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disinherit 2

How Can You Disinherit Someone and Be Sure it Sticks?

How Can You Disinherit Someone and Be Sure it Sticks?

 

Let’s say you want to leave everything you own to your children, but you can’t stand and don’t trust their spouses. That might make you want to delay making an estate plan, because it’s a hard thing to come to terms with, says a recent article “Dealing with disinheritance, spouses” from the Times Herald-Record. There are options, but make the right choice, or your estate could face challenges.

Some people choose to leave nothing at all for their child in the will, so that if there is a divorce or if the child dies, their assets won’t end up in the daughter or son-in-law’s pocket. For some parents, particularly those who are estranged from their children, this can create more problems than it solves.

Disinheriting a child with a will is not always a good idea. If you die with assets in your name only, they go through the court proceeding called probate, when the will is used to guide asset distribution. The law requires that all children, even disinherited ones, are notified that you have died, and that probate is going to occur. The disinherited child can object to the provisions in the will, which can lead to a will contest. Most families engaged in litigation over a will become estranged—even those that weren’t beforehand. The cost of litigation will also take a bite out of the value of your estate.

A common tactic is to leave a small amount of money to the disinherited child in the will and add a no-contest clause in the will. The no-contest clause expressly states that anyone who contests the will loses any right to their inheritance. Here is the problem: the disgruntled child may still object, despite the no contest clause, and invalidate the will by claiming undue influence or incapacity or that the will was not executed properly. If their claims are valid, then they’ll have great satisfaction of undoing your planning.

How can you disinherit a child, and be sure that your plan is going to stand up to challenge?

A trust is better in this case than a will. Not only do trusts avoid probate, but (unless state law requires otherwise at death) the children do not receive notice of the creation of a trust. An inheritance trust, where you leave money to your child, names a trustee to be in charge of the trust and the child is the only beneficiary of the trust. The child might be a co-trustee, but they do not have complete control over the trust. The spouse has no control over the inheritance, and you can also name what happens to the assets in the trust, if the child dies.

This kind of planning is called “controlling from the grave,” but it’s better than not knowing if your child will be able to protect their inheritance from a divorce or from creditors.

With a national divorce rate around fifty percent, it’s hard to tell if the in-law you welcome with an open heart, will one day become a predatory enemy in the future, even after you are gone. The use of trusts can ensure that assets remain in the bloodline and protect your hard work from divorces, lawsuits, creditors and other unexpected events.

Reference: Times Herald-Record (June 6, 2020) “Dealing with disinheritance, spouses”

Read other related articles at:

If you want to disinherit someone, make sure you do it right

Four Ways to Disinherit Family Members

Also read one of our previous Blogs at :

5 Strategies to Keep Your Heirs From Blowing Their Inheritance

Click here to check out our Master Class!

retirement funds in a crisis

Using Retirement Funds in a Financial Crisis

 

Using Retirement Funds in a Financial Crisis

For generations, the tax code has been a public policy tool, used to encourage people to save for retirement and what used to be called “old age.” However, the coronavirus pandemic has created financial emergencies for so many households that lawmakers have responded by making it easier to tap these accounts. The article “Should You Tap Retirement Funds in a Crisis? Increasingly, People Say Yes” from The Wall Street Journal asks if this is really a good idea.

This shift in thinking actually coincides with trends that began to emerge before the last recession. People were living and working longer. Unemployment and career changes later in life were becoming more commonplace, and fewer and fewer people devoted four decades to working for a single employer, before retiring with an employer-funded pension.

For those who have been affected by the economic downturns of the coronavirus, withdrawals up to $100,000 from retirement savings accounts are now allowed, with no early-withdrawal penalty. That includes IRAs (Individual Retirement Accounts) or employment-linked 401(k) plans. In addition, $100,000 may be borrowed from 401(k) plans.

Americans are not alone in this. Australia and Malaysia are also allowing citizens to take money from retirement accounts.

Lawmakers are hoping that putting money into pockets now may help households prevent foreclosures, evictions and bankruptcies, with less of an impact on government spending. With trillions in retirement accounts in the U.S., these accounts are where legislators frequently look when resources are threatened.

