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In the weeks before her death from ovarian cancer, author Amy Krouse Rosenthal gave her husband Jason one of the most treasured gifts a person could receive.

She penned the touching essay “You May Want to Marry My Husband” in the New York Times as a final love letter to him. The essay took the form of a heart-wrenching yet-humorous dating profile that encouraged him to begin dating again once she was gone. In her opening description of Jason, she writes:

“He is an easy man to fall in love with. I did it in one day.”

What followed was an intimate list of attributes and anecdotes, highlighting what she loved most about Jason. It reads like a love story, encompassing 26 years of marriage, three grown children, and a bond that will last forever. She finished the essay on Valentine’s Day, concluding with:

“The most genuine, non-vase-oriented gift I can hope for is that the right person reads this, finds Jason, and another love story begins.”

Just 10 days after the essay was published in March 2017, Amy died at age 51.

the globe. Although he has yet to begin a new relationship, Jason said the outpouring of letters gave him “solace and even laughter” in the darkest days following his wife’s death.

Just over a year later, Jason wrote his own essay for the Times, “My Wife Said You May Want to Marry Me,” in which he expressed how grateful he was for Amy’s words and recounted the lessons he’d learned about loss and grief since her passing.

He said his wife’s parting gift “continues to open doors for me, to affect my choices, to send me off into the world to make the most of it.” Jason has since given a TED Talk on his grieving process in hopes of helping others deal with loss, something he said he never would’ve done without Amy’s motivation.

Toward the end of his essay, Jason gave readers a bit of advice for how they can provide their loved ones with a similar gift:

“Talk with your mate, your children, and other loved ones about what you want for them when you are gone,” he wrote. “By doing this, you give them liberty to live a full life and eventually find meaning again.”

This moving story highlights what could be the most  valuable, yet often-overlooked aspect of estate planning. Planning isn’t just about preserving and passing on your financial wealth and property in the event of your death or incapacity. When done right, it equates to sharing your family’s stories, values, life lessons, and experiences, so your legacy carries on long after you (and your money) are gone.

Indeed, as the Rosenthals demonstrate, these intangible assets can be among the most profound gifts you can give. Of course, not everyone has the talent or time to write a similarly moving essay or have it published in the New York Times, nor is that necessary.

We recognize the enormous value these assets represent, along with the inherent challenge of documenting our life experiences. Given this, in our estate plans, we’ve built in a process, known as Family Wealth Legacy Passages, for preserving and passing on your unique treasures and gifts.

Our Family Wealth Legacy Passages (included in all of our estate plans) guide you to create a customized recording in which you share your most insightful memories and life lessons with those you leave behind.

We’ve developed a series of helpful questions and prompts to make the process of sharing your life experiences not only easy, but enjoyable. And this isn’t something you have to do on your own—which you know you wouldn’t get around to—as we do it with you as an integral part of your planning services.

In the end, your family’s most precious wealth is not money, but the memories you make, the values you instill, and the lessons you hand down. And left to chance, these assets are likely to be lost forever.

If you want to pass down a truly meaningful legacy, one that can provide the kind of inspiration Amy’s letter did for Jason, contact us. Our customized estate planning services will preserve and pass on not only your financial wealth, but your most treasured family values as well. Start by scheduling a Family Wealth Planning Session, where we’ll discuss what kind of assets you have, what matters most to you, and what you want to leave behind.

We don’t 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. Schedule online today.

On September 13, 2021, Democrats in the House of Representatives released a new $3.5 trillion proposed spending plan that includes a wide array of changes to federal tax laws. Specifically, the Democrats have proposed a number of significant tax increases and other changes to fund the plan, including increases to personal income tax rates and the capital gains tax rate, along with a major reduction to the federal estate and gift tax exclusion and new restrictions on Grantor Trusts that would basically eliminate such trust’s ability to be used as planning vehicles.

While the proposed legislation is still under consideration and far from being finalized, given the broad-reaching impact these changes stand to have, we strongly encourage you to take action now if you would be affected by the proposed legislation if it does pass. With the exception of capital gains rate increase, which could go into effect on transactions that occur on or after Sept. 13, 2021, most of the proposed changes would be effective after December 31, 2021, meaning that you have time to plan now.

That said, due to the time it takes to plan and execute some of the financial and estate planning actions we’d need to support you with, we suggest you start strategizing now. That way, you’ll have plenty of time to take the appropriate action before the end of the year. With that in mind, here we’ll outline how  the proposed tax law changes stand to affect your financial, tax, and estate planning, so you can contact us if you would be impacted if the new bill does pass.

