Orlando Estate & Elder Law

Keep it All in the Family For Estate Plan Success

If estate planning were just about some basic math tasks, people would not put off going to their estate planning attorneys every few years to make sure their estate plan is in order. However, as accurately described in the article “Estate Planning: A Family Affair” from Kiplinger, this is a highly emotional process.

If it helps to get you to move on this, consider that if you don’t have a will, the decisions about what will happen to your property–and if you are a parent of minor children, what will happen to your kids—will be decided by the laws of your state and the courts. That should be enough to get you to overcome the fear of mortality that often keeps people from moving their estate planning forward.

Don’t have a will yet? You need to do that right away. If you have an estate plan, but haven’t reviewed it in a while, and your life has become more complex, it’s time for a review. By the way, just because you review your plan, does not necessitate an overhaul. However, laws and lives do change and the same goals your will and estate plan addressed four years or 14 years ago, may not be the same as they are now.

Every five or six years or whenever there is a major change in your life, such as a divorce, inheritance, financial loss, birth or a change in estate laws, it’s time for a review. Reviews should take place more often when you are in your 50s or 60s. At that time, your assets may have grown, your children may have children of their own and your goals may have changed.

Your focus may have switched from protecting your children in the event of a premature death of a parent, to transferring wealth from one generation to the next.

The large changes to the tax law may mean that you no longer need some of the tax planning strategies you put into place prior to 2017. Several states have made major changes to their own estate tax laws. New Jersey eliminated its estate tax in 2018 and New York boosted its state estate tax exemption to $5.25 million that same year. Delaware eliminated its estate tax at the end of 2017.

One couple looked at their estate plans from almost 20 years ago before two of their children were even born. They realized that the plan was out of date, their estate had become much larger, more complicated and they wanted to build in significant charitable giving.

The first task: updating their wills, health care proxies and advance directives for end-of-life care. They created a trust that will donate 11% of their estate to a charity that matters to them. Trusts were set up that will pay out a certain percentage to their children at ages 30, 35 and 40, rather than giving their kids lump sums. They set up a plan whereby a trustee has the discretionary ability to make payments for education, health care, emergencies and even a down payment on a house, which will be subtracted from the child’s future distribution.

An additional benefit: Because of their use of trusts, their distribution of assets will be private.

Trusts are considered the “work horses” of estate planning because they can be used to accomplish so many different tasks within an estate. However, it is important to note that there is no one-size-fits-all trust. An estate planning attorney should review your situation and then will be able to recommend what trusts, if any, will be most useful for you and your family.

Don’t forget to have the talk. Sit down with your family members and tell them, to the extent you are comfortable, what you have decided. You don’t have to discuss numbers. However, your family will appreciate being part of the conversation so they understand the reasoning behind your decisions.

Make sure the information shared is keyed to your child(s) maturity. Some 18-year-olds are mature enough to understand the impact that an inheritance can have, while some 30-year-olds see a future inheritance as a license to slack off. You know your children best—make thoughtful decisions about how much to tell them and when.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Kiplinger (Nov. 1, 2018) “Estate Planning: A Family Affair,”

Expensive Mistakes People Make With Life Insurance

Life insurance sounds like a simple enough concept: you insure your life to protect your family. If something should happen to you, your family receives enough money so it can pay for the things your income would have otherwise provided. According to an article from The Washington Post, “Don’t make these big life insurance blunders,” many people get it wrong.

Here are the common mistakes that financial planners see:

Too much or not enough. Not everyone needs life insurance. If no one is depending on your income, you may not need any. However, if you have young children, and especially if you are the only breadwinner, then you need a lot. Even a stay-at-home parent needs coverage. If you died, how would the surviving spouse cover the cost of child care and all the other tasks that are done by the stay-at-home parent?

One rule of thumb is to purchase seven times the amount of your annual salary plus money for college educations. That’s a lot of insurance but the protection is well worth it.

Buying the wrong kind of policy. There are two kinds of policies and they serve very different purposes. Term life is simple and cheap. It offers coverage for a specific amount of time, usually 10, 20 or 30 years. If you die while the policy is in effect, it pays proceeds to the beneficiaries. If you live past the term, it has no value. It’s a good pick for most families, offering protection when kids are young or there’s a mortgage that needs to be paid. The idea is that at the end of the term you don’t need the insurance anymore.

There’s also permanent or whole life insurance. Many people get sold these policies, usually with the argument that they are building cash value. The problem is that the fees and agent’s commissions consume a lot of that value. One school of thought says to instead put money into tax-advantaged retirement accounts. If you’ve got money left over, use a low-cost index fund instead of funding a life insurance policy.

