Estate Planning Must-Haves for Unmarried Couples

4 Estate Planning Must-Haves for Unmarried Couples

Estate planning is often considered something you only need to worry about once you get married. But the reality is every adult, regardless of age, income level, or marital status, needs to have some fundamental planning strategies in place if you want to keep the people you love out of court and out of conflict.

In fact, estate planning can be even more critical for unmarried couples. Regardless if you’ve been together for decades and act just like a married couple, you likely aren’t viewed as one in the eyes of the law. And in the event one of you becomes incapacitated or when one of you dies, not having any planning in place can have disastrous consequences.

If you’re in a committed relationship and have yet to get—or even have no plans to get—married, the following estate planning documents are an absolute must:

Wills and trusts

If you’re unmarried and die without planning, the assets you leave behind will be distributed according to your state’s intestate laws to your family members: parents, siblings, and possibly even other, more distant relatives if you have no living parents or siblings. North Carolina’s laws would provide NO protection for your unmarried partner. Given this, if you want your partner to receive any of your assets upon your death, you need to – at the very least – create a will.

A will details how you want your assets distributed after you die, and you can name your unmarried partner, or even a friend, to inherit some or all of your assets. However, certain assets like life insurance, pensions, and 401(k)s, are not transferred through a will. Instead, those assets will go to the person named in the beneficiary designation, so be sure to name your partner as beneficiary if you’d like him or her to inherit those assets.

However, there could be an even better way.

Although wills and beneficiary designations offer one way for your unmarried partner to inherit your assets, they’re not always the best option. First and foremost, they do not operate in the event of your incapacity, which could occur before your death. In that case, your partner may not have access to needed assets to pay bills, or he or she could potentially even be kicked out of your home by a family member appointed as your guardian during your incapacity.

Moreover, a will requires probate, a court process that can take quite some time to navigate. And finally, assets passed by beneficiary designation go outright to your partner, with no protection from creditors or lawsuits. To protect those assets for your partner, you’ll need a different planning strategy.

Trusts may be the best option

A far better option would be to place the assets you want your partner to inherit in a living trust. First off, trusts can be used to transfer assets in the event of your incapacity, not just upon your death. Trusts also do not have to go through probate, saving your partner precious time and money.

What’s more, leaving your assets in a continued trust that your partner could control would ensure the assets are protected from creditors, future relationships, and/or unexpected lawsuits.

Consult with us for help deciding which option – a will or trust – is best suited for passing on your assets.

Durable power of attorney

When it comes to estate planning, most people focus only on what happens when they die. However, it’s just as important – if not even more so – to plan for your potential incapacity due to an accident or illness.

If you become incapacitated and haven’t legally named someone to handle your finances while you’re unable to do so, the court will pick someone for you. And this person could be a family member, who doesn’t care for or want to support your partner, or it could be a professional guardian who will charge hefty fees, possibly draining your estate.

Since it’s unlikely that your unmarried partner will be the court’s first choice, What can you do?  If you want your partner (or even a friend)  to manage your finances in the event you become incapacitated, you would grant your partner (or friend) a durable power of attorney.

Durable power of attorney is an estate planning tool that will give your partner immediate authority to manage your financial matters in the event of your incapacity. He or she will have a broad range of powers to handle things like paying your bills and taxes, running your business, collecting government benefits, selling your home, as well as managing your banking and investment accounts.

Granting a durable power of attorney to your partner is especially important if you live together, because without it, the person who is named by the court could legally force your partner out with little to no notice, leaving your partner homeless.

Most people tend to view estate planning as something only married couples need to worry about. However, estate planning can be even more critical for those in committed relationships who are unmarried.

Because your relationship with one another is frequently not legally recognized, if one of you becomes incapacitated or when one of you dies, not having any planning can have disastrous consequences. Your age, income level, and marital status makes no difference – every adult needs to have some fundamental planning strategies in place if you want to keep the people you love out of court and out of conflict.

So far, we discussed wills, trusts, and durable power of attorney. Next, we’ll look at two more must-have estate planning tools, both of which are designed to protect your choices about the type of medical treatment you’d want if tragedy should strike.

Medical power of attorney

In addition to naming someone to manage your finances in the event of your incapacity, you also need to name someone who can make health-care decisions for you. If you want your partner to have any say in how your health care is handled during your incapacity, you should grant your partner medical power of attorney.

This gives your partner the ability to make health-care decisions for you if you’re incapacitated and unable to do so yourself. This is particularly important if you’re unmarried, seeing that your family could leave your partner totally out of the medical decision-making process, and even deny your him or her the right to visit you in the hospital.

Don’t forget to provide your partner with HIPAA authorization within the medical power of attorney, so he or she will have access to your medical records to make educated decisions about your care.

Living will

While medical power of attorney names who can make health-care decisions in the event of your incapacity, a living will explains how your care should be handled, particularly at the end of life. If you want your partner to have control over how your end-of-life care is managed, you should name them as your agent in a living will.

A living will explains how you’d like important medical decisions made, including if and when you want life support removed, whether you would want hydration and nutrition, and even what kind of food you want and who can visit you.

Without a valid living will, doctors will most likely rely entirely on the decisions of your family or the named medical power of attorney holder when determining what course of treatment to pursue. Without a living will, those choices may not be the choices you—or your partner—would want.

We can help

If you’re involved in a committed relationship – married or not – or you just want to make sure that the people you choose are making your most important life-and-death decisions, consult with us as your Personal Family Lawyer® to put these essential estate planning tools in place.

With our help, we can support you in identifying the best planning strategies for your unique needs and situation. Contact us today to get started with a Family Wealth Planning Session.

Call 919-883-2800

And, if you have friends who are unmarried, ask them to call us too!

 

Scams prey on the Elderly

Don’t Let Your Elderly Parents Become Victims of the Grandparent Scam

A recent client was concerned about guardianship scams and other news recently being circulated.  It is a fair concern and she is being very wise to think about how this might affect her elderly parent.  Scams are nothing new, but do you know how they work?

Imagine this… You are an elderly grandparent who lives alone.

You get a call in the middle of the night from your college-aged granddaughter. She’s frantic and crying, telling you she was mistakenly arrested while vacationing in Cancun.

