While many people still think Living Trusts are reserved for the elderly, a growing number of millennials are creating comprehensive estate plans these days, and there’s a range of socioeconomic drivers.
Tech-worker wealth. No surprise here: This trend is most prevalent in tech-centric areas like Silicon Valley, where many young startup workers are making millions of dollars before their 30th birthdays. Investing and creating an estate plan are part of the dialog and the culture.
Terrorism/tragedy. The trend is also strong in cities like New York. The tragedy of 9/11 was a big wakeup call. Subsequent terrorist attacks have made us all feel vulnerable, and many young people feel the need to protect themselves and their families with long-range planning.
Deaths of iconic figures. The deaths of entertainment figures like George Michael and Prince hit home with a generation that grew up with their music.
Family responsibilities. Those millennials who marry, have children and buy a home are hit with a big dose of adult reality and feel the need to protect their children and their assets.
Reliance for support. When there are other people who rely on millennials for support, and this needs to be detailed in a Will or Living Trust. For those who remain single, a Will or Trust will identify how their estates will be distributed among their designated heirs.
Supporting causes. Millennials are a generation with a conscience. Many are driven by causes and want to ensure that their Wills or Trusts allocate money to a cause.
Protecting wealth. Many smart millennials, especially those in the tech sector, have started their own successful businesses. Others work in the family business. A Trust can designate what happens to a small business if the owner dies or becomes incapacitated if a buy-sell agreement is not in place.
Despite this little uptick of millennials creating Living Trusts, 64% of the 18-and-over population did not have a Living Trust in 2016. An estimated 60% of Americans die without a Will or Living Trust, which means their families will be faced with Probate at a very difficult time. Probate can be time-consuming and expensive. If there are minor children, the state chooses guardians for them.
A few things to be thinking about as you prepare a Living Trust
Update Trust with life events. Keep Trusts updated with births, deaths, divorces and significant investments. Anything that will affect the inheritances of those you love.
Synch beneficiaries. Crosscheck the names of beneficiaries on brokerage accounts, 401(k) accounts and life insurance policies with those listed in a Will. The beneficiaries listed on financial accounts will override those on a Will or Living Trust.
Save logins. Store login information to your digital assets, including passwords to banking and financial services sites, social media accounts, healthcare providers, etc. Spend some time compiling this list—most of us have online accounts for a wide range of services. Think about what information your family would need to access if something happened to you.
Planning for pets. This is no longer an afterthought. Pet owners need to make arrangements for their pets. Give some thought to those who would love your pet the way you do and include them in your Trust. Some pet owners allocate a yearly allowance to offset the cost of pet care.
Distributing valuables. If you have valuable collections or antiques, use precise wording and avoid vague terms like “my memorabilia” or “my antiques.” Be specific about these items and leave them to individuals. Don’t leave them to your heirs to divide among themselves—it can be a recipe for disaster. Note that these items don’t necessarily have to have great monetary value. Items with sentimental value have caused many family disputes.
Informing family of location. Make sure your family knows that you have a Trust or Will and its location. We provide a bound hard copy and a soft copy. Many of our clients share the soft copy with their beneficiary designates and/or several family members. If something happens to you and if no one can find your Trust, it’s as if it didn’t exist. The result? Your family will have to go through Probate.
Yet here he was in the ER, surrounded by strangers, the intubation he didn’t want looming, his carefully recorded plans buried somewhere in his electronic record. He was pale, feverish, too confused to communicate, with no family around. The medical team wondered what the patient would have wanted.
One doctor surfaced a note from the patient’s oncologist
Just a few weeks before, the doctor and patient had talked about the realities—that there were no further therapies to slow the growth of his cancer. The patient had requested that when things got worse, there would be no breathing tubes or chest compressions. Only comfort and quiet. Yet the ER team, busy with X-rays, ultrasounds and medications, didn’t see the note. Thankfully, a resident found the notation and flew down to the ER to stop the Hail-Mary efforts and simply follow the patient’s wishes.
We have a system that doesn’t protect patients from getting care they don’t want
It would be easy to blame the oncologist for not sending the patient home with a legally binding directive documenting his end-of-life wishes, or the emergency doctors for not searching harder in the chart, but it’s not that simple. It’s not about individuals, but about a system that doesn’t sufficiently protect patients from getting care they do not want.
Increasingly, doctors are trained to have difficult conversations with patients about prognosis and care goals. Outside the hospital, people with serious illnesses are encouraged to discuss these issues with their friends and family. But what happens after those difficult conversations can be a mystery.
Don’t assume you can tell your doctor your wishes and it will enough
It’s tempting to assume that if you tell one doctor your end-of-life wishes, that’s enough. That what you want will be clearly documented and retrieved when needed, and the record will follow you wherever you go. Yet this critical information is sometimes not documented even when conversations do happen, or they’re scattered through our electronic records, only intermittently accessible, with few standards or best practices to guide us.
Searching electronic records for notes: A common dilemma
“As a doctor working in the ICU I knew firsthand the frustrations of searching the electronic record for notes and scanned documents and had no idea how common this problem was.
I heard stories of patients who had been transferred to nursing facilities without their advance directives and returned to the hospital intubated when that was explicitly not what they wanted.
Other patients had grown ill on vacation, ending up in a hospital they’d never been to, with an entirely different electronic medical record. No one could access prior documentation.
