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4 Ways Wise Planning Can Protect Your Family’s Assets

While most people assume only the uber wealthy need to worry about asset protection, those with less wealth and fewer assets may be at even greater risk. For example, if you’re a multi-millionaire, a $50,000 judgment against you might not be that big of a burden. But for a family with a modest income, home, and savings, it could be catastrophic. 

Asset protection planning isn’t something you can put off until something happens. Like all planning, to be effective, you must have asset protection strategies in place well before something happens. Plus, your asset protection plan isn’t a one-and-done deal: It must be regularly updated to accommodate changes to your family structure and asset profile.

There are numerous planning strategies available for asset protection, but three of the most common include the following:

Insurance
Purchasing different forms of insurance—health, auto, watercraft, and homeowner’s—should always be the first line of defense to protect your assets. Whether you’re ultimately found at fault or not, if you’re ever sued, defending yourself in court can be extremely costly. Insurance is designed not only to help you pay damages if a lawsuit against you is successful, but the insurance company is also responsible for hiring you a lawyer and paying his or her attorney’s fees to defend you in court, whether you lose or win. However, insurance policies come with various amounts of coverage, which can be exceeded by large judgments, so you should also seriously consider buying umbrella insurance. Should your underlying insurance policy max out, an “umbrella” policy will help cover any remaining damages and legal expenses. We can evaluate your current policies and advise you about the types and amounts of insurance you should have for maximum asset protection.

Statutory exemptions
Another way to protect your family’s assets is by taking full advantage of federal and state laws that make certain types of assets “exempt” from creditor claims and judgements. Depending on your state, the availability and amount of protection offered by such exemptions can vary. For example, many states offer a homestead exemption, which protects a certain amount—or even the full value—of the equity you have in your primary residence from creditors. If your state provides a generous homestead exemption, paying down your mortgage could protect funds that are otherwise vulnerable. Similarly, federal and state laws classify many retirement plans, such as 401ks and IRAs, as exempt assets, while some states also offer significant, or complete, exemptions for life insurance policies and annuities, as well. Even though exemptions won’t offer you total protection, they can provide significant shelter for certain assets. Plus, using statutory exemptions is something that can be accomplished without investing anything—all that’s required is for you to understand how best to structure your investments to take advantage of these exemptions. Meet with us for a Family Wealth Planning Session to learn what kinds and amounts of exemptions are available in your location.

Business entities
Owning a business can be an incredible wealth-generating asset for your family, but it can also be a serious liability. Indeed, without the proper protection, your personal assets are extremely vulnerable if your company ever runs into trouble. For example, if your business is currently a sole proprietorship or general partnership, you are personally liable for any debts or lawsuits incurred by your business. Structuring your business as a limited liability company (LLC) or S corporation is typically the best way to go for many small businesses. When properly set up and maintained, both entities create an impenetrable barrier between your personal assets and your business activities. Creditors, clients, and other potentially litigious individuals can go after assets owned by your company, but not your personal assets. If you own any kind of business, even just a side gig to earn extra income, you should seriously consider creating a protective entity to ensure any liabilities incurred by your company won’t affect your personal assets. We can help you select, put in place, and maintain the proper entity structure for your business operation.

Estate Planning
While each of the asset-protection scenarios shared above are “maybes,” there is one certainty in life—death. It’s coming for all of us. And your death, or an incapacity before it, is the biggest risk to your family’s assets. Planning in advance for what is certain to come is a gift to the people you love the most. If you’ve been putting it off, now is the time to get it handled, and we’ve made it easy for you to do that.

You work way too hard to leave your assets at risk. Call your Personal Family Lawyer® to schedule your Family Wealth Planning Session, and let’s get this taken care of now. During your Family Wealth Planning Session, you’ll become educated, informed, and empowered to know you’ve made the right decisions, at the most affordable cost, for the people you love.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

3 Warning Signs of a Financial Scam

Nobody likes to admit they’ve fallen for a financial scam, but the fact is, it’s easier than ever to get caught up in one. This is especially true in today’s all-digital world, where practically every shred of data related to your personal and financial background can be found online. 

While no one is forcing you to use the Internet to manage your financial accounts, purchase goods and services, or communicate with the outside world, these days it’s nearly impossible to live your life without the web. This net-based existence can feel somewhat unnerving for those of us who came of age while the tech revolution was already underway, but for the elderly, who lived the vast majority of their lives offline, it can be absolutely overwhelming.

Given their lack of tech experience, coupled with the fact that many of them are undergoing varying levels of cognitive decline and sometimes live lonely, isolated lives, scammers view seniors as easy targets. And many of today’s con artists are so sophisticated, even the most intelligent and educated can be duped.

To protect your aging loved ones (and yourself) from such predators, it’s critical to know the warning signs of financial exploitation. The following are three big red flags to watch for:

Unexpected requests
If a family member or friend contacts you out of the blue asking for money, especially via email or text, you should be wary. If the request comes from an unfamiliar email address or phone number, you should be extremely wary. While such requests aren’t totally unheard of, never send money unless you can verify the individual’s identity.

A popular con, known as the Grandparent Scam, involves someone calling and pretending to be your grandchild. The “grandchild” explains he or she is in trouble and needs money immediately. The caller then asks you to wire the money or give it to a third party, usually someone posing as a lawyer or police officer.

