Cava Faulkner

Now that same-gender couples can legally marry in all 50 states, more Americans than ever before are enjoying the rights and benefits that come with marriage. Estate planning, in particular, is one arena where these new rights and benefits are readily apparent.

With marriage equality, same-gender couples no longer have to pay exorbitant amounts of money for creative estate-planning work-arounds just to achieve similar protections offered to opposite-gender couples. Yet same-gender couples continue to face unique planning challenges.

Because you may have family members who remain opposed to the validity of your marriage, same-gender couples’ estate plans are often more vulnerable to dispute and even sabotage by unsupportive relatives. This could mean that family members are more likely to contest your wishes, or it might entail custody battles over non-biological children in the event of the biological parent’s death.

Unsupportive family members may even try to block the ability of your spouse to make medical decisions on your behalf should you become incapacitated by accident or illness.

While the planning vehicles available to same-gender and opposite-gender married couples are generally the same, there are a few unique considerations those in same-gender marriages ought to be aware of. Here are three of the most important things to keep in mind.

For a number of reasons, putting a trust in place—rather than relying solely on will—is a good planning strategy for nearly everyone. Upon the death of one spouse, a will is required to go through the often long, costly, and conflict-ridden court process. However, assets passed through a trust pass directly to the named beneficiaries without the need for probate.

If your relationship is not supported by one or both families, avoiding probate is especially important. If a family member doesn’t support same-gender marriage, they’re more likely to contest your will during, especially if that family member would’ve received a substantially larger inheritance in a previous will prepared before the marriage.

If your will is successfully contested, this could prevent your surviving spouse from receiving assets you left them in your will. And even if the contest ultimately fails, the process of defending the will’s validity in court can be extremely time-consuming, costly, and emotionally draining for your surviving spouse.

What’s more, a trust works in cases of both your death and incapacity, while a will only goes into effect upon death. Given these reasons, it’s best for those in same-gender marriages to create both a will and trust.

Estate planning is not just about planning for your death; it’s also about planning for your potential incapacity. Should you be incapacitated by illness or injury, it’s not guaranteed that your spouse would have the ultimate legal authority to make key decisions about your medical treatment and finances.

Absent a plan for incapacity, it’s left to the court to appoint the person who will make these decisions for you. Though spouses are typically given priority, this isn’t always the case, especially if unsupportive family members challenge the issue in court. To ensure your spouse has the authority to make decisions for you, you must grant him or her medical power of attorney and financial power of attorney.

Medical power of attorney gives your spouse the authority to make health-care decisions for you if you’re incapacitated and unable to do so yourself. By the same token, financial power of attorney gives your spouse the authority to manage your financial affairs. And be sure to also create a living will, so that your spouse will know exactly how you want your medical care managed in the event of your incapacity.

While the biological parent of a child in a same-gender marriage is of course automatically granted parental rights, the non-biological spouse/parent still faces a number of legal complications. Because the Supreme Court has yet to rule on the parental rights of non-biological spouses/parents in a same-gender marriage, there is a tangled, often-contradictory, web of state laws governing such rights.

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.

However, using a variety of unique planning strategies, we can provide non-biological, same-gender parents with nearly all parental rights without going through adoption. Using our Kids Protection Plan®, 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.

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

Beyond that, there are several other planning tools we can use to offer the non-biological parent additional rights. One such tool is a co-parenting agreement. This is a legally binding arrangement that stipulates exactly how the child will be raised, what responsibility each spouse has toward the child, and what kind of rights would exist if the couple splits or goes through a divorce.

In light of these issues, it’s crucial that married, same-gender couples, especially those with children, always work with experienced planning professionals and avoid using generic online documents at all costs. We have extensive experience creating plans specifically designed to prevent your plan from being challenged in court by family members who disagree with your relationship.

What’s more, our specialized planning services can help ensure that non-biological parents in same-gender marriages have as many parental rights as possible, without resorting to second-parent adoption.

We offer a complete spectrum of legal services for business owners and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer you a LIFT Your Life And Business Planning Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. Schedule online today.

