(Part 1 of 2) SBB University presents "Death & Taxes: Having the Uncomfortable Conversations"

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Jun 01, 2020

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PART 1 OF 2 VIDEOS - Although the topic may be an uncomfortable one, it is one that needs to be addressed. SBB University and our panel of experts discuss the documents that you need to have in place, best tax practices while you are alive, pre-planning your funeral arrangements, as well as hospice care and bereavement counseling. Original event took place 2/19/2020.

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The Three Biggest Estate Planning Myths

Its human nature to put off what we IMAGINE will be a difficult experience or if it is something that we just dont want to think about.  In my over 30 years of experience, I have found that MOST PEOPLE, including lawyers, think of estate planning as something that they can do later. Unfortunately for many, later often becomes too late. Some of the thoughts that may have crossed your mind are that: Im going to live for a long time and Ill get around to it next year; or Id rather spend my money right now on a new ultra HDTV, and I can wait to do estate planning at another time.  Well in this article, I am going to debunk the THREE BIGGEST MYTHS that may be preventing you from moving forward with your estate plan and why the best time to do it is RIGHT NOW, no matter your age.MYTH #1- PUTTING TOGETHER AN ESTATE PLAN IS TOO TIME CONSUMING AND EXPENSIVE.            Nothing could be further from the truth when it comes to putting together an Estate Plan when working with the Martella Law Firm.  First, when it comes to convenience, I offer an initial consultation via Zoom or phone so you can do the initial meeting to learn about your options in the comfort of your living room, in your shorts and a t-shirt if you like, while sipping a cool beverage.  I also offer a traditional in-person consultation if you prefer to meet face to face.  I will then send you draft documents to review via e-mail so again there is no need to leave the comfort of your home.  Finally, when it comes to the signing of the documents, that is the only time you would have to come to my office.  Even then, if you are in a hospital or other medical facility where you cannot leave, we will come to you.  Therefore, the excuse that its too hard is a fallacy.  As far as expense is concerned, first, the initial consultation is complimentary.  Accordingly, you can get all your questions about putting an estate plan together answered for FREE, at no obligation to you, and learn how a proper plan can not only protect your family, but also save them money if you are sick or after you are gone.  Additionally, an estate plan for an individual starts at only $1,200 at my firm, and I offer payment plans as well, so you can have an estate plan over a few months for probably much less than what you are spending each month on dining out.  Also, with the right plan in place, for a small investment now in a Trust, you could save your heirs $5,000 to $10,000 or more in a costly probate proceeding after your death.MYTH #2- I DONT HAVE ANY ASSETS SO I DONT NEED AN ESTATE PLAN.  The idea that only people with a lot of money and assets need an estate plan is a dangerous misconception that can cause your family a lot of stress and heartache.  While it is true that a Will or a Probate Avoidance Trust can dispose of your assets, there are other documents that everyone needs, no matter their age or health, to protect them and their family when life happens.These documents include the following:         Power of Attorney         Health Care Surrogate         Living Will         HIPAA Consent & WaiverIn a medical crisis, these documents will allow you to take care of the needs of your spouse or parent when they are unable to take care of themselves.  From taking care of banking and real estate, to consenting to medical procedures, these documents make life easier for you and your loved ones.  If you dont have these documents in place, then you may have to go to court to be appointed your family members guardian which can be quite time consuming and expensive.  Believe me, from my personal experience, this is the last thing you want to deal with when your parent or spouse is suffering from a severe medical condition.  I cant tell you how many times I have received a call from a frantic spouse telling me their other half just had a stroke and they need a power of attorney.  Well, if the other spouse is not competent, its too late for the creation of that document and the only option is to apply to be a guardian, even for something as simple as the selling of their house or getting access to a bank account to pay the household bills.  As you can see, your net worth is irrelevant when it comes to deciding whether you need an estate plan.MYTH #3- I DONT NEED A LAST WILL & TESTAMENT BECAUSE EVERYTHING WILL GO TO MY SPOUSE.This myth can really hurt the surviving spouse if there is no Will and the spouse who died had children from a prior marriage.  If you die without a Will, your estate is called intestate and your assets will pass according to Floridas intestacy laws.  Under Florida law, if you die and you have children from a prior marriage, your wife only gets half of your estate and the other half goes to ALL your children, both from prior relationships and your current marriage.            This type of distribution can really hurt when the couple may have been surviving on two social security checks and some savings, and by losing the deceased spouses social security and half of their other assets, the surviving spouse can not financially survive.  Also, if it is a second marriage and the deceased spouse was only on the Deed, then the surviving spouse only gets a life estate in the property allowing her to live there for the rest of her life, and when the property is sold, the proceeds go to all the children of the deceased spouse, less the value of the life estate.  If the children didnt like the stepmom for example, you can image the nightmares for the surviving spouse if she cant afford the monthly carrying costs, and cannot afford a new home with the small net proceeds from the value of the life estate.  If you want your spouse to get the house, you need a Will to provide for that intention or add them to the deed.            Again, a proper Estate Plan consists of so much more than a Last Will and Testament.  That is why I offer a complimentary consultation and free informative videos here so you can educate yourself on the vital importance of having a plan in place, for not only your benefit, but for your familys as well.

