Don’t Let Diminished Financial Capacity Put Your Elderly Loved Ones At Risk—Part 2

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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,

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Don’t Let Diminished Financial Capacity Put Your Elderly Loved Ones At Risk—Part 1

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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,

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5 Steps for Adding Digital Assets To Your Estate Plan

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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,

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4 Tips for Discussing Estate Planning With Your Family This Holiday Season

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As we head into the thick of the holiday season, you’re likely spending more time than usual surrounded by family and friends.

The holidays offer an opportunity to visit with loved ones you rarely see and get caught up on what’s been happening in everyone’s life. And though it might not seem like it, the holidays can also be a good time to discuss estate planning. In fact, with everyone you love—from the youngest to the oldest—gathered under one roof, the holidays provide the ideal opportunity to talk about planning.

That said, asking your uncle about his end-of-life wishes while he’s watching the football game probably isn’t the best way to get the conversation started. In order to make the discussion as productive as possible, consider the following tips.

1. Set aside a time and place to talk
Trying to discuss estate planning in an impromptu fashion over the dinner table or while opening Christmas gifts will most likely not be very productive. Your best bet is to schedule a time separate from the festivities, when you can all focus and talk without distractions or interruptions.

It’s also a good idea to be upfront with your family about the meeting’s purpose, so no one is taken by surprise, and are more prepared for the talk. Choose a setting that’s comfortable, quiet, and private. The more relaxed people are, the more likely they’ll be comfortable sharing about sensitive topics.

2. Create an agenda, and set a start and stop time

To ensure you can cover every subject you want to address, create a list of the most important points you want to cover—and do your best to stick to them. You should encourage open conversation but having a basic agenda of the items you want to address can help ensure you don’t forget anything.

Along those same lines, set a start and stop time for the conversation. This will help you keep the discussion on track and avoid having the conversation veer too far away from the main points you want to discuss. If anything significant comes up that you hadn’t planned on, you can always continue the discussion later.

Keep in mind that the goal is to simply get the planning conversation started, not work out all the specific details or dollar amounts.

3. Explain why planning is important
From the start, assure everyone that the conversation isn’t about prying into anyone’s finances, health, or personal relationships. Instead, it’s about providing for the family’s future security and wellbeing no matter what happens. It’s about ensuring that everyone’s wishes are clearly understood and honored, not about finding out how much money someone stands to inherit.

While some relatives might be reluctant to open up, being surrounded by the loved ones who will ultimately benefit from planning can make people more willing to discuss these sensitive subjects.

Talking about these issues is also a crucial way to avoid unnecessary conflict and expense down the road. When family members don’t clearly understand the rationale behind one another’s planning choices, I’ve seen it breed conflict, resentment, and costly legal battles.

4. Discuss your experience with planning
If you’ve already set up your plan, one way to get the discussion going is to explain the planning vehicles you have in place and why you chose them. Mention any specific questions or concerns you initially had about planning and how you addressed them. If you have loved ones who’ve yet to do any planning and have doubts about its usefulness, discuss any concerns they have in a sympathetic and supportive manner.

For the love of your family
Though death and incapacity can be awkward topics to discuss, talking about how to properly plan for such events can actually bring your family closer together this holiday season. In fact, our clients consistently share that after going through our estate planning process they feel more connected to the people they love the most. And they also feel clearer about the lives they want to live during the short time we have here on earth. 

When done right, planning can put your life and relationships into a much clearer focus and offer peace of mind knowing that the people you love most will be protected and provided for no matter what.

Most importantly this holiday season, enjoy being in the moment and strengthening your bonds with the important people in your life.

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

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Don’t Let Your Kids Move Out Without Signing These Documents

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Although I haven’t experienced it yet, I’ve seen clients, friends, and family watch their kids leave home to attend college or start their career. It can be an emotional time as a parent. On one hand, moving out on their own is a major accomplishment that makes parents proud. On the other hand, having your kids leave the nest and face the world can also induce anxiety and fear.

And it is critical to know that once they reach age 18, your kids become legal adults, and many areas of their lives that were once under your control will be solely their responsibility. Make sure they know that one of the very first items on their to-do list as new adults should be estate planning.

