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Category: Estate Planning (Page 1 of 7)

3 Steps to Add a Charity to Your Estate Plan

By: Sarah Stewart Legal Group, PLLC

As you consider the legacy you want to leave behind through estate planning, charitable giving may blip on your radar.  Many of us have causes and organizations we want to support and impact.  If you are one of those people, the good news is incorporating charitable giving into your estate plan can be an easy process.

(1) Pick Your Charity

Think of the causes and organizations that are important to you.  Where have you donated time, money, or materials?  Are there causes that have impacted the people you love personally? What do you want your gift to contribute to the community?

Charitable giving is immensely personal.  There are a myriad of questions to consider for yourself before making a decision.  But, rest assured, you can plan for any and all organizations you want in your estate plan.

(2) Pick Your Gift

After you’ve decided where you want to donate and the goals you wish to accomplish, you can move on to deciding what you need to donate to meet those goals. If you wish to donate anything other than cash, be sure to reach out to the organization to be sure they accept that kind of donation.

Though many large charities have the means to accept property, stocks, bonds, and other personal assets for donations, many small or medium-sized charities may not have the ability to manage and/or sell those assets.  A simple phone call can help you determine the best assets for you to donate that will best benefit the organization.

(3) Pick How to Give Your Gift

Now that we’ve decided who and what, we have to decide how. Most estate planning documents allow you to designate a charity as a recipient of any or all of your assets.  But, your goals will help you determine the best vehicle to leave your assets to charity.

If you are looking for tax benefits, there are ways to accomplish that.  If you want more say over how your donation is used, there are ways to structure your planning to ensure your goals are met. Professionals can help you meet your goals.

Do you have a charity you want to support after your death?  Reach out to trusted estate and tax planning professionals to help you organize and achieve your goals for your cause.

Planning for 4 Important Life Stages

By Sarah Stewart Legal Group, PLLC

Generally, people will experience 4 different stages through their lives. Estate and financial planning are important for every stage of our lives.  But, certain aspects of planning are more crucial during different stages. Learning what to focus on and when can help you make the best plans possible for your life.

(1) Starter Stage

Budgeting is the most important skill to learn when we are just starting out. A well-planned budget allows individuals to live within their means and avoid getting trapped by credit cards and other debts.

Once the budget is mastered, plan for savings.  Start with emergency savings.  Inevitably, something important will break. Your car will need new brakes.  The hot water heater will go out.  The washing machine will flood.

Having an emergency savings of at least $1,000 can stop an emergency from derailing your budget and financial plan.

It is also wise to start putting away some money for retirement.  Compounding interest helps early investors get the most bang for their buck.  The more you can save the earlier, the better your outcome when you want to retire.

Unless you already have a family, life insurance is not as important at this stage of your life.  Put that money to better use elsewhere, like a good health insurance policy. Figure out a basic estate plan in case something were to happen to you.

(2) Family Stage

Once you have a family, in addition to budgeting, saving, and investing, you’ll want to ensure you have a good life insurance policy to cover them if something happens to you. Term life insurance gives you the most coverage for the lowest rates. Add you family to your health coverage.

Start to revise your budget as income and expenses increase.  Plan for short-term, mid-range, and long-term financial and personal goals. Find a financial advisor to help you focus on greater retirement investments.  If you don’t have an estate plan in place, get one.  Your family will be grateful if they need it.

(3) Growth Stage

During this stage of life, your income will increase and your costs will stabilize. Plan to maximize saving and investing during this stage of life. Restructure your retirement plan based on the extra money you can devote to your investments.

Update your insurance policies based on your current needs. Update your estate plan, taking into account marriages, divorces, deaths, births, and other life changes.  Consider new estate planning vehicles based on the amount of wealth you have accumulated.

As with all other stages, try to keep your debts as low as possible.

(4) Retirement Stage

The focus of your retirement years will be budgeting. You know how much is available to you and you will have to stay within that range to retire successfully.

Healthcare costs will increase, so invest in a good health insurance option.  Debt should be minimal and life insurance will only be critical to protect a spouse or live-in child.

Update your estate planning and financial documents and simplify your finances.  Consolidate accounts and organize your financial portfolio.