Proposed changes: Under the proposed legislation, the top personal income tax rate would increase from 37% to 39.6% for married individuals filing jointly with taxable income over $450,000; single taxpayers with taxable income over $400,000; and married individuals filing separate returns with income over $225,000. Additionally, this increase would also apply to trusts and estates with taxable income over $12,500.

The bill would also create a new 3% surcharge on individuals with modified adjusted gross income (AGI) exceeding $5 million (or $2.5 million for married individuals filing separately) as well as on trusts with AGI greater than $100,000.

Additionally, the net investment income tax (NIIT) would be extended to cover net investment income derived in the ordinary course of a trade or business for individuals with taxable income of greater than $400,000 for individuals or $500,000 for those filing jointly, as well as for trusts and estates. The NIIT tax does not apply to earnings already subject to FICA tax.

These proposed changes are set to be effective for tax years beginning after December 31, 2021.

Potential planning solutions: Since these increases will apply to taxable years beginning after December 31, 2021, we suggest you earn as much as you can this year and consider pushing deductions into next year, while you can still take advantage of historically low tax rates. Keep in mind that if you have a high income and decide to put off planning, you may pay much more in income taxes because of the 3% surcharge on high income and the 3.8% NIIT that will now apply to active business income for high incomes.

Moreover, the increase in personal income tax rates, along with the new 3% surcharge and changes to the NIIT have critical importance to estate planning, since the highest rate applies to estates and trusts with taxable income over $12,500, which is a drastically lower income level at which the highest tax rates apply to individuals, such as beneficiaries of a trust. Given these changes, it may be worth accelerating income for estate and trusts in 2021, while rates are lower.

For so-called “complex” or “non-grantor trusts” that pay their own income tax, distributions may carry out income to the beneficiary in order to be taxed at a lower rate. That said, the benefits of a possibly lower tax rate should be weighed against the impact of an outright distribution of funds to a beneficiary and the inclusion of those funds in the beneficiary’s estate if the distributed funds are not spent. For example, would an outright distribution negatively impact a beneficiary with poor money-management skills or issues with substance abuse?

If you will earn more than these income limits this year, meet with your Personal Family Lawyer® as soon as possible to discuss a plan to adapt your financial and estate planning to offset the impact of these changes.

Proposed changes: The new bill would increase the long-term capital gains tax rate from 20% to 25% on individuals with taxable income over $400,000. The increase is set to be effective for the tax year ending after September 13, 2021, and it also applies to qualified dividends. However, the bill includes a transition rule that provides that any transactions completed on or before September 13, 2021—or subject to a binding written contract entered into on or before September 13, 2021 (even if the transaction closes after September 13)—are subject to the prior 20% tax rate.

Any capital gains recognized after September 13, 2021, would be subject to the new 25% rate. So, for example, if you entered into a contract to sell your home in May 2021, and the sale closes in November 2021 and exceeds your exemption, your transaction would be subject to the 20% rate. However, if the bill passes, and you enter into a contract after September 13, your tax rate will be 25%. This applies equally to sales of appreciated stock and other investments.

Potential planning solutions: While it may seem that it’s too late to do anything about your capital gains on sales at this point, it’s not, but it will require planning. This means if you are selling any assets this year that will result in significant capital gains tax to pay, contact us now to discuss your options. Once the sale happens, it’s too late. Don’t wait.

Proposed changes: The bill would dramatically reduce the federal estate and gift tax exclusion from its current level of $11.7 million for individuals and $23.4 million for married couples to its 2010 level of $5 million per individual, adjusted for inflation, which would bring the estate and gift tax “coupon” to roughly $6 million.

The proposed reduction would apply to estates of decedents who die or make gifts after December 31, 2021. This reduction would expose estates and gifts above the exclusion amount to a 40% federal estate tax.

Potential planning solutions: In light of the proposed reduction, individuals with assets in excess of $6 million (including life insurance) should take a “use it or lose it” approach to gifting, and make any gifts before the end of the year to qualify for the higher exclusion rate. That said, some families should consider making such gifts before the legislation is officially passed due to the changes to Grantor Trusts and other estate planning strategies described below. If your estate is already over the $6 million exemption, or you expect it to be in the future, contact us now. Again, do not wait.

