Why Updating Your Estate Plan is So Important

Most of us remember Sherman Hemsley as George Jefferson, the character he played in the popular television show “The Jeffersons.” When Hemsley passed away in 2012, his will named his longtime partner Flora Enchinton heir to his estate. However, when a man from Philadelphia named Richard Thornton claimed to be Hemsley’s half brother and challenged the will, funeral proceedings were delayed. It was four months before friends could properly say goodbye to Hemsley.

"Families, circumstances, and the law all change"

Hemsley’s will was signed only six weeks before his death, after Hemsley was already ill with lung cancer. It was this delay which gave Thornton grounds to challenge Hemsley’s soundness of mind at the time of the will’s signing. Ultimately, the will was found valid and Enchinton was able to proceed with Hemsley’s wishes, but not until Hemsley’s body had spent four months on ice.

Thomas Kinkade, famous for his paintings of cottages, bubbling streams, and rural churches, passed away the same year as Hemsley. In another similarity, Kinkade’s estate ended up in a lengthy court battle. Kinkade had been in the process of a divorce from his wife Nanette Kinkade when he died. He was also living with his girlfriend Amy Pinto at the time. Pinto laid claim to his home, where she was living, as well as $10 million and a part in his legacy. She produced two handwritten wills and refused to leave the property, even after a security guard was posted to ensure she did not steal any possessions.  Contrarily, his wife Nanette (with whom he had four children) submitted a 2000 will which bequeathed $12.48 million worth of assets to a living trust set up in 1997.

Ultimately the estate was settled, although details have remained private.

While you may think that something like this would never happen to you, it’s worth noting Hemsley’s estate was worth only $50,000 when his half brother challenged his will. I see families come in who haven’t updated their estate plans in years, or decades. Sometimes this causes serious confusion and problems when a loved one passes away, leaving unclear wishes. Families, circumstances, and the law all change. When we set up your estate plan it was the perfect estate plan for you at the time. But that plan may need to be updated.

The best way to avoid a lengthy estate battle is to come in regularly. I offer a free Three-Year Review for all my clients. It’s important to regularly check in with your lawyer, just as you would with a doctor. Moreover, state and federal laws regularly change, so checking in regularly assures your plan is up to date.

Other changes may make it relevant for you to come in earlier. For example, you should come in for a review if you are in the process of a marriage or divorce, have had the birth of a loved one you wish to include in your estate plan, have lost a loved one, have had a financial windfall, have bought or sold a house, or have purchased a business.

Coming in for a review ensures your will and estate plan avoid probate or messy estate battles. Waiting until you are sick or need something done imminently can lead to stress and disappointment, and sometimes, it may be too late.

When’s the last time you reviewed your estate plan? Call 630-574-0123- to schedule your free Three-Year- Review at the Law Offices of Daniel O Hands, P.C.

Marriage in Your Golden Years (Part 3 in a 3 Part Series)

Part 3: We Made Our Decision and We’re NOT Getting Married. Now What?

So you have considered the options and you have decided not to get married. This doesn’t mean you love your partner any less, but there are some provisions to make in the eyes of the law. Just because you’re not getting married doesn’t mean you can skip a visit to the estate planning attorney. In fact, it is essential for unmarried couples to see an estate planning attorney. With good planning unmarried couples can receive many of the same benefits as married couples and avoid stressful situations.

Health Care Decision Making- If you are an unmarried couple, you do not have any right to make decisions regarding your partner’s health care. If your partner ends up in the hospital, the hospital is not obligated to release any information to you regarding their health, or to even let you into the hospital room. Proper planning can eliminate this stressful situation. An attorney can create a Power of Attorney for Health Care for you and your partner, thereby giving you health care decision making rights. You can also sign a HIPAA medical release (Health Insurance Portability and Accountability Act) giving you access to your partner’s medical information.

Property- If your partner becomes incapacitated the court will assign a guardian to make financial decisions. You won’t automatically be given the right to make financial decisions for your partner. A Durable Power of Attorney for Property will give you that power and eliminate the need for a public court date to determine a guardian.

Wills and Trusts- Make sure you have a will or trust listing your partner as a beneficiary to your estate. Whereas married couples will automatically inherit a share of the estate from one another, an unmarried partner will have no right in the eyes of the court unless specifically noted. Also, as with any estate plan, make sure your family is aware of the terms of your wills or trusts.

Taxes and Gifts- Married couples can leave each other as much as they want without paying an estate tax. On the other hand, an unmarried couple cannot. Make sure you take time to look at the tax consequences of gifts when setting up your wills and trusts.