The best way to plan for each stage of life is to focus on the most crucial financial components during each stage of life.  Having a thorough financial and estate plan can help minimize costs and risks for you and your family.

Reach out to professionals today to start your financial and estate plans!

 

How Famous Rapper Mac Miller Planned for His Death

Picture by Clarke Tolton for RollingStone.com

By Sarah Stewart Legal Group, PLLC

Malcolm James McCormick, the rapper and music producer known as Mac Miller, died on September 7 in California.  He was only 26 years old.

The rapper began his career at 14 under the name EZ Mac. In 2010, he signed with Rostrum Records and released his first album, Blue Slide Park in 2011. He went on to create several more albums over the span of his short career and became a highly-sought-after collaborator.  By the time of his death, he amassed more than $9 million in net worth.

Mac Miller was single and had no children, yet despite his youth, he learned from the errors other famous musicians made in their estate planning.  Mac Miller helped his family by pre-planning. He planned for his family after his death with a Will that left everything to a Trust.

Other famous musicians, including Prince and Aretha Franklin, did not properly plan for their assets after their deaths.  Prince died in 2016.  His family is still going through the court process of probate to try to distribute his assets. The process has been stressful, and no doubt, costly.  Aretha Franklin died in August 2018.  Her estate is currently going through the probate process as well.

When estates go through probate, it can take a long time.  Also, the public nature of the proceedings allow family members and sometimes even strangers, to make claims on the estate and delay the process even more.

Mac Miller’s estate will not have to go through the probate process, thanks to his advanced planning.  That means a Court will not have to oversee the division of the assets and notices will not be sent out that allow people to try to stake their claim to his estate.

Another benefit of Mac Miller using a Trust is that his wishes will remain private.  His family will not have to file documents that inventory his assets and who receives them in the court-which makes matters of the estate a public record.

Of course, a Trust is only as good as what you put in it.  When creating a trust, the person making the Trust must change the title of assets into the Trust’s name. Should an asset be missed, most Trust plans will include a Pour-Over Will.  The Will would be probated, but the assets would go straight into a Trust, keeping the assets and distributions private from the public eye.

If you haven’t created a plan for your family after your death, there is no better time than now!  Reach out to an estate planning professional today to get started!

 

 

6 Things You Can Do Now To Reduce Your Risk of Alzheimer’s and Dementia When You’re Older

By Sarah Stewart Legal Group, PLLC

Alzheimer’s and dementia affect the families of many of our clients.  In the later stages, these debilitating diseases often lead to complete physical dependency and lack of awareness of surroundings. The dependency caused by the disease requires families to step in and take over for their ailing loved one.

Alzheimer’s and other forms of dementia are on the rise in the U.S. The Alzheimer’s organization reports there are currently 5.7 million people suffering from these illnesses. They estimate that by 2050, more than 14 million people will suffer from these diseases.

There is no cure for Alzheimer’s and it is hitting more people earlier and earlier in their lives and causing more and more families to devote their time and resources to caring for people suffering.

Luckily, studies are helping doctors understand behaviors that increase the risk of dementia.  With this knowledge, we can make choices in our own lives that will reduce our risk of developing the disease later in life.

(1) Control Blood Pressure

The World Alzheimer Report from 2014 discussed several studies that found people with high blood pressure had an increased risk of dementia. People with high blood pressure are also at an increased risk for stroke. Strokes cause the death of brain cells, which can also lead to Alzheimer’s.

How does this happen?  High blood pressure strains your arteries.  This makes the arteries’ walls stiffer and the passage for blood to flow through narrower. The stiffer, narrower walls restrict the amount of oxygen and essential nutrients that flow to your brain and damages your brain cells.

You may not notice if you have high blood pressure because it will not necessarily affect your day-to-day life.  Get your blood pressure checked every 5 years to make sure you are still on the right track.

Indicators for high blood pressure include being overweight, diets high in salt, excessive alcohol consumption, and smoking.

(2) Kick Those Butts

Smoking increases problems with your heart and blood vessels, which are linked to Alzheimer’s. Also, the toxins in cigarette smoke cause inflammation and oxidative stress, additional factors in Alzheimer’s.  According to the Alzheimer’s Society, smokers are 30 – 50% more likely to develop Alzheimer’s disease than non-smokers.

