How Can I Avoid Family Fighting in My Estate Planning?

It’s not uncommon for parents to modify their first estate plans, when their children become adults. At that point, many parents’ estate plans are designed to help efficiently transfer assets to the surviving spouse and ultimately to the adult children. Avoid family feuds and fighting in your estate plan by working with a professional estate planning attorney. With proper estate planning counsel, hiccups and headaches will be few and far between.

Forbes’ recent article entitled “Three Steps To Estate Planning Without The Family Friction” explains that there are a number of reasons for siblings fighting in the inheritance process. The article says that frequently there are issues that stem from a lack of communication between siblings, which causes doubts as to how things are being done. In addition, siblings may not agree if and how property should be sold and maintained. To help avoid estate planning fighting, use this three-step process for estate planning. After all, family feuds and animosity are avoidable.

Work with an experienced estate planning attorney. Hire an estate planning attorney who has many years of working in this practice area. This will mean that they’ve seen—and more importantly—resolved every type of family fight and discrepancy that can arise in the estate planning process. That’s the know-how that you’re really paying for, in addition to his or her legal expertise in wills and trusts.

Create a financial overview. This will help your beneficiaries see what you own. A financial overview can simplify the inheritance process for your executor, and it can help to serve as the foundation for you and your executor to frankly communicate with future beneficiaries to reduce any lingering doubts or questions that they may have, when they’re not in the loop. This clarity replaces estate planning fighting with resolution. Your inventory should at least include the following items:

  • A list of all assets, liabilities and insurance policies you have and their beneficiaries
  • Contact information for all financial, insurance and legal professionals with whom you partner;
  • Access information for any websites your beneficiaries may need for your online accounts; and
  • A legacy letter that discusses non-financial items for your children.

Hold a family meeting. Next, conduct a family meeting that includes the parents and the children who will be inheriting assets. Some topics for this meeting include:

  • The basics of your estate intentions
  • Verify that a trusted person knows the location of your important estate documents
  • State who your executor and other involved people will be and your rationale
  • Make certain that all parties value communication and transparency during this process; and
  • Discuss non-financial legacy items that are important for you to give to your children.

This three-step process can help keep your children’s relationships intact after you are gone. The last thing that any family wants to experience upon the death of a loved one is drawn-out fights regarding ones estate. Hiring an experienced estate planning attorney, creating a clear financial overview and communicating what’s important to you are critical steps in helping to keep your family together.

Reference: Forbes (July 2, 2020) “Three Steps To Estate Planning Without The Family Friction”

Beginning Estate Planning

When beginning estate planning, it is helpful to clarify what the essential elements of a proper estate plan are. AARP’s recent article entitled “Sign These Papers” suggests that the following documents will give you and your family financial protection, as well as peace of mind. Beginning estate planning can be intimidating, but with appropriate guidance, you will reap the benefits for years to come.

Advance Directive. This document gives your family, loved ones and medical professionals your instructions for your health care. A living will, which is a kind of advance directive, details the treatment you’d like to have in the event you’re unable to speak. It covers things like when you would want doctors to stop treatment, pain relief and life support. Providing these instructions helps your family deal with these issues later.

Durable Power of Attorney for Health Care. This document, regularly included in an advance directive, lets you name a trusted person (plus a backup or two) to make medical decisions on your behalf, when you’re unable to do so.

Revocable Living Trust. Drawn up correctly by an experienced estate planning attorney, this makes it easy to keep track of your finances now, allow a trusted person step in, if necessary, and make certain that there are fewer problems for your heirs when you pass away. A revocable living trust is a powerful document that allows you to stay in control of all your finances as long as you want. You can also make changes to your trust as often as you like.

When you pass away, your family will have a much easiest task of distributing the assets in the trust to your beneficiaries. Without this, they’ll have to go through the probate process.  It can be a long and possibly costly process, if you die with only a will or intestate (i.e., without a will).

Will. Drafting a will with the guidance of an experienced estate planning attorney lets you avoid potential family fighting over what you’ve left behind. Your will can describe in succinct language whom you want to inherit items that might not be in your trust — your home or car, or specific keepsakes, such as your baseball card collection and your Hummel Figurines.

Durable Financial Power of Attorney. If you’re alive but incapacitated, the only way a trusted person, acting on your behalf, can access an IRA, pension or other financial account in your name is with a durable financial power of attorney. Many brokerages and other financial institutions have their own power of attorney forms, so make sure you ask about this.

Beginning estate planning is not complete without these five documents (sometimes four, if your advance directive and health care power of attorney are combined). Drafting a proper estate plan will allow you to enjoy a happier, less stressful life.

In drafting these documents, you know that you’ve taken the steps to make navigating the future as smooth as possible. By making your intentions clear and easing the inheritance process as much as you possibly can, you’re taking care of your family. The benefits of beginning estate planning today will be enjoyed for years to come. Your family will be grateful that you did.

Reference: AARP (August/September 2018) “Sign These Papers”

Important Medicare Deadlines

Here are the important dates for Medicare enrollment:

  • You can initially enroll in Medicare during the seven-month period that begins three months before you turn 65.
  • If you continue to work past 65, sign up for Medicare within eight months of leaving the job or group health plan or penalties apply.
  • The six-month Medicare Supplement Insurance enrollment period starts when you’re 65 or older and enrolled in Medicare Part B.
  • You can make changes to your Medicare coverage during the annual open enrollment period, from Oct. 15 to Dec. 7.
  • Medicare Advantage Plan participants can move to another plan from January 1 to March 31 each year.

