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Include Everything in the Prenup! A Lesson from Robin Williams’ Estate Dispute

"The mess comes when you don't have proper estate planning," said Robert Nachshin, a family law attorney based in Los Angeles. An important tool in that toolbox is a prenup, which spells out how assets should be split up if the marriage fails or a spouse dies. Nachshin said that a spouse who wants to protect assets in a second marriage should have both trusts and a prenup.

A prenup details how assets would be split up if the marriage fails or a spouse dies. A spouse who wants to protect assets in a second marriage should also talk to an experienced estate planning attorney about trusts. Planning details about prenups were covered in a recent CNBC article titled “Remarrying? Shower kids with love, and a good prenup. ”

One of the best features of a prenup is that it can protect nearly every kind of asset an individual may want to pass along—this includes art collections, cash, and the family business. Without a prenup, it’s easier for a spouse to obtain some unintended part of the estate if you die. A prenup should be airtight to avoid legal issues. Although Robin Williams had a well-thought-out estate plan when he passed, which included a prenup and a trust for his children, some of his personal items were left out of the documents. This is causing a fight between his spouse and his children.

Documenting every asset is necessary. Lists of paintings owned before a second marriage can be kept in multiple places, which helps you show evidence of your intentions … and the more detail, the better! Once a prenup is signed, it’s nearly unbreakable and is typically accepted by the courts.

The original articlegives us some guidelines to keep in mind and to discuss with your attorney:

1. Both you and your spouse should understand the prenup, and both should be represented by attorneys.
2. Negotiate and sign the prenup prior to your wedding. A common mistake is signing the prenup the day of the wedding!
3. After you're married, be careful not to commingle all assets because the source of funds—like joint or separate accounts—used to buy an asset will decided who owns it.
4. The more communication, the less misunderstanding. Conduct a family meeting and discuss your intentions for your estate.

Read about more tips in the article and talk to your local estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp, to help avoid costly court battles later.

Reference: CNBC (February 12, 2015) “Remarrying? Shower kids with love, and a good prenup”

Checking in on Your Estate Plan

Once the basic documents are in place, they should be revisited periodically.  If there is a major change in your circumstances- good or bad, your attorney should know.

How are those New Year’s Resolutions coming along for your finances and estate plan?

Fox News recently posted some tips in an article titled “Is it time for your legal checkup?”The article advises that a will is a great starting point, even if you’re young and healthy. Once we have children, another important part of estate planning is designating a guardian who will rear your children if something unforeseen happens. It’s also important to decide the ages at which your kids should inherit assets. You should discuss all of this with your estate planning attorney: allowing the trustee to have the discretion as to how, whether, and when to make distributions can protect immature or young beneficiaries. This will also keep these assets from counting against a young person’s college financial aid applications.

The Fox News article also counsels against online or DIY estate planning kits, as no two situations are identical. You can trust an attorney with information about your loved ones’ spending issues, troubled marriages, developmental disabilities, gambling and/or substance abuse problems so that he or she can work with you to create a strategy to protect everyone. A “fill in the blanks” document could not possibly protect our goofy relatives from each other! Come on, your brother-in-law Ed is no financial planner!

A Power of Attorney allows you to name an agent who can sign documents and transact business on your behalf, if you become mentally or physically incapacitated. It’s critical to customize the document based upon your relationship with the named agent. For example, young people may want to limit the agent’s authority to just paying bills, and older married people usually want to delegate full power to each other.

While you are at it, think about your health care advance directive. This allows you to designate an agent who has your permission to speak with your medical caregivers about your treatment decisions on your behalf if you are unable to speak for yourself.

Once the basic estate plan is in place, you should revisit it periodically with your attorney. If there’s a big change in your circumstances—either good or bad—your estate planning attorney should be made aware. Contact Robert A. Gordon of Redkey Gordon Law Corp to make any needed changes in your estate plan.

Reference: Fox News (February 12, 2015) “Is it time for your legal checkup?”

Financial and Estate Planning for Mom and Dad

While not all encompassing, these guides serve as a starting point to help your parents. There are many family dynamics at play when these types of planning conversations arise, so you need to be cognizant of patterns and relationships. Starting earlier will reap dividends for everyone; delaying these conversations can cause more anxiety and tension.

Do your parents have all of their financial and estate plans in order? How do you have “the talk” without causing hurt feelings?

A recent article in The (Manchester, NH) Union-Leader, titled “Helping parents navigate their finances as they get older,” recommends a proactive approach as the best way to broach this delicate subject. Starting the conversation can be difficult for some, but waiting can cause even more headaches. For example, there are an increasing number of scams targeting our seniors. You want to be ahead of the curve to protect their nest egg and your time.

Take an inventory of their finances to get a baseline understanding of their financial situation, including a list of brokerage and bank accounts, insurance policies, and titles to their home and autos. See whether they are paying their bills on time to help you determine the extent of your day-to-day involvement in the management of their affairs. Obtain copies or know where they keep important documents like their Social Security cards and birth certificates. Your parents should give you the contact information for their CPA, financial advisors, and estate planning attorney.

The original article suggests that you simplify wherever possible, like using online bill paying. If your parents are not comfortable with a computer, ask a trusted family member to assist. The goal is to streamline and to provide some monitoring of their accounts for suspicious activity.