On January 1, 2020, the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) went into effect, and it represents the most significant retirement-planning legislation in decades.

Indeed, the changes ushered in by the SECURE Act have dramatic implications for both your retirement and estate planning strategies—and not all of them are positive. While the law includes a number of taxpayer-friendly measures to boost your ability to save for retirement, it also contains provisions that could have disastrous effects on planning strategies families have used for years to protect and pass on assets contained in retirement accounts.

Given this, if you hold assets in a retirement account you need  to review your financial plan and estate plan as soon as possible. To help you with this process, here we’ll cover three of the SECURE Act’s biggest changes and how they stand to affect your retirement account both during your lifetime and after your death. Next week, we’ll look more deeply into a couple of additional strategies you may want to consider.

Prior to the SECURE Act, the law required you to start making withdrawals from your retirement account at age 70 ½. But for people who haven’t reached 70 ½ by the end of 2019, the SECURE Act pushes back the RMD start date until age 72.

Under previous law, those who continued working could not contribute to a traditional IRA once they reached 70 ½. Starting in 2020, the SECURE Act removed that cap, so you can continue making contributions to your IRA for as long as you and/or your spouse are still working.

These two changes are positive because with our increased life spans people are now staying in the workforce longer than ever before, and the new rules allow you to continue contributing to your retirement accounts and accumulating tax-free growth for as long as possible.

However, to offset the tax revenue lost due to these beneficial changes, as you’ll see below, the SECURE Act also includes some less-favorable changes to the distribution requirements for retirement accounts after your death.

The part of the SECURE Act that’s likely to have the most significant impact on your heirs is a provision that makes significant changes to distribution requirements for inherited retirement accounts, and effectively ends the so-called “stretch IRA.”

Under prior law, beneficiaries of your retirement account could choose to stretch out distributions—and, therefore, the income taxes owed on those distributions—over their own life expectancy. For example, an 18-year old beneficiary expected to live an additional 65 years could inherit an IRA and stretch out the distributions for 65 years, paying income tax on just a small amount of their inheritance every year. And in that case, the income tax law would encourage the child to not withdraw and spend the inherited assets all at once.

Under the SECURE Act, however, most designated beneficiaries will now be required to withdraw all the assets from the inherited account—and pay income taxes on them—within 10 years of the account owner’s death. Those who fail to withdraw funds within the 10-year window face a 50% tax penalty on the assets remaining in the account.

The law does offer exemptions to the mandatory 10-year withdrawal rule for certain beneficiaries, known as eligible designated beneficiaries (EDB):

1. A surviving spouse named as an outright beneficiary of a retirement plan still has the option of rolling over the benefits to his or her own IRA or taking distributions based on his or her own life expectancy.
2. Beneficiaries who are less than 10 years younger than you can still take distributions based on their own life expectancy.
3. Your minor children, who have not reached the “age of majority” don’t have to deplete the account until 10 years after they come of age.  Yet that still would be a much shorter “stretch” than previously available.
4. Disabled individuals and chronically ill individuals can take distributions based on their life expectancy.

Apart from these exceptions, opportunities for stretching an IRA over an extended period of time are no longer available. This means if you want the people who will inherit your retirement account after your death to benefit from long-term income tax deferral—as well as asset protection from lawsuits, creditors, or divorce—you must meet with us now to rework your plan.

Depending on the value of your retirement account, you may have already addressed the distribution of its assets using a “conduit” provision in your will, revocable trust, or standalone retirement trust. Prior to the SECURE Act, a trustee of a trust that included a conduit provision would only distribute the required minimum distributions (RMD) to trust beneficiaries each year.

This allowed the beneficiary to take advantage of the continued “stretch” based on their age and life expectancy. In this way, the conduit trust protected the account balance and only exposed the much smaller RMD amounts to creditors and divorcing spouses.

Under the SECURE Act, however, the 10-year limit for taking distributions will lead to the acceleration of income tax due, possibly bumping your beneficiaries into a higher income tax bracket. This potentially hefty tax burden would likely result in your beneficiary receiving significantly less funds from the retirement account than you had initially planned on.

