5 Updates you must make to your estate plan if you’re getting divorced - Part II

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

January 21, 2020

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. 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 […]

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Safeguard Your Children’s Inheritance With a Lifetime Asset Protection Trust

January 14, 2020

Last week, we discussed the benefits of a unique estate planning vehicle known as a Lifetime Asset Protection Trust (LAPT). We referenced this planning tool in the context of how it could have protected Clare Bronfman, the heiress to the multi-billion-dollar Seagram’s fortune, who was manipulated into blowing much of her $200 million inheritance by financing the cult-like group known as Nxivm. Yet Clare’s case was quite extreme in terms of both the amount of her inheritance and the circumstances that wiped out her wealth. Though an LAPT would have almost undoubtedly protected both her and her family’s fortune, this planning vehicle can benefit families with far less wealth than Clare’s—and offer asset protection from far less outlandish threats. Indeed, LAPTs are primarily designed to protect your loved ones and their inheritance from much more common threats, such as divorce, serious debt, devastating illness, and unfortunate accidents. At the same time, LAPTs can provide your heirs with a unique educational opportunity in which they gain valuable experience managing and growing their inheritance, while enjoying airtight asset protection. To demonstrate how LAPTs can provide protection to families of all asset profiles, here we’ll describe another true story involving a tragic—yet much more relatable—life scenario. While the following events are entirely true, the individual’s name has been changed for privacy protection. The flooded penthouse Eric was staying at a friend’s apartment in New York City. The apartment was the penthouse of the building, and Eric decided to run himself a bath. While the bath was running, another friend called and invited Eric to go out with him, which he did. At about 2 a.m., Eric came back to the apartment and discovered he made a huge mistake and left the bath running when he left the apartment. The resulting flood caused more than $400,000 in damage to the apartment and the one below it. While there was insurance to cover the damage, the insurance company sued Eric for what’s known as “subrogation,” meaning the company sought to collect the $400,000 they paid out to repair the damage Eric caused to the property. Because the flood was due to his negligence in leaving the bath running—a simple, but costly mistake—Eric was responsible for the damage. Now here’s where the inheritance piece comes into play and why it’s so important to leave whatever you’re passing on to your heirs in a protected trust. If Eric had received an inheritance outright in his own name, he would have lost $400,000 of it to this unfortunate mishap. However, if Eric had received an inheritance in an LAPT, instead of an outright distribution, his inheritance would be completely protected from such a lawsuit—and just about any other threat imaginable. Safeguarding your children’s inheritance If you’re like most people, you hope to leave an inheritance for your children. Indeed, it may even be one of the primary motivations driving your life’s work. Yet if you don’t take the proper precautions, the wealth you pass down can easily be lost or squandered. And in certain cases, such as Clare’s, the inheritance can even end up doing more harm than […]

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Protect Your Family From Wealth’s Dark Side With a Lifetime Asset Protection Trust

January 7, 2020

When you create your estate plan, the idea that one of your adult children would ever use their inheritance to bankroll a cult is probably something you’d never dream of, much less anticipate. Yet that’s exactly what 40-year-old Clare Bronfman, heiress to the multi-billion-dollar Seagram’s fortune, did with hers. In the end, with her inheritance—and the power that came with it—she was led down a dark path that seems almost too outlandish to be true. In May, Clare pled guilty to felony charges of harboring an illegal alien and fraudulent use of a deceased person’s identity as part of a plea deal with federal prosecutors. The charges stem from her role as an executive board member of Nxivm (pronounced NEX-ee-um), a group that prosecutors described as a “deeply manipulative pyramid scheme” that forced some of its members to endure slave-like conditions and even have sex with the group’s leader and founder, Keith Raniere. Had she gone to trial for her involvement with Nxivm, Clare would have faced up to 25 years in prison. But given her plea, she’ll likely serve just over two years. Her sentencing is scheduled for July 25. Following Clare’s plea, Raniere, 58, was found guilty in June on seven felony counts, including racketeering and sex trafficking. He faces up to life in prison when he’s sentenced on September 25. His conviction comes following a six-week trial that exposed the world to Nxivm’s sordid inner workings and put wealth’s dark side on full display. Unforeseen threats Clare’s sad story highlights just how risky it can be to leave money outright to your children. Indeed, bestowing significant wealth upon your children or grandchildren can turn out to be a blessing—or it can just as easily be a curse. Fortunately, there are proactive estate planning solutions designed to safeguard your adult children from such scenarios. And these planning protections aren’t just for the extraordinarily rich like Clare’s family—inheriting even relatively modest amounts of wealth can lead to similar issues. Regardless of your asset profile, we can help you put the proper planning vehicles in place to help prevent your heirs from falling prey to wealth’s darkest temptations—or even losing their inheritance to simple mistakes. Indeed, the planning strategies we describe here can safeguard your child’s inheritance from being depleted out by other, less devious events, such as a divorce, a catastrophic medical expense, or even a simple accident. You just never know what life has in store for your heirs, and our planning protections can ensure their inheritance is protected from practically all potential threats—even those you could never possibly imagine. From self-help to self-sabotage Clare joined Nxivm, which was billed as a life-coaching program, in 2002 at age 23. She reportedly joined the group in hopes that its mentoring might help her fulfill her dream of making the U.S. Olympic equestrian team. In large part due to her substantial financial contributions, Clare quickly rose to the top ranks of the organization and became increasingly close with Raniere. According to a recent Forbes article, Raniere took advantage of Clare’s estranged relationship with her elderly father, Edgar Bronfman Sr., and […]

