Law Office of Frank Bruno, Jr.

Category: Estate Planning

  • Securing Tomorrow’s Promise: Expressing Unwavering Support with a Thoughtful Estate Plan

    Securing Tomorrow’s Promise: Expressing Unwavering Support with a Thoughtful Estate Plan

    In contemplating the inevitable, death stands as an undeniable truth that looms over every individual. However, departing from this world without an estate plan serves as a disconcerting choice, unleashing a cascade of uncertainties and potential chaos onto the lives of those left behind.

    The absence of an estate plan transforms the legal aftermath into a labyrinth of confusion. State laws take charge of asset distribution, often disregarding an individual’s unique wishes. A lack of will or trust leads to prolonged legal battles and disputes among heirs, fostering emotional distress and financial strain.

    For example, in numerous instances involving celebrities, their demise occurs without a comprehensive estate plan, an inadequate Will, or a document claiming to be a Will. This often leads to disputes and provides the public with a glimpse into the deceased’s personal and financial matters. Otherwise, this likely won’t happen if the deceased already prepared a Revocable trust.

    One good example was the case of Matthew Perry. He was widely recognized for his portrayal of the sarcastic and witty Chandler Bing on the immensely popular TV show “Friends,” passed away suddenly at the age of 54. Unmarried and without children, he left behind grieving parents, five half-siblings, and a vast fan base. Perry’s Estate Plan presents a unique scenario with the potential absence of a significant courtroom battle over his considerable fortune. This is attributed, at least in part, to his creation of a Revocable Trust, with no additional documents identified at the time of this writing. While the absence of public contention may suggest a smoother process, it doesn’t negate the opportunity to glean valuable lessons from this particular situation.

    At the time of Matthew’s passing, it is estimated that his estate surpassed $120 million, primarily accumulated through his contributions to “Friends” and ongoing royalties from the show. Despite the tragedy of Matthew’s demise, a closer look at his Estate Plan underscores a crucial lesson: irrespective of the estate’s size, having a tailored and comprehensive plan is imperative. Although Matthew had a Revocable Trust, the absence of a Will serves as a reminder of the importance of addressing all facets of estate planning to meet individual needs. Moreover, the manner in which Matthew’s assets will be distributed remains uncertain due to the privacy protections offered by the Revocable Trust. It is evident however that unless specific provisions addressing tax implications were incorporated into the Revocable Trust, substantial tax burdens are anticipated.

    The Revocable Trust sidesteps many of the issues commonly linked with celebrity estates. A Revocable Trust functions as a viable alternative to a Will, effectively avoiding the probate process mandated by the Will. Furthermore, the Revocable Trust offers centralized asset management, facilitates disability planning throughout one’s lifetime, and ensures the confidentiality of the decedent, the estate plan, and its beneficiaries.

    A proficient Trust and Estate practitioner consistently advises clients to establish both a Will and a Revocable Trust, as each document serves distinct purposes in guiding posthumous affairs.

    The Will, uniquely capable of tasks such as nominating guardians for minor children, serves as a crucial fallback to the Trust. In cases where the decedent neglects to retitle assets in the name of the Revocable Trust before passing, the Will contains provisions directing the asset distribution to the Trust. However, this necessitates the assets to undergo probate, a potentially protracted and costly process contingent on the state of residence. It’s important to note that, with rare exceptions, probate is a public process.

    Blogs about celebrity estates are interesting because they show what can go wrong without proper Estate Planning. Everyone, no matter how much they own, needs an Estate Plan. Talk to a qualified Estate Planning attorney about your situation. Many suggest using Revocable Living Trusts instead of Wills to avoid probate and simplify things during disability. But, as this article explains, Revocable Trusts may not cover everything.

    If Matthew had planned his estate properly, he could have made sure his legacy lived on as he wanted, maybe through his foundation or a charity. Get help from an Estate Planning expert to create your plan, and your family will thank you for being a true “Friend.”