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Make sure you keep these important documents close at hand. Keep the original copies in a safe place, and have extra copies somewhere you can get to them easily. We recommend keeping the originals in a safe or lock box, and giving copies to close family members as well as your doctors’ offices. Keep an original somewhere you can quickly access in case of unexpected situations.

With proper planning, you and your partner can share the rest of your lives together without the unwanted consequences a marriage may create. Make sure you see an estate planning attorney to help draw up the above important documents which will allow you protection as a couple.

I work hard to ensure that my clients can live the lives they want knowing that their assets and healthcare decisions will be taken care of in the way they want. Estate planning can provide peace of mind now, and later down the road.

Unanswered questions from our series? Check out the information center http://handslaw.com/Page/information_center on our website.

To schedule a consultation with Mr. Hands call the office at 630-574-0123.

Marriage in Your Golden Years (Part 2 in a 3 Part Series)

Part 2: We Made Our Decision and we ARE Getting Married- Now What?

So, you have considered the factors and you and your new partner have decided to get married. Congratulations! Finding love later in life can be exciting, but can require a little extra planning.

BEFORE the wedding make sure that you and your spouse understand each other’s financial situations. While a younger couple may enter into a union planning on building a financial future together, you and your future spouse have already spent years building your financial estates separately. You don’t want years of work to be compromised. With proper foresight you can gain the marriage you want but protect your assets.

Be aware that whatever estate planning you’ve done to this point is going to be affected by your future marriage- make sure you talk your decision over with your estate planning attorney and your family. Be clear about your wishes so that your attorney can properly draw up your documents, and so that there are no surprises. Inheritance issues can be sticky to resolve, and they’re never pretty.

Take, for example, the case of Joe and JoAnne. Both had children from a previous marriage. Joe’s children believed that his estate would pass on to them at his death. However, the way the trust was written, when Joe died the whole estate instead passed to Jo Anne. When she died a few years later the estate therefore passed to Jo Anne’s children.

The result was that Joe’s children sued his attorney, claiming that their father meant for his estate to pass to them, but the judge could not find reasonable proof that Joe’s intent was for his money to pass to them, and so Joe’s children received no inheritance from their father. Being clear with your attorney and your family can help alleviate these problems. Make sure your wishes are in writing, and be sure you understand the agreement before signing it.

PRENUPTIAL AGREEMENTS: Your estate planning attorney can work with you to prepare a prenuptial agreement. Your future spouse will need their own attorney. A prenuptial agreement lays out in advance what will happen to the couple’s property in case of death or divorce. A properly executed prenuptial agreement commonly delineates each spouse’s right to the other spouse’s property on death or divorce. The major benefit of a prenuptial agreement is that it keeps your assets separate. You can make a lot of provisions in a prenuptial agreement- including timeframes.

There are basic requirements for a court to uphold a prenuptial agreement- as with any estate planning document make sure you have an attorney draw it up to assure it’s an appropriate legal document. It’s important that the agreement be prepared and executed prior to the marriage.

OTHER CONSIDERATIONS: In addition, make sure you discuss what happens to your home and any retirement assets, 401K’s, and other liquid assets with your spouse and attorney. Make sure you account for all your assets.

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Be sure you choose an estate planning attorney who understands your desires. Also, ensure that your attorney isn’t just plugging you in to a pre-existing mold. Each couple has a unique relationship, and likewise situation, and it’s important your attorney consider you as such.

When my clients come in I work hard to ensure that I develop an estate plan that fits their needs and desires. Our estate plans allow for many foreseeable and unforeseeable situations, and deal with each client’s unique situation.

Stay tuned for the next  entry- Part 3 in the 3 Part Series:

We made our decision and we AREN’T getting married- now what?

(To schedule a consultation with Mr. Hands call the office at 630-574-0123)

Marriage in Your Golden Years (Part 1 in a 3 Part Series)

Part 1: To Re-Marry, Or Not?

I see a lot of couples in my office who are considering marrying or remarrying. While all prospective couples have many factors to consider, for couples considering marriage in their later years there will be different, and possibly unexpected, factors to consider. Especially if you have a large estate, or if you have children from a previous marriage, there may be unexpected outcomes from a marriage in your later years that you deserve to know about before signing the marriage certificate.