No matter how urgent the caller may sound, you should always verify their identity. One of the easiest ways to do this is by having the person call you back on his or her phone. Or if the individual’s phone is dead or lost, you can ask them questions only the actual person would know the answer to, such as the name of their first pet. If they refuse, seem unusually aggressive, or act odd, do not send money.

Outside of relatives and friends, scammers often pretend to be from the IRS or another government agency, demanding immediate payment of back taxes or some other debt. They might even threaten you with arrest, ruined credit, or additional fines if you fail to comply. And if they don’t directly ask for money, they sometimes ask for verification of your personal information or direct you to visit a phishing website that secretly puts data-collecting viruses on your computer.

Regardless if it’s done by phone, email, social media, or text, no government agency collects money this way. Moreover, legitimate organizations will be more than happy to verify they are who they claim to be, and will never demand on-the-spot payment. No matter if it’s a government agency, a financial institution, law enforcement, an attorney, or a private business, you should always be allowed to verify the legitimacy of the request and consult with a trusted advisor like us before making any financial transaction.

Unsolicited money-making ventures
Whether through a savvy business deal or by winning the lottery, we all fantasize about striking it rich. And if you’re retired on a fixed income, this fantasy can be all-the-more alluring. Scammers know this and will use your dreams of easy money to trick you into investing in a too-good-to-be-true venture that promises big bucks for little or no effort.

There are endless variations on this popular con, from wealthy foreign nationals needing assistance transferring money to more legitimate-sounding business deals offering huge payoffs with no risk. These messages sometimes appear as if they were sent to you accidentally, making it feel like fortune has finally favored you—just like you always dreamed it would.

But in reality, strangers don’t just randomly offer other strangers incredible money-making opportunities. What kind of trustworthy business person would seek to partner with someone they’ve never met? And if it’s such a great investment, why not recruit someone they know or simply do it themselves? Indeed, any unsolicited money-making venture you receive online from a person you don’t know is almost certainly a scam.

Many such scams originate in foreign countries with people who aren’t fluent in English, so messages with incorrect spelling, poor grammar, and/or unusual phrasing are often a dead giveaway. Other tip-offs include messages containing the following (or very similar) language:

You’ve won one of several valuable prizes.

You’ve been specially selected for this one-time offer.

You’ll get a free bonus if you buy our product.

You’ve won money in a foreign lottery.

This investment is low risk and offers a higher return than anything else.

Our product is free, but we need to put shipping and handling charges on your credit card.

Advance payments or fees are required to clear the promised funds or complete the offer.

Requests for personal information
Whenever someone unfamiliar asks you for personal information like a credit card number, Social Security number, or your mother’s maiden name, proceed with extreme caution. Ask them why they need this information. Request they verify their identity. Inquire about alternate methods of proceeding that do not require such private information.

Reputable sources will respect your privacy and be more than willing to provide you with identity verification, or at least offer an alternate way for you to proceed without the need for such personal data. For example, if you receive an email request for your credit card number, look up the organization’s phone number using a source other than what they provide in the email, and ask if you can call and give your information over the phone instead.

One such con has scammers call claiming to be from the Social Security Administration (SSA), and the number may even come up on your caller ID as the SSA. The caller says your Social Security number has been stolen, used in a crime, or suspended. To protect your funds, they direct you to withdraw the money in your bank account and transfer it to a gift card. The scammers then ask for the gift card PIN number for “safekeeping.” They also may try to get you to reveal your SS number by having you verify it over the phone.

However, the SSA does not suspend your Social Security number, nor will it ever direct you to withdraw money from your bank account. What’s more, any situation in which you’re told to buy gift cards and then give out the cards’ PIN number is undoubtedly a scam.

Today’s most sophisticated scammers don’t even need to ask you for your personal data: They can steal it simply by having you open an email attachment or visit a website that’s loaded with data-scraping bots. Don’t open email attachments from strangers—or even friends and family if the attachment seems unusual. Set all of your social media accounts to private so that your personal info isn’t public. And invest in anti-virus and anti-spyware programs to protect your computer from hacking.

Protect your loved ones from all possible threats
By becoming familiar with how such deceptions work and knowing what to look for, you and your loved ones will be far less likely to be conned. At the same time, you should also do everything you can to safeguard your family’s finances from other threats that have nothing to do with fraud.

Without comprehensive estate planning, your family’s wealth and assets are in real danger of being seriously depleted or lost in the event of your death or incapacity. Meet with us as your Personal Family Lawyer® to learn about the best planning strategies to put in place to ensure your loved ones will be taken care of no matter what happens to you.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

The Real Cost To Your Family: Not Planning For Incapacity

When it comes to estate planning, most people automatically think about taking legal steps to ensure the right people inherit their stuff when they die. And these people aren’t wrong. Indeed, putting strategies in place to protect and pass on your wealth and other assets is a fundamental part of the planning equation. However, providing for the proper distribution of your assets upon your death is just one part of the process. And it’s not even the most critical part.

Planning that’s focused solely on who gets what when you die is ignoring the fact that death isn’t the only thing you must prepare for. You must also consider that at some point before your eventual death, you could be incapacitated by accident or illness. Like death, each of us is at constant risk of experiencing a devastating accident or disease that renders us incapable of caring for ourselves or our loved ones. But unlike death, which is by definition an outcome, incapacity comes with an uncertain outcome and time-frame.