  • Ensuring the Legitimacy: The Vital Role of Witnesses in Your Will

    Ensuring the Legitimacy: The Vital Role of Witnesses in Your Will

    In the realm of estate planning, the crucial task is to guarantee the legal validity of your will. An essential element for a valid will involves the presence of witnesses during the signing process. But what makes this step so vital?

    It is widely understood that for a New York will to be considered valid, additional individuals must witness the testator’s signature and affix their own signatures to the document. Having witnesses to a will is crucial for several reasons, as it helps ensure the validity and authenticity of the document. Despite this awareness, the most frequent cause of a Last Will being deemed invalid is often traced back to improper execution. Improper Execution is when one or several aspects of the witnessing of a Will is done incorrectly.

    What is the purpose of having witnesses? Witnesses play a crucial role in the probate process by offering direct essential evidence. Those who witness your signing can provide firsthand narratives of the Will’s execution. In the event of a Will contest, these witnesses can testify about the procedural steps taken during the execution, the testamentary capacity of the testator, and the mental capacity of the individual creating the will. Our estate lawyers explore the significance of having witnesses for your will in the discussion that follows.

    Here are some key reasons why having witnesses is important when creating a will:

    Legal Requirements

    Many jurisdictions have specific legal requirements regarding the witnessing of wills. New York requires two witnesses to a Last Will. These requirements are in place to prevent fraud, coercion, or other undue influences on the person creating the will (the testator). Failure to meet these requirements could result in the will being declared invalid.

    Verification of Identity and Capacity

    Witnesses can verify the identity of the testator and confirm that they are of sound mind and not under any undue influence or pressure when creating the will. This helps ensure that the testator is making decisions voluntarily and with full mental capacity.

    Documentation of the Signing Process

    Witnesses provide an objective record of the signing process. They can attest that the testator signed the will willingly and in their presence. This can be important if there are any disputes or challenges to the validity of the will.

    Protection Against Fraud

    Having witnesses can deter fraudulent activities, such as someone forging a signature on a will or coercing the testator into making changes against their wishes. Witnesses can provide testimony to the authenticity of the document and the circumstances surrounding its creation.

    Credibility in Court

    In case the will is contested in court, the presence of witnesses adds credibility to the document. Their testimony can be valuable in supporting the validity of the will and ensuring that the testator’s intentions are carried out.

    Adherence to Legal Formalities

    Different jurisdictions may have specific formalities that must be followed when creating a will. The presence of witnesses may be one such formality. Failing to adhere to these formalities can result in the will being deemed invalid.

    Facilitation of Probate Process

    Having properly witnessed and executed wills can streamline the probate process. Probate courts are more likely to accept and enforce a will that has been executed according to legal requirements, making the administration of the estate smoother.

    It’s important to note that the requirements for witnesses may vary by jurisdiction, so individuals should be aware of and follow the specific laws applicable in their area when creating a will. Additionally, some jurisdictions may have restrictions on who can serve as a witness (e.g., beneficiaries or close relatives may be excluded).

    The execution of a New York will is governed by the specifications outlined in Section 3-2.1 of the New York Estates, Powers, and Trusts Law. In summary:

    • A minimum of two attesting witnesses is required.
    • The testator, or the individual creating the will, must sign in the presence of each witness.
    • The attesting witnesses must affix their signatures subsequent to the testator’s signing.

    · The attesting witnesses are also required to provide their addresses.

    Excluding the witnesses’ addresses doesn’t render the will invalid, but it’s advisable to include this information in case the witnesses are summoned to testify.

    Moreover, attesting witnesses must maintain impartiality in the matter. In other words, individuals inheriting through your testamentary documents cannot serve as witnesses. While technically permissible to have an interested witness sign, a third disinterested witness is required for validity. Failure to secure a disinterested witness may result in the nullification of bequests made to the interested party to uphold the will’s validity.

    It’s important to note that laws can change, and specific details may vary. Therefore, individuals in New York City or elsewhere in the state should consult with a legal professional to ensure they understand and comply with the current witness requirements for creating a valid will.