What’s more, because the SECURE Act requires all funds in your retirement account to be withdrawn within 10 years after your death, a conduit trust would be required to distribute all of its assets outright to the beneficiary within this shortened period. This means you would also lose any long-term asset protection you may have built into your plan.

Given the SECURE Act’s new rules, you may want to consider amending your trust to shift it from a “conduit trust” to become an  “accumulation trust.” Such a trust structure can’t extend the tax benefits any longer than 10 years, but it can ensure the assets are protected from your beneficiary’s future risky activities and/or a divorce.

One important thing to note: Retained distributions from a traditional IRA distributing to an accumulation trust would be exposed to compressed income tax rates that apply to trusts. Currently, trusts reach the maximum 37% tax bracket with undistributed taxable income of $12,950. Facing such a tax hit, if you opt for this solution, your plan should include additional strategies to address the tax obligation. We’ll share some options for this in next week’s article.

We can update your plan to address all of the potential ramifications the SECURE Act might have on the distribution of your retirement account’s assets to your loved ones following your death. But to do that, we need to meet with you to consider your family dynamic and all of your assets, so we can thoroughly assess the big-picture impact the SECURE Act stands to have on your estate.

This is exactly what we do during our Family Wealth Planning Session, a two-hour, working meeting that educates and empowers you to know you’ve done the right thing for the people you love no matter what happens to you. Whether you’ve yet to create a plan or already have one created another lawyer, schedule an appointment today.

Next week in the second part of this series, we’ll cover some of the potential ramifications the SECURE Act stands to have on your financial-planning strategies and how you can make the most of the new legal landscape.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Imagine this… You are an elderly grandparent who lives alone.

You get a call in the middle of the night from your college-aged granddaughter. She’s frantic and crying, telling you she was mistakenly arrested while vacationing in Cancun. 

She says she needs you to pay her $1,800 bond, or she’ll be transferred to a dangerous Mexican prison. The Mexican police told her she only has a few hours before she’s transferred, so she needs you to wire the money immediately. 

She’s petrified about her parents finding out she was arrested and begs you not to tell them. Because she only has a couple of minutes to use the police station phone, the call ends abruptly before you can get any further details.

What do you do?

If you’re like the thousands of others who’ve gotten just such a call, you’d probably wire the money in a heartbeat. It is your grandchild’s life after all. However, just like the others, you’d soon find out that your granddaughter hasn’t been arrested and was never in Mexico.

Known as the Grandparent Scam, this con has been around for years, and while it may seem far fetched, it has tricked many caring seniors. And in recent months, there has been an uptick in the number of people falling prey to the deception.

The details can vary, but the scam typically works like this:

1) You get a call from someone pretending to be your grandchild. The “grandchild” explains he or she is in trouble and needs money immediately. They might be in jail and need bond or be stranded in a foreign country and need money to get out.

2) The caller asks you to wire money to a specific location or give it to a third party, usually someone posing as a lawyer or police officer.

3) The “grandchild” will often plead with you not to tell their parents they’re in trouble.

4) Once you send the money, the caller breaks off all contact, making it impossible to recover your funds.

While just about anyone can fall for such scams, the elderly are the ones targeted most often. This is due to the fact that seniors are frequently lonely and eager to hear from family. And whether it’s because their hearing is failing or because they haven’t seen their family members in awhile, they’re more likely to not recognize voices.

Due to their advanced age, seniors are also less likely to think clearly in a crisis, making them more susceptible to fear and panic. Finally, the elderly are less familiar with technology and social media, so they don’t realize how easy it is to access enough of someone’s personal details to make the scenario seem realistic.

In most cases, the best course of action is to simply hang up and contact the authorities. However, if the caller really does sound like the family member they claim to be, here are some steps you can take to help verify the situation is legitimate:

1) Don’t panic. It’s far easier to be deceived if you’re nervous or scared.