Yahoo News’ recent article entitled “Medicare Enrollment Deadlines You Shouldn’t Miss” takes a look at when you need to sign up for Medicare and the penalties that can be imposed for late enrollment.

Medicare Parts A and B Deadline. Individuals who are getting Social Security benefits, may be automatically enrolled in Parts A and B, and coverage starts the month they turn 65. However, those who haven’t claimed Social Security must proactively enroll in Medicare. You can first sign up for Medicare Part A hospital insurance and Medicare Part B medical insurance during the seven months that starts three months before the month you turn 65. Your coverage can start as soon as the first day of the month you turn 65, or the first day of the prior month, if your birthday falls on the first of the month. If you fail to enroll in Medicare during the initial enrollment period, you can sign up during the general enrollment period between January 1 and March 31 each year for coverage that will begin July 1. Note that you might be charged a late enrollment penalty when your benefit begins. Monthly Part B premiums increase by 10% for each 12-month period you delay signing up for Medicare, after becoming eligible for benefits.

If you or your spouse are still working after age 65 for an employer that provides group health insurance, you must enroll in Medicare within eight months of leaving the job or the coverage ending to avoid the penalty.

Medicare Part D Deadline. Part D prescription drug coverage has the same initial enrollment period of the seven months around your 65th birthday as Medicare Parts A and B, but the penalty is different. It’s calculated by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2020) by the number of months you didn’t have prescription drug coverage after Medicare eligibility and rounding to the nearest 10 cents. That’s added to the Medicare Part D plan that you choose each year. As the national base beneficiary premium increases, your penalty also goes up.

Medicare Supplement Insurance Plan Deadline. These plans can be used to pay for some of Medicare’s cost-sharing requirements and some services that traditional Medicare doesn’t cover. The enrollment period is different than the other parts of Medicare. It is a six-month period that starts when you’re 65 or older and enrolled in Medicare Part B. During this open enrollment period, private health insurance companies must sell you a Medicare Supplement Insurance plan, regardless of your health conditions. After this enrollment period, insurance companies can use medical underwriting to decide how much to charge for the policy and can even reject you. If you miss the open enrollment period, you’re no longer guaranteed the ability to buy a Medicare Supplement Insurance plan without underwriting, or you could be charged significantly more, if you have any health conditions.

Medicare Open Enrollment Deadline. You can make changes to your Medicare coverage during the annual open enrollment period from October 15 to December 7. During this period, you can move to a new Medicare Part D prescription drug plan, join a Medicare Advantage Plan, or stop a Medicare Advantage Plan and return to original Medicare. Changes take effect on January 1 of the following year.

Medicare Advantage Open Enrollment Deadline. Participants can move to another plan or drop their Medicare Advantage Plan and return to original Medicare, including purchasing a Medicare Part D plan, from January 1 to March 31 each year. You can only make one change each year during this period, and the new plan will begin on the first of the month after your request is received.

Reference: Yahoo News (July 27, 2020) “Medicare Enrollment Deadlines You Shouldn’t Miss”

How Does My Estate Plan Change After Divorce?

Estate planning after a divorce involves adopting a different type of arithmetic. Without a spouse to anchor an estate plan, the trustees, guardians or health care proxies will have to be chosen from a wider pool of those that are connected to you. As with all significant life changes, a recent divorce requires immediate changes to your estate plan.

Wealth Advisor’s recent article entitled “How to Revise Your Estate Plan After Divorce” explains that beneficiary forms tied to an IRA, 401(k), 403(b) and life insurance are just some of the key documents that will need to change, reflecting the dissolution of the marriage.

It is important to note that there are usually estate planning terms that are included in agreements created during separation and divorce. These may call for the removal of both spouses from each other’s estate planning documents and retirement accounts. For example, in New York, bequests to an ex-spouse in a will prepared during the marriage are voided after the divorce. Even though the old will is still valid, a new will has the benefit of realigning the estate assets with the intended recipients.

However, any trust created while married is treated differently. Revocable trusts can be revoked, and the assets held by those trusts can be part of the divorce. Irrevocable trusts involving marital property are less likely to be dissolved, and after the death of the grantor, distributions may be made to an ex-spouse as directed by the trust.

A big task in the post-divorce estate planning process is changing beneficiaries. Ask for a change of beneficiary forms for all retirement accounts. Without a stipulation in the divorce decree ending their interest, an ex-spouse still listed as beneficiary of an IRA or life insurance policy may still receive the proceeds at your death.

Divorce presents changes to your children in terms of planning your estate. For one, divorce makes children assume responsibility at an earlier age. Adult children in their 20s or early 30s typically assume the place of the ex-spouse as fiduciaries and health care proxies, as well as agents under powers of attorney, executors and trustees. Further, if the divorcing parents have minor children, they must choose a guardian in their wills to care for the children, in the event that both parents pass away.

Ask an experienced estate planning attorney to help you with the issues that are involved in estate planning after a divorce.

Reference: Wealth Advisor (July 7, 2020) “How to Revise Your Estate Plan After Divorce”