While you may believe that planning is the last thing your kids need to be thinking about, it’s actually the first, because once they turn 18, you no longer have automatic access to their medical records and/or financial accounts should anything happen to them.

Before your kids head out on their own, you should discuss and have them sign the following three documents:

1. Medical Power of Attorney

Medical power of attorney is an advance directive that allows your child to grant you (or someone else) the legal authority to make healthcare decisions for them in the event they become incapacitated and cannot make such decisions for themselves.

For example, a medical power of attorney would allow you to make decisions about your child’s medical treatment if he or she is knocked unconscious in a car accident or falls into a coma due to an illness. And with a properly drafted medical power of attorney, you will be able to access your child’s medical records, whereas without one you would not.

Should they become incapacitated without a properly executed medical power of attorney, you’d have to petition the court to become their legal guardian. While a parent is typically the court’s first choice for guardian, the court process can be slow (not to mention expensive)—and in medical emergencies, every second counts.

2. Living Will

Whereas medical power of attorney allows you to make healthcare decisions on your child’s behalf during their incapacity, a living will provides specific guidance about how your child’s medical decisions should be made while they’re incapacitated, particularly at the end of life.

For example, a living will allows your child to let you know if and when they want life support removed, if they ever require it. In addition to documenting how your child wants their medical care handled, a living will can also include instructions about who should be able to visit them in the hospital and even what kind of food they should be fed.


If your child has certain wishes for their medical care, it’s important you discuss these decisions with them and have those wishes documented in a living will to ensure they’re properly carried out.

3. Durable Financial Power of Attorney

Should your child become incapacitated, you’ll also need the ability to access and manage their finances, and this requires your child to grant you durable financial power of attorney.

Durable financial power of attorney gives you the immediate legal authority to manage their financial and legal matters, such as paying bills, applying for Social Security benefits, and/or managing banking and other financial accounts. Without this document, you’ll have to petition the court for such authority.

Start adulthood off right
As parents, it’s natural to experience anxiety when your kid leaves home. But with the support of a trusted attorney, you’ll at least have peace of mind knowing that he or she will be well taken care of in the event of an unforeseen accident or illness. Contact us today to discuss our Young Adult Estate Planning Package to ensure that if your child ever does need your help, you’ll have the legal authority to provide it.

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

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Buyer Beware: The Hidden Dangers of DIY Estate Planning—Part 2

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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,

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Buyer Beware: The Hidden Dangers of DIY Estate Planning—Part 1

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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,

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4 Year-End Tax-Saving Strategies for 2019

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As we head towards the end of the year, we’re fast approaching the deadline to implement your family’s tax strategies for 2019. The Tax Cut and Jobs Act (TCJA) completely overhauled the tax code, and if you’ve yet to take full advantage of the benefits offered by the new tax law, now is the time to do so.

To qualify for some TCJA’ tax benefits, you’ll need to act by December 31, so don’t wait to get started. The following 4 tips could save your family big money on your 2019 tax bill.

1. Rethink itemization
Under the new tax law, itemizing your deductions might no longer make sense. That’s because the TCJA increased the standard deduction up to $12,200 for individuals and $24,400 for married couples filing jointly. So, if you’re filing a joint return, you need more than $24,400 in itemized deductions to make itemization worth it.

The law also places new limits on itemized deductions, including a $10,000 cap on property taxes, and the elimination of state and local income-tax deductions.

Given these changes, taking the standard deduction might be the best option, but other factors, such as your health expenses and charitable giving, could affect your decision, so consult with your CPA to make sure.

2. Maximize contributions to retirement accounts
By maximizing your contributions to tax-deferred retirement accounts like IRAs and 401(k)s, you can not only save for retirement, but also reduce your taxable income for 2019.
In 2019, you can contribute up to $6,000 to an IRA and up to $19,000 to a 401(k) if you’re under 50, and up to $7,000 to an IRA and $25,000 to a 401(k) for those 50 and older. If you can’t afford the maximum amount, try to contribute at least the amount matched by your employer, since that’s basically free money

You have until December 31, 2019 to contribute to a 401(k) plan and until April 15, 2020, to contribute to an IRA for the 2019 tax year.