Proposed changes: The new bill targets Grantor Trusts and would effectively shut them down as planning vehicles. Currently, a Grantor Trust is a trust that can be considered separate and apart from the grantor (individual who creates the trust) and contributor to the trust for estate tax purposes, but be considered as owned by the grantor for income tax purposes.

Since the grantor is considered the owner of the trust for income tax purposes, transactions between the trust and the grantor are “disregarded,” meaning that assets can be sold or exchanged with the trust, without triggering any income tax consequences. However, that same trust can also be used to move assets outside of your estate for estate tax purposes, freezing the value of those assets at their current value, such that when you die, any appreciation in the value of those assets is not taxed for estate tax purposes, saving your family 40% or more.

The new bill provides that any Grantor Trust created on or after the date of the legislation’s enactment will now be included in your estate for estate tax purposes. Distributions from Grantor Trusts (other than to the grantor or the grantor’s spouse) would be treated as gifts made by the grantor, and therefore subject to the gift tax exemption. If the bill is enacted and Grantor Trust ceases to be treated as such during the grantor’s life, the grantor would be deemed to make a gift of the trust assets, and sales of assets between a grantor and the Grantor Trust would no longer be disregarded for income tax purposes.

The good news is that under the new bill Grantor Trusts established and funded before the enactment of the new law would be “grandfathered” in, as would promissory notes that are in place at the time of the law’s enactment.

Potential planning solutions: Contact us if your assets are above the proposed estate tax exemption amount of approximately $6 million, or you anticipate they will be, so we can move some of your assets outside of your estate this year.

Proposed changes: The bill would not only affect the use of Grantor Trusts, but it would also eliminate valuation discounts, unless the asset gifted or sold is an “active trade or business.” Moreover, depending upon how the legislation is applied and interpreted, the new bill may also prevent planners from being able to use irrevocable life insurance trusts (ILITs)—at least to some degree (more about ILITs below)—as well as Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), and Grantor Charitable Lead Annuity Trusts (CLATs).

Irrevocable life insurance trusts (ILITs) are among the most commonly used irrevocable trusts for estate planning, and since most ILITs have traditionally been structured as Grantor Trusts, these trusts will be largely undermined by the new bill. Since the trust would be included in your estate, new ILITs will no longer be feasible. As a workaround, new ILITs may need to be structured as non-Grantor Trusts to avoid estate inclusion.

However, this structure will create an array of problems. First, it will require the trust to expressly prohibit trust income from being used to pay life insurance premiums on your life as the creator of the trust. Second, for those existing trusts that are grandfathered in, no new gifts should be made to the ILIT, or a portion of the trust assets (including life insurance proceeds) will also be included in your estate.

Potential planning solutions: If your estate plan includes any of these trusts or planning strategies, contact us right away for guidance in amending your estate plan to offset the impact of these changes.

As we approach the end of 2021, if your family stands to be impacted by any of these changes, it’s imperative to take action as quickly as possible to ensure that whatever actions that need to be taken can be planned and executed before the end of the year. Not only that, but given the number of proposed changes that are coming, financial advisors and estate planners are sure to be extremely busy in the coming months.

Given this, don’t wait to schedule an appointment with your Personal Family Lawyer®. The sooner you meet with us, the sooner we can make certain that you can amend your planning strategies accordingly to minimize the impacts of this new bill on your financial and estate planning.

Next week in part two, we’ll discuss the rest of the changes proposed in this new bill, with a primary focus on the bill’s impact on retirement planning.

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.

When it comes to estate planning, most people automatically think about taking legal steps to ensure the right people inherit their stuff when they die. Although that thought is not wrong, it also leaves out a very important piece of planning for life, and perhaps the most critical part of planning.

Planning that’s focused solely on who gets what when you die is ignoring the fact that death isn’t the only thing you must prepare for. Rather, consider that at some point before your eventual death, you could be incapacitated by accident or illness.

Like death, each of us is at constant risk of experiencing a devastating accident or disease that renders us incapable of caring for ourselves or our loved ones. But unlike death, which is by definition a final outcome, incapacity comes with an uncertain outcome and timeframe.

Incapacity can be a temporary event from which you eventually recover, or it can be the start of a long and costly event that ultimately ends in your death. Indeed, incapacity can drag out over many years, leaving you and your family in agonizing limbo. This uncertainty is what makes incapacity planning so incredibly important.