She says she needs you to pay her $1,800 bond, or she’ll be transferred to a dangerous Mexican prison. The Mexican police told her she only has a few hours before she’s transferred, so she needs you to wire the money immediately.

She’s petrified about her parents finding out she was arrested and begs you not to tell them. Because she only has a couple of minutes to use the police station phone, the call ends abruptly before you can get any further details.

What do you do?

If you’re like the thousands of others (including me) who’ve gotten just such a call, you’d probably wire the money in a heartbeat. It is your grandchild’s life after all. However, just like the others, you’d soon find out that your granddaughter hasn’t been arrested and was never in Mexico.

The Grandparent Scam

Known as the Grandparent Scam, this con has been around for years, and while it may seem far fetched, it has tricked many caring seniors. And in recent months, there has been an uptick in the number of people falling prey to the deception.

The details can vary, but the scam typically works like this:

  1. You get a call from someone pretending to be your grandchild. The “grandchild” explains he or she is in trouble and needs money immediately. They might be in jail and need bond or be stranded in a foreign country and need money to get out.
  2. The caller asks you to wire money to a specific location or give it to a third party, usually someone posing as a lawyer or police officer.
  3. The “grandchild” will often plead with you not to tell their parents they’re in trouble.
  4. Once you send the money, the caller breaks off all contact, making it impossible to recover your funds.

Another variation asks for funds to help refugees, or to confirm the taxes on your lottery winnings, and more.  The information they use to run the scam is usually posted right on Facebook or other social media.  There, anyone can find the names of your family, where you live, and whether you are on vacation (because so many of us post pictures from our current vacation spot!)

Truth be known, my grandchildren actually live in Mexico, so this could be very hard to ignore at our house!  But, like any scam, every call like this should be evaluated carefully.  I’ve received half a dozen emails or phone calls with this general type of scam over the past few years, and of course, none of them has been real.

Preying on the vulnerable

While just about anyone can fall for such scams, the elderly are the ones targeted most often. This is due to the fact that seniors are frequently lonely and eager to hear from family. And whether it’s because their hearing is failing or because they haven’t seen their family members in a while, they’re more likely to not recognize voices.

Due to their advanced age, seniors are also less likely to think clearly in a crisis, making them more susceptible to fear and panic. Finally, the elderly are less familiar with technology and social media, so they don’t realize how easy it is to access enough of someone’s personal details to make the scenario seem realistic.

What to do

In most cases, the best course of action is to simply hang up and contact the authorities. However, if the caller really does sound like the family member they claim to be, here are some steps you can take to help verify the situation is legitimate:

  1. Don’t panic. It’s far easier to be deceived if you’re nervous or scared.
  2. Be wary of calls from unknown or blocked numbers. Ask to call them back on the person’s own phone, and never accept requests sent solely by email or text.
  3. Verify the caller’s identity by asking them questions only the actual person would know the answer to, such as the name of their first pet.
  4. Beware of urgent demands that money be sent immediately. Reputable sources don’t try to pressure you into making split-second financial decisions.
  5. Call other family and friends to verify where the person is. A reputable source will respect your caution and give you the opportunity to verify the facts.
  6. Requests for money to be wired are often scams, as it’s nearly impossible to get your money back in cases of fraud. Request a more secure transaction method, such as through a bank or PayPal. Legitimate sources are likely to offer multiple payment options.

Comprehensive protection

Please share this article with any seniors in your life. There are countless other scams out there that work in much the same way, so even if it’s not this particular con, by becoming aware how these deceptions work, they’ll be much less likely to fall for them.

Of course, scams and cons are just one threat to seniors’ financial security. Without comprehensive estate planning, there are numerous other ways your family’s wealth and assets can be squandered or lost through financial abuse which have nothing to do with fraud.

Consult with us as your Personal Family Lawyer® to put planning strategies in place to safeguard your family’s finances and other assets, both tangible and intangible. Contact us today to get started with a Family Wealth Planning Session.

How will you pay for your funeral?

Use Estate Planning to Ensure Your Family Isn’t Stuck Paying For Your Funeral

The cost of a funeral is averaging $7,000 and steadily increasing each year; a client recetly told me they had paid $16,00 for a “no-frills” funeral.  I beleive that every estate plan should include enough money to cover this final expense. Yet it isn’t enough to simply set aside money in your will.

Your family won’t be able to access money left in a will until your estate goes through probate, which can last months or even years. Since most funeral providers require full payment upfront, this means your family will likely have to cover your funeral costs out of pocket, unless you take proper action now.

If you want to avoid burdening your family with this hefty bill, you should use planning strategies that do not require probate. Here are a few options:

Prepaid funeral plans
Many funeral homes let you pay for your funeral services in advance, either in a single lump sum or through installments. Also known as pre-need plans, the funeral provider typically puts your money in a trust that pays out upon your death, or buys a burial insurance policy, with itself as the beneficiary.

While such prepaid plans may seem like a convenient way to cover your funeral expenses, these plans sometimes can have serious drawbacks. As mentioned earlier, if the funeral provider buys burial insurance, you’re likely to see massive premiums compared to what the plan actually pays out. And if they use a trust, the plan might not actually cover the full cost of the funeral, leaving your family on the hook for the difference. Plus, your money might be at risk if the funeral provider closes or is bought out by another company.  In North Carolina, the funeral plans are usually held by the state in a pool of such policies that give you excellent protection.

I like this type of plan, but not all groups do.  In fact, the Funeral Consumers Alliance (FCA), a nonprofit industry watchdog group, advises against purchasing such plans. The only instance where prepaid plans are a good idea, according to the FCA, is if you are facing a Medicaid spend down before going into a nursing home. This is because prepaid funeral plans funded through irrevocable trusts are not considered a countable asset for Medicaid eligibility purposes.  This is limited in North Carolina to $15,000 in most situations.

If you’re looking to buy a prepaid funeral plan in order to qualify for Medicaid, be sure to consult with us first, as not all pre-paid funeral plans are actually Medicaid compliant, even if the funeral home says they are. Moreover, if the irrevocable trust is not set up correctly, it may violate Medicaid’s look-back period, delaying your eligibility.  I am licensed to sell insurance products including pre-need funeral trusts, if that seems like a fit for your family.