2) Be wary of calls from unknown or blocked numbers. Ask to call them back on the person’s own phone, and never accept requests sent solely by email or text.

3) Verify the caller’s identity by asking them questions only the actual person would know the answer to, such as the name of their first pet.

4) Beware of urgent demands that money be sent immediately. Reputable sources don’t try to pressure you into making split-second financial decisions.

5) Call other family and friends to verify where the person is. A reputable source will respect your caution and give you the opportunity to verify the facts.

6) Requests for money to be wired are often scams, as it’s nearly impossible to get your money back in cases of fraud. Request a more secure transaction method, such as through a bank or PayPal. Legitimate sources are likely to offer multiple payment options.

Please share this article with any seniors in your life. There are countless other scams out there that work in much the same way, so even if it’s not this particular con, by becoming aware how these deceptions work, they’ll be much less likely to fall for them.

Of course, scams and cons are just one threat to seniors’ financial security. Without comprehensive estate planning, there are numerous other ways your family’s wealth and assets can be squandered or lost which have nothing to do with fraud.

Consult with us to put planning strategies in place to safeguard your family’s finances and other assets, both tangible and intangible.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

As you likely already know, but may not have given much thought about, the most important inheritance you provide is so much more than the money you’ll leave behind, but also includes your values, insights, stories, and experience. And, while those things are being passed on happenstance on the daily, we know that intentionally creating a Family Wealth Legacy requires more than happenstance. That’s why as a Personal Family Lawyer®, part of our unique planning process is to capture your legacy in recorded form through something we call a Family Wealth Legacy Interview.

What we’ve discovered is that we can learn so much more than expected — about ourselves and our loved ones – when we ask the right questions.

So, this year, we invite you to ask your mother, father, and/or another loved one the 32 important questions below that can teach you valuable lessons about love, life, and what matters most. And, don’t just ask them, record their answers to create your own Family Wealth Legacy. Or, contact us to schedule time for a comprehensive Family Wealth Planning Session this month, and we’ll create a Family Wealth Legacy as part of your estate plan.

Use these questions as a springboard and an engaging activity during the holidays and discover what you didn’t know about your loved ones:

1. What comes to mind when you think about growing up in your hometown?
2. What did you love to do as a kid, before high school?
3. What did you love to do in high school?
4. What do you remember most about your teenage years?
5. What do you remember most about your mom (grandma)?
6. What was most important to her?
7. What do you remember most about your dad (grandpa)?
8. What was most important to him?
9. If Grandma and Grandpa had a message to pass along to the grandchildren, what would it be?
10. How did you meet your spouse? How did you know (s)he was the one?
11. How did you choose your career? What was your favorite part about it?
12. What made you successful?
13. What did you believe about yourself that helped you become successful and deal with hard times?
14. What times in your life truly “tested your mettle,” and what did you learn about yourself by dealing (or not dealing) with them?
15. What three events most shaped your life?
16. What do you remember about when I was born?
17. Were you ever scared to be a parent?
18. What three words would you say represented your approach to parenting and why?
19. When you think about [sibling] how would you describe him/her?
20. What message do you have for [sibling] that you want him/her to always keep in mind?[Do the last two questions above for each sibling in your family]
21. When you think about [spouse], how would you describe her/him?
22. What message do you have for [spouse] that you want her/him to always keep in mind?
23. What three words would you say best describe who you tried to be in life? How would you like to be remembered?
24. What do you think your children and grandchildren should focus on professionally?
25. What have you learned about people in life?
26. What do you think the world needs more of right now?
27. What do you believe people want the most in life?
28. What were the three best decisions you ever made?
29. What are you most proud of?
30. What were five of the most memorable moments of your life?
31. What message would you like to share with your family?
32. What are you most thankful for?

These questions can reveal a wealth of valuable life lessons – family treasures to discuss and share with generations to come. But having this conversation is just a start. To preserve and protect your family assets and other things of value, you should create a comprehensive estate plan that will safeguard what you value most. And, we include a recorded Family Wealth Legacy Interview, which becomes a priceless family legacy piece for your loved ones, with every estate plan we create. Because we’ve discovered that estate planning is really a misnomer; when done right, it’s Life and Legacy Planning — planning for a life you love and a legacy worth leaving.