    Reference: New York Laws EPT – Estates, Powers and Trusts Section 3-2.1 (2022) https://law.justia.com/codes/new-york/2022/ept/article-3/part-2/3-2-1/

  • 5 Common Estate Planning Mistakes to Avoid

    5 Common Estate Planning Mistakes to Avoid

    Estate planning is an essential part of financial planning, but it can be a complex process. Unfortunately, many people make common estate planning mistakes that can have serious consequences.

    In this blog post, we will discuss five of the most common estate planning mistakes and offer tips on how to avoid them.

    Mistake 1: Failing to update beneficiary designations

    One of the most common estate planning mistakes is failing to update beneficiary designations on financial accounts or life insurance policies. Many people don’t realize that beneficiary designations take precedence over wills or trusts, so if they haven’t been updated, they may not reflect the person’s current wishes.

    To avoid this mistake, it’s essential to regularly review and update beneficiary designations, especially after major life events like marriage, divorce, or the birth of a child.

    Mistake 2: Not considering tax implications

    Another common estate planning mistake is not considering tax implications. Failing to take into account the tax implications of your estate plan can result in a significant reduction in the value of your assets for your beneficiaries.

    To avoid this mistake, work with an experienced estate planning attorney who can help you navigate the complex tax laws and create a plan that minimizes tax liabilities.

    Mistake 3: Choosing the wrong executor or trustee

    Choosing the wrong executor or trustee can also be a significant estate planning mistake. Executors and trustees have tremendous responsibilities and play a crucial role in ensuring that your wishes are carried out. Choosing the wrong person can result in delays, legal challenges, and potential conflicts among family members.

    To avoid this mistake, carefully consider your options and choose someone who is trustworthy, responsible, and willing to take on the responsibilities of executor or trustee.

    Mistake 4: Failing to plan for incapacity

    Many people make the mistake of assuming that estate planning only involves planning for what happens after they pass away. However, planning for incapacity is just as important. Failing to plan for incapacity can result in significant legal and financial challenges for your loved ones.

    To avoid this mistake, work with an estate planning attorney to create a plan that includes provisions for incapacity, such as a durable power of attorney or healthcare directive.

    Mistake 5: Not regularly reviewing and updating your plan

    Finally, one of the most common estate planning mistakes is failing to review and update your plan regularly. Estate planning is an ongoing process, and your plan should be reviewed and updated in the event of a life change to ensure that it reflects your current wishes and takes into account anything new in your financial or personal situation.

    To avoid this mistake, schedule regular reviews of your estate plan with an experienced estate planning attorney, and make updates as needed.

    Conclusion

    Estate planning is a complex process, and it’s essential to avoid common mistakes that can have serious consequences. By regularly reviewing and updating your plan, carefully choosing your executor or trustee, planning for incapacity, considering tax implications, and updating your beneficiary designations, you can create an estate plan that protects your assets and provides for your loved ones.

    Don’t wait until it’s too late to start planning. Contact an estate planning attorney today to take steps toward a more secure future.

  • Strategies for the “Sandwich” Generation

    Strategies for the “Sandwich” Generation

    If you are taking care of your aging parents and still helping your own children, you are part of the “sandwich” generation. If you feel as if you will never be able to go off duty because of all the people who make demands on your time and money, here are some strategies for the “sandwich” generation.

    Quite a few people start having children when they are in their forties. Your parents could already be in their sixties and seventies, when you have toddlers. By the time your children are in high school, you will be in your fifties with parents in their seventies or eighties. You should be focused on plowing lots of money into your retirement account. However, instead you find yourself pulled in many different directions, without the energy or resources you need for yourself.

    How People with Adult Children Can Get Pulled at Both Ends: Strategies for the “Sandwich” Generation

    You do not have to be raising young children to be in the sandwich generation. Your children might be adults but need financial help because of student loans or other financial pressures. Additional reasons you might need to assist your adult children include things like:

    • You have a child with a disability.
    • One of your children struggles with substance abuse.
    • You have a twenty-something or older child, who is in graduate school.
    • You provide much of the childcare for or you raise one of your grandchildren.

    These are only a few examples of the reasons you might find yourself having to lend a helping hand to your parents and your adult children.