3. Defer your income if you’ll make less next year
If you’re expecting to make significantly more income this year than in 2020, try to defer as much income into next year as possible. However, this strategy only makes sense if you’ll be in the same or a lower tax bracket next year.

This might mean asking your boss to delay paying a year-end bonus until after Jan. 1, 2020, or if you’re self-employed, waiting to invoice some clients until the new year. And whether you’re an employee or self-employed, you can also defer income by taking capital gains in 2020 instead of in 2019.

On the other hand, if you think you’ll be in a higher tax bracket in 2020, you may want to do the opposite and accelerate income into 2019 to take advantage of a lower tax bracket.

4. Save on the child tax credit
 The child tax credit now offers up to $2,000 per qualifying dependent child. To qualify, your child must be 16 or younger at the end of 2019. The first $1,400 of the credit is refundable, so the credit could reduce your tax liability to zero, and you’d still receive a refund.

The cut-off for the tax credit is $400,000 for married couples filing jointly, and $200,000 for everyone else.

Take advantage of 2019 tax savings
Implementing these—and other—year-end tax-saving strategies could save your family thousands of dollars on your 2019 tax bill.  Don’t miss out!

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

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Lifetime Asset Protection Trusts: Airtight Asset Protection For Your Child’s Inheritance—Part 2

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In the first part of this series, we discussed a unique planning tool known as a Lifetime Asset Protection Trust. Here we explain the benefits of these trusts in further detail. 

If you’re planning to leave your children an inheritance of any amount, you likely want to do everything you can to protect what you leave behind from being lost or squandered.

While most lawyers will advise you to distribute the assets you’re leaving to your kids outright at specific ages and stages, based on when you think they will be mature enough to handle an inheritance, there is a much better choice for safeguarding your family wealth.

A Lifetime Asset Protection Trust is a unique estate planning vehicle that’s specifically designed to protect your children’s inheritance from unfortunate life events such as divorce, debt, illness, and accidents. At the same time, you can give your children the ability to access and invest their inheritance, while retaining airtight asset protection for their entire lives.

Today, we’ll look at the Trustee’s role in the process and how these unique trusts can teach your kids to manage and grow their inheritance, so it can support your children to become wealth creators and enrich future generations.

Total discretion for the Trustee offers airtight asset protection
Most trusts require the Trustee to distribute assets to beneficiaries in a structured way, such as at certain ages or stages. Other times, a Trustee is required to distribute assets only for specific purposes, such as for the beneficiary’s “health, education, maintenance, and support,” also known as the “HEMS” standard.

In contrast, a Lifetime Asset Protection Trust gives the Trustee full discretion on whether to make distributions or not. The Trust leaves the decision of whether to release trust assets totally up to the Trustee. The Trustee has full authority to determine how and when the assets should be released based on the beneficiary’s needs and the circumstances going on in his or her life at the time.

For example, if your child was in the process of getting divorced or in the middle of a lawsuit, the Trustee would refuse to distribute any funds. Therefore, the Trust assets remain shielded from a future ex-spouse or a potential judgment creditor, should your child be ordered to pay damages resulting from a lawsuit.

What’s more, because the Trustee controls access to the inheritance, those assets are not only protected from outside threats like ex-spouses and creditors, but from your child’s own poor judgment, as well. For example, if your child develops a substance abuse or gambling problem, the Trustee could withhold distributions until he or she receives the appropriate treatment.

A lifetime of guidance and support
Given that distributions from a Lifetime Asset Protection Trust are 100% up to the Trustee, you may be concerned about the Trustee’s ability to know when to make distributions to your child and when to withhold them. Granting such power is vital for asset protection, but it also puts a lot of pressure on the Trustee, and you probably don’t want your named Trustee making these decisions in a vacuum.

To address this issue, you can write up guidelines to the Trustee, providing the Trustee with direction about how you’d like the trust assets to be used for your beneficiaries. This ensures the Trustee is aware of your values and wishes when making distributions, rather than simply guessing what you would’ve wanted, which often leads to problems down the road. 

In fact, many of our clients add guidelines describing how they’d choose to make distributions in up to 10 different scenarios. These scenarios might involve the purchase of a home, a wedding, the start of a business, and/or travel.

