When it comes to estate planning, the terms “guardian” and “conservator” tend to come up often.  There’s sometimes confusion about what a guardian does as opposed to what a conservator does.  The two roles are similar but distinct.

A guardian is a court-appointed fiduciary who is responsible for ensuring that the personal, day-to-day needs of a child or incapacitated adult are taken care of. The person whose well-being the guardian is responsible for is called a “ward”.  In the case of a child, often the guardian is the primary caregiver, living with the child and fulfilling a parental role.  This is not always the case with an incapacitated adult.  The guardian of an incapacitated adult is usually in charge of making sure that the ward gets adequate medical treatment and that the ward’s caregivers are doing an adequate job of meeting his or her personal needs.

A conservator, or guardian of the property, on the other hand, is a court-appointed fiduciary who is responsible for managing the financial affairs of a child or an incapacitated adult.  The conservator takes care of real estate, manages bank accounts, and handles investments.  His or her duties can range from paying bills to buying and selling stocks and bonds to managing rental property on behalf of the ward.

The main benefit of having a guardian or conservator is that the fiduciary is subject to court oversight in fulfilling his or her duties.  The disadvantages to this arrangement include that, because of court involvement, guardianship or conservatorship can be an expensive and time-consuming process, and that it is a public process.

Having a well-made estate plan that includes incapacity planning documents like a Revocable Living Trust, a Living Will, and a Durable Power of Attorney for Healthcare can ensure that you have agents in place to take care of your personal and financial needs without resorting to court intervention if you should become mentally incapacitated.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

The initial hours and days after your death are some of the most difficult your loved ones will have to face.  One of the ways you can ease their burden is to plan your funeral ahead of time.  This relieves them of the need to make difficult and emotionally draining decisions during an already emotionally stressful time.

So, how do you go about making funeral plans for yourself?  First, keep in mind that planning your funeral ahead of time is not the same as prepaying your funeral.  Prepaying your funeral is seldom a good idea and is not recommended.

If you want to plan ahead for your funeral arrangements, here are some things you’ll want to consider:

1.  Type of Ceremony.  Do you want formal or casual? Large or small? Somber or festive? Do you want a memorial service or a wake? The possibilities truly are endless.
2. Location.  Would you like your ceremony to take place in a church? A funeral home? At the home of a family member or friend?
3. Specific Preferences.  Do you want a specific type of flower at your service?  Who do you want to officiate?  Do you want a certain poem read or song sung?
4. Burial/Cremation Wishes.  Do you want to be buried or cremated?  What casket or urn would you like?  Would you like your ashes to be scattered? If so, where and by whom?
5. Paying for your Funeral.  Although prepaid funerals aren’t a great idea, it is a good idea to have a funeral fund set aside so that your loved ones don’t have to pay for your funeral.

Once you’ve thought through all of your preferences, you’ll want to put your wishes down in writing.  You’ll also want to let your loved ones know where your funeral plans are located, and let your executor or a close relative know how to access your funeral fund.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Qualified retirement plans, such as 401(k)’s and IRA’s have a terminology all their own.  Any withdrawal from your account that you take after you reach age 59 ½ is called a Normal Distribution. 

A Normal Distribution is not the same as a Required Minimum Distribution (RMD).  From age 59 ½ to age 70 ½, you’re free to withdraw any amount you wish from your retirement account, including nothing at all.  Beginning on April 1 in the year after you reach age 70 ½, though, your RMD kicks in.

A Required Minimum Distribution is the baseline amount you must withdraw from your traditional 401(k) or IRA each year after you reach age 70 ½.  It differs each year and is determined by taking the balance of your account in any given year and dividing it by your life expectancy as calculated by the IRS.  If you don’t take your RMD in any given year, you’ll pay a penalty of 50%.

If you have a Roth retirement plan, or if you have a traditional 401(k) and you’re still employed after you reach age 70 ½, then you do not have a Required Minimum Distribution.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

A Revocable Living Trust is an estate planning method for avoiding probate, among other things.  When you establish a Revocable Living Trust, you transfer your assets to a Trustee, who will manage them on your behalf and, after you pass away, on behalf of your remainder beneficiaries. Your Trust Agreement is the document that establishes the trust and gives your Trustee instructions on how to manage the trust assets.

The person establishing a Revocable Living Trust is called the Trustmaker, or Trustor, and he or she is usually also the initial Trustee and beneficiary.  You’ll name a Successor Trustee in the Trust Agreement, and this is the person who will take over your trust when you pass away.  He or she will manage and distribute your assets to your beneficiaries, outside of probate, according to the instructions in your Trust Agreement.

