Top 12 Reasons People Delay Estate Planning


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January is as good a time as any to contemplate your goals for the new year and begin to fulfill new (or old unfulfilled) resolutions. Like doing estate planning. If you did your planning years ago, your goal might be to tune it up, making sure that when it is actually needed, it benefits you and your family as optimally as possible. Your estate plan may be stale if your personal or financial circumstances have changed, including the birth, death or increasing disability of a family member; marriage or divorce; change in net worth or assets; or simply the passage of time.

For sure, estate tax laws changed significantly January 1, 2013. State estate taxes can now be as important as federal estate taxes and capital gains considerations may trump both.

A  properly planned estate will give you peace of mind that your assets go where you desire, with the right people in charge, and keep your family out of court.

If this month turns into the next and so on without completing your estate plan, maybe you fall into one of my top-twelve reasons why people delay estate planning. Do any resonate with you?

12. Most people don’t like to think about death or money. Wills and trusts force you to confront mortality and money, two issues that can be difficult to face. This is particularly true if you are healthy and don’t feel you have much money.

11. Estate planning is something most people are unfamiliar with or feel uncomfortable about. Because you don’t know much about estate-planning documents, you may experience anxiety or struggle with feelings of inadequacy when confronted with the subject. You know how to be a good plumber or schoolteacher or police officer or how to run a restaurant, but you don’t know estate planning.

10. There’s no hard-and-fast deadline. Many people can’t accomplish anything until a deadline looms. But when it comes to wills and trusts, the crucial and final deadline often comes without warning.

9. It’s not much fun. True, but life isn’t always fun, especially if you are an adult. If you need fun, plan a party to celebrate finishing your estate plan.

8. People hate lawyers. But not all people hate all lawyers; you can find one you can relate to.

7. People are afraid of massive amounts of paper. If you understand the paperwork, it becomes less intimidating. Be prepared to ask questions about anything you don’t understand.

6. You won’t live to see the largest benefits of your estate plan. The main beneficiaries will be your heirs. It can be difficult to devote yourself to this task until you accept your family’s priorities as your own.

5. It might mean making decisions that could arouse negative feelings in loved ones. Maybe you’re concerned your family will be angry when they learn the details of your estate plan.

4. The size of the job can be daunting. Estate planning can be, but isn’t necessarily, a big, time-consuming task. The perceived enormity of the task can prevent some people from even starting the job.

3. Not doing your estate planning can be a form of passive-aggressive behavior. If you’re not happy with your future heirs, failing to complete necessary wills or trusts can be a subconscious way to punish them.

2. Some people just like to live for the moment. Some procrastinators simply can’t—or won’t—force themselves to pass up short-term pleasure and sit down to complete their estate planning, even if at some level they understand that doing so will provide them with far greater long-term satisfaction.

1. Guilt feeds upon itself. The real number one excuse for not doing an estate plan, when you know you need one, is the wall built from guilt about not doing estate planning, adding to any depression you might have about procrastination in other areas of your life and leading, ironically, to further delay. If you can’t move from that state, a psychologist or counselor with experience working with procrastinators might help you.

All of these reasons to delay are perfectly understandable—but that doesn’t make them any less harmful. Fortunately, you can benefit by simply recognizing them. Once you do that you realize that doing nothing can make your worst fears come true you can weigh the very real dangers of delay against the fear of thinking about money or mortality. You might discover that doing your estate plan is easier–not only in the long-term, which is obvious, but also in the short-term — since the whole subject can then be put behind you.

We offer a free initial estate planning consultation to help you make the first step in completing your planning goal this year.

Eric Matlin

Eric G. Matlin

A blog article by Eric G. Matlin ©2014. Eric is an Attorney and President of Matlin & Associates, P.C. Please feel free to contact Eric Matlin regarding this or any other matter. Phone number 1-847-770-6600

Disclaimer – The content of this article is not intended to be legal advice and does not create an attorney client relationship with the person reading it

Eric G. Matlin, author of Penguin Group Publishing’s 2004 “The Procrastinator’s Guide to Wills and Estate Planning” has been writing about procrastination now for 10 years and is eager to change direction. Look for Eric’s new book “Not Dead Yet,” featuring a graphic novel book-within-a-book, to be published later this year.

Are You Covering Your Children’s Health Insurance Costs Without Any Access to Their Medical Information?