Incapacity can be a temporary event from which you eventually recover, or it can be the start of a long and costly event that ultimately ends in your death. Indeed, incapacity can drag out over many years, leaving you and your family in an agonizing limbo. This uncertainty is what makes incapacity planning so incredibly important. In fact, incapacity can be a far greater burden for your loved ones than your death. This is true not only in terms of its potentially ruinous financial costs, but also for the emotional trauma, contentious court battles, and internal conflict your family may endure if you fail to address it in your plan.

The goal of effective estate planning is to keep your family out of court and out of conflict no matter what happens to you. So, if you only plan for your death, you’re leaving your family—and yourself—extremely vulnerable to potentially tragic consequences.

Where to start
Planning for incapacity requires a different mindset and different tools than planning for death. If you’re incapacitated by illness or injury, you’ll still be alive when these planning strategies take effect. What’s more, the legal authority you grant others to manage your incapacity is only viable while you remain alive and unable to make decisions about your own welfare.

If you regain the cognitive ability to make your own decisions, for instance, the legal power you granted others is revoked. The same goes if you should eventually succumb to your condition—your death renders these powers null and void.

To this end, the first thing you should ask yourself is, “If I’m ever incapacitated and unable to care for myself, who would I want making decisions on my behalf?” Specifically, you’ll be selecting the person, or persons, you want making your healthcare, financial, and legal decisions for you until you either recover or pass away.

You must name someone
The most important thing to remember is that you must choose someone. If you don’t legally name someone to make these decisions during your incapacity, the court will choose someone for you. And this is where things can get extremely difficult for your loved ones.

Although laws differ by state, in the absence of proper estate planning, the court will typically appoint a guardian or conservator to make these decisions on your behalf. This person could be a family member you’d never want to manage your affairs, or a professional guardian who charges exorbitant fees. Either way, the choice is out of your hands.

Furthermore, like most court proceedings, the process of naming a guardian is often quite time consuming, costly, and emotionally draining for your family. If you’re lying unconscious in a hospital bed, the last thing you’d want is to waste time or impose additional hardship on your loved ones. And this is assuming your family members agree about what’s in your best interest.  For example, if your family members disagree about the course of your medical treatment, this could lead to ugly court battles between your loved ones. Such conflicts can tear your family apart and drain your estate’s finances. And in the end, the individual the court eventually appoints may choose treatment options, such as invasive surgeries, that are the exact opposite of what you’d want.

This potential turmoil and expense can be easily avoided through proper estate planning. An effective plan would give the individuals you’ve chosen immediate authority to make your medical, financial, and legal decisions, without the need for court intervention. What’s more, the plan can provide clear guidance about your wishes, so there’s no mistake or conflict about how these vital decisions should be made.

What won’t work
Determining which planning tools you should use to grant and guide this decision-making authority depends entirely on your personal circumstances. There are several options available but choosing what’s best is something you should ultimately decide after consulting with an experienced lawyer like us. That said, we can tell you one planning tool that’s totally worthless when it comes to your incapacity: a will. A will only goes into effect upon your death, and then it merely governs how your assets should be divided, so having a will does nothing to keep your family out of court and out of conflict in the event of your incapacity.

The proper tools for the job
There are multiple planning vehicles to choose from when creating an incapacity plan. And this shouldn’t be just a single document; instead, it should include a comprehensive variety of multiple planning tools, each serving a different purpose. Though the planning strategies you ultimately put in place will be based on your circumstances, it’s likely that your incapacity plan will include some, or all, of the following:

Healthcare power of attorney: An advanced directive that grants an individual of your choice the immediate legal authority to make decisions about your medical treatment in the event of your incapacity.
Living will: An advanced directive that provides specific guidance about how your medical decisions should be made during your incapacity.
Durable financial power of attorney: A planning document that grants an individual of your choice the immediate legal authority to make decisions related to the management of your finances, real estate, and business interests.
Revocable living trust: A planning document that immediately transfers control of all assets held by the trust to a person of your choosing to be used for your benefit in the event of your incapacity. The trust can include legally binding instructions for how your care should be managed and even spell out specific conditions that must be met for you to be deemed incapacitated.

Don’t let a bad situation become much worse
You may be powerless to prevent your potential incapacity, but proper estate planning can at least give you control over how your life and assets will be managed if it does occur. Moreover, such planning can prevent your family from enduring needless trauma, conflict, and expense during this already trying time.

If you’ve yet to plan for incapacity, meet with us as your Personal Family Lawyer® right away. We can counsel you on the proper planning vehicles to put in place, and help you select the individuals best suited to make such critical decisions on your behalf. If you already have planning strategies in place, we can review your plan to make sure it’s been properly set up, maintained, and updated. Contact us today to get started.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

5 Estate Planning Must-Dos if You’re Getting Divorced—Part 2

In the first part of this series, we discussed a couple of the most critical updates you must make to your estate plan if you’re getting divorced. http://rantala.com/blog/2019/04/23/5-estate-planning-must-dos-if-youre-getting-divorced-part/ Here, we’ll cover the last three of these must-do planning tasks. 

Because getting divorced can be overwhelming on so many different levels, updating your estate plan often takes a back seat to other seemingly more-pressing priorities. But failing to update your plan for divorce can have potentially tragic consequences, some of which you may have never even considered before. In fact, it’s critical that you update your plan not only after the divorce is final, but as soon as you know the split is inevitable. Until your divorce is final, your marriage is legally in full effect, so if you die or become incapacitated while the divorce is still ongoing and you haven’t updated your plan, your soon-to-be ex-spouse could end up with complete control over your life and assets.