However, there’s a tradeoff. If you take out money from accounts that have lost value because of the market’s volatility, those losses are not likely to be recouped. And if money is taken out and not replaced when the world returns to work, there will be less money during retirement. Not only will you miss out on the money you took out, but on the return, it might have made through years of tax-advantaged investments.

The danger is that if retirement accounts are widely seen as accessible and necessary now, a return to saving for retirement or the possibility of putting money back into these accounts when the economy returns to normal may not happen.

IRA and 401(k) accounts began to supplant pensions in the 1970s as a way to encourage people to save for retirement, by deferring income tax on money that was saved. By the end of 2019, IRAs and 401(k) types of accounts held about $20 trillion in the US.

Boston College’s Center for Retirement Research has estimated that even before the coronavirus, early withdrawals were reducing retirement accounts by a quarter over 30 years, taking into account the lost returns on savings that were no longer in the accounts. For many people, taking retirement funds now may be their only choice, but the risk to their financial future and retirement is very real.

Reference: The Wall Street Journal (June 4, 2020) “Should You Tap Retirement Funds in a Crisis? Increasingly, People Say Yes”

Read other related articles at:

How to Raid Your Retirement Funds in a Crisis

Liz Weston: How to raid your retirement funds in a crisis

Also read one of our previous Blogs at:

Should You Cut Retirement Savings Efforts During the Pandemic?

Click here to check out our Master Class!

Elderly woman being scammed

What are the Latest Senior Scams?

While we are concerned about finances and our health with COVID-19, we also must be uber-aware of four points of contact: phone calls, text messages, emails and social media.

CNBC’s recent article entitled “Beware these common scams that specifically target seniors” explains that seniors in the U.S. are more apt to be victims of ID theft, according to IDology, which provides identity protection services. The big issue is having a credit or debit card stolen—and the pandemic has likely helped create a major upswing in crime against the elderly. Looking at data from August 2019 through January with February and March, IDology found a 209% increase in the use of seniors’ personal ID to commit fraud. However, seniors were less likely to take action than other American adults. Here’s what to watch for and how to guard your sensitive info.

  1. ID theft is a commodity. A huge percentage of seniors don’t know or don’t believe that their personal information, like their Social Security numbers, can be had for a few bucks on the dark web. Protect your personal information by learning to recognize phishing scams. These can be text messages, emails, phone calls or websites that ask you for personal details. Check the validity of the entity or a person, prior to donating.
  2. Hello, IRS? Really? Let’s be 100% crystal clear: the government will never call, text, or contact you on social media to inform you that you owe money. Requests for gift cards, cash and wire transfers are always 100% fraudulent. Requests for your personal identification, like your Medicare ID or bank account information, are always 100% a scam!
  3. Bogus claims. You can reach numerous government agencies for information concerning common Covid-19 scams, bogus calls and unproven health claims. To that end, the SEC issued an alert in February about investment scams related to coronavirus. There is no vaccine or drug that’s been approved to treat the virus at this point! Nevertheless, criminals are still touting phony remedies. The FTC continues to send warnings to companies making dubious claims. Another way you can give up your private information, is by sharing your details with scammers pretending to be contact tracers working for public health departments. The FTC issued a warning in May to be on guard for spam texts that ask you to click a link. The FCC site describes scams delivered through text message or by robo-call, with some posing as government health officials.

To repeat: the government will never call, text, or contact you on social media to tell you that you owe money.

Reference:  CNBC (June 5, 2020) “Beware these common scams that specifically target seniors”

Read more related articles at :

Top 10 Financial Scams Targeting Seniors

SENIOR SCAM ALERT

Also, read one of our previous Blogs at :

How Do I Protect My Elderly Parent from Scams and Elder Abuse?

 

 

Update Will

Update Will at These 12 Times in Your Life

Update Will at These 12 Times in Your Life

Estate planning lawyers hear it all the time—people meaning to update their will, but somehow never getting around to actually getting it done. The only group larger than the ones who mean to “someday,” are the ones who don’t think they ever need to update their documents, says the article “12 Different Times When You Should Update Your Will” from Kiplinger. The problems become abundantly clear when people die, and survivors learn that their will is so out-of-date that it creates a world of problems for a grieving family.