Social Security- There are many possible effects of marriage on social security benefits.  If you were receiving benefits from a previous spouse, these benefits will generally cease once you remarry.  If both you and your potential spouse are receiving social security benefits there may be an increase on your taxes. Most importantly, social security benefits will begin to take into account not just you and your children, but also your spouse and their children. This may affect you positively or negatively depending on your situation.

The Family Home- Hypothetically, say your potential spouse moves into a property you already previously owned: pretend it’s the house your children from your past marriage grew up in. You may still want to ensure that the property is transferred to your children after your death. However, if your potential spouse survives you, you don’t want to your spouse to be evicted by your children. There are various ways to get around these problems with the appropriate planning, but planning is needed to assure it will all go smoothly.

College Financial Aid- If you have a college-aged child, you will want to check with your child’s school before remarrying. A new spouse could affect the financial aid your child receives depending on how your income is calculated.

Survivor’s Annuities- Any annuities you or your possible spouse are receiving may cease with a new marriage contract. For example, widows and widowers of military may lose their annuities if they remarry before a certain age. All of these factors need to be considered as you make your decision. 

Long Term Care- No amount of trusts or premarital agreements can protect a spouse from being responsible for the cost of long term care if you or your potential spouse should become incapacitated or need expensive health care. Moreover, your eligibility for Medicaid may be affected by a new marriage in your later years.

Personal Values- I often hear that older couples want to get married so they can set a good example for their grandchildren. Other couples may feel obligated to remarry if they are involved with their church or religious community. Some couples may feel that their own personal values would be compromised if they did not remarry but lived as a married couple. On the other hand, couples may have none of these concerns, but be worried about the effect on their previous estate, or the concerns of their children.

Ultimately, it’s you and your partner’s decision to marry. However, whatever your personal beliefs may be, it’s important to be informed and make a knowledgeable decision to avoid any ugly surprises for you or your family later down the road. An informed decision is always the best decision.

I help clients consider all their options when making a choice about proceeding with a new marriage. Every person’s situation is unique, and you deserve to know all the possible situations before deciding to marry or not.

  

Stay tuned for our next entry- Part 2 in the 3 Part Series:

We Made Our Decision and we ARE Getting Married- Now What?

(To schedule a consultation  with Mr. Hands call the Oak Brook office at 630-574-0123)

Invest in a Good Estate Plan Now, and Save Your Family Trouble and Money Later

In this uncertain economy, everyone wants to save money. Maybe you've started taking the bus, cutting coupons, or overseeing projects you would usually have left to a professional. While fixing that clogged drain without a plumber may have been a great way to cut costs, there are some tasks you shouldn't try to tackle alone.

Developing an estate plan is one project you shouldn't try at home, or even with an online service. Even if you don't have a large estate, you should still consult with a qualified estate planning attorney to ensure your estate is protected. A homemade estate plan can lead to unintended consequences and as a result your heirs may end up paying legal fees in excess of what it would have cost to have an attorney draw up your documents in the first place. 

Take, for example, the case of "John." John drafted his own will. He left to his domestic partner, Fiona, different assets including several bank accounts, his individual retirement account, and a percentage of a corporation. At John's death, his family challenged Fiona's inheritance. They first challenged the bank accounts John had left to Fiona. The bank had failed and had been taken over by another bank, so the bank accounts no longer existed. Therefore, John's family argued that no bank accounts should be transferred to Fiona. Also, John's IRA had titled his sister as the beneficiary, contrary to the will, so the money was paid to her. Finally, at John's death the family alleged that the will was ambiguous regarding the aforementioned corporation. They claimed John only meant to leave Fiona a percentage of his share, rather than his entire share. Needless to say, the family and Fiona ended up in a court battle.

You may think, my family gets along great with my partner or fiancé; this would never happen to us. However,  in the shock and uncertainty following a loved one's death relationships can become very strained. Had John taken the time to consult a qualified estate planning attorney for a soundproof estate plan, his family and partner could have avoided the resultant lawyer's fees and multiple trips to court.

Let's look at the case of "Simon" for another example of a problematic estate plan. Simon split his property evenly amongst his three children. However, his eldest son "Jim" died before Simon passed away. This raised some questions when Simon's estate was being settled. Should Jim's share be redivided amongst his siblings, or should it go to his heirs? Jim had two children and a step-son. Should the inheritance go partially to his step-child? Should all his children be treated equally, or should his biological children receive a larger share? Things can get complicated when situations such as this arise, and unless you've planned for contingencies like this your wishes may not be followed.

