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Incorporating Faith and Values in Estate Planning

For many, passing along religious beliefs and values to the next generation is just as important as passing along financial wealth and tangible assets. Estate planning creates many opportunities to do this, including:

* End-of-Life Care. A health care power of attorney (Advance Directive in some states) lets you name someone to make medical decisions for you in the event you cannot make them yourself. This can be someone who shares your faith and values about end-of-life issues or someone who will honor your wishes. In either case, it is a good idea to provide written instructions about things like organ donation, pain medication (some may want to remain conscious at the end of life), hospice arrangements, even avoiding care in a specific facility. A visit by a priest, rabbi or other member of clergy may be desired. Pregnant women may want to include their preference on medical decisions that would impact the mother and her unborn child.

 * Funeral and Burial Arrangements.  Faith can influence views on burial, cremation, autopsy, even embalming. Faith may also influence certain details in a funeral or memorial service. Some people pre-plan their services and include a list of people to notify (which can be helpful for a grieving family). Some even pre-pay for the funeral and burial plots to prevent their loved ones from overspending out of grief and/or guilt.  Wisconsin allows the selection of an agent to handle funeral arrangements after death.

* Charitable Giving. Giving to others who are less fortunate is common among people of all faiths. Making final distributions to a church or synagogue, university, hospital and other favorite causes will convey the value of charitable giving to family members.

* Distributions to Children and Grandchildren. Taking the time to plan how assets are left to family members lets them know how much they are loved, and is another way to convey faith values. For example, providing for the religious education of children and/or grandchildren speaks volumes. Parents of young children can select someone who shares their religious views to manage the inheritance. A letter of instruction to the guardian can include views on the care and upbringing of young children, which are often influenced by faith.

If the children are older and a son- or daughter-in-law is not fully trusted, an attorney can assist with providing for a son or daughter in a way that will prevent an inheritance from falling into the wrong hands. However, making an inheritance conditional or disinheriting a child or grandchild who marries outside the faith or doesn’t share their parent’s faith can backfire. We cannot really force someone to believe as we do, and trying to do so by withholding an inheritance will only create discord in the family and may not be recognized by law. The emotional scars on the family, especially if a bitter legal fight results, are probably not what parents want for their family.

Transferring faith and values to family members is best done over time, by letting them see your faith at work in your life, taking them to religious services, and letting them see you being charitable. But it’s never too late. Talk to your family while you can. Explain what your faith means to you and how it has helped you through difficult moments in your life. You can also write personal letters or make a video that they can keep and review long after you are gone.

8 Things to Do Before You Travel

Before any trip, most of us create a “to-do list” of things we have put off and want to take care of before we leave. Here is a checklist of estate planning things to do before you take your next trip. Taking care of these will help you travel with peace of mind, knowing that if you don’t return due to serious illness or death, you have made things much easier for those you love.

1. Have your estate planning done. If you have been procrastinating about your estate planning, use your next trip as your deadline to finally get this done. Be sure to allow adequate time to get your estate plan completed in advance of your trip.

2. Review and update your existing estate plan. Revisions should be made any time there are changes in family (birth, death, marriage, divorce, remarriage), finances, tax laws, or if a trustee or executor can no longer serve. Again, be sure to allow enough time to have the changes made.

3. Review titles and beneficiary designations. If you have a living trust and did not finish changing titles and/or beneficiary designations, now is the time to do so. If a beneficiary has died or if you are divorced, change these immediately. If a beneficiary is incapacitated or a minor, set up a trust for this person and name the trust as beneficiary to prevent the court from taking control of the proceeds.

4. Review your plan for minor children. If you haven’t named a guardian who is able and willing to serve and something happens to you, the court will decide who will raise your kids without your input. If you have named a guardian, consider if this person is still the best choice. Name a back-up in case your first choice cannot serve. Select someone responsible to manage the inheritance.

5. Secure or review incapacity documents. Everyone over the age of 18 needs to have these: 1) Durable Power of Attorney for Heath Care, which gives another person legal authority to make health care decisions (including life and death decisions) for you if you are unable to make them for yourself; and 2) HIPPA Authorizations, which give written consent for doctors to discuss your medical situation with others, including family members.

6. Review your insurance. Check the amount of your life insurance coverage and see if it still meets your family’s needs. Consider getting long-term care insurance to help pay for the costs of long-term care (and preserve your assets for your family) in the event you and/or your spouse should need it due to illness or injury.

7. Organize your accounts and documents. It used to be that we could just point to a file cabinet and say everything was “in there.” But now so much is done online that there may not even be a paper trail. Make a list of ALL of your accounts, where they are located, and the user names and passwords, then review and update it before each trip. Print a hard copy in case your computer is stolen or crashes and let someone you trust know where to find it. Clean up your computer desktop and put your financial and other important files where they can be easily found. Make a back-up copy in case your computer is stolen or crashes, and let someone know where to find it. Be sure to include on your master list any passwords that might be needed to access your computer and files.