There are some wills that do stand the test of time, but they are far and few between. Families undergo all kinds of changes, and those changes should be reflected in the will. Here are one dozen times in life when wills need to be reviewed:

Welcoming a child to the family. The focus is on naming a guardian and a trustee to oversee their finances. The will should be flexible to accommodate additional children in the future.

Divorce is a possibility. Don’t wait until the divorce is underway to make changes. Do it beforehand. If you die before the divorce is finalized, your spouse will have marital rights to your property. Once you file for divorce, in many states you are not permitted to change your will, until the divorce is finalized. Make no moves here, however, without the advice of your attorney.

Your divorce has been finalized. If you didn’t do it before, update your will now. Don’t neglect updating beneficiaries on life insurance and any other accounts that may have named your ex as a beneficiary.

When your child(ren) marry. You may be able to mitigate the lack of a prenuptial agreement, by creating trusts in your will, so anything you leave your child won’t be considered a marital asset, if his or her marriage goes south.

Your beneficiary has problems with drugs or money. Money left directly to a beneficiary is at risk of being attached by creditors or dissolving into a drug habit. Updating your will to includes trusts that allow a trustee to only distribute funds under optimal circumstances protects your beneficiary and their inheritance.

Named executor or beneficiary dies. Your old will may have a contingency plan for what should happen if a beneficiary or executor dies, but you should probably revisit the plan. If a named executor dies and you don’t update the will, then what happens if the second executor dies?

A young family member grows up. Most people name a parent as their executor, then a spouse or trusted sibling. Two or three decades go by. An adult child may now be ready to take on the task of handling your estate.

New laws go into effect. In recent months, there have been many big changes to the law that impact estate planning, from the SECURE Act to the CARES act. Ask your estate planning attorney every few years, if there have been new laws that are relevant to your estate plan.

An inheritance or a windfall. If you come into a significant amount of money, your tax liability changes. You’ll want to update your will, so you can do efficient tax planning as part of your estate plan.

Can’t find your will? If you can’t find the original will, then you need a new will. Your estate planning attorney will make sure that your new will has language that states revokes all prior wills.

Buying property in another country or moving to another country. Some countries have reciprocity with America. However, transferring property to an heir in one country may be delayed, if the will needs to be probated in another country. Ask your estate planning attorney, if you need wills for each country in which you own property.

Family and friends are enemies. Friends have no rights when it comes to your estate plan. Therefore, if families and friends are fighting, the family member will win. If you suspect that your family may push back to any bequests to friends, consider adding a “No Contest” clause to disinherit family members who try to elbow your friends out of the estate.

Reference: Kiplinger (May 26, 2020) “12 Different Times When You Should Update Your Will”

Read more related articles at:

When Should You Redo Your Will?

6 Times You Need to Update Your Will

Also, read one of our previous Blogs at :

Wills v. Trusts: What’s Right for You?

Click here to check out our Master Class!

 

Gene Link

Gene Role May Be a Link between Dementia and the Coronavirus

Gene Role May Be a Link between Dementia and the Coronavirus

The study in Great Britain is the latest to suggest that genetics may play a part in why some people are more vulnerable to COVID-19 than others. It may also help to explain why people with dementia have been hard hit.

“It is not just age: this is an example of a specific gene variant causing vulnerability in some people,” said David Melzer, a professor of epidemiology and public health at Exeter University and a co-author of the study.

The Guardian’s recent article entitled “Research reveals gene role in both dementia and severe Covid-19” explains that the study published in the Journal of Gerontology: Medical Sciences reports how researchers analyzed data from the UK Biobank, where genetic and health data on 500,000 volunteers aged between 48 and 86 has been collected.

The researchers focused on a gene called ApoE which gives rise to proteins involved in carrying fats around the body and can exist in several forms. One such variant, called “e4”, is known to impact cholesterol levels and processes involved in inflammation, as well as increasing the risk of heart disease and dementia.

They found 9,022 of almost 383,000 Biobank participants of European ancestry studied had two copies of the e4 variant, while more than 223,000 had two copies of a variant called “e3”. The former have a risk of dementia up to 14 times greater than the latter.

The researchers then studied positive tests for COVID-19 between March 16 and April 26, when testing for the coronavirus was primarily done in hospitals, suggesting the cases were severe.