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Don’t Let Your Kids Move Out Without Signing These Documents

December 31, 2019

Watching your kids leave home to attend college or start their career can be an emotional time for you as a parent. On one hand, moving out on their own is a major accomplishment that should make you proud. On the other hand, having your kids leave the nest and face the world can also induce anxiety and fear. Regardless of your feelings, once they reach age 18, your kids become legal adults, and many areas of their lives that were once under your control will be solely their responsibility. And one of the very first items on their to-do list as new adults should be estate planning. While you may believe that planning is the last thing your kids need to be thinking about, it’s actually the first, because once they turn 18, you no longer have automatic access to their medical records and/or financial accounts should anything happen to them. Before your kids head out on their own, you should discuss and have them sign the following three documents: 1. Medical Power of Attorney Medical power of attorney is an advance directive that allows your child to grant you (or someone else) the legal authority to make healthcare decisions for them in the event they become incapacitated and cannot make such decisions for themselves. For example, medical power of attorney would allow you to make decisions about your child’s medical treatment if he or she is knocked unconscious in a car accident or falls into a coma due to an illness. And with a properly drafted medical power of attorney, you will be able to access your child’s medical records, whereas without one you would not. Should they become incapacitated without a properly executed medical power of attorney, you’d have to petition the court to become their legal guardian. While a parent is typically the court’s first choice for guardian, the court process can be slow—and in medical emergencies, every second counts. 2. Living Will Whereas medical power of attorney allows you to make healthcare decisions on your child’s behalf during their incapacity, a living will provides specific guidance about how your child’s medical decisions should be made while they’re incapacitated, particularly at the end of life. For example, a living will allows your child to let you know if and when they want life support removed, if they ever require it. In addition to documenting how your child wants their medical care handled, a living will can also include instructions about who should be able to visit them in the hospital and even what kind of food they should be fed. For example, if your child is a vegan, vegetarian, gluten-free, or takes specific supplements, these things should be noted in their living will. If your child has certain wishes for their medical care, it’s important you discuss these decisions with them and have those wishes documented in a living will to ensure they’re properly carried out. 3. Durable Financial Power of Attorney Should your child become incapacitated, you’ll also need the ability to access and manage their finances, and this requires your child to grant you […]

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Buyer Beware: The Hidden Dangers of DIY Estate Planning – Part 2