Permanent life insurance is valuable, if there is a special needs child who will be financially dependent on the parents. In that case, speak with an elder law attorney with special needs planning experience.

Depending on the life insurance in your employee benefits package. Check with the HR department to make sure you know how much coverage your work benefits provides. It’s likely not enough to protect your family. When you leave the company, the coverage ends.

Procrastinating the purchase. Many people treat the purchase of life insurance the way they do having their wills and estate planning done. There’s always something else that needs to be done first. However, if you wait too long, it may become more expensive. Get a few quotes from reputable companies and make a decision.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: The Washington Post (Nov. 1, 2018) “Don’t make these big life insurance blunders”

Can a Substitution Be Named for a Power of Attorney?

Naming a trusted individual, whether a family member or a friend, to be your power of attorney is a significant decision. That person has the power to make financial decisions on your behalf when you are unable to do so. It is, therefore, a serious responsibility, says My San Antonio Life in the article “Substitution of Agent and Delegation of Authority.”

Here’s an example of what can go wrong. A man’s father signed a durable power of attorney a decade ago naming his son as his agent in preparation for the possibility that the time would come when he could no longer make decisions on his own. He is now living in a nursing home and is not always clear in his mind. His son wishes to sell his father’s car. However, the car dealership is not accepting the power of attorney.

Here’s the twist: the dealership wants the son to assign one of its employees as the father’s agent so they can sign papers for the elderly man relating to the sale of the car.

That’s a big red flag. First, the son is unlikely to have the right to assign a different person to have the power to represent his father.

The statute behind the durable power of authority does not authorize delegation of authority.

The authority granted to the son is personal—meaning it was intended for his own personal judgment and discretion be used to represent his father, not someone else.

The legal concept of substitution is not used very often. In Texas a court case dates back to 1866, Smith v. Sublett, that holds that the “the doctrine in relation to substitution is that the authority is exclusively personal, unless from the express language used, or from their presumption growing out of the particular transactions, or of the usage of trade, a broader power was to be conferred upon the agent.”

In other words, unless the language in the power of attorney said the person could substitute someone else in a specific transaction, the power rests solely with the person named.

There was a change to the law in Texas in 2017 and it introduced two important concepts.

The third party must either accept the durable power of attorney or have valid grounds for refusing it and the person naming the agent (in this case, the father) must have authorized the agent (the son) to delegate various actions to others.

Speak with an estate planning attorney about what to do with the sale of the car through the use of power of attorney. If you run into a situation like this, consider finding another car dealer.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: My San Antonio Life (Oct. 30, 2018) “Substitution of Agent and Delegation of Authority.”

Retiring in 2019? Steps You Need to Take Now

Is 2019 the year you retire? Congratulations! However, you’ve got a lot of planning to do says CNBC in the article “If you’re planning to retire in 2019, here’s how to make sure you’re prepared.” If you’re seeing your next stage of life as full retirement, semi-retirement or an adventure into the unknown, you should start preparing and dedicating a fair amount of time to what’s coming next.

While we hope your retirement was planned, many of the people who retire—60%—do so because of health issues or because they were laid off and could not get another job. Others have continued to work long after they expected to, sometimes because they don’t see a reason to not keep working.

Whatever category you fall into, your first look should be at your finances.

Do you know what your expenses are? You can’t know how much you’ll need for retirement unless you know what you are spending right now. Maybe you won’t be buying expensive suits for a sales career. However, you’re still going to need to buy clothing. If you are like most retirees, you’ll want to fill your free time with all of the recreational pursuits you couldn’t do when you were working. That may include travelling, entertainment, sports and other activities—all of which cost money.

Pay off any debt you can. The less debt, the better.

Healthcare is one of the most overlooked costs for retirees. Once you reach 65  you’re eligible for Medicare. If you retire at or past that age, the program is available to you. However, it does not cover everything. The single most expensive item not covered: long-term care. Dental, vision and hearing care are not covered either.

You will also need a Social Security strategy. You can file for benefits any time after age 62 but you’ll increase your benefits by some 6% to 8% every year if you delay filing up to age 70. We don’t see those kinds of returns too often. If you work part time, you’ll need to find out how that income impacts your monthly benefits.

Even though you’re retired you have to pay taxes. Your taxes will depend on what kind of retirement accounts you have: traditional IRAs, 401(k)s, Roth IRAs, etc. Not all sources of income are taxed the same way.

