How to Create Meaningful Memorial Activities

How can estate planning attorneys help families hold meaningful, memorable memorial activities, especially with the restrictions of a global pandemic?

Kyle Tevlin, founder of I Want a Fun Funeral, spoke about “Raising the Bar on Our Funeral Traditions” at the fourth annual Before I Die New Mexico Virtual Festival.

She showed a cartoon featuring two homo sapiens making cave paintings. The father had drawn a stick figure animal and the son had produced an illustration of a deer. The father says, “No Og, no! That’s not how we’ve always done it.”

“This is my analogy for funerals,” Tevlin explained. “We have this picture of what we think is great and we have no idea that there was something so much better, more elegant, and beautiful.”

Tevlin suggests making a memorial service a project that can help make the world a better place, take on a life of its own, and preserve the story of a loved one. She shared the inspiring example of Aaron Collins.

Aaron Collins died on July 7, 2012 at the age of 30. He left a note requesting that his family go out to eat and leave an “awesome tip,” suggesting $500 for a pizza. The experience was recorded and uploaded to YouTube by Aaron’s brother, Seth.

Generous people all over the world donated to reproduce “Aaron’s Last Wish” again and again. More than $60,000 was raised, Seth gave $500 tips to more than 100 waiters and waitresses. As a result, Aaron’s life story gets told over and over.

“From sadness and tragedy, now his family gets to talk about that loss with joy, a smile, and Aaron becomes a superhero who makes people happy,” said Tevlin. “This all only happened because Aaron Collins wrote this down ahead of time. The family only planned to do it once, but that’s all the more reason to do something little, because you don’t know where it’s going to take you.”

Tips for Engaging Memorial Actions

So, what do you do to be an engaged creator of a good goodbye? Tevlin recommends these seven tips to raise the bar on our funeral traditions.

  1. Brainstorm an objective for what you will do to honor a person. Find a theme, a vision related to the essence of that person. An objective makes it easier for people to contribute, participate, and generate a wonderful memory.
  2. Make your person’s personality shine, keyed to a hobby, passion, trait or quirk everyone will recognize. It can be fun or solemn, anything that is fitting.
  3. Decide the scope of the tribute, from an event for immediate family to a global affair on the Internet. Bigger isn’t necessarily better, but step outside your comfort zone a bit for a greater reward.
  4. “Roll Up Your Sleeves” means DIY as much as possible, enlisting the talents, contributions, creative ideas and resources within your circle. Involvement is where the bonding happens.
  5. Enjoy the process. While sadness is unavoidable, these activities should bring joy. It’s a way of thanking the person for being in your life, warming your heart and providing an uplifting feeling.
  6. Perfection is not required. Do what you can in whatever way you can, generating personal engagement and emotional connections.
  7. There’s no time limit. Whatever the action or event, it does not need to be done immediately. It can easily be held on an anniversary, birthday, or other meaningful date.

Whatever is done in honor of a loved one, make it an event. Give it a name. Almost any activity can be made into a contest, which is practically guaranteed to be fun and memorable.

What the 2020 Election Could Mean for Your Estate Plan

How did the 2020 elections shape the political landscape and what does that changed landscape mean for your estate plan? First, at the top of the ticket, it appears Joe Biden and Kamala Harris are the new President-Elect and Vice-President Elect, with an apparent 306 electoral votes to Donald Trump and Mike Pence’s apparent 232 electoral votes. Democrats retained control of the House of Representatives, although with a narrower majority.

The Senate is a more complicated matter. Republicans control 50 seats and Democrats control 48 seats in the Senate. Both Senate seats in Georgia will be up for runoff elections on January 5, 2021. There are Republican incumbents in both seats and the Democrats have an uphill battle to defeat them in runoff elections. However, if Democrats prevail in both runoff elections, the Senate would be tied with 50 Republicans and 50 Democrats and, beginning January 20, 2021, Vice President Kamala Harris would be the tie-breaking vote to give Democrats the majority in the Senate.

