Category: Living Trust

As we are about to wrap up another Pride Month, the LGBTQ+ community faces an increasingly uncertain legal landscape. In the wake of the Supreme Court overturning Roe v. Wade, ending the recognition of a constitutional right to abortion, many are worried that other rights, especially those enjoyed by same-gender couples, might also be under threat. 

In fact, with Roe overturned, legal experts warn that the Supreme Court’s new Republican majority may come for landmark LGBTQ-rights decisions next, including marriage equality established by Obergefell v. Hodges. In light of this potential challenge, it’s critical that same-gender couples ensure their estate plans are carefully reviewed and updated by an estate planning lawyer who understands the special needs of LGBTQ+ planning to address any such developments.
Although we will have to wait and see whether the Supreme Court ultimately decides to rule on marriage equality, same gender couples can act right now to put in place a number of proactive estate planning measures to ensure their relationships have the maximum legal protections. 

While you should meet with us, your Personal Family Lawyer® to address your specific circumstances, here are answers to some frequently asked questions related to LGBTQ+ estate planning.

Q: My partner and I are in a registered domestic partnership in our state, but we are not married. Do we qualify for the same rights and benefits available to married couples?

A: No, domestic partnerships, civil unions, and other alternative legal relationships to marriage only offer rights and protections in the states that recognize them. Marriage is the only relationship that is recognized by the federal government. 

Moreover, the rights and protections offered by domestic partnerships and civil unions can vary widely from state to state. In some states, for example, domestic partnerships and civil unions do not affect property rights between the two partners, while in other states they do. 

If you want all of the rights and protections that come with having your relationship recognized by the federal government, marriage is your only option.

However, you can replicate almost all of the benefits of marriage through a comprehensive estate plan—what we call a Life & Legacy Plan—so give us a call and let’s discuss how we can support you in getting the right legal documents and plan in place for you and your partner.

Q: My partner and I have been living together for 10 years, but we are not married and have no desire to get married. I’ve created a will, but my partner has no estate plan at all. What would happen to me in the event my partner dies or becomes incapacitated?

A: If you are unmarried and your partner dies without any estate plan, your partner’s assets will be distributed to his or her surviving family members according to our state’s intestate succession laws. Those laws only apply to relatives in the eyes of the law, so you would have no right to inherit any of your partner’s assets.

If not remedied immediately, this could have catastrophic effects for you. For example, if your partner dies, and you are not named on the deed to a home you live in together, you could even be left homeless should the family member who inherits the house decide to kick you out.

Similarly, in the event of your partner’s incapacity, you would have no automatic right to make medical decisions on their behalf, nor would you be able to access any financial accounts that are solely in their name. Your partner’s family could even prevent you from visiting your partner in the hospital.

In light of these facts, if you are in an unmarried relationship and you want your partner to inherit any of your assets upon your death or have any say in how your healthcare and/or finances are managed in the event of your incapacity, it’s absolutely crucial that each of you create a Life & Legacy Plan that addresses both death and incapacity.

Q: What kind of estate planning tools typically make up an effective incapacity plan for LGBTQ+ or any unmarried couple?

A: Estate planning isn’t just about planning for your eventual death; it’s also about planning for your potential incapacity due to serious injury or illness. Creating an effective incapacity plan allows you to name the person (or persons) you would want to make your healthcare, legal, and financial decisions for you if you are incapacitated and unable to make such decisions yourself.

If you haven’t planned for incapacity, the choice is left up to the court to appoint a legal guardian to make these decisions on your behalf. If you are unmarried and the court appoints one of your relatives as your guardian, your family could leave your partner totally out of the medical decision-making process and even deny him or her the right to visit you in the hospital. And even if you are married, it’s not guaranteed that your spouse would have the ultimate legal authority to make such decisions.

Though the court typically gives spouses priority as guardians, this isn’t always the case, especially if unsupportive family members challenge the issue in court. To ensure your partner/spouse has the ability to make these decisions for you, you must grant him or her the legal authority to do so using medical power of attorney and durable financial power of attorney.

A medical power of attorney gives your partner/spouse the authority to make healthcare decisions for you if you’re incapacitated and unable to do so yourself. Similarly, a durable financial power of attorney gives your partner/spouse the authority to manage your financial, legal, and business affairs, including paying your bills and taxes, running your business, selling your home, as well as managing your banking and investment accounts.

Additionally, you should also create a living will, so that your partner/spouse will know exactly how you want your medical care managed in the event of your incapacity, particularly at the end of life. Finally, don’t forget to provide your partner/spouse with HIPAA authorization within the medical power of attorney, so they will have access to your medical records to make educated decisions about your medical treatment.

As your Personal Family Lawyer®, we will support you in putting in place a robust estate plan that will ensure that your partner/spouse has the maximum rights possible if you are ever struck by a debilitating accident or illness.

Q: My partner and I are married, and we both have a will. Is this a sufficient level of planning?

A: Although a will is a foundational part of nearly every adult’s estate plan, we recommend that couples who have assets—even those who are married—create both a will and a trust, if you want to ensure your loved ones stay out of court upon your incapacity or death.

A will does not work in the event of your incapacity, which could happen at any time before your death. Should you become incapacitated with only a will in place, your spouse may not have access to needed funds to pay bills, or they might even be forced to leave your home by a family member appointed as your guardian during your incapacity.

Furthermore, upon your death, a will is required to go through the often long, costly, and potentially conflict-ridden court process known as probate. In contrast, assets that are properly titled in the name of your trust would pass directly to your spouse upon your death, without the need for probate or any court intervention.

If your relationship is not supported by one or both families, avoiding court is especially important. If a family member doesn’t support your relationship, they are more likely to contest your will during probate. If your will is successfully contested, this could prevent your spouse from receiving assets you left in your will. Not only that, but the process of contesting a will is extremely time-consuming, costly, and emotionally draining for your surviving spouse.

Finally, when an attorney drafts your will, it is typically not set up to protect your assets after they are passed to your spouse from creditors or lawsuits. However, leaving your assets in a trust that your spouse can control would ensure the assets are protected from creditors, future relationships, and/or unexpected lawsuits.

Q: How can I ensure that my unmarried partner is able to carry out my wishes for my funeral arrangements?

A: To make certain that your partner has the legal authority to control your funeral arrangements, you should create a funeral directive, also known as a disposition of remains directive. This directive, which describes how you want your funeral or cremation arrangements carried out, can be included as part of your will, or it can be a separate stand-alone document.

Absent any estate planning, state law dictates who has the right to dispose of your remains and control your funeral, and if you are unmarried, this authority is typically given to your surviving family members. However, a properly drafted funeral directive allows LGTBQ+ couples to opt out of this default and designate the person you want to control your final arrangements.

Q: How can the non-biological parent in an LGTBQ+ relationship gain parental rights and avoid custody battles in the event of the biological parent’s death?

A: To ensure the full rights of a non-biological parent, many legal experts advise same-gender couples to undergo second-parent adoption. But in many states, it can be extremely difficult for same-gender couples to adopt. Some states even permit employees of state-licensed adoption agencies to refuse to grant an adoption if doing so violates their religious beliefs. And given the Supreme Court’s new conservative majority and the recent decision on Roe v Wade, such legal discrimination is likely to continue.

However, using a variety of estate planning strategies, as your local  Personal Family Lawyer® we can provide non-biological, same-gender parents with some protection of their parental rights. Starting with our Kids Protection Plan®, LGBTQ couples can name the non-biological parent as the child’s legal guardian, both for the short-term and the long-term, while confidentially excluding anyone the biological parent thinks may challenge their wishes.

By doing so, if the biological parent becomes incapacitated or dies, his or her wishes are clearly stated, so the court can do what the parent would have wanted and keep the child in the non-biological parent’s care.

Beyond that, there are several other estate planning vehicles—living trusts, power of attorney, and advance healthcare directives—we can use to grant the non-biological parent additional rights. We can also create “co-parenting agreements,” which are legal agreements that stipulate exactly how the child will be raised, what responsibility each partner has toward the child, and what kind of rights would exist if the couple splits or gets divorced.

