It’s an unfortunate fact that predators emerge during times of crisis to take advantage of people. That means the COVID-19 pandemic can leave your elderly parents vulnerable in more ways than one. But even when things go back to normal, this chronic problem of financial exploitation will still be a risk.

We see it happen far too often. Maybe your parents live several hours away, or in another state or country, and someone in their community gets close to them. Or maybe they have a close relationship with a financial advisor who isn’t really looking out for their best interests. This person could even be another family member, friend, business partner, hired caregiver, professional advisor, or just a casual acquaintance.

Sometimes, when bad actors become involved with your parents’ lives and assets, it can lead not only to a loss of money, but even a loss of personal freedom. One of the worst cases of this I’ve heard of is the case of Milo, a retired veteran living in Arizona, and his son Greg, who lives in California. It all started when Milo asked Greg to help him protect his small amount of money from a family member who was “borrowing” it freely. All Milo had was a savings of $140,000 and payments of $3,700 per month from social security, a pension, and veteran’s benefits.

To help his father out, Greg applied for guardianship of Milo’s money, and the court granted it. But at the same time, without notifying Greg, the court appointed a professional financial Conservator that neither Milo nor Greg knew. The Conservator quickly set to draining Milo’s small savings, with the court barring Greg from filing any more motions.

The situation escalated even further when the Conservator decided to move Milo from his assisted living facility to a cheap lock-down facility where he wouldn’t even have access to the outdoors. This would, of course, free up more money for the Conservator to access. Before this could happen, though, Greg hurried to pick his father up and bring him back to California with him.

Now, the two are essentially on-the-run from authorities, who are trying to bring Milo back to Arizona and under the control of the Conservator. Milo and Greg are out of funds and are now trying to raise capital to mount a legal battle and free Milo from this terrible situation.

The scariest part is that Milo and Greg had all the proper legal documents in place. Sometimes, though, that is not enough to protect your parents from being taken advantage of—even to this extreme. Especially in a time of stress and confusion like the COVID-19 pandemic we are currently living in, it is vital to be vigilant and get the best possible counsel to avoid something like this happening.

This isn’t meant to make you paranoid or distrustful of the people around you, or of how your parents handle their own lives. Well, maybe it is a little. Mostly, though, it’s a call to encourage you and your family to be aware, educated, and empowered in knowing what risks are possible for your parents, and for your future inheritance.

Look out for the following “red flag” actions from influencers:

  1. Preventing important communication between family members;
  2. Withholding documents from other family members;
  3. Encouraging financial gifts or economic benefits to recently met connections (usually in the same network as your parents’ “new friend”);
  4. Naming recently met connections as attorney-in-fact (under a financial power of attorney), or as a joint owner on financial accounts, real estate, and other assets;
  5. Giving financial advice that may not be in your or your parents’ best interests, but rather in the interests of the advisor.

We recommend you start talking with your elderly parents now about how they want their affairs to be handled. Also, you should immediately investigate any situation where you suspect your loved ones are being taken advantage of. There have been too many cases of financial abuse or inappropriate influence where family members are too late to stop the bad actor.

Ideally, you’ll know the value of your parents’ tangible assets (i.e., home, car, business, stocks) and intangible assets (i.e., generational stories, personal relationships, theological legacies). Additionally, you should be working with an advisor to help you understand how family dynamics and the law will impact you, and everything that matters to you and your parents when they’re gone.

Dedicated to empowering your family, building your wealth and defining your legacy,

With all the media about “digital wills” and “online estate planning” it could be tempting to think you can do your estate planning yourself, online. And, maybe you can. But, if you do, you need to know the potential pitfalls. Online estate planning could be a big trap for the unwary and end up leaving your family worse off than if you had done nothing at all.

First and foremost, before you do any of your own online estate planning, it’s critical to understand your family dynamics, the nature of your assets, and what the state of California would say should happen to your assets if something happens to you. You see, if you don’t do estate planning, the state does have a plan for your assets if you become incapacitated or when you die. You need to know what that plan is, so you know whether you want to change it.

But Don’t I Need a Will and Can’t I Just Do It Online?
Here’s the funny thing about estate planning: the one legal document that everyone thinks they need most actually does the least.

Every adult does need SOME estate planning. A will is always a good idea because it says who gets, and who oversees distributing, what you have. However, if the default law would have given your assets to the same people you would choose and authority to the person you would name anyway, then an online will would probably do nothing valuable for you at all.

Even a properly drafted will does not keep your family out of court (a will must always be adjudicated by a judge). And if drafted improperly, it could require the person you’ve named to handle things for you to get a bond, which is like an insurance policy. These are expensive and can be hard to get for an executor who has less than a stellar credit score. If your named executor cannot get a bond, it would then mean the court would appoint a court ordered executor, and that can be costly for your estate. This is just one of the examples of how having a will prepared online, can create more expense for the people you love. Unfortunately, all the online will preparation solutions I’ve reviewed don’t even mention this risk.