Others described situations in which last-minute “saves” through extreme diligence or chance had led to good outcomes.”
Few existing regulations on advance care planning
The Centers for Medicare and Medicaid Service are relatively silent on advance-care planning. Recently, a handful of startups has stepped in. Software and clever patient apps that work outside the electronic record are working to help systems communicate with each other.
Creating standards for sharing across all electronic records, everywhere
What could really make a meaningful difference is standards for sharing, or “interoperability” across all electronic records that would benefit every patient, everywhere. At the very least, all related advance-care planning documentation should be in one place in the medical record and accessible with one simple click of the mouse. Beyond that, maybe all health systems could require identification of a health-care proxy for all patients, so we would know who should make decisions if the patient can’t.
The medical industry is playing catch-up
This story is a good example of the medical industry trying to catch up. While this patient never got strong enough to make it back home, his family arrived, and he was quiet and comfortable in the end. Just as he had wanted.
If you and your spouse are thinking about Divorce, and if there’s a likelihood that your Divorce will include an alimony payment, it’s time to get busy. Last winter’s GOP Tax Cuts and Jobs Act will eliminate a tax break for alimony payments finalized after Dec. 31.
Americans who finalize or modify Divorce agreements in 2019 or later will no longer be able to deduct alimony payments. The loss of the deduction has large financial implications for those couples where one partner earns substantially more per year than the other.
The breakdown: $1 of alimony is actually costing just 60 cents
What does the deduction mean for divorcing couples? For those in the highest income-tax bracket, it means that every dollar someone pays to support a former spouse is actually costing him/her a little more than 60 cents. Potential divorcees have the remainder of 2018 to use the alimony deduction as a bargaining chip in their negotiations with estranged spouses.
An increase in acrimonious Divorces that disproportionately target women
Many believe that removing this deduction will make Divorces more acrimonious, that people won’t be willing to pay as much alimony. More couples will end up fighting in court because they won’t be able to agree on alimony terms. Since it is women who tend to earn less and are most often the recipients of alimony, many believe this tax change could disproportionately hurt women. One family law attorney believes that the repeal reduces the bargaining power of vulnerable spouses, mostly women, in achieving financial stability after a Divorce.
For decades, alimony has been tax deductible
For decades, Americans paying alimony to a former spouse have been able to deduct the payments from their taxes. Depending on the size of the payments and the earning gap, they gave themselves a generous tax break. According to the IRS, an estimated 600,000 taxpayers claim this deduction each year. The Joint Committee on Taxation estimates that elimination of the tax break will increase federal revenues by $7 billion over the course of a decade.
There is evidence that some high-net worth clients are devising complicated workarounds in the event they cannot complete their agreements before the Dec. 31 date.
Leverage to negotiate lower spousal support in 2019
Divorce professionals expect that there will be less money for the spouse receiving alimony — or, at the very least, a major source of contention in negotiations between parties. ”The payer is going to have a lot of leverage to negotiate lower spousal support in 2019,” said Jeremy Runnels, a financial planner at West Coast Financial in Santa Barbara, Calif.
Couples looking beyond alimony to reach equitable solutions
Financial planners say some spouses may choose to forgo alimony payments and explore alternatives such as lucrative real estate, larger shares in tax-deferred retirement accounts or some complex combination of the two that maximizes tax advantages. Options include a Qualified Domestic Relations Order (QDRO) that sets up future payments to a lower-earning spouse from a higher-earning spouse’s retirement account, taxed at the lower earner’s rate.
We’ve assisted hundreds of couples with uncontested Divorce
One of our Oakland clients, “Dan”, stopped by our office to get information to help his family solve a puzzle. He and his two sisters had been raised by their father, who had stepped up when their mom died and been an extraordinary parent. The four of them had been very close, with wonderful memories of camping, hiking, walks around Lake Merritt and Saturday matinees at the Grand Lake.
Dad had raised his kids and put them through college. Then he fell in love and got married
In 2010, after all the kids had graduated from college and were on their own, their dad met “Elizabeth”, fell madly in love, and got married. From the beginning, the family had a strained relationship with Elizabeth, and they saw less and less of their father. “Dad died in 2016, and Elizabeth won’t talk to us; we don’t know if he had any kind of estate plan, Will or Living Trust. We called all the courthouses where we thought a Will might be filed, but found nothing. We don’t know if there was a Probate proceeding. What might have happened to our father’s estate? Where should we look? What can we do to find an answer?”
Here are some possible scenarios
If their father had had a Will, it would have needed to go through Probate, in which case Dan and his sisters would have been notified under a court order.
If there were neither a Will nor Living Trust, their father’s estate would have needed to go through Probate as well, and the siblings would have been contacted. Probate is only necessary if the property was in the name of the decedent—their dad.
There would be no Probate if the father’s possessions were all titled “joint with rights of survivorship” with Elizabeth. Upon his death, she would automatically become the sole owner of their entire joint estate.
If the father titled his property to a Living Trust, there would be no Probate. The Trust would own the property and the Trustee named in it, likely Elizabeth, would be responsible for managing the Trust. If Elizabeth is not particularly honest, she could ignore the Trust’s provisions—which well might include distributions for Dan and his sisters—and the siblings would never know if their father had actually identified assets for his children.
One final option: Opening their own Probate proceeding
The family can hire an attorney to open a Probate or other court matter if they cannot communicate with Elizabeth and if they have reason to believe their father had property titled in his name alone.