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Blended Family Calls For Protecting Children and New Spouse
Blended Families Requires Careful Estate Planning

Blended Family Calls For Protecting Children and New Spouse

There are a number of issues in estate planning that are more important in second and subsequent marriages. The planning needs of blended families are discussed in the article “Estate planning documents for second marriages” from the Cleveland Jewish News. A couple who each have children from a prior marriage are planning to marry again and blend their families. Consequently, the blended family couple needs to address income taxes, a prenuptial agreement, pension and 401(k) benefits, Social Security, college funding, cost sharing and estate planning documents.

Here’s an example of how important estate planning is for blended families. A couple who has children of their prior marriages get married. Twenty years later, the husband dies. He had wanted to provide for his second wife, so his will stated that all his assets went to his wife, with the understanding that on her death, those assets would go back to his children.

What actually occurred was that his wife lived a long time after he passed, and she simply combined their assets. When she died, the money went to her children, and her husband’s children received nothing. The husband’s children didn’t believe that he meant to do that, but because of the lack of planning, that’s exactly what happened.

What were the alternatives? He could have set up a marital trust that would have held the assets for his second wife on his death, but upon the wife’s passing, would have gone back to his children. The trust document prohibits the wife from transferring the assets to her children.

It’s wonderful to have a verbal agreement with your spouse, but if you don’t set up a formal legal plan, there’s no way to be sure that assets will be distributed as intended.

Another way to ensure that children from a blended family receive what they are intended, is to have an independent person or entity, like a bank or a trust company, oversee a marital trust.

Other important documents include a durable financial power of attorney, durable health care power of attorney and a living will declaration.

Anyone who has been divorced needs to review their estate planning documents to ensure that they reflect their new marital status, especially when they marry again. That is also the time to review beneficiary designations that appear on insurance policies, 401(k)s, pensions, retirement accounts and investment accounts.

There’s no “set it and forget” plan for estate documents, so before you walk down the aisle a second time, or shortly after you do so, speak with an estate planning attorney to clarify your goals and put them into the appropriate estate planning documents.

See how to design an estate plan with a blended family.

Reference: Cleveland Jewish News (May 7, 2019) “Estate planning documents for second marriages”

Do You Need a Power of Attorney When Diagnosed with a Serious Illness?
Power of Attorney is Necessary With Chronic Diseases

Do You Need a Power of Attorney When Diagnosed with a Serious Illness?

Having a power of attorney is critical for the more than 130 million Americans living with chronic illness. Forbes’ recent article, “Estate Planning Musts When You Or A Or A Loved One Has A Chronic Illness,” says that if you (or a loved one) are living with a chronic illness, you’ll likely need a good power of attorney and other important estate planning documents.

The article discusses these key estate planning documents, along with some suggestions that might help you customize them to your unique challenges because of chronic illness. These documents might need to be altered to better serve your needs or address your challenges. It’s best to get your estate planning documents in place, soon after your diagnosis.

HIPAA Release. The Health Insurance Portability and Accountability Act of 1996 governs the requirements for maintaining the confidentiality of protected or personal health information (PHI). A HIPAA Release lets someone you trust access your protected health information.

Living Will. This is a statement of your health care wishes and can address end of life decisions, as well as many other matters. If you’re living with a chronic illness, there are special considerations you might want to make in having a living will prepared. You might alter the general language to explain your specific disease. The fact that you’re living with disease doesn’t mean you might not face another health issue. Therefore, if you make modifications, set them out as examples of specific changes but retain the broad language that might be more typically used. You can address the disease you have, at what stage and with what anticipated disease course, and how if at all these matters should be reflected. You might wish to also speak to experimental treatments.

Health Care Proxy. This is also known as a medical power of attorney. It is a legal document in which you designate a trusted person to make medical decisions for you, if you’re unable to do so. If your health challenges might result in your becoming incapacitated, you can say that the agent appointed under your health proxy is also to be named as your guardian of the person, should a guardianship proceeding ever happen. Although this may not be binding on the court, it may be persuasive.

Physician Order for Life-Sustaining Treatment (POLST). This is a document that may be included as part of your medical records. A POLST is meant for the end of life medical decisions and may not be as broad as what you might accomplish with a health proxy or living will.

Financial Power of Attorney. This legal document lets you designate a trusted person to handle your legal, tax, and financial matters, if you can’t. There are some unique considerations for those living with chronic illnesses to consider. One is the amount of control that should be given up now or at what stage. Relinquish enough control, so you can be assisted to the degree necessary, but not more than you need at any point in time. Another characteristic for your powers of attorney, is if you should sign a special power that restricts the agent’s authority to certain specified items or sign a general power that provides broad and almost unlimited powers to the agent.

A Revocable Trust. A frequent goal of a revocable trust is to avoid the publicity, costs and difficulties of probate. However, if you or a family member has a chronic illness, using a revocable trust may be a good way to provide for succession of management for your finances.

Learn when you need a power of attorney.

Reference: Forbes (July 5, 2019) “Estate Planning Musts When You Or A Or A Loved One Has A Chronic Illness”

What Do I Tell My Children About Their Inheritances?
Good Inheritance Planning Can Bring Family Harmony

What Do I Tell My Children About Their Inheritances?

For some parents, it can be difficult to discuss family wealth and inheritances with their children. You may worry that when your kid learns they’re going to inherit a chunk of money, they’ll drop out of college and devote all their time to their tan.

Kiplinger’s recent article, “To Prepare Your Heirs for Future Wealth, Don’t Hide the Truth,” says that some parents have lived through many obstacles themselves. Therefore, they may try to find a middle road between keeping their children in the dark about their inheritances and telling them too early and without the proper planning. However, this is missing one critical element, which is the role their children want to play in managing their inheritances creating their own futures.

In addition to the finer points of estate planning and tax planning, another crucial part of successfully transferring wealth is honest communication between parents and their children. This can be valuable on many levels, including having heirs see the family vision and bolstering personal relationships between parents and children through trust, honesty and vulnerability.

For example, if the parents had inherited a $25 million estate and their children would be the primary beneficiaries, transparency would be of the utmost importance. That can create some expectations of money to burn for the kids. However, that might not be the case, if the parents worked with an experienced estate planning attorney to lessen estate taxes for a more successful transfer of wealth.

Without having conversations with parents about the family’s wealth and how it will be distributed, the support a child gets now and what she may receive in the future, may be far different than what she originally thought. With information about inheritances, the child could make informed decisions about her future education and how she would live.

Heirs can have a wide variety of motivations to understand their family’s wealth and what they stand to expect as an inheritance. However, most concern planning for their future. As a child matures and begins to assume greater responsibility, parents should identify opportunities to keep them informed and to learn about their children’s aspirations, and what they want to accomplish.

The best way to find out about an heir’s motivation, is simply to talk to them about it.

Learn how to lessen the chances your children will fight over their inheritances.

Reference: Kiplinger (May 22, 2019) “To Prepare Your Heirs for Future Wealth, Don’t Hide the Truth”