So, yes, you can do your own will online, but at what potential cost for the people you love?

The Problem with Online Wills
DIY online estate plans (and even many estate plans created by lawyers) usually include three or four basic documents: a will, a financial power of attorney, an advance health care directive, and possibly a trust.

But, honestly, completing these documents without counsel is simply not enough to guarantee your estate will be executed as simply, affordably, and effectively as you would wish.

For instance—are you sure there isn’t some missing consideration that could lead to turmoil as your family tries to figure it out? Did you know that most family fights don’t even happen over money, but over lack of clarity? Have you considered all your extended family, including stepchildren and ex-spouses? What will be done with all the personal, sentimental items you want to pass on to your children?

And there have been far too many scenarios where seniors, even those who had some estate planning done, get caught in the court system or even declared incompetent, and then have court-appointed guardians named, who then drain their accounts. In many cases, their assets are gutted before they can go to their kids. You don’t want that to happen to you or your family and a do-it-yourself will makes that outcome more likely, not less.

What about making sure your family knows what you have and where it is? An online will won’t tell them that. There’s nearly $10 billion being held in the California department of unclaimed property; much of it because someone died and their family lost track of their assets.

So how can you be sure you’ve got everything covered, legally?

With online wills and DIY estate planning docs, you wouldn’t even know what questions to ask to uncover the potential risks to the people you love, who deserve to receive what you’ve created in your life, without a big mess.

Think about this: do you know anyone who has lost family relationships because, after a loved one died, the family ended up in an irrevocable fight? Maybe this has even happened in your own family. I see it all the time and the consequences—both, financial and emotional—can be devastating.

And, it’s all unnecessary.

Yes, even if there are attorneys on staff at these online companies, they don’t get to know you and your family dynamics enough to spot the real issues that could arise. They are, instead, focused on a one-size-fits-all solution and easy answers to complex issues.

The Kind of Help Your Family Deserves
Many lawyers who specialize in estate planning often base their work on template documents. Even if they are well-intentioned, they’re working with an old, traditional system that places the focus solely on providing documents. But the documents are only as good as the understanding a lawyer has about your family dynamics, the nature of your assets, how the law will apply to your situation, and how the documents can be written as simply as possible to achieve your wishes. You need much more than just a set of four or five filled-out template documents to address all those complexities.

Your plan should include an inventory of your assets and guarantee they are all owned in a way that will keep your family out of court and conflict while ensuring everyone named in your plan has what they need and understands your choices. Most importantly, you should understand your plan and ensure that it passes along more than just your money.

Do it yourself estate planning is risky. While it may be better than nothing, it may also be worse. And it won’t be until after you are gone that your loved ones find out that answer.

Dedicated to empowering your family, building your wealth and defining your legacy,

In many families, money matters are not typical dinner table discussion, but I think it should be. This is especially true when it comes to affluent parents. And, I hope this changes because one of the most important things you can do is talk to your kids (and your parents) about money.

According to the Spectrem Millionaire Corner, a market research group, only 17% of affluent parents said they would disclose their income or net worth to their kids by the time they turned 18. A nearly equal amount, 18% said they would never disclose these numbers to their kids. 32% of the parents surveyed by Spectrem said “it’s none of their business” when asked why they would not talk to their kids about money.

But, that’s faulty thinking. The amount of money generated by your family, and what will happen to it when you or your parents become incapacitated or die is definitely “family” business. In fact, whether your parents talk with you about it now, or you figure it all out after they die, your parent’s money has a huge impact on you.

If your parents are not talking to you about money, it could be because they are afraid that if you know how much money there is, it will make you lazy, unmotivated, or change the course of your life decisions in a negative manner. And, maybe you have the same fears of talking about money with your own kids.

But the truth is that whether you know exactly what’s there or not, you have a general sense of your family’s financial situation and it’s already impacted your decisions in a myriad of ways. And the best way for your family’s money to impact your decisions in a positive manner is to have open conversation about it.

If you are a child of well-off parents who are not talking to you about money, consider that your job is to learn to communicate with your parents in a way that will have them trust you, and the decisions you will make if you know just how much there is.

When money has come up in the past, have you behaved immaturely? Have your actions or words caused your parents not to trust you? If so, you can change that now. And consider the possibility that your parents would love to see evidence of your maturity in this arena.

If you are a parent yourself, one of the most important wishes you have for your children is probably that they learn to handle money well. And as a parent myself, I know you want to influence them in the most positive way possible when it comes to money (and everything else, for that matter).

Consider how you would want your children to approach you to have the money conversation, and how you can do exactly that with your parents?

