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protect assets from creditors

Make Your Estate Creditor-Proof

Make Your Estate Creditor-Proof

Here’s how to ensure assets go to your heirs

Ensure your assets go to directly to your loved ones instead of through probate.

When you pass away, the tax man isn’t the only one who can take a bite out of the assets that you leave behind for your loved ones.

Whether it is cash, real estate, retirement money or other funds, inherited assets can suddenly come up for grabs in a number of scenarios when creditors and others come calling.

Experts say you can often make your estate creditor-proof by avoiding probate, which is designed to pay off creditors. Here’s a primer on four ways to avoid probate and prevent outsiders from snatching the money you’ve left for your heirs. These measures protect your relatives if they ever get sued, file for bankruptcy or go through a nasty divorce after you’ve died.

 

1. Create a trust

Establishing a trust is not only a key way to skip probate court, it can also prevent the assets you’ve spent a lifetime accumulating from going to predators who might slap your heirs with lawsuits.

Scenario: A 77-year-old man died of cancer. He had a will that left $250,000 to his 26-year-old granddaughter, whom he intended to help buy her first home. Two years after her grandfather’s death, the granddaughter got into a minor car accident. The other driver wasn’t hurt but sued anyway, eventually winning a big chunk of the young woman’s $250,000 inheritance.

How to prevent this: Establish a trust instead of passing money via a will, recommends Elise Gross, an attorney with the Presser Law Firm P.A., a Boca Raton, Fla.-based company that operates nationwide.

“The trust can specify that the money only be used for certain purposes, like the education, care or support of a specific beneficiary. This way, there can be no payout to creditors,” Gross says.

In some states, such as Florida, living trusts are commonly used. These trusts are called “revocable” because you control them and can change them at any time while you are alive. Once you die, however, your living trust becomes irrevocable (since you aren’t alive to revoke it), and the trust is a separate legal entity.

In New York and New Jersey, people typically create testamentary trusts, Gross says. This type of trust is created by the terms of a will, and the trust only takes effect upon a person’s death.

Both types of trusts can contain specific language and provisions that prevent your beneficiaries’ creditors from seizing any trust assets.

Unlike wills, “trusts are not a matter of public record. They’re a tool for maintaining privacy,” says Reid Abedeen, a partner at Safeguard Investment Advisory Group LLC. “In addition, trusts are much more difficult to contest than a will.”

A final advantage of a trust over a will is that a will has to go through probate, which is expensive and time-consuming. Probate costs can eat up more than 3 percent of an estate. So if you bequeath $1 million through your will, your heirs could pay more than $30,000 in probate expenses and wait a year or more for their inheritances.

2. Handle retirement assets appropriately

Be careful with how you pass along retirement assets such as IRAs and 401(k) plans. Creditors can sometimes go after those monies if one of your loved ones winds up in bankruptcy court.

Scenario: A 62-year-old mom died of diabetes and left her $100,000 IRA to her only daughter. Five years after receiving the inheritance, the daughter ran up a lot of credit card debt and filed for bankruptcy. She claimed the inherited IRA was exempt from her creditors, but the bankruptcy court disagreed and that money was used to pay off the debt.

How to prevent this: Leave IRAs to beneficiaries in a separate IRA trust to keep the funds away from creditors.

“The Supreme Court ruled in 2014 that any time a child or grandchild inherits an IRA, it’s no longer protected from creditors,” says Pat Simasko, head of Simasko Law and Simasko Financial in Mount Clemens, Mich.

By creating a stand-alone IRA trust for children or grandchildren to inherit an IRA, your offspring “will have access to the money, but creditors won’t,” he says.

Fortunately, married couples don’t have to worry about this problem. Under current law, if Mom dies with an IRA, Dad is allowed to receive her IRA assets as a “spousal rollover” and the funds are protected from outsiders.

3. Safeguard life insurance proceeds

Money held in a life insurance policy is protected from creditors, so any death benefit or cash value is protected and will go directly only to the individuals or organizations you name as beneficiaries.

But once life insurance proceeds are distributed as cash to your beneficiaries, the funds are open to attack from anyone, including your child’s conniving ex-spouse.

Scenario: A couple in their mid-80s has spent a lifetime together working hard and saving money. They have $1.5 million in life insurance and have told their three sons that each of them will receive $500,000 in insurance payouts. The youngest of the three sons is going through a bitter divorce with his estranged wife. The soon-to-be ex-wife has already told her lawyer about her spouse’s anticipated inheritance, and she feels entitled to a piece of it.

How to prevent this: To thwart a bitter ex from trying to lay claim to your kid’s inheritance, safeguard the life insurance by putting it an irrevocable life insurance trust (ILIT).

An ILIT is a tool specifically designed to own life insurance. Just like other trusts, the ILIT has a trustee, beneficiaries and precise terms for distributions.

“You can add protective provisions, like a spendthrift clause and a discretionary distribution clause, to keep the insurance proceeds from your beneficiaries’ creditors,” Gross says.

A spendthrift clause prohibits the trustee from transferring trust assets to anyone other than the beneficiaries. That includes an ex-spouse, creditors or even the IRS. “A spendthrift clause also says no beneficiary is permitted to assign, pledge or sell any interest in the trust — whether trust principal or income,” Gross adds.

If the trustee believes the distribution would be wasted or claimed by the beneficiaries’ creditors, a discretionary distribution clause gives your trustee the right to withhold income and principal distributions that would otherwise be payable to the beneficiaries.

4. Title bank accounts and assets properly

If you own joint assets or name beneficiaries on your accounts and assets, a creditor cannot seize what you leave behind after you die. Instead, the money will go directly to the person(s) listed on the accounts. But for the unsuspecting who haven’t titled their assets properly, there are pitfalls.

Scenario: A 58-year-old married traveling salesman died of a sudden heart attack. There was an $80,000 bank account in his name alone that had to be probated. His wife later discovered a $60,000 credit card balance, about which she knew nothing. It turns out the husband had a girlfriend on the side. After he died and the bank account went through probate, the wife was forced to use those bank funds to pay off the credit card bills.

How to prevent this: Make sure the spouse is named as a beneficiary on the bank account, which keeps the asset from having to go through probate. “If Dad dies and Mom is on the [bank] account, it’s hers,” Simasko says.

Adding beneficiaries to financial accounts is another creditor-busting move, since those assets avoid probate upon the death of the first account owner. But in this instance, it’s the deceased person’s creditors that won’t get access to the money, not the creditors of the beneficiaries.