December 24, 2019

Last week, we shared the first part of this series on the dangers of do-it-yourself estate planning. Here, we’ll look at how online legal documents can even put your minor children at risk.  Given how far web-based technology has evolved, you might think online legal document services like LegalZoom® and WillsandTrusts.com have advanced to the point where they’re a suitable alternative to having your estate plan prepared by a lawyer. After all, you’ve been able to prepare and file your taxes online for years, so what makes estate planning so much different? Aren’t lawyers using the very same forms you find on these document websites? This kind of reasoning is exactly what do-it-yourself (DIY) planning services would like you to believe—but it’s far from true. Indeed, relying on generic, fill-in-blank planning documents can be one of the costliest planning mistakes you can make for your loved ones. Online planning documents may appear to save you time and money, but keep in mind, just because you created “legal” documents doesn’t mean they will actually work when you (or most importantly, the people you love) need them. Without a thorough understanding of how the legal process works and impacts family dynamics upon your death or incapacity, you’ll likely make serious mistakes when creating a DIY plan. Even worse, these mistakes won’t be discovered until it’s too late—and the loved ones you were trying to protect will be the very ones forced to clean up your mess or get stuck with a huge nightmare. In part one, we discussed the numerous ways DIY estate planning can go wrong, and here we’ll explain how these generic documents can put the people you love most of all—your children—at risk. Putting your children at risk Knowing that your DIY plan could fail and force your family into court and conflict is distressing enough. But imagine how you’d feel if you knew that your attempt to save money on your estate plan caused your children to be taken into the care of strangers, even temporarily. Yet this is exactly what could happen if you rely on a generic will and/or other legal documents you find online to name legal guardians for your kids. In fact, this could happen even if you create a plan with a lawyer who isn’t trained to plan for the unique needs of parents with minor children. Naming and legally documenting guardians for your kids might seem like a fairly straightforward process, but it entails a number of complexities most people aren’t aware of. Even lawyers with decades of experience typically make at least one of six mistakes when naming long-term legal guardians. If estate plans created with the assistance of an attorney are likely to leave your children at risk, do you really think that you’re going to get things right on your own? What’s so complicated about naming guardians? Some DIY wills allow you to name legal guardians for your kids in the event of your death, and that’s a good start. But does it allow you to name back-up candidates in case your first choice is unable to serve? If […]

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Buyer Beware: The Hidden Dangers of DIY Estate Planning – Part 1

December 17, 2019

Do a Google search for “online estate planning documents,” and you’ll find dozens of different websites. From Legal Zoom® and Willing.com to Rocket Lawyer® and Willandtrust.com, these do-it-yourself (DIY) planning services might seem like an enticing bargain. The sites let you complete and print out just about any kind of planning document you can think of—wills, trusts, healthcare directives, and/or power of attorney—in just a matter of minutes. And the documents are typically quite inexpensive, with many sites offering simple wills for $50 or less. At first glance, such DIY planning documents might appear to be a quick and inexpensive way to finally cross estate planning off your life’s lengthy to-do list. You know planning for your death and potential incapacity is important, but you just never seem to have time to take care of it. And even if you realize your DIY plan won’t be as good as those prepared by a lawyer, at least it can serve as a temporary solution, until you can find time to meet with an attorney to upgrade. These forms may not be perfect, you reason, but at least they’re better than having no plan at all. However, relying on DIY planning documents can actually be worse than having no plan at all—and here’s why: An inconvenient truth Creating a plan using online documents, can give you a false sense of security—you think you’ve got planning covered, when you most certainly do not. DIY plans may even lead you to believe that you no longer need to worry about estate planning, causing you to put it off until it’s too late. In this way, relying on DIY planning documents is one of the most dangerous choices you can make. In the end, such generic forms could end up costing your family even more money and heartache than if you’d never gotten around to doing any planning at all. At least with no plan at all, planning would likely remain at the front of your mind, where it rightfully belongs until it’s handled properly. Planning to fail Many people don’t realize that estate planning entails much more than just filling out legal forms. Without a thorough understanding of how the legal process works upon your death or incapacity, you’ll likely make serious mistakes when creating a DIY plan. Even worse, these mistakes won’t be discovered until it’s too late—and the loved ones you were trying to protect will be the very ones forced to clean up your mess. The whole purpose of estate planning is to keep your family out of court and out of conflict in the event of your death or incapacity. Yet, as cheap online estate planning services become more and more popular, millions of people are learning—or will soon learn—that taking the DIY route can not only fail to achieve this purpose, it can make the court cases and family conflicts far worse and more costly. One size does not fit all Online planning documents may appear to save you time and money, but keep in mind, just because you created “legal” documents doesn’t mean they will actually work when […]

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4 Tips For Discussing Estate Planning With Your Family This Holiday Season

