San Antonio, TX Estate Planning

Financial Planning: Don't Go It Alone, Get a Financial Planner To Help

Financial planners are not just for rich people. Everyone, no matter where you stand financially, can benefit from the advice and guidance of a qualified financial planner.

You have probably received a lot of free financial advice over the years from friends, family and coworkers. But how do you know which advice to follow? It can get complicated quickly, and some people do not know what to do. As a result, many do nothing. They put off planning until later in life and then start to panic. That being said, a good financial planner can help clarify and prioritize your goals helping you make the most of your money.

A recent USA TODAY article, titled “How to find the right financial adviser,” states that no matter where you stand financially, you can benefit from the advice and guidance of a qualified financial planner. The article advises that even for those with modest savings can see a significant change in their lives with a one- or two-hour session with a planner.

Many financial planners are members of professional organizations that certify them, such as the Certified Financial Planner Board, which is an independent professional regulatory organization. To earn this certification, a financial planner must meet all the requirements, including extensive study and a comprehensive test on the financial planning process, investment planning, income tax planning, retirement planning and employee benefits and estate planning. There are several other prominent financial planning designations, you should work with our attorneys to identify your needs and determine the right financial advisor for you that will help you design a plan to meet your objectives.

Reference: USA TODAY “How to find the right financial adviser” (July 9, 2014)

Is Your Estate Plan Up-To-Date?

In some cases, outdated or inadequate estate plans have led to highly-publicized disputes between heirs that have squandered fortunes and diminished legacies. These situations are more tragic because they are usually entirely avoidable, especially when advisors are willing to facilitate difficult conversations.

An estate plan is no "one and done" project. In fact, it's very much like a snapshot of your life and your wishes at the time it was created. As your life changes, your priorities will shift. Consequently, it is very important to update your estate plan regularly.

“An estate plan is not a time capsule to be opened and dissected at some distant point in the future," according recent Forbes article. The article, titled "Why You Should Update Your Estate Plan," explains that many ultra-wealthy individuals have a valid estate plan in place, but have not reviewed and updated their plans after they first signed them. In some instances, an outdated or insufficient estate plan have caused disputes between heirs. Unfortunately, many of these situations are even more tragic because they are usually avoidable, especially when professionals can facilitate difficult conversations.

The original article notes that family members will often shy away from the estate planning process because it typically means some tough discussions. However, the article reminds us that this can be a wonderful opportunity for your estate planning attorney to educate family members on the benefits and risks of planning while helping to bridge family divides. In fact, the "key is to evaluate the impact on the estate or wealth transfer plan of all major decisions and life events as elements of a broader generational family wealth strategy." As a result, this can simplify an ongoing process and reduce the possibility of damaging legal disputes on the disposition of family assets in the future.

The easiest way to decide when to review your estate plan is: (i) when there is a meaningful change in your life; or (ii) every few years just to make sure you are up-to-date with the changing tax laws.

Contact us to discover how to make sure your estate plan is current and that your wishes will be carried out when the time comes.

Reference: Forbes (July 3, 2014) "Why You Should Update Your Estate Plan"

Long-Term Care Questions for the Rhinestone Cowboy

[Glen Campbell's wife] Kim Campbell told The Associated Press in an email Thursday that the 78-year-old's Alzheimer's disease has progressed to the point that he needs access to medical care 24 hours a day.

When Alzheimer's strikes, the decision of how to care for a loved one can be increasingly challenging as the disease progresses.

Kim Woolen Campbell, Glenn Campbell's wife, recently told The Associated Press via email that the country and pop music legend was suffering from his Alzheimer's disease to such an extent that he needed access to medical care 24 hours a day. The 78-year-old singer's doctors encouraged her earlier this year to discontinue care at the family's home and move him to a care facility. He has been suffering from the degenerative neurological condition for about three years.

This move was publicly criticized by Mr. Campbell’s eldest daughter, Debby.

As reported by The Associated Press, in an article titled "Glen Campbell's wife defends decision on long-term facility care," Kim Campbell wrote in the email that it was "crushingly sad" to see her husband's health deteriorate "but indulging those feelings does not help him."

His daughter Debby Campbell told Country Weekly in June that she was opposed to the decision, and that she did not feel Campbell's family was spending enough time with him in Nashville.

No doubt with a star of this magnitude, the details will come out about how he planned for his long-term care. You should take some time to come into our office and sit down with one of our estate planning and elder law attorneys to make sure proper planning is in place.

Click here to request a consultation with James or David.

