Redkey Gordon P.C.

Set It and Forget It Approach to Estate Planning Is Never a Good Idea

Your estate plan needs to be refreshed every so often because life's circumstances are always changing. You might be unaware of how much the changes will impact your estate.

From Forbes, we learn that 51% of Americans age 55 – 64 don't have a Will. That's bad news for their families, who will have to deal with the estate plan default: whatever the rules are for their state. But for those who are smart enough to have an estate plan in place, there are still some maintenance issues that need to be addressed with a review every now and then. Everything changes over time, including your personal and financial situations and tax and estate planning laws.

Even if your estate plan was crafted by a skilled and experienced estate planning attorney, you'll want to talk to him or her if any of these things occur:

Marriage or Re-marriage. This doesn't automatically change the provisions of your will or trust and won't necessarily provide for your new spouse. Talk with your attorney to ensure your plan reflects your new goals, both individually and as a couple.

Divorce. After a divorce your goals will probably change and so should your estate plan. When your divorce is finalized, revise your plan as quickly as possible to reflect your new goals and intentions.

Children. When you have a child or adopt, you'll probably want your son or daughter to be the recipient of your estate, and you need to appoint a legal guardian for your child in the event you and your spouse die or are incapacitated.

Injury or Illness. If you (or one of the members of your family) become seriously ill, you may want to consider changing your estate plan to reflect their increased needs. For example, a special needs trust lets you leave assets in a trust that will not disqualify him or her from receiving government benefits.

Change of Plans. With time your goals and intentions naturally change, and your estate plan should reflect your current intentions, not the goals you had five years ago.

You inherit. If you or your spouse expect to get a sizeable inheritance, there may be new opportunities to reduce taxes or provide creditor protection. The increased value of your estate may also mean you change how your assets will be distributed when you die.

Buy or sell a business. If you purchase a business, you may want to create a succession plan. If you sell your business, the capital you receive may require a different plan for asset distribution and reducing the tax burden for your heirs.

Moving to another state. Estate planning documents are generally legal from one jurisdiction to another, but each state has its own laws. If you move from a separate property state (like Virginia) to a community property state (like California), you might want to convert your separate property to community property to take advantage of favorable income tax treatment.

Your best bet? Review your plan with Robert A. Gordon of Redkey Gordon Law Corp, an expereienced estate planning attorney every few years to keep up with changes in federal and state laws. If your life experiences any kind of major change as described above, make that appointment today!

Reference: Forbes (January 28, 2016) "8 Reasons to Revise Your Estate Plan Today"

Candid Discussions on Memory Loss with Your Physician Are A Better Way to Go

Early diagnosis can improve quality of life if it is dementia, and if it is not, your doctor can discuss other reasons for short-term memory loss and treatment options.

The older the patients, the less likely they are to discuss a memory problem with their doctor during an office visit, according to a review of federal government data from more than 10,000 people. This review, published in Preventing Chronic Disease, also revealed that in 2011 as few as 1 in 4 adults age 45 and older discussed memory problems with their physician during routine checkups. The journal article and its findings were reported in US News & World Report's "Too Few Older Adults Tell Doctors About Memory Loss: Study."

Routine checkups can be a missed opportunity for assessing and discussing memory problems for the majority of older adults. Experts say the stigma of memory loss and dementia may keep some from discussing these issues with their doctors.

Many think that as long as we don't mention it, memory loss might just be normal aging. However, talking about memory troubles doesn't necessarily mean you have dementia. It might be another highly treatable condition, like depression. But if it is related to dementia, recognizing it early is crucial.

Patients can meet with family members and an experienced elder law attorney to get advice on making individualized decisions for their care, rather than relying on last-minute decisions.

Memory loss and the possibility of the early onset of dementia is a difficult discussion for both the physician and patient, particularly in light of the long-term implications. However, early diagnosis of dementia is important, as even mild memory loss from early Alzheimer's disease may be improved with medication (although these prescriptions don't stop the disease's progression).