If you don’t already have an estate plan in place, don’t wait until you retire to get this done. Speak with an experienced estate planning attorney who can help you create a will, power of attorney, health care directive and examine tax strategies for your estate and to protect your family.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: CNBC (Nov. 4, 2018) “If you’re planning to retire in 2019, here’s how to make sure you’re prepared.”

He’s 60. She’s 48. What Does Their Retirement Plan Look Like?

When couples are about the same age, working the retirement numbers is complicated enough.  However, what about when there’s a big age gap. In fact, an article from The Washington Post asks “How will a couple’s retirement look when there’s a big age gap?” Apparently, a big age gap can lead to some special challenges.

Not only are men who have recently remarried more likely to have a spouse who is younger, said one researcher, in many cases they are marrying women who are much younger. Twenty percent of newly married men wed women who are at least 10 years younger than themselves and another 18% marry women who are six to nine years younger.

By comparison, just 5% of men in their first marriage marry women who are 10 years younger.

For women, the likelihood of having a far younger spouse is very low.

That big age gap can be a big factor in decisions about when you retire, when spouses take Social Security and in planning how much money the couple needs to save and how to invest their savings.  Since women tend to outlive men, it’s especially important for retirement savings to last longer when the wife is much younger than her husband.

When to retire is one of the big questions. Long-term care considerations, health insurance and other health costs become more significant, when there’s a younger spouse.

Couples with big age gaps need to have a plan that accommodates the partner with the longest life expectancy. Therefore, a 70-year-old husband and a 56-year-old wife need to plan for their portfolio to last over the wife’s longer life span. That could be 30 years, especially if she has good health and a family history of longevity.

If the older partner had a higher income level over his working career, delaying Social Security filing past full retirement age to age 70 could be extremely important. It will enlarge the higher-earning spouse’s benefit and it will also enhance the lifetime benefits for the surviving spouse.

If there is a big age gap between you and your partner, you’ll need to have a lot of discussions about the issues that retirement and retirement planning brings.

Couples should sit down with an estate planning attorney and discuss the challenges they may face because of a large age difference. The attorney will be able to provide guidance, including exploring the use of many kinds of trusts or other estate planning tools that will protect the younger spouse.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: The Washington Post (Oct. 22, 2018) “How will a couple’s retirement look when there’s a big age gap?”

The Brave New World of Cryptocurrencies and Estate Planning

When it comes to digital assets, the future is here and right now. While you can’t be sure about the value of cryptocurrencies, you can be sure of one thing: one day, the human owner of the digital assets will die. What happens then? This article from ThinkAdvisor, “4 Key Steps for Estate Planning with Cryptocurrencies,” explains how cryptocurrency investors can pass their digital assets to their heirs through estate planning.

Record Private-Key Custody and All Access Details. Digital currency is not the same as bank or investment accounts. The information can be lost permanently if the investor fails to share the access information. Here’s what needs to be shared for most cryptocurrencies:

Private Key – A public-private key system is used to ensure transactional validity. The public key becomes public every time the cryptocurrency is bought and sold but only the owner knows the private key. This is used to verify ownership and access accounts. A physical record of the key must be created and maintained. Keeping it in a bank safety deposit box or home safe insulates the private key from hacking.

Passwords – Investors who do not secure their digital assets in “hardware wallets,” often have their cryptocurrency stored on default digital wallets provided by an exchange. The owner must share their user name, password and security question information with the exchange, so that digital assets can be retrieved.

Two-Factor Authentication – Many exchanges require investors to use two-factor authentication, usually via a mobile app that provides a unique time to gain access. User name, password and security system must be recorded for anyone else to access.

Use a Hardware Wallet. Once digital currency is purchased on an exchange, it is automatically stored on the exchange’s default wallet, so the investor can access them. However, these default wallets are susceptible to hackers. Investors should immediately transfer their currency to a hardware wallet. Purchased online, they are generally encrypted flash drives that require a password or PIN code to gain access. If you lose that flash drive, or password or PIN code, you may have lost all the assets. However, some hardware wallets support 24-word recovery phrases to help investors restore their accounts. Investors are advised to buy a secondary hardware wallet and make an exact duplicate to have another means of access.

Uniform Fiduciary Access. Roughly 24 states have passed some version of the Uniform Fiduciary Access to Digital Access Act. These laws empower fiduciaries to manage digital assets.  However, they may not yet provide that same level of power for cryptocurrencies.

Determine Tax Liability. The IRS treats digital assets as property rather than currency for tax purposes, so any capital gains or losses in digital asset transactions must be reported. Many online digital asset exchanges provide data that tracks sales and purchases. However, they don’t always provide enough information to determine the tax basis. Record and save information on every transaction to be able to do the calculations on your tax liability.