An Advocate For LGTBQ+ Rights

Given these uncertain times, it’s more important than ever for LGBTQ+ couples, especially those with children, to have a carefully prepared estate plan that’s been created by a lawyer with experience dealing with these issues, and avoid using online document services at all costs. As your Personal Family Lawyer®, you can trust us to create an estate plan that’s specifically designed to prevent court challenges by family members who disagree with your relationship, and provide your partner/spouse with the maximum legal and financial benefits possible.

Using our Life & Legacy Planning Process, us, your Personal Family Lawyer® can ensure that no matter what happens to you, your beloved will be protected and provided for in the exact manner you wish, rather than being stuck in a financial and legal nightmare. Furthermore, we can help ensure that non-biological parents in same-gender partnerships have as many parental rights as possible, without resorting to second-parent adoption. Contact us, your Personal Family Lawyer® today to learn more and get your plan started.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

These days, more and more young people are delaying—if not totally foregoing—a life that involves marriage and parenting. The lack of jobs, crushing student debt, multiple recessions, and the pandemic have pushed many young people into a life path that leaves little room for settling down with a partner and getting married—and even less room for having children.

Yet, for other young adults, staying single and childless is simply a matter of choice. Regardless of the reason, as more young adults opt for non-traditional lifestyles, the number of single childless households is likely to steadily increase in the coming years.

While most adults don’t take estate planning as seriously as they should, if you are single with no children, you might think that there’s really no need for you to worry about creating an estate plan. But this is a huge mistake. In fact, it can be even MORE important to have an estate plan if you are single and childless.

If you are single without kids, you face several potential estate planning complications that aren’t an issue for those who are married with children. And this is true whether you’re wealthy or have very limited assets. Indeed, without proper estate planning, you’re not only jeopardizing your wealth and assets, but you’re putting your life at risk, too. And that’s not even mentioning the potential conflict, mess, and expense you’re leaving for your surviving family and friends to deal with when something unexpected happens to you. 

With this in mind, if you’re single and childless, consider these three inconvenient truths before you decide to forego estate planning.

1. Someone Will Have to Handle Your Stuff

Whether you’re rich, poor, or somewhere in between, in the event of your death, everything you own will need to be located, managed, and passed on to someone, which can be a massive undertaking in itself—one that few families are properly prepared for. 

In fact, following a loved one’s death, American families spend an average of 500 hours and $12,700 over the course of 13 months (20 month if probate is required) to finalize the person’s affairs and settle their estate, according to the first annual Cost Of Dying report released this March by tech startup Empathy in partnership with Goldman Sachs. Look for additional articles in the coming weeks covering the Cost Of Dying and the new role Empathy is playing in the end-of-life industry.

On top of the logistical complications involved with finalizing your affairs, without a clear estate plan, including a will or trust, your assets will go through the court process of probate, where a judge and state law will decide who gets everything you own. In the event no family steps forward, your assets will become property of the state.

Why give the state everything you worked to build? And even if you have little financial wealth, you undoubtedly own a few sentimental items, maybe even including pets, that you’d like to pass to a close friend or favorite charity.

However, it’s rare for someone to die without any family members stepping forward. It’s far more likely that some relative you haven’t spoken with in years will come out of the woodwork to stake a claim. Without a will or trust, state intestacy laws establish which family member has the priority inheritance. If you’re unmarried with no children, this hierarchy typically puts parents first, then siblings, then more distant relatives like nieces, nephews, uncles, aunts, and cousins.

Depending on your family, this could have a potentially troubling—and even deadly—outcome. For instance, what if your closest living relative is your estranged brother with serious addiction issues? Or what if your assets are passed on to a niece with poor money-management skills, who is likely to squander her inheritance?

And if your estate does contain significant wealth and assets, this could lead to a costly and contentious court battle, with all of your relatives hiring expensive lawyers to fight over your estate. In the end, this could tear your family apart, while making their lawyers rich—all because you didn’t think you needed an estate plan.

As your Personal Family Lawyer®, we will work with you to create an estate plan that ensures that your assets will pass to the proper people, while avoiding both unnecessary court proceedings and family conflict.

2. Someone Will Have Power Over Your Healthcare

Estate planning isn’t just about passing on your assets when you die. In fact, some of the most critical aspects of estate planning have nothing to do with your money at all, but are aimed at protecting you while you’re still very much alive.

Proactive planning allows you to name the person you want to make healthcare decisions for you in the event you are incapacitated and unable to make such decisions yourself. This is done using an estate planning tool known as a medical power of attorney.

For example, if you’re incapacitated due to a serious accident or illness and unable to give doctors permission to perform a potentially risky medical treatment, it would be left up to a judge to decide who gets to make that decision on your behalf.

If you have a romantic partner but aren’t married and haven’t granted him or her medical power of attorney, the court will likely have a family member, not your partner, make those decisions. Depending on your family, that person may make decisions contrary to what you or your partner would want.

And if you don’t want your estranged brother to inherit your assets, you probably don’t want him to have the power to make life-and-death decisions about your medical care, either. But that’s exactly what could happen if you don’t put a plan in place.

Furthermore, your family members who have priority to make decisions for you could keep your dearest friends away from your bedside in the event of your hospitalization. Or family members who don’t share your values about the type of food you eat, or the types of medical care you receive, could be the one’s making decisions about how you’ll be cared for.

To address these issues, you need to implement an estate planning tool that provides specific guidelines detailing exactly how you want your medical care to be managed during your incapacity, including critical end-of-life decisions. This is done using an estate planning vehicle known as a living will.

Bottom line: If you are single with no kids, you need to create an estate plan in order to name healthcare decisions-makers for yourself and provide instructions on how you want those decisions made should you ever become incapacitated and unable to make those decisions yourself.

3. Someone Will Get Power Over Your Finances

As with healthcare decisions, if you become incapacitated and haven’t legally named someone to handle your finances while you’re unable to do so, the court will pick someone for you. The way to avoid this is by granting someone you trust durable financial power of attorney.

A durable financial power of attorney is an estate planning vehicle that gives the person you choose the immediate authority to manage your financial, legal, and business affairs if you’re incapacitated. This agent will have a broad range of powers to handle things like paying your bills and taxes, running your business, collecting your Social Security benefits, selling your home, as well as managing your banking and investment accounts.

Without a signed durable financial power of attorney, your family and friends will have to go to court to get access to your finances, which not only takes time, but it could lead to the mismanagement—and even the loss—of your assets should the court grant this authority to the wrong person.

What’s more, the person you name doesn’t have to be a lawyer or financial professional; it can be anybody you choose, including both family and friends. The most important aspect of your choice is selecting someone who’s imminently trustworthy, since they will have nearly complete control over your finances while you remain incapacitated. And besides, with us as your Personal Family Lawyer®, your agent will have access to our team as their trusted counsel should they need guidance or help.

Don’t Leave So Much At Risk

Given these potential risks and costs for yourself and  those you care about, it would be foolhardy if you are single without kids to ignore or put off these basic estate planning strategies. Identifying the right estate planning tools is easy to do, and it begins with a Family Wealth Planning Session. During this session, us,  your local Personal Family Lawyer® will consider everything you own and everyone you love, and guide you to make informed, educated, and empowered choices for yourself and your loved ones.

In the end, it will likely take just a few hours of your time to make certain that your assets, healthcare, and finances will be managed in the most effective and affordable manner possible in the event of your death or incapacity. Don’t leave your life and assets at risk or leave a mess for the people you love; contact us, your Personal Family Lawyer® to get your estate planning handled today.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during 

which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

If a family member or friend has asked you to serve as trustee for their trust either during their life, or upon their death, it’s a big honor—this means they consider you among the most honest, reliable, and responsible people they know.

That said, serving as a trustee is not only a great honor, it’s also a major responsibility, and the role is definitely not for everyone. Serving as a trustee entails a broad array of duties, and you are both ethically and legally required to properly execute those duties or you could face liability for not doing so.