Insurance
You can purchase a new life insurance policy or add extra coverage to your existing policy to cover funeral expenses. The policy will pay out to the named beneficiary as soon as your death certificate is available. But you’ll likely have to undergo a medical exam and may be disqualified or face costly premiums if you’re older and/or have health issues. I do recommend various kinds of insurance for most families, and can assist you in tailoring it for your needs.

There is also burial insurance specifically designed to cover funeral expenses (different from the funeral trusts I mentioned above). Also known “final expense,” “memorial,” and “preneed” insurance, such policies do not require a medical exam. However, you’ll often pay far more in premiums than what the policy actually pays out.

Because of the sky-high premiums and the fact such policies are sold mostly to the poor and uneducated, consumer advocate groups like the Consumer Federation of America consider burial insurance a bad idea and even predatory in some cases.

But whatever insurance or trust-based plan you have … make sure your family knows about it! These policies are often never cashed in because the family didn’t know they existed.

Payable-on-death accounts
Many banks offer payable-on-death (POD) accounts, sometimes called Totten Trusts, that you can set up to fund your funeral expenses. The account’s named beneficiary can only access the money upon your death, but you can deposit or withdraw money at any time.

A POD does not go through probate, so the beneficiary can access the money once your death certificate is issued. POD accounts are FDIC-insured, but such accounts are treated as countable assets by Medicaid, and the interest is subject to income tax.

Another option is to simply open a joint savings account with the person handling your funeral expenses and give them rights of survivorship. However, this gives the person access to your money while you’re alive too, and it puts the account at risk from their future creditors.

What can happen?  We know one client who lost the money in a joint account she shared with her granddaughter over a single bad business decision. The granddaughter was sued over a lease default, and when she lost the case, her creditors were able to go after the joint account.

Living trusts
With us as your Personal Family Lawyer®, you don’t need to buy a pre-built trust from a funeral provider. We can create a customized living trust that allows you to control the funds until your death and name a successor trustee, who is legally bound to use the trust funds to pay for your funeral expenses exactly as the trust terms stipulate.

With a living trust, you can change the terms at any time and even dissolve the trust if you need the money for other purposes. Alternatively, if you need an irrevocable trust to help qualify for Medicaid, we can create that too and help you ensure the trust stays totally compliant with all of Medicaid’s requirements.

Don’t needlessly burden your family
To help decide which option is best suited for your particular situation, consult with us as your Personal Family Lawyer®. We can put an estate plan in place that includes adequate funding to ensure your funeral services are handled just as you wish—and your family isn’t forced to foot the bill.

Improve your family relationships

4 Ways Estate Planning Can Improve Relationships with Loved Ones

With the holiday season just past, you probably spent lots of time with your family and friends. During these moments, you were likely reminded of just how important these relationships are. And as we grow older, you begin to realize how precious little time we have to spend with one another.

Given life’s fleeting nature, using this time with family to talk about estate planning is vital for ensuring you and your loved ones will be provided and cared for no matter what happens. Though death and incapacity can be uncomfortable subjects to discuss, with a comprehensive plan in place, you’ll almost certainly experience a huge sense of relief and peace, knowing this critical task has been discussed and documented.

Planning Builds Communication

Though you might not realize it, estate planning also has the potential to enhance your relationship with loved ones in some major ways.

Planning requires you to closely consider your relationships with family and friends – past, present, and future – like never before. Indeed, the process can be the ultimate forum for heartfelt communication and prioritizing what matters most in life.

Communicating clearly about what you want to happen in the event of your incapacity or death (and asking your loved ones what they want to happen) can foster a deeper bond and sense of intimacy than just about anything else you can do.

Here are just a few of the valuable ways estate planning can improve the relationships you cherish most:

1) It shows you sincerely care

Taking the time and effort to carefully plan for what will happen to you in the event of your incapacity or when you die is a genuine demonstration of your love. It would be far easier to do nothing and simply let your family and friends figure it out for themselves. After all, you won’t be around to deal with any of the fallout.   Some of my clients choose that approach, but most, like you, want to plan it for the family.

Planning in advance, though, shows that you truly care about the welfare of your loved ones, even when you’re no longer around to benefit from their love and companionship. Such selfless concern and forethought equates to nothing less than a final expression of your unconditional love.

2) It inspires honest communication about difficult issues

Sitting down and having an honest discussion about life’s most taboo subjects – incapacity and death – is almost certain to bring you and your loved ones closer. By forcing you to face immortality together, planning has a way of highlighting what’s really important in life – and what’s not.

In fact, our clients consistently say that after going through our estate planning process they feel more connected to the people they love the most. And they also feel more clear about the lives they want to live during the short time we have here on earth.

Planning offers the opportunity to talk openly about matters you may not have even considered. When it comes to choices about distributing assets and naming executors and trustees, you’ll have a chance to engage in frank discussions about why you made the choices you did.

While this can be uncomfortable, clearly communicating your feelings and intentions is crucial for maintaining healthy relationships. In the end, it might just be the first step in actively addressing and healing any problems that may be lurking under the surface of your relationships.

3) It builds a deep sense of trust and respect

Whether it’s the individuals you name as your children’s legal guardians or those you nominate to handle your own end-of-life care, estate planning shows your loved ones just how much you trust and admire them. What greater honor can you bestow upon another than putting your own life and those of your children in their hands?

Though it’s often challenging to verbally express how much you love your family and friends, estate planning demonstrates your affection in a truly tangible way. And once these people see exactly how much you value them, it can foster a deepening of your relationship with one another.

4) It creates a lasting legacy

While estate planning is primarily viewed as a way to pass on your financial wealth and property, it can offer your loved ones much more than just financial security. When done right, it lets you hand down the most precious assets of all – your life stories, lessons, and values.

The wisdom and experience you’ve gained during your lifetime are among the most treasured gifts you can give. Left to chance, these gifts are likely to be lost forever. In light of this, we’ve built in a process, known as Family Wealth Legacy Passages, for preserving and passing on these intangible assets.

With this service, which is included in every estate plan we create, we guide you to create a customized recording in which you share your most insightful memories and experiences with those you’re leaving behind. Family Wealth Legacy Passages can not only ensure you’re able to say everything that needs to be said, but that your legacy carries on long after you—and your money—are gone.