    The Financial Impact of Taking Care of Two Generations: Strategies for the “Sandwich” Generation

    Any of these situations can put demands on your time, energy and finances. People who take care of their older parents and their own children often suffer as a result. For example, these caregivers drive everyone else to their medical appointments but do not have to time to go for routine checkups. There are not enough hours in the day to go for a walk to de-stress or get physical exercise. Sleep deprivation is common among “sandwichers.”

    The financial impact of dual caregiving can be both short-term and long-term. If you are constantly picking up medications and groceries for your elderly parents and helping your children financially, you might find yourself having a cash flow strain. The time the double caregiving takes from your schedule can also make it impossible for you to engage in the amount of gainful employment you would like, so you can increase your retirement savings.

    How to Handle the Stress and Exhaustion of Dual Caregiving: Strategies for the “Sandwich” Generation

    You are not alone. Many people have walked this path before you. They offer these suggestions:

    • Contact your local government agencies, community groups, senior organizations and charitable entities to find as many resources as possible to take some of the weight off of your shoulders. Adult day programs, respite care and other services can be a godsend.
    • Find sources of funding to ease your financial strain. Your aging parents might qualify for more benefits than they currently receive. You can use the website Benefit Finder to locate additional financial help, like Medicare, Medicaid, veterans benefits and many other programs.
    • Change your expectations. Your house does not have to be perfect. Your teens can get rides with friends, or you can set up a carpool.
    • Set a daily sleep goal of at least seven hours and stick to it. You cannot help anyone, if you get so exhausted that your health deteriorates.
    • Try to find the humor in daily situations.

    Remember, this stage and every stage is temporary. You are creating memories that you will treasure.

    References:

    HuffPost – “This Is What No One Told Me About Suddenly Joining The Sandwich Generation.” (accessed November 8, 2019)

    Benefits.gov – “Benefit Finder.” (accessed November 14, 2019)

  • The Secret Retirement Account HSA

    The Secret Retirement Account HSA

    Medical care is one of the highest expenses in retirement. There is a way for you to save funds for these costs with a triple tax benefit. You do not get taxed on the money you contribute to your Health Savings Account (HSA), on the money you withdraw from it to pay approved medical expenses, or on the earnings the account generates. You also do not have to use the money in the account, until you choose to do so.

    Do not confuse Health Savings Accounts (HSAs) with health care flexible spending accounts (FSAs). The two main differences between HSAs and FSAs are:

    • You can keep thousands of dollars in an HSA for years, even decades. You cannot do that with an FSA.
    • Unlike an FSA, you can invest the money in your HSA into mutual funds, so the account has a possibility for long-term growth and earnings.

    The Secret Retirement Account HSA. HSAs in a Nutshell

    You cannot get an HSA account as a stand-alone plan. You have to enroll in a high-deductible health plan that is eligible for HSA accounts. As of 2019, a high-deductible is at least $1,350 for individual coverage and $2,750 for family plans. Once you enroll in an eligible high-deductible health plan, here is what you need to know:

    • The contribution limit into your HSA is $3,450 in 2019 (combined contributions from you and your employer) for an individual plan and $6,850 for a family plan. If you are 55 or older, you can put an extra $1,000 into your account this year. Covered spouses can add an additional $1,000 to their accounts.
    • You usually cannot have both an FSA and an HSA.
    • Your contributions to your has, have to stop when you enroll in Medicare – any kind of Medicare package. The HSA funds can pay your Medicare premiums, but not your Medigap coverage.
    • If your employer does not arrange an HSA provider, you can open an HSA at the provider or your choice. Fees vary, so comparison shop for the best rates. Optum Bank and HealthSavings Administrators are two well-known HSA providers.
    • You do not have to leave the money in your HSA account. You can pay current approved medical expenses with your HSA account.

    The Secret Retirement Account HSA. HSAs Are Not for Everyone

    HSA accounts have unmatched tax savings potential, but these accounts are not a good choice for everyone. If you have chronic health issues or young children, you might do better off with a traditional form of health insurance like a PPO, instead of a high-deductible health plan. You should not delay getting medical care to keep the funds in the HSA.