In the end, your responsibility as a trustee will vary greatly depending on the size of the estate, the type of assets covered by the trust, how many beneficiaries there are, and the document’s terms. In light of this, you should carefully review the specifics of the trust you would be managing before making your decision to serve.

Remember, you don’t have to take the job. That said, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might actually enjoy the opportunity to serve, so long as you understand what’s expected of you.

With this in mind, here we’ll give you a brief overview of what serving as a trustee typically entails. For help in making your decision, contact us, your Personal Family Lawyer®, so we can detail exactly what your specific trust would require of you. And as we’ll discuss more below, if you do accept, we can also help you carry out your responsibilities, so rest assured, you won’t have to handle things all by yourself.

A Trustee’s Primary Duties

Although every trust is different, serving as trustee comes with a few core requirements. These duties primarily involve accounting for, managing, and distributing the trust’s assets to its named beneficiaries as a fiduciary.

As a fiduciary, you have the power to act on behalf of the trust’s creator and beneficiaries, always putting their interests above your own. In fact, you have a legal obligation to act in a trustworthy and honest manner, while providing the highest standard of care in executing your duties.

This means that you are legally required to properly manage the trust and its assets in the best interest of all the named beneficiaries. And if you fail to abide by your duties as a fiduciary, you could face legal liability. For this reason, you should consult with us for a more in-depth explanation of the duties and responsibilities a specific trust will require of you before agreeing to serve.

But regardless of the trust or the assets it holds, some of your key responsibilities as trustee include:

• Identifying and protecting the trust assets
• Determining what the trust’s terms require in terms of management and distribution of the assets
• Hiring and overseeing an accounting firm to file income and estate taxes for the trust
• Communicating regularly with beneficiaries
• Bringing in the right investment management team to manage the trust assets
• Being scrupulously honest, highly organized, and keeping detailed records of all transactions
• Closing the trust and distributing the assets when the trust terms specify

Experience NOT Required

It’s important to point out that being a trustee does NOT require you to be an expert in law, finance, taxes, or any other field related to trust administration. In fact, trustees are not only allowed to seek outside support from professionals in these areas, they’re highly encouraged to do so, and the trust estate will pay for you to hire the support you need.

So even though serving as a trustee may seem like a daunting proposition, you won’t have to handle the job alone. And you are also able to be paid to serve as trustee of a trust should you choose to accept the role. 

That said, many trustees, particularly close family members, often choose to forgo any payment beyond what’s required to cover the trust expenses, if that’s possible. The way  you are compensated as a trustee will depend on your personal circumstances, your relationship with the trust creator and beneficiaries, as well as the nature of the assets in the trust.

We’re Here To Help

Because serving as a trustee involves such serious responsibility, you should meet with us, your Personal Family Lawyer® for help deciding whether or not to accept the role. We will offer you a clear, unbiased assessment of what’s required of you based on the specific trust’s terms, assets, and beneficiaries.

And if you do choose to serve, it’s even more important that you have someone who can assist you with the trust’s administration. As your Personal Family Lawyer®, we will guide you step-by-step throughout the entire process, ensuring you properly fulfill all of the trust creator’s wishes without exposing the beneficiaries—or yourself—to any unnecessary risks. Contact us today to learn more.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

When creating an estate plan, people are often most concerned with passing on the “big things” like real estate, bank accounts, and vehicles. Yet these possessions very often aren’t the items that have the most meaning for the loved ones we leave behind.

Smaller items, like family heirlooms and keepsakes, which may not have a high dollar value, frequently have the most sentimental value for our family members. But for a number of reasons, these personal possessions are often not specifically accounted for in wills, trusts, and other estate planning documents. 

However, it’s critical that you don’t overlook this type of property in your estate plan, as the distribution of such items can become a source of intense conflict and strife for those you leave behind. In fact, if you don’t properly address family heirlooms and keepsakes in your estate plan, it can lead to long-lasting disagreements that can tear your family apart.

Heirlooms & Keepsakes: Little Things With Big Value

Heirlooms and keepsakes are both prized for their sentimental value, but these possessions are slightly different from one another in terms of the manner in which the items are passed on. 

Heirlooms: Heirlooms are passed down among family members for generations, and the passing of heirlooms sometimes involves traditions. For example, the first daughter to marry inherits grandmother’s heirloom wedding ring.

Keepsakes: Keepsakes, on the other hand, are possessions that are given or kept specifically for sentimental or nostalgic reasons, and these items may only get passed on once. For example, photo albums are a typical keepsake that are treasured by many families. If a keepsake gets passed on multiple times, it may eventually become a family heirloom.

Although just about any personal possession could be considered an heirloom or keepsake, some of the most common examples of these items include the following:

• Jewelry
• Photographs
• Books
• Art
• Musical instruments
• Furniture
• Clothing
• Bibles
• Recipes
• Family documents (such as birth certificates, baptism records, and citizenship papers)
• Collections (such as sports memorabilia, coins, stamps, and doll collections)

Issues Raised By Passing On Heirlooms & Keepsakes

In the legal world, both heirlooms and keepsakes are considered “non-titled personal property.” As mentioned earlier, when there is no plan in place for the distribution of these items following the owner’s death, it can create bitter conflicts among family members. Indeed, fights over heirlooms and keepsakes can cause close family members to never speak with one another again.

In her book “Who Gets Grandma’s Yellow Pie Plate?” Professor Marlene S. Stum, an expert in family social science at the University of Minnesota, warns of the infighting that can occur when there’s no plan for who inherits these personal effects.

“What surprises many people is that often the transfer of non-titled personal property creates more challenges among family members than the transfer of titled property,” says Stum. “Research has shown that disputes over inheritance and property distribution are one of the major reasons for adult siblings to break off relationships with one another.” 

Given the potential trouble the distribution of heirlooms and keepsakes can cause for your heirs, you’ll want to take extra care in seeing that these family treasures are passed on properly. And this means incorporating them into your estate plan in one way or another. 

Strategies For Peacefully Distributing Heirlooms & Keepsakes

While there is no one perfect way to distribute these items in your estate plan, your primary goal should be to maintain harmony among your loved ones during an already emotional time. As with most sensitive issues, clear communication is vital to this process.

Because your family members can have vastly different values associated with certain heirlooms and keepsakes and you may have little idea about how each person feels, you should speak with each family member in advance. By talking with family members about their feelings and expectations regarding your possessions ahead of time, you will have a much better idea how to distribute these items to your loved ones with the least amount of conflict.

Additionally, you should decide ahead of time if you need to have any of your heirlooms or keepsakes appraised. In doing so, you provide your heirs with the necessary documentation to gauge the monetary value of these items, and you can save them from extra work while they are mourning your death. 

Again, the manner in which you distribute your heirlooms and keepsakes will depend largely on the items you have to pass on and your specific family situation. That said, here are a few estate planning strategies to consider when passing on these precious possessions.

Gifting during your lifetime: Of course, you don’t have to wait until you die to pass on your heirlooms and keepsakes, and you may prefer to give away certain special items while you are still living. By doing so, you get to personally witness the joy your loved ones experience when they receive the gift, and you can also personally explain the reasons you want each person to have a particular item.  

If your heirlooms and/or keepsakes have a high monetary value, you should keep gift tax issues in mind when you give them away. That said, the IRS has a high annual gift tax exclusion ($16,000 in 2022) and an equally high lifetime exclusion ($12.06 million in 2022), so few people will need to worry about such taxes.

Keep in mind, the lifetime exclusion amount will revert back to its pre-2018 level of around $5 million per individual in 2026, so if you are considering gifting high-value possessions, you may want to do it sooner, rather than later. In any case, if you have possessions you want to give away that might trigger gift taxes, meet with us, your Personal Family Lawyer® to discuss your options.

Include items in your estate plan using a personal property memorandum: As with other assets you want to pass on after your death, you should include heirlooms and keepsakes in your estate plan by adding them to your will or trust. The best way to do this is by using what’s known as a personal property memorandum.