The heart of the matter

With us as your Personal Family Lawyer®, we can help guide and support you in having these intimate discussions with your loved ones. And as our Family Wealth Legacy Passages service shows, we offer a wide array of customized planning options designed to enrich your family and friends with far more than just material wealth.

With our help, estate planning doesn’t have to be a dreary affair. When done right, it can put your life and relationships into a much clearer focus and ultimately be a tremendously uplifting experience for everyone involved. Contact us today to learn more.

Protecting your pets using Pet Trusts

Pet Trusts Offer Protection for Your Furry Family

If you’re an animal lover and have a pet of your own, you likely consider your pet to be a member of the family. And since your furry friends can provide protection, emotional support, and unconditional love, such consideration is often well deserved.

In stark contrast, the law considers your pet nothing more than personal property. That means that without plans in place, your pet will be treated just like your couch or vacuum in the event of your death or incapacity.

For example, if you die without including any provisions for your pet’s care in your estate plan and none of your family or friends volunteer to take your pet in, your faithful companion will likely end up in an animal shelter.

While you can leave money for the care or your pet in a will, there will be no continuing oversight to ensure your pet (and the money you leave for its care) will be cared for as you wish, if you do it that way.  In fact, a person who is named as the guardian of your pet in your will could drop the animal off at the shelter and use the money to buy a new TV—and face no penalties for doing so.

What’s more, a will is required to go through a court process known as probate, which can last for years and leave your pet in limbo during that entire time. And a will only goes into effect upon your death, so if you’re incapacitated by accident or illness, it will be useless for protecting your pet.

Pet trusts

Given these limitations, the best way to ensure your animal companions are properly taken care of in the event of your death or incapacity might be to create a pet trust.

Pet trusts go into effect immediately and allow you to lay out detailed, legally binding rules for how the funds in the trust can be used. Pet trusts can cover multiple pets, work in cases of incapacity as well as death, and they remain in effect until the last surviving animal dies.

Here are a few of the most important things to consider when setting up a pet trust:

Caregivers: The most important decision when creating a pet trust is naming the caretaker. The caretaker will have custody of your pet and is responsible for your pet’s daily care for the remainder of your pet’s life. As with naming a guardian for your children, make certain you choose someone you know will watch over and love your pet just as you would.

Consider the caretaker’s physical ability—naming someone elderly to raise your Great Dane puppy might be asking too much. Also make certain your pet fits in with the caretaker’s family members and other pets. Discuss your wishes ahead of time with a potential caretaker—never assume they’re willing to take on the responsibility.

In case your first-choice for caretaker is unable to take in your pet, name at least one or two alternates. If you don’t know any suitable caregivers, there are a variety of charitable groups that can provide for your pet if you’re no longer able to.

Trustees: Trustees are tasked with managing the trust’s funds and ensuring your wishes for the animal’s care are carried out in the manner the trust spells out. Given the potential conflict of interest, you may consider naming someone other than the caregiver as trustee.

In this way, you now have two people who are invested in the care of your pet – and money – are properly handled.

Caretaking instructions: At the very least, your caretaking instructions should outline your pet’s basic requirements: dietary needs, exercise regimen, medications, and veterinary care. Be sure you think about all of your pet’s future needs, including extra services like grooming, boarding, and walking.

Beyond basic care, you can also lay out instructions for just about any other special treatment you want your furry friend to receive. From sleeping arrangements and yummy treats to weekly visits to the park and favorite toys, a pet trust can provide Fido and Fluffy with whatever lifestyle you wish for them.

Finally, don’t forget to address what you want done at the end of your pet’s life, such as burial, cremation, or memorial services.

Funding: When determining how much money to put aside for your pet’s care, you should carefully consider the pet’s age, health, and care needs. Remember, you’re covering the cost of caring for the animal for the rest of its life, and even basic expenses can add up over time.

But most pet owners want their beloved pets to receive more than just the bare necessities. Given this, make sure you carefully calculate the costs for any special treatments or services you include in the trust and leave enough money to pay for them.

And if you end up leaving more money behind than needed, you can always name a remainder beneficiary, such as a family member or charity, to inherit any funds not spent on the pet.

Do right by your furry family

Consult with us as your Personal Family Lawyer® for help creating a pet trust. We can make certain that you have all of the necessary terms included in your estate plan to ensure your pet receives the kind of love and care it deserves when you’re no longer around to provide it. Contact us for more information.

We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Dementia and Guns

Dementia and Guns: A Tragedy Waiting to Happen

You know that I do a lot of planning for families with loved ones with Alzheimer’s, and one of the discussions is always about driving and other dangerous activities. But, what about guns?

It’s common for families of those with Alzheimer’s and other forms of dementia to realize that at some point, their loved one shouldn’t be allowed to drive. But fewer people are aware they should exercise the same level of caution when it comes to restricting their loved ones’ access to firearms.

This was one of the findings of a May 2018 study published in the Annals of Internal Medicine covering firearm ownership among Alzheimer’s patients. The study noted that even though 89% of Americans support restricting access to firearms for those with mental illness, there’s been little attention focused on limiting firearm access among elderly dementia patients.

Did you know that there are currently no federal gun laws prohibiting the purchase or possession of firearms by persons with dementia? And only two states—Hawaii and Texas—have laws restricting gun access for dementia patients.

A ticking time bomb

This lack of attention comes despite an increasing number of incidents involving elderly dementia patients shooting and killing family members and caregivers after confusing them for intruders. And with so many Baby Boomers now entering retirement age, this dangerous situation could get much worse.

In fact, the number of people with dementia is expected to double to around 14 million in the next 20 years, with the vast majority of those over age 65. Since nearly half of people over 65 either own a gun or live with someone who does, it’s clear that firearm safety should be a top priority for those with elderly family members—even if they don’t currently have any signs of dementia.

Not restrictions, safe management

That said, just talking about restricting someone’s access to guns can be highly controversial and polarizing. Many people, especially veterans and those in law enforcement, consider guns—and their right to own them—an important part of their identity. Given this, the study’s authors recommended that families should talk with their elderly loved ones early on about the fact that one day they might have to give up their guns. Physicians suggest bringing up the topic of firearms relatively soon after the individual’s initial dementia diagnosis.