Luckily, when smokers kick the habit, the increased risk factors are gone.

(3) Cut the Sugar

Columbia University studied the affects of sugar on dementia.  They found that people who used more than 2 1/2 teaspoons per day in their foods or drinks were 54% more likely to get dementia than those who didn’t.

For those who enjoyed more than half a can of soda each day, there was a 47% increase in the risk of developing dementia.

The study concluded that adding more than 30 grams (the equivalent of one can of soda) of sugar to your diet daily increases your risk of dementia by 33%.

When you increase your blood sugar, you are also increasing your risk for diabetes. Changes in glucose metabolism affect both diabetes and Alzheimer’s and can cause changes to your brain. Any excess sugar, whether from soda or fruit juice, can have the same affect.

(4) Protect Your Head

When people get hit in the head constantly, it can cause mini strokes, and strokes increase your risk of dementia. Repeated hits to the head can cause the central nervous system to become inflamed and lead to tau buildup- a protein that can cause memory loss, aggressive behavior, confusion, depression, and dementia.

Keep your head protected if you do contact sports.  If you do get a severe hit to the head, seek medical attention.  Follow your doctor’s advice about when to return to the sport.

(5) Exercise

A Cardiff University study found that exercising greatly reduces the risk of dementia. The study found that participants who developed 4 out of 5 healthy behaviors- exercising regularly, quitting smoking, keeping a healthy weight, and drinking little alcohol- reduced their risk of developing dementia by 60%.

As a bonus, adopting the healthier lifestyle reduced the risk of diabetes, heart disease, and stroke by 70% over those who did not have any of the studied healthy behaviors.

Exercise caused a greater reduction of health risks than any other single factor. When reviewing clinical trials, the Alzheimer’s Society found one month of regular exercise- just 20 – 30 minutes, several times per week- improved processing speed, attention, and memory in participants.

(6) Exercise Your Brain

Keeping you brain active regularly increases your brain health.  Studies found bi-lingual people developed dementia more than 4 years later than people who only knew one language. In addition, playing an instrument lowers your risk of dementia by 36%.

If language or music aren’t your forte, doctors suggest counting backward from 100 in 2s,3s, or 4s, while doing something else, such as tapping your hand on your thigh. You can also exercise your brain with problems at work or crossword puzzles.

 

3 Estate Planning Tips for Families with Businesses

By Sarah Stewart Legal Group, PLLC

Estate planning helps families preserve their assets and make sure they go to the right people at the right time if a family member dies or is unable to care for themselves. Estate planning can include a variety of documents and roadmaps to reach each individual’s planning goals.

Though estate planning is important for everyone, business owners face unique challenges when it comes to protecting their families and businesses if something happens to the owner. If you are a business owner, make a plan for your business to help your family.

(1) Pre-Plan

Entrepreneurs require more complex planning than their employee counterparts.  Not only do business owners have to plan for what happens to their families and things when they die, they also have to plan for their business.  As a responsible family member and business owner there are several items you want to consider to properly protect your business and family.

Disability Insurance

Disability insurance can replace your income if you become disabled due to illness or injury.  Call an insurance agent to find out how you can sign up and make sure you can still pay the bills if you become disabled.

Life Insurance

What would your family do if they lost your income?  Could they survive month-to-month?  If not, and let’s be honest, the answer is usually not, how much would your family need to pay the mortgage/rent, buy food, clothe themselves, and pay for utilities if you weren’t contributing? You need enough to cover those costs and add some extra cushion to help them get back on their feet after your death.

You will also want to consider life insurance to help keep the business alive while your family grieves.  Family members may not be educated in your business and may have to hire outside help or sell your business once you’re gone.  Consider the costs that will come with that and get life insurance to cover them.

Finding a Successor

You need to find someone who can take over if something happens to you.  If your family is involved in the business, figure out if anyone is interested in and capable of taking over. If you’re a solo entrepreneur, find someone to start grooming to take your place.

If you own your business with other people, think about how you would want your families to be bought out by your business partners and put it in your agreement.

(2) Document Your Plan

Though there are many places you can go to make these documents yourself, you will want and need the help of professionals.  This is not a place to cut corners. Sitting down with an actual person and talking through your plan will help you determine what documents and plan are best for you.