In fact, incapacity can be a far greater burden for your loved ones than your death. This is true not only in terms of its potentially ruinous financial costs, but also for the emotional trauma, contentious court battles, and internal conflict your family may endure if you fail to address it in your plan.

The goal of effective estate planning is to keep your family out of court and out of conflict no matter what happens to you. So if you only plan for your death, you’re leaving your family—and yourself—extremely vulnerable to potentially tragic consequences.

Planning for incapacity requires a different mindset and different tools than planning for death. If you’re incapacitated by illness or injury, you’ll still be alive when these planning strategies take effect. What’s more, the legal authority you grant others to manage your incapacity is only viable while you remain alive and unable to make decisions about your own welfare.

If you regain the cognitive ability to make your own decisions, for instance, the legal power you granted others is revoked. The same goes if you should eventually succumb to your condition—your death renders these powers null and void.

To this end, the first thing you should ask yourself is, “If I’m ever incapacitated and unable to care for myself, who would I want to make decisions on my behalf?” Specifically, you’ll be selecting the person, or persons, you want to make your healthcare, financial, and legal decisions for you until you either recover or pass away.

The most important thing to remember is that you must choose someone. If you don’t legally name someone to make these decisions during your incapacity, the court will choose someone for you. And this is where things can get extremely difficult for you and your loved ones.

Although laws differ by state, in the absence of proper estate planning, the court will typically appoint a guardian or conservator to make these decisions on your behalf. This person could be a family member you’d never want managing your affairs, or a professional guardian who charges exorbitant fees, and could even potentially decimate your estate. Either way, the choice is out of your hands.

Furthermore, like most court proceedings, the process of naming a guardian is often quite a time-consuming, costly, and emotionally draining task for your family. If you’re lying unconscious in a hospital bed, the last thing you’d want is to waste time or impose additional hardship on your loved ones. And this is assuming your family members agree about what’s in your best interest.

For example, if your family members disagree about the course of your medical treatment, this could lead to ugly court battles between your loved ones. Such conflicts can tear your family apart and drain your estate’s finances. And in the end, the individual the court eventually appoints may choose treatment options, such as invasive surgeries, that are the exact opposite of what you’d actually want.

This potential turmoil and expense can be easily avoided through proper estate planning. An effective plan would give the individuals you’ve chosen immediate authority to make your medical, financial, and legal decisions, without the need for court intervention. What’s more, the plan can provide clear guidance about your wishes, so there’s no mistake or conflict about how these vital decisions should be made.

Determining which planning tools you should use to grant and guide this decision-making authority depends entirely on your personal circumstances. There are several options available, but choosing what’s best is something you should ultimately decide on after consulting with an experienced lawyer like us.

That said, we can tell you one planning tool that’s totally worthless when it comes to your incapacity: a will. A will only go into effect upon your death, and then it merely governs how your assets should be divided, so having a will does nothing to keep your family out of court and out of conflict in the event of your incapacity.

There are multiple planning vehicles to choose from when creating an incapacity plan. And this shouldn’t be just a single document; instead, it should include a comprehensive variety of multiple planning tools, each serving a different purpose.

Though the planning strategies you ultimately put in place will be based on your particular circumstances, it’s likely that your incapacity plan will include some, or all, of the following:

Healthcare power of attorney: An advanced directive that grants an individual of your choice the immediate legal authority to make decisions about your medical treatment in the event of your incapacity.

Living will: An advanced directive that provides specific guidance about how your medical decisions should be made during your incapacity.

Durable financial power of attorney: A planning document that grants an individual of your choice the immediate legal authority to make decisions related to the management of your finances, real estate, and business interests.

Revocable living trust: A planning document that immediately transfers control of all assets held by the trust to a person of your choosing to be used for your benefit in the event of your incapacity. The trust can include legally binding instructions for how your care should be managed and even spell out specific conditions that must be met for you to be deemed incapacitated.

While each of these documents is important, they are often of limited usefulness without the counsel and guidance of a personal lawyer who knows you, knows what’s important to you, knows how to locate your assets, and who can guide your family when they don’t know where to turn.

You may be powerless to prevent your potential incapacity, but estate planning — which we prefer to call Life and Legacy Planning because it’s about so much more than just your “estate” — can at least give you control over how your life and assets will be managed if it does occur. Moreover, such planning can prevent your family from enduring needless trauma, conflict, court intervention, and expense during an already trying time.