We all must learn about our family’s money eventually. And if that doesn’t happen until after our parents die, it can be a much bigger burden to deal with, and we can lose tremendous opportunities for passing on more than just money.

As an prosperous parent, or the child of prosperous parents, getting into conversations about money now is a huge opportunity to pass on values, insights, stories and experiences that will be lost if you wait until incapacity or death to start facing that topic.

I believe it’s one of the most valuable, ongoing conversations I’m having with my children – and parents. And it’s one of my favorite things to help my clients get going in their own families.

Don’t underestimate the power of these conversations. Talking to your kids (or your parents) about money is one of life’s real opportunities for your family to come together and use your whole family wealth to create more connection from one generation to the next.

Dedicated to empowering your family, building your wealth and defining your legacy,

On January 1, 2020, the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) went into effect, and it could have big implications for both your retirement and estate planning strategies—and not all of them are positive.

Last week, I gave you a general overview of the SECURE Act’s most impactful provisions. Under the new law, your heirs could end up paying far more in income taxes than necessary when they inherit the assets in your retirement account. Moreover, the assets your heirs inherit could also end up at risk from creditors, lawsuits, or divorce. And this is true even for retirement assets held in certain protective trusts designed to shield those assets from such threats and maximize tax savings.

Here, we’ll cover the SECURE Act’s impact on your financial planning for retirement, offering strategies for maximizing your retirement account’s potential for growth, while minimizing tax liabilities and other risks that could arise in light of the legislation’s legal changes.

Tax-advantaged retirement planning

If your retirement account assets are held in a traditional IRA, you received a tax deduction when you put funds into that account, and now the investments in that account grow tax free as long as they remain in the account. When you eventually withdraw funds from the account, you’ll pay income taxes on that money based on your tax rate at the time.

If you withdraw those funds during retirement, your tax rate will likely (but not always) be lower than it is now. The combination of the upfront tax deduction on your initial investment with the likely lower tax rate on your withdrawal is what makes traditional IRAs such an attractive option for retirement planning.

Thanks to the SECURE Act, these retirement vehicles now come with even more benefits. Previously, you were required to start taking distributions from retirement accounts at age 70 ½. But under the SECURE Act, you are not required to start taking distributions until you reach 72, giving you an additional year-and-a-half to grow your retirement savings tax free.

The SECURE Act also eliminated the age restriction on contributions to traditional IRAs. Under prior law, those who continued working could not contribute to a traditional IRA once they reached 70 ½. Now you can continue making contributions to your IRA for as long as you and/or your spouse are still working.

From a financial-planning perspective, you’ll want to consider the effect these new rules could have on the goal for your retirement account assets. For example, will you need the assets you’ve been accumulating in your retirement account for your own use during retirement, or do you plan to pass those assets to your heirs? From there, you’ll want to consider the potential income-tax consequences of each scenario.

Your retirement account assets are extremely valuable, and you’ll want to ensure those assets are well managed both for yourself and future generations, so you should discuss these issues with your financial advisor as soon as possible. If you don’t already have a financial advisor, we’ll be happy to recommend a few we trust most.

And if you meet with us for a Family Estate Planning Session (or for a review of your existing plan) to discuss your options from a legal perspective, we can integrate your financial advisor into our meeting. Together, we can look at the specific goals you’re trying to achieve and determine the best ways to use your retirement-account assets to benefit yourself and your heirs.

Here are some things we would consider with you and your financial advisor:

Converting to a ROTH IRA
In light of the SECURE Act’s changes, you may want to consider converting your traditional IRA to a ROTH IRA. ROTH IRAs come with a potentially large tax bill up front, when you initially transition the account, but all earnings and future distributions from the account are tax free.

Life insurance trust options
Given the new distribution requirements for inherited IRAs, we can also look at whether it makes sense to withdraw the funds from your retirement account now, pay the resulting tax, and invest the remainder in life insurance. From there, you can set up a life insurance trust to hold the policy’s balance for your heirs.

By directing the death benefits of that insurance into a trust, you can avoid burdening your beneficiaries with the SECURE Act’s new tax requirements for withdrawals of inherited retirement assets as well as provide extended asset protection for the funds held in trust.

Charitable trust options
If you have charitable inclinations, we can consider using a charitable remainder trust (CRT). By naming the CRT as the beneficiary of your retirement account, when you pass away, the CRT would make monthly, quarterly, semi-annual, or annual distributions to your beneficiaries over their lifetime. Then, when the beneficiaries pass away, the remaining assets would be distributed to a charity of your choice.

The decision of whether to transition your traditional IRA into a ROTH IRA now, or cash out and buy insurance, or use a CRT to provide for your beneficiaries is a solvable “math problem.” Using the specific facts of your life goals as the elements that go into solving the problem, we can team up with your financial advisor to help you do the math and solve the equation.