Reference:  Associated Press (June 19, 2014) "Glen Campbell's wife defends decision on long-term facility care"

Stretch IRAs for Your Beneficiaries

This valuable estate-planning tool can help your beneficiaries make the most out of their inheritance but many investors do not know about these stretch provisions. This leaves retirees with the important question: Should they force their beneficiaries to stretch the inherited IRA?

What is a "stretch IRA" strategy? A recent Forbes article titled "Should I Force My Beneficiaries to Stretch My IRA?" discussed Stretch IRAs and their impact with two brothers, Wealth managers Tom and Robert Fross. In the article, Tom thought it best to leave beneficiaries the full range of IRA distribution options. Why? Because trying to manage from beyond the grave does not allow for flexibility or changing family circumstances. Robert agreed but feels it is important to educate beneficiaries and ensure that they comprehend the benefits of stretching distributions across their own lifetime rather than withdrawing money all at once.

Indeed, “stretch IRAs” can be a worthwhile vehicle to allow children to get a head start on their own retirement savings. With proper planning, an inherited IRA can grow from a modest amount into a great sum of money, the Fross brothers agreed. However, they cautioned that it is critical to take some steps now to set your heirs up for success later. Robert explained that only the IRA's named beneficiaries are able to leverage stretch provisions, so you must name your children or grandchildren as direct beneficiaries of the account, rather than indirectly as heirs in your will or beneficiaries of a trust. They also suggest working with an estate planning attorney to guarantee that the current custodian (e.g., bank, investment company, or insurance company) will allow beneficiaries to take advantage of an inherited IRA.

Also, educate your beneficiaries about inherited IRAs and make sure they understand the tax and financial advantages involved.

Reference:  Forbes (March 12, 2014) "Should I Force My Beneficiaries to Stretch My IRA?"

Any Life Changes as of Late? It's Time to Freshen Up Your Estate Plan!

All sorts of things can change over the course of our lives—and some of those changes may affect existing estate plans. Experts recommend that you review your estate plan every few years to confirm whether it needs updating.

Things change over time. New tax laws, more grandchildren, an aging estate executor ... the list goes on and on. That being said, it's no surprise that a recent explorenews.com article, titled "Six reasons to take a fresh look at your estate plan," recommends that you should review your estate plan every few years to see if it needs updating. Whether you have a simple will or a revocable living trust, the article points out several reasons to re-evaluate your estate plan regularly.

New family members and friends. There might be a new person in your family or a friend whom you would like to add as a beneficiary, trustee, or inheritor. There may be some new grandchildren and in-laws, or charitable organizations in which you have become active.

Former family members and friends. Perhaps you want to exclude someone currently in your will or trust, like an ex-spouse or ex-in-laws.

Your choice of executor or co-trustee. The article suggest that you consider the current age, geographic location, abilities and skills of the executor and/or co-trustee you originally chose, and whether those individuals are still the best candidates. For example, you may want to change your named executor or trustee if he or she is in their mid-80s.

Assets. Do your will and/or trust still apply to the assets you currently have? If your assets have increased or become more complex, you might want to look at adding a trust, drawing up a more detailed will, or consulting with an estate planning attorney to better evaluate your circumstances.

Values. There is more to estate planning than just finances. Evaluate the decisions you have documented regarding your health care and Advance Directives, such as any Do Not Resuscitate (DNR) order. Think about whether you would like to make any changes.

Tax law. A change in the federal tax laws may require updates to trusts. Estate planning attorneys generally recommend that you should have a health care power of attorney and a financial power of attorney.

Once you update your estate plan, tell your family what documents you have drawn up and where they can find them (such as at your attorney’s office). You need not tell them what is in your will or trust, but someone needs to know it exists. Keep your living will somewhere easy to find, and give copies to appropriate family members, along with copies of your health care and financial powers of attorney. These extra steps will ensure that your wishes are put into action when needed.

Reference: explorenews.com (June 25, 2014) "Six reasons to take a fresh look at your estate plan"

The Sting of a Disinheritance May Not Be Necessary

Recently rock legend Sting made headlines when he declared that his six children would be receiving little to none of his estimated $300 million fortune. Financial Planner Kevin McKinley argues that there are ways to give your children money without you having to worry about them becoming trust-fund brats.

Sting's motive for not leaving an inheritance to his kids is understandable to a degree. Wealth can be a springboard to some, but others can squander it away to their own demise. Is there another way to ensure your kids will use the money sensibly without cutting them completely out of the will? A recent article explains that, used in the right way, your wealth can help you teach your child about using money wisely.