Having a discussion with your physician about memory loss and whether the lapses are occasional or increasing in frequency will allow your condition to be assessed. If specialized testing is done, then you and your doctor will know if your situation requires treatment or special planning. This is just like any other condition that requires diagnosis and, if indicated, treatment.

Reference: US News & World Report (January 28, 2016) "Too Few Older Adults Tell Doctors about Memory Loss: Study"

Grab the Bull by Both Horns: Money and Death

Don't wait until it's too late to discuss money, death and your personal values with your heirs. If your family can't manage the discussions, then you'll at least know that another tactic is needed.

We don't like to talk about money or death. Our children hate the thought of it, and it's uncomfortable. But Baby Boomers who have not had conversations with their heirs about estate plans need to start talking, and soon. A recent MarketWatch article, "How to tell your kids how much money you're leaving them," provides excellent guidance to help the process along.

A recent survey found that 72% of parents experience at least some reluctance to discussing financial matters with their children. That's not in anyone's best interest. Disorganization and miscommunication can be costly. The costs can be in dollars, as heirs miss tax deadlines and other opportunities sorting through the files, and in hurt feelings and confusion, as children struggle to understand their parents' decisions.

Here are some ideas for boomers who want to start the process:

Decide how you want to communicate. Don't ambush your children with this discussion. Instead, the first conversation should be how to have a discussion about this subject. Tell them what you want to discuss and ask them how they'd like to proceed. Ready them for several conversations so that they're not overwhelmed with everything in one sitting. If you have several kids, ask if they'd like one-on-one conversations or a group talk. Decide on a date for the first conversation, set the agenda, and review your financial and estate planning documents.

Don't start with the bottom line. You might want to jump to the big stuff and discuss who's getting what, but an estate plan involves much more than divvying up assets. It should involve values, which ideally started with parents talking about money with their children when they were young and emphasizing the value of hard work and the importance of saving. If that didn't happen, it's never too late to start. Next, discuss who you plan to designate as your health care power of attorney to make medical decisions in the event you can't do so yourself and who you'll name as your financial power of attorney to handle financial transactions on your behalf. Many people name their spouse as their primary agent, but you should also name a younger person to serve as a secondary agent if the first can't. Also, mention who you plan to name as the executor of your will.

Get some feedback. Children's feelings may be hurt if they don't understand why you designated one child over the other. Tell them your reasoning and ask for input through phrases like "Am I missing anything?" or "Tell me if I'm thinking about this the right way." But remember that you're the ultimate decision maker, and you don't need to change your plans because of your children's opinions. You can just say, "I respect your feelings, but I decided to go ahead with this plan."

If the discussion about powers of attorney and executors doesn't go well, you may think about ending it right there and not discussing your assets. If the discussion goes south, maybe you need to just let your will or trust do the talking after you're dead. You can always include a letter of intent explaining decisions posthumously.

Move carefully with the assets. If you decide to discuss your assets, proceed with caution. There may be arguments over small, symbolic items like jewelry. If so, parents could ask their children which items they'd like the most and do their best to give them some of them.

With dividing up dollars, many middle-class families don't know how much money they'll have left over, if any, after their retirement. That's reason enough to use percentages and not dollar amounts. But adult children still need to know where assets are located if they need to pay for long-term care. If you have these discussions now, it will be much easier to communicate that in the wake of a sudden accident or illness.

Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney can be a helpful part of this conversation, and you may even want to invite your family members to meet with your attorney as a group. You'll be able to cover any technical questions, and this will give your family members a chance to get more comfortable with the concept of life continuing after you are gone.

Reference: MarketWatch (January 29, 2016) "How to tell your kids how much money you're leaving them"

Decision on How to Structure Executor Fees Often Missing in Wills

Without clear direction of what executor fees should be, large estates may get caught up in protracted battles, while medium sized estates may find family members at odds with each other.

A jumbo sized battle in a high profile and seemingly never-ending estate matter highlights what may appear to be a minor detail in estate planning but what is in fact an important consideration: the executor fee.