The Affordable Care Act requires plans that offer dependent coverage to make the dependent coverage available until the adult child reaches the age of 26.  While many parents are covering the costs of their adult children until the age of 26, many of these parents are unaware that they have no access to that adult child’s medical records and/or no one has been appointed agent under power of attorney for healthcare for the adult child.

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Imagine: Your daughter is in college, a thousand miles away. You pray that she is safe in her new environment, but if she is hurt you can find yourself in a nightmare world. You get a call from a hospital: “She’s here, in stable condition.”

You ask, “What happened? What’s happening?”

The worker at the other end of the phone may feel legally restricted in what information she can give you without conflicting with HIPAA regulations, so you receive no clear response and are denied basic information. She believes that she is honoring your daughter’s federal right to privacy under HIPAA and minimizing her potential liability; but her “take it up with our legal department” response leaves you in a lurch.

HIPAA (Health Information Portability and Accountability Act) authorizations and Powers of Attorney for Health Care (POAHC) are examples of estate-planning tools that are valuable to people of all ages and means. Every competent person age 18 and over should have them.  HIPAA authorizations allow access to your adult child’s health information to whomever your adult child chooses.

POAHCs provide for the appointment of an agent who can make the personal and medical decisions on your behalf of your adult child, should they become incapacitated. It is a type of “advance directive” that helps to avoid a guardianship over their person, keeping your family out of court, and provides a forum for your adult child to articulate end-of-life philosophies, addresses organ donation issues and disposition of remains.

Think of a HIPAA Authorization as your loved one’s answer to the voice at the medical emergency end of the phone saying, “Sorry, I’m not authorized to discuss her condition with you — if you have a problem with this, take it up with our lawyers.” The penalties for health workers (physicians, nurses, hospital administrators and others) who violate complex HIPAA privacy rules can include fines and jail time.

If your adult child is in the area over the winter break, please have them contact our office to schedule an appointment to execute their health care power of attorney and HIPAA authorization.  We are running a special from December 20-January 20 for $100.00 to complete this work.

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Eric G. Matlin      Johannah K. Hebl

A blog article by Eric G. Matlin and Johannah K. Hebl.  Eric and Johannah are Attorneys at Matlin & Associates, P.C.   Please feel free to contact Eric Matlin or Johannah Hebl at Matlin & Associates, P.C. regarding this or any other matter.  Phone number 1-847-770-6600.  Our attorneys have the experience to guide you through your estate planning needs.

Disclaimer – The content of this article is not intended to be legal advice and does not create an attorney client relationship with the person reading it.

WHAT IS CAPACITY, AND WHY DOES IT MATTER?


Capacity and Estate Planning

Mom is 78 years old, living alone after the death of Dad.  She was recently diagnosed with the early stages of Alzheimer’s. Mom doesn’t have a will, or powers of attorney for health care or property, and you have heard that these are important. You have also heard that if Mom lacks mental capacity, she can’t sign these crucial estate planning documents.

What is mental capacity? The answer depends upon what type of decision Mom needs to make, and what type of document Mom needs to sign.  “Capacity” is not a one-size-fits-all concept:  the legal standard for capacity is lower for executing a power of attorney for health care than it is for signing a contract or a deed.  What follows is an outline of various levels of capacity:

MEDICAL DECISIONS:

Every adult in Illinois is presumed to have the capacity to make their own health care decisions, assuming they are in a conscious state.  A diagnosis of early Alzheimer’s will not necessarily overcome this presumption, but a diagnosis of advanced dementia or Alzheimer’s could.

POWERS OF ATTORNEY

The level of capacity required to be able to execute a durable power of attorney has not been determined in Illinois. The standard of capacity for powers of attorney for health care would most likely be similar to those outlined above under “medical decisions,” while the standard for powers of attorney for property would most likely fall somewhere between “testamentary capacity” and “contracts and deeds.”

TESTAMENTARY CAPACITY (WILLS)

The standard for testamentary capacity is less exacting than the ability to transact ordinary business.  Mom may not be able to balance her checkbook or pay her bills on time, but if she can meet the following standards, she is competent to make her will:

  1. The ability to know the nature and extent of her assets;
  2.  The ability to know the natural objects of her bounty (typically close family, friends and charities; and
  3. The ability to make a disposition of his property in accordance with some plan formed in her mind.

It is not necessary that the person actually knows these things.  It is necessary only that she have the mental ability to know them.