At the Law Offices of Daniel O. Hands, P.C., when we hand someone a completed estate plan we don't just hand them a piece of paper. They leave with a thick book and a variety of different documents to cover all their needs. We take time to go over the documents with our clients to ensure everything is drafted according to their wishes. Most importantly, our estate planning documents provide for contingencies. That's why they're so thick. Unborn children, the death of a beneficiary, divorce, and special needs are just a few contingencies that can be accounted for with a properly created estate plan.


Make sure your estate plan is up to date, and remind your friends and family that spending the money now to preserve their estate will save their loved ones money and troubles further down the road.

Estate Planning Can Be Fun(ny)!

Estate planning forces us to consider many unpleasant possibilities and realities we often don't like to think about. However, estate planning doesn't have to always be serious. Below are a series of estate planning "funnies" to help lighten the mood.





Why women are superior estate planners:

Carl was a 35-year old bachelor who worked for his father's extremely successful business. When he learned his father was very ill, and that he would inherit a large sum of money, he decided he needed a wife with whom to share his wealth. 

One night, at an investment meeting, a stunning woman walked through the door. Carl was speechless; she was by far the most beautiful woman he had ever seen. After the meeting he approached her. "I may not be much to look at," he said, "but my father is very ill and in a few years I will inherit 20 million dollars." The woman was very impressed. She took his card, and agreed to call him. 

A few days later she called as promised.

"Guess what?" she said. "I'm your new stepmother."

How to solve the deficit: 

Obama Befriends Rich Elderly Widow In Hopes She'll Put Nation In Her Will

Click the link above to view this comic video from the Onion News Network. (The Onion is a fictitious news source.) In this story, newscasters speculate on Obama's friendship with billionaire widow, Adelia Scott. Sources say he has spent time with Mrs. Scott, watching countless hours of "Pride and Prejudice," bringing her chocolates, and listening to stories about woman's baseball in order to secure a place for the US Treasury in her will. The White House Deputy Press Secretary denies the accusation that the president has any ulterior motives for befriending Mrs. Scott other than their mutual enjoyment of activities such as cross-stitching, visiting the doctor, and growing prize-winning petunias. Watch this video for a chuckle.

Why You Should Never Let Your Pet Plan Your Estate:


Dilbert's Advance Health Care Directive


Click the above link to view this recent Dilbert comic by Scott Adams. In this comic strip, Dilbert reads over the Advance Health Care Directive his megalomaniac dog Dogbert has prepared for him. Dilbert says he might have some changes to make, as it states that he should be killed if he has a headache, itch, or complaint.

 Why You Should Never Let Your Pet Plan Your Estate, Part II:


 Dogbert Amends Dilbert's estate plan

Then, a few days later, Dogbert hands Dilbert an amended estate plan. It's not much better. Follow the above link to view the comic.

(We promise we won't draw up documents that look like this at the Law Offices of Daniel O. Hands, P.C.!)

Daniel Hands Invited To Speak at Event

Real-estate agents from Realty Executives on the Move in Cary have invited Mr. Hands to speak at a seminar on Saturday, April 16 at the Sun City Meadow View Lodge in Huntley. He will be presenting on wills and estate Planning. Other topics presented will be reverse mortgages and independent and assisted living. This event is hosted by the Frits Team (http://www.fritsteam.com). The seminar includes lunch and will run from noon until two. To make a reservation call 847-516-8282 by April 14.

Special Needs Trusts

When their daughter Jill was born, Carrie and Tom were no different than any other parents. They displayed pictures on their phones, computers, cubicle walls, Facebook profiles, and anywhere else they could. However, Carrie started to notice that Jill wasn’t developing the same way her nephews had. Tom wondered why it was so difficult for Jill to speak as she passed two. And when Jill started daycare, it became clear something was different.

When Jill was diagnosed with autism, Carrie and Tom suddenly had very different worries than other parents. Would Jill ever find a job? Would she be able to take care of herself if something happened to them? How much would she be affected by the autism? How could they prepare for Jill’s future when they didn’t know what her future would look like? Would the money they had saved be enough?

Every year hundreds of thousands of families struggle with the same questions as Carrie and Tom. Families plan and save for their children, but what if that child requires more special care, medical attention, and assistance then they had prepared for? Not just autism, but many other disabilities can cripple families. While some children may become only mildly impaired other children may ultimately need assisted living if they are unable to care for themselves.