A personal property memorandum is a separate document that is referenced in your will or living trust. The memorandum allows you to list which items you wish to leave to each individual and detail the reasons you are giving each item. In many states, if it’s properly incorporated into your will or trust, a personal property memorandum is a legally binding document.

Furthermore, unlike a will or trust, you can create and update your memorandum without a lawyer’s help. You can change your memorandum as many times as you like, just make sure you sign and date it each time to ensure authenticity. Your memorandum can be as long or short as you like, which allows you to account for even the smallest or seemingly insignificant possessions.

Most types of tangible personal property can be included in your memorandum, but it’s important to note that you cannot list certain assets in a memorandum, including titled property, such as real estate and vehicles; assets with a beneficiary designation, such as life insurance, 401(k)s, and bank accounts; or intellectual property, such as works protected by a copyrights or trademark. If you are unsure if you should include a certain possession in your personal property memorandum, consult with us.

Although you don’t need a lawyer to create or modify your personal property memorandum, if you need any help or support with yours, reach out to us, your Personal Family Lawyer®. That said, you should always enlist our assistance if you’d like to create or update your will or trust.

Pass on the values & stories behind the possessions: You may want to consider making audio recordings to accompany your heirlooms and keepsakes. In this way, your loved ones not only get to hear your voice, but they will also be able to learn the stories behind the possessions, as well as the reasons why you gave each person a particular item.

These stories not only help connect you with future generations, but having a strong family narrative also helps young people develop strong personal identities and boosts their self esteem. In the New York Times article, “The Stories that Bind Us,” author Bruce Feiler comments on this phenomenon: “The more children knew about their family’s history, the stronger their sense of control over their lives, the higher their self-esteem, and the more successfully they believed their families functioned.”

Best of all, you don’t have to worry about creating these recordings yourself, as we offer this exact service during our Family Wealth Legacy Interviews. In every estate plan we create for our clients, we will personally guide you to create a customized recording for the people you love, and then we will provide you with the recording digitally to ensure it will survive long after you are gone.

Don’t Let Anything Fall Through The Cracks
Of course, if no one can find your heirlooms and keepsakes, they aren’t going to do anybody any good. For this reason, it’s vital that you create and maintain a comprehensive inventory of all of your assets, including each of your family heirlooms and keepsakes. Fortunately, this is another service we offer all of our clients at no additional charge. Indeed, we will not only help you create a comprehensive asset inventory, we have systems in place to make sure your inventory stays consistently updated throughout your lifetime. 

To learn more and get your inventory started for free right now, visit the Personal Resource Map website to watch a webinar by Ali Katz, founder of Personal Family Lawyer®. Then, schedule a meeting with us, your local Personal Family Lawyer® to incorporate your inventory with your other estate planning strategies.

Keep The Peace After You Are Gone
To ensure your heirlooms and keepsakes don’t create any unnecessary conflicts among your heirs, make sure that your estate plan includes all of your assets, especially your family heirlooms and keepsakes. As your Personal Family Lawyer, we can support you to ensure these precious treasures are protected and preserved as part of your Life & Legacy Plan, and that they pass to each of your loved ones in exactly the manner you would want, without causing a family feud. Contact us today to learn more.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Whether it’s to avoid probate, or reduce your tax burden, transferring ownership of your home to your adult child during your lifetime may seem like a smart move. But in nearly all cases, it’s actually a huge mistake, which can lead to dire consequences for everyone involved.

With this in mind, before you sign over the title to your family’s beloved homestead, consider the following potential risks.  

Your Child Could Be Stuck With A Massive Tax Bill

Another drawback to transferring ownership of your home in this way is the potential tax liability for your child. If you’re elderly, you’ve probably owned your house for a long time, and its value has dramatically increased, leading you to believe that by transferring your home to your child, he or she can make a windfall by selling it. And by transferring the property before you die, you may think that you can save your child both time and money by avoiding the need for probate.

Probate is the court process used to distribute your assets according to the wishes outlined in your will or according to our state’s intestate succession laws if you don’t have a will. Depending on the complexity of your estate, probate can be a long and expensive process for your loved ones; however, that expense is likely to be relatively minor compared to the tax bill your heirs could face.

That’s because if you transfer your home to your child during your lifetime, he or she will have to pay capital gains tax on the difference between your home’s value when you purchased it and the home’s selling price at the time it’s sold by your child. Depending on your home’s value, that tax bill can be astronomical.

In contrast, by transferring your home at the time of your death via your estate plan, your child will receive what’s known as a “step-up in basis.” This tax savings is one of the only benefits of death, and it allows your child to pay capital gains taxes when he or she sells your home, based only on the difference between the value of the home at the time of inheritance and its sales price, rather than paying taxes based on the home’s value at the time you bought it.

For example, say you originally purchased your home for $80,000, and when you die, the home had appreciated in value to $250,000. Your daughter inherits the home upon your death, and then she sells it five years later for $300,000. With the step-up in basis in effect, she would only owe capital gains taxes on the $50,000 of difference between the home’s value when it was inherited and when it was sold.

However, if you transferred ownership of the home to her while you were still living, your daughter would lose the step-up in basis, and would face a capital gains tax bill of $220,000.

Capital gains tax is only one kind of tax that could be impacted by a transfer of your home during your lifetime. You may also destroy valuable property tax basis, which could cause a re-assessment of your home for property tax purposes, depending on the county or state your home is located in. 

There are much better ways to avoid probate using estate planning, such as by putting your home into a revocable living trust, in which case your home would immediately pass to your loved ones upon your death, without the need for any court intervention. As your Personal Family Lawyer®, we can help you choose the most advantageous estate planning strategies to minimize your beneficiaries’ tax liability and ensure they get the most out of their inheritance, all while allowing them to avoid court and conflict.

Your Home Could Be Vulnerable To Debt, Divorce, Disability, & Death

There are a number of other reasons why transferring ownership of your house to your child is a bad idea. If your child takes ownership of your home and has significant debt, for example, his or her creditors can make claims against the property to recoup what they’re owed, potentially forcing your child to sell the home to pay those debts.

Divorce is another potentially thorny issue. If your child goes through a divorce while the house is in his or her name, the home may be considered marital property. Depending on the outcome of the divorce, the settlement decree may force your child to sell the home or pay his or her ex spouse a share of the home’s value.

The disability or death of your child can also lead to trouble. If your child becomes disabled and seeks Medicaid or other government benefits, having the home in his or her name could compromise their eligibility, just like it would your own. And if your child dies before you and owns the house, the property could be considered part of your child’s estate and end up being passed on to your child’s heirs, leaving you homeless.

There’s Simply No Substitute For Proper Estate Planning

Given these potential risks, transferring ownership of your home to your adult child as a means of “poor-man’s estate planning” is almost never a good idea. Instead, you should consult with us, as your Personal Family Lawyer®, to find alternative solutions. We can help you find much better ways to qualify for Medicaid and other benefits to offset the hefty price tag of long-term care, and at the same time, we will keep your family out of court and conflict in the event of your death or incapacity.

As your Personal Family Lawyer®, we offer a variety of different estate planning packages at a variety of different price points as part of our Life & Legacy Planning Process. With our guidance and support, we will not only help you protect and pass on your home, but all of your family’s wealth and assets, while also enabling you to better afford whatever long-term healthcare services you might require. Contact us today to learn more.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Even if the process is amicable, divorce can be one of life’s most stressful events. With so many major changes taking place, it’s easy to forget to update your estate plan—or simply put it off until it’s too late. After all, dealing with yet another lawyer is probably the last thing you want to do.

However, neglecting to update your estate plan for divorce can have potentially tragic consequences. And you shouldn’t wait until the divorce is final to rework your plan—you should update it as soon as you realize the split is inevitable.

Here’s why: Your marriage is legally still in full effect until your divorce is final, so if you die or become incapacitated while your divorce is ongoing and haven’t changed your estate plan, your soon-to-be ex spouse could wind up with complete control over you life and assets. Unless you want your ex to have that kind of power, you need to take action as soon as possible.