Instead of having a joint owner listed on the title of certain accounts, a variation on this technique is to have a named beneficiary listed on your accounts, such as a 529 plan that may be for the benefit of a grandchild’s college education.

Another way to bypass probate and pass along the money to your heirs is to choose a payable-on-death (POD) or transfer-on-death (TOD) account designation. This differs from a joint tenant or co-owner arrangement because your heirs only have access to the fund after your death. Joint tenant and co-owners have access to the funds while you are alive.

“You deserve the peace of mind in knowing that your life’s economic work will be executed as specified, and your family will be grateful to you for not leaving them with the headache of trying to sort out your estate,” Abedeen says.

Read more related articles at:

How To Protect Your Assets From Lawsuits Or Creditors

Protecting Your Assets from Lawsuits and Judgments: Are You a Target?

Protecting Assets from Lawsuits and Creditors: Part 2

Also, read one of our previous Blogs at:

Do You Need An Asset Protection Plan?

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

Pet Trusts

Estate Planning for Pets: How to Protect Your Furry Friends

Estate Planning for Pets: How to Protect Your Furry Friends

Where would your pets go if something happened to you? Who would take care of them, and how would their costs be covered? A pet trust could be the answer.

For instance, I helped a man with five cats ensure they were able to stay together and live out their lives in a senior cat sanctuary. I also had the pleasure of helping a lady create a pet trust so her cats, dogs and horses can stay in their own home after she dies. A qualified caregiver will move into her home and live on her farm with her pets, so they never have to find a new place to live.

Each case is as different as the animals in our lives, but when planning ahead for your pets, everyone needs to start by considering the following questions:

  • Do any of your pets have unique care requirements (i.e., health concerns, unusual behaviors, etc.) that require special planning?
  • Where do you want your pets to live — at your home, with a friend or loved one, or at a sanctuary?
  • What financial resources will you provide to ensure your pets are adequately provided for?
  • Who will be responsible for providing daily care?
  • Who will be responsible for the oversight and administration of the assets left for the benefit of your pets?
No two pet owners will have the same planning goals for their pets. You may say, “I want my pets to stay in my home, in familiar surroundings, with a pet caregiver who will move in and live on the premises.”  Or you may be comfortable with a new forever family or a sanctuary environment for your pets (particularly horses or other hard-to-place pets). These are just a few of the options that must be considered when creating a plan to ensure your pets will be properly cared for when you are unable to do so yourself, either through natural disaster, disability or death.

First, Decide Who Will Care for Your Pet

The first step in planning for your pets goes beyond the legal design of a pet estate plan. The first step is to identify those persons or organizations (pet caregivers) that will have physical custody of your pets and will provide them with daily care through their lifetime. Much like planning for minor children, before any of the financial considerations are addressed, you have to feel comfortable with the selection of your caregiver.  For some, finding the right pet caregiver can be a challenge.

You may consider family or friends, but you should never assume they will be willing to provide lifetime care for your pets.  You need to have a specific conversation to confirm their willingness to take on this responsibility.  What do you do if you don’t have anyone who is suitable for this important role? In that case, you could consider a pet sanctuary or perpetual care organization.

Without a specific plan for your pets, your pet may become a sad statistic.  It is estimated more than 500,000 loved pets are euthanized annually because their pet parent died or became disabled.

Next, Figure Out the Finances

You will also want to consider how much money to leave for the lifetime care of your pets. If your pets are staying in your home, then you’ll have the added expense of maintaining the property and the home. In all cases, you’ll want to consider compensation for your caregiver and provide sufficient resources for the lifetime care costs of your pets.

How much money is enough?  Only you can answer that question.  First, consider how much you spend to care for your pets now. Then, assume your pets will live for an extraordinary amount of time.  Do the math and then add a little more to provide a cushion in the event your pet has a catastrophic illness. Life insurance and retirement plans can be ideal assets for providing for your pets’ lifetime care.

There are lots of choices when planning for pets. Some pet parents choose to leave a fixed sum of money and their pet to a trusted pet caregiver. This choice has the greatest risk as there is no way to ensure the funds are used for the proper care of the pet.  Or you may want more certainty and elect to create a Pet Trust for the lifetime care of your pets.  Pet Trusts can be included in your Last Will, as part of a Revocable Living Trust or as a separate stand-alone Pet Trust. There are pros and cons for each choice.

Finally, Pick a Trustee

If you create a Pet Trust, selecting a trustee to manage the money for your pets will also be a crucial part of your plan. Your trustee will have the responsibility of making sure your wishes regarding the care of your pets and the distribution of your money are followed. The trustee can be the same person as the pet caregiver, but this is not always recommended because it can create a potential conflict of interest. The best choice is a professional trustee, such as a certified public accountant, attorney, trust company or charity qualified to act as trustee.

Animal Care Trust USA, a non-profit organization I founded in 2018, is the nation’s first charity dedicated to educating pet parents about the importance of pet trusts, providing pet trust options and re-homing services and serving as trustee for Pet Trusts. Pet parents can choose from our ACT4Pets Community Pet Trust, the Forever Loved Pet Trust or create a custom pet trust using their attorney or one of ours.  You can get more information at ACT4Pets.org.

Planning for your pets is an important part of your comprehensive estate plan.  Your pets can’t take care of themselves, and they rely on you for everything.  Be sure to give careful consideration to the needs of your pets as you think about the best way to provide for their lifetime care.

Read more related articles at:

Pet Trust Primer

What Is a Pet Trust?

Also, read one of our previous Blogs at:

Pet Trusts Can Protect Your Pets after You’re Gone

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

blended family

Remarried With Children? 5 Estate Planning Mistakes to Avoid

Remarried With Children? 5 Estate Planning Mistakes to Avoid

Couples on their second marriages need to plan carefully for each other and their kids

You can never guarantee that everyone in the blended family will be happy with the arrangements you have made with a second marriage. But you can at least avoid some mistakes so that your immediate family doesn’t get shut out of an inheritance — or worse, that an ex-spouse gets an inheritance that you didn’t plan on giving.

Most people mean well: They want their spouse to inherit their possessions when they die, and their heirs to split what’s left when the spouse dies. And they want everyone, including their children and their spouse’s children, to be happy. No one wants a brawl to break out when the will is read. Here are five ways to prevent that.

Mistake #1: Not changing beneficiaries

“The most common mistake we see is that people never change their wills or their beneficiary designations,” says Mark Bass, a financial planner with Pennington, Bass & Associates in Lubbock, Texas. “You should see the look on their face — or their new spouse’s face — when you ask, ‘Did you know your first wife is still the beneficiary of your 401(k)?’”