    It is probably not the right time for you to open an HSA, if it would cause you financial stress. You should use a comparison calculator to decide which health care plan is best for you and your family.

    When you eventually withdraw money from your HSA, you must use it for approved medical expenses to avoid getting taxed on the funds. It might be your money, but once it goes into an HSA, the government puts restrictions on how you can use it. Be sure to save all receipts for medical expenses you paid with HSA funds.

    References:
    AARP. “Your Secret Retirement Investment.” (accessed June 12, 2019)

  • It’s Better to Plan Ahead

    It’s Better to Plan Ahead. Two stories of two people who managed their personal lives very differently illustrate the enormous difference that can happen for those who refuse to prepare themselves and their families for the events that often accompany aging. As an article from Sedona Red Rock News titled “Plan ahead in case of sudden sickness or death” makes clear, the value of advance planning becomes very clear. One man, let’s call him James, has been married for 47 years and he’s always overseen the family finances. He has a stroke and can’t walk or talk. His wife Esther is overwhelmed with worry about her husband’s illness. Making matters worse, she doesn’t know what bills need to be paid or when they are due.

    On the other side of town is Sara. At 80, she fell in her own kitchen and broke her hip, a common injury for the elderly. After a week in the hospital, she spent two months in a rehabilitation nursing home. Her son lives on the other side of the country, but he was able to pay her bills and handle all the Medicare issues. Several years ago, Sara and her son had planned what he should do in case she had a health crisis.

    More good planning on Sara’s part: it’s Better to Plan Ahead: all her important papers were organized and put into one place, and she told her son where they could be found. She also shared with him the name of her attorney, a list of people to contact at her bank, primary physician’s office, financial advisor, and insurance agent. She also made sure her son had copies of her Medicare and any other health insurance information. Her son’s name was added to her checking account and to the safe deposit box at the bank. And she made sure to have a legal document prepared so her son could talk with her doctors about her health and any health insurance matters.

    And then there’s James. He always handled everything and wouldn’t let anyone else get involved. Only James knew the whereabouts of his life insurance policy, the title to his car, and the deed to the house. James never expected that someone else would need to know these things. Esther has a tough job ahead of her. There are many steps involved in getting ready for an emergency, but as you can see, this is a necessary task to start and finish.

    First, gather up all your important information because it’s Better to Plan Ahead. That includes your full legal name, Social Security number, birth certificate, marriage certificate, divorce papers, citizenship or adoption papers, information on employers, any military service information, phone numbers for close friends, relatives, doctors, estate planning attorney, financial advisor, CPA, and any other professionals.

    Your will, power of attorney, health care power of attorney, living will and any directives should be stored in a secure location. Make sure at least two people know where they are located. Talk with your estate planning attorney to find out if they will store any documents on your behalf.

    Financial records should be organized. That includes all your insurance policies, bank accounts, investment accounts, 401(k), or other retirement accounts, copies of the most recent tax returns, and any other information about your financial life.

    Advance planning does take time, but not planning will create havoc for your family during a difficult time.

    Reference: Sedona Red Rock News (July 9, 2019) “Plan ahead in case of sudden sickness or death”

  • How Do Prenup and a Postnup Vary?

    How Do Prenup and a Postnup Vary?

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    “yours is the light by which my spirit’s born:
    yours is the darkness of my soul’s return
    —you are my sun, my moon, and all my stars” E.E. Cummings

    “The best thing to hold onto in life is each other.” Audrey Hepburn

    Investopedia recently published an article, “Prenup vs. Postnup: How Are They Different?” It explains that if you or your spouse is wealthy, anticipating a big inheritance, or getting married for the second, third, or fourth time, divorce or death could result in serious financial trouble. In death, these issues are greater, if the spouse leaves children from a previous marriage. That’s why more couples are choosing to sign a prenuptial or postnuptial agreement.

    As prenuptial agreement is made prior to the marriage, where the couple determines how they’ll divide their assets should the marriage end.