However, keep in mind that some states have laws that limit your ability to change your estate plan once your divorce is filed, so you may want to  consider making some or all of the following changes to your estate plan as soon as divorce is on the horizon and before you’ve filed. As your Personal Family Lawyer®, we can support you to ensure your estate plan is properly updated to reflect the latest changes in your life situation, family dynamics, and asset profile. Contact us as soon as you know divorce is coming, or right away if you’ve already begun the divorce process.

1. Change Your Power Of Attorney Documents

Unless you want the person you are removing from your life to make all of your legal, financial, and medical decisions in the event of your incapacity, you need to update your power of attorney documents as soon as divorce is inevitable. All adults over age 18 should have both a durable financial power of attorney and a medical power of attorney in place.

A durable financial power of attorney allows you to grant an individual of your choice the legal authority to make financial and legal decisions on your behalf should you become unable to make such decisions yourself. Similarly, a medical power of attorney grants someone the legal authority to make your healthcare decisions in the event of your incapacity.

Without these documents in place, your spouse has priority to make financial and legal decisions for you. And since most people typically name their spouse as their decision maker in these documents, you need to take action even before you begin the divorce process and grant this authority to someone else, especially if things are anything less than amicable between the two of you.

Once divorce is a sure thing, don’t wait—immediately contact us, your Personal Family Lawyer® to get these documents created or changed. And unless your attorney is an expert in estate planning, we recommend you don’t rely on your divorce lawyer to update these documents for you. There are just far too many important details in these documents that can be overlooked by a lawyer using a standard form, rather than the custom documents we will prepare for you.

2. Change Your Beneficiary Designations

As soon as you know you are getting divorced, you should update the beneficiary designations for assets that do not pass through a will or trust, such as life insurance policies and retirement plans. Failing to update your beneficiaries can lead to serious trouble down the road, and unfortunately, we see this happen all the time.

If you get remarried following your divorce, for example, but you haven’t changed the beneficiary of your 401(k) to name your new spouse, the ex you divorced 10 years ago could end up with your retirement account upon your death. And since there are often restrictions on changing beneficiary designations once a divorce is filed, the timing of your beneficiary change is particularly critical.

In most states, once either spouse files divorce papers with the court, neither party can legally change their beneficiaries without the other’s permission until the divorce is final. With this in mind, you may want to consider changing your beneficiaries prior to filing divorce papers, and then post-divorce you can always change them again to reflect whatever is determined in the divorce settlement.

If your divorce is already filed, meet with us your Personal Family Lawyer® to see if changing beneficiaries is legal in our state—and whether it’s in your best interest. And if naming new beneficiaries is not an option for you now, once the divorce is finalized it should be your number-one priority. In fact, put it on your to-do list right now!

3. Create a New Will

You should create a new will as soon as you decide to get divorced, since once divorce papers are filed, you may not be able to change your will. And because most married couples name each other as their executor and the primary beneficiary of their estate, it’s important to name a new person to fill these roles as well.

When creating a new will, rethink how you want your assets divided upon your death. This most likely means naming new beneficiaries for any assets that you’d previously left to your future ex and his or her family. Keep in mind, some states have community-property laws that entitle your surviving spouse to a certain percentage of the marital estate upon your death, regardless of what your will says. So if you die before the divorce is final, you probably won’t be able to entirely disinherit your surviving spouse through the new will.

That said, it’s almost certain you wouldn’t want him or her to get everything. In light of this, you should create your new will as soon as you realize divorce is inevitable to ensure the proper individuals inherit the remaining percentage of your estate should you pass away while your divorce is still ongoing.

And should you choose not to create a new will during the divorce process, don’t assume that your old will is automatically revoked once the divorce is final. State laws vary widely in regards to how divorce affects a will. In some states, your will is revoked by default upon divorce. In others, unless it’s officially revoked, your entire will—including all provisions benefiting your ex—remain valid even after the divorce is final.

Given the uncertain legal landscape, meet with us your Personal Family Lawyer®  as soon as you know divorce is coming. We can advise you on our state’s laws and how to best navigate them when creating your new will—whether you do so before or after your divorce is final.

4. Amend Your Existing Trust Or Create A New One

If you have a revocable living trust, you’ll want to update it too. Like wills, the laws governing if, when, and how you can change a trust during a divorce can vary, so you should consult us as soon as possible if you are considering divorce. In addition to reconsidering what assets your soon-to-be-ex spouse should receive through the trust, you’ll probably want to replace him or her as successor trustee, if they are so designated.

And if you don’t have a trust in place, you should seriously consider creating one, especially if you have minor children. Trusts provide an array of benefits that are unavailable with a will, and they’re particularly well-suited for blended families. Given the likelihood that both you and your spouse will eventually get remarried—and perhaps have more children—trusts are an invaluable way to protect and manage the assets you want your children to inherit.

By using a trust, for example, should you die or become incapacitated while your kids are minors, you can name someone of your choosing to serve as successor trustee to manage their money until they reach adulthood, making it impossible for your ex to meddle with their inheritance.

Given the enhanced protection and control that a trust can provide compared with a will, you should at least discuss creating a trust with us, your Personal Family Lawyer®  before ruling out the option entirely.

5. Revisit Your Estate Plan Once Your Divorce is Final

During the divorce process, your primary objective is limiting your soon-to-be ex’s control over your life and assets should you die or become incapacited before divorce is final. For this reason, the individuals to whom you grant power of attorney, name as trustee, designate to receive your 401(k), or add to your estate plan in any other way while the divorce is ongoing are often just temporary.

Once the divorce is final and your marital property has been divided up, you should revisit all of your estate planning documents and update them accordingly based on your new asset profile and living situation. From there, your plan should continuously evolve along with your life circumstances, particularly following major life events, such as getting remarried, having additional children, or when family members pass away.

Get Started Right Away

Although it may be tempting to put off changing your estate plan when you are going through a divorce, especially if the process has been contentious, you can’t afford to wait. Meet with us to review your estate plan immediately upon realizing that divorce is unavoidable, and then schedule a follow-up visit once your divorce is final.

If you delay updating your estate plan, even just for a few days during your divorce, it can make it legally impossible to change certain parts of your plan, so act now. And if you’ve yet to create any estate plan at all, an impending divorce is the perfect time to finally take care of this crucial responsibility. Contact us today to learn more.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

If you are running a business, it’s easy to give estate planning less priority than your other business matters. After all, if you’re facing challenges meeting next month’s payroll or your goals for growth over the coming quarter, concerns over your potential incapacity or death can seem far less urgent.

But the reality is considering what would happen to your business in the event of your incapacity or when you die is one of your most pressing responsibilities as a business owner. Although estate planning and business planning may seem like two separate tasks, they’re actually inexorably linked. And given that your business is likely your family’s most valuable asset, estate planning is crucial not only for your company’s continued success, but also for your loved one’s future well being.

Without a proper estate plan, your team, clients, and family could face dire consequences if something should happen to you. Yet these dangers can be fairly easily mitigated using a few basic estate planning strategies. To demonstrate why proper estate planning is so important for business owners, here are four issues your company and family are likely to encounter as a result of poor estate planning, along with the corresponding estate planning solutions you can use to prevent and/or mitigate those issues.   

Issue #1: If your estate plan consists of only a will, your estate—including your business and its assets—must go through probate when you die. 

When it comes to creating an estate plan, most people typically think of a will. While it’s possible to leave your business to someone in your will, it’s far from the ideal option. That’s because upon your death, all assets passed through a will must first go through the court process known as probate.

During probate, the court oversees your will’s administration to ensure your assets (including your business) are distributed according to your wishes. But probate can take months, or even years, to complete, and it can also be quite expensive, which can seriously disrupt your operation and its cash flow. What’s more, probate is a public process, potentially leaving your business affairs open to your competitors.

Plus, while your family and team may know how to run your company without you, they might be unable to access vital assets, such as financial accounts, until probate is concluded. Moreover, even if they can access all of the needed assets, the legal fees charged by the lawyers your family will likely have to hire to help them navigate probate can quickly deplete your company’s coffers.