There are ways families can plan for their special needs children, though. Families can start planning for their child’s future by setting up a Special Needs Trust. A Special Needs Trust ensures that its beneficiary (in this case the child with special needs) can maintain their government benefits even while they are receiving the benefits of the asset in the trust. The special needs child is only the beneficiary and not considered the owner of the property, so they will be able to collect their government benefits as well as have access to the funds in the trust.

Special Needs Trusts can help ensure a special needs child will be taken care of financially throughout their life. Under the terms of a Special Needs Trust, a Trustee will manage the trust to ensure it will last the lifetime of the beneficiary. The Trustee can make distributions to the beneficiary to cover expenses not taken care of by their government benefits. The Special Needs Trust also allows for flexibility. Parents can set up the trust at any point in their child’s life, and once it is established the funds in it can be used immediately or stored for future expenditures.

A qualified estate planning attorney can help you determine if a Special Needs Trust is best for a member of your family. The Law Offices of Daniel O. Hands, P.C. has been helping families with this unique situation plan for their child’s future for over thirty years.

Our Digital Estates

When we die, we leave behind a legacy of pictures, letters, books, and other possessions for our family to remember us by. In today’s digital age, we also leave behind a legacy of emails, blogs, Twitter posts, Facebook pages, and other online traces. We know that in our will we should detail specific requests for our physical possessions, but what should we do about our digital legacy? What happens to our online presence after we die?

John Romano and Evan Carroll have written a book, “Your Digital Afterlife” answering these, and many more, questions about our digital estates. (You can buy the book or read a sample chapter at http://www.yourdigitalafterlife.com/.)

Romano and Carroll bring up some important factors in arranging your digital estate. You can find some of their important tips on NPR's website, which ran a segment on the authors of the book: http://www.npr.org/2011/01/10/132617124/after-death-protecting-your-digital-afterlife. They recommend making sure your executor has a list of your online accounts, as well as your passwords. They also recommend naming a digital executor in addition to your main executor, to ensure that the person handling your online estate has the technological know-how to handle your various accounts.

Each website has its own unique policy for deceased users, and sifting through all of them can be a chore. Some websites require a death certificate while others require a working link to an obituary in order to prove the user has passed. Likewise, websites such as Facebook allow the user’s page to be memorialized while Yahoo closes and deletes the user’s account permanently. You can make the task of unearthing all your online material easier by ensuring any photos you have on Photobucket or similar websites are backed up onto a disk or hard drive. Some websites are non-transferable and after your death those pictures may be deleted.

For more information on the policies of websites such as Facebook, Yahoo, and Twitter check out the Digital Beyond:  http://www.thedigitalbeyond.com/2010/12/so-what-does-happen-to-your-digital-assets-after-you-die/#facebook.

Remember, your digital legacy is only a portion of your entire estate. Only a qualified estate planning attorney can ensure your estate will pass on to your loved ones quickly and easily. To find out more about estate planning visit our website or contact your estate planning attorney.

Estate Planning Seminar at the Oak Brook Marriott!

On Saturday, January 22, 2011 the Law Offices of Daniel O. Hands, P.C. will be hosting a FREE public seminar at the Marriott in Oak Brook.


Estate Planning Seminar
Saturday January 22, 2011
10 am-12 pm
Chicago Marriott Oak Brook
1401 W. 22nd Street
Oak Brook, IL 60523
Refreshments will be provided

Register online: www.handslaw.com
Or call: 630-574-0123

This seminar is an opportunity to learn the ins and outs of basic estate planning. Topics covered will include: the 2011 estate tax laws, avoiding probate court, planning for long term nursing care, protecting your estate from the IRS, and planning for your special needs relatives.

We hope to see you there!

Don't Forget the Family Pet in your Trust

What happens to your animal after you die? We worry about our children and our grandchildren when planning for our future, but our family pets deserve to be remembered as well. Few people would argue that their pet is a part of their family, which is why it is so important to include them in our planning.

In a recent article in USA TODAY, "Pet Talk: For pets' sake, include them in your estate planning,"  Sharon L. Peters discusses why taking the legal steps to ensure your pet's well being is so vital. Many pets end up in shelters after their owners die, and sadly these shelters can only keep animals for so long before they are euthanized. There are many ways your estate planning lawyer can help you ensure your pet avoids this fate, but mentioning your pet in your will may not be enough.

The Law Offices of Daniel O. Hands, P.C. offers services for pet owners. Ask your lawyer how you can ensure your pet is cared for after you can no longer care for it.

To view the article by Sharon L. Peters, posted Dec 8, 2010 on USA TODAY, go to: 
http://www.usatoday.com/

Estate Planning Seminar in November!