    Although negotiating a prenuptial agreement before your wedding may seem unromantic, these agreements can save a lot of heartache and money in the event of divorce—especially when it’s not a first marriage. When a couple decides to divorce, prenups can prevent nasty, drawn-out, excessively expensive litigation. A prenup details everything, so everyone knows exactly who gets what and there’s no room for argument. These agreements also can dictate financial distributions in case of a spouse’s death, which is especially important for couples with children from previous marriages.

    Prenuptial (before a marriage) and postnuptial (after a marriage) agreements detail how a couple will divide their assets if the marriage ends. Prenups are useful if one spouse has substantial assets, a large estate, or anticipates getting a large inheritance or distribution from a family trust. A prenup can protect each spouse’s premarital assets, as property and income in a marriage would otherwise be deemed community property.

    Have an attorney draft one of these agreements, because tax law can create complications.

    A prenup can have terms that state how much your spouse will receive of your estate, if you get divorced or die. This is critical if you have a significant estate and children from a previous marriage to whom you want to leave some of your estate. If you don’t sign a prenuptial agreement that states this, most states will automatically give your surviving spouse a share of your estate at your death. With a prenup, you can predetermine a specific alimony amount or even eliminate this.

    Postnuptial agreements are almost identical to prenups. The big difference is that postnuptial agreements are made after the wedding.You will decide how to divide marital assets, as well as any future earnings, in your postnuptial agreement.

    Reference: Investopedia (April 25, 2019) “Prenup vs. Postnup: How Are They Different?”

  • Inheritance now what?

    Inheritance now what?

    Inheritance now what? Inheriting money puts a whole new spin on your outlook on money, says The Kansas City Star in its article “Coming into some money? Be wise with it.”

    Should you pay off your debts first, if you have any? Make a list of your debt balances and their interest rates. If the interest rate is high, pay it off. If it’s low, you may be better off investing the funds.

    Next, check on your emergency fund. If you don’t have three to six months’ worth of living expenses on hand, use your inheritance to ramp up that fund. Yes, you can use credit cards sometimes. However, having at least two months’ worth of living expenses in cash is worthwhile.

    The third step is to contribute the most you can to a health savings account (HSA), if your employer does not contribute to it and if you have a qualifying health plan. That’s $3,500 if you are single, $7,000 for families and add $1,000, if you are over 55. This gets you a nice tax deduction and withdrawals are tax-free, as long as they are used for qualified medical expenses.

    If you’re still working, and depending upon the size of the inheritance, it might be time to “tax-shift” your portfolio.

    Let’s say you regularly contribute $3,000 to a 401(k). If you can, increase that amount by $22,000, to the maximum, if you’re 50 and older. Since your paycheck decreases, so does your tax. If your tax rate is currently 22%, you’ll only need to add $17,160 from your inherited account to reach the same spendable dollars. The tax-deferred account in your portfolio will grow faster, while the taxable account shrinks.

    Think about whether to commingle funds with your significant other or not. Let’s say you and your spouse have a retirement portfolio. You both can spend it now, maybe on your house. The inheritance may also help you to retire earlier. If you save the inheritance, keeping it in a separate account with only your name on it, it remains your asset, in case of a divorce. Most states will consider this money a non-marital asset, and not subject to division between divorcing parties.

    Consider using the inheritance as a way to avoiding tapping into retirement accounts. Withdrawals from IRAs are taxable. If you’re not worried about commingling funds or investment gains, then use the inherited account to minimize the tax losses from retirement accounts.

    Most people don’t have enough saved to keep spending during retirement as they did while working. Skip the spending spree that often follows an inheritance and enjoy the money over an extended period of time.

    Receiving Inheritance, now what? Now is one of the times when a review of your estate plan becomes a wise move. A new financial position may require more tax planning and more legacy planning.

    Reference: The Kansas City Star (June 27, 2019) “Coming into some money? Be wise with it”

  • Busy People Need to Make Time for Retirement Planning

    Busy People Need to Make Time for Retirement Planning

    If you’re a busy mom or dad; are committed to long hours at work or have a successful career, maybe a real estate developer or a physician, you’re too busy to think about retirement. However, just like you had to prepare for your current position, you need to prepare for your life after you stop working, advises the article “Retirement planning for the busy professional” from the New Haven Register. What busy people often don’t realize, is that before they know it, retirement is around the corner.