With Democrats in control of the Presidency, the Senate, and the House, they might be able to enact legislation similar to then-candidate Joe Biden’s Tax Plan. That plan included a reduction of the amount which could be passed free of estate tax from the current $11.58 million to $3.5 million. The Biden plan also called for increasing income tax rates and capital gains tax rates, as well as other changes.

What could this mean for you and your family? If you have assets that could be over $3.5 million by your death, this could mean you’d owe an estate tax of 40% on those assets above $3.5 million. You may be able to plan now to take advantage of the current exclusion of $11.58 million. (Note, even without Congressional action, under current law the current exclusion will be cut in half at the end of 2025.)

A possible Democrat-controlled government could change the estate tax exclusion retroactive to January 1, 2021. So, you’d need to act in 2020 to be certain to avoid a possible reduction in the exclusion. You could do this by gifting outright to your children or other beneficiaries. However, by gifting to a trust, you could protect them and the assets from creditors, divorcing spouses, and their own mismanagement. If you’re married, you could gift the assets to an irrevocable trust for your spouse’s benefit. Such trusts could distribute for the benefit of the beneficiaries under the distribution terms you’ve specified, such as for their health, education, maintenance, and support.

If you believe income tax rates will be higher in 2021, you might consider recognizing income in 2020 or deferring deductions to 2021 when they might be more valuable.

Preparing for the Unexpected…and the Eventual

All of us face difficulties and tragedies in our lives. Some of these difficulties are expected and some are unexpected. 2020 has been a year of many unexpected difficulties. While all of us get sick from time to time, nobody anticipated the COVID-19 pandemic. Over 9 million Americans have caught the disease, resulting in the deaths of over 230,000 Americans.

Apart from coronavirus, there are many unexpected tragedies, such as 795,000 Americans suffering a stroke each year, according to the CDC. Another 805,000 Americans experience a heart attack each year, according to the CDC. Additionally, automobile accidents claim about 39,000 lives in the United States annually and injure many more.

Further, there are many lesser-known ways to face tragedy or death. An example is an amoeba that can eat the brain. While rare, the amoeba can come from the soil or water and can be lethal.

Few of us know exactly when or how we will face tragedy or death. But we know that we are all mortal and so we know we will face death eventually.

We may not be able to protect ourselves from everything, but we can prepare now for whatever might happen. Do your estate planning now. That way, when tragedy strikes, you’ll be prepared. If you’re prepared, it will be much easier for your loved ones.

To prepare, consider:

  • A Property Power of Attorney in which you appoint someone, your “Agent,” to handle your property if you are unable to do so yourself.
  • A Healthcare Power of Attorney in which you appoint an Agent to make medical decisions for you, if you are unable to make those decisions for yourself.
  • A HIPAA power which gives people whom you designate, such as your Agent, access to your protected health information.
  • A Revocable Trust to allow management of assets during life and at death. Such a trust allows the avoidance of the delays and expense of probate, which vary from state to state. Through this trust and the PourOver Will discussed below, you can spell out how you want your assets distributed to your beneficiaries to help them the most.
  • A PourOver Will which sends any remaining assets to the Revocable Trust at your death and nominates guardians for any minor children.

Once you have all your ducks in a row, you’ll be ready for whatever life has in store for you, even a year like 2020!

What’s an “Atom Bomb” or “Contingent Remainder” Beneficiary?

When you’re planning your estate, among other things, you decide who should inherit your assets. You choose your beneficiaries, typically your children (or Living Trust depending upon the children’s ages), grandchildren, or other close relatives. But what if all the beneficiaries you’ve chosen and all their descendants have died? Then it would fall to the “contingent remainder” beneficiary.

Often the “contingent remainder” beneficiary has a slang nickname, like the “atom bomb” beneficiary or “exploding turkey” beneficiary. The contingent remainder beneficiary often is given this nickname because it’s a very unusual circumstance. The odds of all your descendants dying before you typically are very low. Of course, that’s not to say it is impossible.