Adjusting your plan
While the SECURE Act has significantly altered the tax implications for retirement planning and estate planning, as you can see, there are still plenty of tax-saving options available for managing your retirement account assets. But these options are only available if you plan for them.

If you don’t revise your plan to accommodate the SECURE Act’s new requirements, your family will pay the maximum amount of income taxes and lose valuable opportunities for asset-protection and wealth-creation as well. You’ve worked too hard for these assets to see them lost, squandered, or not pass to your heirs in the way you choose, so put this planning at the top of your new year’s resolution list.

Dedicated to empowering your family, building your wealth and defining your legacy,

On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The SECURE Act, is effective as of January 1, 2020. The Act is the most impactful legislation affecting retirement accounts in decades. The SECURE Act has several positive changes: It increases the required beginning date (RBD) for required minimum distributions (RMDs) from your individual retirement accounts from 70 ½ to 72 years of age, and it eliminates the age restriction for contributions to qualified retirement accounts. However, perhaps the most significant change will affect the beneficiaries of your retirement accounts: The SECURE Act requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death.

The SECURE Act does provide a few exceptions to this new mandatory ten-year withdrawal rule: spouses, beneficiaries who are not more than ten years younger than the account owner, the account owner’s children who have not reached the “age of majority,” disabled individuals, and chronically ill individuals. However, proper analysis of your estate planning goals and planning for your intended beneficiaries’ circumstances are imperative to ensure your goals are accomplished and your beneficiaries are properly planned for.

Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. Under the SECURE Act, the shorter ten-year time frame for taking distributions will result in the acceleration of income tax due, possibly causing your beneficiaries to be bumped into a higher income tax bracket, thus receiving less of the funds contained in the retirement account than you may have originally anticipated.

Your estate planning goals likely include more than just tax considerations. You might be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, or a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, it is critical to act now.

Review/Amend Your Revocable Living Trust (RLT) or Standalone Retirement Trust (SRT)

Depending on the value of your retirement account, you may have addressed the distribution of your accounts in your RLT, or you may have created an SRT that would handle your retirement accounts at your death. Your trust may have included a “conduit” provision, and, under the old law, the trustee would only distribute required minimum distributions (RMDs) to the trust beneficiaries, allowing the continued “stretch” based upon their age and life expectancy.  A conduit trust protected the account balance, and only RMDs–much smaller amounts–were vulnerable to creditors and divorcing spouses. With the SECURE Act’s passage, a conduit trust structure will no longer work because the trustee will be required to distribute the entire account balance to a beneficiary within ten years of your death. You many now need to consider the benefits of an “accumulation trust,” an alternative trust structure through which the trustee can take any required distributions and continue to hold them in a protected trust for your beneficiaries.

Consider Additional Trusts

For most Americans, a retirement account is the largest asset they will own when they pass away. If you have not done so already, it may be beneficial to create a trust to handle your retirement accounts. While many accounts offer simple beneficiary designation forms that allow you to name an individual or charity to receive funds when you pass away, this form alone does not take into consideration your estate planning goals and the unique circumstances of your beneficiary. A trust is a great tool to address the mandatory ten-year withdrawal rule under the new Act, providing continued protection of a beneficiary’s inheritance.

Review Intended Beneficiaries

With the changes to the laws surrounding retirement accounts, now is a great time to review and confirm your retirement account information. Whichever estate planning strategy is appropriate for you, it is important that your beneficiary designation is filled out correctly. If your intention is for the retirement account to go into a trust for a beneficiary, the trust must be properly named as the primary beneficiary. If you want the primary beneficiary to be an individual, he or she must be named. Ensure you have listed contingent beneficiaries as well.

If you have recently divorced or married, you will need to ensure the appropriate changes are made because at your death, in many cases, the plan administrator will distribute the account funds to the beneficiary listed, regardless of your relationship with the beneficiary or what your ultimate wishes might have been.

What Happens Next

If you are a client, we’ll be reaching out to you over the coming weeks if your plan is affected by the SECURE Act. If you are not a client, and don’t have an ongoing relationship with a trusted advisor, we’d be happy to review your plan to determine if it is affected by the SECURE Act. And if you have yet to get an estate plan in place, there’s no better time to get that process started. Let us know if we can help and happy new year!

Dedicated to empowering your family, building your wealth and defining your legacy,

In the first part of this series, we discussed the early warning signs of diminished financial capacity in the elderly. Here, we’ll discuss planning strategies that can protect your loved ones from incapacity of all kinds. 

With more and more Baby Boomers reaching retirement age each year, our country is undergoing an unprecedented demographic transformation that’s sure to challenge our society in many ways. There’s been lots of talk about whether Baby Boomers will have enough savings for retirement and the strains the generation will put on Social Security and Medicare.

But there’s another issue that’s getting far less attention—the coinciding increase in the prevalence of dementia.

