Power of Attorney

The Changing Role of Trusts in Estate Planning

Published on: July 27, 2016 | By McCulloch & Miller, PLLC

A legislative change made the use of trusts less necessary for most Americans, but there are still many situations where this planning tool is the best option.

When the American Taxpayer Relief Act became law, the $5 million exemption and the new rules on portability of the exemption for married couples (i.e., $10 million per couple) became permanent. The tax rate on estates over that threshold, now $5.45 million per person, was bumped up to 40%. Many people who had created trusts to protect their descendents from estate taxes had cause to grumble because their trusts were no longer necessary, according to CNBC in “What's the difference between an inheritance and a trust?”

The estate tax now only affects about 0.2% of the population, translating to about 600,000 Americans. This was one of the big reasons why people set up trusts over the last 20 years…to avoid estate tax consequences. But trusts continue to have an important role in estate planning.

Why Your Power of Attorney Document is Not a Slam Dunk

Published on: June 29, 2016 | By McCulloch & Miller, PLLC

If a financial institution does not accept a properly prepared power of attorney, you will have to know your rights and be prepared to assert yourself.

A power of attorney is an estate planning basic; however, more often than you would expect, people find themselves being told by financial institutions that they will not accept the power of attorney. It’s such a problem that a number of states have enacted laws to protect the power of attorney.

This form gives a designated person the authority to act on another’s behalf when making financial decisions. It is commonly employed by adult children whose aging parents can no longer act on their own. However, financial institutions frequently make it difficult to exercise that power. The Wall Street Journal article, “When the Power of Attorney Lacks Power,” lists some steps to avoid potential problems.

When Power of Attorney Forms Are Refused

Published on: June 1, 2016 | By McCulloch & Miller, PLLC

This is one of those problems that you think you've solved, only to discover that the problem still exists. The best workaround we can think of: overdoing due diligence, well in advance.

When you took the necessary and advisable step to have a parent or other relative sign a durable power of attorney, you might have felt relieved, secure in the knowledge that you were now prepared and protected to handle their finances if they become incapacitated.

However, The New York Times explains in “Finding Out Your Power of Attorney Is Powerless” that when you take the witnessed and notarized document to a financial institution, the officials there may not accept the documents. They may not honor your power of attorney and may insist that the account owners sign the institution’s own power of attorney form.

How Powers of Attorney Are Used in Planning for the Future

Published on: May 25, 2016 | By McCulloch & Miller, PLLC

The same level of advance planning needed for a new baby or for a child going to college is necessary for retirement and estate planning.

Decisions about housing, income, health care and your heirs' lives after you pass away are not always easily made. These decisions involve emotional, financial and legal considerations. Timing these decisions and creating the necessary documents requires good planning, as many of these decisions must complement each other.

According to The Harvard Press in "Older & Wiser: Powers of Attorney," the complexity of these issues leads most people to seek professional assistance regarding retirement living and estate planning. While many of us are tempted to avoid uncomfortable decisions, careful planning can save you thousands of dollars and can help you avoid unnecessary guardianship or institutionalization.

Most Americans Still Don’t Have a Will

Published on: May 20, 2016 | By McCulloch & Miller, PLLC

Despite countless celebrity estate battles, most Americans still put off having a will created. Think of a will as an itinerary for your family that will make their lives easier once you are gone.

Prince was clearly busy with performing, writing, recording and creating. But that's still not a good reason for him to not have put a will in place. The very public court processes that are now underway could have been completely avoided had he devoted the time to creating an estate plan.

The Huffington Post, in its May 3 article, "Like Prince, A Majority Of Americans Don't Have A Will," stressed that wills are important as they establish beneficiaries, distinguish who gets what (and how much of it), and prevent the state from deciding what happens to your property.

Houston, Do You Know the True Cost of Divorce?

Published on: March 24, 2016 | By McCulloch & Miller, PLLC

Once the initial emotional trauma is past and the couple starts working towards creating separation agreements, it's time to consider the day-to-day costs of living that change as the result of a divorce. The family economic unit that formerly had one mortgage or rent payment, one cable bill, one energy bill, etc., now has two of each of these bills. Wise planning for life after divorce includes living expenses, taxes and retirement planning.

Money's recent article, "Keep a Divorce From Killing Your Finances," offers several important tips for those going through or recently completing the divorce process.