If you are involved in cryptocurrency and want to be able to pass these assets along to your heirs, you will need to plan ahead. Speak with an estate planning attorney who is familiar with this new kind of property to ensure that your investments in this new asset do not disappear.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: ThinkAdvisor (Oct. 22, 2018) “4 Key Steps for Estate Planning with Cryptocurrencies”

A Cautionary Tale of Alleged Elder Abuse

This is a sad story that illustrates how even the smartest person can be vulnerable and preyed upon by someone they know and trust. Mary Weiss has endured the violent death of her son, four strokes and a heart attack, says Fox 9 in its report titled “Woman, who helped change research protocols at U of M, allegedly loses savings to caregiver.”

The person she depended on throughout it all is the one who is suspected of taking advantage of her trusting nature. She says she was financially ruined and her nest egg of $150,000 is gone. Debt from credit cards and loans taken out in her name without her consent is mounting.

Weiss gained international attention for her battle with the University of Minnesota researchers who ran a research study of a psychiatric drug. Her son took his own life while enrolled in the study. Because of her fight, the University made a number of changes to its research programs.

The man she believes has ripped her off stood by her during that battle, speaking to reporters on her behalf. However, now he has been charged with one count of theft by swindle by the Washington County Attorney following an investigation by the Cottage Grove Police Department.

Howard lived with Weiss, although they were not romantically involved, for 10 years and had become her caregiver. She had suffered a series of strokes and gave him power of attorney over her financial matters.

Weiss knew that Howard had a record, including a theft by swindle conviction, but she never thought he would do something bad to her.

It was Weiss’ niece who discovered the problem this past spring when she was going through a year’s worth of bank statements. ATM withdrawals, lottery ticket purchases, loans and credit cards were all done in her name. Washington County Human Services did a separate investigation and notified Weiss that an allegation of financial exploitation had been substantiated.

Howard denies taking anything without Weiss’ consent.

Weiss is currently living in a nursing home and is recovering from a fall. She said that she would like to return to her townhome but is not sure she will be able to afford to do that. She wants others to understand that this can happen to anyone, even with full control of their senses and no dementia.

Elder financial abuse is a growing problem as the number of seniors rises. Having a family member who is actively involved and looking out for aging family members is one of several ways to prevent elder abuse from a stranger. However, it is often a family member who is committing the crime.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Fox 9 (Oct. 22, 2018) “Woman, who helped change research protocols at U of M, allegedly loses savings to caregiver”

How Will You Pay for Nursing Care?

In other words, you’re going to need a much heftier retirement fund or a better plan to prepare for the possibility of needing long term care. A recent article from CNBC, “This retirement expense has hit $100,000 annually–and it’s continuing to rise,” reports that a larger number of older adults will need specialized care. Another problem is a shortage of skilled workers. Care expenses will rise with wage demands. Your best bet: start planning now for how you’d like to receive—and pay for—your care.

Overall, the rising cost of care has outpaced inflation. The CPI (Consumer Price Index) for all urban consumers was 2.1% for the first half of 2018. The annual median cost of a room at an assisted living facility grew faster and even the cost of a shared room in a nursing care facility increased—by 4.11%.

Here’s a look at the most expensive places to seek care:

Aging in Alaska is the most expensive state, if you need to be in a nursing home. The annual median cost for a private room: $330,873, according to the Genworth study. An alternative might be assisted living facilities. However, they offer less medical care or assistance. There’s also the option of having a home health care aide come to visit.

Home health care services cost the most in Hawaii where patients pay an annual cost of $68,640 for just 44 hours a week of care at home. The growing demand for support services is likely to push the cost of care even higher.

People planning to retire in five years or so can prepare by working with a knowledgeable advisor. The first question is where do you want to receive care? The next one is to plan for the worst-case situation where you or a spouse need the care that only a skilled facility can provide.

The solution, if you can get coverage, may be a long-term care insurance policy, or a life insurance policy with a long-term care feature. The cost may be high but the costs you might incur without that coverage will be way higher.

Part of your planning should also include selecting trusted people, family or friends, who can be named to take over your financial matters (power of attorney) or medical care (health care power of attorney) should you become incapacitated by illness or injury.

Your estate planning attorney will be able to help you prepare these documents, along with a comprehensive estate plan that protects you and your family while you are living and after you have passed.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: CNBC (Oct. 20, 2018) “This retirement expense has hit $100,000 annually–and it’s continuing to rise”

Bring Your Estate Plan into Today’s Digital World

Life, as well as estate planning, used to be much more one-dimensional. Now that our lives are lived “In Real Life” (IRL) and online, estate plans need to include both aspects of our lives, according to this recent article from North Bay Business Journal titled “Your digital life likely will outlive you, so here’s how to bring your estate plan into the modern age.” You could decide not to deal with it but then you are leaving a mess behind for your loved ones to untangle.