But, still, you should give serious thought to whom you should choose for that role. Sometimes people choose their heirs at law because they think they should or must do so. However, if all your descendants have predeceased you, depending upon state law, that could mean your heirs would be some distant relatives with whom you have little or no relationship in real life.

Sometimes people choose a charity as the contingent remainder beneficiary. Sometimes they choose their alma mater, their church, or the charity to whom they’ve given consistently during their lifetime.

There’s not a wrong choice for the contingent remainder role. But you aren’t required to choose a particular one either. You have no obligation to choose your heirs at law, just because you may share a common ancestor. Give some thought to the decision and name whomever you feel in your heart would be the best recipient for your assets in the event your primary beneficiaries have predeceased you. You’ll be glad you did.

After you’ve chosen your beneficiaries, including your first line beneficiaries like your children (or Living Trust) and the contingent remainder “atom bomb” beneficiary, you’ll sleep better knowing that you’ve covered all your bases. You’ll know that your assets are going where you want them to go, even in the most unlikely of scenarios.

Staying Current is Especially Important in the Pandemic

President Trump and First Lady Melania Trump announced they tested positive for COVID-19. Around the same time, numerous others at the White House also tested positive. In the United States alone, the pandemic has infected over 7.5 million people and has killed nearly 215,000 of them. Worldwide, the pandemic has infected over 36.5 million people and has killed over a million of them. In today’s pandemic, it’s more important than ever to make sure your estate planning documents are current. It’s especially important to ensure your documents relating to your health are up-to-date. Those documents are the Health Care Power of Attorney, the Advance Directive, and the HIPAA Power. It’s important to have several layers of decision-makers.

In the Health Care Power of Attorney you appoint an “Agent” to make health decisions for you when you’re not able to make those decisions for yourself. You can also appoint a successor Agent to make decisions if the first Agent is not available or isn’t able. You can appoint additional successors, too. It’s especially important to name additional successors in today’s pandemic. The fact that President and Melania Trump both tested positive for COVID-19 around the same time demonstrates the importance of naming several successors. It’s all too common nowadays for your initial agent to succumb to the same illness. If you name several successors, especially in a different household, you increase the odds that one of the agents will be unaffected and able to act for you.

An Advance Directive expresses your wishes regarding end-of-life decisions. Without such a clear expression of your wishes, you must be kept alive even if you have no reasonable chance of recovery, even if doing so would prolong your suffering. Sometimes an Advance Directive is called a “Living Will” and often it is combined into the same document as the Health Care Power of Attorney.

The Health Insurance Portability and Accountability Act of 1996 mandates health providers keep your protected health information confidential. While this is primarily a good thing, sometimes you want some people to have access to your protected health information. For example, you want your Health Care Agent to have access to your information so they can make informed decisions regarding your health. Also, you want fiduciaries such as the Agent under a Financial Power of Attorney and the successor Trustee of your Trust to be able to have access so they can know if they need to step in to manage your financial affairs, which is their duty. A HIPAA Power grants access to your protected health information to those whom you designate. In fact, without such a power, your loved ones might not even know you’re in the ICU with COVID-19.

It’s important to have these three documents, but it’s also important to keep them up-to-date and to name successors in them. All too often in the current pandemic, the illness impacts more than one person in the family or locality. If there’s no successor appointed (or that successor is also incapacitated) there can be delays in getting consents for different treatments or implementing end-of-life decisions. So, perhaps you name your spouse first, then your adult child, then your brother or sister, etc. Keep in mind the importance of naming successors who aren’t in your same household and maybe not even in the same locality.

Today’s pandemic is hard on all of us. Precautions like washing your hands, social distancing, and wearing a mask can make all of us safer. Keeping your estate planning documents up-to-date helps ensure that, if the precautions don’t work, your loved ones and fiduciaries can help you through the illness and make it easier for you and your loved ones.