One advantage of changing the name of the beneficiary is that the money will go directly to the intended person — often, the surviving spouse — without probate, which is the legal process of settling an estate. You should go through all of your financial accounts — checking, savings, retirement — to make sure that your spouse is designated the beneficiary if that’s your intention. Check life insurance beneficiaries, too, since these payouts also bypass probate. You can also designate your children as secondary beneficiaries, so they will receive the assets in the event you have both died.

“Basically, change everything with a beneficiary designation,” Bass says. In some instances, federal or state laws may require spousal consent if the primary beneficiary is anyone other than the current spouse.

While you’re poring over important documents, remember to update legal directives — such as a medical power of attorney — to make sure that, say, it’s your current spouse and not your ex who is charge of making medical decisions in case you’re incapacitated.

Mistake #2: Not changing your will

Although changing your beneficiary on financial documents will avoid leaving your 401(k) balance to your ex-spouse, your will determines much of who gets the rest of the assets you and your spouse accumulated during your lifetimes. You probably don’t want your ex-spouse to get your home, either.

Typically, people on their second marriage decide that the surviving spouse gets all the assets, and upon the death of the second spouse, the remaining assets will be divided evenly among all of the children. This assumes, of course, that in five or 20 years everyone will still be getting along — and that your spouse, upon your death, won’t write a new will that shuts out your side of the family.

You could also draw up a contract that would require your surviving spouse to maintain the will as it is. Although some estate lawyers use them, will contracts have their drawbacks. “They’re not valid in every state, and not every state will recognize them,” says Letha Sgritta McDowell of Hook Law Center in Virginia Beach, Virginia. “And the biggest problem we have is that sometimes contractual will provisions can be blurry and not as clear as everyone thought they were when they were first written.”

You should also figure out in advance who will get important family items — even if their value is largely sentimental. You may not want your spouse’s children to inherit your great-great grandfather’s Civil War sword or your mother’s coin collection. You can make those determinations in a codicil to your will or a letter of instruction to your executor, Bass says.

Mistake #3: Treating all heirs equally

Most spouses aren’t financial equals when they marry, and this is particularly true for second marriages. If your new spouse moves into your house, for example, you may want your children to get the proceeds when the house is sold, rather than your spouse or your spouse’s children. Similarly, if you brought more assets to the marriage, you may want more of the money to go to your heirs than your spouse’s heirs.

“There’s no rule that says all children have to be treated equally,” says Jason Smolen, a principal in the Vienna, Virginia, firm SmolenPlevy Attorneys and Counsellors at Law. “There are a number of reasons why parents don’t treat children equally — sometimes it’s an unfortunate situation where a child is disabled, either mentally or physically.” In those cases, you’ll have to discuss with your spouse how to ensure that child is cared for, perhaps through an ABLE (Achieving a Better Life Experience) account or a trust.

Other times, Smolen says, the problem is conduct. A child may have a gambling problem, suffer from addiction or be a compulsive spender. Some parents may simply decide that after death children are responsible for their own actions, and if they lose their inheritance by betting on Seabiscuit in the fourth race at Pimlico, well, that’s the way things go.

Other parents may not be able to stand the thought of an inheritance being squandered. “Essentially, you want to regulate the flow of money to a child like that,” Smolen says. Doing so costs money: You’ll need to create a trust and appoint an executor to manage the assets. A so-called “spendthrift trust” is one solution. It doles out money at regular intervals to the beneficiary and deters creditors from getting the money in the trust.

Mistake #4: Waiting until you’re gone to give

If you’re planning to leave money to your children, you might consider giving it to them now, rather than in your will. You’ll get the pleasure of seeing them use that money while you’re still on the planet.

You can give up to $15,000 per person without having to pay the federal gift tax or deal with the IRS. (Recipients typically don’t pay tax on gifts.) It’s an enormous break.

If you and your spouse have four married children, you can give each child and their spouse $15,000, or $30,000 per lucky couple, without triggering federal gift taxes.

In addition, the giving limit is per giver: Your spouse may also give the same amount. If you and your spouse have four married children, you and your spouse can give $60,000 per couple, for a total gift of $240,000 per year for all eight people, without triggering the gift tax.

You won’t have to alert the IRS unless you exceed the $15,000 per person limit. If you do, you’ll have to file Form 709. But even then you probably won’t have to pay taxes on the gift because of the lifetime gift exclusion of $11.7 million per person (in 2021), or double that ($23.4 million) for married couples. If you exceed those limits, you’ll owe gift taxes on the amount above the lifetime limit.

Mistake #5: Skipping the lawyer

If your assets are few and your circumstances uncomplicated, you can probably get away with going online and drafting a do-it-yourself will. It’s a simple, inexpensive option — and it beats having no will at all.

But if you’re older and on your second marriage, odds are good your life is anything but uncomplicated. Ex-spouses, blended families and comingled assets up the complexity quotient, as does a child with special needs or an aging parent. It may be wise to invest the time and money in getting a thorough estate plan drawn up by a professional.

While consulting an attorney comes at a cost, you’ll get the comfort of knowing that you, and not a probate judge, will decide who gets what when you’re gone. And you’ll also know that your ex won’t be spending your 401(k) money.

Read more related articles at:

A Guide to Estate Planning for Second Marriages

6 Estate Planning Tips For Blended Families

Also, Read one of our Previous Blogs at:

Estate Planning for Blended Families

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

caregiving at home

In-Home Care: Helping Loved Ones Age in Place

In-Home Care: Helping Loved Ones Age in Place

5 steps for keeping older family members comfortable and safe, in their home or yours

In-Home Care: Helping Loved Ones Age in Place. Family caregiving is a key component to making that wish a reality. The 2020 Caregiving in the U.S. report from AARP and the National Alliance for Caregiving found that 43 percent of family caregivers are looking after people who live in their own home, and 40 percent share a residence with the care recipient.

Helping a loved one age in place may mean anything from stopping by a parent’s home to check in every few days to assisting a spouse or partner with tasks such as bathing and meal prep, as well as activities including medication management and administering injections. Whatever level of care you provide, these tips can help you help your loved one remain at home for as long, and as comfortably, as possible.

Develop a plan

Planning for both the short and long term is important. You need to stay on top of the daily stuff, the doctor appointments and prescription refills while thinking through the what-ifs of your relative’s age and condition.