But, at minimum, you will need a will and/or trust, durable powers of attorney, healthcare directives, and proper beneficiary designations on your stocks, bonds, and other assets that allow such designations.

If you are in business with other people, I highly recommend a business agreement. This contract will discuss how/when owners can buy/sell their portions of the company and will discuss what happens when an owner is disabled or dies.  Without these documents, if owners disagree, courts will make these decisions for you.

(3) Talk About It

I understand that talking about death isn’t fun, but it is inevitable.  Talk to your family about your plan.  Tell them where they can find it if something happens to you.  Keep a list of passwords, accounts, assets, and debts in a safe place where they can access it when they need it.

Planning and thinking about the future without you in it can be difficult, but it is the best thing you can do for your family and business.

 

7 Tips to Plan for a Spouse’s Death

By Sarah Stewart Legal Group, PLLC

There are more than 20 million widowers currently living in the U.S.  That number grows each year by about 1.4 million, with women being 3 times more likely to lose their husbands than husbands are to lose their wives.

More than 75% of married retirees interviewed in a Merrill Lynch study admitted that they would not be financially prepared for retirement if they lost their spouse.  And more than 50% of people interviewed who lost their spouse said they did not have a plan in place for their spouse’s death.

Losing a spouse is not only emotionally difficult, there are financial burdens as well.  Most couples are two-earner families.  The death of a spouse immediately turns your family into a single-income family. Planning for the probability that one spouse will outlive the other is crucial to providing your family with security and comfort during an already heart-wrenching time.

How to Plan

(1) Know What Your Spouse Owns

Keep a list of all the assets you own jointly and individually.  For anything not owned jointly, explore the possibility of naming a beneficiary or “payable on death”  on the asset or placing the asset into a Trust that allows ownership to pass directly to your spouse after your death without needing to go to court for a probate.

(2) Have Cash Available

You need to have a plan in place that allows your partner to access money quickly to help keep the family afloat if something happens to you. Build up a savings account for emergencies, put life insurance policies and other accounts into place, and name your spouse jointly or as a beneficiary.

(3) Own Separate Credit Cards

This may help you deduct some debt when a spouse dies.  It will also help you more easily attribute debt to the right spouse.

 

When you are nearing retirement age, there are additional steps you can take:

(4) Social Security

Claim your benefits.  They have the potential to increase a surviving spouse’s own benefit.

(5) Joint and Survivor Annuities

If you choose to have an annuity, or have a pension, in your plan, consider a joint and survivor annuity. These kinds of annuities will provide income to a surviving spouse when the other spouse dies.

(6) Long-term Care

Consider purchasing long-term care insurance and making other plans for long-term care.  With the average costs of assisted living in the U.S. running about $4,000 per month and the average costs of nursing care running about $7,000 per month, long-term care needs can quickly drain your retirement savings. Without proper planning, a spouse can be left broke while struggling with their grief.

(7) Relationships

Stay in contact with family and friends.  When something happens to one of you, you or your spouse will need and want their emotional support.

The best way to show your love for your partner is to make a solid plan for your death.  Planning allows the partner to move forward with their emotional healing without the stress and complication of financial burdens.

Reach out to your team of trusted advisors today to start your financial and estate plan for your family!

Easing the Financial Strain of Caregiving

By: Sarah Stewart Legal Group

Caregiving can be a thankless job.  As the U.S. Baby Boomer populations ages, more and more people are becoming caregivers for their aging family members.  According to the AARP and the National Alliance for Caregiving, in 2015, about 13% of the population were caregivers for adults or children within the previous 12 months of the survey.

Caregivers often work full-time jobs and struggle to balance their own lives and families with the often additional full-time job of caring for their family member.  They usually receive little or no compensation for their time, and often pay out of their own pockets for their loved one’s needs.

If you are a caregiver, how can you ease the financial burdens that come with the territory of caring for your loved one?

An option for those who care for adults who receive some sort of benefits or income may be a caregiver agreement where a caregiver can be reimbursed for time and money spent caring for their family member. If these agreements are properly drafted, they can be used to “spend down” funds to qualify for Medicaid when the person receiving the care needs to.