And this is all assuming your will isn’t disputed during probate, which is also a real possibility, especially with a highly profitable business at stake. If your heirs disagree about whom you name to control your business and/or how the business assets should be divided, a vicious court battle can ensue and drag on for years, dividing your family and crippling your company.

Estate Planning Solution: Given the drawbacks associated with a will, a much better way to ensure your business’s continued success following your death is by placing your company in a trust: either a revocable living trust, an irrevocable trust, or some combination of the two. A trust is not required to go through probate, and all assets placed within the trust are immediately transferred to the person, or persons, of your choice in the event of your death or incapacity.

When you die, having your business held in trust would allow for the smooth transition of control of your company, without the time and expense associated with probate. Plus, trusts are not open to the public, so your company’s internal affairs would remain private, and the transfer of ownership can take place in your lawyer’s office, not a courtroom. Finally, trusts, especially irrevocable trusts, can help shield your business and its assets from creditors and lawsuits, which could threaten your company with you out of the picture.

Issue #2: If you become incapacitated by illness or injury and you haven’t legally named someone to manage your business assets, the court will choose someone for you.

Another issue with relying solely on a will is that a will only goes into effect when you die and offers no protection for your business if you’re incapacitated by accident or illness. With just a will—or no estate plan at all—the court will appoint a financial guardian or conservator to assume control of your business until you recover.

Like probate, the court process associated with guardianship can be long and costly. And whether the guardian is a family member, employee, or outside professional, it’s doubtful that individual would run your business exactly how you would want them to, and this can seriously disrupt your operation. Not to mention, having a court-appointed guardian managing your business affairs can lead to serious conflicts and strife within both your team and family, particularly if you’re out for a lengthy period.

Estate Planning Solution: One estate planning vehicle that can prevent this is a durable financial power of attorney. A durable financial power of attorney allows you to name the person you would want to run your business and handle all of your other financial affairs if you ever become unable to do so yourself. If you’re sidelined by illness or injury, this person will be granted legal authority to handle your business affairs, such as managing payroll, signing documents, and making financial decisions. 

This not only speeds the expense and delay associated with the guardianship process, but it also ensures that while you are incapacitated, your company and other financial interests will be managed by someone you trust, rather than relying on the court to choose someone for you.

Though again, most ideally having a trust and a named Trustee, would allow your business to be operated in the event of your incapacity, without the necessity for any court process at all. 

Issue #3: If your business partner dies and you don’t have a legal agreement that allows you to purchase your partner’s share of ownership in your company, along with a source of liquidity to fund that purchase, you could find yourself in business with your partner’s heirs. 

If you share ownership of your business with one or more other people, it’s crucial that you have a legally binding plan in place designating what would happen to each partner’s ownership interests should one of you leave the company, get divorced, die, or become incapaciated. Without such a plan in place, along with the funds needed to execute that plan, all sorts of potential problems and conflicts can arise.

For example, should your partner die without such a plan in place and the partner’s children inherit his share of ownership in your business, you could find yourself in business with your partner’s kids or be forced to pay an inflated price for their share of the business. A similar situation could arise should your partner get divorced and your partner’s former spouse is awarded a share of the company in the divorce settlement.

Estate Planning Solution: To prevent such conflicts, you should create a buy-sell agreement. A buy-sell agreement outlines exactly what would happen to your business in the event an owner leaves the company for any number of reasons, or when one of the owners die, becomes incapacitated, or gets divorced. 

For example, a buy-sell agreement can ensure that should certain triggering events occur—like a partner’s retirement, death, or permanent incapacity—the remaining owners are able to purchase that partner’s share of the business. In this way, an effective buy-sell agreement can prevent you from having to deal with new partners you didn’t count on. At the same time, a buy-sell can help prevent your loved ones from getting stuck owning a business they don’t want and can’t sell.

In addition to having a buy-sell agreement in place, you will also need to have a source of funding that allows the surviving owners to buy out the deceased partner’s shares. In most cases, the best way to fund your buy-sell is by purchasing life insurance. For example, the company can purchase a life insurance policy on each of the owners, and the company would receive the death benefit to purchase the deceased owner’s share of the business and/or buy out the deceased’s heirs.

Issue #4: If you name a family member to run your company after your death and you don’t provide them with a detailed plan, your business can be ruined by just a few poor decisions.

There are countless stories of family members assuming control of multi-million-dollar businesses and running things into the ground in just a short span of time. And if such massive fortunes can be squandered so easily, it’s seriously doubtful that smaller operations like yours will fare much better.

Even if your successor doesn’t destroy your company, he or she can cause serious conflicts among your staff, clients, and family simply by managing the business radically differently than you. For this reason, simply naming a successor to take the reins in your absence is not enough.

Estate Planning Solution: A comprehensive business succession plan can help ensure your company doesn’t fall apart when you pass on. Beyond simply naming a successor, such plans provide stability and security by allowing you to lay out detailed instructions for how the company should be run.

From specifying how ownership should be transferred and providing rules for compensation and promotions to establishing dispute resolution procedures, an effective succession plan can provide the new owner with a roadmap for your company’s continued success following your death or retirement.

Secure Your Business, Your Legacy, and Your Family’s Future

If you haven’t taken the time to create a proper estate plan, your business is missing one of its most essential components. During our Life & Legacy Planning Process, as your Personal Family Lawyer®, we will work with you to create a comprehensive estate plan to ensure the company and wealth you’ve worked so hard to build will survive—and thrive—no matter what happens to you.

Furthermore, every estate plan we create has built-in legacy planning services, which can greatly facilitate your ability to preserve and communicate your most treasured values, insights, stories, and mementos with the loved ones you’re leaving behind. By working with us, you can rest assured that your business and legacy will offer the maximum benefit for the people you love most. 

You see, we’ve discovered that estate planning is about far more than planning for your death and passing on your “estate” to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning. Contact us today to get started with a Family Wealth Planning Session.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Life insurance is a key component of your family’s estate plan, offering those who depend on you for their financial security a safety net in the event of your death. Whether those dependents include your spouse, children, aging parents, business associates, or all of the above, investing in life insurance is a way to say “I love you” and make certain that when you pass away, the people you love will have a reliable source of financial support to count on.

Although purchasing life insurance may seem fairly straightforward, it can actually be quite complex, especially given all of the different types of coverage available. Plus, because insurance agents often earn hefty commissions on the policies they sell, it can be challenging to determine exactly how much coverage (and what type of insurance) you actually need—and who you can trust to give you objective and accurate advice about that coverage.

With this in mind, we’ll break down the common types of life insurance coverage, explain how each of the different types work, and outline what you need to know in order to purchase a policy that will adequately address your needs, objectives, and family situation. While you should always meet with your Personal Family Lawyer® to ensure you get the proper coverage, here are a few of the most important factors to consider when shopping for a life insurance policy.

Betting On Your Life

Depending on the type and purpose of your coverage, a life insurance policy pays benefits to your family or business (whomever you choose as the beneficiary) in the event of your death. And while you don’t need it until you die, the earlier in life you purchase your policy, the less expensive your monthly or annual premiums will be. Of course, investing in life insurance early on also means that you’ll pay into the policy for a longer period of time.

By the same token, the healthier you are when you get life insurance, the less you’ll pay in premiums, because your policy is basically a bet between you and the insurance company about when you’ll die. The insurance carrier is betting they’ll be able to earn enough from the premiums you pay before you die, so that they’ll have received more than enough money to pay out the death benefit to your designated beneficiaries by the time you pass away. To that end, many carriers require a medical exam before you are issued a policy.

Life insurance comes in two main forms, which you can think of as permanent and non-permanent. With permanent coverage, such as whole life and universal life, as long as you pay the premiums, your insurance cannot be canceled, and your policy will be there and pay out when you die (unless you live longer than the guaranteed period). 

With non-permanent coverage, known as term life insurance, you pay premiums over a certain number of years—usually 10, 20, or 30—and if you have not died during that period, the insurance ends, your premiums are gone, and no benefits are paid out when you die.