You can’t anticipate every scenario, but being forward-thinking now will help you respond more quickly and effectively in an emergency. And don’t go it alone. Reach out to form a larger team of family, friends and others who can help you.

  • Determine tasks and find consensus. Ask team members what they’re willing to do to contribute to the individual’s care. Even if they live far away, they can handle jobs such as paying bills, ordering prescriptions and scheduling medical appointments. Work with them on a plan.
  • Be honest with yourself. What are you prepared to do? If you are uncomfortable with hands-on caregiving tasks, such as helping a family member bathe, ask if another team member can step in, or discuss whether money is available to hire a professional.
  • Summarize the plan in writing. A written record will ensure that everyone on your team, including your loved one, is on the same page, thus avoiding misunderstandings. Remember, of course, that the plan will likely evolve; update it as time passes.

Make adaptations for safety’s sake

If the person you’re caring for has difficulty getting around or has compromised vision or hearing, you’ll need to consider ways to make the home less hazardous.

Consider consulting a professional, such as an occupational therapist, geriatric care manager or aging-in-place specialist, who can assess the home and make recommendations. Be alert to changing needs over time.

  • Make simple fixes for fall prevention. Some basic, low-cost changes include removing trip hazards like throw rugs, making sure the home is well lit (use automatic night-lights) and installing items such as adjustable shower seats, grab bars and handrails.
  • Fine-tune the plan to account for dementia. Dementia brings with it particular worries about wandering and self-injury, but there are many ways to reduce risks. Examples include installing remote door locks, disabling the stove when it’s not in use and keeping the water heater temperature to 120 degrees Fahrenheit or less.
  • Modify more extensively if necessary. When physical limitations are more severe, you may need to hire a contractor to make structural changes, such as installing wheelchair ramps, creating adjustable countertops and widening doorways.

Manage health care needs

Caring for an aging or chronically ill relative can mean performing some basic medical tasks and keeping track of a confusing mix of medications for a range of ailments. The key is to stay organized and know how to get the help you need.

  • Stay on top of meds. Create and maintain an updated medication list with the name, dosage, prescribing doctor and other relevant information — a handy document to bring to medical appointments.
  • Be ready to handle medical tasks. In the aftermath of a loved one’s hospitalization, many family caregivers find themselves performing challenging tasks at home, such as injecting medicines and inserting catheters. Get detailed instructions and even a demonstration of how to do necessary procedures before you leave the hospital.
  • Set up home health services. Medicare will cover certain in-home services deemed medically necessary, including part-time or intermittent skilled nursing care, or physical, occupational or speech therapy. A patient who is considered homebound, or who is unable to make an office visit, may qualify for these services on an ongoing basis.

Maintain a healthy lifestyle

Caregiving can become all-consuming, especially if you are sharing a home with the person you’re caring for. You may find yourself playing nurse, life coach, nutritionist and social director.

All of these roles are important for maintaining your loved one’s mental and physical health. Just don’t neglect your own.

  • Address social needs. Isolation and loneliness are associated with poorer health; helping your family member and yourself avoid them is a key part of caregiving. You could find a community arts program for seniors, invite friends and relatives to visit, or go out to eat together.
  • Manage nutrition. Be conscious of any dietary restrictions, and encourage your loved one to maintain a balanced diet and avoid processed foods. Look into home-delivered meal programs, and be sure the person drinks plenty of fluids, as dehydration can cause fainting, headaches and more conditions.
  • Encourage exercise. Staying mobile can help older people maintain strength, balance, energy and brain health, among other things. Your loved one’s abilities will vary, and you should check any exercise regimen with a doctor, but the routine might include activities like walking, seated yoga, swimming or lifting small weights.
  • Establish boundaries. Everyone needs a level of privacy, especially if the person you’re tending to lives with you and your spouse or partner. Ideally, you should have some separation between living areas and be able to schedule time together as a couple.

Get help

Depending on the severity of your loved one’s problems, you may need a bit of assistance — or a whole lot of it.

Rely on your team for help with some caregiving tasks and to fill in so you can take breaks. Don’t feel guilty: Your own health — and the quality of your caregiving — will suffer if you try to do everything and don’t take time for yourself.

  • Ask friends and family members for help. Plenty of people in your life will be happy, or at least willing, to lend a hand if you ask. Maybe someone could pick up a prescription for you on the next trip to a nearby shopping center, or a neighbor could stop by with dinner once a week.
  • Farm out some household jobs. Consider paying for relatively small services that will relieve your burden, such as a weekly housecleaning, yard care or grocery delivery. If you live apart from your loved one, you could do the same for your home.
  • Hire in-home care. You can go through an agency or hire a caregiver directly, but either way, be sure to check references and background, and monitor performance carefully. Cautionary tales abound. It’s smart to rely on word of mouth. Ask fellow caregivers for recommendations.
  • Watch your mental health. As a caregiver, you are at a higher risk for stress and depression. If either grows serious, seek help from a mental health professional. And consider reaching out to other caregivers for support and advice.

Americans want to age in place, In-Home Care: Helping Loved Ones Age in Place

A 2021 survey of U.S. adults by the Associated Press-NORC Center for Public Affairs Research found that a large majority want to receive care in their own home if they need it. The desire is particularly acute among middle-aged and older adults.

  • Respondents ages 18 to 29: 63 percent
  • 30-44: 79 percent
  • 45-59: 81 percent
  • 60+: 80 percent

Source: “Long-Term Care in America: Americans Want to Age at Home,” AP-NORC

Read more related articles at:

How to Determine a Senior Needs Help at Home

Aging in Place: Growing Older at Home

Also, read one of our previous Blogs at:

Helping Elderly Parents to Live Safely at Home

Click here to check out our On Demand Video about Estate Planning.

estate planning essentials

Estate Planning In The Pandemic Age: It’s Time To Prepare For The Unexpected

Estate Planning In The Pandemic Age: It’s Time To Prepare For The Unexpected

Cody Barbo

Estate Planning In The Pandemic Age: It’s Time To Prepare For The Unexpected. The impact of Covid-19 has affected all of us in different ways. With quarantine and social distancing orders, the pace of life has changed.

While this unprecedented time has been undeniably difficult, it has given many people a chance to spend more quality time with loved ones (speaking from experience with an 8-month-old at home). It has also provided a space for thoughtfulness, reflection and reevaluation regarding what’s really important in life: family, health, happiness.