According to a recent Wall Street Journal article, "Battle Involving Leona Helmsley Estate Spotlights Issue of Executor Pay," the New York attorney general has challenged the proposed fee on the estate of real estate mogul Leona Helmsley. The $100 million sought by the executors, including two of Helmsley's grandchildren, is "astronomical" and should be reduced by 90%, the state Attorney General Eric Schneiderman said.

An issue in this case is that the will does not specify how the executor fees should be calculated, while ruling out the use of a fee schedule in state law, according to the attorney general's filing.

Many wills don't mention executor fees, and state law then determines the fee. Many states base the fee (also called a "commission" in some states) on a sliding percentage of the assets of the estate. In New York, the commission starts at 5% of the first $100,000 and declines to 2% on amounts above $5 million. So in New York, the total fee on a $1 million estate would be $34,000, or 3.4%. There are variations in every state, but the average on an estate of that size is typically about $30,000, or 3%.

Many states allow for extraordinary fees for especially complex estates or estates involved in litigation. States also are different in which assets are included in calculating the executor fee. Some states say only that executor fees must be reasonable, subject to court review. In those states, you should detail fee arrangements to help avoid legal battles later.

In states with fee scales, individuals may cap the fee in their wills at an amount below the amount allowed by statute. Others will provide for payment to an estate planning attorney as executor based on their hourly rate, if they think the cost will be lower than the state's asset-based scale.

In the Helmsley case, the executor fee calculated using the state schedule would have been a $200 million. The $100 million requested by the executors was equivalent to $6,437 an hour based on records of how much time the executors spent working on the estate.

Compensation for executors who are friends or family usually isn't a big deal when the families aren't uber wealthy—particularly when the executors are also beneficiaries. Typically the executors will waive a fee because paying tax on the fee at ordinary-income rates wouldn't be good if instead they receive the money as a bequest tax-free.

If you are asked to serve as someone's executor, be proactive and ask what directions the will contains with regard to executor fees. Being an executor is a time-consuming and complex task, regardless of the size of the estate. There is a lot of responsibility, and the potential for problems, including being sued, is very real.

Reference: The Wall Street Journal (January 29, 2016) "Battle Involving Leona Helmsley Estate Spotlights Issue of Executor Pay"

Battle over Bishop's Estate Pits Church against Family Members

Whenever an estate battle includes a non-family member, things can get rough. When millions are at stake, you can expect the battle to be as mega as the megachurch in this case.

Family members are fighting to lift a shroud of secrecy following the death of a successful bishop who built a real estate empire and a megachurch. As reported in The Detroit News in "Family battles over megachurch founder's estate," the estate of a Pentecostal bishop from Detroit could be valued at up to $10 million. The bishop's heirs want their inheritance, and the church is pushing back.

Bishop William Bonner's two adult grandchildren say his survivors are being shut out of their inheritance, and they believe officials with a Harlem church are hiding money and records about property that belongs to the family.

Bonner died in April at age 93, after suffering from dementia and complications from a stroke. He founded Solomon's Temple in 1944, which has grown into a 2,500-seat sanctuary. His real estate empire includes as many as 30 homes and other properties in several states, his family says. His survivors want the church to open its books on his financial affairs to give them more information about the bishop's Will detailing property and cash that they claim should be part of their inheritance.

The family, which has no part in church business, is fighting for the right to sell the late minister's property, while church officials argue any sale proceeds belong to the church.

Grace Bonner said her grandfather's Will was changed less than a year before he died, which she said is suspicious. Family members have filed the lawsuit to force church leaders to answer questions about what has happened to their grandfather's estate.

A widower, Bonner was survived by his son, William Lee Bonner Jr., and his granddaughters.

The pastor of Solomon's Temple until 2013, Bishop David Maxwell, reportedly said that Bishop Bonner's health began to deteriorate in 2008 and his health and mental abilities became worse a few years later. In a legal deposition, Maxwell told the court that he called Bonner's son and asked him to become involved with his father's affairs. In January 2014, his son sent a letter to the church expressing concerns about his father's mental health.

Reference: The Detroit News (January 27, 2016) "Family battles over megachurch founder's estate"