Law Office of Christopher A. Poulos

11/07/2022

Emma

06/25/2019

How to Leave an Inheritance to Your Kids

5 simple steps can prevent a lot of bickering or hurt feelings
by Jean Chatzky.

One of the most frequently asked questions by anyone leaving an inheritance: Do kids have to be treated equally?

About $30 trillion. That's the amount of money boomer parents — i.e., you and me — are expected to leave to our millennial offspring over the next 30 to 40 years, according to consulting firm Accenture. That number will rise or fall depending on many factors, including the economy, the markets, how long we parents live and so on.

Whichever way the tide flows, it's likely to be a considerable chunk of change. And that means if you're among those leaving a tidy sum to those you love, you want to do it right. Here's how.

1. Manage expectations with open communication. A recent survey from Fidelity Investments showed that adult children underestimated the value of their parents' estates by a tidy $100,000. Granted, that's likely better than if they'd been off by a million, but having some sense of where you stand and what they're likely to receive as a result will put their minds at ease.

That doesn't mean you need to spread your financial life "out on the kitchen table," says Detroit area elder law attorney Mark Accettura. "Estate planning is not a democratic process. It's really the parent's wishes," he says. Parents should give kids a basic sense of where they stand financially — always noting that the situation can change if more money needs to be spent on their own medical care — as well as clear instructions about whom to contact and where important papers are kept.

2. Level the playing field. One of the most frequently asked questions by anyone leaving an inheritance is whether they have to treat the kids equally. Experts say it certainly helps.

"If you want to minimize fighting, leave it as equal as you possibly can," says Accettura. That applies not just to assets but also to responsibilities for settling your affairs. "When parents appoint responsibility they're making a statement as to who is worthy, capable, who they trust. It's a final statement and it's irrevocable, so it's important to be concerned about people's feelings." He suggests that anyone who has any level of capability should at least have a small role.

3. Do the distributing yourself. Leanna Hamill, a Boston-area estate planning attorney, has seen parents with, say, a $200,000 life insurance policy name their oldest child beneficiary and trust him (or her) to divvy it up among the siblings. Big mistake.

"If you want all siblings to inherit equally, put them all down as beneficiaries," she says. Moreover, if you have jewelry, art or other items to bequeath, leave a list of who gets what, along with a method for dividing up whatever is left so that people can take turns calmly.

4. If you distribute unequally, explain yourself. There are reasons parents do this — perhaps one child earns significantly more than another, and therefore needs less — but it can lead to resentment, which is why, Hamill says, many people avoid talking to their kids about inheritances in the first place. At the very least, write a note to go with the will, she says. "Leave something that says, 'I love you all equally. Here is why I am doing the distributions the way I am.'"

5. Use a trust to eliminate uncertainty. If you want to make sure your children use the money wisely, consider putting it in trust with a few strings attached. Many estate planningattorneys recommend distributing the assets in chunks (typically one-third at age 25, one-third at age 30 and one-third at age 35).

The thinking is that with maturity will come better financial decision-making. You can also include a provision that if your child is going through some sort of substance abuse problem at that time, the distribution can be held to a later date.

But Hamill cautions against using what's called an incentive trust. These documents stipulate that your heirs inherit only if they've jumped over a particular hurdle. A trust might say Joe can have half of his inheritance when he graduates from college. But what if he goes to culinary school? Does that count? "It can lead to the beneficiary suing the trustee to interpret what the trust meant, and wasting a lot of trust assets on a suit," she says. "I'm not a fan." — With Arielle O'Shea

04/17/2019

Tom was a single guy living at home with his father and working in the family business. When he found out he was going to inherit a fortune once his sickly father died, he decided he needed a wife with which to share his fortune.

One evening at an investment meeting, he spotted the most beautiful woman he had ever seen. Her natural beauty took his breath away.

"I may look like just an ordinary man," he said to her, "but in just a few years, my father will die, and I'll inherit 20 million dollars."

Impressed, the woman obtained his business card.

Three days later, she became his stepmother.

Women are so much better at estate planning than men.

08/22/2018

Another unnecessary Probate.