For example, if you suddenly die of a heart attack while the divorce is ongoing and never got around to changing your estate plan, it’s quite likely that your future ex would inherit everything. And if that’s not bad enough, if you were to become incapacitated in a car accident during the divorce, the very person you’re paying big money to legally remove from your life could be granted complete authority over all of your legal, financial, and healthcare decisions.

This is something your divorce attorney won’t think to bring up, but it’s literally one of the most critical matters you need to handle if you’re ending your marriage. Last week, we discussed the first two estate planning changes you must make—updating your power of attorney documents and beneficiary designations—and today we’ll share the remaining three.

Create a new will

You should create a new will as soon as you decide to get divorced, because once you file, you may not be able to change your will. Rethink how you want your assets divided upon your death. This most likely means naming new beneficiaries for any assets that you’d previously left to your future ex and his or her family. And unless it’s your wish, you’ll probably no longer want your ex—or any of his or her family—listed as your will’s executor or administrator, either.

Some states have community-property statutes that entitle your surviving spouse to a certain percentage of the marital estate upon your death, regardless of what’s in your will. This means if you die before the divorce is final, you probably won’t be able to entirely disinherit your surviving spouse through the new will. However, it’s almost certain you wouldn’t want him or her to get everything. Given this, you should update your will as soon as possible once divorce is inevitable to ensure the proper individuals inherit the remaining percentage of your estate should you pass away while your divorce is still ongoing. And should you choose not to create a new will during the divorce process, don’t assume that your old will is automatically revoked once the divorce is final. State laws vary widely in regard to how divorce affects a will. In some states, your will is revoked by default upon divorce. While in others, unless it’s officially revoked, your entire will—including all provisions benefiting your ex—remains valid even after the divorce is final.

In light of this uncertain legal landscape, it’s critical that you consult with us as soon as you know divorce is on the horizon. We can help you understand the law and how to best navigate it when creating your new will—whether you do so before or after your divorce is over.

Amend your existing trust or create a new one

If you have a revocable trust set up, you’ll want to review and update it, too. Like wills, the laws governing if, when, and how you can alter a trust during a divorce can vary, so you should do it as soon as legally possible. In addition to reconsidering what assets your ex-spouse should receive through the trust, you’ll probably want to replace him or her as a successor trustee if they are so designated. And if you don’t have a trust in place, you should seriously consider creating one, especially if you have minor children. Trusts provide a wide range of powers and benefits unavailable through a will, and they’re particularly well-suited for blended families. Given the likelihood that both you and your spouse will eventually get remarried—and perhaps have more children—trusts are an invaluable way to protect and manage the assets you want your children to inherit.

By using a trust, for example, should you die or become incapacitated while your kids are minors, you can name someone of your choosing to serve as successor trustee to manage their money until they reach adulthood, making it impossible for your ex to meddle with their inheritance. Beyond this key benefit, trusts afford you several other levels of enhanced protection and control not possible with a will. So, you should at least discuss creating a trust with an experienced lawyer like us before ruling out the option entirely.

Revisit your plan once your divorce is final

During the divorce process, your main planning concern is limiting your soon-to-be ex’s control over your life and assets should you die or become incapacitated before divorce is final. Given this, the individuals to whom you grant power of attorney, name as trustee, designate to receive your 401k, or add to your estate plan in any other way while the divorce is ongoing are often just temporary.

Once the divorce is final and your marital property has been divided up, you should revisit all your estate planning documents and update them accordingly based on your new asset profile and living situation. From there, your plan should continuously evolve along with your life circumstances, particularly following major life events, such as getting remarried, having additional children, and/or when close family members pass away.

Don’t wait; act now!

Even though divorce can be one of life’s most difficult transitions, it’s vital that you make the time to update your estate plan during this trying time. Meet with us as your Personal Family Lawyer® to review your plan immediately upon realizing that divorce is unavoidable. Putting off updating your plan, even for a few days, during a divorce can make it legally impossible to change certain parts of your plan, so act now. And if you’ve yet to create any estate plan at all, an impending divorce is the perfect time to finally take care of this crucial task. Contact us today to get the process underway with a Family Wealth Planning Session.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

5 Estate Planning Must-Dos if You’re Getting Divorced—Part 1

5 Estate Planning Must-Dos if You’re Getting Divorced—Part 1

Divorce can be traumatic for the whole family. Even if the process is amicable, it involves many tough decisions, legal hassles, and painful emotions that can drag out over several months, or even years. That said, while you probably don’t want to add any more items to your to-do list during this trying time, it’s absolutely critical that you review and update your estate plan—not only after the divorce is final, but as soon as possible once you know the split is inevitable. 

Even after you file for divorce, your marriage is legally in full effect until your divorce is finalized. That means if you die while the divorce is still ongoing and you haven’t updated your estate plan, your soon-to-be-ex spouse could end up inheriting everything. Maybe even worse, in the event you’re incapacitated before the divorce is final, your ex would be in complete control of your legal, financial, and healthcare decisions.

Given the fact you’re ending the relationship, you probably wouldn’t want him or her having that much control over your life and assets. If that’s the case, you must take action, and chances are, your divorce attorney is not thinking about these matters on your behalf.

While some state laws limit your ability to completely change your estate plan once your divorce has been filed, the following are a few of the most important updates you should consider making as soon as possible when divorce is on the horizon.

1. Update your power of attorney documents for healthcare, financial, and legal decisions

If you are incapacitated by illness or injury during the divorce, who would you want making life-and-death healthcare decisions on your behalf? If you’re in the midst of divorce, chances are you’ll want someone other than your soon-to-be ex making these important decisions for you. If that’s the case, you must take action. Contact us now; don’t wait.