Aside from allowing you to avoid probate, a properly established trust can help you avoid the need for a court-appointed guardian or conservator if you become mentally incapacitated.  In your Trust Agreement, you can name a Disability Trustee. This person will take over your finances and manage them on your behalf if you suffer an accident or illness that renders you incapable of handling your own financial affairs.

Aside from allowing you to avoid both death probate and living probate, one of the benefits of a Revocable Living Trust is its flexibility.  You can change the terms of your trust, add or change Trustees or beneficiaries, or even cancel your trust in its entirety at any point during your life – as long as you are mentally competent.

Like all estate planning methods, Revocable Living Trusts are appropriate for some people and not for others.  To determine whether a Revocable Living Trust is the right estate planning method for your situation, consult with a qualified estate planning attorney.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Part of a having a complete estate plan is putting together a disability plan, including a Healthcare Power of Attorney.  This document allows you to appoint a healthcare agent to make medical decisions on your behalf if you are too sick or injured to make those decisions on your own.  A lot of people automatically name their spouse or child without considering what a healthcare agent will actually be required to do. Here are some things to consider:

• Make sure your agent is an adult.  Especially if you plan to name your child as healthcare agent, it’s important to make sure that he or she has reached the age of majority.  If not, he or she will not legally be able to make medical decisions on your behalf.
• Make sure your agent will be able to respond quickly.  Choosing someone who lives far away could be problematic, especially if you’re injured in an accident and need someone at the hospital to make critical decisions on your behalf.
• Make sure your agent will follow your wishes.  If you choose someone who disagrees strongly with the way you want things done, this will spell trouble.  It’s important to talk through exactly what you expect from your agent before signing your Healthcare Power of Attorney.
• Make sure your agent can stand up to opposition.  If you’re seriously ill or injured, your family members will likely be highly emotional and under a lot of stress.  They may not agree with the type of treatment decisions your agent is making on your behalf. In this situation, it’s important that he or she can follow your instructions despite any opposition.
• Make sure your agent wants the job.  Even if the person you want as your agent is one hundred percent qualified, it’s useless to name him or her if they’re unwilling or unable to do the job.  Make sure you discuss exactly what you’ll need your agent to do, before you appoint him or her.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

If you need to make a change to your Revocable Living Trust; for example, naming a new Successor Trustee, or eliminating a single, specific provision, you’ll need a Trust Amendment.  A Trust Amendment is a legal document that makes changes to certain parts of your Revocable Living Trust but leaves the rest of the provisions unchanged. 

If you want to make changes to your trust, it’s important that you consult with your attorney and have him or her draw up a Trust Amendment for you to sign.  Don’t just make handwritten changes to your original Trust Agreement – doing so won’t result in changing the terms of your trust, because, in order to be legally binding, any changes to your trust have to be signed with the same formality as the original agreement.

When you sign the Trust Amendment, the changes take effect as if they were in the original Trust Agreement. So, making a change to the terms of your trust does not necessarily undo essential actions that took place before the signing of the Trust Amendment.  For example, any property you funded into the trust stays in the trust, and the name of the trust and the original effective date remain the same — the only alterations are those specified in the Trust Amendment.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

With the American population aging, more than 40% of us are expected to need some type of long-term care during our lifetimes.  Long-term care encompasses traditional nursing homes as well as assisted living facilities, certain types of hospital stays after surgery and other procedures, and care provided in the home.  One feature common to all types of long-term care is that it tends to be expensive, and there’s a gap left in Medicare and traditional health insurance policies for the coverage of long-term care. These plans cover only minimal long-term care expenses, and not everyone qualifies for Medicaid.

This is where long-term care insurance comes in.  Long-term care insurance is a type  insurance policy you can buy in anticipation of your need for extended care.  Here’s a brief overview:

• Your policy will allow you to choose a daily benefit amount, as well as a lifetime maximum benefit.  The daily benefit amount is the amount the policy will cover for your care on a daily basis.  The lifetime maximum is the total ceiling which the insurance will pay for your care.  For example, if you choose a daily benefit amount of $250 for a three-year policy, then you’ll have a lifetime maximum benefit of $273,750.
• You’ll also choose the type of location where you’ll be able to receive care.  You can opt for a “facility care only” policy or a “comprehensive” policy.  A “comprehensive” policy covers the cost of in-home care as well as nursing home or assisted living care, while a “facility care only” policy, as its name suggests, only pays benefits for care you receive during your stay on-site in a facility.
• Generally, the older you are, the more expensive a long-term care policy premium is.
• Policy add-ons, called riders, may be available to cover additional in-home care devices like wheelchair ramps, grab bars, and monitors.