Preserve Your Assets for Your Beneficiaries

Anyone who has gone through the gauntlet of law school classes or who has had a lot of dealings with attorneys, knows that the most classic and common answer to what would appear to be a straight forward legal question is: it depends. This response is true when it comes to a discussion as to whether or not life insurance proceeds and 401-K Retirement Plans are exempt from attachment by your creditors.First, lets take a look at life insurance proceeds. Under Fla. Stat. 222.13, if a person is residing in the state of Florida at the time of their death, the proceeds of the policy are deemed exclusively for the benefit of the beneficiaries of the insurance policy as designated in the policy and the insurance proceeds are exempt from the claims of creditors of the insured. Therefore, if someone owes $5,000 to credit card companies at the time of their death, the credit card companies cannot attach or seek to obtain in any way the proceeds of those insurance policies and those proceeds go directly to the beneficiaries.However, that is not the end of the analysis. The statute further provides that if the named beneficiary in the policy is the insured (i.e. the decedent) or the estate of the insured, or his or her executors or administrators, then the insurance proceeds become part of the insureds estate, and would be subject to distribution according to the laws governing the distribution of estates which would include the payment to creditors of the decedent prior to distribution to beneficiaries under the estate. Therefore, for estate planning purposes, if you have significant liabilities, you should consult with an estate planning attorney to review your life insurance policies to make sure that they name a beneficiary outside of your estate, so the proceeds go to the people you wish to receive the funds and not your creditors upon your death.Another exception to the rule of life insurance policies being exempt is with regard to the beneficiarys creditors. While one might assume that since there is an exemption for life insurance proceeds the exemption protects the proceeds are exempt from all creditors. However, the exemption is limited to creditors of the insured, namely the person who took out the policy and is not exempt from creditors of the beneficiary. Therefore, if you have a life insurance policy for your daughter, and she owes a lot of money to credit cards or hospitals, and she were to receive $100,000 worth of life insurance proceeds upon your death, that $100,000 of proceeds could be subject to attachment and levy by her creditors.As difficult as it is, we encourage family members to be frank with their parents if they anticipate receiving an inheritance and are presently in a difficult financial position. If you are a parent looking to leave funds to a child or other relative, and you do not want your funds to go to pay off their creditors, you need to have a direct and honest discussion with them concerning their financial position. Likewise, if you know your parents are going to leave you substantial funds and you are in way over your head and maybe even possibly considering filing bankruptcy, you need to have a frank discussion with them regarding your financial position so that they are not mislead and their hard earned assets go to pay off your creditors.A second issue that comes up is whether or not 401-Ks are exempt from creditors upon a persons death. Under Fla. Stat. 222.21 it provides that a fund or account that meets Internal Revenue Code requirements (which is beyond the scope of this article) is exempt from all claims of creditors of the owner, beneficiary or participant of the fund or account. This is a great advantage and benefit to individuals who may have to face a foreclosure since it allows them to maintain their retirement accounts (if they have not drained them in an effort to avoid bankruptcy) and provide them with a financial basis to get a new start if necessary.The issue that arose over the past couple of years was whether or not a qualified 401-K that was inherited was also exempt. The courts across the country were split on this issue. Some courts limited the exemption to just the owners creditors while others said also the beneficiary of the proceeds receive the same protections from creditors. However, just as with life insurance policies, the issue became whether the beneficiary was also protected from the beneficiaries creditors upon receipt of the 401-K.Fortunately, this question was answered outside of the courts by the legislature amending Fla. Stat. 222.21 last year. Specifically, the Florida legislature added language to paragraph (2)(c) and provided that the fund or account is exempt from claims of creditors of the owner, beneficiary, or participant in that is does not cease to be exempt after the owners death by reason of a direct transfer or eligible rollover.Specifically, the legislature further noted this paragraph is intended to clarify existing law, is remedial in nature, and shall have retroactive application to all inherited individual retirement accounts without regard to the date an account was created. This is example of one of the key roles of a legislature to clarify existing law when courts conflict in their interpretation of an existing statute.In summary, since in the new economy it is not unusual for you to have family members going through difficult situations, it is important to discuss these issues not only with them but with your estate planning attorney to make sure that your hard earned assets go to your intended family members and not their creditors.