Similarly, who would you want managing your finances and making legal decisions for you? In light of the impending split, you’ll most likely want to select another individual, particularly if things are anything less than friendly between the two of you. Again, you have to take action if you do not want your spouse making these decisions for you. Don’t wait, contact us if you know divorce is coming.

2. Update your beneficiary designations

Failing to update beneficiary designations for assets that do not pass through a will or trust, such as life insurance policies and retirement accounts, is one of the most frequent—and tragic—planning mistakes made by those who get divorced. If you get remarried following your divorce, for example, but haven’t changed your IRA beneficiary designation to name your new spouse, the ex you divorced 10 years ago could end up with your retirement savings upon your death.

That said, in most states, once either spouse files divorce papers with the court, neither party can legally amend their beneficiaries without the other’s permission until the divorce is final. Given this, if you’re anticipating a divorce, you may want to consider changing your beneficiaries prior to filing divorce papers. If your divorce is already filed, you should consult with us to see if changing beneficiaries is legal in your state—and in your best interest.

Finally, if naming new beneficiaries is not an option for you now, once the divorce is finalized it should be your number-one planning priority. In fact, put it on your to-do list right now!

Next week, we’ll continue with part two in this series on the critical estate-planning updates you should make when divorce is inevitable.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

4 Critical Estate Planning Tasks to Complete Before Going on Vacation

Going on vacation entails lots of planning: packing luggage, buying plane tickets, making hotel reservations, and confirming rental vehicles. But one thing many people forget to do is plan for the worst. Traveling, especially in foreign destinations, means you’ll likely be at greater risk than usual for illness, injury, and even death. 

In light of this reality, you must have a legally sound and updated estate plan in place before taking your next trip. If not, your loved ones can face a legal nightmare if something should happen to you while you’re away. The following are 4 critical estate planning tasks to take care of before departing.

  1. Make sure your beneficiary designations are up-to-date
    Some of your most valuable assets, like life insurance policies and retirement accounts, do not transfer via a will or trust. Instead, they have beneficiary designations that allow you to name the person (or persons) you’d like to inherit the asset upon your death. It’s vital you name a primary beneficiary and at least one alternate beneficiary in case the primary dies before you. Moreover, these designations must be regularly reviewed and updated, especially following major life events like marriage, divorce, and having children.
  2. Create power of attorney documents
    Outside of death, unforeseen illness and injury can leave you incapacitated and unable to make critical decisions about your own well-being. Given this, you must grant someone the legal authority to make those decisions on your behalf through power of attorney. You need two such documents: medical power of attorney and financial durable power of attorney. Medical power of attorney gives the person of your choice the authority to make your healthcare decisions for you, while durable financial power of attorney gives someone the authority to manage your finances. As with beneficiary designations, these decision makers can change over time, so before you leave for vacation, be sure both documents are up to date.
  3. Name guardians for your minor children
    If you’re the parent of minor children, your most important planning task is to legally document guardians to care for your kids in the event of your death or incapacity. These are the people whom you trust to care for your children—and potentially raise them to adulthood—if something should happen to you. Given the monumental importance of this decision, we’ve created a comprehensive system called the Kids Protection Plan that guides you step-by-step through the process of creating the legal documents naming these guardians. You can get started with this process right now for free by visiting our user-friendly website https://mariannesrantalapc.kidsprotectionplan.com/
  4. Organize your digital assets
    If you’re like most people, you probably have dozens of digital accounts like email, social media, cloud storage, and cryptocurrency. If these assets aren’t properly inventoried and accounted for, they’ll likely be lost forever if something happens to you. At minimum, you should write down the location and passwords for each account and ensure someone you trust knows what to do with these digital assets in the event of your death or incapacity. To make this process easier, consider using LastPass or a similar service that stores and organizes your passwords.

Complete your vacation planning now
If you have a vacation planned, be sure to add these 4 items to your to-do list before leaving. And if you need help completing any of these tasks—or would simply like us to double check the plan you have in place—consult with us as your Personal Family Lawyer®.

We recommend you complete these tasks at least 8 weeks before you depart. However, if your trip is sooner than that, call and let us know you need a rush Family Wealth Planning Session, and we’ll do our best to fit you in as soon as possible. Contact us today to get started. 

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

6 Questions to Consider When Selecting Beneficiaries For Your Life Insurance Policy—Part 2

In the first part of this series, we discussed the first three of six questions you should ask yourself when selecting a life insurance beneficiary. http://rantala.com/blog/2019/04/02/6-questions-to-consider-when-selecting-beneficiaries-for-a-life-insurance-policy/ Here we cover the final half. 

Selecting a beneficiary for your life insurance policy sounds straightforward. But given all the options available and the potential for unforeseen problems, it can be a more complicated decision than you might imagine. For instance, when purchasing a life insurance policy, your primary goal is most likely to make the named beneficiary’s life better or easier in some way in the aftermath of your death. However, unless you consider all the unique circumstances involved with your choice, you might actually end up creating additional problems for your loved ones.