Check into your parents’ estate planning. This should include, at a minimum, a will, financial durable powers of attorney, health care durable powers of attorney, and a living will. If they don't have these documents in place, the probate court will make the important decisions, which can be costly and time-consuming. An estate planning attorney can help draft the appropriate documents and review their existing documents. In addition, the beneficiaries designated on your parents’ life insurance policies, IRAs, qualified accounts, and pensions should be coordinated with their estate planning documents and overall intentions.

This article is a nice starting point to help your parents. There are many family dynamics at play with these conversations, so beginning earlier will help everyone; delaying these conversations can cause more anxiety and headaches. Talk with an experienced estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp, and make sure you’re totally prepared.

Reference: The (Manchester, NH) Union-Leader (February 14, 2015) “Helping parents navigate their finances as they get older”

Elder Abuse Is a Real Problem, and We Need a Solution!

How big a problem is impossible to say, because hard data is scarce. “The reality is that we don’t even have national data on the scope of the problem,” Sen. Claire McCaskill (D-Mo.), said at the hearing.

It has been found that much of the financial abuse involving seniors goes unreported. According to a New York State Elder Abuse Prevalence Study, only one in 44 cases is reported. And knowing that makes for a real problem when reviewing some of the data we do have.

It’s a problem that Kathleen Quinn, Executive Director of the National Adult Protective Services Association, called “rampant, largely invisible, expensive and lethal” at a recent Senate Special Committee on Aging hearing on the subject. In fact, as reported in a recent Forbes article titled “Why Elder Financial Abuse Is Such A Slippery Crime,” a new study asserts that financial elder abuse costs $36.5 billion annually—more than 12 times the figures that MetLife has published in the past few years.

Each type of fraud has a different age spectrum. Investment scams peak around age 65, and work-from-home scams, dating scams, weight loss, and most Internet scams are more common at a bit younger age. Finally, theft by family members peaks much later.

While attempting to determine the extent of financial elder abuse is difficult, curbing it is even tougher. Elder abuse frequently will involve overlapping types of crimes, such as neglect and physical and sexual assault. Further, many caregivers, family members, financial services employees, and police officers simply are not trained in preventing, detecting or dealing with financial exploitation of the elderly. Add to this a lack of coordination between agencies and professionals, and you can see the scope of the issue.

Fortunately, our government is getting more involved. The 2015 White House Conference on Aging has made “elder justice” one of its four tracks. Also, a government working group known as the Elder Justice Coordinating Council, the Department of Justice, HHS’s Administration for Community Living and the Consumer Financial Protection Bureau’s Office for Older Americans have teamed up to gather data and create materials for professionals and family members. The Securities and Exchange Commission is also getting more involved. Its first Investor Advocate says one of his agency’s priorities is to give financial service professionals more effective tools to protect clients whenever an adviser or registered representative suspects financial or other abuse of a vulnerable client.

Find out more by speaking with an experienced elder law attorney, Robert A. Gordon of Redkey Gordon Law Corp.

Reference: Forbes (February 13, 2015) “Why Elder Financial Abuse Is Such A Slippery Crime”

Seniors, Finances and Medicaid Planning: What You Need to Know

In continuation of the series on estate and life planning, this column focuses on how Medicaid factors into financial planning for long-term care.

Seniors need to have a plan in place for long-term care, should they need care assistance in the future. A recent article in The Victoria (TX) Advocate titled “How does Medicaid factor into financial planning?” recommends that seniors need a strategy to pay for the costs of long-term care. In some instances, however, some individuals may have to rely on Medicaid if they don't have enough income to purchase long-term care insurance, the assets to pay for care themselves, or they are uninsurable.

Medicaid planning was often thought of as a viable tool for long-term planning. However, estate planning attorneys are now rethinking this strategy. Medicaid planning—which was, in essence, planning to make asset transfers, used to be the primary tool used by seniors considering long-term care costs. However, law changes and the advent of new financial products and plans will work better, they say. Medicaid "planning" is actually a misnomer as most seniors don’t plan to go on Medicaid, but rather experience an urgent care need, and there aren’t any other options. A better alternative is to obtain a long-term care insurance policy.

To qualify for Medicaid, a senior must be at what the government deems poverty level: less than $2,000 in countable assets (countable assets doesn’t include one's personal residence and this threshold varies by state) and roughly $2,000 or less in monthly income. Even if a senior is considered well off when he or she retires, medical and long-term care costs can decrease their assets to the poverty level, which means Medicaid would be an option at that point.

Some seniors will purposely transfer or retitle assets to qualify for Medicaid. This can be risky, the original article advises. There are other methods of spending down assets which can be more beneficial to the senior—like using cash assets to make substantial home improvements and repairs, adding safety features in the home should the senior become wheelchair bound.

Another risk in depending on Medicaid for long-term care is that federal law requires states to look for recovery of Medicaid benefits. The state will put in a claim against any assets that pass through probate upon the death of the recipient. This will include assets not counted during eligibility, such as the senior’s home.

Because estate and lifetime planning can be overwhelming and wrought with pitfalls, seniors should enlist the help of an estate planning attorney and, more particularly, an elder law attorney to evaluate all options available. Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced elder law attorney.

Reference: The Victoria (TX) Advocate (February 13, 2015) “How does Medicaid factor into financial planning?”