Because of this, you may have noticed that some important questions have begun bubbling to the surface: Are my loved ones protected? What if something were to happen to me tomorrow? Should I have a plan in place for the future?

When you get caught up in the everyday routine of life, it’s easy to push your end-of-life planning aside. But with more flexibility in your schedule, now is the time to prioritize creating (or updating) your trust or will. Fortunately, you have plenty of options for setting up a comprehensive estate plan. In addition to an in-person meeting with an attorney, you also have the option of setting up a plan from the comfort of your home thanks to emerging online services.

Here are some factors to consider when embarking on your estate planning journey:

Have You Been Procrastinating?

Procrastination is not only normal, it’s absolutely understandable. No one really wants to think about the end of their life. However, the alternative is that something happens to you before having a proper plan in place. That’s why it’s time to put your procrastination to a stop.

Creating a trust or will so you can nominate guardians for your children, decide how your assets should be distributed after your death and specify your final arrangement wishes can help you gain peace of mind and get back to enjoying life.

Are Your Loved Ones Protected?

It’s easy to assume that estate planning is only for the wealthy or elderly. However, anyone over the age of 18 should start thinking about their estate plan — regardless of income level. In addition, there’s so much more to estate planning than the distribution of assets. More importantly, you are protecting your loved ones in the case something were to unexpectedly happen to you. Here are some key areas to cover in your trust or will:

• Defining arrangements for important family keepsakes and items.

• Laying out a plan for long-term health care.

• Naming guardians for minors and dependents.

• Communicating final wishes, funeral arrangements and burial requests.

• Clarifying the distribution of assets.

Your estate plan can also include policies that help provide your family members with a budget to help pay for health care, end-of-life expenses or outstanding debts.

Do You Have Key Documents In Place?

Having a proper estate plan can give you a sense of control and relief. You’ll feel safe knowing your family and legacy will be protected long after you’re gone.

With this, it’s important for your plan to be thorough. There are several key documents that are generally recommended:

• Will or trust

• Power of attorney

• Living will

• Health Insurance Portability and Accountability Act (HIPAA) authorization

• Designation of guardianship

• Insurance policies (life and disability)

Is Your Existing Plan Up To Date?

If you already have an existing estate plan, you’re one step ahead of the game. However, can you remember how long it’s been since you revisited your estate planning documents? Many things can change during the course of life, whether they be regarding your assets or beneficiaries, and your estate plan should reflect those changes.

Marriage, divorce, the purchase of a new home, the birth of a child or grandchild or a death in the family are just a few examples of life events that warrant updating your will or trust. It’s also a good idea to revisit your plan every three to five years.

Don’t let Covid-19 act as a deterrent that prevents you from prioritizing your end-of-life planning. These uncertain times should be a strong reminder that anything can happen no matter how secure things feel. Estate planning should be inclusive, accessible and affordable for all because everyone deserves peace of mind.

Read more related articles at:

Estate Planning During a Pandemic – Quit Stalling

Wills and Estate Planning During the Coronavirus Pandemic and in Changing Times

Also, read one of our previous Blogs at:

Coronavirus Makes Estate and Tax Planning an Urgent Task

Click here to check out our On Demand Video about Estate Planning.

Caregivers

5 New Year’s Resolutions for Caregivers to Consider

5 New Year’s Resolutions for Caregivers to Consider

Positive intentions to embrace in the year ahead

FRED FROESE / GETTY IMAGES

En español

For family caregivers, making New Year’s resolutions doesn’t have to be the futile exercise of vowing to lose weight and then eating half a chocolate cake on January 3. It can be, as the Serenity Prayer suggests, a call for the courage to change what they can — their mindsets, for instance, when they must accept loved ones’ medical situations that they can’t change. To get inspired for the coming year, all caregivers should take time in December to think about what’s important to them about continuing to be a caregiver and how they can improve their approach to their duties. Here are some possible resolutions for 2022 to consider.

1. “I will reflect more on the good things I do, rather than on my imperfections as a caregiver.”

We all know the cliché that we’re our own worst enemies. But many caregivers still believe that if they critique themselves harshly enough, they can vanquish their imperfections. Bearing down harder doesn’t usually improve anyone’s performance; it creates a sense of failure. It is by easing up on themselves and relaxing more in their difficult role that caregivers can bring out their best. Bringing out more of their best requires recognizing the many good things they do. Caregivers sometimes make light of all the tasks they complete each day but lie awake every night with what they didn’t get done weighing heavily on their minds. Negative bias is what the cognitive behavioral therapists call it. Or, stated differently, it is unfairly ignoring the positive. Caregivers should resolve to practice greater self-compassion and to remember each day the powerful impact of their loving care.

2. “I will spend more time cherishing supportive friends and relatives than dwelling on those who have disappointed me.”

Of course, caregivers feel betrayed when people who should be pitching in instead disappear. But if those deserters won’t change — and frequently they don’t, no matter how much family caregivers implore them — then the question arises, How do disappointed caregivers go forward filled with calm determination, not bitterness? The answer lies in focusing on being grateful for the good people who, sometimes unexpectedly, do step up to help. It could be a neighbor, fellow congregant or distant relative. It could be a miracle-working home health aide. Caregivers should resolve to embrace them this year as literal godsends.

3. “I will compartmentalize more, preserving time for myself.”

It’s not as if caregivers don’t know they should practice self-care. But finding the time for self-care activities, such as exercising and doing artwork, is a challenge when there never seems be an end to the caregiving tasks. It takes steely discipline to protect even one hour of guilt-free time a week for rest and replenishment and not to allow a loved one’s needs to intrude. Resolving to defend that hour as if their well-being depends on it will help caregivers make it from January to December without burning out.

4. “I will be grateful for what I’m learning about myself.”

What do loving family members learn about themselves when they become caregivers? Not much at first; they are too immersed in the everyday struggle to realize how they’re growing. But, aside from getting a crash course in reading health insurance explanation-of-benefit forms and navigating byzantine health systems, caregivers typically learn that they are tougher and more resilient than they ever knew. It also dawns on them, sometimes long after caregiving ends, that they have strengthened positive qualities in themselves, such as compassion, patience and quiet self-confidence. Caregivers should resolve in 2022 to pay greater attention to how caregiving is changing them — often for the good.

5. “I will aim for joy.”