This discussion should be similar to those related to driving, acknowledging the emotions involved and allowing the person to maintain independence and decision control for as long as it’s safe. Even though this can be a very touchy subject, putting off this discussion can literally be life-threatening.

Note that I do not advocate the political positions of either side of the debate, and many questions are raised in that debate. It is important to remember that a confused person with a weapon can lead to terrible consequences, so, this is all about having the conversation.

All part of the plan

Since it relates to so many other end-of-life matters, this discussion should take place as part of the overall estate planning process. One way to handle the risk is to create a legally binding agreement laying out a “firearm retirement date” that’s similar to advance directives addressing the elderly relinquishing their driving privileges.

Such an agreement allows the gun owner to name a trusted family member or friend to take ownership of their firearms once they’ve reached a certain age or stage of dementia. In this way, the process may seem more like passing on a beloved family heirloom and less like giving up their guns.

Consider the legal issues of ownership

The transfer of certain types of firearms must adhere to strict state and federal regulations. Unless the new owner is in full compliance with these requirements, they could inadvertently violate the law simply by taking possession of the guns.

In light of this risk, you should consider creating a “gun trust,”an estate planning tool specially designed to deal with the ownership of firearms. With a gun trust, the firearm is legally owned by the trust, so most of the transfer requirements are avoided, making it a lot easier for family members to manage access after the original owner’s death.

Gun Trusts can be part of your estate planning

Gun trusts can be a valuable planning strategy even for gun owners without dementia. Speak with us to see if a gun trust would be a suitable option for your family.

Three sins of Retirement Planning

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3 Deadly Sins of Retirement Planning

Retirement planning is one of life’s most important financial goals.

Indeed, funding retirement is one of the primary reasons many people put money aside in the first place. Yet many of us put more effort into planning for our vacations than we do to prepare for a time when we may no longer earn an income.

Whether you’ve put off planning for retirement altogether or failed to create a truly comprehensive plan, you’re putting yourself at risk for a future of poverty, penny pinching, and dependence. The stakes could hardly be higher.

When preparing for your final years, it’s not enough to simply hope for the best. You should treat retirement planning as if your life depended on it—because it does. To this end, even well thought-out plans can contain fatal flaws you might not be aware of until it’s too late.

Have you committed any of the following three deadly sins of retirement planning?

1. Not having an actual plan

Even if you’ve been diligent about saving for retirement, without a detailed, goal-oriented plan, you’ll have no clear idea whether your savings strategies are working adequately or not. And such plans aren’t just about calculating a retirement savings number, funding your 401(k), and then setting things on auto-pilot.

Once you know how much you’ll need for retirement, you have to plan for exactly how you’ll accumulate that money and monitor your success. The plan should include clear-cut methods for increasing income, reducing spending, maximizing tax savings, and managing investments when and where needed.

What’s more, you should regularly review and update your asset allocation, investment performance, and savings goals to ensure you’re still on track to hit your target figure. With each new decade of your life (at least), you should adjust your savings strategies to match the specific needs of your new income level and age. The plan should also take into consideration unforeseen contingencies, such as downturns in the economy, health emergencies, layoffs, and inflation.

Failing to plan, as they say, is planning to fail.

2. Not maximizing the use of tax-saving retirement accounts

One way or another, the money you put aside for retirement is going to be taxed. However, by investing in tax-saving retirement accounts, you can significantly reduce the amount of taxes you’ll pay.

Depending on your employment and financial situation, there are numerous different plans available. From traditional IRAs and 401(k)s to Roth IRAs and SEP Plans, you should consider using one or more of these investment vehicles to ensure you achieve the most tax savings possible.

What’s more, many employers will match your contributions to these accounts, which is basically free money. If your employer offers matching funds, you should not only use these accounts, but contribute the maximum amount allowed… and do so as early as possible. If you are self-employed, there are options for you too!

Since figuring out which of these plans will offer the most tax savings can be tricky – and because tax laws are constantly changing – you should consult with us and a professional financial advisor to find the one(s) best suited for your particular situation. Paying taxes is unavoidable, but there’s no reason you should pay any more than you absolutely have to.

3. Underestimating health-care costs

One of the most frequent mistakes people make when planning for retirement is assuming that things will always stay the same. Whether it’s tax laws, inflation, market conditions, or marital status, if you don’t carefully consider how your circumstances might change with time, you’re putting yourself and your savings at serious risk.

While many such contingencies are mere possibilities, the one thing that’s certain to change with time is your body and mind. It’s an inescapable fact that our health naturally declines with age, so one of the most risky things you can do is not plan for increased health-care expenses.

With many employers eliminating retiree health-care coverage, Medicare premiums rising, and the extremely volatile nature of health insurance law, planning for your future health-care expenses is absolutely critical. And it’s even more important seeing that we’re now living longer than ever before.

Plus, these considerations are assuming that you don’t fall victim to a catastrophic illness or accident. The natural aging process is expensive enough to manage, but a serious health-care emergency can wipe out even the most financially well off.

Medicaid is one alternative for handling the costs of long-term care, but it requires proper planning strategies. In the best case, that planning happens more than five years in advance of your need!

With so many unknowns, how can you possibly prepare for every possible scenario?

The truth is, you can’t.

That said, you should take advantage of every available precaution within your means. This might mean delaying retirement, purchasing supplemental insurance, investing in long-term care insurance, opening a Health Savings Account, or some combination of these options. We can work with your team to advise you on precautions that are right for you and your family.

Start preparing for retirement now

The best way to maximize your retirement funding is to start planning (and saving) as soon as possible. In fact, your retirement savings can be exponentially increased simply by starting to plan at an early age. No matter your age, income, or asset value, with us as your Personal Family Lawyer®, we can help you put the legal, insurance, financial, and tax systems (LIFT) in place to ensure you’re prepared for a thriving future.

Contact us to schedule a Family Wealth Planning Session today to get started. We’ll review what you have in place now, what you need, introduce you to advisors you can trust, and ensure you and your family are well-protected and planned for, no matter what.