Along with swelling senior population, the nation is expected to see a corresponding rise in those suffering from age-related dementia—cases of Alzheimer’s alone are expected to double by 2050. While the cognitive decline from dementia affects nearly every mental function, many people aren’t aware that one of the first abilities to go is one’s “financial capacity.”

Financial capacity refers to the ability to manage money and make wise financial decisions. A decline in financial capacity not only makes seniors more likely to mismanage their money, but it also makes them easy targets for financial exploitation, fraud, and abuse.

Last week, we listed six warning signs of a decline in financial capacity. Here we’ll discuss estate planning strategies that can help protect your elderly loved ones and their assets from the debilitating effects of dementia and other forms of incapacity.

Reducing the risks
Taking steps to reduce the risks of diminished financial capacity is vital, but stepping in to help manage an aging parent’s money without threatening their sense of independence and privacy can be a real challenge. Even if they’re aware of their own impairment, many are reluctant to ask for help, and some may even deny there’s a problem.

Ideally, you should address the potential for dementia and other forms of incapacity with your senior family members well before any signs of cognitive decline appear. Waiting until they start showing signs of dementia will only exacerbate the complications and could even invalidate planning efforts.

Start by having a heart-to-heart conversation with your loved ones about the risks involved with incapacity, and how estate planning can help protect them. Approach the subject with care and compassion. Reassure them that your goal is to make certain they retain as much control over their lives as possible—and talking about the issue early on is the best way to do that.

For example, you should let your aging parents know that if they become incapacitated without proper planning, you’ll have to go to court and petition to become their legal guardian. This process is not only quite costly and emotionally taxing, but there’s a possibility that the court could appoint a professional guardian, rather than a loved one such as yourself.

A court-appointed guardianship would mean that a total stranger would control all of their affairs—financial and otherwise—which is something they likely wouldn’t want. Professional guardianships also open the door for potential exploitation and abuse by unscrupulous guardians, which is something that’s on the rise given the sharp uptick in the senior population.

However, unless you have the legal authority to make your parents’ financial decisions, your ability to manage their money will be seriously limited. You might be able to work together with them for a while without such authority, but at some point, their cognitive impairment will likely reach a stage where you’ll need to assume full control—and that’s where estate planning comes in.


Put a plan in place
The best option would be for your aging loved ones to put in place a comprehensive plan for incapacity as soon as possible. This way, they can choose exactly who they want making their financial, medical, and legal decisions for them if and when they’re no longer able to do on their own.

There are a number of planning tools that can be used in an incapacity plan, but a will alone is sufficient. A will only goes into effect upon death, so it would do nothing should your elderly parents become incapacitated by dementia.

While a will is important in planning for death, your parents should also put in place planning tools specially designed for incapacity. One such tool is durable financial power of attorney. This document would give you (or another person of their choosing) the immediate authority to make decisions related to the management of their financial and legal affairs in the event of their incapacity.

The downside of financial durable power of attorney is that it sometimes is not accepted by banks and other financial institutions, and you might still end up needing to go to court to get control of your parents’ affairs.

A revocable living trust is a MUCH better estate planning tool to transfer control of your parents’ financial assets to you without court intervention should they become incapacitated. A revocable living trust, created while your parents have capacity, can plan for the transition of their assets to your care and control in a way that feels safe and secure to them. Bring your parents to meet with us for a Family Wealth Planning Session to learn more about how this would work.

Yet having the legal authority to make your parents’ financial and legal decisions is just part of an overall incapacity plan. They’ll also need to put in place planning strategies designed to address their healthcare decisions and medical treatment like medical power of attorney and a living will. 

We can help your aging parents and other senior family members develop a comprehensive incapacity plan, customized with the specific planning vehicles to match their unique needs and life situation.

Don’t wait until it’s too late
While incapacity from dementia is most common in the elderly, debilitating injury and illness can strike at any point in life. For this reason, all adults age 18 and older should have an incapacity plan. Moreover, such planning must be addressed well before cognitive decline begins, as you must be able to clearly express your wishes and consent for the documents to be valid. Given this urgency, you should discuss incapacity planning with your aging parents right away.

Dedicated to empowering your family, building your wealth and defining your legacy,

With more and more Baby Boomers reaching retirement age each year, our country is undergoing an unprecedented demographic transformation that’s been dubbed “The Greying of America.” This population shift stands to affect many aspects of life, especially your relationships with aging parents and other senior family members.

By 2060, the number of Americans aged 65 and older is projected to nearly double from 52 million in 2018 to 95 million, which will account for 24% of the total population. And as early as 2030, the number of those 65 and older is expected to surpass the number of children (those under age 18) for the first time in history.

Coinciding with the boom in the elderly population, the number of Americans suffering from Alzheimer’s and other forms of dementia is expected to increase substantially as well. The Centers for Disease Control (CDC) estimates that the number of Americans with Alzheimer’s disease will double by 2060, when it’s expected to reach 14 million—more than 3% of the total population.