If you’ve yet to plan for incapacity, meet with us as your Personal Family Lawyer® right away. We can counsel you on the proper planning vehicles to put in place, and help you select the individuals best suited to make such critical decisions on your behalf. If you already have planning strategies in place, we can review your plan to make sure it’s been properly set up, maintained, and updated. Contact us today to get started.

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.

The pandemic is causing us to consider a lot of things that we may not have before, even if maybe we should have.

It brings to mind something a colleague of mine shared recently. One unremarkable weekend, she left her small children with a babysitter and headed out to enjoy dinner at a restaurant with her husband. But as she sat there, a thought crept into her head that she couldn’t let go.

What would happen to her kids, she thought, if she and her husband got into a car accident on the way home?

And even though my colleague is an estate planning lawyer herself, and she had a will at home naming guardians for her kids, she didn’t have a definite and clear answer that provided the comfort she wanted. Her will was in a vault, and her named legal guardians lived thousands of miles away.  It was that thought that spurred her to take action, not only for her own family, but to create tools and resources for others as well.

If you’d like to read the book she wrote as a result of her own discoveries, it’s called “Wear Clean Underwear: A Fast, Fun, Friendly—and Essential—Guide to Legal Planning for Busy Parents” and it’s the best-selling book on legal planning for families.

One thing you’ll discover in the book is that even naming a legal guardian in your will is often not enough to keep your kids out of the care of strangers, or someone you wouldn’t want, if something happens to you.

If you are young and healthy, it might be hard to imagine that you won’t be there to care for your kids. But if the COVID-19 pandemic is showing us anything, it’s that even a healthy person can contract a serious illness that leaves them incapacitated and unable to care for their children.

If there is more than one adult in the house, that may alleviate  some of your worry. While naming  legal guardians for your kids may feel especially urgent for a single parent, parents with partners aren’t off the hook. You should take precautions though, especially since there are high infection rates among people who live in the same household.

A professor at the University of Florida has found a more than 19% chance that someone else in the household of a person infected with COVID-19 will also contract the disease. Researchers estimate the average incubation time is about four days and could be infectious for up to two weeks. That means it’s not outside the realm of possibility that you and your partner could both contract the illness, possibly at the same time.

Even if you never contract COVID-19, you are of course still human, and vulnerable to accidents and other dangers that could separate you from your kids—either temporarily or permanently.

Last week we referred to one way to handle parental guilt: naming temporary and permanent legal guardians for your children. Don’t get me wrong, I’m not trying to give you a guilt trip right now! But I am encouraging you to take action if you haven’t already, and I’m going to show you a very easy (and free!) tool to use to get you started.

Go to this website right now and name guardians for your children in a legal document, and then have it reviewed by us. When we review your legal document (or, your will if you already have one), we can discuss who would care for your children in the immediate term if something happens to you, even on a short-term basis.

And, if you are having a difficult time deciding who to name as legal guardians for your children, we can even help you make the right decisions.

Officially answering the question of who will care for your kids if you can’t—even for a short time—is one of the best things you can do right now. It is a real, concrete way you can protect your kids during this scary period of time. We’ve made it as easy as possible for you to get it done quickly, so you can have peace of mind that your kids’ future is secure no matter what happens.

If you need help with the process, please do give us a call and we’ll be glad to walk you through it.

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.

Selling your business can bring financial rewards. But to get the best price, you need to minimize red flags to potential buyers and maximize the value of the business asset you have created. Before you sell, figure out how to best position yourself within the market and prove that your business is a good investment to prospective buyers. And be sure to keep in mind the six steps to selling your business:

Your asking price should reflect your business’s actual—not just potential—value. Most buyers won’t take a risk on a potential value. They want to see proof of value, not possibilities. Proof of value comes from things like recurring revenue, a team that can lead itself, not depending on you, and a history of increasing profits and independence.

Potential buyers will be paying close attention to your business’s actual profits. Touting your revenue is informative, but it doesn’t provide the information an investor needs. Look at your profits, and see if there is anything you can do to boost them before you sell. If you’ve been managing profits from a tax perspective, and making them appear as small as possible, you may want to shift this for a few years pre-sale.

Potential buyers will want to see invoices and proof of deposits or account activity. Your tax returns aren’t enough. To do this, you’ll need to get your business’s finances in good shape before you sell, which means updated P&Ls with income and expenses broken down and categorized properly, plus future projections.

Your past financial performance may be relevant, but you can’t base your asking price on past profits. Buyers typically want to see how your business has performed in the last 12 months. Be prepared to provide ample proof of that.

