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Category: Legal (Page 1 of 8)

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!

 

 

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.

 

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!

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!

Estate Planning: Planning for Life, Not Just Death

By Sarah Stewart Legal Group

When people think of estate planning- wills, trusts, durable powers of attorney, advance directives for healthcare, and other documents- it can often bring to mind thoughts of death. Though planning for our assets after death is an important part of estate planning, estate planning is also used to plan for you and your family’s best life.

To draft a thorough and appropriate estate plan, professionals will walk you through your plan, asking what will happen if an heir divorces, if someone dies, if someone has a child, or other important life changes happen.  They will also help you plan for illness and disability.

If you are an adult, over the age of 18, an important planning tool you will want to consider is a Durable Power of Attorney. A Power of Attorney will allow someone else to take care of your financial, and possibly medical, responsibilities if you are unable to do so yourself.  You get to create this document any way that works for you and meets your goals and needs.

Another important planning tool for any adult is an Advance Directive for Healthcare.  In Oklahoma, this is the only document that allows you to name someone to withhold life-sustaining treatment when you are unable to make decisions for yourself and other important criteria are met.  These documents walk you through 3 situations and allow you to choose the life-sustaining treatment you want, or don’t want.

Under Oklahoma law, there is no automatic authority for a spouse, child, or parent to access a family member’s information and handle their affairs.  Unless accounts are owned jointly, only a Durable Power of Attorney, or Trust where the person is named a Co-Trustee, will give companies the authority to deal with a spouse or family member on your behalf.

If you do not have a Power of Attorney and have not named an agent, your family will have to go to court to gain access to your accounts and information through a guardianship.  This is a lengthy, costly procedure that invites the Court into your life indefinitely and requires the Court to approve decisions that you may not want them involved in.

If it is important to you to maintain privacy and/or name a specific individual to help care for your health and assets, or to reduce stress and costs for your family, a Durable Power of Attorney and Advance Directive for Healthcare are a great place to start to make a plan for emergencies in your life.

If you do not have a plan in place for your life emergencies, reach out to a professional to help you get started now!

6 Costly Myths About Retirement Planning

By Sarah Stewart Legal Group PLLC

U.S. Citizens are well-known for their lack of retirement planning. According to a 2016 Retirement Confidence Survey, 26% of those surveyed said they had saved less than $1,000 for retirement.  More than 50% saved less than $25,000 for retirement.  Moreover, a Fidelity Investments study in 2017 found that more than 1/5 of workers aren’t contributing enough to their 401(k)s to receive the full benefit of employer-matching.

Whether you’re a Baby Boomer, a Gen X-er, or a Millennial, if you want to retire someday, you need to be aware of some common retirement myths that can stop you from saving the most you can for your best retirement.

(1) You Should Only Invest in 401(k)s and IRAs

Traditional retirement accounts have penalties for withdrawing money before you are 59 1/2 years old. When you consider your retirement plan, if you have any idea you may want to retire early, you will want to invest at least a portion of your money in non-retirement, taxable accounts so that you can fund any years of retirement before age 59 1/2.

(2) You Don’t Have to Invest After Retirement

People are living longer and longer every year.  It is estimated that there are currently more than 72,000 people over the age of 100 in the U.S.  Assuming you want to retire at the average retirement age of 62, you can have up to 38 years of retirement.  Mind blowing- right?

Because we are all living longer, we have to stretch our retirement dollars further. Make a plan that can cover you if you live until 100.  It’s better to plan too much, than not enough.  You don’t want to end up standing on your child’s/grandchild’s doorstep at 80 because your retirement ran out.

(3) You Can Always Invest the Same Amount

As you get older, your income, and lifestyle expenses, increase.  Be sure you invest more in your retirement account to accommodate these lifestyle changes.  You don’t want to eat caviar when your 40 and be forced to eat Ramen noodles every night when you’re 70.

(4) You Don’t Need to Plan Distributions

Our goal is to make sure we don’t run out of money in retirement.  We want to plan distributions so we can be sure we are using our assets for stable income throughout our retirement.

(5) You Only Need to Save 10-15% of Your Income

If you started saving for your retirement in your 20s, saving 10 – 15% of your income each year works because interest compounds.  If you started saving later, you need to increase your savings to catch up.

With that being said, put aside whatever you can whenever you can.  Set up a monthly bank draft of a set amount so that you can be sure you are saving.  Everything will add up, and because of compounding interest, the sooner you start, the better.

(6) Financial Advisors Always Work in Your Best Interests

Not all financial planners are created equal.  Though many people believe financial advisors have to work in your best interests, it simply isn’t true.  Only financial planners who are fiduciaries are required by law to act in your best interests. Ask your financial advisor if he/she is a fiduciary and look for someone who says “yes.”

If you have not started a retirement or estate plan, reach out to professionals today!

 

5 Mistakes to Avoid When Making Your Estate Plan

By Sarah Stewart Legal Group

Estate planning is a topic a lot of people try to avoid, despite all the sage advice otherwise.  Though statistics vary, the consensus is only about 50% of people have actually planned for their family’s inheritance after their deaths.

Adults with children younger than 18 years of age, arguably the people who need to plan the most, have the lowest rate of planning- 36%.

Estate plans help families decide what assets go to whom, when, where, and can possibly save thousands of dollars in attorney and court costs. Planning is important for everyone, and it must be done correctly to meet your goals.

Here are 5 common mistakes you should avoid when estate planning.

(1) Not Planning

The difficulty of talking about death and working through a plan make people put off estate planning.  While you’re waiting for the right time, life, and death, can happen. If you die without an estate plan, the state decides who gets what, while your family is out thousands of dollars in court fees and attorney costs to get the state to divide your assets.

If you’re married, and you don’t have an estate plan, your spouse will not receive everything you left behind.  If you have children from a previous relationship that are not 18, and your previous partner survives you, your previous partner will receive your assets to manage for your children.  Are you comfortable with that?  If not, you need to make a plan.  Now.

(2) Forgetting Health Care Directives

Advance Directives for Health care are the only documents in the state of Oklahoma that gives someone the authority to withhold life-sustaining treatment on your behalf.  If you have certain situations where you would not want to be on life support, you need an Advance Directive in place.

Another important health care document is the Durable Power of Attorney for Health care.  If you are in a situation where you cannot make decisions for yourself, the Durable Power of Attorney will name someone you trust to make those decisions for you.

(3) Not Choosing a Guardian for Your Kids

If you don’t have an estate plan, and you have young children, you have not named a guardian for your children if something happens to you.  Your family will have to go to court, and possibly argue with other family members, to get guardianship of your child. And, the guardian may wind up being someone you wouldn’t want.

Remember when picking your guardian, that though your parents may be your first choice, if your children are older and your parents have health issues in the future, they may not realistically be able to care for them.  Consider naming a back-up guardian or co-guardian who is younger.

(4) Forgetting to Update Documents

When big life changes occur- divorce, birth, death, marriage, kids growing up- you should re-evaluate your plan.  Is everything the way you want it?  Has anything changed?  Documents are easy to amend if your plans change, but you have to stay on top of things.

(5) Incorrectly Titling Assets

Some people take the time and money to set up a trust, but forget to put their assets into the trust.  A trust is only as good as what you put in it.  Be sure to talk to your banks, financial planners, employers, and other asset holders to get your assets put into your trust.

If you don’t have an estate plan in place, or need to update yours, reach out to a professional today!

 

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