Here are a few of your digital assets to consider: bank accounts, email accounts, Facebook page, Linked In profile, online photo albums, blogs and websites. They’re likely to be around long after you are gone.

This is still a relatively new area of estate planning. What often happens is that heirs think they can simply find and use the decedent’s user name and passwords to access their accounts. However, what they learn is that they are legally not permitted to do so. There are state and federal laws, online platform user agreements and a host of barriers to retrieve online assets.

A new law was passed in 2017 in California that attempted to bring order to this chaos back in 2017. The Revised Fiduciary Access to Digital Assets Act allows executors and trustees to obtain disclosure of a person’s digital assets, after the original owner dies but only under certain conditions.

In the recent past, federal and state laws have made it hard for executors and trustees to gain access to these assets without a court order.

Just being the executor or trustee does not automatically give you the right to access assets. There has to be evidence that the decedent consented to disclosure and a court order may be necessary to prove the consent was correct.

The new law mainly gave social media platforms and privacy advocates what they wanted: a requirement of prior consent before disclosure.  However, the end result is that it is easier to gain access to digital assets, if executors and trustees can show that the decedent did consent to disclosure.

However, it’s still not that simple. Here are a few steps to help your loved ones deal with your digital assets:

Inventory every digital asset that you have. Create a list of log-in and password information, plus any “secret questions/answers.”

Tell your trusted family member or friend where that list is. Store it with your other estate planning documents, possibly in your attorney’s vault.

Ask your estate planning attorney how they handle digital assets. Your lawyer will know what steps are necessary in your state to ensure that someone will have legal access to your digital assets after you pass away.

Do not include your digital asset inventory as part of your will. If your estate goes through probate, all of your account information will become part of the public record.

Many wills don’t include provisions about digital assets. If this is the case with your will, contact your estate planning attorney now to make sure your online life is as protected as your “In Real Life” life.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: North Bay Business Journal (Oct. 19, 2018) “Your digital life likely will outlive you, so here’s how to bring your estate plan into the modern age”

The Retirement Money Question: How Much?

This is the question everyone wants to have answered as they save, work and plan for their retirement: How much money will I need when I finally stop working and retire? The typical approach of asking what percentage of your final salary you’ll need is not quite right, says The Wall Street Journal in the article “How Much Money Will You Really Spend in Retirement? Probably a Lot More Than You Think.”

This is a complex question and one that requires more knowledge than most people have, even professionals. Just imagine the data you need:

• The cost of health care
• How much health care you’ll need
• The health of Social Security
• The rate of inflation
• Your risk tolerance level
• How you want to spend your time during retirement

Try figuring this out on your own. How can you know all or any of these items?

To better understand how people approach this question, hundreds of people were invited to a research lab and asked how much of their salary they thought they would need in retirement. The answer most people gave was about 70%. The people were then asked how they got to that number. The answer, not surprisingly, was they had heard it somewhere.

To dig in deeper, another group of participants was asked specific questions about how they wanted to enjoy their time during retirement. Based on this information, the cost of these activities was calculated and then a calculation was done to find out what percentage of their salary they would need to support the type of life they imagined they would have in retirement.

The answer was 130%. That meant their savings rates would have to double for a successful retirement.

How is this possible? Working is cheap. You’re not spending a lot because you’re busy working. The company pays for your health insurance, life insurance and there’s even a breakroom stocked with great coffee and snacks.

When you retire, you’re spending money you would not be spending while you are working. Two big vacations a year, recreational activities and dining out more all add up quickly. So how can you plan successfully for the retirement lifestyle you want?

Think (realistically) about the costs of the activities you have in mind and get as detailed as you can. Once you know how much you want to spend, add them up. Use a spreadsheet or a notepad, but this exercise will give you more information than the simple conventional wisdom of 70%.

Now that you know how much money your dream retirement will require, start to plan what you need to do to get there or adjust your dream retirement. Work backwards to figure out how much risk you are comfortable with your investment portfolios and how much cutting back you’re willing to do in your pre-retirement life for your dream retirement. It’s better to know, years in advance, than to be brought up short and have your retirement dreams come crashing down.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: The Wall Street Journal (Sep. 3, 2018) “How Much Money Will You Really Spend in Retirement? Probably a Lot More Than You Think”