Last week, we discussed the first three of six questions you should ask yourself when choosing a life insurance beneficiary. Here we cover the remaining three:

4. Are any of your beneficiaries’ minors?
While you’re technically allowed to name a minor as the beneficiary of your life insurance policy, it’s a bad idea to do so. Insurance carriers will not allow a minor child to receive the insurance benefits directly until they reach the age of majority—which can be as old as 21 depending on the state. If you have a minor named as your beneficiary when you die, then the proceeds would be distributed to a court-appointed custodian tasked with managing the funds, often at a financial cost to your beneficiary. And this is true even if the minor has a living parent. This means that even the child’s other living birth parent would have to go to court to be appointed as custodian if he or she wanted to manage the funds. And, in some cases, that parent would not be able to be appointed (for example, if they have poor credit), and the court would appoint a paid fiduciary to hold the funds.

Rather than naming a minor child as beneficiary, it’s better to set up a trust for your child to receive the insurance proceeds. That way, you get to choose who would manage your child’s inheritance, and how and when the insurance proceeds would be used and distributed.

5. Would the money negatively affect a beneficiary?
When considering how your insurance funds might help a beneficiary in your absence, you also need to consider how it might potentially cause harm. This is particularly true in the case of young adults.

For example, think about what could go wrong if an 18-year-old suddenly receives a huge windfall of cash. At best, the 18-year-old might blow through the money in a short period of time. At worst, getting all that money at once could lead to actual physical harm (even death), as could be the case for someone with substance-abuse issues.

To help mitigate these potential complications, some life insurance companies allow your death benefit to be paid out in installments over a period of time, giving you some control over when your beneficiary receives the money. However, as discussed earlier, if you set up a trust to receive the insurance payment, you would have total control over the conditions that must be met for proceeds to be used or distributed. For example, you could build the trust so that the insurance proceeds would be kept in trust for beneficiary’s use inside the trust, yet still keep the funds totally protected from future creditors, lawsuits, and/or divorce.

6. Is the beneficiary eligible for government benefits?
Considering how your life insurance money might negatively affect a beneficiary is critical when it comes to those with special needs. If you leave the money directly to someone with special needs, an insurance payout could disqualify your beneficiary from receiving government benefits.

Under federal law, if someone with special needs receives a gift or inheritance of more than $2,000, they can be disqualified for Supplemental Security Income and Medicaid. Since life insurance proceeds are considered inheritance under the law, an individual with special needs SHOULD NEVER be named as beneficiary.

To avoid disqualifying an individual with special needs from receiving government benefits, you would create a “special needs” trust to receive the proceeds. In this way, the money will not go directly to the beneficiary upon your death but be managed by the trustee you name and dispersed per the trust’s terms without affecting benefit eligibility.

The rules governing special needs trusts are quite complicated and can vary greatly from state to state, so if you have a child who has special needs, meet with us to ensure you have the proper planning in place, not just for your insurance proceeds, but for the lifetime of care your child may need.

Make sure you’ve considered all potential circumstances
These are just a few of the questions you should consider when choosing a life insurance beneficiary. Consult with us as your Personal Family Lawyer® to be certain you’ve thought through all possible circumstances.

And if you think you may need to create a trust—special needs or otherwise—to receive the proceeds of your life insurance, meet with us, so we can properly review all of your assets and consider how to best leave behind what you have in a way that will create the most benefit—and the least challenges—for the people you love. Schedule your Family Wealth Planning Session today.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

6 Questions to Consider When Selecting Beneficiaries for a Life Insurance Policy

Selecting a beneficiary for your life insurance policy sounds pretty straightforward. You’re just deciding who will receive the policy’s proceeds when you die, right? But as with most things in life, it’s a bit more complicated than that. It can help to keep in mind that naming someone as your life insurance beneficiary really has nothing to do with you: It should be based on how the funds will affect the beneficiary’s life once you’re no longer here. 

It’s very likely that if you’ve purchased life insurance, you did so to make someone’s life better or easier in some way in the wake of your death. But unless you consider all the unique circumstances involved with your choice, you might actually end up creating additional problems for the people you love. Given the potential complexities involved, here are a few important questions you should ask yourself when choosing your life insurance beneficiary:

  1. What are you intending to accomplish?

The first thing to consider is the “real” reason you’re buying life insurance. On the surface, the reason may simply be because it’s the responsible thing for adults to do. But we recommend you dig deeper to discover what you ultimately intend to accomplish with your life insurance.

Are you married and looking to replace your income for your spouse and kids after death? Are you single without kids and just trying to cover the costs of your funeral? Are you leaving behind money for your grandkids’ college fund? Are you intending to make sure your business continues after you’re gone? Or perhaps your life insurance is in place to cover a future estate-tax burden?

The real reason you’re investing in life insurance is something only you can answer. The answer is critical, because it is what determines how much and what kind of life insurance you should have in the first place. And by first clearly understanding what you’re actually intending to accomplish with the policy, you’ll be in a much better position to make your ultimate decision—who to select as beneficiary.

  1. What are your beneficiary options?

Your insurance company will ask you to name a primary beneficiary—your top choice to get the insurance money at the time of your death. If you fail to name a beneficiary, the insurance company will distribute the proceeds to your estate upon your death. If your estate is the beneficiary of your life insurance, that means a probate court judge will direct where your insurance money goes at the completion of the probate process. And this process can tie your life insurance proceeds up in court for months or even years. To keep this from happening to your loved ones, be sure to name—at the very least—one primary beneficiary.

In case your primary beneficiary dies before you, you should also name at least one contingent (alternate) beneficiary. For maximum protection, you should probably name more than one contingent beneficiary in case both your primary and secondary choices have died before you. Yet, even these seemingly straightforward choices are often more complicated than they appear due to the options available.