Puerto Ricans are Unique, as Is Estate Planning for Them

Puerto Rico is a territory of the United States. Those born in Puerto Rico carry U.S. passports. But, from an estate planning perspective, they hold a unique place.

If a Puerto Rican is living in the United States, they are estate taxed just like other U.S. citizens. In other words, their taxable estate includes their worldwide assets, no matter where their assets are located. They also have the same estate tax exclusion as other U.S. citizens and residents, $11.58 million in 2020.

However, if they are living in Puerto Rico and if they only have U.S. citizenship due to their birth in Puerto Rico, then they are taxed as non-resident aliens. In other words, they are taxed only on their U.S.-situs assets, like real estate in the U.S. However, they would have a dramatically lower exclusion of only $60,000. This is the same as those who are non-resident aliens. By comparison, someone born in the United States, even if they live outside the United States, is taxed on their worldwide assets and gets an exclusion of $11.58 million.

Let’s look at an example:

Maria was born in Puerto Rico and it’s only due to this that she has a U.S. passport. Maria lives in Puerto Rico and does well for herself. Maria buys a vacation home in Miami worth $1 million. Maria has assets in Puerto Rico and elsewhere outside the United States worth $4 million, as well. If Maria dies under these circumstances, Maria will owe a federal estate tax on $940,000, the value of her vacation home in Miami, less her $60,000 exclusion.

Maria decides to move to Miami and live in what had been her vacation home. If Maria dies after the move, she would owe federal estate tax on $5 million, the value of all of her property worldwide. However, she would have an exclusion of $11.58 million. So, she’d owe no estate tax.

Puerto Ricans are special. They are estate taxed in a unique way, depending upon whether they are living in the United States or living in Puerto Rico. While living in the United States, they are treated just like any other American citizen. But, while they are living in Puerto Rico, they are treated differently. Puerto Ricans should be mindful of this difference and the estate tax burden they might owe by owning U.S.-situs assets (such as real estate in the U.S.) while they are living in Puerto Rico.

Planning Is Important

As Autumn arrives, it is not too early to consider end-of-year planning. Fundamental to end-of-year planning is deciding whether to shift income or expenses from this year to the next, to the extent possible.

All other things being equal, typically you would want to defer income (and the taxation on it) until the following year. However, if your income is lower in the current year, you may want to keep extra income in the current year to be taxed in a lower tax bracket and hence a lower marginal tax rate.

Similarly, typically you would want to take expenses in the current year rather than deferring them until the following year. However, with expenses you would need to consider their deductibility in each year. For example, in 2020 a single taxpayer has a standard deduction amount of $12,400 (and a married couple filing jointly has twice that at $24,800). In order for itemized deductions to give you a better result than the standard deduction, they would need to exceed that standard deduction amount of $12,400.

Let us assume that Betty Taxpayer will have the same income in both years. She has no other deductions in the current year. She is considering making a charitable contribution of some stock. Let us say next year Betty will have other itemized deductions in excess of the standard deduction amount. The existence of those other itemized deductions the following year would mean that her charitable deductions would not have to exceed the standard deduction amount of $12,400 to be deductible. She may want to defer gifting the stock until next year. (Note, in 2020 only, Betty may give up to $300 in cash to a public charity as an “above-the-line” deduction that need not be itemized.)

In addition to considering expenses and deductions, Betty should take into consideration whether her employer participated in the optional deferral of payroll taxes. Beginning September 1, 2020, employers can defer withholding the employee’s 6.2% payroll tax for those employees earning less than approximately $100,000 annually. Some employers, such as the military and the federal government are doing so. Many other employers are not doing so due to the complications involved. If Betty’s employer is deferring her payroll tax withholding, she will have larger paychecks than normal in the last four months of 2020. However, Betty’s paychecks in early 2021 will be smaller than normal to pay back the deferred withholding.

Betty should take all this into consideration, and more as she considers her end-of-year tax planning. Of course, if Betty will have more payroll tax withheld next year, she may find it more difficult to put money aside to make IRA contributions. Remember, you have until April 15th to make your IRA contributions for the prior tax year.