The Time article, titled "This is What Sting Should Have Done for His Kids, Instead of Disinheriting Them," lays out three ways you can use a small amount of your own money (during your lifetime) to motivate your children to be more productive and self-reliant without spoiling them rotten.

1. Save something for his college. You need not drop every dollar you have into a college savings account. Instead, set a little aside to show your commitment to your child’s education. It also ensures that he or she does not have to choose between assuming a huge student loan and not going to college at all.

2. Jumpstart retirement savings. When your child earns his or her first paycheck, you can again use a little money to teach a valuable lesson: open a Roth IRA on the child's behalf by April 15^th of the year after they get their first job. They will be able to deposit the lesser of their earnings, or $5,500. The article explains that a $5,000 deposit today into a 16 year-old’s Roth IRA earning 6% annually would be worth almost $100,000 by the time he turns 66, but if he deposits $5,000 into the Roth IRA every year for 50 years, the account could be worth roughly $1.5 million by the time he reaches 66.

3. Help with the house. The Time article quotes the National Association of Realtors, which says the median home price in the U.S. as of May of 2014 is $214,000. If your child’s (and/or their spouse’s) annual income is about $60,000, they should be able to qualify for a 30-year mortgage at about 4.0% to purchase a home in that price range. The monthly mortgage payment would be about $1,300. However, the biggest obstacle to the purchase of a first home may be the down payment of $42,000 (to make a 20% down payment). Consider helping your child meet that down payment requirement so they will not only enjoy the satisfaction of home ownership, but will also build equity in something with their own money.

It might also mean you have a place to stay if you emulate Sting and spend all of your money now.

Reference: Time (June 25, 2014) "This is What Sting Should Have Done for His Kids, Instead of Disinheriting Them"

Family Feud Breaks Out During Casey Kasem's Final Days

The public battle -- always emotional and sometimes bizarre -- began in October 2013 when daughters Julie and Kerri led a protest outside of Kasem's Los Angeles mansion, holding signs demanding that their stepmom let them see their ailing father.

With celebrity life comes a lot of media attention, and with that attention comes the increased risk of the celebrity's issues being showcased for all to see. Such is the case of the recent passing of radio and television personality Casey Kasem. A recent CNN article, titled "Casey Kasem's family feud: Judge allows water, food infusions stopped," provides all of the sordid details of a family feud that ensued during his final days. This vicious and very public battle started in October 2013 when Kasem's daughters Julie and Kerri led a protest outside his LA mansion holding signs demanding that their stepmom let them see their ailing father.

Kasem divorced his first wife when his daughters and son were young, then married an actress in 1980. The couple have a daughter together, Liberty Kasem, a 24-year-old aspiring singer. Casey Kasem retired in 2009—two years after a doctor diagnosed him with Parkinson's disease, a diagnosis that was later changed to Lewy body dementia which has no cure.

After Kasem was told he had Parkinson's in 2007, he signed a document giving his oldest children authority to make his medical decisions if he should become unable to do so himself. The power of attorney statement signed by Kasem included a declaration that he did not want to be kept alive with "any form of life sustaining procedures, including nutrition and hydration" if it "would result in a mere biological existence, devoid of cognitive function, with no reasonable hope of normal functioning."

This document, that cut Kasem's second wife out of the process, was the underpinning for the recent legal battle as his health deteriorated and his children accused the stepmother of shutting them out of their father's life. It served as the legal basis for his daughter to have doctors discontinue infusions of water, food and medicine.

Numerous court appearances by Kasem's daughter and second wife, on a weekly and sometimes daily basis, were battles over the direction and control of his medical care. These battles demonstrated how emotional and bizarre a fight can get when end-of-life decisions are not properly documented and discussed with all members of the family.

Hopefully, we will never see a better (or worse) example of having the proper documents in order and the entire family on the same page. Contact your estate planning attorney today and make sure that you do not have this type of colossal feud because you did not plan and communicate.

Reference: CNN (June 11, 2014) "Casey Kasem's family feud: Judge allows water, food infusions stopped"

Retirement Uncertainties

Around 60 percent of those surveyed described themselves as “terrified” of what health care costs could potentially do to their retirement plans. But one thing they did not do was turn to their financial advisors for help with this issue. In fact, a solid majority - 59 percent – of the respondents said that most financial advisors are “not equipped” to discuss retirement health care costs with their clients.