December 10, 2019

As we head into the peak of the holiday season, you’re likely spending more time than usual surrounded by your family and friends. It’s one of the rare times of the year when loved ones from across the country gather together to enjoy each other’s company and celebrate the passing of another year. The holidays offer an opportunity to visit with loved ones you rarely see and get caught up on what’s been happening in everyone’s life. And though it might not seem like it, the holidays can also be a good time to discuss estate planning. In fact, with everyone you love—from the youngest to the oldest—gathered together under one roof, the holidays provide the ideal opportunity to talk about planning. That said, asking your uncle about his end-of-life wishes while he’s watching the football game probably isn’t the best way to get the conversation started. In order to make the discussion as productive as possible, you should consider the following tips. 1. Set aside a time and place to talk Trying to discuss estate planning in an impromptu fashion over the dinner table or while opening Christmas gifts will most likely not be very productive. Your best bet is to schedule a time separate from the festivities, when you can all gather together and talk without distractions or interruptions. It’s also a good idea to be upfront with your family about the meeting’s purpose, so no one is taken by surprise, and they are more prepared for the talk. Choose a setting that’s comfortable, quiet, and private. The more relaxed people are, the more likely they’ll be comfortable opening up about sensitive topics. 2. Create an agenda, and set a start and stop time To ensure you can cover every topic you want to address, create a list of the most important points you want to cover—and do your best to stick to them. You should encourage open conversation but having a basic agenda of the items you want to talk about can help ensure you don’t forget anything in the midst of emotional moments. Along those same lines, set a start and stop time for the conversation. This will help you keep the discussion on track and avoid having the conversation veer too far away from the main topics you want to discuss. If anything significant comes up that you hadn’t planned on, you can always continue the discussion later. Keep in mind that the goal is to simply get the planning conversation started, not work out all of the specific details or dollar amounts. 3. Explain why planning is important From the start, assure everyone that the conversation isn’t about prying into anyone’s finances, health, or personal relationships. Instead, it’s about providing for the family’s future security and wellbeing no matter what happens. It’s about ensuring that everyone’s wishes are clearly understood and honored, not about finding out how much money someone stands to inherit. While some relatives might be reluctant to open up, being surrounded by the loved ones who will ultimately benefit from planning can make people more willing to discuss these sensitive subjects. […]

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Don’t Forget to Include Your Digital Assets In Your Estate Plan—Part 1

December 25, 2018

If you’ve created an estate plan, it likely includes traditional wealth and assets like finances, real estate, personal property, and family heirlooms. But unless your plan also includes your digital assets, there’s a good chance this online property will be lost forever following your death or incapacity. What’s more, even if these assets are included in your plan, unless your executor and/or trustee knows the accounts exist and how to access them, you risk burdening your family and friends with the often lengthy and expensive process of locating and accessing them. And depending on the terms of service governing your online accounts, your heirs may not be able to inherit some types of digital assets at all. With our lives increasingly being lived online, our digital assets can be quite extensive and extremely valuable. Given this, it’s more important than ever that your estate plan includes detailed provisions to protect and pass on such property in the event of your incapacity or death. Types of digital assets Digital assets generally fall into two categories: those with financial value and those with sentimental value. Those with financial value typically include cryptocurrency like Bitcoin, online payment accounts like PayPal, domain names, websites and blogs generating revenue, as well as other works like photos, videos, music, and writing that generate royalties. Such assets have real financial worth for your heirs, not only in the immediate aftermath of your death or incapacity, but potentially for years to come. Digital assets with sentimental value include email accounts, photos, video, music, publications, social media accounts, apps, and websites or blogs with no revenue potential. While this type of property typically won’t be of any monetary value, it can offer incredible sentimental value and comfort for your family when you’re no longer around. Owned vs licensed Though you might not know it, you don’t actually own many of your digital assets at all. For example, you do own certain assets like cryptocurrency and PayPal accounts, so you can transfer ownership of these in a will or trust. But when you purchase some digital property, such as Kindle e-books and iTunes music files, all you really own is a license to use it. And in many cases, that license is for your personal use only and is non-transferable. Whether or not you can transfer such licensed property depends almost entirely on the account’s Terms of Service Agreements (TOSA) to which you agreed (or more likely, simply clicked a box without reading) upon opening the account. While many TOSA restrict access to accounts only to the original user, some allow access by heirs or executors in certain situations, while others say nothing about transferability. Carefully review the TOSA of your online accounts to see whether you own the asset itself or just a license to use it. If the TOSA states the asset is licensed, not owned, and offers no method for transferring your license, you’ll likely have no way to pass the asset to anyone else, even if it’s included in your estate plan. To make matters more complicated, though you heirs may be able to access your […]

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How to Fix Errors in Your Credit Report