For example, you can name multiple primary beneficiaries, like your children, and have the proceeds divided among them in whatever way you wish. What’s more, the beneficiary doesn’t necessarily have to be a person. You can name a charity, nonprofit, or business as the primary (or contingent) beneficiary.

It’s important to note that if you name a minor child as a primary or contingent beneficiary (and he or she ends up receiving the policy proceeds), a legal guardian must be appointed to manage the funds until the child comes of age. This can lead to numerous complications (which we’ll discuss in detail next week in Part Two), so you should consult with an experienced Family Law attorney like us if you’re considering this option. When selecting your beneficiaries, you should ultimately base your decision on which person(s) or organization(s) you think would most benefit from the money. In general, you can designate one or more of the following examples as beneficiaries:

  • One person
  • Two or more people (you decide how money is split among them)
  • A trust you’ve created
  • Your estate
  • A charity, nonprofit, or business

 

  1. Does your state have community-property laws?

If you’re married, you’ll likely choose your spouse as the primary beneficiary. But unless you live in a state with community-property laws, you can technically choose anyone: a close friend, your favorite charity, or simply the person you think needs the money most. That said, if you do live in a community-property state, your spouse is entitled to the policy proceeds and will have to sign a form waiving his or her rights to the insurance money if you want to name someone else as beneficiary. Currently, community-property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

Next week, we’ll continue with Part Two in this series discussing the remaining three questions to consider when naming beneficiaries for your life insurance policy.

As your Personal Family Lawyer®, we can guide you to make informed, educated, and empowered choices to plan for yourself and the ones you love most. Contact us today to get started with a Family Wealth Planning Session.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Understand What’s At Stake Before Agreeing to Serve as Trustee

Being asked by a family member or close friend to serve as trustee for their trust upon their death can be an incredible honor. At the same time, however, serving as a trustee can be a massive responsibility—and the role is not for everyone.

In fact, depending on the type of trust, the assets held by the trust, the specific terms of the trust, and the beneficiaries named, the job can require you to fulfill a wide range of complex (and potentially unpleasant) duties over the course of many years. What’s more, trustees are both ethically and legally required to properly execute those duties or face liability.

Given this, agreeing to serve as trustee is a decision that shouldn’t be made lightly. Indeed, sometimes the best thing you can do for everyone involved is to politely decline the job. Remember, you don’t have to take it. That said, depending on who nominated you, declining to serve may not be an easy or practical option. Or you might enjoy the opportunity to be a trustee, so long as you understand what it entails.

It’s best to make your decision about serving as trustee with eyes wide open. Here’s a brief look at what the job will likely entail, along with some situations where you might want to seriously think twice about agreeing.

What trustees do
As mentioned earlier, a trustee’s duties can vary tremendously depending on the size of the estate, the type of trust, and the trust’s specific instructions. That said, every trust comes with a few core requirements, primarily revolving around accounting for, managing, and distributing the trust’s assets to its named beneficiaries. 

Regardless of the type of trust or the assets it holds, some of a trustee’s key responsibilities include:

  • Identifying and protecting the trust assets
  • Determining what the trust’s terms actually require you to do
  • Managing the trust assets for the term specified and distributing them properly
  • Filing income and estate taxes for the trust
  • Communicating regularly with beneficiaries
  • Being scrupulously honest, highly organized, and keeping detailed records
  • Closing the trust when the trust terms specify

Ultimately, trustees have a fiduciary duty to properly manage the trust in the best interest of all the trust beneficiaries. Consult with us for more in-depth details regarding the duties and responsibilities a specific trust will require of you as trustee.

Can I get help?
Fortunately, you’re not expected to go it alone: Trustees are encouraged to seek assistance from outside professionals to fulfill their duties. Remember, you do NOT need experience in law, finance, or taxes to serve as trustee. And while you won’t be able to profit from the job, you are able to be paid for your role as trustee.

That said, many trustees, especially family members, choose not to accept any payment beyond what’s required to cover the trust expenses. Yet, this all depends on your personal situation and relationship with the trust’s creator and beneficiaries, and of course, the nature of the assets in the trust. In either case, however, you won’t have to use your own funds to get the job done.

Signs the trustee role might be a bad idea
Given the sense of loyalty and filial responsibility that’s often involved, it might feel difficult to turn the trustee role down. But for a number of reasons, saying “no thanks” can sometimes be the best decision, not only for you, but for all parties involved.

Of course, this is an entirely personal decision and one you’ll ultimately have to make for yourself after considering all of the factors. That said, here are a few red flags that can signal the role might be better fulfilled by someone other than you:

  • Your job, family, and/or health situation is such that you won’t be able to give the job the time and attention it deserves. Some trusts can require far more work than others, and if the role would seriously impede your own life, you might consider declining.
  • You don’t get along with the beneficiaries. If there are underlying conflicts or bad blood with the people you’ll be required to serve, this could make the job incredibly difficult and unpleasant for everyone.
  • The trust’s terms are vague and/or unclear, leaving you in the position to make difficult decisions you don’t feel qualified to make. Such grey areas are especially troublesome when it comes to distributing trust assets to young adult beneficiaries, who might not be the most responsible with their spending and/or lifestyle.
  • It’s not clear exactly what assets the trust creator (grantor) owned, and/or the estate is highly unorganized. Tracking down and managing unorganized and/or poorly funded assets can be a massive undertaking—and potential liability.
  • Lawsuits are likely or already underway. As trustee, it’s your duty to defend the trust against lawsuits, and just doing this can be a huge expenditure of your time and energy. What’s more, if a lawsuit against the trust is successful, it could seriously reduce the trust’s value, making your job infinitely more challenging.