8. Talk to your children about your plan. You don’t have to show them financial statements, but you can discuss in general terms what you are planning and why, especially when any changes are made. The more they understand your plan, the more likely they are to accept it—and that will help to avoid discord after you are gone.

Young Adults Need Estate Planning, Too

Once a child turns 18, parents lose the legal ability to make decisions for their child or even to find out basic information.  Learning you cannot see your college student’s grades without his/her permission can be mildly frustrating, but a medical emergency can take this frustration to a completely different level.  The parents (or a sibling or another person) will probably have to go to court and ask for permission to obtain information about the student’s medical condition, be able to make decisions about treatment, and have access to the student’s financial records and accounts.

The following legal documents allow anyone, including a young adult, to name another person to make medical and financial decisions if someone is unable to make them for themself.  The person(s) selected should be someone the young adult knows and trusts, and a candid discussion should occur now so they know what their wishes would be. Everyone over the age of 18 should have them.

Parents may want to set an appointment with their attorney after each child’s 18th birthday.  Having these documents in place does not mean anyone expects to use them, but everyone will be glad to have them should they be needed.

 In the Event of Incapacity

*    A Durable Power of Attorney for Heath Care gives another person legal authority to make health care decisions (including life and death decisions) if you are unable to make them for yourself.

*    A Durable Financial Power of Attorney gives another person legal authority to manage your assets without court interference.  A “regular” power of attorney ends at incapacity; a “durable” power of attorney remains valid through incapacity.  Your attorney can write it in such a way that it does not go into effect until you become incapacitated.

*    HIPPA Authorizations give your doctors permission to discuss your medical situation with others, including family members and other loved ones.

 In the Event of Death

Most young adults do not have substantial assets, so a simple will is probably all that is needed.  It will let the young adult designate who should receive his/her assets and belongings in the event of death.  Otherwise, the laws of the state in which the young adult lives will determine this and that may not be what anyone would want.

After the Documents Have Been Signed

A little housecleaning will probably be in order.  It is important that the designated person knows where to find financial records and passwords if needed.  The young adult should consider making a list of accounts and passwords (including her computer’s password), print the list and put it in a safe place; a hard copy is important in case the computer is lost or stolen.  If an online back-up system is used, be sure to include it.  Don’t forget online accounts and social media.  If there is anything the young adult does not want someone (think, parents) to see, either get rid of it now or ask a friend to delete files or remove things if something happens.  Finally, the young adult should update these documents as life changes.

VA Benefits For Long-Term Care of Veterans and Their Surviving Spouses

Many wartime veterans and their surviving spouses are currently receiving long-term care or will need some type of long-term care in the near future. The Veterans Administration has funds that are available to help pay for this care, yet many families are not even aware that these benefits exist.

Pension with Aid and Attendance pays the highest amount and benefits a veteran or surviving spouse who requires assistance in activities of daily living (dressing, undressing, eating, toileting, etc.), is blind, or is a patient in a nursing home. Assisted care in an assisted living facility also qualifies.

Pension with Housebound Allowance is for those who need regular assistance but would not meet the more stringent requirements for Aid and Attendance, and wish to remain in their own home or the home of a family member. Care can be provided by family members or outside caregiver agencies.

Basic Pension is for veterans and surviving spouses who are age 65 or older or are disabled, and who have limited income and assets.

Qualifying for Benefits

A veteran does not need to have service-related injuries to qualify for these pension benefits, but must meet certain wartime service and discharge requirements. A surviving spouse must also meet marriage requirements to the qualified veteran. Certain requirements must be met for a disability claim if the claimant (the veteran or surviving spouse filing for benefits) is less than age 65.

When determining eligibility, the VA looks at a claimant’s total net worth, life expectancy, income and medical expenses. A married veteran and spouse should have no more than $80,000 in “countable assets,” which includes retirement assets but does not include a home and vehicle. This amount is a guideline and not a rule.

Income for VA Purposes (called IVAP) must be less than the benefit for which the claimant is applying. IVAP is calculated by subtracting “countable medical expenses” (recurring out-of-pocket medical expenses that can be expected to continue through the claimant’s lifetime) from the claimant’s gross income from all sources.

Note: It is possible to reduce assets and income to a level that will be acceptable to the VA. For example, excess liquid assets (such as cash or stocks) could be converted to an income stream through the use of an annuity or promissory note. However, because the claimant may need to qualify for Medicaid in the future, it is critical that any restructuring or gifting of assets be done in a way that will not jeopardize or delay Medicaid benefits. An attorney who has experience with Elder Law will be able to provide valuable assistance with this.