A decline in financial capacity
Although Alzheimer’s is the most common cause of dementia in older adults, it’s not the only one. In fact, the National Institute on Aging estimates that nearly half of all Americans will develop some form of dementia in their lifetime. And while the cognitive decline brought on by dementia affects a broad array of mental functions, many people aren’t aware that one of the first abilities to go is one’s “financial capacity.”  

Financial capacity refers to the ability to manage money and make wise financial decisions. Yet cognitive decline brought on by dementia often develops slowly over several years, so a diminished financial capacity frequently goes unnoticed—often until it’s too late.

“Financial capacity is one of the first abilities to decline as cognitive impairment encroaches,” notes the AARP’s Public Policy Institute, “yet older people, their families, and others are frequently unaware that these deficits are developing.” 

Ironically, studies have also shown that the elderly’s confidence in their money management skills can actually increase as they get older, which puts them in a perilous position. As seniors begin to experience difficulty managing their money, they don’t realize they’re making poor choices, which makes them easy targets for financial exploitation, fraud, and abuse.

Watch for red flags over the holidays
Now that we’re in the peak of the holiday season, you’re likely spending more time with your aging parents and other senior relatives. This provides an ideal opportunity to be on the lookout for signs that your loved ones might be experiencing a decline in their financial capacity. The University of Alabama study “The Warning Signs of Diminished Financial Capacity in Older Adults” identified six red flags to watch for:

1. Memory lapses: Examples include missing appointments, failing to make a payment—or making multiples of the same payment—forgetting to bring documents or where documents are located, repeatedly giving the same orders, repeatedly asking the same questions.

2. Disorganization: Mismanaging financial documents, and losing or misplacing bills, statements, or other records.

3. Declining checkbook management skills: Forgetting to record transactions in the register, incorrectly or incompletely filling out register entries, and incorrectly filling out the payee or amount on a check.

4. Mathematical mistakes: A declining ability to do basic oral or written math computations, such as making change.

5. Confusion: Difficulty understanding basic financial concepts like mortgages, loans, or interest payments, which were previously well-understood.

6. Poor financial judgment: A new-found interest in get-rich-quick schemes or radical changes in investment strategy.

Managing diminished financial capacity

If you notice your parents or other senior family members displaying any of these behaviors, you should take steps to protect them from their own poor judgement. It’s vital to address their cognitive decline as early as possible, not only to prevent financial mismanagement and exploitation, but also to ensure their overall health and safety.

There are several estate planning tools that can be put in place to help your aging parents and other senior family members protect themselves and their assets from the debilitating effects of dementia and other forms of incapacity. In part two of this series, we’ll discuss the specific planning tools available for this purpose, and provide some guidance on how to address this sensitive subject with your elderly loved ones. 

Dedicated to empowering your family, building your wealth and defining your legacy,

Although digital technology has made many aspects of our lives much easier and more convenient, it has also created some unique challenges when it comes to estate planning.
If you haven’t planned properly, for example, just locating and accessing all of your digital assets can be a major headache—or even impossible—for your loved ones following your death or incapacity.

And even if your loved ones can access your digital assets, in some cases, doing so may violate privacy laws and/or the terms of service governing your accounts. You may also have some online assets that you don’t want your loved ones to inherit, so you’ll need to take measures to restrict and/or limit access to such assets.

Given the unique nature of your online property, there are a number of special considerations you should be aware of when including online property in your plan. Here are a few of the steps you should take to help ensure your digital assets are properly accounted for, managed, and passed on.

1. Make an inventory: Create a list of all your digital assets, along with their login and password information. Some of the most common digital assets include cryptocurrency, online financial accounts, online payment accounts like PayPal, websites, blogs, digital photos, email, and social media.

Store the list in a secure location, and provide your fiduciary (executor, trustee, or power of attorney agent) with detailed instructions about how to locate and access your accounts. To make them easier to manage, back up any cloud-based assets to a computer, flash drive, or other physical storage device. Review this list regularly to account for any new digital property you acquire.

2. Include digital assets in your estate plan: Just like any other property you want to pass on, detail in your plan who you want to inherit each digital asset, along with your wishes for how the asset should be used or managed. If you have any assets you don’t want passed on, include instructions for how these accounts should be closed and/or deleted.

Do NOT include passwords or security keys in your planning documents, where they can be read by others. This is especially true for your will, which becomes public record upon your death. Instead, keep this information in a separate, secure location, and provide your fiduciary with instructions about how to access it. Consider using digital account-management services, such as Directive Communication Systems, to help streamline this process.

If you have particularly complex or highly encrypted digital assets like cryptocurrency, consider including provisions in your plan allowing your fiduciary to hire an IT consultant to deal with any technical challenges that might come up.