07/16/2018

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05/25/2018

Mistake #3
Ignoring the Need for Changes to your Plan
Many times families who do prepare a comprehensive Estate Plan put the plan away once it is completed and forget about it. Your plan should always reflect what you would want to happen if you became incapacitated today. One thing every Estate Planner knows is that life changes. When you experience changes in your assets, family situation and/or there are changes to the law, your plan will need to be updated. I recommend that your plan be reviewed every five to ten years, but I believe you will know when you need to change it based on life events, like divorce , deaths, births, and inheritances.

05/18/2018

Mistake #2
The Complete Plan
Although every estate plan is going to look different based on each families individual needs, there are a few basics that should be included to maximize the benefit to your family and to avoid the headaches and expenses of court.
1. A Living Trust is a document that allows you to retain control of your assets while you are alive and have capacity, but also stipulates what happens is you are incapacitated and when you pass away. The Living Trust is more difficult to contest and therefore can help avoid family conflicts after you are gone. They allow you to decide what will be given to whom (including personal property, real property and all other assets). The Living Trust also allows you to determine when a person will inherit or to pay of expenses (like college) for your beneficiaries prior to receiving the money. You can determine what happens to your home, whether you want to have it sold or to have someone remain in the home to live in.
Living Trusts avoid Medi-Cal liens, so if you are like one in three Americans and end up in a long term care facility, your assets can be protected. The Living Trust can include safeguards to help avoid undue influence and fraud like when someone re-writes the plan to receive the assets of the estate. Some of these safeguards include requiring a doctor’s letter to Amendments, or you can add a Co-Trustee that you trust. In the event that you do not have family you can rely on, there is always the option of Private Professional Fiduciaries.
2. Health Care Power of Attorneys allow you to assign an agent to make medical decisions for you in the event that you are incapacitated. Without a Power of Attorney, your family would have to get a court order in order to have the right to your medical records and the ability to discuss your care and treatment with your doctors.
3. A Medical Directive allows you to decide what medical decisions you would want in different situations. This is a great way to guide your doctors and to let you agents now what treatments you do or do not want.
4. Your plan should include Guardianship nominations for any of your minor children or a Conservatorship nomination for any disabled dependent. This allows you to tell the court who you trust to take care of your loved ones in the event that you are no longer able to. You are also able to include instructions with the nomination for things such as visitation.

05/10/2018

Mistake #1
Your will is not a plan
Remember the old saying, failing to plan is planning to fail. Although your will is a key aspect to your estate plan, it is not the entire plan and leave your heirs with issues that could have been avoided, such as:
1. Wills do not avoid probate and your family will be required to go through a time consuming, expensive and public court proceeding.
2. Wills do not protect your assets from court proceedings (conservatorship), fraud or abuse if you become incapacitated and can not make decisions concerning your finances or health.
3. Wills do not protect your assets from your creditors or from the creditors of your heirs.
4. Wills do not give you the opportunity to provide protection or guidance for when and how your heirs take control of their inheritance.

If you are relying solely on a will for your estate plan, then you are missing out on many valuable safeguards for your assets, as well as guaranteeing your family will have to go to court when you pass away.

05/04/2018

Common Estate Planning Errors
Estate planning is an important aspect for your family that should be an important part of your adult life once you acquire your first asset or have a child. Still many of us cringe at the thought of planning for what happens once we are gone. Estate planning gets put it off for far too long, leaving ourselves and our families at risk of getting stuck in the court system in the event of an unexpected accident, illness, or injury.
Planning for your incapacity and death can be scary. But it’s even more frightening to think of the potential tragedies that can arise if you and your family don’t have the right planning in place. This becomes even more of a tragedy when you have a child with special needs, who will inherit if no plan is in place, causing a devastating loss of benefits, including SSI, Medi-Cal and IHSS, or a court ordered trust, with restrictions.

Some of the most common mistakes I have seen people make (and how to fix them) will be posted soon.

03/28/2018

All about IHSS and Special Needs Trusts. What’s there not to like?

02/23/2018

Come one, come all! I will speaking at the expo about the advantages of putting your home into a living trust.