The results showed that 37 people who tested positive for COVID-19 had two copies of the e4 variant of ApoE, while 401 had two copies of the e3 variant. After considering factors such as age and sex, the researchers say people with two e4 variants had more than twice the risk of severe Covid-19 than those with two e3 variants.

One professor observed that it is possible that the role of ApoE in the immune system is important in the disease. Future research may be able to harness this to develop effective treatments.

Reference: The Guardian (May 26, 2020) “Research reveals gene role in both dementia and severe Covid-19”

Read more related articles at:

Alzheimer’s Gene Linked to Higher Risk of Severe COVID-19

Dementia genotype may increase COVID-19 vulnerability

Also, read one of our previous Blogs at : 

Will New Tool Help Dementia Patients and Their Doctors?

 

End of Life Decisions

How Do I Talk about End-Of-Life Decisions?

How Do I Talk about End-Of-Life Decisions?

With the coronavirus pandemic motivating people to think about what they prioritize in their lives, experts say you should also take the time to determine your own end-of-life plans.

Queens News Service’s recent article entitled “How to have the hardest conversation: Making end-of-life decisions” reports that in this coronavirus pandemic, some people are getting scared and are realizing that they don’t have a will. They also haven’t considered what would happen, if they became extremely ill.

They now can realize that this is something that could have an impact upon them.

According to the U.S. Centers for Disease Control and Prevention (CDC), 70% of Americans say they’d prefer to die at home, while 70% of people die in a hospital, nursing home, or a long-term care facility. This emphasizes the importance of discussing end-of-life plans with family members.

According to a survey of Californians taken by the state Health Care Foundation, although 60% of people say that not burdening their loved ones with extremely tough decisions is important, 56% have failed to talk to them about their final wishes.

“Difficult as they may be, these conversations are essential,” says American Bar Foundation (ABF) Research Professor Susan P. Shapiro, who authored In Speaking for the Dying: Life-and-Death Decisions in Intensive Care.

“Now is a good time to provide loved ones with the information, reassurance and trust they need to make decisions,” Shapiro says.

Odds are the only person who knows your body as well as you do, is your doctor.

When thinking about your end-of-life plans, talk with your doctor and see what kind of insight she or he can provide. They’ve certainly had experience with other older patients.

If you want to make certain your wishes are carried out as you intend, detail all of your plans in writing. That way it will be very clear what your loved ones should do, if a decision needs to be made. This will eliminate some stress in a very stressful situation.

Even after the COVID-19 pandemic is over, everyone will still need a will.

Talk with an experienced elder law or estate planning attorney to make certain that you have all of the necessary legal documents for end-of-life decisions.

Reference: Queens News Service (May 22, 2020) “How to have the hardest conversation: Making end-of-life decisions”

Read more related articles at:

Talking About End-of-Life Decisions Won’t Kill You

A Physician’s Guide to Talking About End-of-Life Care

Also, read one of our previous Blogs at:

How Do I Plan for End-of-Life Measures for a Loved One?

congress 2

What Is Congress Doing to Address Affordable Senior Housing and Elder Abuse?

What Is Congress Doing to Address Affordable Senior Housing and Elder Abuse?

Representatives Katie Porter (D-CA) and Financial Services Committee Chairwoman Maxine Waters (D-CA) have introduced legislation that would provide $1.2 billion of relief to the 1.6 million older adults who live in affordable senior housing communities and the providers serving them.

McKnight Senior Living’s recent article entitled “Federal legislation tackles affordable senior housing, elder abuse” says the “Emergency Housing Assistance for Older Adults Act of 2020” would provide $845 million for the HUD Section 202 Supportive Housing for the Elderly Program, including additional staff and personal protective equipment; $300 million for service coordinator grants to prevent, prepare for or respond to public health emergencies related to COVID-19; and $50 million for wireless Internet.

In addition, Senators Susan Collins (R-ME), Bob Menendez (D-NJ), and Chuck Grassley (R-IA) introduced the “Promoting Alzheimer’s Awareness to Prevent Elder Abuse Act,” with companion legislation being introduced in the House by Reps. Ted Deutch (D-FL) and Guy Reschenthaler (R-PA). The bipartisan legislation is aimed at ensuring the Justice Department’s elder abuse training materials consider those with Alzheimer’s disease and related dementias.