Retirement is an important part of estate planning. The trick is knowing how much you'll need to save. This is no easy task, especially with so many uncertainties in the later years.

As reported in a recent article titled "Overcoming retirement fears" in LifeHealthPro, Legg Mason surveyed 500 affluent investors (those with at least $200,000 in investable assets) and found that 88% were confident that their money would fund their retirement comfortably. Nonetheless, they still had some doubts about retirement. According to the survey, the concerns included:

1. Having a catastrophic event that uses up my retirement funds;

2. Living longer than my retirement funds last; 

3. Government not following up on obligations; 

4. Not saving enough for my retirement; and  

5. Low interest rate environment.

The biggest concern appears to be a devastating illness, which would be the type of “catastrophic event” as mentioned above. Another survey of high-net-worth individuals (defined as those with at least $250,000 in household assets), conducted annually by Nationwide Financial, revealed that roughly 60% of those surveyed described themselves as “terrified” of how future health care costs could potentially impact their retirement plans.

Don't be terrified. Speak with an estate planning attorney and get some peace of mind about the future.

Reference: LifeHealthPro (June 5, 2014) "Overcoming retirement fears"

Letter of Intent - Your Blueprint For Estate Planning

Since for most of us, our children are our foremost priority in life, a Letter of Intent can be a crucial document. And anyone who wants to ensure special care for their children should consider including one with their estate documents; there are no real drawbacks to writing one.

For parents, their children are the most important part of their lives. With that in mind, a Letter of Intent can be a very important document to ensure special care for your children. This estate planning "blueprint" was recently discussed in a LifeHealthPro article titled "Letter of intent: a useful component of an estate plan." Including such a letter as part of your estate documents can prove to be very beneficial.

The article advises that there's no drawback to writing one either. However, there are a few things to keep in mind.

Far from being a “silver bullet” for all of your estate planning “must-haves,” there are some things that a Letter of Intent can't do. For example, a Letter of Intent is really a "blueprint" for other estate planning documents. You can use the Letter of Intent to provide detailed instructions and preferences for the care of your child, and those wishes can then be reflected in your wills or a trust to guarantee that they’re carried out. Financial decisions should be a reflection of your vision of the child's care—not vice versa.

Another thing to note is that the letter can be drafted right now, regardless of where you and your child are in life. "It’s not just that you never know when disaster will strike, although that’s always a good reason to be prepared," the article says. Understanding a child—especially one with special needs—is a lifelong journey. Start the letter now and add to it as the years go on.

Get your child involved, as it is his or her life, and he or she should have a voice. The LifeHealthPro article confirms that the child will appreciate being permitted to be a part of the important decisions about his or her future.

One last thing to remember: this is your opportunity to record everything about your child.A Letter of Intent can do this and more—it can let others know about his or her personality, likes, dislikes, strengths, and weaknesses. This will be critical information for those individuals whom you entrust to potentially have an important role in the care of your child.

Reference: LifeHealthPro (June 3, 2014) "Letter of intent: a useful component of an estate plan"

Money To Part With, But No Heirs -- Where Should Your Dollars Go?

"We say to people: 'If you do nothing, your money will go to the state. Is that what you want?' That's enough to make them want to consider something else," says Andrew Russell, a certified financial planner in San Diego.

If you have an estate to leave behind when you pass away, but no heirs to leave it to ... where should your money go?

A recent Reuters article, titled "Estate planning for the young, rich and childless," reports that there are 17 million unmarried Americans over age 65 who are readying for retirement and that charitable foundations and financial advisers report that a growing number of young people now have these same decisions to make before they marry or have children. This is especially true, the article says, for tech entrepreneurs who can see a large amount of money from stock options or the sale of a start-up business.

When it comes to charitable planning, financial experts say it's not about how old you are but how rich. If you have saved more than $100,000, you do not want to die without a will or estate plan—this can leave the distribution of your assets up to a court-appointed executor and state law. If you do nothing, your money may go to the state. Is that what you want?

You also need to prepare healthcare directives and determine who should manage your affairs should you become incapacitated in the event of an accident or illness. What usually prevents individuals, with or without children, from estate planning is that they don't want to face their mortality.

The article suggests considering establishing a donor-advised fund, which operates similar to mutual funds designated for charitable giving. The funds allow an individual to make a one-time or ongoing contribution through the donor-advised fund, which reduces fees and paperwork. Donors can designate the funds to one or more charities.

Ask your estate planning attorney about these strategies.

Reference: Reuters (June 2, 2014) "Estate planning for the young, rich and childless"