TRUSTS

Neither Illinois statutes nor Illinois case law clearly establish the level of capacity needed to execute a trust.  The key is determining whether the trust in question is more like a will or more like a contract.  An irrevocable trust (such as a special needs trust or a life insurance trust) is more like a contract or deed than a will, because it disposes of the person’s property immediately and forever.  A trust that delays making a gift to another person until after the client dies is more like a will, and requires a level of capacity similar to that required to make one.  An irrevocable trust requires a level of capacity similar to that for a contract, as discussed below.

CONTRACTS AND DEEDS

The requirements to execute a contract or deed are the highest on the capacity spectrum.  The person must have sufficient mind and memory to comprehend the nature and effect of her actions, to exercise her own will, cope with her adversaries, and to protect her interests.

WHY DOES CAPACITY MATTER?

If Mom lacks the capacity to sign a will, then any will which she signs during her incapacity will be subject to legal challenge.  For example, a contested estate matter could revolve around the issue of whether a person lacked capacity to favor one child over another or to give her estate to her hairdresser.  If Mom lacks even the capacity to sign a power of attorney for health care, then you may have no option other than having her declared a disabled person, and appointing a guardian to act on her behalf.

GUARDIANSHIP

Guardianship requires filing a petition with the court to have a guardian appointed to handle the day to day financial and/or health decisions for a disabled person who is not able to fully manage her affairs.  Guardianship can be avoided if the incapacitated person has signed valid powers of attorney for health care and property. Individuals who have been declared to be disabled may still have testamentary capacity that may be exercised with court approval.

ASSESSMENT OF MENTAL CAPACITY

If you are in doubt about a relative’s mental capacity, you should have an assessment made by a qualified physician, (preferably a geriatric psychiatrist, or geriatrician in the case of an elderly person).

CONCLUSION 

If you have a family member whose capacity is diminishing, don’t delay in taking action to get his/her affairs in order.   Encourage your family member to contact an attorney to put estate planning documents in place.  Since capacity usually diminishes over time, it is important to take care of these issues as early as possible before capacity is lost.

Mary Vanek Attorney At Law

Mary E. Vanek Attorney At Law

A blog article by Mary E. Vanek.  Mary is an Attorney at Matlin & Associates, P.C.  Mary’s practice is focused on estate planning, estate administration, guardianships, contested estates and other contested matters, as well as business law.  Please feel free to contact Mary E. Vanek or any of the attorneys at Matlin & Associates, P.C. for a free consultation regarding this or any other matter.  Phone number 1-847-770-6600.  Our attorneys have the experience to guide you through your estate planning and/or guardianship needs.  We not only have the professional legal experience, but have confronted the challenges of dementia, Alzheimer’s and a myriad of other aging issues within our own extended families. Our goal is to provide you legal solutions for your legal challenges and will refer you to our broad community contacts for your non-legal needs and support.

Disclaimer – The content of this article is not intended to be legal advice and does not create an attorney client relationship with the person reading it.

October is Breast Cancer Awareness Month


October is Breast Cancer Awareness month.  All of us probably know somebody who has been affected by breast cancer.    According to Cancer.org, breast cancer is one of the most common cancers among American women, next to skin cancer.  Because of the huge efforts of breast cancer walks and campaigns, women today have more educational and diagnostic tools available to them than ever before.  The odds of surviving breast cancer are strongly tied to how early it is found. Matlin & Associates genuinely cares for our clients and wanted to do our part to get the word out. This month we made up pink Post-It ™ booklets containing pink pens and a message inside.  Our hope is that each time our clients use these booklets, it will remind them to be educated and take the necessary steps available to them in order prevent or fight this disease.

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As estate planning attorneys, we work with clients and their families and have listened to the stories they have shared with their breast cancer experiences.   Whether you’re going for preventative exams and testing, or you are going through treatments, think about updating your Power of Attorney for Health Care and HIPAA documents so that you maintain control of who can make health care choices and have access to your medical information. If you have questions regarding these estate plan documents please feel free to give Matlin and Associates a call at 1-847-770-6600 or via our contact page http://www.ericmatlin.com/contact-estate-plan-attorney.html