3. Restrict access: Include terms in your plan detailing the level of access you want your fiduciary to have to your digital accounts. For example, do you want your fiduciary to be allowed to view your emails, photos, and social media posts before passing them on or deleting them? If there are any assets you want to limit access to, we can help you include the necessary provisions in your plan to ensure your privacy is respected.

4. Include relevant hardware: Don’t forget to include the physical devices—smartphones, computers, tablets—upon which your digital assets are stored in your plan. Having quick access to these devices will make it much easier for your fiduciary to manage your digital assets. And since the data can be transferred or deleted, you can even leave these devices to someone other than the individual who inherits the digital property stored on them.

5. Review service providers’ access-authorization functions: Some service providers like Google, Facebook, and Instagram allow you to give specific individuals access to your accounts upon your death. Review the terms of service for your accounts, and if these functions are available, use them to document who you want to access your accounts.

Double check that the people you named to inherit your digital assets using these access-authorization tools match those you’ve named in your estate plan. If not, the provider will likely give priority to the person named with its tool, not your plan.

Keep pace with technology
As technology evolves, you’ll need to adapt your estate plan to keep pace with the ever-changing nature of your assets.

Dedicated to empowering your family, building your wealth and defining your legacy,

Last week, I shared the first part of this series on the dangers of do-it-yourself estate planning. Here, we’ll look at how online legal documents can also put your minor children at risk.

Given how far web-based technology has evolved, you might think online legal document services have advanced to the point where they’re a viable alternative to having your estate plan prepared by a lawyer.

After all, you’ve been able to prepare and file your taxes online for years, so what makes estate planning different? Aren’t lawyers using the very same forms you find on these document websites?

This kind of reasoning is exactly what do-it-yourself (DIY) planning services would like you to believe—but it’s far from true. Indeed, relying on generic, fill-in-blank planning documents can be one of the costliest planning mistakes you can make for your loved ones.

Online planning documents may appear to save you time and money, but keep in mind, just because you created “legal” documents doesn’t mean they will actually work when you (or most importantly, the people you love) need them. Without a thorough understanding of how the legal process works and impacts family dynamics upon your death or incapacity, you’ll likely make serious mistakes when creating a DIY plan.

Even worse, these mistakes won’t be discovered until it’s too late—and the loved ones you were trying to protect will be the very ones forced to clean up your mess or get stuck with a huge nightmare.

Putting your children at risk
Knowing that your DIY plan could fail and force your family into court and conflict is distressing enough. But imagine how you’d feel if you knew that your attempt to save money on your estate plan caused your children to be taken into the care of strangers, even temporarily.Yet this is exactly what could happen if you rely on a generic will and/or other legal documents you find online to name legal guardians for your kids. In fact, this could happen even if you create a plan with a lawyer who isn’t trained to plan for the unique needs of parents with minor children.
Naming and legally documenting guardians for your kids might seem like a straightforward process, but it entails a number of complexities most people aren’t aware of. Even lawyers with decades of experience typically make at least one of six mistakes when naming long-term legal guardians.

What’s so complicated about naming guardians?
Some DIY wills allow you to name legal guardians for your kids in the event of your death, and that’s a good start. But does it allow you to name back-up candidates in case your first choice is unable to serve?

If you named a married couple to serve and one of them is unavailable due to injury, death, or divorce, what happens then? Would it still be okay if only one of them can serve as your child’s guardian? And does it matter which one it is?

What would happen if you become incapacitated by illness or injury and are unable to care for your kids? You might assume the guardians named in your DIY will would automatically get custody, but did you know that a will only goes into effect upon your death and does nothing to protect your kids in the event of your incapacity?

Do the guardians you named live far from your home? If so, how long would it take them to make it to your house to pick up your kids: a few hours, a few days, a few weeks? Who would care for your kids until those guardians arrive? Did you know that without legally binding arrangements for the immediate care of your children, they are likely to be placed with child protective services until those guardians arrive?

Even if you name family who live nearby as guardians, what happens if they are out of town or otherwise can’t get to your kids right away?

And assuming the guardians you named can immediately get to your home to pick up your kids, do they even know where your will is located? How will they prove they’re your children’s legal guardians if they can’t find your planning documents?

These are just a few of the potential complications that could arise if you try to create your own plan naming legal guardians for your kids. And if just one of these contingencies were to occur, your children would more than likely be placed into the care of strangers, even if it’s only for a short period of time.

The Child Protection Plan
Seeing all of the things that could go wrong, you should never trust the safety and care of your children to a DIY plan—or for that matter, a plan created by a lawyer unfamiliar with the unique needs of planning for parents of minor children.  To ensure your children are never raised by someone you don’t trust or taken into the custody of strangers, even temporarily, consider creating a Child Protection Plan™ – a comprehensive system designed specifically to address the inherent gaps in the way most estate plans document legal guardians.