Permanent vs Term Life Insurance: Which Do You Need?

To determine which type of life insurance policy you should purchase for your family—permanent or term—you’ll need to consider a number of factors. When it comes to buying life insurance for your family, you will need to die with life insurance coverage in place if any of the following three scenarios apply:

1. You are likely to have dependents—minor children, a non-working spouse, or senior parents—who rely on you for their financial needs, and you will not have enough saved up at the time of your death to provide for their needs for the rest of their life.
2. You have a business that will need a cash infusion if you die to keep it running, until it can be sold or for your loved ones to buy out a business partner.
3. You will have an estate tax bill that you want to make sure is covered by life insurance so your family doesn’t have to sell assets to pay your estate taxes.

In each of these situations, you want to make sure you have either term life insurance that will continue long enough to cover your needs, or you’ll want to consider purchasing permanent coverage.

Term Life Insurance
The coverage periods of term life policies can vary widely: 10, 15, 25, 30 years, or longer. Because your coverage expires after a certain number of years, term life insurance is much cheaper than permanent. Term policies are typically used by people who expect that they’ll only need the insurance for a certain period of time or for a certain purpose, but at some point in the future, they will no longer need the coverage.

For example, you might purchase term life coverage in order to pay off your home mortgage in the event you die before it’s paid off. Or you might have minor children, who rely on your income for their basic needs, and you need a term policy to ensure they have enough money to live on until they become financially independent should you die before they reach adulthood.

Permanent Life Insurance

Permanent life insurance comes in several different forms, such as whole life, universal life, and variable universal life. And it’s mostly used for estate tax planning, very high-end income tax planning, and can also be used as key-person insurance, which pays out benefits if you fill a vital role in a company that would need cash upon your death to continue operating. As mentioned earlier, the various forms of permanent life insurance pay a death benefit whenever you die, no matter how long you live (unless the policy contract has a termination provision at a specific age). 

Permanent life insurance policies typically have two components: the amount that goes toward paying for the life insurance, and the amount that builds up as an investment, called the “cash value” component. The cash value amount of your premium is invested tax-free, and depending on the policy, you may be able to use the cash value component in several ways: You can borrow against it throughout your lifetime (in which case you pay interest to the insurance company), you can take out cash withdrawals (in which case your death benefit would be reduced accordingly), or you can use it to pay future premiums.

There are some caveats to mention here: You often need to pay premiums on a permanent life insurance policy for 10 to 15 years before there is enough cash value to borrow against or use to pay premiums. If you access the cash value of your life insurance, you’ll reduce your death benefit, and you also may have to pay fees or taxes, depending on the policy and how much you take out. And if you withdraw too much, your coverage could terminate.

Keep in mind that life insurance is for providing your loved ones with a death benefit when you die, so you should always consult with us, your Personal Family Lawyer® and financial advisor before accessing the cash value funds.

How Much Life Insurance is the Right Amount? 

When purchasing life insurance, you’ll want to make sure you have enough term life insurance to cover the expenses that your dependents will require until they are no longer dependents, or until you are certain that you will have enough money saved up to cover the lifetime needs of those dependents.

If you have children with special needs or a non-working spouse, they will require a longer period of care after your death, compared to a family with two incomes and children who will achieve their own independence in their late 20s or early 30s. To determine the right amount of term life insurance, consult with us, your Personal Family Lawyer® or a fee-only financial planner.

If you plan on staying in your business well beyond the typical retirement age, if you are an absolutely indispensable part of your company’s continued success, or you will have estate taxes to cover upon your death, you should consider permanent life insurance. In that case, you’ll want to consult with us, as your Personal Family Lawyer®, before you meet with an insurance agent to make certain you understand the terms of the policy you are buying and why you are buying it.

Your Trusted Advisor

We all have unique assets, liabilities, and family situations, so there’s no way to know exactly what types and amounts of life insurance coverage your family needs without a full evaluation. Before you sit down with an insurance agent, meet with us, your Personal Family Lawyer® to identify the appropriate life insurance policy for your particular situation. Schedule your appointment today to get started.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

As we head into the third year of the pandemic, we are coming to terms with just how fragile our lives and health really are. If you haven’t gotten sick yourself, it’s almost certain you know someone who has, and many of us even know of one or more individuals who have died in the past two years. Although serious illness and death are something we are always at risk for—and should plan for—the pandemic has forced many of us to face our own mortality like no other event in recent memory. Some of those worst-case scenarios we thought would never happen now seem much more likely, and for some people, those unthinkable situations have even become reality.

Understanding The Risks

Yet even if you manage to avoid becoming sick right now, the fact remains that we are all vulnerable to serious illness or injury, regardless of how young or healthy you are. And if you are a parent, one of the most frightening aspects of that reality is knowing that should something happen to you, your children would be left without you to care for them, whether only for a temporary period or permanently.

With this in mind, consider the following scenario: You and your spouse are out to dinner, and your kids are at home with the babysitter. On your way home, you get into a car accident. When you fail to make it home on time, the babysitter calls you repeatedly, but when no one answers, she calls the police.

The police arrive and find your kids with the babysitter, who offers to stay with the children until a relative can be found to take them. But because the babysitter doesn’t have the legal authority to care for the children—even temporarily—the police have no choice but to call Child Protective Services. These authorities will take your children into custody until they can locate and/or appoint the proper guardian.

This is the case even if you have friends or family living nearby who are willing to care for the children. If you haven’t left proper legal documentation, the authorities have no option but to call Child Protective Services. You must give the authorities a legal basis for keeping your children with the friends or family you designate.

What’s more, your kids are still at risk of being taken by the authorities even if you’ve named legal guardians for them in your will. That’s because your will only becomes operative in the event of your death, so if you are incapacitated by an accident or illness, your will would be ineffective.

Or perhaps the guardians you named in your will live far from your home, so it would take them several days to get there. If you haven’t made legally-binding arrangements for the immediate care of your children, it’s highly likely that they will be placed with Child Protective Services until those guardians arrive. 

And does anyone even know where you will is located and how to access it? 

Most Guardianships Are Lacking

These are just a few of the many scenarios that can cause your children to be taken into custody by strangers or placed with a family member you would never want caring for them. And sadly, we see this happen even to those parents who’ve worked with lawyers to name legal guardians for their children in their will, because most lawyers simply don’t know what’s necessary for planning and ensuring the well-being and care of minor children.

However, as a Personal Family Lawyer® firm, we have been trained by the author of the best-selling book, Wear Clean Underwear!: A Fast, Fun, Friendly, and Essential Guide to Legal Planning for Busy Parents, on legal planning for the unique needs of families with minor children. As a result of this training, we offer a comprehensive system known as the Kids Protection Plan®, which is included with every estate plan we prepare for families with young children.

Developed by a nationally recognized attorney, who is a mom herself, the Kids Protection Plan® provides parents of minor children with a wide array of legal planning tools to make sure there is never a question about who will take care of their kids if they are in an accident or suffer some other life-threatening incident.

The full Kids Protection Plan® includes all of the following:

• Legal documents to name short-term guardians, who can be there immediately for your children, so they will never be taken into the arms of strangers or anyone you wouldn’t want. Not even for a moment.
• Letters to the people you name as short-term guardians, so the people you have named will know just what to do if called upon.
• Instructions to everyone who takes care of your kids as to exactly what to do if you are in an accident, so there’s never any question about what to do or who to call.
• Legal documents to name long-term guardians, who will raise your children just as you would, so there is no family feuding over your children.
• Letters to your long-term guardians, letting them know exactly what to do if called upon.
• Instructions and guidelines for your long-term guardians on how you want your kids to be raised to ensure your kids are raised with your values, insights, stories, and experience.
• Medical powers of attorney for your minor children, so the next time they travel without you or you travel without them, you know they will get the medical care they need.
• A custom, personalized I.D. card for your wallet stating that you have minor children at home and who should be contacted if you are in an accident.