It’s a good idea to seek the help of a trusted advisor when buying long-term care insurance.  You don’t want to buy too little and be left without sufficient coverage when you need it.  By the same token, it’s a mistake to buy too much and be left with expensive, unnecessary coverage.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Before you meet with your estate planning attorney, it helps to be familiar with some of the terminology you’ll be encountering.  Here’s a brief introduction.

Will                                         A legal document that takes effect after your death and with which you specify how property titled in your name alone will be distributed and to whom.  You can also use your will to name a guardian for your minor children and to establish trusts. The formal name for a will is “Last Will and Testament.”

Revocable Living Trust          An estate planning tool with which you name a trustee (usually yourself) to manage your money and property while you’re alive, and then a successor trustee to distribute your property to your beneficiaries upon your death.  The Revocable Living Trust is flexible, because you can change or end it at any time.  It allows you to avoid probate because your property is removed from your name and titled in the name of your trustee, who manages it on behalf of you and your beneficiaries.

Probate                                  The court process by which the distribution of your property is managed if you die owning property solely in your name. Probate can be time consuming and does involve certain expenses.

Power of Attorney                A legal document that allows you to appoint another person, called an “Attorney-in-Fact,” to manage your financial affairs and sign legal documents on your behalf if you are absent or incapacitated.

Healthcare Directive An estate planning tool with which you specify what treatments and life sustaining measures you do and don’t want your doctors to administer in case you’re seriously injured or gravely ill and can’t make medical decisions for yourself.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

You hear about annuities all the time, especially in association with retirement planning, but do you really know what one is?  At core, annuities are pretty simple.  When you buy an annuity, you’re called the annuitant and you’re giving money to a company in return for payments in a fixed amount over a period of time, either for life or for a term of years.

You can make a series of payments for the annuity or you can pay for it all at once.  You can opt to receive your annuity payments back in any number of ways; monthly, quarterly, semi-annually, or yearly. 

Depending on the type of annuity you purchase, the payments may roll over to your spouse when you pass away; however, the more common scenario is that the annuity payments terminate upon your death.

It’s important to shop around before you decide on which annuity you’ll invest in, because some annuities are safer investments than others.  Generally, fixed annuities are less risky than variable annuities.  A fixed annuity gives you a guaranteed payment regardless of how much the market fluctuates.  The payout on a variable annuity, on the other hand, is tied to the performance of the underlying investment on which your annuity is based.  In a strong market,  a variable annuity has the potential to work in your benefit.  In a weak market, however, a variable annuity will work against you.

The right annuity can mean stable and predictable supplemental retirement income.  However, because they can be costly, annuities are not for everyone.  Before you decide to buy, it’s a good idea to do your homework and check with an experienced and trustworthy financial advisor.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Joint ownership is when more than one person owns a piece of land or a financial asset and how you own the property can affect how your estate is settled upon your death. There are three basic types of joint ownership:

Joint Tenancy with Right of Survivorship

This type of ownership gives both owners full ownership of the asset and is most commonly seen in real estate property. In this case, if one owner dies, the other owner automatically inherits the deceased owner’s share.  Other heirs are not able to inherit the property. A joint tenancy owner can then title the property solely in his or her name by showing the death certificate of the deceased owner.

Tenancy By the Entirety

This type of ownership is similar to Joint Tenancy with Rights of Survivorship except that it is normally reserved for married couples only. The reason is that Tenancy by the Entirety allows the couple to own a property as a single legal entity. If one spouse creates a debt, the creditor cannot attach to property owned by the couple “in entirety” because there are no shares to attach to, only the property as a whole.

Like Joint Tenancy with Rights of Survivorship, when one spouse dies, ownership of the property automatically reverts to the surviving spouse without the need for probate.

Tenancy in Common

In the case of tenancy in common, the property owned is usually part of a business. When a piece of property or business is partially owned by two or more people who are not married, they may own the property as shares. In this case, one person’s share may be bigger than the others. When one of the owners dies, that share will go to the deceased’s heirs instead of to the other owner.   If the deceased owner had a Revocable Living Trust and funded his portion of the property into his Trust, the share of the property can avoid probate.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.