Consider what’s at stake
The DIY approach might be a good idea if you’re looking to build a new deck for your backyard, but when it comes to estate planning, it’s one of the worst choices you can make. Are you really willing to put your family’s well-being and wealth at risk just to save a few bucks?

If you’ve yet to do any planning, stop putting it off and get started today – especially if you have minor children.

If you’ve already created a plan—whether it’s a DIY job or one created with another lawyer’s help—contact us if you’d like to schedule an Estate Plan Review and Check-Up. We’ll ensure your plan is not only properly drafted and updated, but that it has all the protections in place to prevent your children from ever being placed in the care of strangers or anyone you’d never want to raise them. 

Dedicated to empowering your family, building your wealth and defining your legacy,

Do a Google search for “online estate planning documents,” and you’ll find dozens of different websites. These sites let you complete and print out just about any kind of planning document you can think of—wills, trusts, healthcare directives, and/or power of attorneys—in just a matter of minutes. And the documents are typically quite inexpensive.

At first glance, such DIY planning documents might appear to be a quick and cheap way to finally cross estate planning off your bucket list. These forms may not be perfect, many consumers reason, but at least they’re better than having no plan at all.

However, relying on DIY planning documents can actually be worse than having no plan at all—and here’s why:

An inconvenient truth
Creating a plan using online documents, can give you a false sense of security—you think you’ve got planning covered, when you most probably do not. Relying on DIY planning documents is one of the most dangerous choices you can make. In the end, such generic forms could end up costing your family even more money and heartache than if you’d never gotten around to doing any planning at all.

At least with no plan at all, planning would likely remain at the front of your mind, where it rightfully belongs until it’s handled properly.

Planning to fail
Many people don’t realize that estate planning entails much more than just filling out template driven legal forms. These websites offer a one-size-fits-all solution to your unique situation, needs, and goals. Even worse, they provide no real guidance or counsel, which leads to a plan that misses the mark often—and the loved ones you were trying to protect will be the very ones forced to clean up the mess.

The whole purpose of estate planning is to keep your family out of court and out of conflict in the event of your death or incapacity. Yet, as cheap online estate planning services become more and more popular, millions of people are learning that taking the DIY route can not only fail to achieve this purpose, it can make the court cases and family conflicts far worse and more costly.

One size does not fit all
Online planning documents may appear to save you time and money, but keep in mind, just because you created “legal” documents doesn’t mean they will actually work when you need them. Indeed, if you read the fine print of most DIY planning websites, you’ll find numerous disclaimers pointing out that their documents are “no substitute” for the advice of a lawyer.

Some disclaimers warn that these documents are not even guaranteed to be “correct, complete, or up to date.” These facts should be a huge red flag, but it’s just one part of the problem.

Even if the forms are 100% correct and up-to-date, there are still many potential pitfalls which can cause the documents to not work as intended—or fail all together. And without an attorney to advise you, you won’t have any idea of what you should watch out for.

Estate planning is not a one-size-fits-all kind of deal. Even if you think your particular situation is simple, that turns out to almost never be the case. To demonstrate just how complicated the planning process can be, here are 4 common complications you’re likely to encounter with DIY plans.

1. Improper execution
To be considered legally valid, some planning documents must be executed (i.e. signed and witnessed or notarized) following very strict legal procedures. For example, California requires that you and every witness to your will must sign it in the presence of one another. If your DIY will doesn’t mention that (or you don’t read the fine print) and you fail to follow this procedure, the document can be worthless.

2. Not adhering to state law
State laws are also very specific about who can serve in certain roles like trustee, executor, financial power of attorney, and witnesses. Having an invalid person serving in an important role can cause your entire plan to fail.

3. Unforeseen conflict
Family dynamics are—to put it lightly—complex. This is particularly true for blended families, where spouses have children from previous relationships. A DIY service cannot help you consider all the potential areas where conflict might arise among your family members and help you plan to avoid it. When done right, the estate planning process is a huge opportunity to build new connections within your family.

4. Thinking a will is enough
Lots of people believe that creating a will is enough to handle all their planning needs. But this is rarely the case. A will, for example, does nothing in the event of your incapacity, for which you would also need a healthcare directive and/or a living will, plus a durable financial power of attorney.

Furthermore, because a will requires probate, it does nothing to keep your loved ones out of court upon your death. And if you have minor children, relying on a will alone could leave your kids vulnerable to being taken out of your home and into the care of strangers.

Don’t do it yourself
Given all these potential dangers, DIY estate plans are a disaster waiting to happen. And as we’ll see next week, perhaps the worst consequence of trying to handle estate planning on your own is the potentially tragic impact it can have on the people you love most of all—your children.

Dedicated to empowering your family, building your wealth and defining your legacy,