December 18, 2018

While some of those TV commercials for free credit-score report companies are pretty funny, having errors on your credit report is no laughing matter. Indeed, your credit score is one of the main factors determining your access to loans, credit cards, housing, and sometimes even jobs. From late payments that were actually made on time and paid debts that are still listed in collections to fake accounts opened in your name by identity thieves, there are all kinds of errors that can end up in your report. What’s more, even if the mistakes were made by the banks, lenders, and/or credit bureaus, they have no obligation to fix them—unless you report them. Given this, it’s vital to monitor your credit score regularly and take immediate action to have any errors corrected. Here, we’ll discuss a few of the most common mistakes found in credit reports and how to fix them. Finding and fixing errors The first step to ensure your credit report stays error-free is to obtain a copy of your report from each of the three major credit-reporting agencies: Experian, TransUnion and Equifax. You can get free access to your reports and even helpful credit monitoring services from companies like CreditKarma.com. Check each of the reports closely for errors. Some of the most common mistakes include: Misspellings and other errors in your name, address, and/or Social Security number Accounts that are mistakenly reported more than once Loan inquiries you didn’t authorize Payments inadvertently applied to the wrong account or noted as unpaid, when they were in fact paid Old debts that have been paid off or should’ve been removed from your report after seven years Fake accounts and debts created by identity thieves Filing a dispute If anything is inaccurate on your report, file a dispute with the credit bureaus as soon as possible. In fact, notifying these agencies is a prerequisite if you eventually decide to take legal action. Note that if a mistake appears on more than one report, you’ll need to file a dispute with each credit bureau involved. To ensure your dispute has the best chances of success, follow these steps: Use the appropriate forms: Each credit bureau has different processes for filing a dispute—whether via regular mail or online—so check the particular bureau’s website for instructions and forms. You can find sample letters showing how to dispute credit reports on the FTC and Consumer Financial Protection Bureau (CFPB) websites. Be absolutely clear: Clearly identify each disputed item in your report, state the facts explaining why the information is incorrect, and request a deletion or correction. If you’ve found multiple errors, include an itemized list of each one. Provide evidence: It’s not enough to just say there’s a mistake; you should substantiate your claim with proof. Collect all documents related to the account, including account statements, letters, emails, and legal correspondence. Include copies (never originals) of this paperwork and highlight or circle the relevant information. Contact credit providers: In addition to the credit bureaus, the CFPB recommends you also contact the credit providers that supplied the incorrect information to the bureaus. Check with the particular […]

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Use Estate Planning to Enrich Your Family With More Than Just Material Wealth

December 11, 2018

In the weeks before her death from ovarian cancer, author Amy Krouse Rosenthal gave her husband Jason one of the most treasured gifts a person could receive. She penned the touching essay “You May Want to Marry My Husband” in the New York Times as a final love letter to him. The essay took the form of a heart-wrenching yet-humorous dating profile that encouraged him to begin dating again once she was gone. In her opening description of Jason, she writes: “He is an easy man to fall in love with. I did it in one day.” What followed was an intimate list of attributes and anecdotes, highlighting what she loved most about Jason. It reads like a love story, encompassing 26 years of marriage, three grown children, and a bond that will last forever. She finished the essay on Valentine’s Day, concluding with: “The most genuine, non-vase-oriented gift I can hope for is that the right person reads this, finds Jason, and another love story begins.” Just 10 days after the essay was published in March 2017, Amy died at age 51. Finding meaning again Amy’s essay immediately went viral, and Jason received countless letters from women across the globe. Although he has yet to begin a new relationship, Jason said the outpouring of letters gave him “solace and even laughter” in the darkest days following his wife’s death. Just over a year later, Jason wrote his own essay for the Times, “My Wife Said You May Want to Marry Me,” in which he expressed how grateful he was for Amy’s words and recounted the lessons he’d learned about loss and grief since her passing. He said his wife’s parting gift “continues to open doors for me, to affect my choices, to send me off into the world to make the most of it.” Jason has since given a TED Talk on his grieving process in hopes of helping others deal with loss, something he said he never would’ve done without Amy’s motivation. Toward the end of his essay, Jason gave readers a bit of advice for how they can provide their loved ones with a similar gift: “Talk with your mate, your children, and other loved ones about what you want for them when you are gone,” he wrote. “By doing this, you give them liberty to live a full life and eventually find meaning again.” Preserving your intangible assets This moving story highlights what could be the most valuable, yet often-overlooked aspect of estate planning. Planning isn’t just about preserving and passing on your financial wealth and property in the event of your death or incapacity. When done right, it equates to sharing your family’s stories, values, life lessons, and experiences, so your legacy carries on long after you (and your money) are gone. Indeed, as the Rosenthals demonstrate, these intangible assets can be among the most profound gifts you can give. Of course, not everyone has the talent or time to write a similarly moving essay or have it published in the New York Times, nor is that necessary. We recognize the enormous value these assets […]

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