Life’s enjoyment doesn’t need to end when caregiving begins. In truth, the circumstances of caregiving are often sad and sometimes dire. What finding joy in being a caregiver requires is taking new pleasure in small things — a care recipient’s smile, a well-cooked meal from a magazine recipe, accurately filling a pillbox. As they dream of returning to their old lives of movies, travel and social outings, caregivers should note what moves them or makes them laugh even when they are buried in adult briefs and drudgery. To resolve to find joy in caregiving is to commit to looking harder for what’s good, if ordinary, in life. It can create a way of thinking that will make every day, even after caregiving, more joyful.

Barry J. Jacobs, a clinical psychologist, family therapist and health care consultant, is the coauthor of  Love and Meaning After 50: The 10 Challenges to Great Relationships — and How to Overcome Them and AARP Meditations for Caregivers. Follow him on Twitter and Facebook.

Read more related articles at:

7 POSITIVE NEW YEAR’S RESOLUTIONS FOR CAREGIVERS

5 Stress-Busting Resolutions for Caregivers

Also, read one of our previous Blogs at:

How Can Long-Distance Caregivers Help Loved Ones?

Click here to check out our On Demand Video about Estate Planning.

Medicaid Trusts

How Medicaid Planning Trusts Protect Assets and Homes from Estate Recovery

How Medicaid Planning Trusts Protect Assets and Homes from Estate Recovery

Last updated: January 02, 2022

How Medicaid Planning Trusts Protect Assets and Homes from Estate Recovery.  Medicaid Asset Protection Trusts (MAPT) can be a valuable planning strategy to meet Medicaid’s asset limit when an applicant has excess assets. Simply stated, these trusts protect a Medicaid applicant’s assets from being counted for eligibility purposes. MAPTs enable someone who would otherwise be ineligible for Medicaid to become eligible and receive the care they require, be that at home or in a nursing home. Assets in this type of trust are no longer considered owned by the Medicaid applicant. MAPTs also protect assets for one’s children and other relatives, which is a win-win for Medicaid applicants and their families. Medicaid Asset Protection Trusts are also called Medicaid Planning Trusts, Medicaid Trusts, or less formally, Home Protection Trusts.

There are many different types of trusts and not all of them are Medicaid compliant. For instance, family trusts, commonly called revocable living trusts, are different from MAPTs. Generally, family trusts are not adequate in protecting money and assets from Medicaid because the language of the trust makes it revocable (meaning the trust can be cancelled or altered) or allows for money in the trust to be used for the Medicaid applicant’s long-term care costs. Therefore, assets in this type of trust would have to be “spent down” to meet Medicaid’s asset limit in order for one to qualify for Medicaid.

This page is about Medicaid Asset Protection Trusts. There are several other types of trusts that are relevant to Medicaid eligibility, but they will not be covered in this article. Irrevocable funeral trusts, also known as burial trusts, are used to protect up to $15,000 in assets for funeral and burial costs. There are also qualifying income trusts, also called qualified income trusts (QITs) or Miller Trusts. This is mentioned to avoid persons confusing MAPTs with QITs. While MAPTs protect one’s assets and allows them to meet the asset limit, QITS allow one who is over the income limit to become income eligible for Medicaid purposes. Unfortunately, not all states allow QITs.

Why Are Medicaid Asset Protection Trusts Important?

While each state runs its Medicaid program within federally set guidelines, there is “wiggle” room for each state to set its own rules within those larger guidelines. Generally speaking, the asset limit for an elderly individual applying for long-term care Medicaid is $2,000. This asset limit can be lower or higher depending on the state in which one resides. For state specific asset limits, click here. While some higher valued assets are usually considered exempt (uncountable), such as one’s primary residence, a vehicle, and wedding rings, too often applicants are still over the asset limit, but still cannot afford their cost of care. Therefore, any assets that exceed the asset limit need to be “spent down” or a planning strategy, such as a Medicaid Asset Protection Trust, needs to be put into place to help the applicant qualify for the care they require. Persons can utilize our Calculator to determine the value of assets that must be spent down to become Medicaid eligible.

 

How Do Medicaid Asset Protection Trusts Work?

To get a better grasp of Medicaid Asset Protection Trusts, one must understand the associated terminology. The individual who creates the MAPT is called a grantor, trustmaker, or settlor. There is also a trustee, who manages the trust and controls the assets within it. The trustee must be someone other than the trustmaker or their spouse, but can be an adult child or another relative. The trustee must adhere to trust rules, which are very specific as to how trust money can be used. For instance, it should be strictly prohibited for funds to be used on the trustee. A beneficiary is also named and is the person who will benefit from the trust after the trustmaker passes away. For the trust to be Medicaid exempt, the beneficiary must be someone other than the trustmaker. If the trustmaker were also the beneficiary, they would have access to the assets, and Medicaid would consider them available to pay for their care and supports.

The trust must be irrevocable for exemption from Medicaid’s asset limit. This means that the trust cannot be cancelled or changed. Once the assets are transferred into the trust, they no longer belong to the trustmaker, nor can the trustmaker regain ownership of them. If the assets are in a revocable (can be changed or terminated) trust, Medicaid considers the assets to still be owned by the Medicaid applicant. This is because they still have control over the assets held in the trust. Therefore, the assets are counted towards Medicaid’s asset limit.

   MAPTs cannot be used to shelter or reduce assets if the applicant is immediately applying for Medicaid.

Planning well in advance of the need for long-term care Medicaid is the best course of action when considering a Medicaid Asset Protection Trust. MAPTs are not suitable for persons who need Medicaid immediately or within a short period. This is because MAPTs are a violation of Medicaid’s look back period if not set up at least 5 years (2.5 years in California) before one applies for long-term care Medicaid. There are other planning strategies for those who need Medicaid currently or in the near future.

 

Benefits of a Medicaid Asset Protection Trust

Putting assets in a Medicaid Asset Protection Trust not only allows one to meet Medicaid’s asset limit without “spending down” assets, but also protects the assets for the beneficiaries listed by the trustee. This means the assets are safe from Medicaid estate recovery. In simplified terms, when a Medicaid recipient passes away, the state in which the individual lived and received Medicaid benefits, attempts to collect reimbursement for which it paid for long-term care. This is done via the deceased’s estate. However, if one’s home and other assets are in a MAPT, the state cannot come after those assets. Learn more about Medicaid estate recovery.