If there is no agreement, any payments made to the caregiver may be seen as a “gift.”  In Oklahoma, the Medicaid “look-back period” is 5 years.  That means if any money or items were given to someone in that time period that are not subject to an exemption defined by the state, it could be counted against the individual trying to qualify for Medicaid or other benefits as a current asset.  That means the person seeking funding will have to wait until that money is “spent” down to the Medicaid qualification level to qualify.

Requirements for Caregiver Agreements

The agreement must be in writing and must be specific about the types of work the caregiver will do.  Will the caregiver be running errands? What kinds of errands?  Where is the loved one needing care living?  If with the caregiver, is the caregiver charging rent to the loved one?

What other, additional services will the caregiver provide?  Is the caregiver paying the bills for the family member?  Are they maintaining or repairing the house the loved one lives in?

Log Your Time and Expenses

Once you have the agreement in place, be sure to keep a detailed log of the time you spend providing the services.  If you pay for something out of pocket and want to be reimbursed, keep receipts. Keep records of the income you receive.  Payments to caregivers are generally counted as taxable income for tax purposes.

When caregivers assist their elderly family members, they are providing a benefit to the family member and the government by allowing that person to stay in their home for a longer period of time and decreasing the amount of care the government will have to pay for for the elderly loved one.

If you are in a situation where you can benefit from a caregiver agreement, reach out to a professional today!

These documents have strict requirements that must be met to ensure your loved one can qualify for government benefits when they need them. Do not try to do this on your own!

How to Protect Aging Loved Ones from Financial Scams and Abuse

By: Sarah Stewart Legal Group

The National Council on Aging reports that financial crimes against the elderly are “the crime of the 21st century.”  Financial crimes are becoming more common because law enforcement has difficulty finding the perpetrators and prosecuting them.  Criminals who financially abuse the elderly can be complete strangers or family members.

Some of the more popular scams in recent years include callers posing as the IRS, Medicare, and claiming a family member has been kidnapped when they haven’t.  These scammers try to force an unsuspecting caller to wire them money immediately and can even spoof a number to make the call look legitimate.

These scammers target people who have worked hard their entire lives to be able to retire in peace, people like our friend Ann. Ann and her husband were married for 40 years when he died.  They worked together to build a nice nest egg that allowed Ann to retire comfortably soon after his death.

Recently, Ann got a call.  On the other end of the line was a man who said he was from the IRS.  He claimed Ann owed the IRS $10,000 in back taxes.  If she did not pay immediately, the IRS would send someone to her home to arrest her.  Ann had never had problems with the IRS before and was, understandably, shaken.

She drove to her local bank branch while she was on the phone with the man, to try to wire the money to him as he requested.  Luckily, an observant bank teller noticed that Ann seemed distressed.  She was able to speak to Ann about the situation and assure her that the man on the phone was not with the IRS. Ann was able to keep her money that day. Many people are not that lucky.

As loved ones age, their ability to recognize these kinds of scams can diminish.  If families are concerned that their elderly loved ones may fall victim to financial abuse and scams, they can help protect them by convincing them to put an estate plan in place.

Everyone has heard of Wills and Trusts and planning for your family after your death, but many of us may not be aware of the fact that estate planning does more.  For elderly family members, estate plans allow trusted loved ones to be aware of the financial health of the aging person and help protect them.

Estate plans usually include documents that allow people to choose others to act for them when they are unable to act on their own.  These documents can include specific provisions about managing bank accounts and other assets to ensure the aging person does not fall prey to predators.

After putting an estate plan into place, be sure to list all of the companies the person holds assets with- banks, retirement accounts, stocks, bonds, insurance accounts, etc.  Also, make a list of trusted advisors- attorneys, accountants, financial planners, etc.  These lists will make it easier for family to step in when an elderly loved one needs them to take over.

Talk to your elderly loved ones about their plans today.  If they have a plan, one that may be older, review the plan and make sure they don’t need to make any changes.

Have these conversations now and get these plans complete before it’s too late!

7 Reasons to Budget and Tips to Do It Right

By Sarah Stewart Legal Group, PLLC

Do you have a budget? If so, you are in the minority.  A study from the U.S. Bank in 2017 found that only 41% of people living in the U.S. had a budget.