We will be holding a FREE estate planning seminar this month.

Saturday, November 20, 2010

10 am- 12:00 noon

The Law Offices of Daniel O. Hands P.C.
Oak Brook, IL

Topics covered will include:

• Avoiding probate court
• Planning for long term nursing care
• Protecting your estate from the IRS
• Planning for your special needs relatives

How can I register?

Register online: http://www.handslaw.com/seminars.aspx

We hope to see you soon.

Why Won’t Michael Jackson’s Children Inherit His Money Until They Are Forty?

When the King of Pop died, he left behind him not only a musical legacy but also a legacy of debt. Poor financial decisions left him debt ridden near the end of his life. Nevertheless, Michael Jackson didn’t die a pauper. As with many celebrities, even after his death his estate continues increasing in value. Continued record sales will bolster his estate, leaving a considerable amount of money to his heirs after his debts are paid. His young children could become billionaires before their eighteenth birthdays, but they won’t.

Many parents hope their children won’t make the same mistakes that they made in their youth, and Jackson must have hoped his children would not be as reckless with their money as he was. In his trust he set out to ensure his children would learn from his financial mistakes. How does Jackson’s trust ensure his children won’t squander their money and end up as debt ridden as their father?

In his will, Michael Jackson left the entirety of his estate to the Michael Jackson Family Trust, and it’s within the trust that the actual breakdown of his estate occurs. He has designated a committee of trustees, including his mother Katherine, to handle the distribution of his assets. (Katherine is guardian of his children, and she is to inherit forty percent of his estate.) A closer look at the trust will reveal why Jackson’s children won’t be spending their entire inheritance any time soon.

Jackson’s trust lays out a very specific timeline for the distribution of money to his children. The Michael Jackson Family Trust specifically stipulates that his children will not receive their full inheritance until the age of forty. Until that time the children will receive an allowance, which is determined by the trustees. Upon turning twenty-one each child can appeal to the trustees for money. When they turn thirty, the children will receive one third of the remaining share. At thirty-five, they will get half their remaining share. It is not until they are forty that Jackson’s children will receive their full inheritance.

What if one of his children requires extra funds before they are forty? The trust stipulates that a child’s distribution may be accelerated in the following situations: if the child wishes to start a family, buy a home, or engage in a business venture. Nevertheless, the trustees are under obligation to ensure any business venture or investment is sound. Jackson’s trust allows for some flexibility, but even the parameters of flexibility are designed to ensure his children won’t carelessly spend their money.

In addition to financial responsibility, perhaps Jackson also wished to teach his children a little bit about generosity. Though he left his estate to be divided amongst his three children and mother, Jackson also left twenty percent of his estate to be distributed amongst children’s charities.

Is this breakdown the best way to ensure Jackson’s children will learn financial responsibility before inheriting billions? It is hard for us to determine whether this is the best breakdown or not, for each family’s situation is unique. It is up to each family to decide what is best for their children after they’re gone. Jackson sought to ensure his children won’t receive their full inheritance until they have matured into adults, and have hopefully learned how to handle their finances. For his family, this may indeed be the best breakdown.

A qualified estate planning attorney can help you find the best way to distribute your assets after you’re gone.  Helping families determine the best estate plan for their needs is what we do at the Law Offices of Daniel O. Hands, P.C. For some families, an inheritance distributed over the course of time is the best choice.

Upcoming Seminar!

We will be holding a FREE estate planning seminar this month.

Saturday, September 25, 2010

10 am- 12:00 noon

The Law Offices of Daniel O. Hands P.C.
Oak Brook, IL

Topics covered will include:

• Avoiding probate court
• Planning for long term nursing care
• Protecting your estate from the IRS
• Planning for your special needs relatives

How can I register?

Register online: http://www.handslaw.com/seminars.aspx

We hope to see you soon.

How Do I Divide My Assets Fairly When My Assets Can’t be Evenly Split?

Or What Does William Shakespeare Have to Do With My Trust?


Though we may wish otherwise, sometimes sibling rivalries can last long into adulthood. As a parent, you may want to leave your children equal shares in your estate. But what if your estate can’t be evenly split? How do you fairly divide your assets amongst the children to avoid increasing tension between the siblings?