An educational opportunity
Beyond these benefits, a Lifetime Asset Protection Trust can also be set up to give your child hands-on experience managing financial matters, like investing, running a business, and charitable giving. And he or she will learn how to do these things with support from the Trustee you’ve chosen to guide them.

This is accomplished by adding provisions to the trust that allow your child to become a Co-Trustee at a predetermined age. Serving alongside the original Trustee, your child will have the opportunity to invest and manage the trust assets under the supervision and tutelage of a trusted mentor.

You can even allow your child to become Sole Trustee later in life, once he or she has gained enough experience and is ready to take full control. As Sole Trustee, your child would be able to resign and replace themselves with an independent trustee, if necessary, for continued asset protection.

Future generations
Regardless of whether or not your child becomes Co-Trustee or Sole Trustee, a Lifetime Asset Protection Trust gives you the opportunity to turn your child’s inheritance into a teaching tool.

Do you want to give your child the ability to leave trust assets to a surviving spouse or a charity upon their death? Or would you prefer that the assets are only distributed to his or her biological or adopted children? You might even want your child to create their own Lifetime Asset Protection Trust for their heirs.

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

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Lifetime Asset Protection Trusts: Airtight Asset Protection for Your Child’s Inheritance—Part 1

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As a parent, you’re likely hoping to leave your children an inheritance. But without taking the proper precautions, the wealth you pass on is at serious risk of being accidentally lost or squandered. In some instances, an inheritance can even wind up doing your kids more harm than good.

Creating a will or a revocable living trust offers some protection, but in most cases, you’ll be guided to distribute assets through your will or trust to your children at specific ages and stages, such as one-third at age 25, half the balance at 30, and the rest at 35.

If you’ve created estate planning documents, check to see if this is how your will or trust leaves assets to your children. If so, you may not have been told about another option that can give your children access, control, and airtight asset protection for whatever assets they inherit from you.

A Lifetime Asset Protection Trust safeguards the inheritance from being lost to common life events, such as divorce, serious illness, lawsuits, or even bankruptcy.

But that’s not all they do.

Indeed, the best part of these trusts is that they offer you—and your kids—the best of both worlds: airtight asset protection AND use and control of the inheritance. What’s more, you can even use the trust to incentivize your children to invest and grow their inheritance.

Not all trusts are created equal
Most lawyers will advise you to put the assets you’re leaving your kids in a revocable living trust—and this is the right move. But most lawyers would structure the trust to distribute those assets outright to your children at certain ages or stages.

And if you’ve used an online do-it-yourself will or trust-preparation service like LegalZoom®, Rocket Lawyer,® or any of the newer options frequently coming online now, you will most likely be offered only two options: outright distribution of the entire inheritance to your kids when you die, or partial distributions when they reach specific ages and stages as described above.

Either of those options leaves their inheritance—and your hard-earned and well-saved money—at risk. Indeed, once assets pass into your child’s name, all the protection previously offered by your trust disappears.

For example, say your son racked up debt while in college, which can sometimes happen. If he were to receive one-third of his inheritance at age 25, creditors could take his inheritance if it’s paid to him in an outright distribution.

The same thing would be true if your daughter gets a divorce after receiving her inheritance, only it would be her soon-to-be ex-spouse who would claim a right to the funds in a divorce settlement. And despite what you may have heard about an inheritance remaining separate property, once it’s in your child’s hands, outright and unprotected, those assets are at risk.

There’s just no way to foresee what the future has in store for your kids—these kind of events happen to families every day. And that’s not even taking into consideration that your kids might simply blow through the money and spend it all on unnecessary luxuries.

Airtight asset protection—and easy access
Lifetime Asset Protection Trusts are specifically designed to prevent your hard-earned assets from being wiped out by such risks. And at the same time, your children will still be able to use and invest the funds held in trust as needed.  

For example, even though the assets are held in trust, your kids would be able to invest those funds in things like stocks, a business, or real estate, provided they do so in the name of the trust. Plus, if your child needs to pull money out to pay for college, a new home, or medical bills, they can do that by asking a Trustee—who’s chosen by you to oversee the money—for a distribution.

Or, as will cover next week, you may even allow your child to become Sole Trustee at some point in the future, allowing him or her to make decisions about the trust’s management.

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

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