The Importance of Estate Planning

As seniors enter the retirement phase of their lives, the subject of estate planning and creating a will might seem overwhelming. However, instead of being intimidating, estate planning should be considered an empowering act, offering peace of mind. As a senior, you should have an understanding of your financial situation, healthcare decisions, and living arrangements to ensure that they are managed in accordance with your wishes. If you dont know where to start, read on. This article will explore the topic of estate planning and discuss why every older adult should get involved in their retirement planning. The Essentials of Estate Planning for Senior AdultsEstate planning involves organizing financial assets, outlining personal healthcare directives, and making decisions about the individual(s) who will represent your interests should you die or become incapacitated. For senior adults considering the potential variables in their future, including the possibility of moving to assisted living or memory care, estate planning becomes even more essential. Estate planning establishes a structured plan that can streamline the process of making care and living decisions before the time comes. There are many types of documents that comprise the entire plan, such as wills, powers of attorney, and trusts.Planning for the possible need for assisted living or memory care is a vital component of senior estate planning. Assisted living is becoming more mainstream as a positive way for senior adults to enjoy their lives while receiving required assistance for daily tasks. Family and personal caregivers are typically not available to visit at any hour, but an assisted living facility has onsite dedicated staff to help residents with whatever they need. Should anything occur that results in incapacitation, an estate plan that communicates the intention to move to assisted living can simplify the process.Creating Your Estate PlanDeveloping an estate plan represents a proactive step towards making sure wishes are honored and legacies are preserved.Speak to a Professional: Legal and financial consultants provide a great deal of assistance to customers every day in assisting them in planning their future. Lawyers provide assistance in drafting a legally sound will as well as any other vital documents that may be needed. A financial advisor can also provide insights into effectively managing assets, including planning for the possible expense of assisted living. A quick consultation with these estate planning experts will provide much more information about your potential options.Documenting Your Decisions: Clear, concise and thorough documentation is the basis of an effective estate plan. You can begin by creating a roster of assets, including savings accounts, real estate and property, and personal items or heirlooms that hold sentimental value. Seniors should also clearly outline their wishes regarding healthcare, assisted living, and asset distribution. The more information provided to the professional representative creating your documents, the stronger and more comprehensive the plan they can help you develop.Keeping the Plan Updated: Life changes every day, and an effective estate plan should reflect the fluid nature of reality. Routinely reviewing, assessing, and updating documents helps keep them updated and relevant and ensures that they communicate your current thoughts and circumstances. Changes in family status and dynamics, health conditions, and financial resources can require the plan to be updated. Also, as your thoughts about assisted living and memory care evolve and change, its essential to review any arrangements and talk about new decisions with legal advisors and family members.If you are uncertain about how assisted living or memory care fits into your estate planning efforts, call an attorney or financial advisor. If you want to learn more about your assisted living and memory care options, call My Care Finders.