We can learn a lot about what not to do from William Shakespeare’s play “King Lear.” In Shakespeare’s play, the King decides he is ready to retire and offers the largest share of his realm to the daughter who loves him best. Sparing you the gruesome details the play can be summed up as follows: Lear goes insane, bitter sibling rivalries become deadly, war erupts, and betrayals abound. Had Lear consulted with an estate planning attorney, he may have been able to avoid the messy end; instead of tearing his family apart he may have been able to leave his daughters with a peaceful, comfortable existence.

So what should you do if your assets can’t be evenly divided amongst your children? Imagine that you, like Lear, have three daughters: Gina, Rebecca, and Christine.

You also have a piece of land that has been in the family since your grandparents were first married. Neither you nor your daughters want the land to be sold outside of the family. The land is worth $1.5 million and your total estate is worth $3 million. You consider the options:

• You would like to divide the land into three equal parts and leave one part to each of your daughters. There are a few complications, however. Firstly, there is a huge grove of crab apple trees on the west end of the property, making it difficult to build on this part of the land. Whichever daughter received that third would have the difficult task of bulldozing the grove. Moreover, a manmade swimming pond in the northeast corner is highly desirable, but impossibly placed to be shared amongst all daughters. Most importantly, Christine works at a hospital in the city and she is not interested in inheriting the property.
 

• You could give each daughter an undivided 1/3 of the property. However you are skeptical of this option. Gina and Rebecca have never been able to agree on anything, and especially with Christine in the city you can’t see the three girls agreeing on plans for the property. You’re worried that after your death rather than a peaceful inheritance your daughters would end up with sibling warfare only slightly less brutal than Lear’s daughters.
  
• What if you don’t divide the land at all? Gina and her husband are still renting property while Rebecca already owns property with her husband. You could give the land to Gina. Nevertheless this still isn’t a fair division. Gina will inherit $1.5 million of property, leaving Rebecca and Christine with $750,000 each. Though they may not want the land, they may still feel jilted by the uneven division.
  
• You’re starting to wonder if there’s a fair way to divide your assets at all. Perhaps like Lear you will have to leave your daughters to fight over the estate.

There is a solution, and it’s one a qualified estate planning attorney could help you arrange. A $1.5 million life insurance policy would increase the estate to $4.5 million, leaving Gina with a $1.5 million property but also leaving Rebecca and Christine with $1.5 million of assets. Each child would inherit a fair share in your legacy, and you would finally be able to relax knowing that you’ve helped spare your children a potentially ugly rivalry.

Life insurance can be fairly inexpensive, especially if you get a “second-to-die” policy which pays off after you and your spouse are gone. If you own that insurance in a properly designed Irrevocable Life Insurance Trust, it would not be estate taxable. (For more information on an Irrevocable Life Insurance Trust, go to our website http://www.handslaw.com/daURL/EP/estate-planning-news.aspx.)

Helping families avoid a fate like Lear’s is something I have been doing for over 30 years. If you think this solution would be best for your family, or if you want more information on dividing your assets, you should contact your estate planning attorney to help you find the best solution for your family.

My Grandma Already has an Estate Plan, Why Does She Keep Worrying?

Recently, your grandma hasn’t been herself. She was always a quiet and calm woman, but now she seems very unsettled. Whenever you visit she spends her time pulling dirty boxes out of the basement and distributing old clothes, toys, notebooks, and tools to you and your other family members. She has been talking a lot about “when I go.”

You know this change has been prompted in part by you grandpa’s death. Grandpa died two years ago, and in the last year Grandma has become obsessed with old pictures and stories. Her living room is full of cluttered memorabilia she has unearthed from the basement. While you’re interested in learning your family history, you’re concerned because it’s all Grandma wants to talk about.
She has also been worrying a lot recently. She worries about Uncle Bob and who will take care of him. She worries about Uncle Carl and his finances, and she worries that your mom will be left with the burden of caring for all these things after Grandma passes away.

You try to insist your grandma not worry so much, but one afternoon as she is napping you and your spouse see that she has brought up a big red binder marked “Estate Planning Portfolio.” You have been talking about setting up an estate plan yourselves so you look through the binder, perusing Grandma’s trust. These documents were signed three years ago, when Grandpa was first sick, and as you read them you become increasingly concerned. Perhaps Grandma is right to worry so much.

Legally speaking, things went smoothly after Grandpa’s death. However, things were much simpler after Grandpa died; all the assets were transferred to Grandma. You start thinking about what will happen when Grandma dies. The house, her finances, the car, the dog….all of these things will have to be divided equally among your mom and her two brothers.