Here’s How To Get Started

While you should meet with us to put the full Kids Protection Plan® in place as soon as possible, protecting your children is such a critical and urgent issue, we’ve created a totally free website, where you can visit to get your plan started right now.

⇒ If you’ve yet to take any action at all, visit this easy-to-use and 100% FREE website, where you can take the first steps to create legal documents naming long-term guardians for your children to ensure that should anything happen to you prior to creating your formal estate plan, your kids would be cared for by the people you would want in exactly the way you would want. Get started here now: http://makekidsplan.com

After you’ve completed those initial actions, schedule a Family Wealth Planning Session with us, your neighborhood Personal Family Lawyer®, where we will put the full Kids Protection Plan® in place, and determine if there is anything else your family might need to ensure the well-being and care of your children no matter what happens.

⇒ If you have already named long-term guardians in your will, either on your own or with a lawyer, we can review your existing legal documents to see whether you have made any of the six common mistakes that could leave your kids at risk, and then revise your plan to ensure your children are fully protected.

A Learning Experience

Although the pandemic is likely to go down as one of the most tragic periods of our lifetime, if it motivates more people to get serious about estate planning, it may end up having some lasting positive effects. On that note, if you are a parent of minor children and want to ensure that your kids will always be taken care of by the people you want, in the way you want, no matter what happens to you, meet with us, your Personal Family Lawyer® to put the Kids Protection Plan® in place today.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Do a Google search for “digital wills” or “online estate planning,” and you’ll find dozens of different websites offering low-cost, do-it-yourself (DIY) and sometimes even free estate planning documents, such as wills, trusts, powers of attorney, and healthcare directives.

From LegalZoom® and Rocket Lawyer® to TrustandWill.com and FreeWill.com, these DIY legal documents may seem like a cheap and easy way to finally cross estate planning off your to-do list—and do so without having to pay a lawyer big bucks to assist you. After all, you’ve been able to prepare and file your taxes online for years, is estate planning really that much different? And aren’t lawyers using the very same forms you find on these DIY document websites?

An Inconvenient Truth

This kind of thinking is exactly what DIY and online estate planning services would like you to believe, but it’s far from true. In fact, relying on DIY or online estate planning documents can be one of the costliest mistakes you can make for your loved ones. Keep in mind, just because you created “legal” estate planning documents that doesn’t mean they will actually work when you—or most importantly, the people you love—need them. 

Without a thorough understanding of your family dynamics, the nature of your assets, and how the legal process works upon your death or incapacity, you are likely to make serious mistakes when creating a DIY estate plan. Even worse, these mistakes won’t be discovered until it’s too late—and the loved ones you were trying to protect will be the very ones forced to clean up your mess or get stuck in a costly and traumatic court process that can drag out for months or even years. 

Last week, in part one of this series, we covered the first two ways DIY estate plans can fail, and here, we’ll cover the remaining three.

Number 3 Way Your DIY Estate Plan Can Fail: Choosing the Wrong Executors or Trustees

State laws are also very specific about who can serve in certain roles like executor, trustee, or financial power of attorney. In some states, for instance, the executor of your will must either be a family member or an in-law, and if not, the person must live in your state. If your chosen executor doesn’t meet those requirements, he or she cannot serve.

Furthermore, some states require the person you name as your executor to get a bond, which is like an insurance policy, before he or she can serve. Such bonds can be difficult to get for someone who has a less-than-stellar credit score. If your executor cannot get a bond, it would be up to the court to appoint your executor, which could end up being someone you would never want managing your assets or a third-party professional, who could drain your estate with costly fees.

Number 4 Way Your DIY Estate Plan Can Fail: Lost and Unclaimed Assets

Unless your family knows exactly what assets you own and how to locate and access those assets, that property is as good as gone when you die—and your online will won’t be of any use to your family. In fact, there’s currently more than $50 billion worth of unclaimed property sitting in the different state Departments of Unclaimed Property across the U.S. because a family member died and their loved ones lost track of their assets.

To ensure that none of your assets end up in our state’s Department of Unclaimed Property, and your family will know exactly what you have and how to find everything if something happens to you, it’s essential that you keep a regularly updated inventory of all your assets. As your Personal Family Lawyer®, we will not only help you create a comprehensive asset inventory, we’ll make sure it stays regularly updated throughout your lifetime. 

Number 5 Way Your DIY Estate Plan Can Fail: Unforeseen Conflict Between Family Members

Family dynamics are—to put it lightly—quite complex. This is particularly true for blended families, where spouses have children from previous relationships. A DIY service cannot help you consider all the potential areas where conflict might arise among your family members and help you plan ahead of time to avoid such disputes. Even the best set of documents will be unable to anticipate and navigate these complex emotional matters—but we can.

Every day we see families ripped apart due to poor estate planning. Yet, we also see families brought closer together as a result of handling these matters the right way. When done right, the estate planning process is actually a huge opportunity to build new connections within your family, and our lawyers are specifically trained to help you with that. 

In fact, preventing family conflict with proactive estate planning is our special sauce and one of the primary reasons to work with us, as your Personal Family Lawyer®, rather than relying on DIY planning documents.

The Kind Of Planning Your Family Deserves

When it comes to estate planning, the documents you use are only as good as the understanding your lawyer has about your family dynamics, the nature of your assets, and how the law will apply to your situation upon your death or incapacity. And in most cases, you will need far more than just a few fill-in-the blank documents to properly address all of those complexities.

If you truly want things to be as simple as possible for the people you love when something happens to you, you want a trusted counsel who can prepare an estate plan that will achieve your desired objectives with a minimum amount of stress and conflict for the loved ones you are leaving behind, not just someone who has the best documents. This is where a Personal Family Lawyer® comes in. 

If you’ve yet to do any planning, contact us, your Personal Family Lawyer® to schedule a Family Wealth Planning Session™, which is the first step in our Life & Legacy Planning Process. During this initial meeting, we’ll take you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you die or if you become incapacitated.

If, as a result of this process, we determine that you really do have a very simple situation, and you want to create your own planning documents yourself online, we will support you to do that. However, if as a result of the process, you decide you would like us to draft a plan for you, we’ll support you to find the optimal level of planning for a price that’s right for you.

As part of our planning process, we will inventory all of your assets and ensure they are titled in a way that will keep your family out of court and out of conflict no matter what happens to you. Moreover, we take the time to get to know your family members and include them in the planning process, so everyone affected by your plan is well-aware of what your latest planning strategies are and why you made the choices you did, along with knowing exactly what they need to do if something happens to you. And if you are the parent of minor children, we will put safeguards in place to ensure that your kids are never placed into the care of strangers, even temporarily.

Finally, and perhaps most importantly, our Life & Legacy Planning process will ensure that it’s not just your money and tangible assets that get preserved and passed on, but also your family’s intangible legacy, which includes your family’s most treasured values, insights, stories, and mementos. We capture and record your family’s legacy using a unique process known as a Family Wealth Legacy Interview, which is included with every estate plan we create.

Life & Legacy Planning

Ultimately, we’ve discovered that estate planning is about far more than planning for your death and passing on your “estate” to your loved ones—it’s about planning for a life you love and a legacy worth leaving by the choices you make today—and this is why we call our services Life & Legacy Planning.

As your Personal Family Lawyer®, we are specifically trained to educate, empower, and support you to make the right decisions for the people you love, and get to know what really matters most to you. Furthermore, because your plan is designed to protect and provide for your loved ones in the event of your death or incapacity, we aren’t just here to serve you—we’re here to serve your entire family. 

In the end, as your Personal Family Lawyer®, our Life & Legacy Planning services go far beyond simply creating documents and then never seeing you again. We will develop a relationship with you and your family that lasts not only for your lifetime but for the lifetime of your children and their children if that’s your wish.

While the DIY approach might be a good idea if you’re looking to build a new deck for your backyard, when it comes to estate planning, it’s one of the worst choices you can make. Are you really willing to put your family’s well-being and wealth at risk just to save a few bucks? If you want to truly do right by those you love, contact us, to get your Life & Legacy Plan started today. 

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.