End-of-year tax planning is just part of the planning process. Estate planning includes tax planning but also much more. Estate planning also considers ensuring your assets go to whom you would like them to go and how you would like them to go.

Staying Current is Especially Important in the Pandemic

In the United States alone, the pandemic has infected nearly 7 million people and has killed nearly 200,000 of them. In today’s pandemic, it is more important than ever to make sure your estate planning documents are current. It is especially important to ensure your documents relating to your health are up to date. Those documents are the Health Care Power of Attorney, the Advance Directive, and the HIPAA Power.

In the Health Care Power of Attorney you appoint an “Agent” to make health decisions for you when you are not able to make those decisions for yourself. You can also appoint a successor Agent to make decisions if the first Agent is not available or is not able. You can appoint additional successors, too.

An Advance Directive expresses your wishes regarding end-of-life decisions. Without such a clear expression of your wishes, you must be kept alive even if you have no reasonable chance of recovery, even if doing so would prolong your suffering. Sometimes an Advance Directive is called a “Living Will” and often it is combined into the same document as the Health Care Power of Attorney.

The Health Insurance Portability and Accountability Act of 1996 mandates healthcare providers keep your protected health information confidential. While this is primarily a good thing, sometimes you want some people to have access to your protected health information. For example, you want your Health Care Agent to have access to your information so they can make informed decisions regarding your health. Also, you want fiduciaries such as the Agent under a Financial Power of Attorney and the successor Trustee of your Trust to be able to have access so they can know if they need to step in to manage your financial affairs, which is their duty. A HIPAA Power grants access to your protected health information to those whom you designate. In fact, without such a power, your loved ones might not even know you are in the ICU with COVID-19.

It is important to have these three documents, but it is also important to keep them up to date and to name successors in them. All too often in the current pandemic, the illness impacts more than one person in the family or locality. If there is no successor appointed (or that successor is also incapacitated) there can be delays in getting consents for different treatments or implementing end-of-life decisions.

Today’s pandemic is hard on all of us. Precautions like washing your hands, social distancing, and wearing a mask can make all of us safer. Keeping your estate planning documents up-to-date helps ensure that, if the precautions do not work, your loved ones and fiduciaries can help you through the illness and make it easier for you and your loved ones.

Generational Wealth is Key to Leveling the Playing Field

Even a little bit of a headstart can be extremely helpful in life. Those who start with little economic wealth, including many minorities and recent immigrants, face obstacles in obtaining a good education and building a business or a solid career. Those who have a headstart in life have an easier path to success and happiness. It doesn’t mean they will have everything handed to them on a silver platter. It just means they won’t start at the bottom of society’s ladder. The biggest factor in the wealth gap between minorities and non-minorities is inheritances, according to a report by the  Brookings Institution. This generational wealth is key to leveling the playing field so your children, grandchildren, and descendants can have a better life. The American dream is to work hard and provide your descendants with a chance for a better life than you had.

How do you provide a headstart in life for your loved ones? First, you can provide them with funds to give them a leg up. These funds could allow:

  • A home to provide a solid footing
  • A good education to allow a more rapid ascent up the career ladder
  • Funds for starting a business
  • Economic security

Second, you can leave those assets to them in a manner that protects those assets.

  • You can protect those assets from the beneficiary’s mismanagement prior to when they have gained maturity
  • You can protect the assets from the beneficiary’s creditors
  • You can protect the assets from the beneficiary’s misuse of the assets

You can achieve all of this by using a trust. Let’s look at an example. Jayden and Alyssa have worked hard all their lives. Through their hard work (and a little good fortune) they have been able to build a tidy nest egg. They have two children, Jasmine and Isaiah (Ike). They want all the best for their children, as we all do, and they want them to be able to have an easier start than they did.