If you wish to make a donation to honor someone you know who is affected by breast cancer, here are two links to websites that accept donations:

http://ww5.komen.org/Donate/Donate.html?ecid=vanityurl:117

https://www.nationalbreastcancer.org/breast-cancer-donations

January 2012 Five Federal Estate Tax Observations


January 2012 Five Federal Estate Tax Observations 

  1. The 2012 exemption from federal estate taxes is $5.12 million per person, up $120,000 from 2011. That number will fall to $1 million on January 1, 2013 unless legislation is passed by congress and signed by the president prior to that date.
  2. The past decade of uncertainty over the direction of the federal estate tax exemption has resulted in a lack of consensus among estate planners regarding what’s next. I do not know the answer, but my goal continues to be assisting families with the big picture, using tried and true techniques, without the need for contortions.
  3. Few serious estate planning professionals are relying upon the existence of federal estate tax exemption “portability” as a means to minimize estate taxes, except as a last-ditch post mortem effort to save the exemption of a first-to-die spouse who has not planned. I listened to one continuing legal education lecturer who ridiculed it as “portapotibility.”
  4. This may be a great time for wealthy people to make family gifts of million of dollars, especially to multiple generations. There is risk of a future “clawback” of the gift back into the future estate that should be considered, but even if that occurs, all appreciation will be removed from the grantor’s estate, who also gets to see the beneficiaries enjoy the assets while still living.
  5. If you are considering a grantor retained annuity trust (GRAT) to make an irrevocable gift of an asset’s future appreciation, this is a good time to act. Proposals have been made that may eliminate the technique of using short term GRATs and those that “zero out.”

The Latest in LGBT Estate Planning: Challenges to DOMA


The Defense of Marriage Act (“DOMA”), signed by President Clinton in 1996 defined marriage for federal purposes as the union of a man and a woman. Various appeals are working their way through the federal court system that challenge the constitutionality of DOMA. Among other things, DOMA is contrary to the doctrine of Full Faith and Credit usually given by one jurisdiction to another under conflict of law principles.

 The Obama administration announced on February 23, 2011, that it would not defend DOMA in federal court. It believes that the law is unconstitutional because it is discriminatory.

 The effect of DOMA on estate planning is that neither the unlimited marital deduction nor the new “portability” of unused applicable exclusion amounts between married couples of the same gender are recognized under federal law, potentially resulting in adverse estate tax results to gay and lesbian couples compared to married couples of different gender.

 It is unlikely that DOMA will be overturned in Congress during the current session. Generally, Republicans, who control the House of Representatives, favor DOMA. Therefore, until DOMA is actually overturned in the federal court system, the announcement by the Obama administration has no effect on estate planning for LGBT couples in states where they are legally married. You can expect that a challenge to the constitutionality of DOMA will find is way to the Supreme Court sooner or later, probably this year. At the Supreme Court, as it is currently composed, you may expect a 5-4 vote, which could go either way.

 If DOMA is overturned, then the unlimited marital deduction and portability will indeed be available to married couples of the same gender. None of this affects same-sex couples whose status is that of a “civil union.”

Portability


By Estate Planning Attorney – Eric Matlin

The Middle Class Tax Relief Act (the “2010 Tax Relief Act”), signed by President Obama on December 17, 2010 (two weeks before a re-set of the federal estate tax exclusion to $1 million per person) threw the classic use of shelter trusts into turmoil by introducing “portability” into the equation.
Portability of unused transfer tax exemption is completely new, though it has been discussed for years. Legally married couples who are of different genders will not have to divide their estates in order to shelter assets from estate taxes because any unused estate tax, GST exemption and lifetime gift amount of the first-to-die spouse is added to the surviving spouse’s unified exemptions.
For the very wealthy, it provides spectacular opportunities to make gifts, potentially in perpetuity, utilizing various retained interests trusts and estate freeze vehicles.
For people who are simply affluent, though portability may make the division of some married couple’s assets for estate tax planning unnecessary, it spawns a few other considerations:
• It requires the filing of an estate tax return upon the first spouse’s death that is purely informational. The value of the first spouse’s estate is left open on his/her return until the second spouse dies. Upon the survivor’s death, if his/her estate exceeds the exclusion amount existing at that time, then the excess is used to fill up the first-to-die spouse’s exclusion amount (as it existed back then?) before the survivor’s estate is taxed.
• If it turns out that the survivor’s estate is below the exclusion amount, then the legal/accounting fees spent on the first death was a waste of time and money.
• With the estate tax laws constantly changing, is it worth the effort to file a return on the first death that might ultimately not otherwise be necessary?
• It only applies to most recent spouse’s unused credit, so if the survivor remarries, that also renders the first informational return a waste.
• Like all of the provisions of the 2010 Tax Relief Act, it is applicable only for the years 2011 and 2012.
• It does not work for gay and lesbian married couples, as their marriages are not federally recognized. Then again, the unlimited marital deduction does not work for them for the same reason.