Full disclosure when it comes to your business’s shortcomings is crucial to a good sale. In fact, this is one area that keeps many sellers from getting top offers. Buyers can quickly be turned off if they suspect you are less than forthright.

With the cost of a funeral averaging $7,000 and steadily increasing each year, every estate plan should include enough money to cover this final expense. Yet it isn’t enough to simply set aside money in your will.

Your family won’t be able to access money left in a will until your estate goes through, which can last months or even years. Since most funeral providers require full payment upfront, this means your family will likely have to cover your funeral costs out of pocket, unless you take proper action now.

If you want to avoid burdening your family with this hefty bill, you should use planning strategies that do not require probate. Here are a few options:

You can purchase a new life insurance policy or add extra coverage to your existing policy to cover funeral expenses. The policy will pay out to the named beneficiary as soon as your death certificate is available. But you’ll likely have to undergo a medical exam and may be disqualified or face costly premiums if you’re older and/or have health issues.

There is also burial insurance specifically designed to cover funeral expenses. Also known “final expense,” “memorial,” and “preneed” insurance, such policies do not require a medical exam. However, you’ll often pay far more in premiums than what the policy actually pays out.

Because of the sky-high premiums and the fact such policies are sold mostly to the poor and uneducated, consumer advocate groups like the Consumer Federation of America consider burial insurance a bad idea and even predatory in some cases.

If you have any type of insurance to cover your funeral, make sure your family knows about it! These policies are often never cashed in because the family didn’t know they existed.

Many funeral homes let you pay for your funeral services in advance, either in a single lump sum or through installments. Also known as pre-need plans, the funeral provider typically puts your money in a trust that pays out upon your death, or buys a burial insurance policy, with itself as the beneficiary.

While such prepaid plans may seem like a convenient way to cover your funeral expenses, these plans can have serious drawbacks. As mentioned earlier, if the funeral provider buys burial insurance, you’re likely to see massive premiums compared to what the plan actually pays out. And if they use a trust, the plan might not actually cover the full cost of the funeral, leaving your family on the hook for the difference. Plus, most states have inadequate laws protecting funds in pre-need plans, putting your money at risk if the funeral provider closes or is bought out by another company.

In fact, these packages are considered so risky, the Funeral Consumers Alliance (FCA), a nonprofit industry watchdog group, advises against purchasing such plans. The only instance where prepaid plans are a good idea, according to the FCA, is if you are facing a Medicaid spend down before going into a nursing home. This is because prepaid funeral plans funded through irrevocable trusts are not considered a countable asset for Medicaid eligibility purposes.

If you’re looking to buy a prepaid funeral plan in order to qualify for Medicaid, be sure to consult with us first, as not all pre-paid funeral plans are actually Medicaid compliant, even if the funeral home says they are. Moreover, if the irrevocable trust is not set up correctly, it may violate Medicaid’s look-back period, delaying your eligibility.

Many banks offer payable-on-death (POD) accounts, sometimes called Totten Trusts, that you can set up to fund your funeral expenses. The account’s named beneficiary can only access the money upon your death, but you can deposit or withdraw money at any time.

A POD does not go through, so the beneficiary can access the money once your death certificate is issued. POD accounts are FDIC-insured, but such accounts are treated as countable assets by Medicaid, and the interest is subject to income tax.

Another option is to simply open a joint savings account with the person handling your funeral expenses and give them rights of survivorship. However, this gives the person access to your money while you’re alive too, and it puts the account at risk from their future creditors.

Indeed, we know one client who lost the money in a joint account she shared with her granddaughter over a single bad business decision. The granddaughter was sued over a lease default, and when she lost the case, her creditors were able to go after the joint account.

You don’t need to buy a pre-built trust from a funeral provider. We can create a customized living trust that allows you to control the funds until your death and name a successor trustee, who is legally bound to use the trust funds to pay for your funeral expenses exactly as the trust terms stipulate.

With a living trust, you can change the terms at any time and even dissolve the trust if you need the money for other purposes. Alternatively, if you need an irrevocable trust to help qualify for Medicaid, we can create that too and help you ensure the trust stays totally compliant with all of Medicaid’s requirements.

To help decide which option is best suited for your particular situation, consult with us. We can put an estate plan in place that includes adequate funding to ensure your funeral services are handled just as you wish—and your family isn’t forced to foot the bill.

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.