Storm coming? Think about insurance…

Think Your Homeowners Insurance Offers Protection From Natural Disasters?
Think Again

From wildfires in California and hurricanes in Texas to floods in West Virginia, hardly any area of the U.S. is immune from the threat of natural disasters. And according to a report released by the government regarding climate change and its impact on Black Friday, it’s only going to get worse. Despite this threat, many homeowners still lack the insurance needed to protect their property and possessions from such catastrophes.

In fact, roughly two-thirds of all homeowners are underinsured for natural disasters, according to United Policyholders (UP), a nonprofit organization for insurance consumers. One contributing factor to this lack of coverage is the mistaken belief that homeowners insurance offers protection from such calamities. In reality, natural disasters are typically not covered by standard homeowners policies.

North Carolina isn’t immune either … as we know from the recent hurricanes AND the coming ice storm.

In order to obtain protection, you often need to purchase separate policies that cover specific types of natural disasters. Here, we’ve highlighted the types of insurance coverage available and how the policies work.

Wildfires

While homeowners insurance typically doesn’t pay for damage caused by natural disasters, most policies do protect against fire damage, including wildfires like the recent ones in California. The only instances of fire damage homeowners policies won’t cover are fires caused by arson or when fire destroys a home that’s been vacant for at least 30 days when the fire occurred.

That said, not all homeowners policies are created equal, so you should check your policy to make certain that it includes enough coverage to do three things: replace your home’s structure, replace your belongings, and cover your living expenses while your home is being repaired, known as “loss of use” coverage.

image from Mark Stephen Houser, (c)2016

 

In April of this year, a serious wildfire affected Bladen County.  Western NC  can be high risk.  While we have a much lower likelihood of wildfires here in the Triangle, it is important to double-check your policy.  In certain areas that are extremely high-risk for wildfires, it can be difficult to find a company to insure your home.

Earthquakes

Unlike fires, earthquakes are typically not covered by homeowners policies. To protect your home against quakes, you’ll need a freestanding earthquake insurance policy. And contrary to popular belief, Californians aren’t the only ones who should be worried.

Most parts of the U.S. are at some risk for earthquakes. Indeed, the U.S. Geological Survey found that between the 20 years from 1975 to 1995 earthquakes occured in every state except Florida, Iowa, North Dakota, and Wisconsin. To gauge the risk in your area, consult with the Federal Emergency Management Agency’s (FEMA) earthquake hazard map.  Do you remember the last North Carolina quake?  Yup, June 13 of 2018.  It didn’t do much damage to anyone, but, it does happen.

While earthquake insurance is available practically everywhere, policies in high-risk areas typically come with high deductibles, ranging from 10% to 15% of the home’s value. What’s more, though earthquake insurance covers damage directly caused by the quake, some related damages such as flooding are likely not covered. Carefully review your policy to see what’s included—and what’s not.

Floods

Though homeowners insurance generally covers flood damage caused by faulty infrastructure like leaky pipes, nearly all policies exclude flood damage caused by natural events like heavy rain, overflowing rivers, and hurricanes. You’ll need stand-alone flood insurance to protect your property and possessions from these events.

The threat from flooding is so widespread, Congress created the National Flood Insurance Program (NFIP) in 1968, which allows homeowners in flood-prone areas to purchase flood insurance backed by the U.S. government. In some coastal regions, especially where hurricanes are prevalent, you might even be required to buy flood insurance. To determine the risk for your property, consult FEMA’s Flood Map service center.

Even if you live in a location where flood insurance isn’t required, you may want to consider buying it anyway. Did you know that 90% of all natural disasters include some form of flooding, and more than 20% of flood-damage claims come from properties outside high-risk flood zones?  Do you have a business near Ephesus Road and 15-501?  You know how important flood insurance can be!

image from Twitter

Hurricanes and Tornadoes

Most homeowners policies do offer coverage for wind-related damage. However, it depends on the type of storm that caused the damage. For example, wind damage from tornadoes and even some tropical storms is typically covered, but wind damage from hurricanes generally requires a separate windstorm policy, or in some cases, a hurricane rider.

Because damage from hurricanes is often measured in the billions, these windstorm policies usually have higher deductibles that are often based on a percentage of your home’s value, instead of a fixed dollar amount. Some policies also come with a cap on coverage, so be sure to review exactly what type and amount of coverage your policy offers.

Of course, high winds aren’t the only threat posed by hurricanes. Such tropical systems can also cause severe flooding, which is frequently the storm’s most damaging element. But as mentioned before, whether it’s caused by a hurricane or a tornado, flooding is not generally covered by homeowners insurance. For flood protection, you’ll need to purchase a separate flood insurance policy through the NFIP.

Get the disaster coverage you need today
To make certain you have the necessary insurance coverage to protect your home and belongings from natural disasters, consult with us as your Personal Family Lawyer®. We’ll help you in one or more ways  … to help evaluate the specific risks for your area, assess the value of your assets, and provide support to determine the optimal levels of insurance you should have in place.

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Protecting Your Digital Assets

Don’t Forget to Include Your Digital Assets In Your Estate Plan

If you’ve created an estate plan with us or anyone, it likely includes traditional wealth and assets like finances, real estate, personal property, and family heirlooms. But unless your plan also includes your digital assets, there’s a good chance this online property will be lost forever following your death or incapacity.

What’s more, even if these assets are included in your plan, unless your executor and/or trustee knows the accounts exist and how to access them, you risk burdening your family and friends with the often lengthy and expensive process of locating and accessing them. And depending on the terms of service governing your online accounts, your heirs may not be able to inherit some types of digital assets at all.

With our lives increasingly being lived online, our digital assets can be quite extensive and extremely valuable. Given this, it’s more important than ever that your estate plan includes detailed provisions to protect and pass on such property in the event of your incapacity or death.

Types of digital assets

Digital assets generally fall into two categories: those with financial value and those with sentimental value.

Those with financial value typically include cryptocurrency like Bitcoin, online payment accounts like PayPal, domain names, websites and blogs generating revenue, as well as other works like photos, videos, music, and writing that generate royalties. Such assets have real financial worth for your heirs, not only in the immediate aftermath of your death or incapacity, but potentially for years to come.