 

Shortcomings of a Medicaid Asset Protection Trust

Planning well in advance of the need for Medicaid, if at all possible, is the best course of action. Medicaid Asset Protection Trusts are ideal for persons who are healthy and don’t foresee needing long-term care Medicaid in the near future. This is because MAPTs violate Medicaid’s look back period, which immediately precedes one’s date of Medicaid application. The “look back” is 60-months in all states, with the exception of California, which only “looks back” 30-months. New York currently has no look back period for long-term home and community based services, but plans to begin phasing in a 30-month look back period in 2022. During the “look back”, Medicaid checks to ensure no assets were gifted or sold for under fair market value. For Medicaid purposes, the transfer of assets to a Medicaid Asset Protection Trust is considered a gift and violates the look back rule. This results in a penalty period of Medicaid ineligibility. Therefore, a MAPT should be created with the idea that Medicaid will not be needed for a minimum of 2.5 years in California and 5 years in the rest of the states.

Once the assets have been transferred to a MAPT, the trustee no longer has control or access to them. They no longer are considered owned by the individual.

Given the fairly expensive fees associated with the creation of a Medicaid Asset Protection Trust ($2,000 – $12,000), they are typically not used for assets less than $100,000. Should a family need to reduce one’s assets to qualify for Medicaid in amounts less than $100,000, there are other approaches.

 

Gifting Assets vs. Creating a Medicaid Asset Protection Trust

While there is more flexibility with gifting assets and it does not require any legal work, it also violates Medicaid’s look back rule and results in a period of Medicaid ineligibility as a penalty. Like with MAPTS, gifting should occur 5 years (2.5 years in California) in advance of the need for long-term care Medicaid. Capital gains taxes are also a common concern with gifting.

 

What Type of Assets can go in an Asset Protection Trust?

Various assets can be put into a Medicaid Asset Protection Trust, including one’s home. When a trustee places their home in a MAPT, they can continue to live in the home. It is even possible to sell the home and for the trust to buy another one. There is one exception to this rule. In Michigan, a home is considered a countable asset when placed in a MAPT. This means the home is non-exempt and is counted towards Medicaid’s asset limit.

Other assets placed in MAPTS include real estate other than one’s primary home, checking and savings accounts, stocks and bonds, mutual funds, and CDs. In most cases, transferring retirement accounts (401k’s and IRAs) is not recommended due to tax implications with cashing out the plans and transferring them to a MAPT.

If income-producing assets are placed in the trust, the trustmaker is able to collect the income while the principal remains protected by the trust. However, Medicaid also has income limits, so it’s important that this income does not cause one to have “excess” income. In 2022, most states have an income limit of $2,523 / month for a single senior applying for long-term care. To see income requirements in the state in which one resides, click here. When a Medicaid applicant is in a nursing home, income produced by the principal generally goes to the nursing home to help pay care costs.

 

How Do Medicaid Asset Protection Trust Rules Change by State?

Medicaid Asset Protection Trust rules are not only complicated and tend to change frequently, they also differ based on the state in which one resides. As mentioned above, Michigan considers a home in a trust, even if it is irrevocable, a countable asset. California Medicaid (Medi-Cal), on the other hand, has very lax rules in regards to transferring a home to a trust. In CA, a home, even in a revocable trust, is exempt from Medicaid’s asset limit and is safe from estate recovery. This is very unusual. In most circumstances, revocable trusts do not keep assets safe from Medicaid’s asset limit and estate recovery. Furthermore, CA can only seek reimbursement of long-term care costs from those assets that go through probate, a legal process where a deceased person’s assets are distributed. If assets have been transferred to a revocable living trust, it is safe from estate recovery. This means it will avoid probate and estate recovery and the need for MAPTs are not as great in the state of CA as in other states.

Wisconsin also stands apart from the other states. In WI, trusts that are irrevocable can generally be altered or cancelled if all parties (trustmaker, trustee, and beneficiaries) are in agreement.

 

Is an Attorney Needed to Set up a Medicaid Asset Protection Trust?

It is imperative that a Medicaid Asset Protection Trust be set up correctly to ensure the assets transferred into the trust are exempt from Medicaid’s asset limit. Since the rules change frequently and vary by state, the trust must be created by someone who is familiar with the MAPT laws in one’s specific state. Incorrectly setting up a MAPT can inadvertently cause one to be ineligible for Medicaid, defeating the purpose of creating one. Therefore, an attorney should be used to set up a Medicaid Asset Protection Trust. Private Medicaid Planners often work with attorneys to keep costs low for their clients.

 

How Much Does it Cost to Create a Medicaid Asset Protection Trust?

The cost of creating a Medicaid Asset Protection Trust varies significantly from a low of $2,000 to a high of $12,000. While the price might seem high, in reality, a MAPT ends up saving persons money in the long run. This is because the nationwide average cost of nursing home care is over $7,750 / month, and a MAPT prevents one from having to pay out of pocket for nursing home expenses (and other long-term care costs).

When considering the cost, there are a lot of variables. First, some attorneys don’t strictly do MAPTS. Rather they do a package of sorts. This may include a pour-over will, powers of attorney, advance health care directive (living will), and HIPAA medical information releases, in addition to the MAPT. Cost can be impacted by the client’s marital status, the assets being transferred into the trust, and if a crisis plan is needed. In addition, price varies by geographic location, with the price in urban areas generally costlier than in rural areas. The experience of the attorney can also impact the cost.

 

Alternatives to a Medicaid Asset Protection Trust

In addition to Medicaid asset protection trusts, there are other planning strategies to help lower one’s countable assets. This includes “spending down” countable assets on ones that are not counted, irrevocable funeral trusts, and annuities. There are also strategies to help lower one’s income to become eligible for Medicaid. Hopefully that answers the question of How Medicaid Planning Trusts Protect Assets and Homes from Estate Recovery.

Read more related articles here:

Can an Irrevocable Trust Protect Your Assets From Medicaid?

Benefit or Backfire: Navigating the Irrevocable Medicaid Trust

Also, read one of our previous Blogs here:

HOW MEDICAID PLANNING TRUSTS PROTECT ASSETS AND HOMES FROM ESTATE RECOVERY

Click here to check out our On Demand Video about Estate Planning.

TOD

Does Transfer-on-Death Become Fraudulent Transfer?

Does Transfer-on-Death Become Fraudulent Transfer?

new case out of the Court of Appeals of Ohio analyzes whether the beneficiary of a transfer-on-death (TOD) account was liable for an unpaid nursing home bill, based on a fraudulent transfer claim. Here, Marian was admitted to a nursing home facility and died about a month later. She left an unpaid balance to the home of roughly $16,000. The nursing home sued Marian’s son, Fredric, alleging fraudulent transfer due to a TOD beneficiary designation that Marian had executed before her death on an investment account, naming Fredric as beneficiary. The nursing home wanted compensation from the investment account funds that Fredric received.