Applying for Benefits

It often takes the VA more than a year to make a decision, but once approved, benefits are paid retroactively to the month after the application is submitted. Having proper documentation (discharge papers, medical evidence, proof of medical expenses, death certificate, marriage certificate and a properly completed application) when the application is submitted can greatly reduce the processing time.

Because time is critical for these aging veterans and their surviving spouses, application should be made as soon as possible. For more information, visit

What and When Should You Tell Your Children About Their Inheritance?

Not many parents like to talk to their children about their wealth.  How much money people have is usually considered a private matter, something it’s not polite to talk about, but not talking to children about how much they may inherit can leave them unprepared to handle even a modest amount.

This is becoming especially important because children of baby boomers are due to inherit more wealth than ever before.  It has been estimated that baby boomers will inherit $12 trillion from their parents and they will leave an additional $30 trillion to their own children over the next 30 to 40 years.

Many who have substantial wealth are concerned that letting their children know how much they have will take away any motivation for the children to be productive and involved citizens.  They often want their children to learn how to live in the world as “normal” people, and to be productive and successful in their own right.

Even those who are not as wealthy may not want their children to know how much they have.  They may be concerned that all of their savings will be needed for retirement, medical expenses and end-of-life expenses.  If that turns out to be the case, their kids would not receive an inheritance they may have been counting on.

But not knowing what they may inherit leaves children in the dark and can actually hinder their ability to handle money wisely.  Those who inherit a substantial amount may be unprepared for what to do with that much money. Many find they suddenly feel separated from their friends, isolated, even confused about how to handle relationships; some will be wasteful and lazy.  Those who inherit even a modest amount are likely to be just as irresponsible; stories of inheritances being squandered on an expensive sports car, lavish vacations and fast living are all too common.

Experts agree it is important to talk to children about money and wealth, at least in generalities.  There is no need to show them bank and financial statements. Instead of concentrating on money and material things, talk to them about your values, the opportunities money can provide and what you want to accomplish with it.  Most parents want their children to think about others and many want to encourage entrepreneurship.  Some give their children a small amount of money at a young age, and teach them how to save and invest, give a certain amount to charity and spend wisely.

Of course, the most effective way to teach children about money is to be an example; let them see you using your money in ways that reinforce your values.  Many parents show how they value family relationships by spending their money on family vacations or buying a second home where the entire family can gather for summers and holidays.  If your children see you being charitable and helping others, chances are they will become charitable, too.



Planning For Incapacity and Long-Term Care

With people living longer due to advances in medicine and changes in lifestyle, odds are that most of us will become disabled for some time before we die and may need long-term care.  Unfortunately, too few plan for an event that is more likely to be a probability than a possibility—and the consequences of not planning can be disastrous for all involved.

When someone owns assets in his/her name and becomes unable to manage financial affairs due to mental or physical incapacity, only a court appointee can sign for the disabled person. This is true even if the person has a will, because a will can only go into effect after death.  With some assets, especially real estate, all owners must sign to sell or refinance.  So, for example, if a married couple owns their assets jointly, one of them becomes disabled and an asset needs to be sold or refinanced, the well spouse will have to go through the probate court in order for that to happen.  In Wisconsin, this is a guardianship.

A guardianship is like  a “living probate” because it is similar to the probate process at death but the person is still alive.  It can be costly, time consuming and cumbersome with annual accountings, bonds, reports, ongoing determinations of incapacity/incompetency, and fees for attorneys, accountants, doctors and guardians.  All costs are paid from the disabled person’s assets and all assets and proceedings become part of the public probate record.  It usually lasts until the person recovers or dies which, depending on his/her age when the disability begins, can be years.

A fully funded revocable living trust avoids this problem.  When a living trust is established, the titles of assets are changed from the individual’s name to the name of the trustee.  This is called “funding” the trust.  If the trust has been fully funded (all titles changed) and the person becomes unable to conduct business, there is no reason for a guardianship because the disabled person does not own any assets in his/her name.  The successor trustee, hand-picked when the trust is created, can automatically step in without court interference and manage the disabled person’s financial affairs—selling or refinancing assets to help pay for his/her care and the care of loved ones, or keeping the owner’s business going—for as long as needed.

Other necessary documents include:

*    Durable  Power of Attorney, which allows the successor trustee to transfer to the trust assets that may have been overlooked, and to manage assets like IRAs and annuities that cannot be put into a living trust;

*    Durable Healthcare Power of Attorney, which gives another person legal authority to make health care decisions (including life and death decisions) if you are unable to make them for yourself.

*    HIPPA Releases, which give written consent for doctors to discuss your medical situation with others, including family members, loved ones and your successor trustee(s).

Planning for disability may also include disability income insurance (to help replace lost income), and long term care insurance (to help cover the costs of care that are not covered by medical insurance).  Business owners may want to consider business or professional overhead insurance that will pay monthly operating expenses until they recover or the business can be sold or transferred, and buy-sell agreements in the event a co-owner becomes permanently disabled.