    Making the transition to a successful, fulfilling retirement is not just about saving money, although that is an important factor. Here are a few tips to help you plan a great retirement:

    Use your imagination. What would you want your life to look like during retirement? How will you spend your days? Write down goals and be specific. If volunteering is something you don’t have time for now, would you want to become active in your community during retirement? What would that be—running a small organization or pitching in as part of a team? Do you plan on spending more time with your family? If so, what does that look like? Being very detailed will help you set goals and allow you to estimate your retirement expenses.

    Run the numbers. There are different scenarios that you can work through. For instance, if your idea of retirement is a schedule of non-stop travel, you can figure out what kind of trips you want to take—Elder Hostels or travelling first class—and what they’ll cost. If you already own a second home and plan to retire there, you have a good idea of what it costs to live in your second community. Consider investment returns, health care costs, taxes and life expectancy.

    Review your financial and legal plans. It is never too early to plan for the legal and financial aspects of your retirement. Anyone over age 18 should have an estate plan, both to protect you and your family in the case of death and incapacity. You should have a will, a power of attorney, health care proxy and possibly a trust. A financial plan will give you a roadmap. Are you saving enough? Are there opportunities you are missing? Do you have the correct insurance in place?

    Cut expenses and minimize debt. The less debt you have going into retirement, the better. Cutting expenses now will get you used to living within a tighter budget and controlling expenses. Write down your expenses to find out where the money is going. You will likely find some big surprises.

    Are your advisors right for you now, and will they be right for you in the future? If you’ve put up with an advisor who never returns your phone calls for a few years, is that the person you want to depend on when hard decisions need to be made about investments and retirement? Your team needs to include an estate planning attorney, a CPA and a financial advisor. Each of them should have a good working relationship with the other, and they should all be making you and your family a top priority.

    Reference:

    New Haven Register (Oct. 13, 2019) “Retirement planning for the busy professional”

  • Estate Plan for Blended Family

    Estate Plan for Blended Family

    Estate Plan for Blended Family. There are several things that blended families need to consider when updating their estate plans, says The University Herald in the article “The Challenges and Complexities of Estate Planning for Blended Families.”

    Estate plans should be reviewed and updated, whenever there’s a major life event, like a divorce, marriage or the birth or adoption of a child. If you don’t do this, it can lead to disastrous consequences after your death, like giving all your assets to an ex-spouse.

    If you have children from previous marriages, make sure they inherit the assets you desire after your death. When new spouses are named as sole beneficiaries on retirement accounts, life insurance policies, and other accounts, they aren’t legally required to share any assets with the children.

    Take time to review and update your estate plan. It will save you and your family a lot of stress in the future.

    Your estate planning attorney can help you with this process.

    You may need more than a simple will to protect your biological children’s ability to inherit. If you draft a will that leaves everything to your new spouse, he or she can cut out the children from your previous marriage altogether. Ask your attorney about a trust for those children. There are many options.

    You can create a trust that will leave assets to your new spouse during his or her lifetime, and then pass those assets to your children, upon your spouse’s death. This is known as an AB trust. There is also a trust known as an ABC trust. Various assets are allocated to each trust, and while this type of trust can be a little complicated, the trusts will ensure that wishes are met, and everyone inherits as you want.

    Be sure you that select your trustee wisely. It’s not uncommon to have tension between your spouse and your children. The trustee may need to serve as a referee between them, so name a person who will carry out your wishes as intended and who respects both your children and your spouse.

    Another option is to simply leave assets to your biological children upon your death. The only problem here, is if your spouse is depending upon you to provide a means of support after you have passed.

    An experienced estate planning attorney will be able to help you map out a plan so that no one is left behind. The earlier in your second (or subsequent) married life you start this process, the better.

    Reference:

    University Herald (June 29, 2019) “The Challenges and Complexities of Estate Planning for Blended Families”