Experts agree making and following a budget is the best way to manage your money and save for emergencies, vacations, and retirement. Budgeting also relieves a lot of stress by allowing people to plan for expenses and be sure they have enough money to live each month.

If you aren’t budgeting, we’ll tell you why you should and how to do it right.

Why Budget?

(1) You Have Control of Your Money

With a budget you know how much money comes in and where it goes.  You know what you can afford each month and can make a plan to lower debt and plan for other life and financial goals.

(2) Emergency Planning

When you have a budget and know where your money comes from and where it goes, you can plan to put some extra aside for emergencies.  Have you ever had your air conditioning go out in the heat of the Summer? Have you had a pipe break, flooding your house?  Wouldn’t it be nice to have the money set aside to cover those expenses without affecting your month?

(3) Determine and Focus on Money Goals

Knowing where your money goes gives you the power to change spending habits and decide what money goals you have.  Have you always wanted to take a trip to Italy?  What would it take to get there?  Planning for that trip will motivate you to skip the coffee drive through a few times a week.

(4) Share with Your Spouse and Family

Budgeting allows you to work as a team with your family and teaches your children how to use their money wisely.

(5) Foresee Problems

With a budget, you learn the ebbs and flows of your finances and can head off possible financial problems before they become problems.

(6) Decide About Debt

Budgeting helps you decide what, if any, debt you can afford. Do you want a new car?  Can you really afford it?

(7) Adjust Spending

When you budget, you can get rid of unnecessary expenses and add the savings up for retirement, college funds, vacations, or whatever you want.

Budgeting Tips

(1) If you’re married, be sure to budget together.  It won’t do any good if the two of you aren’t on the same page about important expenses.

(2) Be flexible.  Every month can be different.  You may need to buy school supplies, car maintenance expenses, or holidays.  Be sure to allow room for these expenses in your budget.

(3) Start with food, shelter, utilities, clothing, and transportation. Your necessities are the most important.  Fill everything else in around them.

(4) Pay off debt.  The less money you owe, the more you have for yourself!  Not to mention, credit cards and loans charge interest and penalties, taking more of your hard-earned money than you can imagine.

(5) If you’re struggling with certain expenses in your budget, such as entertainment, pull out cash for the month for that category.  Only use the cash.  Once it’s gone, you can’t spend any more on that category.

If you don’t have a budget yet, sit down with your family and set one up today!

Planning for Temporary Child Custody if You Die

By: Sarah Stewart Legal Group

If we don’t plan for our assets after our death while we’re alive, the Court will take over for your family and tell them who gets what. Because of this, estate planning tools are important for everyone.   But, families with young children have even more at stake if they don’t plan properly for their children.

Traditional estate planning tools like Wills and Trusts allow parents to name a Guardian for their children if the parents die while the children are under the age of 18.  At the very least, parents should think through who you trust to care for and raise your children if you’re not there.

Though these documents are important for every young family to have,  there are other plans parents of young children may not be aware of that are just as crucial.

Sometimes when both parents have died, children can be taken into state custody, at least for a brief period.  If you want to minimize the chance of this happening to your children, you will need to make plans and arrangements with family members or friends if something happens to you.

Let’s say you go out on a date night and leave the kids with a sitter, but you get in a car accident and don’t make it home.  Who would the babysitter call? Who would care for the children until the Guardian can go to court and establish Guardianship? Getting a guardianship is a process that can take weeks.

What about young families who do not live close to their parents, siblings, or other family members?  What if closest relatives are more than 5 hours away? Where would your children go?

If you have a trusted friend you would like them to stay with until family arrives, you will need documentation granting the friend authority to keep the children temporarily.  Otherwise, child protective services will likely take them into custody.

If you are a parent or Guardian of young children, you should consider drafting a plan for your family.  You can give a copy of the plan to your proposed caretaker and keep a copy somewhere in your home that is easily accessible and that the sitter knows about.

Your children will have enough stress and trauma from dealing with your loss if you die suddenly.  Do you want to make that process even more difficult by having the state take them into custody and hand them over to strangers?

If not, get to work on your temporary custody plans for your children today!

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