Disability before death is not always expected and it does not always happen, but it must be planned for.


Life Insurance: How Much and What Kind?

Life insurance can be an affordable way to provide for our children, spouse, a sibling, aging parents and others if we should die while they are depending on us.  Life insurance proceeds can provide extra income to help pay ongoing household bills and child care; pay off a mortgage, credit cards and other debt; pay for college; and pay funeral costs and other final expenses.  Life insurance also plays a vital role in business succession planning and it has numerous applications in estate planning.

A simple way to determine the amount of life insurance needed for income replacement purposes is to multiply the annual income to be replaced by the number of years it will be needed.  If the insured earns an income, use the amount actually contributed to the household (after personal expenses and taxes).  If the insured is a stay-at-home parent and does not earn an income, determine how much will be needed to pay someone to take over those responsibilities.  As an example, a dad who wants enough life insurance to replace his income for 20 years (until his children have completed college) would take the amount of annual income he wants to replace and multiply that by 20.  He may want to add enough to pay for college and other expenses.  The total amount is how much life insurance he needs.  This is called the “face value” or “death benefit.”

Basically, there are two kinds of life insurance: term and permanent.

Term life insurance provides coverage for a set number of years, or term.  It can be a good choice when coverage is needed for a certain number of years; for example, until the kids are out of college or the mortgage is paid off.  It is also less expensive than permanent life insurance, and is least expensive when the insured is young and healthy.  For these reasons, term life insurance is a popular choice for young families.

Permanent life insurance, on the other hand, does not expire at the end of a specified term (assuming the premiums are paid).  Generally, the coverage stays in effect during the insured’s lifetime and the premium, depending upon the type of policy, can either stay the same or fluctuate based upon the financial performance of the policy.  Permanent policies also build cash value over time that can be borrowed from the policy (reducing the proceeds paid at death), can be used to help pay the premiums, or can be refunded if the policy is cancelled.

The amount a family pays for life insurance must be a reasonable and manageable expense.  The cost will depend on the amount, kind (term vs. permanent), and the age and health of the person to be insured.  If the cost to replace income for 20 or 30 years is too much for the family budget, one option is to cover five to seven years of expenses, which will give the family time to cope and adjust after the loss.

Naming a Guardian for Your Minor Children

Parents with minor children need to name someone to raise them (a guardian) in the event both parents should die before the child becomes an adult.  While the likelihood of that actually happening is slim, the consequences of not naming a guardian are great.

If no guardian is named in the parent’s will, a judge—a stranger who does not know the parents, the child, or their relatives—will decide who will raise the child without knowing whom the parent would have preferred.  Anyone can ask to be considered, and the judge will select the person he/she deems most appropriate.  On the other hand, if the parent names a guardian (typically via the parent’s will), the judge will usually go along with the parent’s choice.

Choosing a Guardian

The guardian does not have to be a relative, so parents should consider and evaluate all candidates:

*    Parenting style, values and religious beliefs should be similar to their own.

*    Location could be important. If the guardian lives far away, the child would have to move from a familiar school, friends and neighborhood.

*    How comfortable with the candidates is the child now?

*    Consider the child’s age and that of the guardian-candidates.  Grandparents may have the time, but they may not have the energy to keep up with a toddler or teenager.  An older guardian may become ill and/or even die before the child is grown.  A younger guardian, especially an adult sibling, may be concentrating on finishing college or starting a career.  If the child is older and more mature, he/she should have some input into this decision.

*    How prepared emotionally are the candidates to take on this added responsibility?  Someone who is single may resent having to care for someone else’s children.  Someone with a houseful of their own children may not want more around.

*    Ask the top candidates if they would be willing to serve, and name  alternates in case the first choice becomes unable to serve.

Raising the child should not be a financial burden for the guardian, and a candidate’s lack of finances should not be the deciding factor.  The parent will need to provide enough money (from assets and/or life insurance) to provide for the child.  Some parents also earmark funds to help the guardian buy a larger car or add onto their existing home or to buy a larger home, if needed.

Naming someone else to handle this money can be a good idea.  Having the same person raise the child and handle the money can make things simpler because the guardian would not have to ask someone else for money, but the best person to raise the child may not be the best person to handle the money.  It may be tempting for them to use this money for their own purposes.

Naming a guardian can be a difficult decision for many parents.  Keep in mind that this person will probably not raise the child because odds are that at least one parent will survive until the child is grown.  By naming a guardian, however, the parent is being responsible and planning ahead for an unlikely, yet possible, situation.  Parents must realize that no one else will be the perfect parent for their child, so typically this means making compromises in some areas.  Finally, parents should remember that they can change their mind.  In fact, parents should review and change the guardian as their child grows and if the guardian’s situation changes.