Collins noted that roughly 10% of adults age 60+ have had some form of elder abuse. Estimates have that number at about 50% for individuals with Alzheimer’s disease and related dementias.

The legislation would require the following:

  • The DOJ’s national elder justice coordinator must consider people with Alzheimer’s disease and related dementias, when creating elder abuse training materials
  • Th DOJ is to consult with stakeholders in developing materials; and
  • Must include information on where to access these materials in the DOJ’s annual report.

“During the COVID-19 pandemic, there may be increased risk for elder abuse, inducing elder financial exploitation. Our bipartisan bill would help ensure that the frontline professionals who are leading the charge against elder abuse have the training needed to respond to cases where the victim or a witness has Alzheimer’s disease or other forms of dementia,” Collins, founder and co-chair of the Congressional Task Force on Alzheimer’s Disease and chair of the Senate Special Committee on Aging, said.

The bill is endorsed by the Alzheimer’s Association and the Alzheimer’s Impact Movement, as well as the bipartisan Elder Justice Coalition.

Reference: McKnight Senior Living (May 19, 2020) “Federal legislation tackles affordable senior housing, elder abuse”

Read more Related Articles at :

Types of Elder Abuse

Also, read one of our previous Blogs at: 

Elder Abuse Continues as a Billion-dollar Problem

 

covid estate planning

How Can Estate Planning Protect Me from COVID-19?

There are several things you need to consider, when it comes to estate planning,

There are several things you need to consider, when it comes to estate planning, explains WFMY.com in the recent article “A different kind of coronavirus protection: Wills & Power of Attorney documents.”

A financial power of attorney is first on the list of things to consider. This essential legal document gives a trusted agent the authority to make financial decisions on your behalf, if you become incapacitated. A financial power of attorney can go into effect whenever you want. However, most people have their estate planning attorney draft the POA to go into effect, once the principal or the person who’s giving the authority can no longer make decisions for themselves.

In addition, if you become ill and fall into a coma, you need someone to be able to also make medical decisions. A health care power of attorney permits your agent to make medical decisions on your behalf. You can also sign a living will, which can state your wishes about healthcare decisions, especially end of life decisions.

A will can state your decisions for the distribution of your assets when you die. However, your property will stay in your name until that occurs. Another option is a living trust, which places your property in a trust for the benefit of a charity, your loved ones, or both. A trust may distribute the property more efficiently.

While the terms in your will and trust are important, you should also have a discussion with your family and let them know what you’re thinking. This will help avoid hard feelings after you’re gone.

It’s important to speak with an experienced estate planning attorney and talk to the people you want to be your POA attorney-in-fact, executor of your will and your trustee. Talk to your attorney about what happens when one of these key persons included in your planning dies.

You should also think about your parents and if they have an estate plan. You should know what will happen, if they become ill and need care. What happens if they get Alzheimer’s or another type of dementia?

You should make certain that you and those you love, have legal estate planning documents in place prepared by an experienced estate planning attorney.

From there, review your plan every few years with your attorney, because things change.

Reference: WFMY.com (April 22, 2020) “A different kind of coronavirus protection: Wills & Power of Attorney document

Read more related Articles at :

Impact of COVID-19 on Estate Planning

Estate Planning and COVID-19: Four Must-Have Documents for Protection During a Crisis

Also, read one of our previous Blogs at :

Requests for Estate Plans Reflect Fears about Coronavirus

 

 

Paris Hilton

Will Paris Hilton See Her Dad’s Wealth?

 

Will Paris Hilton See Her Dad’s Wealth?

Barron Hilton’s father, hotel magnate Conrad, purchased his first hotel in Texas in 1919. His timing was perfect, as the oil boom ensured rooms were fully booked and could sometimes be turned over three times in a day. He then built the Dallas Hilton in 1925 and three more Hiltons in the state in the next five years. He eventually expanded his holding to create the world’s first international hotel chain. By 1966, his son, Barron, replaced him as president of Hilton Hotels.

In 1979, at the age of 91, Conrad Hilton died of natural causes, leaving $10,000 each to his nephews, nieces, and daughter, and $500,000 to his two siblings. The remainder of the estate was bequeathed to the Conrad N. Hilton Foundation, which he had founded in 1944.