Digital assets with sentimental value include email accounts, photos, video, music, publications, social media accounts, apps, and websites or blogs with no revenue potential. While this type of property typically won’t be of any monetary value, it can offer incredible sentimental value and comfort for your family when you’re no longer around.

Owned vs licensed

Though you might not know it, you don’t actually own many of your digital assets at all. For example, you do own certain assets like cryptocurrency and PayPal accounts, so you can transfer ownership of these in a will or trust. But when you purchase some digital property, such as Kindle e-books and iTunes music files, all you really own is a license to use it. And in many cases, that license is for your personal use only and is non-transferable.

Whether or not you can transfer such licensed property depends almost entirely on the account’s Terms of Service Agreements (TOSA) to which you agreed (or more likely, simply clicked a box without reading) upon opening the account. While many TOSA restrict access to accounts only to the original user, some allow access by heirs or executors in certain situations, while others say nothing about transferability.

Carefully review the TOSA of your online accounts to see whether you own the asset itself or just a license to use it. If the TOSA states the asset is licensed, not owned, and offers no method for transferring your license, you’ll likely have no way to pass the asset to anyone else, even if it’s included in your estate plan.

To make matters more complicated, though your heirs may be able to access your digital assets if you’ve provided them with your account login and passwords, doing so may actually violate the TOSA and/or privacy laws. In order to legally access such accounts, your heirs will have to prove they have the right to access it, a process which up until recently was a major legal grey area. Fortunately, a growing number of states are adopting a law that helps clarify how your digital assets can be accessed in the event if your death or incapacity.

The Revised Uniform Fiduciary Access to Digital Assets Act

The Revised Uniform Fiduciary Access to Digital Assets Act, which has been adopted in most states so far, including North Carolina (NCGS Section 36.F) lays out guidelines under which fiduciaries, such as executors and trustees, can access these digital accounts. The Act allows you to grant a fiduciary access to your digital accounts upon your death or incapacity, either by opting them in with an online tool furnished by the service provider or through your estate plan.

The Act offers three-tiers for prioritizing access. The first tier gives priority to the online provider’s access-authorization tool for handling accounts of a decedent. For example, Google’s “inactive account manager” tool lets you choose who can access and manage your account after you pass away. Facebook has a similar tool that allows you to designate someone as a “legacy contact” to manage your personal profile. If an online tool is not available or if the decedent did not use it, the law’s second tier gives priority to directions given by the decedent in a will, trust, power of attorney, or other means. If no such instructions are provided, then the third tier stipulates the provider’s TOSA will govern access.

As long as you use the provider’s online tool – if one is available – and/or include instructions in your estate plan, your digital assets should be accessible per your wishes in states that have adopted the law. It is likely that all 50 states will adopt this law so even if the law isn’t on the books in a state in which you later reside, you should include these provisions in all documents when planning.

Your Estate plan and related documents

When you work with us, we incorporate these provisions in your wills(s), trusts(s), and financial powers of attorney as part of your plan. Be sure that you contact us as you Personal Family Lawyer® if you have any questions about your online property or how to include it in your estate plan.

Today, estate planning encompasses not just tangible property like finances and real estate, but also digital assets like cryptocurrency, blogs, and social media.

With so much of our lives now lived online, it’s vital you put the proper estate planning provisions in place to ensure your digital assets are effectively protected and passed on in the event of your incapacity or death. However, because many types of online assets have only been in existence for a handful of years, there are very few laws governing how they should be dealt with through estate planning. And due to their virtual and often anonymous nature, just locating and accessing some of these assets can be extremely difficult for those you leave behind.

Best practices for including digital assets in your estate plan

If you’re like most people, you probably own numerous digital assets, some of which likely have significant monetary and/or sentimental value. Other types of online property may have no value for anyone other than yourself or be something you’d prefer your family and friends not access or inherit. To ensure all of your digital assets are accounted for, managed, and passed on in exactly the way you want, you should take the following steps:

1. Create an inventory:

Start by creating a list of all your digital assets, including the related login information and passwords. Password management apps such as LastPass can help simplify this effort. From there, store the list in a secure location, and provide detailed instructions to your fiduciary about how to access it and get into the accounts. Just like money you’ve hidden in a safe, if no one knows where it is or how to unlock it, these assets will likely be lost forever.

2. Back up assets stored in the cloud:

If any of your digital assets are stored in the cloud, back them up to a computer and/or other physical storage device on a regular basis, so fiduciaries and family members can access them with fewer obstacles. That said, don’t forget to also include the location and login info of these cloud-based assets in case you don’t have a chance—or forget—to back them all up.

3. Add your digital assets to your estate plan:

Include specific instructions in your will, trust, and/or other estate planning documents about the heir(s) you want to inherit each asset, along with how you’d like the accounts managed in the future, if that’s an option. Some assets might be of no value to your family or be something you don’t want them to access, so you should specify that those accounts and files be closed and/or deleted by your fiduciary.

Do NOT provide the specific account info, logins, or passwords in your estate planning documents, which can be easily read by others. This is especially true for wills, which become public record upon your death. Keep this information stored in a secure place, and let your fiduciary know how to find and use it.

As you may know from working with me, I love technology! And, even for probate and directions to your heirs, there is technology to assist! Consider a service such as Directive Communication Systems to support you here. It’s also a good idea to include terms in your estate plan allowing your fiduciary to hire an IT consultant if necessary. This will help him or her manage and troubleshoot any technical challenges that come up, particularly with highly complex and/or encrypted assets.

4. Limit access:

In your plan, you should also include instructions for your fiduciary about what level of access you want him or her to have. For example, do you want your executor to be able to read all of your emails and social media posts before deleting them or passing them on to your heirs? If there are any assets you want to limit access to, we can help you include the necessary terms in your plan to ensure your privacy is honored.

5. Include relevant hardware:

Don’t forget that your estate plan should also include provisions for any physical devices—smartphones, computers, tablets, flash drives—on which the digital assets are stored. I use the Ledger Nano S for my currency.  Having quick access to this equipment will make it much easier for your fiduciary to access, manage, and transfer the online assets.