Monitor assets in your divorce settlement: If you're in the midst of a divorce, examine the type of assets that you receive as part of your divorce property settlement. The reason for this is your cash flow. Even in cases where the math demonstrates an equal split between the two parties, one spouse could get stuck with a non-liquid asset, which might end up being difficult to liquidate if cash flow becomes a problem.

Estate Planning? Don’t Forget Digital Assets

Published on: December 4, 2015 | By McCulloch & Miller, PLLC

Today’s millennials understand that their digital assets, which include everything from family movies hosted in the cloud, to social media accounts, digital currencies like Bitcoin and domain names, have value that can be passed to others when they die. One young man created a will that listed all of his digital assets and used a password manager to gather all passwords in a central location. He gave the password manager to his brother, who is his estate executor. He also moved certain digital assets, particularly photos and movies, to a file sharing service so that other family members would have access to them in the event of his demise.

Many people neglect to include digital effects in their estate plans, which can be a huge mistake, as valuable assets may go unnoticed, or money and time might be spent attempting to find them.

There are some assets like digital currencies, video game characters, and Internet domain names that exist only in cyberspace. You can’t put these in a safety deposit box: they can be overlooked because they aren’t as tangible. These days, folks are acquiring more digital assets like Facebook photos or email addresses all the time. However, getting access to social media accounts can be difficult because laws governing digital assets vary by state. Online sites concerned with user privacy have drastically different terms and conditions that sometimes exclude executors.

Thanksgiving Dinner: Time to Discuss Estate Planning?

Published on: November 24, 2015 | By McCulloch & Miller, PLLC

Long-standing American family traditions are changing with the times. The sled trips through snowy woods and icy rivers have given way to cross-country jet flights and international Skype visits. But regardless of the changes, when you all do sit down to a holiday meal, according to thestreet.com's "Estate Planning Over Thanksgiving? Time to Talk Turkey," this is a perfect time to start talking about important family matters, including estate planning.

If families or cultures are averse to raising such topics around the holidays, there should be an annual meeting to let family members know where an estate plan stands.

When combing through assets, remember that no item is too small for discussion, especially during the holidays. It is a natural time for emotions to run high, but it is a great time to discuss items of seemingly insignificant value that may take on added significance for each potential heir.

Guardian Abuse is a Growing Problem

Published on: November 18, 2015 | By McCulloch & Miller, PLLC

Guardianship is a fairly straightforward and basic function. A person who is not able to handle her or his own affairs, for any number of reasons, is assigned a guardian by the court, who is to act on their behalf for financial, medical and care-taking purposes. The guardian is charged with putting the interest of their ward first, and the guardian is entrusted with a great deal of responsibility.

However, as the Wall Street Journal reports, in "Abuses Plague Guardianship Systems Across the Country," the financial abuse of elderly people by guardians is rampant throughout the United States.

Court appointed guardians with no family relationship to the elderly wards too often act in their own interests and deplete the wealth of the wards.

Estate Planning for Blended Families Takes Special Consideration

Published on: October 12, 2015 | By McCulloch & Miller, PLLC

Anytime a blended family includes children from prior marriages, estate planning becomes more challenging, as reported in The Meridian Star, in “Estate planning after a second marriage.” If there are young children, how can you ensure that the surviving spouse will take care of them? And what if you pass away and your surviving spouse remarries? One way to prepare for this possibility is to make a child the primary beneficiary of a life insurance policy, place certain property under joint ownership with the child or set up a trust for your children. But none of these steps are simple, and all require the hard conversation with your spouse and with an experienced estate planning attorney.

If you have a written a will, it may require an update. Be extremely specific about which heir gets what and state bequests convincingly. The more convincing your bequest, the less ambiguity and the fewer issues that will arise. Also, update your beneficiary designations for retirement plans, investment accounts, and insurance policies. However, if you’ve been divorced, you may be precluded from changing beneficiaries in certain cases. Talk to a qualified estate planning lawyer. Take a copy of your divorcee decree with you and ask if revising your beneficiary designations will violate it.

You can also take a look at irrevocable trusts, which can be used to provide for your spouse and your kids. Some people establish a separate property trust to provide for their spouse after their death and designate their real property to their children. Parents can also create irrevocable trusts to direct assets to particular children. These can be great estate planning vehicles because: (i) a trust agreement isn’t a public document; (ii) assets within irrevocable trusts are shielded from creditors and from inheritance claims of spouses of the adult children named as heirs; and (iii) an irrevocable trust represents a “finalized” estate planning decision—which guarantees that particular assets transfer to a parent’s biological children. In addition, irrevocable trusts are rarely undone.