Jasmine is level-headed and is a straight-A student. They have greater concerns about Ike, who isn’t as studious as Jasmine. After speaking with their estate planning attorney, Jayden and Alyssa decide upon a plan tailored to their family’s unique needs. Upon the death of the survivor of them, their assets will be split into shares for their two children. Both trusts will have Alyssa’s trusted sister, Janet, as the trustee. Janet will be the trustee of Jasmine’s half until Jasmine is of a suitable age, which they think will be 35. At that age, Jasmine will be the trustee of her own share. Prior to that time, Janet will distribute for Jasmine’s education, support, and other needs. Thus, the assets will provide Jasmine a headstart in life while the assets are protected from misuse and unwise investments in her early adulthood. Then Jasmine can pay it forward to her children when she has them.

Ike is not as studious as Jasmine. In fact, Jayden and Alyssa have some concerns about Ike. Ike has been irresponsible. Ike had an accident while driving under the influence. Luckily, Ike wasn’t hurt, but the passengers in his car and the occupants of the other vehicle involved were injured and received judgments against him. Because of this, they’re giving Janet greater latitude as trustee for Ike’s share. Ike’s share provides distributions to him only in Janet’s discretion. This provides protection from Ike’s creditors. Janet can still make distributions for Ike’s benefit as she sees fit so he can still get a good start in life by getting an education, etc. This ensures the assets will be there for Ike’s benefit and won’t be wasted by Ike or seized by his creditors.

Jayden and Alyssa have worked hard and saved all their lives. They want their children to have an easier start than they did. So, they consulted with an estate planning attorney. After they are gone, they’re leaving their assets for their children in trusts with protection tailored to Jasmine and Ike’s needs. They built their family. They built their nest egg. Now they’ve consulted an estate planning attorney and built a unique plan tailored for their family which will pass on their nest egg to provide a headstart and protections for their family.

Chadwick Boseman Demonstrates the Importance of Planning

The star of multiple films, including the blockbuster superhero film “Black Panther,” died on August 28 of colon cancer. “Black Panther” by Marvel was nominated for 6 Academy Awards, including Best Picture. The film grossed over $1.3 billion worldwide. Chadwick Boseman became a role model for millions by playing Marvel Studio’s first Black superhero. Boseman also starred in films portraying real-life heroes, like Jackie Robinson (“42”), James Brown (“Get On Up”), and Thurgood Marshall (“Marshall”).

Boseman showed us that even those who appear to be young, vibrant, and heroic need planning. Boseman died at age 43. While little is known of Boseman’s estate planning, we do know that he had a wife, Taylor Simone Ledward, whom he met in 2015 and to whom he got engaged to in October 2019. Boseman was the youngest of three sons of his mother, a nurse, and his father, a textile factory worker.

Even those of us who are young need at least a basic estate plan. A basic estate plan includes:

  • A Power of Attorney for Property which appoints someone as your Agent to manage your property, particularly when you’re not able to do so yourself.
  • A Healthcare Power of Attorney which appoints an Agent for you to make healthcare decisions for you when you’re unable to make those decisions for yourself. This may be combined with a Living Will which expresses your wishes regarding end-of-life decisions.
  • A Living Trust often is used to hold your property during lifetime. A Trust avoids the probate process and the cost, delays, and publicity which it might bring.
  • A Pourover Will is used to transfer any property in the estate at death to the Trust for disposition according to its terms. The Will is also the document in which you nominate guardians for any minor children.
  • A HIPAA (Health Insurance Portability and Accountability Act) Power, which grants access to your protected health information. Without this authority, loved ones and fiduciaries, such as your Agent or Successor Trustee, might not be able to know your health information, including whether you’re even in a hospital or other facility or if you’re no longer able to manage your affairs and your Agent or Successor Trustee needs to step in.

Chadwick Boseman performed his most famous roles after his diagnosis with colon cancer four years before his death. President Barack Obama tweeted: “To be young, gifted, and Black; to use that power to give [Black kids] heroes to look up to; to do it all while in pain – what a use of his years.”

What a use of his years, indeed. Chadwick Boseman demonstrated that one can inspire millions through your words and your deeds.