We can help you decide
Given the serious nature of a trustee’s responsibilities, you can meet with us as your Personal Family Lawyer® for help deciding whether or not to accept the job. We can offer a clear, unbiased assessment of what will be required of you based on the specific trust’s terms, assets, and beneficiaries.

And if you do decide to accept the trustee role, we can guide you step-by-step through the entire process, ensuring you effectively fulfill all of the grantor’s wishes with minimal risk. Serving as trustee can be a lot of work, but if you go into the job with eyes wide open and have the proper guidance, it can be an immensely rewarding experience. Contact us today to learn more.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Gen-X, 90210 Star Luke Perry’s Death Demonstrates the Importance of Planning for Incapacity

In late February, Luke Perry, who became famous starring in the 1990s TV series Beverly Hills 90210, suffered a massive stroke at age 52. He was hospitalized under heavy sedation, and five days later, when it became clear he wouldn’t recover, his family decided to remove life support. Perry died on March 4th, 2019 surrounded by his two children—21-year-old Jack and 18-year-old Sophie—along with his fiancé, ex-wife, mother, siblings, and others. 

Whether or not you were a Luke Perry fan, it’s hard not to be somewhat shocked when someone so young, successful, and seemingly healthy passes away so suddenly. In these moments, the fragile impermanence of life becomes glaringly obvious. It’s life’s way of reminding us that incapacity and death can strike at any time, no matter who you are. Such reminders can make you feel extremely vulnerable. And they can also be a precious reminder to make the most of life now.

Reminders of the fleeting nature of life can actually be a wonderful thing, if it motivates you to savor life now AND take the proper action to protect the ones you love through proper estate planning. And while we don’t yet know exactly what levels of planning Perry had in place, it appears he was thoughtful and responsible enough to have at least covered the basics.

Planning for incapacity and death
Perry was reportedly inspired to create his own estate plan following a fairly recent health scare. In 2015, after discovering he had precancerous growths during a colonoscopy, Perry created a will, leaving everything to his two children. Since Perry was worth an estimated $10 million, divorced with kids from the first marriage, and about to be married again, creating a will was the very least he could do.

But wills are just a small part of the planning equation. Wills only apply to the distribution of your assets following death, and even then, your will must go through the court process known as probate for your assets to be distributed. Because a will only comes into play upon your death, if you’re ever incapacitated by accident or illness as Perry was, it offers neither you nor your family any protections.

In Perry’s case, he was incapacitated by a stroke and on life support for nearly a week before he died. During this period, the fact Perry had a will was irrelevant because he was still alive. But given how events unfolded, it appears Perry had other planning vehicles in place to prepare for just this situation.

The power over life and death
During the time he was incapacitated, someone was called upon to make crucial medical decisions for Perry’s welfare, while his family was summoned to his side. To this end, it’s likely that Perry designated someone to serve as his medical decision-maker by granting them medical power of attorney. He may have also created a living will, which would provide specific instructions to this individual regarding how to make these medical decisions. Granting medical power of attorney gives the person you name the authority to make healthcare decisions on your behalf in the event of your incapacity. The document that does this is known as an advance healthcare directive, and it’s an absolute must-have for every adult over age 18.

Perry was put on life support for nearly a week, and then he was removed from it and allowed to die without ever regaining consciousness—and without any apparent conflict between his loved ones. This indicates that someone in his family likely had the legal authority to make those heart-wrenching decisions over Perry’s life and death. Without medical power of attorney, if any of Perry’s family were in disagreement over how his medical care should be handled, the family may have needed a court order to terminate life support. This could have needlessly prolonged the family’s suffering and made his death even more public, costly, and traumatic for those he left behind.

The power over your money
Along with medical power of attorney, every adult should also have financial durable power of attorney. In the event of your incapacity, financial durable power of attorney is an estate planning tool that gives the person you choose immediate authority to manage your finances, such as paying your bills, collecting government benefits, and overseeing your bank accounts.

We can’t be sure at this point whether or not Perry put in place durable power of attorney, but since this planning document goes hand-in hand with medical power of attorney, it’s almost certain he did. Yet seeing that Perry was only incapacitated for five days before his death, durable power of attorney may not seem totally necessary in his case.

But what if Perry’s incapacity had lasted a lot longer?

Given that Perry could have lingered on life support for months or years, it’s crucial that someone he trusted had the authority to manage his finances during his incapacity. Without durable power of attorney, the court will choose someone to manage your finances, and that someone might be a person you wouldn’t want anywhere near your life savings or checkbook. What’s more, that someone could even be a “professional” who gets paid hefty hourly fees to handle things, even if you have family members who want to serve.

Learn from Perry’s example
While Perry’s death is certainly sad, if it inspires you to put the proper estate planning in place, it can ultimately prove immensely beneficial. Whether you already have a basic plan in place or nothing at all, meet with us as your Personal Family Lawyer® to get educated about the specifics necessary to keep your family out of court and out conflict if and when something happens to you.

We’ll help ensure that in the event of your incapacity, or when you die, your loved ones will have the same protections Perry’s had—and more. Contact us today to attend one of our live educational events or get started with a private Family Wealth Planning Session.

This article is a service of Marianne S. Rantala, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.