Celebrity Net Worth’s recent article entitled “Barron Hilton Fulfilled His Promise To Not Leave Any Money To Paris Hilton,” notes that Barron contested his father’s will and ended up settling for four million shares of the company. Years later, Barron watched in horror as his granddaughter Paris tarnished the Hilton name. Barron sent a message. He made an estate plan that excluded Paris’ father and her siblings. His entire fortune would be donated to charity through the family’s foundation, because he felt Paris’ and Nicky’s sex tapes, reality shows, DUIs and other embarrassments sullied the family name.

At Christmas 2007, Barron announced to his family that he was making a major change to his will. Instead of leaving his $4.5 billion fortune to his family, he was leaving the bulk of his estate to the Conrad N. Hilton Foundation. He left 97% to the foundation and split the remaining 3% ($135 million) between about 24 members of his family. So rather than inheriting about $181 million each, the Hilton family members would get $5.6 million each.

It looks like Paris was entirely cut out of her dad’s will, and she didn’t get a penny from her grandfather. Barron died in 2019, and his will instructed 97% of his fortune to be given to the Conrad N. Hilton Foundation for disaster relief, treating children with HIV and AIDS, poverty alleviation and helping homeless shelters.

Barron continues to reinforce his message to Paris and his family from the grave. He was the second-largest philanthropist in U.S. last year with the $2.4 billion he donated to charity. He’ll probably be up there again, as one of the most generous Americans in 2020 since he still has $2 billion to donate.

Reference: Celebrity Net Worth (March 2, 2020) “Barron Hilton Fulfilled His Promise To Not Leave Any Money To Paris Hilton”

 

Read other Related Articles at : 

Paris Hilton’s inheritance goes to charity

Paris loses out: Hilton fortune pledged to charity

Also, read one of our previous Blogs at:

Why is Ashton Kutcher So Stingy with his Kids’ Inheritance?

 

Beneficiary

Are My Beneficiary Designations Trouble for My Heirs?

Are My Beneficiary Designations Trouble for My Heirs?

 

There are many account types that are governed by beneficiary designation, such as life insurance, 401(k)s, IRAs and annuities. These are the most common investment accounts people have with contractual provisions to designate who receives the asset upon the death of the owner.

Kiplinger’s recent article entitled “Beneficiary Designations – The Overlooked Minefield of Estate Planning” provides several of the mistakes that people make with beneficiary designations and some ideas to avoid problems for you or family members.

Believing that Your Will is More Power Than It Really Is. Many people mistakenly think that their will takes precedent over any beneficiary designation form. This is not true. Your will controls the disposition of assets in your “probate” estate. However, the accounts with contractual beneficiary designations aren’t governed by your will, because they pass outside of probate. That is why you need to review your beneficiary designations, when you review your will.

Allowing Accounts to Fall Through the Cracks. Inattention is another thing that can lead to unintended outcomes. A prior employer 401(k) account can be what is known as “orphaned,” which means that the account stays with the former employer and isn’t updated to reflect the account holder’s current situation. It’s not unusual to forget about an account you started at your first job and fail to update the primary beneficiary, which is your ex-wife.

Not Having a Contingency Plan. Another thing people don’t think about, is that a beneficiary may predecease them. This can present a problem with the family, if the beneficiary form does not indicate whether it is a per stirpes or per capita election. This is the difference between a deceased beneficiary’s family getting the share or it going to the other living beneficiaries.

It’s smart to retain copies of all communications when updating beneficiary designations in hard copy or electronically. These copies of correspondence, website submissions and received confirmations from account administrators should be kept with your estate planning documents in a safe location.

Remember that you should review your estate plan and beneficiary designations every few years. Sound estate planning goes well beyond a will but requires periodic review. If this is overlooked, something as simple as a beneficiary designation could create major issues in your family after you pass away.

Reference: Kiplinger (March 4, 2020) “Beneficiary Designations – The Overlooked Minefield of Estate Planning”

Read more Related Articles at :

7 Ways That Beneficiary Designations Can Mess Up Your Estate Plan

Here’s The Difference Between An Heir And A Beneficiary

Also, read one of our previous blogs at:

As a Trust Beneficiary, Am I Required to Pay Taxes?

 

 

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