This worries you. When Grandma and Grandpa first signed their trust your uncles were both thriving financially and physically. Since then, Uncle Bob has had a heart attack and now he needs medical care which he cannot afford without government assistance. If Uncle Bob inherited the assets as currently drafted, he would lose his Medicaid and his inheritance would all go to pay for his care.

Uncle Carl’s wife lost her job a year ago, and his family has been struggling to make ends meet on Carl’s salary. It would be terrible if his inheritance were lost to their creditors.

Grandma was also right about your mom. As the older sister, you know your mom would take responsibility for her brothers and use her inheritance to help Bob and Carl stay afloat.

You decide to talk with Grandma about her estate plan. You make a list of things to discuss with Grandma:

1. A Special Needs Trust for Uncle Bob
2. Asset Protection for Uncle Carl
3. Update who is to manage the assets if she becomes incapacitated or upon her death
4. Update who is to manage her healthcare if she becomes incapacitated
5. My Legacy Workbook (to preserve the stories and photos she keeps finding in the basement)

You know once Grandma has been in for a review with her estate planning attorney she will be able to stop worrying so much about her children, and will be able to enjoy her old age better. Also, once she has a workbook to keep old stories and photos maybe she’ll let you get a word in edgewise at the dinner table!

Not every family is like yours, and so every family’s conversation with their estate planning attorney will be different. But it is easy to call your estate planning attorney and set up a free trust review appointment. Once it’s done, everyone will feel much better.

Compliments of the Law Offices of Daniel O. Hands, P.C.

I'm not planning on going anywhere! Why is everyone saying 2010 is a good year to die?

Why 2010 May Be a Good Year to Die:

The Economic Growth and Tax Relief Reconciliation Act of 2001 provides that in 2010 the estate tax is repealed and there is no estate tax. Therefore, from a tax perspective, 2010 may be a very good year to die. But, we don't know for sure, as many experts expect Congress to act to prevent the repeal of the estate tax. This article written by Steve Hartnett, Associate Director of the American Academy of Estate Planning Attorneys spells out the process for getting a new estate tax measure passed in Congress and the impact of the delays.*

To read more about the current status of the estate tax follow this link to our website: 

http://www.handslaw.com/daURL/v5/global_cda.aspx?cid=9729&ctid=3177

Check back here at our blog for the latest updates!

*Article compliments of the American Academy of Estate Planning Attorneys, By: Stephen C. Hartnett, J.D., LL.M. (Tax)

What is estate planning?

In its most basic form, estate planning is the process of planning for the management and disposition of your assets and resources when you are deceased or no longer able to manage your own affairs. While most people think estate planning is just worrying about assets or minimizing income and estate taxes, it is really much more. Estate planning is really about accomplishing your goals during your life and beyond.

Although many people share similar goals, the process of estate planning involves identifying your own specific goals. Once you identify them you can, along with your advisors, determine the best strategies to achieve them. Since people are different, this estate planning process will be very different from person to person.

*Excerpt from Love, Money, Control: Reinventing Estate Planning by Daniel O. Hands, Robert A. Esperti, and Renno L. Peterson

What’s in an estate?

Your estate is, simply, everything that you own. An estate consists of your investments such as stocks, bonds, mutual funds, annuities, bank accounts, and certificates of deposit; your retirement accounts such as individual retirement accounts and 401(k) plans; real estate; and life insurance policies. It also consists of your “stuff”- furniture, appliances, jewelry, collectibles, and all the other items of personal property. The value of your estate is the value of all these assets, less mortgages and any other debt.

*Excerpt from Love, Money, Control: Reinventing Estate Planning by Daniel O. Hands, Robert A. Esperti, and Renno L. Peterson

Isn’t estate planning just for rich people?

It’s not about how much wealth you have accumulated that’s important; it’s about what and who are important to you. Take as an example a widow with two grown children who has only a house and $200,000 from a life insurance policy on her late husband. Does she need estate planning to protect herself and her two children? To some people, $200,000 isn’t a lot of money. Even so, the widow wants to be assured that she can live in comfort in her own home. What if her son has an alcohol problem? Wouldn’t she worry that he will just drink up whatever amount she leaves him at her death? Wouldn’t she feel better leaving money to him in such a way that it could be used for his rehabilitation? It’s not whether you have an estate that requires planning, it’s whether planning will provide you with a sense of comfort and well-being about your and your family’s future.

*Excerpt from Love, Money, Control: Reinventing Estate Planning by Daniel O. Hands, Robert A. Esperti, and Renno L. Peterson