000 (excluding your home) depending on the size of your estate before you will qualify for Medicaid.  That figure drops to $1,500 if you’re single.  Medicaid also only lets you keep $50/month from your monthly income.  Do you think you can live comfortably off of $50 a month?

Unfortunately there is no crystal ball to predict if you or your spouse will need nursing home care.  All you can do is plan for the worst and expect the best.  Depending on your age, health, and wealth, it might be appropriate to consider advanced planning for Medicaid.  A good estate planning attorney can assess your situation and determine if Medicaid planning is appropriate for you.  Most people incorrectly assume that their assets are protected from Medicaid and the nursing home when their assets are placed in a simple revocable trust.  Such revocable trusts are typically the ones that online document providers provide.  Although these types of trusts may be sufficient for some estate plans, it may not work for yours.  Online estate planning documents cannot provide you with a customized plan that will properly carry out your wishes as well as safeguard your assets from rising nursing home costs.

In estate planning, one size does not fit all. Over the years, I have found that no two families are alike.  Each family has unique issues and online documents typically cannot address those issues.  If your issues are overlooked or ignored, your estate plan will probably not work the way you intended.  If you have concerns about outliving your money and unforeseen circumstances, an estate planning attorney can help you budget your retirement and mold your estate plan to fit your specific needs.

 

Bill Hesch is an attorney, CPA, and PFS (Personal Financial Specialist) who is licensed in Ohio and Kentucky and helps clients get peace of mind with their tax, financial, and estate planning.  He focuses his practice in the areas of elder law, corporate law, Medicaid planning, tax law, estate planning, and probate in the Greater Cincinnati and Northern Kentucky areas.  His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky.

(Legal Disclaimer:  Bill Hesch submits this blog to provide general information about the firm and its services.  Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel.  While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog.  Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)

Reason 1 to Avoid Online Estate Planning Documents

Posted by heschlawadmin on

The Top 3 Reasons How Online Estate Planning Documents Can Devastate Your Family and Leave Them In Financial Ruin

Reason 1: The Pitfalls of Not Getting Legal Advice from an Attorney Can Cause Your Estate Plan to be Defective Because of Wrong Heirs, Wasteful Spending, and Worthless Investments

In my last blog, I broadly identified the top 3 reasons how online estate planning documents can devastate your family and leave them in financial ruin. Over the next several blogs, I will discuss the first reason: the pitfalls of not getting legal advice from an attorney can cause your estate plan to be defective because of wrong heirs, wasteful spending, and worthless investments.

Continue reading “Reason 1 to Avoid Online Estate Planning Documents” →

Family Vacation Planning-Add an Estate Plan to Your To-Do List

Posted by heschlawadmin on

If you are going on a family vacation this summer, you probably have a to-do list that needs to be completed before you leave. Your list might include: packing your bags, confirming hotel rooms, and paying a friend to watch your house and water your plants. However, there is one task that is arguably more important than all the others, and it is typically the most overlooked. That task is to review and update your estate plan with your CPA, estate planning attorney, and financial advisor.

If you listen to the radio or watch the news, you know that traffic accidents occur every day in the Cincinnati and Northern Kentucky area and often someone dies or is seriously injured.

Continue reading “Family Vacation Planning-Add an Estate Plan to Your To-Do List” →

James Gandolfini Lessons

Posted by heschlawadmin on

In June 2013, The Sopranos star, James Gandolfini, died from a sudden heart attack while vacationing in Italy. Gandolfini was survived by his wife, infant daughter, son from a previous marriage, and two sisters. At the time of his death, his estate was valued at an estimated $70 million. Although Gandolfini had a large estate, he did not develop an effective estate plan to safeguard his assets. Although it is very unfortunate to see someone pass away at such a young age (Gandolfini was 51), his death can be used as a lesson for everyone of the importance of having an estate plan that protects their assets for their loved ones.

Continue reading “James Gandolfini Lessons” →

Frequent Flyer Obstacles | Hesch Law

Posted by heschlawadmin on

Overcoming Obstacles

Frequent flyer miles can be very beneficial if you love to vacation or need to regularly travel for work. If you have spent countless dollars building up your frequent flyer miles, you would probably want unused miles to become a part of your estate in the event of your death. However, there are many obstacles that need to be considered before your heirs and beneficiaries can take your miles outright.

Continue reading “Frequent Flyer Obstacles | Hesch Law” →

Proper Estate Planning

Posted by heschlawadmin on

Top 10 Mistakes that may devastate your family and their financial security without proper estate planning

1. Failure to make sure you have enough life/disability insurance to provide for your family.

2. Failure to execute a Health Care Power of Attorney, a Living Will, and a Financial Power of Attorney, resulting in your family needing to go through probate court to be appointed your guardian in order to avoid what Terry Schiavo had to do for 10 years – being kept alive on life support with a feeding tube.

Continue reading “Proper Estate Planning” →

Virtual Assets

Posted by heschlawadmin on

Estate planning typically involves implementing a strategy of how you will dispose of your physical assets upon your death. Physical assets can include a home, jewelry, furniture, and automobiles.

However, in today’s high-tech world, some of your assets probably cannot be physically accounted for. These assets can exist online, such as if you have an internet business, a blog that generates income from ads, frequent flyer miles, or a cloud depository for precious family photos. Such assets may continue to accrue untouched income for years or disappear altogether, simply because your heirs and beneficiaries don’t know they exist or don’t know where to access them.

Continue reading “Virtual Assets” →