As your Personal Family Lawyer®, we can guide you to create a comprehensive estate plan — which we prefer to call and see as a Life and Legacy Plan because it’s about so much more than just your “estate” — that protects and preserves your most valuable assets. Before the session, we’ll send you a Family Wealth Inventory and Assessment to complete that will get you thinking about what you own, what matters most to you, and what you want to leave behind. Contact us today to schedule your Family Wealth Planning Session.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.

Maybe you, like many of us, have been raised to think that the safest way to live in the working world is to have a good career and a steady paycheck. This financial crisis is challenging that framework for many people. Even if you had a steady job, and even if you still have one, by now you’ve learned how easy it is for that security to disappear overnight.

A recession can reveal all of our negative thoughts and internal monologues about money. A sad, yet common, attitude is for us to see money as a scarce resource, and income as something that’s outside of our control. Thinking or talking about money can trigger feelings of guilt and shame in many people.

It doesn’t have to be that way. The truth is, money is a tool that you can access and multiply, independent of anyone else’s permission. And even if you do have anxieties that keep you from seeing how money can be a positive part of your life, that can change.

Other people may react to this period of uncertainty with the same, old-fashioned advice: live within your means and keep 3–6 months’ worth of income in an emergency fund. If you have a secure job that pays you well, and that you enjoy, this is great advice. But, if that’s not what is true for you, you may be looking at this time as a great opportunity to make a shift and create your own financial security.

Consider this: what if you weren’t relying on a check from your boss (or the unemployment office, as the case may be)?

What if a shift in mindset could change your relationship with money, and set you on track to secure you against economic highs and lows in a way you never even dreamed possible? Or, maybe you have been dreaming about it, but don’t know how or where to start to move it all forward.

A financial crisis doesn’t have to be a crisis for you or your family. In fact, this could be the perfect time to access the wealth of resources currently available to fund your next level of growth. It’s a time to invest in yourself, and to learn to use your gifts, skills, and talents to serve others in a big way. That way, you won’t have to depend on anyone else, including your job, corporations, or the government, to sustain you.

Whether or not you have a day job, see this moment as a wake-up call. It’s time for you to take stock of your greatest resource—yourself. What can you do that other people can’t? What can you give that other people need? Start exploring the resources within you, and you’ll realize that you’ve found your way of contributing value to the world.

Everyone has something to offer, and that offering goes far beyond just the products or services you give your potential clients. If you use your talents to become a higher earner, you can establish yourself as a leader in your community, and affect change in areas that you care about. You can contribute to the growth of your local economy by employing people, and be part of what helps pull the larger economy out of the rut that it may be in.

Even in the lowest of times, even in recessions, there have been many, many people who were able to forge their own paths and grow their wealth through entrepreneurship. You can be one of them.

Things have been tough for our lives and livelihoods, it’s true, but we shouldn’t let this moment go by without considering what we can learn from it. I hope that you are learning about how to be prepared for an emergency when it comes to your savings, investments, and income, but not necessarily in the way we’ve been taught in the past.

As we go into this brave new world, the most important thing you can have is a high-value skill that is needed and wanted, no matter what. The next step is to create the systems and structures to offer that skill in a way that you can rely upon, no matter the ups and downs of the economy. This is a lesson that will benefit you, and that you can encourage in your family and friends, and serve as an example for your children—raising a new generation of economic and community leaders.

We are in a time when your best investment is in your resourcefulness, and your creativity, and your community. Bring these together, and your family can rely on you and what you’ve created, and you can trust that your children will be great, no matter what.

If you need help figuring out your next step, please call us, and we can help.

Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. If you’re ready to create a comprehensive estate plan, contact us to schedule your Family Wealth Planning Session. Even if you already have a plan in place, we will review it and help you bring it up to date to avoid heartache for your family. Schedule online today.