The trial court ruled in favor of Fredric and the nursing home appealed. The Court of Appeals of Ohio reversed the trial court’s judgment and remanded for further action. The parties litigated further and the trial court once again ruled in favor of Fredric. The appeals court once again took on the case and now we have the instant ruling.

The pertinent statutes are:

R.C. 1336.05(A): “A transfer made or an obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.”

R.C. 1336.02(A)(1): “A debtor is insolvent if the sum of the debts of the debtor is greater than all of the assets of the debtor at a fair valuation. (2) A debtor who generally is not paying his debts as they become due is presumed to be insolvent.”

R.C. 1336.02(C)(1): “‘[a]ssets’ do not include property that has been transferred, concealed, or removed with intent to hinder, delay, or defraud creditors, or that has been transferred in a manner making the transfer fraudulent under section 1336.04 or 1336.05 of the Revised Code.”

Fredric, who happens to be a gem appraiser, testified that Marian had about $27,000 worth of jewelry at the time of her death. In addition, Marian owned furniture, household goods, and a car. The only listed asset of the estate was the vehicle; the only claim presented in probate was the nursing home claim.

The trial court ruled that Marian’s estate was not insolvent due to the TOD account being transferred to Fredric. On appeal, the nursing home argued that the inventory of the estate was around $10,000 and so there were not enough funds to pay their creditor claim, thus the estate was insolvent. However, the appeals court pointed to the fact that the estate inventory was not certified and to the evidence that suggested there was other property not listed in the estate inventory, such as the value of the jewelry. Thus, the estate was not insolvent and the nursing home loses the case once again.

Read more related articles at:

The Dreaded Transfer on Death Deed

Transfer on Death (TOD) Accounts for Estate Planning

Also, read one of our previous Blogs at:

Is Transferring House to Children a Good Idea?

Click here to check out our On Demand Video about Estate Planning.

anna nicole smith

Five Ways to Avoid Anna Nicole’s Estate Drama

Five Ways to Avoid Anna Nicole’s Estate Drama

Don’t leave behind a legal mess others will have to sort out for you.

Five Ways to Avoid Anna Nicole’s Estate Drama. Now that Anna Nicole Smith’s former boyfriend, Larry Birkhead, is raising their daughter, Dannielynn, you can expect the legal disputes surrounding Smith’s death to melt away like snow in the Bahamas, right?

Joke, people.

In fact, Smith left behind enough unanswered questions and competing interests to keep lawyers wrangling into the next decade. The Playboy centerfold and widow of oil tycoon J. Howard Marshall II died in February 2007 at age 39 of a drug overdose, leaving behind her baby, three would-be daddies and a drawn out lawsuit for a share of her late husband’s fortune. DNA tests showed Birkhead, a photographer, to be Dannielynn’s father; Howard K. Stern, another paternity contender, was named executor of Smith’s will, and Smith’s mother is battling Birkhead for guardianship rights. Smith’s son and only beneficiary, Daniel, died of a drug overdose a few months before his mother.

What can we learn from all this drama? If you must live a messy life, clean your financial affairs up before you depart it. Here are five tips for tidying up your estate so that others don’t have to.

1. Plan for contingencies. Smith’s will, written in 2001, left whatever property she had in trust for her son. It specifically excluded unknown children, a provision that’s more commonly used by men to protect against claims by heirs they’re not aware of. Had Daniel not died before Smith, Dannielynn would have been out in the cold — a development Smith probably would not have intended, says Joanna Grossman, a law professor at Hofstra University. “She was probably just thinking of her one son and wanted him to have everything.” Instead, his death caused the will to lapse. With no will, state intestacy law made Dannielynn sole heir, a determination later affirmed by the court.

2. Appoint a guardian. Although Birkhead’s situation has yet to be resolved (the final custody hearing will be held in June in the Bahamas), he has a big leg up in his custody dispute. It’s the biological or adoptive parent who generally gets custody of the children if the other parent dies. Still, you should name a guardian in your will in case the other parent isn’t available or you both die around the same time. Think that can’t happen to two relatively young people in a single family? Look at Smith and her son.

If you’re convinced that the other parent is unfit for custody, name another guardian, outline your reasoning and hope that the court agrees. Simply saying you prefer someone else doesn’t cut it, says Grossman. “If there is a real live parent who has legal rights, your preference is not going to trump that.” Because Birkhead passed both the DNA and fitness tests, says Grossman, “there’s no justification for taking the child away.”

3. Design your own funeral. Sure, you could leave the arrangements to your next of kin and leave it to them to argue over the details. Smith’s mother, for instance, wanted to bury her in the family plot in Texas; instead, Dannielynn was awarded custody of the body, and Richard C. Milstein, Dannielynn’s representative, had Smith buried in the Bahamas. You can avoid the bickering by putting your funeral instructions in writing, preferably in a living will, which is more readily available to survivors than a regular will, says Martin Shenkman, an estate-planning lawyer in Teaneck, N.J. Have a lawyer write or review the document to make sure the terms are legally enforceable. And include the same instructions in your testamentary will, giving your executor the authority to cover funeral expenses out of the estate.

4. Legalize your love. Getting married for estate-planning purposes hardly constitutes a Hallmark moment, but it does entitle your surviving spouse to half the property you acquire during your marriage or to a significant share of your estate, depending on where you legally reside. You can’t easily override those rights, in a will or otherwise, although your spouse can waive them. For Stern, a marriage license would have meant inheriting some of Smith’s estate; as the boyfriend, he gets zip.

What if you’re in a same-sex partnership? A number of states accord domestic partners some or all of the same protections as married couples; Massachusetts and California recognize same-sex marriages. No matter what your state or status, you can always name a loved one as beneficiary in your will.

5. Tie up loose ends. Ironically, Stern has since been appointed executor of Smith’s estate, as well as a cotrustee, with one-time rival Birkhead of a trust set up for Dannielynn’s benefit. Before you start enjoying that soap opera, make sure your own legal arrangements avoid potential conflicts. “Don’t assume that it’s just Hollywood types who have these issues,” says Shenkman. “A lot of people have messy personal lives.”

Read more related articles at:

Who will get Anna Nicole Smith’s money?

Judge In Decades Old Anna Nicole Smith Case Announces He’s Had Enough

Also, read one of our previous blogs at:

What’s the Latest on Britney Spears’ Conservatorship?

Click here to check out our On Demand Video about Estate Planning.

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