6. Check service providers’ access-authorization tools:

Carefully review the terms and conditions for your online accounts. Some service providers like Google, Facebook, and Instagram have tools in place that allow you to easily designate access to others in the event of your death. If such a function is offered, use it to document who you want to have access to these accounts. Just make certain the people you named to inherit your digital assets using the providers’ access-authorization tools match those you’ve named in your estate plan. If not, the provider will probably give priority access to the person named with its tool, not your estate plan.

Truly comprehensive estate planning

With technology rapidly evolving, it’s critical that your estate planning strategies evolve at the same time to adapt to this changing environment. With us as your Personal Family Lawyer®, we can help you update your plan to include not only your physical wealth and property, but all of your digital assets, too.

Fixing your Credit Report (and do it for your parents, too!)

You can fix errors in your credit report AND the reports for your parents

It is easy to do, just follow a few simple steps.  When you are home for the holidays, look for evidence that your parent(s) are neglecting their finances or not paying bills.  And, check the interest rates on credit card payments.  If there are errors in their report, you will see interest rates MUCH higher than they should be.

How to Fix Errors in Your Credit Report

While some of those TV commercials for free credit-score report companies are pretty funny, having errors on your credit report is no laughing matter. Indeed, your credit score is one of the main factors determining your access to loans, credit cards, housing, and sometimes even jobs. From late payments that were actually made on time and paid debts that are still listed in collections to fake accounts opened in your name by identity thieves, there are all kinds of errors that can end up in your report.

It happened to me

One morning, I checked email to find several messages from my credit card providers that canceled or severely restricted my credit limits!

Whoa, what happened? Turns out that I was an “authorized user” (not even a co-account-holder) on a card for one of my daughters, and one company “accidentally” added her to my credit record.

Bam! Almost all my cards canceled instantly! Only USBank left my credit alone (and I still use their cards today!). It took three letters and phone calls to each credit reporting agency to get it reported and several more months to restore my credit. I canceled the cards from providers who would not fix things immediately.

Since then, my credit report is frozen by my request (you should do the same), and that has been true for my credit for over 10 years now.

When should they fix your report?

Even if the mistakes were made by the banks, lenders, and/or credit bureaus, they have no obligation to fix them—unless you report them. Given this, it’s vital to monitor your credit score regularly and take immediate action to have any errors corrected. Here, we’ll discuss a few of the most common mistakes found in credit reports and how to fix them.

Finding and fixing errors

The first step to ensure your credit report stays error-free is to obtain a copy of your report from each of the three major credit-reporting agencies: Experian, TransUnion and Equifax. You can get your reports truly free, once a year, at www.annualcreditreport.com or by calling 1-877-322-8228. Other websites may claim to offer free reports, but the Federal Trade Commission (FTC) warns that these offers are often deceptive.

You can get free access to your reports and even helpful credit monitoring services from companies like CreditKarma.com. Check each of the reports closely for errors. Some of the most common mistakes include:

  • Misspellings and other errors in your name, address, and/or Social Security number
  • Accounts that are mistakenly reported more than once
  • Loan inquiries you didn’t authorize
  • Payments inadvertently applied to the wrong account or noted as unpaid, when they were in fact paid
  • Old debts that have been paid off or should’ve been removed from your report after seven years
  • Fake accounts and debts created by identity thieves

Filing a dispute

If anything is inaccurate on your report, file a dispute with the credit bureaus as soon as possible. In fact, notifying these agencies is a prerequisite if you eventually decide to take legal action.

Note that if a mistake appears on more than one report, you’ll need to file a dispute with each credit bureau involved. To ensure your dispute has the best chances of success, follow these steps:

  • Use the appropriate forms: Each credit bureau has different processes for filing a dispute—whether via regular mail or online—so check the particular bureau’s website for instructions and forms. You can find sample letters showing how to dispute credit reports on the FTC and Consumer Financial Protection Bureau (CFPB) websites.
  • Be absolutely clear: Clearly identify each disputed item in your report, state the facts explaining why the information is incorrect, and request a deletion or correction. If you’ve found multiple errors, include an itemized list of each one.
  • Provide evidence: It’s not enough to just say there’s a mistake; you should substantiate your claim with proof. Collect all documents related to the account, including account statements, letters, emails, and legal correspondence. Include copies (never originals) of this paperwork, and highlight or circle the relevant information.
  • Contact credit providers: In addition to the credit bureaus, the CFPB recommends you also contact the credit providers that supplied the incorrect information to the bureaus. Check with the particular company to learn how to file a dispute, and then send it the same documentation to them that you sent to the bureaus.

Here are the contact numbers and web sites for the three credit bureaus:

Review the results of the investigation

Credit bureaus typically get back to you within a month, but their response can take up to 45 days. The response will tell you if the disputed item was deleted, fixed, or remains the same. Disputes basically boil down to whether or not the creditor agrees with your claim or not, and what they say typically goes.

If you’re not happy with the result of the dispute or how the dispute was handled, you can file a complaint with the CFPB, which regulates the credit bureaus. They’ll forward your complaint to the credit provider and update you on the response they receive.

If the credit provider insists the information is accurate, you can provide the bureaus with a statement summarizing your dispute and request they include it in your file, in future reports, and to anyone who received a copy of the old report in the recent past.

Legal action

Finally, if the investigation isn’t resolved to your satisfaction and the inaccurate information in your credit report is causing you harm, contact us to determine if taking legal action would be worthwhile. We can review the information, and if necessary, help you find the right attorney to develop and litigate your case.

Reporting and fixing might not be all there is to do

If you have too many debts, stop the bleeding. Once you deal with any errors on your credit report, it’s time to ensure you’re not still spending more than you can afford each month. Why is this so important? It’s because are only three simple things to do to fix your credit:

  • Pay all of your bills on time
  • Pay down debt (especially credit card debt)
  • Avoid applying for credit

But before you can do these things, you need to make sure you’re not spending more than you earn—you need a budget. Consult your financial planner for help!

Take action today

It may take a long time for your credit score to improve. I was lucky that it took only a few months to fix an error. If you plan on buying a new home, or taking on any other big debt, it’s well worth the time. Read more

With us as your Personal Family Lawyer®, we can help get your credit in top shape by guiding you to put the proper legal, insurance, financial, and tax systems in place to secure your family’s financial future.

Contact us today to get started.

919-883-2800

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